U.S. Securities and Exchange Commission Washington, D.C. 20549
FORM 10-Q
x Quarterly Report pursuant to Section 13 or 15(d) of the Securities
and Exchange Act of 1934
For the quarterly period ended September 30, 1998
Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ________ to ________.
Commission File Number 001-14381
Success Bancshares, Inc.
(Exact name of registrant as specified in its charter)
Delaware 36-34976644
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
One Marriott Drive, Lincolnshire, IL 60069
(Address of principal executive offices)
(Zip Code)
(847) 634-4200
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange of Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock: 2,951,236 shares $0.001 par value, outstanding as of October 31,
1998.<PAGE>
Table of Contents
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet 1
Consolidated Statements of Income 2
Consolidated Statements of Cash Flow 3
Footnotes to Unaudited Consolidated Financial Statements 4 - 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6 - 13
Item 3. Quantitative and Qualitative Disclosures about
Market Risk
Part II. OTHER INFORMATION
Item 6. (a) Exhibits 14 - 15
(b) Reports on Form 8-K
Form 10-Q Signature Page 16<PAGE>
Success Bancshares, Inc. and Subsidiaries
Consolidated Balance Sheets
September 30, 1998 and December 31, 1997
September 30, December 31,
1998 1997
------------ ------------
(Unaudited)
(In thousands)
ASSETS
Cash and cash equivalents $ 27,865 $23,901
Securities available-for-sale 19,944 22,090
Securities held-to-maturity (fair value $30,928
and $32,439 in 1998 and 1997, respectively) 29,952 31,664
Real estate loans held-for-sale 1,151 65
Loans, less allowance for loan losses of $3,687
at 1998 and $2,079 at 1997 352,984 287,025
Premises and equipment, net 10,614 8,786
Interest receivable 2,999 2,507
Other real estate owned 1,720 290
Other assets 3,717 2,391
---------- ----------
Total Assets $450,946 $378,719
========== ==========
LIABILITIES AND SHAREHOLDER' EQUITY
Liabilities
Deposits
Non-interest bearing deposits $48,282 $45,225
Interest bearing deposits 337,283 284,199
---------- ----------
Total deposits 385,565 329,424
Federal Home Loan Bank advances 10,549 10,720
Securities sold under repurchase agreements 3,823 3,814
Demand notes payable to U.S. Government 1,185 1,429
Convertible subordinated debentures - 200
Interest payable and other liabilities 2,944 2,482
---------- ----------
Total Liabilities 404,066 348,069
Minority interest in subsidiary bank 502 580
Company obligated mandatory redeemable
preferred securities of subsidiary trust
holding solely junior subordinated debentures 15,000 -
Shareholders' equity
Preferred stock, $0.001 par value,
1,000,000 shares authorized, none issued - -
Common stock, $0.001 par value, 7,500,000 shares
authorized, 2,951,236 and 2,918,324 shares
issued and outstanding, at 1998 and 1997, respectively 3 3
Additional paid-in capital 24,402 24,151
Retained earnings 7,299 6,352
Loan to Employee Stock Ownership Plan (138) (158)
Accumulated other comprehensive income (188) (278)
---------- ----------
Total Shareholders' Equity 31,378 30,070
---------- ----------<PAGE>
Total Liabilities and Shareholders' Equity $450,946 $378,719
========== ==========
See accompanying notes to Unaudited Consolidated Financial Statements<PAGE>
Success Bancshares, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
(In thousands, except share data)
Interest income
Loans (including fee income) $7,528 $5,611 $20,997 $15,299
Investment securities 756 708 2,320 2,101
Other interest income 111 40 441 174
------- ------- ------- -------
8,395 6,359 23,758 17,574
Interest expense
Deposits 3,959 2,843 11,334 7,770
Note payable 0 140 0 329
Convertible subordinated debentures 0 94 7 279
Other borrowings 593 317 1,291 741
------- ------- ------- -------
4,552 3,394 12,632 9,119
------- ------- ------- -------
Net interest income 3,843 2,965 11,126 8,455
Provision for loan losses 1,141 273 1,618 501
------- ------- ------- -------
Net interest income after provision
for loan losses 2,702 2,692 9,508 7,954
Other operating income
Service charges on deposit accounts 502 480 1,538 1,397
Gain on sale of loans 0 26 17 54
Gain on sale of securities 0 0 16 0
Credit card processing income 1,565 1,501 4,364 4,346
Other non-interest income 1,079 38 1,199 161
------- ------- ------- -------
3,146 2,045 7,134 5,958
Other operating expense
Salaries and employee benefits 2,412 1,507 6,274 4,385
Occupancy and equipment expense 737 501 1,909 1,480
Data processing 173 232 542 720
Credit card processing expense 1,572 1,373 4,352 4,138
Other non-interest expense 1,288 759 2,996 2,276
------- ------- ------- -------
6,182 4,372 16,073 12,999
------- ------- ------- -------
Income before income taxes (334) 365 569 913
Income tax (benefit) expense (578) 83 (378) 271
------- ------- ------- -------
Net income 244 282 947 642
Other comprehensive income
Unrealized securities gains,
net of income taxes 12 72 90 166<PAGE>
------- ------- ------- -------
Comprehensive income $256 $354 $1,037 $808
======= ======= ======= =======
Basic earnings per share $ 0.08 $ 0.22 $ 0.32 $ 0.47
Diluted earnings per share $ 0.08 $ 0.20 $ 0.31 $ 0.45
See accompanying notes to Unaudited Consolidated Financial Statements.<PAGE>
Success Bancshares, Inc. and Subsidiaries
Consolidated Statements of Cash Flow
Nine Months Ended September 30, 1998 and 1997
(Unaudited)
1998 1997
(In thousands, except share data)
Net cash provided by operating activities $2,365 $1,221
Cash flows from investing activities:
Proceeds from maturities of available-
for-sale securities 10,561 3,495
Purchase of available-for-sale securities (8,464) (6,479)
Proceeds from maturities of held-to-maturity securities 4,594 954
Purchase of held-to-maturity securities (3,000) -
Purchase of other real estate owned (1,269) -
Proceeds from sale of loans 1,905 -
Proceeds from sale of other real estate owned 369 -
Purchase of subsidiary bank stock - (1)
Loans made to customers, net (71,222) (61,121)
Premises and equipment expenditures (2,681) (2,169)
------- -------
Net cash used in investing activities (69,207) (65,321)
------- -------
Cash flows from financing activities:
Increase (decrease) in non-interest bearing deposits 3,057 (875)
Increase in interest bearing deposits 53,084 59,277
Decrease in demand notes payable to U.S. Government (244) (1,041)
Increase in securities sold under agreements to repurchase 9 6,520
Repayments of notes payable - (400)
Proceeds from notes payable - 3,000
Net increase (decrease) in Federal Home Loan Bank advances (171) 1,361
Repayment of convertible subordinated debentures (200) -
Issuance of Trust Preferred 15,000 -
Issuance of common stock 251 133
Dividends paid - (40)
Loan to ESOP - (50)
Repayment of loan to ESOP 20 -
------- -------
Net cash provided by financing activities 70,806 67,885
------- -------
Net increase in cash and cash equivalents 3,964 3,785
Cash and cash equivalents at beginning of period 23,901 13,833
------- -------
Cash and cash equivalents at end of period $27,865 $17,618
======= =======
See accompanying notes to the Unaudited Consolidated Financial Statement<PAGE>
Success Bancshares, Inc. and Subsidiaries
Notes to Unaudited COnsolidated Financial Statements
NOTE 1: Basis of Presentation
The financial information of Success Bancshares, Inc. and subsidiaries (the
Company) included herein is unaudited; however, such information reflects all
adjustments (consisting of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair statement of results for the
interim periods. The results of the interim period ended September 30, 1998
are not necessarily indicative of the results expected for the year ended
December 31, 1998.
NOTE 2: Recent Accounting Developments
In June 1997, the FASB issued Statement 130, Reporting Comprehensive Income.
The Statement establishes standards for the reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. The Statement does not address when transactions are
recorded, how they are measured in the financial statements, or whether they
should be included in net income or other comprehensive income. The Statement
was effective for fiscal years beginning after December 15, 1997 and has been
implemented by the Company.
Also in June 1997, the FASB issued Statement No. 131, Disclosures about
Segments of an Enterprise and Related Information. The Statement established
standards for the way that public companies report information about operating
segments in annual financial statements and requires that those enterprises
report selected financial information about operating segments in interim
financial reports issued to shareholders. It also established standards for
related disclosures about products and services, geographic areas, and major
customers. Statement No. 131 is effective for financial statements for fiscal
years beginning after December 15, 1997. In the initial year of application,
comparative information for earlier years is required to be restated.
Management will implement this statement in its 1998 Annual Report. Management
believes that the adoption of Statement No. 131 will not have a significant
impact on its financial statements and disclosures as it operates in only one
reporting segment.
During 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and for Hedging Activities" which establishes new standards for
reporting information about derivatives and hedging. It is effective for
periods beginning after June 15, 1999 and will be adopted by the Company as of
January 1, 2000. The Company has not yet quantified the impact of adopting
Statement No. 133 on its financial statements and has not determined the timing
or method of its adoption of Statement No. 133, if any.<PAGE>
NOTE 3: 8.95% Cumulative Trust Preferred Securities
On May 19, 1998, the Company issued $15 million of Trust Preferred Securities
("Securities") through Success Capital Trust I ("Trust"), a statutory
business trust and wholly-owned subsidiary of the Company. The Securities
pay cumulative cash distributions quarterly at an annual rate of 8.95%.
Proceeds from the sale of the Securities were invested by the Trust in 8.95%
Junior Subordinated Deferrable Interest Debentures issued by the Company
which represents all of the assets of the Trust. The Securities are subject
to mandatory redemption, in whole or in part, upon repayment of the Junior
Subordinated Debentures at the stated maturity or their earlier redemption,
in each case at a redemption price equal to the aggregate liquidation
preference of the Securities plus any accumulated and unpaid distributions
thereon to the date of redemption. Prior redemption is permitted under
certain circumstances such as changes in tax and investment company
regulations. The Company fully and unconditionally guarantees the Securities
through the combined operation of the debentures and other related documents.
The Company's obligations under the guarantee are unsecured and subordinate
to senior and subordinated indebtedness of the Bank.
NOTE 4: Earnings Per Share
Basic earnings per share are computed by dividing net income, after deducting
any dividends on preferred stock, by the weighted average number of common
shares outstanding. Diluted earnings per share assumes the exercise of any
dilutive instruments, including stock options and convertible subordinated
debt.
The following tables summarize the computation of earnings per share for the
periods indicated:
<TABLE>
<CAPTION>
For the Three Months Ended September
1998 1997
Income Share Per-Share Income S
(Numerator)(Denominator) Amount(Numerator)(Den
<S> <C> <C> <C> <C>
(In thousands, except per share a
Net income $244 $282
Less: Preferred stock dividends<PAGE>
----- -----
Basic EPS
Income available to common
stockholders 244 2,951 $ 0.08 282
Effect of Dilutive Securities
Options - 136 -
Convertible subordinated debt - - 58
----- ----- -----
Diluted EPS
Income available to common
stockholders + assumed
conversions $244 3,087 $ 0.08 $340
===== ===== ===== =====
For the Nine Months Ended September 3
1998 1997
Income Share Per-Share Income S
(Numerator)(Denominator) Amount(Numerator)(Den
(In thousands, except per share a
Net income $947 $642
Less: Preferred stock dividends - 40
----- -----
Basic EPS
Income available to common stockholders 947 2,934 $0.32 602
Effect of Dilutive Securities
Options - 134 -
Convertible subordinated debt 4 13 171
----- ----- -----
Diluted EPS
Income available to common
stockholders + assumed
conversions $951 3,081 $0.31 $773
===== ===== ===== =====
/TABLE
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
General
The principal business of Success Bancshares, Inc. (referred to as the
"Company" when such reference includes Success Bancshares, Inc. and its
subsidiaries, collectively, or "Success Bancshares" when referring only to the
parent company), is conducted by its majority owned subsidiary, Success
National Bank (the "Bank") and consists of full service community banking. The
profitability of the Company's operations depends primarily on its net interest
income, provision for loan losses, other operating income and other operating
expenses. Net interest income is the difference between the income the Company
receives on its loan and investment portfolios and its cost of funds, which
consists of interest paid on deposits and borrowings. The provision for loan
losses reflects the cost of credit risk in the Company's loan portfolio. Other
operating income consists of service charges on deposit accounts, securities
gains, gains on sale of loans, credit card processing income and fees and
commissions. Other operating expenses include salaries and employee benefits
as well as occupancy and equipment expenses, credit card processing expenses,
and other non-interest expenses.
Net interest income is dependent on the amounts and yields of interest earning
assets as compared to the amounts of and rates on interest bearing liabilities.
Net interest income is sensitive to changes in market rates of interest and the
Company's asset/liability management procedures in coping with such changes.
The provision for loan losses is dependent on increases in the loan portfolio,
management's assessment of the collectibility of the loan portfolio, as well as
economic and market factors. Non-interest expenses are heavily influenced by
the growth of operations, with additional employees necessary to staff and open
new branch facilities and marketing expenses necessary to promote them. Growth
in the number of account relationships directly affects such expenses as data
processing costs, supplies, postage and other miscellaneous expenses.
Since the consummation of its initial public offering in October 1997, the
Company has worked to aggressively execute its strategic plan of continued
growth by providing a high level of service to its core customers while
expanding its market share in its target markets and by entering new markets.
In addition to opening its Downtown Chicago branch in May 1998, the Company
opened its Skokie-Oakton Street branch in August 1998. Current expansion plans
include:
Location Projected Opening By
North Libertyville December 1998
Mundelein January 1999
Skokie March 1999
The Skokie branch office was originally scheduled to open in October 1998;
however, the Company has postponed its opening until March 1999 in order to use
the site as the Company's year 2000 testing facility. In addition, management
determined that the Lake Zurich branch, originally scheduled to open in October
1998, was not feasible and will not be opened.<PAGE>
Operating Results
For the three months ended September 30, 1998, net income was $244,000, a
decrease of 13% from the net income of $282,000 for the same period in 1997.
For the first nine months of 1998, net income was $947,000, an increase of
48% from the net income of $642,000, for the same period in 1997. For the
quarter and nine month period ended September 30, 1998, net income per
diluted share was $0.08 and $0.31, respectively, as compared to $0.20 and
$0.45 per diluted share for the same periods in 1997.
Net Interest Income
The major source of earnings for the Company is net interest income. The
related net interest margin represents the net interest income as a
percentage of average interest earning assets during the period. The
following table sets forth the average daily balances, net interest income
and expenses and average yields and rates for the Company's interest earning
assets and interest bearing liabilities for the indicated periods on a tax
equivalent basis assuming a 34% tax rate.
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1998 1997
Average Average Average Average
Assets Balance Interest Rate Balance Interest Rate
<S> <C> <C> <C> <C> <C> <C>
(Dollars in thousands)
Loans <1> <2> $318,222 $20,997 8.80% $226,076 $15,308 9.03%
Taxable investment securities 42,141 1,936 6.13 39,043 1,777 6.07
Investment securities exempt from
Federal income tax <1> 12,565 692 7.34 8,236 468 7.58
Interest bearing deposits with
financial institutions 5,493 223 5.41 1,803 79 5.84
Other interest earning assets 5,301 218 5.48 2,343 95 5.41
------- ------- ------- ------- ------- -------
Total interest earning assets$383,722 $24,066 8.36% $277,501 $17,727 8.52%
Non-interest earning assets 33,054 24,426
------- -------
Total Assets $416,776 $301,927
======= =======
Liabilities & Shareholders' Equity
Deposits:
NOW & money market accounts $125,789 $3,697 3.92% $84,500 $2,162 3.41%
Savings deposits 20,868 500 3.19 19,647 487 3.30
Time deposits 163,075 7,137 5.84 118,067 5,121 5.78
Notes payable - - 5,137 329 8.54
Other borrowings 26,489 1,298 6.53 21,111 1,020 6.44
------- ------- ------- ------- ------- -------
Total interest bearing
liabilities 336,221 12,632 5.01 248,462 9,119 4.89
Demand deposits -
non-interest bearing 46,514 40,336
Other non-interest bearing <PAGE>
liabilities 2,674 2,078
Minority interest in
subsidiary bank 535 539
Shareholders' equity 30,832 10,512
------- -------
Total Liabilities &
Shareholders' Equity $416,776 $301,927
======= =======
Net Interest Income $11,434 $8,608
======= =======
Net Yield on Interest Earning Assets 3.97% 4.14%
======= =======
<FN>
<1> Tax-exempt income as reflected on a fully tax equivalent basis utilizing a 34%
rate for all years presented.
<2> Non-accrual loans are included in average loans
</TABLE>
The decline in annualized net interest margin for the nine months ended
September 30, 1998 compared with the same period of 1997, is primarily
attributable to a decline in the rate earned on loans as market pressures
forced the Bank to be more competitive in commercial loan pricing and to the
effect of promotional rate home equity products. The situation was further
impacted by promotional deposit programs intended to fund the substantial
growth experienced by the Company. To the extent the Company continues to
grow utilizing promotional products, the net interest margin could experience
further compression.
Additionally, the proceeds from the issuance of the 8.95% trust preferred
securities have not been fully deployed and were invested in overnight
deposits at rates approximating 5% during the quarter, resulting in a
reduction of net interest income.
The following table represents a reconciliation of fully tax equivalent net
interest income.
(Dollars in thousands)
Fully tax equivalent net interest income for the nine
months ended September 30, 1997 $8,608
Change due to average interest earning assets fluctuations 3,467
Change due to interest rate fluctuations (641)
-------
Fully tax equivalent net interest income for the nine
months ended September 30, 1998 $11,434
=======
Provision for Loan Losses
The provision for loan losses was $1.1 million for the quarter ended
September 30, 1998 versus $273,000 for the comparable period in 1997. For
the nine month period ended September 30, 1998, the Bank provided $1.6
million as an addition to the allowance for loan losses as compared to a
provision of $501,000 for the comparable period in 1997. The increased
provisions for the quarter as well as the nine month period were required to
support the growth of the Company's loan portfolio, as more fully discussed
below.<PAGE>
Other Operating Income
For the quarter ended September 30, 1998, other operating income increased
$1.1 million to $3.1 million, compared with $2.0 million for the comparable
period in 1997. The increase is primarily attributed to the receipt of $1.0
million of life insurance proceeds resulting from the unexpected death of the
Company's President and Chief Executive Officer. Service charges on deposit
accounts amounted to $502,000 and $480,000 for the quarters ended September
30, 1998 and 1997, respectively.
For the nine month period ended September 30, 1998, other operating income
increased $1.2 million over the comparable period in 1997 which was largely
the result of both the life insurance proceeds and an increase of $141,000
over 1997 in income relating to service charges on deposit accounts.
Other Operating Expenses
In the third quarter of 1998, other operating expenses increased $1.8
million, or 41.4%, to $6.2 million, compared with $4.4 million in 1997. In
the first nine months of 1998, other operating expense increased $3.1
million, or 23.6%, to $16.1 million, as compared to $13.0 million for the
same period in 1997. The increase for both the quarter and nine month period
reflects the higher level of cost necessary to support the Company's growth.
Salary and employee benefit expenses increased $905,000, or 60.0%, to $2.4
million for the quarter as compared to the same period in 1997. During the
quarter the Company incurred a non-recurring, one-time compensation charge of
$350,000 in connection with the unexpected death of the Company's President
and Chief Executive Officer. For the nine month period ended September 30,
1998 salary and employee benefit expenses increased $1.9 million or 43.1% to
$6.3 million over the comparable period in 1997. The elevated expense levels
reflect both the increased staffing to support the growth of deposit and loan
accounts at existing bank locations as well as the staffing requirements for
newly opened offices.
Occupancy and equipment expenses for the third quarter increased $236,000, or
47.1% to $737,000 over the prior period in 1997. For the nine month period
ended September 30, 1998 occupancy and equipment expense increased $429,000,
or 29.0%, over the comparable period in 1997. The increases are primarily
the result of cost associated with expanding the Company's branch network.
Income Taxes
The Bank recorded income tax benefits of $578,000 and $378,000 for the
quarter and nine month periods ended September 30, 1998, respectively, as
compared to provisions of $83,000 and $271,000 for the respective comparable
periods in 1997. The $1.0 million in life insurance proceeds noted above are
included in income but are excluded from the computation of tax because the
proceeds are income tax exempt.
Financial Condition
Loans<PAGE>
The loan portfolio is the largest category of the Company's interest earning
assets. As of September 30, 1998, loans increased $67.6 million, or 23.4%,
to $356.7 million, as compared to $289.1 million at December 31, 1997.
The increase in loans outstanding has been a result of the Bank's active
solicitation of new lending relationships in the commercial area, the
utilization of a 7.5% three year fixed rate home equity loan promotion and
management's decision to portfolio both conforming and non-conforming
residential home loans.
The following table sets forth the composition of the loan portfolio:
September 30, 1998 December 31, 1997
Percent of Percent of
Amount Portfolio Amount Portfolio
(Dollars in thousands)
Commercial $97,740 27.39% $87,506 30.21%
Real estate - construction 18,536 5.19 13,409 4.63
Real estate - mortgage 150,785 42.26 106,120 36.64
Home equity 80,081 22.44 72,944 25.18
Installment 9,271 2.60 9,253 3.19
Credit cards 395 0.11 432 0.15
------- ------- ------- -------
Total gross loans 356,808 100.00% 289,664 100.00%
======= =======
Net deferred loan fees 184 (187)
Unaccreted discount resulting from
loss on transfer of loans held-for-
sale to portfolio (321) (373)
------- -------
Loans net of unearned discount and
net deferred loan fees 356,671 289,104
Allowance for loan losses (3,687) (2,079)
------- -------
Net loans $352,984 $287,025
======= =======
Allowance to gross loans 1.03% 0.72%
Non-Performing Assets
The following table presents a summary of book value of non-performing assets
which includes (a) non-performing loans and (b) other real estate owned.
Non-performing loans include: (1) loans accounted for on a non-accrual
basis; (2) accruing loans contractually past due 90 days or more as to
interest or principal payment; and (3) loans whose terms have been
renegotiated to provide a reduction or deferral of interest or principal
because of a deterioration in the financial position of the borrower. The
Company has a reporting and control system to monitor non-performing loans.
Loans with principal or interest payments contractually due but not yet paid
are reviewed by senior management on a weekly basis and are placed on
non-accrual status when scheduled payments remain unpaid for 90 days or more,
unless the loan is both well-secured and in the process of collection.
Interest income on non-accrual loans is recorded when actually received in<PAGE>
contrast to the accrual basis, which records income over the period in which
it is earned, regardless of when it is received.
September 30,December 31,
1998 1997
(Dollars in thousands)
Non-performing loans:
Non-accrual $272 $1,479
90 days or more past due, still accruing 692 341
Restructured - -
----- -----
Total non-performing loans 964 1,820
Other real estate owned 1,720 290
----- -----
Total non-performing assets $2,684 $2,110
====== ======
Non-performing loans as a percentage of total loans,
net of unearned income and net deferred loan fees/costs 0.27% 0.63%
====== ======
Non-performing loans as a percentage of the allowance
for loan losses 26.15% 87.54%
====== ======
Non-performing assets as a percentage of total
assets 0.60% 0.56%
====== ======
The decrease in nonaccrual loans of $1.2 million from December 31, 1997 to
September 30, 1998 is primarily associated with the transfer of one
commercial real estate loan with a balance amounting to $555,000 to other
real estate owned and the repayment in full of two loans with balances
amounting to $547,000. At September 30, 1998, other real estate owned was
comprised of the above mentioned commercial real estate which was revalued at
$450,000 and a property originally acquired as bank premises but currently
offered for sale with a fair value of $1.3 million. During the first nine
months of 1998, the only property that had been classified at December 31,
1997 as other real estate owned with a carrying value of $290,000 was sold
for a net loss of $44,000.
Potential Problem Loans
In addition to those loans disclosed under "Non-performing Assets," there are
certain loans in the portfolio which management has identified through its
problem loan identification system which exhibit a higher than normal credit
risk. However, these loans do not represent non-performing loans to the
Company. Management's review of the total loan portfolio to identify loans
where there is concern that the borrower will not be able to continue to
satisfy present loan repayment terms includes factors such as review of
individual loans, recent loss experience and current economic conditions.
Loans in this category include those with characteristics such as those that
have recent adverse operating cash flow or balance sheet trends, or have
general risk characteristics that the loan officer believes might jeopardize
the future timely collection of principal and interest payments. The
principal amount of loans in this category as of September 30, 1998 and
December 31, 1997 was approximately $4.0 million and $3.7 million,
respectively. These loans were classified due to their debt service coverage
levels and loan to value ratios. At September 30, 1998, there were no<PAGE>
significant loans which were classified by any bank regulatory agency that
are not included above as non-performing or as a potential problem loan.
Allowance for Loan Losses
The allowance for loan losses is maintained at a level considered adequate to
provide for potential future losses in the Company's loan portfolio. The
level of the allowance is based upon management's periodic and comprehensive
evaluation of the loan portfolio, as well as current and projected economic
conditions. Reports of examination furnished by Federal banking authorities
are also considered by management in this regard. These evaluations by
management in assessing the adequacy of the allowance include consideration
of past loan loss experience, changes in the composition of the loan
portfolio, the volume and condition of loans outstanding and current market
and economic conditions.
Loans are charged to the allowance for loan losses when deemed uncollectible
by management, unless sufficient collateral exists to repay the loan.
