RELIANCE BANCORP, INC.
585 STEWART AVENUE
GARDEN CITY, NEW YORK 11530
(516) 222-9300
October 11, 1996
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Annual Meeting") of Reliance Bancorp, Inc. (the "Company"), the holding company
for Reliance Federal Savings Bank (the "Bank"), to be held on November 12, 1996,
at the Long Island Marriott Hotel and Conference Center, 101 James Doolittle
Boulevard, Uniondale, New York, 11553, at 9:00 a.m. Eastern time.
The attached Notice of Annual Meeting of Stockholders and the Proxy Statement
describe the formal business to be transacted at the Annual Meeting. Directors
and officers of the Company, as well as a representative of KPMG Peat Marwick
LLP, the Company's independent auditors, will be present at the Annual Meeting
to respond to any questions which stockholders may have.
There are three matters to be considered at the Annual Meeting. The Board of
Directors of the Company has determined that approval of the matters to be
considered at the Annual Meeting is in the best interests of the Company and its
stockholders. For the reasons set forth in the Proxy Statement, the Board of
Directors unanimously recommends a vote "FOR" each matter to be considered.
Please sign and return the enclosed proxy card promptly in the postage-paid
envelope provided. Your cooperation is appreciated since a majority of the
common stock must be represented either in person or by proxy, to constitute a
quorum for the conduct of business.
On behalf of the Board of Directors and all of the employees of the Company and
the Bank, I wish to thank you for your support and interest. We look forward to
seeing you at the Annual Meeting.
Sincerely,
Raymond A. Nielsen
President and
Chief Executive Officer
RELIANCE BANCORP, INC.
585 STEWART AVENUE
GARDEN CITY, NEW YORK 11530
-------------------------------------------
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS To Be Held On
November 12, 1996
-------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Reliance
Bancorp, Inc. will be held on November 12, 1996, at 9:00 a.m., Eastern time, at
the Long Island Marriott Hotel and Conference Center, 101 James Doolittle
Boulevard, Uniondale, New York 11553.
The Annual Meeting is for the purpose of considering and voting upon the
following matters:
1. The election of two directors for terms of three years each;
2. Approval of the Reliance Bancorp, Inc. 1996 Stock Option Plan;
3. The ratification of the appointment of KPMG Peat Marwick LLP as
independent auditors of the Company for the fiscal year ending June
30, 1997; and
4. Such other matters as may properly come before the meeting or any
adjournments thereof.
The Board of Directors has established October 4, 1996, as the record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting and at any adjournments thereof. Only record holders of the
common stock of the Company as of the close of business on that date will be
entitled to vote at the Annual Meeting or any adjournments thereof. In the event
there are not sufficient votes for a quorum or to approve or ratify any of the
foregoing proposals at the time of the Annual Meeting, the Annual Meeting may be
adjourned in order to permit further solicitation of proxies by the Company. A
list of stockholders entitled to vote at the Annual Meeting will be available at
Reliance Bancorp, Inc., 585 Stewart Avenue, Garden City, New York 11530, for a
period of ten days prior to the Annual Meeting and will also be available at the
meeting itself.
By Order of the Board of Directors
Robert F. Pelosi
Secretary
Garden City, New York
October 11, 1996
RELIANCE BANCORP, INC.
---------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
November 12, 1996
---------------------------
General Information
This proxy statement and the accompanying proxy card are being furnished to
stockholders of Reliance Bancorp, Inc. (the "Company") in connection with the
solicitation by the Board of Directors of the Company ("Board of Directors" or
the "Board") of proxies to be used at the annual meeting of stockholders to be
held on November 12, 1996 (the "Annual Meeting"), and at any adjournments
thereof. The 1996 Annual Report to Stockholders, including the consolidated
financial statements for the fiscal year ended June 30, 1996, accompanies this
proxy statement and proxy card, which are first being mailed to record holders
on or about October 11, 1996.
Regardless of the number of shares of common stock owned, it is important
that record holders of a majority of the shares be represented by proxy or
present in person at the Annual Meeting. Stockholders are requested to vote by
completing the enclosed proxy card and returning it signed and dated in the
enclosed postage-paid envelope. Stockholders are urged to indicate their vote in
the spaces provided on the proxy card. Proxies solicited by the Board of
Directors of the Company will be voted in accordance with the directions given
therein. Where no instructions are indicated, signed proxy cards will be voted
"FOR" the election of the nominees for director named in this proxy
statement,"FOR" the approval of the Reliance Bancorp, Inc. 1996 Stock Option
Plan, and "FOR" the ratification of the appointment of KPMG Peat Marwick LLP as
independent auditors of the Company for the year ending June 30, 1997.
Other than the matters listed on the attached Notice of Annual Meeting of
Stockholders, the Board of Directors knows of no matters that will be presented
for consideration at the Annual Meeting. Execution of a proxy, however, confers
on the designated proxy holders discretionary authority to vote the shares in
accordance with their best judgment on such other business, if any, that may
properly come before the Annual Meeting or any adjournments thereof.
A proxy may be revoked at any time prior to its exercise by the filing of a
written notice of revocation with the Secretary of the Company, by delivering to
the Company a duly executed proxy bearing a later date, or by attending the
Annual Meeting and voting in person. However, if you are a stockholder whose
shares are not registered in your own name, you will need appropriate
documentation from your record holder to vote personally at the Annual Meeting.
1
The cost of solicitation of proxies on behalf of management will be borne
by the Company. In addition to the solicitation of proxies by mail, Kissel-Blake
Inc., a proxy solicitation firm, will assist the Company in soliciting proxies
for the Annual Meeting and will be paid a fee of $3,000, plus out-of-pocket
expenses. Proxies may also be solicited personally or by telephone by directors,
officers and regular employees of the Company and its subsidiary, Reliance
Federal Savings Bank (the "Bank"), without additional compensation therefore.
The Company will also request persons, firms and corporations holding shares in
their names, or in the name of their nominees, which are beneficially owned by
others, to send proxy material to and obtain proxies from such beneficial
owners, and will reimburse such holders for their reasonable expenses in doing
so.
Voting Securities
The securities which may be voted at the Annual Meeting consist of shares
of common stock of the Company ("Common Stock"), with each share entitling its
owner to one vote on all matters to be voted on at the Annual Meeting except as
described below. There is no cumulative voting for the election of directors.
The close of business on October 4, 1996, has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
stockholders of record entitled to notice of and to vote at the Annual Meeting
and any adjournments thereof. The total number of shares of Common Stock
outstanding on the Record Date was 8,911,739 shares.
As provided in the Company's Certificate of Incorporation, record holders
of Common Stock who beneficially own in excess of 10% of the outstanding shares
of Common Stock (the "Limit") are not entitled to any vote with respect to the
shares held in excess of the Limit. A person or entity is deemed to beneficially
own shares owned by an affiliate of, as well as persons acting in concert with,
such person or entity. The Company's Certificate of Incorporation authorizes the
Board of Directors to: (i) make all determinations necessary to implement and
apply the Limit, including determining whether persons or entities are acting in
concert, and (ii) demand that any person who is reasonably believed to
beneficially own stock in excess of the Limit to supply information to the
Company to enable the Board to implement and apply the Limit.
The presence, in person or by proxy, of the holders of at least a majority
of the total number of shares of Common Stock entitled to vote (after
subtracting any shares in excess of the Limit pursuant to the Company's
Certificate of Incorporation) is necessary to constitute a quorum at the Annual
Meeting. In the event there are not sufficient votes for a quorum or to approve
or ratify any proposal at the time of the Annual Meeting, the Annual Meeting may
be adjourned in order to permit the further solicitation of proxies.
As to the election of directors, the proxy card being provided by the Board
of Directors enables a shareholder to vote "FOR" the election of the nominees
proposed by the Board, or to "WITHHOLD AUTHORITY" to vote for one or more of the
nominees being proposed. Under
2
Delaware law and the Company's Certificate of Incorporation and Bylaws,
directors are elected by a plurality of votes cast, without regard to either (i)
broker non-votes, or (ii) proxies as to which authority to vote for one or more
of the nominees being proposed is withheld.
As to the approval of the Reliance Bancorp, Inc. 1996 Stock Option Plan
(the "1996 Stock Option Plan"), by checking the appropriate box, you may: (i)
vote "FOR" the item; (ii) vote "AGAINST" the item; or (iii) "ABSTAIN" with
respect to the item. Under Delaware law, an affirmative vote of holders of the
majority of the shares of Common Stock present at the Annual Meeting, in person
or by proxy, and entitled to vote is required to constitute stockholder approval
of this proposal. Shares as to which the "ABSTAIN" box has been selected on the
proxy card, will be counted as present and entitled to vote and will have the
effect of a vote "AGAINST" approval of the 1996 Stock Option Plan. In contrast,
shares underlying broker non-votes or in excess of the Limit will not be counted
as a present and entitled to vote and will have no effect.
As to the approval of KPMG Peat Marwick LLP as independent auditors of the
Company and all other matters that may properly come before the Annual Meeting,
by checking the appropriate box, you may: (i) vote "FOR" the item; (ii) vote
"AGAINST" the item; or (iii) "ABSTAIN" with respect to the item. Under the
Company's Certificate of Incorporation and Bylaws, unless otherwise required by
law, all such matters shall be determined by a majority of the votes cast,
without regard to either (a) broker non-votes, or (b) proxies marked "ABSTAIN"
as to that matter.
Proxies solicited hereby will be returned to the Company's transfer agent,
Registrar and Transfer Company, and will be tabulated by inspectors of election
designated by the Board, who will not be employed by, or a director of, the
Company or any of its affiliates. After the final adjournment of the Annual
Meeting, the proxies will be returned to the Company for safekeeping.
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information as to those persons who
are beneficial owners of more than 5% of the Company's outstanding shares of
Common Stock on the Record Date based solely upon disclosure in certain reports
received by the Company regarding such ownership filed with the Company and with
the Securities and Exchange Commission, in accordance with Sections 13(d) or
13(g) of the Securities Exchange Act of 1934, as amended, ("Exchange Act") by
such persons and groups. Other than those persons listed below, the Company is
not aware of any person or group, as such term is defined in the Exchange Act,
that owns more than 5% of the Company's Common Stock as of the Record Date.
3
Number of Shares Percent
Name and Address and Nature of of
Title of Class of Beneficial Owner Beneficial Ownership Class(1)
-------------- ------------------- -------------------- --------
Common Stock Reliance Federal Savings Bank 826,169 9.27%
Employee Stock Ownership Plan ("ESOP") (2)
585 Stewart Avenue
Garden City, NY 11530
Common Stock Miller, Anderson & Sherrerd (3)
1 Tower Bridge
West Conshohocken, PA 19428
(1) As of the record date there were 8,911,739 shares of common stock
outstanding.
(2) A Committee of the Board of Directors has been appointed to administer the
ESOP (the "ESOP Committee"). An unrelated third party has been appointed as
the corporate trustee for the ESOP ("ESOP Trustee"). The ESOP Committee may
instruct the ESOP Trustee regarding investment of funds contributed to the
ESOP. The ESOP Trustee must vote all allocated shares held in the ESOP in
accordance with the instructions of the participants. As of the Record
Date, 165,600 shares of Common Stock in the ESOP have been allocated to
participants. Under the ESOP, unallocated shares held in the suspense
account will be voted by the ESOP Trustee in a manner calculated to most
accurately reflect the instructions received from participants regarding
the allocated stock so long as such vote is in accordance with the
provisions of Employee Retirement Income Security Act of 1974, as amended
("ERISA").
(3) Based on a Schedule 13G, filed on February 12, 1996 for the year ended
December 31, 1995, in which Miller, Anderson & Sherrerd, an investment
advisor disclosed that it had sole power to dispose or to direct the
disposition of 507,300 shares.
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1. ELECTION OF DIRECTORS
Pursuant to the Company's Bylaws, the number of directors of the Company
may be designated by the Board of Directors. In June 1996, the Board of
Directors designated that the number of directors be increased to eight (8) and
Mr. Conrad J. Gunther, Jr. was appointed to the Board of Directors for a term
expiring in 1998. All the members of the Board of Directors of the Company also
presently serve as directors of the Bank. Directors are elected for staggered
terms of three years each, with a term of office of only one of the three
classes of directors expiring each year. Directors serve until their successors
are elected and qualified.
