<PAGE>
As filed with the Securities and Exchange Commission on November 16, 1998
Registration No. 333-_________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
-------------------------------------
ROSLYN BANCORP, INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
DELAWARE 6036 11-3333218
(State or Other Jurisdiction of (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number)
Incorporation or Organization)
</TABLE>
1400 OLD NORTHERN BOULEVARD
ROSLYN, NEW YORK 11576
(516) 621-6000
(Address, including Zip Code and Telephone Number,
including Area Code, of Registrant's Principle Executive Offices)
JOSEPH L. MANCINO
CHIEF EXECUTIVE OFFICER
1400 OLD NORTHERN BOULEVARD
ROSLYN, NEW YORK 11576
(516) 621-6000
(Name, Address, including Zip Code and Telephone Number,
including Area Code, of Agent for Service)
------------------------------------------------------
COPIES TO:
DOUGLAS P. FAUCETTE, ESQ. DOUGLAS J. MCCLINTOCK, ESQ.
MULDOON, MURPHY & FAUCETTE THACHER PROFFITT & WOOD
5101 WISCONSIN AVENUE, N.W. TWO WORLD TRADE CENTER, 39TH FLOOR
WASHINGTON, D.C. 20016 NEW YORK, NEW YORK 10048
(202) 362-0840 (212) 912-7400
------------------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE AFTER THE EFFECTIVENESS OF THIS REGISTRATION STATEMENT AND
THE SATISFACTION OR WAIVER OF ALL OTHER CONDITIONS TO THE MERGER
DESCRIBED IN THE JOINT PROXY STATEMENT/PROSPECTUS.
If the securities being registered, being offered on this form are in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(b) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration
statement for the same offering. [_]
-------------------------------------------------
<TABLE>
<CAPTION>
Calculation of Registration Fee
- ------------------------------------------------------------------------------
Proposed Proposed
Maximum Maximum
Title of Each Amount Offering Aggregate Amount of
Class of Securities To Be To Be Price Offering Registration
Registered Registered Per Share Price (1) Fee (1)
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par
value $0.01 per 40,199,570 N/A $614,023,910 $75,842
share ("Common Stock")
- ------------------------------------------------------------------------------
</TABLE>
(1) The registration fee has been computed pursuant to Rule 457(f)(1) under
the Securities Act of 1933, as amended, based on the average of the high
and low prices for shares of Common Stock of T R Financial Corp. reported
on the National Market System of the Nasdaq Stock Market on November 11,
1998, ($31.3125) and the maximum number of such shares (19,609,546) that
may be exchanged for the securities being registered. The requested fee
pursuant to Section 6(b) of the Securities Act of 1933, as amended,
($170,699) has been reduced by the amount of the fee previously paid to
the Securities and Exchange Commission ($94,857) in accordance with Rule
457(b). Accordingly, the registration fee payable upon the filing of this
Registration Statement is $75,842.
----------------------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OR
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
ROSLYN BANCORP, INC.'S COMMON STOCK IS LISTED ON THE NATIONAL MARKET SYSTEM
OF THE NASDAQ STOCK MARKET AND IS TRADED UNDER THE SYMBOL"RSLN".
<PAGE>
[ROSLYN LETTERHEAD]
___________, 1998
Dear Roslyn Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders of
Roslyn Bancorp, Inc. ("Roslyn") which will be held on Tuesday, December 22, 1998
at 10:00 a.m., New York time, at The Crest Hollow Country Club, 8325 Jericho
Turnpike, Woodbury, New York 11797 (the "Roslyn Meeting").
At the Roslyn Meeting, you will be asked to consider and vote upon a
proposal to approve and adopt an Agreement and Plan of Merger (the "Merger
Agreement"), dated as of May 25, 1998, by and between Roslyn and T R Financial
Corp. ("T R Financial"), pursuant to which T R Financial will be merged (the
"Merger") with and into Roslyn. It is intended that, as soon as practicable
following the Merger, Roosevelt Savings Bank, a New York State-chartered savings
bank and a wholly owned subsidiary of T R Financial, and The Roslyn Savings
Bank, a New York State-chartered savings bank and a wholly owned subsidiary of
Roslyn, also will merge, with the surviving bank being named The Roslyn Savings
Bank. Upon consummation of the Merger, each share of the common stock of T R
Financial will be converted into and exchangeable for 2.05 shares of Roslyn
common stock, subject to certain adjustments (the "Exchange Ratio"), plus cash
in lieu of any fractional share interest in Roslyn common stock. T R Financial
has the right under the Merger Agreement to terminate the Merger Agreement if
the price of Roslyn common stock as of a designated valuation date (which will
be after all regulatory and stockholder approvals are received) is below certain
levels established in the Merger Agreement, which levels are referred to in the
accompanying Joint Proxy Statement/Prospectus as the "Absolute Termination
Condition" and the "Relative Termination Condition." Illustrations depicting
these conditions and each party's rights thereunder can be found in "THE
MERGER -- Price-Based Termination" section on page __ of the accompanying
Joint Proxy Statement/Prospectus. The Exchange Ratio may be increased by Roslyn
in the event T R Financial exercises its rights under the Merger Agreement to
deliver to Roslyn a notice to terminate the Merger Agreement under the Relative
Termination Condition. The price of Roslyn common stock has been below the
levels set forth under the Absolute Termination Condition for several months,
and, during such period, has also sometimes been below the levels set forth
under the Relative Termination Condition. For a discussion of the present
intention of the Board of Directors of T R Financial regarding its right to
terminate the Merger Agreement, please see the accompanying Joint Proxy
Statement/Prospectus.
The investment banking firm of Sandler O'Neill & Partners, L.P. ("Sandler
O'Neill") has issued a written opinion to your Board of Directors that, as of
the date of such opinion, the Exchange Ratio was fair to Roslyn's stockholders
from a financial point of view. The written opinion of Sandler O'Neill is
reproduced in full as Annex D to the accompanying Joint Proxy
Statement/Prospectus, and Roslyn's stockholders are urged to read carefully such
opinion and the discussion thereof in the accompanying Joint Proxy
Statement/Prospectus in its entirety.
Consummation of the Merger is subject to certain conditions, including the
approval of the Merger Agreement by the holders of T R Financial common stock
and holders of Roslyn common stock and the approval of the Merger by various
bank regulatory agencies.
THE MERGER AGREEMENT HAS BEEN UNANIMOUSLY APPROVED BY THE BOARD OF
DIRECTORS OF EACH OF ROSLYN AND T R FINANCIAL. THE BOARD OF DIRECTORS OF ROSLYN
BELIEVES THAT THE TERMS OF THE MERGER AGREEMENT TO BE PRESENTED AT THE ROSLYN
MEETING ARE FAIR TO, AND IN THE BEST INTERESTS OF, ROSLYN AND ITS STOCKHOLDERS
AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY.
Specific information regarding the Roslyn Meeting is contained in the
enclosed Notice of Special Meeting and Joint Proxy Statement/Prospectus. Please
read these materials carefully.
IT IS VERY IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE ROSLYN
MEETING, WHETHER OR NOT YOU PLAN TO ATTEND IN PERSON. THE AFFIRMATIVE VOTE OF A
MAJORITY OF THE OUTSTANDING SHARES OF COMMON STOCK OF ROSLYN IS REQUIRED FOR
APPROVAL OF THE MERGER AGREEMENT. A FAILURE TO VOTE FOR APPROVAL OF THE MERGER
AGREEMENT WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER AGREEMENT.
THEREFORE, I URGE YOU TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY IN
THE ENCLOSED POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE TO ASSURE THAT YOUR
SHARES WILL BE VOTED AT THE ROSLYN MEETING. IF YOU ATTEND THE ROSLYN MEETING,
YOU MAY REVOKE THE PROXY GIVEN ON SUCH FORM AND VOTE IN PERSON IF YOU WISH, EVEN
IF YOU HAVE PREVIOUSLY RETURNED YOUR FORM OF PROXY. IF YOU ARE A STOCKHOLDER
------------------------
WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL
- --------------------------------------------------------------------------
DOCUMENTATION FROM YOUR RECORD HOLDER IN ORDER TO BE ADMITTED TO THE ROSLYN
- ---------------------------------------------------------------------------
MEETING AND TO VOTE AT THE ROSLYN MEETING. EXAMPLES OF SUCH DOCUMENTATION
- --------------------------------------------------------------------------
INCLUDE A BROKER'S STATEMENT, LETTER OR OTHER DOCUMENT CONFIRMING YOUR OWNERSHIP
- --------------------------------------------------------------------------------
OF SHARES OF ROSLYN COMMON STOCK.
- --------------------------------
On behalf of the Board of Directors and the employees of Roslyn Bancorp,
Inc. and The Roslyn Savings Bank, I thank you for your support and urge you to
vote FOR approval and adoption of the Merger Agreement.
Sincerely,
Joseph L. Mancino
Chairman of the Board, President and
Chief Executive Officer
<PAGE>
[T R FINANCIAL LETTERHEAD]
___________, 1998
Dear T R Financial Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders of
T R Financial Corp. ("T R Financial") which will be held on Tuesday, December
22, 1998 at 9:30 a.m., New York time, at the Garden City Hotel, 45 Seventh
Street, Garden City, New York 11530 (the "T R Financial Meeting").
At the T R Financial Meeting, you will be asked to consider and vote upon a
proposal to approve and adopt an Agreement and Plan of Merger (the "Merger
Agreement"), dated as of May 25, 1998, by and between Roslyn Bancorp, Inc.
("Roslyn") and T R Financial, pursuant to which T R Financial will be merged
(the "Merger") with and into Roslyn. It is intended that, as soon as practicable
following the Merger, Roosevelt Savings Bank, a New York State-chartered savings
bank and a wholly owned subsidiary of T R Financial, and The Roslyn Savings
Bank, a New York State-chartered savings bank and a wholly owned subsidiary of
Roslyn, also will merge, with the surviving bank being named The Roslyn Savings
Bank. Upon consummation of the Merger, each share of the common stock of T R
Financial will be converted into and exchangeable for 2.05 shares of Roslyn
common stock, subject to certain adjustments (the "Exchange Ratio"), plus cash
in lieu of any fractional share interest in Roslyn common stock. T R Financial
has the right under the Merger Agreement to terminate the Merger Agreement if
the price of Roslyn common stock as of a designated valuation date (which will
be after all regulatory and stockholder approvals are received) is below certain
levels established in the Merger Agreement, which levels are referred to in the
accompanying Joint Proxy Statement/Prospectus as the "Absolute Termination
Condition" and the "Relative Termination Condition." Illustrations depicting
these conditions and each party's rights thereunder can be found in "THE
MERGER --Price-Based Termination" section on page __ of the accompanying Joint
Proxy Statement/Prospectus. The Exchange Ratio may be increased by Roslyn in the
event T R Financial exercises its rights under the Merger Agreement to deliver
to Roslyn a notice to terminate the Merger Agreement under the Relative
Termination Condition. The price of Roslyn common stock has been below the
levels set forth under the Absolute Termination Condition for several months,
and, during such period, has also sometimes been below the levels set forth
under the Relative Termination Condition. The Board of Directors of T R
Financial has decided to disclose to stockholders of T R Financial and Roslyn
its present intention with respect to the termination conditions if, as of the
designated valuation date, the price of Roslyn common stock is below the level
set forth under either, or both, of the termination conditions, and if, as of
such date, the absolute prices of T R Financial and Roslyn common stock, the
prices of T R Financial and Roslyn common stock as compared to those of other
thrift institution holding companies, the absolute and relative trends of such
stocks at that time, the sale of control premiums then being offered in other
transactions, T R Financial's and Roslyn's operating performance and projected
future operating performance, and other general business, market and economic
conditions are, in the aggregate, substantially the same as or not materially
less favorable than, they were as of November 13, 1998.
Based upon the 15-consecutive-trading day average closing price of Roslyn
common stock as of November 13, 1998 and the other factors set forth above, it
is the present intention of the Board of Directors of T R Financial that (i) if,
as of the designated valuation date, the price of Roslyn common stock and the
other factors set forth above are substantially the same as or not materially
less favorable than they were on November 13, 1998, T R Financial would not
elect to terminate the Merger Agreement under the Absolute Termination
Condition, (ii) if, as of the designated valuation date, the price of Roslyn
common stock and the other factors set forth above are materially less favorable
than they were as of November 13, 1998, T R Financial would elect to terminate
the Merger Agreement under the Absolute Termination Condition and (iii) if, as
of the designated valuation date, the price of Roslyn common stock and the other
factors set forth above are substantially the same as they were on November 13,
1998 and the price of Roslyn common stock is below the levels set forth under
the Relative Termination Condition, T R Financial would elect to terminate the
Merger Agreement under the Relative Termination Condition, subject to Roslyn's
election to increase the Exchange Ratio, in which case the Merger Agreement
would remain in full force and effect except that the Exchange Ratio would have
been increased.
The foregoing sets forth the present intention of the Board of Directors of
T R Financial with respect to an assumed set of facts. It is not a final
decision, and is based upon an assumed set of facts. T R Financial does not have
the right to terminate the Merger Agreement pursuant to either the Absolute
Termination Condition or the Relative Termination Condition until the designated
valuation date as determined in accordance with the Merger Agreement and
described in the accompanying Joint Proxy Statement/Prospectus.
T R Financial stockholders are urged to read carefully the sections of the
accompanying Joint Proxy Statement/Prospectus that discuss T R Financial's right
to terminate the Merger Agreement under both of the foregoing conditions.
The investment banking firm of Goldman, Sachs & Co. ("Goldman Sachs") has
issued a written opinion to your Board of Directors that, as of the date of such
opinion, the Exchange Ratio was fair to T R Financial's stockholders from a
financial point of view. The written opinion of Goldman Sachs is reproduced in
full as Annex E to the accompanying Joint Proxy Statement/Prospectus, and T R
Financial's stockholders are urged to read carefully such opinion, and the
discussion thereof in the accompanying Joint Proxy Statement/Prospectus, in its
entirety.
Consummation of the Merger is subject to certain conditions, including the
approval of the Merger Agreement by the holders of T R Financial common stock
and the holders of Roslyn common stock and the approval of the Merger by
various bank regulatory agencies.
THE MERGER AGREEMENT HAS BEEN UNANIMOUSLY APPROVED BY THE BOARD OF
DIRECTORS OF EACH OF T R FINANCIAL AND ROSLYN. THE BOARD OF DIRECTORS OF T R
FINANCIAL BELIEVES THAT THE TERMS OF THE MERGER AGREEMENT TO BE PRESENTED AT THE
T R FINANCIAL MEETING, WHICH INCLUDES PROVISIONS THAT WILL ALLOW T R FINANCIAL
TO TERMINATE THE MERGER AGREEMENT IF THE PRICE OF ROSLYN COMMON STOCK IS
BELOW CERTAIN LEVELS ESTABLISHED IN THE MERGER AGREEMENT, ARE FAIR TO, AND IN
THE BEST INTERESTS OF T R FINANCIAL AND ITS STOCKHOLDERS AND UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY.
Specific information regarding the T R Financial Meeting is contained in
the enclosed Notice of Special Meeting and Joint Proxy Statement/Prospectus.
Please read these materials carefully.
IT IS VERY IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE T R FINANCIAL
MEETING, WHETHER OR NOT YOU PLAN TO ATTEND IN PERSON. THE AFFIRMATIVE VOTE OF A
MAJORITY OF THE OUTSTANDING SHARES OF COMMON STOCK OF T R FINANCIAL IS REQUIRED
FOR APPROVAL OF THE MERGER AGREEMENT. A FAILURE TO VOTE FOR APPROVAL OF THE
MERGER AGREEMENT WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER
AGREEMENT. THEREFORE, I URGE YOU TO COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE TO
ASSURE THAT YOUR SHARES WILL BE VOTED AT THE T R FINANCIAL MEETING. IF YOU
ATTEND THE T R FINANCIAL MEETING, YOU MAY REVOKE THE PROXY GIVEN ON SUCH FORM
AND VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR FORM
OF PROXY. IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN
--------------------------------------------------------------------
NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER IN ORDER TO
- --------------------------------------------------------------------------------
BE ADMITTED TO THE T R FINANCIAL MEETING AND TO VOTE AT THE T R FINANCIAL
- -------------------------------------------------------------------------
MEETING. EXAMPLES OF SUCH DOCUMENTATION INCLUDE A BROKER'S STATEMENT, LETTER OR
- --------------------------------------------------------------------------------
OTHER DOCUMENT CONFIRMING YOUR OWNERSHIP OF SHARES OF T R FINANCIAL COMMON
- --------------------------------------------------------------------------
STOCK.
- -----
On behalf of the Board of Directors of T R Financial Corp. and Roosevelt
Savings Bank, I thank you for your support and urge you to vote FOR approval and
adoption of the Merger Agreement.
If you have any questions, please call Theodore S. Ayvas, Vice President,
Investor Relations, Roosevelt Savings Bank, at (516) 739-4219.
Sincerely,
John M. Tsimbinos
Chairman of the Board and
Chief Executive Officer
<PAGE>
ROSLYN BANCORP, INC.
1400 OLD NORTHERN BOULEVARD
ROSLYN, NEW YORK 11576
(516) 621-6000
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 22, 1998
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Roslyn
Bancorp, Inc. ("Roslyn"), Roslyn, New York will be held at The Crest Hollow
Country Club, 8325 Jericho Turnpike, Woodbury, New York 11797 on Tuesday,
December 22, 1998, at 10:00 a.m. New York time (the "Roslyn Meeting"), for the
following purposes, all of which are more completely set forth in the
accompanying Joint Proxy Statement/Prospectus:
1. To consider and vote upon a proposal to approve and adopt the Agreement
and Plan of Merger, dated as of May 25, 1998, by and between Roslyn and
T R Financial Corp. ("T R Financial") (the "Merger Agreement"). The
Merger Agreement provides for the merger of T R Financial with and into
Roslyn (the "Merger"), pursuant to which each share of common stock of
T R Financial, par value $0.01 per share, will be converted into and
exchangeable for 2.05 shares of the common stock of Roslyn, par value
$0.01 per share (the "Exchange Ratio"), plus cash in lieu of any
fractional share interest (such cash, together with the shares of Roslyn
common stock to be received in the Merger, is collectively referred to
as the "Merger Consideration"). The Exchange Ratio may be increased by
Roslyn in the event T R Financial exercises its rights under the Merger
Agreement to deliver to Roslyn a notice to terminate the Merger
Agreement if the price of the Roslyn common stock is below certain
levels established in the Merger Agreement. A copy of the Merger
Agreement is included as Annex A to the accompanying Joint Proxy
Statement/Prospectus.
2. To transact such other business as may properly come before the Roslyn
Meeting and any adjournment or postponement thereof.
Pursuant to Roslyn's Bylaws, the Board of Directors has fixed October 26,
1998 as the record date for the determination of stockholders entitled to notice
of and to vote at the Roslyn Meeting and any adjournment or postponement
thereof. Only stockholders of record at the close of business on that date will
be entitled to notice of and to vote at the Roslyn Meeting. A list of Roslyn
stockholders entitled to vote at the Roslyn Meeting will be available for
examination for any purpose germane to the Roslyn Meeting, during ordinary
business hours, at the principal executive offices of Roslyn located at 1400 Old
Northern Boulevard, Roslyn, New York 11576 for ten days prior to the Roslyn
Meeting and will also be available at the Roslyn Meeting.
In the event that there are not sufficient votes to approve any of the
foregoing proposals at the time of the Roslyn Meeting, the Roslyn Meeting may be
adjourned in order to permit further solicitation by Roslyn.
By Order of the Board of Directors
Mary M. Ehrich
Corporate Secretary
Roslyn, New York
_______, 1998
ROSLYN'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
PROPOSAL TO APPROVE AND ADOPT THE MERGER AGREEMENT.
WHETHER OR NOT YOU PLAN TO ATTEND THE ROSLYN MEETING, YOU ARE URGED TO
COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING PRE-
ADDRESSED POSTAGE-PAID ENVELOPE. YOUR PROXY MAY BE REVOKED PRIOR TO ITS
EXERCISE BY FILING WITH THE CORPORATE SECRETARY OF ROSLYN PRIOR TO THE ROSLYN
MEETING A WRITTEN NOTICE OF REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER
DATE, OR BY ATTENDING THE ROSLYN MEETING, FILING A WRITTEN NOTICE OF REVOCATION
WITH THE SECRETARY OF THE MEETING AND VOTING IN PERSON.
<PAGE>
T R FINANCIAL CORP.
1122 FRANKLIN AVENUE
GARDEN CITY, NEW YORK 11530
(516) 742-9300
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 22, 1998
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of T R
Financial Corp. ("T R Financial"), Garden City, New York will be held at
the Garden City Hotel, 45 Seventh Street, Garden City, New York 11530 on
Tuesday, December 22, 1998, at 9:30 a.m. New York time (the "T R Financial
Meeting"), for the following purposes, all of which are more completely set
forth in the accompanying Joint Proxy Statement/Prospectus:
1. To consider and vote upon a proposal to approve and adopt the Agreement
and Plan of Merger, dated as of May 25, 1998, by and between Roslyn
Bancorp, Inc. ("Roslyn") and T R Financial (the "Merger Agreement"). The
Merger Agreement provides for the merger of T R Financial with and into
Roslyn (the "Merger"), pursuant to which each share of common stock of
T R Financial, par value $0.01 per share, will be converted into and
exchangeable for 2.05 shares of the common stock of Roslyn, par value
$0.01 per share (the "Exchange Ratio"), plus cash in lieu of any
fractional share interest (such cash, together with the shares of Roslyn
common stock to be received in the Merger, is collectively referred to
as the "Merger Consideration"). The Exchange Ratio may be increased by
Roslyn in the event T R Financial exercises its rights under the Merger
Agreement to deliver to Roslyn a notice to terminate the Merger
Agreement if the price of the Roslyn common stock is below certain
levels established in the Merger Agreement. A copy of the Merger
Agreement is included as Annex A to the accompanying Joint Proxy
Statement/Prospectus.
2. To transact such other business as may properly come before the T R
Financial Meeting or any adjournment or postponement thereof.
Pursuant to T R Financial's Bylaws, the Board of Directors has fixed
October 26, 1998 as the record date for the determination of stockholders
entitled to notice of and to vote at the T R Financial Meeting and any
adjournment or postponement thereof. Only stockholders of record at the close
of business on that date will be entitled to notice of and to vote at the T R
Financial Meeting. A list of T R Financial stockholders entitled to vote at the
T R Financial Meeting will be available for examination for any purpose germane
to the T R Financial Meeting, during ordinary business hours, at the principal
executive offices of T R Financial located at 1122 Franklin Avenue, Garden City,
New York 11530 for ten days prior to the T R Financial Meeting and will also be
available at the T R Financial Meeting.
In the event that there are not sufficient votes to approve any of the
foregoing proposals at the time of the T R Financial Meeting, the T R Financial
Meeting may be adjourned in order to permit further solicitation by
T R Financial.
By Order of the Board of Directors
Ira H. Kramer
Corporate Secretary
Garden City, New York
_______, 1998
T R FINANCIAL'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
THE PROPOSAL TO APPROVE AND ADOPT THE MERGER AGREEMENT.
WHETHER OR NOT YOU PLAN TO ATTEND THE T R FINANCIAL MEETING, YOU ARE URGED
TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING PRE-
ADDRESSED POSTAGE-PAID ENVELOPE. YOUR PROXY MAY BE REVOKED PRIOR TO ITS EXERCISE
BY FILING WITH THE CORPORATE SECRETARY OF T R FINANCIAL PRIOR TO THE T R
FINANCIAL MEETING A WRITTEN NOTICE OF REVOCATION OR A DULY EXECUTED PROXY
BEARING A LATER DATE, OR BY ATTENDING THE T R FINANCIAL MEETING, FILING A
WRITTEN NOTICE OF REVOCATION WITH THE SECRETARY OF THE MEETING AND VOTING IN
PERSON.
<PAGE>
ROSLYN BANCORP, INC.
AND
T R FINANCIAL CORP.
JOINT PROXY STATEMENT
____________________
ROSLYN BANCORP, INC.
PROSPECTUS
40,199,570 SHARES OF ROSLYN COMMON STOCK
_____________________
This Joint Proxy Statement/Prospectus relates to the proposed merger (the
"Merger") of T R Financial Corp., a Delaware corporation ("T R Financial"), with
and into Roslyn Bancorp, Inc., a Delaware corporation ("Roslyn"), with Roslyn as
the surviving corporation in the Merger, as contemplated by the Agreement and
Plan of Merger (the "Merger Agreement"), dated as of May 25, 1998, by and
between Roslyn and T R Financial. A copy of the Merger Agreement is attached as
Annex A hereto and is incorporated herein by reference. Upon consummation of the
Merger, each outstanding share of T R Financial common stock, par value $0.01
per share ("T R Financial Common Stock"), with certain exceptions, will be
converted into and exchangeable for 2.05 shares the ("Exchange Ratio") of Roslyn
common stock par value 10.01 per share ("Roslyn Common Stock"). Cash will be
paid in lieu of the issuance of fractional shares of Roslyn Common Stock (such
cash, together with the shares of Roslyn Common Stock to be received in the
Merger, is collectively referred to as the "Merger Consideration"). No
stockholder of Roslyn or T R Financial is entitled to appraisal rights in
connection with or as a result of the Merger. See "THE MERGER -- No Appraisal
Rights."
This Joint Proxy Statement/Prospectus is being furnished to the
stockholders of Roslyn and T R Financial in connection with the solicitation of
proxies by the respective Boards of Directors of Roslyn and T R Financial for
use at the special meetings of stockholders of Roslyn and T R Financial, each to
be held on December 22, 1998, including any adjournment or postponement of such
meetings (the "Meetings"). At their respective Meetings, stockholders of Roslyn
and T R Financial will consider and vote upon a proposal to approve and adopt
the Merger Agreement and the transactions contemplated thereby.
This Joint Proxy Statement/Prospectus also constitutes a prospectus of
Roslyn with respect to the issuance of 40,199,570 shares of Roslyn Common Stock
issuable to holders of T R Financial Common Stock in the Merger.
Set forth below is a description of the termination provisions of the
Merger Agreement and the present intention of the Board of Directors of T R
Financial (the "T R Financial Board") with respect to these provisions based
upon current market conditions. The termination provisions were included in the
Merger Agreement because the consideration to be provided to T R Financial
stockholders for each share of T R Financial Common Stock held is generally
equal to 2.05 (the Exchange Ratio) shares of Roslyn Common Stock, and, if the
value of Roslyn Common Stock declined significantly, either absolutely or
relative to a specified index of stocks of certain other financial institutions
("Index Group"), or both, the T R Financial Board wanted the authority to
terminate the Merger Agreement if it believed that the Merger was not in the
best long-term interests of T R Financial stockholders. During the period
following the execution of the Merger Agreement and preceding the mailing of
this Joint Proxy Statement/Prospectus, there has been substantial volatility in
U.S. and foreign stock markets. The closing sales price of Roslyn Common Stock,
as reported on the National Market System of the Nasdaq Stock Market ("Nasdaq
National Market"), has declined from $27.625 on May 22, 1998 (the trading date
immediately preceding the public announcement of the Merger Agreement) to $17.50
on November 13, 1998 (the latest practicable trading date prior to the mailing
of this Joint Proxy Statement/Prospectus), which is a decline of 36.65%. Hence,
the dollar value of the consideration to be received by T R Financial
stockholders in connection with the Merger has declined from $56.63 per share
($27.625 x 2.05) to $35.875 per share ($17.50 x 2.05) over the same period.
The Merger Agreement generally provides that T R Financial may, if the T R
Financial Board so determines by a majority vote of the entire T R Financial
Board, at any time during the five-day period commencing on the date by which
all stockholder and regulatory approvals have been obtained and all required
waiting periods have expired (the "Valuation Date"), terminate the Merger
Agreement if (i) the 15-consecutive-trading day average closing price of Roslyn
Common Stock ("Roslyn Market Value") on the Valuation Date is less than $20.72,
which is referred to herein as the "Absolute Termination Condition," or (ii)
both the Roslyn Market Value on the Valuation Date is less than $22.10 and the
number obtained by dividing the Roslyn Market Value by the closing sales price
for a share of Roslyn Common Stock on May 22, 1998 (the "Roslyn Ratio") is less
than the number obtained by dividing (a) the weighted sum of the average of the
daily closing sales prices for a share of common stock of each company in the
Index Group for the 30 consecutive trading days immediately preceding the
Valuation Date by (b) the sum of the per share closing sales prices of the
common stock of each company in the Index Group as of May 22, 1998 and
subtracting 0.15 from such quotient (the "Index Ratio"), which is referred to
herein as the "Relative Termination Condition." If T R Financial elects to
exercise its right to terminate the Merger Agreement under the Absolute
Termination Condition or the Relative Termination Condition, the Merger
Agreement would generally be terminated effective as of the 3Oth day following
the Valuation Date, except that T R Financial could withdraw its notice at any
time prior to such termination effective date. If T R Financial elects to
exercise its rights under the Relative Termination Condition, Roslyn has the
option, but not the obligation, to increase the Exchange Ratio pursuant to the
formula set forth in the Merger Agreement, in which case the Merger Agreement
would not be terminated and would remain in full force and effect in accordance
with its terms, except that the Exchange Ratio would have been increased. See
"THE MERGER -- Price-Based Termination."
If November 16, 1998 had been defined by the Merger Agreement to be the
Valuation Date and the Roslyn Market Value, the Roslyn Ratio and the Index Ratio
had been determined as of that date, the Roslyn Market Value, the Roslyn Ratio
and the Index Ratio would have been $17.396, 62.97% and 61.97%, respectively. In
such case, T R Financial could have terminated the Merger Agreement under the
Absolute Termination Condition because $17.396 is below $20.72, but not under
the Relative Termination Condition because, even though $17.396 is below $22.10,
the Roslyn Ratio was not less than the Index Ratio. Roslyn and T R Financial do
not know as of the date of this Joint Proxy Statement/Prospectus whether either
or both of the termination conditions will be applicable on the Valuation Date,
since the actual Valuation Date is in the future and cannot be earlier than
December 21, 1998 (the day prior to the Roslyn and T R Financial stockholder
meetings), and have not yet determined what action, if any, each might take
under the Merger Agreement if either or both of the termination conditions are
applicable on the actual Valuation Date. Such decision can only be made during
the five-day period commencing on the Valuation Date in accordance with the
Merger Agreement and will only be made after careful review of all relevant
factors and only after T R Financial reviews all such factors with its financial
and legal advisors. Subject to applicable law, such decision will be made by the
T R Financial Board based upon what it believes to be in the long-term best
interests of T R Financial stockholders as determined at that time. The price of
Roslyn Common Stock has been below the levels set forth under the Absolute
Termination Condition for several months, and, during such period, has also
sometimes been below the levels set forth under the Relative Termination
Condition. The T R Financial Board has decided to disclose to stockholders of
T R Financial and Roslyn its present intention with respect to the termination
conditions if, as of the Valuation Date, the price of Roslyn Common Stock is
below the level set forth under either, or both, of the termination conditions,
and if, as of such date, the absolute prices of T R Financial Common Stock and
Roslyn Common Stock, the prices of Roslyn Common Stock and T R Financial Common
Stock as compared to those of other thrift institution holding companies, the
absolute and relative trends of such stocks at that time, the sale of control
premiums then being offered in other transactions, Roslyn's and T R Financial's
operating performance and projected future operating performance, and other
general business, market and economic conditions are, in the aggregate,
substantially the same as or not materially less favorable than, they were as of
November 13, 1998.
Based upon the 15-consecutive-trading day average closing price of Roslyn
Common Stock as of November 13, 1998 and the other factors set forth above, it
is the present intention of the T R Financial Board that: (i) if, as of the
Valuation Date, the price of Roslyn Common Stock and the other factors set forth
above are substantially the same as or not materially less favorable than they
were on November 13, 1998, T R Financial would not elect to terminate the Merger
Agreement under the Absolute Termination Condition; (ii) if, as of the Valuation
Date, the price of Roslyn Common Stock and the other factors set forth above are
materially less favorable than they were as of November 13, 1998, T R Financial
would elect to terminate the Merger Agreement under the Absolute Termination
Condition; and (iii) if, as of the Valuation Date, the price of Roslyn Common
Stock and the other factors set forth above are substantially the same as they
were on November 13, 1998 and the price of Roslyn Common Stock is below the
levels set forth under the Relative Termination Condition, T R Financial would
elect to terminate the Merger Agreement under the Relative Termination
Condition, subject to Roslyn's election to increase the Exchange Ratio, in which
case the Merger Agreement would remain in full force and effect except that the
Exchange Ratio would have been increased.
The foregoing sets forth the present intention of the T R Financial Board
with respect to an assumed set of facts. It is not a final decision, and is
based upon an assumed set of facts. T R FINANCIAL DOES NOT HAVE THE RIGHT TO
TERMINATE THE MERGER AGREEMENT PURSUANT TO EITHER THE ABSOLUTE TERMINATION
CONDITION OR THE RELATIVE TERMINATION CONDITION UNTIL THE VALUATION DATE.
Because the market price of Roslyn Common Stock is subject to fluctuation,
the value of the shares of Roslyn Common Stock that holders of T R Financial
Common Stock will receive in the Merger may
<PAGE>
increase or decrease prior to and after the Merger. See "MARKET PRICES AND
DIVIDEND INFORMATION." Upon consummation of the Merger and assuming the Exchange
Ratio is not adjusted, the holders of T R Financial Common Stock will own
approximately 47% of the outstanding shares of Roslyn Common Stock.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS JOINT PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
___________________________
THE SHARES OF ROSLYN COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, BANK INSURANCE FUND OR ANY
OTHER GOVERNMENT AGENCY, NOR ARE THEY GUARANTEED BY ANY BANK OR BANK HOLDING
COMPANY, AND THEY ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
INVESTMENT.
____________________________
STOCKHOLDERS OF T R FINANCIAL WHO ARE NOT AFFILIATED WITH ROSYLN AND WHO
RECEIVE SHARES OF ROSLYN COMMON STOCK IN CONNECTION WITH THE MERGER WILL BE
ABLE TO SELL SUCH SHARES WITHOUT THE USE OF A RESALE PROSPECTUS.
____________________________
This Joint Proxy Statement/Prospectus and the accompanying forms of proxy
are first being mailed to stockholders of Roslyn and T R Financial on or about
______________, 1998.
No persons have been authorized to give any information or to make any
representations other than those contained in this Joint Proxy
Statement/Prospectus, or incorporated by reference herein, in connection with
the solicitation of proxies or the offering of securities made hereby and, if
given or made, such information or representations must not be relied upon as
having been authorized by Roslyn or T R Financial. This Joint Proxy
Statement/Prospectus does not constitute an offer to sell, or a solicitation of
an offer to buy, any securities, or the solicitation of a proxy, in any
jurisdiction to or from any person to whom it is not lawful to make any such
offer or solicitation in such jurisdiction. Neither the delivery of this Joint
Proxy Statement/Prospectus nor any distribution of securities made hereunder
shall, under any circumstances, create an implication that there has been no
change in the affairs of Roslyn or T R Financial since the date of this Joint
Proxy Statement/Prospectus or that the information herein or the documents or
reports incorporated by reference herein is correct as of any time subsequent to
such date. All information contained in this Joint Proxy Statement/Prospectus
relating to Roslyn and its subsidiaries has been supplied by Roslyn and all pro
forma information was prepared by Roslyn. All information contained in this
Joint Proxy Statement/Prospectus relating to T R Financial and its subsidiaries
has been supplied by T R Financial.
The date of this Joint Proxy Statement/Prospectus is ______________, 1998.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C>
AVAILABLE INFORMATION..................................................... 8
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION.............................................................. 8
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... 9
SUMMARY................................................................... 11
Parties to the Merger.................................................... 11
The Stockholder Meetings................................................. 12
Effects of the Merger.................................................... 13
Exchange Ratio........................................................... 13
Recommendations of the Boards of Directors; Reasons for
the Merger.............................................................. 13
Opinions of Financial Advisors........................................... 14
Interests of Certain Persons in the Merger............................... 15
Employee Matters......................................................... 16
Effective Time........................................................... 16
Conditions; Regulatory Approvals......................................... 16
Termination of the Merger Agreement...................................... 17
Nasdaq National Market Listing........................................... 18
Anticipated Accounting Treatment......................................... 19
Federal Income Tax Consequences of the Merger............................ 19
No Appraisal Rights...................................................... 19
Merger Stock Option Agreements........................................... 19
Comparison of Rights of Stockholders..................................... 20
Amendment to T R Financial Rights Agreement.............................. 21
MARKET PRICES AND DIVIDEND INFORMATION.................................... 22
SELECTED HISTORICAL CONSOLIDATED FINANCIAL
INFORMATION(UNAUDITED)................................................... 24
UNAUDITED PRO FORMA COMBINED SELECTED FINANCIAL
INFORMATION.............................................................. 28
COMPARATIVE PER SHARE DATA(UNAUDITED)..................................... 30
PARTIES TO THE MERGER..................................................... 31
Roslyn................................................................... 31
T R Financial............................................................ 31
MEETING OF ROSLYN STOCKHOLDERS............................................ 32
Date, Time and Place; Purpose of Meeting................................. 32
Record Date.............................................................. 32
Proxies; Voting and Revocation of Proxies................................ 32
Vote Required; Principal Stockholders.................................... 34
BENEFICIAL OWNERSHIP OF ROSLYN COMMON STOCK............................... 35
Principal Security Ownership............................................. 35
Directors and Executive Officers......................................... 36
</TABLE>
3
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<TABLE>
<CAPTION>
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<S> <C>
MEETING OF T R FINANCIAL STOCKHOLDERS..................................... 37
Date, Time and Place; Purpose of Meeting................................. 37
Record Date.............................................................. 37
Proxies; Voting and Revocation of Proxies................................ 38
Vote Required; Principal Stockholders.................................... 39
BENEFICIAL OWNERSHIP OF T R FINANCIAL COMMON STOCK........................ 41
Principal Security Ownership............................................. 41
Directors and Executive Officers......................................... 42
THE MERGER................................................................ 44
General.................................................................. 44
Exchange Ratio........................................................... 44
Background of the Merger................................................. 45
Recommendation of the Roslyn Board; Roslyn's Reasons
for the Merger.......................................................... 48
Opinion of Roslyn's Financial Advisor.................................... 50
Recommendation of the T R Financial Board;
T R Financial's Reasons for the Merger.................................. 54
Opinion of T R Financial's Financial Advisor............................. 56
Certain Estimates of Future Operations and Other
Information............................................................. 63
Interests of Certain Persons in the Merger............................... 65
Management and Operations Following the Merger........................... 68
Employee Matters......................................................... 70
Conditions to the Merger................................................. 72
Regulatory Approvals Required for the Merger............................. 75
Conduct of Business Pending the Merger................................... 77
Representations and Warranties........................................... 80
Solicitation Proposals................................................... 80
Waiver and Amendment; Termination........................................ 81
Price-Based Termination.................................................. 81
Nasdaq National Market Listing........................................... 86
Anticipated Accounting Treatment......................................... 86
Federal Income Tax Consequences of the Merger............................ 87
Resales of Roslyn Common Stock by Affiliates............................. 88
No Appraisal Rights...................................................... 88
Expenses................................................................. 89
Effective Time........................................................... 89
Conversion of Shares; Procedures for Exchange of
Certificates; Fractional Shares......................................... 89
CERTAIN RELATED TRANSACTIONS.............................................. 90
Merger Stock Option Agreements........................................... 90
Amendment to T R Financial Rights Agreement.............................. 93
Bank Merger Agreement.................................................... 94
CERTAIN BANKING REGULATORY CONSIDERATIONS................................. 94
General.................................................................. 94
New York State Law....................................................... 94
FDIC Regulations......................................................... 96
Investment Activities.................................................... 98
Prompt Corrective Regulatory Action...................................... 98
Transactions with Affiliates............................................. 99
Enforcement.............................................................. 100
Insurance of Deposit Accounts............................................ 100
Payment of FICO Bonds.................................................... 101
Federal Reserve System................................................... 101
</TABLE>
4
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<TABLE>
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<S> <C>
Community Reinvestment Act................................................ 101
Holding Company Regulation................................................ 102
Interstate Banking and Branching.......................................... 104
DESCRIPTION OF ROSLYN CAPITAL STOCK........................................ 105
General................................................................... 105
Common Stock.............................................................. 105
Preferred Stock........................................................... 106
COMPARISON OF RIGHTS OF STOCKHOLDERS....................................... 106
General................................................................... 106
Quorum.................................................................... 106
Calling Stockholder Meetings.............................................. 106
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
FINANCIAL STATEMENTS...................................................... 107
LEGAL MATTERS.............................................................. 116
EXPERTS.................................................................... 116
STOCKHOLDER PROPOSALS...................................................... 117
INFORMATION NOT REQUIRED IN PROSPECTUS..................................... II-1
SIGNATURES................................................................. II-8
EXHIBIT INDEX.............................................................. II-10
</TABLE>
ANNEX A Agreement and Plan of Merger, dated as of May 25, 1998, by and between
Roslyn Bancorp, Inc. and T R Financial Corp.
ANNEX B Stock Option Agreement, dated as of May 25, 1998, by and between T R
Financial Corp. and Roslyn Bancorp, Inc.
ANNEX C Stock Option Agreement, dated as of May 25, 1998, by and between
Roslyn Bancorp, Inc. and T R Financial Corp.
ANNEX D Opinion of Sandler O'Neill & Partners, L.P.
ANNEX E Opinion of Goldman, Sachs & Co.
5
<PAGE>
AVAILABLE INFORMATION
Roslyn and T R Financial are subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, file reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). The reports, proxy
statements and other information filed by Roslyn and T R Financial with the
Commission can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices at 7 World Trade Center,
New York, New York 10048 and Northwestern Atrium Center, 500 West Madison,
Suite 1400, Chicago, Illinois 60661. Copies of such materials also can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates or from the Internet
Website maintained by the Commission at "http://www.sec.gov."
Roslyn has filed with the Commission a Registration Statement on Form S-4
(together with any amendments thereof, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
shares of Roslyn Common Stock to be issued pursuant to the Merger Agreement.
This Joint Proxy Statement/Prospectus does not contain all the information set
forth in the Registration Statement and the exhibits thereto. Such additional
information may be inspected and copied as set forth above. Statements contained
in this Joint Proxy Statement/Prospectus or in any document incorporated by
reference in this Joint Proxy Statement/Prospectus as to the contents of any
contract or other document referred to herein or therein are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement or such other
document, each such statement being qualified in all respects by such reference.
Additional information regarding Roslyn may be obtained on Roslyn's
Internet Website, the address of which is http://www.roslynsavings.com.
Additional information regarding T R Financial may be obtained on T R
Financial's Internet Website, the address of which is http://www.trfin.com.
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING INFORMATION
THIS JOINT PROXY STATEMENT/PROSPECTUS CONTAINS CERTAIN FORWARD-LOOKING
STATEMENTS WITH RESPECT TO THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND
BUSINESS OF ROSLYN FOLLOWING THE CONSUMMATION OF THE MERGER, INCLUDING
STATEMENTS RELATING TO: (I) THE COST SAVINGS THAT ARE EXPECTED TO BE REALIZED
FROM THE MERGER AND (II) PRO FORMA EARNINGS AND EARNINGS PER SHARE. SEE
"SUMMARY," "THE MERGER -- BACKGROUND OF THE MERGER," "-- RECOMMENDATION OF THE
ROSLYN BOARD; ROSLYN'S REASONS FOR THE MERGER" AND "UNAUDITED PRO FORMA
CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS." FACTORS THAT MAY CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD-
LOOKING STATEMENTS INCLUDE, AMONG OTHERS, THE FOLLOWING POSSIBILITIES: (I)
EXPECTED COST SAVINGS FROM THE MERGER CANNOT BE FULLY REALIZED; (II) DEPOSIT
ATTRITION, CUSTOMER LOSS OR REVENUE LOSS FOLLOWING THE MERGER IS GREATER THAN
EXPECTED; (III) COMPETITIVE PRESSURE IN THE BANKING AND FINANCIAL SERVICES
INDUSTRY INCREASES SIGNIFICANTLY; (IV) CHANGES IN THE INTEREST RATE ENVIRONMENT
REDUCE NET INTEREST MARGINS; (V) GENERAL ECONOMIC CONDITIONS, EITHER NATIONALLY,
REGIONALLY OR IN THE STATE OF NEW YORK, ARE LESS FAVORABLE THAN EXPECTED; (VI)
CHANGES IN REAL ESTATE VALUES; (VII) CHANGES IN COMPETITION; (VIII) CHANGES IN
ACCOUNTING PRINCIPLES; (IX) CHANGES IN LEGISLATION AND (X) CHANGES IN OTHER
ECONOMIC, COMPETITIVE, GOVERNMENT, REGULATORY AND TECHNOLOGICAL FACTORS
AFFECTING ROSLYN'S OPERATIONS, PRICING, PRODUCTS AND SERVICES.
6
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by Roslyn (File
No. 0-28886) and T R Financial (File No. 0-21386) pursuant to the Exchange Act
are incorporated by reference in this Joint Proxy Statement/Prospectus:
1. Roslyn's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 and any amendments thereto (the "1997 Roslyn Form 10-K");
2. Roslyn's Quarterly Reports on Form 10-Q for the quarter ended
March 31, 1998 and for the quarter ended June 30, 1998;
3. Roslyn's Current Reports on Form 8-K, dated June 3, 1998 and July 22,
1998;
4. The description of Roslyn Common Stock set forth in Roslyn's
Registration Statement filed by Roslyn on August 20, 1996 pursuant to Section 12
of the Exchange Act, including any amendment or report filed for purposes of
updating any such description;
5. The portions of Roslyn's Proxy Statement for the Annual Meeting of
Stockholders held on April 28, 1998 that have been incorporated by reference in
the 1997 Roslyn Form 10-K;
6. T R Financial's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 (the "1997 T R Financial Form 10-K");
7. T R Financial's Quarterly Reports on Form 10-Q for the quarter ended
March 31, 1998 and for the quarter ended June 30, 1998;
8. T R Financial's Current Report on Form 8-K, dated June 4, 1998;
9. The description of T R Financial's Common Stock set forth in T R
Financial's Registration Statement filed by T R Financial on March 5, 1993
pursuant to Section 12 of the Exchange Act, including any amendment or report
filed for purposes of updating any such description; and
10. The portions of T R Financial's Proxy Statement for the Annual Meeting
of Stockholders held on April 27, 1998 that have been incorporated by reference
in the 1997 T R Financial Form 10-K.
All documents and reports filed by Roslyn or T R Financial with the
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this Joint Proxy Statement/Prospectus and prior to the date of
the Meetings shall be deemed to be incorporated by reference in this Joint Proxy
Statement/Prospectus and to be a part hereof from the dates of filing of such
documents or reports. Any statement contained in a document or report
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Joint Proxy Statement/Prospectus
to the extent that a statement contained herein, or in any other subsequently
filed document or report which also is deemed to be incorporated by reference
herein, modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Joint Proxy Statement/Prospectus.
THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY
REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS
(OTHER THAN EXHIBITS OR ANNEXES TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS OR
ANNEXES ARE SPECIFICALLY INCORPORATED BY REFERENCE) ARE AVAILABLE, WITHOUT
CHARGE, TO ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS JOINT PROXY
STATEMENT/PROSPECTUS IS DELIVERED, ON WRITTEN OR ORAL REQUEST, IN THE CASE OF
DOCUMENTS RELATING TO ROSLYN, TO ROSLYN BANCORP, INC., 1400 OLD NORTHERN
BOULEVARD, ROSLYN, NEW YORK 11576, ATTENTION: MARY M. EHRICH, CORPORATE
SECRETARY, TELEPHONE NUMBER (516) 621-6000, AND IN THE CASE OF DOCUMENTS
RELATING TO T R FINANCIAL, TO T R FINANCIAL CORP., 1122 FRANKLIN AVENUE, GARDEN
CITY, NEW YORK 11530, ATTENTION: IRA H. KRAMER, CORPORATE SECRETARY, TELEPHONE
NUMBER (516) 742-9300. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS,
REQUESTS SHOULD BE RECEIVED BY DECEMBER 11, 1998.
7
<PAGE>
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SUMMARY
The following is a summary of certain information contained elsewhere in
this Joint Proxy Statement/Prospectus. As this summary is necessarily
incomplete, reference is made to, and this summary is qualified in its entirety
by, the more detailed information contained or incorporated by reference in this
Joint Proxy Statement/Prospectus and the Annexes hereto. Roslyn and T R
Financial stockholders are urged to read this Joint Proxy Statement/Prospectus
and the Annexes hereto in their entirety. Certain capitalized terms which are
used but not defined in this summary are defined elsewhere in this Joint Proxy
Statement/Prospectus. We have included page references parenthetically to
direct you to a more complete description of the topics presented in this
summary.
PARTIES TO THE MERGER (Page ___ )
ROSLYN. (Page ___ ) Roslyn is a savings and loan holding company organized
under the laws of the State of Delaware in 1996. Roslyn's wholly owned
subsidiary, The Roslyn Savings Bank ("Roslyn Savings"), operates 8 full service
banking offices in the State of New York Counties of Nassau and Suffolk, as well
as 12 mortgage origination offices in the states of New York, New Jersey,
Connecticut, Delaware and Pennsylvania through Roslyn Savings' wholly owned
subsidiary, Roslyn National Mortgage Corporation ("RNMC"). In addition, Roslyn
Savings has received the requisite regulatory approvals to open full service
branch offices in Bay Shore, New York, Oceanside, New York and Smithtown, New
York, all of which are expected to open in the fourth quarter of 1998 and the
first quarter of 1999. Roslyn Savings is a New York State-chartered savings bank
which has operated since 1875. Roslyn Savings' deposits are insured by the Bank
Insurance Fund ("BIF") of the Federal Deposit Insurance Corporation ("FDIC").
At June 30, 1998, Roslyn had total assets of $3.85 billion, deposits of
$2.03 billion and stockholders' equity of $594.4 million. Roslyn's principal
executive offices are located at 1400 Old Northern Boulevard, Roslyn, New York
11576, and its telephone number is (516) 621-6000.
For more information about Roslyn, reference is made to "PARTIES TO THE
MERGER -- Roslyn" and to the 1997 Roslyn Form 10-K, which is incorporated herein
by reference. See "AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE."
T R FINANCIAL. (Page ___ ) T R Financial is a bank holding company
organized under the laws of the State of Delaware in 1993. T R Financial's
wholly owned subsidiary, Roosevelt Savings Bank ("Roosevelt Savings"), operates
15 full service banking offices in the New York City Boroughs of Brooklyn and
Queens and the State of New York Counties of Nassau and Suffolk. Roosevelt
Savings is a New York State-chartered savings bank which has operated since
1895. Roosevelt Savings' deposits are insured by the BIF.
At June 30, 1998, T R Financial had total assets of $4.12 billion, deposits
of $2.12 billion and stockholders' equity of $256.2 million. T R Financial's
principal executive offices are located at 1122 Franklin Avenue, Garden City,
New York 11530, and its telephone number is (516) 742-9300.
For more information about T R Financial, reference is made to "PARTIES TO
THE MERGER -- T R Financial" and to the 1997 T R Financial Form 10-K, which is
incorporated herein by reference. See "AVAILABLE INFORMATION" and
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
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8
<PAGE>
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THE STOCKHOLDER MEETINGS (Page ___ )
ROSLYN (Page ___ ). The special meeting of stockholders of Roslyn will be
held at 10:00 a.m. on Tuesday, December 22, 1998 at The Crest Hollow Country
Club, 8325 Jericho Turnpike, Woodbury, New York 11797 (including any adjournment
or postponement thereof, the "Roslyn Meeting"). The purposes of the Roslyn
Meeting are to consider and vote upon (i) a proposal to approve and adopt the
Merger Agreement, which is included as Annex A to this Joint Proxy Statement/
Prospectus, and the consummation of the transactions contemplated thereby; and
(ii) such other matters as may properly be brought before the Roslyn Meeting.
Only holders of record of Roslyn Common Stock at the close of business on
October 26, 1998 (the "Roslyn Record Date ") will be entitled to notice of and
to vote at the Roslyn Meeting. The affirmative vote of the holders of a
majority of the outstanding shares of Roslyn Common Stock entitled to vote
thereon is required to approve and adopt the Merger Agreement. As of the Roslyn
Record Date, there were 41,399,959 shares of Roslyn Common Stock outstanding and
entitled to be voted at the Roslyn Meeting.
The directors and executive officers of Roslyn and their affiliates
beneficially owned, as of September 30, 1998, 1,995,957 shares, or approximately
4.81% of the outstanding shares, of Roslyn Common Stock (inclusive of shares of
Roslyn Common Stock which may be acquired upon the exercise of vested options
under the Roslyn Bancorp, Inc. 1997 Stock-Based Incentive Plan). As of the
Roslyn Record Date, such persons were entitled to vote 1,463,310 shares of
Roslyn Common Stock at the Roslyn Meeting and all such persons have indicated a
present intent to vote such shares in favor of the Merger Agreement. See "--
BENEFICIAL OWNERSHIP OF ROSLYN COMMON STOCK." As of September 30, 1998, T R
Financial, its subsidiaries, and its directors and executive officers
beneficially owned 103,755 shares of Roslyn Common Stock. See "MEETING OF ROSLYN
STOCKHOLDERS."
T R FINANCIAL (Page ___ ). The special meeting of stockholders of T R
Financial will be held at 9:30 a.m. on December 22, 1998 at the Garden City
Hotel, 45 Seventh Street, Garden City, New York 11530 (including any adjournment
or postponement thereof, the "T R Financial Meeting"). The purpose of the T R
Financial Meeting is to consider and vote upon (i) a proposal to approve and
adopt the Merger Agreement and the consummation of the transactions contemplated
thereby; and (ii) such other matters as may properly be brought before the T R
Financial Meeting.
Only holders of record of T R Financial Common Stock at the close of
business on October 26, 1998 (the "T R Financial Record Date") will be entitled
to notice of and to vote at the T R Financial Meeting. The affirmative vote of
the holders of a majority of the outstanding shares of T R Financial Common
Stock entitled to vote thereon is required to approve and adopt the Merger
Agreement. As of the T R Financial Record Date, there were 17,629,964 shares
of T R Financial Common Stock outstanding and entitled to be voted at the
T R Financial Meeting.
The directors and executive officers of T R Financial and their affiliates
beneficially owned, as of September 30, 1998, 2,662,762 shares, or
approximately 14.1% of the outstanding shares, of T R Financial Common Stock
(inclusive of shares of T R Financial Common Stock which may be acquired upon
the exercise of vested options under the T R Financial Corp. 1993 Incentive
Stock Option Plan and the T R Financial Corp. 1993 Stock Option Plan for Outside
Directors). As of the T R Financial Record Date, such persons were entitled to
vote 1,247,036 shares of T R Financial Common Stock at the T R Financial Meeting
and all such persons have indicated a present intent to vote their shares in
favor of the Merger Agreement. See "BENEFICIAL OWNERSHIP OF T R FINANCIAL COMMON
STOCK." As of September 30, 1998, Roslyn, its subsidiaries, and its directors
and executive officers beneficially owned 502,910 shares of T R Financial Common
Stock. See "MEETING OF T R FINANCIAL STOCKHOLDERS."
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EFFECTS OF THE MERGER (Page ___ )
Pursuant to the Merger Agreement, at the Effective Time (as defined below),
T R Financial will be merged with and into Roslyn, and T R Financial
stockholders will become stockholders of Roslyn. See "THE MERGER -- General."
For information on how T R Financial stockholders will be able to exchange
certificates representing shares of T R Financial Common Stock for new
certificates representing Roslyn Common Stock to be issued to them, see "THE
MERGER -- Conversion of Shares; Procedures for Exchange of Certificates;
Fractional Shares."
Immediately following the consummation of the Merger, Roosevelt Savings and
Roslyn Savings will also merge, with the surviving bank being named The Roslyn
Savings Bank (the "Bank Merger"). The surviving bank will continue as a New
York State-chartered savings bank and a wholly owned subsidiary of Roslyn. See
"THE MERGER -- General" and "CERTAIN RELATED TRANSACTIONS -- Bank Merger
Agreement."
EXCHANGE RATIO (Page ___ )
At the Effective Time, each issued and outstanding share of T R Financial
Common Stock, other than (i) shares held directly or indirectly by Roslyn (other
than shares held by Roslyn in a fiduciary capacity or in satisfaction of a debt
previously contracted), (ii) shares held by T R Financial as treasury stock, and
(iii) unallocated shares held in T R Financial's Recognition and Retention Plan
for Officers (collectively, "Excluded Shares"), will be converted into and
exchangeable for 2.05 shares of Roslyn Common Stock (i.e., the Exchange Ratio).
The Exchange Ratio may be increased by Roslyn in the event T R Financial
exercises its rights under the Merger Agreement to deliver to Roslyn a notice to
terminate the Merger Agreement if the price of the Roslyn Common Stock is below
certain levels established in the Merger Agreement. See "THE MERGER -- Price-
Based Termination." No stockholder of T R Financial or Roslyn is entitled to
appraisal rights in connection with or as a result of the Merger. See "THE
MERGER -- No Appraisal Rights."
Under the terms of the Merger Agreement, cash will be paid in lieu of the
issuance of fractional shares of Roslyn Common Stock. Such cash, together with
the shares of Roslyn Common Stock to be received in the Merger, is collectively
referred to as the "Merger Consideration."
At the Effective Time, each outstanding and unexercised option to purchase
shares of T R Financial Common Stock (a "T R Financial Option") (representing
options to purchase 1,757,692 shares of T R Financial Common Stock as of
September 30, 1998 with an aggregate value of approximately $40.6 million, based
on the closing price for a share of T R Financial Common Stock on November 13,
1998, the latest practicable date prior to the mailing of this Joint Proxy
Statement/Prospectus) shall be converted into options to purchase Roslyn Common
Stock pursuant to the Exchange Ratio. See "THE MERGER -- Exchange Ratio."
RECOMMENDATIONS OF THE BOARDS OF DIRECTORS; REASONS FOR THE MERGER (PAGE ___)
ROSLYN (Page ___). The Roslyn Board of Directors (the "Roslyn Board") has
unanimously approved the Merger Agreement and believes that the terms of the
Merger Agreement are fair to, and in the best interests of, Roslyn and its
stockholders. The Roslyn Board has not yet determined what action, if any, it
might take under the Merger Agreement in the event that the Relative Termination
Condition is applicable and T R Financial exercises its termination rights under
the Relative Termination Condition.
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Approval of the Merger Agreement by the Roslyn stockholders at the Roslyn
Meeting will confer on the Roslyn Board the power, consistent with its fiduciary
duties, to determine, if T R Financial exercises its right to terminate the
Merger Agreement under the Relative Termination Condition, in the alternative,
(i) whether to increase the Exchange Ratio in accordance with the formula set
forth in the Merger Agreement or (ii) to permit the Merger Agreement to be
terminated, in either case without any further action by, or resolicitation of
the votes of, the stockholders of Roslyn. In such a situation, the Roslyn Board,
consistent with its fiduciary duties, will consider all relevant facts and
circumstances that exist at such time, including, without limitation, the advice
of its legal and financial advisors, to determine whether or not to exercise its
option to increase the Exchange Ratio so that the Merger Agreement would
continue in full force and effect. THE ROSLYN BOARD THEREFORE UNANIMOUSLY
RECOMMENDS THAT ROSLYN'S STOCKHOLDERS VOTE FOR APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT. For a discussion of the factors considered by the Roslyn Board
in approving the Merger Agreement, see "THE MERGER -- Recommendation of the
Roslyn Board; Roslyn's Reasons for the Merger."
T R FINANCIAL (Page ___). The T R Financial Board has unanimously approved
the Merger Agreement and has determined that the terms of the Merger Agreement
are fair to, and in the best interests of, T R Financial and its stockholders,
in part because the Merger Agreement includes safeguards that will allow
T R Financial to terminate the Merger Agreement if the price of Roslyn Common
Stock is below certain levels established in the Merger Agreement, as more fully
described below under "THE MERGER -- Price-Based Termination." For a discussion
of T R Financial's present intention with respect to its right to terminate the
Merger Agreement, see "THE MERGER -- Price-Based Termination." THE T R FINANCIAL
BOARD THEREFORE UNANIMOUSLY RECOMMENDS THAT T R FINANCIAL'S STOCKHOLDERS VOTE
FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT. For a discussion of the
factors considered by the T R Financial Board in approving the Merger Agreement,
see "THE MERGER -- Recommendation of the T R Financial Board; T R Financial's
Reasons for the Merger."
OPINIONS OF FINANCIAL ADVISORS (Page ___)
ROSLYN. Sandler O'Neill & Partners, L.P. ("Sandler O'Neill") has served as
financial advisor to Roslyn in connection with the Merger and has rendered a
written opinion to the Roslyn Board, dated May 25, 1998, which has been updated
as of the date of this Joint Proxy Statement/Prospectus, to the effect that, as
of such dates, the Exchange Ratio was fair, from a financial point of view, to
the holders of Roslyn Common Stock. As discussed in "THE MERGER --
Recommendation of the Roslyn Board; Roslyn's Reasons for the Merger," Sandler
O'Neill's opinion and presentation to the Roslyn Board, together with a review
by the Roslyn Board of the assumptions used by Sandler O'Neill, were among the
factors considered by the Roslyn Board in reaching its determination to approve
the Merger Agreement. The opinion of Sandler O'Neill is attached as Annex D
to this Joint Proxy Statement/Prospectus. Stockholders are urged to read such
opinion in its entirety for a description of the procedures followed,
assumptions made, matters considered and qualifications and limitations on the
review undertaken by Sandler O'Neill in connection therewith. The estimated
fee to be paid to Sandler O'Neill for its services as financial advisor in
connection with the Merger is approximately $4.7 million based upon the
closing price of Roslyn Common Stock on October 19, 1998. See "THE MERGER --
Opinion of Roslyn's Financial Advisor."
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T R FINANCIAL. Goldman, Sachs & Co. ("Goldman Sachs") has served as
financial advisor to T R Financial in connection with the Merger and has
rendered a written opinion to the T R Financial Board, dated May 25, 1998, which
has been updated as of the date of this Joint Proxy Statement/Prospectus, to the
effect that, as of such dates, the Exchange Ratio was fair, from a financial
point of view, to the holders of T R Financial Common Stock. As discussed in
"THE MERGER -- Recommendation of the T R Financial Board; T R Financial's
Reasons for the Merger," Goldman Sachs' opinion and presentation to the
T R Financial Board, together with a review by the T R Financial Board of the
assumptions used by Goldman Sachs, were among the factors considered by the
T R Financial Board in reaching its determination to approve the Merger
Agreement. The opinion of Goldman Sachs is attached as Annex E to this Joint
Proxy Statement/Prospectus. Stockholders are urged to read such opinion in its
entirety for a description of the procedures followed, assumptions made, matters
considered and qualifications and limitations on the review undertaken by
Goldman Sachs in connection therewith. The fairness opinion received by T R
Financial from Goldman Sachs is dated as of the date of this Joint Proxy
Statement/Prospectus and is based on conditions in effect on the date hereof.
Accordingly, such opinion does not address the circumstances that may exist
after the date of this Joint Proxy Statement/Prospectus but before the date that
the Merger is expected to be consummated. In the event that T R Financial has
the right to terminate the Merger Agreement pursuant to the termination
provisions of the Merger Agreement, the T R Financial Board may request another
fairness opinion prior to deciding whether to consummate the Merger or to
terminate the Merger Agreement. See "THE MERGER -- Opinion of T R Financial's
Financial Advisor."
Notwithstanding the Goldman Sachs opinion to the effect that, as of the
date of this Joint Proxy Statement/Prospectus, the Exchange Ratio was fair, from
a financial point of view, to the holders of T R Financial Common Stock,
T R Financial may exercise its right to terminate the Merger Agreement pursuant
to the termination provisions of the Merger Agreement if the Absolute
Termination Condition, the Relative Termination Condition or both are
applicable on the Valuation Date (as defined below). T R Financial may
exercise such right even if (i) the price of Roslyn Common Stock on the
Valuation Date is equal to or greater than the price of Roslyn Common Stock on
the date of this Joint Proxy Statement/Prospectus, (ii) the Roslyn Market
Value (as defined below) on the Valuation Date is equal to or greater than the
price of Roslyn Common Stock on the date of this Joint Proxy Statement/
Prospectus, (iii) the Exchange Ratio on the Valuation Date is fair, from a
financial point of view, to the holders of T R Financial Common Stock and/or
(iv) the stockholders of T R Financial approve the Merger Agreement at the
T R Financial Meeting. See "THE MERGER -- Price-Based Termination."
The estimated fee to be paid to Goldman Sachs for its services as financial
advisor in connection with the Merger is approximately $5.8 million based upon
the closing prices of T R Financial Common Stock and Roslyn Common Stock on
October 22, 1998.
INTERESTS OF CERTAIN PERSONS IN THE MERGER (Page ___)
Certain members of T R Financial's management and the T R Financial Board
have interests in the Merger in addition to, or potentially different from,
their interests as stockholders of T R Financial generally. These interests
include, among other things, provisions in the Merger Agreement relating to
indemnification, the creation of an advisory board, the payout of cash amounts
and continuing employee benefits under existing employment agreements (totaling
approximately $17.9 million for the six senior executive officers of
T R Financial, excluding tax indemnification payments pursuant to existing
employment agreements, or $28.8 million including such payments), the
acceleration and vesting of certain benefits under certain benefit plans
(including the vesting upon consummation of the Merger of 298,456 unvested
options to purchase T R Financial Common
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Stock which had been granted to directors and executive officers of
T R Financial having an aggregate dollar value of approximately $3.5 million
based on the closing price for a share of Roslyn Common Stock on November 13,
1998, the latest practicable date prior to the mailing of this Joint Proxy
Statement/Prospectus multiplied by 2.05, and an assumed closing date for the
Merger of December 31, 1998), the appointment to the Roslyn Board of four
members of the T R Financial Board, including John M. Tsimbinos as Chairman of
the Roslyn Board, the appointment of Mr. Tsimbinos as Vice Chairman of Roslyn
Savings and as a member of the nominating committees of Roslyn and Roslyn
Savings, the execution of an employment agreement between Roslyn and Mr.
Tsimbinos substantially in the form included as an exhibit to the Merger
Agreement, and the offering of employment agreements to two other executive
officers of T R Financial. In addition, if, within four years following the
Effective Time, Mr. Mancino, Roslyn's and Roslyn Savings' Chief Executive
Officer and President, shall cease to be Chief Executive Officer of Roslyn or
Roslyn Savings by reason of death, disability, retirement or otherwise, Mr.
Tsimbinos will be appointed interim Chief Executive Officer until a permanent
replacement is appointed. The T R Financial Board was aware of these interests
and considered them, among other matters, in unanimously approving the Merger
Agreement and the transactions contemplated thereby. See "THE MERGER --Interests
of Certain Persons in the Merger."
EMPLOYEE MATTERS (Page ___)
The Merger Agreement provides for T R Financial and Roosevelt Savings
employees who continue to be employed by Roslyn or Roslyn Savings to participate
in benefit plans maintained by Roslyn or Roslyn Savings and provides, in certain
instances, more specific provisions with respect to such participation and
treatment of T R Financial and Roosevelt Savings benefit plans following the
Merger. See "THE MERGER -- Employee Matters."
EFFECTIVE TIME (Page ___)
The Merger will become effective at the date and time (the "Effective Date"
and the "Effective Time," respectively) set forth in the Certificate of Merger
which will be filed with the Secretary of State of the State of Delaware (the
"Secretary of State") in accordance with applicable law. The Certificate of
Merger will be filed no later than five business days following the date on
which the expiration of the last applicable waiting period in connection with
the notices to and approvals of governmental authorities shall occur and all
conditions to the consummation of the Merger are satisfied or waived, or on
such other date as agreed to by Roslyn and T R Financial. See "THE MERGER --
Effective Time." The date of such filing is referred to herein as the
"Closing Date."
CONDITIONS; REGULATORY APPROVALS (Page ___)
Consummation of the Merger is subject to various conditions, including,
among others, receipt of the stockholder approvals solicited hereby, receipt of
necessary regulatory approvals, receipt of opinions of counsel regarding certain
federal income tax consequences of the Merger, receipt of a letter from Roslyn's
independent accountants that the Merger qualifies for pooling-of-interests
accounting treatment and the satisfaction of certain other customary closing
conditions. In some instances, if either party wishes to waive a condition, the
parties may be required to resolicit the approval of the stockholders of T R
Financial or Roslyn if the waiver adversely affects the holders of T R Financial
Common Stock or Roslyn Common Stock. Waivers which may require a resolicitation
of stockholders could include the failure to receive the tax and accounting
opinions referenced above. See "THE MERGER -- Conditions to the Merger."
Consummation of the Merger and the transactions contemplated thereby are
subject to the prior approval of the FDIC and the Superintendent of Banks of New
York State (the "Superintendent") and the approval of, or waiver of the
application requirement by, the Board of Governors of the Federal Reserve
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System ("FRB"). An application has been filed with the FDIC and the
Superintendent, and a waiver request has been submitted to the Federal Reserve
Bank of New York. On September 23, 1998, the FRB waived the application
requirement with respect to the Merger. On November 5, 1998, the Superintendent
approved the application for the merger of Roosevelt Savings and Roslyn Savings.
See "THE MERGER -- Regulatory Approvals Required for the Merger."
TERMINATION OF THE MERGER AGREEMENT (Page ___)
The Merger Agreement may be terminated at any time prior to the Effective
Time by the mutual consent of Roslyn and T R Financial, and by either of them,
individually, under certain specified circumstances, including if the Merger has
not been consummated by January 31, 1999 (unless all conditions precedent to the
Merger have been satisfied except for obtaining all necessary regulatory
approvals, consents or waivers, in which case such date may be extended to March
31, 1999). In addition, the Merger Agreement provides that T R Financial may,
if the T R Financial Board so determines by a majority vote of the entire T R
Financial Board, at any time during the five-day period commencing on the
"Valuation Date" (as defined below), terminate the Merger Agreement (i) if the
"Roslyn Market Value" (as defined below) on the Valuation Date is less than
$20.72, which is referred to herein as the "Absolute Termination Condition" or
(ii) if both the Roslyn Market Value on the Valuation Date is less than $22.10
and the "Roslyn Ratio" (as defined below) is less than the "Index Ratio" (as
defined below), which is referred to herein as the "Relative Termination
Condition." T R Financial may make an election to terminate the Merger
Agreement under the Absolute Termination Condition or the Relative Termination
Condition by giving prompt written notice thereof to Roslyn during such five-day
period, and such termination would be effective on the 30th day following the
Valuation Date ("Effective Termination Date"). If the Roslyn Market Value and
the Roslyn Ratio's relation to the Index Ratio are such that, on the Valuation
Date, both the Absolute Termination Condition and the Relative Termination
Condition are applicable, T R Financial could exercise its termination rights
under either condition. If T R Financial elects to exercise its termination
rights under the Merger Agreement, it may withdraw such election at any time
prior to the Effective Termination Date. If T R Financial exercises its right of
termination under the Relative Termination Condition Roslyn may elect, during
the five-day period commencing with its receipt of any written termination
notice of T R Financial, to increase the Exchange Ratio in accordance with the
formula set forth in the Merger Agreement by giving, within such five-day
period, written notice to T R Financial of such election and the revised
Exchange Ratio, in which case the Merger Agreement would remain in full force
and effect in accordance with its terms, except that the Exchange Ratio would
have been increased. See "THE MERGER -- Exchange Ratio," "-- Waiver and
Amendment; Termination" and "-- Price-Based Termination." See also "CERTAIN
RELATED TRANSACTIONS -- Merger Stock Option Agreements." If November 16, 1998
had been defined by the Merger Agreement to be the Valuation Date and the Roslyn
Market Value, the Roslyn Ratio and the Index Ratio had been determined as of
that date, the Roslyn Market Value, the Roslyn Ratio and the Index Ratio would
have been $17.396, 62.97% and 61.97%, respectively. In such case, T R Financial
could have terminated the Merger Agreement under the Absolute Termination
Condition because $17.396 is below $20.72, but not under the Relative
Termination Condition because, even though $17.396 is below $22.10, the Roslyn
Ratio was not less than the Index Ratio. Roslyn and T R Financial do not know as
of the date of this Joint Proxy Statement/Prospectus whether either or both of
the termination conditions will be applicable on the Valuation Date, since the
actual Valuation Date is in the future and cannot be earlier than December 21,
1998 (the day prior to the Roslyn and T R Financial stockholder meetings), and
have not yet determined what action, if any, each might take under the Merger
Agreement if either or both of the termination conditions are applicable on the
actual Valuation Date. Such decision can only be made during the five-day period
commencing on the Valuation Date in accordance with the Merger Agreement and
will only be made after careful review of all relevant factors and only after
T R Financial reviews all such factors with its financial and legal advisors.
Subject to applicable law, such decision will be made by the T R Financial Board
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based upon what it believes to be in the long-term best interests of T R
Financial stockholders as determined at that time. The price of Roslyn Common
Stock has been below the levels set forth under the Absolute Termination
Condition for several months, and, during such period, has also sometimes been
below the levels set forth under the Relative Termination Condition. The T R
Financial Board has decided to disclose to stockholders of T R Financial and
Roslyn its present intention with respect to the termination conditions if, as
of the Valuation Date, the price of Roslyn Common Stock is below the level set
forth under either, or both, of the termination conditions, and if, as of such
date, the absolute prices of Roslyn Common Stock and T R Financial Common Stock,
the prices of Roslyn Common Stock and T R Financial Common Stock as compared to
those of other thrift institution holding companies, the absolute and relative
trends of such stocks at that time, the sale of control premiums then being
offered in other transactions, Roslyn's and T R Financial's operating
performance and projected future operating performance, and other general
business, market and economic conditions are, in the aggregate, substantially
the same as or not materially less favorable than, they were as of November 13,
1998.
Based upon the 15-consecutive-trading day average closing price of Roslyn
Common Stock as of November 13, 1998 and the other factors set forth above, it
is the present intention of the T R Financial Board that: (i) if, as of the
Valuation Date, the price of Roslyn Common Stock and the other factors set forth
above are substantially the same as or not materially less favorable than they
were on November 13, 1998, T R Financial would not elect to terminate the Merger
Agreement under the Absolute Termination Condition; (ii) if, as of the Valuation
Date, the price of Roslyn Common Stock and the other factors set forth above are
materially less favorable than they were as of November 13, 1998, T R Financial
would elect to terminate the Merger Agreement under the Absolute Termination
Condition; and (iii) if, as of the Valuation Date, the price of Roslyn Common
Stock and the other factors set forth above are substantially the same as they
were on November 13, 1998 and the price of Roslyn Common Stock is below the
levels set forth under the Relative Termination Condition, T R Financial would
elect to terminate the Merger Agreement under the Relative Termination
Condition, subject to Roslyn's election to increase the Exchange Ratio, in which
case the Merger Agreement would remain in full force and effect except that the
Exchange Ratio would have been increased.
The foregoing sets forth the present intention of the T R Financial Board
with respect to an assumed set of facts. It is not a final decision, and is
based upon an assumed set of facts. T R FINANCIAL DOES NOT HAVE THE RIGHT TO
TERMINATE THE MERGER AGREEMENT PURSUANT TO EITHER THE ABSOLUTE TERMINATION
CONDITION OR THE RELATIVE TERMINATION CONDITION UNTIL THE VALUATION DATE.
Approval of the Merger Agreement by the Roslyn Stockholders at the Roslyn
Meeting will confer on the will Roslyn Board the power, consistent with its
fiduciary duties, to determine, if T R Financial exercises its right to
terminate the Merger Agreement under the Relative Termination Condition, in the
alternative, (i) whether to increase the Exchange Ratio in accordance with the
formula set forth in the Merger Agreement, or (ii) whether to permit the Merger
Agreement to be terminated, in either case without any further action by, or
resolicitation of the votes of, the stockholders of Roslyn.
NASDAQ NATIONAL MARKET LISTING (Page ___)
Roslyn's Common Stock is listed on the National Market System of the Nasdaq
Stock Market (the "Nasdaq National Market"). Roslyn has agreed to use its best
efforts to cause the shares of Roslyn Common Stock to be issued in the Merger to
be approved for quotation on the Nasdaq National Market. See "THE MERGER --
Nasdaq National Market Listing." The obligation of each of Roslyn and
T R Financial to consummate the Merger is subject to the listing of such shares
on the Nasdaq National Market or on such other market on which shares of Roslyn
Common Stock shall then be trading. See "THE MERGER -- Conditions to the
Merger."
ANTICIPATED ACCOUNTING TREATMENT (Page ___)
The Merger has been structured to qualify as a pooling-of-interests for
accounting and financial reporting purposes. In order to achieve pooling-of-
interests accounting treatment, T R Financial is required to sell approximately
222,000 shares of T R Financial Common Stock, presently held in the treasury
account of T R Financial, prior to the consummation of the Merger. It is a
condition to each of Roslyn's and T R Financial's obligation to consummate the
Merger that Roslyn receives a letter from its independent accountants to the
effect that the Merger qualifies for pooling-of-interests accounting treatment.
See "THE MERGER -- Conditions to the Merger" and "-- Anticipated Accounting
Treatment."
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER (Page ___)
The Merger has been structured as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
Consummation of the Merger is conditioned upon receipt by Roslyn of an opinion
of its tax counsel and the receipt by T R Financial of an opinion of its tax
counsel, each dated as of the Effective Date, substantially to such effect. It
is expected that no gain or loss will be recognized by Roslyn or T R Financial
as a result of the Merger and, except to the extent of any cash received in lieu
of a fractional share interest in Roslyn Common Stock, no gain or loss will be
recognized by holders of T R Financial Common Stock as a result of their receipt
of shares of Roslyn Common Stock in the Merger.
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NO APPRAISAL RIGHTS (Page ___)
No stockholder of Roslyn or T R Financial is entitled to appraisal rights
in connection with, or as a result of, the Merger. See "THE MERGER -- No
Appraisal Rights."
MERGER STOCK OPTION AGREEMENTS (Page ___)
Execution of stock option agreements, dated as of May 25, 1998, by and
between T R Financial and Roslyn (the "T R Financial Merger Stock Option
Agreement"), and by and between Roslyn and T R Financial (the "Roslyn Merger
Stock Option Agreement") (collectively, the "Merger Stock Option Agreements"),
were conditions to the parties entering into the Merger Agreement. Pursuant to
the Merger Stock Option Agreements, both parties acquired an option to purchase
shares of the other's common stock, representing 19.9% of the issued and
outstanding shares of such common stock of each respective company without
giving effect to the shares issuable upon exercise of the options. Roslyn's
option to purchase up to 3,488,068 shares of T R Financial Common Stock has an
exercise price of $38.625 per share (the "Roslyn Merger Stock Option"). T R
Financial's option to purchase up to 8,238,591 shares of Roslyn Common Stock has
an exercise price of $27.625 per share (the "T R Financial Merger Stock
Option"). The Roslyn Merger Stock Option and the T R Financial Merger Stock
Option are collectively referred to as the "Merger Stock Options." The Merger
Stock Options may only be exercised upon the occurrence of certain events (none
of which has occurred). The Merger Stock Option Agreements are subject to a $50
million profit limitation. The Merger Stock Option Agreements are attached as
Annex B and Annex C, respectively, to this Joint Proxy Statement/Prospectus. See
"CERTAIN RELATED TRANSACTIONS --Merger Stock Option Agreements."
The T R Financial Merger Stock Option Agreement is intended to increase the
likelihood that the Merger will be consummated in accordance with the terms of
the Merger Agreement. Consequently, certain aspects of the T R Financial Merger
Stock Option Agreement may have the effect of discouraging persons who might now
or prior to the Effective Time be interested in acquiring all of or a
significant interest in T R Financial from considering or proposing such an
acquisition, even if such persons were prepared to pay a higher price per share
for T R Financial Common Stock than the price per share implicit in the Exchange
Ratio. The acquisition of T R Financial or an interest in T R Financial, or an
agreement to do either, could cause the Roslyn Merger Stock Option to become
exercisable. The existence of the Roslyn Merger Stock Option could
significantly increase the cost to a potential acquiror of acquiring
T R Financial compared to its cost had the T R Financial Merger Stock Option
Agreement not been entered into. Such increased costs might discourage a
potential acquiror from considering or proposing an acquisition or might result
in a potential acquiror proposing to pay a lower per share price to acquire
T R Financial than it might otherwise have proposed to pay. The management of
T R Financial believes that the exercise of the Roslyn Merger Stock Option is
likely to prohibit any acquiror of T R Financial from accounting for any
acquisition of T R Financial using the pooling-of-interests accounting method
for a period of two years. The inability to use the pooling-of-interests
accounting method could discourage or preclude an acquisition of T R Financial
by other organizations during that period.
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Similarly, the Roslyn Merger Stock Option Agreement is intended to increase
the likelihood that the Merger will be consummated in accordance with the terms
of the Merger Agreement. Consequently, certain aspects of the Roslyn Merger
Stock Option Agreement may have the effect of discouraging persons who might
now or prior to the Effective Time be interested in acquiring all of or a
significant interest in Roslyn from considering or proposing such an
acquisition. The acquisition of Roslyn or an interest in Roslyn, or an
agreement to do either, could cause the T R Financial Merger Stock Option to
become exercisable. The existence of the T R Financial Merger Stock Option
could significantly increase the cost to a potential acquiror of acquiring
Roslyn compared to its cost had the Roslyn Merger Stock Option Agreement not
been entered into. Such increased costs might discourage a potential acquiror
from considering or proposing an acquisition or might result in a potential
aquiror proposing to pay a lower per share price to acquire Roslyn than it
might otherwise have proposed to pay. The management of Roslyn believes that
the exercise of the T R Financial Merger Stock Option is likely to prohibit
any acquiror of Roslyn from accounting for any acquisition of Roslyn using the
pooling-of-interests accounting method for a period of two years. The
inability to use the pooling-of-interests accounting method could discourage
or preclude an acquisition of Roslyn by other organizations during that period.
COMPARISON OF RIGHTS OF STOCKHOLDERS (Page ___)
At the Effective Time, T R Financial's stockholders automatically will
become stockholders of Roslyn, and their rights as stockholders of Roslyn will
be governed by the Delaware General Corporation Law and by Roslyn's
Certificate of Incorporation and Bylaws. The rights of stockholders of Roslyn,
as defined in its Certificate of Incorporation and Bylaws, differ from the
rights of the stockholders of T R Financial, as defined in its Certificate of
Incorporation and Bylaws, with respect to certain matters, including, among
others, the requirements for achieving a quorum at stockholder meetings, the
conduct of business at stockholder meetings and proxies and voting at
stockholder meetings. For a summary of the material differences, see "COMPARISON
OF RIGHTS OF STOCKHOLDERS."
AMENDMENT TO T R FINANCIAL RIGHTS AGREEMENT (Page ___)
On July 19, 1994, T R Financial adopted a Rights Agreement (the
"T R Financial Rights Agreement"), pursuant to which T R Financial's
stockholders of record on August 2, 1994 each received a dividend of one
preferred share purchase right (a "T R Financial Right") for each share of
T R Financial Common Stock held. In connection with the Merger, T R Financial
amended the T R Financial Rights Agreement to clarify that, for purposes of
determining whether Roslyn (as well as its affiliates and associates) is an
Acquiring Person, as defined in the T R Financial Rights Agreement, Roslyn
shall not be deemed to be a Beneficial Owner, as defined in the T R Financial
Rights Agreement, or to beneficially own any securities as a result of the
execution and delivery of the Merger Agreement, the consummation of the Merger,
the execution and delivery of the T R Financial Merger Stock Option Agreement
or Roslyn's right to acquire, or acquisition of, T R Financial Common Stock
pursuant to the T R Financial Merger Stock Option Agreement. See "CERTAIN
RELATED TRANSACTIONS -- Amendment to T R Financial Rights Agreement."
- --------------------------------------------------------------------------------
17
<PAGE>
MARKET PRICES AND DIVIDEND INFORMATION
Roslyn Common Stock is traded over the counter and quoted on the Nasdaq
National Market under the symbol "RSLN." T R Financial Common Stock is traded
over the counter and quoted on the Nasdaq National Market under the symbol
"ROSE."
The following table sets forth, for the calendar periods indicated, the
high and low closing prices per share for Roslyn Common Stock and T R Financial
Common Stock, as reported on the Nasdaq National Market, and the quarterly cash
dividends declared by each company for the periods indicated. Roslyn's Common
Stock began trading on the Nasdaq National Market on January 13, 1997.
<TABLE>
<CAPTION>
ROSLYN COMMON STOCK T R FINANCIAL COMMON STOCK/(1)/
-------------------------- -------------------------------
HIGH LOW DIVIDENDS HIGH LOW DIVIDENDS
------- ------ --------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
1996
Quarter ended March 31............ $ N/A $ N/A $ N/A $13.31 $11.69 $0.07
Quarter ended June 30............. N/A N/A N/A 13.88 12.41 0.08
Quarter ended September 30........ N/A N/A N/A 14.75 13.00 0.09
Quarter ended December 31......... N/A N/A N/A 17.75 14.38 0.10
1997
Quarter ended March 31............ 18.63 15.00 N/A 18.44 16.56 0.11
Quarter ended June 30............. 22.88 15.88 0.050 25.94 16.69 0.13
Quarter ended September 30........ 24.31 21.44 0.060 31.88 23.00 0.15
Quarter ended December 31......... 24.25 20.94 0.070 35.00 30.38 0.16
1998
Quarter ended March 31............ 24.50 20.31 0.080 35.50 26.50 0.17
Quarter ended June 30............. 30.50 20.88 0.085 44.75 34.88 0.18
Quarter ended September 30........ 22.63 13.75 0.100 44.13 20.69 0.20
Quarter ended December 31
(As of November 13, 1998)....... 18.00 13.31 N/A/(2)/ 34.38 19.88 0.22
</TABLE>
_________________________________
(1) Stock prices and dividend information for T R Financial have been adjusted
to reflect a 100% stock dividend paid on May 14, 1997.
