<PAGE> 1
As filed with the Securities and Exchange Commission on June 3, 1997.
Registration No. 333-__________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_______________________
RELIANCE BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
WISCONSIN 39-1834823
(State of incorporation) (I.R.S. Employer Identification No.)
RELIANCE BANCSHARES, INC. 1997 STOCK OPTION PLAN
RELIANCE SAVINGS BANK RECOGNITION AND RETENTION PLAN
(Full title of the plans)
3140 SOUTH 27TH STREET
MILWAUKEE, WISCONSIN 53215
(Address of Principal Executive Offices)
ALLAN T. BACH
PRESIDENT AND CHIEF EXECUTIVE OFFICER
RELIANCE BANCSHARES, INC.
3140 SOUTH 27TH STREET
MILWAUKEE, WISCONSIN 53215
(414) 671-2222
(Telephone number, including area code, of agent for service)
______________________________
Copy to:
PATRICK J. MARGET, ESQ.
MICHAEL BEST & FRIEDRICH
100 EAST WISCONSIN AVENUE
SUITE 3100
MILWAUKEE, WISCONSIN 53202
(414) 271-6560
________________________________
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 check the following box. [x]
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=====================================================================================================================
TITLE OF EACH PROPOSED PROPOSED
CLASS OF AMOUNT MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
BE REGISTERED REGISTERED(1) PER SHARE PRICE FEE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 358,728 shares(2) $ 7.81(3) $2,801,666 $849
($1.00 Par Value)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Together with an indeterminate number of additional shares which may
be necessary to adjust the number of shares reserved for issuance
pursuant to the Reliance Bancshares, Inc. 1997 Stock Option Plan (the
"Stock Option Plan") and the Reliance Savings Bank Recognition and
Retention Plan (the "Retention Plan").
(2) Represents 256,234 shares reserved for issuance under the Stock Option
Plan and 102,494 shares reserved for issuance under the Rentention
Plan.
(3) Based upon the $7.81 exercise price for options issued under the Stock
Option Plan and the value of the shares awarded under the Retention
Plan as of the grant date ($7.81) in accordance with Rule 457(h)(1).
________________________________________________
This Registration Statement shall become effective automatically upon
the date of filing in accordance with Section 8(a) of the Securities Act of
1933, as amended, and 17 C.F.R. Section 230.462.
Total number of pages: 7.
Exhibit index on page: 7.
<PAGE> 3
PART I. INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEMS 1 AND 2. PLAN INFORMATION AND REGISTRANT INFORMATION AND
EMPLOYEE PLAN ANNUAL INFORMATION.
The information required by Part I is included in documents
sent or given to participants in the Reliance Bancshares, Inc. 1997 Stock
Option Plan (the "Stock Option Plan") and the Reliance Savings Bank Recognition
and Retention Plan (the "Retention Plan") (collectively referred to as the
"Plans") pursuant to Rule 428(b)(1). Such documents are not being filed with
the Securities and Exchange Commission (the "Commission") either as part of
this Registration Statement or as prospectuses or prospectus supplements
pursuant to Rule 424 in reliance on Rule 428.
PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed by Reliance Bancshares, Inc.
(the "Registrant" or "Company") with the Commission are incorporated herein by
reference and made a part hereof:
(a) The Registrant's latest Annual Report on Form 10-KSB,
filed on September 27, 1996, which includes the
consolidated statements of operations, retained
earnings and cash flows for each of the three years
in the period ended June 30, 1996, and the
consolidated balance sheets at June 30, 1996 and
1995, together with related notes and report of
independent auditors (dated July 19, 1996).
(b) All other reports filed pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934, as
amended, since the end of the last fiscal year for
which financial statements were included in the
report referred to in (a) above.
(c) The description of the Registrant's common stock,
$1.00 par value per share, contained in the
Registrant's Prospectus, dated April 18, 1996, and
included in its Registration Statement on Form SB-2
(File No. 33-99706), which was declared effective by
the Commission on February 29, 1996, and Amendment
Nos. 1 and 2 to such Registration Statement on Form
SB-2, filed on January 23, 1996 and February 21,
1996, respectively.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities remaining
unsold, shall be deemed to be incorporated by reference herein and to be a part
hereof from the date of the filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not Applicable.
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ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant is incorporated under the Wisconsin Business
Corporation Law ("WBCL"). Under Section 180.0851(1) of the WBCL, the
Registrant is required to indemnify a director or officer, to the extent such
person is successful on the merits or otherwise in the defense of a proceeding,
for all reasonable expenses incurred in the proceeding if such person was a
party because he or she was a director or officer of the Registrant. In all
other cases, the Registrant is required by Section 180.0851(2) to indemnify a
director or officer against liability incurred in a proceeding to which such a
person was a party because he or she was a director or officer of the
Registrant, unless it is determined that he or she breached or failed to
perform a duty owed to the Registrant and the breach or failure to perform
constitutes: (i) a willful failure to deal fairly with the Registrant or its
shareholders in connection with a matter in which the director or officer has a
material conflict of interest; (ii) a violation of criminal law, unless the
director or officer had reasonable cause to believe his or her conduct was
lawful or no reasonable cause to believe his or her conduct was unlawful; (iii)
a transaction from which the director or officer derived an improper personal
profit; or (iv) willful misconduct. Section 180.0858(1) provides that, subject
to certain limitations, the mandatory indemnification provisions do not
preclude any additional right to indemnification or allowance of expenses that
a director or officer may have under the Registrant's articles of
incorporation, bylaws, a written agreement or a resolution of the Board of
Directors or shareholders.
Section 180.0859 of the WBCL provides that it is the public
policy of the State of Wisconsin to require or permit indemnification,
allowance of expenses and insurance to the extent required to be permitted
under Sections 180.0850 to 180.0858 of the WBCL, for any liability incurred in
connection with a proceeding involving a federal or state statute, rule or
regulation regulating the offer, sale or purchase of securities.
Section 180.0828 of the WBCL provides that, with certain
exceptions, a director is not liable to a corporation, its shareholders, or any
person asserting rights on behalf of the corporation or its shareholders, for
damages, settlements, fees, fines, penalties or other monetary liabilities
arising from a breach of, or failure to perform, any duty resulting solely from
his or her status as a director, unless the person asserting liability proves
that the breach or failure to perform constitutes any of the four exceptions to
mandatory indemnification under Section 180.0851(2) referred to above.
Section 180.0833 of the WBCL provides that, with certain
exceptions, directors of the Registrant against whom claims are asserted with
respect to the declaration of improper dividends or distributions to
shareholders or certain other improper acts which they approved are entitled to
contribution from other directors who approved such actions and from
shareholders who knowingly accepted an improper dividend or distribution, as
provided therein. In addition, Articles VIII and IX of the Registrant's
Articles of Incorporation provide as follows:
"Article VIII. Indemnification."