The nominees proposed for election at the Annual Meeting are Messrs. Thomas
G. Davis, Jr. and Donald LaPasta. All nominees named are presently directors of
the Company and the Bank. No person being nominated as a director is being
proposed for election pursuant to any agreement or understanding between any
such person and the Company.
In the event that either Mr. Davis or Mr. LaPasta are unable to serve or
declines to serve for any reason, it is intended the proxies will be voted for
the election of such other person as may be designated by the present Board of
Directors. The Board of Directors has no reason to believe that Messrs. Davis
and LaPasta will be unable or unwilling to serve. Unless authority to vote for
the nominees is withheld, it is intended that the shares represented by the
enclosed proxy card if executed and returned will be voted FOR the election of
the nominees proposed by the Board of Directors.
4
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR THE ELECTION OF THE
NOMINEES NAMED IN THIS PROXY STATEMENT.
Information with respect to the Nominees, Continuing Directors, and Named
Executive Officers
The following table sets forth, as of the Record Date, the names of the
nominees and the continuing directors and certain executive officers, their
ages, a brief description of their recent business experience, including present
occupations and employment, certain directorships held by each, the year in
which each became a director and the year in which their terms (or in the case
of the nominees, their proposed terms) as director of the Company expire. The
table also sets forth the amount of Common Stock and the percent thereof
beneficially owned by each director and each Named Executive Officer (see
"Summary Compensation Table") and all directors and executive officers as a
group as of the Record Date.
Shares of
Name and Principal Expiration Common Stock Ownership
Occupation at Present and Director of Term as Beneficially As a Percent
for the Past Five Years Age Since(1) Director Owned(2) of Class(3)
----------------------- --- -------- -------- -------- -----------
Nominees
Thomas G. Davis, Jr. 62 1991 1999 52,385 (4)(5) *
Retired President and Director of
Institutional Mortgage Investors
Management Corporation, a national
investment firm involved in the
purchase of mortgages for pension
and other types of funds.
Donald LaPasta 77 1958 1999 52,074 (4)(5) *
Retired Chairman of the Board and
Chief Executive Officer of the Bank.
Continuing Directors
Conrad J. Gunther, Jr. 50 1996 1998 2,052 (4)(5) *
Vice President of Allied Coverage Corp,
an independent insurance brokerage
Raymond L. Nielsen 70 1961 1998 154,784 (6)(7) 1.65%
Chairman of the Board and former (9)
Chief Executive Officer of the
Company and the Bank.
5
Shares of
Name and Principal Expiration Common Stock Ownership
Occupation at Present and Director of Term as Beneficially As a Percent
for the Past Five Years Age Since(1) Director Owned(2) of Class(3)
----------------------- --- -------- -------- -------- -----------
Continuing Directors (Continued)
J. William Newby 68 1979 1998 47,205 (4)(5) *
Owner/President of Beacon
Mortgage Company, a national
mortgage brokerage and servicing firm.
Raymond A. Nielsen (8) 45 1983 1997 149,584 (6)(7) 1.60%
President and Chief Executive (9)
Officer of the Company and the Bank
since July 1, 1996. Formerly Chief
Operating Officer of the Bank from
June 18, 1986 to June 30, 1996.
Douglas G. LaPasta (10) 50 1983 1997 43,385 (4)(5) *
Principal of Stonehill Management
Consultants, a management
consulting firm.
Peter F. Neumann 62 1982 1997 60,885 (4)(5) *
President of Bradley Parker, Flynn-
Neumann, Inc., an insurance agency
and director of Vicon Industries, Inc.
Executive Officers Who Are Not Directors
Gerald M. Sauvigne 43 -- -- 54,717 (6)(7) *
Executive Vice President and (9)
Treasurer of the Company
and the Bank.
Robert F. Pelosi 64 -- -- 40,242 (6)(7) *
Senior Vice President and (9)
Secretary of the Company
and the Bank.
John F. Traxler 48 -- -- 38,265 (6)(7) *
Vice President and Investment (9)
Officer of the Company
and the Bank.
All directors and executive officers -- -- -- 909,750 (11) 9.71%
as a group (21 persons)
- ----------
*Does not exceed 1.0% of the Company's voting securities.
(Footnotes on next page)
6
(1) Includes years of service as a director of the Company's predecessor, the
Bank.
(2) Each person effectively exercises sole (or shares with spouse or other
immediate family member) voting or dispositive power as to shares reported.
(3) For purposes of calculating the aggregate ownership percentage, all
presently exercisable options have been added to the amount of outstanding
common stock as of the record date.
(4) Includes 11,799 unvested shares awarded each to Messrs. Davis, Donald
LaPasta, Douglas G. LaPasta, Neumann, Newby and 1,552 shares awarded to Mr.
Gunther under the Reliance Federal Savings Bank Recognition and Retention
Plan for Outside Directors (the "DRP"). Although awards granted under the
plan vest at a rate of 20% commencing March 31, 1995 for each participant
except Mr. Gunther whose award begins vesting on June 19, 1997, each
participant presently has voting power as to the shares awarded.
(5) Includes 26,220 options granted each to Messrs. Davis, Donald LaPasta,
Neumann and Newby and 22,220 granted to Douglas G. LaPasta, under the
Reliance Bancorp, Inc. 1994 Stock Option Plan for Outside Directors (the
"Directors' Option Plan") which are currently exercisable. Excludes 13,110
shares subject to option granted each to Messrs. Davis, Donald LaPasta,
Douglas G. LaPasta, Neumann, and Newby which will vest on March 31, 1997
and 6,727 shares granted to Mr. Gunther which are exercisable at a rate of
33 1/3% per year commencing June 19, 1997.
(6) Includes 54,272; 54,272; 14,904; 11,799; and 9,315 of unvested shares
awarded to Messrs. R.L. Nielsen, R.A. Nielsen, Sauvigne, Pelosi and
Traxler, respectively, under the Reliance Federal Savings Bank Recognition
and Retention Plan for Officers and Employees (the "MRP"). MRP awards
granted under the plan vest at a rate of 20% per year commencing March 31,
1995 and November 9, 1995. Each participant presently has voting power as
to the shares awarded.
(7) Includes 62,100;62,100; 22,356; 15,732 and 14,490 shares subject to options
granted to Messrs. R.L. Nielsen, R.A. Nielsen, Sauvigne, Pelosi and
Traxler, respectively, under the Reliance Bancorp, Inc. 1994 Incentive
Stock Option Plan which are currently exercisable. Excludes 93,150; 93,150;
33,534; 23,598 and 21,735, respectively, of shares subject to option which
become exercisable at a rate of 33 1/3% per year commencing March 31, 1997.
(8) Raymond A. Nielsen is the son of Raymond L. Nielsen.
(9) Includes 5,594; 5,594; 5,594; 4,660 and 4,250 shares awarded to Messrs.
R.L. Nielsen, R.A. Nielsen, Sauvigne, Pelosi and Traxler, respectively,
under the Reliance Federal Savings Bank Employee Stock Ownership Plan (the
"ESOP").
(10) Douglas G. LaPasta is the nephew of Donald LaPasta.
(11) Excludes a total of 72,277 options granted to six outside directors under
the 1994 Stock Option Plan for Outside Directors. Excludes a total of
494,937 shares subject to options awarded under the 1994 Incentive Stock
Option Plan. Includes a total of 386,449 shares awarded under the MRP and
DRP, as to which voting may be directed.
Note: The above table does not include options granted to Executive Officers and
Directors pursuant to the 1996 Stock Option Plan.
Meetings of the Board and Committees of the Board
The Board of Directors of the Company conducts its business through
meetings of the Board and through activities of its committees. The Board of
Directors of the Company meets quarterly and may have additional meetings as
needed. During fiscal 1996, the Board of Directors of the Company held 15
meetings. All of the directors of the Company attended at least 75% in the
aggregate of the total number of the Company's board meetings held and committee
meetings on which such director served during fiscal 1996. The Board of
Directors of the Company maintains committees, the nature and composition of
which are described below:
7
Audit Committee. The Audit Committee of the Company consists of Messrs.
Newby, Donald LaPasta and Davis all of whom are outside directors. This
committee meets on a quarterly basis to meet with the internal and independent
auditors and to review the plans and reports of such auditors. The Audit
Committee met two (2) times in fiscal 1996.
Nominating Committee. The Company's Nominating Committee for the 1996
Annual Meeting consisted of Messrs. Douglas G. LaPasta, R. L. Nielsen, R. A.
Nielsen, Newby and Neumann. The Committee considers and recommends the nominees
for Director to stand for election at the Company's annual meeting of
stockholders. The Company's Certificate of Incorporation and Bylaws provide for
stockholder nominations of Directors. These provisions require such nominations
to be made pursuant to timely notice in writing to the Secretary of the Company.
The stockholder's notice of nomination must contain all information relating to
the nominee which is required to be disclosed by the Company's Bylaws and by the
Exchange Act. See "Additional Information - Notice of Business to Be Conducted
at an Annual Meeting." The Nominating Committee met on June 19, 1996.
Compensation/Benefits Committee. The Joint Compensation Committee of the
Company and the Bank (the "Compensation Committee") consists of Messrs. Neumann,
Newby, Donald LaPasta, Douglas G. LaPasta and Davis. The Compensation Committee
establishes guidelines for the level of compensation and to review incentive
compensation programs for executive officers. The Compensation Committee met
four times in fiscal 1996.
Proxy Committee. The Proxy Committee of the Company consists of Messrs.
R.L. Nielsen, Neumann and Newby. The Proxy Committee serves as proxy for
stockholders solicited by the Board of Directors for voting at annual meetings
or other meetings of stockholders. The Proxy Committee met once in fiscal 1996.
Directors' Compensation
Directors' Fees. Each outside director of the Company receives an annual
retainer of $6,000, except for the Chairman who receives a salary at $1,000 per
month. No additional fees are paid for attending meetings. The annual retainer
for outside directors of the Bank is currently $18,000, payable on an annual
basis with the exception of the Chairman of the Board who receives $36,000. In
addition, each outside director of the Bank receives $1,000 for each meeting
attended. Neither the Company nor the Bank pays fees for committee meetings.
Directors' Consultation and Retirement Plan. The Bank has established the
Reliance Federal Savings Bank Outside Directors' Consultation and Retirement
Plan (the "Directors' Retirement Plan"). Outside directors of the Bank, who have
served the Bank for at least ten years and who have attained the age of at least
70, will be eligible to receive benefits under the Directors' Retirement Plan.
Pursuant to such plan, if, within thirty days of retirement, an outside director
agrees to provide consulting services to the Bank, such outside director shall
be paid an annual retirement benefit, in equal monthly installments, equal to
the lesser of the number of
8
months such outside director agrees to provide consulting services or ten years.
The annual benefit will be based on the outside director's annual retainer fee
determined as of the outside director's termination date.
Directors' Option Plan. The Company has adopted the Reliance Bancorp, Inc.
1994 Stock Option Plan for Outside Directors ("the Directors' Option Plan"), the
purpose of which is to promote the growth and profitability of the Bank by
providing an incentive in the form of stock options to attract and retain
outside directors of the Company and the Bank by encouraging their acquisition
of an equity interest in the Company.
Under the Directors' Option Plan, outside directors were granted, effective
March 31, 1994, non-statutory stock options to purchase 196,650 shares of Common
Stock. Accordingly, Messrs. Donald LaPasta, Douglas LaPasta, Neumann, Newby, and
Davis were each granted an option to purchase 39,330 shares of the Company's
Common Stock at an exercise price of $10.00 per share. On June 19, 1996, under
the same plan, Mr. Gunther, who became a director as of such date, was granted
6,727 shares of common stock at a price of $15.25.
All options granted pursuant to the Directors' Option Plan become
exercisable on a cumulative basis in equal annual installments at a rate of 33
1/3% per year commencing on March 31, 1995 with respect to Messrs. Donald
LaPasta, Douglas LaPasta, Neumann, Newby and Davis and June 19, 1997 with
respect to Mr. Gunther. To satisfy the exercise of an option under the Directors
Option Plan, either authorized but unissued shares or treasury shares may be
used.