The following table summarizes transactions in the allowance for loan losses
for the periods indicated
Nine Months Ended September 30,
1998 1997
(Dollars in thousands)
Balance at beginning of period $ 2,079 $1,425
Charge-offs (19) (74)
Recoveries 9 40
Provision for loan losses 1,618 501
------ ------
Balance at end of period $3,687 $1,892
====== ======
Allowance as a % of total loans, net of unearned
discount and net deferred loan fees/costs 1.03% 0.71%
====== ======
Ratio of net charge-offs to average loans
outstanding (annualized) 0.008% 0.044%
====== ======
Control of the Company's loan quality is continually monitored by management
and is reviewed by the Board of Directors and loan committee of the Bank on
a monthly basis, subject to the oversight by the Company's Board of
Directors through its members who serve on the loan committee. Independent
external review of the loan portfolio is provided by the examinations
conducted by regulatory authorities, independent public accountants in
conjunction with their annual audit, and an independent loan review
performed by a consultant engaged by the Board of Directors. Additions to
the allowance for possible loan losses, which are charged to earnings
through the provision for loan losses, are determined based on a variety of
factors, including actual charge-offs during the year, historical loss
experience, delinquent loans, and an evaluation of current and prospective
economic conditions in the market area. During the quarter, management
determined that an increase in the allowance balance was warranted due to
the growth of the commercial loan portfolio and general economic conditions.
Although management believes the allowance for possible loan losses is<PAGE>
adequate to cover any potential losses, there can be no assurance that the
allowance will prove sufficient to cover actual loan losses in the future.
Deposits
The following table sets forth the amount and composition of deposit
products for the periods indicated:
September 30,Percentage December 31, Percentage
1998 of Deposits 1997 of Deposits
(Dollars in thousands)
NOW and money market accounts $144,312 37.43% $108,998 33.09%
Savings deposits 21,880 5.67 19,389 5.89
Time deposits 171,091 44.37 155,812 47.30
Demand deposits - non-interest
bearing 48,282 12.52 45,225 13.73%
-------- -------- -------- --------
Total $385,565 100.00% $329,424 100.00%
======== ======== ======== ========
Liquidity and Capital Resources
Shareholders' Equity and Capital Standards
The Company and the Bank are subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory, and possibly
additional discretionary, actions by regulators that, if undertaken, could
have a direct material effect on the Company's growth and financial condition.
The regulations require the Company and the Bank to meet specific capital
adequacy guidelines that involve quantitative measures of assets, liabilities,
and certain off-balance-sheet items as calculated under regulatory accounting
principles. The capital classifications are also subject to qualitative
judgments by the regulators about risk weightings and other factors.
Quantitative measures established by Federal regulations to ensure capital
adequacy require the Company and the Bank to maintain minimum ratios (set
forth in the table below) of Tier 1 capital (as defined in the regulations) to
total average assets (as defined in the regulations). As of September 30,
1998, the Company's actual total capital to risk-weighted assets ratio was
16.54%. As of September 30, 1998, the ratio of the Bank's total capital to
risk-weighted assets was 9.75% and less than the threshold ratio of 10.00%
required for "well-capitalized" financial institutions. The Company, which
received approval from the Office of the Comptroller of the Currency to
acquire the Bank's minority interest on October 23, 1998, immediately infused
$5.0 million of capital into the Bank. The ratio of the Bank's total capital
to risk-weighted assets as a result of the capital contribution improved to
approximately 10.75% restoring the Bank to "well-capitalized" status. The
Company, which now owns a 100% interest in the Bank, is able and prepared to
retain the well-capitalized status.
The required ratios and the Company's and Bank's actual ratios at September
30, 1998, are presented on the following page:
<TABLE>
CAPTION
<PAGE>
To Be Well Capitalized
For Capital Under Prompt Corrective
Actual Adequacy Purposes Action Provisions
Actual Ratio Actual Ratio Actual Ratio
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
As of September 30, 1998
Total Capital (to Risk Weighted Assets):
Consolidated $50,755 15.93% $25,490 8.0% Not Applicable
Bank 30,925 9.75 25,366 8.0 $31,708 10.0%
Tier 1 Capital (to Risk Weighted Assets):
Consolidated 42,757 13.42 12,745 4.0 Not Applicable
Bank 27,238 8.59 12,683 4.0 19,025 6.0
Tier 1 Capital (to Average Assets):
Consolidated 42,757 10.26 16,671 4.0 Not Applicable
Bank $27,238 6.79% $16,041 4.0% $20,051 5.0%
</TABLE>
Operating Investing and Financing Activities
The Company's cash flows are composed of three classifications: cash flows
from operating activities, cash flows from investing activities, and cash
flows from financing activities. Net cash provided by operating activities
consists primarily of earnings. Net cash used in investing activities,
consisting primarily of loan and investment funding, was $69.2 million and
$65.3 million for the nine months ended September 30, 1998 and 1997,
respectively. The increased usage is attributed to a much greater volume of
loan closings as a result of the Company's growth strategy. Net cash
provided by financing activities, consisting principally of deposit growth
and trust preferred securities issuance, was $70.8 million and $67.9 million
for the nine months ended September 30, 1998 and 1997, respectively.
Year 2000
The year 2000 will be the first century date change ever for an automated
society. For years, information systems were designed using a two-digit date
field. This practice has created an environment in which older generation
software programs may not be able to discern the difference between the year
2000 and the year 1900. This problem could result in the failure of
computers and/or information systems. Due to its reliance on both computers
and information systems, in early 1998, the Company began the process of
identifying and assessing the degree to which its hardware and software would
be impacted by the date change.
A committee, comprised of representatives from all major operating areas, was
created to assess whether or not the Company's internal and external systems,
particularly those that are mission-critical, are year 2000 compliant. The
committee has developed and adopted an action plan that addresses the
Company's year 2000 renovation, testing, contingency planning and management
review process. In addition the Company has developed a due diligence
process to monitor and evaluate the efforts of external third party suppliers
to achieve year 2000 readiness. The committee has developed and implemented
a written testing plan for both internal and external mission-critical
systems and anticipates that substantially all testing of internal<PAGE>
mission-critical systems will be complete by December 31, 1998. A
contingency plan that defines scenarios for mission-critical systems failing
to achieve year 2000 readiness and evaluates the Company's options is in the
process of development by the committee and is expected to be completed by
December 31, 1998.
The Company is committed to year 2000 compliance and, as such, has taken
steps to educate its customers in identifying potential year 2000 problems.
A year 2000 risk assessment of borrowers with loans in excess of $100,000 has
been completed. The Company is satisfied that these borrowers represent a
low year 2000 risk; however, the Company has instituted a program to assist
in the management of underwriting risk.
As of September 30, 1998 year 2000 compliance costs incurred are estimated to
be $75,000 to $100,000. It is estimated that the Company will spend $150,000
in total. However, this is a complex issue and no assurances can be given
that compliance will be achieved without any unplanned outlays that would
affect future financial results.
Forward Looking Statements
Statements made about the Company's future economic performance, strategic
plans or objectives, revenues or earnings projections, or other financial
items and similar statements are not guarantees of future performance, but
are forward looking statements. By their nature, these statements are
subject to numerous uncertainties that could cause actual results to differ
materially from those in the statements. Important factors that might cause
the Company's actual results to differ materially include, but are not
limited to, the following:
. Federal and state legislative and regulatory developments;
. The impact of continued loan and deposit promotions on the
Company's net interest margin;
. The impact of opening, staffing and operating new branch
facilities;
. Changes in management's estimate of the adequacy of the allowance
for loan losses;
. Changes in the level and direction of loan delinquencies and
write-offs;
. Interest rate movements and their impact on customer behavior and
the Company's net interest margin;
. The impact of repricing and competitors' pricing initiatives on
loan and deposit products;
. The Company's ability to adapt successfully to technological
changes to meet customers' needs and developments in the marketplace;
. The Company's ability to access cost effective funding;
. Changes in financial markets and general economic conditions; and <PAGE>
. The Company's ability to achieve year 2000 compliance without
incurring material, unplanned expenditures.<PAGE>
PART II: OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Exhibit
Number Exhibit Title
3.1 Second Restated Certificate of Incorporation of Success Bancshares
(incorporated by reference to Exhibit 3.1 of Success Bancshares' Form
S-1 Registration Statement (No. 333-32561) filed with the Securities
and Exchange Commission the ("Commission") on July 31, 1997).
3.1.1 Certificate of Designations of Series B Junior Participating
Preferred Stock
3.2 By-laws of Success Bancshares (incorporated by reference to Exhibit
3.2 of Success Bancshares' Form S-1 Registration Statement (No.
333-32561) filed with the Commission on July 31, 1997).
4.1 Form of Subordinated Indenture relating to the Junior Subordinated
Debentures (incorporated by reference to Exhibit 4.1 of the Form S-1
Registration Statement of Success Bancshares and Success Capital
Trust I ("Success Capital") (No. 333-51271 and No. 333-51271-01)
filed with the Commission on April 28, 1998).
4.2 Form of Junior Subordinated Debenture Certificate (included as an
exhibit to Exhibit 4.1).
4.3 Certificate of Trust of Success Capital (incorporated by reference
to Exhibit 4.3 of the Form S-1 Registration Statement of Success
Bancshares and Success Capital (No. 333-51271 and 333-51271-01) filed
with the Commission on April 28, 1998).
4.4 Form of Amended and Restated Trust Agreement of Success Capital
(incorporated by reference to Exhibit 4.4 of the Form S-1
Registration Statement of Success Bancshares and Success Capital (No.
333-51271 and 333-51271-01) filed with the Commission on April 28,
1998).
4.5 Form of Trust Preferred Security Certificate of Success Capital
(included as an exhibit to Exhibit 4.4).
4.6 Form of Common Security Certificate of Success Capital (included as
an exhibit to Exhibit 4.4).
4.7 Form of Guarantee Agreement of Success Bancshares relating to the
Trust Preferred Securities (incorporated by reference to Exhibit 4.7
of the Form S-1 Registration Statement of Success Bancshares and
Success Capital (No. 333-51271 and 333-51271-01) filed with the
Commission on April 28, 1998).
4.8 Form of Rights Agreement, dated as of August 1, 1998, between
Success Bancshares and Harris Trust and Savings Bank, which includes
as Exhibit B thereto the Form of Right Certificate (incorporated by
reference to Exhibit 1 of Success Bancshares' Form 8-A Registration
Statement (File No. 001-14381) filed with the Commission on August
6, 1998)
10.1 $10 Million Business Loan Agreement, dated January 13, 1997, between
Success Bancshares and Cole Taylor Bank (incorporated by reference to
Exhibit 10.1 of Success Bancshares' 1997 Annual Report on Form 10-K
filed with the Commission on March 31, 1998).
10.2 1995 Success Bancshares, Inc. Employee Stock Option Plan
(incorporated by reference to Exhibit 10.2 of Success Bancshares'
Form S-1 Registration Statement (No. 333-32561) filed with the
Commission on July 31, 1997).<PAGE>
10.3 Employment Agreement between Success Bancshares and Saul D. Binder
(incorporated by reference to Exhibit 10.3 of Success Bancshares'
Form S-1 Registration Statement (No. 333-32561) filed with the
Commission on July 31, 1997).
10.4 Executive Severance Agreement between Success Bancshares and Steven
A. Covert (incorporated by reference to Exhibit 10.4 of Success
Bancshares' Form S-1 Registration Statement (No. 333-32561) filed
with the Commission on July 31, 1997).
10.5 Lease with respect to Lincolnwood branch banking facility (October,
1991) (incorporated by reference to Exhibit 10.5 of the Company's
Form S-1 Registration Statement (No. 333-32561) filed with the
Securities and Exchange Commission on July 31, 1997).
10.6 Lease with respect to Lincoln Park branch banking facility (April,
1993) (incorporated by reference to Exhibit 10.6 of Success
Bancshares' Form S-1 Registration Statement (No. 333-32561) filed
with the Commission on July 31, 1997).
10.7 Lease with respect to Northbrook branch banking facility (December,
1994) (incorporated by reference to Exhibit 10.7 of Success
Bancshares' Form S-1 Registration Statement (No. 333-32561) filed
with the Commission on July 31, 1997).
10.8 Lease with respect to Deerfield/Riverwoods branch banking facility
(September, 1995) (incorporated by reference to Exhibit 10.8 of
Success Bancshares' Form S-1 Registration Statement (No. 333-32561)
filed with the Commission on July 31, 1997).
10.9 Employment Agreement between the Bank and Christa N. Calabrese dated
as of August 1, 1998, as amended.
10.10 Employment Agreement between the Bank and Kurt C. Felde dated as of
August 1, 1998, as amended.
10.11 Employment Agreement between the Bank and Ronald W. Tragasz dated as
of August 1,1 998, as amended.
10.12 Employment Agreement between the Bank and Marlene Sachs dated as of
August 1, 1998.
10.13 Stock Option Agreement dated as of September 23, 1998 between
Success Bancshares and Christa N. Calabrese.
10.14 Stock Option Agreement dated as of June 25, 1998 between Success
Bancshares and Kurt C. Felde.
10.15 Stock Option Agreement dated as of September 23, 1998 between
Success Bancshares and Ronald W. Tragasz.
10.16 Stock Option Agreement dated as of September 23, 1998 between
Success Bancshares and Marlene Sachs.
10.17 Stock Option Agreement dated as of August 26, 1998 between Success
Bancshares and Sherwin Koopmans.
10.18 Stock Option Agreement dated as of August 26, 1998 between Success
Bancshares and George M. Ohlhausen.
10.19 Stock Option Agreement dated as of August 26, 1998 between Success
Bancshares and Charles G. Freund.
10.20 Stock Option Agreement dated as of August 26, 1998 between Success
Bancshares and Norman D. Rich.
10.21 Stock Option Agreement dated as of August 26, 1998 between Success
Bancshares and Samuel D. Kahan.
10.22 Stock Option Agreement dated as of August 26, 1998 between Success
Bancshares and Avrom H. Goldfeder.
10.23 Stock Option Agreement dated as of August 26, 1998 between Success
Bancshares and Glen Wherfel..
*27.1 Financial Data Schedule
* Filed herewith<PAGE>
(b) Reports on Form 8-K
On July 17, 1998 Success Bancshares, Inc. filed Form 8-K which included press
releases relating to the unexpected death of the Company's President and Chief
Executive Officer and the appointments of Christa N. Calabrese, Executive Vice
President and Chief Lending Officer of the Bank, as interim Chief Operating
Officer and Sherwin Koopmans, a Director of Success Bancshares, Inc., as
interim Chairman of the Executive Committee of the of the Bank.
On August 6, 1998 Success Bancshares, Inc. filed Form 8-K which disclosed that
the Board of Directors of Success Bancshares, Inc. had approved a shareholders'
Rights Plan on May 27, 1998.<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Success Bancshares, Inc.
-------------------------------------
(Registrant)
November 13, 1998 /s/ Christa Calabrese
---------------------- --------------------------------
Date Christa Calabrese
Acting Chief Operating Officer
November 13, 1998 /s/ Kurt C. Felde
---------------------- --------------------------------
Date Kurt C. Felde
Senior Vice President
& Chief Financial Officer<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit Title
3.1 Second Restated Certificate of Incorporation of Success Bancshares
(incorporated by reference to Exhibit 3.1 of Success Bancshares' Form
S-1 Registration Statement (No. 333-32561) filed with the Securities
and Exchange Commission the ("Commission") on July 31, 1997).
3.1.1 Certificate of Designations of Series B Junior Participating
Preferred Stock
3.2 By-laws of Success Bancshares (incorporated by reference to Exhibit
3.2 of Success Bancshares' Form S-1 Registration Statement (No.
333-32561) filed with the Commission on July 31, 1997).
4.1 Form of Subordinated Indenture relating to the Junior Subordinated
Debentures (incorporated by reference to Exhibit 4.1 of the Form S-1
Registration Statement of Success Bancshares and Success Capital
Trust I ("Success Capital") (No. 333-51271 and No. 333-51271-01)
filed with the Commission on April 28, 1998).
4.2 Form of Junior Subordinated Debenture Certificate (included as an
exhibit to Exhibit 4.1).
4.3 Certificate of Trust of Success Capital (incorporated by reference to
Exhibit 4.3 of the Form S-1 Registration Statement of Success
Bancshares and Success Capital (No. 333-51271 and 333-51271-01) filed
with the Commission on April 28, 1998).
4.4 Form of Amended and Restated Trust Agreement of Success Capital
(incorporated by reference to Exhibit 4.4 of the Form S-1
Registration Statement of Success Bancshares and Success Capital (No.
333-51271 and 333-51271-01) filed with the Commission on April 28,
1998).
4.5 Form of Trust Preferred Security Certificate of Success Capital
(included as an exhibit to Exhibit 4.4).
4.6 Form of Common Security Certificate of Success Capital (included as
an exhibit to Exhibit 4.4).
4.7 Form of Guarantee Agreement of Success Bancshares relating to the
Trust Preferred Securities (incorporated by reference to Exhibit 4.7
of the Form S-1 Registration Statement of Success Bancshares and
Success Capital (No. 333-51271 and 333-51271-01) filed with the
Commission on April 28, 1998).
4.8 Form of Rights Agreement, dated as of August 1, 1998, between Success
Bancshares and Harris Trust and Savings Bank, which includes as
Exhibit B thereto the Form of Right Certificate (incorporated by
reference to Exhibit 1 of Success Bancshares' Form 8-A Registration
Statement (File No. 001-14381) filed with the Commission on August 6,
1998)
10.1 $10 Million Business Loan Agreement, dated January 13, 1997, between
Success Bancshares and Cole Taylor Bank (incorporated by reference to
Exhibit 10.1 of Success Bancshares' 1997 Annual Report on Form 10-K
filed with the Commission on March 31, 1998).
10.2 1995 Success Bancshares, Inc. Employee Stock Option Plan
(incorporated by reference to Exhibit 10.2 of Success Bancshares'
Form S-1 Registration Statement (No. 333-32561) filed with the
Commission on July 31, 1997).
10.3 Employment Agreement between Success Bancshares and Saul D. Binder
(incorporated by reference to Exhibit 10.3 of Success Bancshares'
Form S-1 Registration Statement (No. 333-32561) filed with the
Commission on July 31, 1997).<PAGE>
10.4 Executive Severance Agreement between Success Bancshares and Steven
A. Covert (incorporated by reference to Exhibit 10.4 of Success
Bancshares' Form S-1 Registration Statement (No. 333-32561) filed
with the Commission on July 31, 1997).
10.5 Lease with respect to Lincolnwood branch banking facility (October,
1991) (incorporated by reference to Exhibit 10.5 of the Company's
Form S-1 Registration Statement (No. 333-32561) filed with the
Securities and Exchange Commission on July 31, 1997).
10.6 Lease with respect to Lincoln Park branch banking facility (April,
1993) (incorporated by reference to Exhibit 10.6 of Success
Bancshares' Form S-1 Registration Statement (No. 333-32561) filed
with the Commission on July 31, 1997).
10.7 Lease with respect to Northbrook branch banking facility (December,
1994) (incorporated by reference to Exhibit 10.7 of Success
Bancshares' Form S-1 Registration Statement (No. 333-32561) filed
with the Commission on July 31, 1997).
10.8 Lease with respect to Deerfield/Riverwoods branch banking facility
(September, 1995) (incorporated by reference to Exhibit 10.8 of
Success Bancshares' Form S-1 Registration Statement (No. 333-32561)
filed with the Commission on July 31, 1997).
10.9 Employment Agreement between the Bank and Christa N. Calabrese dated
as of August 1, 1998, as amended.
10.10 Employment Agreement between the Bank and Kurt C. Felde dated as of
August 1, 1998, as amended.
10.11 Employment Agreement between the Bank and Ronald W. Tragasz dated as
of August 1,1 998, as amended.
10.12 Employment Agreement between the Bank and Marlene Sachs dated as of
August 1, 1998.
10.13 Stock Option Agreement dated as of September 23, 1998 between Success
Bancshares and Christa N. Calabrese.
10.14 Stock Option Agreement dated as of June 25, 1998 between Success
Bancshares and Kurt C. Felde.
10.15 Stock Option Agreement dated as of September 23, 1998 between Success
Bancshares and Ronald W. Tragasz.
10.16 Stock Option Agreement dated as of September 23, 1998 between Success
Bancshares and Marlene Sachs.
10.17 Stock Option Agreement dated as of August 26, 1998 between Success
Bancshares and Sherwin Koopmans.
10.18 Stock Option Agreement dated as of August 26, 1998 between Success
Bancshares and George M. Ohlhausen.
10.19 Stock Option Agreement dated as of August 26, 1998 between Success
Bancshares and Charles G. Freund.
10.20 Stock Option Agreement dated as of August 26, 1998 between Success
Bancshares and Norman D. Rich.
10.21 Stock Option Agreement dated as of August 26, 1998 between Success
Bancshares and Samuel D. Kahan.
10.22 Stock Option Agreement dated as of August 26, 1998 between Success
Bancshares and Avrom H. Goldfeder.
10.23 Stock Option Agreement dated as of August 26, 1998 between Success
Bancshares and Glen Wherfel..
*27.1 Financial Data Schedule
* Filed herewith<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
quarterly unaudited financial statements of Success Bancshares, Inc. for the
three months ended September 30, 1998, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0001009569
<NAME>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 22,757
<INT-BEARING-DEPOSITS> 508
<FED-FUNDS-SOLD> 4,600
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 19,944
<INVESTMENTS-CARRYING> 29,952
<INVESTMENTS-MARKET> 30,928
<LOANS> 356,671
<ALLOWANCE> 3,687
<TOTAL-ASSETS> 450,946
<DEPOSITS> 385,565
<SHORT-TERM> 7,008
<LIABILITIES-OTHER> 2,944
<LONG-TERM> 8,549
15,000
0
<COMMON> 24,405
<OTHER-SE> 6,973
<TOTAL-LIABILITIES-AND-EQUITY> 450,946
<INTEREST-LOAN> 7,528
<INTEREST-INVEST> 756
<INTEREST-OTHER> 111
<INTEREST-TOTAL> 8,395
<INTEREST-DEPOSIT> 3,959
<INTEREST-EXPENSE> 4,552
<INTEREST-INCOME-NET> 3,843
<LOAN-LOSSES> 1,141
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 6,182
<INCOME-PRETAX> (334)
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 244
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
<YIELD-ACTUAL> 3.97
<LOANS-NON> 272
<LOANS-PAST> 692
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,079
<CHARGE-OFFS> 19
<RECOVERIES> 9
<ALLOWANCE-CLOSE> 3,687
<ALLOWANCE-DOMESTIC> 3,687
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,014
</TABLE>
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
This Amendment (this "Amendment") is made and entered into as of August 1,
1998, by and between Success National Bank, a national banking organization
("Employer"), and Christa N. Calabrese ("Employee").
WHEREAS, Employer and Employee have entered into an Employment Agreement
dated as of August 1, 1998 (the "Employment Agreement"); and
WHEREAS, Employer and Employee desire to amend the Employment Agreement as
set forth below.
NOW, THEREFORE, in consideration of the provisions and undertakings set
forth herein, the parties, intending to be legally bound, hereby agree as
follows:
1. AMENDMENT. Section 2.1 of the Employment Agreement is hereby amended by
adding the following subsection thereto:
"(f) Automobile Allowance. Employee shall be entitled to the use of an
automobile provided by Employer and Employer shall be responsible, and shall
not be entitled to reimbursement for, any and all reasonable costs and expenses
relating to the use and maintenance of such automobile to the extent such costs
and expenses are substantiated by Employee."
2. MISCELLANEOUS
2.1 Sole Amendment. The Employment Agreement shall not be amended except
as expressly set forth herein.
2.2 Governing Law. This Amendment shall be interpreted, construed and
enforced in accordance with the internal laws of Illinois.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the last date written below.
EMPLOYER
SUCCESS NATIONAL BANK
By: /s/ Christa N. Calabrese
- ---------------------------------------------
Name: Christa N. Calabrese
Title: Executive Vice President
EMPLOYEE:
/s/ Christa N. Calabrese
- ---------------------------------------------
Name: Christa N. Calabrese<PAGE>
SUCCESS BANCSHARES, INC.
STOCK OPTION AGREEMENT
(NON-TRANSFERABLE)
Success Bancshares, Inc., a Delaware corporation (the "Company"), hereby
grants to Sherwin Koopmans (the "Optionee") an option to purchase a total of
5,000 shares of Common Stock (the "Shares") of the Company, at the price set
forth herein, and in all respects subject to the terms and provisions of the
Company's 1995 Stock Option Plan (the "Plan") applicable to stock options which
terms and provisions are hereby incorporated by reference herein. Unless
otherwise defined or the context herein otherwise requires, the capitalized
terms used herein shall have the same meanings ascribed to them in the Plan.
1 DATE OF GRANT; TERM OF OPTION. This Option is granted as of August
26, 1998, and it may not be exercised later than August 26, 2008.
2. OPTION EXERCISE PRICE. The Option exercise price is $14.50 per Share,
which price is not less than the fair market value thereof on the date this
Option was granted.
3. EXERCISE OF OPTION. This Option shall be exercisable during its term
only in accordance with the terms and provisions of the Plan and this Option as
follows:
(a) RIGHT TO EXERCISE. The total number of Shares subject to this
Option is 5,000. Subject to the foregoing and the limitations contained herein
and in the Plan, this Option shall vest and be exercisable in full on August
26, 1999; provided, however, that, upon any Change of Control (as defined in
the Plan), this Option shall become immediately exercisable as to all Shares
remaining subject to this Option and all restrictions on vesting shall
terminate.
