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STOCK OPTION AGREEMENT
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STOCK OPTION AGREEMENT ("Option Agreement") dated March
20, 1997, by and between ALLEGIANT BANCORP, INC. ("Buyer"), a
Missouri corporation registered as a bank holding company under the
Bank Holding Company Act of 1956, as amended (the "Holding Company
Act"), and RELIANCE FINANCIAL, INC. ("Seller"), a Delaware
corporation registered as a savings and loan holding company under
the Home Owners' Loan Act, as amended (the "HOLA").
W I T N E S S E T H:
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WHEREAS, the Board of Directors of Buyer and the Board of
Directors of Seller have approved an Agreement and Plan of Merger
dated as of even date herewith (the "Merger Agreement") providing
for the merger of Seller with and into Buyer; and
WHEREAS, as a condition to Buyer's entering into the
Merger Agreement, Buyer has required that Seller agree, and Seller
has agreed, to grant to Buyer the option set forth herein to
purchase authorized but unissued shares of the common stock, $0.10
par value, of Seller ("Seller Common Stock").
NOW, THEREFORE, in consideration of the premises herein
contained, the parties agree as follows:
1. Definitions.
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Capitalized terms used but not defined herein shall have
the same meanings as in the Merger Agreement.
2. Grant of Option.
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Subject to the terms and conditions set forth herein,
Seller hereby grants to Buyer an option (the "Option") to purchase
up to 46,775 shares of Seller Common Stock at a price per share
equal to $16.00 (such price, as adjusted if applicable, the
"Purchase Price") payable in cash as provided in Section 4 hereof.
3. Exercise of Option.
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(a) If not then in material breach of the Merger
Agreement, Buyer may exercise the Option, in whole or in part, at
any time or from time to time if a Purchase Event (as defined
below) shall have occurred; provided, however, that (i) to the
extent the Option shall not have been exercised, it shall terminate
and be of no further force and effect upon the earlier to occur of
(A) the Effective Time of the Merger and (B) the termination of the
Merger Agreement in accordance with Article VII thereof, provided
that in the case of a termination by Buyer pursuant to Section
7.01(d) arising from the volitional breach by Seller of any of its
representations, warranties or covenants in the Merger Agreement,
a termination by Seller or Buyer pursuant to Section 7.01(c)(ii) or
a termination by Seller pursuant to Section 7.01(f), the Option
shall not terminate until the date that is 12 months following such
termination; (ii) if the Option cannot be exercised on such day
because of any injunction, order or similar restraint issued by a
court of competent jurisdiction, the Option shall expire on the
30th business day after such injunction, order or restraint shall
have been dissolved or when such injunction, order or restraint
shall have become permanent and no longer subject to appeal, as the
case may be; and (iii) that any such exercise shall be subject to
compliance with applicable law, including the Holding Company Act
and the HOLA.
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(b) As used herein, a "Purchase Event" shall mean
any of the following events:
(i) Seller or any of its Subsidiaries, without
having received prior written consent from Buyer, shall
have entered into, authorized, recommended, proposed or
publicly announced its intention to enter into,
authorize, recommend or propose, an agreement,
arrangement or understanding with any person (other than
Buyer or any of its Subsidiaries) to (A) effect a merger
or consolidation or similar transaction involving Seller
or any of its Subsidiaries, (B) purchase, lease or
otherwise acquire 15% or more of the assets or earning
power of Seller or any of its Subsidiaries or (C)
purchase or otherwise acquire (including by way of
merger, consolidation, share exchange or similar
transaction) Beneficial Ownership (as defined in Section
3(d) hereof) of securities representing 20% or more of
the voting power of Seller or any of its Subsidiaries;
(ii) any person (other than Buyer or any
Subsidiary of Buyer, or Seller or any Subsidiary of
Seller in a fiduciary capacity) shall have acquired
Beneficial Ownership or the right to acquire Beneficial
Ownership of 20% or more of the voting power of Seller;
or
(iii) the holders of Seller Common Stock shall
not have approved the Merger Agreement at the meeting of
such stockholders held for the purpose of voting on the
Merger Agreement, such meeting shall not have been held
or shall have been cancelled prior to termination of the
Merger Agreement in accordance with its terms or Seller's
Board of Directors shall have withdrawn or modified in a
manner adverse to Buyer the recommendation of Seller's
Board of Directors with respect to the Merger Agreement,
in each case after an Extension Event.