(2) As of November 13, 1998, Roslyn had not yet declared its dividend for the
fourth quarter of 1998.
The following table sets forth the closing prices per share for Roslyn
Common Stock and T R Financial Common Stock and the equivalent per share price
for T R Financial Common Stock, giving effect to the Merger on (i) May 22, 1998,
the last business day preceding public announcement of the proposed Merger; and
(ii) November 13, 1998, the latest practicable trading day prior to the mailing
of this Joint Proxy Statement/Prospectus:
<TABLE>
<CAPTION>
EQUIVALENT PRICE PER
T R SHARE OF
ROSLYN FINANCIAL T R FINANCIAL
COMMON STOCK COMMON STOCK COMMON STOCK/(1)/
------------- ------------- --------------------
<S> <C> <C> <C>
May 22, 1998.......... $27.625 $38.625 $56.631
November 13, 1998..... $17.850 $31.125 $35.875
</TABLE>
_______________________
(1) The equivalent price per share of T R Financial Common Stock at each
specified date was determined by multiplying the closing sales price for
a share of Roslyn Common Stock on each specified date by the Exchange
Ratio of 2.05 (see "THE MERGER -- Exchange Ratio").
18
<PAGE>
Roslyn and T R Financial stockholders are advised to obtain current market
quotations for Roslyn Common Stock and T R Financial Common Stock. It is
expected that the market price of Roslyn Common Stock will fluctuate between the
date of this Joint Proxy Statement/Prospectus and the date on which the Merger
is consummated, and thereafter. Because the number of shares of Roslyn Common
Stock to be received by T R Financial stockholders in the Merger is fixed
(subject to possible increase in certain limited circumstances) and because the
market price of Roslyn Common Stock is subject to fluctuation, the value of the
shares of Roslyn Common Stock that holders of T R Financial Common Stock will
receive in the Merger may increase or decrease prior to and after the Merger.
No assurance can be given concerning the market price of Roslyn Common Stock
before or after the Effective Time. See "THE MERGER -- Exchange Ratio,"
"-- Waiver and Amendment; Termination," and "-- Price-Based Termination."
19
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(UNAUDITED)
The following tables set forth selected unaudited historical consolidated
financial and other data for Roslyn and T R Financial for the five years ended
December 31, 1997 and the six-month periods ended June 30, 1998 and 1997. The
selected data presented in the tables under the caption "Selected Financial
Data" and "Selected Operating Data" for, and as of, each of the years in the
five-year period ended December 31, 1997 are derived from audited financial
statements of Roslyn and T R Financial. The consolidated financial statements
as of December 31, 1997 and 1996, and for each of the years in the three-year
period ended December 31, 1997, and the auditors' report thereon, are
incorporated by reference elsewhere in this Joint Proxy Statement/Prospectus.
The selected data presented in the table for the six-month periods ended June
30, 1998 and 1997 and as of June 30, 1998 are derived from the unaudited
consolidated financial statements of Roslyn and T R Financial, incorporated by
reference elsewhere in this Joint Proxy Statement/Prospectus. See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE." Roslyn had no operations
prior to January 10, 1997 and, accordingly, the information provided below prior
to that date reflects only that of Roslyn Savings, as its predecessor. The
financial information for the six-month periods ended June 30, 1998 and 1997 for
Roslyn and T R Financial reflect, in the opinions of the management of Roslyn
and T R Financial, respectively, all adjustments necessary for a fair
presentation of such information and include only normal recurring items.
Results for these interim periods are not necessarily indicative of the results
which may be expected for the full year or any other interim period.
ROSLYN BANCORP, INC.
SELECTED HISTORICAL UNAUDITED FINANCIAL AND OTHER DATA
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
AT JUNE 30, AT DECEMBER 31,
---------------------- -----------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---------- ---------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED FINANCIAL DATA:
Total assets................................ $3,853,282 $3,159,301 $3,601,079 $3,617,953 $1,598,270 $1,438,337 $1,344,390
Securities available-for-sale/(1)/.......... 2,382,261 2,148,346 2,350,826 1,646,307 792,816 140,498 --
Securities held-to-maturity/for
investment, net/(1)/...................... 118,592 245,154 202,123 278,562 349,143 877,545 996,517
Loans held-for-sale, net.................... 41,551 9,819 15,283 14,134 17,151 -- 8,105
Loans receivable held-for-investment,
net /(2)/................................. 1,161,679 653,784 954,291 488,890 365,265 342,091 264,667
Deposits.................................... 2,034,370 1,771,208 1,942,245 1,955,535 1,328,945 1,219,481 1,141,528
Borrowed funds.............................. 1,132,174 692,203 966,451 1,829 1,647 -- --
Total stockholders' equity/(3)/............. 594,398 636,423 628,335 249,349 226,413 193,066 176,380
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30, FOR THE YEAR ENDED DECEMBER 31,
---------------------- ----------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Interest income............................ $128,894 $103,252 $224,964 $140,473 $109,737 $93,282 $94,819
Interest expense........................... 77,770 54,283 126,414 78,759 59,298 40,353 39,698
-------- -------- -------- -------- -------- ------- -------
Net interest income........................ 51,124 48,969 98,550 61,714 50,439 52,929 55,121
Provision for possible loan losses......... 600 300 600 2,000 600 600 6,860
-------- -------- -------- -------- -------- ------- -------
Net interest income after provision
for possible loan losses.................. 50,524 48,669 97,950 59,714 49,839 52,329 48,261
Non-interest income........................ 10,245 4,892 12,075 8,409 6,297 3,127 6,714
Non-interest expense/(4)/.................. 23,039 34,759 60,562 38,051 28,908 26,016 26,229
-------- -------- -------- -------- -------- ------- -------
Income before provision for income
taxes and cumulative effect of
changes in accounting principles.......... 37,730 18,802 49,463 30,072 27,228 29,440 28,746
Provision for income taxes................. 12,100 5,871 16,073 9,438 8,510 10,018 10,586
-------- -------- -------- -------- -------- ------- -------
Income before cumulative effect of
changes in accounting principles.......... 25,630 12,931 33,390 20,634 18,718 19,422 18,160
Cumulative effect of changes in
accounting principles/(5)/................ -- -- -- -- -- -- 5,983
-------- -------- -------- -------- -------- ------- -------
Net income................................. $ 25,630 $ 12,931 $ 33,390 $ 20,634 $ 18,718 $19,422 $24,143
======== ======== ======== ======== ======== ======= =======
Basic earnings per common share............ $ 0.66 $ 0.32 $ 0.83 N/A N/A N/A N/A
Diluted earnings per common share.......... 0.65 0.32 0.83 N/A N/A N/A N/A
Cash dividends paid per share.............. 0.165 0.05 0.18 N/A N/A N/A N/A
</TABLE>
(footnotes on following page)
20
<PAGE>
<TABLE>
<CAPTION>
AT OR FOR THE
SIX MONTHS ENDED
JUNE 30, AT OR FOR THE YEAR ENDED DECEMBER 31,
---------------------- -----------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---------- ---------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED PERFORMANCE RATIOS AND OTHER
DATA/(6)/:
Return on average assets.................. 1.39% 1.39% 1.29% 1.03% 1.21% 1.39% 1.35%/(9)/
Return on average stockholders' equity.... 8.41% 6.52%/(7)/ 6.57%/(8)/ 8.97% 8.82% 10.27% 10.85%/(9)/
Stockholders' equity to total assets...... 15.43% 20.14% 17.45% 6.89% 14.17% 13.42% 13.12%
Average stockholders'
equity to average assets................. 16.57% 20.45% 19.22% 11.45% 13.69% 13.56% 12.48%
Net interest rate spread.................. 1.92% 2.47% 2.20% 2.69% 2.71% 3.45% 3.81%
Net interest margin....................... 2.84% 3.47% 3.20% 3.19% 3.37% 3.93% 4.26%
Operating expenses to average assets...... 1.24% 1.49% 1.49% 1.84% 1.89% 1.87% 1.83%
Net interest income to
operating expenses....................... 2.24x 2.24x 2.09x 1.68x 1.75x 2.06x 2.27x
Efficiency ratio.......................... 39.92% 40.73% 43.77% 51.66% 51.30% 45.98% 41.47%
Dividend payout ratio..................... 27.35% 16.87% 23.53% N/A N/A N/A N/A
</TABLE>
___________________________________
(1) Roslyn Savings adopted Statement of Financial Accounting Standards ("SFAS")
No. 115, "Accounting for Certain Investments in Debt and Equity Securities,"
as of January 1, 1994, and reclassified securities having a market value of
$658.3 million from its held-to-maturity portfolio to its available-for-sale
portfolio in November 1995 pursuant to a Financial Accounting Standards
Board (FASB) interpretation of SFAS No. 115. Prior to the adoption of SFAS
No. 115, all securities were carried at amortized cost, as adjusted for
amortization of premiums and accretion of discounts over the remaining terms
of the securities from the dates of purchase.
(2) All loans receivable held for investment are presented net of Roslyn
Savings' allowance for possible loan losses which at June 30, 1998 and 1997
were $24.6 million and $23.8 million, respectively, and at December 31,
1997, 1996, 1995, 1994 and 1993 were $24.0 million, $23.3 million,
$23.4 million, $25.1 million and $24.5 million, respectively.
(3) The amounts prior to December 31, 1997 represent retained earnings only.
(4) Included in both the six month and year end 1997 is a $12.7 million
charitable contribution to The Roslyn Savings Foundation, and included in
the year end 1997 is a $4.6 million pre-tax charge for a settlement
agreement, including professional fees related thereto, with the New York
State Banking Department regarding certain loan and origination fee
practices by Roslyn Savings' mortgage banking subsidiary.
(5) Reflects the net cumulative effect of Roslyn Savings' adoption of SFAS
No. 106, "Employer's Accounting for Post-retirement Benefits Other than
Pensions" and SFAS No. 109, "Accounting for Income Taxes."
(6) All performance ratios at or for the six months ended June 30, 1997 and year
ended December 31, 1997 exclude the $7.4 million after-tax effect of the
shares contributed to The Roslyn Savings Foundation concurrent with Roslyn
Savings' mutual-to-stock conversion and Roslyn's simultaneous initial public
offering of Roslyn Common Stock (the "Conversion").
(7) The ratio assumes that the Conversion was completed on January 1, 1997. The
actual return on average stockholders' equity based on the January 10, 1997
Conversion date was 6.79%.
(8) The ratio assumes that the Conversion was completed on January 1, 1997. The
actual return on average stockholders' equity based on the January 10, 1997
Conversion date was 6.70%.
(9) Does not include the net effect of accounting changes due to the
implementation of SFAS Nos. 106 and 109.
21
<PAGE>
T R FINANCIAL CORP.
SELECTED HISTORICAL UNAUDITED FINANCIAL AND OTHER DATA
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
AT JUNE 30, AT DECEMBER 31,
---------------------- -----------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---------- ---------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED FINANCIAL DATA:
Total assets................................. $4,115,800 $3,551,783 $3,843,056 $3,259,627 $2,904,623 $2,563,949 $2,007,234
Securities available-for-sale................ 503,392 480,490 476,665 441,847 530,996 422,530 434,451
Securities held-to-maturity/for
investment, net............................. 1,258,852 1,108,148 1,219,300 1,008,932 855,623 827,760 369,907
Loans receivable held-for-investment, net.... 2,240,654 1,859,100 2,047,979 1,701,812 1,410,307 1,185,295 1,058,824
Deposits..................................... 2,118,339 2,397,143 2,202,353 2,343,513 2,038,341 1,696,359 1,217,745
Borrowed funds............................... 1,645,078 859,728 1,298,578 637,835 594,563 625,200 545,200
Total stockholders' equity................... 256,233 220,350 240,971 204,038 199,684 177,767 184,738
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30, FOR THE YEAR ENDED DECEMBER 31,
---------------------- -----------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---------- ---------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Interest income.............................. $141,601 $122,581 $255,412 $218,404 $194,690 $148,073 $119,404
Interest expense............................. 91,042 78,064 163,766 137,170 124,305 88,321 68,148
-------- -------- -------- -------- -------- -------- --------
Net interest income.......................... 50,559 44,517 91,646 81,234 70,385 59,752 51,256
Provision for possible loan losses........... 500 550 800 1,400 3,050 2,250 6,100
-------- -------- -------- -------- -------- -------- --------
Net interest income after provision
for possible loan losses.................... 50,059 43,967 90,846 79,834 67,335 57,502 45,156
Non-interest income:
Loan fees and other charges, net
and other income.......................... 3,019 3,828 7,224 8,406 7,621 6,596 8,514
Net gain on securities activities
and sales of whole loans.................. 5,238 2,138 5,711 7,513 5,464 592 4,589
Non-interest expense......................... 24,098 22,928 45,813 43,063 42,685 42,019 38,155
-------- -------- -------- -------- -------- -------- --------
Income before provision for income taxes,
extraordinary charges and net cumulative
effect of changes in accounting principles.. 34,218 27,005 57,968 52,690 37,735 22,671 20,104
Provision for income taxes................... 13,721 10,827 23,240 22,175 16,810 10,256 8,646
-------- -------- -------- -------- -------- -------- --------
Income before extraordinary charges
and net cumulative effect of
changes in accounting principles............ 20,497 16,178 34,728 30,515 20,925 12,415 11,458
Extraordinary charges from pre-payments
of FHLB advances, net of tax................ -- -- -- -- -- -- (2,287)
Net cumulative effect of
changes in accounting principles............ -- -- -- -- -- -- 500
-------- -------- -------- -------- -------- -------- --------
Net income................................... $ 20,497 $ 16,178 $ 34,728 $ 30,515 $ 20,925 $ 12,415 $ 9,671
======== ======== ======== ======== ======== ======== ========
Basic earnings per common
share /(1)(2)/.............................. $ 1.24 $ 0.99 $ 2.11 $ 1.84 $ 1.16 $ 0.64 $ 0.23
Diluted earnings per
common share /(1)(2)/....................... 1.17 0.92 1.96 1.72 1.10 0.62 0.23
Cash dividends paid per
share/(2)(3)/............................... 0.35 0.24 0.55 0.34 0.185 0.025 N/A
</TABLE>
(footnotes on following page)
22
<PAGE>
<TABLE>
<CAPTION>
AT OR FOR THE
SIX
MONTHS ENDED
JUNE 30, AT OR FOR THE YEAR ENDED DECEMBER 31,
---------------- --------------------------------------
1998 1997 1997 1996 1995 1994 1993
------- ------- ------- ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED PERFORMANCE RATIOS AND
OTHER DATA:
Return on average assets................................ 1.02% 0.95% 0.98% 1.00% 0.76% 0.55% 0.54%
Return on average stockholders' equity.................. 16.63% 15.50% 15.86% 16.03% 10.65% 6.84% 6.85%
Stockholders' equity to total assets.................... 6.23% 6.20% 6.27% 6.26% 6.87% 6.93% 9.20%
Average stockholders' equity to average assets.......... 6.14% 6.11% 6.16% 6.24% 7.14% 8.05% 7.89%
Net interest rate spread................................ 2.19% 2.28% 2.23% 2.34% 2.24% 2.31% 2.54%
Net interest margin..................................... 2.57% 2.66% 2.63% 2.72% 2.64% 2.73% 2.97%
Operating expenses to average assets.................... 1.20% 1.34% 1.29% 1.41% 1.55% 1.86% 2.13%
Net interest income to operating expenses............... 2.10x 1.94x 2.00x 1.89x 1.65x 1.42x 1.34x
Efficiency ratio........................................ 44.98% 47.43% 46.34% 48.04% 54.72% 63.33% 63.84%
Dividend payout ratio................................... 29.91% 26.09% 28.06% 19.77% 16.82% 4.03% N/A
</TABLE>
_________________________
(1) 1993 basic and diluted earnings per share are presented only for the period
subsequent to the conversion of Roosevelt Savings from a mutual to stock
form on June 29, 1993. Because extraordinary charges and accounting changes
occurred prior to June 29, 1993, basic and diluted earnings per share
exclude the effects of these items.
(2) Restated to give effect to a 100% stock dividend paid on May 14, 1997.
(3) Dividends for the year ended December 31, 1994 are for one quarter.
23
<PAGE>
UNAUDITED PRO FORMA COMBINED SELECTED
FINANCIAL INFORMATION
The following tables set forth certain selected condensed financial
information for Roslyn and T R Financial on an unaudited pro forma combined
basis as if the Merger had become effective as of the dates indicated, in the
case of the balance sheet information presented, and as if the Merger had become
effective at the beginning of the periods indicated, in the case of the income
statement information presented. The pro forma information in the tables assumes
that the Merger is accounted for using the pooling-of-interests method of
accounting. See "THE MERGER -- Anticipated Accounting Treatment." These tables
should be read in conjunction with, and are qualified in their entirety by, the
historical financial statements, including the notes thereto, of Roslyn and T R
Financial incorporated by reference herein and the more detailed pro forma
financial information, including the notes thereto, appearing elsewhere in this
Joint Proxy Statement/Prospectus. Certain T R Financial information has been
reclassified to conform with Roslyn financial information. See "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE" and "UNAUDITED PRO FORMA CONDENSED COMBINED
CONSOLIDATED FINANCIAL STATEMENTS."
The pro forma financial information set forth in the following tables does
not reflect the expected cost savings and revenue enhancement opportunities that
could result from the Merger or any other items of income or expense which may
result from the Merger, except as set forth in Note 4 to the "UNAUDITED PRO
FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS". The unaudited pro
forma combined selected financial information is presented for informational
purposes only and is not necessarily indicative of the combined financial
position or results of operations that would have occurred if the Merger had
been consummated on June 30, 1998, or at the beginning of the periods indicated,
or which may be obtained in the future.
24
<PAGE>
ROSLYN BANCORP, INC. AND
T R FINANCIAL CORP.
UNAUDITED PRO FORMA COMBINED SELECTED FINANCIAL INFORMATION
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
AT JUNE 30, AT DECEMBER 31,
---------------------- -----------------------------------
1998 1997 1997 1996 1995
---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
SELECTED FINANCIAL DATA:
Total assets/(1)/.................................. $7,963,842 $6,711,084 $7,444,135 $6,877,580 $4,502,893
Securities available-for-sale/(1)/................. 2,878,181 2,628,836 2,827,491 2,088,154 1,323,812
Securities held-to-maturity, net................... 1,377,444 1,353,302 1,421,423 1,287,494 1,204,766
Loan held-for-sale, net............................ 41,551 9,819 15,283 14,134 17,151
Loans receivable held-for-investment, net.......... 3,402,333 2,512,884 3,002,270 2,190,702 1,775,572
Deposits........................................... 4,152,709 4,168,351 4,144,598 4,299,048 3,367,286
Borrowed funds..................................... 2,777,252 1,551,931 2,265,029 639,664 596,210
Total stockholders' equity/(1)/.................... 798,992 856,773 869,306 453,387 426,097
<CAPTION>
FOR THE SIX
MONTHS ENDED JUNE 30, FOR THE YEAR ENDED DECEMBER 31,
---------------------- -----------------------------------
1998 1997 1997 1996 1995
---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Interest income..................................... $270,495 $225,833 $480,376 $358,877 $304,427
Interest expense.................................... 168,812 132,347 290,180 215,929 183,603
-------- -------- -------- -------- --------
Net interest income................................. 101,683 93,486 190,196 142,948 120,824
Provision for possible loan losses.................. 1,100 850 1,400 3,400 3,650
-------- -------- -------- -------- --------
Net interest income after provision for
possible loan losses.............................. 100,583 92,636 188,796 139,548 117.174
-------- -------- -------- -------- --------
Non-interest income................................. 18,502 10,858 25,010 24,328 19,382
Non-interest expense................................ 47,137 57,687 106,375 81,114 71,593
-------- -------- -------- -------- --------
Income before provision for income taxes............ 71,948 45,807 107,431 82,762 64,963
Provision for income taxes.......................... 25,821 16,698 39,313 31,613 25,320
-------- -------- -------- -------- --------
Net income.......................................... $ 46,127 $ 29,109 $ 68,118 $ 51,149 $ 39,643
======== ======== ======== ======== ========
Basic earnings per common share/(2)/................ $ 0.63 $ 0.39 $ 0.92 N/A N/A
======== ======== ========
Diluted earnings per common share/(2)/.............. $ 0.62 $ 0.38 $ 0.89 N/A N/A
======== ======== ========
<CAPTION>
AT OR FOR THE SIX AT OR FOR
MONTHS ENDED JUNE 30, THE YEAR ENDED DECEMBER 31,
------------------------ -----------------------------------
1998 1997 1997 1996 1995
------------ ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
SELECTED PERFORMANCE RATIOS AND OTHER DATA:
Return on average assets............................... 1.20% 0.92% 1.01% 1.01% 0.92%
Return on average stockholders' equity................. 10.78% 7.22% 8.24% 12.17% 9.70%
Stockholders' equity to total assets /(1)/............. 10.03% 12.77% 11.68% 6.59% 9.46%
Average stockholders' equity to average assets......... 11.13% 12.72% 12.31% 8.31% 9.51%
Net interest rate spread............................... 2.07% 2.35% 2.22% 2.48% 2.41%
Net interest margin.................................... 2.70% 3.03% 2.90% 2.91% 2.90%
Operating expenses to average assets................... 1.21% 1.41% 1.38% 1.56% 1.62%
Net interest income to operating expenses.............. 2.18x 2.10x 2.05x 1.81x 1.73x
Efficiency ratio/(3)/.................................. 42.12% 43.71% 44.84% 49.27% 51.94%
</TABLE>
_____________________
(1) The June 30, 1998 pro forma stockholders' equity, total assets, securities
available-for-sale, and the ratio of stockholders' equity to total assets
reflect the effects of the Merger as if the Merger had become effective on
June 30, 1998. See "UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
FINANCIAL INFORMATION."
(2) Pro forma earnings per common and weighted average common shares utilize
restated amounts for the periods shown as a result of SFAS No. 128,
"Earnings Per Share," and reflect the Exchange Ratio of 2.05 shares of
Roslyn Common Stock for each share of T R Financial Common Stock.
(3) Efficiency ratio represents the ratio of general and administrative expenses
divided by the sum of net interest income and non-interest income excluding
net gains on sales of securities.
25
<PAGE>
COMPARATIVE PER SHARE DATA
(UNAUDITED)
The following table sets forth for Roslyn Common Stock and T R Financial
Common Stock certain historical, pro forma and pro forma equivalent per share
financial information. The pro forma and pro forma equivalent per share
information gives effect to the Merger as if the Merger had been effective at
the beginning of each of the periods presented. The pro forma data in the
tables assumes that the Merger is accounted for using the pooling-of-interests
method of accounting. See "THE MERGER -- Anticipated Accounting Treatment."
The information presented herein is based on, and is qualified in its entirety
by, the historical financial statements, including the notes thereto, of Roslyn
and T R Financial incorporated by reference herein and the pro forma financial
information, including the notes thereto, appearing elsewhere in this Joint
Proxy Statement/Prospectus, and should be read in conjunction therewith. See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE" and "UNAUDITED PRO FORMA
CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS." The pro forma and
equivalent pro forma per share data in the following tables are presented for
comparative purposes only and are not necessarily indicative of what the
combined financial position or results of operations would have been had the
Merger been consummated during the periods or as of the date for which such pro
forma tables are presented. Roslyn became a publicly traded company on
January 10, 1997, therefore, no Roslyn data is included for prior periods.
<TABLE>
<CAPTION>
AT OR FOR THE SIX AT OR FOR
MONTHS ENDED JUNE 30, THE YEAR ENDED DECEMBER 31,
---------------------- -----------------------------------
1998 1997 1997 1996 1995
---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
BASIC EARNINGS PER SHARE:
Roslyn....................................... $ 0.66 $ 0.32 $ 0.83 $ N/A $ N/A
T R Financial................................ 1.24 0.99 2.11 1.84 1.16
Roslyn pro forma............................. 0.63 0.39 0.92 N/A N/A
T R Financial pro forma equivalent........... 1.29 0.80 1.89 N/A N/A
DILUTED EARNINGS PER SHARE:
Roslyn....................................... 0.65 0.32 0.83 N/A N/A
T R Financial................................ 1.17 0.92 1.96 1.72 1.10
Roslyn pro forma............................. 0.62 0.38 0.89 N/A N/A
T R Financial pro forma equivalent........... 1.27 0.78 1.82 N/A N/A
CASH DIVIDENDS DECLARED PER SHARE:
Roslyn....................................... 0.165 0.05 0.18 N/A N/A
T R Financial................................ 0.35 0.24 0.55 0.34 0.19
Roslyn pro forma(1).......................... 0.165 0.05 0.18 N/A N/A
T R Financial pro forma equivalent........... 0.34 0.10 0.37 N/A N/A
BOOK VALUE PER SHARE AT PERIOD END:
Roslyn....................................... 14.36 14.58 14.40 N/A N/A
T R Financial................................ 14.62 12.58 13.69 11.61 10.53
Roslyn pro forma(2).......................... 10.41 10.77 10.90 N/A N/A
T R Financial pro forma equivalent(2)........ 21.34 22.08 22.35 N/A N/A
TANGIBLE BOOK VALUE PER SHARE AT PERIOD END:
Roslyn....................................... 14.29 14.51 14.33 N/A N/A
T R Financial................................ 14.62 12.58 13.69 11.61 10.53
Roslyn pro forma(2).......................... 10.38 10.73 10.87 N/A N/A
T R Financial pro forma equivalent(2)........ 21.28 22.00 22.28 N/A N/A
</TABLE>
______________________________
(1) The Roslyn pro forma dividends declared per share amounts are based on
Roslyn's historical amounts.
(2) The June 30, 1998 pro forma amounts have been adjusted to reflect the Merger
as if the Merger had become effective on June 30, 1998.
26
<PAGE>
PARTIES TO THE MERGER
ROSLYN
Roslyn is a savings and loan holding company organized under the laws of
the State of Delaware in 1996. Roslyn's direct subsidiary, Roslyn Savings,
operates 8 full service banking offices in the State of New York Counties of
Nassau and Suffolk, as well as 12 mortgage origination offices in the states of
New York, New Jersey, Connecticut, Delaware and Pennsylvania through Roslyn
Savings' wholly owned subsidiary, RNMC. In addition, Roslyn Savings has
received the requisite regulatory approvals to open full service branch offices
in Bay Shore, New York, Oceanside, New York and Smithtown, New York, all of
which are expected to open in the fourth quarter of 1998 and the first quarter
of 1999. Roslyn Savings is a New York State-chartered savings bank which has
operated since 1875. Roslyn Savings' deposits are insured by the BIF.
At June 30, 1998, Roslyn had total assets of $3.85 billion, deposits of
$2.03 billion and stockholders' equity of $594.4 million. Roslyn's principal
executive offices are located at 1400 Old Northern Boulevard, Roslyn, New York
11576, and its telephone number is (516) 621-6000.
For more information about Roslyn, reference is made to the 1997 Roslyn
Form 10-K, which is incorporated herein by reference. See "AVAILABLE
INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
T R FINANCIAL
T R Financial is a bank holding company organized under the laws of the
State of Delaware in 1993. T R Financial's wholly owned subsidiary, Roosevelt
Savings, operates 15 full service banking offices in the New York City Boroughs
of Brooklyn and Queens and the State of New York Counties of Nassau and Suffolk.
Roosevelt Savings is a New York State-chartered savings bank which has operated
since 1895. Roosevelt Savings' deposits are insured by the BIF.
At June 30, 1998, T R Financial had total assets of $4.12 billion, deposits
of $2.12 billion and stockholders' equity of $256.2 million. T R Financial's
principal executive offices are located at 1122 Franklin Avenue, Garden City,
New York 11530, and its telephone number is (516) 742-9300.
For more information about T R Financial, reference is made to the 1997 T R
Financial Form 10-K, which is incorporated herein by reference. See "AVAILABLE
INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
27
<PAGE>
MEETING OF ROSLYN STOCKHOLDERS
DATE, TIME AND PLACE; PURPOSE OF MEETING
This Joint Proxy Statement/Prospectus is being furnished to stockholders of
Roslyn in connection with the solicitation of proxies by the Roslyn Board for
use at the Roslyn Meeting to be held at The Crest Hollow Country Club, 8325
Jericho Turnpike, Woodbury, New York, 11797, on Tuesday, December 22, 1998, at
10:00 a.m. New York time. At the Roslyn Meeting, the holders of Roslyn Common
Stock will be asked to consider and vote upon (i) a proposal to approve and
adopt the Merger Agreement, which is included as Annex A to this Joint Proxy
Statement/Prospectus, and the consummation of the transactions contemplated
thereby, which are more fully described herein; and (ii) such other matters as
may properly be brought before the Roslyn Meeting.
THE ROSLYN BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND HAS
DETERMINED THAT THE TERMS OF THE MERGER AGREEMENT ARE FAIR TO, AND IN THE BEST
INTERESTS OF, ROSLYN AND ITS STOCKHOLDERS. THE ROSLYN BOARD THEREFORE
UNANIMOUSLY RECOMMENDS THAT ROSLYN'S STOCKHOLDERS VOTE "FOR" APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY.
See "THE MERGER -- Background of the Merger" and "-- Recommendation of the
Roslyn Board; Roslyn's Reasons for the Merger."
RECORD DATE
The Roslyn Board has fixed the close of business on October 26, 1998 as the
Roslyn Record Date for the determination of the holders of Roslyn Common Stock
entitled to receive notice of and to vote at the Roslyn Meeting. Only holders of
record of Roslyn Common Stock at the close of business on the Roslyn Record Date
will be entitled to receive notice of and to vote at the Roslyn Meeting. At the
close of business on the Roslyn Record Date, there were 41,399,959 shares of
Roslyn Common Stock outstanding and entitled to be voted at the Roslyn Meeting,
which were held by approximately 9,390 holders of record. The presence, in
person or by proxy, of the holders of at least a majority of the total number of
outstanding shares of Roslyn Common Stock entitled to vote at the Roslyn Meeting
is necessary to constitute a quorum thereat.
PROXIES; VOTING AND REVOCATION OF PROXIES
Each holder of shares of Roslyn Common Stock on the Roslyn Record
Date will be entitled to one vote for each share of Roslyn Common Stock held of
record (except for shares held in excess of the Limit, as defined below) on each
matter to be voted upon at the Roslyn Meeting.
As provided in Roslyn's Certificate of Incorporation, record holders of
Roslyn Common Stock who beneficially own in excess of 10% of the outstanding
shares of Roslyn Common Stock (the "Limit") are not entitled to any vote with
respect to the shares held in excess of the Limit. Beneficial ownership is
determined pursuant to Rule 13d-3 of the General Rules and Regulations
promulgated pursuant to the Exchange Act, and includes shares beneficially owned
by such person or any of his or her affiliates (as defined in the Certificate of
Incorporation), shares which such person or his or her affiliates have the right
to acquire pursuant to any agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange rights, warrants or options or otherwise
and shares as to which such person and his or her affiliates have sole or shared
voting or investment power, but shall not include shares that are subject to a
publicly solicited revocable proxy and
28
<PAGE>
that are not otherwise deemed to be beneficially owned by such person and his or
her affiliates. Roslyn's Certificate of Incorporation authorizes the Roslyn
Board (i) to make all determinations necessary to implement and apply the Limit,
including determining whether persons or entities are acting in concert, and
(ii) to demand that any person who is reasonably believed to beneficially own
Roslyn Common Stock in excess of the Limit supply information to Roslyn to
enable the Roslyn Board to implement and apply the Limit.
Roslyn intends to count shares of Roslyn Common Stock present in person at
the Roslyn Meeting but not voted, and shares of Roslyn Common Stock for which it
has received proxies but with respect to which holders of shares have abstained
on any matter, as present at the Roslyn Meeting for purposes of determining the
presence or absence of a quorum for the transaction of business. Since the
approval and adoption of the Merger Agreement requires the affirmative vote of
the holders of a majority of the outstanding shares of Roslyn Common Stock
entitled to vote thereon, each such non-voting share and abstention will have
the effect of a vote AGAINST the approval and adoption of the Merger Agreement.
In addition, brokers who hold shares in street name for customers who are
beneficial owners of such shares are prohibited from giving a proxy to vote
shares held for such customers on the approval and adoption of the Merger
Agreement without specific instructions from such customers. Given that the
approval and adoption of the Merger Agreement requires the affirmative vote of
the holders of a majority of the outstanding shares of Roslyn Common Stock
entitled to vote thereon, the failure of any such customers to provide specific
instructions to his or her broker with respect to his or her shares of Roslyn
Common Stock (a "broker non-vote") will have the effect of a vote AGAINST the
approval and adoption of the Merger Agreement.
All shares of Roslyn Common Stock which are entitled to be voted and are
represented at the Roslyn Meeting by properly executed proxies received by
Roslyn in time to be voted at the Roslyn Meeting, and which are not revoked,
will be voted in accordance with the instructions indicated on such proxies.
IF NO INSTRUCTIONS ARE GIVEN, SUCH PROXIES WILL BE VOTED FOR APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT.
If any other matters are properly presented for consideration at the Roslyn
Meeting including, among other things, a motion to adjourn or postpone the
Roslyn Meeting to another time and/or place for the purpose of soliciting
additional proxies or otherwise, the persons named in the form of proxy enclosed
herewith and acting thereunder will have discretionary authority to vote on such
matters in accordance with the best judgment of the Roslyn Board; provided,
however, that such discretionary authority will only be exercised to the extent
allowable under applicable federal and state securities and corporation laws;
and provided further, that no proxy which is voted against the proposal to
approve and adopt the Merger Agreement will be voted in favor of any adjournment
or postponement for the purpose of soliciting additional votes in favor of that
proposal. Roslyn does not have any knowledge of any matters to be presented at
the Roslyn Meeting other than the matters set forth above.
The presence of a stockholder at the Roslyn Meeting will not automatically
revoke such stockholder's proxy. However, a stockholder may revoke a proxy at
any time prior to its exercise by (i) filing a written notice of revocation
bearing a later date than the date of the proxy with the Corporate Secretary of
Roslyn prior to the Roslyn Meeting; (ii) duly executing a later-dated proxy
relating to the same shares and delivering it to the Secretary of the Roslyn
Meeting before the taking of the vote at the Roslyn Meeting; or (iii) attending
the Roslyn Meeting, filing a written notice of revocation with the Secretary of
the Roslyn Meeting, and voting in person. Any written notice of revocation or
subsequently executed proxy should be sent so as to be delivered to Roslyn
Bancorp, Inc., 1400 Old Northern Boulevard, Roslyn, New York 11576, Attention:
Corporate Secretary, or hand delivered to Roslyn's Corporate Secretary at such
address on or before the day of the Roslyn Meeting or to the Inspector of
Election of the Roslyn Meeting before the taking of the vote at the Roslyn
29
<PAGE>
Meeting. IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN
--------------------------------------------------------------------
NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER IN ORDER TO
- --------------------------------------------------------------------------------
BE ADMITTED TO THE ROSLYN MEETING AND TO VOTE AT THE ROSLYN MEETING. Examples
- --------------------------------------------------------------------
of such documentation include a broker's statement, letter or other document
confirming your ownership of shares of Roslyn Common Stock.
Roslyn will bear the cost of soliciting proxies from the holders of Roslyn
Common Stock. In addition to the solicitation of proxies by mail, Kissel-Blake
Inc., a proxy solicitation firm, will assist Roslyn in soliciting proxies for
the Roslyn Meeting and will be paid a fee estimated to be $10,500, plus
reasonable out-of-pocket costs and expenses. Proxies may also be solicited
personally, by telephone, telegram or other means, by directors, officers and
employees of Roslyn or its subsidiaries, without additional compensation. Such
directors, officers and employees may, however, be reimbursed for reasonable
out-of-pocket expenses in connection with such solicitation. Roslyn will also
request persons, firms and corporations holding shares of Roslyn Common Stock in
their names or in the name of their nominees, which are beneficially owned by
others, to forward proxy materials to or obtain proxies from such beneficial
owners, and will reimburse such record holders for their reasonable expenses
incurred in doing so.
HOLDERS OF ROSLYN COMMON STOCK ARE REQUESTED TO PROMPTLY COMPLETE, SIGN AND
DATE THE ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY TO ROSLYN IN THE
ENCLOSED POSTAGE-PAID PRE-ADDRESSED ENVELOPE.
VOTE REQUIRED; PRINCIPAL STOCKHOLDERS
The approval and adoption of the Merger Agreement by Roslyn stockholders
will require the affirmative vote of at least a majority of the outstanding
shares of Roslyn Common Stock entitled to vote at the Roslyn Meeting.
Accordingly, a failure to return a properly executed proxy card or to vote in
person, or abstaining from voting, will have the same effect as a vote AGAINST
the Merger Agreement. Shares underlying broker non-votes or held in excess of
the Limit will not be counted as having been voted in person or by proxy at the
Roslyn Meeting and will have the same effect as a vote AGAINST the Merger
Agreement. SUCH STOCKHOLDER APPROVAL IS A CONDITION TO CONSUMMATION OF THE
MERGER.
As of September 30, 1998, directors and executive officers of Roslyn and
their affiliates beneficially owned 1,995,957 shares of Roslyn Common Stock,
or approximately 4.81% of the outstanding shares Roslyn Common Stock (inclusive
of shares which may be acquired upon the exercise of vested options under the
Roslyn Bancorp, Inc. 1997 Stock-Based Incentive Plan). As of the Roslyn Record
Date, such persons were entitled to vote 1,463,310 shares of Roslyn Common Stock
at the Roslyn Meeting, and all such persons have indicated their intent to vote
or direct the vote of all such shares FOR approval and adoption of the Merger
Agreement. As of September 30, 1998, T R Financial, its subsidiaries and the
directors and executive officers of T R Financial beneficially owned 103,755
shares of Roslyn Common Stock. Additionally, T R Financial may also be deemed to
be the beneficial owner of 8,238,591 shares of Roslyn Common Stock issuable
pursuant to the Roslyn Merger Stock Option Agreement attached hereto as Annex C.
Pursuant to the Roslyn Merger Stock Option Agreement, T R Financial has the
right to exercise an option to purchase the aforesaid 8,238,591 shares upon the
occurrence of certain events (all of which are described in the Roslyn Merger
Stock Option Agreement), none of which has occurred as of the date hereof. T R
Financial has expressly disclaimed beneficial ownership of such 8,238,591
shares. See "CERTAIN RELATED TRANSACTIONS -- Merger Stock Option Agreements."
30
<PAGE>
BENEFICIAL OWNERSHIP OF ROSLYN COMMON STOCK
PRINCIPAL SECURITY OWNERSHIP
Other than those persons listed below, Roslyn is not aware of any person
who is the beneficial owner of more than 5% of the outstanding shares of Roslyn
Common Stock as of September 30, 1998. For the purposes of the following table
and the table set forth under "Directors and Executive Officers," in accordance
with Rule 13d-3 under the Exchange Act, a person is deemed to "beneficially own"
any shares of Roslyn Common Stock (i) over which such person has, directly or
indirectly, sole or shared voting or investment power or (ii) of which such
person has the right to acquire beneficial ownership, including the right to
acquire beneficial ownership by the exercise of stock options, within 60 days
after September 30, 1998. As used herein, "voting power" includes the power to
vote, or direct the voting of, such shares, and "investment power" includes the
power to dispose, or direct the disposition, of such shares.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT OF
TITLE OF CLASS NAME AND ADDRESS BENEFICIAL COMMON STOCK
OF SECURITY OF BENEFICIAL OWNER OWNERSHIP OUTSTANDING
- ---------------- ----------------------------- -------------- ------------
<S> <C> <C> <C>
Common Stock The Roslyn Savings Bank 3,486,727/(1)/ 8.42%
Employee Stock Ownership Plan
(the "Roslyn ESOP")
1400 Old Northern Boulevard
Roslyn, New York 11576
</TABLE>
____________________________
(1) Marine Midland Bank has been appointed as the corporate trustee for the
Roslyn ESOP ("ESOP Trustee"). The ESOP Trustee, subject to its fiduciary
duty, must vote all allocated shares held in the Roslyn ESOP in accordance
with the instructions of the Roslyn ESOP participants. As of September 30,
1998, 173,291 shares had been allocated under the Roslyn ESOP and 3,313,436
shares remain unallocated. With respect to unallocated shares, such
unallocated shares are required to be voted by the ESOP Trustee in a manner
calculated to most accurately reflect the voting instructions received from
Roslyn ESOP participants, so long as such vote is in accordance with the
provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").
31
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information with respect to the shares of
Roslyn Common Stock beneficially owned by each director of Roslyn, by Roslyn's
Chief Executive Officer and the next four most highly paid executive officers of
Roslyn (the "Named Executive Officers") and by all directors and executive
officers of Roslyn as a group as of September 30, 1998. Except as otherwise
indicated, each person and each group shown in the table has sole voting and
investment power with respect to the shares of Roslyn Common Stock indicated.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL COMMON STOCK
NAME TITLE OWNERSHIP/(1)(2)(3)(4)(5)(6)/ OUTSTANDING/(7)/
- ---------------------------------- ---------------------------------- ------------------------------ ----------------
<S> <C> <C> <C>
Joseph L. Mancino Chairman of the Board, 416,209 1.00%
President and Chief Executive
Officer
James E. Swiggett Director 98,130 *
Robert G. Freese Director 47,164 *
Thomas J. Calabrese, Jr. Director 43,677 *
Dr. Edwin W. Martin, Jr. Director 45,563 *
Richard C. Webel Director 49,177 *
Floyd N. York Director 46,850 *
Victor C. McCuaig Director 61,350 *
John P. Nicholson Director 57,470 *
John R. Bransfield, Jr. Director, Executive Vice President 192,236 *
and Senior Lending Officer
Michael P. Puorro Senior Vice President and Chief 130,697 *
Financial Officer
John L. Klag Senior Vice President and 120,424 *
Investment Officer
Arthur W. Toohig Senior Vice President and Human 132,946 *
Resources Officer
All directors and executive 1,995,957 4.81%
officers as a group (24 persons)
</TABLE>
________________________
* Represents less than 1% of outstanding Roslyn Common Stock.
(1) The figures shown include shares awarded under the Roslyn Bancorp, Inc. 1997
Stock-Based Incentive Plan (the "Roslyn Incentive Plan"), as follows:
Mr. Swiggett, 34,164 shares; Mr. Freese, 34,164 shares; Mr. Calabrese,
31,677 shares; Dr. Martin, 31,677 shares; Mr. Webel, 31,677 shares; Mr.
York, 34,350 shares; Mr. McCuaig, 34,350 shares; and Mr. Nicholson, 34,350
shares. Such awards commenced vesting at a rate of 20% per year beginning
September 2, 1998. Each participant has voting power as to the shares
awarded.
(2) The figures shown include shares awarded under the Roslyn Incentive Plan
(other than as reflected in Note 1 above), as follows: Mr. Mancino, 181,818
shares; Mr. Bransfield, 101,138 shares; Mr. Puorro, 62,500 shares;
Mr. Toohig, 62,500 shares; and Mr. Klag, 62,500 shares, all of which will
commenced vesting at a rate of 20% per year beginning on September 2, 1998.
The figures shown also include shares awarded under the Roslyn Incentive
Plan (other than as reflected in Notes 1 and 2 above), as follows, and which
vest based upon the achievement of certain specified performance objectives,
but in no event later than September 2, 2002: Mr. Mancino, 45,000 shares;
Mr. Bransfield, 20,000 shares; Mr. Puorro, 9,400 shares; Mr. Toohig, 9,400
shares; and Mr. Klag, 9,400 shares, of which, as of June 30, 1998, have
vested as follows: Mr. Mancino, 15,000 shares; Mr. Bransfield, 4,214 shares;
Mr. Puorro, 3,134 shares; Mr. Toohig, 1,939 shares; and Mr. Klag, 3,134
shares.
(3) The figures shown include shares in which individuals have a right to
acquire beneficial ownership by the exercise of stock options pursuant to
the Roslyn Incentive Plan as follows: Mr. Mancino, 38,007 shares;
Mr. Bransfield, 17,003 shares; Mr. Puorro, 7,801 shares; Mr. Klag, 7,801
shares; Mr. Toohig, 7,801 shares; and all directors and executive officers
as a group, 106,116 shares.
(4) The figures shown include shares held in trust pursuant to the Roslyn ESOP
that have been allocated as of September 30, 1998 to individual accounts as
follows: Mr. Mancino, 2,885 shares; Mr. Bransfield, 2,662 shares;
Mr. Puorro, 2,581 shares; Mr. Klag, 2,439 shares; Mr. Toohig, 2,720 shares;
and all directors and executive officers as a group, 24,848 shares. Such
persons have sole voting power, but no investment
32
<PAGE>
power, except in limited circumstances, as to such shares. The figures shown
do not include 3,313,436 shares held in trust pursuant to the Roslyn ESOP
that have not been allocated to any individual's account and as to which the
members of The Roslyn ESOP Committee (consisting of Mr. Mancino, Mr. Klag,
Mr. Puorro and Mr. Toohig) may be deemed to share investment power, thereby
causing each such person to be deemed a beneficial owner of such shares.
Each of the members of the Roslyn ESOP Committee and the participants
included in the table disclaims beneficial ownership of the unallocated
shares in the Roslyn ESOP. The Personnel Committee of Roslyn Savings (the
"Roslyn Personnel Committee") (consisting of Mr. Freese, Mr. Swiggett,
Mr. Calabrese, Dr. Martin and Mr. Nicholson, all of whom are outside
directors) supervises, and must approve the decisions of, the Roslyn ESOP
Committee with respect to its decisions that relate to the Roslyn ESOP,
including any proposed amendment to the Roslyn ESOP and any proposed change
in the trustees or other fiduciaries of the Roslyn ESOP. Each of the members
of the Roslyn Personnel Committee disclaims beneficial ownership of the
unallocated shares in the Roslyn ESOP.
(5) The figures shown include shares held in the trust of the Roslyn 401(k) Plan
as to which each person identified has shared voting and investment power as
follows: Mr. Mancino, 27,877 shares; Mr. Bransfield, 3,913 shares;
Mr. Puorro, 8,262 shares; Mr. Klag, 2,496 shares; Mr. Toohig, 17,269 shares;
and all directors and executive officers as a group, 97,716 shares.
(6) The figures shown include shares over which individuals share voting and
investment power (other than as disclosed in Notes 4 and 5, as follows:
Mr. Mancino, 29,539 shares; Mr. Swiggett, 3,000 shares; Mr. Calabrese, 100
shares; Dr. Martin, 286 shares; Mr. York, 25,000 shares; Mr. McCuaig, 4,000
shares; Mr. Nicholson, 2,000 shares; Mr. Bransfield, 1,403 shares; Mr.
Puorro, 100 shares; Mr. Klag, 2,900 shares; Mr. Toohig, 2,263 shares; and
all executive officers and directors as a group, 86,288 shares.
(7) Percentages with respect to each person or group of persons have been
calculated on the basis of 41,399,959 shares of Roslyn Common Stock, the
number of shares of Roslyn Common Stock outstanding as of September 30,
1998, plus the number of shares of Roslyn Common Stock which such person or
group of persons has the right to acquire within 60 days after September 30,
1998 by the exercise of stock options.
33
<PAGE>
MEETING OF T R FINANCIAL STOCKHOLDERS
DATE, TIME AND PLACE; PURPOSE OF MEETING
This Joint Proxy Statement/Prospectus is being furnished to stockholders of
T R Financial in connection with the solicitation of proxies by the T R
Financial Board for use at the T R Financial Meeting to be held on Tuesday,
December 22, 1998, at 9:30 a.m. New York time, at the Garden City Hotel, 45
Seventh Street, Garden City, New York 11530. At the T R Financial Meeting, the
holders of T R Financial Common Stock will be asked to consider and vote upon
(i) a proposal to approve and adopt the Merger Agreement, which is included as
Annex A to this Joint Proxy Statement/Prospectus, and the consummation of the
transactions contemplated thereby, which are more fully described herein; and
(ii) such other matters as may properly be brought before the T R Financial
Meeting.
THE T R FINANCIAL BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND HAS
DETERMINED THAT THE TERMS OF THE MERGER AGREEMENT ARE FAIR TO, AND IN THE BEST
INTERESTS OF, T R FINANCIAL AND ITS STOCKHOLDERS, IN PART BECAUSE THE MERGER
AGREEMENT INCLUDES SAFEGUARDS THAT WILL ALLOW T R FINANCIAL TO TERMINATE THE
MERGER AGREEMENT IF THE PRICE OF ROSLYN COMMON STOCK IS BELOW CERTAIN LEVELS
ESTABLISHED IN THE MERGER AGREEMENT. THE T R FINANCIAL BOARD THEREFORE
UNANIMOUSLY RECOMMENDS THAT T R FINANCIAL'S STOCKHOLDERS VOTE "FOR" APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY.
See "THE MERGER -- Background of the Merger" and "-- Recommendation of the
T R Financial Board; T R Financial's Reasons for the Merger."
RECORD DATE
The T R Financial Board has fixed the close of business on October 26, 1998
as the T R Financial Record Date for the determination of the holders of T R
Financial Common Stock entitled to receive notice of and to vote at the T R
Financial Meeting. Only holders of record of T R Financial Common Stock at the
close of business on the T R Financial Record Date will be entitled to receive
notice of and to vote at the T R Financial Meeting. At the close of business on
the T R Financial Record Date, there were 17,629,964 shares of T R Financial
Common Stock outstanding and entitled to be voted at the T R Financial Meeting,
which were held by approximately 980 holders of record. The presence, in person
or by proxy, of the holders of at least a majority of the total number of
outstanding shares of T R Financial Common Stock entitled to vote at the T R
Financial Meeting is necessary to constitute a quorum thereat.
PROXIES; VOTING AND REVOCATION OF PROXIES
Each holder of T R Financial Common Stock on the T R Financial Record Date
will be entitled to one vote for each share of T R Financial Common Stock held
of record (except for shares held in excess of the Limit, as defined below) on
each matter to be voted upon at the T R Financial Meeting. As provided in T R
Financial's Certificate of Incorporation, record holders of T R Financial Common
Stock who beneficially own in excess of 10% of the outstanding shares of T R
Financial Common Stock (the "Limit") are not entitled to any vote with respect
to the shares held in excess of the Limit. Beneficial ownership is determined
pursuant to Rule 13d-3 of the General Rules and Regulations promulgated pursuant
to the Exchange Act, and includes shares beneficially owned by such person or
any of his or her affiliates (as defined in the Certificate of Incorporation),
shares which such person or his or her affiliates have the right to acquire
pursuant to any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options or otherwise and shares
as to which such person and his or her affiliates have sole or shared voting or
investment power, but shall not include shares that are subject to a
34
<PAGE>
publicly solicited revocable proxy and that are not otherwise deemed to be
beneficially owned by such person and his or her affiliates. T R Financial's
Certificate of Incorporation authorizes the Board of Directors of T R Financial
Board (i) to make all determinations necessary to implement and apply the Limit,
including determining whether persons or entities are acting in concert, and
(ii) to demand that any person who is reasonably believed to beneficially own
T R Financial Common Stock in excess of the Limit supply information to T R
Financial to enable the T R Financial Board to implement and apply the Limit.
T R Financial intends to count shares of T R Financial Common Stock present
in person at the T R Financial Meeting but not voted, and shares of T R
Financial Common Stock for which it has received proxies but with respect to
which holders of shares have abstained on any matter, as present at the T R
Financial Meeting for purposes of determining the presence or absence of a
quorum for the transaction of business. Since the approval and adoption of the
Merger Agreement requires the affirmative vote of the holders of a majority of
the outstanding shares of T R Financial Common Stock entitled to vote thereon,
each such non-voting share and abstention will have the effect of a vote AGAINST
the approval and adoption of the Merger Agreement. In addition, brokers who
hold shares in street name for customers who are beneficial owners of such
shares are prohibited from giving a proxy to vote shares held for such customers
on the approval and adoption of the Merger Agreement without specific
instructions from such customers. Given that the approval and adoption of the
Merger Agreement requires the affirmative vote of the holders of a majority of
the outstanding shares of T R Financial Common Stock entitled to vote thereon,
the failure of any such customers to provide specific instructions to his or her
broker with respect to his or her shares of T R Financial Common Stock (a
"broker non-vote") will have the effect of a vote AGAINST the approval and
adoption of the Merger Agreement.
All shares of T R Financial Common Stock which are entitled to be voted and
are represented at the T R Financial Meeting by properly executed proxies
received by T R Financial in time to be voted at the T R Financial Meeting, and
which are not revoked, will be voted in accordance with the instructions
indicated on such proxies. IF NO INSTRUCTIONS ARE GIVEN, PROPERLY EXECUTED
PROXIES WILL BE VOTED FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
If any other matters are properly presented for consideration at the T R
Financial Meeting, including, among other things, a motion to adjourn or
postpone the T R Financial Meeting to another time and/or place for the purpose
of soliciting additional proxies or otherwise, the persons named in the form of
proxy enclosed herewith and acting thereunder will have discretionary authority
to vote on such matters in accordance with the best judgement of the T R
Financial Board; provided, however, that such discretionary authority will only
be exercised to the extent allowable under applicable federal and state
securities and corporation laws; and provided further, that no proxy which is
voted against the proposal to approve and adopt the Merger Agreement will be
voted in favor of any adjournment or postponement of the T R Financial Meeting
for the purpose of soliciting additional votes in favor of that proposal. T R
Financial does not have any knowledge of any matters to be presented at the T R
Financial Meeting other than the matters set forth above.
The presence of a stockholder at the T R Financial Meeting will not
automatically revoke such stockholder's proxy. However, a stockholder may
revoke a proxy at any time prior to its exercise by (i) filing a written notice
of revocation bearing a later date than the date of the proxy with the Corporate
Secretary of T R Financial prior to the T R Financial Meeting, (ii) duly
executing a later-dated proxy relating to the same shares and delivering it to
the Secretary of the T R Financial Meeting before the taking of the vote at the
T R Financial Meeting or (iii) attending the T R Financial Meeting, filing a
written notice of revocation with the secretary of the T R Financial meeting and
voting in person. Any written notice of revocation or subsequently executed
proxy should be sent so as to be delivered to T R Financial Corp., 1122 Franklin
Avenue, Garden City, New York 11530, Attention: Corporate Secretary, or hand
delivered to T R Financial's Corporate Secretary at such address on or before
the day of the T R Financial Meeting or to the Inspector of Election of the T R
Financial Meeting before the taking of the vote at the T R Financial Meeting. IF
--
YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL
- --------------------------------------------------------------------------------
NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER IN ORDER TO BE ADMITTED TO
- --------------------------------------------------------------------------------
THE T R FINANCIAL MEETING AND TO VOTE AT THE T R FINANCIAL MEETING. Examples of
- ------------------------------------------------------------------
such documentation include a broker's statement, letter or other document
confirming your ownership of shares of T R Financial Common Stock.
T R Financial will bear the cost of soliciting proxies from the holders of
T R Financial Common Stock. In addition to the solicitation of proxies by mail,
D. F. King & Co., Inc., a proxy solicitation firm, will assist T R Financial in
soliciting proxies for the T R Financial Meeting and will be paid a fee
estimated to be $5,500, plus reasonable out-of-pocket costs and expenses.
Proxies may also be solicited personally, by telephone, facsimile or other
means, by directors, officers and employees of T R Financial or its
subsidiaries, without additional compensation. Such directors, officers and
employees may, however, be reimbursed for reasonable out-of-pocket expenses in
connection with such solicitation. T R Financial will also request
35
<PAGE>
persons, firms and corporations holding shares of T R Financial Common Stock in
their names or in the name of their nominees, which are beneficially owned by
others, to forward proxy materials to and obtain proxies from such beneficial
owners, and will reimburse such record holders for their reasonable expenses
incurred in doing so.
HOLDERS OF T R FINANCIAL COMMON STOCK ARE REQUESTED TO PROMPTLY COMPLETE,
SIGN AND DATE THE ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY TO
T R FINANCIAL IN THE ENCLOSED POSTAGE-PAID PRE-ADDRESSED ENVELOPE.
VOTE REQUIRED; PRINCIPAL STOCKHOLDERS
The approval and adoption of the Merger Agreement by T R Financial
stockholders will require the affirmative vote of at least a majority of the
outstanding shares of T R Financial Common Stock entitled to vote at the
T R Financial Meeting. Accordingly, a failure to return a properly executed
proxy card or to vote in person, or abstaining from voting, will have the same
effect as a vote AGAINST the Merger Agreement. Shares underlying broker non-
votes or held in excess of the Limit will not be counted as having been voted in
person or by proxy at the T R Financial Meeting and will have the same effect as
a vote AGAINST the Merger Agreement. SUCH STOCKHOLDER APPROVAL IS A CONDITION TO
CONSUMMATION OF THE MERGER.
As of September 30, 1998, directors and executive officers of T R Financial
and their affiliates beneficially owned 2,662,762 shares of T R Financial Common
Stock, or approximately 14.1% of the outstanding shares of T R Financial Common
Stock (inclusive of shares of T R Financial Common Stock which may be acquired
upon the exercise of vested options under the T R Financial Corp. 1993 Incentive
Stock Option Plan and the T R Financial Corp. 1993 Stock Option Plan for Outside
Directors). As of the T R Financial Record Date, such persons were entitled to
vote 1,247,036 shares of T R Financial Common Stock at the T R Financial
Meeting, and all such persons have indicated their intent to vote or direct the
vote of all such shares FOR approval and adoption of the Merger Agreement. As of
September 30, 1998, Roslyn, its subsidiaries and the directors and executive
officers of Roslyn beneficially owned 502,910 shares of T R Financial Common
Stock. Additionally, Roslyn may also be deemed to be the beneficial owner of
3,488,068 shares of T R Financial Common Stock issuable pursuant to the T R
Financial Merger Stock Option Agreement attached hereto as Annex B. Pursuant to
the T R Financial Merger Stock Option Agreement, Roslyn has the right to
exercise an option to purchase the aforesaid 3,488,068 shares upon the
occurrence of certain events (all of which are described in the T R Financial
Merger Stock Option Agreement), none of which has occurred as of the date
hereof. Roslyn has expressly disclaimed beneficial ownership of such 3,488,068
shares. See "CERTAIN RELATED TRANSACTIONS -- Merger Stock Option Agreements."
36
<PAGE>
BENEFICIAL OWNERSHIP OF T R FINANCIAL COMMON STOCK
PRINCIPAL SECURITY OWNERSHIP
Other than those persons listed below, T R Financial is not aware of any
person who is the beneficial owner of more than 5% of the outstanding shares of
T R Financial Common Stock as of September 30, 1998. For the purposes of the
following table and the table set forth under "Directors and Executive
Officers," in accordance with Rule 13d-3 under the Exchange Act, a person is
deemed to "beneficially own" any shares of T R Financial Common Stock (i) over
which such person has, directly or indirectly, sole or shared voting or
investment power, or (ii) of which such person has the right to acquire
beneficial ownership, including the right to acquire beneficial ownership by the
exercise of stock options, within 60 days after September 30, 1998. As used
herein, "voting power" includes the power to vote, or direct the voting of, such
shares, and "investment power" includes the power to dispose, or direct the
disposition, of such shares.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT OF
TITLE OF CLASS NAME AND ADDRESS BENEFICIAL COMMON STOCK
OF SECURITY OF BENEFICIAL OWNER OWNERSHIP OUTSTANDING/(1)/
- ---------------- -------------------------------------------- -------------- -----------------
<S> <C> <C> <C>
Common Stock T R Financial Corp. 2,029,877/(2)/ 11.5%
Employee Stock Ownership Plan and Trust
(the "T R Financial ESOP")
1122 Franklin Avenue
Garden City, New York 11530
Common Stock John M. Tsimbinos 1,209,421/(3)/ 6.7%
Chairman of the Board and
Chief Executive Officer
T R Financial Corp.
1122 Franklin Avenue
Garden City, New York 11530
Common Stock Thomson Horstmann & Bryant, Inc. 1,156,500/(4)/ 6.6%
Park 80 West, Plaza Two
Saddle Brook, New Jersey 07663
</TABLE>
_______________________
(1) Calculated based upon 17,629,854 shares of T R Financial Common Stock
outstanding as of September 30, 1998, except that the percentage with
respect to Mr. Tsimbinos has been calculated on the basis of such number of
shares outstanding, plus 522,360 shares of which Mr. Tsimbinos has the
right to acquire beneficial ownership by the exercise of stock options
granted pursuant to the T R Financial Corp. 1993 Incentive Stock Option
Plan at the time of T R Financial's initial public offering in 1993 and on
January 23, 1997.
(2) The Administrative Committee of T R Financial, consisting of Messrs. Eisen,
Galgano, Genovese, Kowatch, Loser, Orr and Voutsinas, all of whom are non-
employee directors, administers the T R Financial ESOP as a committee. The
Administrative Committee has delegated authority over routine
administrative matters concerning the T R Financial ESOP to the Roosevelt
Savings Bank Employee Benefits Committee, which consists of four officers
of the Bank. An unrelated third party, State Street Bank and Trust
Company, is the trustee for the T R Financial ESOP (the "ESOP Trustee").
The Administrative Committee may instruct the ESOP Trustee regarding
investment of funds contributed to the T R Financial ESOP. Each member of
the Administrative Committee disclaims beneficial ownership of the shares
of T R Financial Common Stock held in the T R Financial ESOP. T R Financial
Common Stock purchased by the T R Financial ESOP is released from a
suspense account and allocated to participants annually based on
contributions made to the T R Financial ESOP by T R Financial. Shares
released from the suspense account are allocated among participants in
proportion to their compensation, as defined in the T R Financial ESOP, for
the year the contributions are made, up to the limits permitted under the
Code. The T R Financial ESOP Trustee must vote all allocated shares held
in the T R Financial ESOP in accordance with the instructions of
participants. Shares of T R Financial Common Stock are allocated to
participants under the T R Financial ESOP as of December 31st of each year.
As of September 30, 1998, 1,006,783 shares of T R Financial Common Stock in
the T R Financial ESOP had been allocated to and were held in the accounts
of participants, former participants and beneficiaries thereof. Under the
T R Financial ESOP, unallocated shares will be voted by the ESOP Trustee in
a manner calculated to most accurately reflect the voting instructions
received from participants regarding the allocated shares so long as such
vote is in accordance with the requirements of ERISA.
37
<PAGE>
(3) Includes 522,360 shares of which Mr. Tsimbinos has the right to acquire
beneficial ownership by the exercise of stock options granted pursuant to
the T R Financial Corp. 1993 Incentive Stock Option Plan. Also includes
(a) 18,524 shares held in trust pursuant to the T R Financial ESOP that
have been allocated to Mr. Tsimbinos's account and as to which he has sole
voting power but no investment power, except in limited circumstances,
(b) 57,650 shares held in the Employer Stock Fund of the Roosevelt Savings
401(k) Plan as to which he has shared voting and investment power,
(c) 93,951 shares held in the Roosevelt Savings SERP as to which he has
sole investment but no voting power and (d) 36,776 shares as to which he
otherwise shares voting and investment power .
(4) Based upon information in a Schedule 13G, dated January 28, 1998. Thomson
Horstmann & Bryant, Inc. is an investment advisor registered under Section
203 of the Investment Advisors Act of 1940, as amended. The figure shown
includes 743,600 shares with respect to which Thomson Horstmann & Bryant,
Inc. has sole voting power, 15,600 shares as to which it has shared voting
power and 1,156,500 shares as to which it has sole dispositive power.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information with respect to the shares of
T R Financial Common Stock beneficially owned by each director of T R Financial,
by each Named Executive Officer of T R Financial and by all directors and
executive officers of T R Financial as a group as of September 30, 1998. Except
as otherwise indicated, each person and each group shown in the table has sole
voting and investment power with respect to the shares of T R Financial Common
Stock indicated.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL COMMON STOCK
NAME TITLE/(1)/ OWNERSHIP/(1)(2)(3)(4)(5)(6)/ OUTSTANDING/(7)/
- ----------------------------------- --------------------------------- ------------------------------ ----------------
<S> <C> <C> <C>
John M. Tsimbinos Chairman of the Board, Chief 1,209,421 6.7%
Executive Officer and Director
A. Gordon Nutt President, Chief Administrative 271,459 1.5%
Officer and Director
Maureen E. Clancy Director 67,184 *
Robert F. Eisen, Sr. Director 83,944 *
Michael P. Galgano Director 72,074 *
Leonard Genovese Director 65,270 *
Edward J. Kowatch Director 7,800 *
Ernest L. Loser Director 63,102 *
John C. Mesloh Director 66,104 *
James E. Orr, Jr. Director 108,670 *
Spiros J. Voutsinas Director 75,772 *
William R. Kuhn Executive Vice President and 223,746 1.3%
Chief Real Estate Lending Officer
Dennis E. Henchy Executive Vice President and 222,768 1.3%
Chief Financial Officer
Ira H. Kramer Senior Vice President and 103,152 *
Corporate Secretary
John J. DeRusso Senior Vice President 22,296 *
All directors and executive 2,662,762/(8)/ 14.1%
officers as a group (15 persons)
</TABLE>
________________________
* Represents less than 1% of outstanding T R Financial Common Stock.
(1) Titles are for both Roosevelt Savings and T R Financial.
(2) The figures shown include shares which individuals have the right to acquire
beneficial ownership of by the exercise of stock options pursuant to the T R
Financial Corp. 1993 Incentive Stock Option Plan or the T R Financial Corp.
1993 Stock Option Plan for Outside Directors as follows: Mr. Tsimbinos,
522,360 shares; Mr. Nutt, 141,432 shares; Ms. Clancy, 41,470 shares;
Mr. Eisen, 41,694 shares; Mr. Galgano, 800 shares; Mr. Genovese, 41,770
shares; Mr. Kowatch, 3,800 shares; Mr. Loser, 41,770 shares; Mr. Mesloh,
41,770 shares; Mr. Orr, 64,080 shares; Mr. Voutsinas, 800 shares; Mr. Kuhn,
135,766 shares; Mr. Henchy, 135,766 shares; Mr. Kramer, 62,462 shares;
Mr. DeRusso, 6,666 shares; and all directors and executive officers as a
group, 1,282,406 shares.
38
<PAGE>
(3) The figures shown include shares held in trust pursuant to the T R Financial
ESOP that have been allocated as of September 30, 1998 to individual
accounts as follows: Mr. Tsimbinos, 18,524 shares; Mr. Nutt, 18,524 shares;
Mr. Kuhn, 18,313 shares; Mr. Henchy, 18,126 shares; Mr. Kramer, 16,530
shares; Mr. DeRusso, 6,912 shares; and all executive officers as a group,
96,929 shares. Such persons have sole voting power but no investment power,
except in limited circumstances, as to such shares. The figures shown do
not include 1,023,094 shares held in trust pursuant to the T R Financial
ESOP that have not been allocated to any individual's account and as to
which the members of T R Financial's Administrative Committee (consisting of
Messrs. Eisen, Galgano, Genovese, Kowatch, Loser, Orr and Voutsinas) may be
deemed to share investment power, and as to which each of the participants
identified in the table may be deemed to share voting power, thereby causing
each such person to be deemed a beneficial owner of such shares. Each of
the members of the Administrative Committee and the participants included in
the table disclaims beneficial ownership of the unallocated shares in the
T R Financial ESOP.
(4) The figures shown include shares held in the Employer Stock Fund of the
Roosevelt Savings 401(k) Plan as to which each person identified has shared
voting and investment power as follows: Mr. Tsimbinos, 57,650 shares;
Mr. Nutt, 28,260 shares; Mr. Kuhn, 25,764 shares; Mr. Henchy, 25,898 shares;
Mr. Kramer, 9,828 shares; Mr. DeRusso, 1,568 shares; and all executive
officers as a group, 148,968 shares.
(5) The figures shown include shares held in the Roosevelt Savings SERP as to
which each person identified has sole investment but no voting power as
follows: Mr. Tsimbinos, 93,951 shares; Mr. Nutt, 16,431 shares; Mr. Kuhn,
10,711 shares; Mr. Henchy, 9,998 shares; Mr. Kramer, 1,079 shares;
Mr. DeRusso, 1,150 shares; and all executive officers as a group, 133,320
shares.
(6) The figures shown include shares over which individuals share voting and
investment power (other than as disclosed in notes 3, 4, and 5) as follows:
Mr. Tsimbinos, 36,776 shares; Mr. Nutt, 10,000 shares; Ms. Clancy, 10,214
shares; Mr. Eisen, 8,757 shares; Mr. Galgano, 16,600 shares; Mr. Loser,
5,832 shares; Mr. Orr, 12,950 shares; Mr. Voutsinas, 3,032 shares; Mr. Kuhn,
33,191 shares; Mr. Henchy, 17,240 shares; Mr. Kramer, 1,394 shares; and all
directors and executive officers as a group, 155,986 shares.
(7) Percentages with respect to each person or group of persons have been
calculated on the basis of 17,629,854 shares of T R Financial Common Stock,
the number of shares of T R Financial Common Stock outstanding as of
September 30, 1998, plus the number of shares of T R Financial Common Stock
which such person or group of persons has the right to acquire beneficial
ownership of within 60 days after September 30, 1998 by the exercise of
stock options.
(8) The figure shown includes 155,986 shares over which T R Financial's
directors and executive officers share voting and investment power (other
than as disclosed in notes 3, 4 and 5).
39
<PAGE>
THE MERGER
The following information concerning the Merger, insofar as it relates to
matters contained in the Merger Agreement, describes the material terms and
conditions of the Merger Agreement but does not purport to be a complete
description and is qualified in its entirety by reference to the Merger
Agreement, which is incorporated herein by reference and attached hereto as
Annex A. Roslyn and T R Financial stockholders are urged to read carefully the
Merger Agreement in its entirety.
GENERAL
Pursuant to the terms of the Merger Agreement, subject to the satisfaction
or waiver (where permissible) of certain conditions, including, among other
things, the receipt of all necessary regulatory approvals and the approval of
the Merger Agreement by the requisite vote of the stockholders of Roslyn and
T R Financial, T R Financial will be merged with and into Roslyn and
T R Financial's stockholders will become stockholders of Roslyn. Roslyn will
be the surviving corporation in the Merger, and will continue its corporate
existence under the laws of the State of Delaware. Upon consummation of the
Merger, the separate corporate existence of T R Financial will terminate.
Immediately after the consummation of the Merger, Roosevelt Savings, a New
York State-chartered savings bank and wholly owned subsidiary of T R Financial,
and Roslyn Savings, a New York State-chartered savings bank and a wholly owned
subsidiary of Roslyn, will merge, with the surviving bank being named The Roslyn
Savings Bank. See "CERTAIN RELATED TRANSACTIONS -- Bank Merger Agreement."
EXCHANGE RATIO
At the Effective Time, each issued and outstanding share of T R Financial
Common Stock, except for Excluded Shares, will be converted into and
exchangeable for 2.05 shares of Roslyn Common Stock (i.e., the Exchange Ratio).
The Exchange Ratio may be increased by Roslyn in the event that T R Financial
exercises its rights under the Merger Agreement to deliver to Roslyn a notice to
terminate the Merger Agreement if the price of the Roslyn Common Stock is below
certain levels established in the Merger Agreement. See "-- Price-Based
Termination." However, Roslyn is under no obligation to increase the Exchange
Ratio, and there can be no assurance that Roslyn would elect to increase the
Exchange Ratio if T R Financial were to exercise such termination rights. Any
such decision would be made by the Roslyn Board in light of all relevant facts
and circumstances existing at such time, including, without limitation, the
advice of its financial and legal advisors. If Roslyn elects to increase the
Exchange Ratio as set forth in the Merger Agreement, it must give T R Financial
prompt notice of that election and such increased Exchange Ratio, in which case
no termination of the Merger Agreement would occur.
Although Roslyn has the right in the limited circumstances described
above to increase the Exchange Ratio, under no circumstances may the Exchange
Ratio be decreased. The Exchange Ratio was arrived at through arm's-length
negotiations between Roslyn and T R Financial. The Merger Agreement provides
that, if Roslyn effects a stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares of Roslyn Common
Stock, an appropriate adjustment to the Exchange Ratio will be made.
It is expected that the market price of Roslyn Common Stock will fluctuate
between the date of this Joint Proxy Statement/Prospectus and the date on which
the Merger is consummated, and thereafter. Because the number of shares of
Roslyn Common Stock to be received by T R Financial's stockholders in the Merger
40
<PAGE>
is fixed (subject to possible increase in the limited circumstances described
above) and because the market price of Roslyn Common Stock is subject to
fluctuation, the value of the shares of Roslyn Common Stock that holders of
T R Financial Common Stock receive in the Merger may increase or decrease
prior to and after the Merger. For further information concerning the market
prices of Roslyn Common Stock and T R Financial Common Stock, see "MARKET PRICES
AND DIVIDEND INFORMATION." No assurance can be given concerning the market
price of Roslyn Common Stock before or after the Effective Time.
No fractional shares of Roslyn Common Stock will be issued in connection
with the Merger. In lieu of the issuance of fractional shares, Roslyn will make
a cash payment, rounded to the nearest cent, to each T R Financial stockholder
who otherwise would be entitled to receive a fractional share equal to the
product of (i) the fractional portion which a T R Financial stockholder would
otherwise receive and (ii) the average of the daily closing sales prices of a
share of Roslyn Common Stock, as reported on the Nasdaq National Market for the
15 consecutive trading days immediately preceding the "Valuation Date." The
"Valuation Date" means the latest of the days on which the following events
occur: (x) the last required regulatory approval for the Merger is obtained,
(y) the expiration of the last regulatory waiting period; and (z) the last
required stockholder approval is obtained.
Upon consummation of the Merger, Excluded Shares will be canceled and
retired and no payment will be made with respect thereto.
In addition, at the Effective Time, each T R Financial Option shall be
converted into options to purchase shares of Roslyn Common Stock pursuant to the
Exchange Ratio. After the Effective Time, each T R Financial Option will be
deemed to constitute an option to acquire, on the same terms and conditions as
were applicable under such T R Financial Option immediately prior to the
Effective Time, the number of shares of Roslyn Common Stock equal to the
product, rounded to the nearest share, of the number of shares of T R Financial
Common Stock subject to the T R Financial Option and the Exchange Ratio, at a
price per share equal to the exercise price per share of T R Financial Common
Stock otherwise purchasable pursuant to such T R Financial Option divided by the
Exchange Ratio, rounded to the nearest cent.
BACKGROUND OF THE MERGER
The Boards of Directors of T R Financial and Roosevelt Savings periodically
reviewed the strategic alternatives available to T R Financial, including
regular meetings with Goldman Sachs and Thacher Proffitt & Wood, its outside
legal counsel ("Thacher Proffitt"), on September 26, 1995, March 26, 1996,
April 15, 1997, July 28, 1997 and March 24, 1998, at which meetings the
T R Financial Board and the Roosevelt Savings Board of Directors (the "Roosevelt
Savings Board") considered, among other items, strategic alternatives ranging
from pursuing a course of continuing as an independent institution and growing
internally, possible acquisitions of smaller financial institutions by
T R Financial, a possible merger-of-equals with a similar sized institution
and a possible sale of T R Financial to another financial institution. At the
July 28, 1997 T R Financial Board meeting, the T R Financial Board instructed
Mr. Tsimbinos, as a part of his ongoing duties and responsibilities, to continue
to explore all of the strategic alternatives available to T R Financial,
including speaking with the chief executive officers of several financial
institutions who had indicated a preliminary interest in pursuing a possible
transaction with T R Financial.
Following such T R Financial Board meeting, Mr. Tsimbinos spoke with the
chief executive officers of four New York-based financial institutions to assess
whether more formal discussions would be worthwhile. In this regard,
Mr. Tsimbinos met with Mr. Mancino on October 10 and 17, 1997 to assess Roslyn's
consideration of possible acquisition candidates, its strategic plans and its
continuing expression of interest regarding initiating discussions exploring a
possible business combination with T R Financial and
41
<PAGE>
the broad outlines on which such discussions could begin. On October 20, 1997,
Mr. Tsimbinos met with the chief executive officer of another New York-based
institution regarding such institution's initial expression of interest
regarding whether to initiate discussions exploring a possible business
combination with T R Financial.
At the October 23, 1997 T R Financial Board meeting, Mr. Tsimbinos reported
back to the T R Financial Board regarding his preliminary assessment of the
possible interest and ability of another financial institution to offer a
level of merger consideration that would be worth exploring further, as
compared to T R Financial continuing as an independent institution. He also
reviewed with the T R Financial Board the relatively high level of
T R Financial's stock price, which would make it difficult for many financial
institutions to offer a sufficiently high level of merger consideration
without diluting the value of their institution's stock. The T R Financial
Board directed Mr. Tsimbinos to continue to assess T R Financial's strategic
alternatives.
On October 27, 1997, Mr. Mancino and Mr. Tsimbinos met again to discuss
Roslyn's level of interest and whether a business combination could be
structured that would provide a level of consideration that might interest both
institutions, and the decision was made that further discussions would not be
productive in light of the level of merger consideration that Roslyn and T R
Financial were willing to consider. On February 18, 1998, the chief executive
officer another New York based institution (the "Other Institution") of the
Other Institution met with Mr. Tsimbinos to discuss such institution's possible
expression of interest regarding whether to initiate future discussions
exploring a possible business combination with T R Financial.
On March 6, 1998, representatives of Sandler O'Neill, Roslyn's financial
advisor, and Goldman Sachs conferred to discuss whether a further meeting
between Messrs. Mancino and Tsimbinos would be worthwhile in light of market and
industry changes since the prior October meeting. On March 11, 1998,
Mr. Tsimbinos and Mr. Mancino met to discuss Roslyn's continuing expression of
interest in exploring a possible business combination and Roslyn's recent
settlement agreement with the Banking Department of the State of New York
("Banking Department") in connection with certain alleged unfair loan and
origination fee practices. They also discussed a potential delay in pursuing
any further discussions until it was determined whether such allegations would
require a separate resolution with the federal banking regulators; however, the
substantive terms of a proposed business combination were not discussed. At the
March 24, 1998 meeting of the Roosevelt Savings Board, which consisted of the
same directors as the T R Financial Board, Mr. Tsimbinos reported the foregoing
to the Roosevelt Savings Board, and representatives of Goldman Sachs and Thacher
Proffitt advised the Roosevelt Savings Board at length regarding T R Financial's
strategic alternatives. The Roosevelt Savings Board analyzed the option of
continuing as an independent institution and considered possible acquisition
candidates, one other possible merger-of-equals candidate, possible acquirors,
the impending auction of Long Island Bancorp, Inc. and the anticipated high
price that was expected to be offered in that case. The Roosevelt Savings Board
also assessed the relative value of the stock that might be offered in the case
of a sale, because it was expected that any business combination would involve a
stock-for-stock exchange that would be accounted for as a pooling-of-interests.
For a more detailed discussion of Roslyn's settlement with the Banking
Department see "CERTAIN BANKING REGULATORY CONSIDERATIONS -- Community
Reinvestment Act."
In early April 1998, shortly after the proposed acquisition of Long Island
Bancorp, Inc. was announced, Goldman Sachs contacted the investment banking
firms that represented Roslyn and the Other Institution, with whom Mr. Tsimbinos
had met several times over the prior year, to assess such institutions'
continued interest in pursuing a business combination with T R Financial. On
April 28, 1998, Goldman Sachs delivered to T R Financial selected financial
information and materials regarding Roslyn and the Other Institution that it had
prepared, and, on such date, representatives of management of T R Financial,
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Goldman Sachs and Thacher Proffitt reviewed such materials and considered
possible further discussions that might be conducted with each institution with
respect to a possible strategic combination not involving a sale or auction of
T R Financial. On May 1, 1998, Mr. Tsimbinos met again with the chief executive
officer of the Other Institution to assess whether more formal discussions would
be appropriate. On May 4, 1998, Mr. Tsimbinos met again with Mr. Mancino for the
same purpose.
During the week of May 11, 1998, Mr. Tsimbinos and representatives of
Goldman Sachs conferred with Mr. Mancino and the chief executive officer of the
Other Institution regarding possible further discussions, due diligence
procedures that might be pursued and the possible outlines of each respective
institution's interest in T R Financial. On May 12, 1998, the members of the
T R Financial Board authorized management and its investment banking and legal
representatives to commence due diligence on both institutions and to begin
discussions regarding a possible strategic business combination.
On May 13, 1998, T R Financial entered into confidentiality letter
agreements with both Roslyn and the Other Institution as a prelude to conducting
due diligence. During the following week, T R Financial conducted its due
diligence review of both Roslyn and the Other Institution, and Roslyn and the
Other Institution conducted their due diligence review of T R Financial. At a
special T R Financial Board meeting held on May 22, 1998, the T R Financial
Board reviewed the results of such due diligence reviews with T R Financial's
management, Goldman Sachs and Thacher Proffitt. Goldman Sachs presented the
proposals of both Roslyn and the Other Institution and engaged in a detailed
financial presentation comparing a possible strategic combination with Roslyn to
a possible strategic combination with the Other Institution. Roslyn's proposal
was for a fixed exchange ratio of 1.9481 shares of Roslyn Common Stock for each
share of T R Financial Common Stock, which was higher than its prior indication
of interest of an exchange ratio of 1.8 shares of Roslyn Common Stock. At
Roslyn's stock price as of May 22, 1998, such exchange ratio represented
approximately $53.82 per share of T R Financial Common Stock. Roslyn also
offered a "walkaway" provision that would allow T R Financial to terminate the
Merger Agreement in the event of a specified decline in Roslyn's stock price.
The Other Institution's proposal was for a fixed exchange ratio of its common
stock for each share of T R Financial Common Stock, which was the same exchange
ratio as its prior indication of interest. At the Other Institution's stock
price as of May 22, 1998, such exchange ratio represented approximately $53.34
per share of T R Financial Common Stock. Both companies proposed a 100%
exchange of stock that would be accounted for as a pooling-of-interests, with no
expected branch closings, and both offered four board seats on the combined
institution's board of directors, with an advisory board to be created for the
remaining T R Financial Board members. Both companies also proposed to have
Mr. Tsimbinos enter into an employment agreement and to become the Chairman of
the resulting holding company and Vice Chairman of the resulting savings bank
subsidiary. Roslyn also offered to enter into employment agreements with two
additional executive officers of T R Financial.
Following the presentation of Goldman Sachs and a detailed discussion of
each proposal, it was determined that, at this point, Roslyn had made the
superior proposal. Goldman Sachs was instructed to contact Roslyn's
representatives during the May 22, 1998 special T R Financial Board meeting to
discuss the negotiation of a definitive agreement, and the T R Financial Board
authorized Goldman Sachs to encourage Roslyn to increase the exchange ratio
offered by Roslyn, which would be an inducement for T R Financial to enter into
negotiations to reach a definitive agreement with Roslyn. Roslyn responded with
a revised proposal of a fixed exchange ratio of 2.05 shares of Roslyn Common
Stock for each share of T R Financial Common Stock, or, at Roslyn's closing
stock price on May 22, 1998, approximately $56.63 per share of T R Financial
Common Stock. Roslyn also agreed to use its best efforts to increase the
quarterly dividend on Roslyn Common Stock so that, after the consummation of the
transaction, T R Financial's stockholders would receive no less than the
dividends they were receiving on their shares of T R Financial Common Stock.
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During the May 22, 1998 special T R Financial Board meeting, Thacher
Proffitt also reviewed with the T R Financial Board the terms and conditions
contained in the draft Merger Agreement, including, among other things, pricing,
termination, standard representations and warranties, negative covenants,
customary closing conditions and treatment of T R Financial's employee benefit
plans and arrangements. Thacher Proffitt also reviewed the terms and conditions
of the T R Financial Merger Stock Option Agreement and the Roslyn Merger Stock
Option Agreement. Based upon Roslyn's revised proposal and the T R Financial
Board's review of the draft Merger Agreement and related documents, the
T R Financial Board then authorized management to continue negotiations with
Roslyn and attempt to reach a mutually acceptable definitive merger agreement
on the proposed terms.
At a special T R Financial Board meeting held on May 25, 1998, the T R
Financial Board was presented with Goldman Sachs' written opinion that the
Exchange Ratio was fair, from a financial point of view, to T R Financial's
stockholders and a copy of the final definitive agreement between T R Financial
and Roslyn. After discussion with Thacher Proffitt of the terms and conditions
of the definitive Merger Agreement and the related documents, and based on the
consideration of the various factors discussed below under "-- Recommendation of
the T R Financial Board; T R Financial's Reasons for the Merger," the T R
Financial Board unanimously approved the Merger Agreement and the T R Financial
Merger Stock Option Agreement.
On May 25, 1998, the Roslyn Board considered and approved, by unanimous
vote, the Merger, the Merger Agreement, the Merger Stock Option Agreements and
the related transactions. Presentations were made by both Sandler O'Neill and
Roslyn's legal counsel. At the special meeting, members of Roslyn's senior
management, together with its legal and financial advisors, reviewed with the
Roslyn Board, among other things, the background of the proposed transaction,
the potential benefits of the transaction, including the strategic rationale
for the transaction, a summary of their due diligence findings, financial and
valuation analyses of the transaction and the terms of the proposed agreements.