(b) METHOD OF EXERCISE. This Option shall be exercisable by written
notice which shall state the election to exercise this Option, the number of
Shares in respect to which this Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such Shares as may be required by the Company hereunder or pursuant
to the provisions of the Plan. Such written notice shall be signed by the
Optionee and shall be delivered in person or by certified mail to the Secretary
of the Company or such other person as may be designated by the Company. The
written notice shall be accompanied by payment of the exercise price. The
exercise price may be paid: (i) in cash; (ii) by check; (iii) by delivering
certificates of other shares of Common Stock of the Company; (iv) by
transferring shares of Common Stock of the Company to the Company's transfer
agent for delivery to the Company provided that the written notice of exercise
is accompanied by a written acknowledgment by the Optionee that the Optionee
has instructed his broker dealer to transfer such shares and such transfer is
confirmed by a letter from such broker dealer acknowledging that the Optionee
has directed such broker dealer to transfer such shares; (v) by Optionee
simultaneously exercising this Option and selling the Shares thereby acquired
pursuant to a brokerage or similar arrangement approved in advance by the Board
(which approval shall not be unreasonably withheld) and to use the proceeds
from such sale to pay the exercise price and any federal, state and local taxes
required to be withheld as a result of such exercise; or (vi) by any other
method of payment approved by the Company's Board of Directors. For purposes
of clauses (iii) and (iv), the value of the shares of Common Stock of the
Company delivered, or to be delivered, as payment of the exercise price shall<PAGE>
be the closing price per share of the Company's Common Stock on the last
business day prior to the date the written notice is actually received and
acknowledged as received by the Company. Upon receipt of payment, the Company
shall deliver to Optionee or the person exercising this Option for Optionee, an
appropriate certificate or certificates for fully paid nonassessable Shares.
For purposes of clause (iv), should any Optionee fail to have the number of
shares required to pay the exercise price delivered to the Company's transfer
agent within 90 days, this Option, with respect to the number of shares stated
in the written notice, will terminate and be deemed to be forfeited by the
Optionee. The certificate or certificates for the Shares as to which the Option
shall be exercised shall be registered in the name of the Optionee and shall be
legended as set forth in the Plan and/or as required under applicable law. This
Option may not be exercised for a fraction of a share.
(c) RESTRICTIONS ON EXERCISE. This Option may not be exercised if
the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities laws or other laws or regulations.
As a condition to the exercise of this Option, the Company may require the
Optionee to make such representations and warranties to the Company as may be
required by any applicable law or regulation.
(d) NO SHAREHOLDER RIGHTS BEFORE EXERCISE AND ISSUANCE. No rights as
a shareholder shall exist with respect to the Shares subject to the Option as a
result of the grant of the Option. Such rights shall exist only after issuance
of a stock certificate in accordance with Article V, Section J of the Plan
following the exercise of the Option as provided in this Agreement and the
Plan.
(e) TERMINATION OF EMPLOYMENT. In the event that the Optionee
ceases to be a Key Non-Employee of the Company or an Affiliate, the
exercisability of the Option is subject to the provisions of Article V, Section
G of the Plan.
4. INVESTMENT REPRESENTATIONS. In connection with the acquisition of
this Option, the Optionee represents and warrants as follows:
(a) The Optionee is acquiring this Option, and upon exercise of this
Option, he will be acquiring the Shares, for investment for his own account,
not as a nominee or agent, and not with a view to, or for resale in connection
with, any distribution thereof.
(b) The Optionee has a preexisting business or personal relationship
with the Company or one of its directors, officers or controlling persons and
by reason of his business or financial experience, has, and could be reasonably
assumed to have, the capacity to evaluate the merits and risks of purchasing
Common Stock of the Company and to make an informed investment decision with
respect thereto and to protect Optionee's interests in connection with the
acquisition of this Option and the Shares.
5. WITHHOLDING. The Company reserves the right to withhold, in
accordance with any applicable laws, from any compensation or other
consideration payable to the Optionee, any taxes required to be withheld by
federal, state or local law as a result of the grant or exercise of this Option
or the sale or other disposition of the Shares issued upon exercise of this
Option; and, if such compensation or consideration is insufficient, the Company
may require Optionee to pay to the Company an amount sufficient to cover such
withholding tax liability. <PAGE>
6. NONTRANSFERABILITY OF OPTION. This Option may not be transferred,
assigned, pledged or hypothecated or otherwise disposed of in any way (whether
by operation of law or otherwise) and is not subject to execution, attachment
or similar process. Any attempted transfer, assignment, pledge, hypothecation
or other disposition of this Option or of any rights granted hereunder, or the
levy of any attachment or similar process upon this Option or such rights, will
be null and void. This Option may be exercised during the lifetime of the
Optionee only by such Optionee or his legal guardian. Subject to the foregoing
and the terms of the Plan, the terms of this Option shall be binding upon the
executors, administrators, heirs, successors and permitted assigns of the
Optionee.
7. CONTINUATION OF EMPLOYMENT. Neither the Plan nor this Option shall
(a) confer upon the Optionee any right whatsoever to continue to serve as a Key
Non-Employee of the Company or any Affiliate or (b) limit or restrict in any
respect the rights of the Company, which rights are hereby expressly reserved,
to terminate the Optionee's service as a Key Non-Employee and any compensation
being paid to Optionee at any time for any reason whatsoever, with or without
cause, in the Company's sole discretion and with or without notice.
8. THE PLAN. This Option is subject to, and the Company and the
Optionee agree to be bound by, all the terms and conditions of the Company's
Plan as such Plan may be amended from time to time in accordance with the terms
thereof, provided that no such amendment shall deprive the Optionee, without
his consent, of this Option or any rights hereunder. Pursuant to the Plan, the
Board is authorized to adopt rules and regulations not inconsistent with the
Plan as it shall deem appropriate and proper. A copy of the Plan in its present
form is available for inspection at the Company's principal office during
business hours by the Optionee or the persons entitled to exercise this Option.
9. ENTIRE AGREEMENT. The terms of this Agreement and the Plan
constitute the entire agreement between the Company and the Optionee with
respect to the subject matter hereof and supersede any and all previous
agreements between the Company and the Optionee.
SUCCESS BANCSHARES, INC., a Delaware corporation
Dated as of: August 26, 1998 By: /s/ Christa N. Calabrese
-----------------------------------
Name: Christa N. Calabrese
Title: Chief Operating Officer<PAGE>
CERTIFICATE OF DESIGNATIONS
of
SERIES B JUNIOR PARTICIPATING PREFERRED STOCK
of
SUCCESS BANCSHARES, INC.
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
Success Bancshares, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), does
hereby certify that, pursuant to authority conferred upon its Board of
Directors ("Board of Directors") by its Certificate of Incorporation, as
amended, and by the provisions of Section 151 of the General Corporation Law of
the State of Delaware, the following resolution was adopted by its Board of
Directors by unanimous written consent on May 27, 1998.
RESOLVED, that, pursuant to the authority conferred upon the Board of
Directors by the provisions of the Certificate of Incorporation, as amended, of
the Corporation and by the provisions of Section 151 of the General Corporation
Law of the State of Delaware, there is hereby created a series of Preferred
Stock of the Corporation, which series shall have the following powers,
designations, preferences and relative, participating, optional and other
special rights, and the qualifications, limitations or restrictions thereof, in
addition to those set forth in the Second Restated Certificate of Incorporation
of the Corporation.
Section 1. Designation of Series: Number of Shares. The series of
Preferred Stock established hereby shall be designated the "Series B Junior
Participating Preferred Stock" (the "Series B Preferred Stock"), par value
$.001 per share, and the authorized number of shares constituting the Series B
Preferred Stock shall be 90,000. Such number of authorized shares may be
increased or decreased, from time to time, by resolution of the Board of
Directors; provided, however, that no such decrease shall reduce the number of
authorized shares of the Series B Preferred Stock to a number less than the
number of shares of the Series B Preferred Stock then outstanding, plus the
number of shares of the Series B Preferred Stock then reserved for issuance
upon the exercise of any outstanding options, warrants or rights or the
exercise of any conversion or exchange privilege contained in any outstanding
security issued by the Corporation.
Section 2. Dividends and Distributions. (A) Subject to the rights of the
holders of shares of any other series of the Preferred Stock (or shares of any
other class of capital stock of the Corporation) ranking senior to the Series B
Preferred Stock with respect to dividends, the holders of shares of the Series
B Preferred Stock, in preference to the holders of shares of Common Stock and
of any other class of capital stock of the Corporation ranking junior to the
Series B Preferred Stock with respect to dividends, shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds
legally available therefor, quarterly dividends payable in cash on the first
day of July, October, January and April in each year (each such date being a
"Dividend Payment Date"), commencing on the first Dividend Payment Date after<PAGE>
the initial issuance of a share or fractional share of the Series B Preferred
Stock, in an amount per share (rounded to the nearest whole cent) equal to the
greater of (a) $1.00 and (b) 100 times the aggregate per share amount of all
cash dividends, plus 100 times the aggregate per share amount (payable in kind)
of all noncash dividends or other distributions (other than a dividend payable
in shares of Common Stock or a distribution in connection with the subdivision
of the outstanding shares of Common Stock, by reclassification or otherwise),
declared on the Common Stock since the immediately preceding Dividend Payment
Date or, with respect to the first Dividend Payment Date, since the initial
issuance of a share or fractional share of the Series B Preferred Stock. The
multiple of 100 (the "Dividend Multiple") set forth in the preceding sentence
shall be adjusted from time to time as hereinafter provided in this paragraph
(A). In the event that the Corporation shall at any time after the effective
date hereof (i) declare or pay any dividend on the Common Stock payable in
shares of Common Stock of (ii) effect a subdivision, combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then, in each such case,
the Dividend Multiple thereafter applicable to the determination of the amount
of dividends per share which the holders of shares of the Series B Preferred
Stock shall be entitled to receive shall be the Dividend Multiple in effect
immediately prior to such event multiplied by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
after such event and the denominator of which shall be the number of shares of
Common Stock that were outstanding immediately prior to such event. As used
herein, the term "effective date hereof" shall mean August 10, 1998.
(B) The Board of Directors shall declare, out of funds legally available
therefor, a dividend or distribution on the Series B Preferred Stock, as
provided in paragraph (A) of this Section 2, immediately after it has declared
a dividend or distribution on the Common Stock (other than a dividend payable
in shares of Common Stock); provided, however, that, in the event that no
dividend or distribution shall have been declared on the Common Stock during
the period between any Dividend Payment Date and the next subsequent Dividend
Payment Date, a dividend of $1.00 per share on the Series B Preferred Stock
less an amount equal to the dividends already paid on the Series B Preferred
Stock during such period shall nevertheless by payable on such subsequent
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on the outstanding
shares of the Series B Preferred Stock from the Dividend Payment Date next
preceding the date of issuance of such shares, unless such date of issuance
shall be prior to the record date for the fist Dividend Payment Date, in which
case dividends on such shares shall begin to accrue and be cumulative from the
date of issuance of such shares, or unless such date of issuance shall be after
the close of business on the record date with respect to any Dividend Payment
Date and on or prior to such Dividend Payment Date, in which case dividends on
such shares shall begin to accrue and be cumulative from such Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on
shares of the Series B Preferred Stock in an amount less than the total amount
of dividends then accrued shall be allocated pro rata among such shares. The
Board of Directors may fix a record date for the determination of the holders
of shares of the Series B Preferred Stock entitled to receive payment of any
dividend or distribution declared thereon, which record date shall be not more
than the number of days prior to the date fixed for such payment permitted by
applicable law.<PAGE>
Section 3. Voting Rights. In addition to any other voting rights
required by applicable law, the holders of shares of the Series B Preferred
Stock shall have the following voting rights:
(A) Each share of the Series B Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the stockholders of
the Corporation. The multiple of 100 (the "Voting Multiple") set forth in the
preceding sentence shall be adjusted from time to time as hereinafter provided
in this paragraph (A). In the event that the Corporation shall at any time
after the effective date hereof (i) declare or pay any dividend on the Common
Stock payable in shares of Common Stock or (ii) effect a subdivision,
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then, in each
such case, the Voting Multiple thereafter applicable to the determination of
the number of votes per share to which the holders of shares of the Series B
Preferred Stock shall be entitled shall be the Voting Multiple in effect
immediately prior to such event multiplied by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
after such event and the denominator of which shall be the number of shares of
Common Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other resolution of the
Board of Directors establishing another series of the Preferred Stock (or any
series of any other class of capital stock of the Corporation) or by applicable
law, the holders of the Series B Preferred Stock, the holders of the Common
Stock and the holders of any other class of capital stock of the Corporation
having general voting rights shall vote together as a single class on all
matters submitted to a vote of the stockholders of the Corporation.
(C) (i) Whenever, at any time or times, dividends payable on any share or
shares of Series B Preferred Stock shall be in arrears in an amount equal to at
least six full quarterly dividends (whether or not declared and whether or not
consecutive), the holders of record of the outstanding Series B Preferred Stock
shall have the exclusive right, voting separately as a single class, to elect
two directors of the Corporation at a special meeting of stockholders of the
Corporation or at the Corporation's next annual meeting of stockholders, and at
each subsequent annual meeting of stockholders, as provided below. At
elections for such directors, the holders of shares of Series B Preferred Stock
shall be entitled to cast one vote for each one one-hundredth of a share of
Series B Preferred Stock held.
(ii) Upon the vesting of such right of the holders of the Series B
Preferred Stock, the maximum authorized number of members of the Board of
Directors shall automatically be increased by two and the two vacancies so
created shall be filled by vote of the holders of the outstanding Series B
Preferred Stock as hereinafter set forth. A special meeting of the stockholders
of the Corporation then entitled to vote shall be called by the Chairman or the
President or the Secretary of the Corporation, if requested in writing by the
holder of record of not less than 10% of the Series B Preferred Stock then
outstanding. At such special meeting, or, if no such special meeting shall
have been called, then at the next annual meeting of stockholders of the
Corporation, the holders of the shares of the Series B Preferred Stock shall
elect, voting as above provided, two directors of the Corporation to fill the
aforesaid vacancies created by the automatic increase in the number of members
of the Board of Directors. At any and all such meetings for such election, the
holders of a majority of the outstanding shares of the Series B Preferred Stock<PAGE>
shall be necessary to constitute a quorum for such election, whether present in
person or by proxy, and such two directions shall be elected by the vote of at
least a plurality of shares held by such stockholders present or presented at
the meeting. Any director elected by holders of shares of the Series B
Preferred Stock pursuant to this Section may be removed at any annual or
special meeting, by vote of a majority of the stockholders voting as a class
who elected such director, with or without cause. In case any vacancy shall
occur among the directors elected by the holders of the Series B Preferred
Stock pursuant to this Section, such vacancy may be filled by the remaining
director so elected, or his successor then in office, and the director so
elected to fill such vacancy shall serve until the next meeting of stockholders
for the election of directors. After the holders of the Series B Preferred
Stock shall have exercised their right to elect Directors in any default period
and during the continuance of such period, the number of Directors shall not be
further increased or decreased except by vote of the holders of Series B
Preferred Stock as herein provided or pursuant to the rights of any equity
securities ranking senior to or pari passu with the Series B Preferred Stock.
(iii) The right of the holders of the Series B Preferred Stock, voting
separately as a class, to elect two members of the Board of Directors of the
Corporation as aforesaid shall continue until, and only until, such time as all
arrears in dividends (whether or not declared) on the Series B Preferred Stock
shall have been paid or declared and set apart for payment, at which time such
right shall terminate, except as herein or by law expressly provided, subject
to revesting in the event of each and every subsequent default of the character
above-mentioned. Upon any termination of the right of the holders of the shares
of the Series B Preferred Stock as a class to vote for director as herein
provided, the term of office of all directors then in office elected by the
holders of Series B Preferred Stock pursuant to this Section shall terminate
immediately. Whenever the term of office of the directors elected by the
holders of the Series B Preferred Stock pursuant to this Section shall
terminate and the special voting powers vested in the holders of the Series B
Preferred Stock pursuant to this Section shall have expired, the maximum number
of members of the Board of Directors of the Corporation shall be such number as
may be provided for in the By-laws of the Corporation irrespective of any
increase made pursuant to the provisions of this Section.
(D) Except as otherwise provided herein or by applicable law, the holders
of the Series B Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent provided in paragraph (B)
of this Section 3) for the taking of any corporate action.
Section 4. Certain Restrictions
(A) Whenever dividends or other distributions payable on the Series B
Preferred Stock as provided in Section 2 are in arrears, thereafter and until
all accrued and unpaid dividends and distributions, whether or not declared, on
outstanding shares of the Series B Preferred Stock shall have been paid in
full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any
shares of any class of capital stock of the Corporation ranking junior (either
as to dividends or upon liquidation, dissolution or winding up of the
Corporation) to the Series B Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on any
shares of any class of capital stock of the Corporation ranking on a parity<PAGE>
(either as to dividends or upon liquidation, dissolution or winding up of the
Corporation) with the Series B Preferred Stock, except dividends paid ratably
on the Series B Preferred Stock and all such parity stock on which dividends
are accrued and unpaid in proportion to the total amounts to which the holders
of all such shares are then entitled;
(iii) redeem, purchase or otherwise acquire for consideration any shares
of any class of capital stock of the Corporation ranking junior (either as to
dividends of upon liquidation, dissolution or winding up of the Corporation) to
the Series B Preferred Stock, except that the Corporation may at any time
redeem, purchase or otherwise acquire any shares of such junior stock in
exchange for other shares of any class of capital stock of the Corporation
ranking junior (both as to dividends and upon dissolution, liquidation or
winding up of the Corporation) to the Series B Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of the
Series B Preferred Stock or any shares of any class of capital stock of the
Corporation ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up of the Corporation) with the Series B Preferred
Stock, or redeem any shares of such parity stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the Board of
Directors) to the holders of all such shares upon such terms and conditions as
the Board of Directors, after taking into consideration the respective annual
dividend rates and the other relative powers, preferences and rights of the
respective series and classes of such shares, shall determine in good faith
will result in fair and equitable treatment among the respective holders of
shares of all such series and classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of any class of
capital stock of the Corporation unless the Corporation could, under paragraph
(A) of this Section 4, purchase or otherwise acquire such shares at such time
and in such manner.
Section 5. Reacquired Shares. Any shares of the Series B Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after such purchase or acquisition. All
such canceled shares shall thereupon become authorized and unissued shares of
Preferred Stock and may be reissued as part of any new series of the Preferred
Stock, subject to the conditions and restrictions on issuance set forth in the
Certificate of Incorporation of the Corporation, as amended from time to time,
in any other resolution of the Board of directors establishing another series
of the Preferred Stock (or any series of any other class of capital stock of
the Corporation) or in any applicable law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation
(whether voluntary or otherwise), dissolution or winding up of the Corporation,
no distribution shall be made (a) to the holders of shares of any class of
capital stock of the Corporation ranking junior (either as to dividends or upon
liquidation, dissolution, or winding up of the Corporation) to the Series B
Preferred Stock unless, prior thereto, the holder of each outstanding share of
the Series B Preferred Stock shall have received an amount equal to the accrued
and unpaid dividends and distributions thereon, whether or not declared, to the
date of such payment, plus an amount equal to the Dividend Multiple (the
"Series B Liquidation Preference"). Following payment in full of the Series B
Liquidation Preference, no additional distributions shall be made to the
holders of the Series B Preferred Stock unless, prior thereto, the holders of<PAGE>
the Common Stock shall have received an amount per share (The "Common
Adjustment") equal to the quotient obtained by dividing (i) the Series B
Liquidation Preference by (ii) the Dividend Multiple. Following payment in
full of the Series B Liquidation Preference and the Common Adjustment in
respect of all outstanding shares of Series B Preferred Stock and Common Stock,
respectively, holders of the Series B Preferred Stock and holders of Common
Stock shall receive their relative and proportionate share of the remaining
assets to be distributed to them in the ratio of the Dividend Multiple to one
with respect to such Series B Preferred Stock and Common Stock, on a per-share
basis.
Section 7. Consolidation, Merger, etc. In the event that the Corporation
shall be a party to any consolidation, merger, combination or other transaction
in which the outstanding shares of Common Stock are converted or changed into
or exchanged for other capital stock, securities, cash or other property, or
any combination thereof, then, in each such case, each share of the Series B
Preferred Stock shall at the same time be similarly converted or changed into
or exchanged for an aggregate amount, subject to adjustment as hereinafter
provided in this Section 7, equal to 100 times the aggregate amount of capital
stock, securities, cash and/or other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is being converted
or changed or exchanged. In the event that the Corporation shall at any time
after the effective date hereof (a) declare or pay any dividend on the Common
Stock payable in shares of Common Stock of (b) effect a subdivision,
combination or consolidation of the outstanding shares of Common Stock by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then, in such
case, the aggregate amount per share which the holders of shares of the Series
B Preferred Stock shall thereafter be entitled to receive pursuant to the
preceding sentence shall be the aggregate amount per share in effect pursuant
to such sentence immediately prior to such event multiplied by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately after such event and the denominator of which shall be the number
of shares of Common Stock that were outstanding immediately prior to such
event.
Section 8. No Redemption. The shares of the Series B Preferred Stock
shall not be redeemable at any time.
Section 9. Rank. Unless otherwise provided in the resolution of the
Board of Directors establishing another series of the Preferred Stock after the
effective date hereof, the Series B Preferred Stock shall rank, as to the
payment of dividends and the making of any other distribution of assets of the
Corporation, senior to the Common Stock, but junior to all other series of the
Preferred Stock.
Section 10. Amendments. The Certificate of Incorporation of the
Corporation shall not be amended in any manner which would materially alter or
change the powers, preferences and rights of the Series B Preferred Stock so as
to adversely affect any thereof without the affirmative vote of the holders of
a majority of the outstanding shares of the Series B Preferred Stock, voting
separately as a single class.
Section 11. Fractional Shares. Fractional shares of the Series B
Preferred Stock may be issued, but, unless the Board of Directors shall
otherwise determine, only in multiples of one one-hundredth of a share. The
holder of any fractional share of the Series B Preferred Stock shall be<PAGE>
entitled to receive dividends, participate in distributions, exercise voting
rights and have the benefit of all other powers, preferences and rights
relating to the Series B Preferred Stock in the same proportion as such
fractional share bears to a whole share.
IN WITNESS WHEREOF, Success Bancshares, Inc. has caused this Certificate
of Designations to be executed and attested by its duly authorized officers
this 1st day of August, 1998.
Success Bancshares, Inc.
By: /s/ Christa N. Calabrese
--------------------------------
Christa N. Calabrese
Chief Operating Officer
Attest:
By: /s/ Marlene Sachs
--------------------------
Name: Marlene Sachs
Title: Secretary<PAGE>
SUCCESS BANCSHARES, INC.
STOCK OPTION AGREEMENT
(NON-TRANSFERABLE)
Success Bancshares, Inc., a Delaware corporation (the "Company"), hereby
grants to George M. Ohlhausen (the "Optionee") an option to purchase a total of
5,000 shares of Common Stock (the "Shares") of the Company, at the price set
forth herein, and in all respects subject to the terms and provisions of the
Company's 1995 Stock Option Plan (the "Plan") applicable to stock options which
terms and provisions are hereby incorporated by reference herein. Unless
otherwise defined or the context herein otherwise requires, the capitalized
terms used herein shall have the same meanings ascribed to them in the Plan.
1 DATE OF GRANT; TERM OF OPTION. This Option is granted as of August
26, 1998, and it may not be exercised later than August 26, 2008.
2. OPTION EXERCISE PRICE. The Option exercise price is $14.50 per Share,
which price is not less than the fair market value thereof on the date this
Option was granted.
3. EXERCISE OF OPTION. This Option shall be exercisable during its term
only in accordance with the terms and provisions of the Plan and this Option as
follows:
(a) RIGHT TO EXERCISE. The total number of Shares subject to this
Option is 5,000. Subject to the foregoing and the limitations contained herein
and in the Plan, this Option shall vest and be exercisable in full on August
26, 1999; provided, however, that, upon any Change of Control (as defined in
the Plan), this Option shall become immediately exercisable as to all Shares
remaining subject to this Option and all restrictions on vesting shall
terminate.
(b) METHOD OF EXERCISE. This Option shall be exercisable by written
notice which shall state the election to exercise this Option, the number of
Shares in respect to which this Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such Shares as may be required by the Company hereunder or pursuant
to the provisions of the Plan. Such written notice shall be signed by the
Optionee and shall be delivered in person or by certified mail to the Secretary
of the Company or such other person as may be designated by the Company. The
written notice shall be accompanied by payment of the exercise price. The
exercise price may be paid: (i) in cash; (ii) by check; (iii) by delivering
certificates of other shares of Common Stock of the Company; (iv) by
transferring shares of Common Stock of the Company to the Company's transfer
agent for delivery to the Company provided that the written notice of exercise
is accompanied by a written acknowledgment by the Optionee that the Optionee
has instructed his broker dealer to transfer such shares and such transfer is
confirmed by a letter from such broker dealer acknowledging that the Optionee
has directed such broker dealer to transfer such shares; (v) by Optionee
simultaneously exercising this Option and selling the Shares thereby acquired
pursuant to a brokerage or similar arrangement approved in advance by the Board
(which approval shall not be unreasonably withheld) and to use the proceeds
from such sale to pay the exercise price and any federal, state and local taxes
required to be withheld as a result of such exercise; or (vi) by any other
method of payment approved by the Company's Board of Directors. For purposes
of clauses (iii) and (iv), the value of the shares of Common Stock of the
Company delivered, or to be delivered, as payment of the exercise price shall<PAGE>
be the closing price per share of the Company's Common Stock on the last
business day prior to the date the written notice is actually received and
acknowledged as received by the Company. Upon receipt of payment, the Company
shall deliver to Optionee or the person exercising this Option for Optionee, an
appropriate certificate or certificates for fully paid nonassessable Shares.
For purposes of clause (iv), should any Optionee fail to have the number of
shares required to pay the exercise price delivered to the Company's transfer
agent within 90 days, this Option, with respect to the number of shares stated
in the written notice, will terminate and be deemed to be forfeited by the
Optionee. The certificate or certificates for the Shares as to which the Option
shall be exercised shall be registered in the name of the Optionee and shall be
legended as set forth in the Plan and/or as required under applicable law. This
Option may not be exercised for a fraction of a share.
