<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
_________________________________
Date of Report (Date of earliest event reported): July 17, 1998
RICHMOND COUNTY FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
DELAWARE 0-23271 06-1498455
(State or other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
</TABLE>
1214 CASTLETON AVENUE, STATEN ISLAND, NEW YORK 10310
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (718) 448-2800
NOT APPLICABLE
(Former name or former address, if changed since last report)
<PAGE>
ITEMS 1 THROUGH 4. NOT APPLICABLE.
ITEM 5. OTHER EVENTS.
On July 17, 1998, Richmond County Financial Corp., a Delaware corporation
("Richmond County"), announced that it had entered into an Agreement and Plan of
Merger, dated as of July 17, 1998 (the "Ironbound Merger Agreement"), with
Ironbound Bankcorp, NJ, a New Jersey corporation ("Ironbound"). Ironbound is a
bank holding company that owns Ironbound Bank, a New Jersey State chartered
commercial bank. The Ironbound Merger Agreement provides, among other things,
that Ironbound will merge with and into Richmond County, with Richmond County
being the surviving corporation (the "Ironbound Merger"). A copy of the
Ironbound Merger Agreement is attached hereto as Exhibit 2.1.
Pursuant to the Ironbound Merger Agreement, each share of Ironbound common
stock, par value $5.00 per share ("Ironbound Common Stock"), issued and
outstanding immediately prior to the Effective Time (as defined in the Ironbound
Merger Agreement) will be converted into and become the right to receive 1.45
shares (the "Ironbound Exchange Ratio") of Richmond County common stock, par
value $.01 per share ("Richmond County Common Stock"), except for (i) shares the
holder of which, pursuant to any applicable law providing for dissenter's or
appraisal rights, is entitled to receive payment in accordance with the
provisions of any such law, such holder to have only the rights provided in any
such law; (ii) shares of Ironbound's Common Stock held directly or indirectly by
Richmond County, other than shares held in a fiduciary capacity in satisfaction
of a debt previously contracted; and (iii) shares held by Ironbound as treasury
stock. Each holder of Ironbound Common Stock who would otherwise be entitled to
receive a fraction of a share of Richmond County Common Stock will receive an
amount in cash equal to the product arrived at by multiplying such fraction of a
share of Richmond County Common Stock by the Richmond County Market Value (as
defined in the Ironbound Merger Agreement).
The Ironbound Merger will be structured as a tax-free reorganization and it
is the intent of the parties to account for the transaction as a pooling-of-
interest transaction. Consummation of the Ironbound Merger is subject to the
satisfaction of certain conditions, including approval of the Ironbound Merger
Agreement by the stockholders of Ironbound and approval by the appropriate
regulatory agencies.
The Ironbound Merger Agreement may be terminated and the Ironbound Merger
abandoned at or prior to the effective date of the Ironbound Merger either
before or after its approval by the stockholders of Ironbound:
(a) by the mutual consent of Richmond County and Ironbound in a
written instrument, if the Board of Directors of each so determines by vote of a
majority of the members of its entire Board;
2
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(b) by Richmond County or Ironbound, if its Board of Directors so
determines by vote of a majority of the members of its entire Board, in the
event of the failure of the stockholders of Ironbound to approve the Ironbound
Merger Agreement at its Stockholder Meeting called to consider such approval;
(c) by Richmond County or Ironbound, 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 the Ironbound Merger Agreement;
(d) by Richmond County or Ironbound, if its Board of Directors so
determines by vote of a majority of the members of its entire Board, in the
event that the Ironbound Merger is not consummated by April 30, 1999, unless the
failure to so consummate by such time is due to the breach of any
representation, warranty or covenant contained in the Ironbound Merger Agreement
by the party seeking to terminate;
(e) by Richmond County, if the Board of Directors of Ironbound does
not publicly recommend in the proxy statement relating to the Ironbound Merger
Agreement that Ironbound's stockholders approve and adopt the Ironbound Merger
Agreement or if, after recommending in the proxy that stockholders approve and
adopt the Ironbound Merger Agreement, the Board of Directors of Ironbound shall
have withdrawn, modified or amended such recommendation in any respect
materially adverse to Richmond County;
(f) by Richmond County by written notice to Ironbound, or by Ironbound
by written notice to Richmond County in the event that there has occurred since