(c) As used herein, the term "Extension Event"
shall mean any of the following events:
(i) a Purchase Event;
(ii) any person (other than Buyer or any of
its Subsidiaries) shall have "commenced" (as such term is
defined in Rule 14d-2 under the Exchange Act), or shall
have filed a registration statement under the Securities
Act with respect to, a tender offer or exchange offer to
purchase shares of Seller Common Stock such that, upon
consummation of such offer, such person would have
Beneficial Ownership or the right to acquire Beneficial
Ownership of 20% or more of the voting power of Sellers
for a value per share of Seller Common Stock in excess of
$16.00; or
(iii) any person (other than Buyer or any
Subsidiary of Buyer, or Seller or any Subsidiary of
Seller in a fiduciary capacity) shall have publicly
announced its willingness, or shall have publicly
announced a proposal, or publicly disclosed an intention
to make a proposal, (x) to make an offer described in
clause (ii) above, or (y) to engage in a transaction
described in Section 3(b) hereof at a price per share of
Seller Common Stock in excess of $16.00.
(d) As used herein, the terms "Beneficial
Ownership" and "Beneficially Own" shall have the meanings ascribed
to them in Rule 13d-3 under the Exchange Act.
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(e) As used herein, the term "person" shall have
the meaning ascribed to it in the Exchange Act.
(f) In the event Buyer wishes to exercise the
Option, it shall deliver to Seller a written notice (the date of
which being herein referred to as the "Notice Date") specifying (i)
the total number of shares it intends to purchase pursuant to such
exercise and (ii) a place and date not earlier than ten business
days nor later than 30 calendar days from the Notice Date for the
closing of such purchase (the "Closing Date").
4. Payment and Delivery of Certificates.
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(a) At the closing referred to in Section 3 hereof,
Buyer shall pay to Seller the aggregate Purchase Price for the
shares of Seller Common Stock purchased pursuant to the exercise of
the Option in immediately available funds by wire transfer to a
bank account designated by Seller.
(b) At such closing, simultaneously with the
delivery of cash as provided in Section 4(a), Seller shall deliver
to Buyer a certificate or certificates representing the number of
shares of Seller Common Stock purchased by Buyer, registered in the
name of Buyer or a nominee designated in writing by Buyer, and
Buyer shall deliver to Seller a letter in customary form agreeing
that Buyer shall not offer to sell, pledge or otherwise dispose of
such shares in violation of applicable law or the provisions of
this Option Agreement.
(c) If at the time of issuance of any Seller Common
Stock pursuant to any exercise of the Option, Seller shall have
issued any share purchase rights or similar securities to holders
of Seller Common Stock, then each such share of Seller Common Stock
shall also represent rights with terms substantially the same as
and at least as favorable to Buyer as those issued to other holders
of Seller Common Stock.
(d) Certificates for Seller Common Stock delivered
at any closing hereunder shall be endorsed with a restrictive
legend which shall read substantially as follows:
The transfer of the shares represented by this
certificate is subject to certain provisions of an
agreement between the registered holder hereof and
Reliance Financial, Inc., a copy of which is on file at
the principal office of Reliance Financial, Inc., and to
resale restrictions arising under the Securities Act of
1933, as amended, and any applicable state securities
laws. A copy of such agreement will be provided to the
holder hereof without charge upon receipt by Reliance
Financial, Inc. of a written request therefor.