In addition, Sandler O'Neill delivered to the Roslyn Board its written opinion
to the effect that, as of such date, the Exchange Ratio was fair, from a
financial point of view, to Roslyn's stockholders.
RECOMMENDATION OF THE ROSLYN BOARD; ROSLYN'S REASONS FOR THE MERGER
The Roslyn Board has unanimously approved the Merger Agreement and has
determined that the terms of the Merger Agreement and the transactions
contemplated thereby are fair to, and in the best interests of, Roslyn and its
stockholders. Accordingly, the Roslyn Board unanimously recommends that the
stockholders of Roslyn vote FOR the approval and adoption of the Merger
Agreement.
In reaching its determination that the terms of the Merger Agreement and
the transactions contemplated thereby are fair to, and in the best interests of,
Roslyn and its stockholders, the Roslyn Board considered, during the course of
its strategic deliberations, a number of factors, both from a short-term and a
long-term perspective, including, without limitation, the following (which are
all the material factors that the Roslyn Board considered):
(i) the Roslyn Board's familiarity with and review of Roslyn's business,
results of operations, financial condition, competitive position and
prospects, the nature of the industry in which Roslyn operates, both
on a historical and prospective basis, and the potential growth,
development, productivity and profitability of Roslyn;
(ii) the current and prospective environment in which Roslyn operates,
including national and local economic conditions, the competitive
environment for thrifts and other financial institutions generally,
the trend toward consolidation in the financial services industry
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and in the thrift industry and the likely effect of the foregoing
factors on Roslyn's potential growth, development, productivity and
profitability;
(iii) the Roslyn Board's review, based in part on presentations by
Roslyn's management and advisors, of T R Financial's business,
financial condition, results of operations and management, and the
performance of the T R Financial Common Stock on both a historical
and prospective basis, the strategic fit between the parties, the
enhanced opportunities for operating efficiencies and cost savings
that could result from the Merger (which were estimated to be
approximately $18.8 million, including approximately $11.2 million
attributable to savings on employee compensation and benefits) and
the respective contributions the parties (including experienced
senior management and board members and the ability to market
products and services to an increased customer base) would bring to
a combined institution;
(iv) the Roslyn Board's review of the historical and prospective market
prices of the Roslyn Common Stock and the T R Financial Common Stock
compared to the Merger Consideration;
(v) a comparison of the consideration to be paid to T R Financial's
stockholders compared to that paid in other comparable thrift
mergers;
(vi) the Roslyn Board's review with its legal and financial advisors of
alternatives to the Merger, including the possibility of growing
internally;
(vii) the Roslyn Board's belief that T R Financial has a strong financial
and capital position and that the combined company presents a high
long-term intrinsic value, substantial capacity for future growth
and considerable potential for long-term strategic value to Roslyn
stockholders;
(viii) the presentation by Sandler O'Neill and the written opinion of
Sandler O'Neill that the Exchange Ratio is fair, from a financial
point of view, to Roslyn stockholders. See "-- Opinion of Roslyn's
Financial Advisor;"
(ix) the significant similarity between and the compatibility of Roslyn's
and T R Financial's business lines, cultures and management
philosophies and their commitments to the communities and customers
they each serve and to their respective employees;
(x) the expectation that the combined institution will continue to
provide quality service to the communities and customers served by
both companies;
(xi) the review by the Roslyn Board with its legal and financial advisors
of the terms and conditions of the Merger Agreement, including the
Exchange Ratio;
(xii) the review by the Roslyn Board with its legal and financial advisors
of the terms and conditions of the T R Financial Merger Stock Option
Agreement, the Roslyn Merger Stock Option Agreement and the other
documents executed in connection with the Merger Agreement;
(xiii) the Roslyn Board's recognition of the complementary nature of the
markets served and products offered by Roslyn and T R Financial;
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(xiv) a variety of factors affecting and relating to the overall strategic
focus of Roslyn including, without limitation, opportunities for
growth in deposits, assets and earnings, (including ongoing
potential acquisition opportunities) and opportunities available to
Roslyn in the market areas where T R Financial conducts business;
(xv) the anticipated revenue enhancements, cost savings and efficiencies
(including reduction or elimination of certain operational and
administrative systems and the elimination of certain compensation
plans of T R Financial and Roosevelt Savings) available from the
Merger; and
(xvi) the expectation that the Merger would be treated as a tax-free
reorganization for federal income tax purposes (see "-- Federal
Income Tax Consequences of the Merger" below) and accounted for as a
pooling-of-interests.
The Roslyn Board did not assign any specific or relative weights to the
factors under consideration. The Roslyn Board believes that the terms of the
Merger Agreement are fair to, and in the best interests of, Roslyn and its
stockholders. ACCORDINGLY, THE ROSLYN BOARD UNANIMOUSLY RECOMMENDS THAT ROSLYN'S
STOCKHOLDERS VOTE "FOR" APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY.
OPINION OF ROSLYN'S FINANCIAL ADVISOR
Pursuant to a letter agreement dated as of May 1, 1998 (the "Sandler
O'Neill Agreement"), Roslyn retained Sandler O'Neill as an independent financial
advisor in connection with Roslyn's consideration of a possible business
combination with T R Financial. Sandler O'Neill is a nationally recognized
investment banking firm whose principal business specialty is financial
institutions. In the ordinary course of its investment banking business, Sandler
O'Neill is regularly engaged in the valuation of such businesses and their
securities in connection with mergers and acquisitions and other corporate
transactions.
In connection with its consideration of the Merger, the Roslyn Board
requested Sandler O'Neill to render its opinion as to the fairness of the
Exchange Ratio to the stockholders of Roslyn from a financial point of view. On
May 25, 1998, Sandler O'Neill delivered to the Roslyn Board its written opinion
that, as of such date, the Exchange Ratio was fair to the holders of Roslyn
Common Stock from a financial point of view. Sandler O'Neill has also delivered
to the Roslyn Board a written opinion dated the date of this Joint Proxy
Statement/Prospectus (the "Sandler O'Neill Fairness Opinion") which is
substantially identical to the May 25, 1998 opinion. THE FULL TEXT OF THE
SANDLER O'NEILL FAIRNESS OPINION, WHICH SETS FORTH THE PROCEDURES FOLLOWED,
ASSUMPTIONS MADE, MATTERS CONSIDERED AND QUALIFICATIONS AND LIMITATIONS ON THE
REVIEW UNDERTAKEN IN CONNECTION WITH RENDERING SUCH OPINION, IS ATTACHED AS
ANNEX D TO THIS JOINT PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY
REFERENCE. THE DESCRIPTION OF THE OPINION SET FORTH HEREIN IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO ANNEX D. ROSLYN'S STOCKHOLDERS ARE URGED TO READ THE
SANDLER O'NEILL FAIRNESS OPINION IN ITS ENTIRETY IN CONNECTION WITH THEIR
CONSIDERATION OF THE PROPOSED MERGER.
THE SANDLER O'NEILL FAIRNESS OPINION WAS PROVIDED TO THE ROSLYN BOARD FOR
ITS INFORMATION AND IS DIRECTED ONLY TO THE FAIRNESS, FROM A FINANCIAL POINT OF
VIEW, OF THE EXCHANGE RATIO TO THE HOLDERS OF SHARES OF ROSLYN COMMON STOCK. IT
DOES NOT ADDRESS THE UNDERLYING BUSINESS DECISION OF ROSLYN TO ENGAGE IN THE
MERGER OR ANY OTHER ASPECT OF THE MERGER AND DOES NOT CONSTITUTE A
RECOMMENDATION TO ANY HOLDER OF SHARES OF ROSLYN COMMON STOCK AS TO HOW SUCH
STOCKHOLDER SHOULD VOTE AT THE ROSLYN MEETING WITH RESPECT TO THE MERGER OR ANY
OTHER MATTER RELATED THERETO.
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In connection with rendering its May 25, 1998 opinion, Sandler O'Neill
performed a variety of financial analyses. The following is a summary of all
such material analyses, but does not purport to be a complete description of all
the analyses underlying Sandler O'Neill's opinion. The preparation of a
fairness opinion is a complex process involving subjective judgments and is not
necessarily susceptible to a partial analysis or summary description. Sandler
O'Neill believes that its analyses must be considered as a whole and that
selecting portions of such analyses and the factors considered therein, without
considering all factors and analyses, could create an incomplete view of the
analyses and processes underlying its opinion. In performing its analyses,
Sandler O'Neill made numerous assumptions with respect to industry performance
and business and economic conditions, many of which cannot be predicted and are
beyond the control of Roslyn, T R Financial and Sandler O'Neill. Any estimates
contained in Sandler O'Neill's analyses are not necessarily indicative of future
results or values, which may be significantly more or less favorable than such
estimates. Estimates on the values of companies do not purport to be appraisals
or necessarily reflect the prices at which companies or their securities may
actually be sold. Because such estimates are inherently subject to uncertainty,
neither Roslyn, T R Financial nor Sandler O'Neill assumes responsibility for
their accuracy.
SUMMARY OF PROPOSAL. Sandler O'Neill reviewed the financial terms of the
proposed transaction. Based on the closing price of Roslyn Common Stock on
May 22, 1998 of $27.63 and an Exchange Ratio of 2.05, Sandler O'Neill calculated
an implied transaction value per share of T R Financial of $56.63. Based upon
T R Financial's March 31, 1998 financial information and an Exchange Ratio of
2.05, Sandler O'Neill calculated the price to tangible book value per share and
price to last 12-months' ("LTM") earnings per share. This analysis yielded a
price to tangible book value multiple of 3.81x based upon the book value per
common share at March 31, 1998 and a price to LTM earnings multiple of 27.2x.
STOCK TRADING HISTORY. Sandler O'Neill reviewed the history of the
reported trading prices and volume of Roslyn Common Stock and T R Financial
Common Stock, and the relationship between the movements in the prices of Roslyn
Common Stock and T R Financial Common Stock, respectively, to movements in
certain stock indices, including the Standard & Poor's 500 Index, the Nasdaq
Bank Index and a selected composite group of publicly traded savings
institutions. During the one-year period ended May 22, 1998, the Roslyn Common
Stock and the T R Financial Common Stock each outperformed the indices to which
each was compared.
COMPARABLE COMPANY ANALYSIS. Sandler O'Neill used publicly available
information to compare selected financial and market trading information,
including balance sheet composition, asset quality ratios, loan loss reserve
levels, profitability, capital adequacy, dividends and trading multiples, for
T R Financial, Roslyn and two groups of selected institutions. The first group
consisted of T R Financial or Roslyn, respectively, and the following fourteen
publicly traded regional savings institutions (the "Regional Group"): ALBANK
Financial Corp., Staten Island Bancorp, Inc., Commonwealth Bancorp Inc.,
Reliance Bancorp, Inc., Haven Bancorp, Inc., Queens County Bancorp, Inc., Dime
Community Bancshares, Inc., JSB Financial, Inc., WSFS Financial Corp., Ocean
Financial Corp., PennFed Financial Services Inc., York Financial Corp., Flushing
Financial Corp. and Parkvale Financial Corp. Sandler O'Neill also compared T R
Financial and Roslyn to a group of seven publicly traded savings institutions
which had a return on equity of greater than 15.4% (based on the LTM earnings)
and a price-to-tangible book value of greater than 254% (the "Highly-Valued
Group"). The Highly-Valued Group was comprised of BankAtlantic Bancorp Inc.,
Ocean Financial Corp., Flagstar Bancorp Inc., InterWest Bancorp Inc., Anchor
BanCorp Wisconsin, First Federal Capital Corp. and WSFS Financial Corp. The
analysis compared publicly available financial information for Roslyn and T R
Financial and the median data for each of the Regional Group and the Highly-
Valued Group as of and for each of the years ended December 31, 1993 through
December 31, 1997 and as of and for the 12-months ended March 31, 1998.
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ANALYSES OF SELECTED MERGER TRANSACTIONS. Sandler O'Neill reviewed 21
transactions announced from January 1, 1998 to May 21, 1998 (the "Analysis
Period") involving publicly traded savings institutions as acquired institutions
with transaction values over $15 million ("Nationwide Transactions"), and seven
transactions announced during the Analysis Period involving publicly traded
savings institutions in the Mid-Atlantic region (Delaware, District of Columbia,
Pennsylvania, Maryland, New Jersey and New York) as acquired institutions with
transaction values over $15 million ("Mid-Atlantic Transactions"), and 10
transactions announced during the Analysis Period involving publicly traded
savings institutions nationwide as acquired institutions with transaction values
greater than $200 million and less than $2 billion ("Large Nationwide
Transactions"). Sandler O'Neill reviewed the ratios of transaction value to LTM
net income, transaction value to tangible book value, transaction value to book
value, tangible book premium to core deposits, transaction value to total
deposits and transaction value to total assets and computed high, low, mean and
median ratios and premiums for the respective groups of transactions. These
multiples were applied to T R Financial's financial information as of and for
the 12-months ended March 31, 1998. Based upon the median multiples for
Nationwide Transactions, Sandler O'Neill derived an imputed range of values per
share of T R Financial Common Stock of $32.58 to $57.40. Based upon the median
multiples for Mid-Atlantic Transactions, Sandler O'Neill derived an imputed
range of values per share of T R Financial Common Stock of $27.65 to $61.08.
Based upon the median multiples for Large Nationwide Transactions, Sandler
O'Neill derived an imputed range of values per share of T R Financial Common
Stock of $36.22 to $61.17.
No company involved in the transactions included in the above analysis is
identical to Roslyn or T R Financial and no transaction included in the above
analysis is identical to the Merger. Accordingly, an analysis of the results of
the foregoing analysis is not mathematical; rather, it involves complex
considerations and judgments concerning differences in financial and operating
characteristics of the companies and other factors that could affect the public
trading value of Roslyn and T R Financial and the companies to which they are
being compared.
DISCOUNTED DIVIDEND STREAM AND TERMINAL VALUE ANALYSIS. Sandler O'Neill
also performed an analysis which estimated the future stream of after-tax
dividend flows of T R Financial through the year 2002 under various
circumstances, assuming T R Financial performed in accordance with the earnings
forecasts of its management and certain variations thereof. To approximate the
terminal value of T R Financial Common Stock at December 31, 2002, Sandler
O'Neill applied price to earnings multiples ranging from 12x to 32x and applied
multiples of tangible book value ranging from 150% to 400%. The dividend income
streams and terminal values were then discounted to present values using
different discount rates (ranging from 9% to 14%) chosen to reflect different
assumptions regarding required rates of return of holders or prospective buyers
of T R Financial Common Stock. This analysis, assuming the current dividend
payout ratio and management's earnings forecasts, indicated an imputed range of
values per share of T R Financial Common Stock of between $26.49 and $79.82 when
applying the price to earnings multiples, and an imputed range of values per
share of T R Financial Common Stock of between $20.11 and $58.78 when applying
multiples of tangible book value. In connection with its analysis, Sandler
O'Neill used sensitivity analyses to consider the effects changes in the
underlying assumptions (including variations with respect to the growth rate of
assets, net interest spread, non-interest income, non-interest expenses and
dividend payout ratio) would have on the resulting present value, and discussed
these changes with the Roslyn Board. Sandler O'Neill noted that the discounted
dividend stream and terminal value analysis is a widely used valuation
methodology, but the results of such methodology are highly dependent upon the
numerous assumptions that must be made, and the results thereof are not
necessarily indicative of actual values or actual future results.
PRO FORMA MERGER ANALYSIS. Sandler O'Neill analyzed certain potential pro
forma effects of the Merger on Roslyn, based upon an Exchange Ratio of 2.05,
Roslyn's and T R Financial's current and
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projected income statements and balance sheets, and assumptions regarding the
economic environment, accounting and tax treatment of the Merger, charges
associated with the Merger, operating efficiencies and other adjustments
discussed with the senior managements of Roslyn and T R Financial. This analysis
indicated that the Merger would be approximately 7.6% accretive to Roslyn's
projected 1999 earnings per share (calculated on a generally accepted accounting
principles ("GAAP") basis) and increasingly accretive to projected GAAP earnings
per share in each of the four years analyzed thereafter and approximately
24.0% dilutive to Roslyn's projected December 31, 1998 tangible book value
per share. The actual results achieved by Roslyn may vary from projected
results and the variations may be material.
CONTRIBUTION ANALYSIS. Sandler O'Neill reviewed the relative contributions
to, among other things, total assets, total net loans, total deposits, total
borrowings, total tangible equity and LTM net income to be made by Roslyn and
T R Financial to the combined institution based on data at and for the 12-months
ended March 31, 1998. This analysis indicated that T R Financial's implied
contribution was 51.9% of total assets, 66.6% of total net loans, 51.5% of total
deposits, 61.0% of total borrowings, 28.5% of total tangible equity and 45.3% of
LTM net income. Based upon an Exchange Ratio of 2.05, holders of T R Financial
Common Stock would own approximately 48.4% of the outstanding shares of the
combined institution.
In connection with rendering its May 25, 1998 opinion, Sandler O'Neill
reviewed, among other things: (i) the Merger Agreement and exhibits thereto;
(ii) the Merger Stock Option Agreements; (iii) certain publicly available
financial statements of Roslyn and other historical financial information
provided by Roslyn that it deemed relevant; (iv) certain publicly available
financial statements of T R Financial and other historical financial information
provided by T R Financial that it deemed relevant; (v) certain financial
analyses and forecasts of Roslyn prepared by and reviewed with management of
Roslyn and the views of senior management of Roslyn regarding Roslyn's past and
current business, operations, results thereof, financial condition and future
prospects; (vi) certain financial analyses and forecasts of T R Financial
prepared by and reviewed with management of T R Financial and the views of
senior management of T R Financial regarding T R Financial's past and current
business, operations, results thereof, financial condition and future prospects;
(vii) the pro forma impact of the Merger on Roslyn; (viii) the publicly reported
historical price and trading activity for Roslyn Common Stock and T R Financial
Common Stock, including a comparison of certain financial and stock market
information for Roslyn and T R Financial with similar publicly available
information for certain other companies the securities of which are publicly
traded; (ix) the financial terms of recent business combinations in the
savings institution industry, to the extent publicly available; (x) the
current market environment generally and the banking environment in particular;
and (xi) such other information, financial studies, analyses and investigations
and financial, economic and market criteria as Sandler O'Neill considered
relevant.
In connection with rendering the Sandler O'Neill Fairness Opinion, Sandler
O'Neill confirmed the appropriateness of its reliance on the analyses used to
render its May 25, 1998 opinion by performing procedures to update certain of
such analyses and by reviewing the assumptions upon which such analyses were
based and the factors considered in connection therewith.
In performing its reviews and analyses, Sandler O'Neill assumed and relied
upon, without independent verification, the accuracy and completeness of all the
financial information, analyses and other information that was publicly
available or otherwise furnished to, reviewed by or discussed with it, and
Sandler O'Neill does not assume any responsibility or liability therefor.
Sandler O'Neill did not make an independent evaluation or appraisal of the
specific assets, the collateral securing assets or the liabilities (contingent
or otherwise) of Roslyn or T R Financial or any of their subsidiaries, or the
collectibility of any such assets, nor was it furnished with any such
evaluations or appraisals (relying, where relevant, on the analyses and
estimates of Roslyn and T R Financial). Sandler O'Neill is not an expert in the
evaluation of
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allowances for loan losses and it has not made an independent evaluation of the
adequacy of the allowance for loan losses of Roslyn or T R Financial, nor has it
reviewed any individual credit files relating to Roslyn or T R Financial. With
Roslyn's consent, Sandler O'Neill has assumed that the respective aggregate
allowances for loan losses for both Roslyn and T R Financial are adequate to
cover such losses and will be adequate on a pro forma basis for the combined
entity. In addition, Sandler O'Neill has not conducted any physical inspection
of the properties or facilities of Roslyn or T R Financial. With respect to all
financial information and projections reviewed with each company's management,
Sandler O'Neill assumed, with Roslyn's consent, that they had been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the respective managements of the respective future financial
performances of Roslyn and T R Financial and that such performances will be
achieved. Sandler O'Neill expressed no opinion as to such financial projections
or the assumptions on which they were based.
Sandler O'Neill's opinion was necessarily based upon market, economic and
other conditions as they existed on, and could be evaluated as of, the date of
such opinion. Sandler O'Neill assumed, in all respects material to its
analysis, that all of the representations and warranties contained in the Merger
Agreement and all related agreements are true and correct, that each party to
such agreements will perform all of the covenants required to be performed by
such party under such agreements and that the conditions precedent in the Merger
Agreement are not waived. Sandler O'Neill also assumed, with Roslyn's consent,
that there has been no material change in Roslyn's and T R Financial's assets,
financial condition, results of operations, business or prospects since the
date of the last financial statements made available to them, that the Merger
will be accounted for as a pooling of interests, that Roslyn and T R Financial
will remain as going concerns for all periods relevant to its analyses and that
the Merger will qualify as a tax-free reorganization for federal income tax
purposes.
Under the Sandler O'Neill Agreement, Roslyn will pay Sandler O'Neill a
transaction fee in connection with the Merger, a substantial portion of which is
contingent upon the consummation of the Merger. Under the terms of the Sandler
O'Neill Agreement, Roslyn has agreed to pay Sandler O'Neill a transaction fee
equal to 0.75% of the aggregate transaction value, or approximately
$4.7 million, based upon the closing price of Roslyn Common Stock on October 19,
1998, of which approximately $2.1 million has been paid and the remainder of
which is payable upon closing of the transaction. Sandler O'Neill has also
received a fee of $250,000 for rendering its fairness opinion, which will be
credited against that portion of the transaction fee payable at closing.
Roslyn has also agreed to reimburse Sandler O'Neill for its reasonable
out-of-pocket expenses incurred in connection with its engagement and to
indemnify Sandler O'Neill and its affiliates and their respective partners,
directors, officers, employees, agents and controlling persons against certain
expenses and liabilities, including liabilities under securities laws. It is
expected that Sandler O'Neill and Goldman Sachs will act as underwriters or
placement agents in connection with the offering of certain shares of treasury
stock of Roslyn or T R Financial to be reissued in connection with the Merger
and, in connection therewith, will be compensated for such services in an
amount to be negotiated and will be indemnified by the issuer (and following
the Merger, by Roslyn) against certain liabilities, including liabilities
under securities laws.
Sandler O'Neill has in the past provided and may in the future provide
other investment banking services to Roslyn and has received and will receive
compensation for such services. During the two years prior to the date of this
Joint Proxy Statement/Prospectus, Sandler O'Neill received fees and expense
reimbursements from Roslyn aggregating approximately $7.5 million, all of which
related to Roslyn Savings' mutual to stock conversion. In the ordinary course
of its business, Sandler O'Neill may actively trade the equity securities of
Roslyn and T R Financial and their respective affiliates for its own account
and for the accounts of its customers and, accordingly, may at any time hold a
long or short position in such securities.
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RECOMMENDATION OF THE T R FINANCIAL BOARD; T R FINANCIAL'S REASONS FOR THE
MERGER
The T R Financial Board has unanimously approved the Merger Agreement and
has determined that the terms of the Merger Agreement and the transactions
contemplated thereby are fair to, and in the best interests of, T R Financial
and its stockholders, in part because the Merger Agreement includes safeguards
that will allow T R Financial to terminate the Merger Agreement if the price of
Roslyn Common Stock is below certain levels established in the Merger
Agreement. Accordingly, the T R Financial Board unanimously recommends that
stockholders of T R Financial vote FOR the approval and adoption of the Merger
Agreement. The T R Financial Board believes that the Merger will enable the
stockholders of T R Financial to realize significant value on a tax-free basis.
For a discussion of T R Financial's present intention with respect to its right
to terminate the Merger Agreement, see "-- Price-Based Termination."
In reaching its determination that the terms of the Merger Agreement and
the transactions contemplated thereby are fair to and in the best interests of
T R Financial and its stockholders, the T R Financial Board considered during
the course of its strategic deliberations a number of factors, both from a
short-term and a long-term perspective, including, without limitation, the
following (which are all the material factors that the T R Financial Board
considered):
(i) the T R Financial Board's familiarity with and review of
T R Financial's business, results of operations, financial
condition, competitive position and prospects, the nature of the
industry in which T R Financial operates, both on a historical and
prospective basis, and the potential growth, development,
productivity and profitability of T R Financial;
(ii) the current and prospective environment in which T R Financial
operates, including national and local economic conditions, the
competitive environment for thrifts and other financial institutions
generally, the trend toward consolidation in the financial services
industry and in the thrift industry and the likely effect of the
foregoing factors on T R Financial's potential growth, development,
productivity and profitability;
(iii) the T R Financial Board's review, based in part on presentations by
T R Financial's management and advisors, of Roslyn's business,
financial condition, results of operations and management, and the
performance of the Roslyn Common Stock on both a historical and
prospective basis, the strategic fit between the parties, the
enhanced opportunities for operating efficiencies that could result
from the Merger, which were estimated to exceed 43% of non-interest
expense, and the respective contributions that each of the parties
would bring to a combined institution with respect to market
capitalization, balance sheet, last twelve months' net income,
estimated 1998 net income and estimated 1999 net income;
(iv) the T R Financial Board's review of the historical and prospective
market prices of the T R Financial Common Stock compared to the
Merger Consideration, and the expectation of the T R Financial Board
that the Merger will provide holders of T R Financial Common Stock
with the opportunity to receive a premium over the historical
trading prices for their shares and that the receipt of Roslyn
Common Stock by the T R Financial stockholders in the Merger would
be on a tax-free basis for federal income tax purposes (except with
respect to cash received in lieu of fractional shares);
(v) a comparison of the consideration to be paid to T R Financial's
stockholders compared to that paid in other comparable thrift
mergers;
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<PAGE>
(vi) the T R Financial Board's review with its legal and financial
advisors of alternatives to the Merger, including its review of and
negotiations over the proposal made by the Other Institution and the
possibility of remaining independent and growing internally;
(vii) the T R Financial Board's belief that Roslyn has a strong financial
and capital position and that the Roslyn Common Stock to be received
by T R Financial's stockholders presents a high long-term intrinsic
value, substantial capacity for future growth and considerable
potential for long-term strategic value to such stockholders;
(viii) the presentation by Goldman Sachs and the written opinion of Goldman
Sachs that the consideration to be received by T R Financial's
stockholders is fair from a financial point of view to such
stockholders. See "-- Opinion of T R Financial's Financial Advisor;"
(ix) the significant similarity between and the compatibility of Roslyn's
and T R Financial's business lines, cultures and management
philosophies and their commitments to the communities and customers
they each serve and to their respective employees;
(x) the expectation that the combined institution will continue to
provide quality service to the communities and customers served by
T R Financial;
(xi) the review by the T R Financial Board with its legal and financial
advisors of the terms and conditions of the Merger Agreement,
including the Exchange Ratio, the ability of T R Financial to
terminate the Merger Agreement under certain circumstances if the
value of the Roslyn Common Stock declines (see "-- Price-Based
Termination"), the obligation of Roslyn to appoint four members of
the T R Financial Board to the Roslyn Board and to create an
advisory board for the remaining T R Financial Board members to
advise Roslyn with respect to deposit and lending activities in
T R Financial's former market area and to maintain and develop
customer relationships and the interests of certain other persons in
the Merger (see "-- Interests of Certain Persons in the Merger");
and
(xii) the review by the T R Financial Board with its legal and financial
advisors of the terms and conditions of the T R Financial Merger
Stock Option Agreement, the Roslyn Merger Stock Option Agreement and
the other documents executed in connection with the Merger
Agreement.
In view of the wide variety of material factors considered in connection
with its evaluation of the Merger Agreement, the T R Financial Board did not
find it practical to, and did not, quantify or otherwise attempt to assign
relative weights to the specific factors considered in reaching its
determination.
The T R Financial Board believes that the terms of the Merger Agreement are
fair to, and in the best interests of, T R Financial and its stockholders.
ACCORDINGLY, THE T R FINANCIAL BOARD UNANIMOUSLY RECOMMENDS THAT T R FINANCIAL'S
STOCKHOLDERS VOTE "FOR" APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY.
OPINION OF T R FINANCIAL'S FINANCIAL ADVISOR
Goldman Sachs was retained by T R Financial on May 22, 1998, to act as
T R Financial's financial advisor in connection with the Merger.
Representatives of Goldman Sachs participated in the meeting of the
T R Financial Board held on May 25, 1998, at which the T R Financial Board
approved the Merger Agreement. AT THAT MEETING, GOLDMAN SACHS RENDERED ITS
OPINION TO THE EFFECT THAT, AS OF THE
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<PAGE>
DATE THEREOF, THE EXCHANGE RATIO WAS FAIR TO THE HOLDERS OF T R FINANCIAL COMMON
STOCK FROM A FINANCIAL POINT OF VIEW. GOLDMAN SACHS RECONFIRMED ITS OPINION
DATED AS OF MAY 25, 1998 BY DELIVERING A WRITTEN OPINION TO THE T R FINANCIAL
BOARD DATED THE DATE OF THIS JOINT PROXY STATEMENT/PROSPECTUS (THE "GOLDMAN
SACHS OPINION").
THE FULL TEXT OF THE GOLDMAN SACHS OPINION, DATED THE DATE OF THIS JOINT
PROXY STATEMENT/PROSPECTUS, WHICH SETS FORTH THE ASSUMPTIONS MADE, PROCEDURES
FOLLOWED, MATTERS CONSIDERED AND LIMITS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS
ANNEX E TO THIS JOINT PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY
REFERENCE. THE GOLDMAN SACHS OPINION, WHICH WAS PROVIDED TO THE T R FINANCIAL
BOARD FOR ITS INFORMATION, IS DIRECTED ONLY TO THE FAIRNESS OF THE EXCHANGE
RATIO TO THE HOLDERS OF T R FINANCIAL COMMON STOCK FROM A FINANCIAL POINT OF
VIEW AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY T R FINANCIAL STOCKHOLDER
AS TO HOW SUCH STOCKHOLDER SHOULD VOTE AT THE T R FINANCIAL MEETING WITH RESPECT
TO THE MERGER AGREEMENT OR ANY OTHER MATTER RELATED THERETO. THE DESCRIPTION OF
THE GOLDMAN SACHS OPINION SET FORTH HEREIN IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO ANNEX E. T R FINANCIAL STOCKHOLDERS ARE URGED TO READ THE GOLDMAN
SACHS OPINION IN ITS ENTIRETY.
Notwithstanding the Goldman Sachs Opinion to the effect that, as of the
date of this Joint Proxy Statement/Prospectus, the Exchange Ratio was fair, from
a financial point of view, to the holders of T R Financial Common Stock, T R
Financial may exercise its right to terminate the Merger Agreement pursuant to
the termination provisions of the Merger Agreement if the Absolute Termination
Condition, the Relative Termination Condition or both are applicable on the
Valuation Date (as defined below). T R Financial may exercise such right even if
(i) the price of Roslyn Common Stock on the Valuation Date is equal to or
greater than the price of Roslyn Common Stock on the date of this Joint Proxy
Statement/Prospectus, (ii) the Roslyn Market Value (as defined below) on the
Valuation Date is equal to or greater than the price of Roslyn Common Stock on
the date of this Joint Proxy Statement/Prospectus, (iii) the Exchange Ratio on
the Valuation Date is fair, from a financial point of view, to the holders of
T R Financial Common Stock and/or (iv) the stockholders of T R Financial approve
the Merger Agreement at the T R Financial Meeting. See "-- Price-Based
Termination."
Goldman Sachs is an internationally recognized investment banking and,
advisory firm and as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. Goldman Sachs is
familiar with T R Financial, having acted as its financial advisor in connection
with, and having participated in certain of the negotiations leading to, the
Merger Agreement. Goldman Sachs is a full service securities firm, and in the
course of its trading activities, may from time to time effect transactions, for
its own account or the account of customers, and hold positions in securities or
options of T R Financial and Roslyn.
In connection with rendering the Goldman Sachs Opinion, Goldman Sachs,
among other things: (i) reviewed the Merger Agreement; (ii) reviewed Annual
Reports to Stockholders and Annual Reports on Form 10-K of T R Financial and
Roslyn for the five years and two years ended December 31, 1997, respectively,
audited financial statements of Roslyn for the three years ended December 31,
1995, and the Registration Statement on Form S-1 relating to Roslyn Savings'
Plan of Conversion in 1996, as well as certain interim reports to stockholders
and Quarterly Reports on Form 10-Q of T R Financial and Roslyn and certain
other communications from T R Financial and Roslyn to their respective
stockholders; (iii) reviewed certain internal financial analyses and forecasts
for T R Financial and Roslyn prepared by their respective
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<PAGE>
managements, including forecasts of certain net cost savings expected to be
achieved as a result of the Merger ("Synergies"); (iv) held discussions with
members of the senior management of T R Financial and Roslyn regarding the
strategic rationale for, and the potential benefits of, the Merger and the past
and current business operations, financial condition and future prospects of
their respective companies; (v) reviewed the reported price and trading activity
for T R Financial Common Stock and Roslyn Common Stock; (vi) compared certain
financial and stock market information for T R Financial and Roslyn with similar
information for certain other companies, the securities of which are publicly
traded; (vii) reviewed the financial terms of certain recent business
combinations in the thrift industry; and (viii) performed such other studies and
analyses as it considered appropriate.
As set forth in the Goldman Sachs Opinion, Goldman Sachs relied upon the
accuracy and completeness of all of the financial and other information reviewed
by it and assumed such accuracy and completeness for purposes of rendering the
Goldman Sachs Opinion. In that regard, Goldman Sachs assumed, with
T R Financial's consent, that the financial forecasts, including, without
limitation, the Synergies and projections, had been reasonably prepared on a
basis reflecting the best then available judgments and estimates of
T R Financial and Roslyn and that such forecasts will be realized in the
amounts and at the times contemplated thereby. Goldman Sachs is not an expert
in the evaluation of loan and lease portfolios for purposes of assessing the
adequacy of the allowance for losses with respect thereto and assumed, with
T R Financial's consent, that such allowances for each of T R Financial and
Roslyn are in the aggregate adequate to cover all such losses. In addition,
Goldman Sachs did not review individual credit files nor did it make an
independent evaluation or appraisal of the assets and liabilities of
T R Financial or Roslyn or any of their respective subsidiaries and had not
been furnished with any such evaluation or appraisal. The Goldman Sachs
Opinion as to the fairness of the Exchange Ratio addressed the ownership
position in the combined company to be received by the holders of T R Financial
Common Stock and did not address the future trading or acquisition value for
the stock of the combined company.
The advisory services provided by Goldman Sachs, including the Goldman
Sachs Opinion to the effect that, as of the date thereof, the Exchange Ratio was
fair to the holders of T R Financial Common Stock from a financial point of
view, were for the information and assistance of the T R Financial Board in
connection with its consideration of the Merger and do not constitute a
recommendation as to how any T R Financial stockholder should vote with respect
to the Merger Agreement.
The following describes each of the material financial analyses resulting
from such procedures and review and considered by Goldman Sachs in connection
with arriving at the updated Goldman Sachs Opinion, which was rendered to the T
R Financial Board at its meeting held on November 16, 1998 but does not purport
to be a complete description of the analyses performed by Goldman Sachs.
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<PAGE>
SUMMARY OF TERMS OF PROPOSED TRANSACTION. Goldman Sachs reviewed the terms
of the proposed Merger as of November 16, 1998, as compared to those as of May
22, 1998, including the expected method of accounting, the Exchange Ratio, the
share price of T R Financial as of November 13, 1998, the resulting Indicated
Value per share of T R Financial Common Stock of the Merger as of November 13,
1998 and the resulting Indicated Aggregate Consideration to be paid in the
Merger as of such date. The Indicated Value was $35.88 per share of T R
Financial Common Stock, determined by multiplying the Exchange Ratio by the
closing price of Roslyn Common Stock as reported on the Nasdaq National Market
on November 13, 1998. The Indicated Aggregate Consideration to be paid in the
Merger was $677 million based on 18.9 million fully diluted shares outstanding
(utilizing the treasury stock method at the Indicated Value).
The analysis noted that such Indicated Value constituted: (i) a premium
over the market price of T R Financial Common Stock on November 13, 1998 of
15.3% and a negative premium to the May 22, 1998 market price of (7.1)%, (ii) a
multiple of 19.3x T R Financial's EPS for the 12-months ended September 30, 1998
(excluding gains on sales), (iii) a multiple of 18.7x T R Financial management
estimates of T R Financial's 1998 GAAP EPS, (iv) a multiple of 18.6x T R
Financial management estimates of T R Financial's 1999 GAAP EPS, (v) a multiple
of 15.4x T R Financial management estimates of T R Financial's 1998 Cash EPS and
(vi) a multiple of 15.9x T R Financial management estimates of T R Financial's
1999 Cash EPS. In addition, such Indicated Value reflected a multiple of 2.54x
T R Financial's tangible book value per fully diluted share based on a September
30, 1998 tangible book value of $266 million, and a multiple of 2.71x T R
Financial's adjusted book value per fully diluted share based on a September 30,
1998 adjusted book value of $240 million. The Indicated Aggregate Consideration
represented a deposit premium of 16.8%.
SELECTED TRANSACTION ANALYSIS. Goldman Sachs reviewed certain information
relating to 23 selected thrift acquisitions since January 1998 and prior to
November 16, 1998 in which the aggregate consideration paid was in excess of
$100 million (the "Selected Recent Thrift Acquisitions"). The Selected Recent
Thrift Acquisitions consist of: Centura Banks, Inc./First Costal Bankshares;
Fifth Third Bancorp/Enterprise Federal Bancorp; FBOP Corporation/Calumet
Bancorp, Inc.; Astoria Financial Corp./Long Island Bancorp, Inc.; Washington
Mutual, Inc./H.F. Ahmanson & Co.; Commercial Federal/First Colorado Bancorp;
Fifth Third Bancorp/CitiFed Bancorp, Inc.; Fifth Third Bancorp/State Savings
Co.; Peoples Heritage Financial/SIS Bancorp, Inc.; Sovereign Bancorp/Peoples
Bancorp, Inc; Richmond County Financial Corp./Bayonne Bancshares, Inc.; First
Source Bancorp/Pulse Bancorp; Summit Bancorp/NSS Bancorp; Charter One
Financial/ALBANK Financial Corp.; State Financial Services Corp./ Home Bancorp
of Elgin; Republic Security/First Palm Beach Bancorp; First Charter Corp./HFNC
Financial Corp.; Second Bancorp, Inc./ Trumbull Financial Corp.; FirstMerit
Corp./ Security First Corp.; HUBCO, Inc./Dime Financial Corp.; HUBCO, Inc./IBS
Financial Corp.; BB&T Corp./Maryland Federal Bancorp; and FirstFederal Financial
Services/First Shenango Bancorp. Such analysis indicated that the median
multiples of consideration paid to tangible book value, adjusted book value,
latest 12-months' EPS, 1998 estimated EPS and 1999 estimated EPS for the pending
Selected Recent Thrift Acquisitions (as of their announcement, adjusted to
reflect the respective buyer's stock price as of November 13, 1998) and for all
announced Selected Recent Thrift Acquisitions (as of their announcement) were
2.19, 2.63, 22.8, 22.3 and 20.4 times and 2.63, 3.47, 27.2, 28.0 and 24.7 times,
respectively, compared to a multiple of price to tangible book value of T R
Financial of 2.54x, a multiple of price to adjusted book value of T R Financial
of 2.71x, a multiple of price to T R Financial's EPS for the 12-month period
ended September 30, 1998 of 19.3x (excluding gains on sales), a multiple of
price to T R Financial's 1998 GAAP EPS of 18.7x and a multiple of price to T R
Financial's 1999 GAAP EPS of 18.6x. Such analysis also indicated that the median
premium over market price and deposit premium for the pending Selected Recent
Thrift Acquisitions (as of their announcement, adjusted to reflect the
respective buyer's stock price as of November 13, 1998) and for all announced
Selected Recent Thrift Acquisitions (as of their announcement) were (2.2)% (for
transactions announced prior to August __, 1998) and 15.7%, and 24.0% and 23.4%,
respectively, compared to a negative premium to the market price of T R
Financial Common Stock on May 22, 1998 of (7.1)% and a deposit premium for T R
Financial of 18.6% as of November 13, 1998.
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OVERVIEW OF STOCK PRICE AND OPERATING PERFORMANCE. Goldman Sachs presented
an overview of T R Financial and Roslyn which included a comparison of
historical profitability and stock price performance data for T R Financial and
Roslyn to corresponding data for the members of a peer group comprised of the
following eight thrift institutions: GreenPoint Financial Corp.; Dime Bancorp,
Inc.; Astoria Financial Corp.; North Fork Bancorporation, Inc.; Independence
Savings; Staten Island Bancorp, Inc.; Jamaica Savings; and Richmond County
Financial Corp.; including, among other things: (i) market capitalization; (ii)
price change since May 22, 1998; (iii) price to 1998 and 1999 estimated EPS;
(iv) price to tangible and adjusted book values; and (v) dividend yield.
CONTRIBUTION ANALYSIS. Goldman Sachs analyzed certain historical and
estimated financial information for T R Financial and Roslyn and the pro forma
combined entity resulting from the Merger. This analysis indicated, among other
things, that T R Financial and Roslyn would contribute: 44% and 56%,
respectively, to the pro forma combined market capitalization (as of November
13, 1998), after taking into account the treatment of T R Financial ESOP shares
and T R Financial Options. Goldman Sachs compared this relative contribution to
market capitalization to other financial indicators. The resulting analysis
indicated that T R Financial and Roslyn would contribute 31% and 69%,
respectively, to the pro forma combined tangible common equity (using balance
sheet data as of September 30, 1998); 45% and 55%, respectively, to the pro
forma combined GAAP Net Income for the 12-month period ended September 30, 1998;
44% and 56%, respectively, to the pro forma combined Cash Net Income for the 12-
month period ended September 30, 1998; 45% and 55%, respectively, to the
estimated 1998 pro forma combined GAAP Net Income; 45% and 55%, respectively, to
the estimated 1998 pro forma combined 1998 Cash Net Income; 41% and 59%,
respectively, to the estimated 1999 pro forma combined GAAP Net Income; and 44%
and 56%, respectively, to the estimated 1999 pro forma combined 1999 Cash Net
Income. In calculating the pro forma combined GAAP Net Income and Cash Net
Income amounts, Goldman Sachs utilized estimates prepared by Roslyn management
and adjusted such estimates to take account of realized gains and losses during
the relevant periods.
PRO FORMA ANALYSIS. Based on projections provided by T R Financial and
Roslyn, Goldman Sachs analyzed the pro forma per share impact of the Merger on a
variety of measures including, among other things, multiples of EPS, cash
earnings per share, and stated and tangible book value per share, relative to
the expected pro forma combined result and relative to T R Financial on a stand-
alone basis. The pro forma share prices at closing for T R Financial Common
Stock and Roslyn Common Stock were based upon the respective closing prices on
November 13, 1998. The analysis was based on the assumption that the combined
companies would realize the projected Synergies within time periods specified by
T R Financial and Roslyn, although actual results achieved by the combined
company may vary materially from projected results.
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The analysis performed indicated that, on a per share basis, the
transaction would be accretive to T R Financial's estimated 1999 and 2000 EPS by
35.3% and 32.0%, respectively, calculated on a GAAP basis, and by 18.5% and
14.8%, respectively, calculated on a cash basis. The analysis further indicated
that the Merger would be accretive to stated and tangible book value by 40.8%
and 40.4%, respectively. These analyses assumed management's cost savings
estimates would be achieved and would phase in 50% in year one and 100%
thereafter. The analysis also indicated that the transaction would be dilutive
to T R Financial's dividends per share by 3.2%.
DISCOUNTED CASH FLOW ANALYSIS. Goldman Sachs performed a discounted cash
flow analysis for T R Financial using management estimates. In performing its
analysis, Goldman Sachs used forward EPS terminal multiples ranging from 12x to
20x, discount rates ranging from 12.5% to 17.5%, an assumed dividend growth rate
of $0.08 per year and an assumed exit date of 2001. Based on this methodology,
Goldman Sachs calculated implied share values for T R Financial Common Stock
ranging from $21.99 to $40.20.
The summary set forth above does not purport to be a complete description
of the analyses performed by Goldman Sachs but describes each of the material
financial analyses considered thereby in connection with arriving at the Goldman
Sachs Opinion.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or a summary description. Goldman
Sachs believes that its analyses must be considered as a whole and that
selecting portions of its analyses without considering all factors and analyses
would create an incomplete view of the analyses and processes underlying its
opinion. In its analyses, Goldman Sachs relied upon numerous assumptions made by
T R Financial and Roslyn with respect to industry performance, general business
and economic conditions, and other matters, many of which are beyond the control
of T R Financial or Roslyn. Analyses based upon forecasts of future results are
not necessarily indicative of actual values, which may be significantly more or
less favorable than suggested by such analyses. No company or transaction used
as a comparison in the analyses is identical to T R Financial or Roslyn or to
the Merger. Additionally, estimates of the value of businesses do not purport
to be appraisals or necessarily reflective of the prices at which businesses
actually may be sold. Such estimates are inherently subject to uncertainty and
actual values may be materially different. Goldman Sachs prepared the analyses
solely for purposes of rendering the Goldman Sachs Opinion regarding the
fairness of the Exchange Ratio to T R Financial's stockholders from a financial
point of view. The analyses do not purport to be appraisals or necessarily
reflect the prices at which Roslyn Common Stock may actually be sold.
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The fairness opinion received by T R Financial is dated as of the date of
this Joint Proxy Statement/Prospectus and is based on conditions in effect on
the date hereof. Accordingly, such opinion does not address the circumstances
that may exist after the date of this Joint Proxy Statement/Prospectus but
before the date the Merger is consummated. In the event that T R Financial has
the right to terminate the Merger Agreement pursuant to the termination
provisions of the Merger Agreement, the T R Financial Board may request another
fairness opinion prior to deciding whether to consummate the Merger or to
terminate the Merger Agreement. If the T R Financial Board requests another
fairness opinion as part of the process of evaluating T R Financial's
termination rights and receives or does not receive another fairness opinion,
the T R Financial Board will consider the fairness opinion, or the lack thereof,
and all other relevant facts and circumstances then existing in determining
whether terminating the Merger Agreement is in the best interests of T R
Financial and its stockholders.
For the services of Goldman Sachs as financial advisor to T R Financial in
connection with the Merger, T R Financial has agreed to pay Goldman Sachs a cash
fee equal to 0.85% of the aggregate consideration paid in the event that at
least 50% of the outstanding common stock or at least 50% of the assets (based
on the book value thereof) of T R Financial is acquired in one or more
transactions, payable upon the consummation of such acquisition. The estimated
fee to be paid to Goldman Sachs for its services as financial advisor in
connection with the Merger is approximately $5.8 million based upon the closing
prices of T R Financial Common Stock and Roslyn Common Stock on October 22,
1998. T R Financial has also agreed to pay Goldman Sachs its reasonable out-of-
pocket expenses, including the reasonable fees and disbursements of its counsel,
and to indemnify Goldman Sachs against certain liabilities, including certain
liabilities arising under the federal securities laws. During the two-year
period prior to the date of this Joint Proxy Statement/Prospectus, Goldman Sachs
has received aggregate fees of $150,000 from T R Financial.
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CERTAIN ESTIMATES OF FUTURE OPERATIONS AND OTHER INFORMATION
In connection with the evaluation by certain third parties, including
Roslyn, of a possible transaction involving T R Financial, T R Financial
prepared certain nonpublic estimates reflecting management's views as to the
possible future performance of T R Financial over the three fiscal years ending
in the year 2000. These estimates were based on assumptions (relating to the
interest rate environment, loan portfolio growth, asset growth and deposit
growth) which management believed to be reasonable at the time. Management's
belief as to the reasonableness of its estimates and of the assumptions
underlying such estimates is based upon the use of industry data, management's
history of operations of T R Financial and the significant time and resources
management devoted to developing such estimates. All of the following estimates
exclude gain on sale of investments and non-recurring items.
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The material estimates (collectively, the "T R Financial Estimates") are
provided in the following table:
T R FINANCIAL - MAY 1998 ESTIMATES
<TABLE>
<CAPTION>
1998 1999 2000
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net Interest Income................... $101,836 $111,882 $130,421
Non-Interest Income................... 7,200 8,100 9,000
Total Revenues........................ 109,036 119,982 139,421
Pre-Tax Core Income................... 55,814 62,352 76,963
Tangible Common/Tangible Assets....... 6.40% 6.33% 6.33%
</TABLE>
Similarly, Roslyn prepared certain nonpublic estimates reflecting
management's views as to the possible future performance of Roslyn over the same
period. These estimates were based on assumptions which management believed to
be reasonable at the time. Management's belief as to the reasonableness of its
estimates and of the assumptions underlying such estimates is based upon the use
of industry data, management's history of operations of Roslyn and the
significant time and resources management devoted to developing such estimates.
The material estimates (collectively, the "Roslyn Estimates") are provided
in the following table:
ROSLYN - MAY 1998 ESTIMATES
<TABLE>
<CAPTION>
1998 1999 2000
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net Interest Income................... $107,833 $116,042 $127,351
Non-Interest Income................... 10,169 10,332 13,101
Total Revenues........................ 118,002 126,374 140,452
Pre-Tax Core Income................... 67,245 70,851 78,242
Tangible Common/Tangible Assets....... 14.61% 13.95% 13.89%
</TABLE>
In October 1998, T R Financial and Roslyn provided each other on a
confidential basis certain revised management estimates indicating the following
revisions:
T R FINANCIAL - OCTOBER 1998 ESTIMATES
<TABLE>
<CAPTION>
1998 1999 2000
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net Interest Income................... $100,710 $101,419 $115,129
Non-Interest Income................... 5,817 6,300 6,900
Total Revenues........................ 106,527 107,719 122,029
Pre-Tax Core Income................... 59,857 61,139 70,824
Tangible Common/Tangible Assets....... 6.71% 6.58% 6.66%
</TABLE>
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ROSLYN - OCTOBER 1998 ESTIMATES
<TABLE>
<CAPTION>
1998 1999 2000
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net Interest Income................... $100,288 $107,106 $115,552
Non-Interest Income................... 14,621 16,847 17,829
Total Revenues........................ 114,909 123,953 133,381
Pre-Tax Core Income................... 68,293 75,577 82,710
Tangible Common/Tangible Assets....... 16.06% 16.84% 16.11%
</TABLE>
THE T R FINANCIAL ESTIMATES AND THE ROSLYN ESTIMATES (COLLECTIVELY, THE
"ESTIMATES") WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE
WITH PUBLISHED GUIDELINES ESTABLISHED BY THE COMMISSION OR THE AMERICAN
INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS. THE ESTIMATES
ARE INCLUDED IN THIS JOINT PROXY STATEMENT/PROSPECTUS SOLELY BECAUSE SUCH
INFORMATION WAS PROVIDED TO ROSLYN AND T R FINANCIAL, RESPECTIVELY. NEITHER
T R FINANCIAL NOR ROSLYN, NOR EITHER OF THEIR INDEPENDENT AUDITORS, ASSUME ANY
RESPONSIBILITY FOR THE ACCURACY OF SUCH INFORMATION. IN ADDITION, BECAUSE THE
ESTIMATES ARE INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES BEYOND EACH COMPANY'S CONTROL, THERE CAN BE NO
ASSURANCE THAT THE ESTIMATES WILL BE REALIZED; ACTUAL RESULTS MAY BE HIGHER OR
LOWER THAN THOSE ESTIMATED. NEITHER T R FINANCIAL'S AUDITOR OR ROSLYN'S
AUDITOR NOR ANY OTHER INDEPENDENT ACCOUNTANTS HAVE COMPILED, EXAMINED OR
PERFORMED ANY PROCEDURES WITH RESPECT TO THE ESTIMATES, NOR HAVE THEY EXPRESSED
ANY OPINION OR ANY OTHER FORM OF ASSURANCE ON SUCH INFORMATION OR ITS
ACHIEVABILITY, AND ASSUME NO RESPONSIBILITY FOR, AND DISCLAIM ANY ASSOCIATION
WITH, THE FOREGOING PROSPECTIVE FINANCIAL INFORMATION.
The Estimates do not give effect to the Merger and should be read together
with the Unaudited Pro Forma Condensed Combined Consolidated Financial
Statements.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of T R Financial's management and the T R Financial Board
may be deemed to have certain interests in the Merger that are in addition to or
potentially different from the interests of stockholders of T R Financial
generally. The T R Financial Board was aware of these interests and considered
them, among other matters, in approving the Merger Agreement and the
transactions contemplated thereby.
EMPLOYMENT AGREEMENTS. Roslyn has agreed to honor (i) the Employment
Agreements between T R Financial and, respectively, John M. Tsimbinos, A. Gordon
Nutt, William R. Kuhn, Dennis E. Henchy, Ira H. Kramer and John J. DeRusso, each
as amended and restated as of January 23, 1997, and (ii) the Employment
Agreements between Roosevelt Savings and, respectively, John M. Tsimbinos,
A. Gordon Nutt, William R. Kuhn, Dennis E. Henchy, Ira H. Kramer and John J.
DeRusso, each as amended and restated as of January 23, 1997 (collectively, the
"Employment Agreements"). The Employment Agreements provide
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for initial three-year terms with respect to Messrs. Tsimbinos and Nutt, two-
year terms with respect to Messrs. Kuhn, Henchy and Kramer and a one-year term
with respect to Mr. DeRusso (each an "Executive"). Each contract provides for
daily extensions such that the term of the contract will always be three years
for Messrs. Tsimbinos and Nutt, two years for Messrs. Kuhn, Henchy and Kramer
and one year for Mr. DeRusso unless written notice of termination of such
extensions is provided by either party. Upon a termination of the Executive's
employment for reasons other than cause, retirement, disability or death or,
unless consented to by the Executive, the Executive's resignation upon certain
events, including (i) failure to re-elect the Executive to his current office or
offices (or a more senior office) or, if currently a member of the T R Financial
Board, to renominate the Executive for election to the T R Financial Board,
(ii) a material adverse change in the Executive's functions, duties or
responsibilities, or relocation of his principal place of employment, or
(iii) liquidation or dissolution of T R Financial or Roosevelt Savings, the
Executive would be entitled to receive payments and benefits under the
Employment Agreements. Such payments and benefits would generally include a lump
sum payment equal to (i) his earned but unpaid salary as of the date of
termination, (ii) the present value of the amount the Executive would have
earned in salary had he continued working through the unexpired term of the
Employment Agreement and (iii) the present value of the additional benefits to
which he would have been entitled under all of T R Financial's or Roosevelt
Savings' employee benefit plans had he continued working through the unexpired
term of the Employment Agreement at the rate of salary in effect on his date of
termination, including, in the case of Messrs. Tsimbinos and Nutt, an additional
two years of service credit under the supplemental retirement benefit portion of
the Roosevelt Savings Supplemental Executive Retirement Plan (the "Roosevelt
Savings SERP"). Each Executive would also be entitled to continued
group life, health, prescription drug, dental and long-term disability insurance
coverage through the unexpired term of the Employment Agreement, except that for
Messrs. Tsimbinos and Nutt, such health and life insurance coverage would
continue for each of their and their spouses' lifetimes. Each Executive would
also be entitled to the payments that would have been paid under any incentive
plan as if he had continued working through the unexpired term of the Employment
Agreement and had earned an incentive award in each calendar year that ends
during the unexpired term of the Employment Agreement in an amount equal to the
product of the average rate for the four highest compensated officers of
T R Financial and the salary that would have been paid during such calendar
year.
If termination of employment, whether voluntary or involuntary, follows a
change in control of T R Financial or Roosevelt Savings, the Executive would be
entitled to the severance pay as described above, except that the unexpired term
of the Employment Agreement would be five years from the date of the change in
control for Messrs. Tsimbinos and Nutt, three years from the date of the change
in control for Messrs. Kuhn, Henchy and Kramer, and one year from the date of
the change in control for Mr. DeRusso, and that the payments under any incentive
plan would be based on the maximum attainable rate under such plan. The
payments made to an Executive upon or following a change in control of
T R Financial or Roosevelt Savings may result in an "excess parachute payment"
as defined under Section 280G of the Code, which may result in the imposition
of a 20% federal excise tax on the Executive and a denial of the deduction for
such excess amounts to T R Financial and Roosevelt Savings or to an acquiror
of T R Financial or Roosevelt Savings. Under the Employment Agreements,
T R Financial would indemnify the Executive for any such excise tax and for
any additional income, excise and employment taxes imposed as a result of such
indemnification. A "change in control" is generally defined to mean, during
the term of the Employment Agreement, an event that would be reported in
response to Item 1(a) of the Current Report on Form 8-K or an acquisition of
T R Financial's or Roosevelt Savings' stock that would require FRB approval
under the Bank Holding Company Act of 1956, as amended (the "BHC Act"), or
approval under the Change in Bank Control Act, as amended (the "CBCA"), or the
acquisition by a person or group of persons of 20% or more of T R Financial's
or Roosevelt Savings' common stock or a tender offer, exchange offer, merger
or other form of business combination, sale of assets or contested election
of directors which results in a change of a majority of the T R Financial
Board or the Roosevelt Savings Board.
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The Merger Agreement provides that, upon closing of the Merger, Roslyn will
pay Messrs. Tsimbinos, Nutt, Henchy, Kuhn, Kramer and DeRusso, in the form of a
lump sum, the amounts that would be due under each Employment Agreement, less
withholding, as if each such individual had effectively terminated employment
immediately after the Effective Time with full entitlement to lump sum cash
benefits following a change in control, as defined in such Employment
Agreements, regardless of any other requirements in the Employment Agreements
and whether or not the individual died or became disabled prior to the Effective
Time. The estimated aggregate amount of the payments and benefits to be paid to
the above named executives in satisfaction of the obligations described above
under the Employment Agreements (based on the closing price of a share of Roslyn
Common Stock on November 6, 1998, the latest practicable date prior to the
mailing of this Joint Proxy Statement/Prospectus, multiplied by 2.05, and an
assumed closing date for the Merger of December 31, 1998) is approximately
$17.9 million, without including amounts payable as a result of the
indemnification for the 20% federal excise tax on "excess parachute payments"
described above and for any additional taxes imposed as a result of such
indemnification, all as described above. In the event that a "change in control"
within the meaning of section 280G of the Code does not occur as a result of the
Merger because of an increase in the Exchange Ratio or otherwise, the 20%
federal excise tax may not apply to the payments to these six executives. In the
event that the 20% excise tax does apply to these payments and benefits, the
estimated aggregate amount of the benefits to be paid to the above named
Executives in satisfaction of the obligation described above under the
Employment Agreements, based on the assumptions described above, including such
indemnification payments, would be approximately $28.8 million. In addition, if
the Merger is a "change in control" within the meaning of Section 280G of the
Code, approximately $26.4 million of the $28.8 million would not be deductible
by T R Financial or Roslyn as a result of Section 280G of the Code. If the
Merger is not considered a "change in control" within the meaning of Section
280G of the Code, the approximate $17.9 million will be deductible or not
deductible under the ordinary rules governing deductibility of compensation
payments and benefits.
At the Effective Time, Roslyn will enter into new employment agreements
with Mr. Tsimbinos and with two additional executive officers of T R Financial
to be determined by Roslyn and T R Financial ("Roslyn Employment Agreements").
In addition, as of the Effective Time, Mr. Tsimbinos will be named Chairman of
the Board of Roslyn and a Vice Chairman of Roslyn Savings and a member of the
committee of the Board of Directors of each of Roslyn and Roslyn Savings
responsible for selecting or nominating directors of Roslyn and Roslyn Savings.
If, within four years following the Effective Time, Mr. Mancino, Roslyn's and
Roslyn Savings' President and Chief Executive Officer, shall cease to be the
Chief Executive Officer of Roslyn or Roslyn Savings by reason of death,
disability, retirement or otherwise, Mr. Tsimbinos will be named as the interim
Chief Executive Officer of Roslyn or Roslyn Savings, or both, as the case may
be, to replace Mr. Mancino until such time as each of the Boards of Directors of
Roslyn and Roslyn Savings, respectively, appoints a new chief executive officer.
The Roslyn Employment Agreement for Mr. Tsimbinos will have a term through
June 30, 2002 and will provide for an annual salary of no less than $500,000 per
year, noncompetition compensation at an annual rate of $175,000 per year plus
certain specified benefits under Roslyn's or Roslyn Savings' employee benefit
plans. The total aggregate estimated present value of the compensation and
benefits to be provided to Mr. Tsimbinos under the Roslyn Employment Agreement
is expected to be approximately $1 million per year. Such agreement also
contains provisions regarding a change in control, indemnification for excise,
income and employment taxes and other provisions generally comparable to the
employment agreements in effect for existing officers of Roslyn. The terms and
conditions of the Roslyn Employment Agreements for each of the two additional
executive officers of T R Financial have not yet been determined.
T R FINANCIAL CORP. 1993 INCENTIVE STOCK OPTION PLAN AND 1993 STOCK OPTION
PLAN FOR OUTSIDE DIRECTORS (THE "OPTION PLANS"). Under the terms of the Merger
Agreement, all T R Financial Options outstanding at the Effective Time
(representing options to purchase 1,757,692 shares of T R Financial Common
Stock, as of September 30, 1998) will automatically be converted into options to
purchase shares
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of Roslyn Common Stock, subject to the terms of the Option Plans and the
individual award agreements issued thereunder. Under the Option Plans, all
T R Financial Options will become fully vested and exercisable upon a change in
control, as defined in the Option Plans. The number of substitute options and
the exercise price thereof will be set by, respectively, multiplying the number
of shares covered by, and dividing the exercise price of, the T R Financial
Options by the Exchange Ratio.
ROSLYN BOARD OF DIRECTORS. Roslyn has agreed in the Merger Agreement to
cause four members of the current T R Financial Board, selected by T R Financial
and acceptable to Roslyn, who are willing to so serve, to be elected or
appointed as directors of Roslyn and Roslyn Savings at, or as promptly as
practicable after, the Effective Time. Such new directors of Roslyn and Roslyn
Savings will receive fees and other compensation, remuneration and benefits
equal to the fees, compensation, remuneration and benefits received by other
members of Roslyn's and Roslyn Savings' Boards of Directors.
ADVISORY BOARD. Promptly following the Effective Time, Roslyn will cause
all of the members of the T R Financial Board as of May 25, 1998, who do not
become new directors of Roslyn and Roslyn Savings and who are willing to
so serve, to be elected or appointed as members of an advisory board established
by Roslyn (the "Advisory Board"), the function of which shall be to advise
Roslyn with respect to deposit and lending activities in T R Financial's former
market area and to maintain and develop customer relationships. The members of
the Advisory Board will be elected to serve a term of three years beginning on
the date the Merger is consummated. Beginning immediately after such date, each
member of the Advisory Board shall receive an annual retainer fee for such
service equal to the estimated average fees payable during that year (including
annual or retainer fees and fees for attending board or committee meetings) to a
member of the Roslyn Board. The Advisory Board shall terminate three years
after the Effective Date unless extended by Roslyn. Roslyn has also agreed
that, in the event one or more of the former T R Financial Board members who
becomes a new member of the Roslyn or Roslyn Savings Board of Directors ceases
to be a member of the Board of Directors of either Roslyn or Roslyn Savings
within three years after the Effective Time, Roslyn will use good faith
efforts, within the confines of its fiduciary duties, to replace such director
with an Advisory Board member.
INDEMNIFICATION AND INSURANCE. Roslyn has agreed in the Merger Agreement
that, from and after the Effective Time through the sixth anniversary of the
Effective Time, Roslyn will indemnify and hold harmless each present and former
director and officer of T R Financial or its direct or indirect subsidiaries and
each officer or employee of T R Financial or its direct or indirect subsidiaries
who is serving or has served as a director or trustee of another entity
expressly at T R Financial's request or direction (each, an "Indemnified
Party"), against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities (collectively, "Costs")
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of matters existing or occurring at or prior to the Effective Time
(including the transactions contemplated by the Merger Agreement, including the
entering into of the T R Financial Merger Stock Option Agreement), whether
asserted or claimed prior to, at or after the Effective Time, and to advance any
such Costs to each Indemnified Party as they are from time to time incurred, in
each case to the fullest extent such Indemnified Party would have been
indemnified as a director, officer or employee of T R Financial and its
subsidiaries and as then permitted under applicable law.
Roslyn has also agreed in the Merger Agreement that, for a period of six
years after the Effective Time, it will cause to be maintained in effect for
T R Financial's and Roosevelt Savings's former directors and officers coverage
under Roslyn's and Roslyn Savings' directors' and officers' liability insurance
policies no less advantageous to the beneficiaries thereof than the current
directors' and officers' liability insurance policies maintained by
T R Financial and Roosevelt Savings, subject to certain maximum cost limits.
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SHARE OWNERSHIP. As of September 30, 1998, directors and executive
officers of T R Financial, Roosevelt Savings and certain of their affiliates
owned an aggregate of 2,961,218 shares of T R Financial Common Stock (inclusive
of shares which could be acquired upon the exercise of vested and unvested
T R Financial Options) for which they will receive the Merger Consideration.
MANAGEMENT AND OPERATIONS FOLLOWING THE MERGER
Pursuant to the terms of the Merger Agreement, at the Effective Time,
Mr. Mancino will be the Vice Chairman of the Roslyn Board, President and
Chief Executive Officer of Roslyn and the Chairman of the Board, President and
Chief Executive Officer of Roslyn Savings. Pursuant to the Merger Agreement, the
Roslyn Board will appoint Mr. Tsimbinos and three other members of the
T R Financial Board as members of both the Roslyn Board and the Roslyn Savings
Board and Mr. Tsimbinos as the Chairman of Roslyn and Vice Chairman of Roslyn
Savings. In addition, Roslyn has also agreed to appoint Mr. Tsimbinos to the
nominating committee of both the Roslyn Board and the Roslyn Savings Board.
Following the Effective Time, Roslyn will establish the Advisory Board to
advise Roslyn on deposit and lending activities in T R Financial's former market
area and to develop and maintain customer relationships and will maintain the
Advisory Board for a period of three years following the Effective Time. The
Advisory Board will be comprised of all of the former members of the T R
Financial Board who are not appointed to the Roslyn Board and are willing to be
selected and to serve on the Advisory Board. Each member of the Advisory Board
will be entitled to receive an annual retainer fee.
Following the Merger, the parties intend, subject to regulatory approval,
to merge Roosevelt Savings and Roslyn Savings, with the surviving bank named The
Roslyn Savings Bank, pursuant to the Bank Merger, and to consolidate their
operations. Roslyn expects to achieve significant consolidation efficiencies
following the consummation of the Merger, although there can be no assurance
that the anticipated efficiencies will be achieved. The efficiencies are
expected to be achieved primarily through the elimination of duplicative
compensation costs, advertising, marketing and computer system costs. A merger
integration committee, consisting of senior management members of Roslyn and T R
Financial, is in the process of establishing a definitive plan, including a
timetable, to achieve the cost reductions.
The Merger Agreement provides that Roosevelt Savings will be merged with
and into Roslyn Savings. Roosevelt Savings is currently a member of the Federal
Home Loan Bank ("FHLB") and, as of September 30, 1998, had $623.4 million in
outstanding indebtedness, and $4.0 million in accrued interest payable, to the
FHLB. Roslyn Savings withdrew as a member of the FHLB in 1990 and generally is
not entitled to become a member of the FHLB again until 2000, the end of the
ten-year period following its withdrawal. If Roosevelt Savings is merged with
and into Roslyn Savings, Roosevelt Savings' membership in the FHLB will
terminate. One consequence of such a termination is that the FHLB could declare
Roosevelt Savings' indebtedness to the FHLB, and accrued interest thereon,
immediately due and payable, and could impose prepayment fees for such amounts.
Based upon the amounts outstanding as of September 30, 1998 and the interest
rate in effect as of October 27, 1998, such prepayment fees were estimated by
the FHLB to be approximately $24 million, if imposed by the FHLB. The
FHLB is not required to declare Roosevelt Savings' FHLB borrowings, and accrued
interest thereon, as immediately due and payable, and Roslyn Savings has
requested confirmation from the FHLB that the FHLB will not make such a
declaration or impose prepayment fees upon such amounts. By letter dated
October 29, 1998, the FHLB stated that it is not the FHLB's present intention to
require that Roosevelt Savings' outstanding indebtedness be prepaid by Roslyn
Savings at the time of the consummation of the Merger, and as such, prepayment
fees or other settlement amounts are not expected to be an issue, although the
FHLB's position is subject to its review of Roslyn Savings' financial condition
at the time of the Merger, the amount and value of collateral
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pledged with respect to any outstanding indebtedness, any changes in the law and
policies governing the operations of the FHLB and whether Roslyn's intent to
apply for FHLB membership has changed.
In addition to the foregoing, if Roosevelt Savings' FHLB membership is
terminated upon the Bank Merger, the resulting bank would no longer have access
to the privileges of Roosevelt Savings' membership in the FHLB, which include,
among other things, (i) access to FHLB borrowing for liquidity and operating
purposes and (ii) eligibility to participate in FHLB programs administered with
respect to the Community Reinvestment Act ("CRA"), several of which programs
Roosevelt Savings participates in. Currently, it is the intention of Roslyn
Savings to apply to have its FHLB membership reinstated in the year 2000.
Roslyn believes that the inability to utilize FHLB advances will not have a
material adverse effect on the resulting bank's financial condition or results
of operations; however, should Roslyn Savings be unable to receive its FHLB
membership shortly following its application in the year 2000, such inability to
utilize FHLB advances on a long-term basis may hinder Roslyn Savings' ability to
meet its liquidity needs on the most cost-effective basis.
The Merger Agreement permits an alternative structure under which Roslyn
may specify that the structure of the transactions contemplated by the Merger
Agreement be revised so as to effect the purposes of the Merger Agreement,
provided that such revised structure would not adversely affect the treatment of
the transaction as a pooling-of-interests for accounting purposes, the tax or
economic benefits of the transactions contemplated by the Merger Agreement
or materially delay the Closing Date. Roslyn therefore could specify that
Roslyn Savings will merge with and into Roosevelt Savings, rather than Roosevelt
Savings merging with and into Roslyn Savings, in order to avoid the termination
of membership in the FHLB, as long as such a change does not adversely affect
the treatment of the transaction as a pooling-of-interests for accounting
purposes, the tax or economic benefits of the transactions contemplated by
the Merger Agreement or materially delay the Closing Date. No
final decision has been made as to whether or not the proposed merger of
Roosevelt Savings with and into Roslyn Savings will be restructured so as to
avoid termination of the resulting bank's membership in the FHLB. In either
case, the resulting bank will be called "The Roslyn Savings Bank."
EMPLOYEE MATTERS
Each person who is employed by T R Financial or Roosevelt Savings as an
employee immediately prior to the Effective Time (a "T R Financial Employee")
shall, at the Effective Time, become an employee of Roslyn or Roslyn Savings.
Beginning at the Effective Time, each of the T R Financial Employees shall serve
Roslyn or Roslyn Savings in the same capacity in which such employee served
immediately prior to the Effective Time and upon the same terms and conditions
generally applicable to other employees of Roslyn or Roslyn Savings with
comparable positions, with the following special provisions:
(i) No T R Financial Employee shall be, or have or exercise the authority
of, an officer of Roslyn or Roslyn Savings, unless and until elected or
appointed an officer of Roslyn or Roslyn Savings in accordance with Roslyn's or
Roslyn Savings' Bylaws.
(ii) At or as soon as practicable following the Effective Time, Roslyn
and Roslyn Savings will implement a program of compensation and benefits
designed to cover all similarly situated employees on a uniform basis (the "New
Compensation and Benefits Program"). The New Compensation and Benefits Program
may contain any combination of new plans, continuations of plans maintained by
Roslyn or Roslyn Savings immediately prior to the Effective Time and
continuations of plans maintained by T R Financial or Roosevelt Savings
immediately prior to the Effective Time, as Roslyn or Roslyn Savings, in its
discretion, may determine. To the extent that it is not practicable to
implement any constituent part of the New Compensation and Benefits Program at
the Effective Time, Roslyn and Roslyn Savings shall continue in
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effect any comparable plan maintained immediately prior to the Effective Time
for the respective employees of Roslyn, T R Financial, Roslyn Savings and
Roosevelt Savings for a transition period. During the transition period, the
T R Financial Employees who become employees of Roslyn or Roslyn Savings at the
Effective Time shall continue to participate in the plans of T R Financial and
Roosevelt Savings that are continued for transitional purposes, and all other
employees of Roslyn or Roslyn Savings will participate only in the comparable
plans of Roslyn and Roslyn Savings that are continued for transitional purposes.
(iii) Each constituent part of the New Compensation and Benefits Program
will recognize, in the case of persons employed by Roslyn, Roslyn Savings,
T R Financial or Roosevelt Savings immediately prior to the Effective Time who
are also employed by Roslyn or Roslyn Savings immediately after the Effective
Time, all service with Roslyn, Roslyn Savings, T R Financial or Roosevelt
Savings as service with Roslyn and Roslyn Savings for all purposes, including
eligibility, vesting, benefit accrual and level of matching contributions;
provided, however, that such service will not be recognized to the extent that
such recognition would result in a duplication of benefits.
(iv) In the case of any constituent part of the New Compensation and
Benefits Program which is a life, health or long-term disability insurance plan:
(a) such plan will not apply any pre-existing condition limitations for
conditions covered under the applicable life, health or long-term disability
insurance plans maintained by Roslyn, Roslyn Savings, T R Financial or Roosevelt
Savings as of the Effective Time, (b) each such plan which is a health insurance
plan will honor any deductible and co-payment or out-of-pocket expenses incurred
under the applicable health insurance plans maintained by Roslyn, Roslyn
Savings, T R Financial and Roosevelt Savings as of the Effective Time and
(c) each such plan which is a life or long-term disability insurance plan will
waive any medical certification otherwise required in order to assure the
continuation of coverage at a level not less than that in effect immediately
prior to the implementation of such plan (but subject to any overall limit on
the maximum amount of coverage under such plans).
Roslyn has also agreed to assume the obligations of T R Financial and
Roosevelt Savings with respect to any severance plans or agreements of
T R Financial or Roosevelt Savings in effect as of May 25, 1998, and to pay
amounts thereunder when due; provided, however, that in the event of the
termination of employment of T R Financial Employees within one year following
the Effective Time, such persons shall be provided severance benefits equal to
the greater of those provided under the Roosevelt Savings Bank Severance Plan
or those provided by the Roslyn Savings Bank Employee Severance Compensation
Plan as in effect as of May 25, 1998; provided, however, that the severance
benefits payable to such persons under the Roslyn Savings Bank Employee
Severance Compensation Plan shall be limited to a maximum of 52 weeks of
Annual Compensation, as defined in such plan.
In addition, annual incentive compensation under T R Financial's pre-
established incentive plans will be paid at the Effective Time, but such
payments will be adjusted and pro-rated for the portion of the year from
January 1, 1998 through the Closing Date.
T R Financial Options granted under the Option Plans will vest upon a
change in control, as defined in the Option Plans. See "-- Interests of Certain
Persons in the Merger."
Pursuant to the terms of the T R Financial ESOP, in the event of a "change
in control," as defined by the T R Financial ESOP, any unvested portion of
benefits shall vest immediately. For purposes of this plan, it is expected that
the Merger will constitute a change in control. As of September 30, 1998, the
T R Financial ESOP held 1,023,094 shares of T R Financial Common Stock in an
unallocated account, and the outstanding principal balance of the loan to the
T R Financial ESOP was $4.6 million. In the ordinary course, the loan to the
T R Financial ESOP would have been repaid as quarterly contributions were made
to the T R Financial ESOP and shares would have been released annually from the
unallocated account and
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allocated to active participants' accounts. The T R Financial ESOP generally
provides that, upon a change in control, unallocated shares in the T R Financial
ESOP will be sold to repay any outstanding loan balance and all remaining
unallocated shares or proceeds thereof will be allocated among participants who
were employed immediately preceding the change in control in proportion to
compensation for that part of the year prior to the change in control. The
allocation of previously unallocated shares to participants will result in the
recognition of compensation expense at the Effective Time equal to the fair
value of such shares multiplied by the number of shares allocated to the
participants' accounts. It is estimated that, after repayment of the outstanding
loan to the T R Financial ESOP (based upon the closing price of Roslyn Common
Stock on November 6, 1998, the latest practicable date prior to the mailing of
this Joint Proxy Statement/Prospectus, multiplied by 2.05, an assumed
outstanding principal balance of the loan to the T R Financial ESOP of
approximately $4.4 million on December 31, 1998), and an assumed closing date
for the Merger of December 31, 1998 the expense would be approximately
$25.1 million. As of the date of the change in control of T R Financial, the
committee under the T R Financial ESOP will direct the trustee of the T R
Financial ESOP to sell a sufficient number of shares of Roslyn Common Stock
received by such trustee in exchange for the T R Financial Common Stock held in
the unallocated account under the T R Financial ESOP in order to repay in full
the outstanding balance of any loan to the T R Financial ESOP. The number of
such shares that will be sold will depend upon the value of such shares at the
time sold and the outstanding balance of any such loan, and any remaining shares
or cash proceeds from the sale of such shares held in the unallocated account
under the T R Financial ESOP will be allocated among the accounts of the
participants in the T R Financial ESOP who were employed by, or on a recognized
absence from the employment of, T R Financial or Roosevelt Savings immediately
prior to the date on which the change in control occurs, and all participants
will fully vest in their allocated account. Generally, the allocation will be
based on the proportion of each such participant's "cash compensation" as
defined in the T R Financial ESOP (up to the maximum annual compensation
permitted to be taken into account under tax-qualified plans under the
limitations of the Code, which is $160,000 in 1998) during the period from
January 1/st/ in the plan year in which the change in control occurs through the
day immediately preceding the change in control date, to the aggregate cash
compensation for all such participants during such period.
Roosevelt Savings maintains the Roosevelt Savings SERP to compensate
certain individuals who participate in the Roosevelt Savings Retirement Plan,
the Roosevelt Savings 401(k) Plan and the T R Financial ESOP, but whose benefits
otherwise receivable under such plans are limited because of certain specified
limitations under the Code. Under the Roosevelt Savings SERP, if a
participant's account in the T R Financial ESOP is adversely affected by one or
more of such Code limitations, including Code limitations affecting allocation
under the T R Financial ESOP on a change of control as described above, a
supplemental benefit is provided under the Roosevelt Savings SERP. Such
supplemental benefit would include any amount that could not be allocated to a
participant's account under the T R Financial ESOP because of the limitations on
annual additions under, or the amount of compensation that could be taken into
account under, a tax-qualified plan.
Under the provisions of the T R Financial ESOP and the Roosevelt Savings
SERP, six senior executives would be entitled to benefits under the T R
Financial ESOP and the Roosevelt Savings SERP as a result of the change in
control and the plan provisions described above in an aggregate amount estimated
to be approximately $5.0 million, based on the closing price of a share of
Roslyn Common Stock on November 6, 1998, the latest practicable date prior to
the mailing of this Joint Proxy Statement/Prospectus, multiplied by 2.05, and an
assumed closing date for the Merger of December 31, 1998.
CONDITIONS TO THE MERGER
The respective obligations of Roslyn and T R Financial to effect the Merger
are subject to the satisfaction of the following conditions at or prior to the
Effective Time: (i) the Merger Agreement shall have been approved and adopted by
the requisite vote of each of Roslyn's and T R Financial's stockholders in
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accordance with applicable laws and regulations; (ii) the requisite regulatory
approvals and any necessary regulatory consents and waivers with respect to the
Merger shall have been obtained and shall remain in full force and effect, and
all statutory waiting periods shall have expired; and all other consents,
waivers and approvals of any third parties which are necessary to permit the
consummation of the Merger shall have been obtained or made, except for those of
which failure to obtain would not have a Material Adverse Effect (as defined
below) (a) on Roslyn and its subsidiaries taken as a whole or (b) on
T R Financial and its subsidiaries taken as a whole; (iii) neither Roslyn nor
T R Financial shall be subject to any order, decree or injunction of a court or
agency of competent jurisdiction which enjoins or prohibits the consummation of
the Merger, the Bank Merger or any other transactions contemplated by the Merger
Agreement; (iv) no statute, rule or regulation shall have been enacted, entered,
promulgated, interpreted, applied or enforced by any governmental authority
which prohibits, restricts or makes illegal consummation of the Merger, the Bank
Merger or any other transactions contemplated by the Merger Agreement; (v) the
Registration Statement shall have been declared effective by the Commission and
no proceedings shall be pending or threatened by the Commission to suspend the
effectiveness of the Registration Statement, and all required approvals by state
securities or "blue sky" authorities with respect to the transactions
contemplated by the Merger Agreement shall have been obtained; (vi) Roslyn shall
have received a letter, dated as of the Effective Date, from its independent
certified public accountants, reasonably satisfactory to Roslyn and
T R Financial, to the effect that the Merger shall be qualified to be treated
as a pooling-of-interests for accounting purposes by Roslyn; (vii) Roslyn
shall have received a letter agreement from each T R Financial affiliate
agreeing: (a) to comply with Rule 145 of the Securities Act; (b) to refrain
from transferring shares as required by the pooling-of-interests accounting
rules; and (c) to be present, in person or by proxy, and vote in favor of the
Merger Agreement at the T R Financial Meeting; and (viii) Roslyn shall have
caused to be listed on the Nasdaq National Market, or on such other market on
which shares of Roslyn Common Stock shall then be trading, subject only to
official notice of issuance, the shares of Roslyn Common Stock to be issued by
Roslyn in exchange for the shares of T R Financial Common Stock. In addition,
the Merger Agreement has a condition that Roslyn is to receive stockholder
approval of an amendment to its Certificate of Incorporation to increase from
100,000,000 to 200,000,000 the number of authorized shares of Roslyn Common
Stock; however, the T R Financial Board has waived this condition to the Merger
since Roslyn presently has sufficient authorized shares of Roslyn Common Stock
to consummate the Merger.
The obligation of Roslyn to effect the Merger is further subject to the
satisfaction, or waiver by Roslyn, of the following conditions: (i) each of the
obligations of T R Financial and Roosevelt Savings, respectively, required to be
performed by it at or prior to the Effective Time pursuant to the terms of the
Merger Agreement shall have been duly performed and complied with in all
material respects and the representations and warranties of T R Financial and
Roosevelt Savings contained in the Merger Agreement shall be true and correct
(subject to T R Financial's and Roosevelt Savings' prior disclosure of any
necessary qualification of such representations and warranties and subject to
the Material Adverse Effect threshold defined below) as of May 25, 1998 and as
of the Effective Time as though made at and as of the Effective Time (except as
to any representation or warranty which specifically relates to an earlier
date), and Roslyn shall have received a certificate to the foregoing effect
signed by the chief executive officer and the chief financial or principal
accounting officer of T R Financial; (ii) all action required to be taken by, or
on the part of, T R Financial and Roosevelt Savings to authorize the execution,
delivery and performance of the Merger Agreement and the consummation by
T R Financial and Roosevelt Savings of the transactions contemplated thereby
shall have been duly and validly taken by the Board of Directors and
stockholders of T R Financial or Roosevelt Savings, as the case may be, and
Roslyn shall have received certified copies of the resolutions evidencing such
authorization; (iii) T R Financial shall have obtained the consent or approval
of each person (except for those the absence of which would not have a Material
Adverse Effect on T R Financial, Roslyn or their respective subsidiaries) whose
consent or approval shall be required in order to permit the succession by the
surviving corporation pursuant to the Merger to any obligation, right or
interest of T R Financial or its subsidiaries under any loan or credit
agreement, note, mortgage, indenture, lease, license or other
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agreement or instrument to which T R Financial or its subsidiaries is a party or
is otherwise bound, except those of which failure to obtain would not,
individually or in the aggregate, have a Material Adverse Effect on Roslyn
(after giving effect to the consummation of the transactions contemplated by the
Merger Agreement) or upon the consummation of the transactions contemplated by
the Merger Agreement; (iv) neither a "Distribution Date" nor a "Shares
Acquisition Date," as such terms are defined in the T R Financial Rights
Agreement, shall have occurred, and the T R Financial Rights shall not have
become nonredeemable and shall not become nonredeemable upon consummation of the
Merger, and the T R Financial Rights shall not become exercisable for capital
stock of Roslyn upon consummation of the Merger; (v) Roslyn shall have received
certificates (such certificates to be dated as of a day as close as practicable
to the Closing Date) from appropriate authorities as to the corporate existence
and good standing of T R Financial and its subsidiaries; and (vi) Roslyn shall
have received an opinion of Muldoon, Murphy & Faucette, counsel to Roslyn, dated
as of the Effective Date, in form and substance customary in transactions of the
type contemplated by the Merger Agreement, and reasonably satisfactory to
Roslyn, substantially to the effect that on the basis of the facts,
representations and assumptions set forth in such opinion which are consistent
with the state of facts existing at the Effective Time, the Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code and that accordingly: (a) no gain or loss will be
recognized by Roslyn, Roslyn Savings, T R Financial or Roosevelt Savings as a
result of the Merger; (b) except to the extent of any cash received in lieu of a
fractional share interest in Roslyn Common Stock, no gain or loss will be
recognized by the stockholders of T R Financial who exchange their T R Financial
Common Stock for Roslyn Common Stock pursuant to the Merger; (c) the tax basis
of Roslyn Common Stock received by stockholders who exchange their T R Financial
Common Stock for Roslyn Common Stock in the Merger will be the same as the tax
basis of T R Financial Common Stock surrendered pursuant to the Merger, reduced
by any amount allocable to a fractional share interest for which cash is
received; and (d) the holding period of Roslyn Common Stock received by each
stockholder in the Merger will include the holding period of T R Financial
Common Stock exchanged therefor, provided that such stockholder held such
T R Financial Common Stock as a capital asset on the Effective Date.