A. Each person who was or is made a party or is
threatened to be made a party to or is otherwise
involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of service as
a director or officer of the Corporation or is or was
serving or has agreed to serve at the request of the
Corporation as a director or officer of another
corporation, including, without limitation, any
subsidiary, partnership, joint venture, trust or
other enterprise, including service with respect to
an employee benefit plan (hereinafter an
"indemnitee"), whether the basis of such proceeding
is alleged action in their capacity as a director or
officer or in any other capacity while serving as
such, shall be indemnified and held harmless to the
fullest extent authorized by the WBCL, as the same
exists or may hereafter be amended (but, in the case
of any amendment, only to the extent the amendment
permits the Corporation to provide broader
indemnification rights than such law permitted prior
to amendment), against all expense, liability and
loss (including attorneys' fees, judgments, fines,
Employee Retirement Income Security Act of 1974
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<PAGE> 5
excise taxes or penalties and amounts paid in
settlement) reasonably incurred or suffered by the
indemnitee in connection therewith; provided,
however, that, except as provided in Section C of
this Article VIII with respect to proceedings to
enforce rights to indemnification, the Corporation
shall indemnify such indemnitee in connection with a
proceeding (or part thereof) initiated by the
indemnitee only if the proceeding (or part thereof)
was authorized by the Board pursuant to the WBCL on
written request by the indemnitee to the
Corporation.
B. The right to indemnification conferred in Section A
of this Article VIII shall include the right to be
paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final
disposition ("advancement of expenses"); provided,
that if the WBCL requires, an advancement of expenses
incurred by an indemnitee in his or her capacity as a
director or officer (and not in any other capacity in
which service was or is rendered by such indemnitee,
including, without limitation, service to an employee
benefit plan) shall be made only upon delivery to the
Corporation of an undertaking ("undertaking"), by or
on behalf of the indemnitee, to repay all amounts so
advanced if it is ultimately determined by final
judicial decision from which there is no further
right to appeal ("final adjudication") that the
indemnitee is not entitled to indemnification for
expenses under this Section B or otherwise, together
with a written affirmation by the indemnitee of his
or her good faith belief that he or she has not
breached or failed his or her duties to the
Corporation. The rights to indemnification and to
the advancement of expenses conferred in Sections A
and B of this Article VIII shall be contract rights
and such rights shall continue as to an indemnitee
who has ceased to be a director or officer and shall
inure to the benefit of the indemnitee's heirs,
executors and administrators.
C. The rights to indemnifications and to advancement of
expenses conferred in this Article VIII shall not be
exclusive of any other right which any person may
have or hereafter acquire under any statute, these
Articles of Incorporation, By- laws, agreement, vote
of shareholders or directors, or otherwise.
D. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer,
employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or
other enterprise against any expense, liability or
loss, regardless of whether the Corporation would
have the power to indemnify such person against such
expense, liability or loss under the WBCL.
E. The Corporation may, as authorized from time to time
by a majority vote of disinterested directors, grant
indemnification and advancement of expenses to any
employee or agent of the Corporation or any person
who is or was serving or has agreed to serve at the
request of the Corporation as an employee or agent of
another corporation, including, without limitation,
any subsidiary of the Corporation, partnership, joint
venture, trust or other enterprise, including service
with respect to an employee benefit plan, to the
fullest extent this Article VIII permits
indemnification and advancement of expenses for
directors and officers of the Corporation.
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<PAGE> 6
"Article IX. Limitation of Liability."
A director of this Corporation shall not be personally liable
to the Corporation or its shareholders, or any person
asserting rights on behalf of the Corporation or its
shareholders, for monetary damages for breach or failure to
perform any duty resulting from his or her status unless the
person asserting liability proves that the breach or failure
to perform constitutes (i) a willful failure to deal fairly
with the Corporation or its shareholders in a matter in which
the director has a material conflict of interest; (ii) a
violation of criminal law, unless the director had reasonable
cause to believe his or her conduct was lawful; (iii) a
transaction from which the director received an improper
personal benefit; or (iv) willful misconduct. If the WBCL is
hereafter amended to authorize corporate action further
eliminating or limiting the personal liability of directors,
the liability of directors of the Corporation shall be
eliminated or limited to the fullest extent permitted by such
law as amended.
Any repeal or modification of the foregoing paragraph by
shareholders of the Corporation shall not adversely affect any
right or protection of a director existing at the time of such
repeal or modification.
The directors and officers are included in the directors' and
officers' liability insurance policy applicable to Reliance Savings Bank, the
Company's wholly-owned state-chartered stock savings bank subsidiary (the
"Bank"). The Registrant has not obtained substitute or additional directors'
and officers' liability coverage for liability which may be incurred in their
capacity as such. The Bank's insurance policy provides that, subject to the
applicable liability limits and retention amounts, the insurer will reimburse
directors and officers of the Bank for a "loss" (as defined in the policy)
sustained by a director or officer resulting from any claim made against them
for a "wrongful act" (as defined in the policy). The policy also provides
that, subject to, the applicable liability limits and retention amounts, the
insurer will reimburse the Bank for a loss which the bank has lawfully
indemnified (or is required or permitted by law to indemnify) a director or
officer resulting from any such claim. Subject to certain exclusions set forth
in the policy, "wrongful act" is defined to mean any actual or alleged error,
misstatement, misleading statement, act or omission, or neglect or breach of
duty by the directors or officers in the discharge of their duties solely in
their capacities as such directors or officers, individually or collectively,
or any matter claimed against them solely by reason of their being directors or
officers of the Bank.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
ITEM 8. EXHIBITS.
The Exhibits to this Registration Statement are listed in the
Exhibit Index on page 8 of this Registration Statement, which Exhibit Index is
incorporated herein by reference.
ITEM 9. UNDERTAKINGS.
The undersigned Registrant undertakes as follows:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement:
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(i) To include any Prospectus required by
Section 10(a)(3) of the Securities Act of
1933;
(ii) To reflect in the Prospectus any facts or
events arising after the effective date of
the Registration Statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the Registration
Statement; and
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the Registration
Statement or any material change to such
information in the Registration Statement.
Provided, however, that paragraphs (1)(i) and (1)(ii)
do not apply if the Registration Statement is on Form
S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports
filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, that are
incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities
offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the Offering.
(4) That, for purposes of determining any liability under
the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated
by reference in the Registration Statement shall be
deemed to be a new registration statement relating to
the securities offered therein, and the offering of
such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange
Commission, such indemnification is against public
policy as expressed in the Act, and is, therefore,
unenforceable. In the event that a claim for
indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of
the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such
director, officer or controlling person in connection
with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question
whether such indemnification by it is against public
policy as expressed in the Act and will be governed
by the final adjudication of such issue.
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<PAGE> 8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Amery, and the State of Wisconsin, on the 3rd
day of June, 1997.
RELIANCE BANCSHARES, INC.