the date of the Ironbound Merger Agreement an event, condition, change or
occurrence which, individually or in the aggregate, has had or could reasonably
be expected to result in a Material Adverse Effect (as defined below) on
Ironbound or Richmond County, as the case may be; provided that one party shall
have given the other thirty (30) calendar days prior written notice of such
termination, and the breaching party shall not have remedied such event,
condition, change or occurrence by the end of such thirty-day period;
(g) by Ironbound, if its board of directors so determines by the
requisite vote of members of its entire board, at any time during the five-day
period commencing with the Valuation Date (as defined below), in accordance with
(i) below:
(i) if the Richmond County Market Value (as defined below) is less
than $14.00, adjusted as follows:
If Richmond County declares or effects a stock dividend,
reclassification, recapitalization, split-up, combination, exchange of shares or
similar transaction between the date
3
<PAGE>
of the Ironbound Merger Agreement and the Valuation Date, the prices for the
common stock of such company shall be appropriately adjusted in the number and
kind of shares of Richmond County Common Stock to be thereafter delivered
pursuant to the Ironbound Merger Agreement and the Ironbound Exchange Ratio so
that each stockholder of Ironbound shall be entitled to receive such number of
shares of Richmond County Common Stock or other securities as such stockholder
would have received pursuant to such reorganization, recapitalization,
reclassification, stock split, exchange of shares or readjustment or other like
changes in the capitalization of Richmond County, or as a result of a stock
dividend on Richmond County Common Stock, had the record (or pay) date therefor
been immediately following the Effective Time (as defined in the Ironbound
Merger Agreement).
(h) by Richmond County or Ironbound (provided that the party seeking
termination is not then in material breach of any representation, warranty,
covenant or other agreement contained in the Ironbound Merger Agreement), in the
event of (i) a failure to perform or comply by the other party with any covenant
or agreement of such other party contained in the Ironbound Merger Agreement,
which failure or non-compliance is material in the context of the transactions
contemplated by the Ironbound Merger Agreement, or (ii) subject to the
materiality thresholds established by Sections 2.2(a) and (b) of the Ironbound
Merger Agreement, any inaccuracies, omissions or breach in the representations,
warranties, covenants or agreements of the other party contained in the
Ironbound Merger Agreement the circumstances as to which either individually or
in the aggregate have, or reasonably could be expected to have, a Material
Adverse Effect on such other party; in either case which has not been or cannot
be cured within 30 calendar days after written notice thereof is given by the
party seeking to terminate to such other party.
In addition, if Richmond County's Market Value is less than $15.945, but
equal to or greater than $14.00 (subject to the appropriate adjustment for a
stock dividend reclassification, recapitalization, split-up, combination,
exchange of shares or similar transaction between the date of the Ironbound
Merger Agreement and the Valuation Date), the Ironbound Exchange Ratio shall be
adjusted such that the value of the consideration (valued at the Valuation Date)
to be paid in respect to each share of Ironbound Common Stock to be converted
into Richmond County Common Stock and cash in lieu of fractional shares upon
consummation of the Ironbound Merger is $23.12.
"Richmond County Market Value" means the average of the closing sales
price as reported on the National Market System of The Nasdaq Stock Market,
Inc., for the fifteen (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 the
Ironbound Merger Agreement; (ii) the day on which the last of the regulatory
approvals, as contemplated by Section 5.1(b) of the Ironbound Merger Agreement,
is obtained; and (iii) the day on which the last of the required stockholder
approvals have been obtained (such date being the Valuation Date).
4
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As an inducement for Richmond County to enter into the Ironbound Merger
Agreement, Richmond County and Ironbound entered into a stock option agreement
(the "Ironbound Stock Option Agreement") pursuant to which, under certain
circumstances, Richmond County would have the option to purchase up to 19.9% of
Ironbound's issued and outstanding shares of common stock (without giving effect
to the stock issued in connection with the exercise of the option). A copy of
the Ironbound Stock Option Agreement is attached hereto as Exhibit 10.1.