The Merger Agreement defines a "Material Adverse Effect," when applied to a
party to the Merger Agreement, as either (i) an effect which is material and
adverse to the business, financial condition or results of operations of such
party and its subsidiaries taken as whole; provided, however, that any such
effect resulting from any (a) changes in laws, rules or regulations or generally
accepted accounting principles or interpretations thereof that apply to Roslyn
and Roslyn Savings and T R Financial and Roosevelt Savings, as the case may be,
or (b) changes in the general level of market interest rates shall not be
considered in determining if a Material Adverse Effect has occurred; or (ii) the
failure of certain representations and warranties required by the Merger
Agreement to be true and correct or true and correct in all material respects.
The obligation of T R Financial to effect the Merger is further subject
to the satisfaction, or waiver by T R Financial, of the following conditions:
(i) each of the obligations of Roslyn and Roslyn Savings, respectively, required
to be performed by it at or prior to the Effective Time pursuant to the terms of
the Merger Agreement shall have been duly performed and complied with in all
material respects and the representations and warranties of Roslyn and Roslyn
Savings contained in the Merger Agreement shall be true and correct (subject to
Roslyn's and Roslyn Savings' prior disclosure of any necessary qualification of
such representations and warranties and subject to the Material Adverse Effect
threshold previously defined) as of May 25, 1998 and as of the Effective Time as
though made at and as of the Effective Time (except as to any representation or
warranty which specifically relates to an earlier date), and T R Financial shall
have received a certificate to the foregoing effect signed by the chief
executive officer and the chief financial or principal accounting officer of
Roslyn; (ii) all action required to be taken by, or on the part of, Roslyn and
Roslyn Savings to authorize the execution, delivery and performance of the
Merger Agreement and the
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consummation by Roslyn and Roslyn Savings of the transactions contemplated
thereby shall have been duly and validly taken by the Board of Directors and
stockholders of Roslyn and Roslyn Savings, as the case may be, and T R Financial
shall have received certified copies of the resolutions evidencing such
authorization; (iii) Roslyn shall have obtained the consent or approval of each
person whose consent or approval shall be required in connection with the
transactions contemplated by the Merger Agreement under any loan or credit
agreement, note, mortgage, indenture, lease, license or other agreement or
instrument to which Roslyn or its subsidiaries is a party or is otherwise bound,
except those of which failure to obtain would not, individually or in the
aggregate, have a Material Adverse Effect on Roslyn (after giving effect to the
transactions contemplated by the Merger Agreement) or upon the consummation of
the transactions contemplated by the Merger Agreement; (iv) T R Financial shall
have received certificates (such certificates to be dated as of a day as close
as practicable to the Closing Date) from appropriate authorities as to the
corporate existence and good standing of Roslyn and its subsidiaries; and (v)
T R Financial shall have received an opinion of Thacher Proffitt, counsel to T R
Financial, dated as of the Effective Date, in form and substance customary in
transactions of the type contemplated by the Merger Agreement, and reasonably
satisfactory to T R Financial, substantially to the effect that on the basis of
the facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time, the Merger
will be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code and that accordingly: (a) no gain or loss
will be recognized by Roslyn, Roslyn Savings, T R Financial, or Roosevelt
Savings as a result of the Merger; (b) except to the extent of any cash received
in lieu of a fractional share interest in Roslyn Common Stock, no gain or loss
will be recognized by the stockholders of T R Financial who exchange their T R
Financial Common Stock for Roslyn Common Stock pursuant to the Merger; (c) the
tax basis of Roslyn Common Stock received by stockholders who exchange their T R
Financial Common Stock for Roslyn Common Stock in the Merger will be the same as
the tax basis of T R Financial Common Stock surrendered pursuant to the Merger,
reduced by any amount allocable to a fractional share interest for which cash is
received; and (d) the holding period of Roslyn Common Stock received by each
stockholder in the Merger will include the holding period of T R Financial
Common Stock exchanged therefor, provided that such stockholder held such T R
Financial Common Stock as a capital asset on the Effective Date.
No assurance can be provided as to when, or whether, the regulatory
consents and approvals necessary to consummate the Merger will be obtained or
whether all of the other conditions precedent to the Merger will be
satisfied or waived by the party permitted to do so. See
"--Regulatory Approvals Required for the Merger" below. If the Merger is not
effected on or before January 31, 1999 (provided that if, as of such date, all
necessary regulatory or governmental approvals, consents or waivers required to
consummate the Merger shall not have been obtained but all other conditions have
been fulfilled, then such date may be extended to March 31, 1999), the Merger
Agreement may be terminated by a vote of a majority of the Board of Directors of
either Roslyn or T R Financial unless the failure to effect the Merger by such
date is due to the breach of the Merger Agreement by the party seeking to
terminate the Merger Agreement.
REGULATORY APPROVALS REQUIRED FOR THE MERGER
Consummation of the Merger is subject to a number of regulatory approvals
and consents. The Bank Merger is subject to the prior approval of the FDIC
under the Bank Merger Act, as amended (the "Bank Merger Act"). In reviewing
applications under the Bank Merger Act, the FDIC must consider, among other
factors, the financial and managerial resources and future prospects of the
existing and resulting institutions, and the convenience and needs of the
communities to be served. In addition, the FDIC may not approve a transaction
that will result in a monopoly or be in furtherance of any combination or
conspiracy to monopolize or to attempt to monopolize the business of banking in
any part of the United States, or if its effect in any section of the country
may be substantially to lessen competition or to tend to create a monopoly, or
if it would in any other manner be a restraint of trade, unless the FDIC finds
that the anticompetitive effects of the
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transaction are clearly outweighed by the public interests and the probable
effect of the transaction on meeting the convenience and needs of the
communities to be served. In addition, as discussed below, a waiting period of
up to 30 days must be satisfied prior to consummation of the Bank Merger after
FDIC approval. Roslyn filed an application with the FDIC for approval of the
Bank Merger on September 9, 1998.
In addition, pursuant to Section 601 of the New York State Banking Law (the
"NYBL"), the Bank Merger is subject to the prior approval of the Superintendent.
Roslyn filed an application for approval of the Bank Merger with the
Superintendent on September 9, 1998. In determining whether to approve the
application for the merger of Roosevelt Savings with and into Roslyn Savings,
the Superintendent will consider, among other factors, whether the Bank Merger
would be consistent with adequate or sound banking and would not result in
concentration of assets beyond limits consistent with effective competition, and
whether the Bank Merger would result in such a lessening of competition as to be
injurious to the interest of the public or tend toward monopoly. The
Superintendent will also consider the public interest and the needs and
convenience thereof. Further, it is the policy of the State of New York to
ensure the safe and sound conduct of banking organizations, to conserve assets
of banking organizations, to prevent hoarding of money, to eliminate unsound and
destructive competition among banking organizations, and to maintain public
confidence in the business of banking and protect the public interest and the
interests of depositors, creditors, and stockholders, and such factors will be
considered by the Superintendent in connection with Roslyn's application. The
Superintendent approved the application on November 5, 1998.
The Merger is subject to the approval of the FRB or the Federal Reserve
Bank of New York, acting pursuant to delegated authority (the "Reserve Bank"),
or the waiver by the FRB of such requirement. Roslyn filed a request for a
waiver from this application requirement since the FRB will have no continuing
jurisdiction over the merged company and the transaction is being reviewed by
other banking agencies. The Reserve Bank approved the waiver request on
September 23, 1998.
Under the CRA, the FDIC must take into account the record of performance of
Roslyn Savings and Roosevelt Savings in meeting the credit needs of the entire
community, including low- and moderate-income neighborhoods, served by each
institution. As part of the review process, the banking agencies frequently
receive comments and challenges from several such community groups and others.
The FDIC and NYBD have each received, and the FDIC is currently reviewing, a
number of positive comments from community groups and a single challenge from
another such community group which alleges, among other things, that Roslyn
Savings and Roosevelt Savings have not met their obligations in helping to meet
the credit needs of low- and moderate-income neighborhoods. Roslyn Savings and
Roosevelt Savings intend to vigorously defend their lending records and do not
currently anticipate that the community group's challenge on the applications
filed with the FDIC and NYBD will significantly delay the consummation of the
Merger or result in the imposition by the FDIC or NYBD of any condition of its
approval that would be materially burdensome to Roslyn or Roslyn Savings;
however, there can be no assurance that such a delay will not result or that
such condition
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will not be imposed. See "CERTAIN BANKING REGULATORY CONSIDERATIONS -- Community
Reinvestment Act."
In addition, under federal law, prior to consummation of a merger, a period
of 30 days must expire following approval by the FDIC and FRB within which
period the United States Department of Justice ("Department of Justice") may
file objections to the Merger under the federal antitrust laws. The post-
approval waiting period may be reduced by the FDIC or FRB to 15 days, with the
concurrence of the Department of Justice. The Department of Justice could take
such action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the Merger unless divestiture of an
acceptable number of branches to a competitively suitable purchaser could be
made. While Roslyn believes that the likelihood of such action by the
Department of Justice is remote in this case, there can be no assurance that the
Department of Justice will not initiate such proceeding, or that the Attorney
General of the State of New York will not challenge the Merger, or if such
proceeding is instituted or challenge is made, as to the result thereof.
The Merger and Bank Merger cannot proceed in the absence of the requisite
regulatory approvals. See "-- Conditions to the Merger" and "-- Waiver and
Amendment; Termination." There can be no assurance that such regulatory
approvals will be obtained, and if obtained, there can be no assurance as to the
date of any such approval. There can also be no assurance that any such
approvals will not contain a condition or requirement which causes such
approvals to fail to satisfy the condition set forth in the Merger Agreement and
described above under "-- Conditions to the Merger."
Roslyn is not aware of any other regulatory approvals that would be
required for consummation of the Merger, except as described above. Should any
other approvals be required, it is presently contemplated that such approvals
would be sought. There can be no assurance that any other approvals, if
required, will be obtained.
CONDUCT OF BUSINESS PENDING THE MERGER
Pursuant to the Merger Agreement, Roslyn has agreed that, during the period
from the date of the Merger Agreement to the Effective Time (except as expressly
provided for in the Merger Agreement and except to the extent required by law or
regulation or by regulatory authorities), Roslyn and its subsidiaries will use
commercially reasonable efforts to: (i) conduct their business in the regular,
ordinary and usual course consistent with past practice; (ii) maintain and
preserve intact their business organization, properties, leases, employees and
advantageous business relationships and retain the services of their officers
and key employees; (iii) take no action which would materially adversely effect
or delay the ability of Roslyn or T R Financial to perform their respective
covenants and agreements on a timely basis under the Merger Agreement; (iv) take
no action which would adversely affect or delay the ability of Roslyn, Roslyn
Savings, T R Financial or Roosevelt Savings to obtain any necessary approvals,
consents or waivers of any governmental authority required for the transactions
contemplated by the Merger Agreement or which would reasonably be expected to
result in any such approvals, consents or waivers containing any material
condition or restriction and (v) take no action that results in or is reasonably
likely to have a Material Adverse Effect on Roslyn.
In addition, pursuant to the Merger Agreement, during the period from the
date of the Merger Agreement to the Effective Time (except as otherwise provided
in the Merger Agreement or as required by law or regulation or by regulatory
authorities), Roslyn has agreed that neither it nor any of its subsidiaries
shall, without the prior written consent of T R Financial, which consent shall
not be unreasonably withheld, take certain actions, including the following:
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(i) change any provisions of its Certificate of Incorporation or Bylaws,
or the similar governing documents of its subsidiaries, other than to
increase its authorized capital stock;
(ii) issue any shares of capital stock or change the terms of any
outstanding stock options or warrants or issue, grant or sell any
option, warrant, call, commitment, stock appreciation right, right to
purchase or agreement of any character relating to its authorized or
issued capital stock except pursuant to (a) the exercise of stock
options or warrants as contemplated by the Merger Agreement (attached
hereto as Annex A); or (b) the Roslyn Merger Stock Option Agreement
(attached hereto as Annex C); adjust, split, combine or reclassify
any capital stock; or make, declare or pay any dividend (except for
its regular quarterly dividend, which shall not be increased by more
than $.03 per share from the prior quarter's dividend) or make any
other distribution on, or directly or indirectly redeem, purchase or
otherwise acquire, any shares of its capital stock or any securities
or obligations convertible into or exchangeable for any shares of its
capital stock;
(iii) make any acquisition or take any other action that individually or in
the aggregate could materially adversely affect the ability of Roslyn
to consummate the transactions contemplated by the Merger Agreement,
or enter into any agreement providing for, or otherwise participate
in, any merger, consolidation or other transaction in which Roslyn or
any surviving corporation may be required not to consummate the
Merger or any of the other transactions contemplated in the Merger
Agreement in accordance with the terms of the Merger Agreement;
(iv) take any action that would prevent or impede the Merger from
qualifying (a) for pooling-of-interests accounting treatment or
(b) as a tax-free reorganization under the Code; provided, however,
that nothing contained in the Merger Agreement shall limit the
ability of Roslyn to exercise its rights under the T R Financial
Merger Stock Option Agreement;
(v) enter into an agreement with respect to an Acquisition Transaction
(as defined below) with a third party; provided, that this
prohibition does not prevent Roslyn or any of its subsidiaries from
acquiring any other assets or businesses or from discontinuing or
disposing of any of its assets or business if, in the reasonable
judgment of Roslyn, it is desirable in the conduct of the business of
Roslyn and its subsidiaries and would not, in the reasonable judgment
of Roslyn likely delay the Effective Time to a date subsequent to the
Closing Date or adversely affect the consideration to be received
pursuant to the Merger Agreement. "Acquisition Transaction" shall
mean (a) a merger or consolidation, or any similar transaction,
involving Roslyn; (b) a purchase, lease or other acquisition of all
or substantially all of the assets of Roslyn; or (c) a purchase or
other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 10% of more of the
voting power of Roslyn; provided, that the term "Acquisition
Transaction" does not include any internal merger or consolidation
involving only Roslyn and its subsidiaries; or
(vi) agree to do any of the foregoing.
Pursuant to the Merger Agreement, T R Financial has agreed that, during the
period from the date of the Merger Agreement to the Effective Time (except as
expressly provided in the Merger Agreement and except to the extent required by
law or regulation or by regulatory authorities), T R Financial and its
subsidiaries will use commercially reasonable efforts to (i) conduct their
business in the regular, ordinary and usual course consistent with past
practice, (ii) maintain and preserve intact their business organization,
properties, leases, employees and advantageous business relationships and retain
the services of their officers
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and key employees, (iii) take no action that would materially adversely affect
or delay the ability of Roslyn or T R Financial to perform their respective
covenants and agreements on a timely basis under the Merger Agreement, (iv) take
no action which would adversely effect or delay the ability of Roslyn, Roslyn
Savings, T R Financial or Roosevelt Savings to obtain any necessary approvals,
consents or waivers of any governmental authority required for the transactions
contemplated by the Merger Agreement or which could reasonably be expected to
result in any such approvals, consents or waivers containing any material
condition or restriction, and (v) take no action that results in or is
reasonably likely to have a Material Adverse Effect on T R Financial or
Roosevelt Savings.
In addition, pursuant to the Merger Agreement, during the period from the
date of the Merger Agreement to the Effective Time (except as otherwise provided
in the Merger Agreement or as required by law or regulation or by regulatory
authorities), T R Financial has agreed that neither it nor any of its
subsidiaries shall, without the prior consent of Roslyn, which consent shall not
be unreasonably withheld, take certain actions, including the following:
(i) change any provisions of the Certificate of Incorporation or Bylaws
of T R Financial or the similar governing documents of its
subsidiaries;
(ii) issue any shares of capital stock or change the terms of any
outstanding stock options or warrants or issue, grant or sell any
option, warrant, call, commitment, stock appreciation right, right
to purchase or agreement of any character relating to the authorized
or issued capital stock of T R Financial except pursuant to (a) the
exercise of stock options or warrants outstanding as of the date of
the Merger Agreement in the ordinary course of business and
consistent with past practice, (b) the T R Financial Merger Stock
Option Agreement or (c) the terms of the T R Financial Rights
Agreement; adjust, split, combine or reclassify any capital stock;
make, declare or pay any dividend (except for T R Financial's
regular quarterly dividend, which shall not be increased by more
than $.02 per share from the prior quarter's dividend) or make any
other distribution on, or directly or indirectly redeem, purchase or
otherwise acquire, any shares of its capital stock or any securities
or obligations convertible into or exchangeable for any shares of
its capital stock;
(iii) other than in the ordinary course of business consistent with past
practice and pursuant to policies currently in effect, sell,
transfer, mortgage, encumber or otherwise dispose of any of its
material properties, leases or assets to any individual, corporation
or other entity other than a direct or indirect wholly owned
subsidiary of T R Financial or cancel, release or assign any
indebtedness of any such individual, corporation or other entity,
except pursuant to contracts or agreements in force at the date of
the Merger Agreement and which have been disclosed to Roslyn;
(iv) except as contemplated by the Merger Agreement or to the extent
required by law, increase the compensation or fringe benefits of any
employees or directors, other than general increases in compensation
for employees other than executive officers in the ordinary course
of business consistent with past practice, or pay any pension or
retirement allowance not required by any existing plan or agreement
to any such employees or directors, or become a party to, amend or
commit itself to fund or otherwise establish any trust or account
related to any T R Financial employee benefit plan with or for the
benefit of any employee or director or voluntarily accelerate the
vesting of any stock options or other compensation or benefit;
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(v) except as contemplated by the Merger Agreement, change its method of
accounting as in effect at June 30, 1998, except as required by
changes in GAAP as concurred in by T R Financial's independent
auditors;
(vi) settle any claim, action or proceeding involving any liability of
T R Financial or any of its subsidiaries for money damages in excess
of $500,000 or impose material restrictions upon the operations of
T R Financial or any of its subsidiaries;
(vii) acquire or agree to acquire, by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion
of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization
or division thereof or otherwise acquire or agree to acquire any
assets, in each case which are material, individually or in the
aggregate, to T R Financial, except in satisfaction of debts
previously contracted;
(viii) except pursuant to commitments existing at the date of the Merger
Agreement which have previously been disclosed to Roslyn, make any
real estate loans secured by undeveloped land or real estate located
outside the State of New York (other than real estate secured by
one- to four-family homes) or make any construction loan (other than
construction loans secured by one- to four-family homes) outside the
State of New York;
(ix) establish or commit to the establishment of any new branch or other
office facilities other than those for which all regulatory
approvals have been obtained;
(x) take any action that would prevent or impede the Merger from
qualifying (a) for pooling-of-interests accounting treatment, or
(b) as a tax-free reorganization under the Code; provided, however,
that nothing contained in the Merger Agreement shall limit the
ability of T R Financial to exercise its rights under the Roslyn
Merger Stock Option Agreement; or
(xi) agree to do any of the foregoing.
At the request of Roslyn, T R Financial shall cause Roosevelt Savings to
modify and change its loan, litigation or real estate valuation policies and
practices (including loan classifications and levels of reserves) and investment
and asset/liability management policies and practices after the date on which
all required regulatory approvals and stockholder approvals are received, and
after receipt of written confirmation from Roslyn that it is not aware of any
fact or circumstance that would prevent completion of the Merger, and no earlier
than 30 days prior to the Effective Time, so as to be consistent on a mutually
satisfactory basis with those of Roslyn Savings; provided, that such policies
and procedures are not prohibited by GAAP or any applicable laws and
regulations.
T R Financial has agreed under the Merger Agreement to cause its regular
quarterly dividend record dates and payment dates to be the same as Roslyn's
regular quarterly dividend record dates and payment dates for Roslyn Common
Stock.
REPRESENTATIONS AND WARRANTIES
Both Roslyn and T R Financial have made certain customary representations
and warranties relating to, among other things, the parties' respective
organization, authority relative to the Merger Agreement, capitalization,
subsidiaries, required consents and approvals, taxes, employee benefit plans,
material
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contracts, litigation, compliance with applicable laws, environmental matters,
reliability of financial statements and the absence of material adverse changes
in the parties' businesses, financial condition or results of operations. For
detailed information on such representations and warranties, see the Merger
Agreement attached hereto as Annex A and incorporated by reference herein.
Pursuant to the Merger Agreement, it is a condition to each party's obligation
to consummate the Merger that the representations and warranties of the other
party contained in the Merger Agreement be true and correct in all material
respects as of the date of the Merger Agreement and as of the Effective Time;
provided, however, that such representations and warranties will be deemed to be
true and correct in all material respects unless the failure to be true and
correct, individually or in the aggregate, represents a material adverse change
from the business, financial condition or results of operations of the party
making such representations and warranties and its subsidiaries, taken as a
whole, as represented in the Merger Agreement. See "-- Conditions to the
Merger."
SOLICITATION PROPOSALS
T R Financial has agreed not to: (i) initiate, solicit or encourage,
directly or indirectly, any inquiries or the making of any proposal or offer
(including, without limitation, any proposal or offer to T R Financial's
stockholders) with respect to a merger, consolidation or similar transaction
involving, or any purchase of all or any significant portion of the assets or
any equity securities, of T R Financial or any of its material subsidiaries (any
such proposal or offer being hereinafter referred to as an "Acquisition
Proposal"); or (ii) engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any person
relating to an Acquisition Proposal, or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal. This restriction applies
to T R Financial's subsidiaries and the officers and directors of T R Financial
and its subsidiaries as well. T R Financial is required to notify Roslyn
immediately if any such negotiations or discussions are sought to be initiated
or continued in respect of any such Acquisition Proposal, together with the
details as to the identity of the persons making such inquiry or proposal,
requesting such information or seeking such negotiations or discussions and the
terms and conditions thereof.
WAIVER AND AMENDMENT; TERMINATION
Prior to the Effective Time, any provision of the Merger Agreement may be
waived by the party benefitted by the provision or, subject to applicable law,
amended or modified (including the structure of the transaction) by an agreement
in writing approved by the parties; provided that, after the vote of the
stockholders of Roslyn and/or T R Financial, the Merger Agreement may not be
amended to reduce the Merger Consideration.
The Merger Agreement may be terminated at any time prior to the Effective
Time, either before or after approval of the Merger Agreement by the
stockholders of both Roslyn and T R Financial, as follows: (i) by the mutual
consent of Roslyn and T R Financial if the Boards of Directors of each so
determines by vote of a majority of the members of their entire respective
Boards; (ii) by either Roslyn or T R Financial, if either of their respective
Board of Directors so determines by vote of a majority of the members of their
entire respective Boards if the stockholders of Roslyn or T R Financial do not
approve the Merger Agreement; provided, however, that Roslyn or T R Financial
will only be entitled to terminate the Merger Agreement if it has complied in
all material respects with its obligations to solicit the support of its
respective stockholders for the Merger Agreement and has complied, in all
material respects, with its representations and warranties made in the Merger
Agreement; (iii) by either Roslyn or T R Financial, if either (a) any approval,
consent or waiver of a governmental agency required to permit consummation of
the transactions contemplated by the Merger Agreement shall have been denied or
(b) any governmental authority of competent jurisdiction shall have issued a
final, unappealable order enjoining or otherwise prohibiting consummation
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of the transactions contemplated by the Merger Agreement; (iv) by either Roslyn
or T R Financial, if its Board of Directors so determines by vote of majority of
the members of its entire Board, in the event that the Merger is not consummated
by January 31, 1999 ("Initial Termination Date"); provided, that if, as of such
date, all necessary regulatory or governmental approvals, consents or waivers
required to consummate the transactions contemplated the Merger Agreement shall
not have been obtained but all other conditions to the consummation of the
Merger (other than the delivery of executed documents at the Closing) shall be
fulfilled, the Initial Termination Date shall be extended to March 31, 1999,
unless the failure to so consummate by such time is due to the breach of any
representation, warranty or covenant contained in the Merger Agreement by the
party seeking to terminate; or (v) by T R Financial as discussed below under
"-- Price-Based Termination."
PRICE-BASED TERMINATION
The Merger Agreement provides that if the "Roslyn Market Value" on the
"Valuation Date" (see the definitions in the following paragraph for the
meanings of the capitalized terms in this paragraph which previously have not
been defined) is less than $20.72 (the "Absolute Termination Condition"), or if
both the Roslyn Market Value on the Valuation Date is less than $22.10 and the
"Roslyn Ratio" is less than the "Index Ratio" (the "Relative Termination
Condition"), then T R Financial may, during the five-day period commencing on
the Valuation Date, elect to terminate the Merger Agreement. T R Financial may
make such an election by giving prompt written notice thereof to Roslyn during
such five-day period, and such termination would be effective on the 30th day
following the Valuation Date (the "Effective Termination Date"). If, on the
Valuation Date, both the Absolute Termination Condition and the Relative
Termination Condition are applicable, T R Financial could exercise its
termination rights under either condition. If T R Financial elects to exercise
its termination rights under the Merger Agreement, it may withdraw such election
at any time prior to the Effective Termination Date. If T R Financial exercises
its termination rights under the Relative Termination Condition, no such
termination will occur and the Merger Agreement will remain in full force and
effect if Roslyn agrees to increase the Exchange Ratio to equal the lesser of
(i) a number equal to a fraction, the numerator of which is 2.05 multiplied by
the "Initial Roslyn Market Value" and the denominator of which is the Roslyn
Market Value on the Valuation Date, and (ii) a number equal to a fraction, the
numerator of which is the Index Ratio multiplied by 2.05 and the denominator of
which is the Roslyn Ratio. If T R Financial exercises its rights under the
Relative Termination Condition, Roslyn may elect, during the five-day period
commencing with its receipt of the written termination notice of T R Financial,
to exercise its option to increase the Exchange Ratio under the Relative
Termination Condition by giving, within such five-day period, written notice to
T R Financial of such election and the revised Exchange Ratio, in which case the
Merger Agreement would remain in full force and effect in accordance with its
terms, except that the Exchange Ratio would have been so increased.
The "Roslyn Market Value" means the average of the daily closing sales
prices of a share of Roslyn Common Stock (and if there is no closing sales price
on any such day, then the mean between the closing bid and the closing asked
prices on that day), as reported on the Nasdaq National Market for the 15
consecutive trading days immediately preceding the Valuation Date. "Valuation
Date" means the day that is the latest of: (i) the day on which the last
required regulatory approval for the Merger is obtained; (ii) the day of the
expiration of the last regulatory waiting period; and (iii) the day on which the
last required stockholder approval is obtained. The "Roslyn Ratio" means the
number obtained by dividing the Roslyn Market Value on the Valuation Date by the
Initial Roslyn Market Value. The "Initial Roslyn Market Value" (i.e., $27.625)
means the closing sales price of a share of Roslyn Common Stock, as reported on
the Nasdaq National Market, on May 22, 1998, the trading day immediately
preceding the public announcement of the Merger Agreement. The "Index Ratio"
means the number obtained by dividing the "Final Index Price" by the "Initial
Index Price" and then subtracting 0.15. "Final Index Price" means the sum of the
Final Prices for each company comprising the Index Group multiplied by the
weighting set forth opposite such company's name in the definition of Index
Group below. "Final Price" with respect to any company belonging to the
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Index Group, means the average of the daily closing sales prices of a share of
common stock of such company (and if there is no closing sales price on any such
day, then the mean between the closing bid and the closing asked prices on that
day), as reported on the consolidated transaction reporting system for the
market or exchange on which such common stock is principally traded, for the 30
consecutive trading days immediately preceding the Valuation Date. "Index Group"
means the 24 financial institution holding companies listed below, the common
stock of all of which shall be publicly traded and as to which there shall not
have been an Acquisition Transaction involving such company publicly announced
at any time during the period beginning on the date of the Merger Agreement and
ending on the Valuation Date. "Initial Index Price" means the sum of the per
share closing sales price of the common stock of each company comprising the
Index Group multiplied by the applicable weighting, as such prices are reported
on the consolidated transaction reporting system for the market or exchange on
which such common stock is principally traded on the trading day immediately
preceding the public announcement of the Merger Agreement. The 24 financial
institution holding companies and the weights attributed to them as of the
date of this Joint Proxy Statement/Prospectus are as follows:
<TABLE>
<CAPTION>
INDEX GROUP WEIGHTING
- ---------------------------------- ---------
<S> <C>
Anchor Bancorp Wisconsin 2.42%
Astoria Financial Corporation 4.65%
Bank United Corp. 5.05%
Bay View Capital Corp. 2.05%
Commonwealth Bancorp, Inc. 1.23%
Charter One Financial, Inc. 15.19%
Commercial Federal Corp. 4.33%
Dime Bancorp, Inc. 10.42%
Dime Community Bancorp, Inc. 1.11%
GreenPoint Financial Corp. 10.84%
Haven Bancorp, Inc. 0.72%
Independence Community Bank Corp. 4.25%
InterWest Bancorp, Inc. 1.80%
JSB Financial Inc. 1.82%
MAF Bancorp 2.68%
Peoples Heritage Financial 4.12%
Queens County Bancorp, Inc. 3.14%
Reliance Bancorp, Inc. 1.16%
Richmond County Financial Corp. 1.56%
Sovereign Bancorp, Inc. 7.82%
St. Paul Bancorp 2.70%
Staten Island Bancorp, Inc. 3.19%
Washington Federal Inc. 4.87%
Webster Financial Corporation 2.88%
------
100.00%
</TABLE>
In the event that the common stock of any such company ceases to be
publicly traded or an Acquisition Transaction involving any such company is
announced at any time during the period beginning on the date of the Merger
Agreement and ending on the Valuation Date, such company is removed from the
Index Group, and the weights attributed to the remaining companies are adjusted
proportionately for purposes of determining the Final Index Price and the
Initial Index Price. In this regard, ALBANK Financial Corporation was removed
from the Index Group pursuant to the Merger Agreement because it has agreed to
be merged with and into Charter One Financial, Inc. In addition, if any company
in the Index Group declares or effects a stock split, stock dividend,
recapitalization, exchange of shares or similar transaction between the date of
the Merger Agreement and the Valuation Date, the price of the common stock of
such
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company is adjusted appropriately. In this regard, the price of Anchor Bancorp
Wisconsin, Charter One Financial, Inc., InterWest Bancorp, Inc., MAF Bancorp and
Queens County Bancorp, Inc. have been adjusted to reflect a stock split, stock
dividend, recapitalization, exchange of shares or similar transaction by such
companies.
During the period following the execution of the Merger Agreement and
preceding the mailing of this Joint Proxy Statement/Prospectus, there has been
substantial volatility in U.S. and foreign stock markets. The closing sales
price of Roslyn Common Stock, as reported on the Nasdaq National Market, has
declined from $27.625 on May 22, 1998 (the trading date immediately preceding
the public announcement of the Merger Agreement) to $17.50 on November 13, 1998
(the latest practicable trading date prior to the mailing of this Joint Proxy
Statement/Prospectus), which is a decline of 36.65%. Hence, the dollar value of
the consideration to be received by T R Financial stockholders in connection
with the Merger has declined from $56.63 per share ($27.625 X 2.05) to $35.875
per share ($17.50 X 2.05) over the same period.
If November 16, 1998 had been defined by the Merger Agreement to be the
Valuation Date and the Roslyn Market Value, the Roslyn Ratio and the Index Ratio
had been determined as of that date, the Roslyn Market Value, the Roslyn Ratio
and the Index Ratio would have been $17.396, 62.97% and 61.97%, respectively. In
such case, T R Financial could have terminated the Merger Agreement under the
Absolute Termination Condition because $17.396 is below $20.72, but not under
the Relative Termination Condition because, even though $17.396 is below
$22.10, the Roslyn Ratio was not less than the Index Ratio. Roslyn and T R
Financial do not know as of the date of this Joint Proxy Statement/Prospectus
whether either or both of the termination conditions will be applicable on the
Valuation Date, since the actual Valuation Date is in the future and cannot be
earlier than December 21, 1998 (the day prior to the Roslyn and T R Financial
stockholder meetings), and have not yet determined what action, if any, each
might take under the Merger Agreement if either or both of the termination
conditions are applicable on the actual Valuation Date. Such decision can only
be made during the five-day period commencing on the Valuation Date in
accordance with the Merger Agreement and will only be made after careful review
of all relevant factors and only after T R Financial reviews all such factors
with its legal and financial advisors. Subject to applicable law, such decision
will be made by the T R Financial Board based upon what it believes to be in the
long-term best interests of T R Financial stockholders as determined at that
time. The price of Roslyn Common Stock has been below the levels set forth under
the Absolute Termination Condition for several months, and, during such period,
has also sometimes been below the levels set forth under the Relative
Termination Condition. The T R Financial Board has decided to disclose to
stockholders of T R Financial and Roslyn its present intention with respect to
the termination conditions if, as of the Valuation Date, the price of Roslyn
Common Stock is below the level set forth under either, or both, of the
termination conditions, and if, as of such date, the absolute prices of Roslyn
Common Stock and T R Financial Common Stock, the prices of Roslyn Common Stock
and T R Financial Common Stock as compared to those of other thrift institution
holding companies, the absolute and relative trends of such stocks at that time,
the sale of control premiums then being offered in other transactions, Roslyn's
and T R Financial's operating performance and projected future operating
performance, and other general business, market and economic conditions are, in
the aggregate, substantially the same as or not materially less favorable than,
they were as of November 13, 1998.
Based upon the 15-consecutive-trading day average closing price of Roslyn
Common Stock as of November 13, 1998 and the other factors set forth above, it
is the present intention of the T R Financial Board that: (i) if; as of the
Valuation Date, the price of Roslyn Common Stock and the other factors set forth
above are substantially the same as or not materially less favorable than they
were on November 13, 1998, T R Financial would not elect to terminate the Merger
Agreement under the Absolute Termination Condition; (ii) if, as of the Valuation
Date, the price of Roslyn Common Stock and the other factors set forth above are
materially less favorable than they were as of November 13, 1998, T R Financial
would elect to terminate the Merger Agreement under the Absolute Termination
Condition; and (iii) if, as of the Valuation Date, the price of Roslyn Common
Stock and the other factors set forth above are substantially the same as they
were on November 13, 1998 and the price of Roslyn Common Stock is below the
levels set forth under the Relative Termination Condition, T R Financial would
elect to terminate the Merger Agreement, under the Relative Termination
Condition, subject to Roslyn's election to increase the Exchange Ratio, in which
case the Merger Agreement would remain in full force and effect except that the
Exchange Ratio would have been increased.
The foregoing sets forth the present intention of the T R Financial Board
with respect to an assumed set of facts. It is not a final decision, and is
based upon an assumed set of facts. T R FINANCIAL DOES NOT HAVE THE RIGHT TO
TERMINATE THE MERGER AGREEMENT PURSUANT TO EITHER THE ABSOLUTE TERMINATION
CONDITION OR THE RELATIVE TERMINATION CONDITION UNTIL THE VALUATION DATE.
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The financial information set forth in this Joint Proxy Statement/
Prospectus reflects an Exchange Ratio of 2.05 and does not reflect any increased
Exchange Ratio that may result if T R Financial exercises its right to terminate
the Merger Agreement under the Relative Termination Condition and Roslyn elects
to increase the Exchange Ratio so that the Merger Agreement remains in full
force and effect in accordance with its terms.
ILLUSTRATION 1. For the purposes of the following illustration, assume
that the Valuation Date had been on October 26, 1998, at which time the Roslyn
Market Value, the Roslyn Ratio and the Index Ratio were $15.73, 56.94% and
59.76%, respectively. Under these assumptions, T R Financial would have the
right to terminate the Merger Agreement under either the Absolute Termination
Condition or the Relative Termination Condition because:
(i) the Roslyn Market Value of $15.73 less than $20.72; and
(ii) the Roslyn Market Value of $15.73 is less than $22.10 and the Roslyn
Ratio of 56.94% is less than the Index Ratio of 59.76%.
If T R Financial exercised its termination rights under the Absolute
Termination Condition because the Roslyn Market Value of $15.73 was less than
$20.72, the Merger Agreement would be terminated on the Effective Termination
Date. If T R Financial exercised its termination rights under the Relative
Termination Condition because the Roslyn Market Value of $15.73 was less than
$22.10 and the Roslyn Ratio of 56.94% was less than the Index Ratio of 59.76%
the Merger Agreement would be terminated on the Effective Termination Date,
unless Roslyn exercised its option to increase the Exchange Ratio in accordance
with the formula set forth in the Merger Agreement, in which case the Merger
Agreement would remain in full force and effect in accordance with its terms,
except that the Exchange Ratio would have been increased. According to the
formula set forth in the Merger Agreement, in order to avoid termination of the
Merger Agreement under the Relative Termination Condition, Roslyn would have to
increase the Exchange Ratio from 2.05 to the lesser of the following:
(i) 3.600, which is the product of 2.05 (the Exchange Ratio) multiplied by
$27.625 (the price of a share of Roslyn Common Stock on May 22, 1998)
divided by $15.73 (the Roslyn Market Value); or
(ii) 2.152, which is the product of 2.05 (the Exchange Ratio) multiplied by
59.76% (the Index Ratio) divided by 56.94% (the Roslyn Ratio).
Pursuant to these formulas, Roslyn would have to increase the Exchange
Ratio from 2.05 to 2.152 in order to avoid termination of the Merger Agreement
under the Relative Termination Condition. The information used in this
illustration is for informational purposes only and reflects stock prices as if
the Valuation Date had been October 26, 1998. If the Valuation Date had been
November 16, 1998, the Roslyn Market Value, the Roslyn Ratio and the Index Ratio
would have been $17.396, 62.97% and 61.97%, respectively, as of such date, and T
R Financial would have the ability to exercise its termination rights only under
the Absolute Termination Condition and not under the Relative Termination
Condition.
ILLUSTRATION 2. For the purposes of the following illustration, assume the
same facts as the previous illustration except that the Index Ratio is 56%.
Under these assumptions, T R Financial would have the right to terminate the
Merger Agreement under only the Absolute Termination Condition because:
(i) the Roslyn Market Value of $15.73 is less than $20.72; but
(ii) the Roslyn Ratio of 56.94% is greater than the Index Ratio of 56%.
If T R Financial exercised its termination rights under the Absolute
Termination Condition because the Roslyn Market Value of $15.73 was less than
$20.72, the Merger Agreement would be terminated on the
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Effective Termination Date and Roslyn would have no right to elect to increase
the Exchange Ratio in order to avoid termination of the Merger Agreement.
NASDAQ NATIONAL MARKET LISTING
The Roslyn Common Stock is listed on the Nasdaq National Market. Roslyn
has agreed to use reasonable efforts to cause the shares of Roslyn Common Stock
to be issued in the Merger to be approved for quotation on the Nasdaq National
Market, subject to official notice of issuance, prior to or at the Effective
Time. The obligations of the parties to consummate the Merger are subject to
the listing of such shares on the Nasdaq National Market or on such other market
on which shares of Rosyln Common Stock shall then be trading. See "-- Conditions
to the Merger" above.
ANTICIPATED ACCOUNTING TREATMENT
The Merger has been structured to qualify as a pooling-of-interests for
accounting and financial reporting purposes. Under this method of accounting,
the recorded amount of assets and liabilities of Roslyn and T R Financial will
be combined at the Effective Time and carried forward at their previously
recorded amounts and the stockholders' equity accounts of Roslyn and T R
Financial will be combined on Roslyn's consolidated balance sheet. Income and
other financial statements of Roslyn issued after the Effective Time will be
restated retroactively to reflect the consolidated operations of Roslyn and T R
Financial as if Roslyn and T R Financial have always been combined. In order to
achieve pooling-of-interests accounting treatment, T R Financial is required to
sell approximately 222,000 shares of T R Financial Common Stock, presently held
in the treasury account of T R Financial, prior to the consummation of the
Merger.
The Merger Agreement provides that a condition to each of Roslyn's and T R
Financial's obligation to consummate the Merger is the receipt of a letter from
Roslyn's independent accountants to the effect that the Merger qualifies for
pooling-of-interests accounting treatment. See "-- Conditions to the Merger"
above.
For information concerning certain restrictions to be imposed on the
transferability of Roslyn Common Stock to be received by affiliates of T R
Financial in order, among other things, to ensure the availability of pooling-
of-interests accounting treatment, see "-- Resales of Roslyn Common Stock by
Affiliates" below.
The unaudited pro forma condensed combined consolidated financial
information contained in this Joint Proxy Statement/Prospectus has been prepared
using the pooling-of-interests accounting method to account for the Merger. See
"UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS."
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following is a discussion of the material Federal income tax
consequences of the Merger to Roslyn, T R Financial and the holders of T R
Financial Common Stock. The discussion is based upon the Code, Treasury
regulations, Internal Revenue Service (the "Service") rulings, and judicial and
administrative decisions in effect as of the date hereof, all of which are
subject to change at any time, possibly with retroactive effect. This discussion
assumes that the T R Financial Common Stock is held as a "capital asset" within
the meaning of Section 1221 of the Code (i.e., property generally held for
investment). In addition, this discussion does not address all of the tax
consequences that may be relevant to a holder of T R Financial Common Stock in
light of his or her particular circumstances or to holders subject to special
rules, such as foreign persons, financial institutions, tax-exempt
organizations, dealers in securities or foreign currencies or insurance
companies. The opinions of counsel referred to in this section will be based on
facts existing
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at the Effective Time, and in rendering such opinions, such counsel will require
and rely upon representations contained in certificates of officers of Roslyn,
T R Financial and others.
HOLDERS OF T R FINANCIAL COMMON STOCK SHOULD CONSULT THEIR TAX ADVISORS AS
TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND
OTHER TAX LAWS.
It is a condition to the obligations of Roslyn and T R Financial to
consummate the Merger that Roslyn and T R Financial each shall have received an
opinion of their respective counsel, dated as of the Effective Time, in form and
substance customary in transactions of the type contemplated by the Merger
Agreement and reasonably satisfactory to Roslyn and T R Financial, respectively,
that the Merger will be treated as a reorganization within the meaning of
Section 368(a) of the Code and that, accordingly, for federal income tax
purposes:
(i) no gain or loss will be recognized by Roslyn, Roslyn Savings, T R
Financial or Roosevelt Savings as a result of the Merger;
(ii) no gain or loss will be recognized by the stockholders of T R
Financial who exchange all of their T R Financial Common Stock solely
for Roslyn Common Stock pursuant to the Merger (except with respect
to cash received in lieu of a fractional share interest in Roslyn
Common Stock);
(iii) the tax basis of Roslyn Common Stock received by stockholders who
exchange their T R Financial Common Stock for Roslyn Common Stock in
the Merger will be the same as the tax basis of T R Financial Common
Stock surrendered pursuant to the Merger, reduced by any amount
allocable to a fractional share interest for which cash is received;
and
(iv) the holding period of Roslyn Common Stock received by each
stockholder in the Merger will include the holding period of T R
Financial Common Stock exchanged therefor, provided that such
stockholder held such T R Financial Common Stock as a capital asset
on the Effective Date.
RESALES OF ROSLYN COMMON STOCK BY AFFILIATES
The shares of Roslyn Common Stock to be issued in the Merger will be
registered under the Securities Act and will be freely transferable under the
Securities Act except for shares issued to any T R Financial stockholder who may
be deemed to be an "affiliate" of T R Financial for purposes of Rule 145 under
the Securities Act. Affiliates of T R Financial may not sell their shares of
Roslyn Common Stock acquired in connection with the Merger except pursuant to an
effective registration statement under the Securities Act covering such shares
or in compliance with Rule 145 or another applicable exemption from the
registration requirements of the Securities Act. This Joint Proxy Statement/
Prospectus does not cover any resales of Roslyn Common Stock received in the
Merger by persons who may be deemed to be affiliates of T R Financial. Persons
who may be deemed to be affiliates of T R Financial generally include
individuals or entities that control, are controlled by or are under common
control with T R Financial, and may include certain officers and directors as
well as principal stockholders of T R Financial.
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The Commission guidelines regarding qualifying for pooling-of-interests of
accounting treatment also limit sales by affiliates of the acquiring and
acquired company in a business combination. The Commission guidelines indicate
further that the pooling-of-interests method of accounting will generally not be
challenged on the basis of sales by affiliates of the acquiring or acquired
company if they do not dispose of any of the shares of the corporation they own
or shares of a corporation they receive in connection with a merger during the
period beginning 30 days before the effective date of the merger and ending when
financial results covering at least 30 days of post-merger operations of the
combined entity have been published. Roslyn has agreed in the Merger Agreement
to use its best efforts to publish such results no later than 30 days after the
end of the first calendar month ending 30 days after the Effective Time.
Roslyn and T R Financial have each obtained from each person who is an
affiliate (for purposes of Rule 145 of the Securities Act and for purposes of
qualifying the Merger for pooling-of-interests accounting treatment) of such
party and has delivered to the other party a written agreement intended to
ensure compliance with the Securities Act and preserve the ability to treat the
Merger as a pooling-of-interests.
NO APPRAISAL RIGHTS
Pursuant to Section 262(b) of the Delaware General Corporation Law, the
stockholders of a constituent corporation in a merger generally are not entitled
to appraisal rights if the shares of stock they own are, as of the record date
fixed to determine stockholders entitled to notice of and to vote at the meeting
to act upon the agreement providing for such merger, either listed on a national
securities exchange or designated as a national market system security on the
Nasdaq National Market, or held of record by more than 2,000 stockholders.
However, stockholders that would otherwise not have appraisal rights pursuant to
the provisions described in the previous sentence are entitled to appraisal
rights if such stockholders are required by the terms of the merger to accept
for their stock anything except (i) shares of the corporation surviving the
merger, (ii) shares of stock which are either listed on a national securities
exchange, designated as a national market system security on the Nasdaq National
Market or held of record by more than 2,000 stockholders, or (iii) cash in lieu
of fractional shares of stock described in (i) and (ii) above or any combination
thereof. T R Financial stockholders are not entitled to appraisal rights
generally because the shares of T R Financial Common Stock are listed on the
Nasdaq National Market and such stockholders are not entitled to appraisal
rights in connection with the Merger because the shares of Roslyn Common Stock
to be issued in the Merger are shares of the surviving corporation in the Merger
and will be listed on the Nasdaq National Market at the Effective Time, subject
to official notice of issuance. In addition, there are more than 2,000 holders
of record of Roslyn Common Stock.
EXPENSES
All costs and expenses incurred in connection with the Merger Agreement,
the Merger Stock Option Agreements and the transactions contemplated thereby
shall be paid by the party incurring such expense, except that Roslyn and T R
Financial shall share equally in the expenses incurred in connection with
printing and mailing this Joint Proxy Statement/Prospectus.
EFFECTIVE TIME
The Merger will become effective at the Effective Time set forth in the
Certificate of Merger which will be filed with the Secretary of State of the
State of Delaware in accordance with applicable law. The Certificate of Merger
will be filed no later than five days following the date on which the expiration
of the last applicable waiting period in connection with notices to and
approvals of governmental authorities occurs and all conditions to the Merger
are satisfied or waived, unless another date is agreed to in writing by Roslyn
and T R Financial. See "-- Conditions to the Merger." The closing of the
transactions
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contemplated by the Merger Agreement will take place on the date of such filing.
It is expected that a period of time will elapse between the Meetings and the
Effective Time while the parties seek to obtain the regulatory approvals
required to consummate the Merger. There can be no assurance that such
regulatory approvals will be obtained, and if obtained, there can be no
assurance as to the date of any such approval. There can likewise be no
assurance that the Department of Justice or the New York State Attorney General
will not challenge the Merger or, if such a challenge is made, the result
thereof. See "-- Regulatory Approvals Required for the Merger."
CONVERSION OF SHARES; PROCEDURES FOR EXCHANGE OF CERTIFICATES; FRACTIONAL SHARES
ROSLYN. Shares of Roslyn capital stock (including Roslyn Common Stock)
issued and outstanding immediately prior to the Effective Time will remain
issued and outstanding and be unaffected by the Merger, and holders of such
stock will not be required to exchange the certificates representing such stock
or take any other action by reason of the consummation of the Merger.
T R FINANCIAL. As promptly as practicable after the Effective Time, and in
no event more than five business days thereafter, a bank or trust company
selected by Roslyn and reasonably satisfactory to T R Financial, acting in the
capacity of exchange agent (the "Exchange Agent"), will mail to each former
holder of record of T R Financial Common Stock a form of letter of transmittal,
together with instructions for the exchange of such holder's certificates
representing shares of T R Financial Common Stock for certificates representing
shares of Roslyn Common Stock and cash in lieu of fractional shares.
HOLDERS OF T R FINANCIAL COMMON STOCK SHOULD NOT SEND IN THEIR CERTIFICATES
UNTIL THEY RECEIVE THE LETTER OF TRANSMITTAL FORM AND INSTRUCTIONS FROM THE
EXCHANGE AGENT, AND SHOULD NOT RETURN SUCH STOCK CERTIFICATES WITH THE ENCLOSED
PROXY.
Upon surrender to the Exchange Agent of one or more certificates
representing shares of T R Financial Common Stock, together with a properly
completed letter of transmittal, there will be issued and mailed to the holder
of T R Financial Common Stock surrendering such items a certificate or
certificates representing the number of shares of Roslyn Common Stock to which
such holder is entitled, if any, and, where applicable, a check for the amount
representing any fractional share determined in the manner described below,
without interest. The T R Financial certificate or certificates so surrendered
will be canceled.
No dividend or other distribution declared after the Effective Time with
respect to Roslyn Common Stock will be paid to the holder of any unsurrendered
T R Financial certificate until the holder surrenders such certificate, at which
time the holder will be entitled to receive all previously withheld dividends
and distributions, without interest.
After the Effective Time, there will be no transfers on the stock transfer
books of T R Financial of shares of T R Financial Common Stock issued and
outstanding immediately prior to the Effective Time. If certificates
representing shares of T R Financial Common Stock are presented for transfer
after the Effective Time, they will be canceled and exchanged for certificates
representing shares of Roslyn Common Stock.
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Neither the Exchange Agent, Roslyn nor T R Financial, or any other person,
will be liable to any former holder of T R Financial Common Stock for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
If a certificate for T R Financial Common Stock has been lost, stolen or
destroyed, the Exchange Agent will issue the consideration properly payable in
accordance with the Merger Agreement upon receipt of appropriate evidence as to
such loss, theft or destruction, appropriate evidence as to the ownership of
such certificate by the claimant, and appropriate and customary indemnification.
No fractional shares of Roslyn Common Stock will be issued in the Merger.
Instead, the Merger Agreement provides that each holder of shares of T R
Financial Common Stock exchanged pursuant to the Merger who would otherwise have
been entitled to receive a fraction of a share of Roslyn Common Stock will
receive, in lieu thereof, cash in an amount equal to such fractional part of a
share of Roslyn Common Stock multiplied by the Roslyn Market Value. No such
holder will be entitled to dividends, voting rights or any other rights as a
stockholder in respect of any fractional share which such holder would otherwise
have been entitled to receive.
CERTAIN RELATED TRANSACTIONS
MERGER STOCK OPTION AGREEMENTS
The following is a summary of the material provisions of the Merger Stock
Option Agreements, which are attached hereto as Annex B and Annex C. The
following summary is qualified in its entirety by reference to the Merger Stock
Option Agreements. Execution of the Merger Stock Option Agreements were
conditions to the parties entering into the Merger Agreement.
T R FINANCIAL MERGER STOCK OPTION AGREEMENT. Concurrently with the
execution of the Merger Agreement, Roslyn and T R Financial entered into the T R
Financial Merger Stock Option Agreement. The T R Financial Merger Stock Option
Agreement is designed to enhance the likelihood that the Merger will be
successfully consummated in accordance with the terms contemplated by the Merger
Agreement and Roslyn insisted on such agreement for that reason. Pursuant to
the T R Financial Merger Stock Option Agreement, T R Financial granted Roslyn
the option to purchase up to 3,488,068 authorized but unissued shares (the
"Merger Stock Option Shares") of T R Financial Common Stock (representing
approximately 19.9% of the issued and outstanding shares of T R Financial Common
Stock on May 25, 1998) at a price of $38.625 per share, subject to adjustment in
certain circumstances (the "Roslyn Merger Stock Option"). Each Merger Stock
Option Share issued upon exercise of the Roslyn Merger Stock Option shall be
accompanied by the related T R Financial Right issued pursuant to the T R
Financial Rights Agreement.
Provided that (i) Roslyn is not in material breach of the agreements or
covenants contained in the Merger Agreement or the T R Financial Merger Stock
Option Agreement and (ii) no preliminary or permanent injunction or other order
against the delivery of the shares covered by the Roslyn Merger Stock Option
issued by any court of competent jurisdiction in the United States shall be in
effect, Roslyn may exercise the Roslyn Merger Stock Option, in whole or in part,
at any time and from time to time, following the occurrence of a Purchase Event
(as defined below); provided, however, that the Roslyn Merger Stock Option shall
terminate and be of no further force or effect upon the earliest to occur of (a)
the Effective Time, (b) termination of the Merger Agreement in accordance with
the terms thereof prior to the occurrence of a Purchase Event or a Preliminary
Purchase Event (as defined below) other than a termination thereof by Roslyn
under certain circumstances (a "Default Termination"), (c) 18 months after a
Default Termination
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or (d) 18 months after termination of the Merger Agreement (other than a Default
Termination) following the occurrence of a Purchase Event or a Preliminary
Purchase Event; provided, however, that any purchase of shares upon exercise of
the Roslyn Merger Stock Option shall be subject to compliance with applicable
law.
A "Purchase Event" means any of the following events:
(i) Without Roslyn's prior written consent, T R Financial shall
have authorized, recommended, publicly proposed or publicly
announced an intention to authorize, recommend or propose,
or T R Financial shall have entered into an agreement with
any person (other than Roslyn or any subsidiary of Roslyn)
to effect (a) a merger, consolidation or similar
transaction involving T R Financial or any of its
significant subsidiaries, (b) the disposition, by sale,
lease, exchange or otherwise, of assets or deposits of T R
Financial or any of its significant subsidiaries
representing in either case 10% or more of the consolidated
assets or deposits of T R Financial and its subsidiaries,
other than in the ordinary course of business or (c) the
issuance, sale or other disposition by T R Financial of
(including by way of merger, consolidation, share exchange
or any similar transaction) securities representing 10% or
more of the voting power of T R Financial or any of its
significant subsidiaries (each of (a), (b) or (c), an
"Acquisition Transaction"); or
(ii) Any person (other than Roslyn or any subsidiary of Roslyn)
shall have acquired beneficial ownership (as such term is
defined in Rule 13d-3 under the Exchange Act) of, or the
right to acquire beneficial ownership of, or any "group"
(as such term is defined in Section 13(d)(3) of the
Exchange Act), other than a group of which Roslyn or any
subsidiary of Roslyn is a member, shall have been formed
which beneficially owns, or has the right to acquire
beneficial ownership of, 10% or more of the voting power of
T R Financial or any of its significant subsidiaries.
A "Preliminary Purchase Event" means any of the following events:
(i) Any person (other than Roslyn or any subsidiary of Roslyn)
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 any shares of T R
Financial Common Stock such that, upon consummation of such
offer, such person would own or control 10% or more of the
then outstanding shares of T R Financial Common Stock (such
an offer being referred to herein as a "Tender Offer" or an
"Exchange Offer," respectively); or
(ii) The stockholders of T R Financial shall not have approved
the Merger Agreement by the requisite vote at the T R
Financial Meeting, the T R Financial Meeting shall not have
been held or shall have been canceled prior to termination
of the Merger Agreement or the T R Financial Board shall
have withdrawn or modified in a manner adverse to Roslyn
the recommendation of the T R Financial Board with respect
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to the Merger Agreement, in each case after it shall have
been publicly announced that any person (other than Roslyn
or any subsidiary of Roslyn) shall have (a) made, or
disclosed an intention to make, a bona fide proposal to
engage in an Acquisition Transaction, (b) commenced a
Tender Offer or filed a registration statement under the
Securities Act with respect to an Exchange Offer or
(c) filed an application (or given a notice), whether in
draft or final form, under the BHC Act, the Home Owners'
Loan Act of 1933, as amended ("HOLA"), the Bank Merger Act
or the CBCA, for approval to engage in an Acquisition
Transaction; or
(iii) Any person (other than Roslyn or any subsidiary of Roslyn)
shall have made a bona fide proposal to T R Financial or
its stockholders by public announcement, or written
communication that is or becomes the subject of public
disclosure, to engage in an Acquisition Transaction; or
(iv) After a proposal is made by a third party to T R Financial
or its stockholders to engage in an Acquisition
Transaction, or such third party states its intention to
T R Financial to make such a proposal if the Merger
Agreement terminates, and thereafter T R Financial shall
have breached any representation, warranty, covenant or
agreement contained in the Merger Agreement and such breach
would entitle Roslyn to terminate the Merger Agreement
under Section 6.1(b) thereof (without regard to the cure
period provided for therein unless such cure is promptly
effected without jeopardizing consummation of the Merger
pursuant to the terms of the Merger Agreement).
T R Financial shall notify Roslyn promptly in writing of the occurrence of
any Preliminary Purchase Event or Purchase Event of which it has knowledge, it
being understood that the giving of such notice by T R Financial shall not be a
condition to the right of Roslyn to exercise the Roslyn Merger Stock Option.
As provided for in the T R Financial Merger Stock Option Agreement, in the
event Holder (meaning the holder of the Roslyn Merger Stock Option from time to
time, the initial holder being Roslyn) wishes to exercise the Roslyn Merger
Stock Option, it shall send to T R Financial a written notice (the "Roslyn
Merger Option Notice"), the date of which is herein referred to as the "Notice
Date," specifying (i) the total number of Roslyn Merger Stock Option Shares it
intends to purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 45 business days from the Notice
Date for the closing (the "Option Closing") of such purchase; provided, that the
first Roslyn Merger Option Notice shall be sent to T R Financial within 180 days
after the first Purchase Event of which Roslyn has been notified. If prior
notification to or approval of any regulatory authority is required in
connection with any such purchase, T R Financial shall cooperate with Roslyn in
the filing of the required notice of application for approval and the obtaining
of such approval, and the Option Closing shall occur promptly following such
regulatory approvals and any mandatory waiting periods. Any exercise of the
Roslyn Merger Stock Option shall be deemed to occur on the Notice Date relating
thereto.
The T R Financial Merger Stock Option Agreement provides that Roslyn may
require, under certain circumstances, T R Financial to repurchase the Roslyn
Merger Stock Option and all the shares of T R Financial Common Stock purchased
by Roslyn pursuant to the T R Financial Merger Stock Option Agreement on the
terms and conditions set forth therein.
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The T R Financial Merger Stock Option Agreement contains a provision
limiting the aggregate realizable value to Roslyn from the Roslyn Merger Stock
Option to $50 million plus reasonable expenses.
ROSLYN MERGER STOCK OPTION AGREEMENT. Concurrently with the execution of
the Merger Agreement, Roslyn and T R Financial entered into the Roslyn Merger
Stock Option Agreement. The Roslyn Merger Stock Option Agreement is designed to
enhance the likelihood that the Merger will be successfully consummated in
accordance with the terms contemplated by the Merger Agreement and T R Financial
insisted on such agreement for that reason. Pursuant to the Roslyn Merger Stock
Option Agreement, Roslyn granted T R Financial the option to purchase up to
8,238,591 authorized but unissued shares of Roslyn Common Stock (representing
approximately 19.9% of the issued and outstanding shares of Roslyn Common Stock
on May 25, 1998) at a price of $27.625 per share, subject to adjustment in
certain circumstances. Except for the number of shares issuable pursuant to the
Roslyn Merger Stock Option Agreement and the exercise price, the Roslyn Merger
Stock Option Agreement is identical to the T R Financial Merger Stock Option
Agreement in regard to all material terms and conditions, including the $50
million profit limitation.
EFFECT OF THE MERGER STOCK OPTION AGREEMENTS. The Merger Stock Option
Agreements are intended to increase the likelihood that the Merger will be
consummated in accordance with the terms of the Merger Agreement. Consequently,
certain aspects of the Merger Stock Option Agreements may have the effect of
discouraging persons who might now or prior to the Effective Time be interested
in acquiring all of or a significant interest in Roslyn or T R Financial from
considering or proposing such an acquisition. The acquisition of Roslyn or T R
Financial or an interest therein, or an agreement to acquire all or part of
Roslyn or T R Financial, could cause the Merger Stock Options to become
exercisable. The existence of the Merger Stock Option Agreements could
significantly increase the cost to a potential acquiror of acquiring either
Roslyn or T R Financial compared to its cost had the Merger Stock Option
Agreements not been entered into. Such increased cost might discourage a
potential acquiror from considering or proposing an acquisition. Moreover,
following consultation with Roslyn's and T R Financial's respective independent
accountants, Roslyn's and T R Financial's respective management believes that
the exercise of either of the Merger Stock Options is likely to prohibit any
acquiror from accounting for any acquisition of either of the parties using the
pooling-of-interests accounting method for a period of two years following such
exercise. Accordingly, the existence of the Merger Stock Option Agreements may
deter significantly, or completely preclude, an acquisition of either of the
parties by certain other banking organizations. The Roslyn and T R Financial
Boards took this factor into account before approving the Merger Stock Option
Agreements. See "THE MERGER -- Recommendation of the Roslyn Board; Roslyn's
Reasons for the Merger," "-- Recommendation of the T R Financial Board; T R
Financial's Reasons for the Merger."
AMENDMENT TO T R FINANCIAL RIGHTS AGREEMENT
On July 19, 1994, T R Financial adopted the T R Financial Rights Agreement
pursuant to which T R Financial's stockholders of record as of August 2, 1994
each received a dividend of one T R Financial Right for each share of T R
Financial Common Stock held. In connection with the execution of the Merger
Agreement, T R Financial amended the T R Financial Rights Agreement to clarify
that, for purposes of determining whether Roslyn (as well as its affiliates and
associates) is an Acquiring Person, as defined in the T R Financial Rights
Agreement, Roslyn shall not be deemed to be a Beneficial Owner, as defined in
the T R Financial Rights Agreement, or to beneficially own any securities as a
result of the execution and delivery of the Merger Agreement, the consummation
of the Merger, the execution and delivery of the T R Financial Merger Stock
Option Agreement or Roslyn's right to acquire, or acquisition of, T R Financial
Common Stock pursuant to the T R Financial Merger Stock Option Agreement.
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BANK MERGER AGREEMENT
In connection with the Merger, Roslyn Savings and Roosevelt Savings have
entered into the Bank Merger Agreement pursuant to which Roosevelt Savings and
Roslyn Savings will merge. The Merger Agreement permits an alternative
structure under which the Bank Merger can be structured so that Roosevelt
Savings can merge into Roslyn Savings or Roslyn Savings can merge into Roosevelt
Savings, in either case, with the resulting bank being named "The Roslyn Savings
Bank." See "THE MERGER -- Management and Operations Following the Merger."
The Bank Merger Agreement may be terminated by mutual consent of the parties at
any time and will be terminated automatically in the event the Merger Agreement
is terminated.
CERTAIN BANKING REGULATORY CONSIDERATIONS
GENERAL
Roslyn Savings is a New York State-chartered stock savings bank and its
deposit accounts are insured up to applicable limits by the FDIC under the BIF.
Roslyn Savings is subject to extensive regulation by the Superintendent and the
New York Banking Board (the "NYBB" and collectively with the Superintendent, the
"NYBD"), as its chartering agency, and by the FDIC, as the deposit insurer.
Roslyn Savings must file reports with the NYBD and the FDIC concerning its
activities and financial condition, in addition to obtaining regulatory
approvals prior to entering into certain transactions such as establishing
branches and mergers with, or acquisitions of, other depository institutions.
There are periodic examinations by the NYBD and the FDIC to assess Roslyn's
compliance with various regulatory requirements and financial condition. This
regulation and supervision establishes a framework of activities in which a
savings bank can engage and is intended primarily for the protection of the
insurance fund and depositors. The regulatory structure also gives the
regulatory authorities extensive discretion in connection with their supervisory
and enforcement activities and examination policies, including policies with
respect to the classification of assets and the establishment of adequate loan
loss reserves for regulatory purposes. Any change in such regulation, whether
by the NYBD, the FDIC or through legislation, could have a material adverse
impact on Roslyn and Roslyn Savings and their operations and stockholders.
Roslyn is also required to file certain reports with, and otherwise comply with
the rules and regulations of, the OTS and the NYBD. Certain of the regulatory
requirements applicable to Roslyn and to Roslyn Savings are referred to below or
elsewhere herein. This description of the statutory provisions and regulations
applicable to Roslyn and Roslyn Savings does not purport to be complete, and is
qualified in its entirety by reference to such statutes and regulations.
NEW YORK STATE LAW
Roslyn Savings derives its lending, investment and other authority
primarily from the applicable provisions of NYBL and the regulations of the
NYBD, as limited by FDIC regulations. See "-- Investment Activities." Under
these laws and regulations, savings banks, including Roslyn Savings, may invest
in real estate mortgages, consumer and commercial loans, certain types of debt
securities, including certain corporate debt securities and obligations of
federal, state and local governments and agencies, certain types of corporate
equity securities and certain other assets. Under the statutory authority for
investing in equity securities, a savings bank may directly invest up to 7.5% of
its assets in certain corporate stock and may also invest up to 7.5% of its
assets in certain mutual fund securities. Investment in the stock of a single
corporation is limited to the lesser of 2% of the outstanding stock of such
corporation or 1% of the savings bank's assets, except as set forth below. Such
equity securities must meet certain tests of financial performance. A savings
bank's lending powers are not subject to percentage of asset limitations,
although there are limits applicable to single borrowers. A savings bank may
also, pursuant to the "leeway" authority, make investments not otherwise
authorized under the NYBL. This authority permits investments not
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otherwise authorized of up to 1% of the savings bank's assets in any single
investment, subject to certain restrictions, and to an aggregate limit for all
such investments of up to 5% of assets. Additionally, in lieu of investing in
such securities in accordance with and reliance upon the specific investment
authority set forth in the NYBL, savings banks are authorized to elect to invest
under a "prudent person" standard in a wider range of debt and equity securities
as compared to the types of investments permissible under such specific
investment authority. However, in the event a savings bank elects to utilize the
"prudent person" standard, it will be unable to avail itself of the other
provisions of the NYBL and regulations which set forth specific investment
authority. A New York State-chartered stock savings bank may also exercise trust
powers upon approval of the NYBD.
New York State-chartered savings banks may also invest in subsidiaries
under their service corporation investment power. A savings bank may use this
power to invest in corporations that engage in various activities authorized for
savings banks, plus any additional activities which may be authorized by the
NYBB. Investment by a savings bank in the stock, capital notes and debentures
of its service corporations is limited to 3% of the bank's assets, and such
investments, together with the bank's loans to its service corporations, may not
exceed 10% of the savings bank's assets.
The exercise by an FDIC-insured New York State-chartered savings bank of
the lending and investment powers of a savings bank under the NYBL is limited by
FDIC regulations and other federal laws and regulations. In particular, the
applicable provisions of the NYBL and regulations governing the investment
authority and activities of an FDIC insured state-chartered savings bank have
been effectively limited by the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA") and the FDIC regulations issued pursuant
thereto. See "-- Investment Activities."
With certain limited exceptions, a New York State-chartered savings bank
may not make loans or extend unsecured credit for commercial, corporate or
business purposes (including lease financing) to a single borrower, the
aggregate amount of which would be in excess of 15% of the bank's net worth.
Roslyn Savings currently complies with all applicable loans-to-one-borrower
limitations.
Under the NYBL, a New York State-chartered stock savings bank may declare
and pay dividends out of its net profits, unless there is an impairment of
capital, but approval of the Superintendent is required if the total of all
dividends declared in a calendar year would exceed the total of its net profits
for that year combined with its retained net profits of the preceding two years,
subject to certain adjustments.
Under the NYBL, the Superintendent may issue an order to a New York State-
chartered banking institution to appear and explain an apparent violation of
law, to discontinue unauthorized or unsafe practices and to keep prescribed
books and accounts. Upon a finding by the NYBB that any director, trustee or
officer of any banking organization has violated any law, or has continued
unauthorized or unsafe practices in conducting the business of the banking
organization after having been notified by the Superintendent to discontinue
such practices, such director, trustee or officer may be removed from office by
the NYBB after notice and an opportunity to be heard. The Superintendent also
may take possession of a banking organization under specified statutory
criteria. Roslyn Savings does not know of any past or current practice,
condition or violation that might lead to any proceeding by the Superintendent
or the NYBB against Roslyn Savings or any of its trustees or officers.
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FDIC REGULATIONS
CAPITAL REQUIREMENTS. The FDIC has adopted risk-based capital guidelines
to which Roslyn Savings is subject. The guidelines establish a systematic
analytical framework that makes regulatory capital requirements more sensitive
to differences in risk profiles among banking organizations. Roslyn Savings is
required to maintain minimum levels of regulatory capital in relation to its
regulatory risk-weighted assets. The ratio of such regulatory capital to
regulatory risk-weighted assets is referred to as Roslyn Savings' "risk-based
capital ratio." Risk-based capital ratios are determined by allocating assets
and specified off-balance sheet items to four risk-weighted categories ranging
from 0% to 100%, with higher levels of capital being required for the categories
considered as representing greater risk.
These guidelines divide a savings bank's capital into two tiers. The first
tier ("Tier I") includes common equity, retained earnings, certain non-
cumulative perpetual preferred stock (excluding auction rate issues) and
minority interests in equity accounts of consolidated subsidiaries, less
goodwill and other intangible assets (except mortgage servicing rights and
purchased credit card relationships subject to certain limitations).
Supplementary ("Tier II") capital includes, among other items, cumulative
perpetual and long-term limited-life preferred stock, mandatory convertible
securities, certain hybrid capital instruments, term subordinated debt and the
allowance for loan and lease losses, subject to certain limitations, less
required deductions. Savings banks are required to maintain a total risk-based
capital ratio of at least 8%, of which at least 4% must be Tier I capital.
In addition, the FDIC has established regulations prescribing a minimum
Tier I leverage ratio (ratio of Tier I capital to adjusted total average balance
of assets as specified in the regulations). These regulations provide for a
minimum Tier I leverage ratio of 3% for banks that meet certain specified
criteria, including that they have the highest examination rating and are not
experiencing or anticipating significant growth. All other banks are required to
maintain a Tier I leverage ratio of 3% plus an additional cushion of at least
100 to 200 basis points. The federal banking agencies, including the FDIC, have
established a uniform minimum Tier 1 leverage ratio of 4% for all but the
highest rated banks. The FDIC may, however, set higher leverage and risk-based
capital requirements on individual institutions when particular circumstances
warrant. Savings banks experiencing or anticipating significant growth are
expected to maintain capital ratios, including tangible capital positions, well
above the minimum levels.
The following is a summary of Roslyn Savings' regulatory capital ratios at
June 30, 1998:
Tier 1 Risk-Based Capital.......................... 21.59%
Total Risked-Based Capital......................... 22.84%
Leverage Capital................................... 11.00%
In August 1995, the FDIC, along with the other federal banking agencies,
adopted a regulation providing that the agencies will take account of the
exposure of a bank's capital and economic value to changes in interest rate risk
in assessing a bank's capital adequacy. According to the agencies, applicable
considerations include the quality of the bank's interest rate risk management
process, the overall financial condition of the bank and the level of other
risks at the bank for which capital is needed. Institutions with significant
interest rate risk may be required to hold additional capital. The agencies also
have issued a joint policy statement providing guidance on interest rate risk
management, including a discussion of the critical factors affecting the
agencies' evaluation of interest rate risk in connection with capital adequacy.
The agencies have determined not to proceed with a previously issued proposal to
develop a supervisory framework for measuring interest rate risk and an explicit
capital component for interest rate risk.
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The following is a summary of Roosevelt Savings' regulatory capital at
June 30, 1998:
Tier 1 Risk-Based Capital.................................. 16.31%
Total Risked-Based Capital................................. 17.34%
Leverage Capital........................................... 5.95%
STANDARDS FOR SAFETY AND SOUNDNESS. Federal law requires each federal
banking agency to prescribe for depository institutions under its jurisdiction
standards relating to, among other things, internal controls; information
systems and audit systems; loan documentation; credit underwriting; interest
rate risk exposure; asset growth; compensation; fees and benefits; and such
other operational and managerial standards as the agency deems appropriate. The
federal banking agencies adopted final regulations and Interagency Guidelines
Establishing Standards for Safety and Soundness (the "Guidelines") to implement
these safety and soundness standards. The Guidelines set forth the safety and
soundness standards that the federal banking agencies use to identify and
address problems at insured depository institutions before capital becomes
impaired. The Guidelines address internal controls and information systems;
internal audit system; credit underwriting; loan documentation; interest rate
risk exposure; asset growth; asset quality; earnings; and compensation, fees and
benefits. If the appropriate federal banking agency determines that an
institution fails to meet any standard prescribed by the Guidelines, the agency
may require the institution to submit to the agency an acceptable plan to
achieve compliance with the standard, as required by the Federal Deposit
Insurance Act, as amended, ("FDI Act"). The final regulation establishes
deadlines for the submission and review of such safety and soundness compliance
plans.
REAL ESTATE LENDING STANDARDS. The FDIC and the other federal banking
agencies have adopted regulations that prescribe standards for extensions of
credit that (i) are secured by real estate or (ii) are made for the purpose of
financing the construction or improvements on real estate. The FDIC regulations
require each institution to establish and maintain written internal real estate
lending standards that are consistent with safe and sound banking practices and
appropriate to the size of the institution and the nature and scope of its real
estate lending activities. The standards also must be consistent with
accompanying FDIC guidelines, which include loan-to-value limitations for the
different types of real estate loans. Institutions are also permitted to make a
limited amount of loans that do not conform to the proposed loan-to-value
limitations so long as such exceptions are reviewed and justified appropriately.
The guidelines also list a number of lending situations in which exceptions to
the loan-to-value standard are justified.
DIVIDEND LIMITATIONS. The FDIC has authority to use its enforcement
powers to prohibit a savings bank from paying dividends if, in its opinion, the
payment of dividends would constitute an unsafe or unsound practice. Federal
law prohibits the payment of dividends by a bank that will result in the bank
failing to meet applicable minimum capital requirements on a pro forma basis.
Additionally, Roslyn Savings, as a subsidiary of a savings and loan holding
company, is required to provide the OTS with 30 days' prior written notice
before declaring any dividend. The Plan of Conversion governing Roslyn Savings'
1996 conversion to stock form also restricts the institution's payment of
dividends in the event the dividend would impair the liquidation account
established in connection with the conversion. In addition, the liquidation
account established by Roosevelt Savings in connection with its conversion to
stock form may not be impaired by the payment of dividends. Roslyn Savings is
also subject to dividend declaration restrictions imposed by New York State law.
See "-- New York State Law."
INVESTMENT ACTIVITIES
Since the enactment of FDICIA, all insured state-chartered banks,
including savings banks and their subsidiaries, have generally been limited to
activities as principal and equity investments of the types and
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in the amounts authorized for national banks, notwithstanding state law. FDICIA
and the FDIC regulations thereunder permit certain exceptions to these
limitations. For example, certain state-chartered banks, such as Roslyn Savings,
may, with FDIC approval, continue to exercise state authority to invest in
common or preferred stocks listed on a national securities exchange or the
Nasdaq National Market and in the shares of investment companies registered
under the Investment Company Act of 1940, as amended. Such banks may also
continue to sell savings bank life insurance. In addition, the FDIC is
authorized to permit such institutions to engage in state authorized activities
or investments that do not meet this standard (other than non-subsidiary equity
investments) for institutions that meet all applicable capital requirements if
it is determined that such activities or investments do not pose a significant
risk to the BIF. The FDIC has recently proposed revisions to its regulations
governing the procedures for institutions seeking approval to engage in such
activities or investments. These proposed revisions would, among other things,
streamline certain application procedures for healthy banks and impose certain
quantitative and qualitative restrictions on a bank's dealings with its
subsidiaries engaged in activities not permitted for national bank subsidiaries.
All non-subsidiary equity investments, unless otherwise authorized or approved
by the FDIC, must have been divested by December 19, 1996, pursuant to a FDIC-
approved divestiture plan unless such investments were grandfathered by the
FDIC. Roslyn Savings received grandfathering authority from the FDIC in
February, 1993 to invest in listed stocks and/or registered shares subject to
the maximum permissible investment of 100% of Tier 1 capital, as specified by
the FDIC's regulations, or the maximum amount permitted by the NYBL, whichever
is less. Such grandfathering authority is subject to termination upon the FDIC's
determination that such investments pose a safety and soundness risk to Roslyn
Savings or in the event Roslyn Savings converts its charter, other than a mutual
to stock conversion, or undergoes a change in control. As of June 30, 1998,
Roslyn Savings had $110.6 million of securities which were permissible under
such grandfathering authority.
PROMPT CORRECTIVE REGULATORY ACTION
Federal law requires, among other things, that federal bank regulatory
authorities take "prompt corrective action" with respect to banks that do not
meet minimum capital requirements. For these purposes, the law establishes five
capital categories: well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized, and critically undercapitalized.
The FDIC has adopted regulations to implement the prompt corrective
action legislation. Among other things, the regulations define the relevant
capital measures for the five capital categories. An institution is deemed to
be "well capitalized" if it has a total risk-based capital ratio of 10% or
greater, a Tier I risk-based capital ratio of 6% or greater, and a leverage
ratio of 5% or greater, and is not subject to a regulatory order, agreement or
directive to meet and maintain a specific capital level for any capital measure.
An institution is deemed to be "adequately capitalized" if it has a total risk-
based capital ratio of 8% or greater, a Tier I risk-based capital ratio of 4% or
greater, and generally a leverage ratio of 4% or greater. An institution is
deemed to be "undercapitalized" if it has a total risk-based capital ratio of
less than 8%, a Tier I risk-based capital ratio of less than 4%, or generally a
leverage ratio of less than 4%. An institution is deemed to be "significantly
undercapitalized" if it has a total risk-based capital ratio of less than 6%, a
Tier I risk-based capital ratio of less than 3%, or a leverage ratio of less
than 3%. An institution is deemed to be "critically undercapitalized" if it has
a ratio of tangible equity (as defined in the regulations) to total assets that
is equal to or less than 2%.
"Undercapitalized" banks are subject to growth, capital distribution
(including dividend) and other limitations and are required to submit a capital
restoration plan. A bank's compliance with such plan is required to be
guaranteed by any company that controls the undercapitalized institution in an
amount equal to the lesser of 5.0% of the bank's total assets when deemed
undercapitalized or the amount necessary to
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achieve the status of adequately capitalized. If an "undercapitalized" bank
fails to submit an acceptable plan, it is treated as if it is "significantly
undercapitalized." "Significantly undercapitalized" banks are subject to one or
more of a number of additional restrictions, including but not limited to an
order by the FDIC to sell sufficient voting stock to become adequately
capitalized, requirements to reduce total assets and cease receipt of deposits
from correspondent banks or dismiss directors or officers, and restrictions on
interest rates paid on deposits, compensation of executive officers and capital
distributions by the parent holding company. "Critically undercapitalized"
institutions also may not, beginning 60 days after becoming "critically
undercapitalized," make any payment of principal or interest on certain
subordinated debt or extend credit for a highly leveraged transaction or enter
into any material transaction outside the ordinary course of business. In
addition, "critically undercapitalized" institutions are subject to appointment
of a receiver or conservator. Generally, subject to a narrow exception, the
appointment of a receiver or conservator is required for a "critically
undercapitalized" institution within 270 days after it obtains such status.
TRANSACTIONS WITH AFFILIATES
Under current federal law, transactions between depository
institutions and their affiliates are governed by Sections 23A and 23B of the
Federal Reserve Act. An affiliate of a savings bank is any company or entity
that controls, is controlled by, or is under common control with the savings
bank, other than a nonbanking subsidiary of the bank. In a holding company
context, at a minimum, the parent holding company of a savings bank and any
companies which are controlled by such parent holding company are affiliates of
the savings bank. The FRB has proposed regulations that would treat as an
affiliate any subsidiary of a savings bank that engages in activities not
permissible for the parent savings bank to engage in directly. Generally,
Section 23A limits the extent to which the savings bank or its subsidiaries may
engage in "covered transactions" with any one affiliate to an amount equal to
10% of such savings bank's capital stock and surplus, and contains an aggregate
limit on all such transactions with all affiliates to an amount equal to 20% of
such capital stock and surplus. The term "covered transaction" includes the
making of loans or other extensions of credit to an affiliate; the purchase of
assets from an affiliate, the purchase of, or an investment in, the securities
of an affiliate; the acceptance of securities of an affiliate as collateral for
a loan or extension of credit to any person; or issuance of a guarantee,
acceptance, or letter of credit on behalf of an affiliate. Section 23A also
establishes specific collateral requirements for loans or extensions of credit
to, or guarantees, acceptances or letters of credit issued on behalf of an
affiliate. Section 23B requires that covered transactions and a broad list of
other specified transactions be on terms substantially the same, or no less
favorable, to the savings bank or its subsidiary as similar transactions with
nonaffiliates.
Further, Section 22(h) of the Federal Reserve Act restricts a savings
bank with respect to loans to directors, executive officers, and principal
stockholders. Under Section 22(h), loans to directors, executive officers and
stockholders who control, directly or indirectly, 10% or more of voting
securities of a savings bank, and certain related interests of any of the
foregoing, may not exceed, together with all other outstanding loans to such
persons and affiliated entities, the savings bank's total capital and surplus.
Section 22(h) also prohibits loans above amounts prescribed by the appropriate
federal banking agency to directors, executive officers, and stockholders who
control 10% or more of voting securities of a stock savings bank, and their
respective related interests, unless such loan is approved in advance by a
majority of the board of directors of the savings bank. Any "interested"
director may not participate in the voting. The loan amount (which includes all
other outstanding loans to such person) as to which such prior board of director
approval is required, is the greater of $25,000 or 5% of capital and surplus or
any loans over $500,000. Further, pursuant to Section 22(h), loans to
directors, executive officers and principal stockholders must be made on terms
substantially the same as offered in comparable transactions to other persons
except for extensions of credit made pursuant to a benefit or compensation
program that is widely available to the institution's employees
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and does not give preference to insiders over other employees. Section 22(g) of
the Federal Reserve Act places additional limitations on loans to executive
officers.
ENFORCEMENT
The FDIC has extensive enforcement authority over insured savings
banks, including Roslyn Savings. This enforcement authority includes, among
other things, the ability to assess civil money penalties, to issue cease and
desist orders and to remove directors and officers. In general, these
enforcement actions may be initiated in response to violations of laws and
regulations and to unsafe or unsound practices.
The FDIC has authority under federal law to appoint a conservator or
receiver for an insured savings bank under certain circumstances. The FDIC is
required, with certain exceptions, to appoint a receiver or conservator for an
insured state savings bank if that savings bank was "critically
undercapitalized" on average during the calendar quarter beginning 270 days
after the date on which the savings bank became "critically undercapitalized."
For this purpose, "critically undercapitalized" means having a ratio of tangible
capital to total assets of less than 2%. See "-- Prompt Corrective Regulatory
Action." The FDIC may also appoint a conservator or receiver for an insured
state savings bank on the basis of the institution's financial condition or upon
the occurrence of certain events, including: (i) insolvency (whereby the assets
of the savings bank are less than its liabilities to depositors and others);
(ii) substantial dissipation of assets or earnings through violations of law or
unsafe or unsound practices; (iii) existence of an unsafe or unsound condition
to transact business; (iv) likelihood that the savings bank will be unable to
meet the demands of its depositors or to pay its obligations in the normal
course of business; and (v) insufficient capital, or the incurring or likely
incurring of losses that will deplete substantially all of the institution's
capital with no reasonable prospect of replenishment of capital without federal
assistance.
INSURANCE OF DEPOSIT ACCOUNTS
The FDIC has adopted a risk-based insurance assessment system. The
FDIC assigns an institution to one of three capital categories based on the
institution's financial information, as of the reporting period ending seven
months before the assessment period, consisting of (i) well capitalized,
(ii) adequately capitalized or (iii) undercapitalized, and one of three
supervisory subcategories within each capital group. The supervisory subgroup to
which an institution is assigned is based on a supervisory evaluation provided
to the FDIC by the institution's primary federal regulator and additional
information which the FDIC determines to be relevant to the institution's
financial condition and the risk posed to the deposit insurance funds. An
institution's assessment rate depends on the capital category and supervisory
category to which it is assigned. Deposits of Roslyn Savings are presently
insured by the BIF. Assessment rates for BIF deposits, exclusive of assessments
for Financing Corporation ("FICO") bonds described below, currently range from
0 basis points to 27 basis points, and the FDIC has determined to retain such
range of assessment rates for the second half of 1998. The FDIC is authorized to
raise the assessment rates in certain circumstances, including to maintain or
achieve the designated reserve ratio of 1.25%, which requirement the BIF
currently meets. The FDIC has exercised its authority to raise rates in the past
and may raise insurance premiums in the future. If such action is taken by the
FDIC, it could have an adverse effect on the earnings of Roslyn Savings. In
addition, recent legislation requires BIF-insured institutions like Roslyn
Savings to assist in the payment of FICO bonds.
Under the FDI Act, insurance of deposits may be terminated by the FDIC
upon a finding that the institution has engaged in unsafe or unsound practices,
is in an unsafe or unsound condition to continue operations or has violated any
applicable law, regulation, rule, order or condition imposed by the FDIC.
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The management of Roslyn Savings does not know of any practice, condition or
violation that might lead to termination of deposit insurance.
PAYMENT OF FICO BONDS
Beginning on January 1, 1997, BIF deposits are also assessed for
payments on bonds issued by FICO, which were issued in the late 1980's to
recapitalize the predecessor Savings Association Insurance Fund ("SAIF"). For
the third quarter of 1998, the FICO assessment rates, on an annual basis, are
1.22 basis points for BIF-assessable deposits and 6.10 basis points for SAIF-
assessable deposits. Full pro rata sharing of the FICO payments by BIF members
will occur on the earlier of January 1, 2000 or the date the BIF and SAIF are
merged.