By: /s/ Allan T. Bach
-------------------------------------
Allan T. Bach,
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Allan T. Bach his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign
any and all amendments (including pre-effective and post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing necessary and
requisite to be done, as fully and to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue
hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Allan T. Bach President, Chief Executive
- ------------------------- Officer and Director
Allan T. Bach (Principal Executive Officer) June 3, 1997
/s/ Carol A. Barnharst Vice President, Chief Financial
- ------------------------- Officer, Secretary,Treasurer
Carol A. Barnharst and Director (Principal Financial
Officer and Accounting Officer) June 3, 1997
/s/ O. William Held Director June 3, 1997
- ------------------------
O. William Held
- ------------------------ Director June 3, 1997
John T. Lynch
/s/ Marjorie A. Spicuzza Director June 3, 1997
- ------------------------
Marjorie A. Spicuzza
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EXHIBITS INDEX
REGULATION S-K DESCRIPTION
EXHIBIT NUMBER OF DOCUMENT
- -------------- -----------
Exhibit 4.1 Reliance Savings Bank Recognition and Retention Plan
Exhibit 4.2 Reliance Bancshares, Inc. 1997 Stock Option Plan
Exhibit 5 Opinion of Michael Best & Friedrich
Exhibit 23.1 Consent of Meier, Clancey, George & Co.
Exhibit 23.2 Consent of Michael Best & Friedrich (included in Exhibit 5)
Exhibit 24 Power of Attorney (included as part of signature page)
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<PAGE> 1
021997
RELIANCE SAVINGS BANK
RECOGNITION AND RETENTION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
1.01 Reliance Savings Bank (the "Bank") hereby establishes this
Recognition and Retention Plan (the "Plan") upon the terms and conditions
hereinafter stated in this Recognition and Retention Plan Agreement (the
"Agreement").
ARTICLE II
PURPOSE OF THE PLAN
2.01 The Purpose of the Plan is to retain officers of experience and
ability by providing such persons with a proprietary interest in the Company as
compensation for their contributions to the Bank and its Affiliates and as an
incentive to make such contributions and to promote the Bank's growth and
profitability in the future.
ARTICLE III
DEFINITIONS
The following words and phrases when used in this Plan with an initial
capital letter, unless the context clearly indicates otherwise, shall have the
meanings set forth below. Wherever appropriate, the masculine pronoun shall
include the feminine pronoun and the singular shall include the plural.
3.01 "Affiliate" means the Company and those subsidiaries of the Bank
or Company which, with the consent of the Board, agree to participate in this
Plan.
3.02 "Bank" means Reliance Savings Bank.
3.03 "Beneficiary" means the person or persons designated by a
Recipient to receive any benefits payable under the Plan in the event of such
Recipient's death. Such person or persons shall be designated in writing on
forms provided for this purpose by the Committee and may be changed from time to
time by similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Recipient's surviving spouse, if any
or if none, his estate.
3.04 "Board" means the Board of Directors of the Bank.
3.05 "Committee" means a committee consisting of two or more
Non-Employee Directors appointed by the Board pursuant to Article IV hereof.
"Non-Employee Director," as defined in
<PAGE> 2
Rule 16b-3 promulgated by the Securities and Exchange Commission ("SEC") under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), means a
director who (i) is not currently an officer or otherwise employed by the
Company or the Bank, or a parent or other subsidiary of the Company, (ii) does
not receive compensation for consulting services or in any other capacity from
the Company or the Bank in excess of $60,000 in any one year, and (iii) does
not possess an interest in and is not engaged in business relationships
required to be reported under Items 404(a) or 404(b) of Regulations S-K
promulgated under the Exchange Act.
3.06 "Common Stock" means shares of the common stock, $1.00 par value
per share, of the Company.
3.07 "Company" shall mean Reliance Bancshares, Inc.
3.08 "Disability" means the permanent and total inability by reason
of mental or physical infirmity, or both, of an employee or Director to perform
the work customarily assigned to him. Additionally, a medical doctor selected
or approved by the Board of Directors must advise the Committee that it is
either not possible to determine when such Disability will terminate or that it
appears probable that such Disability will be permanent during the remainder of
said participant's lifetime.
3.9 "Employee" means any person who is currently employed by the
Bank or an Affiliate, including officers.
3.10 "Plan Shares" means shares of Common Stock issued or issuable to
a Recipient pursuant to the Plan.
3.11 "Plan Share Award" means a right granted under this Plan to earn
Plan Shares.
3.12 "Plan Share Reserve" means the shares of Common Stock held by
the Bank pursuant to Sections 5.01 and 5.02.
3.13 "Recipient" means an Employee who receives a Plan Share Award
under the Plan.
3.14 "Retirement" means termination of employment or service which
constitutes normal retirement or early retirement under the employee stock
ownership plan maintained by the Bank or by reaching age 65, or such later
retirement as may be agreed upon between the Bank and the Employee.
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<PAGE> 3
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 Role of the Committee. The Plan shall be administered and
interpreted by the Committee, which shall have all of the powers allocated to it
in this and other Sections of the Plan. The interpretation and construction by
the Committee of any provisions of the Plan or of any Plan Share Award granted
hereunder shall be final and binding. The Plan shall be administered by the
Committee in accordance with its terms. The Committee shall act by vote or
written consent of a majority of its members. Subject to the express provisions
and limitations of the Plan, the Committee may adopt such rules, regulations and
procedures as it deems appropriate for the conduct of its affairs. The
Committee shall report its actions and decisions with respect to the Plan to the
Board at appropriate times, but in no event less than one time per calendar
year.
4.02 Role of the Board. The members of the Committee shall be
appointed or approved by, and will serve at the pleasure of, the Board. The
Board may in its discretion from time to time remove members from, or add
members to, the Committee. The Board shall have all of the powers allocated to
it in this and other Sections of the Plan.
4.03 Limitation on Liability. No member of the Board or the
Committee shall be liable for any determination made in good faith with respect
to the Plan or any Plan Shares or Plan Share Awards granted under it. If a
member of the Board or the Committee is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of anything
done or not done by him in such capacity under or with respect to the Plan, the
Bank shall indemnify such member against expense (including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in the best interests of the
Bank and its Affiliates and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful.
ARTICLE V
PURCHASE OF COMMON STOCK; PLAN SHARE RESERVE
5.01 Purchase of Common Stock; Creation of Plan Share Reserve.
Following Shareholder approval of the Plan, the Bank shall purchase 102,494
shares of Common Stock. No contributions by Employees shall be permitted. Any
earnings received with respect to Common Stock held in the Reserve shall be held
in an interest-bearing account, except that any earnings received with respect
to
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<PAGE> 4
Common Stock subject to a Plan Share Award shall be distributed directly by the
Company to the individual Recipient.
5.02 Effect of Allocations, Returns and Forfeitures Upon Plan Share
Reserves. Upon the allocation of Plan Share Awards under Section 6.02 the Plan
Share Reserve shall be reduced by the number of Shares subject to the Awards so
allocated. Any Shares subject to an Award which may not be earned because of a
forfeiture by the Recipient pursuant to Section 7.01 shall be returned (added)
to the Plan Share Reserve.
ARTICLE VI
ELIGIBILITY; ALLOCATIONS
6.01 Eligibility. Inside Directors and Management Officers of the
Bank and its Affiliates are eligible to receive Plan Share Awards.