(c) RESTRICTIONS ON EXERCISE. This Option may not be exercised if
the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities laws or other laws or regulations.
As a condition to the exercise of this Option, the Company may require the
Optionee to make such representations and warranties to the Company as may be
required by any applicable law or regulation.
(d) NO SHAREHOLDER RIGHTS BEFORE EXERCISE AND ISSUANCE. No rights as
a shareholder shall exist with respect to the Shares subject to the Option as a
result of the grant of the Option. Such rights shall exist only after issuance
of a stock certificate in accordance with Article V, Section J of the Plan
following the exercise of the Option as provided in this Agreement and the
Plan.
(e) TERMINATION OF EMPLOYMENT. In the event that the Optionee
ceases to be a Key Non-Employee of the Company or an Affiliate, the
exercisability of the Option is subject to the provisions of Article V, Section
G of the Plan.
4. INVESTMENT REPRESENTATIONS. In connection with the acquisition of
this Option, the Optionee represents and warrants as follows:
(a) The Optionee is acquiring this Option, and upon exercise of this
Option, he will be acquiring the Shares, for investment for his own account,
not as a nominee or agent, and not with a view to, or for resale in connection
with, any distribution thereof.
(b) The Optionee has a preexisting business or personal relationship
with the Company or one of its directors, officers or controlling persons and
by reason of his business or financial experience, has, and could be reasonably
assumed to have, the capacity to evaluate the merits and risks of purchasing
Common Stock of the Company and to make an informed investment decision with
respect thereto and to protect Optionee's interests in connection with the
acquisition of this Option and the Shares.
5. WITHHOLDING. The Company reserves the right to withhold, in
accordance with any applicable laws, from any compensation or other
consideration payable to the Optionee, any taxes required to be withheld by
federal, state or local law as a result of the grant or exercise of this Option
or the sale or other disposition of the Shares issued upon exercise of this
Option; and, if such compensation or consideration is insufficient, the Company
may require Optionee to pay to the Company an amount sufficient to cover such
withholding tax liability. <PAGE>
6. NONTRANSFERABILITY OF OPTION. This Option may not be transferred,
assigned, pledged or hypothecated or otherwise disposed of in any way (whether
by operation of law or otherwise) and is not subject to execution, attachment
or similar process. Any attempted transfer, assignment, pledge, hypothecation
or other disposition of this Option or of any rights granted hereunder, or the
levy of any attachment or similar process upon this Option or such rights, will
be null and void. This Option may be exercised during the lifetime of the
Optionee only by such Optionee or his legal guardian. Subject to the foregoing
and the terms of the Plan, the terms of this Option shall be binding upon the
executors, administrators, heirs, successors and permitted assigns of the
Optionee.
7. CONTINUATION OF EMPLOYMENT. Neither the Plan nor this Option shall
(a) confer upon the Optionee any right whatsoever to continue to serve as a Key
Non-Employee of the Company or any Affiliate or (b) limit or restrict in any
respect the rights of the Company, which rights are hereby expressly reserved,
to terminate the Optionee's service as a Key Non-Employee and any compensation
being paid to Optionee at any time for any reason whatsoever, with or without
cause, in the Company's sole discretion and with or without notice.
8. THE PLAN. This Option is subject to, and the Company and the
Optionee agree to be bound by, all the terms and conditions of the Company's
Plan as such Plan may be amended from time to time in accordance with the terms
thereof, provided that no such amendment shall deprive the Optionee, without
his consent, of this Option or any rights hereunder. Pursuant to the Plan, the
Board is authorized to adopt rules and regulations not inconsistent with the
Plan as it shall deem appropriate and proper. A copy of the Plan in its present
form is available for inspection at the Company's principal office during
business hours by the Optionee or the persons entitled to exercise this Option.
9. ENTIRE AGREEMENT. The terms of this Agreement and the Plan
constitute the entire agreement between the Company and the Optionee with
respect to the subject matter hereof and supersede any and all previous
agreements between the Company and the Optionee.
SUCCESS BANCSHARES, INC., a Delaware corporation
Dated as of: August 26, 1998 By: /s/ Christa N. Calabrese
------------------------------------------
Name: Christa N. Calabrese
Title: Chief Operating Officer<PAGE>
SUCCESS BANCSHARES, INC.
STOCK OPTION AGREEMENT
(NON-TRANSFERABLE)
Success Bancshares, Inc., a Delaware corporation (the "Company"), hereby
grants to Norman D. Rich (the "Optionee") an option to purchase a total of
5,000 shares of Common Stock (the "Shares") of the Company, at the price set
forth herein, and in all respects subject to the terms and provisions of the
Company's 1995 Stock Option Plan (the "Plan") applicable to stock options which
terms and provisions are hereby incorporated by reference herein. Unless
otherwise defined or the context herein otherwise requires, the capitalized
terms used herein shall have the same meanings ascribed to them in the Plan.
1 DATE OF GRANT; TERM OF OPTION. This Option is granted as of August
26, 1998, and it may not be exercised later than August 26, 2008.
2. OPTION EXERCISE PRICE. The Option exercise price is $14.50 per Share,
which price is not less than the fair market value thereof on the date this
Option was granted.
3. EXERCISE OF OPTION. This Option shall be exercisable during its term
only in accordance with the terms and provisions of the Plan and this Option as
follows:
(a) RIGHT TO EXERCISE. The total number of Shares subject to this
Option is 5,000. Subject to the foregoing and the limitations contained herein
and in the Plan, this Option shall vest and be exercisable in full on August
26, 1999; provided, however, that, upon any Change of Control (as defined in
the Plan), this Option shall become immediately exercisable as to all Shares
remaining subject to this Option and all restrictions on vesting shall
terminate.
(b) METHOD OF EXERCISE. This Option shall be exercisable by written
notice which shall state the election to exercise this Option, the number of
Shares in respect to which this Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such Shares as may be required by the Company hereunder or pursuant
to the provisions of the Plan. Such written notice shall be signed by the
Optionee and shall be delivered in person or by certified mail to the Secretary
of the Company or such other person as may be designated by the Company. The
written notice shall be accompanied by payment of the exercise price. The
exercise price may be paid: (i) in cash; (ii) by check; (iii) by delivering
certificates of other shares of Common Stock of the Company; (iv) by
transferring shares of Common Stock of the Company to the Company's transfer
agent for delivery to the Company provided that the written notice of exercise
is accompanied by a written acknowledgment by the Optionee that the Optionee
has instructed his broker dealer to transfer such shares and such transfer is
confirmed by a letter from such broker dealer acknowledging that the Optionee
has directed such broker dealer to transfer such shares; (v) by Optionee
simultaneously exercising this Option and selling the Shares thereby acquired
pursuant to a brokerage or similar arrangement approved in advance by the Board
(which approval shall not be unreasonably withheld) and to use the proceeds
from such sale to pay the exercise price and any federal, state and local taxes
required to be withheld as a result of such exercise; or (vi) by any other
method of payment approved by the Company's Board of Directors. For purposes
of clauses (iii) and (iv), the value of the shares of Common Stock of the<PAGE>
Company delivered, or to be delivered, as payment of the exercise price shall
be the closing price per share of the Company's Common Stock on the last
business day prior to the date the written notice is actually received and
acknowledged as received by the Company. Upon receipt of payment, the Company
shall deliver to Optionee or the person exercising this Option for Optionee, an
appropriate certificate or certificates for fully paid nonassessable Shares.
For purposes of clause (iv), should any Optionee fail to have the number of
shares required to pay the exercise price delivered to the Company's transfer
agent within 90 days, this Option, with respect to the number of shares stated
in the written notice, will terminate and be deemed to be forfeited by the
Optionee. The certificate or certificates for the Shares as to which the Option
shall be exercised shall be registered in the name of the Optionee and shall be
legended as set forth in the Plan and/or as required under applicable law. This
Option may not be exercised for a fraction of a share.
(c) RESTRICTIONS ON EXERCISE. This Option may not be exercised if
the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities laws or other laws or regulations.
As a condition to the exercise of this Option, the Company may require the
Optionee to make such representations and warranties to the Company as may be
required by any applicable law or regulation.
(d) NO SHAREHOLDER RIGHTS BEFORE EXERCISE AND ISSUANCE. No rights as
a shareholder shall exist with respect to the Shares subject to the Option as a
result of the grant of the Option. Such rights shall exist only after issuance
of a stock certificate in accordance with Article V, Section J of the Plan
following the exercise of the Option as provided in this Agreement and the
Plan.
(e) TERMINATION OF EMPLOYMENT. In the event that the Optionee
ceases to be a Key Non-Employee of the Company or an Affiliate, the
exercisability of the Option is subject to the provisions of Article V, Section
G of the Plan.
4. INVESTMENT REPRESENTATIONS. In connection with the acquisition of
this Option, the Optionee represents and warrants as follows:
(a) The Optionee is acquiring this Option, and upon exercise of this
Option, he will be acquiring the Shares, for investment for his own account,
not as a nominee or agent, and not with a view to, or for resale in connection
with, any distribution thereof.
(b) The Optionee has a preexisting business or personal relationship
with the Company or one of its directors, officers or controlling persons and
by reason of his business or financial experience, has, and could be reasonably
assumed to have, the capacity to evaluate the merits and risks of purchasing
Common Stock of the Company and to make an informed investment decision with
respect thereto and to protect Optionee's interests in connection with the
acquisition of this Option and the Shares.
5. WITHHOLDING. The Company reserves the right to withhold, in
accordance with any applicable laws, from any compensation or other
consideration payable to the Optionee, any taxes required to be withheld by
federal, state or local law as a result of the grant or exercise of this Option
or the sale or other disposition of the Shares issued upon exercise of this
Option; and, if such compensation or consideration is insufficient, the Company<PAGE>
may require Optionee to pay to the Company an amount sufficient to cover such
withholding tax liability.
6. NONTRANSFERABILITY OF OPTION. This Option may not be transferred,
assigned, pledged or hypothecated or otherwise disposed of in any way (whether
by operation of law or otherwise) and is not subject to execution, attachment
or similar process. Any attempted transfer, assignment, pledge, hypothecation
or other disposition of this Option or of any rights granted hereunder, or the
levy of any attachment or similar process upon this Option or such rights, will
be null and void. This Option may be exercised during the lifetime of the
Optionee only by such Optionee or his legal guardian. Subject to the foregoing
and the terms of the Plan, the terms of this Option shall be binding upon the
executors, administrators, heirs, successors and permitted assigns of the
Optionee.
7. CONTINUATION OF EMPLOYMENT. Neither the Plan nor this Option shall
(a) confer upon the Optionee any right whatsoever to continue to serve as a Key
Non-Employee of the Company or any Affiliate or (b) limit or restrict in any
respect the rights of the Company, which rights are hereby expressly reserved,
to terminate the Optionee's service as a Key Non-Employee and any compensation
being paid to Optionee at any time for any reason whatsoever, with or without
cause, in the Company's sole discretion and with or without notice.
8. THE PLAN. This Option is subject to, and the Company and the
Optionee agree to be bound by, all the terms and conditions of the Company's
Plan as such Plan may be amended from time to time in accordance with the terms
thereof, provided that no such amendment shall deprive the Optionee, without
his consent, of this Option or any rights hereunder. Pursuant to the Plan, the
Board is authorized to adopt rules and regulations not inconsistent with the
Plan as it shall deem appropriate and proper. A copy of the Plan in its present
form is available for inspection at the Company's principal office during
business hours by the Optionee or the persons entitled to exercise this Option.
9. ENTIRE AGREEMENT. The terms of this Agreement and the Plan
constitute the entire agreement between the Company and the Optionee with
respect to the subject matter hereof and supersede any and all previous
agreements between the Company and the Optionee.
SUCCESS BANCSHARES, INC., a Delaware corporation
Dated as of: August 26, 1998 By: /s/ Christa N. Calabrese
----------------------------------------------
Name: Christa N. Calabrese
Title: Chief Operating Officer<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into as
of August 1, 1998, by and between Success National Bank, a national banking
organization ("Employer"), and Marlene Sachs ("Employee").
WHEREAS, Employer and Employee desire to enter into an employment
agreement governed by the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the provisions and undertakings set
forth herein, the parties, intending to be legally bound, hereby agree as
follows:
1. EMPLOYMENT.
1.1 Employment. Employer hereby retains and employs, and Employee
accepts such retention and employment, to provide services hereunder as Vice
President and Secretary to the Board of Directors. Employee shall be
accountable to Employer through its Chief Executive Officer and Board of
Directors.
1.2 Duties and Obligations. As Vice President and Secretary to the Board
of Directors, Employee shall perform all executive and managerial duties
incumbent upon such position. Employee will devote her full time and attention
and give her best efforts to the performance of such executive and managerial
duties. It is intended that Employee may have other business investments or
directorships and engage in civic, charitable and other such activities so long
as such activities do not interfere with her duties hereunder. Employer shall
not relocate Employee to a location more than 40 miles from the location where
she is presently employed.
1.3 Proprietary Property. Employee acknowledges that in the course of
her employment with Employer, Employer will provide Employee with, or access
to, customer lists, memoranda, files, records, trade secrets and such other
proprietary information and property (collectively, the "Proprietary Property")
as is necessary or desirable to assist Employee in her duties. Employee
acknowledges that the Proprietary Property is the sole and exclusive property
of Employer and is not available to the public at large. Employee agrees that
she shall not, while in the employ of Employer or thereafter, communicate or
divulge to, or use for the benefit of herself or any other person, firm or
corporation, without the prior written consent of Employer, any information
relating to the Proprietary Property. Upon termination of Employee's
employment with Employer, Employee shall thereupon return all Proprietary
Property in her possession or control to Employer.
2. FINANCIAL ARRANGEMENTS.
2.1 Compensation. As Employee's compensation for services provided
hereunder, Employer shall do the following:
(a) Salary. Employer shall pay Employee, pursuant to Employer's payroll
schedule, an annual salary in the amount of $43,000 during the term of this
Agreement, subject to annual review and increase, but not decrease, by the
Board of Directors of Employer.<PAGE>
(b) Bonus. Employer, based upon the sole determination of Employer's
Board of Directors, may grant a bonus to Employee in any year in which it
determines that Employer's performance justifies such a bonus.
(c) Expenses. Employee shall be reimbursed on a monthly basis for all
reasonable business expenses incurred by her in the performance of her duties
hereunder, to the extent such expenses are substantiated and are consistent
with the general policies of Employer relative to expense reimbursement.
(d) Benefits. In addition to any compensation provided under this
Agreement, Employee shall be entitled to participate in and receive benefits
under any and all pension, profit sharing and other employee benefit plans,
insurance programs and other benefit programs which are, from time to time,
maintained by Employer for its senior executive officers, in accordance with
the provisions of such plans or programs as from time to time in effect.
(e) Vacations. Employee shall be entitled to paid vacation days in
accordance with the Employer's Associate Handbook, as such may be amended from
time to time.
3. TERM AND TERMINATION.
3.1 Term. This Agreement shall be effective for a period of three (3)
years from the date hereof.
3.2 Termination. This Agreement may also be terminated on the first to
occur of any of the following events:
(a) Agreement. Written agreement by both parties to terminate this
Agreement.
(b) Negligence; Misconduct. (i) substantial neglect of her duties
hereunder by Employee, (ii) gross misconduct or (iii) any intentional act by
Employee constituting fraud, misappropriation, embezzlement, dishonesty or
similar act which is injurious to Employer. Prior to termination of this
Agreement under Section 3.2(b)(i) and 3.2(b)(ii) only, Employer shall be
required to provide written notice to Employee of the act or omission
complained of, giving reasonably specific details in describing necessary
corrective action, and Employee shall be given a period of twenty (20) days in
which to cure or correct such act or omission. If such act or omission is
cured or corrected, the right of Employer to terminate this Agreement under
Sections 3.2(b)(i) and 3.2(b)(ii) shall be extinguished.
(c) Breach. Excluding actions or events which may cause termination of
this Agreement as provided in Section 3.2(b), in the event of the breach of any
of the terms and conditions of this Agreement by either party and the failure
of the breaching party to correct such breach within ten (10) business days
after receipt of written notice of such breach by the breaching party, such
other party may terminate this Agreement immediately upon written notice of
such termination to the breaching party.
(d) Death or Disability. In the event Employee dies or becomes disabled,
to the extent that she is physically or materially incapacitated for more than
six (6) months in the aggregate over a period of twenty-four (24) months so
that Employee is unable to perform his essential duties and functions
hereunder, this Agreement may be terminated by Employer upon written notice to
Employee.<PAGE>
3.3 Effects of Termination. In the event of termination of this
Agreement pursuant to Sections 3.1, 3.2(a), 3.2(b) or 3.2(d) hereof or
termination by Employer pursuant to Section 3.2(c) hereof, Employer shall have
no continuing obligation to Employee hereunder. In the event of termination by
Employee pursuant to Section 3.2(c) hereof or termination by Employer for any
reason not set forth in Section 3.1 or 3.2 hereof, Employer shall continue to
pay Employee salary, bonus, if any is due, and benefits for the duration of the
term.
4. CHANGE OF CONTROL, SALE.
4.1 Payment Upon Termination. Upon a Change of Control (as defined
herein) of Employer or its holding company, Success Bancshares, Inc.
("Bancshares"), Employer shall pay Employee the sum of one times Employee's
base salary in one lump sum payment or, if such payment is not permissible as a
matter of law, then such other maximum payment, not to exceed one times
Employee's base salary, as is lawful; provided, however, that such payment
shall only be made if (a) Employee is an employee of the Employer immediately
prior to such Change of Control and (b) within three hundred sixty (360) days
following such Change of Control Employee is terminated by Employer as an
employee of the Employer for any reason.
4.2 Change of Control Defined. For purposes of this Agreement, a "Change
of Control" shall be deemed to have occurred upon any of the following events:
(a) The consummation of any of the following transactions: (i) a merger,
recapitalization or other business combination of Employer or Bancshares with
or into another corporation pursuant to which Employer or Bancshares,
respectively, is not the continuing or surviving corporation or pursuant to
which shares of the Common Stock of Employer or Bancshares, as the case may be,
are converted into cash, securities of another corporation or other entity or
other property, other than a transaction in which the holders of the Common
Stock immediately prior to such transaction (including any preliminary or other
transaction relating to such transaction) will continue to own at least
fifty-five (55%) percent of the total voting power of the then-outstanding
securities of the surviving or continuing corporation immediately after such
transaction or (ii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of Employer or Bancshares.
(b) A transaction in which any person (including any "person" as defined
in Section 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), corporation or other entity (other than Employer
or Bancshares, an affiliate thereof or any profit-sharing, employee ownership
or other employee benefit or similar plan sponsored by Employer or Bancshares
or any subsidiaries thereof, or any trustee of or fiduciary with respect to any
such plan when acting in such capacity, or any group comprised solely of such
entities): shall become, through purchase or otherwise, the "beneficial owner"
(as such term is defined in Rule 13d-3 under the Exchange Act), directly or
indirectly (in one transaction or a series of related transactions), of
securities of Employer or Bancshares, as the case may be, representing
forty-five (45%) percent or more of the total voting power of the
then-outstanding securities of Employer or Bancshares, respectively, ordinarily
(and apart from the rights accruing under special circumstances) having the
right to vote in the election of the directors of Employer or Bancshares,
respectively.<PAGE>
(c) If, during any period of two (2) consecutive years, individuals who
at the beginning of such period constituted the entire Board and any new
director whose election by the Board or nomination for election by the
stockholders of Employer or Bancshares, as the case may be, was approved by a
vote of eighty (80%) percent of the directors then still in office who either
were directors at the beginning of the period or whose election or nomination
for election by the stockholders was previously so approved, cease for any
reason to constitute a majority thereof.
4.3 Survival. The provisions of this Section 4 shall survive the
expiration of this Agreement until such time as Employee shall no longer be an
employee of the Employer.
5. PAYMENT BY HOLDING COMPANY
In view of Employee's contribution to Bancshares, any compensation or
benefit provided for herein to Employee may, upon the approval of both the
Boards of Directors of Employer and Bancshares, be paid by Bancshares.
6. NON-SOLICITATION/NON-COMPETITION
6.1 Non-Solicitation. Employee shall not, during the term of Employee's
employment with Employer and for a period of six (6) months after the
termination or expiration thereof, directly or indirectly, hire, offer to hire,
divert, entice away, solicit or in any other manner persuade or attempt to
persuade ("Solicitation") any person who is, or was, at any time within the
twelve (12) months prior to such Solicitation, an officer, director, employee,
agent, lessor, lessee, licensor, licensee, customer, prospective customer,
supplier or shareholder or prospective shareholder of Employer or Bancshares to
discontinue, cease or alter his, her or its relationship with Employer or
Bancshares.
6.2 Non-Competition. Employee shall not, during the term of Employee's
employment with Employer and for a period of six (6) months after the
termination or expiration thereof, except in the event that (a) such
termination occurs upon a Change of Control and otherwise as set forth in
Section 4.1 of this Agreement or (b) Employee is terminated by Employer as an
employee of the Employer for any reason other than one described in Sections
3.2(a), 3.2(b)(i), (ii) or (iii) or 3.2(c), directly or indirectly, within five
(5) miles of the three (3) largest then-existing offices of Employer: (i)
engage in any business or activity that competes with the business of Employer
or Bancshares; (ii) enter the employ of any person engaged in any business or
activity that competes with the business of Employer or Bancshares or render
any services to any person for use in competing with the business of Employer
or Bancshares; or (iii) have an interest in any person engaged in any business
or activity that competes with the business of Employer or Bancshares, directly
or indirectly, in any capacity, including, without limitation, as an
individual, partner, shareholder, officer, director, principal, agent,
employee, trustee, creditor or consultant or any other relationship or
capacity.
6.3 Remedies Upon Breach. Employee acknowledges and agrees that (a)
Employer shall be irreparably injured in the event of a breach by Employee of
any of Employee's obligations under this Section 6.3; (b) monetary damages
shall not be an adequate remedy for any such breach; (c) Employer shall be
entitled to injunctive relief, in addition to any other remedy which it may<PAGE>
have, in the event of any such breach; and (d) the existence of any claims
which Employee may have against Employer, whether under this Agreement or
otherwise, shall not be a defense to the enforcement by Employer of any of its
rights under this Section 6.3.
6.4 Enforcement. The covenants and obligations of Employee contained in
this Section 6.4 shall be in addition to, and not in lieu of, any covenants and
obligations which Employee may have with respect to the subject matter hereof,
whether by contract, as a matter of law or otherwise, and such covenants and
obligations, and their enforceability, shall survive the termination of this
Agreement.
6.5 Survival. The provisions of this Section 6 shall survive until the
later of (a) six (6) months following the expiration of this Agreement and (b)
six (6) months following the termination of Employee's employment with
Employer.
7. MISCELLANEOUS
7.1 Assignment. This Agreement and all rights and benefits hereunder are
personal to Employee and to Employer. Accordingly, no rights, interests or
benefits hereunder shall be sold, transferred or assigned without the prior
written consent of the other party.
7.2 Employment Status of Employee. It is expressly acknowledged that
Employee, in the performance of her services hereunder, is an employee of
Employer. Accordingly, Employer shall deduct from the compensation paid to
Employee any sums for income tax, social security or any other withholding
taxes as are required by law.
7.3 Changes or Modifications. No change or modification of this
Agreement shall be valid unless the same shall be in writing signed by Employer
and Employee. No waiver of any provision hereof shall be valid unless in
writing and signed by the party against whom charged.
7.4 Entire Agreement. This Agreement constitutes the entire Agreement
between the parties with respect to the matters set forth herein. This
Agreement supersedes any and all other agreements between the parties with
respect to the subject matter.
7.5 Notices. Notice required herein shall be effective when delivered in
person or sent by United States Certified Mail, postage prepaid and addressed
to:
Employer: Board of Directors
Success National Bank
One Marriott Drive
Lincolnshire, Illinois 60069-3703
Employee: Marlene Sachs
Success National Bank
One Marriott Drive
Lincolnshire, Illinois 60069-3703.
7.6 Governing Law. This Agreement shall be interpreted, construed and
enforced in accordance with the internal laws of Illinois.<PAGE>
7.7 Separability. The inability or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted.
7.8 Waiver of Breach. The waiver by either party of a breach or
violation of any provision hereof shall not operate as a waiver of any
subsequent breach of the same or any other provision hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the last date written below.
EMPLOYER
SUCCESS NATIONAL BANK
By: /s/ Christa N. Calabrese
-------------------------------------
Name: Christa N. Calabrese
Title: Executive Vice President
EMPLOYEE:
/s/ Marlene Sachs
----------------------------------------
Name: Marlene Sachs <PAGE>
SUCCESS BANCSHARES, INC.
STOCK OPTION AGREEMENT
(NON-TRANSFERABLE)
Success Bancshares, Inc., a Delaware corporation (the "Company"), hereby
grants to Marlene Sachs (the "Optionee") an option to purchase a total of 7,500
shares of Common Stock (the "Shares") of the Company, at the price set forth
herein, and in all respects subject to the terms and provisions of the
Company's 1995 Stock Option Plan (the "Plan") applicable to stock options which
terms and provisions are hereby incorporated by reference herein. Unless
otherwise defined or the context herein otherwise requires, the capitalized
terms used herein shall have the same meanings ascribed to them in the Plan.
1 NATURE OF THE OPTION. This Option is intended to be an incentive
stock option within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
2. DATE OF GRANT; TERM OF OPTION. This Option is granted as of September
23, 1998, and it may not be exercised later than September 23, 2008.
3. OPTION EXERCISE PRICE. The Option exercise price is $13.875 per
Share, which price is not less than the fair market value thereof on the date
this Option was granted.