All options granted under the Directors Option Plan expire upon the earlier
of 10 years following the date of grant or one year following the date the
optionee ceases to be a director for any reason other than removal for cause, in
which case they terminate immediately. Upon death or disability of the
participant, retirement from the Board upon reaching mandatory retirement as
specified in the Bylaws of the Company or the Bank or in the event of a change
of control as defined in the Directors' Option Plan, all options previously
granted automatically become exercisable.
Bank Recognition and Retention Plan for Outside Directors. The Bank has
established the Reliance Federal Savings Bank Recognition and Retention Plan for
Outside Directors (the "DRP") as a method of providing directors with a
proprietary interest in the Company to encourage them to continue to serve with
the Bank. Awards to directors vest in equal annual installments at a rate of 20%
per year commencing one year from the date of grant. Awards will be 100% vested
upon termination of employment or service as a director due to death or
disability of the director or following a change in the control of the Bank or
the Company. In the event a director otherwise discontinues service on the Board
prior to earning all plan shares subject to an award, the directors nonvested
awards will be forfeited. When shares become vested and are actually distributed
in accordance with the DRP, the recipients will also receive amounts equal to
any accrued dividends with respect thereto. Prior to vesting, recipients of
awards may direct voting of the shares allocated to them.
9
Executive Compensation
The following report of the compensation committee and the stock
performance graph shall not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933 (the "Securities Act") or the Exchange Act, except as
to the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
Compensation Committee Report on Executive Compensation.
Under rules established by the Securities and Exchange Commission (the
"SEC"), the Company is required to provide certain data and information in
regard to the compensation and benefits provided to the Company's Chief
Executive Officer and other executive officers. The disclosure requirements for
the Chief Executive Officer and other executive officers include the use of
tables and a report explaining the rationale and considerations that led to the
fundamental compensation decisions affecting those individuals. The Company and
the Bank have a Joint Compensation/Benefits Committee consisting of only
disinterested outside directors. In the past, given the limited nature of the
operations of the Company, no annual compensation was paid to executive officers
of the Company for their services as officers of the Company. For fiscal 1997,
the Chairman of the Board will receive compensation of $1,000 per month for
services performed for the Company. Accordingly, the following discussion
addresses compensation paid by the Bank to executive officers of the Bank. In
fulfillment of the SEC requirement, the Compensation Committee has prepared the
following report for inclusion in this proxy statement.
General. The stated purpose of the Compensation Committee is to review the
respective compensation philosophy and programs and exercise authority with
respect to the payment of direct salaries and incentive compensation to the
directors and officers of the Bank and Company and serve as administrator for
certain benefit plans of the Bank and Company as may be determined by the Board
of Directors. The Compensation Committee periodically reviews and determines the
compensation of the Chief Executive Officer and certain other executive
officers, and authorizes the compensation paid to the remaining officers and
employees.
Base Salary. All officers' salaries are reviewed annually in June for the
upcoming fiscal year. Management prepares its recommendations (for all employees
and officers other than the CEO and President) and supplies the Compensation
Committee with reference materials such as various published compensation
surveys and other supporting documentation. Salary levels are designed to be
competitive with cash compensation levels paid by peer group institutions. The
Bank generally considers its peer group to be thrift institutions and banks with
assets between $1.0 billion and $5.0 billion operating within the Mid-Atlantic
region, with specific emphasis on the metropolitan New York area and generating
a comparable Return on Equity. The peer group used to compare salaries is not
necessarily comprised of the same institutions which make up the peer group used
in the Stock Performance Graph. Among the published compensation surveys used to
determine compensation levels for the Chief Executive Officer, President and
other executive
10
officers for the July 1995 salary adjustment were the "1995 SNL Executive
Compensation Review" (by SNL Securities), "1994 Executive Compensation Practices
in Financial Companies" (KPMG Peat Marwick), and "1994 Compensation for Savings
Institutions" (by the Savings and Community Bankers of America). Evaluations of
the executive officers of the Bank and their specific levels of compensation are
based on discretionary criteria and no specific formula is utilized to fix
annual compensation.
Short-term Incentive Compensation. The Bank maintains a formal "Incentive
Compensation Plan." The Plan is specifically designed to provide a short-term
incentive to executive officers and other officers of the Bank. The Compensation
Committee considers the payment of discretionary awards if and when appropriate
under the terms of the Plan. Prior to the start of each Fiscal Year, the
Committee establishes a "Target Incentive Award" for each Participant, based on
that Participant's "Target Incentive Award Category." Each Award is determined
by a weighted measurement system containing two components: the Bank's financial
performance and the individual officer's performance.
The financial performance component consists of a variety of factors
including, but not limited to, earnings per share and returns on average equity.
The Committee determines the weight to be assigned to each factor, and in any
given semi-annual Award Period different factors may be emphasized and all
factors may not be addressed. Financial performance targets or goals are judged
against the Bank's own anticipated performance and the actual experience of the
Bank's peers. The Committee makes this performance measure as objective and
quantitative as possible, and the Target Incentive Award has been structured so
that this component makes up the majority of the award.
The Compensation Committee of the Bank, which administers the plan, has
discretion under the Incentive Compensation Plan to make adjustments in
Incentive Compensation awards where circumstances warrant. In addition, the
Committee retains the right to include an "Exceptional Performance Component".
This component, awarded for exceptional Bank financial performance, may not
exceed 120% of the Target Incentive Award. For fiscal 1996, the Company's
financial performance was in the areas specified within the Plan and the
individual officers' performance, resulted in awards ranging from 90% to 100% of
the Target Incentive Award.
Long-term Incentive Compensation. The long-term incentive compensation
portion of Company's and the Bank's compensation program consists of the
Employee Stock Ownership Plan (the "ESOP"), the Recognition and Retention Plan
for Officers and Employees (the "MRP"), the Incentive Stock Option Plan all of
which were established in conjunction with the Bank's conversion and the
company's initial public stock offering. Additionally, on July 17, 1996, the
Board of Directors adopted the 1996 Stock Option Plan which is submitted to
stockholders for approval under Proposal 2 of this Proxy statement. The ESOP,
Incentive Stock Option Plan, MRP and 1996 Stock Option Plan are designed as an
incentive to the executive officers and employees of the Bank and act to align
the interests of the officers and employees of the Bank with
11
stockholders. The executive and other officers of the Bank were awarded
options/shares under the Incentive Stock Option Plan and the MRP which were
allocated by the Compensation Committee based upon regulatory practices and
policies, the practices of other recently converted financial institutions as
verified by external surveys and based upon the executive officer's level of
responsibility and contributions to the Bank as determined by the Compensation
Committee. The outstanding awards are taken into account in determining annual
compensation for the executive officers.
The Compensation Committee administers the MRP, determines which eligible
employees will be granted plan share awards (the "Plan Share Awards") and grants
Plan Share Awards. Under the MRP, Plan Share Awards, which are nontransferable
and nonassignable, are granted in the form of shares of Company Common Stock
which are held in trust until the Plan Share Awards vest. See the "Summary
Compensation Table."
Chief Executive Officer. Effective July 1, 1995, Mr. Raymond L. Nielsen was
granted a salary increase of 7.14% to bring his annual compensation to $375,000.
This salary adjustment and the Incentive Compensation paid to Mr. R.L. Nielsen
recognized his significant contributions to the Bank's successful operations and
reputation in our marketplace and maintains his overall compensation on a
competitive level with industry peers. In comparison to cash compensation paid
to Chief Executive Officers by industry peer groups, Mr. R.L. Nielsen's salary
was similar to the average compensation survey relied upon by the Compensation
Committee. No specific formula is used in connection with the Committee's
decisions regarding the Chief Executive Officer's annual salary nor did the
Committee set specified salary levels based on the achievement of particular
quantifiable objectives or financial goals of the Bank. Rather, the Committee
considered the overall profitability of the Bank and the contributions made to
the Bank by the CEO.
Compensation/Benefits Committee of the Company and Bank.
Peter F. Neumann (Chairman)
Donald LaPasta Douglas G. LaPasta
Thomas G. Davis, Jr. J. William Newby
Compensation Committee Interlocks and Insider Participation. All of the
members of the Compensation Committee -- Messrs. Donald LaPasta, Douglas G.
LaPasta, Neumann, Newby and Davis -- are outside directors of the Company. The
SEC further requires disclosure of, among other items, any member of the
Compensation Committee who was formerly an officer of the company or any of its
subsidiaries. Director Donald LaPasta, member of the Compensation Committees of
both the Bank and the Company, was formerly the Chairman of the Board and Chief
Executive Officer of the Bank. Mr. LaPasta retired from the Bank on October 1,
1983.
Stock Performance Graph. The following graph shows a comparison of
cumulative total shareholder return on the Company's Common Stock, based on the
market price of the Common Stock assuming reinvestment of dividends, with the
cumulative total return of companies in the Nasdaq National Market and Nasdaq
Bank Stocks for the period beginning on March 31, 1994, the day the Company's
Common Stock began trading, through June 30, 1996.
12
Cumulative Total Return Among Reliance Bancorp, Inc. Common Stock,
CRSP Nasdaq Market Index and CRSP Nasdaq Bank Index
March 31, 1994 - June 30, 1996
[THE FOLLOWING WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED DOCUMENT]
SUMMARY
3/31/94 6/30/94 12/31/94 6/30/95 12/31/95 6/30/96
------- ------- -------- ------- -------- -------
Reliance Bancorp, Inc. 100.000 123.684 112.518 154.003 160.476 174.007
CRSP Nasdaq Market Index 100.000 95.325 102.041 127.093 144.292 163.357
CRSP Nasdaq Bank Index 100.000 107.945 100.856 121.786 150.211 158.824
Notes:
A. The lines represent index levels derived from compounded daily returns that
include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the interval is not a trading day, the preceding trading day is used.
D. The index level for all series were set to $100.00 on 3/31/94.
13
Summary Compensation Table. The following table shows, for the fiscal years
ending June 30, 1996, 1995 and 1994, the cash compensation paid by the Bank, as
well as certain other compensation paid or accrued for those years, to the Chief
Executive Officer and the other highest paid Executive Officers of the Company
and/or the Bank who received an amount in salary and bonus in excess of $100,000
in fiscal 1996. The Company did not pay any cash compensation in fiscal year
1996, 1995 and 1994.
Annual Compensation Long-Term Compensation
------------------- ----------------------
Awards Payouts
------ -------
Other Restricted Securities
Annual Stock Underlying All Other
Name and Bonus Compensation Awards Options/ LTIP Compensation
Principal Office Year Salary($) ($)(1) ($)(2) ($)(3) SARs (#)($)(4) Payouts(5) $(7)
---------------- ---- --------- ------ ------ ------ -------------- ---------- ----
Raymond L. Nielsen 1996 375,000 93,750 -- -- -- -- 83,156
Chief Executive Officer and 1995 356,730 87,500 -- 426,298(6) -- -- 48,342
Chairman of the Board (8) 1994 301,844 91,250 -- 350,000 155,250 -- --
Raymond A. Nielsen 1996 305,000 76,250 -- -- -- -- 95,062
President and Chief 1995 294,558 72,250 -- 426,298(6) -- -- 73,896
Operating Officer (8) 1994 261,659 86,000 -- 350,000 155,250 -- --
Gerald M. Sauvigne 1996 145,000 29,000 -- -- -- -- 5,694
Senior Vice President 1995 137,596 27,000 -- -- -- -- --
and Treasurer (8) 1994 108,636 35,000 -- 248,400 55,890 -- --
Robert F. Pelosi 1996 110,000 22,000 -- -- -- -- --
Senior Vice President 1995 107,019 21,000 -- -- -- -- --
and Secretary 1994 93,079 21,600 -- 196,650 39,330 -- --
John F. Traxler 1996 105,000 16,800 -- -- -- -- --
Vice President and 1995 101,923 17,000 -- -- -- -- --
Investment Officer 1994 89,118 14,000 -- 155,250 36,225 -- --
(1) Consists of payments under the Bank's Incentive Compensation Plan. See
Executive Compensation- Compensation Committee Report.