6.02 Allocations. The Committee may determine which of the Inside
Directors and Management Officers will be granted Plan Share Awards and the
number of Shares covered by each Award, provided, however, that the number of
Shares covered by such Awards may not exceed the number of Shares in the Plan
Share Reserve immediately prior to the grant of such Awards, and provided
further, that in no event shall any Awards be made which will violate the
Charter, Bylaws or any applicable federal or state law or regulation. In the
event Plan Shares are forfeited for any reason, such Shares shall remain in the
Plan Share Reserve until used to satisfy subsequent Awards or until the
termination of the Plan.
6.03 Form of Allocation. The recipients shall be notified in writing
of the grant of a Plan Share Award. Such notice shall include the number of
Plan Shares covered by the Award, and the terms upon which the Plan Shares
subject to the Award may be earned. The Committee shall maintain records as to
all grants of Plan Share Awards under the Plan.
6.04 Allocations Not Required. Notwithstanding anything to the
contrary in Sections 6.01 and 6.02, no Inside Director or Management Officer
shall have any right or entitlement to receive a Plan Share Award hereunder,
such Awards being at the total discretion of the Committee and the Board, nor
shall the Inside Directors or Management Officers as a group have such a right.
The Committee may, with the approval of the Board (or, if so directed by the
Board, may) return all Common Stock in the Plan Share Reserve to the Company at
any time.
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<PAGE> 5
ARTICLE VII
EARNING AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 Earning Plan Shares; Forfeitures.
(a) General Rules. Unless the Committee shall specifically state to
the contrary at the time a Plan Share Award is granted, Plan Shares subject to
an Award shall be earned by a Recipient at the rate of thirty-three and one
third percent (33 1/3%) of the aggregate number of Shares covered by the Award
at the end of each full twelve months of consecutive employment or service (in
the case of a Director) with the Bank or an Affiliate after the date of grant of
the Award. If the employment of a Recipient is terminated prior to the date the
Recipient earns the full Award for any reason (except as specifically provided
in Subsections (b) and (c) below), the Recipient shall forfeit the right to earn
any Shares subject to the Award which have not theretofore been earned. In
determining the number of Plan Shares which are earned, fractional shares shall
be rounded down to the nearest whole number, provided that such fractional
shares shall be aggregated and earned, on the last anniversary on which the Plan
Share Award vests.
(b) Exception for Terminations Due to Death, Disability and
Retirement. Notwithstanding the general rule contained in Section 7.01(a)
above, all Plan Shares subject to a Plan Share Award held by a Recipient whose
employment with the Bank or an Affiliate terminates due to death, Disability or
Retirement, shall be deemed earned as of the Recipient's last day of employment
with the Bank or an Affiliate.
(c) Exception for Terminations After a Change in Control.
Notwithstanding the general rule contained in Section 7.01(a) above, all Plan
Shares subject to a Plan Share Award held by a Recipient whose employment with
the Bank or an Affiliate terminates following a Change in Control of the Bank or
Company, shall be deemed earned as of the Recipient's last day of employment
with the Bank or an Affiliate. For purposes of determining under the Plan
whether there has been a Change in Control of the Bank or the Holding Company, a
"Change in Control" of the Bank or the Holding Company means a "Change in
Control" of a nature that (i) would be required to be reported in response to
Item 1 of the current report on Form 8-K, as in effect on the date hereof,
pursuant to Section 13 or 15(d) of the Exchange Act; or (ii) results in a Change
in Control of the Bank or the Company within the meaning of the Home Owners Loan
Act of 1933 and the Rules and Regulations promulgated by the Office of Thrift
Supervision (or its predecessor agency), as in effect on the effective date of
this Plan; or (iii) without limitation such a Change in Control shall be deemed
to have occurred at such time as (a) any "person" (as the term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
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<PAGE> 6
indirectly, of securities of the Bank or the Company representing 20% or more
of the Bank's or the Company's outstanding securities ordinarily having the
right to vote at the election of directors except for any securities of the
Bank purchased by the Company in connection with the conversion of the Bank to
the stock form and any securities purchased by the Bank's employee stock
benefit plans; or (b) individuals who constitute the Board on the date hereof
(the "Incumbent Board"), cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the date
hereof whose election was approved by a vote of at least three-quarters of the
directors comprising the Incumbent Board, or whose nomination for election by
the Company's shareholders was approved by the same Nominating Committee
serving under an Incumbent Board, shall be, for purposes of this clause (b),
considered as though he were a member of the Incumbent Board; or (c) a Plan of
reorganization, a merger, consolidation, sale or substantially all the assets
of the Bank or the Company or similar transaction in which the Bank or Company
is not the surviving institution occurs; or (d) a proxy statement soliciting
proxies from stockholders of the Company, by someone other than the current
management of the Company, seeking stockholder approval of a plan of
reorganization, merger or consolidation of the Company or the Bank or similar
transaction with one or more corporations as a result of which the outstanding
shares of the class of securities then subject to such plan or transaction are
exchanged for or converted into cash or property or securities not issued by
the Bank or the Company shall be distributed; or (e) a tender offer is made for
20% or more of the voting securities of the Bank or the Company.
(d) Revocation for Misconduct. Notwithstanding anything hereinafter
to the contrary, the Committee may by resolution immediately revoke, rescind and
terminate any Plan Share Award, or portion thereof, previously awarded under
this Plan, to the extent Plan Shares have not been delivered thereunder to the
Recipient, whether or not yet earned, in the case of an Employee who is
discharged from the Bank or an Affiliate for cause (as hereinafter defined), or
who is discovered after termination of employment or service to have engaged in
conduct that would have justified termination for cause. "Cause" is defined as
personal dishonesty, willful misconduct, any breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties, or the willful
violation of any law, rule or regulation (other than traffic violations or
similar offenses) which results in a material loss to the Bank or Company or a
final cease and desist order.
7.02 Payment of Dividends. Whenever Plan Shares are granted to a
Recipient or Beneficiary under Section 6.02, such Recipient or Beneficiary shall
also become entitled to receive, with respect to each Plan Share awarded, any
dividends declared and paid with respect to a share of Common Stock between the
date the relevant Plan Share Award was granted and the date the Plan Shares are
being
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<PAGE> 7
distributed. The Bank may withhold from any payment or distribution of
dividends sufficient amounts to cover any applicable withholding and employment
taxes.
7.03 Distribution of Plan Shares.
(a) Timing of Distributions: General Rule. Plan Shares
shall be distributed to the Recipient or his Beneficiary, as the case may be, as
soon as practicable after they have been earned.
(b) Form of Distribution. All Plan Shares, together with
any shares representing stock dividends, shall be distributed in the form of
Common Stock. One share of Common Stock shall be given for each Plan Share
earned and payable.
(c) Withholding. The Bank may withhold from any payment
or distribution made under this Plan sufficient amounts of cash or shares of
Common Stock to cover any applicable withholding and employment taxes, and if
the amount of such payment is insufficient, the Bank may require the Recipient
or Beneficiary to pay to the Bank the amount required to be withheld as a
condition of delivering the Plan Shares.