4. EXERCISE OF OPTION. This Option shall be exercisable during its term
only in accordance with the terms and provisions of the Plan and this Option as
follows:
(a) RIGHT TO EXERCISE. The total number of Shares subject to this
Option is 7,500. Subject to the foregoing and the limitations contained herein
and in the Plan, this Option shall vest and be exercisable, cumulatively, as
follows:
Number of Shares Exercisable First Date Option is Exercisable
1,875 September 23, 1999
1,875 September 23, 2000
1,875 September 23, 2001
1,875 September 23, 2002
; provided, however, that, upon any Change of Control (as defined in the Plan),
this Option shall become immediately exercisable as to all Shares remaining
subject to this Option and all restrictions on vesting shall terminate.
(b) METHOD OF EXERCISE. This Option shall be exercisable by written
notice which shall state the election to exercise this Option, the number of
Shares in respect to which this Option is being exercised, and such other
representations and agreements as to the Optionee's investment intent with
respect to such Shares as may be required by the Company hereunder or pursuant
to the provisions of the Plan. Such written notice shall be signed by the
Optionee and shall be delivered in person or by certified mail to the Secretary
of the Company or such other person as may be designated by the Company. The
written notice shall be accompanied by payment of the exercise price. The
exercise price may be paid: (i) in cash; (ii) by check; (iii) by delivering
certificates of other shares of Common Stock of the Company; (iv) by
transferring shares of Common Stock of the Company to the Company's transfer
agent for delivery to the Company provided that the written notice of exercise<PAGE>
is accompanied by a written acknowledgment by the Optionee that the Optionee
has instructed her broker dealer to transfer such shares and such transfer is
confirmed by a letter from such broker dealer acknowledging that the Optionee
has directed such broker dealer to transfer such shares; (v) by Optionee
simultaneously exercising this Option and selling the Shares thereby acquired
pursuant to a brokerage or similar arrangement approved in advance by the Board
(which approval shall not be unreasonably withheld) and to use the proceeds
from such sale to pay the exercise price and any federal, state and local taxes
required to be withheld as a result of such exercise; or (vi) by any other
method of payment approved by the Company's Board of Directors. For purposes
of clauses (iii) and (iv), the value of the shares of Common Stock of the
Company delivered, or to be delivered, as payment of the exercise price shall
be the closing price per share of the Company's Common Stock on the last
business day prior to the date the written notice is actually received and
acknowledged as received by the Company. Upon receipt of payment, the Company
shall deliver to Optionee or the person exercising this Option for Optionee, an
appropriate certificate or certificates for fully paid nonassessable Shares.
For purposes of clause (iv), should any Optionee fail to have the number of
shares required to pay the exercise price delivered to the Company's transfer
agent within 90 days, this Option, with respect to the number of shares stated
in the written notice, will terminate and be deemed to be forfeited by the
Optionee. The certificate or certificates for the Shares as to which the Option
shall be exercised shall be registered in the name of the Optionee and shall be
legended as set forth in the Plan and/or as required under applicable law. This
Option may not be exercised for a fraction of a share.
(c) RESTRICTIONS ON EXERCISE. This Option may not be exercised if
the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities laws or other laws or regulations.
As a condition to the exercise of this Option, the Company may require the
Optionee to make such representations and warranties to the Company as may be
required by any applicable law or regulation.
(d) NO SHAREHOLDER RIGHTS BEFORE EXERCISE AND ISSUANCE. No rights as
a shareholder shall exist with respect to the Shares subject to the Option as a
result of the grant of the Option. Such rights shall exist only after issuance
of a stock certificate in accordance with Article V, Section J of the Plan
following the exercise of the Option as provided in this Agreement and the
Plan.
(e) TERMINATION OF EMPLOYMENT. In the event that the Optionee
ceases to be an employee of the Company or an Affiliate, the exercisability of
the Option is subject to the provisions of Article V, Section G of the Plan.
5. INVESTMENT REPRESENTATIONS. In connection with the acquisition of
this Option, the Optionee represents and warrants as follows:
(a) The Optionee is acquiring this Option, and upon exercise of this
Option, she will be acquiring the Shares, for investment for her own account,
not as a nominee or agent, and not with a view to, or for resale in connection
with, any distribution thereof.
(b) The Optionee has a preexisting business or personal relationship
with the Company or one of its directors, officers or controlling persons and
by reason of her business or financial experience, has, and could be reasonably
assumed to have, the capacity to evaluate the merits and risks of purchasing
Common Stock of the Company and to make an informed investment decision with<PAGE>
respect thereto and to protect Optionee's interests in connection with the
acquisition of this Option and the Shares.
6. WITHHOLDING. The Company reserves the right to withhold, in
accordance with any applicable laws, from any compensation or other
consideration payable to the Optionee, any taxes required to be withheld by
federal, state or local law as a result of the grant or exercise of this Option
or the sale or other disposition of the Shares issued upon exercise of this
Option; and, if such compensation or consideration is insufficient, the Company
may require Optionee to pay to the Company an amount sufficient to cover such
withholding tax liability.
7. NONTRANSFERABILITY OF OPTION. This Option may not be transferred,
assigned, pledged or hypothecated or otherwise disposed of in any way (whether
by operation of law or otherwise) and is not subject to execution, attachment
or similar process. Any attempted transfer, assignment, pledge, hypothecation
or other disposition of this Option or of any rights granted hereunder, or the
levy of any attachment or similar process upon this Option or such rights, will
be null and void. This Option may be exercised during the lifetime of the
Optionee only by such Optionee or her legal guardian. Subject to the foregoing
and the terms of the Plan, the terms of this Option shall be binding upon the
executors, administrators, heirs, successors and permitted assigns of the
Optionee.
8. CONTINUATION OF EMPLOYMENT. Neither the Plan nor this Option shall
(a) confer upon the Optionee any right whatsoever to continue in the employment
of the Company or any Affiliate or (b) limit or restrict in any respect the
rights of the Company, which rights are hereby expressly reserved, to terminate
the Optionee's employment and compensation at any time for any reason
whatsoever, with or without cause, in the Company's sole discretion and with or
without notice.
9. THE PLAN. This Option is subject to, and the Company and the Optionee
agree to be bound by, all the terms and conditions of the Company's Plan as
such Plan may be amended from time to time in accordance with the terms
thereof, provided that no such amendment shall deprive the Optionee, without
her consent, of this Option or any rights hereunder. Pursuant to the Plan, the
Board is authorized to adopt rules and regulations not inconsistent with the
Plan as it shall deem appropriate and proper. A copy of the Plan in its present
form is available for inspection at the Company's principal office during
business hours by the Optionee or the persons entitled to exercise this Option.
10. ENTIRE AGREEMENT. The terms of this Agreement and the Plan
constitute the entire agreement between the Company and the Optionee with
respect to the subject matter hereof and supersede any and all previous
agreements between the Company and the Optionee.
SUCCESS BANCSHARES, INC., a Delaware corporation
Dated as of: September 23, 1998 By: /s/ Christa N. Calabrese
---------------------------------
Name: Christa N. Calabrese
Title: Chief Operating Officer<PAGE>
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
This Amendment (this "Amendment") is made and entered into as of August 1,
1998, by and between Success National Bank, a national banking organization
("Employer"), and Ronald W. Tragasz ("Employee").
WHEREAS, Employer and Employee have entered into an Employment Agreement
dated as of August 1, 1998 (the "Employment Agreement"); and
WHEREAS, Employer and Employee desire to amend the Employment Agreement as
set forth below.
NOW, THEREFORE, in consideration of the provisions and undertakings set
forth herein, the parties, intending to be legally bound, hereby agree as
follows:
1. AMENDMENT. Section 2.1 of the Employment Agreement is hereby amended by
adding the following subsection thereto:
"(f) Automobile Allowance. Employee shall be entitled to the use of an
automobile provided by Employer and Employer shall be responsible, and shall
not be entitled to reimbursement for, any and all reasonable costs and expenses
relating to the use and maintenance of such automobile to the extent such costs
and expenses are substantiated by Employee."
2. MISCELLANEOUS
2.1 Sole Amendment. The Employment Agreement shall not be amended except
as expressly set forth herein.
2.2 Governing Law. This Amendment shall be interpreted, construed and
enforced in accordance with the internal laws of Illinois.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the last date written below.
EMPLOYER
SUCCESS NATIONAL BANK
By: /s/ Christa N. Calabrese
- ---------------------------------------------
Name: Christa N. Calabrese
Title: Executive Vice President
EMPLOYEE:
/s/ Ronald W. Tragasz
- ---------------------------------------------
Name: Ronald W. Tragasz<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into as
of August 1, 1998, by and between Success National Bank, a national banking
organization ("Employer"), and Ronald W. Tragasz ("Employee").
WHEREAS, Employer and Employee desire to enter into an employment
agreement governed by the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the provisions and undertakings set
forth herein, the parties, intending to be legally bound, hereby agree as
follows:
1. EMPLOYMENT.
1.1 Employment. Employer hereby retains and employs, and Employee
accepts such retention and employment, to provide services hereunder Senior
Vice President and Cashier. Employee shall be accountable to Employer through
its Chief Executive Officer and Board of Directors.
1.2 Duties and Obligations. As Senior Vice President and Cashier,
Employee shall perform all executive and managerial duties incumbent upon such
position. Employee will devote his full time and attention and give his best
efforts to the performance of such executive and managerial duties. It is
intended that Employee may have other business investments or directorships and
engage in civic, charitable and other such activities so long as such
activities do not interfere with his duties hereunder. Employer shall not
relocate Employee to a location more than 40 miles from the location where he
is presently employed.
1.3 Proprietary Property. Employee acknowledges that in the course of
his employment with Employer, Employer will provide Employee with, or access
to, customer lists, memoranda, files, records, trade secrets and such other
proprietary information and property (collectively, the "Proprietary Property")
as is necessary or desirable to assist Employee in his duties. Employee
acknowledges that the Proprietary Property is the sole and exclusive property
of Employer and is not available to the public at large. Employee agrees that
he shall not, while in the employ of Employer or thereafter, communicate or
divulge to, or use for the benefit of himself or any other person, firm or
corporation, without the prior written consent of Employer, any information
relating to the Proprietary Property. Upon termination of Employee's
employment with Employer, Employee shall thereupon return all Proprietary
Property in his possession or control to Employer.
2. FINANCIAL ARRANGEMENTS.
2.1 Compensation. As Employee's compensation for services provided
hereunder, Employer shall do the following:
(a) Salary. Employer shall pay Employee, pursuant to Employer's payroll
schedule, an annual salary in the amount of $80,000 during the term of this
Agreement, subject to annual review and increase, but not decrease, by the
Board of Directors of Employer.
(b) Bonus. Employer, based upon the sole determination of Employer's
Board of Directors, may grant a bonus to Employee in any year in which it
determines that Employer's performance justifies such a bonus.<PAGE>
(c) Expenses. Employee shall be reimbursed on a monthly basis for all
reasonable business expenses incurred by him in the performance of his duties
hereunder, to the extent such expenses are substantiated and are consistent
with the general policies of Employer relative to expense reimbursement.
(d) Benefits. In addition to any compensation provided under this
Agreement, Employee shall be entitled to participate in and receive benefits
under any and all pension, profit sharing and other employee benefit plans,
insurance programs and other benefit programs which are, from time to time,
maintained by Employer for its senior executive officers, in accordance with
the provisions of such plans or programs as from time to time in effect.
(e) Vacations. Employee shall be entitled to paid vacation days in
accordance with the Employer's Associate Handbook, as such may be amended from
time to time.
3. TERM AND TERMINATION.
3.1 Term. This Agreement shall be effective for a period of three (3)
years from the date hereof.
3.2 Termination. This Agreement may also be terminated on the first to
occur of any of the following events:
(a) Agreement. Written agreement by both parties to terminate this
Agreement.
(b) Negligence; Misconduct. (i) substantial neglect of his duties
hereunder by Employee, (ii) gross misconduct or (iii) any intentional act by
Employee constituting fraud, misappropriation, embezzlement, dishonesty or
similar act which is injurious to Employer. Prior to termination of this
Agreement under Section 3.2(b)(i) and 3.2(b)(ii) only, Employer shall be
required to provide written notice to Employee of the act or omission
complained of, giving reasonably specific details in describing necessary
corrective action, and Employee shall be given a period of twenty (20) days in
which to cure or correct such act or omission. If such act or omission is
cured or corrected, the right of Employer to terminate this Agreement under
Sections 3.2(b)(i) and 3.2(b)(ii) shall be extinguished.
(c) Breach. Excluding actions or events which may cause termination of
this Agreement as provided in Section 3.2(b), in the event of the breach of any
of the terms and conditions of this Agreement by either party and the failure
of the breaching party to correct such breach within ten (10) business days
after receipt of written notice of such breach by the breaching party, such
other party may terminate this Agreement immediately upon written notice of
such termination to the breaching party.
(d) Death or Disability. In the event Employee dies or becomes disabled,
to the extent that he is physically or materially incapacitated for more than
six (6) months in the aggregate over a period of twenty-four (24) months so
that Employee is unable to perform his essential duties and functions
hereunder, this Agreement may be terminated by Employer upon written notice to
Employee.
3.3 Effects of Termination. In the event of termination of this
Agreement pursuant to Sections 3.1, 3.2(a), 3.2(b) or 3.2(d) hereof or<PAGE>
termination by Employer pursuant to Section 3.2(c) hereof, Employer shall have
no continuing obligation to Employee hereunder. In the event of termination by
Employee pursuant to Section 3.2(c) hereof or termination by Employer for any
reason not set forth in Section 3.1 or 3.2 hereof, Employer shall continue to
pay Employee salary, bonus, if any is due, and benefits for the duration of the
term.
4. CHANGE OF CONTROL, SALE.
4.1 Payment Upon Termination. Upon a Change of Control (as defined
herein) of Employer or its holding company, Success Bancshares, Inc.
("Bancshares"), Employer shall pay Employee the sum of one times Employee's
base salary in one lump sum payment or, if such payment is not permissible as a
matter of law, then such other maximum payment, not to exceed one times base
salary, as is lawful; provided, however, that such payment shall only be made
if (a) Employee is an employee of the Employer immediately prior to such Change
of Control and (b) within three hundred sixty (360) days following such Change
of Control Employee is terminated by Employer as an employee of the Employer
for any reason.
4.2 Change of Control Defined. For purposes of this Agreement, a "Change
of Control" shall be deemed to have occurred upon any of the following events:
(a) The consummation of any of the following transactions: (i) a merger,
recapitalization or other business combination of Employer or Bancshares with
or into another corporation pursuant to which Employer or Bancshares,
respectively, is not the continuing or surviving corporation or pursuant to
which shares of the Common Stock of Employer or Bancshares, as the case may be,
are converted into cash, securities of another corporation or other entity or
other property, other than a transaction in which the holders of the Common
Stock immediately prior to such transaction (including any preliminary or other
transaction relating to such transaction) will continue to own at least
fifty-five (55%) percent of the total voting power of the then-outstanding
securities of the surviving or continuing corporation immediately after such
transaction or (ii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of Employer or Bancshares.
(b) A transaction in which any person (including any "person" as defined
in Section 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), corporation or other entity (other than Employer
or Bancshares, an affiliate thereof or any profit-sharing, employee ownership
or other employee benefit or similar plan sponsored by Employer or Bancshares
or any subsidiaries thereof, or any trustee of or fiduciary with respect to any
such plan when acting in such capacity, or any group comprised solely of such
entities): shall become, through purchase or otherwise, the "beneficial owner"
(as such term is defined in Rule 13d-3 under the Exchange Act), directly or
indirectly (in one transaction or a series of related transactions), of
securities of Employer or Bancshares, as the case may be, representing
forty-five (45%) percent or more of the total voting power of the
then-outstanding securities of Employer or Bancshares, respectively, ordinarily
(and apart from the rights accruing under special circumstances) having the
right to vote in the election of the directors of Employer or Bancshares,
respectively.
(c) If, during any period of two (2) consecutive years, individuals who
at the beginning of such period constituted the entire Board and any new<PAGE>
director whose election by the Board or nomination for election by the
stockholders of Employer or Bancshares, as the case may be, was approved by a
vote of eighty (80%) percent of the directors then still in office who either
were directors at the beginning of the period or whose election or nomination
for election by the stockholders was previously so approved, cease for any
reason to constitute a majority thereof.
4.3 Survival. The provisions of this Section 4 shall survive the
expiration of this Agreement until such time as Employee shall no longer be an
employee of the Employer.
5. PAYMENT BY HOLDING COMPANY
In view of Employee's contribution to Bancshares, any compensation or
benefit provided for herein to Employee may, upon the approval of both the
Boards of Directors of Employer and Bancshares, be paid by Bancshares.
6. NON-SOLICITATION/NON-COMPETITION
6.1 Non-Solicitation. Employee shall not, during the term of Employee's
employment with Employer and for a period of six (6) months after the
termination or expiration thereof, directly or indirectly, hire, offer to hire,
divert, entice away, solicit or in any other manner persuade or attempt to
persuade ("Solicitation") any person who is, or was, at any time within the
twelve (12) months prior to such Solicitation, an officer, director, employee,
agent, lessor, lessee, licensor, licensee, customer, prospective customer,
supplier or shareholder or prospective shareholder of Employer or Bancshares to
discontinue, cease or alter his, her or its relationship with Employer or
Bancshares.
6.2 Non-Competition. Employee shall not, during the term of Employee's
employment with Employer and for a period of six (6) months after the
termination or expiration thereof, except in the event that (a) such
termination occurs upon a Change of Control and otherwise as set forth in
Section 4.1 of this Agreement or (b) Employee is terminated by Employer as an
employee of the Employer for any reason other than one described in Sections
3.2(a), 3.2(b)(i), (ii) or (iii) or 3.2(c), directly or indirectly, within five
(5) miles of the three (3) largest then-existing offices of Employer: (i)
engage in any business or activity that competes with the business of Employer
or Bancshares; (ii) enter the employ of any person engaged in any business or
activity that competes with the business of Employer or Bancshares or render
any services to any person for use in competing with the business of Employer
or Bancshares; or (iii) have an interest in any person engaged in any business
or activity that competes with the business of Employer or Bancshares, directly
or indirectly, in any capacity, including, without limitation, as an
individual, partner, shareholder, officer, director, principal, agent,
employee, trustee, creditor or consultant or any other relationship or
capacity.
6.3 Remedies Upon Breach. Employee acknowledges and agrees that (a)
Employer shall be irreparably injured in the event of a breach by Employee of
any of Employee's obligations under this Section 6.3; (b) monetary damages
shall not be an adequate remedy for any such breach; (c) Employer shall be
entitled to injunctive relief, in addition to any other remedy which it may
have, in the event of any such breach; and (d) the existence of any claims
which Employee may have against Employer, whether under this Agreement or<PAGE>
otherwise, shall not be a defense to the enforcement by Employer of any of its
rights under this Section 6.3.
6.4 Enforcement. The covenants and obligations of Employee contained in
this Section 6.4 shall be in addition to, and not in lieu of, any covenants and
obligations which Employee may have with respect to the subject matter hereof,
whether by contract, as a matter of law or otherwise, and such covenants and
obligations, and their enforceability, shall survive the termination of this
Agreement.
6.5 Survival. The provisions of this Section 6 shall survive until the
later of (a) six (6) months following the expiration of this Agreement and (b)
six (6) months following the termination of Employee's employment with
Employer.
7. MISCELLANEOUS
7.1 Assignment. This Agreement and all rights and benefits hereunder are
personal to Employee and to Employer. Accordingly, no rights, interests or
benefits hereunder shall be sold, transferred or assigned without the prior
written consent of the other party.
7.2 Employment Status of Employee. It is expressly acknowledged that
Employee, in the performance of his services hereunder, is an employee of
Employer. Accordingly, Employer shall deduct from the compensation paid to
Employee any sums for income tax, social security or any other withholding
taxes as are required by law.
7.3 Changes or Modifications. No change or modification of this
Agreement shall be valid unless the same shall be in writing signed by Employer
and Employee. No waiver of any provision hereof shall be valid unless in
writing and signed by the party against whom charged.
7.4 Entire Agreement. This Agreement constitutes the entire Agreement
between the parties with respect to the matters set forth herein. This
Agreement supersedes any and all other agreements between the parties with
respect to the subject matter.
7.5 Notices. Notice required herein shall be effective when delivered in
person or sent by United States Certified Mail, postage prepaid and addressed
to:
Employer: Board of Directors
Success National Bank
One Marriott Drive
Lincolnshire, Illinois 60069-3703
Employee: Ronald W. Tragasz
Success National Bank
One Marriott Drive
Lincolnshire, Illinois 60069-3703.
7.6 Governing Law. This Agreement shall be interpreted, construed and
enforced in accordance with the internal laws of Illinois.<PAGE>
7.7 Separability. The inability or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted.
7.8 Waiver of Breach. The waiver by either party of a breach or
violation of any provision hereof shall not operate as a waiver of any
subsequent breach of the same or any other provision hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the last date written below.
EMPLOYER
SUCCESS NATIONAL BANK
By: /s/ Christa N. Calabrese
--------------------------------------------
Name: Christa N. Calabrese
Title: Executive Vice President
EMPLOYEE:
/s/ Ronald W. Tragasz
--------------------------------------
Name: Ronald W. Tragasz <PAGE>
SUCCESS BANCSHARES, INC.
STOCK OPTION AGREEMENT
(NON-TRANSFERABLE)
Success Bancshares, Inc., a Delaware corporation (the "Company"), hereby
grants to Ronald W. Tragasz (the "Optionee") an option to purchase a total of
5,000 shares of Common Stock (the "Shares") of the Company, at the price set
forth herein, and in all respects subject to the terms and provisions of the
Company's 1995 Stock Option Plan (the "Plan") applicable to stock options which
terms and provisions are hereby incorporated by reference herein. Unless
otherwise defined or the context herein otherwise requires, the capitalized
terms used herein shall have the same meanings ascribed to them in the Plan.
1 NATURE OF THE OPTION. This Option is intended to be an incentive
stock option within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
2. DATE OF GRANT; TERM OF OPTION. This Option is granted as of September
23, 1998, and it may not be exercised later than September 23, 2008.
3. OPTION EXERCISE PRICE. The Option exercise price is $13.875 per
Share, which price is not less than the fair market value thereof on the date
this Option was granted. 4. EXERCISE OF OPTION. This Option shall be
exercisable during its term only in accordance with the terms and provisions of
the Plan and this Option as follows:
(a) RIGHT TO EXERCISE. The total number of Shares subject to this
Option is 5,000. Subject to the foregoing and the limitations contained herein
and in the Plan, this Option shall vest and be exercisable, cumulatively, as
follows:
Number of Shares Exercisable First Date Option is Exercisable
1,250 September 23, 1999
1,250 September 23, 2000
1,250 September 23, 2001
1,250 September 23, 2002
; provided, however, that, upon any Change of Control (as defined in the Plan),
this Option shall become immediately exercisable as to all Shares remaining
subject to this Option and all restrictions on vesting shall terminate.
(b) METHOD OF EXERCISE. This Option shall be exercisable by written
notice which shall state the election to exercise this Option, the number of
Shares in respect to which this Option is being exercised, and such other
representations and agreements as to the Optionee's investment intent with
respect to such Shares as may be required by the Company hereunder or pursuant
to the provisions of the Plan. Such written notice shall be signed by the
Optionee and shall be delivered in person or by certified mail to the Secretary
of the Company or such other person as may be designated by the Company. The
written notice shall be accompanied by payment of the exercise price. The
exercise price may be paid: (i) in cash; (ii) by check; (iii) by delivering
certificates of other shares of Common Stock of the Company; (iv) by
transferring shares of Common Stock of the Company to the Company's transfer
agent for delivery to the Company provided that the written notice of exercise
is accompanied by a written acknowledgment by the Optionee that the Optionee
has instructed his broker dealer to transfer such shares and such transfer is<PAGE>
confirmed by a letter from such broker dealer acknowledging that the Optionee
has directed such broker dealer to transfer such shares; (v) by Optionee
simultaneously exercising this Option and selling the Shares thereby acquired
pursuant to a brokerage or similar arrangement approved in advance by the Board
(which approval shall not be unreasonably withheld) and to use the proceeds
from such sale to pay the exercise price and any federal, state and local taxes
required to be withheld as a result of such exercise; or (vi) by any other
method of payment approved by the Company's Board of Directors. For purposes
of clauses (iii) and (iv), the value of the shares of Common Stock of the
Company delivered, or to be delivered, as payment of the exercise price shall
be the closing price per share of the Company's Common Stock on the last
business day prior to the date the written notice is actually received and
acknowledged as received by the Company. Upon receipt of payment, the Company
shall deliver to Optionee or the person exercising this Option for Optionee, an
appropriate certificate or certificates for fully paid nonassessable Shares.
For purposes of clause (iv), should any Optionee fail to have the number of
shares required to pay the exercise price delivered to the Company's transfer
agent within 90 days, this Option, with respect to the number of shares stated
in the written notice, will terminate and be deemed to be forfeited by the
Optionee. The certificate or certificates for the Shares as to which the Option
shall be exercised shall be registered in the name of the Optionee and shall be
legended as set forth in the Plan and/or as required under applicable law. This
Option may not be exercised for a fraction of a share.
(c) RESTRICTIONS ON EXERCISE. This Option may not be exercised if
the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities laws or other laws or regulations.
As a condition to the exercise of this Option, the Company may require the
Optionee to make such representations and warranties to the Company as may be
required by any applicable law or regulation.
(d) NO SHAREHOLDER RIGHTS BEFORE EXERCISE AND ISSUANCE. No rights as
a shareholder shall exist with respect to the Shares subject to the Option as a
result of the grant of the Option. Such rights shall exist only after issuance
of a stock certificate in accordance with Article V, Section J of the Plan
following the exercise of the Option as provided in this Agreement and the
Plan.