(2) For fiscal years 1996, 1995 and 1994, there were no (a) perquisites over
the lesser of $50,000 or 10% of the individual's total salary and bonus for
the year; (b) payments of above-market preferential earnings on deferred
compensation; (c) payments of earnings with respect to long-term incentive
plans prior to settlement or maturation; (d) tax payment reimbursements; or
(e) preferential discounts on stock.
(3) Pursuant to the MRP, Messrs. R.L. Nielsen, R.A. Nielsen, Sauvigne, Pelosi
and Traxler held an aggregate of 54,272; 54,272; 14,904; 11,799 and 9,315
unvested shares of Common Stock, respectively, as of June 30, 1996. The
market value of all shares at June 30, 1996 would have been $848,000;
$848,000; $232,875; $184,359 and $145,547 for Messrs. R.L. Nielsen, R.A.
Nielsen, Sauvigne, Pelosi and Traxler, respectively. Such awards will vest
in five equal installments at a rate of 20% per year, the first of which
commenced on March 31, 1995, with the exception of 41,590 shares granted to
each of Messrs. R.L. Nielsen and R.A. Nielsen which will vest in five equal
installments at a rate of 20% per year, beginning on November 9, 1995. See
footnote (6) for discussion of 1995 grant. When shares become vested and
are distributed, the recipient will also receive an amount equal to
accumulated dividends and earnings thereon (if any). All awards vest
immediately upon termination of employment due to death, disability or
following a change in control.
(4) Includes options granted under the Incentive Stock Option Plan. Each
incentive stock option was granted in tandem with a limited rights, which
is exercisable only in the event of a change in control of the Company.
(Footnotes continued next page)
14
(5) For the fiscal year 1994, the Bank had no long-term incentive plans in
existence and therefore made no payouts or awards under any such plan. The
Bank did not make any payment of long-term incentive plans in fiscal 1995
and 1996.
(6) Messrs. R.L. Nielsen and R.A. Nielsen were each granted plan share awards
of 41,590 shares of Common Stock to vest in equal annual installments of
20% per year commencing on November 9, 1995 pursuant to the MRP. The market
price on the date of grant was $10.25 per share.
(7) For fiscal year 1996, amount includes SERP contributions of $67,556,
$48,362 and $2,094 for Messrs. R.L. Nielsen, R.A. Nielsen and Sauvigne,
respectively, for the reduction of benefits related to the Bank's ESOP and
$15,600, $46,700 and $3,600, respectively, for reduction of benefits under
the Bank's defined benefit pension plan.
(8) Effective July 1, 1996, Mr. R.L. Nielsen is the Chairman of the Board, Mr.
R.A. Nielsen is the President and Chief Executive Officer and Mr. Sauvigne
is the Executive Vice President and Treasurer.
Employment Agreements. The Bank and the Company have entered into
employment agreements with Messrs. R.A. Nielsen, Sauvigne, Pelosi, and Traxler.
The Company also has entered into an employment agreement with Mr. R.L. Nielsen.
These employment agreements are intended to ensure that the Bank and the Company
will be able to maintain a stable and competent management base. The continued
success of the Bank and the Company depends to a significant degree on the
skills and competence of these individuals.
On September 11, 1996, the Company adopted new employment agreements for
Messrs. R.A. Nielsen and Sauvigne and amended the employment agreements of
Messrs. Pelosi and Traxler. The new employment agreements also reflected the
promotions of Mr. R.A. Nielsen to Chief Executive Officer and of Mr. Sauvigne to
Executive Vice President effective July 1, 1996. The Company employment
agreements provide for a five-year term for each of Messrs. R.L. Nielsen, R.A.
Nielsen and Sauvigne and provide for a two-year term for each of Messrs. Pelosi
and Traxler, except that the term is three years with respect to the obligation
to make payments based on termination of employment after a change in control as
discussed below. The Bank agreements provide that commencing on July 1, 1996 and
continuing on July 1 of each year thereafter, the Board of Directors of the Bank
may, with the consent of the respective employees, extend the employment
agreements with the Bank for an additional year, such that the remaining terms
of the respective agreements shall be the amount of the original term unless
written notice of non-renewal is given by the Board of Directors after
conducting a performance evaluation of the executive. The employment agreements
with the Company provide for automatic daily extensions such that the remaining
terms shall be the amount of the original term unless written notice of
non-renewal is given by the Board of Directors or the employee. The Company and
Bank employment agreements provide that Messrs. R.L. Nielsen, R.A. Nielsen,
Sauvigne, Pelosi and Traxler will receive annual base salaries of $12,000,
$375,000, $175,000, $120,000 and $107,500, respectively, which will be reviewed
annually by the Board. In addition to the base salary, the Company and Bank
employment agreements provide for, among other things, disability payments,
participation in retirement plans, stock benefit plans and other compensation
plans applicable to executive personnel from time to time. The Company and Bank
employment agreements provide for termination by the Bank or the Company for
"cause", as defined in such agreements, at any time. In the event the Bank or
the Company chooses to terminate the executive's employment for reasons other
than a change in control, retirement or for cause or in
15
the event of the executive's resignation from the Bank and the Company
subsequent to: (i) the failure to re-elect the executive to his current offices
or the extent this executive serves as a director of the Company, failure to
renominate or reelect the executive as a director; (ii) a material adverse
change in the executive's functions, duties or responsibilities, or relocation
of his principal place of employment, or a material reduction in benefits or
perquisites; (iii) liquidation or dissolution of the Bank or the Company; or
(iv) a breach of the agreement by the Bank or the Company, the executive or, in
the event of death, his beneficiary, would be entitled to receive an aggregate
payment amount equal to the amount of the remaining payments (or benefits) that
the executive would have earned if he continued his employment with the Bank or
Company during the remaining unexpired term of the agreement based on the
executive's defined base salary on the date the executive was terminated.
Additionally, the Company employment agreement of Messrs. R.A. Nielsen and
Sauvigne provide that in the event of their termination of employment, the
Company or any of its subsidiaries amend any employee benefit plan maintained by
the Company or any of its subsidiaries such that it reduces the benefits payable
to the executives that the Company will provide the executive with an economic
benefit equal to the amount of any such reduction on an annual basis.
Under the terms of the Company employment agreements, if termination of
employment, whether voluntary or involuntary, follows a "change in control" of
the Bank or the Company, as defined in the employment agreements, the executive
or, in the event of death, his beneficiary, would be entitled to an aggregate
payment equal to the greater of (1) the payments due under the remaining term of
the agreement, (2) five times the average annual compensation with respect to
Messrs. R.L. Nielsen, R.A. Nielsen and Sauvigne or (3) three times the average
compensation with respect to Messrs. Pelosi and Traxler. Such average annual
compensation will be determined, in the case of the Bank employment agreements,
over the five most recent taxable years, and, in the case of the Company
employment agreements, for the three or two preceding taxable years, whichever
is applicable to the term of the respective employment agreement. Such average
annual compensation shall include any commissions, bonuses, pension and profit
sharing plan benefits, severance payments, retirement benefits, director or
committee fees and fringe benefits paid or to be paid to the executive in any
such years. The Bank and the Company would also continue the executive's life,
health, and disability coverage and any dependent that is currently covered by
such plans, for the remaining unexpired term of the agreements to the extent
allowed by the plans or policies maintained by the Company or Bank from time to
time. Payments to the executive under the Bank's employment agreements will be
guaranteed by the Company in the event that payments or benefits are not paid by
the Bank. The agreements also provide that the Bank and the Company shall
indemnify the executive to the fullest extent allowable under federal and
Delaware law, respectively.
In the event of a change in control of the Bank or the Company, the total
amount of payments due under the Company employment agreements, in the
aggregate, based solely on cash compensation paid to the five executives covered
by such agreements over the past three or two taxable years and excluding any
benefits under any employee benefit plan which may be payable, are estimated to
be approximately: $2.4 million for Mr. R.L. Nielsen, $2.1 million for Mr. R.A.
16
Nielsen, $849,000 for Mr. Sauvigne, $466,000 for Mr. Pelosi and $402,000 for Mr.
Traxler. In addition, upon a change in control, certain awards made to each of
the executives under the Incentive Option Plan and the MRP would vest
immediately. If any amounts payable in connection with any change in control are
determined to be "excess parachute payments" under Section 280G of the code
resulting in the imposition of the 20% excise tax on such payments under Section
4999 of the code, each officer will receive from the Company an additional
amount such that the effect of the imposition of that excise tax is effectively
eliminated.
Stock Option Plan. The following table provides certain information with
respect to the number of shares of Common Stock represented by outstanding stock
options held by the Named Executive Officers as of June 30, 1996. Also reported
are the values for "in-the-money" options which represent the positive spread
between the exercise price of any such existing stock options and the year-end
price of the Common Stock. No options were exercised by the Named Executive
Officers in fiscal year 1996.
FISCAL YEAR END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the- Money Options
Options at June 30, 1996 at June 30, 1996
Name Exercisable/Unexercisable Exercisable/Unexercisable
(#) ($)(1)
- ------------------- -------------------------- -------------------------
Raymond L. Nielsen 62,100 / 93,150 349,313 / 523,969
Raymond A. Nielsen 62,100 / 93,150 349,313 / 523,969
Gerald M. Sauvigne 22,356 / 33,534 125,726 / 188,629
Robert F. Pelosi 15,732 / 23,598 88,493 / 132,739
John F. Traxler 14,490 / 21,735 81,506 / 122,254
(1) Market Value of underlying securities at fiscal year-end ($15.625) minus
the exercise or base price, $10.00 per share.
Pension Plan. The Bank maintains the Reliance Federal Savings Bank
Retirement Plan (the "Pension Plan"), for the benefit of the employees of the
Bank. The Pension is a noncontributory defined benefit pension plan. All
employees over the age of 21 who have worked 1,000 hours at the Bank for a
twelve month period are eligible to participate in the Pension Plan. The Bank
annually contributes an amount to the Pension Plan necessary to satisfy the
actuarially determined minimum funding requirements in accordance with ERISA.
Upon the attainment of normal retirement age (age 65), a participant is
entitled to a retirement benefit in an amount equal to 50.0% of the
participant's average annual base wage (determined by using the participant's
earnings for the highest five complete consecutive plan years out of the last
ten plan years of a participant's employment) multiplied by a ratio, the
17
numerator of which is the number of months of the participant's service, and the
denominator of which is 240. Under the Pension Plan, benefits are also payable
for termination due to early retirement or death of a married participant.
Benefits become vested after a participant completes five years of service. In
the case of death, or early retirement occurring on or after attainment of age
60, but after the completion of five years of service, benefits are reduced if
they commence prior to age 65.
Supplemental Executives' Retirement Plan. The Bank maintains the Reliance
Federal Savings Bank Supplemental Executives' Retirement Plan (the "SERP"),
which is intended to provide an additional retirement benefit to designated
executives who are participants in the Bank's tax qualified plans, and whose
benefits under such plans are reduced due to the limitations imposed by Section
415 of the Code on the maximum annual benefits and contributions that may be
made with regard to such plans and the limitations imposed by Section 401(a)(17)
of the Code on the maximum amount of compensation that may be taken into account
in determining benefits and contributions with respect to such plans. The SERP
is intended to provide a benefit equal to the benefit the participant would have
received under the applicable tax qualified plans if the Code's limitations did
not apply and the amounts such individuals will actually receive with the
application of the Code's limitations.
The following table sets forth the estimated annual benefits payable under
the Pension Plan and SERP described above upon retirement at age 65 in calendar
year 1995, expressed in the form of a 10-year certain and continuous annuity,
for the average annual earnings and years of service classifications specified.
Creditable Years of Service at Age 65
Average
Annual
Earnings(1)(2) 15 20 25 30 35
-------------- -------------- -------------- -------------- -------------- --------------
$ 25,000 $ 9,375 $ 12,500 $ 12,500 $ 12,500 $ 12,500
50,000 18,750 25,000 25,000 25,000 25,000
100,000 37,500 50,000 50,000 50,000 50,000
150,000 56,250 75,000 75,000 75,000 75,000
200,000 75,000 100,000 100,000 100,000 100,000
250,000 93,750 125,000 125,000 125,000 125,000
300,000 112,500 150,000 150,000 150,000 150,000
350,000 131,250 175,000 175,000 175,000 175,000
400,000 150,000 200,000 200,000 200,000 200,000
(1) The covered salary under the Pension Plan is the amounts shown in the
column entitled "Salary" in the Summary Compensation Table and does not
include amounts shown in the column entitled "Bonus" in such table.