Richmond County and Ironbound publicly announced the Ironbound Merger in a
press release dated July 17, 1998, a copy of which is attached hereto as Exhibit
99.1.
The foregoing description is qualified in its entirety by reference to the
Ironbound Merger Agreement and the Ironbound Stock Option Agreement themselves,
copies of which are attached hereto as Exhibits 2.1 and 10.1, respectively.
In addition, on July 20, 1998, Richmond County Financial Corp., a Delaware
corporation ("Richmond County"), announced that it had entered into an Agreement
and Plan of Merger, dated as of July 19, 1998 ("Bayonne Merger Agreement"), with
Bayonne Bancshares, Inc., a Delaware corporation ("Bayonne"). Bayonne is a
savings and loan holding company that owns First Savings Bank of New Jersey,
SLA, a New Jersey State chartered savings association ("First Savings"). The
Bayonne Merger Agreement provides, among other things, that Bayonne will merge
with and into Richmond County, with Richmond County being the surviving
corporation (the "Bayonne Merger"). A copy of the Bayonne Merger Agreement is
attached hereto as Exhibit 2.2.
Pursuant to the Bayonne Merger Agreement, each share of Bayonne common
stock, par value $0.01 per share ("Bayonne Common Stock"), issued and
outstanding immediately prior to the Effective Time (as defined in the Bayonne
Merger Agreement) will be converted into and become the right to receive 1.05
shares (the "Bayonne Exchange Ratio") of Richmond County common stock, par value
$.01 per share ("Richmond County Common Stock"), except for (i) shares the
holder of which, pursuant to any applicable law providing for dissenter's or
appraisal rights is entitled to receive payment in accordance with the
provisions of any such law, such holder to have only the rights provided in any
such law; (ii) shares of Bayonne's Common Stock held directly or indirectly by
Richmond County, other than shares held in a fiduciary capacity in satisfaction
of a debt previously contracted; (iii) shares held by Bayonne as treasury stock;
and (iv) unallocated shares held in the Amended and Restated 1995 Recognition
and Retention Plan. Each holder of Bayonne Common Stock who would otherwise be
entitled to receive a fraction of a share of Richmond County Common Stock will
receive an amount in cash equal to the product arrived at by multiplying such
fraction of a share of Richmond County Common Stock by the Richmond County
Market Value (as defined in the Bayonne Merger Agreement).
The Bayonne Merger will be structured as a tax-free reorganization and will
be accounted for as a pooling-of-interests. Consummation of the Bayonne Merger
is subject to the satisfaction of certain conditions, including approval of the
Bayonne Merger Agreement by the stockholders
5
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of both Richmond County and Bayonne and approval by the appropriate regulatory
agencies.