(e) TERMINATION OF EMPLOYMENT. In the event that the Optionee
ceases to be an employee of the Company or an Affiliate, the exercisability of
the Option is subject to the provisions of Article V, Section G of the Plan.
5. INVESTMENT REPRESENTATIONS. In connection with the acquisition of
this Option, the Optionee represents and warrants as follows:
(a) The Optionee is acquiring this Option, and upon exercise of this
Option, he will be acquiring the Shares, for investment for his own account,
not as a nominee or agent, and not with a view to, or for resale in connection
with, any distribution thereof.
(b) The Optionee has a preexisting business or personal relationship
with the Company or one of its directors, officers or controlling persons and
by reason of his business or financial experience, has, and could be reasonably
assumed to have, the capacity to evaluate the merits and risks of purchasing
Common Stock of the Company and to make an informed investment decision with
respect thereto and to protect Optionee's interests in connection with the
acquisition of this Option and the Shares. <PAGE>
6. WITHHOLDING. The Company reserves the right to withhold, in
accordance with any applicable laws, from any compensation or other
consideration payable to the Optionee, any taxes required to be withheld by
federal, state or local law as a result of the grant or exercise of this Option
or the sale or other disposition of the Shares issued upon exercise of this
Option; and, if such compensation or consideration is insufficient, the Company
may require Optionee to pay to the Company an amount sufficient to cover such
withholding tax liability.
7. NONTRANSFERABILITY OF OPTION. This Option may not be transferred,
assigned, pledged or hypothecated or otherwise disposed of in any way (whether
by operation of law or otherwise) and is not subject to execution, attachment
or similar process. Any attempted transfer, assignment, pledge, hypothecation
or other disposition of this Option or of any rights granted hereunder, or the
levy of any attachment or similar process upon this Option or such rights, will
be null and void. This Option may be exercised during the lifetime of the
Optionee only by such Optionee or his legal guardian. Subject to the foregoing
and the terms of the Plan, the terms of this Option shall be binding upon the
executors, administrators, heirs, successors and permitted assigns of the
Optionee.
8. CONTINUATION OF EMPLOYMENT. Neither the Plan nor this Option shall
(a) confer upon the Optionee any right whatsoever to continue in the employment
of the Company or any Affiliate or (b) limit or restrict in any respect the
rights of the Company, which rights are hereby expressly reserved, to terminate
the Optionee's employment and compensation at any time for any reason
whatsoever, with or without cause, in the Company's sole discretion and with or
without notice.
9. THE PLAN. This Option is subject to, and the Company and the Optionee
agree to be bound by, all the terms and conditions of the Company's Plan as
such Plan may be amended from time to time in accordance with the terms
thereof, provided that no such amendment shall deprive the Optionee, without
his consent, of this Option or any rights hereunder. Pursuant to the Plan, the
Board is authorized to adopt rules and regulations not inconsistent with the
Plan as it shall deem appropriate and proper. A copy of the Plan in its present
form is available for inspection at the Company's principal office during
business hours by the Optionee or the persons entitled to exercise this Option.
10. ENTIRE AGREEMENT. The terms of this Agreement and the Plan
constitute the entire agreement between the Company and the Optionee with
respect to the subject matter hereof and supersede any and all previous
agreements between the Company and the Optionee.
SUCCESS BANCSHARES, INC., a Delaware corporation
Dated as of: September 23, 1998 By: /s/ Christa N. Calabrese
--------------------------------
Name: Christa N. Calabrese
Title: Chief Operating Officer<PAGE>
SUCCESS BANCSHARES, INC.
STOCK OPTION AGREEMENT
(NON-TRANSFERABLE)
Success Bancshares, Inc., a Delaware corporation (the "Company"), hereby
grants to Glen Wherfel (the "Optionee") an option to purchase a total of 5,000
shares of Common Stock (the "Shares") of the Company, at the price set forth
herein, and in all respects subject to the terms and provisions of the
Company's 1995 Stock Option Plan (the "Plan") applicable to stock options which
terms and provisions are hereby incorporated by reference herein. Unless
otherwise defined or the context herein otherwise requires, the capitalized
terms used herein shall have the same meanings ascribed to them in the Plan.
1 DATE OF GRANT; TERM OF OPTION. This Option is granted as of August
26, 1998, and it may not be exercised later than August 26, 2008.
2. OPTION EXERCISE PRICE. The Option exercise price is $14.50 per Share,
which price is not less than the fair market value thereof on the date this
Option was granted.
3. EXERCISE OF OPTION. This Option shall be exercisable during its term
only in accordance with the terms and provisions of the Plan and this Option as
follows:
(a) RIGHT TO EXERCISE. The total number of Shares subject to this
Option is 5,000. Subject to the foregoing and the limitations contained herein
and in the Plan, this Option shall vest and be exercisable in full on August
26, 1999; provided, however, that, upon any Change of Control (as defined in
the Plan), this Option shall become immediately exercisable as to all Shares
remaining subject to this Option and all restrictions on vesting shall
terminate.
(b) METHOD OF EXERCISE. This Option shall be exercisable by written
notice which shall state the election to exercise this Option, the number of
Shares in respect to which this Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such Shares as may be required by the Company hereunder or pursuant
to the provisions of the Plan. Such written notice shall be signed by the
Optionee and shall be delivered in person or by certified mail to the Secretary
of the Company or such other person as may be designated by the Company. The
written notice shall be accompanied by payment of the exercise price. The
exercise price may be paid: (i) in cash; (ii) by check; (iii) by delivering
certificates of other shares of Common Stock of the Company; (iv) by
transferring shares of Common Stock of the Company to the Company's transfer
agent for delivery to the Company provided that the written notice of exercise
is accompanied by a written acknowledgment by the Optionee that the Optionee
has instructed his broker dealer to transfer such shares and such transfer is
confirmed by a letter from such broker dealer acknowledging that the Optionee
has directed such broker dealer to transfer such shares; (v) by Optionee
simultaneously exercising this Option and selling the Shares thereby acquired
pursuant to a brokerage or similar arrangement approved in advance by the Board
(which approval shall not be unreasonably withheld) and to use the proceeds
from such sale to pay the exercise price and any federal, state and local taxes
required to be withheld as a result of such exercise; or (vi) by any other
method of payment approved by the Company's Board of Directors. For purposes
of clauses (iii) and (iv), the value of the shares of Common Stock of the<PAGE>
Company delivered, or to be delivered, as payment of the exercise price shall
be the closing price per share of the Company's Common Stock on the last
business day prior to the date the written notice is actually received and
acknowledged as received by the Company. Upon receipt of payment, the Company
shall deliver to Optionee or the person exercising this Option for Optionee, an
appropriate certificate or certificates for fully paid nonassessable Shares.
For purposes of clause (iv), should any Optionee fail to have the number of
shares required to pay the exercise price delivered to the Company's transfer
agent within 90 days, this Option, with respect to the number of shares stated
in the written notice, will terminate and be deemed to be forfeited by the
Optionee. The certificate or certificates for the Shares as to which the Option
shall be exercised shall be registered in the name of the Optionee and shall be
legended as set forth in the Plan and/or as required under applicable law. This
Option may not be exercised for a fraction of a share.
(c) RESTRICTIONS ON EXERCISE. This Option may not be exercised if
the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities laws or other laws or regulations.
As a condition to the exercise of this Option, the Company may require the
Optionee to make such representations and warranties to the Company as may be
required by any applicable law or regulation.
(d) NO SHAREHOLDER RIGHTS BEFORE EXERCISE AND ISSUANCE. No rights as
a shareholder shall exist with respect to the Shares subject to the Option as a
result of the grant of the Option. Such rights shall exist only after issuance
of a stock certificate in accordance with Article V, Section J of the Plan
following the exercise of the Option as provided in this Agreement and the
Plan.
(e) TERMINATION OF EMPLOYMENT. In the event that the Optionee
ceases to be a Key Non-Employee of the Company or an Affiliate, the
exercisability of the Option is subject to the provisions of Article V, Section
G of the Plan.
4. INVESTMENT REPRESENTATIONS. In connection with the acquisition of
this Option, the Optionee represents and warrants as follows:
(a) The Optionee is acquiring this Option, and upon exercise of this
Option, he will be acquiring the Shares, for investment for his own account,
not as a nominee or agent, and not with a view to, or for resale in connection
with, any distribution thereof.
(b) The Optionee has a preexisting business or personal relationship
with the Company or one of its directors, officers or controlling persons and
by reason of his business or financial experience, has, and could be reasonably
assumed to have, the capacity to evaluate the merits and risks of purchasing
Common Stock of the Company and to make an informed investment decision with
respect thereto and to protect Optionee's interests in connection with the
acquisition of this Option and the Shares.
5. WITHHOLDING. The Company reserves the right to withhold, in
accordance with any applicable laws, from any compensation or other
consideration payable to the Optionee, any taxes required to be withheld by
federal, state or local law as a result of the grant or exercise of this Option
or the sale or other disposition of the Shares issued upon exercise of this
Option; and, if such compensation or consideration is insufficient, the Company<PAGE>
may require Optionee to pay to the Company an amount sufficient to cover such
withholding tax liability.
6. NONTRANSFERABILITY OF OPTION. This Option may not be transferred,
assigned, pledged or hypothecated or otherwise disposed of in any way (whether
by operation of law or otherwise) and is not subject to execution, attachment
or similar process. Any attempted transfer, assignment, pledge, hypothecation
or other disposition of this Option or of any rights granted hereunder, or the
levy of any attachment or similar process upon this Option or such rights, will
be null and void. This Option may be exercised during the lifetime of the
Optionee only by such Optionee or his legal guardian. Subject to the foregoing
and the terms of the Plan, the terms of this Option shall be binding upon the
executors, administrators, heirs, successors and permitted assigns of the
Optionee.
7. CONTINUATION OF EMPLOYMENT. Neither the Plan nor this Option shall
(a) confer upon the Optionee any right whatsoever to continue to serve as a Key
Non-Employee of the Company or any Affiliate or (b) limit or restrict in any
respect the rights of the Company, which rights are hereby expressly reserved,
to terminate the Optionee's service as a Key Non-Employee and any compensation
being paid to Optionee at any time for any reason whatsoever, with or without
cause, in the Company's sole discretion and with or without notice.
8. THE PLAN. This Option is subject to, and the Company and the
Optionee agree to be bound by, all the terms and conditions of the Company's
Plan as such Plan may be amended from time to time in accordance with the terms
thereof, provided that no such amendment shall deprive the Optionee, without
his consent, of this Option or any rights hereunder. Pursuant to the Plan, the
Board is authorized to adopt rules and regulations not inconsistent with the
Plan as it shall deem appropriate and proper. A copy of the Plan in its present
form is available for inspection at the Company's principal office during
business hours by the Optionee or the persons entitled to exercise this Option.
9. ENTIRE AGREEMENT. The terms of this Agreement and the Plan
constitute the entire agreement between the Company and the Optionee with
respect to the subject matter hereof and supersede any and all previous
agreements between the Company and the Optionee.
SUCCESS BANCSHARES, INC., a Delaware corporation
Dated as of: August 26, 1998 By: /s/ Christa N. Calabrese
---------------------------------------
Name: Christa N. Calabrese
Title: Chief Operating Officer<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into as
of August 1, 1998, by and between Success National Bank, a national banking
organization ("Employer"), and Christa N. Calabrese ("Employee").
WHEREAS, Employer and Employee desire to enter into an employment
agreement governed by the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the provisions and undertakings set
forth herein, the parties, intending to be legally bound, hereby agree as
follows:
1. EMPLOYMENT.
1.1 Employment. Employer hereby retains and employs, and Employee
accepts such retention and employment, to provide services hereunder as
Executive Vice President and Chief Lending Officer. Employee shall be
accountable to Employer through its Chief Executive Officer and Board of
Directors.
1.2 Duties and Obligations. As Executive Vice President and Chief
Lending Officer, Employee shall perform all executive and managerial duties
incumbent upon such position. Employee will devote her full time and attention
and give her best efforts to the performance of such executive and managerial
duties. It is intended that Employee may have other business investments or
directorships and engage in civic, charitable and other such activities so long
as such activities do not interfere with her duties hereunder. Employer shall
not relocate Employee to a location more than 40 miles from the location where
she is presently employed.
1.3 Proprietary Property. Employee acknowledges that in the course of
her employment with Employer, Employer will provide Employee with, or access
to, customer lists, memoranda, files, records, trade secrets and such other
proprietary information and property (collectively, the "Proprietary Property")
as is necessary or desirable to assist Employee in her duties. Employee
acknowledges that the Proprietary Property is the sole and exclusive property
of Employer and is not available to the public at large. Employee agrees that
she shall not, while in the employ of Employer or thereafter, communicate or
divulge to, or use for the benefit of herself or any other person, firm or
corporation, without the prior written consent of Employer, any information
relating to the Proprietary Property. Upon termination of Employee's
employment with Employer, Employee shall thereupon return all Proprietary
Property in her possession or control to Employer.
2. FINANCIAL ARRANGEMENTS.
2.1 Compensation. As Employee's compensation for services provided
hereunder, Employer shall do the following:
(a) Salary. Employer shall pay Employee, pursuant to Employer's payroll
schedule, an annual salary in the amount of $106,000 during the term of this
Agreement, subject to annual review and increase, but not decrease, by the
Board of Directors of Employer.<PAGE>
(b) Bonus. Employer, based upon the sole determination of Employer's
Board of Directors, may grant a bonus to Employee in any year in which it
determines that Employer's performance justifies such a bonus.
(c) Expenses. Employee shall be reimbursed on a monthly basis for all
reasonable business expenses incurred by her in the performance of her duties
hereunder, to the extent such expenses are substantiated and are consistent
with the general policies of Employer relative to expense reimbursement.
(d) Benefits. In addition to any compensation provided under this
Agreement, Employee shall be entitled to participate in and receive benefits
under any and all pension, profit sharing and other employee benefit plans,
insurance programs and other benefit programs which are, from time to time,
maintained by Employer for its senior executive officers, in accordance with
the provisions of such plans or programs as from time to time in effect.
(e) Vacations. Employee shall be entitled to paid vacation days in
accordance with the Employer's Associate Handbook, as such may be amended from
time to time.
3. TERM AND TERMINATION.
3.1 Term. This Agreement shall be effective for a period of three (3)
years from the date hereof.
3.2 Termination. This Agreement may also be terminated on the first to
occur of any of the following events:
(a) Agreement. Written agreement by both parties to terminate this
Agreement.
(b) Negligence; Misconduct. (i) substantial neglect of her duties
hereunder by Employee, (ii) gross misconduct or (iii) any intentional act by
Employee constituting fraud, misappropriation, embezzlement, dishonesty or
similar act which is injurious to Employer. Prior to termination of this
Agreement under Section 3.2(b)(i) and 3.2(b)(ii) only, Employer shall be
required to provide written notice to Employee of the act or omission
complained of, giving reasonably specific details in describing necessary
corrective action, and Employee shall be given a period of twenty (20) days in
which to cure or correct such act or omission. If such act or omission is
cured or corrected, the right of Employer to terminate this Agreement under
Sections 3.2(b)(i) and 3.2(b)(ii) shall be extinguished.
(c) Breach. Excluding actions or events which may cause termination of
this Agreement as provided in Section 3.2(b), in the event of the breach of any
of the terms and conditions of this Agreement by either party and the failure
of the breaching party to correct such breach within ten (10) business days
after receipt of written notice of such breach by the breaching party, such
other party may terminate this Agreement immediately upon written notice of
such termination to the breaching party.
(d) Death or Disability. In the event Employee dies or becomes disabled,
to the extent that she is physically or materially incapacitated for more than
six (6) months in the aggregate over a period of twenty-four (24) months so
that Employee is unable to perform her essential duties and functions
hereunder, this Agreement may be terminated by Employer upon written notice to
Employee.<PAGE>
3.3 Effects of Termination. In the event of termination of this
Agreement pursuant to Sections 3.1, 3.2(a), 3.2(b) or 3.2(d) hereof or
termination by Employer pursuant to Section 3.2(c) hereof, Employer shall have
no continuing obligation to Employee hereunder. In the event of termination by
Employee pursuant to Section 3.2(c) hereof or termination by Employer for any
reason not set forth in Section 3.1 or 3.2 hereof, Employer shall continue to
pay Employee salary, bonus, if any is due, and benefits for the duration of the
term.
4. CHANGE OF CONTROL, SALE.
4.1 Payment Upon Termination. Upon a Change of Control (as defined
herein) of Employer or its holding company, Success Bancshares, Inc.
("Bancshares"), Employer shall pay Employee the sum of two times Employee's
base salary in one lump sum payment or, if such payment is not permissible as a
matter of law, then such other maximum payment, not to exceed two times
Employee's base salary, as is lawful; provided, however, that such payment
shall only be made if Employee is an employee of the Employer immediately prior
to such Change of Control and either (a) within three hundred sixty (360) days
following such Change of Control Employee is terminated by Employer as an
employee of the Employer for any reason or (b) within one hundred eighty (180)
days following such Change of Control Employee terminates her employment with
the Employer as a result of her determination in her sole discretion that she
is not comfortable continuing to work for Employer.
4.2 Change of Control Defined. For purposes of this Agreement, a "Change
of Control" shall be deemed to have occurred upon any of the following events:
(a) The consummation of any of the following transactions: (i) a merger,
recapitalization or other business combination of Employer or Bancshares with
or into another corporation pursuant to which Employer or Bancshares,
respectively, is not the continuing or surviving corporation or pursuant to
which shares of the Common Stock of Employer or Bancshares, as the case may be,
are converted into cash, securities of another corporation or other entity or
other property, other than a transaction in which the holders of the Common
Stock immediately prior to such transaction (including any preliminary or other
transaction relating to such transaction) will continue to own at least
fifty-five (55%) percent of the total voting power of the then-outstanding
securities of the surviving or continuing corporation immediately after such
transaction or (ii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of Employer or Bancshares.
(b) A transaction in which any person (including any "person" as defined
in Section 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), corporation or other entity (other than Employer
or Bancshares, an affiliate thereof or any profit-sharing, employee ownership
or other employee benefit or similar plan sponsored by Employer or Bancshares
or any subsidiaries thereof, or any trustee of or fiduciary with respect to any
such plan when acting in such capacity, or any group comprised solely of such
entities): shall become, through purchase or otherwise, the "beneficial owner"
(as such term is defined in Rule 13d-3 under the Exchange Act), directly or
indirectly (in one transaction or a series of related transactions), of
securities of Employer or Bancshares, as the case may be, representing
forty-five (45%) percent or more of the total voting power of the
then-outstanding securities of Employer or Bancshares, respectively, ordinarily<PAGE>
(and apart from the rights accruing under special circumstances) having the
right to vote in the election of the directors of Employer or Bancshares,
respectively.
(c) If, during any period of two (2) consecutive years, individuals who
at the beginning of such period constituted the entire Board and any new
director whose election by the Board or nomination for election by the
stockholders of Employer or Bancshares, as the case may be, was approved by a
vote of eighty (80%) percent of the directors then still in office who either
were directors at the beginning of the period or whose election or nomination
for election by the stockholders was previously so approved, cease for any
reason to constitute a majority thereof.
4.3 Survival. The provisions of this Section 4 shall survive the
expiration of this Agreement until such time as Employee shall no longer be an
employee of the Employer.
5. PAYMENT BY HOLDING COMPANY
In view of Employee's contribution to Bancshares, any compensation or
benefit provided for herein to Employee may, upon the approval of both the
Boards of Directors of Employer and Bancshares, be paid by Bancshares.
6. NON-SOLICITATION/NON-COMPETITION
6.1 Non-Solicitation. Employee shall not, during the term of Employee's
employment with Employer and for a period of six (6) months after the
termination or expiration thereof, directly or indirectly, hire, offer to hire,
divert, entice away, solicit or in any other manner persuade or attempt to
persuade ("Solicitation") any person who is, or was, at any time within the
twelve (12) months prior to such Solicitation, an officer, director, employee,
agent, lessor, lessee, licensor, licensee, customer, prospective customer,
supplier or shareholder or prospective shareholder of Employer or Bancshares to
discontinue, cease or alter his, her or its relationship with Employer or
Bancshares.
6.2 Non-Competition. Employee shall not, during the term of Employee's
employment with Employer and for a period of six (6) months after the
termination or expiration thereof, except in the event that (a) such
termination occurs upon a Change of Control and otherwise as set forth in
Section 4.1 of this Agreement or (b) Employee is terminated by Employer as an
employee of the Employer for any reason other than one described in Sections
3.2(a), 3.2(b)(i), (ii) or (iii) or 3.2(c), directly or indirectly, within ten
(10) miles of the three (3) largest then-existing offices of Employer: (i)
engage in any business or activity that competes with the business of Employer
or Bancshares; (ii) enter the employ of any person engaged in any business or
activity that competes with the business of Employer or Bancshares or render
any services to any person for use in competing with the business of Employer
or Bancshares; or (iii) have an interest in any person engaged in any business
or activity that competes with the business of Employer or Bancshares, directly
or indirectly, in any capacity, including, without limitation, as an
individual, partner, shareholder, officer, director, principal, agent,
employee, trustee, creditor or consultant or any other relationship or
capacity.
6.3 Remedies Upon Breach. Employee acknowledges and agrees that (a)
Employer shall be irreparably injured in the event of a breach by Employee of<PAGE>
any of Employee's obligations under this Section 6.3; (b) monetary damages
shall not be an adequate remedy for any such breach; (c) Employer shall be
entitled to injunctive relief, in addition to any other remedy which it may
have, in the event of any such breach; and (d) the existence of any claims
which Employee may have against Employer, whether under this Agreement or
otherwise, shall not be a defense to the enforcement by Employer of any of its
rights under this Section 6.3.
6.4 Enforcement. The covenants and obligations of Employee contained in
this Section 6.4 shall be in addition to, and not in lieu of, any covenants and
obligations which Employee may have with respect to the subject matter hereof,
whether by contract, as a matter of law or otherwise, and such covenants and
obligations, and their enforceability, shall survive the termination of this
Agreement.
6.5 Survival. The provisions of this Section 6 shall survive until the
later of (a) six (6) months following the expiration of this Agreement and (b)
six (6) months following the termination of Employee's employment with
Employer.
7. MISCELLANEOUS
7.1 Assignment. This Agreement and all rights and benefits hereunder are
personal to Employee and to Employer. Accordingly, no rights, interests or
benefits hereunder shall be sold, transferred or assigned without the prior
written consent of the other party.
7.2 Employment Status of Employee. It is expressly acknowledged that
Employee, in the performance of her services hereunder, is an employee of
Employer. Accordingly, Employer shall deduct from the compensation paid to
Employee any sums for income tax, social security or any other withholding
taxes as are required by law.
7.3 Changes or Modifications. No change or modification of this
Agreement shall be valid unless the same shall be in writing signed by Employer
and Employee. No waiver of any provision hereof shall be valid unless in
writing and signed by the party against whom charged.
7.4 Entire Agreement. This Agreement constitutes the entire Agreement
between the parties with respect to the matters set forth herein. This
Agreement supersedes any and all other agreements between the parties with
respect to the subject matter.
7.5 Notices. Notice required herein shall be effective when delivered in
person or sent by United States Certified Mail, postage prepaid and addressed
to:
Employer: Board of Directors
Success National Bank
One Marriott Drive
Lincolnshire, Illinois 60069-3703
Employee: Christa N. Calabrese
Success National Bank
One Marriott Drive
Lincolnshire, Illinois 60069-3703. <PAGE>
7.6 Governing Law. This Agreement shall be interpreted, construed and
enforced in accordance with the internal laws of Illinois.
7.7 Separability. The inability or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted.
7.8 Waiver of Breach. The waiver by either party of a breach or
violation of any provision hereof shall not operate as a waiver of any
subsequent breach of the same or any other provision hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the last date written below.
EMPLOYER
SUCCESS NATIONAL BANK
By: /s/ Christa N. Calabrese
-------------------------------------
Name: Christa N. Calabrese
Title: Executive Vice President
EMPLOYEE:
/s/ Christa N. Calabrese
-----------------------------------------
Name: Christa N. Calabrese <PAGE>
SUCCESS BANCSHARES, INC.
STOCK OPTION AGREEMENT
(NON-TRANSFERABLE)
Success Bancshares, Inc., a Delaware corporation (the "Company"), hereby
grants to Christa N. Calabrese (the "Optionee") an option to purchase a total
of 10,000 shares of Common Stock (the "Shares") of the Company, at the price
set forth herein, and in all respects subject to the terms and provisions of
the Company's 1995 Stock Option Plan (the "Plan") applicable to stock options
which terms and provisions are hereby incorporated by reference herein. Unless
otherwise defined or the context herein otherwise requires, the capitalized
terms used herein shall have the same meanings ascribed to them in the Plan.
1 NATURE OF THE OPTION. This Option is intended to be an incentive
stock option within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
2. DATE OF GRANT; TERM OF OPTION. This Option is granted as of September
23, 1998, and it may not be exercised later than September 23, 2008.
3. OPTION EXERCISE PRICE. The Option exercise price is $13.875 per
Share, which price is not less than the fair market value thereof on the date
this Option was granted.
4. EXERCISE OF OPTION. This Option shall be exercisable during its term
only in accordance with the terms and provisions of the Plan and this Option as
follows:
(a) RIGHT TO EXERCISE. The total number of Shares subject to this
Option is 10,000. Subject to the foregoing and the limitations contained
herein and in the Plan, this Option shall vest and be exercisable,
cumulatively, as follows:
Number of Shares Exercisable First Date Option is Exercisable
2,500 September 23, 1999
2,500 September 23, 2000
2,500 September 23, 2001
2,500 September 23, 2002
; provided, however, that, upon any Change of Control (as defined in the Plan),
this Option shall become immediately exercisable as to all Shares remaining
subject to this Option and all restrictions on vesting shall terminate.