It is understood and agreed that the above legend shall be removed
by delivery of substitute certificates without such legend if Buyer
shall have delivered to Seller an opinion of counsel, in form and
substance reasonably satisfactory to Seller and its counsel, to the
effect that such legend is not required for purposes of the
Securities Act and any applicable state securities laws and this
Option Agreement.
5. Authorization, etc.
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(a) Seller hereby represents and warrants to Buyer
that:
(i) Seller has full corporate authority to
execute and deliver this Option Agreement and, subject to
Section 11(i), to consummate the transactions
contemplated hereby;
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(ii) such execution, delivery and consummation
have been authorized by the Board of Directors of Seller,
and no other corporate proceedings are necessary
therefor;
(iii) this Option Agreement has been duly and
validly executed and delivered and represents a valid and
legally binding obligation of Seller, enforceable against
Seller in accordance with its terms; and
(iv) Seller has taken all necessary corporate
action to authorize and reserve and, subject to Section
11(i), permit it to issue and, at all times from the date
hereof through the date of the exercise in full or the
expiration or termination of the Option, shall have
reserved for issuance upon exercise of the Option, 46,775
shares of Seller Common Stock, all of which, upon
issuance pursuant hereto, shall be duly authorized,
validly issued, fully paid and nonassessable (upon full
payment for such shares in accordance with Section 4
hereof), and shall be delivered free and clear of all
claims, liens, encumbrances, restrictions (other than
federal and state securities restrictions) and security
interests and not subject to any preemptive rights.
(b) Buyer hereby represents and warrants to Seller
that:
(i) Buyer has full corporate authority to
execute and deliver this Option Agreement and, subject to
Section 11(i), to consummate the transactions
contemplated hereby;
(ii) such execution, delivery and consummation
have been authorized by all requisite corporate action by
Buyer, and no other corporate proceedings are necessary
therefor;
(iii) this Option Agreement has been duly and
validly executed and delivered and represents a valid and
legally binding obligation of Buyer, enforceable against
Buyer in accordance with its terms; and
(iv) any Seller Common Stock or other
securities acquired by Buyer upon exercise of the Option
will not be taken with a view to the public distribution
thereof and will not be transferred or otherwise disposed
of except in compliance with the Securities Act and
applicable state law.
6. Adjustment Upon Changes in Capitalization.
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In the event of any change in Seller Common Stock by
reason of stock dividends, split-ups, recapitalizations or the
like, the type and number of shares subject to the Option, and the
Purchase Price per share, as the case may be, shall be adjusted
appropriately. In the event that any additional shares of Seller
Common Stock are issued after the date of this Option Agreement
(other than pursuant to an event described in the preceding
sentence or pursuant to this Option Agreement), the number of
shares of Seller Common Stock subject to the Option shall be
adjusted so that, after such issuance, it equals at least 9.9% of
the number of shares of Seller Common Stock then issued and
outstanding (taking into account the shares to be issued pursuant
to the Option).
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7. Repurchase.