7.04 Voting of Plan Shares. After a Plan Share Award has been
granted, the Recipient shall be entitled to direct the Committee as to the
voting of the Plan Shares which are covered by the Plan Share Award and which
have not yet been earned and distributed to him pursuant to Section 7.03,
subject to rules and procedures adopted by the Committee for this purpose. All
shares of Common Stock as to which Recipients are not entitled to direct, or
have not directed, the voting, shall be voted by the Committee in the same
proportion as Plan Shares which have been awarded and voted.
ARTICLE VIII
MISCELLANEOUS
8.01 Adjustments for Capital Changes. In the event of any change in
the outstanding shares of Common Stock of the Company by reason of any stock
dividend or split, recapitalization, merger, consolidation, spin-off,
reorganization, combination or exchange of shares, or other similar corporate
change, or other increase or decrease in such shares effected without receipt or
payment of consideration by the Company, the Committee shall adjust the
aggregate number of Plan Shares available for issuance pursuant to the Plan and
shall adjust the number of shares to which any Plan Share Award relates to
prevent dilution or enlargement of the rights granted to the Recipient under the
Plan.
8.02 Amendment and Termination of Plan. The Board may, by
resolution, at any time amend or terminate the Plan. The Board may
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<PAGE> 8
determine that shareholder approval of any amendment to this Plan may be
advisable for any reason including but not limited to, for the purpose of
obtaining or retaining any statutory or regulatory benefits under tax,
securities or other laws or satisfying applicable stock exchange listing
requirements.
8.03 Nontransferable. Plan Share Awards and rights to Plan Shares
shall not be transferable by a Recipient, and during the lifetime of the
Recipient, Plan Shares may only be earned by and paid to the Recipient who was
notified in writing of the Award by the Committee pursuant to Section 6.03.
8.04 Employment Rights. Neither the Plan nor any grant of a Plan
Share Award or Plan Shares hereunder no any action taken by the Committee or the
Board in connection with the Plan shall create any right on the part of any
Employee to continue in the employ of the Bank or an Affiliate thereof, or the
Company.
8.05 Voting and Dividend Rights. No Recipient shall have any voting
or dividend rights or other rights of a shareholder in respect of any Plan
Shares covered by a Plan Share Award, except as expressly provided in Sections
7.02 and 7.04 above, prior to the time said Plan Shares are actually distributed
to him.
8.06 Governing Law. The Plan shall be governed by the laws of the
State of Wisconsin to the extent not pre-empted by the laws of the United States
as now or hereafter in effect.
8.07 Effective Date. This Plan is effective as of the date the Plan
is approved by shareholders at an annual or special meeting of the shareholders
(the "Effective Date"). The Plan shall also be presented to shareholders of the
Company for ratification for purposes of maintaining listing on the National
Association of Securities Dealers Automated Quotation ("NASDAQ") National Market
System.
8.08 Term of Plan. This Plan shall remain in effect until the
earlier of (1) 21 years from the Effective Date or (2) termination by the Board.
Termination of the Plan shall not affect any Plan Share Awards previously
granted, and such Awards shall remain valid and in effect until they have been
earned and paid, or by their terms expire or are forfeited.
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<PAGE> 9
8.09 Compliance with Section 16. With respect to persons subject to
Section 16 of the Exchange Act, transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors under the
Exchange Act. To the extent any provision of the Plan or action by the
Committee fails to so comply, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Committee.
IN WITNESS WHEREOF, the Bank has caused this Plan and to be executed by its
duly authorized officer and the corporate seal to be affixed and duly attested,
as of the ____ day of ____________________, 1997.
By:___________________________
_________________Attest:
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<PAGE> 1
021997
RELIANCE BANCSHARES, INC.
1997 STOCK OPTION PLAN
1. PURPOSE.
The purpose of the Reliance Bancshares, Inc. (the "Holding Company") 1997
Stock Option Plan (the "Plan") is to advance the interests of the Holding
Company and its shareholders by providing those key employees and directors of
the Holding Company and its Affiliates, including Reliance Savings Bank (the
"Bank"), upon whose judgment, initiative and efforts the successful conduct of
the business of the Holding Company and its affiliates largely depends, with
additional incentive to perform in a superior manner. A purpose of the Plan is
also to attract people of experience and ability to the service of the Holding
Company and its Affiliates.
2. DEFINITIONS.
(a) "Affiliate" means (i) a member of a controlled group of corporations
of which the Holding Company is a member or (ii) an unincorporated trade or
business which is under common control with the Holding Company as determined in
accordance with Section 414(c) of the Internal Revenue Code of 1986, as amended,
(the "Code") and the regulations issued thereunder. For purposes hereof, a
"controlled group of corporations" shall mean a controlled group of corporations
as defined in Section 1563(a) of the Code determined without regard to Section
1563(a)(4) and (e)(3)(C).
(b) "Award" means a grant of Non-statutory Stock Options or Incentive
Stock Options under the provisions of this Plan.
(c) "Board of Directors" or "Board" means the board of directors of the
Holding Company.
(d) "Change in Control" of the Holding Company means a Change in Control
of a nature that: (i) would be required to be reported in response to Item 1 of
the current report on Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act");
or (ii) results in a Change in Control of the Bank or the Holding Company within
the meaning of the Home Owners Loan Act of 1933 and the Rules and Regulations
promulgated by the Office of Thrift Supervision (or its predecessor agency), as
in effect on the effective date of this Plan; or (iii) without limitation shall
be deemed to have occurred at such time as (a) any "person" (as the term is used
in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Bank or the Holding Company representing 25% or
more of the Bank's or the
<PAGE> 2
Holding Company's outstanding securities ordinarily having the right to vote at
the election of directors except for any securities of the Bank purchased by
the Holding Company in connection with the conversion of the Bank to the stock
form and any securities purchased by the Bank's employee stock benefit plans;
or (b) individuals who constitute the Board on the date hereof (the "Incumbent
Board"), cease for any reason to constitute at least a majority thereof,
provided that any person becoming a director subsequent to the date hereof
whose election was approved by a vote of at least three-quarters of the
directors comprising the Incumbent Board, or whose nomination for election by
the Holding Company's shareholders was approved by the same Nominating
Committee serving under an Incumbent Board, shall be, for purposes of this
clause (b), considered as though he were a member of the Incumbent Board; or
(c) a plan of reorganization, a merger, consolidation, sale of all or
substantially all the assets of the Bank or the Holding Company or similar
transaction in which the Bank or Holding Company is not the surviving
institution is approved by shareholders and becomes effective; or (d) a proxy
statement soliciting proxies from stockholders of the Holding Company, by
someone other than the current management of the Holding Company, seeking
stockholder approval of a plan of reorganization, merger or consolidation of
the Holding Company or the Bank or similar transaction with one or more
corporations as a result of which the outstanding shares of the class of
securities then subject to such plan or transaction are exchanged for or
converted into cash or Property or securities not issued by the Bank or the
Holding Company shall be distributed and shareholders approve the action
disclosed in the proxy materials.