(b) METHOD OF EXERCISE. This Option shall be exercisable by written
notice which shall state the election to exercise this Option, the number of
Shares in respect to which this Option is being exercised, and such other
representations and agreements as to the Optionee's investment intent with
respect to such Shares as may be required by the Company hereunder or pursuant
to the provisions of the Plan. Such written notice shall be signed by the
Optionee and shall be delivered in person or by certified mail to the Secretary
of the Company or such other person as may be designated by the Company. The
written notice shall be accompanied by payment of the exercise price. The
exercise price may be paid: (i) in cash; (ii) by check; (iii) by delivering
certificates of other shares of Common Stock of the Company; (iv) by
transferring shares of Common Stock of the Company to the Company's transfer<PAGE>
agent for delivery to the Company provided that the written notice of exercise
is accompanied by a written acknowledgment by the Optionee that the Optionee
has instructed her broker dealer to transfer such shares and such transfer is
confirmed by a letter from such broker dealer acknowledging that the Optionee
has directed such broker dealer to transfer such shares; (v) by Optionee
simultaneously exercising this Option and selling the Shares thereby acquired
pursuant to a brokerage or similar arrangement approved in advance by the Board
(which approval shall not be unreasonably withheld) and to use the proceeds
from such sale to pay the exercise price and any federal, state and local taxes
required to be withheld as a result of such exercise; or (vi) by any other
method of payment approved by the Company's Board of Directors. For purposes
of clauses (iii) and (iv), the value of the shares of Common Stock of the
Company delivered, or to be delivered, as payment of the exercise price shall
be the closing price per share of the Company's Common Stock on the last
business day prior to the date the written notice is actually received and
acknowledged as received by the Company. Upon receipt of payment, the Company
shall deliver to Optionee or the person exercising this Option for Optionee, an
appropriate certificate or certificates for fully paid nonassessable Shares.
For purposes of clause (iv), should any Optionee fail to have the number of
shares required to pay the exercise price delivered to the Company's transfer
agent within 90 days, this Option, with respect to the number of shares stated
in the written notice, will terminate and be deemed to be forfeited by the
Optionee. The certificate or certificates for the Shares as to which the Option
shall be exercised shall be registered in the name of the Optionee and shall be
legended as set forth in the Plan and/or as required under applicable law. This
Option may not be exercised for a fraction of a share.
(c) RESTRICTIONS ON EXERCISE. This Option may not be exercised if
the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities laws or other laws or regulations.
As a condition to the exercise of this Option, the Company may require the
Optionee to make such representations and warranties to the Company as may be
required by any applicable law or regulation.
(d) NO SHAREHOLDER RIGHTS BEFORE EXERCISE AND ISSUANCE. No rights as
a shareholder shall exist with respect to the Shares subject to the Option as a
result of the grant of the Option. Such rights shall exist only after issuance
of a stock certificate in accordance with Article V, Section J of the Plan
following the exercise of the Option as provided in this Agreement and the
Plan.
(e) TERMINATION OF EMPLOYMENT. In the event that the Optionee
ceases to be an employee of the Company or an Affiliate, the exercisability of
the Option is subject to the provisions of Article V, Section G of the Plan.
5. INVESTMENT REPRESENTATIONS. In connection with the acquisition of
this Option, the Optionee represents and warrants as follows:
(a) The Optionee is acquiring this Option, and upon exercise of this
Option, she will be acquiring the Shares, for investment for her own account,
not as a nominee or agent, and not with a view to, or for resale in connection
with, any distribution thereof.
(b) The Optionee has a preexisting business or personal relationship
with the Company or one of its directors, officers or controlling persons and
by reason of her business or financial experience, has, and could be reasonably
assumed to have, the capacity to evaluate the merits and risks of purchasing<PAGE>
Common Stock of the Company and to make an informed investment decision with
respect thereto and to protect Optionee's interests in connection with the
acquisition of this Option and the Shares.
6. WITHHOLDING. The Company reserves the right to withhold, in
accordance with any applicable laws, from any compensation or other
consideration payable to the Optionee, any taxes required to be withheld by
federal, state or local law as a result of the grant or exercise of this Option
or the sale or other disposition of the Shares issued upon exercise of this
Option; and, if such compensation or consideration is insufficient, the Company
may require Optionee to pay to the Company an amount sufficient to cover such
withholding tax liability.
7. NONTRANSFERABILITY OF OPTION. This Option may not be transferred,
assigned, pledged or hypothecated or otherwise disposed of in any way (whether
by operation of law or otherwise) and is not subject to execution, attachment
or similar process. Any attempted transfer, assignment, pledge, hypothecation
or other disposition of this Option or of any rights granted hereunder, or the
levy of any attachment or similar process upon this Option or such rights, will
be null and void. This Option may be exercised during the lifetime of the
Optionee only by such Optionee or her legal guardian. Subject to the foregoing
and the terms of the Plan, the terms of this Option shall be binding upon the
executors, administrators, heirs, successors and permitted assigns of the
Optionee.
8. CONTINUATION OF EMPLOYMENT. Neither the Plan nor this Option shall
(a) confer upon the Optionee any right whatsoever to continue in the employment
of the Company or any Affiliate or (b) limit or restrict in any respect the
rights of the Company, which rights are hereby expressly reserved, to terminate
the Optionee's employment and compensation at any time for any reason
whatsoever, with or without cause, in the Company's sole discretion and with or
without notice.
9. THE PLAN. This Option is subject to, and the Company and the Optionee
agree to be bound by, all the terms and conditions of the Company's Plan as
such Plan may be amended from time to time in accordance with the terms
thereof, provided that no such amendment shall deprive the Optionee, without
her consent, of this Option or any rights hereunder. Pursuant to the Plan, the
Board is authorized to adopt rules and regulations not inconsistent with the
Plan as it shall deem appropriate and proper. A copy of the Plan in its present
form is available for inspection at the Company's principal office during
business hours by the Optionee or the persons entitled to exercise this Option.
10. ENTIRE AGREEMENT. The terms of this Agreement and the Plan constitute the
entire agreement between the Company and the Optionee with respect to the
subject matter hereof and supersede any and all previous agreements between the
Company and the Optionee.
SUCCESS BANCSHARES, INC., a Delaware corporation
Dated as of: September 23, 1998 By: /s/ Christa N. Calabrese
---------------------------------
Name: Christa N. Calabrese
Title: Chief Operating Officer<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into as
of August 1, 1998, by and between Success National Bank, a national banking
organization ("Employer"), and Kurt C. Felde ("Employee").
WHEREAS, Employer and Employee desire to enter into an employment
agreement governed by the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the provisions and undertakings set
forth herein, the parties, intending to be legally bound, hereby agree as
follows:
1. EMPLOYMENT.
1.1 Employment. Employer hereby retains and employs, and Employee
accepts such retention and employment, to provide services hereunder as Senior
Vice President and Chief Financial Officer. Employee shall be accountable to
Employer through its Board of Directors.
1.2 Duties and Obligations. As Senior Vice President and Chief Financial
Officer, Employee shall perform all executive and managerial duties incumbent
upon such position. Employee will devote his full time and attention and give
his best efforts to the performance of such executive and managerial duties.
It is intended that Employee may have other business investments or
directorships and engage in civic, charitable and other such activities so long
as such activities do not interfere with his duties hereunder. Employer shall
not relocate Employee to a location more than 40 miles from the location where
he is presently employed.
1.3 Proprietary Property. Employee acknowledges that in the course of
his employment with Employer, Employer will provide Employee with, or access
to, customer lists, memoranda, files, records, trade secrets and such other
proprietary information and property (collectively, the "Proprietary Property")
as is necessary or desirable to assist Employee in his duties. Employee
acknowledges that the Proprietary Property is the sole and exclusive property
of Employer and is not available to the public at large. Employee agrees that
he shall not, while in the employ of Employer or thereafter, communicate or
divulge to, or use for the benefit of himself or any other person, firm or
corporation, without the prior written consent of Employer, any information
relating to the Proprietary Property. Upon termination of Employee's
employment with Employer, Employee shall thereupon return all Proprietary
Property in his possession or control to Employer.
2. FINANCIAL ARRANGEMENTS.
2.1 Compensation. As Employee's compensation for services provided
hereunder, Employer shall do the following:
(a) Salary. Employer shall pay Employee, pursuant to Employer's payroll
schedule, an annual salary in the amount of $106,000 during the term of this
Agreement, subject to annual review and increase, but not decrease, by the
Board of Directors of Employer.
(b) Bonus. Employer, based upon the sole determination of Employer's
Board of Directors, may grant a bonus to Employee in any year in which it
determines that Employer's performance justifies such a bonus.<PAGE>
(c) Expenses. Employee shall be reimbursed on a monthly basis for all
reasonable business expenses incurred by him in the performance of his duties
hereunder, to the extent such expenses are substantiated and are consistent
with the general policies of Employer relative to expense reimbursement.
(d) Benefits. In addition to any compensation provided under this
Agreement, Employee shall be entitled to participate in and receive benefits
under any and all pension, profit sharing and other employee benefit plans,
insurance programs and other benefit programs which are, from time to time,
maintained by Employer for its senior executive officers, in accordance with
the provisions of such plans or programs as from time to time in effect.
(e) Vacations. Employee shall be entitled to paid vacation days in
accordance with the Employer's Associate Handbook, as such may be amended from
time to time.
3. TERM AND TERMINATION.
3.1 Term. This Agreement shall be effective for a period of two (2)
years from the date hereof.
3.2 Termination. This Agreement may also be terminated on the first to
occur of any of the following events:
(a) Agreement. Written agreement by both parties to terminate this
Agreement.
(b) Negligence; Misconduct. (i) substantial neglect of his duties
hereunder by Employee, (ii) gross misconduct or (iii) any intentional act by
Employee constituting fraud, misappropriation, embezzlement, dishonesty or
similar act which is injurious to Employer. Prior to termination of this
Agreement under Section 3.2(b)(i) and 3.2(b)(ii) only, Employer shall be
required to provide written notice to Employee of the act or omission
complained of, giving reasonably specific details in describing necessary
corrective action, and Employee shall be given a period of sixty (60) days in
which to cure or correct such act or omission. If such act or omission is
cured or corrected, the right of Employer to terminate this Agreement under
Sections 3.2(b)(i) and 3.2(b)(ii) shall be extinguished.
(c) Breach. Excluding actions or events which may cause termination of
this Agreement as provided in Section 3.2(b), in the event of the breach of any
of the terms and conditions of this Agreement by either party and the failure
of the breaching party to correct such breach within ten (10) business days
after receipt of written notice of such breach by the breaching party, such
other party may terminate this Agreement immediately upon written notice of
such termination to the breaching party.
(d) Death or Disability. In the event Employee dies or becomes disabled,
to the extent that he is physically or materially incapacitated for more than
six (6) months in the aggregate so that Employee is unable to perform his
essential duties and functions hereunder, this Agreement may be terminated by
Employer upon written notice to Employee.
(e) Force Majeure. If either party is prevented from performing its
obligations under this Agreement as a result of labor disputes, fire, war,
flood or any other such reason beyond the party's reasonable control, each<PAGE>
party's rights and obligations hereunder shall cease until written notice of
such cessation by either party.
3.3 Effects of Termination. In the event of termination of this
Agreement pursuant to Sections 3.1, 3.2(a), 3.2(b), 3.2(d) or 3.2(e) hereof or
termination by Employer pursuant to Section 3.2(c) hereof, Employer shall have
no continuing obligation to Employee hereunder. In the event of termination by
Employee pursuant to Section 3.2(c) hereof or termination by Employer for any
reason not set forth in Section 3.1 or 3.2 hereof, Employer shall continue to
pay Employee salary, bonus, if any is due, and benefits for the duration of the
term.
4. CHANGE OF CONTROL, SALE.
4.1 Payment Upon Termination. Upon a Change of Control (as defined
herein) of Employer or its holding company, Success Bancshares, Inc.
("Bancshares"), Employer shall pay Employee the sum of one times Employee's
base salary in one lump sum payment or, if such payment is not permissible as a
matter of law, then such other maximum payment, not to exceed one times
Employee's base salary, as is lawful; provided, however, that such payment
shall only be made if (a) Employee is an employee of the Employer immediately
prior to such Change of Control and (b) within one hundred eighty (180) days
following such Change of Control Employee is terminated by Employer as an
employee of the Employer for any reason.
4.2 Change of Control Defined. For purposes of this Agreement, a "Change
of Control" shall be deemed to have occurred upon any of the following events:
(a) The consummation of any of the following transactions: (i) a merger,
recapitalization or other business combination of Employer or Bancshares with
or into another corporation pursuant to which Employer or Bancshares,
respectively, is not the continuing or surviving corporation or pursuant to
which shares of the Common Stock of Employer or Bancshares, as the case may be,
are converted into cash, securities of another corporation or other entity or
other property, other than a transaction in which the holders of the Common
Stock immediately prior to such transaction (including any preliminary or other
transaction relating to such transaction) will continue to own at least
fifty-five (55%) percent of the total voting power of the then-outstanding
securities of the surviving or continuing corporation immediately after such
transaction or (ii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of Employer or Bancshares.
(b) A transaction in which any person (including any "person" as defined
in Section 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), corporation or other entity (other than Employer
or Bancshares, an affiliate thereof or any profit-sharing, employee ownership
or other employee benefit or similar plan sponsored by Employer or Bancshares
or any subsidiaries thereof, or any trustee of or fiduciary with respect to any
such plan when acting in such capacity, or any group comprised solely of such
entities): shall become, through purchase or otherwise, the "beneficial owner"
(as such term is defined in Rule 13d-3 under the Exchange Act), directly or
indirectly (in one transaction or a series of related transactions), of
securities of Employer or Bancshares, as the case may be, representing
forty-five (45%) percent or more of the total voting power of the
then-outstanding securities of Employer or Bancshares, respectively, ordinarily
(and apart from the rights accruing under special circumstances) having the<PAGE>
right to vote in the election of the directors of Employer or Bancshares,
respectively.
(c) If, during any period of two (2) consecutive years, individuals who
at the beginning of such period constituted the entire Board and any new
director whose election by the Board or nomination for election by the
stockholders of Employer or Bancshares, as the case may be, was approved by a
vote of eighty (80%) percent of the directors then still in office who either
were directors at the beginning of the period or whose election or nomination
for election by the stockholders was previously so approved, cease for any
reason to constitute a majority thereof.
5. PAYMENT BY HOLDING COMPANY
In view of Employee's contribution to Bancshares, any compensation or
benefit provided for herein to Employee may, upon the approval of both the
Boards of Directors of Employer and Bancshares, be paid by Bancshares.
6. NON-SOLICITATION/NON-COMPETITION
6.1 Non-Solicitation. Employee shall not, during the term of Employee's
employment with Employer and for a period of six (6) months after the
termination or expiration thereof, directly or indirectly, hire, offer to hire,
divert, entice away, solicit or in any other manner persuade or attempt to
persuade ("Solicitation") any person who is, or was, at any time within the
twelve (12) months prior to such Solicitation, an officer, director, employee,
agent, lessor, lessee, licensor, licensee, customer, prospective customer,
supplier or shareholder or prospective shareholder of Employer or Bancshares to
discontinue, cease or alter his, her or its relationship with Employer or
Bancshares.
6.2 Non-Competition. Employee shall not, during the term of Employee's
employment with Employer and for a period of six (6) months after the
termination or expiration thereof, except in the event that (a) such
termination occurs upon a Change of Control and otherwise as set forth in
Section 4.1 of this Agreement or (b) Employee is terminated by Employer as an
employee of the Employer for any reason other than one described in Sections
3.2(a), 3.2(b)(i), (ii) or (iii) or 3.2(c), directly or indirectly, within five
(5) miles of the three (3) largest then-existing offices of Employer: (i)
engage in any business or activity that competes with the business of Employer
or Bancshares; (ii) enter the employ of any person engaged in any business or
activity that competes with the business of Employer or Bancshares or render
any services to any person for use in competing with the business of Employer
or Bancshares; or (iii) have an interest in any person engaged in any business
or activity that competes with the business of Employer or Bancshares, directly
or indirectly, in any capacity, including, without limitation, as an
individual, partner, shareholder, officer, director, principal, agent,
employee, trustee, creditor or consultant or any other relationship or
capacity.
6.3 Remedies Upon Breach. Employee acknowledges and agrees that (a)
Employer shall be irreparably injured in the event of a breach by Employee of
any of Employee's obligations under this Section 6.3; (b) monetary damages
shall not be an adequate remedy for any such breach; (c) Employer shall be
entitled to injunctive relief, in addition to any other remedy which it may
have, in the event of any such breach; and (d) the existence of any claims
which Employee may have against Employer, whether under this Agreement or<PAGE>
otherwise, shall not be a defense to the enforcement by Employer of any of its
rights under this Section 6.3.
6.4 Enforcement. The covenants and obligations of Employee contained in
this Section 6.4 shall be in addition to, and not in lieu of, any covenants and
obligations which Employee may have with respect to the subject matter hereof,
whether by contract, as a matter of law or otherwise, and such covenants and
obligations, and their enforceability, shall survive the termination of this
Agreement.
6.5 Survival. The provisions of this Section 6 shall survive until the
later of (a) six (6) months following the expiration of this Agreement and (b)
six (6) months following the termination of Employee's employment with
Employer.
7. MISCELLANEOUS
7.1 Assignment. This Agreement and all rights and benefits hereunder are
personal to Employee and to Employer. Accordingly, no rights, interests or
benefits hereunder shall be sold, transferred or assigned without the prior
written consent of the other party.
7.2 Employment Status of Employee. It is expressly acknowledged that
Employee, in the performance of his services hereunder, is an employee of
Employer. Accordingly, Employer shall deduct from the compensation paid to
Employee any sums for income tax, social security or any other withholding
taxes as are required by law.
7.3 Changes or Modifications. No change or modification of this
Agreement shall be valid unless the same shall be in writing signed by Employer
and Employee. No waiver of any provision hereof shall be valid unless in
writing and signed by the party against whom charged.
7.4 Entire Agreement. This Agreement constitutes the entire Agreement
between the parties with respect to the matters set forth herein. This
Agreement supersedes any and all other agreements between the parties with
respect to the subject matter.
7.5 Notices. Notice required herein shall be effective when delivered in
person or sent by United States Certified Mail, postage prepaid and addressed
to:
Employer: Board of Directors
Success National Bank
One Marriott Drive
Lincolnshire, Illinois 60069-3703
Employee: Kurt C. Felde
Success National Bank
One Marriott Drive
Lincolnshire, Illinois 60069-3703.
7.6 Governing Law. This Agreement shall be interpreted, construed and
enforced in accordance with the internal laws of Illinois.<PAGE>
7.7 Separability. The inability or unenforceability of any particular
provision of this Agreement shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted.
7.8 Waiver of Breach. The waiver by either party of a breach or
violation of any provision hereof shall not operate as a waiver of any
subsequent breach of the same or any other provision hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the last date written below.
EMPLOYER
SUCCESS NATIONAL BANK
By: /s/ Christa N. Calabrese
------------------------------------
Name: Christa N. Calabrese
Title: Executive Vice President
EMPLOYEE:
/s/ Kurt C. Felde
-----------------------------------
Name: Kurt C. Felde <PAGE>
SUCCESS BANCSHARES, INC.
STOCK OPTION AGREEMENT
(NON-TRANSFERABLE)
Success Bancshares, Inc., a Delaware corporation (the "Company"), hereby
grants to Kurt C. Felde (the "Optionee") an option to purchase a total of 5,000
shares of Common Stock (the "Shares") of the Company, at the price set forth
herein, and in all respects subject to the terms and provisions of the
Company's 1995 Stock Option Plan (the "Plan") applicable to stock options which
terms and provisions are hereby incorporated by reference herein. Unless
otherwise defined or the context herein otherwise requires, the capitalized
terms used herein shall have the same meanings ascribed to them in the Plan.
1 NATURE OF THE OPTION. This Option is intended to be an incentive
stock option within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
2. DATE OF GRANT; TERM OF OPTION. This Option is granted as of June 25,
1998, and it may not be exercised later than June 24, 2008.
3. OPTION EXERCISE PRICE. The Option exercise price is $14 per Share,
which price is not less than the fair market value thereof on the date this
Option was granted.
4. EXERCISE OF OPTION. This Option shall be exercisable during its term
only in accordance with the terms and provisions of the Plan and this Option as
follows:
(a) RIGHT TO EXERCISE. The total number of Shares subject to this
Option is 5,000. Subject to the foregoing and the limitations contained herein
and in the Plan, this Option shall vest and be exercisable in full on June 25,
1999; provided, however, that, upon any Change of Control (as defined in the
Plan), this Option shall become immediately exercisable as to all Shares
remaining subject to this Option and all restrictions on vesting shall
terminate.
(b) METHOD OF EXERCISE. This Option shall be exercisable by written
notice which shall state the election to exercise this Option, the number of
Shares in respect to which this Option is being exercised, such other
representations and agreements as to the Optionee's investment intent with
respect to such Shares as may be required by the Company hereunder or pursuant
to the provisions of the Plan. Such written notice shall be signed by the
Optionee and shall be delivered in person or by certified mail to the Secretary
of the Company or such other person as may be designated by the Company. The
written notice shall be accompanied by payment of the exercise price . The
exercise price may be paid: (i) in cash; (ii) by check; (iii) by delivering
certificates of other shares of Common Stock of the Company; (iv) by
transferring shares of Common Stock of the Company to the Company's transfer
agent for delivery to the Company provided that the written notice of exercise
is accompanied by a written acknowledgement by the Optionee that the Optionee
has instructed his broker dealer to transfer such shares and such transfer is
confirmed by a letter from such broker dealer acknowledging that the Optionee
has directed such broker dealer to transfer such shares; (v) by Optionee
simultaneously exercising this Option and selling the Shares thereby acquired
pursuant to a brokerage or similar arrangement approved in advance by the Board
(which approval shall not be unreasonably withheld) and to use the proceeds<PAGE>
from such sale to pay the exercise price and any federal, state and local taxes
required to be withheld as a result of such exercise; or (vi) by any other
method of payment approved by the Company's Board of Directors. For purposes
of clauses (iii) and (iv) the value of the shares of Common Stock of the
Company delivered, or to be delivered, as payment of the exercise price shall
be the closing price per share of the Company's Common Stock on the last
business day prior to the date the written notice is actually received and
acknowledged as received by the Company. Upon receipt of payment, the Company
shall deliver to Optionee or the person exercising this Option for Optionee, an
appropriate certificate or certificates for fully paid nonassessable Shares.
For purposes of clause (iv), should any Optionee fail to have the number of
shares required to pay the exercise price delivered to the Company's transfer
agent within 90 days, this Option, with respect to the number of shares stated
in the written notice, will terminate and be deemed to be forfeited by the
Optionee. The certificate or certificates for the Shares as to which the Option
shall be exercised shall be registered in the name of the Optionee and shall be
legended as set forth in the Plan and/or as required under applicable law. This
Option may not be exercised for a fraction of a share.
(c) RESTRICTIONS ON EXERCISE. This Option may not be exercised if
the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities laws or other laws or regulations.
As a condition to the exercise of this Option, the Company may require the
Optionee to make such representations and warranties to the Company as may be
required by any applicable law or regulation.
(d) NO SHAREHOLDER RIGHTS BEFORE EXERCISE AND ISSUANCE. No rights as
a shareholder shall exist with respect to the Shares subject to the Option as a
result of the grant of the Option. Such rights shall exist only after issuance
of a stock certificate in accordance with Article V, Section J of the Plan
following the exercise of the Option as provided in this Agreement and the
Plan.
(e) TERMINATION OF EMPLOYMENT. In the event that the Optionee
ceases to be an employee of the Company or an Affiliate, the exercisability of
the Option is subject to the provisions of Article V, Section G of the Plan.
5. INVESTMENT REPRESENTATIONS. In connection with the acquisition of
this Option, the Optionee represents and warrants as follows:
(a) The Optionee is acquiring this Option, and upon exercise of this
Option, he will be acquiring the Shares, for investment for his own account,
not as a nominee or agent, and not with a view to, or for resale in connection
with, any distribution thereof.
(b) The Optionee has a preexisting business or personal relationship
with the Company or one of its directors, officers or controlling persons and
by reason of his business or financial experience, has, and could be reasonably
assumed to have, the capacity to evaluate the merits and risks of purchasing
Common Stock of the Company and to make an informed investment decision with
respect thereto and to protect Optionee's interests in connection with the
acquisition of this Option and the Shares.
6. WITHHOLDING. The Company reserves the right to withhold, in
accordance with any applicable laws, from any compensation or other
consideration payable to the Optionee, any taxes required to be withheld by
federal, state or local law as a result of the grant or exercise of this Option<PAGE>
or the sale or other disposition of the Shares issued upon exercise of this
Option; and, if such compensation or consideration is insufficient, the Company
may require Optionee to pay to the Company an amount sufficient to cover such
withholding tax liability.
7. NONTRANSFERABILITY OF OPTION. This Option may not be transferred,
assigned, pledged or hypothecated or otherwise disposed of in any way (whether
by operation of law or otherwise) and is not subject to execution, attachment
or similar process. Any attempted transfer, assignment, pledge, hypothecation
or other disposition of this Option or of any rights granted hereunder, or the
levy of any attachment or similar process upon this Option or such rights, will
be null and void. This Option may be exercised during the lifetime of the
Optionee only by such Optionee or his or her legal guardian. Subject to the
foregoing and the terms of the Plan, the terms of this Option shall be binding
upon the executors, administrators, heirs, successors and permitted assigns of
the Optionee.
8. CONTINUATION OF EMPLOYMENT. Neither the Plan nor this Option shall
(a) confer upon the Optionee any right whatsoever to continue in the employment
of the Company or any Affiliate or (b) limit or restrict in any respect the
rights of the Company, which rights are hereby expressly reserved, to terminate
the Optionee's employment and compensation at any time for any reason
whatsoever, with or without cause, in the Company's sole discretion and with or
without notice.