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(a) Subject to the giving of any notices and the
receipt of any approvals as contemplated by Section 11(i), at the
request of Buyer at any time commencing upon the first occurrence
of a Purchase Event described in Section 3(b) hereof and ending 13
months immediately thereafter but not later than the termination of
the Option pursuant to Section 3(a) hereof (the "Repurchase
Period"), Seller (or any successor entity thereof) shall repurchase
the Option from Buyer together with all (but not less than all,
subject to Section 10) shares of Seller Common Stock purchased by
Buyer pursuant to the exercise of the Option with respect to which
Buyer then has Beneficial Ownership, at a price (per share, the
"Per Share Repurchase Price") equal to the sum of:
(i) The exercise price paid by Buyer for any
shares of Seller Common Stock acquired pursuant to
exercise of the Option;
(ii) The difference between (A) the
"Market/Tender Offer Price" for shares of Seller Common
Stock (defined as the greatest of: (w) of the highest
price per share at which a tender or exchange offer has
been made for shares of Seller Common Stock, (x) the
price per share of Seller Common Stock paid or to be paid
by any third party pursuant to an agreement with Seller
(whether by way of a merger, consolidation or otherwise),
(y) the highest closing mean of the "bid" and the "ask"
prices per share of Seller Common Stock reported in the
over-the-counter market or (z) in the event of a sale of
all or substantially all of Seller's or any Seller
Subsidiary's assets, the sum of the price per share paid
in such sale for such assets and the current fair market
value per share of the remaining assets of Seller as
determined by an investment banking firm selected by
Buyer and reasonably acceptable to Seller, in each case
for any day within that portion of the Repurchase Period
which precedes the date Buyer gives notice of the
required repurchase under this Section 7) and (B) the
exercise price as determined pursuant to Section 2 hereof
(subject to adjustment as provided in Section 6),
multiplied by the number of shares of Seller Common Stock
with respect to which the Option has not been exercised,
but only if the Market/Tender Offer Price is greater than
such exercise price; and
(iii) The difference between the Market/Tender
Offer Price and the exercise price paid by Buyer for any
shares of Seller Common Stock purchased pursuant to the
exercise of the Option, multiplied by the number of
shares so purchased, but only if the Market/Tender Offer
Price is greater than such exercise price.
(b) In the event Buyer exercises its rights under
this Section 7, Seller shall, within 10 business days thereafter,
pay the required amount to Buyer by wire transfer of immediately
available funds to an account designated by Buyer and Buyer shall
surrender to Seller the Option and the certificates evidencing the
shares of Seller Common Stock purchased thereunder with respect to
which Buyer then has Beneficial Ownership, and Buyer shall warrant
that it has sole record and Beneficial Ownership of such shares and
that the same are free and clear of all liens, claims, charges,
restrictions and encumbrances of any kind whatsoever.
(c) In determining the Market/Tender Offer Price,
the value of any consideration other than cash shall be determined
by an independent investment banking firm selected by Buyer and
reasonably acceptable to Seller.
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8. Repurchase at Option of Seller and First Refusal.
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(a) Except to the extent that Buyer shall have
previously exercised its rights under Section 7, at the request of
Seller during the six-month period commencing 13 months following
the first occurrence of a Purchase Event, Seller may repurchase
from Buyer, and Buyer shall sell to Seller, all (but not less than
all, subject to Section 10) of the Seller Common Stock acquired by
Buyer pursuant hereto and with respect to which Buyer has
Beneficial Ownership at the time of such repurchase at a price per
share equal to the greater of (i) the Per Share Repurchase Price or
(ii) the sum of (A) the aggregate Purchase Price of the shares so
repurchased plus (B) interest on the aggregate Purchase Price paid
for the shares so repurchased from the date of purchase to the date
of repurchase at the highest rate of interest announced by Buyer as
its prime or base lending or reference rate during such period,
less any dividends received on the shares so repurchased. Any
repurchase under this Section 8(a) shall be consummated in
accordance with Section 7(b).