(e) "Committee" means a committee consisting of two or more Non-Employee
Directors appointed by the Board pursuant to Section 3 hereof. "Non-Employee
Director," as defined in Rule 16b-3 promulgated by the Securities and Exchange
Commission ("SEC") under the Exchange Act, means a director who (i) is not
currently an officer or otherwise employed by the Holding Company or the Bank,
or a parent or other subsidiary of the Holding Company, (ii) does not receive
compensation for consulting services or in any other capacity from the Holding
Company or the Bank in excess of $60,000 in any one year, and (iii) does not
possess an interest in and is not engaged in business relationships required to
be reported under Items 404(a) or 404(b) of Regulation S-K promulgated under the
Exchange Act.
(f) "Common Stock" means the Common Stock of the Holding Company, par
value, $1.00 per share.
(g) "Date of Grant" means the date an Award is effective pursuant to the
terms hereof.
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<PAGE> 3
(h) "Disability" means the permanent and total inability by reason of
mental or physical infirmity, or both, of an Employee to perform the work
customarily assigned to him and the inability of an Outside Director to perform
the services customarily performed by an Outside Director. Additionally, a
medical doctor selected or approved by the Committee must advise the Committee
that it is either not possible to determine when such Disability will terminate
or that it appears probable that such Disability will be permanent during the
remainder of said participant's lifetime.
(i) "Employee" means any person who is currently employed by the Holding
Company or any Affiliate.
(j) "Fair Market Value" means, when used in connection with the Common
Stock on a certain date, the closing price as reported by the National
Association of Securities Dealers Automated Quotation System (as published by
the Wall Street Journal, if published) on such date or if the Common Stock was
not traded on such date, on the next preceding day on which the Common Stock was
traded thereon or the last previous date on which a sale is reported.
(k) "Incentive Stock Option" means an Option granted by the Committee to a
Participant, which Option is designed as an Incentive Stock Option pursuant to
Section 8 of this Plan.
(l) "Non-statutory Stock Option" means an Option granted to a participant
and which is not an Incentive Stock Option.
(m) "Option" means an Award granted under Section 7 or Section 8 of this
Plan.
(n) "Outside Director" means a member of the Board of Directors of the
Holding Company or the Bank, not also serving as an Employee of the Holding
Company or any of its Affiliates.
(o) "Participant" means an employee of the Holding Company or its
affiliates chosen by the Committee to participate in the Plan, or an Outside
Director.
(p) "Plan Year(s)" means a calendar year or years commencing on or after
January 1, 1997.
(q) "Termination for Cause" means the termination upon personal
dishonesty, incompetence, willful misconduct, any breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, or the
willful violation of any law, rule or regulation (other than traffic violations
or similar offenses) or final cease-and-desist order or the material breach of
any provisions of an Employee's employment contract.
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<PAGE> 4
3. ADMINISTRATION.
The Plan shall be administered by the Committee. The Committee is
authorized, subject to the provisions of the Plan, to establish such rules and
regulations as it sees necessary for the proper administration of the Plan and
to make whatever determinations and interpretations in connection with the Plan
it sees as necessary or advisable with respect to Participants. All
determinations and interpretations made by the Committee shall be binding and
conclusive on such Participants and on their legal representatives and
beneficiaries.
4. TYPES OF AWARDS.
Awards under the Plan may be granted in any one or a combination of:
(a) Non-statutory Stock Options; and
(b) Incentive Stock Options;
as defined in paragraphs 7 and 8 of the Plan.
5. STOCK SUBJECT TO THE PLAN.
Subject to adjustment as provided in Section 14, the maximum number of
shares reserved for purchase pursuant to the exercise of options granted under
the Plan is 256,234 shares of Common Stock of the Holding Company, par value
$1.00 per share. These shares of Common Stock may be either authorized but
unissued shares or shares previously issued and reacquired by the Holding
Company. To the extent that options are granted under the Plan, the shares
underlying such options will be unavailable for future grants under the Plan
except that, to the extent that options granted under the Plan terminate, expire
or are canceled without having been exercised new Awards may be made with
respect to these shares.
6. ELIGIBILITY.
Officers and other Employees (including Employees who are also directors of
the Holding Company or its Affiliates) shall be eligible to receive Incentive
Stock Options and Non-statutory Stock Options under the Plan. Outside Directors
shall be eligible to receive Non-statutory Stock Options under the Plan.
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<PAGE> 5
7. NON-STATUTORY STOCK OPTIONS.
7.1 Grant of Non-statutory Stock Options.
(a) Grants to Employees. The Committee may, from time to time, grant
Non-statutory Stock Options to Employees and, upon such terms and conditions as
the Committee may determine, grant Non-statutory Stock Options in exchange for
and upon surrender of previously granted Awards under this Plan.
(b) Grants to Outside Directors. The Board may, from time to time, grant
Non-statutory Stock Options to Outside Directors and, upon such terms and
conditions as the Board may determine, grant Non-statutory Stock Options in
exchange for and upon surrender of previously granted Awards under this Plan.
(c) Terms of Non-Statutory Options. Non-statutory Stock Options granted
under this Plan are subject to the following terms and conditions:
(i) Price. The purchase price per share of Common Stock deliverable upon
the exercise of each Non-statutory Stock Option shall be determined on the date
the option is granted. Such purchase price shall be the Fair Market Value of
the Holding Company's Common Stock on the Date of Grant or such greater amount
as determined by the Committee with respect to Employees or by the Board with
respect to Outside Directors. Shares may be purchased only upon full payment of
the purchase price. Payment of the purchase price may be made, in whole or in
part, through the surrender of shares of the Common Stock of the Holding Company
at the Fair Market Value of such shares on the date of surrender determined in
the manner described in Section 2(j) of the Plan.
(ii) Terms of Options. The term during which each Non-statutory Stock
Option may be exercised shall be 10 years from the Date of Grant, or such
shorter period determined by the Committee with respect to Employees or by the
Board with respect to Outside Directors. The Committee shall determine with
respect to Employees, and the Board shall determine with respect to Outside
Directors the date on which each Non-statutory Stock Option shall become
exercisable and may provide that a Non-statutory Stock Option shall become
exercisable in installments. The shares comprising each installment may be
purchased in whole or in part at any time after such installment becomes
purchasable. The Committee may, in its sole discretion, accelerate the time at
which any Non-statutory Stock Option granted to an Employee may be exercised in
whole or in part. The Board may, in its sole discretion accelerate the time at
which any Non-statutory Stock Option granted to an Outside Director may be
exercised in whole or in part. Notwithstanding the above, in the event of a
Change in Control of the Holding Company, all Non-statutory Stock Options shall
become immediately exercisable.
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<PAGE> 6
(iii) Termination of Service. Upon the termination of a Participant's
service for any reason other than Disability, death, retirement or Termination
for Cause, the Participant's Non-statutory Stock Options shall be exercisable
only as to those shares which were immediately purchasable by the Participant at
the date of termination and only for a period of three months following
termination. In the event of Termination for Cause, all rights under the
Participant's Non-statutory Stock Options shall expire upon termination. In the
event of the death, retirement or Disability of any Participant or a Change in
Control, all Non-statutory Stock Options held by the Participant, whether or not
exercisable at such time, shall be exercisable by the Participant or his legal
representatives or beneficiaries of the Participant for one year or such longer
period as determined by the Committee following the date of the Participant's
death, or cessation of service due to Disability or retirement, or following a
Change in Control; provided that in no event shall the period extend beyond the
expiration of the Non-statutory Stock Option term. For purposes of this Section
a Participant who has served as both an Employee and as a member of the Board of
Directors shall have terminated service only when he has terminated service as
both an Employee and a director. The Committee (with respect to Employees) and
the Board (with respect to Outside Directors) at the time of grant or
thereafter, may extend the period of non-statutory Stock Option exercise on a
Participant's termination of service to a period not exceeding 5 years, provided
that in no event shall the period extend beyond the expiration of the
non-statutory Stock Option term.