18
(2) The benefits listed in the retirement benefit table are not subject to
Social Security or other offset amounts.
The following table sets forth the years of certified service (i.e.,
benefit service) as of the fiscal year ended June 30, 1996, for each of the
individuals named in the Summary Compensation Table.
Credited Service
----------------
Years Months
----- ------
Raymond L. Nielsen.................. 45 0
Raymond A. Nielsen.................. 26 0
Gerald M. Sauvigne.................. 18 10
Robert F. Pelosi.................... 33 9
John F. Traxler..................... 23 4
Transactions With Certain Related Persons
Federal law and regulation require that all loans or extensions of credit
to executive officers and directors must be made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with the general public and must not involve more
than the normal risk of repayment or present other unfavorable features; and
such law and regulation places limitations on the amounts of certain extensions
of credit to executive officers and directors. Although the Company does not
currently lend funds to its executive officers and directors, the Bank, from
time to time, lends funds to executive officers. The Bank's policy regarding
loans to directors and executive officers is in accordance with such
requirements. The Bank's policy provides that all loans made by the Bank to its
directors and executive officers shall be made in the ordinary course of
business, on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons and shall not involve more than the normal risk of collectibility
or present other unfavorable features.
Nielsen and Shoemaker Architects P.C., of which the son of Raymond L.
Nielsen is a principal, has been engaged by the Bank on a periodic basis in the
past to provide professional services and is currently so engaged for the
modernization of multiple branch facilities and installation of automated teller
machines. The engagement was approved by the Board of Directors of the Bank and
architectural fees paid by the Bank during fiscal year 1996 totalling
approximately $169,000 were fixed in accordance with professional standards.
19
PROPOSAL 2. APPROVAL OF THE RELIANCE BANCORP, INC. 1996
STOCK OPTION PLAN
1996 Stock Option Plan - Summary Description
The Board of Directors of the Company is presenting for stockholder
approval the Reliance Bancorp, Inc. 1996 Incentive Stock Option Plan (the "Stock
Option Plan"), in the form attached hereto as Exhibit A. The purpose of the
Stock Option Plan is to advance the interests of the Company and its
stockholders by providing those key employees and nonemployee directors of the
Company and its affiliates, including the Bank, upon whose judgment, initiative
and efforts the successful conduct of the business of the Company and its
affiliates largely depends, with additional incentive in the form of a
proprietary interest in the Company to perform in a superior manner. A further
purpose of the Stock Option Plan is also to attract and retain people of
experience and ability to the service of the Company and its affiliates. The
following is a summary of the material terms of the Stock Option Plan which is
qualified in its entirety by the complete provisions of the attached Stock
Option Plan document attached as Exhibit A.
General
The Stock Option Plan authorizes the granting of options to purchase up to
450,000 shares of Common Stock (which is equal to 5% of the Company's
outstanding shares as of July 17, 1996), and the granting of limited rights and
dividend adjustment rights in conjunction with the granting of stock options.
Under the Stock Option Plan, options to purchase 315,000 shares are reserved for
grants to officers and employees and options to purchase 135,000 shares are
reserved for grants to Outside Directors. All officers and other employees of
the Company and its affiliates, and directors who are not also serving as
employees of the Company or any of its affiliates ("Outside Directors"), are
eligible to receive awards under the Stock Option Plan, a potential total of
approximately 500 persons. The Stock Option Plan will be administered by a
committee of non-employee directors (the "Committee"). Authorized but unissued
shares or shares previously issued and reacquired by the Company or shares
repurchased in the open market may be used to satisfy an exercise of an option
under the Stock Option Plan. If authorized but unissued shares are used to
satisfy option exercises, the number of shares outstanding would increase which
would have a dilutive effect on the holdings of existing stockholders.
Awards to Employees
Types of Awards. The Stock Option Plan authorizes the grant to employees of
(i) options to purchase the Company's Common Stock intended to qualify as
incentive Stock options under Section 422 of the Code (options which afford tax
benefits to the recipients upon compliance with certain conditions and which do
not result in tax deductions to the Company) referred to as "Incentive Stock
Options"; (ii) options that do not so qualify (options which do not afford
income tax benefits to recipients, but which may provide tax deductions to the
Company) referred to as "Non-statutory Stock Options"; (iii) Limited Rights
(discussed below) which are exercisable only
20
upon a change in control (as defined in the Stock Option Plan) of the Company;
and (iv) dividend adjustment rights which, upon the payment by the Company of an
extraordinary dividend (as defined in the Stock Option Plan), at the sole
discretion of the Committee, would provide a grant to the holder of the dividend
adjustment tight a cash payment equal to the amount of the extraordinary
dividend multiplied by the number of shares subject to the Option underlying the
dividend adjustment right ("Dividend Adjustment Right").
The Board of Directors, on July 17, 1996, granted 87,600 options (with
Limited Rights and Dividend Adjustment Rights) under the Stock Option Plan to
employees, of which 60,600 are intended to be Incentive Stock Options. The
remaining 227,400 options have been reserved for future grants to employees.
Pursuant to the Stock Option Plan, unless determined by the Committee, stock
options granted to employees shall become exercisable six months from the date
of grant, provided, however, that all options shall become fully vested and
exercisable upon death, disability, retirement or a change of control of the
Company or Bank, as defined in the Stock Option Plan. The Committee may, in its
sole discretion, accelerate the time at which any stock option granted to an
employee may be exercised in whole or in part. The exercise price of all stock
options must be 100% of the fair market value of the underlying Common Stock at
the time of grant, except as provided below. The exercise price may be paid in
cash or in Common Stock.
Incentive Stock Options may only be granted to employees. In order to
qualify as Incentive Stock Options under Section 422 of the Code, in addition to
certain other restrictions, the exercise price must not be less than 100% of the
fair market value on the date of grant. Incentive Stock Options granted to any
person who is the beneficial owner of more than 10% of the outstanding voting
stock may be exercised only for a period of five years from the date of grant
and the exercise price must be at least equal to 110% of the fair market value
of the underlying common stock on the date of grant.
Termination of Employment. Options granted under the Stock Option Plan to
employees may be exercised at such times as the Committee determines, but in no
event shall an option be exercisable more than ten years from the date of grant.
Unless otherwise determined by the Committee, upon the termination of an
employee's service for any reason, other than death, disability, retirement or
change in control, the employee's options will be exercisable only as to those
shares that were immediately exercisable by the employee at the date of
termination and only for a period of three months in the case of Incentive Stock
Options and one year in the case of Non-Statutory Stock Options. In the event of
disability, the period for exercise is one year from termination of employment.
Limited Rights. Upon exercise of Limited Rights in the event of a change in
control of the Company or the Bank, the optionee will be entitled to receive a
lump sum cash payment equal to the difference between the exercise price of the
related option and the fair market value of the shares of Common Stock subject
to the option on the date of exercise of the right in lieu of purchasing the
stock underlying the option.
21
Dividend Adjustment Rights. Simultaneously with the grant of any option to
any employee, the Committee may grant a Dividend Adjustment Right with respect
to all or some of the shares covered by such option. The Dividend Adjustment
Right provides, at the sole discretion of the Committee, in the event of the
declaration of an extraordinary dividend, a separate cash benefit equal to 100%
of the amount of any extraordinary dividend declared by the Company on shares of
Common Stock subject to an option. Under the terms of the Stock Option Plan, an
extraordinary dividend is any dividend paid on shares of Common Stock where the
rate of the dividend exceeds the Bank's current earnings or the weighted average
cost of funds on interest bearing liabilities for the period in which the
dividend is declared. The Dividend Adjustment Right is transferable only when
the underlying option is transferable and under the same conditions.
Change in Control. In the event of a change in control of the Company or
Bank, options then available for grant under the Stock Option Plan will
automatically be granted, on a pro rata basis, among current employees and
Outside Directors who have previously been granted options under the Stock
Option plan, as of the date of the change in control. All such options will be
100% vested and exercisable upon the date of grant and will remain exercisable
for 10 years following the change in control.
Awards to Outside Directors
On July 17, 1996, the Board of Directors granted a total of 40,500 options
to current Outside Directors. Under the terms of the Plan, each such current
Outside Director will receive a grant of 6,750 options on July 1, 1997 and July
1, 1998 to the extent such Outside Director is serving on the Board of the
Company at such dates, for a total of 81,000 options. The remaining 13,500
options have been reserved for grants to future Outside Directors. The initial
awards granted to each current Outside Directors are Non-statutory Stock Options
to purchase Common Stock at an exercise price of 100% of the Fair Market Value
of the Common Stock of the Company on the date of grant.
The options awarded to current Outside Directors become exercisable six
months subsequent to the date of grant, however, all options become fully vested
and exercisable upon death, disability, retirement or change in control of the
Company or Bank. Exercise price must be fair market value for Directors.
Amendment
The Board of Directors may at any time amend the Stock Option Plan in any
respect, provided that, the provisions governing grants of Options and Limited
Rights, unless permitted by the rules promulgated under Section 16(b) of the
Exchange Act.
22
Nontransferabifity
An award of options under the Stock Option Plan shall not be transferable
by the optionee other than by will or the laws of descent and distribution and
may only be exercised during his lifetime by the optionee, or by a guardian or
legal representative. With the consent of the Committee an employee may
designate a person or his or her estate, beneficiary of any stock option,
Limited Right and Dividend Adjustment Right award to which the optionee would
then be entitled, in the event of the death of the employee.
Tax Treatment
An optionee will generally not be deemed to have recognized taxable income
upon grant or exercise of any Incentive Stock Option, provided that shares
transferred in connection with the exercise are not disposed of by the optionee
for at least one year after the date the shares are transferred in connection
with the exercise of the option and two years after the date of grant of the
option. If the holding periods are satisfied, upon disposal of the shares, the
aggregate difference between the per share option exercise price and the fair
market value of the common Stock is recognized as income taxable at long term
capital gains rates. No compensation deduction may be taken by the Company as a
result of the grant or exercise of Incentive Stock Options, assuming these
holding periods are met. In the case of the exercise of a Non-Statutory Stock
Option, an optionee will be deemed to have received ordinary income upon
exercise of the stock option in an amount equal to the aggregate amount by which
the per share exercise price is exceeded by the fair market value of the Common
Stock. In the event that a Non-Statutory Stock Option is exercised during a
period that would subject the optionee to liability under Section 16(b) of the
Exchange Act (i.e., within six months of the date of grant), the optionee will
not be deemed to have recognized income until such period of liability has
expired, unless the optionee makes a Section 83(b) election under the Code. In
the event shares received through the exercise of an Incentive Stock Option are
disposed of prior to the satisfaction of the holding periods (a "disqualifying
disposition"), the exercise of the option will be treated as the exercise of a
Non- Statutory Stock Option, except that the optionee will recognize the
ordinary income for the year in which the disqualifying disposition occurs. The
amount of any Ordinary income deemed to have been received by an optionee upon
the exercise of a Non-Statutory Stock Option or due to a disqualifying
disposition will be a deductible expense of the Company for tax purposes, In the
case of Limited Rights, upon exercise, the option holder would have to include
the amount paid to him upon exercise in his gross income for federal income tax
purposes in the year in which the payment is made and the Company would be
entitled to a deduction for federal income tax purposes of the amount paid. The
employee will recognize taxable income for the amount of cash received under the
Dividend Adjustment Right for the year such amounts are paid. The Company may
take on off-setting deduction for such amount. Dividend Adjustment Rights have
the same tax treatment as other Non-Statutory Stock Options.
23
Awards
The following table provides certain information with respect to certain of
the options granted to executive officers and non-employee directors pursuant to
the Stock Option Plan on July 17, 1996. Additionally, see "New Plan Benefits."