9. THE PLAN. This Option is subject to, and the Company and the Optionee
agree to be bound by, all the terms and conditions of the Company's Plan as
such Plan may be amended from time to time in accordance with the terms
thereof, provided that no such amendment shall deprive the Optionee, without
his consent, of this Option or any rights hereunder. Pursuant to the Plan, the
Board is authorized to adopt rules and regulations not inconsistent with the
Plan as it shall deem appropriate and proper. A copy of the Plan in its present
form is available for inspection at the Company's principal office during
business hours by the Optionee or the persons entitled to exercise this Option.
10. ENTIRE AGREEMENT. The terms of this Agreement and the Plan
constitute the entire agreement between the Company and the Optionee with
respect to the subject matter hereof and supersede any and all previous
agreements between the Company and the Optionee.
SUCCESS BANCSHARES, INC., a Delaware corporation
Dated as of: June 25, 1998 By: /s/ Christa N. Calabrese
-----------------------------------
Name: Christa N. Calabrese
Title: Chief Operating Officer<PAGE>
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
This Amendment (this "Amendment") is made and entered into as of August 1,
1998, by and between Success National Bank, a national banking organization
("Employer"), and Kurt C. Felde ("Employee").
WHEREAS, Employer and Employee have entered into an Employment Agreement
dated as of August 1, 1998 (the "Employment Agreement"); and
WHEREAS, Employer and Employee desire to amend the Employment Agreement as
set forth below.
NOW, THEREFORE, in consideration of the provisions and undertakings set
forth herein, the parties, intending to be legally bound, hereby agree as
follows:
1. AMENDMENT. Section 2.1 of the Employment Agreement is hereby amended by
adding the following subsection thereto:
"(f) Automobile Allowance. Employee shall be entitled to the use of an
automobile provided by Employer and Employer shall be responsible, and shall
not be entitled to reimbursement for, any and all reasonable costs and expenses
relating to the use and maintenance of such automobile to the extent such costs
and expenses are substantiated by Employee."
2. MISCELLANEOUS
2.1 Sole Amendment. The Employment Agreement shall not be amended except
as expressly set forth herein.
2.2 Governing Law. This Amendment shall be interpreted, construed and
enforced in accordance with the internal laws of Illinois.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the last date written below.
EMPLOYER
SUCCESS NATIONAL BANK
By: /s/ Christa N. Calabrese
- ---------------------------------------------
Name: Christa N. Calabrese
Title: Executive Vice President
EMPLOYEE:
/s/ Kurt C. Felde
- ---------------------------------------------
Name: Kurt C. Felde<PAGE>
SUCCESS BANCSHARES, INC.
STOCK OPTION AGREEMENT
(NON-TRANSFERABLE)
Success Bancshares, Inc., a Delaware corporation (the "Company"), hereby
grants to Charles G. Freud (the "Optionee") an option to purchase a total of
5,000 shares of Common Stock (the "Shares") of the Company, at the price set
forth herein, and in all respects subject to the terms and provisions of the
Company's 1995 Stock Option Plan (the "Plan") applicable to stock options which
terms and provisions are hereby incorporated by reference herein. Unless
otherwise defined or the context herein otherwise requires, the capitalized
terms used herein shall have the same meanings ascribed to them in the Plan.
1 DATE OF GRANT; TERM OF OPTION. This Option is granted as of August
26, 1998, and it may not be exercised later than August 26, 2008.
2. OPTION EXERCISE PRICE. The Option exercise price is $14.50 per Share,
which price is not less than the fair market value thereof on the date this
Option was granted.
3. EXERCISE OF OPTION. This Option shall be exercisable during its term
only in accordance with the terms and provisions of the Plan and this Option as
follows:
(a) RIGHT TO EXERCISE. The total number of Shares subject to this
Option is 5,000. Subject to the foregoing and the limitations contained herein
and in the Plan, this Option shall vest and be exercisable in full on August
26, 1999; provided, however, that, upon any Change of Control (as defined in
the Plan), this Option shall become immediately exercisable as to all Shares
remaining subject to this Option and all restrictions on vesting shall
terminate.
(b) METHOD OF EXERCISE. This Option shall be exercisable by written
notice which shall state the election to exercise this Option, the number of
Shares in respect to which this Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such Shares as may be required by the Company hereunder or pursuant
to the provisions of the Plan. Such written notice shall be signed by the
Optionee and shall be delivered in person or by certified mail to the Secretary
of the Company or such other person as may be designated by the Company. The
written notice shall be accompanied by payment of the exercise price. The
exercise price may be paid: (i) in cash; (ii) by check; (iii) by delivering
certificates of other shares of Common Stock of the Company; (iv) by
transferring shares of Common Stock of the Company to the Company's transfer
agent for delivery to the Company provided that the written notice of exercise
is accompanied by a written acknowledgment by the Optionee that the Optionee
has instructed his broker dealer to transfer such shares and such transfer is
confirmed by a letter from such broker dealer acknowledging that the Optionee
has directed such broker dealer to transfer such shares; (v) by Optionee
simultaneously exercising this Option and selling the Shares thereby acquired
pursuant to a brokerage or similar arrangement approved in advance by the Board
(which approval shall not be unreasonably withheld) and to use the proceeds
from such sale to pay the exercise price and any federal, state and local taxes
required to be withheld as a result of such exercise; or (vi) by any other
method of payment approved by the Company's Board of Directors. For purposes
of clauses (iii) and (iv), the value of the shares of Common Stock of the
Company delivered, or to be delivered, as payment of the exercise price shall<PAGE>
be the closing price per share of the Company's Common Stock on the last
business day prior to the date the written notice is actually received and
acknowledged as received by the Company. Upon receipt of payment, the Company
shall deliver to Optionee or the person exercising this Option for Optionee, an
appropriate certificate or certificates for fully paid nonassessable Shares.
For purposes of clause (iv), should any Optionee fail to have the number of
shares required to pay the exercise price delivered to the Company's transfer
agent within 90 days, this Option, with respect to the number of shares stated
in the written notice, will terminate and be deemed to be forfeited by the
Optionee. The certificate or certificates for the Shares as to which the Option
shall be exercised shall be registered in the name of the Optionee and shall be
legended as set forth in the Plan and/or as required under applicable law. This
Option may not be exercised for a fraction of a share.
(c) RESTRICTIONS ON EXERCISE. This Option may not be exercised if
the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities laws or other laws or regulations.
As a condition to the exercise of this Option, the Company may require the
Optionee to make such representations and warranties to the Company as may be
required by any applicable law or regulation.
(d) NO SHAREHOLDER RIGHTS BEFORE EXERCISE AND ISSUANCE. No rights as
a shareholder shall exist with respect to the Shares subject to the Option as a
result of the grant of the Option. Such rights shall exist only after issuance
of a stock certificate in accordance with Article V, Section J of the Plan
following the exercise of the Option as provided in this Agreement and the
Plan.
(e) TERMINATION OF EMPLOYMENT. In the event that the Optionee
ceases to be a Key Non-Employee of the Company or an Affiliate, the
exercisability of the Option is subject to the provisions of Article V, Section
G of the Plan.
4. INVESTMENT REPRESENTATIONS. In connection with the acquisition of
this Option, the Optionee represents and warrants as follows:
(a) The Optionee is acquiring this Option, and upon exercise of this
Option, he will be acquiring the Shares, for investment for his own account,
not as a nominee or agent, and not with a view to, or for resale in connection
with, any distribution thereof.
(b) The Optionee has a preexisting business or personal relationship
with the Company or one of its directors, officers or controlling persons and
by reason of his business or financial experience, has, and could be reasonably
assumed to have, the capacity to evaluate the merits and risks of purchasing
Common Stock of the Company and to make an informed investment decision with
respect thereto and to protect Optionee's interests in connection with the
acquisition of this Option and the Shares.
5. WITHHOLDING. The Company reserves the right to withhold, in
accordance with any applicable laws, from any compensation or other
consideration payable to the Optionee, any taxes required to be withheld by
federal, state or local law as a result of the grant or exercise of this Option
or the sale or other disposition of the Shares issued upon exercise of this
Option; and, if such compensation or consideration is insufficient, the Company
may require Optionee to pay to the Company an amount sufficient to cover such
withholding tax liability. <PAGE>
6. NONTRANSFERABILITY OF OPTION. This Option may not be transferred,
assigned, pledged or hypothecated or otherwise disposed of in any way (whether
by operation of law or otherwise) and is not subject to execution, attachment
or similar process. Any attempted transfer, assignment, pledge, hypothecation
or other disposition of this Option or of any rights granted hereunder, or the
levy of any attachment or similar process upon this Option or such rights, will
be null and void. This Option may be exercised during the lifetime of the
Optionee only by such Optionee or his legal guardian. Subject to the foregoing
and the terms of the Plan, the terms of this Option shall be binding upon the
executors, administrators, heirs, successors and permitted assigns of the
Optionee.
7. CONTINUATION OF EMPLOYMENT. Neither the Plan nor this Option shall
(a) confer upon the Optionee any right whatsoever to continue to serve as a Key
Non-Employee of the Company or any Affiliate or (b) limit or restrict in any
respect the rights of the Company, which rights are hereby expressly reserved,
to terminate the Optionee's service as a Key Non-Employee and any compensation
being paid to Optionee at any time for any reason whatsoever, with or without
cause, in the Company's sole discretion and with or without notice.
8. THE PLAN. This Option is subject to, and the Company and the
Optionee agree to be bound by, all the terms and conditions of the Company's
Plan as such Plan may be amended from time to time in accordance with the terms
thereof, provided that no such amendment shall deprive the Optionee, without
his consent, of this Option or any rights hereunder. Pursuant to the Plan, the
Board is authorized to adopt rules and regulations not inconsistent with the
Plan as it shall deem appropriate and proper. A copy of the Plan in its present
form is available for inspection at the Company's principal office during
business hours by the Optionee or the persons entitled to exercise this Option.
9. ENTIRE AGREEMENT. The terms of this Agreement and the Plan
constitute the entire agreement between the Company and the Optionee with
respect to the subject matter hereof and supersede any and all previous
agreements between the Company and the Optionee.
SUCCESS BANCSHARES, INC., a Delaware corporation
Dated as of: August 26, 1998 By: /s/ Christa N. Calabrese
-----------------------------------------
Name: Christa N. Calabrese
Title: Chief Operating Officer<PAGE>
SUCCESS BANCSHARES, INC.
STOCK OPTION AGREEMENT
(NON-TRANSFERABLE)
Success Bancshares, Inc., a Delaware corporation (the "Company"), hereby
grants to Avrom H. Goldfeder (the "Optionee") an option to purchase a total of
5,000 shares of Common Stock (the "Shares") of the Company, at the price set
forth herein, and in all respects subject to the terms and provisions of the
Company's 1995 Stock Option Plan (the "Plan") applicable to stock options which
terms and provisions are hereby incorporated by reference herein. Unless
otherwise defined or the context herein otherwise requires, the capitalized
terms used herein shall have the same meanings ascribed to them in the Plan.
1 DATE OF GRANT; TERM OF OPTION. This Option is granted as of August
26, 1998, and it may not be exercised later than August 26, 2008.
2. OPTION EXERCISE PRICE. The Option exercise price is $14.50 per Share,
which price is not less than the fair market value thereof on the date this
Option was granted.
3. EXERCISE OF OPTION. This Option shall be exercisable during its term
only in accordance with the terms and provisions of the Plan and this Option as
follows:
(a) RIGHT TO EXERCISE. The total number of Shares subject to this
Option is 5,000. Subject to the foregoing and the limitations contained herein
and in the Plan, this Option shall vest and be exercisable in full on August
26, 1999; provided, however, that, upon any Change of Control (as defined in
the Plan), this Option shall become immediately exercisable as to all Shares
remaining subject to this Option and all restrictions on vesting shall
terminate.
(b) METHOD OF EXERCISE. This Option shall be exercisable by written
notice which shall state the election to exercise this Option, the number of
Shares in respect to which this Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such Shares as may be required by the Company hereunder or pursuant
to the provisions of the Plan. Such written notice shall be signed by the
Optionee and shall be delivered in person or by certified mail to the Secretary
of the Company or such other person as may be designated by the Company. The
written notice shall be accompanied by payment of the exercise price. The
exercise price may be paid: (i) in cash; (ii) by check; (iii) by delivering
certificates of other shares of Common Stock of the Company; (iv) by
transferring shares of Common Stock of the Company to the Company's transfer
agent for delivery to the Company provided that the written notice of exercise
is accompanied by a written acknowledgment by the Optionee that the Optionee
has instructed his broker dealer to transfer such shares and such transfer is
confirmed by a letter from such broker dealer acknowledging that the Optionee
has directed such broker dealer to transfer such shares; (v) by Optionee
simultaneously exercising this Option and selling the Shares thereby acquired
pursuant to a brokerage or similar arrangement approved in advance by the Board
(which approval shall not be unreasonably withheld) and to use the proceeds
from such sale to pay the exercise price and any federal, state and local taxes
required to be withheld as a result of such exercise; or (vi) by any other
method of payment approved by the Company's Board of Directors. For purposes
of clauses (iii) and (iv), the value of the shares of Common Stock of the<PAGE>
Company delivered, or to be delivered, as payment of the exercise price shall
be the closing price per share of the Company's Common Stock on the last
business day prior to the date the written notice is actually received and
acknowledged as received by the Company. Upon receipt of payment, the Company
shall deliver to Optionee or the person exercising this Option for Optionee, an
appropriate certificate or certificates for fully paid nonassessable Shares.
For purposes of clause (iv), should any Optionee fail to have the number of
shares required to pay the exercise price delivered to the Company's transfer
agent within 90 days, this Option, with respect to the number of shares stated
in the written notice, will terminate and be deemed to be forfeited by the
Optionee. The certificate or certificates for the Shares as to which the Option
shall be exercised shall be registered in the name of the Optionee and shall be
legended as set forth in the Plan and/or as required under applicable law. This
Option may not be exercised for a fraction of a share.
(c) RESTRICTIONS ON EXERCISE. This Option may not be exercised if
the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities laws or other laws or regulations.
As a condition to the exercise of this Option, the Company may require the
Optionee to make such representations and warranties to the Company as may be
required by any applicable law or regulation.
(d) NO SHAREHOLDER RIGHTS BEFORE EXERCISE AND ISSUANCE. No rights as
a shareholder shall exist with respect to the Shares subject to the Option as a
result of the grant of the Option. Such rights shall exist only after issuance
of a stock certificate in accordance with Article V, Section J of the Plan
following the exercise of the Option as provided in this Agreement and the
Plan.
(e) TERMINATION OF EMPLOYMENT. In the event that the Optionee
ceases to be a Key Non-Employee of the Company or an Affiliate, the
exercisability of the Option is subject to the provisions of Article V, Section
G of the Plan.
4. INVESTMENT REPRESENTATIONS. In connection with the acquisition of
this Option, the Optionee represents and warrants as follows:
(a) The Optionee is acquiring this Option, and upon exercise of this
Option, he will be acquiring the Shares, for investment for his own account,
not as a nominee or agent, and not with a view to, or for resale in connection
with, any distribution thereof.
(b) The Optionee has a preexisting business or personal relationship
with the Company or one of its directors, officers or controlling persons and
by reason of his business or financial experience, has, and could be reasonably
assumed to have, the capacity to evaluate the merits and risks of purchasing
Common Stock of the Company and to make an informed investment decision with
respect thereto and to protect Optionee's interests in connection with the
acquisition of this Option and the Shares.
5. WITHHOLDING. The Company reserves the right to withhold, in
accordance with any applicable laws, from any compensation or other
consideration payable to the Optionee, any taxes required to be withheld by
federal, state or local law as a result of the grant or exercise of this Option
or the sale or other disposition of the Shares issued upon exercise of this
Option; and, if such compensation or consideration is insufficient, the Company<PAGE>
may require Optionee to pay to the Company an amount sufficient to cover such
withholding tax liability.
6. NONTRANSFERABILITY OF OPTION. This Option may not be transferred,
assigned, pledged or hypothecated or otherwise disposed of in any way (whether
by operation of law or otherwise) and is not subject to execution, attachment
or similar process. Any attempted transfer, assignment, pledge, hypothecation
or other disposition of this Option or of any rights granted hereunder, or the
levy of any attachment or similar process upon this Option or such rights, will
be null and void. This Option may be exercised during the lifetime of the
Optionee only by such Optionee or his legal guardian. Subject to the foregoing
and the terms of the Plan, the terms of this Option shall be binding upon the
executors, administrators, heirs, successors and permitted assigns of the
Optionee.
7. CONTINUATION OF EMPLOYMENT. Neither the Plan nor this Option shall
(a) confer upon the Optionee any right whatsoever to continue to serve as a Key
Non-Employee of the Company or any Affiliate or (b) limit or restrict in any
respect the rights of the Company, which rights are hereby expressly reserved,
to terminate the Optionee's service as a Key Non-Employee and any compensation
being paid to Optionee at any time for any reason whatsoever, with or without
cause, in the Company's sole discretion and with or without notice.
8. THE PLAN. This Option is subject to, and the Company and the
Optionee agree to be bound by, all the terms and conditions of the Company's
Plan as such Plan may be amended from time to time in accordance with the terms
thereof, provided that no such amendment shall deprive the Optionee, without
his consent, of this Option or any rights hereunder. Pursuant to the Plan, the
Board is authorized to adopt rules and regulations not inconsistent with the
Plan as it shall deem appropriate and proper. A copy of the Plan in its present
form is available for inspection at the Company's principal office during
business hours by the Optionee or the persons entitled to exercise this Option.
9. ENTIRE AGREEMENT. The terms of this Agreement and the Plan
constitute the entire agreement between the Company and the Optionee with
respect to the subject matter hereof and supersede any and all previous
agreements between the Company and the Optionee.
SUCCESS BANCSHARES, INC., a Delaware corporation
Dated as of: August 26, 1998 By: /s/ Christa N. Calabrese
-------------------------------------------
Name: Christa N. Calabrese
Title: Chief Operating Officer<PAGE>
SUCCESS BANCSHARES, INC.
STOCK OPTION AGREEMENT
(NON-TRANSFERABLE)
Success Bancshares, Inc., a Delaware corporation (the "Company"), hereby
grants to Samuel D. Kahan (the "Optionee") an option to purchase a total of
5,000 shares of Common Stock (the "Shares") of the Company, at the price set
forth herein, and in all respects subject to the terms and provisions of the
Company's 1995 Stock Option Plan (the "Plan") applicable to stock options which
terms and provisions are hereby incorporated by reference herein. Unless
otherwise defined or the context herein otherwise requires, the capitalized
terms used herein shall have the same meanings ascribed to them in the Plan.
1 DATE OF GRANT; TERM OF OPTION. This Option is granted as of August
26, 1998, and it may not be exercised later than August 26, 2008.
2. OPTION EXERCISE PRICE. The Option exercise price is $14.50 per Share,
which price is not less than the fair market value thereof on the date this
Option was granted.
3. EXERCISE OF OPTION. This Option shall be exercisable during its term
only in accordance with the terms and provisions of the Plan and this Option as
follows:
(a) RIGHT TO EXERCISE. The total number of Shares subject to this
Option is 5,000. Subject to the foregoing and the limitations contained herein
and in the Plan, this Option shall vest and be exercisable in full on August
26, 1999; provided, however, that, upon any Change of Control (as defined in
the Plan), this Option shall become immediately exercisable as to all Shares
remaining subject to this Option and all restrictions on vesting shall
terminate.
(b) METHOD OF EXERCISE. This Option shall be exercisable by written
notice which shall state the election to exercise this Option, the number of
Shares in respect to which this Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such Shares as may be required by the Company hereunder or pursuant
to the provisions of the Plan. Such written notice shall be signed by the
Optionee and shall be delivered in person or by certified mail to the Secretary
of the Company or such other person as may be designated by the Company. The
written notice shall be accompanied by payment of the exercise price. The
exercise price may be paid: (i) in cash; (ii) by check; (iii) by delivering
certificates of other shares of Common Stock of the Company; (iv) by
transferring shares of Common Stock of the Company to the Company's transfer
agent for delivery to the Company provided that the written notice of exercise
is accompanied by a written acknowledgment by the Optionee that the Optionee
has instructed his broker dealer to transfer such shares and such transfer is
confirmed by a letter from such broker dealer acknowledging that the Optionee
has directed such broker dealer to transfer such shares; (v) by Optionee
simultaneously exercising this Option and selling the Shares thereby acquired
pursuant to a brokerage or similar arrangement approved in advance by the Board
(which approval shall not be unreasonably withheld) and to use the proceeds
from such sale to pay the exercise price and any federal, state and local taxes
required to be withheld as a result of such exercise; or (vi) by any other
method of payment approved by the Company's Board of Directors. For purposes
of clauses (iii) and (iv), the value of the shares of Common Stock of the<PAGE>
Company delivered, or to be delivered, as payment of the exercise price shall
be the closing price per share of the Company's Common Stock on the last
business day prior to the date the written notice is actually received and
acknowledged as received by the Company. Upon receipt of payment, the Company
shall deliver to Optionee or the person exercising this Option for Optionee, an
appropriate certificate or certificates for fully paid nonassessable Shares.
For purposes of clause (iv), should any Optionee fail to have the number of
shares required to pay the exercise price delivered to the Company's transfer
agent within 90 days, this Option, with respect to the number of shares stated
in the written notice, will terminate and be deemed to be forfeited by the
Optionee. The certificate or certificates for the Shares as to which the Option
shall be exercised shall be registered in the name of the Optionee and shall be
legended as set forth in the Plan and/or as required under applicable law. This
Option may not be exercised for a fraction of a share.
(c) RESTRICTIONS ON EXERCISE. This Option may not be exercised if
the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities laws or other laws or regulations.
As a condition to the exercise of this Option, the Company may require the
Optionee to make such representations and warranties to the Company as may be
required by any applicable law or regulation.
(d) NO SHAREHOLDER RIGHTS BEFORE EXERCISE AND ISSUANCE. No rights as
a shareholder shall exist with respect to the Shares subject to the Option as a
result of the grant of the Option. Such rights shall exist only after issuance
of a stock certificate in accordance with Article V, Section J of the Plan
following the exercise of the Option as provided in this Agreement and the
Plan.
(e) TERMINATION OF EMPLOYMENT. In the event that the Optionee
ceases to be a Key Non-Employee of the Company or an Affiliate, the
exercisability of the Option is subject to the provisions of Article V, Section
G of the Plan.
4. INVESTMENT REPRESENTATIONS. In connection with the acquisition of
this Option, the Optionee represents and warrants as follows:
(a) The Optionee is acquiring this Option, and upon exercise of this
Option, he will be acquiring the Shares, for investment for his own account,
not as a nominee or agent, and not with a view to, or for resale in connection
with, any distribution thereof.
(b) The Optionee has a preexisting business or personal relationship
with the Company or one of its directors, officers or controlling persons and
by reason of his business or financial experience, has, and could be reasonably
assumed to have, the capacity to evaluate the merits and risks of purchasing
Common Stock of the Company and to make an informed investment decision with
respect thereto and to protect Optionee's interests in connection with the
acquisition of this Option and the Shares.
5. WITHHOLDING. The Company reserves the right to withhold, in
accordance with any applicable laws, from any compensation or other
consideration payable to the Optionee, any taxes required to be withheld by
federal, state or local law as a result of the grant or exercise of this Option
or the sale or other disposition of the Shares issued upon exercise of this
Option; and, if such compensation or consideration is insufficient, the Company<PAGE>
may require Optionee to pay to the Company an amount sufficient to cover such
withholding tax liability.
6. NONTRANSFERABILITY OF OPTION. This Option may not be transferred,
assigned, pledged or hypothecated or otherwise disposed of in any way (whether
by operation of law or otherwise) and is not subject to execution, attachment
or similar process. Any attempted transfer, assignment, pledge, hypothecation
or other disposition of this Option or of any rights granted hereunder, or the
levy of any attachment or similar process upon this Option or such rights, will
be null and void. This Option may be exercised during the lifetime of the
Optionee only by such Optionee or his legal guardian. Subject to the foregoing
and the terms of the Plan, the terms of this Option shall be binding upon the
executors, administrators, heirs, successors and permitted assigns of the
Optionee.
7. CONTINUATION OF EMPLOYMENT. Neither the Plan nor this Option shall
(a) confer upon the Optionee any right whatsoever to continue to serve as a Key
Non-Employee of the Company or any Affiliate or (b) limit or restrict in any
respect the rights of the Company, which rights are hereby expressly reserved,
to terminate the Optionee's service as a Key Non-Employee and any compensation
being paid to Optionee at any time for any reason whatsoever, with or without
cause, in the Company's sole discretion and with or without notice.
8. THE PLAN. This Option is subject to, and the Company and the
Optionee agree to be bound by, all the terms and conditions of the Company's
Plan as such Plan may be amended from time to time in accordance with the terms
thereof, provided that no such amendment shall deprive the Optionee, without
his consent, of this Option or any rights hereunder. Pursuant to the Plan, the
Board is authorized to adopt rules and regulations not inconsistent with the
Plan as it shall deem appropriate and proper. A copy of the Plan in its present
form is available for inspection at the Company's principal office during
business hours by the Optionee or the persons entitled to exercise this Option.
9. ENTIRE AGREEMENT. The terms of this Agreement and the Plan
constitute the entire agreement between the Company and the Optionee with
respect to the subject matter hereof and supersede any and all previous
agreements between the Company and the Optionee.
SUCCESS BANCSHARES, INC., a Delaware corporation
Dated as of: August 26, 1998 By: /s/ Christa N. Calabrese
------------------------------------------
Name: Christa N. Calabrese
Title: Chief Operating Officer<PAGE>