FEDERAL RESERVE SYSTEM
The FRB regulations require depository institutions to maintain non-
interest-earning reserves against their transaction accounts (primarily NOW and
regular checking accounts). The FRB regulations generally require that reserves
be maintained against aggregate transaction accounts as follows: for that
portion of transaction accounts aggregating $47.8 million or less (subject to
adjustment by the FRB) the reserve requirement is 3%; and for accounts greater
than $47.8 million, the reserve requirement is $1.4 million plus 10% (subject to
adjustment by the FRB between 8% and 14%) against that portion of total
transaction accounts in excess of $47.8 million. The first $4.7 million of
otherwise reservable balances (subject to adjustments by the FRB) are exempted
from the reserve requirements. Roslyn Savings is in compliance with the
foregoing requirements. Because required reserves must be maintained in the form
of either vault cash, a non-interest-bearing account at a Federal Reserve Bank
or a pass-through account as defined by the FRB the effect of this reserve
requirement is to reduce Roslyn Savings' interest-earning assets.
COMMUNITY REINVESTMENT ACT
NEW YORK STATE REGULATION. Roslyn Savings is also subject to
provisions of the NYBL which impose continuing and affirmative obligations upon
banking institutions organized in New York State to serve the credit needs of
its local community ("NYCRA"), which are substantially similar to those imposed
by the CRA. Pursuant to the NYCRA, a bank must file copies of all Federal CRA
reports with the NYBD. The NYCRA also requires the Superintendent to consider a
bank's NYCRA rating when reviewing a bank's application to engage in certain
transactions, including mergers, asset purchases and the establishment of branch
offices or automated teller machines, and provides that such assessment may
serve as a basis for the denial of any such application. The New York
regulations require a biennial assessment of a bank's compliance with the NYCRA,
utilizing a four-tiered rating system, and require the NYBD to make available to
the public such rating and a written summary of the results.
FEDERAL REGULATION. Under the CRA, as implemented by FDIC
regulations, a savings bank has a continuing and affirmative obligation
consistent with its safe and sound operation to help meet the credit needs of
its entire community, including low- and moderate-income neighborhoods. The CRA
does not establish specific lending requirements or programs for financial
institutions nor does it limit an institution's discretion to develop the types
of products and services that it believes are best suited to its particular
community, consistent with the CRA. The CRA requires the FDIC, in connection
with its examination of a savings institution, to assess the institution's
record of meeting the credit needs of its community and to take such record into
account in its evaluation of certain applications by such institution. The FDIC
utilizes a four-tier descriptive rating system in its CRA evaluations. Public
disclosure is made of such evaluations.
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At the most recent examination by the NYBD, Roslyn Savings received a
CRA performance rating of "Satisfactory." During the examination, based on a
statistical review, the NYBD identified certain discrepancies in the frequency
and amount of "overages" charged to minority borrowers as compared to non-
minority borrowers by a wholly owned residential mortgage banking subsidiary of
Roslyn Savings. Overages are increased amounts charged to borrowers either in
the form of a higher interest rate or points. The NYBD alleged that minority
borrowers were charged higher rates and/or points more frequently than
non-minority borrowers. The statistical analysis employed by the NYBD, however,
did not involve a variable for geographic market factors on the basis that the
Roslyn Savings subsidiary had utilized centralized underwriting, statewide rate
sheets and uniform policies and procedures throughout New York State. A
comprehensive statistical analysis performed on behalf of Roslyn Savings, which
included geographic market factors, found no disparate treatment of minority
borrowers. In any event, the NYBD required, and in order to avoid protracted and
costly litigation, Roslyn Savings agreed, that its subsidiary and the NYBD would
enter into a remediation agreement. Pursuant to such agreement, Roslyn, among
other things, established a $3 million fund to provide reimbursement to certain
borrowers of the subsidiary.
In addition, the FDIC, in its most recent examination, identified the
same discrepancies as the NYBD described above and required Roslyn to enter into
a memorandum to improve its compliance program. The FDIC assigned Roslyn
Savings a "Needs to Improve" rating.
Subsequent to the execution of the above-referenced agreements, the
FDIC and the NYBD both approved Roslyn Savings' applications to establish branch
offices in Bay Shore, New York, Oceanside, New York and Smithtown, New York.
HOLDING COMPANY REGULATION
As a unitary savings and loan holding company, Roslyn generally is not
restricted under existing laws as to the types of business activities in which
it may engage. Upon any non-supervisory acquisition by Roslyn of another
savings association to be held as a separate subsidiary, Roslyn would become a
multiple savings and loan holding company and would be subject to extensive
limitations on the types of business activities in which it could engage. The
HOLA limits the activities of a multiple savings and loan holding company and
its non-insured institution subsidiaries primarily to activities permissible for
bank holding companies under Section 4(c)(8) of the BHC Act, subject to the
prior approval of the OTS, and to other activities authorized by OTS
regulations. Multiple savings and loan holding companies are prohibited from
acquiring or retaining, with certain exceptions, more than 5% of the voting
shares of a non-subsidiary holding company or other company engaged in
activities other than those permitted by the HOLA.
Recently enacted legislation provides that the BIF and the SAIF will
merge on January 1, 1999 if there are no more savings associations as of that
date. Several bills have been introduced in the current Congress that would
eliminate the federal thrift charter and the OTS. The bill that was passed by
the House of Representatives in May 1998 would subject unitary savings and loan
holding companies to the activities restrictions generally applicable to other
depository institution holding companies under the legislation and would not
require state savings banks, such as Roslyn Savings, to change their charter. A
grandfathering provision would allow existing unitary savings and loan holding
companies to continue to engage in activities permitted a unitary savings and
loan holding company under existing law and that grandfather could be
transferred to acquirers. Unless the grandfather date in the bill is changed,
Roslyn would qualify for the grandfather if the legislation is enacted. Roslyn
Savings in unable to predict whether the legislation will be enacted or, given
such uncertainty, determine the extent to which the legislation, if enacted,
would affect its business.
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The HOLA prohibits a savings and loan holding company, directly or
indirectly, or through one or more subsidiaries, from acquiring more than 5% of
the voting stock of another savings association or holding company thereof or
from acquiring such an institution or company by merger, consolidation or
purchase of its assets, without prior written approval of the OTS. In
evaluating applications by holding companies to acquire savings institutions,
the OTS must consider the financial and managerial resources and future
prospects of the company and institution involved, the effect of the acquisition
on the risk to the insurance funds, the convenience and needs of the community
and competitive factors.
The OTS is prohibited from approving any acquisition that would result
in a multiple savings and loan holding company controlling savings institutions
in more than one state, except: (i) interstate supervisory acquisitions by
savings and loan holding companies, and (ii) the acquisition of a savings
institution in another state if the laws of the state of the target savings
institution specifically permit such acquisitions. The states vary in the
extent to which they permit interstate savings and loan holding company
acquisitions.
In order to elect and continue to be regulated as a savings and loan
holding company by the OTS (rather than as a bank holding company by the FRB),
Roslyn Savings must continue to qualify as a Qualified Thrift Lender ("QTL").
In order to qualify as a QTL, Roslyn Savings must maintain compliance with a
Qualified Thrift Lender Test ("QTL Test"). Under the QTL Test, a savings
institution is required to maintain at least 65% of its "portfolio assets"
(total assets less: (i) specified liquid assets up to 20% of total assets; (ii)
intangibles, including goodwill; and (iii) the value of property used to conduct
business) in certain "qualified thrift investments" (primarily residential
mortgages and related investments, including certain mortgage-backed and related
securities) in at least 9 months out of each 12-month period. A holding company
of a savings institution that fails the QTL Test must either convert to a bank
holding company and thereby become subject to the regulation and supervision of
the FRB or operate under certain restrictions. As of June 30, 1998, Roslyn
Savings maintained in excess of 65% its portfolio assets in qualified thrift
investments. Roslyn Savings also met the QTL Test in each of the prior 12
months and, therefore, met the QTL Test. Recent legislative amendments have
broadened the scope of "qualified thrift investments" that go toward meeting the
QTL Test to fully include credit card loans, student loans and small business
loans. A savings association may also satisfy the QTL Test by qualifying as a
"domestic building and loan association" as defined in the Code.
NEW YORK STATE HOLDING COMPANY REGULATION. In addition to the federal
holding company regulations, a bank holding company organized or doing business
in New York State may be also subject to regulation under the NYBL. The term
"bank holding company," for the purposes of the NYBL, is defined generally to
include any person, company or trust that directly or indirectly either controls
the election of a majority of the directors or owns, controls or holds with
power to vote more than 10% of the voting stock of a bank holding company or, if
the company is a banking institution, another banking institution, or 10% or
more of the voting stock of each of two or more banking institutions, including
commercial banks and state savings banks and savings and loan associations
organized in stock form. In general, a holding company controlling, directly or
indirectly, only one banking institution will not be deemed to be a bank holding
company for the purposes of the NYBL. Under the NYBL, the prior approval of the
NYBD is required before: (i) any action is taken that causes any company to
become a bank holding company; (ii) any action is taken that causes any banking
institution to become or to be merged or consolidated with a subsidiary of a
bank holding company; (iii) any bank holding company acquires direct or indirect
ownership or control of more than 5% of the voting stock of a banking
institution; (iv) any bank holding company or subsidiary thereof acquires all or
substantially all of the assets of a banking institution; or (v) any action is
taken that causes any bank holding company to merge or consolidate with another
bank holding company. Additionally, certain restrictions apply to New York
State bank holding companies regarding the acquisition of banking
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institutions which have been chartered five years or less and are located in
smaller communities. Officers, directors and employees of New York State bank
holding companies are subject to limitations regarding their affiliation with
securities underwriting or brokerage firms and other bank holding companies and
limitations regarding loans obtained from its subsidiaries.
INTERSTATE BANKING AND BRANCHING
Roslyn, as a savings and loan holding company, is limited under HOLA
with respect to its acquisition of a savings association located in a state
other than New York. In general, a savings and loan holding company may not
acquire an additional savings association subsidiary that is located in a state
other than the home state of its first savings association subsidiary unless
such an interstate acquisition is permitted by the statutes of such other state.
Many states permit such interstate acquisitions if the statutes of the home
state of the acquiring savings and loan holding company satisfy various
reciprocity conditions. New York is one of a number of states that permit out-
of-state bank and savings and loan holding companies to acquire New York savings
banks and savings associations.
In contrast, bank holding companies are generally authorized to
acquire banking subsidiaries in more than one state irrespective of any state
law restrictions on such acquisitions. The Riegle-Neal Interstate Banking and
Branching Efficiency Act of 1994 ("Interstate Banking Act"), which was enacted
on September 29, 1994, permits approval under the BHC Act of the acquisition of
a bank located outside of the holding company's home state regardless of whether
the acquisition is permitted under the law of the state of the acquired bank.
The FRB may not approve an acquisition under the BHC Act that would result in
the acquiring holding company controlling more than 10% of the deposits in the
United States or more than 30% of the deposits in any particular state.
In the past, branching across state lines was not generally available
to a state bank such as Roslyn Savings. Out-of-state branches of savings banks
are authorized under the NYBL, but similar authority does not exist generally
under the laws of most other states. The Interstate Banking Act permitted,
beginning June 1, 1997, the responsible federal banking agencies to approve
merger transactions between banks located in different states, regardless of
whether the merger would be prohibited under the law of the two states. The
Interstate Banking Act also permitted a state to "opt in" to the provisions of
the Interstate Banking Act prior to June 1, 1997, and permitted a state to "opt
out" of the provisions of the Interstate Banking Act by adopting appropriate
legislation, beginning June 1, 1997, before that date. Accordingly, the
Interstate Banking Act, permits a bank, such as Roslyn Savings, to acquire
branches in a state other than New York unless the other state has opted out of
the Interstate Banking Act. The Interstate Banking Act also authorizes de novo
branching into another state if the host state enacts a law expressly permitting
out-of-state banks to establish such branches within its borders.
The Interstate Banking Act may facilitate the further consolidation of
the banking industry. The effect of the Interstate Banking Act on Roslyn
Savings, if any, is likely to occur as banking institutions, state legislators,
and bank regulators respond to the new federal regulatory structure. The states
will have to establish appropriate corporate law, tax and regulatory structures
to adjust to the growth of new interstate banks.
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DESCRIPTION OF ROSLYN CAPITAL STOCK
GENERAL
The authorized capital stock of Roslyn consists of 100,000,000 shares of
Roslyn Common Stock and 10,000,000 shares of preferred stock, par value $0.01
per share ("Roslyn Preferred Stock"), issuable in one or more series with such
terms and at such times and for such consideration as the Roslyn Board
determines. As of May 25, 1998, 41,399,959 shares of Roslyn Common Stock
(excluding 2,242,500 shares of treasury stock) and no shares of Roslyn Preferred
Stock had been issued.
As of June 30, 1988, approximately 4,364,246 shares of Roslyn Common Stock
had been reserved for issuance pursuant to the Roslyn Incentive Plan.
The following description contains a summary of all the material features
of the capital stock of Roslyn but does not purport to be complete and is
subject in all respects to the applicable provisions of the Delaware General
Corporate Law (the "DGCL") and is qualified in its entirety by reference to the
Certificate of Incorporation of Roslyn (the "Roslyn Certificate").
COMMON STOCK
The outstanding shares of Roslyn Common Stock are fully paid and
nonassessable. Holders of Roslyn Common Stock are entitled to one vote for each
share held of record on all matters submitted to a vote of the stockholders and
have no preemptive rights. See also "MEETING OF ROSLYN STOCKHOLDERS -- Proxies;
Voting and Revocation of Proxies" for additional limitations on the voting
rights of Roslyn Common Stock. Holders of Roslyn Common Stock are not entitled
to cumulative voting rights with respect to the election of directors. The
Roslyn Common Stock is neither redeemable nor convertible into other securities,
and there are no sinking fund provisions.
Subject to the preferences applicable to any shares of Roslyn Preferred
Stock outstanding at the time, holders of Roslyn Common Stock are entitled to
dividends when and as declared by the Roslyn Board from funds legally available
therefor and are entitled, in the event of liquidation, to share ratably in all
assets remaining after payment of liabilities.
The Roslyn Certificate and Roslyn's Bylaws provide that the Roslyn Board is
to be divided into three classes which shall be as nearly equal in number as
possible. Directors are elected by classes to three-year terms, so that
approximately one-third of the directors of Roslyn are elected at each annual
meeting of the stockholders. In addition, Roslyn's Bylaws provide that the
power to fill vacancies is vested in the Roslyn Board. The overall effect of
such provisions may be to prevent a person or entity from seeking to acquire
control of Roslyn through an increase in the number of directors on the Roslyn
Board and the election of designated nominees to fill such newly created
vacancies.
PREFERRED STOCK
Roslyn Preferred Stock may be issued with such designations, powers,
preferences and rights as the Roslyn Board may from time to time determine. The
Roslyn Board can, without stockholder approval, issue Roslyn Preferred Stock
with voting, dividend, liquidation and conversion rights which could dilute the
voting strength of the holders of Roslyn Common Stock and may assist management
in impeding an unfriendly takeover or attempted change in control. Roslyn
presently does not have plans to issue Roslyn Preferred Stock.
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COMPARISON OF RIGHTS OF STOCKHOLDERS
GENERAL
Roslyn and T R Financial are both Delaware corporations subject to the
provisions of the DGCL. If the Merger is consummated, the holders of T R
Financial Common Stock, whose rights are currently protected by the DGCL and
governed under the T R Financial Certificate of Incorporation and the T R
Financial Bylaws will, at the Effective Time, become stockholders of Roslyn and
continue to have rights protected by DGCL but governed under the Roslyn
Certificate and Roslyn's Bylaws. The material differences between the rights of
the holders of T R Financial Common Stock and the rights of holders of Roslyn
Common Stock as described in the respective company's certificates of
incorporation and bylaws are summarized below. Except for the provisions
described below, the Roslyn Certificate and Roslyn's Bylaws are substantially
equivalent to the T R Financial Certificate of Incorporation and T R Financial's
Bylaws.
The following summary highlights the material differences affecting the
rights of holders of Roslyn Common Stock and T R Financial Common Stock under
their respective certificates of incorporation and bylaws. This summary
contains a list of the material differences but is not meant to be relied upon
as an exhaustive list or a detailed description of the provisions discussed and
is qualified in its entirety by reference to the governing corporate instruments
of Roslyn and T R Financial. Copies of such governing instruments of Roslyn and
T R Financial are available, without charge, to any person, including any
beneficial owner to whom this Joint Proxy Statement/Prospectus is delivered, and
may be obtained by following the instructions listed under "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE."
QUORUM
ROSLYN. Roslyn's Bylaws provide that, in the event that a meeting of
stockholders is adjourned because a quorum was not present, if notice of the
adjourned special meeting is sent to all stockholders entitled to vote at such
meeting advising them that the adjourned meeting will be held with those present
constituting a quorum, then a quorum may be achieved by the shares of stock
entitled to vote who are present in person or by proxy at such meeting.
T R FINANCIAL. T R Financial's Bylaws do not contain a similar provision.
CALLING STOCKHOLDER MEETINGS
ROSLYN. The Roslyn Board has the discretion to designate a person to call
a meeting of the stockholders to order. In the absence of such designated
person, the Chairman of the Roslyn Board is obligated to serve as the alternate.
In the absence of the Chairman of the Roslyn Board, a majority of the
stockholders entitled to vote who are present, in person or by proxy, may
designate a person to call the meeting to order. That person shall act as
chairman of the meeting.
T R FINANCIAL. The Chairman of the T R Financial Board, or in his absence,
the President of T R Financial, or in his absence, such person as the T R
Financial Board may have designated, shall call stockholder meetings to order.
In the absence of any of the foregoing, the majority of the stockholders
entitled to vote, who are present in person or by proxy, may designate a person
to act as chairman of the meeting and call the meeting to order.
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UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
FINANCIAL STATEMENTS
The following statements set forth certain condensed financial information
for Roslyn and T R Financial on an unaudited pro forma condensed combined
consolidated basis giving effect to the merger of T R Financial into Roslyn as
if the Merger had become effective on June 30, 1998, in the case of the balance
sheet information presented, and as if the Merger had become effective at the
beginning of the periods indicated, in the case of the income statement
information presented. The pro forma information in the statements assumes that
the Merger is accounted for using the pooling-of-interests method of accounting.
See "THE MERGER -- Anticipated Accounting Treatment." These statements should be
read in conjunction with, and are qualified in their entirety by, the historical
financial statements, including the notes thereto, of Roslyn and T R Financial
incorporated by reference herein. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."
The pro forma condensed combined consolidated financial information set
forth in the following tables does not reflect the expected cost savings and
revenue enhancement opportunities that could result from the Merger or any other
items of income or expense which may result from the Merger, except as set forth
in Note 4 to the "Unaudited Pro Forma Condensed Combined Consolidated Financial
Statements." The unaudited pro forma condensed combined consolidated financial
data is presented for informational purposes only and is not necessarily
indicative of the combined financial position or results of operations that
would have occurred if the Merger had been consummated on June 30, 1998, or at
the beginning of the periods indicated or which may be obtained in the future.
Roslyn became a publicly traded company on January 10, 1997, therefore no Roslyn
per share data is included for prior periods.
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ROSLYN BANCORP, INC.
T R FINANCIAL CORP.
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
STATEMENT OF FINANCIAL CONDITION
(UNAUDITED)
AT JUNE 30, 1998
(In thousands)
<TABLE>
<CAPTION>
--------------------------------------------------------------
PRO FORMA ROSLYN
ROSLYN T R FINANCIAL ADJUSTMENTS PRO FORMA
---------- ------------- -------------------- ----------
<S> <C> <C> <C> <C>
ASSETS:
Cash and due from banks................... $ 28,724 $ 22,656 $ -- $ 51,380
Short-term investments.................... 58,500 -- -- 58,500
Loans held for sale....................... 41,551 -- -- 41,551
Securities available-for-sale............. 2,382,261 503,392 (7,472)/(1)(2)(3)/ 2,878,181
Securities held-to-maturity............... 118,592 1,258,852 -- 1,377,444
Federal Home Loan Bank of New York
Stock, at cost.......................... -- 40,029 -- 40,029
Loans receivable held-for investment:
Loans, net of unearned income and fees.... 1,186,308 2,256,021 -- 3,442,329
Allowance for loan losses................. (24,629) (15,367) -- (39,996)
---------- ---------- ------------------- ----------
Net loans................................ 1,161,679 2,240,654 -- 3,402,333
---------- ---------- ------------------- ----------
Premises and equipment, net............... 17,825 12,899 -- 30,724
Other assets.............................. 44,150 37,318 2,232/(1)(2)/ 83,700
---------- ---------- ------------------- ----------
Total assets.......................... $3,853,282 $4,115,800 $ (5,240) $7,963,842
========== ========== =================== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Liabilities:
Non-interest bearing deposits............. $ 43,378 64,856 $ -- $ 108,234
Interest-bearing deposits................. 1,990,992 2,053,483 -- 4,044,475
---------- ---------- ------------------- ----------
Total deposits........................... 2,034,370 2,118,339 -- 4,152,709
Short-term borrowings..................... 527,963 366,750 -- 894,713
Long-term borrowings...................... 604,211 1,278,328 -- 1,882,539
Other liabilities......................... 92,340 96,150 46.399/(3)(4)/ 234,889
---------- ---------- ------------------- ----------
Total liabilities........................ 3,258,884 3,859,567 46,399 7,164,850
---------- ---------- ------------------- ----------
Stockholders' Equity:
Common stock.............................. 436 227 126/(1)/ 789
Additional paid in capital................ 424,237 116,800 (20,238)/(1)(3)(4)/ 520,799
Retained earnings......................... 280,228 197,686 (90,426)/(4)/ 387,488
Unallocated common stock held by
the Company's ESOP...................... (51,115) (4,112) 4,112/(3)/ (51,115)
Unearned common stock held by the
Company's Stock-Based Incentive Plan.... (34,444) (52) 52/(1)/ (34,444)
Accumulated other comprehensive income:
Net unrealized gain on certain
securities, net of tax.............. 33,227 4,743 (3,103)/(1)(2)/ 34,867
Common stock held by the bank's
supplemental executive
retirement plan......................... -- (2,097) 2,097/(3)/ --
Treasury stock............................ (58,171) (56,962) 55,741/(1)(2)/ (59,392)
---------- ---------- ------------------- ----------
Total stockholders' equity............ 594,398 256,233 (51,639) 798,992
---------- ---------- ------------------- ----------
Total liabilities and
stockholders' equity................ $3,853,282 $4,115,800 $ (5,240) $7,963,842
========== ========== =================== ==========
</TABLE>
See "Notes to Unaudited Pro Forma Condensed Combined Consolidated
Financial StatementS."
104
<PAGE>
ROSLYN BANCORP, INC.
T R FINANCIAL CORP.
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
ROSLYN
ROSLYN T R FINANCIAL PRO FORMA
----------- ------------- ----------------
<S> <C> <C> <C>
Interest income............................ $ 128,894 $ 141,601 $ 270,495
Interest expense........................... 77,770 91,042 168,812
----------- ----------- ----------------
Net interest income........................ 51,124 50,559 101,683
Provision for possible loan losses......... 600 500 1,100
----------- ----------- ----------------
Net interest income after
provision for possible loan losses........ 50,524 50,059 100,583
----------- ----------- ----------------
Net security gains......................... 3,752 4,958 8,710
Non-interest income........................ 6,493 3,299 9,792
Non-interest expense....................... 23,039 24,098 47,137
----------- ----------- ----------------
Income before provision for income taxes... 37,730 34,218 71,948
Provision for income taxes................. 12,100 13,721 25,821
----------- ----------- ----------------
Net income................................. $ 25,630 $ 20,497 $ 46,127
=========== =========== ================
Weighted average shares outstanding:
Basic..................................... 38,976,269 16,570,434 72,945,659/(5)/
Diluted................................... 39,144,380 17,453,216 74,923,473/(5)/
Earnings per share:
Basic..................................... $0.66 $1.24 $0.63
Diluted................................... $0.65 $1.17 $0.62
</TABLE>
See "Notes to Unaudited Pro Forma Condensed Combined Consolidated
Financial StatementS."
105
<PAGE>
ROSLYN BANCORP, INC.
T R FINANCIAL CORP.
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
ROSLYN
ROSLYN T R FINANCIAL PRO FORMA
----------- ------------- ----------------
<S> <C> <C> <C>
Interest income............................ $ 103,252 $ 122,581 $ 225,833
Interest expense........................... 54,283 78,064 132,347
----------- ----------- ----------------
Net interest income........................ 48,969 44,517 93,486
Provision for possible loan losses......... 300 550 850
----------- ----------- ----------------
Net interest income after
provision for possible loan losses........ 48,669 43,967 92,636
----------- ----------- ----------------
Net security gains......................... 343 1,980 2,323
Non-interest income........................ 4,549 3,986 8,535
Non-interest expense....................... 34,759 22,928 57,687
----------- ----------- ----------------
Income before provision for income taxes... 18,802 27,005 45,807
Provision for income taxes................. 5,871 10,827 16,698
----------- ----------- ----------------
Net income................................. $ 12,931 $ 16,178 $ 29,109
=========== =========== ================
Weighted average shares outstanding:
Basic..................................... 40,463,404 16,378,295 74,038,909/(5)/
Diluted................................... 40,463,404 17,586,119 76,514,948/(5)/
Earnings per share:
Basic..................................... $0.32 $0.99 $0.39
Diluted................................... $0.32 $0.92 $0.38
</TABLE>
See "Notes to Unaudited Pro Forma Condensed Combined Consolidated
Financial StatementS."
106
<PAGE>
ROSLYN BANCORP, INC.
T R FINANCIAL CORP.
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
ROSLYN
ROSLYN T R FINANCIAL PRO FORMA
----------- ------------- ----------------
<S> <C> <C> <C>
Interest income............................ $ 224,964 $ 255,412 $ 480,376
Interest expense........................... 126,414 163,766 290,180
----------- ----------- ----------------
Net interest income........................ 98,550 91,646 190,196
Provision for possible loan losses......... 600 800 1,400
----------- ----------- ----------------
Net interest income after
provision for possible loan losses........ 97,950 90,846 188,796
----------- ----------- ----------------
Net security gains......................... 2,757 5,553 8,310
Non-interest income........................ 9,318 7,382 16,700
Non-interest expense....................... 60,562 45,813 106,375
----------- ----------- ----------------
Income before provision for income taxes... 49,463 57,968 107,431
Provision for income taxes................. 16,073 23,240 39,313
----------- ----------- ----------------
Net income................................. $ 33,390 $ 34,728 $ 68,118
=========== =========== ================
Weighted average shares outstanding:
Basic..................................... 40,159,931 16,442,188 73,866,416/(5)/
Diluted................................... 40,159,931 17,734,627 76,515,916/(5)/
Earnings per share:
Basic..................................... $0.83 $2.11 $0.92
Diluted................................... $0.83 $1.96 $0.89
</TABLE>
See "Notes to Unaudited Pro Forma Condensed Combined Consolidated
Financial StatementS."
107
<PAGE>
ROSLYN BANCORP, INC.
T R FINANCIAL CORP.
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
ROSLYN
ROSLYN T R FINANCIAL PRO FORMA
-------- ------------- ---------
<S> <C> <C> <C>
Interest income............................ $140,473 $218,404 $358,877
Interest expense........................... 78,759 137,170 215,929
-------- ----------- --------
Net interest income........................ 61,714 81,234 142,948
Provision for possible loan losses......... 2,000 1,400 3,400
-------- ----------- --------
Net interest income after
provision for possible loan losses...... 59,714 79,834 139,548
-------- ----------- --------
Net security (losses) gains................ (804) 7,511 6,707
Non-interest income........................ 9,213 8,408 17,621
Non-interest expense....................... 38,051 43,063 81,114
-------- ----------- --------
Income before provision for income taxes... 30,072 52,690 82,762
Provision for income taxes................. 9,438 22,175 31,613
-------- ----------- --------
Net income................................. $ 20,634 $ 30,515 $ 51,149
======== =========== ========
Weighted average shares outstanding:
Basic..................................... N/A 16,574,990 N/A
Diluted................................... N/A 17,728,008 N/A
Earnings per share:
Basic..................................... N/A $1.84 N/A
Diluted................................... N/A $1.72 N/A
</TABLE>
See "NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL
STATEMENTS."
108
<PAGE>
ROSLYN BANCORP, INC.
T R FINANCIAL CORP.
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
ROSLYN
ROSLYN T R FINANCIAL PRO FORMA
-------- ------------- ---------
<S> <C> <C> <C>
Interest income............................ $109,737 $194,690 $304,427
Interest expense........................... 59,298 124,305 183,603
-------- ----------- --------
Net interest income........................ 50,439 70,385 120,824
Provision for possible loan losses......... 600 3,050 3,650
-------- ----------- --------
Net interest income after
provision for possible loan losses........ 49,839 67,335 117,174
-------- ----------- --------
Net security gains......................... 486 5,309 5,795
Non-interest income........................ 5,811 7,776 13,587
Non-interest expense....................... 28,908 42,685 71,593
-------- ----------- --------
Income before provision for income taxes... 27,228 37,735 64,963
Provision for income taxes................. 8,510 16,810 25,320
-------- ----------- --------
Net income................................. $ 18,718 $ 20,925 $ 39,643
======== =========== ========
Weighted average shares outstanding:
Basic..................................... N/A 18,017,118 N/A
Diluted................................... N/A 19,025,706 N/A
Earnings per share:
Basic..................................... N/A $1.16 N/A
Diluted................................... N/A $1.10 N/A
</TABLE>
See "Notes to Unaudited Pro Forma Condensed Combined Consolidated
Financial StatementS."
109
<PAGE>
ROSLYN BANCORP, INC.
T R FINANCIAL CORP.
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED CONSOLIDATED FINANCIAL STATEMENTS
(1) Pro forma adjustments to common stock and additional paid-in capital,
at June 30, 1998, reflect the Merger accounted for as a pooling-of-interests
through: (a) the reissuance of 222,000 shares of T R Financial Common Stock from
T R Financial treasury stock with a book value of $2.4 million, or an average
cost basis of $10.96 per share, at $45.7406 per share (the market price of
Roslyn Common Stock on or about June 30, 1998, multiplied by the Exchange
Ratio), generating proceeds of $10.1 million, which are assumed to be reinvested
in securities available-for-sale, and causing an increase of $7.7 million in
additional paid-in capital; (b) the retirement of the initial 5,195,182 shares
of T R Financial Common Stock held in treasury stock, with a book value of
$57.0 million, or an average cost basis of $10.96 per share as of June 30, 1998,
causing a decrease of $107,000 in common stock and $56.9 million in additional
paid-in capital; (c) the retirement of an additional 502,510 shares of T R
Financial Common Stock held by Roslyn, with a book value of $21.0 million, or an
average cost basis of $31.71 per share at June 30, 1998, causing decreases of
$10,000 in common stock, $15.9 million in additional paid-in capital, $3.0
million in net unrealized gain on securities available-for-sale and $21.0
million in securities available-for-sale and an increase of $2.1 million in
deferred tax assets (other assets); (d) the retirement of an additional 11,580
shares of unawarded common stock held by T R Financial's Recognition and
Retention Plan and Trust with a book value of $52,000, or an average cost basis
of $4.50 per share, at June 30, 1998, causing a decrease of $200 in common stock
and $52,000 in additional paid-in capital; and (e) the exchange of 35,335,292
shares of Roslyn Common Stock at June 30, 1998 (using the Exchange Ratio of
2.05) for the 17,236,728 outstanding shares of T R Financial Common Stock,
generating a $239,000 increase to common stock and a $239,000 decrease to
additional paid-in capital.
(2) The pro forma adjustment to the securities available-for-sale portfolio
reflects the return of 65,000 shares of Roslyn Common Stock, with a carrying
value of $1.5 million at June 30, 1998, held by T R Financial, causing an
increase of $1.2 million in treasury stock and $100,000 in deferred tax assets
(other assets), and a decrease in the net unrealized gain on securities
available-for-sale by $133,000.
(3) The pro forma adjustment to unallocated common stock held by the T R
Financial ESOP of $4.1 million reflects the satisfaction of T R Financial's loan
to the T R Financial ESOP. The proceeds of the satisfaction of $4.9 million are
assumed to be reinvested in securities available-for-sale, with the $755,000
balance credited to additional paid-in capital. The remaining unallocated
shares held by the T R Financial ESOP were allocated pursuant to the plan and
converted to Roslyn Common Stock at June 30, 1998 (using the Exchange Ratio of
2.05 shares) and are included in the non-recurring merger and restructuring
charges ($38.0 million) which will be recognized upon consummation of the
transaction, causing a $3.9 million decrease in accrued liabilities and a
$41.9 million increase in additional paid-in capital. T R Financial Common
Stock held by the Roosevelt Savings SERP is treated as distributed pursuant to
the SERP for pro forma purposes. The distribution of the Roosevelt Savings SERP
is reflected as a $2.1 million decrease to accrued liabilities and a decrease of
$2.1 million to common stock held by the SERP.
(4) The pro forma condensed combined consolidated balance sheet reflects
a non-recurring merger and restructuring charge of approximately $90.4 million
(including the termination of the T R Financial ESOP), net of taxes, which will
be recognized upon consummation of the Merger. Such charge will reduce EPS for
the period in which such charge is recognized by approximately $1.24 (based on
pro forma basic weighted
110
<PAGE>
average shares outstanding of 72,945,659 for the six months ended June 30,
1998). A summary of the estimated merger and restructuring charges, including
the T R Financial ESOP, are as follows:
<TABLE>
<CAPTION>
TYPE OF COST EXPECTED COSTS
- ------------ --------------
(IN THOUSANDS)
<S> <C>
Merger Expenses...................................... $20,373
ESOP Termination Charge.............................. 37,990
Other Merger Related Compensation and................ 33,308
Severance Costs
Facility and System Costs............................ 1,000
Other Merger Related Costs........................... 1,000
-------
Total Pre-Tax Merger and Restructuring Charge........ 93,671
Less: Tax Effect................................. 3,245
-------
Total Merger and Restructuring Charge, After Tax..... $90,426
=======
</TABLE>
Merger expenses consist primarily of investment banking, legal and other
professional fees, and expenses associated with stockholder notification.
Merger related compensation and severance costs consist primarily of employee
severance, compensation arrangements, transitional staffing and the related
employee benefits expenses. Facility and system costs consist primarily of
lease termination charges and equipment write-offs resulting from the
consolidation of duplicate headquarters and operational facilities. Also
reflected are the costs associated with the cancellation of certain data and
item processing contracts and the conversion of existing computer systems.
The effect of the proposed charge (including the ESOP described in Note 3)
has been reflected in the pro forma condensed combined consolidated balance
sheet as of June 30, 1998 as a $90.4 million reduction of retained earnings, an
increase of $48.5 million in accrued liabilities and $41.9 million in additional
paid-in capital; however, since this charge is non-recurring, it has not been
reflected in the pro forma combined statements of income. Although no assurance
can be given, Roslyn expects that cost savings will be achieved at an annual
rate of approximately $27.1 million on a pre-tax basis by the end of 1999 as a
result of steps to be taken to integrate operations and to achieve efficiencies
in certain combined lines of business. These anticipated merger cost savings
were determined based upon preliminary estimates provided by the management of
Roslyn. The pro forma financial information does not give effect to these
expected cost savings, nor does it include any estimates of revenue enhancements
that could be realized with the Merger.
(5) The pro forma weighted average common and common equivalent shares for
the six months ended June 30, 1998 and 1997 and for the year ended December 31,
1997, reflect the Exchange Ratio of 2.05 shares of Roslyn Common Stock for each
share of T R Financial Common Stock and does not reflect the reissuance of the
222,000 shares of T R Financial Common Stock from treasury or the allocation of
the unallocated shares of common stock held by T R Financial's ESOP. Prior to
1997, Roslyn had no common stock outstanding.
Roslyn is currently reviewing the investment securities portfolios of T R
Financial to determine the classification of such securities as either
available-for-sale or held-to-maturity in connection with Roslyn's existing
interest-rate risk position. As a result of this review, certain
reclassifications of T R Financial's investment securities may result. No
adjustments have been made to either the available-for-sale or the held-
111
<PAGE>
to-maturity portfolios in the accompanying pro forma condensed combined
consolidated balance sheets to reflect any such reclassification as a final
determination has not been made with respect to such matters. Any such
reclassification will be accounted for in accordance with SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," which
requires that securities transferred from held-to-maturity to available-for-sale
be transferred at fair value with any unrealized gain or loss, net of taxes, at
the date of transfer recognized as a separate component of stockholders' equity.
The pro forma financial information presented has been prepared in
conformity with GAAP and prevailing practices within the financial services
industry. In accounting for the Merger, under GAAP, the assets and liabilities
of T R Financial will be combined with those of Roslyn at book value. The
unaudited condensed combined consolidated statements of income for the years
ended 1997, 1996 and 1995 and for the six month periods ended June 30, 1998 and
1997 combine Roslyn and T R Financial at their respective periods. Certain
reclassifications have been included in the pro forma financial statements to
conform to Roslyn's presentation.
LEGAL MATTERS
The validity of the shares of Roslyn Common Stock which will be issued in
the Merger will be passed upon for Roslyn by Muldoon, Murphy & Faucette,
Washington, D.C. In addition, Muldoon, Murphy & Faucette, Washington, D.C., will
pass upon the tax-free nature of the Merger for Roslyn, and Thacher Proffitt &
Wood, New York, New York will pass upon the tax-free nature of the Merger for
T R Financial. Douglas P. Faucette, a partner in the law firm of Muldoon, Murphy
& Faucette, personally beneficially owns 35,792 shares of T R Financial Common
Stock. Douglas J. McClintock, a partner in the law firm of Thacher Proffitt &
Wood, personally beneficially owns 200 shares of T R Financial Common Stock and
100 shares of Roslyn Common Stock.
EXPERTS
The consolidated financial statements of Roslyn Bancorp, Inc. and
subsidiary as of December 31, 1997 and 1996, and for each of the years in the
three-year period ended December 31, 1997, incorporated by reference in the 1997
Roslyn Form 10-K and incorporated by reference herein and in the Registration
Statement of which this Joint Proxy Statement/Prospectus is a part, have been so
incorporated by reference in reliance upon the report of KPMG Peat Marwick LLP,
independent public accountants, incorporated by reference in the 1997 Roslyn
Form 10-K and incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
The consolidated financial statements of T R Financial and subsidiaries as
of December 31, 1997 and 1996, and for each of the years in the three-year
period ended December 31, 1997, incorporated by reference in the 1997
T R Financial Form 10-K and incorporated by reference herein and in the
Registration Statement of which this Joint Proxy Statement/Prospectus is a part,
have been so incorporated by reference in reliance upon the report of
KPMG Peat Marwick LLP, independent public accountants, incorporated by reference
in the 1997 T R Financial Form 10-K and incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
112
<PAGE>
STOCKHOLDER PROPOSALS
Any proposal of a stockholder intended to be presented at the 1999 Annual
Meeting of Roslyn Bancorp, Inc. must be received by Roslyn Bancorp, Inc. at
1400 Old Northern Boulevard, Roslyn, New York 11576 no later than November 27,
1998 to be eligible for inclusion in the proxy statement and form of proxy. Any
such proposal shall be subject to 17 C.F.R. Section 240.14a-8 promulgated by the
Commission under the Exchange Act.
Any proposal of a stockholder to be presented at the 1999 Annual Meeting of
T R Financial Corp., if the Merger has not been consummated prior to the date on
which such meeting is to be held, must be received by T R Financial Corp. at
1122 Franklin Avenue, Garden City, New York 11530 no later than November 30,
1998 to be eligible for inclusion in the proxy statement and form of proxy. Any
such proposal shall be subject to 17 C.F.R. Section 240.14a-8 promulgated by the
Commission under the Exchange Act.
113
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law ("DGCL"), inter alia,
empowers a Delaware corporation to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
(other than an action by or in the right of the corporation) by reason of the
fact that such person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by the person in
connection with such action, suit or proceeding if the person acted in good
faith and in a manner the person reasonably believed to be in or not opposed to
the best interest of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe the person conduct was
unlawful. Similar indemnity is authorized for such person against expenses
(including attorneys' fees) actually and reasonably incurred in connection with
the defense or settlement of any such threatened, pending or completed action or
suit if such person acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, and provided
further that (unless a court of competent jurisdiction otherwise provides) such
person shall not have been adjudged liable to the corporation. Any such
indemnification may be made only as adjudged liable to the corporation. Any
such indemnification may be made only as authorized in each specific case upon a
determination by the shareholders or disinterested directors or by independent
legal counsel in a written opinion that indemnification is proper because the
indemnitee has met the applicable standard of conduct.
Any such indemnification and advancement of expenses provided under
Section 145 shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of such person's
heirs, executors and administrators.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him, and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would otherwise have the power to indemnify him under Section 145.
The Registrant has also entered into employment agreements with certain
executive officers, which agreements require that the Registrant maintain a
directors' and officers' liability policy for the benefit of such officers and
that the Registrant will indemnify such officers and their heirs to the fullest
extent permitted by law.
In addition, pursuant to the Merger Agreement, the Registrant has agreed
that, for a period of six years following the effective time of the Merger, the
Registrant will indemnify and hold harmless each present and former director and
officer of T R Financial or its direct or indirect subsidiaries, and each
officer or employee of T R Financial or its direct or indirect subsidiaries who
is serving or has served as a director or trustee of another entity expressly at
T R Financial's request or direction, with respect to matters existing or
occurring at or prior to the effective time of the Merger, whether asserted or
claimed prior to, at or after the effective time. The Registrant has also
agreed in the Merger Agreement to maintain, for a period of six
II-1
<PAGE>
years following the effective time of the Merger, the directors' and officers'
liability insurance coverage maintained by T R Financial (or substantially
equivalent coverage under substitute policies) with respect to any claims
arising out of any actions or omissions occurring at or prior to the effective
time of the Merger.
In accordance with the DGCL (being Chapter 1 of Title 8 of the Delaware
Code), Articles 10 and 11 of the Registrant's Certificate of Incorporation
provide as follows:
TENTH:
A. Each person who was or is made a party or is threatened to be made
a party to or is otherwise involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she is or was a Director or
an Officer of the Corporation or is or was serving at the request of the
Corporation as a Director, Officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan (hereinafter an
"indemnitee"), whether the basis of such proceeding is alleged action in an
official capacity as a Director, Officer, employee or agent or in any other
capacity while serving as a Director, Officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to
the extent that such amendment permits the Corporation to provide broader
indemnification rights than such law permitted the Corporation to provide
prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgment, fines, ERISA excise taxes or
penalties and amounts paid in settlement) reasonably incurred or suffered
by such indemnitee in connection therewith; provided, however, that, except
as provided in Section C hereof with respect to proceedings to enforce
rights to indemnification, the Corporation shall indemnify any such
indemnitee in connection with a proceeding (or part thereof) initiated by
such indemnitee only if such proceeding (or part thereof) was authorized by
the Board of Directors of the Corporation.
B. The right to indemnification conferred in Section A of this
Article TENTH shall include the right to be paid by the Corporation the
expenses incurred in defending any such proceeding in advance of its final
disposition (hereinafter and "advancement of expenses"); provided, however,
that, if the Delaware General Corporation Law requires, an advancement of
expenses incurred by an indemnitee in his or her capacity as a Director or
Officer (and not in any other capacity in which service was or is rendered
by such indemnitee, including, without limitation, services to an employee
benefit plan) shall be made only upon delivery to the Corporation of an
undertaking (hereinafter an "undertaking"), by or on behalf of such
indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right
to appeal (hereinafter a "final adjudication") that such indemnitee is not
entitled to be indemnified for such expenses under this Section or
otherwise. The rights to indemnification and to the advancement of expenses
conferred in Sections A and B of this Article TENTH shall be contract
rights and such rights shall continue as to an indemnitee who has ceased to
be a Director, Officer, employee or agent and shall inure to the benefit of
the indemnitee's heirs, executors and administrators.
C. If a claim under Section A or B of this Article TENTH is not paid
in full by the Corporation within sixty days after a written claim has been
received by the Corporation, except in the case of a claim or an
advancement of expenses, in which case the applicable period shall be
twenty days, the indemnitee may at any time thereafter bring suit against
the Corporation to recover
II-2
<PAGE>
the unpaid amount of the claim. If successful in whole or in part in any
such suit, or in a suit brought by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the
indemnitee shall be entitled to be paid also the expenses of prosecuting or
defending such suit. In (i) any suit brought by the indemnitee to enforce a
right to indemnification hereunder (but not in a suit brought by the
indemnitee to enforce a right to an advancement of expenses) it shall be a
defense that, and (ii) in any suit by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking the
Corporation shall be entitled to recover such expenses upon a final
adjudication that, the indemnitee has not met any applicable standard for
indemnification set forth in the Delaware General Corporation Law. Neither
the failure of the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification
of the indemnitee is proper in the circumstances because the indemnitee has
met the applicable standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by the Corporation (including
its Board of Directors, independent legal counsel, or its stockholders)
that the indemnitee has not met such applicable standard of conduct, shall
create a presumption that the indemnitee has not met the applicable
standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the
indemnitee to enforce a right to indemnification or to an advancement of
expenses hereunder, or by the Corporation to recover an advancement of
expenses pursuant to the terms of an undertaking, the burden of proving
that the indemnitee is not entitled to be indemnified, or to such
advancement of expenses, under this Article TENTH or otherwise shall be on
the Corporation.
D. The rights to indemnification and to the advancement of expenses
conferred in this Article TENTH shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, the
Corporation's Certificate of Incorporation, Bylaws, agreement, vote of
stockholders or Disinterested Directors or otherwise.
E. The Corporation may maintain insurance, at its expense, to protect
itself and any Director, Officer, employee or agent of the Corporation or
subsidiary or Affiliate or another corporation, partnership, joint venture,
trust or other enterprise against any expense, liability or loss, whether
or not the Corporation would have the power to indemnify such person
against such expense, liability or loss under the Delaware General
Corporation Law.
F. The Corporation may, to the extent authorized from time to time by
the Board of Directors, grant rights to indemnification and to the
advancement of expenses to any employee or agent of the Corporation to the
fullest extent of the provisions of this Article TENTH with respect to the
indemnification and advancement of expenses of Directors and Officers of
the Corporation.
ELEVENTH: A Director of this Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a Director, except for liability: (i) for any breach of the Director's
duty of loyalty to the Corporation or its stockholders; (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; (iii) under Section 174 of the Delaware General Corporation
Law; or (iv) for any transaction from which the Director derived an improper
personal benefit. If the Delaware General Corporation Law is amended to
authorize corporate action further eliminating or limiting the personal
liability of Directors, then the liability of a Director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended.
II-3
<PAGE>
Any repeal or modification of the foregoing paragraph by the stockholders
of the Corporation shall not adversely affect any right or protection of a
Director of the Corporation existing at the time of such repeal or modification.
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits.
2.1 Agreement and Plan of Merger, dated as of May 25, 1998, by and
between Roslyn Bancorp, Inc. and T R Financial Corp. is included as
Annex A to the Joint Proxy Statement/Prospectus which is part of this
Registration Statement.
3.1 Certificate of Incorporation of Roslyn Bancorp, Inc. (1).
3.2 Bylaws of Roslyn Bancorp, Inc. (1).
4.1 Roslyn Bancorp, Inc. Specimen Stock Certificate (1).
5.1 Opinion of Muldoon, Murphy & Faucette regarding legality.
8.1 Opinion of Muldoon, Murphy & Faucette regarding tax matters.
8.2 Opinion of Thacher Proffitt & Wood regarding tax matters.
10.1 Stock Option Agreement, dated as of May 25, 1998, by and between T R
Financial Corp. and Roslyn Bancorp, Inc. is included as Annex B to
the Joint Proxy Statement/Prospectus which is part of this
Registration Statement.
10.2 Stock Option Agreement, dated as of May 25, 1998, by and between
Roslyn Bancorp, Inc. and T R Financial Corp. is included as Annex C
to the Joint Proxy Statement/Prospectus which is part of this
Registration Statement.
10.3 Form of Employment Agreement between Roslyn Savings Bank and
Joseph L. Mancino and Form of Employment Agreement between the Roslyn
Bancorp, Inc. and Joseph L. Mancino (1).
10.4 Form of Employment Agreement between Roslyn Savings Bank and John R.
Bransfield, Jr. and Form of Employment Agreement between the Roslyn
Bancorp, Inc. and John R. Bransfield, Jr. (1).
II-4
<PAGE>
10.5 Form of Employment Agreement between Roslyn Savings Bank and
Michael P. Puorro and Form of Employment Agreement between the Roslyn
Bancorp, Inc. and Michael P. Puorro (1).
10.6 Form of Employment Agreement between Roslyn Savings Bank and John L.
Klag and Form of Employment Agreement between the Roslyn Bancorp,
Inc. and John L. Klag (1).
10.7 Form of Employment Agreement between Roslyn Savings Bank and
Arthur W. Toohig and Form of Employment Agreement between the Roslyn
Bancorp, Inc. and Arthur W. Toohig (1).
10.8 The Roslyn Savings Bank Employee Severance Compensation Plan (1).
10.9 Management's Supplemental Executive Retirement Plan (1).
10.10 Employee Stock Ownership Plan and Trust (1).
10.11 Roslyn Bancorp, Inc. 1997 Stock-Based Incentive Plan (2).
11.0 Statement Re: Computation of Per Share Earnings (3).
21.1 Subsidiaries of the Registrant (1).
23.1 Consent of Muldoon, Murphy & Faucette (included in Exhibit 5.1
hereto).
23.2 Consent of Muldoon, Murphy & Faucette (included in Exhibit 8.1
hereto).
23.3 Consent of Thacher Proffitt & Wood (including in Exhibit 8.2 hereto).
23.4 Consent of KPMG Peat Marwick LLP, Independent Auditors for Roslyn
Bancorp, Inc.
23.5 Consent of KPMG Peat Marwick LLP, Independent Auditors for T R
Financial Corp.
23.6 Consent of Sandler O'Neill & Partners, L.P.
II-5
<PAGE>
23.7 Consent of Goldman, Sachs & Co.
24.1 Powers of Attorney (see the signature page to this Form S-4
Registration Statement).
99.1 Opinion of Sandler O'Neill & Partners, L.P. is included as Annex D to
the Joint Proxy Statement/Prospectus which is part of this
Registration Statement.
99.2 Opinion of Goldman, Sachs & Co. is included as Annex E to the Joint
Proxy Statement/Prospectus which is part of this Registration
Statement.
99.3 Consent of Person to be Named as Director of Roslyn Bancorp, Inc.
(b) Financial Statement Schedules.
None.
(c) Item 4(b) Information.
None.
99.4 Telephone Voting Instruction Sheet for Roslyn Bancorp, Inc.
Registered Stockholders.
____________________
(1) Incorporated by reference into this document from the Exhibits filed
with the Registration Statement on Form S-1 and any amendments
thereto, Registration No. 333-10471 filed with the SEC on August 20,
1996.
(2) Incorporated by reference into this document from the Appendix to the
Proxy Statement for the Annual Meeting of Stockholders held on
July 22, 1997, filed with the SEC on June 6, 1997.
(3) Incorporated by reference into this document from the Roslyn
Bancorp's Report on Form 10-Q for the quarter ended June 30, 1998,
filed with the SEC on August 13, 1998.
Item 22. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) ((S)
230.424(b) of this chapter) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
II-6
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the Registration Statement shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c)(1) The undersigned Registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder, through
use of a prospectus which is a part of this Registration Statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145(c) of the Securities Act of 1933, the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(c)(2) The undersigned Registrant hereby undertakes: that every
prospectus (i) that is filed pursuant to the paragraph immediately preceding, or
(ii) that purports to meet the requirements of Section 10(a)(3) of the
Securities Act of 1933 and is used in connection with an offering of securities
subject to Rule 415 of the Securities Act of 1933, will be filed as a part of an
amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(e) The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through the
date of responding to the request.
II-7
<PAGE>
(f) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(g) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the Town of Roslyn, State of New York,
on November 16, 1998.
ROSLYN BANCORP, INC.
By: /s/ Joseph L. Mancino
---------------------
Joseph L. Mancino
Chairman of the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on November 16, 1998.
We, the undersigned officers and directors of Roslyn Bancorp, Inc.
hereby severally and individually constitute and appoint Joseph L. Mancino, the
true and lawful attorney and agent (with full power of substitution and
resubstitution in each case) of each of us, to execute in the name, place and
stead of each of us (individually and in any capacity stated below) any and all
amendments to this Registration Statement and all instruments necessary or
advisable in connection therewith and to file the same with the Securities and
Exchange Commission, said attorney and agent to have power to act and to have
full power and authority to do and perform in the name and on behalf of each of
the undersigned every act whatsoever necessary or advisable to be done in the
premises as fully and to all intents and purposes as any of the undersigned
might or could do in person and we hereby ratify and confirm our signatures as
they may be signed by or said attorney and agent to any and all such amendments
and instruments.
NAME TITLE
---- -----
/s/ Joseph L. Mancino Chairman of the Board,
- ------------------------------------- President and
Joseph L. Mancino Chief Executive Officer (principal
executive officer)
/s/ John R. Bransfield, Jr. Vice President and
- ------------------------------------- Director
John R. Bransfield, Jr.
/s/ Michael P. Puorro Treasurer and Chief
- ------------------------------------- Financial Officer
Michael P. Puorro (principal financial and accounting
officer)
/s/ Floyd N. York Director
- -------------------------------------
Floyd N. York
/s/ Victor C. McCuaig Director
- -------------------------------------
Victor C. McCuaig
/s/ John P. Nicholson Director
- -------------------------------------
John P. Nicholson
<PAGE>
/s/James E. Swiggett Director
- ------------------------------------
James E. Swiggett
/s/ Robert G. Freese Director
- ------------------------------------
Robert G. Freese
/s/ Thomas J. Calabrese, Jr. Director
- ------------------------------------
Thomas J. Calabrese, Jr.
/s/ Edward W. Martin, Jr. Director
- ------------------------------------
Dr. Edward W. Martin, Jr.
/s/ Richard C. Webel Director
- ------------------------------------
Richard C. Webel
<PAGE>
EXHIBIT INDEX
2.1 Agreement and Plan of Merger, dated as of May 25, 1998, by and between
Roslyn Bancorp, Inc. and T R Financial Corp. is included as Annex A to
the Joint Proxy Statement/Prospectus which is part of this
Registration Statement.
3.1 Certificate of Incorporation of Roslyn Bancorp, Inc. (1).
3.2 Bylaws of Roslyn Bancorp, Inc. (1).
4.1 Roslyn Bancorp, Inc. Specimen Stock Certificate (1).
5.1 Opinion of Muldoon, Murphy & Faucette regarding legality.
8.1 Opinion of Muldoon, Murphy & Faucette regarding tax matters.
8.2 Opinion of Thacher Proffitt & Wood regarding tax matters.
10.1 Stock Option Agreement, dated as of May 25, 1998, by and between T R
Financial Corp. and Roslyn Bancorp, Inc. is included as Annex B to the
Joint Proxy Statement/Prospectus which is part of this Registration
Statement.
10.2 Stock Option Agreement, dated as of May 25, 1998, by and between
Roslyn Bancorp, Inc. and T R Financial Corp. is included as Annex C to
the Joint Proxy Statement/Prospectus which is part of this
Registration Statement.
10.3 Form of Employment Agreement between Roslyn Savings Bank and Joseph L.
Mancino and Form of Employment Agreement between the Roslyn Bancorp,
Inc. and Joseph L. Mancino (1).
10.4 Form of Employment Agreement between Roslyn Savings Bank and John R.
Bransfield, Jr. and Form of Employment Agreement between the Roslyn
Bancorp, Inc. and John R. Bransfield, Jr. (1).
10.5 Form of Employment Agreement between Roslyn Savings Bank and
Michael P. Puorro and Form of Employment Agreement between the Roslyn
Bancorp, Inc. and Michael P. Puorro (1).
10.6 Form of Employment Agreement between Roslyn Savings Bank and John L.
Klag and Form of Employment Agreement between the Roslyn Bancorp, Inc.
and John L. Klag (1).
10.7 Form of Employment Agreement between Roslyn Savings Bank and Arthur W.
Toohig and Form of Employment Agreement between the Roslyn Bancorp,
Inc. and Arthur W. Toohig (1).
10.8 The Roslyn Savings Bank Employee Severance Compensation Plan (1).
10.9 Management's Supplemental Executive Retirement Plan (1).
10.10 Employee Stock Ownership Plan and Trust (1).
<PAGE>
10.11 Roslyn Bancorp, Inc. 1997 Stock-Based Incentive Plan (2).
11.0 Statement Re: Computation of Per Share Earnings (3).
21.1 Subsidiaries of the Registrant (1).
23.1 Consent of Muldoon, Murphy & Faucette (included in Exhibit 5.1
hereto).
23.2 Consent of Muldoon, Murphy & Faucette (included in Exhibit 8.1
hereto).
23.3 Consent of Thacher Proffitt & Wood (including in Exhibit 8.2 hereto).
23.4 Consent of KPMG Peat Marwick LLP, Independent Auditors for Roslyn
Bancorp, Inc.
23.5 Consent of KPMG Peat Marwick LLP, Independent Auditors for T R
Financial Corp.
23.6 Consent of Sandler O'Neill & Partners, L.P.
23.7 Consent of Goldman, Sachs & Co.
24.1 Powers of Attorney (see the signature page to this Form S-4
Registration Statement).
99.1 Opinion of Sandler O'Neill & Partners, L.P. is included as Annex D to
the Joint Proxy Statement/Prospectus which is part of this
Registration Statement.
99.2 Opinion of Goldman, Sachs & Co. is included as Annex E to the Joint
Proxy Statement/Prospectus which is part of this Registration
Statement.
99.3 Consent of Person to be Named as Director of Roslyn Bancorp, Inc.
99.4 Telephone Voting Instructions Sheet for Roslyn Bancorp, Inc.
Registered Stockholders.
_______________________
(1) Incorporated by reference into this document from the Exhibits filed
with the Registration Statement on Form S-1 and any amendments
thereto, Registration No. 333-10471 filed with the SEC on August 20,
1996.
(2) Incorporated by reference into this document from the Appendix to the
Proxy Statement for the Annual Meeting of Stockholders held on
July 22, 1997, filed with the SEC on June 6, 1997.
(3) Incorporated by reference into this document from the Roslyn Bancorp's
Report on Form 10-Q for the quarter ended June 30, 1998, filed with the
SEC on August 13, 1998.
<PAGE>
ANNEX A
================================================================================
AGREEMENT AND PLAN OF MERGER
dated as of May 25, 1998
by and between
Roslyn Bancorp, Inc.
and
T R Financial Corp.
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
INTRODUCTORY STATEMENT...................................................... 1
ARTICLE I
THE MERGER
Section 1.1. Structure of the Merger..................................... 2
Section 1.2. Effect on Outstanding Shares of TRFC Common Stock........... 2
Section 1.3. Exchange Procedures......................................... 3
Section 1.4. Stock Options............................................... 5
Section 1.5. Bank Merger................................................. 6
Section 1.6. Directors of RBI after Effective Time....................... 6
Section 1.7. Alternative Structure....................................... 6
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Disclosure Letters.......................................... 7
Section 2.2. Standards................................................... 7
Section 2.3. Representations and Warranties of TRFC...................... 8
Section 2.4. Representations and Warranties of RBI....................... 22
ARTICLE III
CONDUCT PENDING THE MERGER
Section 3.1. Conduct of TRFC's Business Prior to the Effective Time...... 33
Section 3.2. Forbearance by TRFC......................................... 34
Section 3.3. Conduct of RBI's Business Prior to the Effective Time....... 36
Section 3.4. Forbearance by RBI.......................................... 36
ARTICLE IV
COVENANTS
Section 4.1. Acquisition Proposals...................................... 37
Section 4.2. Certain Policies of TRFC................................... 38
Section 4.3. Access and Information..................................... 39
Section 4.4. Certain Filings, Consents and Arrangements................. 40
Section 4.5. Antitakeover Provisions.................................... 40
Section 4.6. Additional Agreements...................................... 41
Section 4.7. Publicity.................................................. 41
Section 4.8. Stockholders Meetings...................................... 41
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C> <C>
Section 4.9. Proxy Statements; Comfort Letters.......................... 41
Section 4.10. Registration of RBI Common Stock........................... 42
Section 4.11. Affiliate Letters.......................................... 42
Section 4.12. Notification of Certain Matters............................ 43
Section 4.13. Directors and Officers..................................... 43
Section 4.14. Indemnification; Directors' and Officers' Insurance........ 44
Section 4.15. Pooling and Tax-Free Reorganization Treatment.............. 45
Section 4.16. Employees; Benefit Plans and Programs...................... 45
Section 4.17. Advisory Board............................................. 47
Section 4.18. Savings and Loan Holding Company Structure................. 47
Section 4.19. RBI Dividends.............................................. 47
ARTICLE V
CONDITIONS TO CONSUMMATION
Section 5.1. Conditions to Each Party's Obligations..................... 48
Section 5.2. Conditions to the Obligations of RBI and RBI Bank.......... 49
Section 5.3. Conditions to the Obligations of TRFC and TRFC Bank........ 51
ARTICLE VI
TERMINATION
Section 6.1. Termination................................................ 52
Section 6.2. Effect of Termination...................................... 56
ARTICLE VII
CLOSING, EFFECTIVE DATE AND EFFECTIVE TIME
Section 7.1. Effective Date and Effective Time.......................... 56
Section 7.2. Deliveries at the Closing.................................. 56
ARTICLE VIII
CERTAIN OTHER MATTERS
Section 8.1. Certain Definitions; Interpretation........................ 56
Section 8.2. Survival................................................... 57
Section 8.3. Waiver; Amendment.......................................... 57
Section 8.4. Counterparts............................................... 57
Section 8.5. Governing Law.............................................. 57
Section 8.6. Expenses................................................... 57
Section 8.7. Notices.................................................... 57
Section 8.8. Entire Agreement; etc...................................... 59
Section 8.9. Assignment................................................. 59
</TABLE>
-ii-
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
This is an AGREEMENT AND PLAN OF MERGER, dated as of the 25th day of
May, 1998 ("Agreement"), by and between Roslyn Bancorp, Inc., a Delaware
corporation ("RBI"), and T R Financial Corp., a Delaware corporation ("TRFC").
INTRODUCTORY STATEMENT
The Board of Directors of each of RBI and TRFC (i) has determined that
this Agreement and the business combination and related transactions
contemplated hereby are in the best interests of RBI and TRFC, respectively, and
in the best long-term interests of their respective stockholders, (ii) has
determined that this Agreement and the transactions contemplated hereby are
consistent with, and in furtherance of, its respective business strategies and
(iii) has approved, at meetings of each of such Boards of Directors, this
Agreement.
Concurrently with the execution and delivery of this Agreement, and as
a condition and inducement to RBI's willingness to enter into this Agreement,
RBI and TRFC have entered into a stock option agreement ("TRFC Option
Agreement"), pursuant to which TRFC has granted to RBI an option to purchase
shares of TRFC's common stock, par value $.01 per share ("TRFC Common Stock"),
upon the terms and conditions therein contained. In addition, concurrently with
the execution and delivery of this Agreement, and as a condition and inducement
to TRFC's willingness to enter into this Agreement, RBI and TRFC have entered
into a stock option agreement ("RBI Option Agreement"), pursuant to which RBI
has granted to TRFC an option to purchase shares of RBI's common stock, par
value $.01 per share ("RBI Common Stock"), upon the terms and conditions therein
contained.
Promptly following the consummation of the Merger (as defined below),
the parties hereto intend that Roosevelt Savings Bank, a wholly owned subsidiary
of TRFC ("TRFC Bank"), shall be merged with and into The Roslyn Savings Bank, a
wholly owned subsidiary of RBI ("RBI Bank"), with RBI Bank being the surviving
entity ("Bank Merger").
The parties hereto intend that the Merger and the Bank Merger shall
qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended ("Code"), for federal income tax
purposes, and that the Merger shall be accounted for as a pooling-of-interests
for accounting purposes.
RBI and TRFC desire to make certain representations, warranties and
agreements in connection with the business combination and related transactions
provided for herein and to prescribe various conditions to such transactions.
In consideration of their mutual promises and obligations hereunder,
the parties hereto adopt and make this Agreement and prescribe the terms and
conditions hereof and the manner and basis of carrying it into effect, which
shall be as follows:
<PAGE>
ARTICLE I
THE MERGER
----------
Section 1.1 Structure of the Merger. On the Effective Date (as
-----------------------
defined in Section 7.1), TRFC will merge with and into RBI ("Merger"), with RBI
being the surviving entity, pursuant to the provisions of, and with the effect
provided in, the Delaware General Corporation Law. Upon consummation of the
Merger, the separate corporate existence of TRFC shall cease. RBI shall
continue to be governed by the laws of the State of Delaware and its name and
separate corporate existence, with all of its rights, privileges, immunities,
powers and franchises, shall continue unaffected by the Merger.
Section 1.2 Effect on Outstanding Shares of TRFC Common Stock.
-------------------------------------------------
(a) By virtue of the Merger, automatically and without any action on
the part of the holder thereof, each share of TRFC Common Stock issued and
outstanding at the Effective Time (as defined in Section 7.1), other than (i)
shares held directly or indirectly by RBI (other than shares held in a fiduciary
capacity or in satisfaction of a debt previously contracted), (ii) shares held
by TRFC as treasury stock and (iii) unallocated shares held in TRFC's
Recognition and Retention Plan for Officers ("TRFC RRP") (such shares referred
to in clauses (i), (ii) and (iii) being referred to herein as the "Excluded
Shares"), together with the related preferred share purchase right ("TRFC
Preferred Share Purchase Right") issued pursuant to the Rights Agreement ("TRFC
Rights Agreement"), dated as of July 19, 1994, between TRFC and Chemical Bank,
as Rights Agent, shall become and be converted into the right to receive 2.05
shares of RBI Common Stock (the "Exchange Ratio"); provided, however, that,
notwithstanding any other provision hereof, no fraction of a share of RBI Common
Stock and no certificates or scrip therefor will be issued in the Merger;
instead, RBI shall pay to each holder of TRFC Common Stock who would otherwise
be entitled to a fraction of a share of RBI Common Stock an amount in cash,
rounded to the nearest cent, determined by multiplying such fraction by the RBI
Market Value (collectively, the "Merger Consideration").
(b) As used herein, "RBI Market Value" shall be the average of the
daily closing sales prices of a share of RBI Common Stock (and if there is no
closing sales price on any such day, then the mean between the closing bid and
the closing asked prices on that day), as reported on the National Market System
of The Nasdaq Stock Market, Inc. ("Nasdaq National Market"), for the 15
consecutive trading days immediately preceding the day that is the latest of (i)
the day of expiration of the last waiting period with respect to any of the
required regulatory approvals, as contemplated by Section 5.1(b), (ii) the day
on which the last of the required regulatory approvals, as contemplated by
Section 5.1(b), is obtained and (iii) the day on which the last of the required
stockholder approvals have been obtained (such date being referred to herein as
the "Valuation Date").
(c) If, between the date of this Agreement and the Effective Time,
the outstanding shares of RBI Common Stock shall have been changed into a
different number of shares or into a different class by reason of any stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares (each, a "Stock Adjustment"), the Merger Consideration shall
be adjusted correspondingly to the extent appropriate to reflect the Stock
Adjustment.
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(d) As of the Effective Time, each Excluded Share shall be cancelled
and retired and shall cease to exist, and no exchange or payment shall be made
with respect thereto. All shares of RBI Common Stock and RBI Preferred Stock
(as defined in Section 2.4(b)) that are held by TRFC, if any, other than shares
held in a fiduciary capacity or in satisfaction of a debt previously contracted,
shall become treasury stock of RBI.
Section 1.3 Exchange Procedures.
-------------------
(a) Appropriate transmittal materials ("Letter of Transmittal") shall
be mailed as soon as reasonably practicable after the Effective Time, and in no
event later than 5 business days thereafter, to each holder of record of TRFC
Common Stock as of the Effective Time. A Letter of Transmittal will be deemed
properly completed only if accompanied by certificates representing all shares
of TRFC Common Stock to be converted thereby.
(b) At and after the Effective Time, each certificate ("TRFC
Certificate") previously representing shares of TRFC Common Stock (except as
specifically set forth in Section 1.2) shall represent only the right to receive
the Merger Consideration.
(c) Prior to the Effective Time, RBI shall deposit, or shall cause to
be deposited, with such bank or trust company that is selected by RBI and is
reasonably acceptable to TRFC to act as exchange agent ("Exchange Agent"), for
the benefit of the holders of shares of TRFC Common Stock, for exchange in
accordance with this Section 1.3, an estimated amount of cash sufficient to pay
the aggregate amount of cash in lieu of fractional shares to be paid pursuant to
Section 1.2, and RBI shall reserve for issuance with its Transfer Agent and
Registrar a sufficient number of shares of RBI Common Stock to provide for
payment of the Merger Consideration.
(d) The Letter of Transmittal shall (i) specify that delivery shall
be effected, and risk of loss and title to the TRFC Certificates shall pass,
only upon delivery of the TRFC Certificates to the Exchange Agent, (ii) be in a
form and contain any other provisions as RBI may reasonably determine and (iii)
include instructions for use in effecting the surrender of the TRFC Certificates
in exchange for the Merger Consideration. Upon the proper surrender of the TRFC
Certificates to the Exchange Agent, together with a properly completed and duly
executed Letter of Transmittal, the holder of such TRFC Certificates shall be
entitled to receive in exchange therefor (m) a certificate representing that
number of whole shares of RBI Common Stock that such holder has the right to
receive pursuant to Section 1.2 and (n) a check in the amount equal to the cash
in lieu of fractional shares, if any, that such holder has the right to receive
pursuant to Section 1.2 and any dividends or other distributions to which such
holder is entitled pursuant to this Section 1.3. TRFC Certificates so
surrendered shall forthwith be cancelled. As soon as practicable, but no later
than 10 business days following receipt of the properly completed Letter of
Transmittal and any necessary accompanying documentation, the Exchange Agent
shall distribute RBI Common Stock and cash as provided herein. The Exchange
Agent shall not be entitled to vote or exercise any rights of ownership with
respect to the shares of RBI Common Stock held by it from time to time
hereunder, except that it shall receive and hold all dividends or other
distributions paid or distributed with respect to such shares for the account of
the persons entitled thereto. If there is a transfer of
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<PAGE>
ownership of any shares of TRFC Common Stock not registered in the transfer
records of TRFC, the Merger Consideration shall be issued to the transferee
thereof if the TRFC Certificates representing such TRFC Common Stock are
presented to the Exchange Agent, accompanied by all documents required, in the
reasonable judgment of RBI and the Exchange Agent, (x) to evidence and effect
such transfer and (y) to evidence that any applicable stock transfer taxes have
been paid.
(e) No dividends or other distributions declared or made after the
Effective Time with respect to RBI Common Stock shall be remitted to any person
entitled to receive shares of RBI Common Stock hereunder until such person
surrenders his or her TRFC Certificates in accordance with this Section 1.3.
Upon the surrender of such person's TRFC Certificates, such person shall be
entitled to receive any dividends or other distributions, without interest
thereon, which theretofore had become payable with respect to shares of RBI
Common Stock represented by such person's TRFC Certificates.
(f) From and after the Effective Time there shall be no transfers on
the stock transfer records of TRFC of any shares of TRFC Common Stock. If,
after the Effective Time, TRFC Certificates are presented to RBI, they shall be
cancelled and exchanged for the Merger Consideration deliverable in respect
thereof pursuant to this Agreement in accordance with the procedures set forth
in this Section 1.3.
(g) Any portion of the aggregate amount of cash to be paid in lieu of
fractional shares pursuant to Section 1.2, any dividends or other distributions
to be paid pursuant to this Section 1.3 or any proceeds from any investments
thereof that remains unclaimed by the stockholders of TRFC for six months after
the Effective Time shall be repaid by the Exchange Agent to RBI upon the written
request of RBI. After such request is made, any stockholders of TRFC who have
not theretofore complied with this Section 1.3 shall look only to RBI for the
Merger Consideration deliverable in respect of each share of TRFC Common Stock
such stockholder holds, as determined pursuant to Section 1.2 of this Agreement,
without any interest thereon. If outstanding TRFC Certificates are not
surrendered prior to the date on which such payments would otherwise escheat to
or become the property of any governmental unit or agency, the unclaimed items
shall, to the extent permitted by any abandoned property, escheat or other
applicable laws, become the property of RBI (and, to the extent not in its
possession, shall be paid over to it), free and clear of all claims or interest
of any person previously entitled to such claims. Notwithstanding the
foregoing, none of RBI, RBI Bank, the Exchange Agent or any other person shall
be liable to any former holder of TRFC Common Stock for any amount delivered to
a public official pursuant to applicable abandoned property, escheat or similar
laws.
(h) RBI and the Exchange Agent shall be entitled to rely upon TRFC's
stock transfer books to establish the identity of those persons entitled to
receive the Merger Consideration, which books shall be conclusive with respect
thereto. In the event of a dispute with respect to ownership of stock
represented by any TRFC Certificate, RBI and the Exchange Agent shall be
entitled to deposit any Merger Consideration represented thereby in escrow with
an independent third party and thereafter be relieved with respect to any claims
thereto.
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<PAGE>
(i) If any TRFC Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such TRFC Certificate to be lost, stolen or destroyed and, if required by the
Exchange Agent, the posting by such person of a bond in such amount as the
Exchange Agent may direct as indemnity against any claim that may be made
against it with respect to such TRFC Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed TRFC Certificate the Merger
Consideration deliverable in respect thereof pursuant to Section 1.2.
Section 1.4 Stock Options.
-------------
(a) Options to purchase shares of TRFC Common Stock that have been
issued by TRFC and are outstanding at the Effective Time (each, a "TRFC Option")
pursuant to the TRFC 1993 Incentive Stock Option Plan and the TRFC 1993 Stock
Option Plan for Outside Directors (collectively, the "TRFC Option Plans") shall
be converted into options to purchase shares of RBI Common Stock as follows:
(i) the aggregate number of shares of RBI Common Stock issuable
upon the exercise of converted TRFC Options after the Effective Time shall
be equal to the product of the Exchange Ratio multiplied by the number of
shares of TRFC Common Stock issuable upon exercise of the TRFC Options
immediately prior to the Effective Time, such product to be rounded to the
nearest whole share of RBI Common Stock; and
(ii) the exercise price per share of each converted TRFC Option
shall be equal to the quotient of the exercise price of such TRFC Option at
the Effective Time divided by the Exchange Ratio, such quotient to be
rounded to the nearest whole cent;
provided, however, that, in the case of any TRFC Option that is intended to
qualify as an incentive stock option under Section 422 of the Code, the number
of shares of RBI Common Stock issuable upon exercise of and the exercise price
per share for such converted TRFC Option determined in the manner provided above
shall be further adjusted in such manner as RBI may determine to be necessary to
conform to the requirements of Section 424(b) of the Code. Options to purchase
shares of RBI Common Stock that arise from the operation of this Section 1.4
shall be referred to as the "Converted Options." All Converted Options shall be
exercisable for the same period and otherwise have the same terms and conditions
applicable to the TRFC Options that they replace; provided, however, that such
exercise period, terms and conditions shall be further modified if and to the
extent necessary to enable the Merger to qualify for pooling-of-interests
accounting treatment. Prior to the Effective Time, RBI shall take, or cause to
be taken, all necessary action to effect the intent of the provisions set forth
in this Section 1.4.
(b) Prior to the date of the TRFC stockholders meeting contemplated
by Section 4.8, TRFC shall take, or cause to be taken, appropriate action under
the terms of any stock option plan, agreement or arrangement under which TRFC
Options have been granted to provide for the conversion of TRFC Options
outstanding at the Effective Time into Converted Options and to effect any other
modifications contemplated by Section 1.4(a).
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<PAGE>
(c) Concurrently with the reservation of shares of RBI Common Stock
to provide for the payment of the Merger Consideration, RBI shall take all
corporate action necessary to reserve for future issuance a sufficient
additional number of shares of RBI Common Stock to provide for the satisfaction
of its obligations with respect to the Converted Options. On or before the
Effective Time, RBI shall (i) cause to be executed and delivered to each holder
of a Converted Option an agreement, certificate or other instrument, in such
form and of such substance as RBI may reasonably determine, evidencing such
holder's rights with respect to the Converted Options; and (ii) file a
registration statement on Form S-8 (or any successor or other appropriate form)
and make any state filings or obtain state exemptions with respect to the RBI
Common Stock issuable upon exercise of the Converted Options.
Section 1.5 Bank Merger. Concurrently with or as soon as
-----------
practicable after the execution and delivery of this Agreement, RBI Bank and
TRFC Bank shall enter into the Plan of Bank Merger, in the form attached hereto
as Exhibit A, pursuant to which the Bank Merger will be effected. The parties
hereto intend that the Bank Merger shall become effective on the Effective Date.
The Plan of Bank Merger shall provide that the directors of RBI Bank as the
surviving entity of the Bank Merger shall be (a) all of the directors of RBI
Bank serving immediately prior to the Bank Merger and (b) such additional
persons who shall become directors of RBI Bank in accordance with Section 4.13.
Section 1.6 Directors of RBI after Effective Time. At the
-------------------------------------
Effective Time, the directors of RBI shall consist of (a) the directors of RBI
serving immediately prior to the Effective Time and (b) such additional persons
who shall become directors of RBI in accordance with Section 4.13. Other than
as provided in Section 4.13 and 4.17, no director of TRFC shall be made a
director of RBI.
Section 1.7 Alternative Structure. Notwithstanding anything to the
---------------------
contrary contained in this Agreement, prior to the Effective Time, RBI may
specify that the structure of the transactions contemplated hereby be revised
and the parties shall enter into such alternative transactions as RBI may
determine to effect the purposes of this Agreement; provided, however, that such
revised structure shall not adversely affect the treatment of the transaction as
a pooling-of-interests for accounting purposes, the tax effects or economic
benefits of the transactions contemplated hereby to the holders of TRFC Common
Stock and shall not materially delay the Closing Date (as defined in Section
7.1). This Agreement and any related documents shall be appropriately amended
in order to reflect any such revised structure.
A-6
<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 2.1 Disclosure Letters. On or prior to the execution and
------------------
delivery of this Agreement, TRFC and RBI each shall have delivered to the other
a letter (each, its "Disclosure Letter") setting forth, among other things,
facts, circumstances and events the disclosure of which is required or
appropriate in relation to any or all of their respective representations and
warranties (and making specific reference to the Section of this Agreement to
which they relate), other than Section 2.3(g) and Section 2.4(g); provided, that
(a) no such fact, circumstance or event is required to be set forth in the
Disclosure Letter as an exception to a representation or warranty if its absence
is not reasonably likely to result in the related representation or warranty
being deemed untrue or incorrect under the standards established by Section 2.2
and (b) the mere inclusion of a fact, circumstance or event in a Disclosure
Letter shall not be deemed an admission by a party that such item represents a
material exception or that such item is reasonably likely to result in a
Material Adverse Effect (as defined in Section 2.2(b)).
Section 2.2 Standards.
---------
(a) No representation or warranty of TRFC or RBI contained in
Sections 2.3 or 2.4, respectively, shall be deemed untrue or incorrect, and no
party hereto shall be deemed to have breached a representation or warranty, on
account of the existence of any fact, circumstance or event unless, as a direct
or indirect consequence of such fact, circumstance or event, individually or
taken together with all other facts, circumstances or events inconsistent with
any paragraph of Sections 2.3 or 2.4, as applicable, there is reasonably likely
to exist a Material Adverse Effect. TRFC's representations, warranties and
covenants contained in this Agreement shall not be deemed to be untrue or
breached as a result of effects arising solely from actions taken in compliance
with a written request of RBI.
(b) As used in this Agreement, the term "Material Adverse Effect"
means either (i) an effect which is material and adverse to the business,
financial condition or results of operations of TRFC or RBI, as the context may
dictate, and its Subsidiaries taken as a whole; provided, however, that any such
effect resulting from any (A) changes in laws, rules or regulations or generally
accepted accounting principles or interpretations thereof that apply to both RBI
and RBI Bank and TRFC and TRFC Bank, as the case may be, or (B) changes in the
general level of market interest rates shall not be considered in determining if
a Material Adverse Effect has occurred; or (ii) the failure of (x) a
representation or warranty contained in Section 2.3(a)(i) and (iv), Section
2.3(c), Section 2.3(d), 2.3(g)(iii), 2.4(a)(i) and (iv), Section 2.4(c), 2.4(d),
2.4(g)(iii) or 2.4(l) to be true and correct or (y) a representation or warranty
contained in the last sentence of each of Section 2.3(e) or 2.4(e), the second
sentence of each of 2.3(f)(i) or 2.4(f)(i) and the first two sentences of each
of Section 2.3(bb) or 2.4(x) to be true and correct in all material respects.
(c) For purposes of this Agreement, "knowledge" shall mean, with
respect to a party hereto, actual knowledge of the members of the Board of
Directors of that party, its counsel or any officer of that party with the title
ranking not less than senior vice president.
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<PAGE>
Section 2.3 Representations and Warranties of TRFC. Subject to
--------------------------------------
Sections 2.1 and 2.2, TRFC represents and warrants to RBI that, except as
disclosed in TRFC's Disclosure Letter:
(a) Organization. (i) TRFC is a corporation duly organized,
------------
validly existing and in good standing under the laws of the State of Delaware
and is duly registered as a bank holding company under the Bank Holding Company
Act of 1956, as amended ("BHCA"). TRFC Bank is a stock savings bank duly
organized, validly existing and in good standing under the laws of the State of
New York. Each Subsidiary (as defined below) of TRFC Bank is a corporation,
limited liability company or partnership duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization. Each of TRFC and its Subsidiaries has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. As used in this Agreement, unless the context requires
otherwise, the term "Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated, which
is consolidated with such party for financial reporting purposes or which is
controlled, directly or indirectly, by such party.
(ii) Each of TRFC and its Subsidiaries has the requisite corporate
power and authority, and is duly qualified and is in good standing, to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary.
(iii) TRFC's Disclosure Letter sets forth all of TRFC's
Subsidiaries and all entities (whether corporations, partnerships or similar
organizations), including the corresponding percentage ownership, in which TRFC
owns, directly or indirectly, 5% or more of the ownership interests as of the
date of this Agreement and indicates for each of TRFC's Subsidiaries, as of such
date, its jurisdiction of organization and the jurisdiction(s) wherein it is
qualified to do business. All such Subsidiaries and ownership interests are in
compliance with all applicable laws, rules and regulations relating to direct
investments in equity ownership interests. TRFC owns, either directly or
indirectly, all of the outstanding capital stock of each of its Subsidiaries,
except for certain preferred shares issued by Roosevelt Asset Funding Corp.
("RAFC"). No Subsidiary of TRFC other than TRFC Bank is an "insured depository
institution" as defined in the Federal Deposit Insurance Act, as amended
("FDIA"), and the applicable regulations thereunder. All of the shares of
capital stock of each of the Subsidiaries held by TRFC or any of its other
Subsidiaries are fully paid, nonassessable and not subject to any preemptive
rights and are owned by TRFC or a Subsidiary of TRFC free and clear of any
claims, liens, encumbrances or restrictions (other than those imposed by
applicable federal and state securities laws), and there are no agreements or
understandings with respect to the voting or disposition of any such shares.
(iv) The deposits of TRFC Bank are insured by the Bank Insurance Fund
("BIF") of the Federal Deposit Insurance Corporation ("FDIC") to the extent
provided in the FDIA.
(b) Capital Structure. (i) The authorized capital stock of TRFC
-----------------
consists of 60,000,000 shares of TRFC Common Stock and 5,000,000 shares of
preferred stock, par value $.01 per share ("TRFC Preferred Stock"). As of the
date of this Agreement: (A) 17,527,983 shares
A-8
<PAGE>
of TRFC Common Stock were issued and outstanding, (B) no shares of TRFC
Preferred Stock were issued and outstanding, (C) no shares of TRFC Common Stock
were reserved for issuance, except that 2,654,277 shares of TRFC Common Stock
were reserved for issuance pursuant to the TRFC Option Plans, (D) no shares of
TRFC Preferred Stock were reserved for issuance except pursuant to the TRFC
Rights Agreement and (E) 5,196,017 shares of TRFC Common Stock were held by TRFC
in its treasury or by its Subsidiaries. The authorized capital stock of TRFC
Bank consists of 30,000,000 shares of common stock, par value $.01 per share,
and 5,000,000 shares of preferred stock, par value $.01 per share. As of the
date of the Agreement, 1,000 shares of such common stock were outstanding, no
shares of such preferred stock were outstanding and all outstanding shares of
such common stock were, and as of the Effective Time will be, owned by TRFC. All
outstanding shares of capital stock of TRFC and TRFC Bank are duly authorized
and validly issued, fully paid and nonassessable and not subject to any
preemptive rights and, with respect to shares held by TRFC in its treasury or by
its Subsidiaries, are free and clear of all liens, claims, encumbrances or
restrictions (other than those imposed by applicable federal and state
securities laws) and there are no agreements or understandings with respect to
the voting or disposition of any such shares. TRFC's Disclosure Letter sets
forth a complete and accurate list of all options to purchase TRFC Common Stock
that have been granted pursuant to the TRFC Option Plans and all restricted
stock grants under the TRFC RRP, including the dates of grant, exercise prices,
dates of vesting, dates of termination and shares subject to each grant.