(b) If, at any time after the occurrence of a
Purchase Event and prior to the earlier of (i) the expiration of 18
months immediately following such Purchase Event or (ii) the
expiration or termination of the Option, Buyer shall desire to
sell, assign, transfer or otherwise dispose of the Option or all or
any of the shares of Seller Common Stock acquired by it pursuant to
the Option, it shall give Seller written notice of the proposed
transaction (an "Offeror's Notice"), identifying the proposed
transferee, and setting forth the terms of the proposed
transaction. An Offeror's Notice shall be deemed an offer by Buyer
to Seller, which may be accepted within 10 business days of the
receipt of such Offeror's Notice, on the same terms and conditions
and at the same price at which Buyer is proposing to transfer the
Option or such shares to a third party. The purchase of the Option
or any such shares by Seller shall be closed within 10 business
days of the date of the acceptance of the offer and the purchase
price shall be paid to Buyer by wire transfer of immediately
available funds to an account designated by Buyer. In the event of
the failure or refusal of Seller to purchase the Option or all the
shares covered by the Offeror's Notice or if the Office of Thrift
Supervision or any other Regulatory Authority disapproves Seller's
proposed purchase of the Option or such shares, Buyer may, within
60 days from the date of the Offeror's Notice, sell all, but not
less than all, of the Option or such shares to such third party at
no less than the price specified and on terms no more favorable to
the purchaser than those set forth in the Offeror's Notice. The
requirements of this Section 8(b) shall not apply to (i) any
disposition as a result of which the proposed transferee would
Beneficially Own not more than 2% of the voting power of Seller or
(ii) any disposition of Seller Common Stock by a person to whom
Buyer has sold shares of Seller Common Stock issued upon exercise
of the Option.
9. Registration Rights.
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At any time after the exercise of the Option by Buyer for
an aggregate of at least 50% of the shares subject thereto, Seller
shall, if requested by Buyer, as expeditiously as practicable file
a registration statement on a form for general use under the
Securities Act if necessary in order to permit the sale or other
disposition of the shares of Seller Common Stock that have been
acquired upon exercise of the Option in accordance with the
intended method of sale or other disposition requested by Buyer (it
being understood and agreed that any such sale or other disposition
shall be effected on a widely distributed basis so that, upon
consummation thereof, no purchaser or transferee shall Beneficially
Own more than 2% of the shares of Seller Common Stock then
outstanding). Buyer shall provide all information reasonably
requested by Seller for inclusion in any registration statement to
be filed hereunder. Seller shall use its reasonable best efforts
to cause such registration statement first to become effective and
then to remain effective for such period not in excess of 90 days
from the day such registration statement first becomes effective as
may be reasonably necessary to effect such sales or other
dispositions. The registration effected under this Section 9 shall
be at Seller's expense except for
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underwriting discounts and commissions and the fees and disbursements
of Buyer's counsel attributable to the registration of such Seller
Common Stock. In no event shall Seller be required to effect more
than one registration hereunder. The filing of the registration
statement hereunder may be delayed for such period of time as may
reasonably be required to facilitate any public distribution by Seller
of Seller Common Stock or if a special audit of Seller would otherwise
be required in connection therewith. If requested by Buyer in
connection with such registration, Seller shall become a party to
any underwriting agreement relating to the sale of such shares, but
only to the extent of obligating itself in respect of
representations, warranties, indemnities and other agreements
customarily included in such underwriting agreements for parties
similarly situated.
10. Severability.
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Any term, provision, covenant or restriction contained in
this Option Agreement held by a court or a Regulatory Authority of
competent jurisdiction to be invalid, void or unenforceable, shall
be ineffective to the extent of such invalidity, voidness or
unenforceability, but neither the remaining terms, provisions,
covenants or restrictions contained in this Option Agreement nor
the validity or enforceability thereof in any other jurisdiction
shall be affected or impaired thereby. Any term, provision,
covenant or restriction contained in this Option Agreement that is
so found to be so broad as to be unenforceable shall be interpreted
to be as broad as is enforceable. If for any reason such court or
Regulatory Authority determines that applicable law will not permit
Buyer or any other person to acquire, or Seller to repurchase or
purchase, the full number of shares of Seller Common Stock provided
in Section 2 hereof (as adjusted pursuant to Section 6 hereof), it
is the express intention of the parties hereto to allow Buyer or
such other person to acquire, or Seller to repurchase or purchase,
such lesser number of shares as may be permissible, without any
amendment or modification hereof.
11. Miscellaneous.
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(a) Expenses. Each of the parties hereto shall pay
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all costs and expenses incurred by it or on its behalf in
connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment
bankers, accountants and counsel, except as otherwise provided
herein.