8. INCENTIVE STOCK OPTIONS.
8.1 Grant of Incentive Stock Options.
The Committee may, from time to time, grant Incentive Stock Options to
Employees. Incentive Stock Options granted pursuant to the Plan shall be
subject to the following terms and conditions:
(a) Price. The purchase price per share of Common Stock deliverable upon
the exercise of each Incentive Stock Option shall be not less than 100% of the
Fair Market Value of the Holding Company's Common Stock on the Date of Grant.
However, if a Participant owns Common Stock possessing more than 10% of the
total combined voting power of all classes of Common Stock of the Holding
Company (or under Section 425(d) of the Code is deemed to own Common Stock
representing more than 10% of the total combined voting power of all such
classes of Common Stock), the purchase price per share of Common Stock
deliverable upon the exercise of each Incentive Stock Option shall not be less
than 110% of the Fair Market Value of the Holding Company's Common Stock on the
Date of Grant. Payment of the purchase price may be made, in whole or in part,
through the surrender of shares of the Common Stock of the
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<PAGE> 7
Holding Company at the Fair Market Value of such shares on the date of
surrender determined in the manner described in Section 2(j).
(b) Amounts of Options. Incentive Stock Options may be granted to any
Employee in such amounts as determined by the Committee. In the case of an
option intended to qualify as an Incentive Stock Option, the aggregate Fair
Market Value (determined as of the time the option is granted) of the Common
Stock with respect to which Incentive Stock Options granted are exercisable for
the first time by the Participant during any calendar year (under all plans of
the Participant's employer corporation and its parent and subsidiary
corporations) shall not exceed $100,000. The provisions of this Section 8.1(b)
shall be construed and applied in accordance with Section 422(d) of the Code and
the regulations, if any, promulgated thereunder. To the extent an award under
this Section 8.1 exceeds this $100,000 limit, the portion of the award in excess
of such limit shall be deemed a Non-statutory Stock Option.
(c) Terms of Options. The term during which each Incentive Stock Option
may be exercised shall be determined by the Committee, but in no event shall an
Incentive Stock Option be exercisable in whole or in part more than 10 years
from the Date of Grant. If at the time an Incentive Stock Option is granted to
an Employee, the Employee owns Common Stock representing more than 10% of the
total combined voting power of the Holding Company (or, under Section 425(d) of
the Code, is deemed to own Common Stock representing more than 10% of the total
combined voting power of all such classes of Common Stock) the Incentive Stock
Option granted to such Employee shall not be exercisable after the expiration
of five years from the Date of Grant. No Incentive Stock Option granted under
this Plan is transferable except by will or the laws of descent and distribution
and is exercisable in his lifetime only by the Employee to whom it is granted.
The Committee shall determine the date on which each Incentive Stock Option
shall become exercisable and may provide that an Incentive Stock Option shall
become exercisable in installments. The shares comprising each installment may
be purchased in whole or in part at any time after such installment becomes
purchasable, provided that the amount able to be first exercised in a given year
is consistent with the terms of Section 422 of the Code. The Committee may, in
its sole discretion, accelerate the time at which any Incentive Stock Option may
be exercised in whole or in part, provided that it is consistent with the terms
of Section 422 of the Code. Notwithstanding the above, in the event of a Change
in Control of the Holding Company, all Incentive Stock Options shall become
immediately exercisable.
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<PAGE> 8
(d) Termination of Employment. Upon the termination of a Participant's
service for any reason other than Disability, Change in Control, death,
retirement or Termination for Cause, the Incentive Stock Options shall be
exercisable only as to those shares which were immediately purchasable by the
Participant at the date of termination and only for a period of three months
following termination. In the event of Termination for Cause all rights under
the Participant's Incentive Stock Options shall expire upon termination.
In the event of death, retirement or Disability of any Employee, all
Incentive Stock Options held by such Participant, whether or not exercisable at
such time, shall be exercisable by the Participant or the Participant's legal
representatives or beneficiaries for one year following the date of the
Participant's death, retirement or cessation of employment due to Disability;
provided, however, that such option shall not be eligible for treatment as an
Incentive Stock Option in the event such option is exercised more than three
months following the date of the Participant's cessation of employment. Upon
termination of the Participant's service due to a Change in Control, all
Incentive Stock Options held by such Participant, whether or not exercisable at
such time, shall be exercisable for a period of one year following the date of
Participant's cessation of employment; provided however, that such option shall
not be eligible for treatment as an Incentive Stock Option in the event such
option is exercised more than three months following the date of the
Participant's cessation of employment. In no event shall the exercise period
extend beyond the expiration of the Incentive Stock Option term. For purposes
of this Section a Participant who has served as both an Employee and as a member
of the Board of Directors shall have terminated service only when he has
terminated service as both an Employee and a director.
The Committee, at the time of grant or thereafter, may extend the period
Incentive Stock Option exercise on a Participant's termination of service to a
period not exceeding 5 years, provided, however, that such option shall not be
eligible for treatment as an Incentive Stock Option in the event such option is
exercised more than three months following the date of the Participant's
cessation of employment. Notwithstanding anything to the contrary contained
herein, in no event shall the exercise period extend beyond the expiration of
the Incentive Stock Option term.
(e) Compliance with Code. The options granted under this Section 8 of the
Plan are intended to qualify as incentive stock options within the meaning of
Section 422 of the Code, but the Holding Company makes no warranty as to the
qualification of any option as an incentive stock option within the meaning of
Section 422 of the Code.
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<PAGE> 9
9. SURRENDER OPTION.
In the event of a Participant's termination of employment (or service as a
Director), the Participant (or the Participant's Personal representative(s),
heir(s), or devisee(s)) may, in a form acceptable to the Committee make
application to surrender all or part of options held by such Participant in
exchange for a cash payment from the Holding Company of an amount equal to the
difference between the Fair Market Value of the Common Stock on the date of
termination and the exercise price per share of the option on the Date of
Grant. Whether the Committee accepts such application or determines to make
payment, in whole or part, is within its absolute and sole discretion, it being
expressly understood that the Committee is under no obligation to any
Participant whatsoever to make such payments. In the event that the Committee
accepts such application and the Holding Company determines to make payment,
such payment shall be in lieu of the exercise of the underlying option and such
option shall cease to be exercisable.