Recipients Option Awards
---------- -------------
Raymond L. Nielsen 9,000
Raymond A. Nielsen 9,000
Gerald M. Sauvigne 9,000
Robert F. Pelosi 6,150
John F. Traxler 6,150
All current executive officers as a group
(15 persons) 87,600
All current directors who are not
executive officers as a group
(6 persons) 40,500
In addition, there are options for 227,400 and 13,500 shares of Common
Stock reserved for future grants to employees and Outside Directors of the
Company and the Bank, respectively.
The options granted to employees reflected in the table above include
Limited Rights and Dividend Adjustment Rights and are exercisable six months
from the date of grant, provided, however, that all options will be immediately
exercisable in the event the optionee terminates employment due to death,
disability, retirement or change in control. The exercise price of all such
options is 100% of the fair market value of the underlying Common Stock at the
time of grant, which as of July 17, 1996 was $15.75.
Options granted to Outside Directors reflected in the table above include
Limited Rights and Dividend Adjustment Rights and become exercisable from the
date of grant. The exercise price of all such options is 100% of the fair market
value of the underlying Common Stock at the time of grant, which as of July 17,
1996 was $15.75.
As of September 25, 1996, the closing price per share of common Stock, as
reported on the Nasdaq Stock Market was $18.3125.
Stockholder Approval
The Company is submitting the Stock Option Plan for Stockholder approval
although it is not required. If the Stock Option Plan does not receive
stockholder approval, the Board of Directors of the Company may nonetheless
maintained the effectiveness of the Stock Option Plan
24
and award grants thereunder. Implementation of the Stock Option Plan in the
absence of approval by a majority of the votes cast at this meeting may result
in the inability of the Company to continue the listing of its Common Stock on
the Nasdaq Stock Market. In the event that its Common Stock is not quoted on the
Nasdaq Stock Market, the Company believes its Common Stock would qualify for
quotation on the Nasdaq Small-Cap Market.
Unless marked to the contrary, the shares represented by the enclosed proxy
card, if executed and returned, will be voted "FOR" the approval of the,
Reliance Bancorp 1996 Incentive Stock Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE
RELIANCE BANCORP 1996 INCENTIVE STOCK OPTION PLAN.
New Plan Benefits
The following table provides certain information with respect to all
options under the Stock Option Plan, specifying the amounts granted to the Named
Executive Officers individually, all current executive officers as a group, all
current directors who are not executive officers as a group, and all employees,
including all current officers who are not executive officers, as a group.
NEW PLAN BENEFITS
Stock Option
Plan
--------------------
Dollar Number
Name and Position(l) Value(2) of Units
-------------------- -------- --------
Raymond L. Nielsen, Chairman of the Board $ -- 9,000
Raymond A. Nielsen, CEO and President -- 9,000
Gerald M. Sauvigne, Executive VP and Treasurer -- 9,000
Robert P. Pelosi, Senior VP and Secretary -- 6,150
John F. Traxler, VP and Investment Officer -- 6,150
All current executive officers
officers as a group (15 persons) -- 87,600
All current directors (who are not executive
officers) as a group (6 persons) -- 40,500
All employees (who are not executive officers)
as a group (approximately 500 persons) -- --
(1) Unless otherwise stated, the listed positions are with the Company and the
Bank. Mr. R.L. Nielsen is an employee of the Company only.
(2) Assuming a market value of the underlying securities of $18.3125 (the
closing price as of September 25, 1996) minus the exercise or base price of
$15.75 (the fair market value on the date of grant), the participants would
have a benefit of the following dollar values. Messrs. R.L. Nielsen, R.A
Nielsen and Sauvigne each would have a benefit of $23,063 and Messrs.
Pelosi and Traxler each would have a benefit of $15,759. All current
executive officers as a group and directors as a group would have a benefit
of $224,475 and 103,781, respectively.
25
PROPOSAL 3. RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended June 30, 1996
were KPMG Peat Marwick LLP. The Company's Board of Directors has reappointed
KPMG Peat Marwick LLP to continue as independent auditors for the Bank and the
Company for the year ending June 30, 1997 subject to ratification of such
appointment by the stockholders.
Representatives of KPMG Peat Marwick LLP will be present at the Annual
Meeting. They will be given an opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions from
stockholders present at the Annual Meeting.
Unless marked to the contrary, the shares represented by the enclosed proxy
card will be voted FOR ratification of the appointment of KPMG Peat Marwick LLP
as the independent auditors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY.
ADDITIONAL INFORMATION
Stockholder Proposals
To be considered for inclusion in the Company's proxy statement and form of
proxy relating to the Annual Meeting of Stockholders to be held in 1997, a
stockholder proposal must be received by the Secretary of the Company at the
address set forth on the attached notice of annual meeting of stockholders, not
later than June 13, 1997. Any such proposal will be subject to 17 C.F.R. ss.
240.14a-8 of the Rules and Regulations under the Exchange Act.
Notice of Business to be Conducted at an Annual Meeting
The Bylaws of the Company provide an advance notice procedure for a
stockholder to properly bring business before an annual meeting. The stockholder
must give written advance notice to the Secretary of the Company not less than
ninety (90) days before the date originally fixed for such meeting; provided,
however, that in the event that less than one hundred (100) days notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be received not later than the close
of business on the tenth day following the date on which the Company's notice to
stockholders of the annual meeting date was mailed or such public disclosure was
made. The advance notice by stockholders must include the stockholder's name and
address, as they appear on the Company's record of
26
stockholders, a brief description of the proposed business, the reason for
conducting such business at the annual meeting, the class and number of shares
of the Company's capital stock that are beneficially owned by such stockholder
and any material interest of such stockholder in the proposed business. In the
case of nominations to the Board, certain information regarding the nominee must
be provided. Nothing in this paragraph shall be deemed to require the Company to
include in its proxy statement and proxy relating to an annual meeting any
stockholder proposal which does not meet all of the requirements for inclusion
established by the SEC in effect at the time such proposal is received.
Other Matters Which May Properly Come Before the Meeting
The Board of Directors knows of no business which will be presented for
consideration at the Annual Meeting other than as stated in the Notice of Annual
Meeting of Stockholders. If, however, other matters are properly brought before
the Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote the shares represented thereby on such matters in accordance with
their best judgment.
Whether or not you intend to be present at the Annual Meeting, you are
urged to return your proxy card promptly. If you are present at the Annual
Meeting and wish to vote your shares in person, your proxy may be revoked by
voting at the Annual Meeting.
A copy of the Annual Report to Stockholders on Form 10-K, including the
consolidated financial statements for the fiscal year ended June 30, 1996, as
filed with the SEC, will be furnished without charge to stockholders of record
upon written request to Reliance Bancorp, Inc., 585 Stewart Avenue, Garden City,
New York 11530.
By Order of the Board of Directors
Robert F. Pelosi
Secretary
Garden City, New York
October 11, 1996
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER OR NOT
YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO SIGN AND PROMPTLY
RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
27
Exhibit A
RELIANCE BANCORP, INC.
1996 INCENTIVE STOCK OPTION PLAN
1. 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) "Alternate Option Payment Mechanism" refers to one of several methods
available to a Participant to fund the exercise of a stock option set out in
Section 12. These mechanisms include: broker assisted cashless exercise and
stock for stock exchange.
(c) "Award" means any grant of benefits pursuant to Section 3 hereof.
(d) "Bank" means Reliance Federal Savings Bank.
(e) "Board of Directors" or "Board" means the board of directors of the
Holding Company.
(f) "Change in Control" means a change in control of the Bank or Holding
Company of a nature that: (i) would be required to be reported in response to
Item 1(a) 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, as
amended (the "Exchange Act"); or (ii) results in a Change in Control within the
meaning of the Home Owners' Loan Act of 1933, as amended ("HOLA") and the Rules
and Regulations promulgated by the Office of Thrift Supervision ("OTS") (or its
predecessor agency), as in effect on the date hereof (provided that, in applying
the definition of change in control as set forth under such rules and
regulations, the Board shall substitute its judgment for that of the OTS); 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 indirectly, of securities of
the Bank or the Holding Company representing 20% or more of the Bank's or the
Holding Company's outstanding securities except for any securities of the Bank
purchased by the Holding Company and any securities purchased by any tax
qualified employee benefit plan of the Holding Company or the Bank; 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 seventy-five percent (75%) of the directors
comprising the Incumbent Board, or whose nomination for election by the Holding
Company's stockholders 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, merger,
consolidation, sale of all or substantially all the assets of the Bank or the
Holding Company or similar transaction occurs in which the Bank or Holding
Company is not the resulting entity; or (D) a solicitation of shareholders 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 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 the plan are exchanged for or converted into cash or
property or securities not issued by the Bank or the Holding Company; or (E) a
tender offer is made for 20% or more of the voting securities of the Bank or the
Holding Company.
(g) "Committee" means a committee consisting of at least two members of the
Board of Directors who are defined as Outside Directors, all of whom are
"Non-Employee Directors" as such term is defined under Rule 16b-3 under the
Exchange Act as promulgated by the Securities and Exchange Commission.
(h) "Common Stock" means the Common Stock of the Holding Company, par
value, $.01 per share or any stock exchanged for shares of Common Stock pursuant
to Section 17 hereof.
(i) "Date of Grant" means the effective date of an Award.
(j) "Directors' Awards" means awards of Non-statutory Stock Options to
Outside Directors pursuant to the terms of Section 10.
(k) "Disability" means the permanent and total inability by reason of
mental or physical infirmity, or both, of a Participant to perform the work
customarily assigned. 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.
(l) "Dividend Adjustment Right" means the adjustment of the number of
shares subject to an option and/or the Exercise Price of an option and/or the
right to receive an amount of cash based upon the terms set forth in Section 9.
(m) "Effective Date" means July 17, 1996, the effective date of the Plan.
(n) "Employee" means any person who is currently employed by the Holding
Company or an Affiliate, including officers, but such term shall not include
Outside Directors.
(o) "Exercise Price" means the purchase price per share of Common Stock
deliverable upon the exercise of each Option in order for the option to be
exchanged for shares of Common Stock.
2
(p) "Extraordinary Dividend" means a distribution to shareholders by the
Holding Company of earnings or capital in excess of either (i) current earnings
or (ii) the weighted average cost of funds of the Bank for the period in which
the dividend is paid, as determined for this purpose by the Committee.
(q) "Fair Market Value" means, when used in connection with the Common
Stock on a certain date, the average of the high and low bid prices of the
Common Stock as reported by the Nasdaq National Market ("Nasdaq") (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. If the
Common Stock is not reported on the Nasdaq, the Fair Market Value of the Common
Stock is the value so determined by the Committee in good faith.
(r) "Holding Company" means Reliance Bancorp, Inc.
(s) "Incentive Stock Option" means an Option granted by the Committee to a
Participant, which Option is designated by the Committee as an Incentive Stock
Option pursuant to Section 7.
(t) "Limited Right" means the right to receive an amount of cash based upon
the terms set forth in Section 8.
(u) "Non-statutory Stock Option" means an Option granted by the Committee
to a Participant pursuant to Section 6, which is not designated by the Committee
as an Incentive Stock Option or which is redesignated by the Committee under
Section 7 as a Non-Statutory Stock Option. All options granted to Outside
Directors pursuant to Section 10 shall be Non-statutory Stock Options.
(v) "Option" means the right to buy a fixed amount of Common Stock at the
Exercise Price within a limited period of time designated as the term of the
option as granted under Sections 6 and 7 of the Plan.
(w) "Outside Director" means a member of the Board of Directors of the
Holding Company or its Affiliates, who is not also an Employee.
(x) "Participant" means any Employee who holds an outstanding Award under
the terms of the Plan.
(y) "Retirement" with respect to a Participant means termination of
employment which constitutes retirement under any tax qualified plan maintained
by the Holding Company or the Bank. However, "Retirement" will not be deemed to
have occurred for purposes of this Plan if a Participant continues to serve on
the Board of Directors of the Holding Company or its Affiliates even if such
Participant is receiving benefits under any tax-qualified retirement plan of the
Holding Company or its Affiliates. With respect to an Outside Director,
"Retirement" means the termination of service from the Board of Directors of the
Holding Company or its Affiliates
3
following written notice to the Board as a whole of such Outside Director's
intention to retire or retirement as determined by the Holding Company or
applicable Affiliate's bylaws, except that an Outside Director shall not be
deemed to have "Retired" for purposes of the Plan in the event he continues to
serve as a consultant or advisory director to the Holding Company or any of its
Affiliates.