(ii) No bonds, debentures, notes or other indebtedness having the
right to vote on any matters on which stockholders may vote ("Voting Debt") of
TRFC are issued or outstanding.
(iii) As of the date of this Agreement, except for this Agreement and
the TRFC Option Agreement, neither TRFC nor any of its Subsidiaries has or is
bound by any outstanding options, warrants, calls, rights, convertible
securities, commitments or agreements of any character obligating TRFC or any of
its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, any additional shares of capital stock of TRFC or any of its Subsidiaries
or obligating TRFC or any of its Subsidiaries to grant, extend or enter into any
such option, warrant, call, right, convertible security, commitment or
agreement. As of the date hereof, there are no outstanding contractual
obligations of TRFC or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of TRFC or any of its
Subsidiaries.
(c) Authority. Each of TRFC and TRFC Bank has all requisite
---------
corporate power and authority to enter into this Agreement and the Plan of Bank
Merger, respectively, and, subject to approval of this Agreement by the
requisite vote of TRFC's stockholders and receipt of all required regulatory or
governmental approvals, as contemplated by Section 5.1(b) of this Agreement, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement, and, subject to the approval of this Agreement by TRFC's
stockholders, the consummation of the transactions contemplated hereby, have
been duly authorized by all necessary corporate actions on the part of TRFC and
TRFC Bank. This Agreement has been duly executed and delivered by TRFC and
constitutes a valid and binding obligation of TRFC, enforceable in accordance
with its terms subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies
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<PAGE>
generally and subject, as to enforceability, to general principles of equity,
whether applied in a court of law or a court of equity.
(d) Stockholder Approval; Fairness Opinion. The affirmative vote of
--------------------------------------
a majority of the outstanding shares of TRFC Common Stock entitled to vote on
this Agreement is the only vote of the stockholders of TRFC required for
approval of this Agreement and the consummation of the Merger and the related
transactions contemplated hereby. TRFC has received the written opinion of
Goldman, Sachs & Co. to the effect that, as of the date hereof, the Merger
Consideration to be received by TRFC's stockholders is fair, from a financial
point of view, to such stockholders.
(e) No Violations. The execution, delivery and performance of this
-------------
Agreement by TRFC do not, and the consummation of the transactions contemplated
hereby will not, constitute (i) assuming receipt of all Requisite Regulatory
Approvals (as defined below) and requisite stockholder approvals, a breach or
violation of, or a default under, any law, rule or regulation or any judgment,
decree, order, governmental permit or license, or agreement, indenture or
instrument of TRFC or any of its Subsidiaries, or to which TRFC or any of its
Subsidiaries (or any of their respective properties) is subject, (ii) a breach
or violation of, or a default under, the certificate of incorporation or bylaws
of TRFC or the similar organizational documents of any of its Subsidiaries or
(iii) a breach or violation of, or a default under (or an event which, with due
notice or lapse of time or both, would constitute a default under), or result in
the termination of, accelerate the performance required by, or result in the
creation of any lien, pledge, security interest, charge or other encumbrance
upon any of the properties or assets of TRFC or any of its Subsidiaries, under,
any of the terms, conditions or provisions of any note, bond, indenture, deed of
trust, loan agreement or other agreement, instrument or obligation to which TRFC
or any of its Subsidiaries is a party, or to which any of their respective
properties or assets may be subject; and the consummation of the transactions
(including the Bank Merger) contemplated hereby (exclusive of the effect of any
changes effected pursuant to Section 1.7) will not require any approval, consent
or waiver under any such law, rule, regulation, judgment, decree, order,
governmental permit or license or the approval, consent or waiver of any other
party to any such agreement, indenture or instrument, other than (x) the
approval of the holders of a majority of the outstanding shares of TRFC Common
Stock, (y) the approval of the Banking Board of the State of New York ("Banking
Board") under Section 143-b of the Banking Law of the State of New York
("Banking Law"), the approval of the Superintendent of Banks of the State of New
York ("Superintendent") under Section 601 of the Banking Law and any other
requirement of the Banking Board or the Superintendent, the approval of the
Board of Governors of the Federal Reserve System ("FRB") under the BHCA, if
necessary (or the receipt of a waiver of such requirement), the approval of the
Office of Thrift Supervision ("OTS") under the Home Owners' Loan Act of 1933, as
amended ("HOLA"), and the approval of the appropriate regulatory authority under
Section 18(c) of the FDIA (collectively, the "Requisite Regulatory Approvals"),
and (z) such approvals, consents or waivers as are required under the federal
and state securities or "blue sky" laws in connection with the transactions
contemplated by this Agreement. As of the date hereof, the executive officers
of TRFC know of no reason pertaining to TRFC why any of the approvals referred
to in this Section 2.3(e) should not be obtained without the imposition of any
material condition or restriction described in the proviso to Section 5.1(b).
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(f) Reports. (i) As of their respective dates, none of the reports
-------
or other statements filed by TRFC or TRFC Bank on or subsequent to December 31,
1997 with the Securities and Exchange Commission ("SEC") (collectively, "TRFC's
Reports"), contained, or will contain, any untrue statement of a material fact
or omitted or will omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading. Each of the financial statements of
TRFC included in TRFC's Reports complied as to form, as of their respective
dates of filing with the SEC, in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved ("GAAP")(except as may be indicated in the notes thereto or, in the
case of the unaudited financial statements, as permitted by Form 10-Q of the
SEC). Each of the consolidated statements of condition contained or
incorporated by reference in TRFC's Reports (including in each case any related
notes and schedules) fairly presented, or will fairly present, as the case may
be (A) the financial position of the entity or entities to which it relates as
of its date and each of the consolidated statements of operations, consolidated
statements of cash flows and consolidated statements of changes in stockholders'
equity, contained or incorporated by reference in TRFC's Reports (including in
each case any related notes and schedules), and (B) the results of operations,
stockholders' equity and cash flows, as the case may be, of the entity or
entities to which it relates for the periods set forth therein (subject, in the
case of unaudited interim statements, to normal year-end audit adjustments that
are not material in amount or effect), in each case in accordance with GAAP,
except as may be noted therein. TRFC has made available to RBI a true and
complete copy of each of TRFC's Report filed with the SEC since December 31,
1997.
(ii) TRFC and each of its Subsidiaries have each timely filed
all material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file since
December 31, 1993 with (A) the Banking Department of the State of New York
("Banking Department"), (B) the FDIC, (C) the FRB, (D) the National Association
of Securities Dealers, Inc. ("NASD"), (E) the SEC and (F) any other self-
regulatory organization ("SRO"), and have paid all fees and assessments due and
payable in connection therewith.
(g) Absence of Certain Changes or Events. Except as disclosed in
------------------------------------
TRFC's Reports filed on or prior to the date of this Agreement, since
December 31, 1997, (i) TRFC and its Subsidiaries have not incurred any
liability, except in the ordinary course of their business consistent with past
practice, (ii) TRFC and its Subsidiaries have conducted their respective
businesses only in the ordinary and usual course of such businesses and
(iii) there has not been any Material Adverse Effect with respect to TRFC.
(h) Absence of Claims. Except as set forth in TRFC's Disclosure
-----------------
Letter, no litigation, proceeding, controversy, claim or action before any court
or governmental agency is pending against TRFC or any of its Subsidiaries and,
to the best of TRFC's knowledge, no such litigation, proceeding, controversy,
claim or action has been threatened.
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(i) Absence of Regulatory Actions. Neither TRFC nor any of its
-----------------------------
Subsidiaries is a party to any cease and desist order, written agreement or
memorandum of understanding with, or any commitment letter or similar
undertaking to, or is subject to any action, proceeding, order or directive by,
or is a recipient of any extraordinary supervisory letter from any federal or
state governmental authority charged with the supervision or regulation of
depository institutions or depository institution holding companies or engaged
in the insurance of bank and/or savings and loan deposits ("Government
Regulators"), or has adopted any board resolutions at the request of any
Government Regulators, nor has it been advised by any Government Regulator that
it is contemplating issuing or requesting (or is considering the appropriateness
of issuing or requesting) any such action, proceeding, order, directive, written
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter, board resolutions or similar undertaking.
(j) Taxes. All federal, state, local and foreign tax returns
-----
required to be filed by or on behalf of TRFC or any of its Subsidiaries have
been timely filed or requests for extensions have been timely filed and any such
extension shall have been granted and not have expired, and all such filed
returns are complete and accurate in all material respects. All taxes shown on
such returns, all taxes required to be shown on returns for which extensions
have been granted and all other taxes required to be paid by TRFC or any of its
Subsidiaries have been paid in full or adequate provision has been made for any
such taxes on TRFC's balance sheet (in accordance with GAAP). For purposes of
this Section 2.3(j), the term "taxes" shall include all income, franchise, gross
receipts, real and personal property, real property transfer and gains, wage and
employment taxes. As of the date of this Agreement, there is no audit
examination, deficiency assessment, tax investigation or refund litigation with
respect to any taxes of TRFC or any of its Subsidiaries, and no claim has been
made by any authority in a jurisdiction where TRFC or any of its Subsidiaries do
not file tax returns that TRFC or any such Subsidiary is subject to taxation in
that jurisdiction. All taxes, interest, additions and penalties due with respect
to completed and settled examinations or concluded litigation relating to TRFC
or any of its Subsidiaries have been paid in full or adequate provision has been
made for any such taxes on TRFC's balance sheet (in accordance with GAAP).
Except as set forth in TRFC's Disclosure Letter, TRFC and its Subsidiaries have
not executed an extension or waiver of any statute of limitations on the
assessment or collection of any material tax due that is currently in effect.
TRFC and each of its Subsidiaries has withheld and paid all taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party,
and TRFC and each of its Subsidiaries has timely complied with all applicable
information reporting requirements under Part III, Subchapter A of Chapter 61 of
the Code and similar applicable state and local information reporting
requirements. Neither TRFC nor any of its Subsidiaries (i) has made an election
under Section 341(f) of the Code, (ii) has issued or assumed any obligation
under Section 279 of the Code, any high yield discount obligation as described
in Section 163(i) of the Code or any registration-required obligation within the
meaning of Section 163(f)(2) of the Code that is not in registered form or (iii)
is or has been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code.
(k) Agreements. (i) Except for the TRFC Option Agreement and
----------
arrangements made in the ordinary course of business, and except as set forth in
TRFC's Disclosure Letter, TRFC and its Subsidiaries are not bound by any
material contract (as defined in Item
A-12
<PAGE>
601(b)(10) of Regulation S-K) to be performed after the date hereof that has not
been filed with or incorporated by reference in TRFC's Reports. Except as
disclosed in TRFC's Disclosure Letter, neither TRFC nor any of its Subsidiaries
is a party to an oral or written (A) consulting agreement (other than data
processing, software programming and licensing contracts entered into in the
ordinary course of business) not terminable on 60 days' or less notice,
(B) agreement with any executive officer or other key employee of TRFC or any of
its Subsidiaries the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving TRFC or any
of its Subsidiaries of the nature contemplated by this Agreement or the TRFC
Option Agreement, (C) agreement with respect to any employee or director of TRFC
or any of its Subsidiaries providing any term of employment or compensation
guarantee extending for a period longer than 60 days or for the payment of in
excess of $50,000 per annum, (D) agreement or plan, including any stock option
plan, phantom stock or stock appreciation rights plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be increased, or the
vesting or payment of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the TRFC
Option Agreement or the value of any of the benefits of which will be calculated
on the basis of any of the transactions contemplated by this Agreement or the
TRFC Option Agreement or (E) agreement containing covenants that limit the
ability of TRFC or any of its Subsidiaries to compete in any line of business or
with any person, or that involve any restriction on the geographic area in
which, or method by which, TRFC (including any successor thereof) or any of its
Subsidiaries may carry on its business (other than as may be required by law or
any regulatory agency).
(ii) Neither TRFC nor any of its Subsidiaries is in default
under or in violation of any provision of any note, bond, indenture, mortgage,
deed of trust, loan agreement, lease or other agreement to which it is a party
or by which it is bound or to which any of its respective properties or assets
is subject.
(iii) TRFC and each of its Subsidiaries owns or possesses
valid and binding licenses and other rights to use without payment all patents,
copyrights, trade secrets, trade names, servicemarks and trademarks used in its
businesses, and neither TRFC nor any of its Subsidiaries has received any notice
of conflict with respect thereto that asserts the right of others. Each of TRFC
and its Subsidiaries has performed all the obligations required to be performed
by it and are not in default under any contact, agreement, arrangement or
commitment relating to any of the foregoing.
(l) Labor Matters. Neither TRFC nor any of its Subsidiaries is or
-------------
has ever been a party to, or is or has ever been bound by, any collective
bargaining agreement, contract or other agreement or understanding with a labor
union or labor organization with respect to its employees, nor is TRFC or any of
its Subsidiaries the subject of any proceeding asserting that it has committed
an unfair labor practice or seeking to compel it or any such Subsidiary to
bargain with any labor organization as to wages and conditions of employment,
nor is there any strike, other labor dispute or organizational effort involving
TRFC or any of its Subsidiaries pending or, to TRFC's knowledge, threatened.
TRFC and its Subsidiaries are in compliance with applicable laws regarding
employment of employees and retention of independent contractors and are in
compliance with applicable employment tax laws.
A-13
<PAGE>
(m) Employee Benefit Plans. TRFC's Disclosure Letter contains a
----------------------
complete and accurate list of all pension, retirement, stock option, stock
purchase, stock ownership, savings, stock appreciation right, profit sharing,
deferred compensation, consulting, bonus, group insurance, severance and other
benefit plans, contracts, agreements and arrangements, including, but not
limited to, "employee benefit plans," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), incentive and
welfare policies, contracts, plans and arrangements and all trust agreements
related thereto with respect to any present or former directors, officers or
other employees of TRFC or any of its Subsidiaries (hereinafter collectively
referred to as the "TRFC Employee Plans"). All of the TRFC Employee Plans
comply in all material respects with all applicable requirements of ERISA, the
Code and other applicable laws; there has occurred no "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code) which is likely
to result in the imposition of any penalties or taxes under Section 502(i) of
ERISA or Section 4975 of the Code upon TRFC or any of its Subsidiaries. No
liability to the Pension Benefit Guaranty Corporation ("PBGC") has been or is
expected by TRFC or any of its Subsidiaries to be incurred with respect to any
TRFC Employee Plan which is subject to Title IV of ERISA (" TRFC Pension Plan"),
or with respect to any "single-employer plan" (as defined in Section 4001(a) of
ERISA) currently or formerly maintained by TRFC or any entity which is
considered one employer with TRFC under Section 4001(b)(1) of ERISA or Section
414 of the Code (an "ERISA Affiliate"). No TRFC Pension Plan had an "accumulated
funding deficiency" (as defined in Section 302 of ERISA), whether or not waived,
as of the last day of the end of the most recent plan year ending prior to the
date hereof; the fair market value of the assets of each TRFC Pension Plan
exceeds the present value of the "benefit liabilities" (as defined in Section
4001(a)(16) of ERISA) under such TRFC Pension Plan as of the end of the most
recent plan year with respect to the respective TRFC Pension Plan ending prior
to the date hereof, calculated on the basis of the actuarial assumptions used in
the most recent actuarial valuation for such TRFC Pension Plan as of the date
hereof; and no notice of a "reportable event" (as defined in Section 4043 of
ERISA) for which the 30-day reporting requirement has not been waived has been
required to be filed for any TRFC Pension Plan within the 12-month period ending
on the date hereof. Neither TRFC nor any of its Subsidiaries has provided, or
is required to provide, security to any TRFC Pension Plan or to any single-
employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
Neither TRFC, its Subsidiaries, nor any ERISA Affiliate has contributed to any
"multiemployer plan," as defined in Section 3(37) of ERISA, on or after
September 26, 1980. Each TRFC Employee Plan that is an "employee pension benefit
plan" (as defined in Section 3(2) of ERISA) and which is intended to be
qualified under Section 401(a) of the Code (a "TRFC Qualified Plan") has
received a favorable determination letter from the Internal Revenue Service
("IRS"), and TRFC and its Subsidiaries are not aware of any circumstances likely
to result in revocation of any such favorable determination letter. Each TRFC
Qualified Plan that is an "employee stock ownership plan" (as defined in Section
4975(e)(7) of the Code) has satisfied all of the applicable requirements of
Sections 409 and 4975(e)(7) of the Code and the regulations thereunder in all
respects and any assets of any such TRFC Qualified Plan that are not allocated
to participants' individual accounts are pledged as security for, and may be
applied to satisfy, any securities acquisition indebtedness. There is no
pending or, to TRFC's knowledge, threatened litigation, administrative action or
proceeding relating to any TRFC Employee Plan. There has been no announcement
or commitment by TRFC or any of its Subsidiaries to create an additional TRFC
Employee Plan, or to amend any TRFC Employee Plan, except for amendments
required by applicable law which do not materially increase the cost
A-14
<PAGE>
of such TRFC Employee Plan; and, except as specifically identified in TRFC's
Disclosure Letter, TRFC and its Subsidiaries do not have any obligations for
post-retirement or post-employment benefits under any TRFC Employee Plan that
cannot be amended or terminated upon 60 days' notice or less without incurring
any liability thereunder, except for coverage required by Part 6 of Title I of
ERISA or Section 4980B of the Code, or similar state laws, the cost of which is
borne by the insured individuals. With respect to TRFC or any of its
Subsidiaries, for the Employee Plans listed in TRFC's Disclosure Letter, the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not result in any payment or series of
payments by TRFC or any of its Subsidiaries to any person which is an "excess
parachute payment" (as defined in Section 280G of the Code), increase or secure
(by way of a trust or other vehicle) any benefits payable under any TRFC
Employee Plan or accelerate the time of payment or vesting of any such benefit.
With respect to each TRFC Employee Plan, TRFC has supplied to RBI a true and
correct copy of (A) the annual report on the applicable form of the Form 5500
series filed with the IRS for the most recent three plan years, if required to
be filed, (B) such TRFC Employee Plan, including amendments thereto, (C) each
trust agreement, insurance contract or other funding arrangement relating to
such TRFC Employee Plan, including amendments thereto, (D) the most recent
summary plan description and summary of material modifications thereto for such
TRFC Employee Plan, if the TRFC Employee Plan is subject to Title I of ERISA,
(E) the most recent actuarial report or valuation if such TRFC Employee Plan is
a TRFC Pension Plan and any subsequent changes to the actuarial assumptions
contained therein and (F) the most recent determination letter issued by the IRS
if such Employee Plan is a Qualified Plan.
(n) Termination Benefits. TRFC's Disclosure Letter contains a
--------------------
schedule identifying the types of benefits and other payments due under the
Specified Compensation and Benefit Programs (as defined herein) for each Named
Individual (as defined herein), and TRFC has previously provided to RBI a
reasonable, good faith estimate of the amounts payable and certain of the
benefits to be provided pursuant to the Employment Agreements between TRFC and
each of Messrs. Tsimbinos, Nutt, Henchy, Kuhn, Kramer and DeRusso and pursuant
to the Employment Agreements between TRFC Bank and each of Messrs. Tsimbinos,
Nutt, Henchy, Kuhn, Kramer and DeRusso. For purposes hereof, "Specified
Compensation and Benefit Programs" shall include all employment agreements,
change in control agreements, severance or special termination agreements,
severance plans, pension, retirement or deferred compensation plans for non-
employee directors, supplemental executive retirement programs, tax
indemnification agreements, outplacement programs, cash bonus programs, deferred
compensation plans, all performance and/or bonus plans, stock appreciation
right, phantom stock or stock unit plan, and health, life, disability and other
insurance or welfare plans, but shall not include any tax-qualified pension,
profit-sharing or employee stock ownership plan or any TRFC Option Plans or TRFC
RRP. For purposes hereof, "Named Individual" shall include each non-employee
director of TRFC or any of its Subsidiaries and each executive officer of TRFC.
(o) Title to Assets. TRFC and each of its Subsidiaries has good and
---------------
marketable title to its properties and assets (including any intellectual
property asset such as any trademark, service mark, tradename or copyright) and
property acquired in a judicial foreclosure proceeding or by way of a deed in
lieu of foreclosure or similar transfer, other than property as to which it is
lessee, in which case the related lease is valid and in full force and effect.
Each lease pursuant to which
A-15
<PAGE>
TRFC or any of its Subsidiaries is lessor is valid and in full force and effect
and no lessee under any such lease is in default or in violation of any
provisions of any such lease. All material tangible properties of TRFC and each
of its Subsidiaries are in a good state of maintenance and repair, conform with
all applicable ordinances, regulations and zoning laws and are considered by
TRFC to be adequate for the current business of TRFC and its Subsidiaries.
(p) Compliance with Laws. TRFC and each of its Subsidiaries has all
--------------------
permits, licenses, certificates of authority, orders and approvals of, and has
made all filings, applications and registrations with, all federal, state, local
and foreign governmental or regulatory bodies that are required in order to
permit it to carry on its business as it is presently conducted; all such
permits, licenses, certificates of authority, orders and approvals are in full
force and effect, and, to the best knowledge of TRFC, no suspension or
cancellation of any of them is threatened. Since the date of its incorporation,
the corporate affairs of TRFC have not been conducted in violation of any law,
ordinance, regulation, order, writ, rule, decree or approval of any federal or
state regulatory authority having jurisdiction over insured depositary
institutions or their holding companies, the SEC, the NASD or any other SRO
(each, a "Governmental Entity"). The businesses of TRFC and its Subsidiaries
are not being conducted in violation of any law, ordinance, regulation, order,
writ, rule, decree or condition to approval of any Governmental Entity.
(q) Fees. Other than financial advisory services performed for TRFC
----
by Goldman, Sachs & Co. pursuant to an agreement dated May 22, 1998, a true and
complete copy of which has been previously delivered to RBI, neither TRFC nor
any of its Subsidiaries, nor any of their respective officers, directors,
employees or agents, has employed any broker or finder or incurred any liability
for any financial advisory fees, brokerage fees, commissions or finder's fees,
and no broker or finder has acted directly or indirectly for TRFC or any of its
Subsidiaries in connection with this Agreement or the transactions contemplated
hereby.
(r) Environmental Matters. (i) With respect to TRFC and each of
---------------------
its Subsidiaries:
(A) Each of TRFC and its Subsidiaries, the Participation
Facilities (as defined herein), and, to TRFC's knowledge, the Loan
Properties (as defined herein) are, and have been, in substantial
compliance with, and are not liable under, all Environmental Laws (as
defined herein);
(B) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to
TRFC's knowledge, threatened, before any court, governmental agency or
board or other forum against it or any of its Subsidiaries or any
Participation Facility (x) for alleged noncompliance (including by any
predecessor) with, or liability under, any Environmental Law or (y)
relating to the presence of or release (as defined herein) into the
environment of any Hazardous Material (as defined herein), whether or not
occurring at or on a site owned, leased or operated by it or any of its
Subsidiaries or any Participation Facility;
A-16
<PAGE>
(C) To TRFC's knowledge, there is no suit, claim, action,
demand, executive or administrative order, directive, investigation or
proceeding pending or threatened before any court, governmental agency or
board or other forum relating to or against any Loan Property (or TRFC or
any of its Subsidiaries in respect of such Loan Property) (x) relating to
alleged noncompliance (including by any predecessor) with, or liability
under, any Environmental Law or (y) relating to the presence of or release
into the environment of any Hazardous Material, whether or not occurring at
or on a site owned, leased or operated by a Loan Property;
(D) To TRFC's knowledge, the properties currently owned or
operated by TRFC or any of its Subsidiaries (including, without limitation,
soil, groundwater or surface water on, under or adjacent to the properties,
and buildings thereon) are not contaminated with and do not otherwise
contain any Hazardous Material other than as permitted under applicable
Environmental Law;
(E) Neither TRFC nor any of its Subsidiaries has received any
notice, demand letter, executive or administrative order, directive or
request for information from any federal, state, local or foreign
governmental entity or any third party indicating that it may be in
violation of, or liable under, any Environmental Law;
(F) To TRFC's knowledge, there are no underground storage tanks
on, in or under any properties owned or operated by TRFC or any of its
Subsidiaries or any Participation Facility, and no underground storage
tanks have been closed or removed from any properties owned or operated by
TRFC or any of its Subsidiaries or any Participation Facility; and
(G) To TRFC's knowledge, during the period of (l) TRFC's or any
of its Subsidiaries' ownership or operation of any of their respective
current properties or (m) TRFC's or any of its Subsidiaries' participation
in the management of any Participation Facility, there has been no
contamination by or release of Hazardous Materials in, on, under or
affecting such properties. To TRFC's knowledge, prior to the period of (x)
TRFC's or any of its Subsidiaries' ownership or operation of any of their
respective current properties or (y) TRFC's or any of its Subsidiaries'
participation in the management of any Participation Facility, there was no
contamination by or release of Hazardous Material in, on, under or
affecting such properties.
(ii) The following definitions apply for purposes of this
Section 2.3(r) and Section 2.4(r): (w) "Loan Property" means any property in
which the applicable party (or a Subsidiary of it) holds a security interest,
and, where required by the context, includes the owner or operator of such
property, but only with respect to such property; (x) "Participation Facility"
means any facility in which the applicable party (or a Subsidiary of it)
participates in the management (including all property held as trustee or in any
other fiduciary capacity) and, where required by the context, includes the owner
or operator of such property, but only with respect to such property;
(y) "Environmental Law" means (i) any federal, state or local law, statute,
ordinance, rule, regulation,
A-17
<PAGE>
code, license, permit, authorization, approval, consent, legal doctrine, order,
directive, executive or administrative order, judgment, decree, injunction,
legal requirement or agreement with any governmental entity relating to (A) the
protection, preservation or restoration of the environment (which includes,
without limitation, air, water vapor, surface water, groundwater, drinking water
supply, structures, soil, surface land, subsurface land, plant and animal life
or any other natural resource), or to human health or safety as it relates to
Hazardous Materials, or (B) the exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of, Hazardous Materials, in each case as amended
and as now in effect. The term Environmental Law includes all federal, state and
local laws, rules, regulations or requirements relating to the protection of the
environment or health and safety, including, without limitation, (i) the Federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Superfund Amendments and Reauthorization Act of 1986, the Federal Water
Pollution Control Act of 1972, the Federal Clean Air Act, the Federal Clean
Water Act, the Federal Resource Conservation and Recovery Act of 1976
(including, but not limited to, the Hazardous and Solid Waste Amendments thereto
and Subtitle I relating to underground storage tanks), the Federal Solid Waste
Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide,
Fungicide and Rodenticide Act, the Federal Occupational Safety and Health Act of
1970 as it relates to Hazardous Materials, the Federal Hazardous Substances
Transportation Act, the Emergency Planning and Community Right-To-Know Act, the
Safe Drinking Water Act, the Endangered Species Act, the National Environmental
Policy Act, the Rivers and Harbors Appropriation Act or any so-called
"Superfund" or "Superlien" law, each as amended and as now or hereafter in
effect, and (ii) any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as negligence, nuisance,
trespass and strict liability) that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Material; and (z) "Hazardous Material" means any
substance (whether solid, liquid or gas) which is or could be detrimental to
human health or safety or to the environment, currently or hereafter listed,
defined, designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated, under any Environmental Law, whether by type or by
quantity, including any substance containing any such substance as a component.
Hazardous Material includes, without limitation, any toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous waste, special
waste, industrial substance, oil or petroleum, or any derivative or by-product
thereof, radon, radioactive material, asbestos, asbestos-containing material,
urea formaldehyde foam insulation, lead and polychlorinated biphenyl.
(s) Loan Portfolio; Allowance; Asset Quality. (i) With respect to
----------------------------------------
each loan owned by TRFC or its Subsidiaries in whole or in part (each, a
"Loan"), to the best knowledge of TRFC:
(A) the note and the related security documents are each legal,
valid and binding obligations of the maker or obligor thereof, enforceable
against such maker or obligor in accordance with their terms;
(B) neither TRFC nor any of its Subsidiaries, nor any prior
holder of a Loan, has modified the note or any of the related security
documents in any material
A-18
<PAGE>
respect or satisfied, canceled or subordinated the note or any of the
related security documents except as otherwise disclosed by documents in
the applicable Loan file;
(C) TRFC or a Subsidiary is the sole holder of legal and
beneficial title to each Loan (or TRFC's applicable participation interest,
as applicable), except as otherwise referenced on the books and records of
TRFC;
(D) the note and the related security documents, copies of which
are included in the Loan files, are true and correct copies of the
documents they purport to be and have not been suspended, amended,
modified, canceled or otherwise changed except as otherwise disclosed by
documents in the applicable Loan file;
(E) there is no pending or threatened condemnation proceeding or
similar proceeding affecting the property that serves as security for a
Loan, except as otherwise referenced on the books and records of TRFC;
(F) there is no litigation or proceeding pending or threatened
relating to the property that serves as security for a Loan that would have
a Material Adverse Effect upon the related Loan; and
(G) with respect to a Loan held in the form of a participation,
the participation documentation is legal, valid, binding and enforceable.
(ii) The allowance for possible losses reflected in TRFC's
audited statement of condition at December 31, 1997 was, and the allowance for
possible losses shown on the balance sheets in TRFC's Reports for periods ending
after December 31, 1997 will be, adequate, as of the dates thereof, under
generally accepted accounting principles applicable to stock savings banks
consistently applied.
(iii) TRFC's Disclosure Letter sets forth by category the
amounts of all loans, leases, advances, credit enhancements, other extensions of
credit, commitments and interest-bearing assets of TRFC and its Subsidiaries
that have been classified (whether regulatory or internal) as "Special Mention,"
"Substandard," "Doubtful," "Loss" or words of similar import, and TRFC and its
Subsidiaries shall promptly after the end of any month inform RBI of any such
classification arrived at any time after the date hereof. The other real estate
owned ("OREO") included in any non-performing assets of TRFC or any of its
Subsidiaries is carried net of reserves at the lower of cost or fair value, less
estimated selling costs, based on current independent appraisals or evaluations
or current management appraisals or evaluations; provided, however, that
"current" shall mean within the past 12 months.
(t) Deposits. None of the deposits of TRFC or any of its
--------
Subsidiaries is a "brokered" deposit.
(u) Accounting Matters. Neither TRFC nor any of its Subsidiaries or,
------------------
to the best of its knowledge, any of its other affiliates has, through the date
hereof, taken or agreed to take any
A-19
<PAGE>
action that would prevent RBI from accounting for the business combination to be
effected by the Merger as a pooling-of-interests, and TRFC has no knowledge of
any fact or circumstance that would prevent such accounting treatment.
(v) Antitakeover Provisions Inapplicable. TRFC and its Subsidiaries
------------------------------------
have taken all actions required to exempt TRFC, the Agreement, the Merger and
the TRFC Option Agreement from any provisions of an antitakeover nature in their
organization certificates and bylaws, the TRFC Rights Agreement, and the
provisions of any federal or state "antitakeover," "fair price," "moratorium,"
"control share acquisition" or similar laws or regulations.
(w) Material Interests of Certain Persons. Except as disclosed in
-------------------------------------
TRFC's Proxy Statement for its 1998 Annual Meeting of Stockholders, no officer
or director of TRFC, or any "associate" (as such term is defined in Rule 12b-2
under the Securities Exchange Act of 1934, as amended ("Exchange Act")) of any
such officer or director, has any material interest in any material contract or
property (real or personal), tangible or intangible, used in or pertaining to
the business of TRFC or any of its Subsidiaries. No such interest has been
created or modified since the date of the last regulatory examination of TRFC or
its Subsidiaries.
(x) Insurance. TRFC and its Subsidiaries are presently insured, and
---------
since December 31, 1995, have been insured, for reasonable amounts with
financially sound and reputable insurance companies, against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured. All of the insurance policies and bonds
maintained by TRFC and its Subsidiaries are in full force and effect, TRFC and
its Subsidiaries are not in default thereunder and all material claims
thereunder have been filed in due and timely fashion.
(y) Investment Securities; Borrowings. (i) Except for investments in
---------------------------------
Federal Home Loan Bank ("FHLB") Stock and pledges to secure FHLB borrowings and
reverse repurchase agreements entered into in arms-length transactions pursuant
to normal commercial terms and conditions and entered into in the ordinary
course of business and restrictions that exist for securities to be classified
as "held to maturity," none of the investments reflected in the consolidated
balance sheet of TRFC included in TRFC's Report on Form 10-K for the year ended
December 31, 1997, and none of the investment securities held by it or any of
its Subsidiaries since December 31, 1997, is subject to any restriction
(contractual or statutory) that would materially impair the ability of the
entity holding such investment freely to dispose of such investment at any time.
(ii) Neither TRFC nor any Subsidiary is a party to or has agreed
to enter into an exchange-traded or over-the-counter equity, interest rate,
foreign exchange or other swap, forward, future, option, cap, floor or collar or
any other contract that is a derivative contract (including various combinations
thereof) (each, a "Derivatives Contract") or owns securities that (A) are
referred to generically as "structured notes," "high risk mortgage derivatives,"
"capped floating rate notes" or "capped floating rate mortgage derivatives" or
(B) are likely to have changes in value as a result of interest or exchange rate
changes that significantly exceed normal changes in value attributable to
interest or exchange rate changes.
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<PAGE>
(iii) Set forth in TRFC's Disclosure Letter is a true and
complete list of TRFC's borrowed funds (excluding deposit accounts) as of the
date hereof.
(z) Indemnification. Except as provided in TRFC's Disclosure Letter,
---------------
TRFC's Employment Agreements, TRFC Bank's Indemnification Agreements or the
organization certificate or bylaws of TRFC and its Subsidiaries, neither TRFC
nor any Subsidiary is a party to any indemnification agreement with any of its
present or future directors, officers, employees, agents or other persons who
serve or served in any other capacity with any other enterprise at the request
of TRFC (a "Covered Person"), and, except as set forth in TRFC's Disclosure
Letter, to the best knowledge of TRFC, there are no claims for which any Covered
Person would be entitled to indemnification under the organization certificate
or bylaws of TRFC or any of its Subsidiaries, under any applicable law or
regulation or under any indemnification agreement.
(aa) Books and Records. The books and records of TRFC and its
-----------------
Subsidiaries on a consolidated basis have been, and are being, maintained in
accordance with applicable legal and accounting requirements and reflect in all
material respects the substance of events and transactions that should be
included therein.
(bb) Corporate Documents. TRFC has delivered to RBI true and
-------------------
complete copies of its certificate of incorporation and bylaws and of TRFC
Bank's and RAFC's organization certificate and bylaws. The minute books of TRFC,
TRFC Bank and RAFC constitute a complete and correct record of all actions taken
by their respective boards of directors (and each committee thereof) and their
stockholders. The minute books of each of TRFC's Subsidiaries constitutes a
complete and correct record of all actions taken by the respective boards of
directors (and each committee thereof) and the stockholders of each such
Subsidiary.
(cc) Liquidation Account. The Merger will not result in any payment
-------------------
or distribution payable out of the liquidation account of TRFC Bank established
in connection with TRFC Bank's conversion from mutual to stock form.
(dd) Tax Treatment of the Merger. As of the date hereof, TRFC has no
---------------------------
knowledge of any fact or circumstance that would prevent the transactions
contemplated by this Agreement from qualifying as a tax-free reorganization
under the Code.
(ee) Beneficial Ownership of RBI Common Stock. As of the date
----------------------------------------
hereof, TRFC beneficially owns 65,000 shares of RBI Common Stock and, other than
as contemplated by the RBI Option Agreement, does not have any option, warrant
or right of any kind to acquire the beneficial ownership of any shares of RBI
Common Stock.
(ff) Year 2000 Matters. TRFC has completed a review of its computer
-----------------
systems to identify systems that could be affected by the "Year 2000" issue and
reasonably believes it has identified all such Year 2000 problems. TRFC's
management has developed and commenced implementation of a plan to respond to
this issue which is designed to complete any required initial changes to its
computer systems and to complete testing of those changes by December 31, 1998.
Between the date of this Agreement and the Effective Time, TRFC shall use
commercially
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<PAGE>
practicable efforts to implement and/or continue to undertake such plan. Year
2000 issues have not had, and are not reasonably expected to have, a Material
Adverse Effect on TRFC or its Subsidiaries.
(gg) Registration Statement. The information regarding TRFC to be
----------------------
supplied by TRFC for inclusion in (i) the Registration Statement on Form S-4
and/or such other form(s) as may be appropriate to be filed under the Securities
Act of 1933, as amended ("Securities Act"), with the SEC by RBI for the purpose
of, among other things, registering the RBI Common Stock to be issued to TRFC's
stockholders in the Merger (as amended or supplemented from time to time, the
"Registration Statement"), or (ii) the proxy statement to be filed with the SEC
by TRFC and RBI under the Exchange Act and distributed in connection with TRFC's
meeting of stockholders to vote upon this Agreement (as amended or supplemented
from time to time, the "Proxy Statement," and together with the prospectus
included in the Registration Statement, as amended or supplemented from time to
time, the "Proxy Statement-Prospectus") will not, at the time such Registration
Statement becomes effective, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
Section 2.4 Representations and Warranties of RBI. Subject to
-------------------------------------
Sections 2.1 and 2.2, RBI represents and warrants to TRFC that, except as
specifically disclosed in RBI's Disclosure Letter:
(a) Organization. (i) RBI is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Delaware and is
duly registered as a savings and loan holding company under HOLA. RBI Bank is a
stock savings bank duly organized, validly existing and in good standing under
the laws of the State of New York. Each Subsidiary of RBI Bank is a
corporation, limited liability company or partnership duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization. Each of RBI and its Subsidiaries has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted.
(ii) RBI and each of its Subsidiaries has the requisite
corporate power and authority, and is duly qualified and is in good standing, to
do business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary.
(iii) RBI's Disclosure Letter sets forth all of RBI's
Subsidiaries and all entities (whether corporations, partnerships or similar
organizations), including the corresponding percentage ownership, in which RBI
owns, directly or indirectly, 5% or more of the ownership interests as of the
date of this Agreement and indicates for each Subsidiary, as of the such date,
its jurisdiction of organization and the jurisdiction(s) wherein it is qualified
to do business. All such Subsidiaries and ownership interests are in compliance
with all applicable laws, rules and regulations relating to direct investments
in equity ownership interests. RBI owns, either directly or indirectly, all of
the outstanding capital stock of each of its Subsidiaries, except for certain
preferred shares issued by Roslyn Capital Corp. No Subsidiary of RBI other than
RBI Bank is an "insured depository institution" as defined in the FDIA and the
applicable regulations thereunder. All of the shares of
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<PAGE>
capital stock of each of the Subsidiaries held by RBI or any of its other
Subsidiaries are fully paid, nonassessable and not subject to any preemptive
rights and are owned by RBI or a Subsidiary of RBI free and clear of any claims,
liens, encumbrances or restrictions (other than those imposed by applicable
federal and state securities laws) and there are no agreements or understandings
with respect to the voting or disposition of any such shares.
(iv) The deposits of RBI Bank are insured by the BIF of the FDIC
to the extent provided in the FDIA.
(b) Capital Structure. (i) The authorized capital stock of RBI
-----------------
consists of 100,000,000 shares of RBI Common Stock and 10,000,000 shares of
preferred stock, par value $.01 per share ("RBI Preferred Stock"). As of the
date of this Agreement, (A) 41,399,959 shares of RBI Common Stock were issued
and outstanding, (B) no shares of RBI Preferred Stock were outstanding, (C) no
shares of RBI Common Stock were reserved for issuance, except that 4,364,246
shares of RBI Common Stock were reserved for issuance pursuant to the RBI 1997
Stock-Based Incentive Plan and (D) 2,242,500 shares of RBI Common Stock were
held by RBI in its treasury or by its Subsidiaries. The authorized capital
stock of RBI Bank consists of 100,000,000 shares of common stock, par value $.01
per share, and 10,000,000 shares of preferred stock, par value $.01 per share.
As of the date of this Agreement, 1,000 shares of such common stock were
outstanding, no shares of such preferred stock were outstanding and all
outstanding shares of such common stock were, and as of the Effective Time will
be, owned by RBI. All outstanding shares of capital stock of RBI and RBI Bank
are validly issued, fully paid and nonassessable and not subject to any
preemptive rights and, with respect to shares held by RBI in its treasury or by
its Subsidiaries, are free and clear of all liens, encumbrances or restrictions
(other than those imposed by applicable federal or state securities laws) and
there are no agreements or understandings with respect to the voting or
disposition of any such shares.
(ii) No Voting Debt of RBI is issued or outstanding.
(iii) As of the date of this Agreement, except for this
Agreement, the RBI Option Agreement and as set forth in RBI's Disclosure Letter,
neither RBI nor any of its Subsidiaries has or is bound by any outstanding
options, warrants, calls, rights, convertible securities, commitments or
agreements of any character obligating RBI or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, any additional shares
of capital stock of RBI or any of its Subsidiaries or obligating RBI or any of
its Subsidiaries to grant, extend or enter into any such option, warrant, call,
right, convertible security, commitment or agreement. As of the date hereof,
there are no outstanding contractual obligations of RBI or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of RBI or any of its Subsidiaries.
(c) Authority. Each of RBI and RBI Bank has the requisite corporate
---------
power and authority to enter into this Agreement and the Plan of Bank Merger,
respectively and, subject to approval of this Agreement and the amendment to
RBI's Certificate of Incorporation to increase the number of authorized shares
of RBI Common Stock (the "Amendment") by the requisite vote of RBI's
stockholders and receipt of all required regulatory or governmental approvals,
as contemplated by Section 5.1(b) of this Agreement, to consummate the
transactions contemplated hereby. The
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<PAGE>
execution and delivery of this Agreement, and, subject to the approval of this
Agreement by RBI's stockholders, the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
actions on the part of RBI and RBI Bank. This Agreement has been duly executed
and delivered by RBI and constitutes a valid and binding obligation of RBI,
enforceable in accordance with its terms subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity, whether
applied in a court of law or a court of equity.
(d) Stockholder Approvals; Fairness Opinion. The affirmative vote
---------------------------------------
of a majority of the outstanding shares of the RBI Common Stock entitled to vote
on this Agreement and the Amendment are the only votes of the stockholders of
RBI required for approval of this Agreement and the consummation of the Merger
and the related transactions contemplated hereby. RBI has received the opinion
of Sandler O'Neill & Partners, L.P. to the effect that, as of the date hereof,
the Merger Consideration is fair, from a financial point of view, to RBI's
stockholders.
(e) No Violations. The execution, delivery and performance of this
-------------
Agreement by RBI do not, and the consummation of the transactions contemplated
hereby will not, constitute (i) assuming receipt of all Requisite Regulatory
Approvals and requisite stockholder approvals, a breach or violation of, or a
default under, any law, rule or regulation or any judgment, decree, order,
governmental permit or license, or agreement, indenture or instrument of RBI or
any of its Subsidiaries, or to which RBI or any of its Subsidiaries (or any of
their respective properties) is subject, (ii) a breach or violation of, or a
default under, the certificate of incorporation or bylaws of RBI or the similar
organizational documents of any of its Subsidiaries or (iii) a breach or
violation of, or a default under (or an event which, with due notice or lapse of
time or both, would constitute a default under), or result in the termination
of, accelerate the performance required by, or result in the creation of any
lien, pledge, security interest, charge or other encumbrance upon any of the
properties or assets of RBI or any of its Subsidiaries, under, any of the terms,
conditions or provisions of any note, bond, indenture, deed of trust, loan
agreement or other agreement, instrument or obligation to which RBI or any of
its Subsidiaries is a party, or to which any of their respective properties or
assets may be subject; and the consummation of the transactions (including the
Bank Merger) contemplated hereby (exclusive of the effect of any changes
effected pursuant to Section 1.7) will not require any approval, consent or
waiver under any such law, rule, regulation, judgment, decree, order,
governmental permit or license or the approval, consent or waiver of any other
party to any such agreement, indenture or instrument, other than (x) the
approval of the holders of a majority of the outstanding shares of RBI Common
Stock, (y) the Requisite Regulatory Approvals and (z) such approvals, consents
or waivers as are required under the federal and state securities or "blue sky"
laws in connection with the transactions contemplated by this Agreement. As of
the date hereof, the executive officers of RBI know of no reason pertaining to
RBI why any of the approvals referred to in this Section 2.4(e) should not be
obtained without the imposition of any material condition or restriction
described in the proviso to Section 5.1(b).
(f) Reports. (i) As of their respective dates, none of the reports
-------
or other statements filed by RBI or RBI Bank on or subsequent to December 31,
1997, with the SEC (collectively, "RBI's Reports"), contained, or will contain,
any untrue statement of a material fact or omitted or will omit to state a
material fact required to be stated therein or necessary to make the
A-24
<PAGE>
statements made therein, in light of the circumstances under which they were
made, not misleading. Each of the financial statements of RBI included in RBI's
Report complied as to form, as of their respective dates of filing with the SEC,
in all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto and have been
prepared in accordance with GAAP (except as may be indicated in the notes
thereto or, in the case of unaudited financial statements, as permitted by Form
10-Q of the SEC). Each of the consolidated statements of condition contained or
incorporated by reference in RBI's Reports (including in each case any related
notes and schedules) fairly presented, or will fairly present, as the case may
be, (A) the financial position of the entity or entities to which it relates as
of its date and each of the statements of operations, consolidated statements of
cash flows and consolidated statements of changes in stockholders' equity,
contained or incorporated by reference in RBI's Reports (including in each case
any related notes and schedules), and (B) the results of operations,
stockholders' equity and cash flows, as the case may be, of the entity or
entities to which it relates for the periods set forth therein (subject, in the
case of unaudited interim statements, to normal year-end audit adjustments that
are not material in amount or effect), in each case in accordance with GAAP,
except as may be noted therein. RBI has made available to TRFC a true and
complete copy of each of RBI's Report filed with the SEC since December 31,
1997.
(ii) RBI and each of its Subsidiaries have each timely filed all
material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file since
December 31, 1993 with (A) the OTS, (B) the SEC, (C) the NASD and (D) any other
SRO, and have paid all fees and assessments due and payable in connection
therewith.
(g) Absence of Certain Changes or Events. Except as disclosed in
------------------------------------
RBI's Reports filed on or prior to the date of this Agreement, since December
31, 1997, (i) RBI and its Subsidiaries have not incurred any liability, except
in the ordinary course of their business consistent with past practice, (ii) RBI
and its Subsidiaries have conducted their respective businesses only in the
ordinary and usual course of such businesses and (iii) there has not been any
Material Adverse Effect with respect to RBI.
(h) Absence of Claims. Except as set forth in RBI's Disclosure
-----------------
Letter, no litigation, proceeding, controversy, claim or action before any court
or governmental agency is pending against RBI or any of its Subsidiaries, and,
to the best of RBI's knowledge, no such litigation, proceeding, controversy,
claim or action has been threatened.
(i) Absence of Regulatory Actions. Neither RBI nor any of its
-----------------------------
Subsidiaries is a party to any cease and desist order, written agreement or
memorandum of understanding with, or any commitment letter or similar written
undertaking to, or is subject to any action, proceeding, order or directive by,
or is a recipient of any extraordinary supervisory letter from any Government
Regulator, or has adopted any board resolutions at the request of any Government
Regulator, nor has it been advised by any Governmental Regulator that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such action, proceeding, order, directive, written
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter, board resolutions or similar written undertaking.
A-25
<PAGE>
(j) Taxes. All federal, state, local and foreign tax returns
-----
required to be filed by or on behalf of RBI or any of its Subsidiaries have been
timely filed or requests for extensions have been timely filed and any such
extension shall have been granted and not have expired, and all such filed
returns are complete and accurate in all material respects. All taxes shown on
such returns, all taxes required to be shown on returns for which extensions
have been granted and all other taxes required to be paid by RBI or any of its
Subsidiaries have been paid in full or adequate provision has been made for any
such taxes on RBI's balance sheet (in accordance with GAAP). For purposes of
this Section 2.4(j), the term "taxes" shall include all income, franchise, gross
receipts, real and personal property, real property transfer and gains, wage and
employment taxes. As of the date of this Agreement, there is no audit
examination, deficiency assessment, tax investigation or refund litigation with
respect to any taxes of RBI or any of its Subsidiaries, and no claim has been
made by any authority in a jurisdiction where RBI or any of its Subsidiaries do
not file tax returns that RBI or any such Subsidiary is subject to taxation in
that jurisdiction. All taxes, interest, additions and penalties due with respect
to completed and settled examinations or concluded litigation relating to RBI or
any of its Subsidiaries have been paid in full or adequate provision has been
made for any such taxes on RBI's balance sheet (in accordance with GAAP). Except
as set forth in RBI's Disclosure Letter, RBI and its Subsidiaries have not
executed an extension or waiver of any statute of limitations on the assessment
or collection of any material tax due that is currently in effect. RBI and each
of its Subsidiaries has withheld and paid all taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party, and RBI and
each of its Subsidiaries has timely complied with all applicable information
reporting requirements under Part III, Subchapter A of Chapter 61 of the Code
and similar applicable state and local information reporting requirements.
Neither RBI nor any of its Subsidiaries (i) has made an election under Section
341(f) of the Code, (ii) has issued or assumed any obligation under Section 279
of the Code, any high yield discount obligation as described in Section 163(i)
of the Code or any registration-required obligation within the meaning of
Section 163(f)(2) of the Code that is not in registered form or (iii) is or has
been a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code.
(k) Agreements. (i) Except for the RBI Option Agreement and
----------
arrangements made in the ordinary course of business, and except as set forth in
RBI's Disclosure Letter, RBI and its Subsidiaries are not bound by any material
contract (as defined in Item 601(b)(10) of Regulation S-K) to be performed after
the date hereof that has not been filed with or incorporated by reference in
RBI's Report. Except as disclosed in RBI's Report filed prior to the date of
this Agreement, neither RBI nor any of its Subsidiaries is a party to an oral or
written (A) consulting agreement (other than data processing, software
programming and licensing contracts entered into in the ordinary course of
business) not terminable on 60 days' or less notice, (B) agreement with any
executive officer or other key employee of RBI or any of its Subsidiaries the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction involving RBI or any of its Subsidiaries of
the nature contemplated by this Agreement or the RBI Option Agreement, (C)
agreement with respect to any employee or director of RBI or any of its
Subsidiaries providing any term of employment or compensation guarantee
extending for a period longer than 60 days or for the payment of in excess of
$50,000 per annum, (D) agreement or plan, including any stock option plan,
phantom stock or stock appreciation rights
A-26
<PAGE>
plan, restricted stock plan or stock purchase plan, any of the benefits of which
will be increased, or the vesting or payment of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the RBI Option Agreement or the value of any of the benefits of
which will be calculated on the basis of any of the transactions contemplated by
this Agreement or the RBI Option Agreement or (E) agreement containing covenants
that limit the ability of RBI or any of its Subsidiaries to compete in any line
of business or with any person, or that involve any restriction on the
geographic area in which, or method by which, RBI (including any successor
thereof) or any of its Subsidiaries may carry on its business (other than as may
be required by law or any regulatory agency).
(ii) Except as set forth in RBI's Disclosure Letter, neither RBI
nor any of its Subsidiaries is in default under or in violation of any provision
of any note, bond, indenture, mortgage, deed of trust, loan agreement, lease or
other agreement to which it is a party or by which it is bound or to which any
of its respective properties or assets is subject.
(iii) RBI and each of its Subsidiaries owns or possesses
valid and binding licenses and other rights to use without payment all patents,
copyrights, trade secrets, trade names, servicemarks and trademarks used in its
businesses, and neither RBI nor any of its Subsidiaries has received any notice
of conflict with respect thereto that asserts the right of others. Each of RBI
and its Subsidiaries has performed all the obligations required to be performed
by it and are not in default under any contact, agreement, arrangement or
commitment relating to any of the foregoing.
(l) RBI Common Stock. The shares of RBI Common Stock to be issued
----------------
pursuant to this Agreement, when issued in accordance with the terms of this
Agreement, will be duly authorized, validly issued, fully paid and non-
assessable and subject to no preemptive rights.
(m) Labor Matters. Neither RBI nor any of its Subsidiaries is or has
-------------
ever been a party to, or is or has ever been bound by, any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization with respect to its employees, nor is RBI or any of its
Subsidiaries the subject of any proceeding asserting that it has committed an
unfair labor practice or seeking to compel RBI or any of its Subsidiaries to
bargain with any labor organization as to wages and conditions of employment,
nor is there any strike, other labor dispute or organizational effort involving
RBI or any of its Subsidiaries pending or, to RBI's knowledge, threatened. RBI
and its Subsidiaries are in compliance with applicable laws regarding employment
of employees and retention of independent contractors and are in compliance with
applicable employment tax laws.
(n) Employee Benefit Plans. RBI's Disclosure Letter contains a
----------------------
complete and accurate list of all pension, retirement, stock option, stock
purchase, stock ownership, savings, stock appreciation right, profit sharing,
deferred compensation, consulting, bonus, group insurance, severance and other
benefit plans, contracts, agreements and arrangements, including, but not
limited to, "employee benefit plans," as defined in Section 3(3) of ERISA,
incentive and welfare policies, contracts, plans and arrangements and all trust
agreements related thereto with respect to any present or former directors,
officers or other employees of RBI or any of its Subsidiaries (hereinafter
referred to collectively as the "RBI Employee Plans"). All of the RBI Employee
Plans comply in all material
A-27
<PAGE>
respects with all applicable requirements of ERISA, the Code and other
applicable laws; there has occurred no "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Code) which is likely to result in
the imposition of any penalties or taxes under Section 502(i) of ERISA or
Section 4975 of the Code upon RBI or any of its Subsidiaries. No liability to
the PBGC has been or is expected by RBI or any of its Subsidiaries to be
incurred with respect to any RBI Employee Plan which is subject to Title IV of
ERISA ("RBI Pension Plan"), or with respect to any "single-employer plan" (as
defined in Section 4001(a) of ERISA) currently or formerly maintained by RBI or
any entity which is considered one employer with RBI under Section 4001(b)(1) of
ERISA or Section 414 of the Code (an "ERISA Affiliate"). No RBI Pension Plan had
an "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, as of the last day of the end of the most recent plan
year ending prior to the date hereof; the fair market value of the assets of
each RBI Pension Plan exceeds the present value of the "benefit liabilities" (as
defined in Section 4001(a)(16) of ERISA) under such RBI Pension Plan as of the
end of the most recent plan year with respect to the respective RBI Pension Plan
ending prior to the date hereof, calculated on the basis of the actuarial
assumptions used in the most recent actuarial valuation for such RBI Pension
Plan as of the date hereof; and no notice of a "reportable event" (as defined in
Section 4043 of ERISA) for which the 30-day reporting requirement has not been
waived has been required to be filed for any RBI Pension Plan within the 12-
month period ending on the date hereof. Neither RBI nor any of its Subsidiaries
has provided, or is required to provide, security to any RBI Pension Plan or to
any single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of
the Code. Neither RBI, its Subsidiaries, nor any ERISA Affiliate has contributed
to any "multiemployer plan," as defined in Section 3(37) of ERISA, on or after
September 26, 1980. Each RBI Employee Plan that is an "employee pension benefit
plan" (as defined in Section 3(2) of ERISA) and which is intended to be
qualified under Section 401(a) of the Code (an "RBI Qualified Plan") has
received a favorable determination letter from the IRS, and RBI and its
Subsidiaries are not aware of any circumstances likely to result in revocation
of any such favorable determination letter. Each RBI Qualified Plan that is an
"employee stock ownership plan" (as defined in Section 4975(e)(7) of the Code)
has satisfied all of the applicable requirements of Sections 409 and 4975(e)(7)
of the Code and the regulations thereunder in all respects and any assets of any
such RBI Qualified Plan that are not allocated to participants' individual
accounts are pledged as security for, and may be applied to satisfy, any
securities acquisition indebtedness. There is no pending or, to RBI's knowledge,
threatened litigation, administrative action or proceeding relating to any RBI
Employee Plan. Except as relating to the employee(s) of The Roslyn Savings
Foundation, there has been no announcement or commitment by RBI or any of its
Subsidiaries to create an additional RBI Employee Plan, or to amend any RBI
Employee Plan, except for amendments required by applicable law which do not
materially increase the cost of such RBI Employee Plan; and, except as
specifically identified in RBI's Disclosure Letter, RBI and its Subsidiaries do
not have any obligations for post-retirement or post-employment benefits under
any RBI Employee Plan that cannot be amended or terminated upon 60 days' notice
or less without incurring any liability thereunder, except for coverage required
by Part 6 of Title I of ERISA or Section 4980B of the Code, or similar state
laws, the cost of which is borne by the insured individuals. With respect to RBI
or any of its Subsidiaries, for the Employee Plans listed in RBI's Disclosure
Letter, the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not result in any payment or series of
payments by RBI or any of its Subsidiaries to any person which is an "excess
parachute payment" (as defined in Section 280G of the Code), increase or secure
(by way of a trust
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<PAGE>
or other vehicle) any benefits payable under any RBI Employee Plan or accelerate
the time of payment or vesting of any such benefit. With respect to each RBI
Employee Plan, RBI has supplied to TRFC a true and correct copy of (A) the
annual report on the applicable form of the Form 5500 series filed with the IRS
for the most recent three plan years, if required to be filed, (B) such RBI
Employee Plan, including amendments thereto, (C) each trust agreement, insurance
contract or other funding arrangement relating to such RBI Employee Plan,
including amendments thereto, (D) the most recent summary plan description and
summary of material modifications thereto for such RBI Employee Plan, if the RBI
Employee Plan is subject to Title I of ERISA, (E) the most recent actuarial
report or valuation if such RBI Employee Plan is an RBI Pension Plan and any
subsequent changes to the actuarial assumptions contained therein and (F) the
most recent determination letter issued by the IRS if such RBI Employee Plan is
a Qualified Plan.
(o) Title to Assets. RBI and each of its Subsidiaries has good and
---------------
marketable title to its properties and assets (including any intellectual
property asset such as any trademark, service mark, tradename or copyright) and
property acquired in a judicial foreclosure proceeding or by way of a deed in
lieu of foreclosure or similar transfer, other than property as to which it is
lessee, in which case the related lease is valid and in full force and effect.
Each lease pursuant to which RBI or any of its Subsidiaries is lessor is valid
and in full force and effect and no lessee under any such lease is in default or
in violation of any provisions of any such lease. All material tangible
properties of RBI and each of its Subsidiaries are in a good state of
maintenance and repair, conform with all applicable ordinances, regulations and
zoning laws and are considered by RBI to be adequate for the current business of
RBI and its Subsidiaries.
(p) Compliance with Laws. RBI and each of its Subsidiaries has all
--------------------
permits, licenses, certificates of authority, orders and approvals of, and has
made all filings, applications and registrations with, all federal, state, local
and foreign governmental or regulatory bodies that are required in order to
permit it to carry on its business as it is presently conducted; all such
permits, licenses, certificates of authority, orders and approvals are in full
force and effect, and, to the best knowledge of RBI, no suspension or
cancellation of any of them is threatened. Since the date of its incorporation,
the corporate affairs of RBI have not been conducted in violation of any law,
ordinance, regulation, order, writ, rule, decree or approval of any Governmental
Entity. The businesses of RBI and its Subsidiaries are not being conducted in
violation of any law, ordinance, regulation, order, writ, rule, decree or
condition to approval of any Governmental Entity.
(q) Fees. Other than the financial advisory services performed for
----
RBI by Sandler O'Neill & Partners, L.P. pursuant to an agreement dated May 22,
1998, a true and complete copy of which has been previously delivered to TRFC,
neither RBI nor any of its Subsidiaries, nor any of their respective officers,
directors, employees or agents, has employed any broker or finder or incurred
any liability for any financial advisory fees, brokerage fees, commissions or
finder's fees, and no broker or finder has acted directly or indirectly for RBI
or any of its Subsidiaries in connection with this Agreement or the transactions
contemplated hereby.
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(r) Environmental Matters. With respect to RBI and each of its
---------------------
Subsidiaries:
(i) Each of RBI and its Subsidiaries, the Participation
Facilities and, to RBI's knowledge, the Loan Properties are, and have been,
in substantial compliance with, and are not liable under, all Environmental
Laws;
(ii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to
RBI's knowledge, threatened, before any court, governmental agency or board
or other forum against it or any of its Subsidiaries or any Participation
Facility (x) for alleged noncompliance (including by any predecessor) with,
or liability under, any Environmental Law or (y) relating to the presence
of or release into the environment of any Hazardous Material, whether or
not occurring at or on a site owned, leased or operated by it or any of its
Subsidiaries or any Participation Facility;
(iii) To RBI's knowledge, there is no suit, claim, action,
demand, executive or administrative order, directive, investigation or
proceeding pending or threatened before any court, governmental agency or
board or other forum relating to or against any Loan Property (or RBI or
any of its Subsidiaries in respect of such Loan Property) (x) relating to
alleged noncompliance (including by any predecessor) with, or liability
under, any Environmental Law or (y) relating to the presence of or release
into the environment of any Hazardous Material, whether or not occurring at
or on a site owned, leased or operated by a Loan Property;
(iv) To RBI's knowledge, the properties currently owned or
operated by RBI or any of its Subsidiaries (including, without limitation,
soil, groundwater or surface water on, under or adjacent to the properties,
and buildings thereon) are not contaminated with and do not otherwise
contain any Hazardous Material other than as permitted under applicable
Environmental Law;
(v) Neither RBI nor any of its Subsidiaries has received any
notice, demand letter, executive or administrative order, directive or
request for information from any federal, state, local or foreign
governmental entity or any third party indicating that it may be in
violation of, or liable under, any Environmental Law;
(vi) To RBI's knowledge, there are no underground storage tanks
on, in or under any properties owned or operated by RBI or any of its
Subsidiaries or any Participation Facility, and no underground storage
tanks have been closed or removed from any properties owned or operated by
RBI or any of its Subsidiaries or any Participation Facility; and
(vii) To RBI's knowledge, during the period of (l) RBI's or any
of its Subsidiaries' ownership or operation of any of their respective
current properties or (m) RBI's or any of its Subsidiaries' participation
in the management of any Participation Facility, there has been
contamination by or release of Hazardous Materials in, on, under or
affecting such
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<PAGE>
properties. To RBI's knowledge, prior to the period of (x) RBI's or any of
its Subsidiaries' ownership or operation of any of their respective current
properties or (y) RBI's or any of its Subsidiaries' participation in the
management of any Participation Facility, there was no contamination by or
release of Hazardous Material in, on, under or affecting such property,
Participation Facility or Loan Property.
(s) Loan Portfolio; Allowance; Asset Quality. (i) With respect to
----------------------------------------
each Loan owned by RBI or its Subsidiaries in whole or in part, to the best
knowledge of RBI:
(A) the note and the related security documents are each legal,
valid and binding obligations of the maker or obligor thereof, enforceable
against such maker or obligor in accordance with their terms;
(B) neither RBI nor any of its Subsidiaries nor any prior holder
of a Loan has modified the note or any of the related security documents in
any material respect or satisfied, canceled or subordinated the note or any
of the related security documents except as otherwise disclosed by
documents in the applicable Loan file;
(C) RBI or a Subsidiary is the sole holder of legal and
beneficial title to each Loan (or RBI Bank's applicable participation
interest, as applicable); except as otherwise referenced on the books and
records of RBI;
(D) the note and the related security documents, copies of which
are included in the Loan files, are true and correct copies of the
documents they purport to be and have not been suspended, amended,
modified, canceled or otherwise changed except as otherwise disclosed by
documents in the applicable Loan file;
(E) there is no pending or threatened condemnation proceeding or
similar proceeding affecting the property that serves as security for a
Loan; except as otherwise referenced on the books and records of RBI;
(F) there is no litigation or proceeding pending or threatened,
relating to the property that serves as security for a Loan that would have
a Material Adverse Effect upon the related Loan; and
(G) with respect to a Loan held in the form of a participation,
the participation documentation is legal, valid, binding and enforceable.
(ii) The allowance for possible losses reflected in RBI's
audited statement of condition at December 31, 1997 was, and the allowance for
possible losses shown on the balance sheets in RBI's Reports for periods ending
after December 31, 1997 will be, adequate, as of the dates thereof, under
generally accepted accounting principles applicable to stock savings banks
consistently applied.
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<PAGE>
(iii) RBI's Disclosure Letter sets forth by category the
amounts of all loans, leases, advances, credit enhancements, other extensions of
credit, commitments and interest-bearing assets of RBI and its Subsidiaries that
have been classified (whether regulatory or internal) as "Other Loans Specially
Mentioned," "Special Mention," "Substandard," "Doubtful," "Loss," "Classified,"
"Criticized," "Credit Risk Assets," "Concerned Loans" (in the latter two cases,
to the extent available) or words of similar import, and RBI and its
Subsidiaries shall promptly after the end of any month inform TRFC of any such
classification arrived at any time after the date hereof. The OREO included in
any non-performing assets of RBI or any of its Subsidiaries is carried net of
reserves at the lower of cost or fair value, less estimated selling costs, based
on current independent appraisals or evaluations or current management
appraisals or evaluations; provided, however, that "current" shall mean within
the past 12 months.
(t) Accounting Matters. Neither RBI nor any of its Subsidiaries or,
------------------
to the best of its knowledge, any of its other affiliates has, through the date
hereof, taken or agreed to take any action that would prevent RBI from
accounting for the business combination to be effected by the Merger as a
pooling-of-interests, and RBI has no knowledge of any fact or circumstance that
would prevent such accounting treatment.
(u) Investment Securities; Borrowing. (i) Except for investments in
--------------------------------
FHLB Stock and pledges to secure FHLB borrowings and reverse repurchase
agreements entered into in arms-length transactions pursuant to normal
commercial terms and conditions and entered into in the ordinary course of
business and restrictions that exist for securities to be classified as "held to
maturity," none of the investments reflected in the consolidated balance sheet
of RBI included in RBI's Report on Form 10-K for the year ended December 31,
1997, and none of the investment securities held by it or any of its
Subsidiaries since December 31, 1997 is subject to any restriction (contractual
or statutory) that would materially impair the ability of the entity holding
such investment freely to dispose of such investment at any time.
(ii) Except as set forth in RBI's Disclosure Letter, neither RBI
nor any Subsidiary is a party to or has agreed to enter into any Derivatives
Contract or owns securities that (A) are referred to generically as "structured
notes," "high risk mortgage derivatives," "capped floating rate notes" or
"capped floating rate mortgage derivatives" or (B) are likely to have changes in
value as a result of interest or exchange rate changes that significantly exceed
normal changes in value attributable to interest or exchange rate changes,
except for those Derivatives Contracts and other instruments legally purchased
or entered into in the ordinary course of business, consistent with safe and
sound banking practices and regulatory guidance, and listed (as of the date
hereof) in RBI's Disclosure Letter or disclosed in RBI's Report filed on or
prior to the date hereof.
(iii) Set forth in RBI's Disclosure Letter is a true and
complete list of RBI's borrowed funds (excluding deposit accounts) as of the
date hereof.
(v) Registration Statement. The information regarding RBI to be
----------------------
supplied by RBI for inclusion in (i) the Registration Statement or (ii) the
Proxy Statement will not, at the time such Registration Statement becomes
effective, contain any untrue statement of a material fact or omit
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to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading.
(w) Books and Records. The books and records of RBI and its
-----------------
Subsidiaries on a consolidated basis have been, and are being, maintained in
accordance with applicable legal and accounting requirements and reflect in all
material respects the substance of events and transactions that should be
included therein.
(x) Corporate Documents. RBI has delivered to TRFC true and complete
-------------------
copies of its organization certificate and bylaws and of RBI Bank's organization
certificate and bylaws. The minute books of RBI and RBI Bank constitute a
complete and correct record of all actions taken by their respective boards of
directors (and each committee thereof) and their stockholders. The minute books
of each of RBI's Subsidiaries constitutes a complete and correct record of all
actions taken by the respective boards of directors (and each committee thereof)
and the stockholders of each such Subsidiary.
(y) Beneficial Ownership of TRFC Common Stock. As of the date
-----------------------------------------
hereof, RBI beneficially owns 502.510 shares of TRFC Common Stock and, other
than as contemplated by the TRFC Option Agreement, does not have any option,
warrant or right of any kind to acquire the beneficial ownership of any shares
of TRFC Common Stock.
(z) Tax Treatment of the Merger. As of the date hereof, RBI has no
---------------------------
knowledge of any fact or circumstance that would prevent the transactions
contemplated by this Agreement from qualifying as a tax-free reorganization
under the Code.
(aa) Year 2000 Matters. RBI has completed a review of its computer
-----------------
systems to identify systems that could be affected by the "Year 2000" issue and
reasonably believes it has identified all Year 2000 problems. RBI's management
has developed and commenced implementation of a plan which is designed to
complete any required initial changes to its computer systems and to complete
testing of those changes by December 31, 1998. Between the date of this
Agreement and the Effective Time, RBI shall use commercially practicable efforts
to implement and/or continue to undertake such plan. Year 2000 issues have not
had, and are not reasonably expected to have, a Material Adverse Effect on RBI
or its Subsidiaries.
ARTICLE III
CONDUCT PENDING THE MERGER
--------------------------
Section 3.1 Conduct of TRFC's Business Prior to the Effective Time.
------------------------------------------------------
Except as expressly provided in this Agreement, during the period from the date
of this Agreement to the Effective Time, TRFC shall, and shall cause its
Subsidiaries to, use commercially reasonable efforts to (i) conduct its business
in the regular, ordinary and usual course consistent with past practice;
(ii) maintain and preserve intact its business organization, properties, leases,
employees and advantageous business relationships and retain the services of its
officers and key employees,
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(iii) take no action which would adversely affect or delay the ability of TRFC
or RBI to perform their respective covenants and agreements on a timely basis
under this Agreement, (iv) take no action which would adversely affect or delay
the ability of TRFC, TRFC Bank, RBI or RBI Bank to obtain any necessary
approvals, consents or waivers of any governmental authority required for the
transactions contemplated hereby or which would reasonably be expected to result
in any such approvals, consents or waivers containing any material condition or
restriction, and (v) take no action that results in or is reasonably likely to
have a Material Adverse Effect on TRFC or TRFC Bank.
Section 3.2 Forbearance by TRFC. Without limiting the covenants
-------------------
set forth in Section 3.1 hereof, except as otherwise provided in this Agreement
and except to the extent required by law or regulation or any Government
Regulators, during the period from the date of this Agreement to the Effective
Time, TRFC shall not, and shall not permit any of its Subsidiaries to, without
the prior consent of RBI, which consent shall not be unreasonably withheld:
(a) change any provisions of the certificate of incorporation or
bylaws of TRFC or the similar governing documents of its Subsidiaries;
(b) issue any shares of capital stock or change the terms of any
outstanding stock options or warrants or issue, grant or sell any option,
warrant, call, commitment, stock appreciation right, right to purchase or
agreement of any character relating to the authorized or issued capital stock of
TRFC except pursuant to (i) the exercise of stock options or warrants
outstanding as of the date of this Agreement in the ordinary course of business
and consistent with past practice, (ii) the TRFC Option Agreement or (iii) the
terms of the TRFC Rights Agreement; adjust, split, combine or reclassify any
capital stock; make, declare or pay any dividend (except for TRFC's regular
quarterly dividend, which shall not be increased by more than $.02 per share
from the prior quarter's dividend) or make any other distribution on, or
directly or indirectly redeem, purchase or otherwise acquire, any shares of its
capital stock or any securities or obligations convertible into or exchangeable
for any shares of its capital stock. As promptly as practicable following the
date of this Agreement, the Board of Directors of TRFC shall cause its regular
quarterly dividend record dates and payment dates to be the same as RBI's
regular quarterly dividend record dates and payments dates for RBI Common Stock,
and TRFC shall not thereafter change its regular dividend payment dates and
record dates. Nothing contained in this Section 3.2(b) or in any other Section
of this Agreement shall be construed to permit holders of shares of TRFC Common
Stock to receive two dividends from either TRFC or from TRFC and RBI in any one
quarter or to deny or prohibit such holders from receiving one dividend from
either TRFC or RBI in any quarter. Subject to applicable regulatory
restrictions, if any, TRFC Bank may pay a cash dividend that is, in the
aggregate, sufficient to fund any dividend by TRFC permitted hereunder;
(c) other than in the ordinary course of business consistent with
past practice and pursuant to policies currently in effect, sell, transfer,
mortgage, encumber or otherwise dispose of any of its material properties,
leases or assets to any individual, corporation or other entity other than a
direct or indirect wholly owned Subsidiary of TRFC or cancel, release or assign
any indebtedness of any such individual, corporation or other entity, except
pursuant to contracts or agreements in force at the date of this Agreement and
which have been disclosed to RBI;
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(d) except to the extent required by law or as disclosed in Section
3.2(d) of TRFC's Disclosure Letter or specifically provided for elsewhere
herein, increase the compensation or fringe benefits of any of its employees or
directors, other than general increases in compensation for employees other than
executive officers in the ordinary course of business consistent with past
practice and, upon consultation with RBI, the payment of reasonable "stay in
place" pay where necessary or appropriate to retain key employees, or pay any
pension or retirement allowance not required by any existing plan or agreement
to any such employees or directors, or become a party to, amend or commit itself
to fund or otherwise establish any trust or account related to any TRFC Employee
Plan (as defined in Section 2.3(m)) with or for the benefit of any employee or
director; voluntarily accelerate the vesting of any stock options or other
compensation or benefit;
(e) except as contemplated by Section 4.2, change its method of
accounting as in effect at December 31, 1997, except as required by changes in
GAAP as concurred in by TRFC's independent auditors;
(f) settle any claim, action or proceeding involving any liability of
TRFC or any of its Subsidiaries for money damages in excess of $500,000 or
impose material restrictions upon the operations of TRFC or any of its
Subsidiaries;
(g) acquire or agree to acquire, by merging or consolidating with, or
by purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets, in each case which are material,
individually or in the aggregate, to TRFC, except in satisfaction of debts
previously contracted;
(h) except pursuant to commitments existing at the date hereof which
have previously been disclosed to RBI, make any real estate loans secured by
undeveloped land or real estate located outside the State of New York (other
than real estate secured by one-to-four family homes) or make any construction
loan (other than construction loans secured by one-to-four family homes) outside
the State of New York;
(i) establish or commit to the establishment of any new branch or
other office facilities other than those for which all regulatory approvals have
been obtained;
(j) take any action that would prevent or impede the Merger from
qualifying (A) for pooling-of-interests accounting treatment, or (B) as a
reorganization under the Code; provided, however, that nothing contained herein
shall limit the ability of TRFC to exercise its rights under the RBI Option
Agreement; and
(k) agree or commit to take any action that is prohibited by this
Section 3.2.
In the event that RBI does not respond in writing to TRFC within three
business days of receipt by RBI of a written request for TRFC to engage in any
of the actions for which RBI's prior written consent is required pursuant to
this Section 3.2, RBI shall be deemed to have consented to
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<PAGE>
such action. Any request by TRFC or response thereto by RBI shall be made in
accordance with the notice provisions of Section 8.7, shall note that it is a
request pursuant to this Section 3.2 and shall state that a failure to respond
within three business days shall constitute consent.
Section 3.3 Conduct of RBI's Business Prior to the Effective Time.
-----------------------------------------------------
Except as expressly provided in this Agreement, during the period from the date
of this Agreement to the Effective Time, RBI shall, and shall cause its
Subsidiaries to, use commercially reasonable efforts to (i) conduct its
business in the regular, ordinary and usual course consistent with past
practice; (ii) maintain and preserve intact its business organization,
properties, leases, employees and advantageous business relationships and retain
the services of its officers and key employees, (iii) take no action which would
materially adversely affect or delay the ability of TRFC or RBI to perform their
respective covenants and agreements on a timely basis under this Agreement, (iv)
take no action which would adversely affect or delay the ability of TRFC, RBI,
TRFC Bank or RBI Bank to obtain any necessary approvals, consents or waivers of
any governmental authority required for the transactions contemplated hereby or
which would reasonably be expected to result in any such approvals, consents or
waivers containing any material condition or restriction, and (v) take no action
that results in or is reasonably likely to have a Material Adverse Effect on
RBI.
Section 3.4 Forbearance by RBI. Without limiting the covenants set
------------------
forth in Section 3.3 hereof, during the period from the date of this Agreement
to the Effective Time, RBI shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of TRFC, which consent shall
not be unreasonably withheld, to:
(a) change any provisions of the certificate of incorporation or
bylaws of RBI or the similar governing documents of its Subsidiaries, other than
to increase the authorized capital stock of RBI;
(b) issue any shares of capital stock or change the terms of any
outstanding stock options or warrants or issue, grant or sell any option,
warrant, call, commitment, stock appreciation right, right to purchase or
agreement of any character relating to the authorized or issued capital stock of
RBI except pursuant to (i) the exercise of stock options or warrants as set
forth in RBI's Disclosure Letter or consistent with Section 1.4 of this
Agreement; (ii) the RBI Option Agreement; (iii) pursuant to the terms of any RBI
Rights Agreement; adjust, split, combine or reclassify any capital stock; or
make, declare or pay any dividend (except for RBI's regular quarterly dividend,
which shall not be increased by more than $.03 per share from the prior
quarter's dividend) or make any other distribution on, or directly or indirectly
redeem, purchase or otherwise acquire, any shares of its capital stock or any
securities or obligations convertible into or exchangeable for any shares of its
capital stock;
(c) make any acquisition or take any other action that individually
or in the aggregate could materially adversely affect the ability of RBI to
consummate the transactions contemplated hereby, or enter into any agreement
providing for, or otherwise participate in, any merger, consolidation or other
transaction in which RBI or any surviving corporation may be required not to
consummate the Merger or any of the other transactions contemplated hereby in
accordance with the terms of this Agreement;
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<PAGE>
(d) take any action that would prevent or impede the Merger from
qualifying (A) for pooling-of-interests accounting treatment or (B) as a
reorganization under the Code; provided, however, that nothing contained herein
shall limit the ability of RBI to exercise its rights under the TRFC Option
Agreement;
(e) enter into an agreement with respect to an Acquisition
Transaction with a third party; provided, that the foregoing shall not prevent
RBI or any of its Subsidiaries from acquiring any other assets or businesses or
from discontinuing or disposing of any of its assets or business if such action
is, in the reasonable judgment of RBI desirable in the conduct of the business
of RBI and its Subsidiaries and would not, in the reasonable judgment of RBI
likely delay the Effective Time to a date subsequent to the date set forth in
Section 7.1(e) of this Agreement or adversely affect the Merger Consideration to
be received pursuant to this Agreement. For purposes of this Agreement,
"Acquisition Transaction" shall mean (x) a merger or consolidation, or any
similar transaction, involving RBI, (y) a purchase, lease or other acquisition
of all or substantially all of the assets of RBI or (z) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of securities representing 10% or more of the voting power of RBI;
provided, that the term "Acquisition Transaction" does not include any internal
merger or consolidation involving only RBI and its Subsidiaries; or
(f) agree or commit to take any action that is prohibited by this
Section 3.4.
ARTICLE IV
COVENANTS
---------
Section 4.1 Acquisition Proposals. TRFC agrees that neither it nor
---------------------
any of its Subsidiaries, nor any of the respective officers and directors of
TRFC or any of its Subsidiaries, shall, and TRFC shall direct and use its best
efforts to cause its employees, agents and representatives (including, without
limitation, any investment banker, attorney or accountant retained by it or any
of its Subsidiaries) not to, (a) initiate, solicit or encourage, directly or
indirectly, any inquiries or the making of any proposal or offer (including,
without limitation, any proposal or offer to TRFC's stockholders) with respect
to a merger, consolidation or similar transaction involving, or any purchase of
all or any significant portion of the assets or any equity securities of, TRFC
or any of its material Subsidiaries (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal") or (b) engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal; provided, however, that nothing contained in this Agreement shall
prevent TRFC or its Board of Directors from (i) complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal or
(ii) (A) providing information in response to a request therefor by a person who
has made an unsolicited bona fide written Acquisition Proposal (an "Unsolicited
Acquisition Proposal") if the Board of Directors receives from the person so
requesting such information an executed confidentiality agreement on terms
substantially equivalent to those contained in the
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<PAGE>
confidentiality agreement between RBI and TRFC, dated as of May 13, 1998; or (B)
engaging in any negotiations or discussions with any person who has made an
Unsolicited Acquisition Proposal, if and only to the extent that, in each such
case referred to in clause (A) or (B) above, (x) TRFC has given prior written
notice to RBI, (y) the Board of Directors of TRFC, after consultation with and
based upon a written opinion of outside legal counsel, in good faith deems such
action to be legally necessary for the proper discharge of its fiduciary duties
under applicable law and (z) the Board of Directors of TRFC, after consultation
with its financial advisor, determines in good faith that such Acquisition
Proposal, if accepted, is reasonably likely to be consummated, taking into
account all legal, financial and regulatory aspects of the proposal and the
person making the proposal and would, if consummated, result in a more favorable
transaction than the transaction contemplated by this Agreement, taking into
account the long-term prospects and interests of TRFC and its stockholders. TRFC
will notify RBI immediately orally (within one day) and in writing (within three
days) if any such Acquisition Proposals are received by, any such information is
requested from or any such negotiations or discussions are sought to be
initiated or continued with TRFC after the date hereof, the identity of the
person making such inquiry, proposal or offer and the substance thereof and will
keep RBI informed of any developments with respect thereto immediately upon the
occurrence thereof. In the event of an Unsolicited Acquisition Proposal, RBI
shall have the right to agree to increase the Merger Consideration (the "Revised
Terms") and if RBI does so, TRFC may continue to engage in the activities
enumerated in clauses (b)(ii)(A) or (B) above only if TRFC's Board of Directors
takes the actions specified in clauses (y) and (z) above, after consideration of
the Revised Terms. Subject to the foregoing, TRFC will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing. TRFC will
take the necessary steps to inform the appropriate individuals or entities
referred to in the first sentence hereof of the obligations undertaken in this
Section 4.1. TRFC will promptly request each person (other than RBI) that has
executed a confidentiality agreement prior to the date hereof in connection with
its consideration of a business combination with TRFC or any of its Subsidiaries
to return or destroy all confidential information previously furnished to such
person by or on behalf of TRFC or any of its Subsidiaries.
Section 4.2 Certain Policies of TRFC.
------------------------
(a) At the request of RBI, TRFC shall cause TRFC Bank to modify and
change its loan, litigation and real estate valuation policies and practices
(including loan classifications and levels of reserves) and investment and
asset/liability management policies and practices after the date on which all
Requisite Regulatory Approvals and stockholder approvals are received, and after
receipt of written confirmation from RBI that it is not aware of any fact or
circumstance that would prevent completion of the Merger, and prior to the
Effective Time so as to be consistent on a mutually satisfactory basis with
those of RBI Bank; provided, however, that TRFC shall not be required to take
such action more than 30 days prior to the Effective Date; and provided,
further, that such policies and procedures are not prohibited by GAAP or any
applicable laws and regulations.
(b) TRFC's representations, warranties and covenants contained in
this Agreement shall not be deemed to be untrue or breached in any respect for
any purpose as a consequence of any modifications or changes undertaken solely
on account of this Section 4.2. RBI agrees to hold harmless, indemnify and
defend TRFC and its Subsidiaries, and their respective directors, officers
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and employees, for any loss, claim, liability or other damage caused by or
resulting from compliance with this Section 4.2.
Section 4.3 Access and Information.
----------------------
(a) Upon reasonable notice, TRFC and RBI shall (and shall cause their
respective Subsidiaries to) afford to the other and their respective
representatives (including, without limitation, directors, officers and
employees of such party and its affiliates and counsel, accountants and other
professionals retained by such party) such reasonable access during normal
business hours throughout the period prior to the Effective Time to the books,
records (including, without limitation, tax returns and work papers of
independent auditors), properties, personnel and to such other information as
either party may reasonably request; provided, however, that no investigation
pursuant to this Section 4.3 shall affect or be deemed to modify any
representation or warranty made herein. In furtherance, and not in limitation
of the foregoing, TRFC shall make available to RBI all information necessary or
appropriate for the preparation and filing of all real property and real estate
transfer tax returns and reports required by reason of the Merger or the Bank
Merger. RBI and TRFC will not, and will cause their respective representatives
not to, use any information obtained pursuant to this Section 4.3 for any
purpose unrelated to the consummation of the transactions contemplated by this
Agreement. Subject to the requirements of applicable law, each of RBI and TRFC
will keep confidential, and will cause their respective representatives to keep
confidential, all information and documents obtained pursuant to this Section
4.3 unless such information (i) was already known to such party or an affiliate
of such party, other than pursuant to a confidentiality agreement or other
confidential relationship, (ii) becomes available to such party or an affiliate
of such party from other sources not known by such party to be bound by a
confidentiality agreement or other obligation of secrecy, (iii) is disclosed
with the prior written approval of the other party or (iv) is or becomes readily
ascertainable from published information or trade sources. In the event that
this Agreement is terminated or the transactions contemplated by this Agreement
shall otherwise fail to be consummated, each party shall promptly cause all
copies of documents or extracts thereof containing information and data as to
another party hereto (or an affiliate of any party hereto) to be returned to the
party that furnished the same.