(b) Entire Agreement. Except as otherwise
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expressly provided herein, this Option Agreement and the Merger
Agreement contain the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes
all prior arrangements or understandings with respect thereto,
written or oral.
(c) Successors; No Third Party Beneficiaries. The
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terms and conditions of this Option Agreement shall inure to the
benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Nothing in this
Option Agreement, expressed or implied, is intended to confer upon
any party, other than the parties hereto, and their respective
successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Option Agreement, except as
expressly provided herein.
(d) Assignment. Other than as provided in Section
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8 hereof, neither of the parties hereto may sell, transfer, assign
or otherwise dispose of any of its rights or obligations under this
Option Agreement or the Option created hereunder to any other
person (whether by operation of law or otherwise), without the
express written consent of the other party.
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(e) Notices. All notices or other communications
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which are required or permitted hereunder shall be in writing and
sufficient if delivered in accordance with Section 8.08 of the
Merger Agreement (which is incorporated herein by reference).
(f) Counterparts. This Option Agreement may be
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executed in counterparts, and each such counterpart shall be deemed
to be an original instrument, but both such counterparts together
shall constitute but one agreement.
(g) Specific Performance. The parties hereto agree
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that if for any reason Buyer or Seller shall have failed to perform
its obligations under this Option Agreement, then either party
hereto seeking to enforce this Option Agreement against such non-
performing party shall be entitled to specific performance and
injunctive and other equitable relief, and the parties hereto
further agree to waive any requirement for the securing or posting
of any bond in connection with the obtaining of any such injunctive
or other equitable relief. This provision is without prejudice to
any other rights that either party hereto may have against the
other party hereto for any failure to perform its obligations under
this Option Agreement.
(h) Governing Law. This Option Agreement shall be
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governed by and construed in accordance with the laws of the State
of Missouri applicable to agreements made and entirely to be
performed within such state, without regard to its conflict of laws
principles.
(i) Regulatory Approvals; Section 16(b). If, in
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connection with (A) the exercise of the Option under Section 3 or
a sale by Buyer to a third party under Section 8, (B) a repurchase
by Seller under Section 7 or a repurchase or purchase by Seller
under Section 8, prior notification to or approval of the Federal
Reserve Board, the OTS or any other Regulatory Authority is
required, then the required notice or application for approval
shall be promptly filed and expeditiously processed and periods of
time that otherwise would run pursuant to such Sections shall run
instead from the date on which any such required notification
period has expired or been terminated or such approval has been
obtained, and in either event, any requisite waiting period shall
have passed. In the case of clause (A) of this subsection (i),
such filing shall be made by Buyer, and in the case of clause (B)
of this subsection (i), such filing shall be made by Seller,
provided that each of Buyer and Seller shall use its best efforts
to make all filings with, and to obtain consents of, all third
parties and Regulatory Authorities necessary to the consummation of
the transactions contemplated hereby, including without limitation
applying to the Federal Reserve Board under the Holding Company Act
and to the OTS under the HOLA for approval to acquire the shares
issuable hereunder. Periods of time that otherwise would run
pursuant to Sections 3, 7 or 8 shall also be extended to the extent
necessary to avoid liability under Section 16(b) of the Exchange
Act.
(j) Waiver and Amendment. Any provision of this
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Option Agreement may be waived at any time by the party that is
entitled to the benefits of such provision. This Option Agreement
may not be modified, amended, altered or supplemented except upon
the execution and delivery of a written agreement executed by the
parties hereto.
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IN WITNESS WHEREOF, each of the parties hereto has
executed this Option Agreement as of the date first written above.
ALLEGIANT BANCORP, INC.
By: /s/ Xxxxxx X. Wool
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Xxxxxx X. Wool
Chairman and Chief Executive Officer
RELIANCE FINANCIAL, INC.
By: /s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
President and Chief Executive Officer
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