(z) "Termination for Cause" shall mean termination because of a material
loss to the Holding Company or one of its subsidiaries caused by the
Participant's intentional failure to perform stated duties, personal dishonesty,
willful violation of any law, rule, regulation, (other than traffic violations
or similar offenses) or final cease and desist order. No act, or the failure to
act, on Participant's part shall be "willful" unless done, or omitted to be
done, not in good faith and without reasonable belief that the action or
omission was in the best interest of the Holding Company or its affiliates.
2. ADMINISTRATION.
(a) The Plan as regards Options shall be granted and administered by the
Committee. The Committee is authorized, subject to the provisions of the Plan,
to establish such rules and regulations as it deems necessary for the proper
administration of the Plan and to make whatever determinations and
interpretations in connection with the Plan it deems necessary or advisable. All
determinations and interpretations made by the Committee shall be binding and
conclusive on all Participants and on their legal representatives and
beneficiaries.
(b) The grant of Non-statutory Stock Options to Outside Directors are made
herein by the terms of this Plan. Actual transference of any Non-statutory Stock
Options to Outside Directors requires no, nor allows any, discretion by the
Committee.
3. TYPES OF AWARDS.
The following Awards may be granted under the Plan:
(a) Non-statutory Stock Options;
(b) Incentive Stock Options;
(c) Limited Rights;
(d) Dividend Adjustment Rights; and
(e) Directors Awards
as described below in paragraphs 6 through 10 of the Plan.
4. STOCK SUBJECT TO THE PLAN.
Subject to adjustment as provided in Section 17, the maximum number of
shares reserved hereby for purchase pursuant to the exercise of Options and
Option-related Awards granted under the Plan is 450,000 shares of which Options
to purchase 315,000 shares are reserved for grants to Employees and Options to
purchase 135,000 shares are reserved for grants to Outside
4
Directors. These shares of Common Stock subject to Options which may be awarded
hereunder may be either authorized but unissued shares or authorized 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 any other use including future grants under the Plan except
that, to the extent that Options terminate, expire, are forfeited or are
cancelled without having been exercised (in the case of Limited Rights,
exercised for cash), new Options may be made with respect to these shares.
5. ELIGIBILITY.
All Employees shall be eligible to receive Options under the Plan. Outside
Directors shall only be eligible to receive Non-statutory Stock Options under
the Plan under Section 10 of this Plan. An Outside Director who is a former
Employee may, however, continue to hold unexercised or unvested Awards granted
while such person was an Employee.
6. NON-STATUTORY STOCK OPTIONS.
The Committee may, subject to the limitations of the Plan, 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.
Non-statutory Stock Options granted under this Plan are subject to the following
terms and conditions:
(a) Exercise Price. The Exercise Price of each Non-statutory Stock Option
shall be determined by the Committee on the date the option is granted. Such
Exercise Price shall not be less than 100% of the Fair Market Value of the
Common Stock on the Date of Grant. Common Stock underlying such Non-statutory
Stock Options may be purchased only upon full payment of the Exercise Price or
upon operation of an Option Exercise Alternative set out in Section 12 of the
Plan.
(b) Terms of Options. Non-Statutory Stock Options may in the discretion of
the Committee be granted at any time and subject to any conditions allowed under
this Plan. The term during which each Non-statutory Stock Option may be
exercised shall be determined by the Committee, but in no event shall a
Non-statutory Stock Option be exercisable in whole or in part more than 10 years
from the Date of Grant. Unless otherwise determined by the Committee,
Non-statutory Stock Options shall become exercisable six months subsequent to
the Date of Grant; provided, however, that all options shall become fully vested
and exercisable upon the Participant's termination due to death, Disability,
Retirement or in the event of a Change in Control. The Common Stock comprising
each installment may be purchased in whole or in part at any time during the
term of such Non-statutory Stock Option after such Non-Statutory Stock Option
becomes exercisable. The Committee may, in its sole discretion, accelerate the
time at which any Non-statutory Stock Option may be exercised in whole or in
part. The acceleration of any Non-statutory Stock Option under the authority of
this paragraph will create no right, expectation or reliance on the part of any
other Participant or that certain Participant regarding any other unaccelerated
Non-statutory Stock Options.
5
(c) The terms and conditions of any Non-statutory Stock Options shall be
evidenced by an agreement (the "NSO Agreement") which such NSO Agreement will be
subject to the terms and conditions of the Plan.
(d) Termination of Employment. Notwithstanding any provisions set forth
herein or contained in any NSO Agreement relating to an award of an Option, in
the event of termination for reasons other than for death, Disability,
Retirement or Change in Control or Termination for Cause, only those options
exercisable at the time of termination may be exercised and only for a period of
one year after such termination. In the event of the Participant's termination
of service for death, Disability, Retirement or in the event of a Change in
Control, all options shall become exercisable and may be exercised for a period
of one year after such termination. In the event of Termination for Cause, all
rights under the Participant's Non-Statutory Stock Options shall expire
immediately upon termination.
7. INCENTIVE STOCK OPTIONS.
The Committee may, subject to the limitations of the Plan, 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) Exercise Price. The Exercise Price of each Incentive Stock Option shall
be not less than 100% of the Fair Market Value of the Common Stock on the Date
of Grant. However, if at the time an Incentive Stock Option is granted to a
Participant, the Participant owns Common Stock representing more than 10% of the
total combined voting securities of the Holding Company (or, under Section
424(d) of the Code, is deemed to own Common Stock representing more than 10% of
the total combined voting power of all classes of stock of the Holding Company,
by reason of the ownership of such classes of stock, directly or indirectly, by
or for any brother, sister, spouse, ancestor or lineal descendent of such
Participant, or by or for any corporation, partnership, estate or trust of which
such Participant is a shareholder, partner or beneficiary), ("10% Owner"), the
Exercise 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 Common Stock on the Date of Grant. Shares may be purchased only upon payment
of the full Exercise Price or upon operation of an Option Exercise Alternative
set forth in Section 12 of the Plan.
(b) Amounts of Incentive Stock Options. Incentive Stock Options may be
granted to any Employee in such amounts as determined by the Committee; provided
that the amount granted is consistent with the terms of Section 422 of the Code.
In the case of a stock 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 7(b) shall be construed and applied in accordance with Section
422(d) of the Code and the regulations, if any, promulgated thereunder.
6
To the extent an Award of an Incentive Stock Option under this Section 7 exceeds
this $100,000 limit, the portion of the Award of an Incentive Stock Option in
excess of such limit shall be deemed a Non-statutory Stock Option. The Committee
shall have discretion to redesignate Stock Options granted as Incentive Stock
Options as Non-statutory Stock Options. Such Non-statutory Stock Options shall
be subject to Section 6 of the Plan.
(c) Terms of Incentive Stock Options. Incentive Stock Options may in the
discretion of the Committee be granted at any time and subject to any conditions
allowed under this Plan. 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 a
Participant who is a 10% Owner, the Incentive Stock Option granted to such
Participant 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 Participant to whom it is granted.
Unless otherwise determined by the Committee, Incentive Stock Options shall
become exercisable six months subsequent to the Date of Grant; provided,
however, that all options shall become fully vested and exercisable upon the
Participant's termination due to death, Disability, Retirement or Change in
Control. The shares comprising each installment may be purchased in whole or in
part at any time during the term of such Incentive Stock Option after such
installment becomes exercisable. The Committee may, in its sole discretion,
accelerate the time at which any Incentive Stock Option may be exercised in
whole or in part. To the extent that such acceleration, through the operation of
law, destroys incentive treatment under the Code, then such accelerated Stock
Option shall be deemed to be a Non-Statutory Stock Option. The acceleration of
any Incentive Stock Option under the authority of this paragraph will create no
right, expectation or reliance on the part of any other Participant or that
certain Participant regarding any other unaccelerated Incentive Stock Options.
(d) The terms and conditions of any Incentive Stock Option shall be
evidenced by an agreement (the "Incentive Stock Option Agreement") which such
Incentive Stock Option Agreement will be subject to the terms and conditions of
the Plan.
(e) Termination of Employment. Unless otherwise determined by the
Committee, upon the termination of a Participant's service for any reason other
than death, Disability, Retirement or Change in Control the Participant's
Incentive Stock Options shall be exercisable only as to those shares that were
immediately exercisable by the Participant at the date of termination and only
for a period of three months following termination; provided, however, that, in
the event that the Committee extends the exercisability of any Incentive Stock
Options beyond three months following termination, such Incentive Stock Options
shall be treated as Non-Statutory Stock Options. In the event of the termination
of a Participant's service due to death, Disability, Retirement or in the event
of a Change in Control, all of the Participant's Incentive Stock Options shall
become exercisable for a period of one year after such termination.
Notwithstanding, any Incentive Stock Options are exercised more than three
months after the Participant's terminations,
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such Options shall be treated as Non-Statutory Stock Options. In the event of
Termination for Cause all rights under the Participant's Incentive Stock Options
shall expire immediately upon termination. In the event of Disability, the
period for exercise is one year from termination of employment.
(g) Compliance with Code. The Incentive Stock Options granted under this
Section 7 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. All Incentive Stock Options that
do not so quality shall be treated as Non-statutory Stock Options.
8. LIMITED RIGHTS.
Simultaneously with the grant of any Option to an Employee or Outside
Director, the Committee may grant a Limited Right with respect to all or some of
the shares covered by such Option. Limited Rights granted under this Plan are
subject to the following terms and conditions:
(a) Terms of Rights. In no event shall a Limited Right be exercisable in
whole or in part before the expiration of six months from the Date of Grant of
the Limited Right. A Limited Right may be exercised only in the event of a
Change in Control.
The Limited Right may be exercised only when the underlying Option is
eligible to be exercised, and only when the Fair Market Value of the underlying
shares on the day of exercise is greater than the Exercise Price of the
underlying Option.
Upon exercise of a Limited Right, the underlying Option shall cease to
be exercisable. Upon exercise or termination of an Option, any related Limited
Rights shall terminate. The Limited Rights may be for no more than 100% of the
difference between the purchase price and the Fair Market Value of the Common
Stock subject to the underlying option. The Limited Right is transferable only
when the underlying option is transferable and under the same conditions.
(b) Payment. Upon exercise of a Limited Right, the holder shall promptly
receive from the Holding Company an amount of cash or some other payment
alternative found in Section 11, equal to the difference between the Exercise
Price of the underlying option and the Fair Market Value of the Common Stock
subject to the underlying Option on the date the Limited Right is exercised,
multiplied by the number of shares with respect to which such Limited Right is
being exercised. Payments shall be less an applicable tax withholding as set
forth in Section 18.
9. DIVIDEND ADJUSTMENT RIGHT
Simultaneously with the grant of any Option under this Plan, the Committee
may grant a Dividend Adjustment Right. Upon the payment of an Extraordinary
Dividend, the Committee may grant to the holder of a Dividend Adjustment Right a
payment from the Holding Company
8
of an amount of cash equal to the amount of the Extraordinary Dividend paid on
one share of Common Stock, multiplied by the number of shares of Common Stock
subject to the underlying Option
10. DIRECTORS' AWARDS
Awards to Outside Directors under this Plan ("Directors' Awards) are made
in the form of Non-statutory Stock Options. Directors' Awards shall be made
subject to the following terms and conditions:
(a) Initial Grant of Directors' Awards. Each Outside Director who is
serving on the Board of Directors on the Effective Date of this Plan shall
receive Non-statutory Stock Options for 6,750 shares of Common Stock, each with
a Dividend Adjustment Right pursuant to Section 9, which shall be granted as of
the Effective Date of the Plan.
(b) Continuing Grant of Directors' Awards. Any Outside Director currently
serving on the Board of Directors as of the Effective Date of the Plan who
continues to serve as a Director on July 1, 1997 and July 1, 1998, shall be
granted Options for 6,750 shares on each respective date pursuant to the terms
fixed by the Committee.