(b) During the period of time beginning on the day application
materials for the Bank Merger are initially filed with the OTS, the FDIC and the
Banking Department and continuing to the Effective Time, including weekends and
holidays, TRFC shall cause TRFC Bank to provide RBI, RBI Bank and their
authorized agents and representatives full access to TRFC Bank's offices after
normal business hours for the purpose of installing necessary wiring and
equipment to be utilized by RBI Bank after the Effective Time; provided, that:
(i) reasonable advance notice of each entry shall be given to
TRFC Bank and TRFC Bank approves of each entry, which approval shall not be
unreasonably withheld;
(ii) TRFC Bank shall have the right to have its employees or
contractors present to inspect the work being done;
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(iii) to the extent practicable, such work shall be done in a
manner that will not interfere with TRFC Bank's business conducted at any
affected branch offices;
(iv) all such work shall be done in compliance with all
applicable laws and government regulations, and RBI Bank shall be
responsible for the procurement, at RBI Bank's expense, of all required
governmental or administrative permits and approvals;
(v) RBI Bank shall maintain appropriate insurance satisfactory
to TRFC Bank in connection with any work done by RBI Bank's agents and
representatives pursuant to this Section 4.3;
(vi) RBI Bank shall reimburse TRFC Bank for any material out-of-
pocket costs or expenses incurred by TRFC Bank in connection with this
undertaking; and
(vii) in the event this Agreement is terminated in accordance
with Article VI hereof, RBI Bank, within a reasonable time period and at
its sole cost and expense, will restore such offices to their condition
prior to the commencement of any such installation.
Section 4.4 Certain Filings, Consents and Arrangements. RBI and
------------------------------------------
TRFC shall (a) as soon as practicable (and in any event within 45 days after the
date hereof) make, or cause to be made, any filings and applications and provide
any notices required to be filed or provided in order to obtain all approvals,
consents and waivers of governmental authorities and third parties necessary or
appropriate for the consummation of the transactions contemplated hereby or by
the TRFC Option Agreement or the RBI Option Agreement; (b) cooperate with one
another in promptly (i) determining what filings and notices are required to be
made or approvals, consents or waivers are required to be obtained under any
relevant federal or state law or regulation or under any relevant agreement or
other document and (ii) making any such filings and notices, furnishing
information required in connection therewith and seeking timely to obtain any
such approvals, consents or waivers; and (c) deliver to the other copies of the
publicly available portions of all such filings, notices and applications
promptly after they are filed.
Section 4.5 Antitakeover Provisions.
-----------------------
(a) TRFC and its Subsidiaries shall take all steps required by any
relevant federal or state law or regulation or under any relevant agreement or
other document (i) to exempt or continue to exempt RBI, the Agreement, the
Merger, the Bank Merger and the TRFC Option Agreement from any provisions of an
antitakeover nature in TRFC's or its Subsidiaries' organization certificates and
bylaws and the provisions of any federal or state antitakeover laws and the TRFC
Rights Agreements, and (ii) upon the request of RBI, to assist in any challenge
to the applicability to the Agreement, the Merger, the Bank Merger or the TRFC
Option Agreement of any federal or state antitakeover laws.
(b) Except for amendments approved in writing by RBI, TRFC will not,
following the date hereof, amend or waive any of the provisions of, or take any
action to exempt any other persons from the provisions of, the TRFC Rights
Agreement in any manner that adversely affects
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RBI or RBI Bank with respect to the consummation of the Merger or, except as
provided in the next sentence, redeem the rights thereunder; provided, however,
that nothing herein shall prevent TRFC from amending or otherwise taking any
action under the TRFC Rights Agreement to delay the Distribution Date (as
permitted under Section 3(b)(ii) of the TRFC Rights Agreement). If requested by
RBI, but not otherwise, TRFC will redeem all outstanding TRFC Preferred Share
Purchase Rights at a redemption price of not more than $.01 per TRFC Preferred
Share Purchase Right effective immediately prior to the Effective Time.
Section 4.6 Additional Agreements. Subject to the terms and
---------------------
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take promptly, or cause to be taken promptly, all actions
and to do promptly, or cause to be done promptly, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including the Bank
Merger, as expeditiously as possible, including using efforts to obtain all
necessary actions or non-actions, extensions, waivers, consents and approvals
from all applicable governmental entities, effecting all necessary
registrations, applications and filings (including, without limitation, filings
under any applicable state securities laws) and obtaining any required
contractual consents and regulatory approvals.
Section 4.7 Publicity. The initial press release announcing this
---------
Agreement shall be a joint press release and thereafter TRFC and RBI shall
consult with each other in issuing any press releases or otherwise making public
statements with respect to the Merger and any other transaction contemplated
hereby and in making any filings with any governmental entity or with any
national securities exchange with respect thereto.
Section 4.8 Stockholders Meetings. TRFC and RBI each shall take
---------------------
all action necessary, in accordance with applicable law and its respective
corporate documents, to convene a meeting of its respective stockholders (each,
a "Stockholder Meeting") as promptly as practicable for the purpose of
considering and voting on approval and adoption of the transactions provided for
in this Agreement. Except to the extent legally required for the discharge by
the Board of Directors of its fiduciary duties as advised by such Board's
counsel, the Board of Directors of each of TRFC and RBI shall (a) recommend at
its Stockholder Meeting that the stockholders vote in favor of and approve the
transactions provided for in this Agreement and (b) use its best efforts to
solicit such approvals. TRFC and RBI, in consultation with the other, shall
each employ professional proxy solicitors to assist in contacting stockholders
in connection with soliciting favorable votes on the Merger. TRFC and RBI shall
coordinate and cooperate with respect to the timing of their respective
Stockholder Meetings.
Section 4.9 Proxy Statements; Comfort Letters. (i) As soon as
---------------------------------
practicable after the date hereof, RBI and TRFC shall cooperate with respect to
the preparation of a Proxy Statement-Prospectus for the purpose of taking
stockholder action on the Merger and this Agreement and file the Proxy
Statement-Prospectus with the SEC, respond to comments of the staff of the SEC
and, promptly after the Registration Statement is declared effective by the SEC,
mail the Proxy Statement-Prospectus to the respective holders of record (as of
the applicable record date) of shares of voting stock of each of TRFC and RBI.
RBI and TRFC each represents and covenants to the other that the Proxy
Statement-Prospectus, and any amendment or supplement thereto, with respect
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to the information pertaining to it or its Subsidiaries at the date of mailing
to its stockholders and the date of its Stockholder Meeting will be in
compliance with the Exchange Act and all relevant rules and regulations of the
SEC and will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(ii) RBI shall cause KPMG Peat Marwick LLP, its independent
public accounting firm, to deliver to TRFC, and TRFC shall cause KPMG Peat
Marwick LLP, its independent public accounting firm, to deliver to RBI and to
its officers and directors who sign the Registration Statement for this
transaction, a "comfort letter" or "agreed upon procedures" letter, in the form
customarily issued by such accountants at such time in transactions of this
type, dated (a) the date of the mailing of the Proxy Statement-Prospectus for
the Stockholders Meeting of TRFC and the date of mailing of the Proxy Statement
for the Stockholders meeting of RBI, respectively, and (b) a date not earlier
than five business days preceding the date of the Closing (as defined in
Section 7.1).
Section 4.10 Registration of RBI Common Stock.
--------------------------------
(a) RBI shall, as promptly as practicable following the preparation
thereof, file the Registration Statement (including any pre-effective or post-
effective amendments or supplements thereto) with the SEC under the Securities
Act in connection with the transactions contemplated by this Agreement, and RBI
and TRFC shall use all reasonable efforts to have the Registration Statement
declared effective under the Securities Act as promptly as practicable after
such filing. RBI will advise TRFC promptly after RBI receives notice of the time
when the Registration Statement has become effective or any supplement or
amendment has been filed, of the issuance of any stop order or the suspension of
the qualification of the shares of capital stock issuable pursuant to the
Registration Statement, or the initiation or threat of any proceeding for any
such purpose, or of any request by the SEC for the amendment or supplement of
the Registration Statement or for additional information. RBI will provide TRFC
with as many copies of such Registration Statement and all amendments thereto
promptly upon the filing thereof as TRFC may reasonably request.
(b) RBI shall use its best efforts to obtain, prior to the effective
date of the Registration Statement, all necessary state securities laws or "blue
sky" permits and approvals required to carry out the transactions contemplated
by this Agreement.
(c) RBI shall use its best efforts to list, prior to the Effective
Time, on the Nasdaq National Market, or on such other exchange as RBI Common
Stock shall then be trading, subject only to official notice of issuance, the
shares of RBI Common Stock to be issued by RBI in exchange for the shares of
TRFC Common Stock.
Section 4.11 Affiliate Letters. Promptly, but in any event within
-----------------
two weeks after the execution and delivery of this Agreement, TRFC shall deliver
to RBI a letter identifying all persons who, to the knowledge of TRFC, may be
deemed to be "affiliates" of TRFC under Rule 145 of the Securities Act and the
pooling-of-interests accounting rules, including, without limitation, all
directors and executive officers of TRFC. Within two weeks after delivery of
such letter, TRFC
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shall deliver executed letter agreements, each substantially in the form
attached hereto as Exhibit B, executed by each such person so identified as an
affiliate of TRFC agreeing (i) to comply with Rule 145, (ii) to refrain from
transferring shares as required by the pooling-of-interests accounting rules and
(iii) to be present in person or by proxy and vote in favor of the Merger at the
TRFC Stockholders Meeting. Within two weeks after the date hereof, RBI shall
cause its directors and executive officers to enter into letter agreements, in
the form attached hereto as Exhibit C, with RBI concerning the pooling-of-
interests accounting rules. RBI hereby agrees to publish, or file a Form 8-K,
Form 10-K or Form 10-Q containing, financial results covering at least 30 days
of post-Merger combined operations of RBI and TRFC as soon as practicable, but
RBI shall use its best efforts to publish no later than 30 days, following the
close of the first calendar month ending 30 days after the Effective Time, in
form and substance sufficient to remove the restrictions set forth in paragraph
"B" of each of Exhibit B and Exhibit C attached hereto.
Section 4.12 Notification of Certain Matters. Each party shall
-------------------------------
give prompt notice to the others of: (a) any event or notice of, or other
communication relating to, a default or event that, with notice or lapse of time
or both, would become a default, received by it or any of its Subsidiaries
subsequent to the date of this Agreement and prior to the Effective Time, under
any contract material to the financial condition, properties, businesses or
results of operations of each party and its Subsidiaries taken as a whole to
which each party or any Subsidiary is a party or is subject; and (b) any event,
condition, change or occurrence which individually or in the aggregate has, or
which, so far as reasonably can be foreseen at the time of its occurrence, is
reasonably likely to result in a Material Adverse Event. Each of TRFC and RBI
shall give prompt notice to the other party of any notice or other communication
from any third party alleging that the consent of such third party is or may be
required in connection with any of the transactions contemplated by this
Agreement.
Section 4.13 Directors and Officers.
----------------------
(a) RBI agrees to cause four members of the TRFC Board of Directors
(on the date hereof) selected by TRFC and acceptable to RBI, who are willing so
to serve ("New RBI Directors"), to be elected or appointed as directors of RBI
and RBI Bank at, or as promptly as practicable after, the Effective Time (such
appointment or election of New RBI Directors to be as evenly distributed as
possible among the classes of RBI directors). The directors of RBI Bank,
following the Bank Merger, shall be the current directors of RBI Bank plus the
four individuals described above in the immediately preceding sentence.
(b) At the Effective Time, RBI shall enter into an employment
agreement with John M. Tsimbinos, substantially in the form attached hereto as
Exhibit D, as well as an employment agreement with each of two additional
executive officers of TRFC to be determined by RBI and TRFC.
(c) RBI shall honor (i) the Employment Agreements between TRFC and,
respectively, John M. Tsimbinos, A. Gordon Nutt, Dennis E. Henchy, William R.
Kuhn, Ira H. Kramer and John J. DeRusso, each as amended and restated as of
January 23, 1997, and (ii) the Employment Agreements between TRFC Bank and,
respectively, John M. Tsimbinos, A. Gordon Nutt, Dennis E. Henchy, William R.
Kuhn, Ira H. Kramer and John J. DeRusso, each as amended
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and restated as of January 23, 1997, by paying to each such individual on the
Closing Date in the form of a lump sum the amounts that would be due under each
agreement less withholding as if each such individual had effectively terminated
employment immediately after the Effective Time with full entitlement to lump
sum cash benefits following a "change of control" as defined in such Employment
Agreements, regardless of any other requirements in the Employment Agreements
and whether or not the individual died or became disabled prior to the Effective
Time.
(d) As of the Effective Time, John M. Tsimbinos shall be named
Chairman of the Board of RBI and a member of the committee of the Board of
Directors of RBI and RBI Bank responsible for selecting or nominating directors
of RBI and RBI Bank and a Vice Chairman of RBI Bank. If within four years
following the Effective Time, RBI's President and Chief Executive Officer shall
cease to be the Chief Executive Officer of RBI or RBI Bank, by reason of death,
disability, retirement or otherwise, John M. Tsimbinos shall be named as the
interim Chief Executive Officer of RBI or RBI Bank, or both, as the case may be,
until such time as each of the Boards of Directors of RBI and RBI Bank,
respectively, appoint a new chief executive officer.
Section 4.14 Indemnification; Directors' and Officers' Insurance.
---------------------------------------------------
(a) From and after the Effective Time through the sixth anniversary
of the Effective Date, RBI agrees to indemnify and hold harmless each present
and former director and officer of TRFC and its Subsidiaries and each officer or
employee of TRFC and its Subsidiaries that is serving or has served as a
director or trustee of another entity expressly at TRFC's request or direction
(each, an "Indemnified Party"), against any costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages or
liabilities (collectively, "Costs") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of matters existing or occurring at
or prior to the Effective Time (including the transactions contemplated by this
Agreement, including the entering into of the TRFC Option Agreement), whether
asserted or claimed prior to, at or after the Effective Time, and to advance any
such Costs to each Indemnified Party as they are from time to time incurred, in
each case to the fullest extent such Indemnified Party would have been
indemnified as a director, officer or employee of TRFC and its Subsidiaries and
as then permitted under applicable law.
(b) Any Indemnified Party wishing to claim indemnification under
Section 4.14(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify RBI thereof, but the failure to so notify
shall not relieve RBI of any liability it may have hereunder to such Indemnified
Party if such failure does not materially and substantially prejudice the
indemnifying party. In the event of any such claim, action, suit, proceeding or
investigation, (i) RBI shall have the right to assume the defense thereof with
counsel reasonably acceptable to the Indemnified Party and RBI shall not be
liable to such Indemnified Party for any legal expenses of other counsel
subsequently incurred by such Indemnified Party in connection with the defense
thereof, except that if RBI does not elect to assume such defense within a
reasonable time or counsel for the Indemnified Party at any time advises that
there are issues which raise conflicts of interest between RBI and the
Indemnified Party (and counsel for RBI does not disagree), the Indemnified Party
may retain counsel satisfactory to such Indemnified Party, and RBI shall remain
responsible
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for the reasonable fees and expenses of such counsel as set forth above, to be
paid promptly as statements therefor are received; provided, however, that RBI
shall be obligated pursuant to this paragraph (b) to pay for only one firm of
counsel for all Indemnified Parties in any one jurisdiction with respect to any
given claim, action, suit, proceeding or investigation unless the use of one
counsel for such Indemnified Parties would present such counsel with a conflict
of interest; (ii) the Indemnified Party will reasonably cooperate in the defense
of any such matter; and (iii) RBI shall not be liable for any settlement
effected by an Indemnified Party without its prior written consent, which
consent may not be withheld unless such settlement is unreasonable in light of
such claims, actions, suits, proceedings or investigations against, or defenses
available to, such Indemnified Party.
(c) RBI shall pay all reasonable Costs, including attorneys' fees,
that may be incurred by any Indemnified Party in successfully enforcing the
indemnity and other obligations provided for in this Section 4.14 to the fullest
extent permitted under applicable law. The rights of each Indemnified Party
hereunder shall be in addition to any other rights such Indemnified Party may
have under applicable law.
(d) For a period of six years after the Effective Time, RBI shall
cause to be maintained in effect for the former directors and officers of TRFC
coverage under RBI's policy of directors and officers liability insurance no
less advantageous to the beneficiaries thereof than the current policies of
directors' and officers' liability insurance maintained by TRFC; provided,
however, that in no event shall RBI be obligated to expend, in order to maintain
or provide insurance coverage pursuant to this Subsection 4.14(d), any premium
per annum in excess of 175% of the amount of the annual premiums paid as of the
date hereof by TRFC for such insurance ("Maximum Agreement"); provided, further,
that if the amount of the annual premiums necessary to maintain or procure such
insurance coverage exceeds the Maximum Amount, RBI shall obtain the most
advantageous coverage of directors' and officers' insurance obtainable for an
annual premium equal to the Maximum Amount; and provided, further, that officers
and directors of TRFC may be required to make application and provide customary
representations and warranties to RBI's insurance carrier for the purpose of
obtaining such insurance.
Section 4.15 Pooling and Tax-Free Reorganization Treatment. Prior
---------------------------------------------
to the Effective Time, neither RBI nor TRFC shall intentionally take, fail to
take, or cause to be taken or not taken, or cause or permit any of their
respective Subsidiaries to take, fail to take, or cause to be taken or not
taken, any action within its control that would disqualify the Merger as a
pooling-of-interests for accounting purposes or as a reorganization within the
meaning of Section 368(a) of the Code. Subsequent to the Effective Time, RBI
shall not take any action within its control that would disqualify the Merger as
a pooling-of-interests for accounting purposes or as a reorganization under the
Code.
Section 4.16 Employees; Benefit Plans and Programs.
-------------------------------------
(a) Each person, other than an executive officer, who is employed by
TRFC or TRFC Bank immediately prior to the Effective Time (a "TRFC Employee")
and the executive officers listed on TRFC's Disclosure Letter shall, at the
Effective Time, become an employee of RBI or RBI Bank. Beginning at the
Effective Time, each of the TRFC Employees shall serve RBI or RBI
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Bank in the same capacity in which he or she served immediately prior to the
Effective Time and upon the same terms and conditions generally applicable to
other employees of RBI or RBI Bank with comparable positions, with the following
special provisions:
(i) No TRFC Employee shall be, or have or exercise the authority
of, an officer of RBI or RBI Bank unless and until elected or appointed an
officer of RBI or RBI Bank in accordance with RBI's or RBI Bank's bylaws;
(ii) At or as soon as practicable following the Effective Time,
RBI and RBI Bank shall establish and implement a program of compensation
and benefits designed to cover all similarly situated employees on a
uniform basis ("New Compensation and Benefits Program"). The New
Compensation and Benefits Program may contain any combination of new plans,
continuations of plans maintained by RBI or RBI Bank immediately prior to
the Effective Time and continuation of plans maintained by TRFC or TRFC
Bank immediately prior to the Effective Time as RBI or RBI Bank, in its
discretion, may determine. To the extent that it is not practicable to
implement any constituent part of the New Compensation and Benefits Program
at the Effective Time, RBI and RBI Bank shall continue in effect any
comparable plan maintained immediately prior to the Effective Time for the
respective employees of RBI, TRFC, RBI Bank and TRFC Bank for a transition
period. During the transition period, the persons who were employees of
TRFC or TRFC Bank immediately prior to the Effective Time who become
employees of RBI or RBI Bank at the Effective Time shall continue to
participate in the plans of TRFC and TRFC Bank that are continued for
transitional purposes, and all other employees of RBI or RBI Bank will
participate only in the comparable plans of RBI and RBI Bank that are
continued for transitional purposes.
(iii) Each constituent part of the New Compensation and Benefits
Program shall recognize, in the case of persons employed by RBI, RBI Bank,
TRFC or TRFC Bank immediately prior to the Effective Time who are also
employed by RBI or RBI Bank immediately after the Effective Time, all
service with RBI, RBI Bank, TRFC or TRFC Bank as service with RBI and RBI
Bank for all purposes, including eligibility, vesting, benefit accrual and
level of matching contributions; provided, however, that such service shall
not be recognized to the extent that such recognition would result in a
duplication of benefits.
(iv) In the case of any constituent part of the New Compensation
and Benefits Program which is a life, health or long-term disability
insurance plan: (A) such plan shall not apply any preexisting condition
limitations for conditions covered under the applicable life, health or
long-term disability insurance plans maintained by RBI, RBI Bank, TRFC and
TRFC Bank as of the Effective Time, (B) each such plan which is a health
insurance plan shall honor any deductible and out of pocket expenses
incurred under the applicable life health plans maintained by RBI, RBI
Bank, TRFC and TRFC Bank as of the Effective Time and (C) each such plan
which is a life or long-term disability insurance plan shall waive any
medical certification otherwise required in order to assure the
continuation of coverage at a level not less than that in effect
immediately prior to the implementation of
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such plan (but subject to any overall limit on the maximum amount of
coverage under such plans).
(b) (i) RBI shall assume the obligations of TRFC and TRFC Bank with
respect to any severance plans or agreements identified in TRFC's Disclosure
Letter, as they may be in effect as of the date hereof, and shall pay amounts
thereunder when due; provided, however, that in the event of the termination of
employment of officers and employees of TRFC or TRFC Bank within one year
following the Effective Time, such persons shall be provided severance benefits
equal to the greater of those provided under the TRFC Bank Severance Plan or
those provided by the RBI Bank Employee Severance Compensation Plan as in effect
as of the date of this Agreement; provided, however, that severance benefits
payable to such persons under the RBI Bank Employee Severance Compensation Plan
shall be limited to a maximum of 52 weeks of Annual Compensation, as defined in
such plan.
(ii) The amounts payable under the Performance Compensation Plan
and Performance Compensation Program of TRFC Bank shall be determined for the
period from January 1, 1998 through the Closing Date, except that (A) the
adjusted pre-tax net income and target goals shall be adjusted and pro-rated for
the portion of the year from January 1, 1998 through the Closing Date and (B)
payments thereunder, as so adjusted, shall be made as of the Closing Date. Such
amounts shall be paid in accordance with the terms of such plans and consistent
with past practice.
Section 4.17 Advisory Board. RBI shall, promptly following the
--------------
Effective Time, cause all of the members of TRFC's Board of Directors as of the
date of this Agreement, other than the New RBI Directors, who are willing to so
serve to be elected or appointed as members of RBI's advisory board ("Advisory
Board"), the function of which shall be to advise RBI with respect to deposit
and lending activities in TRFC's former market area and to maintain and develop
customer relationships. The members of the Advisory Board who are willing to so
serve shall be elected to serve a term of three years beginning on the Effective
Date. Beginning immediately after the Effective Time, each member of the
Advisory Board shall receive an annual retainer fee for such service equal to
the estimated average fees payable during that year (including annual or
retainer fees and fees for attending board or committee meetings) to a member of
RBI's Board of Directors. Such Advisory Board annual retainer fee shall be
payable in quarterly installments or in one lump sum at any time in advance at
the option of RBI. The Advisory Board shall terminate three years after the
Effective Date unless extended by RBI. In the event one or more of the New RBI
Directors ceases to be a director of RBI or RBI Bank within three years after
the Effective Time, RBI shall use good faith efforts, within the confines of its
fiduciary duties, to replace that New RBI Director with an Advisory Board
member.
Section 4.18 Savings and Loan Holding Company Structure. If
------------------------------------------
requested by RBI in order to facilitate the transactions contemplated in this
Agreement and assuming all other material conditions have been met, TRFC will
take such steps as are necessary to become a savings and loan holding company
pursuant to HOLA, assuming TRFC so qualifies.
Section 4.19 RBI Dividends. After the Effective Time, RBI shall use
-------------
its reasonable best efforts to cause to be paid to its stockholders a quarterly
cash dividend of at least
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$.09 per share of RBI Common Stock; provided, however, that the declaration and
payment of such dividend shall be subject to all applicable laws and
regulations, RBI's fiduciary duties and financial and economic conditions.
ARTICLE V
CONDITIONS TO CONSUMMATION
--------------------------
Section 5.1 Conditions to Each Party's Obligations. The respective
--------------------------------------
obligations of each party to effect the Merger, the Bank Merger and any other
transactions contemplated by this Agreement shall be subject to the satisfaction
of the following conditions:
(a) this Agreement shall have been approved by the requisite vote of
each of TRFC's and RBI's stockholders in accordance with applicable laws and
regulations and the Amendment shall have been approved by the requisite vote of
RBI's stockholders in accordance with applicable law and regulations;
(b) the Requisite Regulatory Approvals and any necessary regulatory
consents and waivers with respect to this Agreement and the transactions
contemplated hereby shall have been obtained and shall remain in full force and
effect, and all statutory waiting periods shall have expired; and all other
consents, waivers and approvals of any third parties which are necessary to
permit the consummation of the Merger and the other transactions contemplated
hereby shall have been obtained or made except for those the failure to obtain
would not have a Material Adverse Effect (i) on TRFC and its Subsidiaries taken
as a whole or (ii) on RBI and its Subsidiaries taken as a whole. None of the
approvals or waivers referred to herein shall contain any term or condition
which would have a Material Adverse Effect on (x) TRFC and its Subsidiaries
taken as a whole or (y) RBI and its Subsidiaries taken as a whole;
(c) no party hereto shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of the Merger, the Bank Merger or any other
transactions contemplated by this Agreement;
(d) no statute, rule or regulation shall have been enacted, entered,
promulgated, interpreted, applied or enforced by any governmental authority
which prohibits, restricts or makes illegal consummation of the Merger, the Bank
Merger or any other transactions contemplated by this Agreement;
(e) the Registration Statement shall have been declared effective by
the SEC and no proceedings shall be pending or threatened by the SEC to suspend
the effectiveness of the Registration Statement; all required approvals by state
securities or "blue sky" authorities with respect to the transactions
contemplated by this Agreement shall have been obtained;
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(f) RBI shall have received a letter, dated as of the Effective Date,
from its independent certified public accountants, reasonably satisfactory to
RBI and TRFC, to the effect that the Merger shall be qualified to be treated as
a pooling-of-interests for accounting purposes by RBI;
(g) RBI shall have received the letter agreement referred to in
Section 4.11 from each affiliate of TRFC; and
(h) RBI shall have caused to be listed on the Nasdaq National Market,
or on such other market on which shares of RBI Common Stock shall then be
trading, subject only to official notice of issuance, the shares of RBI Common
Stock to be issued by RBI in exchange for the shares of TRFC Common Stock.
Section 5.2 Conditions to the Obligations of RBI and RBI Bank. The
-------------------------------------------------
obligations of RBI and RBI Bank to effect the Merger, the Bank Merger and any
other transactions contemplated by this Agreement shall be further subject to
the satisfaction of the following additional conditions, any one or more of
which may be waived by RBI:
(a) each of the obligations of TRFC and TRFC Bank, respectively,
required to be performed by it at or prior to the Closing pursuant to the terms
of this Agreement shall have been duly performed and complied with in all
material respects and the representations and warranties of TRFC and TRFC Bank
contained in this Agreement shall be true and correct, subject to Sections 2.1
and 2.2, as of the date of this Agreement and as of the Effective Time as though
made at and as of the Effective Time (except as to any representation or
warranty which specifically relates to an earlier date). RBI shall have
received a certificate to the foregoing effect signed by the chief executive
officer and the chief financial or principal accounting officer of TRFC;
(b) all action required to be taken by, or on the part of, TRFC and
TRFC Bank to authorize the execution, delivery and performance of this Agreement
and the consummation by TRFC and TRFC Bank of the transactions contemplated
hereby shall have been duly and validly taken by the Board of Directors and
stockholders of TRFC or TRFC Bank, as the case may be, and RBI shall have
received certified copies of the resolutions evidencing such authorization;
(c) TRFC shall have obtained the consent or approval of each person
(other than the governmental approvals or consents referred to in Section
5.1(b)) whose consent or approval shall be required in order to permit the
succession by the surviving corporation pursuant to the Merger to any
obligation, right or interest of TRFC or its Subsidiaries under any loan or
credit agreement, note, mortgage, indenture, lease, license or other agreement
or instrument to which TRFC or its Subsidiaries is a party or is otherwise
bound, except those for which failure to obtain such consents and approvals
would not, individually or in the aggregate, have a Material Adverse Effect on
RBI (after giving effect to the consummation of the transactions contemplated
hereby) or upon the consummation of the transactions contemplated hereby.
(d) Neither a Distribution Date nor a Shares Acquisition Date, as
such terms are defined in the TRFC Rights Agreement, shall have occurred, and
the TRFC Preferred Share Purchase Rights shall not have become nonredeemable and
shall not become nonredeemable upon
A-49
<PAGE>
consummation of the Merger, and the TRFC Preferred Share Purchase Rights shall
not become exercisable for capital stock of RBI upon consummation of the Merger.
(e) RBI shall have received certificates (such certificates to be
dated as of a day as close as practicable to the Closing Date) from appropriate
authorities as to the corporate existence and good standing of TRFC and its
Subsidiaries;
(f) RBI shall have received an opinion of Muldoon, Murphy & Faucette,
counsel to RBI, dated as of the Effective Date, in form and substance customary
in transactions of the type contemplated hereby, and reasonably satisfactory to
RBI, substantially to the effect that on the basis of the facts, representations
and assumptions set forth in such opinion which are consistent with the state of
facts existing at the Effective Time, the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section 368(a) of
the Code and that accordingly:
(i) No gain or loss will be recognized by RBI, RBI Bank, TRFC or
TRFC Bank as a result of the Merger;
(ii) Except to the extent of any cash received in lieu of a
fractional share interest in RBI Common Stock, no gain or loss will be
recognized by the stockholders of TRFC who exchange their TRFC Common Stock
for RBI Common Stock pursuant to the Merger;
(iii) The tax basis of RBI Common Stock received by stockholders
who exchange their TRFC Common Stock for RBI Common Stock in the Merger
will be the same as the tax basis of TRFC Common Stock surrendered pursuant
to the Merger, reduced by any amount allocable to a fractional share
interest for which cash is received and increased by any gain recognized on
the exchange; and
(iv) The holding period of RBI Common Stock received by each
stockholder in the Merger will include the holding period of TRFC Common
Stock exchanged therefor, provided that such stockholder held such TRFC
Common Stock as a capital asset on the Effective Date.
Such opinion may be based on, in addition to the review of such
matters of fact and law as Muldoon, Murphy & Faucette considers appropriate, (x)
representations made at the request of Muldoon, Murphy & Faucette by RBI, RBI
Bank, TRFC, TRFC Bank, stockholders of RBI or TRFC, or any combination of such
persons and (y) certificates provided at the request of Muldoon, Murphy &
Faucette by officers of RBI, RBI Bank, TRFC, TRFC Bank and other appropriate
persons.
A-50
<PAGE>
Section 5.3 Conditions to the Obligations of TRFC and TRFC Bank.
---------------------------------------------------
The obligations of TRFC and TRFC Bank to effect the Merger, the Bank Merger and
any other transactions contemplated by this Agreement shall be further subject
to the satisfaction of the following additional conditions, any one or more of
which may be waived by TRFC:
(a) each of the obligations of RBI and RBI Bank, respectively,
required to be performed by it at or prior to the Closing pursuant to the terms
of this Agreement shall have been duly performed and complied with in all
material respects and the representations and warranties of RBI and RBI Bank
contained in this Agreement shall be true and correct, subject to Sections 2.1
and 2.2, as of the date of this Agreement and as of the Effective Time as though
made at and as of the Effective Time (except as to any representation or
warranty which specifically relates to an earlier date). TRFC shall have
received a certificate to the foregoing effect signed by the chief executive
officer and the chief financial or principal accounting officer of RBI;
(b) all action required to be taken by, or on the part of, RBI and
RBI Bank to authorize the execution, delivery and performance of this Agreement
and the consummation by RBI and RBI Bank of the transactions contemplated hereby
shall have been duly and validly taken by the Board of Directors and
stockholders of RBI or RBI Bank, as the case may be, and TRFC shall have
received certified copies of the resolutions evidencing such authorization;
(c) RBI shall have obtained the consent or approval of each person
(other than the governmental approvals or consents referred to in Section
5.1(b)) whose consent or approval shall be required in connection with the
transactions contemplated hereby under any loan or credit agreement, note,
mortgage, indenture, lease, license or other agreement or instrument to which
RBI or its Subsidiaries is a party or is otherwise bound, except those for which
failure to obtain such consents and approvals would not, individually or in the
aggregate, have a Material Adverse Effect on RBI (after giving effect to the
transactions contemplated hereby) or upon the consummation of the transactions
contemplated hereby.
(d) TRFC shall have received certificates (such certificates to be
dated as of a day as close as practicable to the Closing Date) from appropriate
authorities as to the corporate existence and good standing of RBI and its
Subsidiaries;
(e) TRFC shall have received an opinion of Thacher Proffitt & Wood,
counsel to TRFC, dated as of the Effective Date, in form and substance customary
in transactions of the type contemplated hereby, and reasonably satisfactory to
TRFC, substantially to the effect that on the basis of the facts,
representations and assumptions set forth in such opinion which are consistent
with the state of facts existing at the Effective Time, the Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code and that accordingly:
(i) No gain or loss will be recognized by RBI, RBI Bank, TRFC or
TRFC Bank as a result of the Merger;
(ii) Except to the extent of any cash received in lieu of a
fractional share interest in RBI Common Stock, no gain or loss will be
recognized by the stockholders of
A-51
<PAGE>
TRFC who exchange their TRFC Common Stock for RBI Common Stock pursuant to
the Merger;
(iii) The tax basis of RBI Common Stock received by stockholders
who exchange their TRFC Common Stock for RBI Common Stock in the Merger
will be the same as the tax basis of TRFC Common Stock surrendered pursuant
to the Merger, reduced by any amount allocable to a fractional share
interest for which cash is received and increased by any gain recognized on
the exchange; and
(iv) The holding period of RBI Common Stock received by each
stockholder in the Merger will include the holding period of TRFC Common
Stock exchanged therefor, provided that such stockholder held such TRFC
Common Stock as a capital asset on the Effective Date.
Such opinion may be based on, in addition to the review of such
matters of fact and law as Thacher Proffitt & Wood considers appropriate, (x)
representations made at the request of Thacher Proffitt & Wood by RBI, RBI Bank,
TRFC, TRFC Bank, stockholders of RBI or TRFC, or any combination of such persons
and (y) certificates provided at the request of Thacher Proffitt & Wood by
officers of RBI, RBI Bank, TRFC and other appropriate persons.
ARTICLE VI
TERMINATION
-----------
Section 6.1 Termination. This Agreement may be terminated, and
-----------
the Merger abandoned, at or prior to the Effective Date, either before or after
its approval by the stockholders of TRFC and RBI:
(a) by the mutual consent of RBI and TRFC, if the Board of Directors
of each so determines by vote of a majority of the members of its entire Board;
(b) by RBI or TRFC, if its Board of Directors so determines by vote
of a majority of the members of its entire Board, in the event of (i) the
failure of the stockholders of TRFC or RBI to approve the Agreement at its
Stockholder Meeting called to consider such approval; provided, however, that
TRFC or RBI, as the case may be, shall only be entitled to terminate the
Agreement pursuant to this clause (i) if it has complied in all material
respects with its obligations under Sections 4.8 and 4.9, or (ii) a material
breach by the other party hereto of any representation, warranty, covenant or
agreement contained herein which causes the conditions set forth in Section
5.2(a) (in the case of termination by RBI) and Section 5.3(a) (in the case of
the termination by TRFC) not to be satisfied and such breach is not cured within
25 business days after written notice of such breach is given to the party
committing such breach by the other party or which breach is not capable of
being cured by the date set forth in Section 6.1(d) or any extension thereof;
A-52
<PAGE>
(c) by RBI or TRFC, by written notice to the other party, if either
(i) any approval, consent or waiver of a governmental agency required to permit
consummation of the transactions contemplated hereby shall have been denied or
(ii) any governmental authority of competent jurisdiction shall have issued a
final, unappealable order enjoining or otherwise prohibiting consummation of the
transactions contemplated by this Agreement;
(d) by RBI or TRFC, if its Board of Directors so determines by vote
of a majority of the members of its entire Board, in the event that the Merger
is not consummated by January 31, 1999 ("Initial Termination Date"); provided,
that if, as of such date, all necessary regulatory or governmental approvals,
consents or waivers required to consummate the transactions contemplated hereby
shall not have been obtained but all other conditions to the consummation of the
Merger (other than the delivery of executed documents at the Closing) shall be
fulfilled, the Initial Termination Date shall be extended to March 31, 1999,
unless the failure to so consummate by such time is due to the breach of any
representation, warranty or covenant contained in this Agreement by the party
seeking to terminate; or
(e) by TRFC, if its Board of Directors so determines by a majority
vote of the members of its entire Board, at any time during the five-day period
commencing on the Valuation Date, such termination to be effective on the 30/th/
day following such Valuation Date ("Effective Termination Date"), if the RBI
Market Value on the Valuation Date is less than $20.72 or if both of the
following conditions are satisfied:
(i) The RBI Market Value on the Valuation Date is less than
$22.10; and
(ii) (A) the number obtained by dividing the RBI Market Value
on the Valuation Date by the Initial RBI Market Value ("RBI Ratio") shall
be less than (B) the number obtained by dividing the Final Index Price by
the Initial Index Price and subtracting 0.15 from the quotient in this
clause (ii)(B) ("Index Ratio");
subject, however, to the following three sentences. If TRFC elects to exercise
its termination right pursuant to this Section 6.1(e), it shall give prompt
written notice thereof to RBI; provided, that such notice of election to
terminate may be withdrawn at any time prior to the Effective Termination Date.
During the five-day period commencing with its receipt of such notice, RBI shall
have the option to increase the consideration to be received by the holders of
RBI Common Stock hereunder by adjusting the Exchange Ratio to equal the lesser
of (x) a number equal to a fraction, the numerator of which is 2.05 multiplied
by the Initial RBI Market Value and the denominator of which is the RBI Market
Value, and (y) a number equal to a fraction, the numerator of which is the Index
Ratio multiplied by 2.05 and the denominator of which is the RBI Ratio. If RBI
so elects, it shall give, within such five-day period, written notice to TRFC of
such election and the revised Exchange Ratio, whereupon no termination shall be
deemed to have occurred pursuant to this Section 6.1(e) and this Agreement shall
remain in full force and effect in accordance with its terms (except as the
Exchange Ratio shall have been so modified).
For purposes of this Section 6.1(e), the following terms shall have
the meanings indicated below:
A-53
<PAGE>
"Acquisition Transaction" shall have the meaning set forth in
Section 3.4(e).
"Final Index Price" means the sum of the Final Prices for each company
comprising the Index Group multiplied by the weighting set forth opposite such
company's name in the definition of Index Group below.
"Final Price," with respect to any company belonging to the Index
Group, means the average of the daily closing sales prices of a share of common
stock of such company (and if there is no closing sales price on any such day,
then the mean between the closing bid and the closing asked prices on that day),
as reported on the consolidated transaction reporting system for the market or
exchange on which such common stock is principally traded, for the 30
consecutive trading days immediately preceding the Valuation Date.
"Index Group" means the 25 financial institution holding companies
listed below, the common stock of all of which shall be publicly traded and as
to which there shall not have been an Acquisition Transaction involving such
company publicly announced at any time during the period beginning on the date
of this Agreement and ending on the Valuation Date. In the event that the
common stock of any such company ceases to be publicly traded or an Acquisition
Proposal involving any such company is announced at any time during the period
beginning on the date of this Agreement and ending on the Valuation Date, such
company will be removed from the Index Group, and the weights attributed to the
remaining companies will be adjusted proportionately for purposes of determining
the Final Index Price and the Initial Index Price. The 25 financial institution
holding companies and the weights attributed to them are as follows:
<TABLE>
<CAPTION>
Holding Company Weighting
---------------------------------- ----------
<S> <C>
Anchor Bancorp Wisconsin 1.24%
ALBANK Financial Corporation 2.19%
Astoria Financial Corporation 4.76%
Bank United Corp. 5.17%
Bay View Capital Corp. 2.10%
Commonwealth Bancorp, Inc. 1.26%
Charter One Financial, Inc. 14.81%
Commercial Federal Corp. 4.43%
Dime Bancorp, Inc. 10.67%
Dime Community Bancorp, Inc. 1.14%
GreenPoint Financial Corp. 11.10%
Haven Bancorp, Inc. 0.74%
</TABLE>
A-54
<PAGE>
<TABLE>
<CAPTION>
Holding Company Weighting
---------------------------------- ----------
<S> <C>
Independence Community Bank Corp 4.35%
InterWest Bancorp Inc. 1.23%
JSB Financial Inc. 1.86%
MAF Bancorp 1.83%
Peoples Heritage Financial 4.22%
Queens County Bancorp, Inc. 2.14%
Reliance Bancorp, Inc. 1.19%
Richmond County Financial Corp. 1.60%
Sovereign Bancorp, Inc. 8.01%
St. Paul Bancorp 2.76%
Staten Island Bancorp, Inc. 3.26%
Washington Federal Inc. 4.99%
Webster Financial Corporation 2.95%
</TABLE>
"Initial Index Price" means the sum of the per share closing sales
price of the common stock of each company comprising the Index Group multiplied
by the applicable weighting, as such prices are reported on the consolidated
transaction reporting system for the market or exchange on which such common
stock is principally traded on the trading day immediately preceding the public
announcement of this Agreement.
"Initial RBI Market Value" means the closing sales price of a share of
RBI Common Stock, as reported on the Nasdaq National Market, on the trading day
immediately preceding the public announcement of this Agreement, adjusted as
indicated in the last sentence of this Section 6.1(e).
"RBI Market Value" shall have the meaning set forth in Section 1.2(b)
hereof.
"Valuation Date" shall have the meaning set forth in Section 1.2(b)
hereof.
If RBI or any company belonging to the Index Group declares or effects
a stock dividend, reclassification, recapitalization, split-up, combination,
exchange of shares or similar transaction between the date of this Agreement and
the Valuation Date, the prices for the common stock of such company shall be
appropriately adjusted for the purposes of applying this Section 6.1(e).
A-55
<PAGE>
Section 6.2 Effect of Termination. In the event of the
---------------------
termination of this Agreement by either RBI or TRFC, as provided above, this
Agreement shall thereafter become void and there shall be no liability on the
part of any party hereto or their respective officers or directors, except that
(a) any such termination shall be without prejudice to the rights of any party
hereto arising out of the breach by any other party of any covenant,
representation or obligation contained in this Agreement and (b) the obligations
of the parties under Section 4.3(a) and Section 8.6 shall survive.
ARTICLE VII
CLOSING, EFFECTIVE DATE AND EFFECTIVE TIME
------------------------------------------
Section 7.1 Effective Date and Effective Time. The closing of the
---------------------------------
transactions contemplated hereby ("Closing") shall take place at the offices of
Thacher Proffitt & Wood, Two World Trade Center, New York, New York 10048,
unless another place is agreed to by RBI and TRFC, on a date ("Closing Date")
that is no later than five business days following the date on which the
expiration of the last applicable waiting period in connection with notices to
and approvals of governmental authorities shall occur and all conditions to the
consummation of this Agreement are satisfied or waived, or on such other date as
may be agreed to by the parties. Prior to the Closing Date, RBI and TRFC shall
execute a Certificate of Merger in accordance with all appropriate legal
requirements, which shall be filed as required by law on the Closing Date, and
the Merger provided for therein shall become effective upon such filing or on
such date as may be specified in such Certificate of Merger. The date of such
filing or such later effective date as specified in the Certificate of Merger is
herein referred to as the "Effective Date." The "Effective Time" of the Merger
shall be as set forth in the Certificate of Merger.
Section 7.2 Deliveries at the Closing. Subject to the provisions
-------------------------
of Articles V and VI, on the Closing Date there shall be delivered to RBI and
TRFC the documents and instruments required to be delivered under Article V.
ARTICLE VII
CERTAIN OTHER MATTERS
---------------------
Section 8.1 Certain Definitions; Interpretation. As used in this
-----------------------------------
Agreement, the following terms shall have the meanings indicated:
"material" means material to RBI or TRFC (as the case may be) and its
respective Subsidiaries, taken as a whole.
"person" includes an individual, corporation, limited liability
company, partnership, association, trust or unincorporated organization.
A-56
<PAGE>
When a reference is made in this Agreement to Sections, Exhibits or
Schedules, such reference shall be to a Section of, Exhibit or Schedule to, this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for ease of reference only and shall not affect
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation." Any singular term in this Agreement
shall be deemed to include the plural, and any plural term the singular. Any
reference to gender in this Agreement shall be deemed to include any other
gender.
Section 8.2 Survival. Only those agreements and covenants of the
--------
parties that are by their terms applicable in whole or in part after the
Effective Time, including Sections 4.3(a), 4.13, 4.14, 4.16, 4.17, 4.19 and 8.6
of this Agreement, shall survive the Effective Time. All other representations,
warranties, agreements and covenants shall be deemed to be conditions of the
Agreement and shall not survive the Effective Time. If the Agreement shall be
terminated, the agreements of the parties in the last three sentences of Section
4.3(a) and Section 8.6 shall survive such termination.
Section 8.3 Waiver; Amendment. Prior to the Effective Time, any
-----------------
provision of this Agreement may be: (i) waived in writing by the party
benefitted by the provision or (ii) amended or modified at any time (including
the structure of the transaction) by an agreement in writing between the parties
hereto except that, after the vote by the stockholders of TRFC or RBI, no
amendment or modification may be made that would reduce the Merger Consideration
or contravene any provision of the Delaware General Corporation Law or the
federal banking laws, rules and regulations.
Section 8.4 Counterparts. This Agreement may be executed in
------------
counterparts each of which shall be deemed to constitute an original, but all of
which together shall constitute one and the same instrument.
Section 8.5 Governing Law. This Agreement shall be governed by,
-------------
and interpreted in accordance with, the laws of the State of New York, without
regard to conflicts of laws principles.
Section 8.6 Expenses. Each party hereto will bear all expenses
--------
incurred by it in connection with this Agreement and the transactions
contemplated hereby.
Section 8.7 Notices. All notices, requests, acknowledgments and
-------
other communications hereunder to a party shall be in writing and shall be
deemed to have been duly given when delivered by hand, overnight courier or
facsimile transmission (confirmed in writing) to such party at its address or
facsimile number set forth below or such other address or facsimile transmission
as such party may specify by notice to the other party hereto.
A-57
<PAGE>
If to TRFC, to:
T R Financial Corp.
1122 Franklin Avenue
Garden City, New York 11530
Facsimile: (516) 742-8941
Attention: John M. Tsimbinos
Chairman of the Board and Chief Executive Officer
With copies to:
T R Financial Corp.
1122 Franklin Avenue
Garden City, New York 11530
Facsimile: (516) 742-5329
Attention: Ira H. Kramer
Senior Vice President and Corporate Secretary
and
Douglas J. McClintock, Esq.
Thacher Proffitt & Wood, 39th Floor
Two World Trade Center
New York, New York 10048
Facsimile: (212) 432-2898
If to RBI, to:
Roslyn Bancorp, Inc.
1400 Old Northern Boulevard
Roslyn, New York 11576
Facsimile: (516) 621-9351
Attention: Joseph L. Mancino
Chairman of the Board, President and
Chief Executive Officer
A-58
<PAGE>
With copies to:
Roslyn Bancorp, Inc.
1400 Old Northern Boulevard
Roslyn, New York 11576
Facsimile: (516) 625-3274
Attention: John R. Bransfield, Jr.
Vice President
and
Douglas P. Faucette, Esq.
Muldoon, Murphy & Faucette
5101 Wisconsin Avenue, N.W.
Washington, D.C. 20016
Facsimile: (202) 966-9409
Section 8.8 Entire Agreement; etc. This Agreement, together with
---------------------
the Plan of Bank Merger, the TRFC Option Agreement, the RBI Option Agreement and
the Disclosure Letters, represents the entire understanding of the parties
hereto with reference to the transactions contemplated hereby and supersedes any
and all other oral or written agreements heretofore made. All terms and
provisions of this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
Except for Section 4.13 and 4.14, which confer rights on the parties described
therein, nothing in this Agreement is intended to confer upon any other person
any rights or remedies of any nature whatsoever under or by reason of this
Agreement.
Section 8.9 Assignment. This Agreement may not be assigned by
----------
either party hereto without the written consent of the other party.
A-59
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the 25th day of May, 1998.
ROSLYN BANCORP, INC.
By: /s/ Joseph L. Mancino
---------------------------------------------
Joseph L. Mancino
Chairman of the Board, President and
Chief Executive Officer
T R FINANCIAL CORP.
By: /s/ John M. Tsimbinos
---------------------------------------------
John M. Tsimbinos
Chairman of the Board and
Chief Executive Officer
A-60
<PAGE>
ANNEX B
T R FINANCIAL CORP.
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of May 25, 1998 (the "Agreement"), by
and between T R Financial Corp., a Delaware corporation ("Issuer"), and Roslyn
Bancorp, Inc., a Delaware corporation ("Grantee").
RECITALS
A. The Agreement and Plan of Merger. Grantee and Issuer have
--------------------------------
entered into an Agreement and Plan of Merger, dated as of May 25, 1998 (the
"Merger Agreement"), providing for, among other things, the merger of Issuer
with and into Grantee, with Grantee being the surviving corporation.
B. Condition to Agreement and Plan of Merger. As a condition and an
-----------------------------------------
inducement to Grantee's execution and delivery of the Merger Agreement, Grantee
has required that Issuer agree, and Issuer has agreed, to grant Grantee the
Option (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, and intending to be legally bound hereby, Issuer and
Grantee agree as follows:
1. Defined Terms. Capitalized terms which are used but not defined
-------------
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. Grant of Option. Subject to the terms and conditions set forth
---------------
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 3,488,068 shares of common stock, par value $.01 per share
("Issuer Common Stock"), of Issuer (as adjusted as set forth herein, the "Option
Shares," which shall include the Option Shares before and after any transfer of
such Option Shares, but in no event shall the number of Option Shares for which
this Option is exercisable exceed 19.9% of the issued and outstanding shares of
Issuer Common Stock), at a purchase price per Option Share (as adjusted as set
forth herein, the "Purchase Price") equal to $38.625. Each Option Share issued
upon exercise of the Option shall be accompanied by the related preferred share
purchase right ("Right") issued pursuant to the Shareholder Rights Agreement,
dated July 19, 1994, as amended (the "Rights Agreement") between Issuer and
Chemical Bank, as Rights Agent.
3. Exercise of Option.
------------------
(a) Provided that (i) Grantee or Holder (as hereinafter defined), as
applicable, shall not be in material breach of the agreements or covenants
contained in this Agreement or the Merger Agreement, and (ii) no preliminary or
permanent injunction or other order against the delivery of shares covered by
the Option issued by any court of competent jurisdiction in the United States
shall be in effect, the Holder may exercise the Option, in whole or in part, at
any
<PAGE>
time and from time to time, following the occurrence of a Purchase Event (as
hereinafter defined); provided, that, the Option shall terminate and be of no
--------
further force or effect upon the earliest to occur of (A) the Effective Time,
(B) termination of the Merger Agreement in accordance with the terms thereof
prior to the occurrence of a Purchase Event or a Preliminary Purchase Event
other than a termination thereof by Grantee pursuant to Section 6.1(b)(ii) of
the Merger Agreement (a termination of the Merger Agreement by Grantee pursuant
to Section 6.1(b)(ii) of the Merger Agreement, being referred to herein as a
"Default Termination"), (C) 18 months after a Default Termination or (D) 18
months after termination of the Merger Agreement (other than a Default
Termination) following the occurrence of a Purchase Event or a Preliminary
Purchase Event; provided, however, that any purchase of shares upon exercise of
-------- -------
the Option shall be subject to compliance with applicable law; provided further,
-------- -------
however, that if the Option cannot be exercised on any day because of an
- -------
injunction, order or similar restraint issued by a court of competent
jurisdiction, the period during which the Option may be exercised shall be
extended so that the Option shall expire no earlier than the tenth 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. The term "Holder" shall mean the holder or
holders of the Option from time to time, and which initially is Grantee. The
rights set forth in Sections 8 and 9 of this Agreement shall terminate when the
right to exercise the Option and Substitute Option terminate (other than as a
result of a complete exercise of the Option) as set forth herein.
(b) As used herein, a "Purchase Event" means any of the following
events:
(i) Without Grantee's prior written consent, Issuer shall have
authorized, recommended, publicly proposed or publicly announced an
intention to authorize, recommend or propose, or Issuer shall have entered
into an agreement with any person (other than Grantee or any subsidiary of
Grantee) to effect (A) a merger, consolidation or similar transaction
involving Issuer or any of its significant subsidiaries, (B) the
disposition, by sale, lease, exchange or otherwise, of assets or deposits
of Issuer or any of its significant subsidiaries representing in either
case 10% or more of the consolidated assets or deposits of the Issuer and
its Subsidiaries, other than in the ordinary course of business, or (C) the
issuance, sale or other disposition by Issuer of (including by way of
merger, consolidation, share exchange or any similar transaction)
securities representing 10% or more of the voting power of Issuer or any of
its significant subsidiaries (each of (A), (B) or (C), an "Acquisition
Transaction"); or
(ii) Any person (other than Grantee or any subsidiary of Grantee)
shall have acquired beneficial ownership (as such term is defined in Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) of, or the right to acquire beneficial ownership of, or any "group"
(as such term is defined in Section 13(d)(3) of the Exchange Act), other
than a group of which Grantee or any subsidiary of Grantee is a member,
shall have been formed which beneficially owns, or has the right to acquire
beneficial ownership of, 10% or more of the voting power of Issuer or any
of its significant subsidiaries.
B-2
<PAGE>
(c) As used herein, a "Preliminary Purchase Event" means any of the
following events:
(i) Any person (other than Grantee or any subsidiary of Grantee)
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 of 1933, as amended, (the "Securities Act"), with respect
to, a tender offer or exchange offer to purchase any shares of Issuer
Common Stock such that, upon consummation of such offer, such person would
own or control 10% or more of the then outstanding shares of Issuer Common
Stock (such an offer being referred to herein as a "Tender Offer" or an
"Exchange Offer," respectively); or
(ii) The stockholders of Issuer shall not have approved the
Merger Agreement by the requisite vote at the meeting of the stockholders
of the Issuer required to be called to approve the Merger Agreement (the
"Issuer Meeting"), the Issuer Meeting shall not have been held or shall
have been canceled prior to termination of the Merger Agreement or Issuer's
Board of Directors shall have withdrawn or modified in a manner adverse to
Grantee the recommendation of Issuer's Board of Directors with respect to
the Merger Agreement, in each case after it shall have been publicly
announced that any person (other than Grantee or any subsidiary of Grantee)
shall have (A) made, or disclosed an intention to make, a bona fide
proposal to engage in an Acquisition Transaction, (B) commenced a Tender
Offer or filed a registration statement under the Securities Act with
respect to an Exchange Offer or (C) filed an application (or given a
notice), whether in draft or final form, under the Bank Holding Company
Act, as amended (the "BHC Act"), the Home Owners' Loan Act of 1933, as
amended ("HOLA"), the Bank Merger Act, as amended (the"BMA") or the Change
in Bank Control Act of 1978, as amended ("CBCA"), for approval to engage in
an Acquisition Transaction; or
(iii) Any person (other than Grantee or any subsidiary of
Grantee) shall have made a bona fide proposal to Issuer or its stockholders
by public announcement, or written communication that is or becomes the
subject of public disclosure, to engage in an Acquisition Transaction; or
(iv) After a proposal is made by a third party to Issuer or its
stockholders to engage in an Acquisition Transaction, or such third party
states its intention to the Issuer to make such a proposal if the Merger
Agreement terminates, and thereafter Issuer shall have breached any
representation, warranty, covenant or agreement contained in the Merger
Agreement and such breach would entitle Grantee to terminate the Merger
Agreement under Section 6.1(b) thereof (without regard to the cure period
provided for therein unless such cure is promptly effected without
jeopardizing consummation of the Merger pursuant to the terms of the Merger
Agreement).
As used in this Agreement, the term "person" shall have the meaning
specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
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<PAGE>
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Preliminary Purchase Event or Purchase Event of which it has knowledge,
it being understood that the giving of such notice by Issuer shall not be a
condition to the right of Holder to exercise the Option.
(e) In the event Holder wishes to exercise the Option, it shall send
to Issuer a written notice (the "Option Notice," the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of Option
Shares it intends to purchase pursuant to such exercise and (ii) a place and
date not earlier than three business days nor later than 45 business days from
the Notice Date for the closing (the "Closing") of such purchase (the "Closing
Date"); provided, that the first Option Notice shall be sent to Issuer within
--------
180 days after the first Purchase Event of which Grantee has been notified. If
prior notification to or approval of any Regulatory Authority is required in
connection with any such purchase, Issuer shall cooperate with the Holder in the
filing of the required notice of application for approval and the obtaining of
such approval, and the Closing shall occur promptly following such regulatory
approvals and any mandatory waiting periods. Any exercise of the Option shall
be deemed to occur on the Notice Date relating thereto.
4. Payment and Delivery of Certificates.
------------------------------------
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of Option
Shares to be purchased on such Closing Date and (ii) present and surrender this
Agreement to the Issuer at the address of the Issuer specified in Section 13(f)
of this Agreement.
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section 4(a) of
this Agreement, (i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such Closing,
which Option Shares shall be free and clear of all liens (as defined in the
Merger Agreement) and subject to no preemptive rights, and (B) if the Option is
exercised in part only, an executed new agreement with the same terms as this
Agreement evidencing the right to purchase the balance of the shares of Issuer
Common Stock purchasable hereunder, and (ii) Holder shall deliver to Issuer a
letter agreeing that Holder shall not offer to sell or otherwise dispose of such
Option Shares in violation of applicable federal and state law or of the
provisions of this Agreement.
(c) In addition to any other legend that is required by applicable
law, certificates for the Option Shares delivered at each Closing shall be
endorsed with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND PURSUANT
TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF MAY 25, 1998. A COPY OF
SUCH AGREEMENT WILL BE PROVIDED
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<PAGE>
TO THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN
REQUEST THEREFOR.
It is understood and agreed that the portion of the above legend relating to the
Securities Act shall be removed by delivery of substitute certificate(s) without
such legend if Holder shall have delivered to Issuer a copy of a letter from the
staff of the Securities Exchange Commission (the "SEC"), or an opinion of
counsel in form and substance reasonably satisfactory to Issuer and its counsel,
to the effect that such legend is not required for purposes of the Securities
Act.
(d) Upon the giving by Holder to Issuer of an Option Notice, the
tender of the applicable purchase price in immediately available funds and the
tender of this Agreement to Issuer, Holder shall be deemed to be the holder of
record of the shares of Issuer Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Issuer Common Stock shall not then
be actually delivered to Holder. Issuer shall pay all expenses, and any and all
United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issuance and delivery of stock
certificates under this Section 4 in the name of Holder or its assignee,
transferee or designee.
(e) Issuer agrees (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Issuer Common Stock so that the Option may be exercised without additional
authorization of Issuer Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Issuer Common
Stock, (ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer, (iii) promptly to take all action as may from time to time be required
(including (A) complying with all premerger notification, reporting and waiting
period requirements and (B) in the event prior approval of or notice to any
Regulatory Authority is necessary before the Option may be exercised,
cooperating fully with Holder in preparing such applications or notices and
providing such information to such Regulatory Authority as it may require) in
order to permit Holder to exercise the Option and Issuer duly and effectively to
issue shares of the Issuer Common Stock pursuant hereto and (iv) promptly to
take all action provided herein to protect the rights of Holder against
dilution.
5. Representations and Warranties of Issuer. Issuer hereby
----------------------------------------
represents and warrants to Grantee (and Holder, if different than Grantee) as
follows:
(a) Corporate Authority. Issuer has full corporate power and
-------------------
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby; the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Issuer, and no other corporate
proceedings on the part of Issuer are necessary to authorize this Agreement or
to consummate the transactions contemplated by this Agreement. This Agreement
has been duly and validly executed and delivered by Issuer.
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<PAGE>
(b) Beneficial Ownership. To the best knowledge of Issuer, as of the
--------------------
date of this Agreement, no person or group has beneficial ownership of more than
10% of the issued and outstanding shares of Issuer Common Stock, other than the
Issuer's Employee Stock Ownership Plan.
(c) Shares Reserved for Issuance; Capital Stock. Issuer has taken
-------------------------------------------
all necessary corporate action to authorize and reserve and permit it to issue,
and at all times from the date hereof through the termination of this Agreement
in accordance with its terms, will have reserved for issuance upon the exercise
of the Option, that number of shares of Issuer Common Stock equal to the maximum
number of shares of Issuer Common Stock at any time and from time to time
purchasable upon exercise of the Option, and all such shares, upon issuance
pursuant to the Option, will be duly authorized, validly issued, fully paid and
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests (other than those created by this Agreement)
and not subject to any preemptive rights.
(d) No Violations. The execution, delivery and performance of this
-------------
Agreement does not and will not, and the consummation by Issuer of any of the
transactions contemplated hereby will not, constitute or result in (i) a breach
or violation of, or a default under, its Certificate of Incorporation or By-
Laws, or the comparable governing instruments of any of its subsidiaries, or
(ii) a breach or violation of, or a default under, any agreement, lease,
contract, note, mortgage, indenture, arrangement or other obligation of it or
any of its subsidiaries (with or without the giving of notice, the lapse of time
or both) or under any law, rule, ordinance or regulation or judgment, decree,
order, award or governmental or non-governmental permit or license to which it
or any of its subsidiaries is subject, that would, in any case, give any other
person the ability to prevent or enjoin Issuer's performance under this
Agreement in any material respect.
6. Representations and Warranties of Grantee. Grantee hereby
-----------------------------------------
represents and warrants to Issuer that Grantee has full corporate power and
authority to enter into this Agreement and, subject to obtaining the approvals
referred to in this Agreement, to consummate the transactions contemplated by
this Agreement; the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Grantee; and this Agreement has
been duly executed and delivered by Grantee.
7. Adjustment upon Changes in Issuer Capitalization, Etc.
-----------------------------------------------------
(a) In the event of any change in Issuer Common Stock by reason of a
stock dividend, stock split, split-up, recapitalization, combination, exchange
of shares, exercise of the Company Rights or similar transaction, the type and
number of shares or securities subject to the Option, and the Purchase Price
therefor, shall be adjusted appropriately, and proper provision shall be made in
the agreements governing any such transaction so that Holder shall receive, upon
exercise of the Option, the number and class of shares or other securities or
property that Holder would have received in respect of Issuer Common Stock if
the Option had been exercised immediately prior to such event, or the record
date therefor, as applicable. If any additional
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<PAGE>
shares of Issuer Common Stock are issued after the date of this Agreement (other
than pursuant to an event described in the first sentence of this Section 7(a),
upon exercise of any option to purchase Issuer Common Stock outstanding on the
date hereof or upon conversion into Issuer Common Stock of any convertible
security of Issuer outstanding on the date hereof), the number of shares of
Issuer Common Stock subject to the Option shall be adjusted so that, after such
issuance, it, together with any shares of Issuer Common Stock previously issued
pursuant hereto, equals 19.9% of the number of shares of Issuer Common Stock
then issued and outstanding, without giving effect to any shares subject to or
issued pursuant to the Option. No provision of this Section 7 shall be deemed to
affect or change, or constitute authorization for any violation of, any of the
covenants or representations in the Merger Agreement.
(b) In the event that Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
subsidiaries, and Issuer shall not be the continuing or surviving corporation of
such consolidation or merger, (ii) to permit any person, other than Grantee or
one of its subsidiaries, to merge into Issuer and Issuer shall be the continuing
or surviving corporation, but, in connection with such merger, the then
outstanding shares of Issuer Common Stock shall be changed into or exchanged for
stock or other securities of Issuer or any other person or cash or any other
property, or the outstanding shares of Issuer Common Stock immediately prior to
such merger shall, after such merger, represent less than 50% of the outstanding
shares and share equivalents of the merged company or (iii) to sell or otherwise
transfer all or substantially all of its assets or deposits to any person, other
than Grantee or one of its subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provisions so that the
Option shall, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of Holder, of either (A) the
Acquiring Corporation (as hereinafter defined), (B) any person that controls the
Acquiring Corporation or (C) in the case of a merger described in clause (ii),
Issuer (such person being referred to as "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option,
provided, that, if the terms of the Substitute Option cannot, for legal reasons,
- --------
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to Holder. Substitute Option Issuer shall also enter
into an agreement with Holder in substantially the same form as this Agreement,
which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock (as hereinafter defined) as is equal to the
Assigned Value (as hereinafter defined) multiplied by the number of shares of
Issuer Common Stock for which the Option was theretofore exercisable, divided by
the Average Price (as hereinafter defined). The exercise price of the
Substitute Option per share of Substitute Common Stock (the "Substitute Option
Price") shall then be equal to the Purchase Price multiplied by a fraction in
which the numerator is the number of shares of Issuer Common Stock for which the
Option was theretofore exercisable and the denominator is the number of shares
of the Substitute Common Stock for which the Substitute Option is exercisable.
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<PAGE>
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (A) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other
than Issuer), (B) Issuer in a merger in which Issuer is the continuing or
surviving person, or (C) the transferee of all or substantially all of
Issuer's assets (or a substantial part of the assets of its subsidiaries
taken as a whole).
(ii) "Substitute Common Stock" shall mean the shares of capital
stock (or similar equity interest) with the greatest voting power in
respect of the election of directors (or persons similarly responsible for
the direction of the business and affairs) of the Substitute Option Issuer.
(iii) "Assigned Value" shall mean the highest of (A) the price
per share of Issuer Common Stock at which a Tender Offer or an Exchange
Offer therefor has been made, (B) the price per share of Issuer Common
Stock to be paid by any third party pursuant to an agreement with Issuer,
(C) the highest closing price for shares of Issuer Common Stock within the
sixty-day period immediately preceding the consolidation, merger or sale in
question and (D) in the event of a sale of all or substantially all of
Issuer's assets or deposits, an amount equal to (x) the sum of the price
paid in such sale for such assets (and/or deposits) and the current market
value of the remaining assets of Issuer, as determined by a nationally
recognized investment banking firm selected by Holder, divided by (y) the
number of shares of Issuer Common Stock outstanding at such time. In the
event that a Tender Offer or an Exchange Offer is made for Issuer Common
Stock or an agreement is entered into for a merger or consolidation
involving consideration other than cash, the value of the securities or
other property issuable or deliverable in exchange for Issuer Common Stock
shall be determined by a nationally recognized investment banking firm
selected by Holder.
(iv) "Average Price" shall mean the average closing price of a
share of Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided, that, if Issuer is the issuer
--------
of the Substitute Option, the Average Price shall be computed with respect
to a share of common stock issued by Issuer, the person merging into Issuer
or by any company which controls such person, as Holder may elect.
(f) In no event, pursuant to any of the foregoing paragraphs, shall
the Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 19.9% of the aggregate of the shares of Substitute Common Stock
but for the limitation in the first sentence of this Section 7(f), Substitute
Option Issuer shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in the
first sentence of this Section 7(f) over (ii) the value of the Substitute Option
after giving effect to the limitation in the first sentence of this Section
7(f). This
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<PAGE>
difference in value shall be determined by a nationally recognized investment
banking firm selected by Holder.
(g) Issuer shall not enter into any transaction described in Section
7(b) of this Agreement unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including, without
limitation, any action that may be necessary so that the holders of the other
shares of common stock issued by Substitute Option Issuer are not entitled to
exercise any rights by reason of the issuance or exercise of the Substitute
Option and the shares of Substitute Common Stock are otherwise in no way
distinguishable from or have lesser economic value (other than any diminution in
value resulting from the fact that the shares Substitute Common Stock are
restricted securities, as defined in Rule 144, promulgated under the Securities
Act ("Rule 144"), or any successor provision) than other shares of common stock
issued by Substitute Option Issuer).
8. Repurchase at the Option of Holder.
----------------------------------
(a) Subject to the last sentence of Section 3(a) of this Agreement,
at the request of Holder at any time commencing upon the first occurrence of a
Repurchase Event (as defined in Section 8(d) hereof) and ending 12 months
immediately thereafter, Issuer shall repurchase from Holder (i) the Option and
(ii) all shares of Issuer Common Stock purchased by Holder pursuant hereto with
respect to which Holder then has beneficial ownership. The date on which Holder
exercises its rights under this Section 8 is referred to as the "Request Date."
Such repurchase shall be at an aggregate price (the "Section 8 Repurchase
Consideration") equal to the sum of:
(i) The aggregate Purchase Price paid by Holder for any shares of
Issuer Common Stock acquired pursuant to the Option with respect to which
Holder then has beneficial ownership;
(ii) The excess, if any, of (A) the Applicable Price (as defined
below) for each share of Issuer Common Stock over (B) the Purchase Price
(subject to adjustment pursuant to Section 7 of this Agreement), multiplied
by the number of shares of Issuer Common Stock with respect to which the
Option has not been exercised; and
(iii) The excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7 of this
Agreement) paid (or, in the case of Option Shares with respect to which the
Option has been exercised but the Closing Date has not occurred, payable)
by Holder for each share of Issuer Common Stock with respect to which the
Option has been exercised and with respect to which Holder then has
beneficial ownership, multiplied by the number of such shares.
(b) If Holder exercises its rights under this Section 8, Issuer shall,
within 10 business days after the Request Date, pay the Section 8 Repurchase
Consideration to Holder in immediately available funds, and contemporaneously
with such payment, Holder shall surrender to Issuer the Option and the
certificates evidencing the shares of Issuer Common Stock purchased
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<PAGE>
thereunder with respect to which Holder then has beneficial ownership, and
Holder shall warrant that it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all Liens. Notwithstanding
the foregoing, to the extent that prior notification to or approval of any
Regulatory Authority is required in connection with the payment of all or any
portion of the Section 8 Repurchase Consideration, Holder shall have the ongoing
option to revoke its request for repurchase pursuant to this Section 8, in whole
or in part, or to require that Issuer deliver from time to time that portion of
the Section 8 Repurchase Consideration that it is not then so prohibited from
paying and promptly file the required notice or application for approval and
expeditiously process the same (and each party shall cooperate with the other in
the filing of any such notice or application and the obtaining of any such
approval). If any Regulatory Authority disapproves of any part of Issuer's
proposed repurchase pursuant to this Section 8, Issuer shall promptly give
notice of such fact to Holder and Holder shall have the right (i) to revoke the
repurchase request or (ii) to the extent permitted by such Regulatory Authority,
determine whether the repurchase should apply to the Option and/or Option Shares
and to what extent to each, and Holder shall thereupon have the right to
exercise the Option as to the number of Option Shares for which the Option was
exercisable at the Request Date less the number of shares covered by the Option
in respect of which payment has been made pursuant to Section 8(a)(ii) of this
Agreement. Holder shall notify Issuer of its determination under the preceding
sentence within five business days of receipt of notice of disapproval of the
repurchase. Notwithstanding anything herein to the contrary, in the event that
Issuer delivers to the Holder written notice accompanied by a certification of
Issuer's independent auditor each stating that a requested repurchase of Issuer
Common Stock would result in the recapture of Issuer's bad debt reserves under
the Internal Revenue Code of 1986, as amended, Holder's repurchase request shall
be deemed to be automatically revoked.
Notwithstanding anything herein to the contrary, all of Holder's
rights under this Section 8 shall terminate on the date of termination of this
Option pursuant to Section 3(a) of this Agreement.
(c) For purposes of this Agreement, the "Applicable Price" means the
highest of (i) the highest price per share of Issuer Common Stock paid for any
such share by the person or groups described in Section 8(d)(i) hereof, (ii) the
price per share of Issuer Common Stock received by holders of Issuer Common
Stock in connection with any merger, sale or other business combination
transaction described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii) of this
Agreement, or (iii) the highest closing sales price per share of Issuer Common
Stock quoted on the New York Stock Exchange ("NYSE"), the American Stock
Exchange ("AMEX") or the National Market System of The Nasdaq Stock Market
("Nasdaq") (or if Issuer Common Stock is not quoted on the NYSE, AMEX or Nasdaq,
the highest bid price per share as quoted on the principal trading market or
securities exchange on which such shares are traded as reported by a recognized
source chosen by Holder) during the 40 business days preceding the Request Date;
provided, however, that in the event of a sale of less than all of Issuer's
- -------- -------
assets, the Applicable Price shall be the sum of the price paid in such sale for
such assets and the current market value of the remaining assets of Issuer as
determined by a nationally recognized investment banking firm selected by
Holder, divided by the number of shares of the Issuer Common Stock outstanding
at the time of such sale. If the consideration to be offered, paid or received
pursuant to either of the foregoing clauses (i) or (ii)
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<PAGE>
shall be other than in cash, the value of such consideration shall be determined
in good faith by an independent nationally recognized investment banking firm
selected by Holder and reasonably acceptable to Issuer, which determination
shall be conclusive for all purposes of this Agreement.
(d) As used herein, "Repurchase Event" shall occur if (i) any person
(other than Grantee or any subsidiary of Grantee) shall have acquired beneficial
ownership of (as such term is defined in Rule 13d-3, promulgated under the
Exchange Act), or the right to acquire beneficial ownership of, or any "group"
(as such term is defined under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of, more than
25% of the then outstanding shares of Issuer Common Stock, or (ii) any of the
transactions described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii) of this
Agreement shall be consummated.
9. Repurchase of Substitute Option.
-------------------------------
(a) Subject to the last sentence of Section 3(a) of this Agreement,
at the request of Holder at any time commencing upon the first occurrence of a
Repurchase Event (as defined in Section 8(d) hereof) and ending 12 months
immediately thereafter, Substitute Option Issuer (or any successor entity
thereof) shall repurchase from Holder (i) the Substitute Option and (ii) all
shares of Substitute Common Stock purchased by Holder pursuant hereto with
respect to which Holder then has beneficial ownership. The date on which Holder
exercises its rights under this Section 9 is referred to as the "Section 9
Request Date." Such repurchase shall be at an aggregate price (the "Section 9
Repurchase Consideration") equal to the sum of:
(i) The aggregate Purchase Price paid by Holder for any shares of
Substitute Common Stock acquired pursuant to the Substitute Option with
respect to which Holder then has beneficial ownership;
(ii) The excess, if any, of (A) the Highest Closing Price (as
defined below) for each share of Substitute Common Stock over (B) the
Purchase Price (subject to adjustment pursuant to Section 7 of this
Agreement), multiplied by the number of shares of Substitute Common Stock
with respect to which the Substitute Option has not been exercised; and
(iii) The excess, if any, of the Highest Closing Price over the
Purchase Price (subject to adjustment pursuant to Section 7 of this
Agreement) paid (or, in the case of Substitute Option Shares with respect
to which the Substitute Option has been exercised but the Closing Date has
not occurred, payable) by Holder for each share of Substitute Common Stock
with respect to which the Substitute Option has been exercised and with
respect to which Holder then has beneficial ownership, multiplied by the
number of such shares.
(b) If Holder exercises its rights under this Section 9, Substitute
Option Issuer shall, within 10 business days after the Section 9 Request Date,
pay the Section 9 Repurchase Consideration to Holder in immediately available
funds, and contemporaneously with such payment, Holder shall surrender to
Substitute Option Issuer the Substitute Option and the
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<PAGE>
certificates evidencing the shares of Substitute Common Stock purchased
thereunder with respect to which Holder then has beneficial ownership, and
Holder shall warrant that it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all Liens. Notwithstanding
the foregoing, to the extent that prior notification to or approval of any
Regulatory Authority is required in connection with the payment of all or any
portion of the Section 9 Repurchase Consideration, Holder shall have the ongoing
option to revoke its request for repurchase pursuant to this Section 9, in whole
or in part, or to require that Substitute Option Issuer deliver from time to
time that portion of the Section 9 Repurchase Consideration that it is not then
so prohibited from paying and promptly file the required notice or application
for approval and expeditiously process the same (and each party shall cooperate
with the other in the filing of any such notice or application and the obtaining
of any such approval). If any Regulatory Authority disapproves of any part of
Substitute Option Issuer's proposed repurchase pursuant to this Section 9,
Substitute Option Issuer shall promptly give notice of such fact to Holder and
Holder shall have the right (i) to revoke the repurchase request or (ii) to the
extent permitted by such Regulatory Authority, determine whether the repurchase
should apply to the Substitute Option and/or Substitute Option Shares and to
what extent to each, and Holder shall thereupon have the right to exercise the
Substitute Option as to the number of Substitute Option Shares for which the
Substitute Option was exercisable at the Section 9 Request Date less the number
of shares covered by the Substitute Option in respect of which payment has been
made pursuant to Section 9(a)(ii) of this Agreement. Holder shall notify
Substitute Option Issuer of its determination under the preceding sentence
within five business days of receipt of notice of disapproval of the repurchase.
Notwithstanding anything herein to the contrary, in the event that Substitute
Option Issuer delivers to the Holder written notice accompanied by a
certification of Substitute Option Issuer's independent auditor each stating
that a requested repurchase of Substitute Common Stock would result in the
recapture of Substitute Option Issuer's bad debt reserves under the Internal
Revenue Code of 1986, as amended, Holder's repurchase request shall be deemed to
be automatically revoked.
Notwithstanding anything herein to the contrary, all of Holder's
rights under this Section 9 shall terminate on the date of termination of this
Substitute Option pursuant to Section 3(a) of this Agreement.
(c) For purposes of this Agreement, the "Highest Closing Price" means
the highest of closing sales price for shares of Substitute Common Stock quoted
on the Nasdaq (or if the Substitute Common Stock is not quoted on the Nasdaq, on
the principal trading market on which such shares are traded as reported by a
recognized source) during the six-month period preceding the Section 9 Request
Date.
10. Registration Rights.
-------------------
(a) Demand Registration Rights. Issuer shall, subject to the
--------------------------
conditions of Section 10(c) of this Agreement, if requested by any Holder,
including Grantee and any permitted transferee ("Selling Shareholder"), as
expeditiously as possible, prepare and file and keep current a registration
statement under the Securities Act if such registration is necessary in order to
permit the sale or other disposition of any or all shares of Issuer Common Stock
or other securities that
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<PAGE>
have been acquired by or are issuable to the Selling Shareholder upon exercise
of the Option in accordance with the intended method of sale or other
disposition stated by the Selling Shareholder in such request, including without
limitation a "shelf" registration statement under Rule 415, promulgated under
the Securities Act, or any successor provision, and Issuer shall use its best
efforts to qualify such shares or other securities for sale under any applicable
state securities laws.
(b) Additional Registration Rights. If Issuer at any time after the
------------------------------
exercise of the Option proposes to register any shares of Issuer Common Stock
under the Securities Act in connection with an underwritten public offering of
such Issuer Common Stock, Issuer will promptly give written notice to the
Selling Shareholders of its intention to do so and, upon the written request of
any Selling Shareholder given within 30 days after receipt of any such notice
(which request shall specify the number of shares of Issuer Common Stock
intended to be included in such underwritten public offering by the Selling
Shareholder), Issuer will cause all such shares for which a Selling Shareholder
requests participation in such registration, to be so registered and included in
such underwritten public offering; provided, however, that Issuer may elect to
-------- -------
not cause some or all of such shares to be so registered (i) if the underwriters
in the Public Offering in good faith object for valid business reasons, or (ii)
in the case of a registration solely to implement an employee benefit agreement
or a registration filed on Form S-4 of the Securities Act or any equivalent or
successor Form. If some, but not all the shares of Issuer Common Stock, with
respect to which Issuer shall have received requests for registration pursuant
to this Section 10(b), shall be excluded from such registration, Issuer shall
make appropriate allocation of shares to be registered among the Selling
Shareholders desiring to register their shares pro rata in the proportion that
the number of shares requested to be registered by each such Selling Shareholder
bears to the total number of shares requested to be registered by all such
Selling Shareholders then desiring to have Issuer Common Stock registered for
sale.
(c) Conditions to Required Registration. Issuer shall use all
-----------------------------------
reasonable efforts to cause each registration statement referred to in Section
10(a) of this Agreement to become effective and to obtain all consents or
waivers of other parties which are required therefor and to keep such
registration statement effective, provided, however, that Issuer may delay any
-------- -------
registration of Option Shares required pursuant to Section 10(a) of this
Agreement for a period not exceeding 90 days provided Issuer shall in good faith
determine that any such registration would adversely affect an offering or
contemplated offering of other securities by Issuer, and Issuer shall not be
required to register Option Shares under the Securities Act pursuant to Section
10(a) hereof:
(i) Prior to the earliest of (A) termination of the Merger
Agreement pursuant to Article VI thereof, (B) failure to obtain the
requisite stockholder approval pursuant to Section 6.1(b) of the Merger
Agreement, and (C) a Purchase Event or a Preliminary Purchase Event;
(ii) On more than one occasion during any calendar year;
(iii) Within 90 days after the effective date of a registration
referred to in Section 10(b) of this Agreement pursuant to which the
Selling Shareholder or Selling
B-13
<PAGE>
Shareholders concerned were afforded the opportunity to register such
shares under the Securities Act and such shares were registered as
requested; and
(iv) Unless a request therefor is made to Issuer by Selling
Shareholders that hold at least 25% or more of the aggregate number of
Option Shares (including shares of Issuer Common Stock issuable upon
exercise of the Option) then outstanding.
In addition to the foregoing, Issuer shall not be required to maintain
the effectiveness of any registration statement after the expiration of nine
months from the effective date of such registration statement. Issuer shall use
all reasonable efforts to make any filings, and take all steps, under all
applicable state securities laws to the extent necessary to permit the sale or
other disposition of the Option Shares so registered in accordance with the
intended method of distribution for such shares; provided, however, that Issuer
-------- -------
shall not be required to consent to general jurisdiction or qualify to do
business in any state where it is not otherwise required to so consent to such
jurisdiction or to so qualify to do business.
(d) Expenses. Except where applicable state law prohibits such
--------
payments, Issuer will pay all expenses (including without limitation
registration fees, qualification fees, blue sky fees and expenses (including the
fees and expenses of counsel), legal expenses, including the reasonable fees and
expenses of one counsel to the holders whose Option Shares are being registered,
printing expenses and the costs of special audits or "cold comfort" letters,
expenses of underwriters, excluding discounts and commissions but including
liability insurance if Issuer so desires or the underwriters so require, and the
reasonable fees and expenses of any necessary special experts) in connection
with each registration pursuant to Section 10(a) or 10(b) of this Agreement
(including the related offerings and sales by holders of Option Shares) and all
other qualifications, notifications or exemptions pursuant to Section 10(a) or
10(b) of this Agreement.
(e) Indemnification. In connection with any registration under
---------------
Section 10(a) or 10(b) of this Agreement, Issuer hereby indemnifies the Selling
Shareholders, and each underwriter thereof, including each person, if any, who
controls such holder or underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, losses, claims, damages and liabilities
caused by any untrue, or alleged untrue, statement of a material fact contained
in any registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission, or alleged omission, to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such expenses, losses, claims, damages or
liabilities of such indemnified party are caused by any untrue statement or
alleged untrue statement that was included by Issuer in any such registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) in reliance upon and in conformity with,
information furnished in writing to Issuer by such indemnified party expressly
for use therein, and Issuer and each officer, director and controlling person of
Issuer shall be indemnified by such Selling Shareholders, or by such
underwriter, as the case may be, for all such expenses, losses, claims, damages
and liabilities caused by any untrue, or alleged untrue, statement, that was
included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance
B-14
<PAGE>
upon, and in conformity with, information furnished in writing to Issuer by such
holder or such underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this Section 10(e)
of notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 10(e), such indemnified party shall notify
the indemnifying party in writing of the commencement of such action, but the
failure so to notify the indemnifying party shall not relieve it of any
liability which it may otherwise have to any indemnified party under this
Section 10(e). In case notice of commencement of any such action shall be given
to the indemnifying party as above provided, the indemnifying party shall be
--------
entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel (other than reasonable costs of
investigation) shall be paid by the indemnified party unless (i) the
indemnifying party either agrees to pay the same, (ii) the indemnifying party
fails to assume the defense of such action with counsel satisfactory to the
indemnified party, or (iii) the indemnified party has been advised by counsel
that one or more legal defenses may be available to the indemnifying party that
may be contrary to the interest of the indemnified party, in which case the
indemnifying party shall be entitled to assume the defense of such action
notwithstanding its obligation to bear fees and expenses of such counsel. No
indemnifying party shall be liable for any settlement entered into without its
consent, which consent may not be unreasonably withheld.
If the indemnification provided for in this Section 10(e) is
unavailable to a party otherwise entitled to be indemnified in respect of any
expenses, losses, claims, damages or liabilities referred to herein, then the
indemnifying party, in lieu of indemnifying such party otherwise entitled to be
indemnified, shall contribute to the amount paid or payable by such party to be
indemnified as a result of such expenses, losses, claims, damages or liabilities
in such proportion as is appropriate to reflect the relative benefits received
by Issuer, the Selling Shareholders and the underwriters from the offering of
the securities and also the relative fault of Issuer, the Selling Shareholders
and the underwriters in connection with the statements or omissions which
resulted in such expenses, losses, claims, damages or liabilities, as well as
any other relevant equitable considerations. The amount paid or payable by a
party as a result of the expenses, losses, claims, damages and liabilities
referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim; provided, however, that in no case shall any Selling
-------- -------
Shareholder be responsible, in the aggregate, for any amount in excess of the
net offering proceeds attributable to its Option Shares included in the
offering. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. Any
obligation by any holder to indemnify shall be several and not joint with other
holders.
B-15
<PAGE>
In connection with any registration pursuant to Section 10(a) or 10(b)
of this Agreement, Issuer and each Selling Shareholder (other than Grantee)
shall enter into an agreement containing the indemnification provisions of
Section 10(e) of this Agreement.
(f) Miscellaneous Reporting. Issuer shall comply with all reporting
-----------------------
requirements and will do all such other things as may be necessary to permit the
expeditious sale at any time of any Option Shares by the Selling Shareholders
thereof in accordance with and to the extent permitted by any rule or regulation
promulgated by the SEC from time to time, including, without limitation, Rule
144. Issuer shall at its expense provide the Selling Shareholders with any
information necessary in connection with the completion and filing of any
reports or forms required to be filed by them under the Securities Act or the
Exchange Act, or required pursuant to any state securities laws or the rules of
any stock exchange.