10. RIGHTS OF A SHAREHOLDER; LIMITED TRANSFERABILITY.
No Participant shall have any rights as a shareholder with respect to any
shares covered by a Non-statutory and/or Incentive Stock Option until the date
of issuance of a stock certificate for such shares. Nothing in this Plan or in
any Award granted confers on any person any right to continue in the employ of
the Holding Company or its Affiliates or to continue to perform services for the
Holding Company or its Affiliates or interferes in any way with the right of the
Holding Company or its Affiliates to terminate a Participant's services as an
officer or other Employee at any time.
No Incentive Stock Option granted under this Plan is transferable except by
will or the laws of descent and distribution and is exercisable in his or her
lifetime only by the Participant to whom it is granted.
Non-statutory Stock Options granted hereunder may be exercised only during
a Participant's lifetime by the Participant, the Participant's guardian or legal
representative or by a permissible transferee. Non-statutory Stock Options
shall be transferable by Participants pursuant to the laws of descent and
distribution upon a Participant's death, and during a Participant's lifetime,
Non-statutory Stock Options shall be transferable by Participants to members of
their immediate family, trusts for the benefit of members of their immediate
family, and charitable institutions ("permissible transferee") to the extent
permitted under Section 16 of the Exchange Act and subject to federal and state
securities laws. The term "immediate family" shall mean any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, sibling,
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mother-in-law, father-in-law, son-in-law, sister-in-law, or brother-in-law and
shall include adoptive relationships.
The Committee shall have the authority to establish rules and regulations
specifically governing the transfer of stock options granted under this Plan as
it deems necessary and advisable.
11. AGREEMENT WITH GRANTEES.
Each Award of Options will be evidenced by a written agreement, executed by
the Participant and the Holding Company or its Affiliates which describes the
conditions for receiving the Awards including the date of Award, the purchase
price if any, applicable periods, and any other terms and conditions as may be
required by applicable securities law.
12. DESIGNATION OF BENEFICIARY.
A Participant may, with the consent of the Committee, designate a person or
persons to receive, in the event of death, any stock option Award to which the
Participant would then be entitled. Such designation will be made upon forms
supplied by and delivered to the Holding Company and may be revoked in writing.
If a Participant fails effectively to designate a beneficiary, then the
Participant's estate will be deemed to be the beneficiary.
13. DILUTION AND OTHER ADJUSTMENTS.
In the event of any change in the outstanding shares of Common Stock of the
Holding Company by reason of any stock dividend or split, recapitalization,
merger, consolidation, spin-off, reorganization, combination or exchange of
shares, or other similar corporate change, or other increase or decrease in such
shares without receipt or payment of consideration by the Holding Company, the
Committee will make such adjustments to previously granted Awards, to prevent
dilution or enlargement of the rights of the Participant, including any or all
of the following:
(a) adjustments in the aggregate number or kind of shares of Common Stock
which may be awarded under the Plan;
(b) adjustments in the aggregate number or kind of shares of Common Stock
covered by Awards already made under the Plan;
(c) adjustments in the purchase price of outstanding Incentive and/or
Non-statutory Stock Options.
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No such adjustments may, however, materially change the value of benefits
available to a Participant under a previously granted Award.
14. WITHHOLDING.
There may be deducted from each distribution of cash and/or Common Stock
under the Plan the amount of tax required by any governmental authority to be
withheld.
15. AMENDMENT OF THE PLAN.
The Board of Directors may at any time, and from time to time, modify or
amend the Plan in any respect; provided however, that Sections 7.1 and 8.1
governing grants shall not be amended more than once every six months other than
to comport with the Code or the Employee Retirement Income Security Act of 1974,
as amended, if applicable.
The Board may determine that shareholder approval of any amendment to this
Plan may be advisable for any reason, including but not limited to, for the
purpose of obtaining or retaining any statutory or regulatory benefits under
tax, securities or other laws or satisfying applicable stock exchange listing
requirements.
No such termination, modification or amendment may affect the rights of a
Participant under an outstanding Award.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as of the date the Plan is approved by
shareholders at an annual or special meeting of shareholders (the "Effective
Date"). The Plan also shall be presented to shareholders of the Holding Company
for ratification for purposes of: (i) satisfying one of the requirements of
Section 422 of the Code governing the tax treatment for Incentive Stock Options;
and (ii) maintaining listing on the NASDAQ National Market System.
17. TERMINATION OF THE PLAN.
No Awards under the Plan shall be granted more than ten (10) years after
the Effective Date of the Plan. The Board of Directors
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has the right to suspend or terminate the Plan at any time. No termination
shall, without the consent of a Participant, adversely affect such individual's
rights under a previously granted award.
Notwithstanding the prohibitions on the adjustments and amendments which
materially change the value of benefit available to a Participant under a
previously granted Award contained in Sections 13 and 15, the Board may, in
connection with a Change in Control, terminate the Plan and require the
Participants to accept cash equal to the difference between the price at which
Common Stock may be purchased through the Participant's Option and the value of
cash or stock consideration received by shareholders of the Holding Company in
connection with the Change in Control.
18. APPLICABLE LAW.
The Plan will be administered in accordance with the laws of the State of
Wisconsin to the extent not Preempted by Federal law as now or hereafter in
effect.
19. COMPLIANCE WITH SECTION 16.
With respect to persons subject to Section 16 of the Exchange Act,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the
extent any provision of the Plan or action by the Committee fails to so comply,
it shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee.
- ----------------- ----------------------
Date Adopted (Signature)
Title
- ----------------- ----------------------
Date Approved by Secretary
Stockholders
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[MICHAEL BEST & FRIEDRICH LETTERHEAD]
June 3, 1997
Reliance Bancshares, Inc.
3140 South 27th Street
Milwaukee, Wisconsin 53215
RE: REGISTRATION STATEMENT ON FORM S-8
Gentlemen:
You have requested our opinion as to the legality of 358,728 shares of
common stock, $1.00 par value per share ("Common Stock"), of Reliance
Bancshares, Inc. (the "Company") being registered with the Securities and
Exchange Commission pursuant to a Registration Statement on Form S-8. As your
counsel, we have examined such records and other documents as we deemed
necessary for the purposes of this opinion and considered such questions of law
as we believe to be involved. Based upon such examination and consideration,
it is our opinion that the shares of Common Stock will, when issued and sold in
accordance with the respective provisions of the plans under which they are
granted, be validly issued, fully paid and nonassessable shares of Common Stock
of the Company (except as may be provided in Section 180.0622(2)(b) of the
Wisconsin Statutes which may require further assessment for unpaid wages to
employees under certain circumstances).
We give our consent to the filing of this opinion as an Exhibit to the
Registration Statement on Form S-8 and the use of our name in connection
therewith.
Very truly yours,
MICHAEL BEST & FRIEDRICH
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CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
on Form S-8 pertaining to the Reliance Bancshares, Inc. 1997 Stock Option Plan
and the Reliance Savings Bank Recognition and Retention Plan of our report
dated July 19, 1996, with respect to the consolidated financial statements and
schedules of Reliance Bancshares, Inc. included in its Annual Report on
Form 10-KSB for the year ended June 30, 1996, filed with the Securities and
Exchange Commission.
MEIER, CLANCEY, GEORGE & CO.
June 3, 1997
Brookfield, Wisconsin