(c) Grants to Subsequent Outside Directors. To the extent Options to
purchase shares are available for grant under the Plan, due to such Options not
being reserved for granting under paragraphs (a) and (b) of this Section 10 or
due to forfeiture of Options previously awarded to Outside Directors, the
Committee shall have the authority to grant such available Options to Outside
Directors in amounts and with terms as determined by the Committee.
The terms and conditions of any Director Award will be evidenced by an
agreement which shall be subject to the terms and conditions of the Plan.
(d) Exercise Price. The Exercise Price of each Non-statutory Stock Option
awarded to an Outside Director shall equal the Fair Market Value of the Common
Stock on the date of the grant of the Option. Shares may be purchased only upon
full payment of the Exercise Price or upon operation of an Option Exercise
Alternative set forth in Section 12 of the Plan.
(e) Terms of Non-statutory Stock Options Award to Directors. Unless
otherwise determined by the Committee, Non-Statutory Stock Options granted to
Outside Directors shall become exercisable six months subsequent to the Date of
Grant. The term during which each Non-statutory Stock Option awarded to a
director may be exercised shall be 10 years from the Date of Grant. The shares
comprising each installment may be purchased in whole or in part at any time
during the term of such Non-statutory Stock Option.
(f) Death, Disability, Retirement or Change in Control of a Director. All
Stock Options shall be fully vested and exercisable upon death, Disability,
Retirement or Change in Control.
9
(g) Forfeiture. If the service of an Outside Director as a member of the
Board is terminated for any other reason than death, Disability, Retirement or
Change in Control, all unvested Stock Options shall be forfeited immediately
upon such termination and the Outside Director shall have no further rights with
respect to such Directors' Award.
11. PAYOUT ALTERNATIVES
Payments due to a Participant upon the exercise or redemption of an Award,
may be made under the following terms and conditions:
(a) Discretion of the Committee. The Committee has the sole discretion to
determine the form of payment (whether monetary, Common Stock, a combination of
payout alternatives or otherwise) it shall use in making distributions or
payments for all Options. If the Committee requests any or all Participants to
make an election as to form of payment or distribution, it shall not be
considered bound by the election.
(b) Payment in the form of Common Stock. Any shares of Common Stock
tendered in satisfaction of an obligation arising under this Plan shall be
valued at the Fair Market Value of the Common Stock at the time of the
distribution. The Committee may use Common Stock in Treasury or may direct the
market purchase of such Common Stock to satisfy its obligations under this Plan.
12. OPTION EXERCISE ALTERNATIVES
The Committee has sole discretion to determine the form of payment it will
accept for the exercise of an Option. The Committee may indicate acceptable
forms in the Incentive Stock Option or Non-statutory Stock Option Agreement
covering such Options or may reserve its decision until the time of exercise. No
Option is to be considered exercised until payment in full is accepted by the
Committee or its agent.
(a) Cash Payment. The exercise price may be paid in cash or by certified
check.
(b) Borrowed Funds. To the extent permitted by law, the Committee may
permit all or a portion of the exercise price of an Option to be paid through
borrowed funds.
(c) Exchange of Common Stock. (i) The Committee may, in its sole
discretion, permit payment by the tendering of previously acquired shares of
Common Stock.
(ii) Any shares of Common Stock tendered in payment of the exercise
price of an Option shall be valued at the Fair Market Value of the Common Stock
on the date prior to the date of exercise.
10
13. GRANTS IN THE EVENT OF A CHANGE IN CONTROL
(a) In the event of a Change in Control, Options then available for grant
under this Plan pursuant to Section 4 shall be automatically granted among those
current Employees and current Outside Directors who have previously been granted
Options under this Plan, as of the date of the Change in Control. The number of
shares subject to Options to be granted to each such individual pursuant to this
Section 13 shall be determined by multiplying the number of Options to purchase
shares of Common Stock then available for grant to Employees and Outside
Directors, respectively, pursuant to Section 4 by a fraction, the numerator of
which is the number of Options to purchase shares of Common Stock previously
granted to that individual under this Plan, and the denominator of which is the
total number of Options to purchase shares of Common Stock previously granted to
all Employees, in the case of an Employee, and all current Outside Directors, in
the case of an Outside Director, under this Plan.
(b) The Exercise Price for any option granted pursuant to Section 13 shall
be the average of the Exercise Price of each share of Common Stock, as adjusted
pursuant to Section 17, subject to an Option granted under this Plan to the
respective Employee or Outside Director prior to the Change in Control.
(c) All Options granted pursuant to Section 13 shall be 100% vested and
exercisable upon the Change in Control and shall remain exercisable for a period
of 10 years from the date of grant.
14. RIGHTS OF A SHAREHOLDER: NONTRANSFERABILITY.
No Participant or Outside Director shall have any rights as a shareholder
with respect to any shares of Common Stock covered by an Option until the date
of issuance of a stock certificate for such Common Stock. Nothing in this Plan
or in any Option granted confers on any person any right to continue in the
employ or service of 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.
Except as permitted under the Code and the rules promulgated pursuant to
Section 16(b) of the Exchange Act or any successor statutes or rules, no Option
under the Plan shall be transferable by the Participant or Outside Director
other than by will or the laws of intestate succession or pursuant to a
qualified domestic relations order.
15. AGREEMENT WITH GRANTEES.
Each Option will be evidenced by a written agreement ("Agreement"),
executed by the Participant or Outside Director and the Holding Company or its
Affiliates that describes the terms and conditions for receiving the Option
including the date of Option, the Exercise Price if any, the term or other
applicable periods, and other terms and conditions as may be required or imposed
by the Plan, the Board of Directors, tax law consideration or applicable
securities law.
11
16. DESIGNATION OF BENEFICIARY.
A Participant or Outside Director may, with the consent of the Committee,
designate a person or persons to receive, in the event of death, any Option 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 or Outside Director fails effectively to designate a
beneficiary, then the Participant's or Outside Director's estate will be deemed
to be the beneficiary.
17. ADJUSTMENTS.
In the event of any change in the outstanding shares of Common Stock by
reason of any stock dividend, 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 or Outside Director, including any or all of the
following:
(a) adjustments in the aggregate number or kind of shares of Common
Stock or other securities that may underlie future Options under
the Plan;
(b) adjustments in the aggregate number or kind of shares of Common
Stock or other securities underlying Options already made under
the Plan;
(c) adjustments in the purchase price of outstanding Incentive and/or
Non-statutory Stock Options, or any Limited Rights attached to
such Options.
No such adjustments may, however, materially change the value of benefits
available to a Participant or Outside Director under a previously granted
Option. All awards under this Plan shall be binding upon any successors or
assigns of the Holding Company.
18. TAX WITHHOLDING.
Awards under this Plan shall be subject to tax withholding to the extent
required by any governmental authority. If this Plan meets the requirements
under 17 C.F.R. ss.240.16b-3 under the Exchange Act ("Rule 16b-3"), then any
withholding shall comply with Rule 16b-3 or any amendment or successive rule.
19. 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, prospectively or retroactively; provided however,
that provisions governing grants of Options and Limited Rights, unless permitted
by the rules promulgated to Section 16(b) of the Exchange Act, shall not be
amended more than once every six months other than to comport with the Internal
Revenue Code or the Employee Retirement Income Security Act, if applicable.
12
No such termination, modification or amendment may affect the rights of a
Participant or Outside Director under an outstanding Option without the written
permission of such Participant or Outside Directors.
20. APPROVAL OF SHAREHOLDERS.
The Plan shall be presented to shareholders for approval for purposes of:
(i) obtaining favorable treatment under Section 16(b) of the Securities Exchange
Act; (ii) obtaining preferential tax treatment for Incentive Stock Options; and
(iii) maintaining listing on Nasdaq National Market. The failure to obtain
shareholder approval will not effect the validity or effectiveness of the Plan
and the Options granted hereunder, provided, however, that if the Plan is not
approved by stockholders, the Board of Directors may, in its sole discretion,
terminate the Plan and rescind any Options granted hereunder and, to the extent
the Board of Directors does not exercise its discretion to terminate the Plan,
any Incentive Stock Options granted shall be deemed to be Non- Statutory Stock
Options.
21. TERMINATION OF THE PLAN.
The right to grant Options under the Plan will terminate upon the earlier
of (i) ten (10) years after the Effective Date or (ii) the issuance of Common
Stock or (iii) the exercise of Options, or related Limited Rights equivalent to
the maximum number of shares reserved under the Plan as set forth in Section 4.
The Board of Directors has the right to suspend or terminate the Plan at any
time, provided that, except as to termination of the Plan or rescission of
awards pursuant to Section 20 hereof, no such action will, without the consent
of a Participant or Outside Director, adversely affect his vested rights under a
previously granted Option.
22. APPLICABLE LAW.
The Plan will be administered in accordance with the laws of the state of
Delaware.
23. COMPLIANCE WITH SECTION 16.
If this Plan is qualified under Rule 16b-3 (or any successor rule), 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 provisions of the Plan
or action by the Committee fail to so comply, such provisions shall be deemed
null and void, to the extent permitted by law and deemed advisable by the
Committee.
13
24. DELEGATION OF AUTHORITY
The Committee may delegate all authority for: the determination of forms of
payment to be made by or received by the Plan; the execution of Agreements; the
determination of Fair Market Value; the determination of all other aspects of
administration of the plan to the executive officer(s) of the Holding Company or
Reliance Federal Savings Bank ("Bank"). The Committee may rely on the
descriptions, representations, reports and estimate provided to it by the
management of the Holding Company or the Bank for determinations to be made
pursuant to the Plan.
IN WITNESS WHEREOF, Reliance Bancorp, Inc. has established this Plan, to be
executed by a designee of the Board of Directors its duly corporate seal to be
affixed and duly attested, effective as of the ____ day of____, 1996.
[CORPORATE SEAL] RELIANCE BANCORP, INC.
ADOPTED BY THE BOARD OF DIRECTORS:
_____________ By: _____________________________________
Date Raymond L. Nielsen
Chairman of the Board of Directors
For the Board of Directors
APPROVED BY STOCKHOLDERS:
_____________ By: _____________________________________
Date Robert F. Pelosi
Secretary
14
PAGE>
REVOCABLE PROXY
RELIANCE BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
November 12, 1996, 9:00 a.m. Eastern time
The undersigned hereby appoints the official proxy committee of the
Board of Directors of Reliance Bancorp, Inc. (the "Company"), each with full
power of substitution, to act as attorneys and proxies for the undersigned, and
to vote all shares of Common Stock of the Company which the undersigned is
entitled to vote only at the Annual Meeting of Stockholders, to be held on
November 12, 1996, at 9:00 a.m. Eastern time, at the Long Island Marriott Hotel
and Conference Center, 101 James Doolittle Boulevard, Uniondale, New York, and
at any and all adjournments thereof, as follows:
1. The election as directors of all nominees listed (except as marked to the
contrary below): FOR |__| WITHHOLD |__| FOR ALL EXCEPT |__|
Thomas G. Davis, Jr. and Donald LaPasta.
INSTRUCTION: To withhold your vote for any individual nominee, mark "For
All Except" and write that nominee's name on the space provided below:
- --------------------------------------------------------------------------------
2. Approval of the Reliance Bancorp, Inc. 1996 Stock Option Plan.
FOR |__| AGAINST |__| ABSTAIN |__|
3. The ratification of KPMG Peat Marwick as independent auditors of Reliance
Bancorp, Inc. for the fiscal year ending June 30, 1997.
FOR |__| AGAINST |__| ABSTAIN |__|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
This proxy is revocable and will be voted as directed, but if no
instructions are specified, this proxy will be voted FOR each of the proposals
listed. If any other business is presented at the Annual Meeting, this proxy
will be voted by those named in this proxy in their best judgment. At the
present time, the Board of Directors knows of no other business to be presented
at the Annual Meeting.
The stockholder acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Stockholders and of a
Proxy Statement dated October 11, 1996, and of the Annual Report to
Stockholders.
Please sign exactly as your name appears hereon. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title. If
shares are held jointly, each holder may sign but only one signature is
required.
Dated:_______________________, 1996
-----------------------------------
Signature of Stockholder
-----------------------------------
Signature of Stockholder
PLEASE COMPLETE, DATE, SIGN
AND MAIL THIS PROXY PROMPTLY
IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.