(g) Issue Taxes. Issuer will pay all stamp taxes in connection with
-----------
the issuance and the sale of the Option Shares and in connection with the
exercise of the Option, and will save the Selling Shareholders harmless, without
limitation as to time, against any and all liabilities, with respect to all such
taxes.
11. Quotation; Listing. If Issuer Common Stock or any other
------------------
securities to be acquired in connection with the exercise of the Option are then
authorized for quotation or trading or listing on the NYSE or Nasdaq or any
securities exchange, Issuer, upon the request of Holder, will promptly file an
application, if required, to authorize for quotation or trading or listing the
shares of Issuer Common Stock or other securities to be acquired upon exercise
of the Option on the NYSE or Nasdaq or such other securities exchange and will
use its best efforts to obtain approval, if required, of such quotation or
listing as soon as practicable.
12. Division of Option. This Agreement (and the Option granted
------------------
hereby) are exchangeable, without expense, at the option of Holder, upon
presentation and surrender of this Agreement at the principal office of Issuer
for other Agreements providing for Options of different denominations entitling
the holder thereof to purchase in the aggregate the same number of shares of
Issuer Common Stock purchasable hereunder. The terms "Agreement" and "Option"
as used herein include any other Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon receipt by
Issuer of evidence reasonably satisfactory to it of the loss, theft, destruction
or mutilation of this Agreement, and (in the case of loss, theft or destruction)
of reasonably satisfactory indemnification, and upon surrender and cancellation
of this Agreement, if mutilated, Issuer will execute and deliver a new Agreement
of like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
13. Profit Limitation.
-----------------
(a) Notwithstanding any other provision of this agreement, in no
event shall Grantee's Total Profit (as hereinafter defined) exceed $50 million,
plus Grantee's documented, reasonable out-of-pocket expenses (including fees and
expenses of legal, financial and accounting
B-16
<PAGE>
advisors) incurred in connection with the transactions contemplated by the
Merger Agreement, and, if it otherwise would exceed such amount, Grantee, at its
sole election, shall either (a) deliver to Robin for cancellation Shares
previously purchased by Grantee, (b) pay cash or other consideration to Robin or
(c) undertake any combination thereof, so that Grantee's Total Profit shall not
exceed $50 million, plus Grantee's documented, reasonable out-of-pocket expenses
(including fees and expenses of legal, financial and accounting advisors)
incurred in connection with the transactions contemplated by the Merger
Agreement, after taking into account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, this
Option may not be exercised for a number of Shares as would, as of the Notice
Date, result in a Notional Total Profit (as defined below) of more than $50
million, plus Grantee's documented, reasonable out-of-pocket expenses (including
fees and expenses of legal, financial and accounting advisors) incurred in
connection with the transactions contemplated by the Merger Agreement, and, if
exercise of the Option otherwise would exceed such amount, Grantee, at its
discretion, may increase the Purchase Price for that number of Shares set forth
in the Stock Exercise Notice so that the Notional Total Profit shall not exceed
$50 million, plus Grantee's documented, reasonable out-of-pocket expenses
(including fees and expenses of legal, financial and accounting advisors)
incurred in connection with the transactions contemplated by the Merger
Agreement; provided, that nothing in this sentence shall restrict any exercise
--------
of the Option permitted hereby on any subsequent date at the Purchase Price set
forth in Section 2 hereof.
(c) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the amount of cash received by
Grantee pursuant to Section 8(a)(ii) hereof, (ii) (x) the amount received by
Grantee pursuant to the repurchase of Option Shares pursuant to Section 8 or
Section 9 hereof, less (y) Grantee's purchase price for such Option Shares, and
(iii) (z) the net cash amounts received by Grantee pursuant to the sale of
Option Shares (or any other securities into which such Option Shares are
converted or exchanged) to any unaffiliated party, less (y) Grantee's purchase
price for such Option Shares.
(d) As used herein, the term "Notional Total Profit" with respect to
any number of Option Shares as to which Grantee may propose to exercise this
Option shall be the Total Profit determined as of the date of the Stock Exercise
Notice assuming that this Option were exercised on such date for such number of
Shares and assuming that such Option Shares, together with all other Option
Shares held by Grantee and its affiliates as of such date, were sold for cash at
the closing market price for the Common Stock as of the close of business on the
preceding trading day (less customary brokerage commissions).
14. Miscellaneous.
-------------
(a) Expenses. Except to the extent expressly provided for herein,
--------
each of the parties hereto shall bear and pay 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.
B-17
<PAGE>
(b) Waiver and Amendment. Any provision of this Agreement may be
--------------------
waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(c) Entire Agreement; No Third-Party Beneficiaries; Severability.
------------------------------------------------------------
This Agreement, together with the Merger Agreement and the other documents and
instruments referred to herein and therein, between Grantee and Issuer (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (ii) is not intended to confer upon any person other
than the parties hereto (other than the indemnified parties under Section 10(e)
of this Agreement and any transferees of the Option Shares or any permitted
transferee of this Agreement pursuant to Section 14(h) of this Agreement) any
rights or remedies hereunder. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or Regulatory
Authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated. If
for any reason such court or Regulatory Authority determines that the Option
does not permit Holder to acquire, or does not require Issuer to repurchase, the
full number of shares of Issuer Common Stock as provided in Section 3 of this
Agreement (as may be adjusted herein), it is the express intention of Issuer to
allow Holder to acquire or to require Issuer to repurchase such lesser number of
shares as may be permissible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and construed in
-------------
accordance with the laws of the State of New York without regard to any
applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained herein
--------------------
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be
-------
in writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the addresses set forth in the Merger Agreement (or
at such other address for a party as shall be specified by like notice).
(g) Counterparts. This Agreement and any amendments hereto may be
------------
executed in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed, it
being understood that both parties need not sign the same counterpart.
(h) Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder or under the Option shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other party, except that Holder may assign this
Agreement to a wholly-owned subsidiary of Holder and Holder may assign
B-18
<PAGE>
its rights hereunder in whole or in part after the occurrence of a Purchase
Event. Subject to the preceding sentence, this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
(i) Further Assurances. In the event of any exercise of the Option
------------------
by the Holder, Issuer, and the Holder shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree that this
--------------------
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any failure
to perform this Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
T R FINANCIAL CORP.
By: /s/ John M. Tsimbinos
----------------------------------------------
John M. Tsimbinos
Chairman of the Board and
Chief Executive Officer
ROSLYN BANCORP, INC.
By: /s/ Joseph L. Mancino
----------------------------------------------
Joseph L. Mancino
Chairman of the Board, President
and Chief Executive Officer
B-19
<PAGE>
ANNEX C
ROSLYN BANCORP, INC.
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of May 25, 1998 (the "Agreement"), by
and between Roslyn Bancorp, Inc., a Delaware corporation ("Issuer"), and T R
Financial Corp., a Delaware corporation ("Grantee").
RECITALS
A. The Agreement and Plan of Merger. Grantee and Issuer have
--------------------------------
entered into an Agreement and Plan of Merger, dated as of May 25, 1998 (the
"Merger Agreement"), providing for, among other things, the merger of Grantee
with and into Issuer, with Issuer being the surviving corporation.
B. Condition to Agreement and Plan of Merger. As a condition and an
-----------------------------------------
inducement to Grantee's execution and delivery of the Merger Agreement, Grantee
has required that Issuer agree, and Issuer has agreed, to grant Grantee the
Option (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, and intending to be legally bound hereby, Issuer and
Grantee agree as follows:
1. Defined Terms. Capitalized terms which are used but not defined
-------------
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. Grant of Option. Subject to the terms and conditions set forth
---------------
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 8,238,591 shares of common stock, par value $.01 per share
("Issuer Common Stock"), of Issuer (as adjusted as set forth herein, the "Option
Shares," which shall include the Option Shares before and after any transfer of
such Option Shares, but in no event shall the number of Option Shares for which
this Option is exercisable exceed 19.9% of the issued and outstanding shares of
Issuer Common Stock), at a purchase price per Option Share (as adjusted as set
forth herein, the "Purchase Price") equal to $27.625.
3. Exercise of Option.
------------------
(a) Provided that (i) Grantee or Holder (as hereinafter defined), as
applicable, shall not be in material breach of the agreements or covenants
contained in this Agreement or the Merger Agreement, and (ii) no preliminary or
permanent injunction or other order against the delivery of shares covered by
the Option issued by any court of competent jurisdiction in the United States
shall be in effect, the Holder may exercise the Option, in whole or in part, at
any time and from time to time, following the occurrence of a Purchase Event (as
hereinafter defined); provided, that, the Option shall terminate and be of no
--------
further force or effect upon the earliest to occur of (A) the Effective Time,
(B) termination of the Merger Agreement in accordance with the
<PAGE>
terms thereof prior to the occurrence of a Purchase Event or a Preliminary
Purchase Event other than a termination thereof by Grantee pursuant to Section
6.1(b)(ii) of the Merger Agreement (a termination of the Merger Agreement by
Grantee pursuant to Section 6.1(b)(ii) of the Merger Agreement, being referred
to herein as a "Default Termination"), (C) 18 months after a Default Termination
or (D) 18 months after termination of the Merger Agreement (other than a Default
Termination) following the occurrence of a Purchase Event or a Preliminary
Purchase Event; provided, however, that any purchase of shares upon exercise of
-------- -------
the Option shall be subject to compliance with applicable law; provided further,
-------- -------
however, that if the Option cannot be exercised on any day because of an
- -------
injunction, order or similar restraint issued by a court of competent
jurisdiction, the period during which the Option may be exercised shall be
extended so that the Option shall expire no earlier than the tenth 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. The term "Holder" shall mean the holder or
holders of the Option from time to time, and which initially is Grantee. The
rights set forth in Sections 8 and 9 of this Agreement shall terminate when the
right to exercise the Option and Substitute Option terminate (other than as a
result of a complete exercise of the Option) as set forth herein.
(b) As used herein, a "Purchase Event" means any of the following
events:
(i) Without Grantee's prior written consent, Issuer shall have
authorized, recommended, publicly proposed or publicly announced an
intention to authorize, recommend or propose, or Issuer shall have entered
into an agreement with any person (other than Grantee or any subsidiary of
Grantee) to effect (A) a merger, consolidation or similar transaction
involving Issuer or any of its significant subsidiaries, (B) the
disposition, by sale, lease, exchange or otherwise, of assets or deposits
of Issuer or any of its significant subsidiaries representing in either
case 10% or more of the consolidated assets or deposits of Issuer and its
subsidiaries, other than in the ordinary course of business, or (C) the
issuance, sale or other disposition by Issuer of (including by way of
merger, consolidation, share exchange or any similar transaction)
securities representing 10% or more of the voting power of Issuer or any of
its significant subsidiaries (each of (A), (B) or (C), an "Acquisition
Transaction"); or
(ii) Any person (other than Grantee or any subsidiary of Grantee)
shall have acquired beneficial ownership (as such term is defined in Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) of, or the right to acquire beneficial ownership of, or any "group"
(as such term is defined in Section 13(d)(3) of the Exchange Act), other
than a group of which Grantee or any subsidiary of Grantee is a member,
shall have been formed which beneficially owns, or has the right to acquire
beneficial ownership of, 10% or more of the voting power of Issuer or any
of its significant subsidiaries.
(c) As used herein, a "Preliminary Purchase Event" means any of the
following events:
C-2
<PAGE>
(i) Any person (other than Grantee or any subsidiary of Grantee)
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 of 1933, as amended, (the "Securities Act"), with respect
to, a tender offer or exchange offer to purchase any shares of Issuer
Common Stock such that, upon consummation of such offer, such person would
own or control 10% or more of the then outstanding shares of Issuer Common
Stock (such an offer being referred to herein as a "Tender Offer" or an
"Exchange Offer," respectively); or
(ii) The stockholders of Issuer shall not have approved the
Merger Agreement by the requisite vote at the meeting of the stockholders
of the Issuer required to be called to approve the Merger Agreement (the
"Issuer Meeting"), the Issuer Meeting shall not have been held or shall
have been canceled prior to termination of the Merger Agreement or Issuer's
Board of Directors shall have withdrawn or modified in a manner adverse to
Grantee the recommendation of Issuer's Board of Directors with respect to
the Merger Agreement, in each case after it shall have been publicly
announced that any person (other than Grantee or any subsidiary of Grantee)
shall have (A) made, or disclosed an intention to make, a bona fide
proposal to engage in an Acquisition Transaction, (B) commenced a Tender
Offer or filed a registration statement under the Securities Act with
respect to an Exchange Offer or (C) filed an application (or given a
notice), whether in draft or final form, under the Bank Holding Company
Act, as amended (the "BHC Act"), the Home Owners' Loan Act of 1933, as
amended ("HOLA"), the Bank Merger Act, as amended ("BMA") or the Change in
Bank Control Act of 1978, as amended ("CBCA"), for approval to engage in an
Acquisition Transaction; or
(iii) Any person (other than Grantee or any subsidiary of
Grantee) shall have made a bona fide proposal to Issuer or its stockholders
by public announcement, or written communication that is or becomes the
subject of public disclosure, to engage in an Acquisition Transaction; or
(iv) After a proposal is made by a third party to Issuer or its
stockholders to engage in an Acquisition Transaction, or such third party
states its intention to the Issuer to make such a proposal if the Merger
Agreement terminates, and thereafter Issuer shall have breached any
representation, warranty, covenant or agreement contained in the Merger
Agreement and such breach would entitle Grantee to terminate the Merger
Agreement under Section 6.1(b) thereof (without regard to the cure period
provided for therein unless such cure is promptly effected without
jeopardizing consummation of the Merger pursuant to the terms of the Merger
Agreement).
As used in this Agreement, the term "person" shall have the meaning
specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Preliminary Purchase Event or Purchase Event of which it has knowledge,
it being understood that
C-3
<PAGE>
the giving of such notice by Issuer shall not be a condition to the right of
Holder to exercise the Option.
(e) In the event Holder wishes to exercise the Option, it shall send
to Issuer a written notice (the "Option Notice," the date of which being herein
referred to as the ("Notice Date") specifying (i) the total number of Option
Shares it intends to purchase pursuant to such exercise and (ii) a place and
date not earlier than three business days nor later than 15 business days from
the Notice Date for the closing (the "Closing") of such purchase (the "Closing
Date"); provided, that the first Option Notice shall be sent to Issuer within
--------
180 days after the first Purchase Event of which Grantee has been notified. If
prior notification to or approval of any Regulatory Authority is required in
connection with any such purchase, Issuer shall cooperate with the Holder in the
filing of the required notice of application for approval and the obtaining of
such approval, and the Closing shall occur promptly following such regulatory
approvals and any mandatory waiting periods. Any exercise of the Option shall
be deemed to occur on the Notice Date relating thereto.
4. Payment and Delivery of Certificates.
------------------------------------
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of Option
Shares to be purchased on such Closing Date and (ii) present and surrender this
Agreement to the Issuer at the address of the Issuer specified in Section 13(f)
of this Agreement.
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section 4(a) of
this Agreement, (i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such Closing,
which Option Shares shall be free and clear of all liens (as defined in the
Merger Agreement) and subject to no preemptive rights, and (B) if the Option is
exercised in part only, an executed new agreement with the same terms as this
Agreement evidencing the right to purchase the balance of the shares of Issuer
Common Stock purchasable hereunder, and (ii) Holder shall deliver to Issuer a
letter agreeing that Holder shall not offer to sell or otherwise dispose of such
Option Shares in violation of applicable federal and state law or of the
provisions of this Agreement.
(c) In addition to any other legend that is required by applicable
law, certificates for the Option Shares delivered at each Closing shall be
endorsed with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND PURSUANT
TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF MAY 25, 1998. A COPY OF
SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT
BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.
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It is understood and agreed that the portion of the above legend relating to the
Securities Act shall be removed by delivery of substitute certificate(s) without
such legend if Holder shall have delivered to Issuer a copy of a letter from the
staff of the Securities Exchange Commission (the "SEC"), or an opinion of
counsel in form and substance reasonably satisfactory to Issuer and its counsel,
to the effect that such legend is not required for purposes of the Securities
Act.
(d) Upon the giving by Holder to Issuer of an Option Notice, the
tender of the applicable purchase price in immediately available funds and the
tender of this Agreement to Issuer, Holder shall be deemed to be the holder of
record of the shares of Issuer Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Issuer Common Stock shall not then
be actually delivered to Holder. Issuer shall pay all expenses, and any and all
United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issuance and delivery of stock
certificates under this Section 4 in the name of Holder or its assignee,
transferee or designee.
(e) Issuer agrees (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Issuer Common Stock so that the Option may be exercised without additional
authorization of Issuer Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Issuer Common
Stock, (ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer, (iii) promptly to take all action as may from time to time be required
(including (A) complying with all premerger notification, reporting and waiting
period requirements and (B) in the event prior approval of or notice to any
Regulatory Authority is necessary before the Option may be exercised,
cooperating fully with Holder in preparing such applications or notices and
providing such information to such Regulatory Authority as it may require) in
order to permit Holder to exercise the Option and Issuer duly and effectively to
issue shares of the Issuer Common Stock pursuant hereto and (iv) promptly to
take all action provided herein to protect the rights of Holder against
dilution.
5. Representations and Warranties of Issuer. Issuer hereby
----------------------------------------
represents and warrants to Grantee (and Holder, if different than Grantee) as
follows:
(a) Corporate Authority. Issuer has full corporate power and
-------------------
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby; the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of Issuer, and
no other corporate proceedings on the part of Issuer are necessary to
authorize this Agreement or to consummate the transactions contemplated by
this Agreement. This Agreement has been duly and validly executed and
delivered by Issuer.
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<PAGE>
(b) Beneficial Ownership. To the best knowledge of Issuer, as of the
--------------------
date of this Agreement, no person or group has beneficial ownership of more
than 10% of the issued and outstanding shares of Issuer Common Stock.
(c) Shares Reserved for Issuance; Capital Stock. Issuer has taken all
-------------------------------------------
necessary corporate action to authorize and reserve and permit it to issue,
and at all times from the date hereof through the termination of this
Agreement in accordance with its terms, will have reserved for issuance
upon the exercise of the Option, that number of shares of Issuer Common
Stock equal to the maximum number of shares of Issuer Common Stock at any
time and from time to time purchasable upon exercise of the Option, and all
such shares, upon issuance pursuant to the Option, will be duly authorized,
validly issued, fully paid and nonassessable, and will be delivered free
and clear of all claims, liens, encumbrances and security interests (other
than those created by this Agreement) and not subject to any preemptive
rights.
(d) No Violations. The execution, delivery and performance of this
-------------
Agreement does not and will not, and the consummation by Issuer of any of
the transactions contemplated hereby will not, constitute or result in (i)
a breach or violation of, or a default under, its Certificate of
Incorporation or By-Laws, or the comparable governing instruments of any of
its subsidiaries, or (ii) a breach or violation of, or a default under, any
agreement, lease, contract, note, mortgage, indenture, arrangement or other
obligation of it or any of its subsidiaries (with or without the giving of
notice, the lapse of time or both) or under any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or non-
governmental permit or license to which it or any of its subsidiaries is
subject, that would, in any case, give any other person the ability to
prevent or enjoin Issuer's performance under this Agreement in any material
respect.
6. Representations and Warranties of Grantee. Grantee hereby
-----------------------------------------
represents and warrants to Issuer that Grantee has full corporate power and
authority to enter into this Agreement and, subject to obtaining the approvals
referred to in this Agreement, to consummate the transactions contemplated by
this Agreement; the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Grantee; and this Agreement has
been duly executed and delivered by Grantee.
7. Adjustment upon Changes in Issuer Capitalization, Etc.
-----------------------------------------------------
(a) In the event of any change in Issuer Common Stock by reason of a
stock dividend, stock split, split-up, recapitalization, combination, exchange
of shares, exercise of the Company Rights or similar transaction, the type and
number of shares or securities subject to the Option, and the Purchase Price
therefor, shall be adjusted appropriately, and proper provision shall be made in
the agreements governing any such transaction so that Holder shall receive, upon
exercise of the Option, the number and class of shares or other securities or
property that Holder would have received in respect of Issuer Common Stock if
the Option had been exercised immediately prior to such event, or the record
date therefor, as applicable. If any additional
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shares of Issuer Common Stock are issued after the date of this Agreement (other
than pursuant to an event described in the first sentence of this Section 7(a),
upon exercise of any option to purchase Issuer Common Stock outstanding on the
date hereof or upon conversion into Issuer Common Stock of any convertible
security of Issuer outstanding on the date hereof), the number of shares of
Issuer Common Stock subject to the Option shall be adjusted so that, after such
issuance, it, together with any shares of Issuer Common Stock previously issued
pursuant hereto, equals 19.9% of the number of shares of Issuer Common Stock
then issued and outstanding, without giving effect to any shares subject to or
issued pursuant to the Option. No provision of this Section 7 shall be deemed to
affect or change, or constitute authorization for any violation of, any of the
covenants or representations in the Merger Agreement.
(b) In the event that Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
subsidiaries, and Issuer shall not be the continuing or surviving corporation of
such consolidation or merger, (ii) to permit any person, other than Grantee or
one of its subsidiaries, to merge into Issuer and Issuer shall be the continuing
or surviving corporation, but, in connection with such merger, the then
outstanding shares of Issuer Common Stock shall be changed into or exchanged for
stock or other securities of Issuer or any other person or cash or any other
property, or the outstanding shares of Issuer Common Stock immediately prior to
such merger shall, after such merger, represent less than 50% of the outstanding
shares and share equivalents of the merged company or (iii) to sell or otherwise
transfer all or substantially all of its assets or deposits to any person, other
than Grantee or one of its subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provisions so that the
Option shall, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of Holder, of either (A) the
Acquiring Corporation (as hereinafter defined), (B) any person that controls the
Acquiring Corporation or (C) in the case of a merger described in clause (ii),
Issuer (such person being referred to as "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option,
provided, that, if the terms of the Substitute Option cannot, for legal reasons,
- --------
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to Holder. Substitute Option Issuer shall also enter
into an agreement with Holder in substantially the same form as this Agreement,
which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock (as hereinafter defined) as is equal to the
Assigned Value (as hereinafter defined) multiplied by the number of shares of
Issuer Common Stock for which the Option was theretofore exercisable, divided by
the Average Price (as hereinafter defined). The exercise price of the
Substitute Option per share of Substitute Common Stock (the "Substitute Option
Price") shall then be equal to the Purchase Price multiplied by a fraction in
which the numerator is the number of shares of Issuer Common Stock for which the
Option was theretofore exercisable and the denominator is the number of shares
of the Substitute Common Stock for which the Substitute Option is exercisable.
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<PAGE>
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (A) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other
than Issuer), (B) Issuer in a merger in which Issuer is the continuing or
surviving person, or (C) the transferee of all or substantially all of
Issuer's assets (or a substantial part of the assets of its subsidiaries
taken as a whole).
(ii) "Substitute Common Stock" shall mean the shares of capital
stock (or similar equity interest) with the greatest voting power in
respect of the election of directors (or persons similarly responsible for
the direction of the business and affairs) of the Substitute Option Issuer.
(iii) "Assigned Value" shall mean the highest of (A) the price
per share of Issuer Common Stock at which a Tender Offer or an Exchange
Offer therefor has been made, (B) the price per share of Issuer Common
Stock to be paid by any third party pursuant to an agreement with Issuer,
(C) the highest closing price for shares of Issuer Common Stock within the
sixty-day period immediately preceding the consolidation, merger or sale in
question and (D) in the event of a sale of all or substantially all of
Issuer's assets or deposits, an amount equal to (x) the sum of the price
paid in such sale for such assets (and/or deposits) and the current market
value of the remaining assets of Issuer, as determined by a nationally
recognized investment banking firm selected by Holder, divided by (y) the
number of shares of Issuer Common Stock outstanding at such time. In the
event that a Tender Offer or an Exchange Offer is made for Issuer Common
Stock or an agreement is entered into for a merger or consolidation
involving consideration other than cash, the value of the securities or
other property issuable or deliverable in exchange for Issuer Common Stock
shall be determined by a nationally recognized investment banking firm
selected by Holder.
(iv) "Average Price" shall mean the average closing price of a
share of Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided, that, if Issuer is the issuer
--------
of the Substitute Option, the Average Price shall be computed with respect
to a share of common stock issued by Issuer, the person merging into Issuer
or by any company which controls such person, as Holder may elect.
(f) In no event, pursuant to any of the foregoing paragraphs, shall
the Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 19.9% of the aggregate of the shares of Substitute Common Stock
but for the limitation in the first sentence of this Section 7(f), Substitute
Option Issuer shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in the
first sentence of this Section 7(f) over (ii) the value of the Substitute Option
after giving effect to the limitation in the first sentence of this Section
7(f). This
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<PAGE>
difference in value shall be determined by a nationally recognized investment
banking firm selected by Holder.
(g) Issuer shall not enter into any transaction described in Section
7(b) of this Agreement unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including, without
limitation, any action that may be necessary so that the holders of the other
shares of common stock issued by Substitute Option Issuer are not entitled to
exercise any rights by reason of the issuance or exercise of the Substitute
Option and the shares of Substitute Common Stock are otherwise in no way
distinguishable from or have lesser economic value (other than any diminution in
value resulting from the fact that the shares Substitute Common Stock are
restricted securities, as defined in Rule 144, promulgated under the Securities
Act ("Rule 144"), or any successor provision) than other shares of common stock
issued by Substitute Option Issuer).
8. Repurchase at the Option of Holder.
----------------------------------
(a) Subject to the last sentence of Section 3(a) of this Agreement, at
the request of Holder at any time commencing upon the first occurrence of a
Repurchase Event (as defined in Section 8(d) hereof) and ending 12 months
immediately thereafter, Issuer shall repurchase from Holder (i) the Option and
(ii) all shares of Issuer Common Stock purchased by Holder pursuant hereto with
respect to which Holder then has beneficial ownership. The date on which Holder
exercises its rights under this Section 8 is referred to as the "Request Date."
Such repurchase shall be at an aggregate price (the "Section 8 Repurchase
Consideration") equal to the sum of:
(i) The aggregate Purchase Price paid by Holder for any shares of
Issuer Common Stock acquired pursuant to the Option with respect to which
Holder then has beneficial ownership;
(ii) The excess, if any, of (A) the Applicable Price (as defined
below) for each share of Issuer Common Stock over (B) the Purchase Price
(subject to adjustment pursuant to Section 7 of this Agreement), multiplied
by the number of shares of Issuer Common Stock with respect to which the
Option has not been exercised; and
(iii) The excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7 of this
Agreement) paid (or, in the case of Option Shares with respect to which the
Option has been exercised but the Closing Date has not occurred, payable)
by Holder for each share of Issuer Common Stock with respect to which the
Option has been exercised and with respect to which Holder then has
beneficial ownership, multiplied by the number of such shares.
(b) If Holder exercises its rights under this Section 8, Issuer shall,
within 10 business days after the Request Date, pay the Section 8 Repurchase
Consideration to Holder in immediately available funds, and contemporaneously
with such payment, Holder shall surrender to Issuer the Option and the
certificates evidencing the shares of Issuer Common Stock purchased
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<PAGE>
thereunder with respect to which Holder then has beneficial ownership, and
Holder shall warrant that it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all Liens. Notwithstanding
the foregoing, to the extent that prior notification to or approval of any
Regulatory Authority is required in connection with the payment of all or any
portion of the Section 8 Repurchase Consideration, Holder shall have the ongoing
option to revoke its request for repurchase pursuant to this Section 8, in whole
or in part, or to require that Issuer deliver from time to time that portion of
the Section 8 Repurchase Consideration that it is not then so prohibited from
paying and promptly file the required notice or application for approval and
expeditiously process the same (and each party shall cooperate with the other in
the filing of any such notice or application and the obtaining of any such
approval). If any Regulatory Authority disapproves of any part of Issuer's
proposed repurchase pursuant to this Section 8, Issuer shall promptly give
notice of such fact to Holder and Holder shall have the right (i) to revoke the
repurchase request or (ii) to the extent permitted by such Regulatory Authority,
determine whether the repurchase should apply to the Option and/or Option Shares
and to what extent to each, and Holder shall thereupon have the right to
exercise the Option as to the number of Option Shares for which the Option was
exercisable at the Request Date less the number of shares covered by the Option
in respect of which payment has been made pursuant to Section 8(a)(ii) of this
Agreement. Holder shall notify Issuer of its determination under the preceding
sentence within five business days of receipt of notice of disapproval of the
repurchase. Notwithstanding anything herein to the contrary, in the event that
Issuer delivers to the Holder written notice accompanied by a certification of
Issuer's independent auditor each stating that a requested repurchase of Issuer
Common Stock would result in the recapture of Issuer's bad debt reserves under
the Internal Revenue Code of 1986, as amended, Holder's repurchase request shall
be deemed to be automatically revoked.
Notwithstanding anything herein to the contrary, all of Holder's
rights under this Section 8 shall terminate on the date of termination of this
Option pursuant to Section 3(a) of this Agreement.
(c) For purposes of this Agreement, the "Applicable Price" means the
highest of (i) the highest price per share of Issuer Common Stock paid for any
such share by the person or groups described in Section 8(d)(i) hereof, (ii) the
price per share of Issuer Common Stock received by holders of Issuer Common
Stock in connection with any merger, sale or other business combination
transaction described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii) of this
Agreement, or (iii) the highest closing sales price per share of Issuer Common
Stock quoted on the New York Stock Exchange ("NYSE"), the American Stock
Exchange ("AMEX") or the National Market System of The Nasdaq Stock Market
("Nasdaq") (or if Issuer Common Stock is not quoted on the NYSE, AMEX or Nasdaq,
the highest bid price per share as quoted on the principal trading market or
securities exchange on which such shares are traded as reported by a recognized
source chosen by Holder) during the 40 business days preceding the Request Date;
provided, however, that in the event of a sale of less than all of Issuer's
- -------- -------
assets, the Applicable Price shall be the sum of the price paid in such sale for
such assets and the current market value of the remaining assets of Issuer as
determined by a nationally recognized investment banking firm selected by
Holder, divided by the number of shares of the Issuer Common Stock outstanding
at the time of such sale. If the consideration to be offered, paid or received
pursuant to either of the foregoing clauses (i) or (ii)
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<PAGE>
shall be other than in cash, the value of such consideration shall be determined
in good faith by an independent nationally recognized investment banking firm
selected by Holder and reasonably acceptable to Issuer, which determination
shall be conclusive for all purposes of this Agreement.
(d) As used herein, "Repurchase Event" shall occur if (i) any person
(other than Grantee or any subsidiary of Grantee) shall have acquired beneficial
ownership of (as such term is defined in Rule 13d-3, promulgated under the
Exchange Act), or the right to acquire beneficial ownership of, or any "group"
(as such term is defined under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of, more than
25% of the then outstanding shares of Issuer Common Stock, or (ii) any of the
transactions described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii) of this
Agreement shall be consummated.
9. Repurchase of Substitute Option.
-------------------------------
(a) Subject to the last sentence of Section 3(a) of this Agreement, at
the request of Holder at any time commencing upon the first occurrence of a
Repurchase Event (as defined in Section 8(d) hereof) and ending 12 months
immediately thereafter, Substitute Option Issuer (or any successor entity
thereof) shall repurchase from Holder (i) the Substitute Option and (ii) all
shares of Substitute Common Stock purchased by Holder pursuant hereto with
respect to which Holder then has beneficial ownership. The date on which Holder
exercises its rights under this Section 9 is referred to as the "Section 9
Request Date." Such repurchase shall be at an aggregate price (the "Section 9
Repurchase Consideration") equal to the sum of:
(i) The aggregate Purchase Price paid by Holder for any shares of
Substitute Common Stock acquired pursuant to the Substitute Option with
respect to which Holder then has beneficial ownership;
(ii) The excess, if any, of (A) the Highest Closing Price (as
defined below) for each share of Substitute Common Stock over (B) the
Purchase Price (subject to adjustment pursuant to Section 7 of this
Agreement), multiplied by the number of shares of Substitute Common Stock
with respect to which the Substitute Option has not been exercised; and
(iii) The excess, if any, of the Highest Closing Price over the
Purchase Price (subject to adjustment pursuant to Section 7 of this
Agreement) paid (or, in the case of Substitute Option Shares with respect
to which the Substitute Option has been exercised but the Closing Date has
not occurred, payable) by Holder for each share of Substitute Common Stock
with respect to which the Substitute Option has been exercised and with
respect to which Holder then has beneficial ownership, multiplied by the
number of such shares.
(b) If Holder exercises its rights under this Section 9, Substitute
Option Issuer shall, within 10 business days after the Section 9 Request Date,
pay the Section 9 Repurchase Consideration to Holder in immediately available
funds, and contemporaneously with such payment, Holder shall surrender to
Substitute Option Issuer the Substitute Option and the
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<PAGE>
certificates evidencing the shares of Substitute Common Stock purchased
thereunder with respect to which Holder then has beneficial ownership, and
Holder shall warrant that it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all Liens. Notwithstanding
the foregoing, to the extent that prior notification to or approval of any
Regulatory Authority is required in connection with the payment of all or any
portion of the Section 9 Repurchase Consideration, Holder shall have the ongoing
option to revoke its request for repurchase pursuant to this Section 9, in whole
or in part, or to require that Substitute Option Issuer deliver from time to
time that portion of the Section 9 Repurchase Consideration that it is not then
so prohibited from paying and promptly file the required notice or application
for approval and expeditiously process the same (and each party shall cooperate
with the other in the filing of any such notice or application and the obtaining
of any such approval). If any Regulatory Authority disapproves of any part of
Substitute Option Issuer's proposed repurchase pursuant to this Section 9,
Substitute Option Issuer shall promptly give notice of such fact to Holder and
Holder shall have the right (i) to revoke the repurchase request or (ii) to the
extent permitted by such Regulatory Authority, determine whether the repurchase
should apply to the Substitute Option and/or Substitute Option Shares and to
what extent to each, and Holder shall thereupon have the right to exercise the
Substitute Option as to the number of Substitute Option Shares for which the
Substitute Option was exercisable at the Section 9 Request Date less the number
of shares covered by the Substitute Option in respect of which payment has been
made pursuant to Section 9(a)(ii) of this Agreement. Holder shall notify
Substitute Option Issuer of its determination under the preceding sentence
within five business days of receipt of notice of disapproval of the repurchase.
Notwithstanding anything herein to the contrary, in the event that Substitute
Option Issuer delivers to the Holder written notice accompanied by a
certification of Substitute Option Issuer's independent auditor each stating
that a requested repurchase of Substitute Common Stock would result in the
recapture of Substitute Option Issuer's bad debt reserves under the Internal
Revenue Code of 1986, as amended, Holder's repurchase request shall be deemed to
be automatically revoked.
Notwithstanding anything herein to the contrary, all of Holder's
rights under this Section 9 shall terminate on the date of termination of this
Substitute Option pursuant to Section 3(a) of this Agreement.
(c) For purposes of this Agreement, the "Highest Closing Price" means
the highest of closing sales price for shares of Substitute Common Stock quoted
on the Nasdaq (or if the Substitute Common Stock is not quoted on the Nasdaq, on
the principal trading market on which such shares are traded as reported by a
recognized source) during the six-month period preceding the Section 9 Request
Date.
10. Registration Rights.
-------------------
(a) Demand Registration Rights. Issuer shall, subject to the
--------------------------
conditions of Section 10(c) of this Agreement, if requested by any Holder,
including Grantee and any permitted transferee ("Selling Shareholder"), as
expeditiously as possible, prepare and file and keep current a registration
statement under the Securities Act if such registration is necessary in order to
permit the sale or other disposition of any or all shares of Issuer Common Stock
or other securities that
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<PAGE>
have been acquired by or are issuable to the Selling Shareholder upon exercise
of the Option in accordance with the intended method of sale or other
disposition stated by the Selling Shareholder in such request, including without
limitation a "shelf" registration statement under Rule 415, promulgated under
the Securities Act, or any successor provision, and Issuer shall use its best
efforts to qualify such shares or other securities for sale under any applicable
state securities laws.
(b) Additional Registration Rights. If Issuer at any time after the
------------------------------
exercise of the Option proposes to register any shares of Issuer Common Stock
under the Securities Act in connection with an underwritten public offering of
such Issuer Common Stock, Issuer will promptly give written notice to the
Selling Shareholders of its intention to do so and, upon the written request of
any Selling Shareholder given within 30 days after receipt of any such notice
(which request shall specify the number of shares of Issuer Common Stock
intended to be included in such underwritten public offering by the Selling
Shareholder), Issuer will cause all such shares for which a Selling Shareholder
requests participation in such registration, to be so registered and included in
such underwritten public offering; provided, however, that Issuer may elect to
-------- -------
not cause some or all of such shares to be so registered (i) if the underwriters
in the Public Offering in good faith object for valid business reasons, or (ii)
in the case of a registration solely to implement an employee benefit agreement
or a registration filed on Form S-4 of the Securities Act or any equivalent or
successor Form. If some, but not all the shares of Issuer Common Stock, with
respect to which Issuer shall have received requests for registration pursuant
to this Section 10(b), shall be excluded from such registration, Issuer shall
make appropriate allocation of shares to be registered among the Selling
Shareholders desiring to register their shares pro rata in the proportion that
the number of shares requested to be registered by each such Selling Shareholder
bears to the total number of shares requested to be registered by all such
Selling Shareholders then desiring to have Issuer Common Stock registered for
sale.
(c) Conditions to Required Registration. Issuer shall use all
-----------------------------------
reasonable efforts to cause each registration statement referred to in Section
10(a) of this Agreement to become effective and to obtain all consents or
waivers of other parties which are required therefor and to keep such
registration statement effective, provided, however, that Issuer may delay any
-------- -------
registration of Option Shares required pursuant to Section 10(a) of this
Agreement for a period not exceeding 90 days provided Issuer shall in good faith
determine that any such registration would adversely affect an offering or
contemplated offering of other securities by Issuer, and Issuer shall not be
required to register Option Shares under the Securities Act pursuant to Section
10(a) hereof:
(i) Prior to the earliest of (A) termination of the Merger
Agreement pursuant to Article VI thereof, (B) failure to obtain the
requisite stockholder approval pursuant to Section 6.1(b) of the Merger
Agreement, and (C) a Purchase Event or a Preliminary Purchase Event;
(ii) On more than one occasion during any calendar year;
(iii) Within 90 days after the effective date of a registration
referred to in Section 10(b) of this Agreement pursuant to which the
Selling Shareholder or Selling
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<PAGE>
Shareholders concerned were afforded the opportunity to register such
shares under the Securities Act and such shares were registered as
requested; and
(iv) Unless a request therefor is made to Issuer by Selling
Shareholders that hold at least 25% or more of the aggregate number of
Option Shares (including shares of Issuer Common Stock issuable upon
exercise of the Option) then outstanding.
In addition to the foregoing, Issuer shall not be required to maintain
the effectiveness of any registration statement after the expiration of nine
months from the effective date of such registration statement. Issuer shall use
all reasonable efforts to make any filings, and take all steps, under all
applicable state securities laws to the extent necessary to permit the sale or
other disposition of the Option Shares so registered in accordance with the
intended method of distribution for such shares; provided, however, that Issuer
-------- -------
shall not be required to consent to general jurisdiction or qualify to do
business in any state where it is not otherwise required to so consent to such
jurisdiction or to so qualify to do business.
(d) Expenses. Except where applicable state law prohibits such
--------
payments, Issuer will pay all expenses (including without limitation
registration fees, qualification fees, blue sky fees and expenses (including the
fees and expenses of counsel), legal expenses, including the reasonable fees and
expenses of one counsel to the holders whose Option Shares are being registered,
printing expenses and the costs of special audits or "cold comfort" letters,
expenses of underwriters, excluding discounts and commissions but including
liability insurance if Issuer so desires or the underwriters so require, and the
reasonable fees and expenses of any necessary special experts) in connection
with each registration pursuant to Section 10(a) or 10(b) of this Agreement
(including the related offerings and sales by holders of Option Shares) and all
other qualifications, notifications or exemptions pursuant to Section 10(a) or
10(b) of this Agreement.
(e) Indemnification. In connection with any registration under
---------------
Section 10(a) or 10(b) of this Agreement, Issuer hereby indemnifies the Selling
Shareholders, and each underwriter thereof, including each person, if any, who
controls such holder or underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, losses, claims, damages and liabilities
caused by any untrue, or alleged untrue, statement of a material fact contained
in any registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission, or alleged omission, to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such expenses, losses, claims, damages or
liabilities of such indemnified party are caused by any untrue statement or
alleged untrue statement that was included by Issuer in any such registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) in reliance upon and in conformity with,
information furnished in writing to Issuer by such indemnified party expressly
for use therein, and Issuer and each officer, director and controlling person of
Issuer shall be indemnified by such Selling Shareholders, or by such
underwriter, as the case may be, for all such expenses, losses, claims, damages
and liabilities caused by any untrue, or alleged untrue, statement, that was
included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance
C-14
<PAGE>
upon, and in conformity with, information furnished in writing to Issuer by such
holder or such underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this Section 10(e)
of notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 10(e), such indemnified party shall notify
the indemnifying party in writing of the commencement of such action, but the
failure so to notify the indemnifying party shall not relieve it of any
liability which it may otherwise have to any indemnified party under this
Section 10(e). In case notice of commencement of any such action shall be given
to the indemnifying party as above provided, the indemnifying party shall be
--------
entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel (other than reasonable costs of
investigation) shall be paid by the indemnified party unless (i) the
indemnifying party either agrees to pay the same, (ii) the indemnifying party
fails to assume the defense of such action with counsel satisfactory to the
indemnified party, or (iii) the indemnified party has been advised by counsel
that one or more legal defenses may be available to the indemnifying party that
may be contrary to the interest of the indemnified party, in which case the
indemnifying party shall be entitled to assume the defense of such action
notwithstanding its obligation to bear fees and expenses of such counsel. No
indemnifying party shall be liable for any settlement entered into without its
consent, which consent may not be unreasonably withheld.
If the indemnification provided for in this Section 10(e) is
unavailable to a party otherwise entitled to be indemnified in respect of any
expenses, losses, claims, damages or liabilities referred to herein, then the
indemnifying party, in lieu of indemnifying such party otherwise entitled to be
indemnified, shall contribute to the amount paid or payable by such party to be
indemnified as a result of such expenses, losses, claims, damages or liabilities
in such proportion as is appropriate to reflect the relative benefits received
by Issuer, the Selling Shareholders and the underwriters from the offering of
the securities and also the relative fault of Issuer, the Selling Shareholders
and the underwriters in connection with the statements or omissions which
resulted in such expenses, losses, claims, damages or liabilities, as well as
any other relevant equitable considerations. The amount paid or payable by a
party as a result of the expenses, losses, claims, damages and liabilities
referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim; provided, however, that in no case shall any Selling
-------- -------
Shareholder be responsible, in the aggregate, for any amount in excess of the
net offering proceeds attributable to its Option Shares included in the
offering. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. Any
obligation by any holder to indemnify shall be several and not joint with other
holders.
C-15
<PAGE>
In connection with any registration pursuant to Section 10(a) or 10(b)
of this Agreement, Issuer and each Selling Shareholder (other than Grantee)
shall enter into an agreement containing the indemnification provisions of
Section 10(e) of this Agreement.
(f) Miscellaneous Reporting. Issuer shall comply with all reporting
-----------------------
requirements and will do all such other things as may be necessary to permit the
expeditious sale at any time of any Option Shares by the Selling Shareholders
thereof in accordance with and to the extent permitted by any rule or regulation
promulgated by the SEC from time to time, including, without limitation, Rule
144. Issuer shall at its expense provide the Selling Shareholders with any
information necessary in connection with the completion and filing of any
reports or forms required to be filed by them under the Securities Act or the
Exchange Act, or required pursuant to any state securities laws or the rules of
any stock exchange.
(g) Issue Taxes. Issuer will pay all stamp taxes in connection with
-----------
the issuance and the sale of the Option Shares and in connection with the
exercise of the Option, and will save the Selling Shareholders harmless, without
limitation as to time, against any and all liabilities, with respect to all such
taxes.
11. Quotation; Listing. If Issuer Common Stock or any other
------------------
securities to be acquired in connection with the exercise of the Option are then
authorized for quotation or trading or listing on the NYSE or Nasdaq or any
securities exchange, Issuer, upon the request of Holder, will promptly file an
application, if required, to authorize for quotation or trading or listing the
shares of Issuer Common Stock or other securities to be acquired upon exercise
of the Option on the NYSE or Nasdaq or such other securities exchange and will
use its best efforts to obtain approval, if required, of such quotation or
listing as soon as practicable.
12. Division of Option. This Agreement (and the Option granted
------------------
hereby) are exchangeable, without expense, at the option of Holder, upon
presentation and surrender of this Agreement at the principal office of Issuer
for other Agreements providing for Options of different denominations entitling
the holder thereof to purchase in the aggregate the same number of shares of
Issuer Common Stock purchasable hereunder. The terms "Agreement" and "Option"
as used herein include any other Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon receipt by
Issuer of evidence reasonably satisfactory to it of the loss, theft, destruction
or mutilation of this Agreement, and (in the case of loss, theft or destruction)
of reasonably satisfactory indemnification, and upon surrender and cancellation
of this Agreement, if mutilated, Issuer will execute and deliver a new Agreement
of like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
13. Profit Limitation.
-----------------
(a) Notwithstanding any other provision of this agreement, in no event
shall Grantee's Total Profit (as hereinafter defined) exceed $50 million, plus
Grantee's documented, reasonable out-of-pocket expenses (including fees and
expenses of legal, financial and accounting
C-16
<PAGE>
advisors) incurred in connection with the transactions contemplated by the
Merger Agreement, and, if it otherwise would exceed such amount, Grantee, at its
sole election, shall either (a) deliver to Eagle for cancellation Shares
previously purchased by Grantee, (b) pay cash or other consideration to Eagle or
(c) undertake any combination thereof, so that Grantee's Total Profit shall not
exceed $50 million, plus Grantee's documented, reasonable out-of-pocket expenses
(including fees and expenses of legal, financial and accounting advisors)
incurred in connection with the transactions contemplated by the Merger
Agreement, after taking into account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, this Option
may not be exercised for a number of Shares as would, as of the Notice Date,
result in a Notional Total Profit (as defined below) of more than $50 million,
plus Grantee's documented, reasonable out-of-pocket expenses (including fees and
expenses of legal, financial and accounting advisors) incurred in connection
with the transactions contemplated by the Merger Agreement, and, if exercise of
the Option otherwise would exceed such amount, Grantee, at its discretion, may
increase the Purchase Price for that number of Shares set forth in the Stock
Exercise Notice so that the Notional Total Profit shall not exceed $50 million,
plus Grantee's documented, reasonable out-of-pocket expenses (including fees and
expenses of legal, financial and accounting advisors) incurred in connection
with the transactions contemplated by the Merger Agreement; provided, that
--------
nothing in this sentence shall restrict any exercise of the Option permitted
hereby on any subsequent date at the Purchase Price set forth in Section 2
hereof.
(c) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the amount of cash received by
Grantee pursuant to Section 8(a)(ii) hereof, (ii) (x) the amount received by
Grantee pursuant to the repurchase of Option Shares pursuant to Section 8 or
Section 9 hereof, less (y) Grantee's purchase price for such Option Shares, and
(iii) (z) the net cash amounts received by Grantee pursuant to the sale of
Option Shares (or any other securities into which such Option Shares are
converted or exchanged) to any unaffiliated party, less (y) Grantee's purchase
price for such Option Shares.
(d) As used herein, the term "Notional Total Profit" with respect to
any number of Option Shares as to which Grantee may propose to exercise this
Option shall be the Total Profit determined as of the date of the Stock Exercise
Notice assuming that this Option were exercised on such date for such number of
Shares and assuming that such Option Shares, together with all other Option
Shares held by Grantee and its affiliates as of such date, were sold for cash at
the closing market price for the Common Stock as of the close of business on the
preceding trading day (less customary brokerage commissions).
14. Miscellaneous.
-------------
(a) Expenses. Except to the extent expressly provided for herein,
--------
each of the parties hereto shall bear and pay 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.
C-17
<PAGE>
(b) Waiver and Amendment. Any provision of this Agreement may be
--------------------
waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(c) Entire Agreement; No Third-Party Beneficiaries; Severability.
------------------------------------------------------------
This Agreement, together with the Merger Agreement and the other documents and
instruments referred to herein and therein, between Grantee and Issuer (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (ii) is not intended to confer upon any person other
than the parties hereto (other than the indemnified parties under Section 10(e)
of this Agreement and any transferees of the Option Shares or any permitted
transferee of this Agreement pursuant to Section 14(h) of this Agreement) any
rights or remedies hereunder. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or Regulatory
Authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated. If
for any reason such court or Regulatory Authority determines that the Option
does not permit Holder to acquire, or does not require Issuer to repurchase, the
full number of shares of Issuer Common Stock as provided in Section 3 of this
Agreement (as may be adjusted herein), it is the express intention of Issuer to
allow Holder to acquire or to require Issuer to repurchase such lesser number of
shares as may be permissible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and construed in
-------------
accordance with the laws of the State of New York without regard to any
applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained herein
--------------------
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be
-------
in writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the addresses set forth in the Merger Agreement (or
at such other address for a party as shall be specified by like notice).
(g) Counterparts. This Agreement and any amendments hereto may be
------------
executed in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed, it
being understood that both parties need not sign the same counterpart.
(h) Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder or under the Option shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other party, except that Holder may assign this
Agreement to a wholly-owned subsidiary of Holder and Holder may assign
C-18
<PAGE>
its rights hereunder in whole or in part after the occurrence of a Purchase
Event. Subject to the preceding sentence, this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
(i) Further Assurances. In the event of any exercise of the Option by
------------------
the Holder, Issuer, and the Holder shall execute and deliver all other documents
and instruments and take all other action that may be reasonably necessary in
order to consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree that this
--------------------
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any failure
to perform this Agreement.
(k) Limitation on Resale of Issuer Common Stock. Grantee agrees that
-------------------------------------------
no shares of Issuer Common Stock acquired by it upon exercise of the Option, if
any, shall be sold, transferred or otherwise disposed by it prior to the
termination of the Merger Agreement in accordance with the terms thereof, except
as follows. If the Grantee shall determine to accept a bona fide offer to
---- ----
purchase the Issuer Common Stock then held by it or to sell any such Stock on
the open market, the Grantee shall give notice thereof to the Issuer specifying
(i) the Issuer Common Stock to be sold and (ii) the purchase price to be offered
therefor (or in the case of open market sales, that the sales are to be at
prices prevailing on the market) and any other significant terms of the proposed
transaction. Upon receipt of such notice, the Issuer shall, for a period of
three business days immediately following such receipt, have the right of first
refusal to purchase the Issuer Common Stock then held by Grantee that is
proposed to be sold at the purchase price set forth in such notice or, if such
shares are to be sold in open market transaction, at a purchase price equal to
the average of the closing prices therefor (and if there is no such closing
price on any of such days, then the mean of the closing bid and the closing
asked prices on that day) on the principal market on which Issuer Common Stock
is traded for the five trading days immediately prior to the Issuer's receipt of
such notice. Payment for such shares shall be made to the Grantee in
immediately available funds within three business days immediately following
receipt of the notice of the proposed sale.
C-19
<PAGE>
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
ROSLYN BANCORP, INC.
By: /s/ Joseph L. Mancino
------------------------------------
Joseph L. Mancino
Chairman of the Board, President and
Chief Executive Officer
T R FINANCIAL CORP.
By: /s/ John M. Tsimbinos
------------------------------------
John M. Tsimbinos
Chairman of the Board
and Chief Executive Officer
C-20
<PAGE>
DRAFT ANNEX D
______________, 1998
Board of Directors
Roslyn Bancorp, Inc.
1400 Old Northern Boulevard
Roslyn, NY 11576
Ladies and Gentlemen:
Roslyn Bancorp, Inc. ("Roslyn") and TR Financial Corp. ("TRFC") have
entered into an Agreement and Plan of Merger, dated as of May 25, 1998 (the
"Agreement"), pursuant to which TRFC will be merged with and into Roslyn (the
"Merger"). Upon consummation of the Merger, each share of TRFC common stock,
par value $.01 per share (together with the preferred share purchase right
attached thereto issued pursuant to the Rights Agreement dated July 19, 1994
between TRFC and Chemical Bank, as Rights Agent), issued and outstanding
immediately prior to the Merger, other than certain shares specified in the
Agreement, will be converted into the right to receive 2.05 shares (the
"Exchange Ratio") of Roslyn common stock, par value $.01 per share. The terms
and conditions of the Merger are more fully set forth in the Agreement. You
have requested our opinion as to the fairness of the Exchange Ratio to the
holders of shares of Roslyn common stock from a financial point of view.
Sandler O'Neill & Partners, L.P., as part of its investment banking
business, is regularly engaged in the valuation of financial institutions and
their securities in connection with mergers and acquisitions and other corporate
transactions. In connection with this opinion, we have reviewed, among other
things: (i) the Agreement and exhibits thereto; (ii) the Stock Option
Agreements, dated as of May 25, 1998, by and between Roslyn and TRFC; (iii)
certain publicly available financial statements of Roslyn and other historical
financial information provided by Roslyn that we deemed relevant; (iv) certain
publicly available financial statements of TRFC and other historical financial
information provided by TRFC that we deemed relevant; (v) certain financial
analyses and forecasts of Roslyn prepared by and reviewed with management of
Roslyn and the views of senior management of Roslyn regarding Roslyn's past and
current business, operations, results thereof, financial condition and future
prospects; (vi) certain financial analyses and forecasts of TRFC prepared by and
reviewed with management of TRFC and the views of senior management of TRFC
regarding TRFC's past and current business, operations, results thereof,
financial condition and future prospects; (vii) the pro forma impact of the
Merger on Roslyn, including enhancements to TRFC's earnings which Roslyn
anticipates as a result of the Merger; (viii) the publicly reported
<PAGE>
Board of Directors
Roslyn Bancorp, Inc.
_______________,1998
Page 2
historical price and trading activity for Roslyn's and TRFC's common stock,
including a comparison of certain financial and stock market information for
Roslyn and TRFC with similar publicly available information for certain other
companies the securities of which are publicly traded; (ix) the financial terms
of recent business combinations in the savings institution industry, to the
extent publicly available; (x) the current market environment generally and the
banking environment in particular; and (xi) such other information, financial
studies, analyses and investigations and financial, economic and market criteria
as we considered relevant.
In performing our review, we have assumed and relied upon, without
independent verification, the accuracy and completeness of all the financial
information, analyses and other information that was publicly available or
otherwise furnished to, reviewed by or discussed with us, and we do not assume
any responsibility or liability for the accuracy or completeness thereof. We
did not make an independent evaluation or appraisal of the specific assets, the
collateral securing assets or the liabilities (contingent or otherwise) of
Roslyn or TRFC or any of their subsidiaries, or the collectibility of any such
assets, nor have we been furnished with any such evaluations or appraisals.
With respect to the financial projections reviewed with management, we have
assumed that they have been reasonably prepared on bases reflecting the best
currently available estimates and judgments of the respective managements of the
respective future financial performances of Roslyn and TRFC and that such
performances will be achieved, and we express no opinion as to such financial
projections or the assumptions on which they are based. We have also assumed
that there has been no material change in Roslyn's or TRFC's assets, financial
condition, results of operations, business or prospects since the date of the
most recent financial statements made available to us. We have assumed in all
respects material to our analysis that Roslyn and TRFC will remain as going
concerns for all periods relevant to our analyses, that all of the
representations and warranties contained in the Agreement and all related
agreements are true and correct, that each party to such agreements will perform
all of the covenants required to be performed by such party under such
agreements, that the conditions precedent in the Agreement are not waived and
that the Merger will be accounted for as a pooling-of-interests and will qualify
as a tax-free reorganization for federal income tax purposes.
Our opinion is necessarily based on financial, economic, market and other
conditions as in effect on, and the information made available to us as of, the
date hereof. Events occurring after the date hereof could materially affect
this opinion. We have not undertaken to update, revise or reaffirm this opinion
or otherwise comment upon events occurring after the date hereof. We are
expressing no opinion herein as to what the value of Roslyn common stock will be
when issued to TRFC's shareholders pursuant to the Agreement or the prices at
which Roslyn's or TRFC's common stock will trade at any time.
<PAGE>
Board of Directors
Roslyn Bancorp, Inc.
_______________,1998
Page 3
We have acted as Roslyn's financial advisor in connection with the Merger
and will receive a fee for our services, a significant portion of which is
contingent upon consummation of the Merger. We have also received a fee for
rendering this opinion. In the past, we have also provided certain other
investment banking services for Roslyn and have received compensation for such
services. We may also provide certain investment banking services to Roslyn in
the future, including in connection with the reissuance of certain shares of
Roslyn's or TRFC's common stock in connection with the Merger, and will receive
compensation for such services.
In the ordinary course of our business, we may actively trade the equity
securities of Roslyn and TRFC for our own account and for the accounts of our
customers and, accordingly, may at any time hold a long or short position in
such securities.
Our opinion is directed to the Board of Directors of Roslyn in connection
with its consideration of the Merger and does not constitute a recommendation to
any stockholder of Roslyn as to how such stockholder should vote at any meeting
of stockholders called to consider and vote upon the Merger. Our opinion is not
to be quoted or referred to, in whole or in part, in a registration statement,
prospectus, proxy statement or in any other document, nor shall this opinion be
used for any other purposes, without Sandler O'Neill's prior written consent;
provided, however, that we hereby consent to the inclusion of this opinion as an
annex to Roslyn's and TRFC's Joint Proxy Statement/Prospectus dated the date
hereof and to the references to this opinion therein.
Based upon and subject to the foregoing, it is our opinion, as of the date
hereof, that the Exchange Ratio is fair to the holders of shares of Roslyn
common stock from a financial point of view.
Very truly yours,
Sandler O'Neill & Partners, L.P.
<PAGE>
ANNEX E
[GOLDMAN, SACHS & CO. LETTERHEAD]
November [_], 1998
Board of Directors
T R Financial Corp.
1122 Franklin Ave.
Garden City, New York 11530
Ladies and Gentlemen:
You have requested our opinion as to the fairness from a financial point of view
to the holders of the outstanding shares of Common Stock, par value $.01 per
share (the "Shares"), of T R Financial Corp. (the "Company") of the exchange
ratio of 2.05 shares of Common Stock, par value $.01 per share (the "Roslyn
Common Stock") of Roslyn Bancorp, Inc. ("Roslyn"), to be received for each Share
(the "Exchange Ratio") pursuant to the merger (the "Merger") contemplated by the
Agreement and Plan of Merger, dated as of May 25, 1998, between Roslyn and the
Company (the "Agreement").
Goldman, Sachs & Co., as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. We are familiar with
the Company having acted as its financial advisor in connection with, and having
participated in certain of the negotiations leading to, the Agreement.
In connection with this opinion, we have reviewed, among other things, the
Agreement; Annual Reports to Stockholders and Annual Reports on Form 10-K of the
Company and Roslyn for the five years and two years ended December 31, 1997,
respectively; audited financial statements of Roslyn for the three years ended
December 31, 1996; the Registration Statement on Form S-1 relating to Roslyn's
Plan of Conversion in 1996; certain interim reports to stockholders and
Quarterly Reports on Form 10-Q of the Company and Roslyn; certain other
communications from the Company and Roslyn to their respective stockholders; and
certain internal financial analyses and forecasts for the Company and Roslyn
prepared by their respective managements including forecasts of certain net cost
savings and revenue enhancements (the "Synergies") expected to be achieved as a
result of the Merger. We also have held discussions with members of the senior
management of the Company and Roslyn regarding the strategic rationale for, and
the potential benefits of, the transaction contemplated by the Agreement and the
past and current business operations, financial condition and future prospects
of their respective companies. In addition, we have reviewed the reported price
and trading activity for the Shares and Roslyn Common Stock, compared certain
financial and stock market information for
<PAGE>
T R Financial Corp.
November [_], 1998
Page Two
the Company and Roslyn with similar Information for certain other companies the
securities of which are publicly traded, reviewed the financial terms of certain
recent business combinations in the thrift industry specifically and in other
industries generally and performed such other studies and analyses as we
considered appropriate.
We have relied upon the accuracy and completeness of all of the financial and
other information reviewed by us and have assumed such accuracy and completeness
for purposes of rendering this opinion. In that regard, we have assumed, with
your consent, that the financial forecasts, including, without limitation, the
Synergies have been reasonably prepared on a basis reflecting the best currently
available judgments and estimates of the Company and Roslyn and that such
forecasts will be realized in the amounts and at the times contemplated thereby.
We are not experts in the evaluation of loan and lease portfolios for purposes
of assessing the adequacy of the allowances for losses with respect thereto and
have assumed, with your consent, that such allowances for each of the Company
and Roslyn are in the aggregate adequate to cover all such losses. In addition,
we have not reviewed individual credit files nor have we made an independent
evaluation or appraisal of the assets and liabilities of the Company or Roslyn
or any of their subsidiaries, and we have not been furnished with any such
evaluation or appraisal. Our opinion as to the fairness of the Exchange Ratio
addresses the ownership position in the combined company to be received by the
holders of Shares pursuant to the Exchange Ratio on the terms set forth in the
Agreement and does not address the future trading or acquisition value for the
stock of the combined company. Our advisory services and the opinion expressed
herein are provided for the information and assistance of the Board of Directors
of the Company in the connection with its consideration of the transaction
contemplated by the Agreement and such opinion does not constitute a
recommendation as to how any holder of Shares should vote with respect to such
transaction.
Based upon and subject to the foregoing and based upon such other matters as we
consider relevant, it is our opinion that as of the date hereof the Exchange
Ratio pursuant to the Agreement is fair from a financial point of view to the
holders of Shares.
Very truly yours,
- -------------------------
(GOLDMAN, SACHS & CO.)
<PAGE>
EXHIBIT 5.1
[MULDOON, MURPHY & FAUCETTE LETTERHEAD APPEARS HERE]
November 16, 1998
Roslyn Bancorp, Inc.
1400 Old Northern Boulevard
Roslyn, New York 11576
Re: Roslyn Bancorp, Inc.
Registration Statement on Form S-4
Ladies and Gentlemen:
We have acted as special counsel for Roslyn Bancorp, Inc., a Delaware
corporation ("Roslyn") and, at the request of Roslyn, have examined the
registration statement on Form S-4 (the "Registration Statement"), filed by
Roslyn with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act") on November 16, 1998, and the
regulations promulgated thereunder. All capitalized terms not otherwise defined
herein are defined herein as in the Registration Statement.
The Registration Statement relates to, among other things, the registration
under the Act of 40,199,570 shares, subject to adjustment, of common stock,
$0.01 par value per share, of Roslyn (the "Merger Shares"), into which certain
shares of common stock, $0.01 par value per share of T R Financial Corp., a
Delaware corporation ("T R Financial"), will be converted persuant to an
<PAGE>
Roslyn Bancorp, Inc.
November 16, 1998
Page 2
Agreement and Plan of Merger dated as of May 25, 1998 (the "Merger Agreement")
by and between T R Financial and Roslyn and certain related instruments and
agreements described in the Registration Statement that were executed, or are to
be executed, in connection with the Merger Agreement (the "Related
Instruments"). In rendering the opinion set forth below, we do not express any
opinion concerning law other than the federal law of the United States and the
corporate law of the State of Delaware.
It is our understanding that upon consummation of the Merger, among other
things, (i) T R Financial will merge with and into Roslyn, with Roslyn as the
surviving corporation, succeeding to all of the assets and liabilities of T R
Financial (the "Merger"); (ii) subject to certain exceptions, each outstanding
share of common stock, $.01 par value per share, of T R Financial (the "T R
Financial Common Stock"), will be converted and exchangeable for 2.05 Merger
Shares (the "Exchange Ratio") plus cash in lieu of fractional shares; and (iii)
the Exchange Ratio may be increased by Roslyn in the event T R Financial
exercises its rights under the Merger Agreement to deliver to Roslyn a notice to
terminate the Merger Agreement due to the price of the Roslyn Common Stock
declining below certain levels established by formulas set forth in the Merger
Agreement.
In addition, each option granted by T R Financial to purchase T R Financial
Common Stock which is outstanding and unexercised immediately prior to the
consummation of the Merger shall
<PAGE>
Roslyn Bancorp, Inc.
November 16, 1998
Page 3
be converted automatically into an option to purchase shares of Merger Shares in
an amount and at an exercise price equal to the product of the number of shares
of T R Financial Common Stock subject to the original option and the Exchange
Ratio, provided that any fractional Merger Shares resulting from such
multiplication shall be rounded to the nearest whole share; and the exercise
price per share of Merger Shares under the new option shall be equal to the
exercise price per share of T R Financial Common Stock under the original option
divided by the Exchange Ratio, provided that such exercise price shall be
rounded to the nearest whole cent.
In the preparation of this opinion, we have examined originals or copies
identified to our satisfaction of (i) the Certificate of Incorporation of
Roslyn, as filed with the State of Delaware; (ii) the By-laws of Roslyn; (iii)
certain minutes of Roslyn made available to us by officers of Roslyn; (iv)
certain certificates from officers of Roslyn as to certain factual matters
material to the opinion expressed below; (v) the Certificate of Incorporation of
T R Financial as filed with the Secretary of
<PAGE>
Roslyn Bancorp, Inc.
November 16, 1998
Page 4
State of the State of Delaware; (vi) the By-laws of T R Financial; (vii) certain
minutes of T R Financial made available to us by officers of T R Financial;
(viii) certain certificates from officers of T R Financial as to certain factual
matters material to the opinion expressed below; (ix) the representations of T R
Financial and Roslyn contained in the Merger Agreement and the Registration
Statement; and (x) the Registration Statement, including the exhibits thereto.
We have also examined originals or copies of such documents, corporate records,
certificates of public officials and other instruments, and have conducted such
other investigations of law and fact, as we have deemed necessary or advisable
for purposes of our opinion.
In our examinations, we have assumed, without investigation, the
genuineness of all signatures, the authenticity of all documents and instruments
submitted to us as originals, the conformity to the originals of all documents
and instruments submitted to us as certified or conformed copies and the
authenticity of the originals of such copies, the correctness of all
certificates, and the accuracy and completeness of all records, documents,
instruments and materials made available to us by Roslyn and T R Financial.
In addition, in rendering this opinion we have assumed, without
investigation, (i) that the Merger Shares will be offered and the shares of T R
Financial Common Stock will be exchanged in the manner and on the terms
identified or referred to in the Registration Statement; (ii) that all
conditions to the Merger
<PAGE>
Roslyn Bancorp, Inc.
November 16, 1998
Page 5
have been, or will be, met; (iii) that the Merger will be consummated in
accordance with the terms of the Registration Statement, the Merger Agreement
and the Related Instruments; (iv) the Registration Statement becomes and remains
effective under the Act and fully complies with all of the requirements of the
Act and the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the regulations promulgated thereunder, during all relevant periods; (v) the
Joint Proxy Statement/Prospectus forming a part of the Registration Statement,
and the delivery procedures with respect thereto, fulfill all requirements of
the Act, the Exchange Act, and all applicable regulations promulgated under the
Act and the Exchange Act, throughout all relevant periods; (vi) compliance with
all federal and state securities laws throughout all relevant periods; (vii) the
Merger has become effective under applicable state law; and (viii) the Merger
Shares are issued and delivered in the manner referred to in the Merger
Agreement and the Registration Statement, upon consummation of the Merger. We
have also relied, without independent investigation, upon the representations
and warranties of the parties to the Merger Agreement set forth in the Merger
Agreement.
Our opinion is limited to the matters set forth herein and we express no
opinion other than as expressly set forth herein. Our opinion is expressed as
of the date hereof and is based on laws currently in effect. Accordingly, the
conclusions set forth in this opinion are subject to change in the event that
any laws should change or be enacted in the future. We are under no obligation
to update this opinion or to otherwise communicate with you in the event of any
such change.
<PAGE>
Roslyn Bancorp, Inc.
November 16, 1998
Page 6
Based upon and subject to the foregoing, it is our opinion that, upon
effectiveness of the Registration Statement and approval of the issuance of the
Merger Shares by Roslyn shareholders, the issuance of the Merger Shares in
accordance with the terms of the Merger Agreement will have been duly authorized
and, when the Merger Shares are issued in accordance with the terms of the
Merger Agreement and the Registration Statement, the Merger Shares will be
validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our Firm under the caption "Legal
Matters" in the Joint Proxy Statement/Prospectus forming a part of the
Registration Statement. In giving such consent we do not hereby admit that we
are experts or otherwise within the category of persons whose consent is
required under Section 7 of the Act or the rules or regulations of the
Securities and Exchange Commission thereunder.
Sincerely,
/s/ Muldoon, Murphy, & Faucette
MULDOON, MURPHY & FAUCETTE
<PAGE>
EXHIBIT 8.1
[MULDOON, MURPHY & FAUCETTE LETTERHEAD]
November 16, 1998
Board of Directors
Roslyn Bancorp, Inc.
1400 Old Northern Boulevard
Roslyn, New York 11576
Re: Federal Income Tax Consequences of Merger of T R Financial
Corp. with and into Roslyn Bancorp, Inc. (the "Merger")
-------------------------------------------------------
To the Members of the Board of Directors:
You have requested an opinion regarding certain federal tax consequences of
a proposed transaction involving the merger of T R Financial Corp., a bank
holding company organized under the laws of the State of Delaware ("T R
Financial") with and into Roslyn Bancorp, Inc. ("Roslyn"), a savings and loan
holding company organized under the laws of the State of Delaware. The Merger
will be effected pursuant to the Agreement and Plan of Merger, dated as of May
25, 1998, by and between Roslyn Bancorp, Inc. and T R Financial Corp. (the
"Merger Agreement"). The Merger and related transactions are described in the
Merger Agreement and in the Joint Proxy Statement/Prospectus (the "Proxy
Statement") included in Roslyn's Registration Statement on Form S-4 filed with
the Securities and Exchange Commission in connection with the Merger (the
"Registration Statement"). All capitalized terms used but not defined in this
letter shall have the meanings set forth in the Merger Agreement or the Proxy
Statement.
Under the Merger Agreement, at the Effective Time, T R Financial shall be
merged with and into Roslyn (the "Merger") and the separate existence of T R
Financial shall cease. Roslyn shall be the surviving corporation in the Merger
and shall continue its corporate existence under the laws of Delaware. By
virtue of the Merger, automatically and without any action on the part of the
holder thereof, each share of T R Financial's common stock (the "T R Financial
Common Stock") issued and outstanding immediately prior to the Effective Time
shall be converted into the right to receive that number of shares of the common
stock of Roslyn (the "Roslyn Common Stock") determined under the formula set out
in the Merger Agreement, subject to the payment of cash in lieu of fractional
shares.
<PAGE>
Board of Directors
November 16, 1998
Page 2
Our opinion is provided solely with respect to certain federal income tax
consequences of the Merger. This opinion is being delivered at your request and
pursuant to Sections 5.2(f) of the Merger Agreement.
In connection with the opinions expressed herein, we have examined and
relied upon originals, or copies certified or otherwise identified to our
satisfaction, of the Merger Agreement and the Proxy Statement, and of such
corporate records of the parties to the Merger as we have deemed appropriate.
We have also received and relied upon, without independent verification, the
representations of T R Financial concerning T R Financial itself as well as the
transaction ("Representations"); we have received and relied upon, without
independent verification, the representations of Roslyn concerning the
transaction and certain post-Merger plans ("Representations"); copies of these
Representations are attached as exhibits to this letter. We have assumed that
such Representations are true and that the parties to the Merger will act in
accordance with the Merger Agreement. We have assumed that all daily operations
of Roslyn will be conducted in a manner wholly consistent with all
Representations provided by Roslyn. In addition, we have made such
investigations of law as we have deemed appropriate to form a basis for the
opinions expressed below.
We will rely upon the accuracy of the Representations and the statements of
facts contained in the examined documents, particularly the Merger Agreement.
We have also assumed the authenticity of all signatures, the legal capacity of
all natural persons and the conformity to the originals of all documents
submitted to us as copies. Each capitalized term used herein, unless otherwise
defined, has the meaning set forth in the Merger Agreement. We have assumed
that the Merger will be consummated strictly in accordance with the terms of the
Merger Agreement.
The Merger Agreement and the Proxy Statement contain a detailed description
of the Merger. These documents as well as the Representations to be provided by
T R Financial and Roslyn are incorporated in this letter as part of the
statement of the facts.
LIMITATIONS ON OPINION
The opinions expressed herein are rendered only with respect to the issues
specified herein. We express no opinion with respect to any other federal, state
or local tax or other legal aspect of the transaction. If any of the above
referenced facts or Representations are not true, correct and complete in all
material respects, our opinion could be subject to change. In issuing our
opinion, we are relying on the provisions of the Internal Revenue Code of 1986,
as amended (the "Code") and
<PAGE>
Board of Directors
November 16, 1998
Page 3
regulations issued thereunder which are cited herein. All such provisions are
subject to change, which change can be retroactive in effect. Any such change
could have an effect on the validity of our opinions. We assume no obligation to
revise or supplement this opinion if any subsequent change were to occur.
The opinions contained herein are not binding on the Internal Revenue
Service ("IRS") or any court. No assurance can be given that the IRS will not
take a different view of these transactions and that view may be ultimately
sustained by a court. It is our understanding that neither party to the Merger
intends to request a ruling from the IRS concerning the Merger.
FEDERAL TAX OPINION
Based on and subject to the foregoing, the facts referenced in this
opinion, the Representations referred to and attached as exhibits to this
opinion, and subject to the limitations referenced herein, it is our opinion
that for federal income tax purposes, under the current law:
(1) The Merger will constitute a tax-free reorganization under Section
368(a)(1)(A) of the Code and Roslyn and T R Financial will each be a
party to the reorganization.
(2) No gain or loss will be recognized by Roslyn, Roslyn Bank, T R
Financial or Roosevelt Savings Bank as a result of the Merger.
(3) No gain or loss will be recognized by the stockholders of T R Financial
who exchange all of their T R Financial Common Stock solely for Roslyn
Common Stock pursuant to the Merger, except to the extent of any cash
received in lieu of a fractional share interest in Roslyn Common Stock.
(4) The tax basis of the Roslyn Common Stock received by shareholders who
exchange their T R Financial Common Stock for Roslyn Common Stock
pursuant to the Merger will be the same as the tax basis of the T R
Financial Common Stock surrendered in exchange therefor, reduced by any
amount allocable to a fractional share interest for which cash is
received and increased by any gain recognized on the exchange.
<PAGE>
Board of Directors
November 16, 1998
Page 4
(5) The holding period of Roslyn Common Stock received by each stockholder
in the Merger will include the holding period of T R Financial Common
Stock exchanged therefor, provided that such stockholder held such T R
Financial Common Stock as a capital asset on the Effective Date.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement on Form S-4 of Roslyn filed in connection with the Merger
and to the references to us under the headings "SUMMARY -- Certain Federal
Income Tax Considerations" and "THE MERGER -- Certain Federal Income Tax
Considerations" in the Joint Proxy Statement/Prospectus on T R Financial and
Roslyn. In giving such consent, we do not thereby admit that we are in the
category of persons whose consent is required under the Securities Act of 1933.
Sincerely,
/s/ Muldoon, Murphy & Faucette
MULDOON, MURPHY & FAUCETTE
<PAGE>
EXHIBIT 8.2
[THACHER PROFFITT & WOOD LETTERHEAD]
November 16, 1998
T R Financial Corp.
1222 Franklin Avenue
Garden City, New York 11520
Re: Merger of T R Financial Corp.
into Roslyn Bancorp, Inc.
-------------------------
Dear Sirs:
You have requested our opinion regarding certain federal income tax
consequences of the merger (the "Merger") of T R Financial Corp. ("TRF"), a
Delaware corporation and sole shareholder of Roosevelt Savings Bank ("TRF
Bank"), with and into Roslyn Bancorp, Inc. ("RBI"), a Delaware corporation and
sole shareholder of Roslyn Savings Bank ("RBI Bank"). The Merger will be
effected pursuant to the Agreement and Plan of Merger dated as of May 25, 1998
by and between RBI and TRF (the "Merger Agreement"). The Merger and related
transactions are described in the Merger Agreement and in the Joint Proxy
Statement/Prospectus (the "Proxy Statement") included in RBI's Registration
Statement on Form S-4 filed with the Securities and Exchange Commission in
connection with the Merger (the "Registration Statement"). All capitalized
terms used but not defined in this letter shall have the meanings set forth in
the Merger Agreement or in the Proxy Statement.
In connection with the opinions expressed below, we have examined and
relied on originals, or copies certified or otherwise identified to our
satisfaction, of the Merger Agreement and of such corporate records of RBI and
TRF as we have deemed appropriate. We have also relied, without independent
verification, upon the October 14, 1998 letter of RBI and the November 10, 1998
letter of TRF to Thacher Proffitt & Wood containing certain tax representations.
We have assumed that the parties will act, and that the Merger will be effected,
in accordance with the Merger Agreement, and that the representations made by
RBI and TRF in the foregoing letters are true, correct and complete, and will be
true, correct and complete at the Effective Time, and as to statements qualified
by the best of knowledge of the Management of RBI or TRF, will be consistent
with the underlying facts as of the Effective Time. In addition, we have made
such investigations of law as we have deemed appropriate to form a basis for the
opinions expressed below.
<PAGE>
T R Financial Corp.
Page 2
November 16, 1998
Based on and subject to the foregoing, it is our opinion that, for Federal
income tax purposes, under current law:
(1) The Merger will be treated as a reorganization within the meaning
of Section 368(a) of the Code;
(2) No gain or loss will be recognized by RBI, RBI Bank, TRF or TRF
Bank as a result of the Merger;
(3) Except to the extent of any cash received in lieu of a fractional
share interest in RBI Common Stock, no gain or loss will be recognized by
holders of TRF Common Stock who exchange their shares of TRF Common Stock
for shares of RBI Common Stock pursuant to the Merger;
(4) The tax basis of the shares of RBI Common Stock received by each
holder of TRF Common Stock who exchanges shares of TRF Common Stock for
shares of RBI Common Stock in the Merger will be the same as the tax basis
of the shares of TRF Common Stock surrendered pursuant to the Merger,
reduced by any amount allocable to a fractional share interest of RBI
Common Stock for which cash is received; and
(5) The holding period of the shares of RBI Common Stock received by
each holder of TRF Common Stock in the Merger will include the holding
period of the shares of TRF Common Stock exchanged therefor, provided that
such stockholder holds such shares of TRF Common Stock as a capital asset
at the Effective Time.
Except as set forth above, we express no opinion to any party as to the tax
consequences, whether federal, state, local or foreign, of the Merger or of any
transaction related thereto or contemplated by the Merger Agreement. This
opinion is given solely for the benefit of TRF and its shareholders and RBI, and
may not be relied upon by any other party or entity or otherwise referred to in
any document without our express written consent. We
<PAGE>
T R Financial Corp.
Page 3
November 16, 1998
consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference thereto under the heading "The Merger -- Certain
Federal Income Tax Consequences of the Merger" and "Legal Matters" in the Proxy
Statement.
Very truly yours,
/s/ Thacher Proffitt & Wood
THACHER PROFFITT & WOOD
<PAGE>
EXHIBIT 23.4
Accountants' Consent
--------------------
The Stockholders and the
Board of Directors of
Roslyn Bancorp, Inc.:
We consent to incorporation by reference in the Registration Statement
on Form S-4 of Roslyn Bancorp, Inc. of our report dated January 28, 1998,
relating to the consolidated statements of financial condition of Roslyn
Bancorp, Inc. and subsidiary as of December 31, 1997 and 1996, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1997,
which report is incorporated by reference to the December 31, 1997 Annual Report
on Form 10-K/A No. 1 of Roslyn Bancorp, Inc., and to the reference to our firm
under the heading "Experts" in the Joint Proxy Statement/Prospectus which is a
part of that Registration Statement.
/s/ KPMG Peat Marwick, LLP
-------------------------------
KPMG Peat Marwick, LLP
Melville, New York
November 16, 1998
<PAGE>
EXHIBIT 23.5
Accountants' Consent
--------------------
The Stockholders and the
Board of Directors of
T R Financial Corp.:
We consent to incorporation by reference in the Registration Statement on
Form S-4 of T R Financial Corp. of our report dated January 22, 1998, relating
to the consolidated statements of financial condition of T R Financial Corp. and
subsidiaries as of December 31, 1997 and 1996, and the related consolidated
statements of income, changes in stockholders' equity and cash flows for each of
the years in the three-year period ended December 31, 1997, which report is
incorporated by reference to the December 31, 1997 Annual Report on Form 10-K of
T R Financial Corp., and to the reference to our firm under the heading
"Experts" in the Joint Proxy Statement/Prospectus which is a part of that
Registration Statement.
/s/ KPMG Peat Marwick, LLP
--------------------------------------
KPMG Peat Marwick, LLP
Melville, New York
November 16, 1998
<PAGE>
EXHIBIT 23.6
[SANDLER O'NEILL LETTERHEAD APPEARS HERE]
CONSENT OF SANDLER O'NEILL & PARTNERS, L.P.
We hereby consent to the inclusion of our opinion letter to the Board of
Directors of Roslyn Bancorp, Inc. (the "Company") as an Annex to the Joint Proxy
Statement/Prospectus relating to the proposed merger of T R Financial Corp.
with and into the Company contained in the Registration Statement on Form S-4
as filed with the Securities and Exchange Commission on the date hereof, and
to the references to our firm and such opinion in such Joint Proxy Statement/
Prospectus. In giving such consent, we do not admit that we come within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended (the "Act"), or the rules and regulations of the
Securities and Exchange Commission thereunder (the "Regulations"), nor do we
admit that we are experts with respect to any part of such Registration
Statement within the meaning of the term "experts" as used in the Act or the
Regulations.
/s/ Sandler O'Neill & Partners, L.P.
------------------------------------
Sandler O'Neill & Partners, L.P.
November 16, 1998
<PAGE>
EXHIBIT 23.7
PERSONAL AND CONFIDENTIAL
- -------------------------
November 16, 1998
Board of Directors
TR Financial Corp.
1122 Franklin Ave.
Garden City, New York 11530
Re: Proxy Statement of T R Financial Corp.
Ladies and Gentlemen:
Attached is our opinion letter dated November 10, 1998 with respect to the
fairness from a financial point of view to the holders of the outstanding shares
of Common Stock, par value $.01 per share (the "Shares"), of T R Financial Corp.
(the "Company") of the exchange ratio of 2.05 shares of Common Stock, par value
$.01 per share of Roslyn Bancorp, Inc. ("Roslyn"), to be received for each Share
pursuant to the merger (the "Merger") contemplated by the Agreement and Plan of
Merger, dated as of May 25, 1998, between Roslyn and the Company.
The foregoing opinion letter is provided solely for the information and
assistance of the Board of Directors of the Company in connection with its
consideration of the transaction contemplated therein and is not to be used,
circulated, quoted or otherwise referred to for any other purpose, nor is it to
be filed with, included in or referred to in whole or in part in any
registration statement, proxy statement or any other document, except in
accordance with our prior written consent. We understand that the Company has
determined to include our opinion in the proxy statement/prospectus (the "Proxy
Statement") being sent to the Company's shareholders in connection with the
Merger and the related Registration Statement on Form S-4 (the "Registration
Statement").
In that regard, we hereby consent to the reference to the opinion of our Firm
under the captions "Summary -- Opinions of Financial Advisors -- T R
Financial,""THE MERGER -- Opinion of T R Financial's Financial Advisor" and to
the inclusion of the foregoing opinion as Appendix E to the Proxy Statement
included in the Registration Statement, as amended. In giving such consent, we
do not thereby admit that we come within the category of persons whose consent
is required under Section 7 of the Securities act of 1933 or the rules and
regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ GOLDMAN, SACHS & CO.
- -------------------------
(GOLDMAN, SACHS & CO.)
<PAGE>
EXHIBIT 99.3
CONSENT TO BE NAMED AS A DIRECTOR
OF ROSLYN BANCORP, INC.
The undersigned, John M. Tsimbinos, hereby consents to be named as a
director of Roslyn Bancorp, Inc. (the "Company") in the Company's Registration
Statement on Form S-4 to be filed with the Securities and Exchange Commission.
/s/ John M. Tsimbinos
-------------------------------------
John M. Tsimbinos
Dated: November 16, 1998
<PAGE>
EXHIBIT 99.4
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF TWO WAYS:
1. Call toll free 1-800-786-5219 from a Touch Tone telephone and follow
the instruction listed below. There is NO CHARGE to you for this call.
OR
--
2. Mark, sign and date our proxy card and return it promptly in the
enclosed postage-paid envelope.
PLEASE VOTE
- --------------------------------------------------------------------------------
VOTE BY TELEPHONE
QUICK***EASY***TOLL FREE***IMMEDIATE
Your telephone vote authorizes the named proxies to vote your shares in the same
manner as if you marked, signed, and returned your proxy card.
You will be asked to enter a Control Number which is located in the box in the
lower right hand corner of this form.
OPTION #1. To vote as the Board of Directors recommends on BOTH proposals.
Press 1.
WHEN ASKED, PLEASE CONFIRM YOUR VOTE BY PRESSING 1.
OPTION #2. If you choose to vote on each proposal separately, press 0,
You will hear these instructions:
Proposal 1: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
Proposal 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0,
WHEN ASKED, PLEASE CONFIRM YOUR VOTE BY PRESSING 1.
PLEASE DO NOT RETURN THE ABOVE PROXY CARD IF VOTED BY PHONE.
CALL**TOLL FREE**ANYTIME FROM A TOUCH TONE TELEPHONE
1-800-786-5219
There is NO CHARGE to you for this call.