The Bayonne Merger Agreement may be terminated and the Bayonne Merger
abandoned at or prior to the effective date of the Bayonne Merger either before
or after any requisite stockholder approval:
(a) by the mutual consent of Richmond County and Bayonne in a written
instrument, if the Board of Directors of each so determines by vote of a
majority of the members of its entire Board; or
(b) by Richmond County or Bayonne, if its Board of Directors so
determines by vote of a majority of the members of its entire Board, in the
event of the failure of the stockholders of Bayonne or Richmond County to
approve the Bayonne Merger Agreement at its stockholder meeting called to
consider such approval; provided, however, that Bayonne or Richmond County, as
the case may be, shall only be entitled to terminate the Bayonne Merger
Agreement pursuant to this clause if it has complied in all material respects
with its obligations to solicit the approval of the stockholders at their
respective stockholder meeting; or
(c) by Richmond County or Bayonne, 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 the Bayonne Merger Agreement;
or
(d) by Richmond County or Bayonne, if its Board of Directors so
determines by vote of a majority of the members of its entire Board, in the
event that the Bayonne Merger is not consummated by April 30, 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 Bayonne Merger (other than the delivery of
executed documents at the closing) shall be fulfilled, the Initial Termination
Date shall be extended to July 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 Bayonne Merger Agreement by the party seeking to terminate; or
(e) by Richmond County, if the Board of Directors of Bayonne does not
publicly recommend in the Proxy Statement that Bayonne's stockholders approve
and adopt the Bayonne Merger Agreement or if, after recommending in the Proxy
that stockholders approve and adopt the Bayonne Merger Agreement, the Board of
Directors of Bayonne shall have withdrawn, modified or amended such
recommendation in any respect materially adverse to Richmond County; or
(f) by Richmond County or Bayonne by written notice to the other party
in
6
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the event that there has occurred since the date of the Bayonne Merger Agreement
an event, condition, change or occurrence which, individually or in the
aggregate, has had or could reasonably be expected to result in a Material
Adverse Effect (as defined in the Bayonne Merger Agreement) on Bayonne or
Richmond County as the case may be; provided that each party shall have given
the other 30 calendar days prior written notice of such termination, and such
party shall not have remedied such event, condition, change or occurrence by the
end of such 30-day period; or
(g) by Bayonne, if its Board of Directors so determines by the
requisite vote of members of its entire board, at any time during the 5-day
period commencing with the Valuation Date as defined below, if both of the
following conditions are satisfied:
(i) Richmond County Market Value is less than $15.41, adjusted to
account for the effects of a stock dividend, reclassification,
recapitalization, split-up, combination, exchange of shares between
July 19, 1998 and the Valuation Date; and
(ii) (A) the number obtained by dividing Richmond County Market
Value on the Valuation Date by the Initial Richmond County Market
Value (the "Richmond County Ratio") is 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) (the
"Index Ratio");
subject, however, to the following three sentences: (1) if Bayonne elects to
exercise its termination right pursuant to the foregoing, it shall give prompt
written notice to Richmond County (provided, further, that such notice of
election to terminate may be withdrawn at any time during the 5-day period); (2)
for a period of 7 days commencing with its receipt of such notice, Richmond
County shall have the option to increase the consideration to be received by the
holders of Bayonne Common Stock hereunder, by adjusting the Bayonne Exchange
Ratio to equal the lesser of (x) a number equal to a fraction, the numerator of
which is 1.05 multiplied by the Initial Richmond County Market Value multiplied
by .85 and the denominator of which is the Richmond County Market Value, and (y)
a number equal to a fraction, the numerator of which is the Index Ratio
multiplied by 1.05 and the denominator of which is Richmond County Ratio; and
(3) if Richmond County so elects it shall give prompt written notice to Bayonne
of such election and the adjusted Merger Consideration, whereupon no termination
shall have occurred pursuant to the foregoing and the Bayonne Merger Agreement
shall remain in effect in accordance with its terms (except as the Merger
Consideration shall have been so adjusted).
"Final Index Price" means the sum of the Final Prices for each company
comprising the Index Group multiplied by the applicable weighting.
"Final Price," with respect to any company being a member of the Index
Group,
7
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means the average of the daily closing sales prices of a share of common
stock of such company, as reported on the consolidated transaction
reporting system for the market or exchange on which such common stock is
principally traded, during the period of 15 trading days ending on the
Valuation Date, adjusted as indicated below.
"Index Group" means the 14 financial institution holding companies
listed below, the common stock of all of which are publicly traded and as
to which there have not been any publicly announced proposal at any time
during the period beginning on the date of the Bayonne Merger Agreement and
ending on the Valuation Date for any such company to be acquired. In the
event that the common stock of any such company ceases to be publicly
traded or a proposal to acquire any such company is announced at any time
during the period beginning on the date of the Bayonne Merger Agreement and
ending on the Valuation Date, such company shall be removed from the Index
Group, and the weights attributed to the remaining companies shall be
adjusted proportionately for purposes of determining the Final Index Price
and the Initial Index Price. The 14 financial institution holding
companies and the weights attributed to them are as follows:
<TABLE>
<CAPTION>
Holding Company Weighting
--------------- ---------
<S> <C>
GreenPoint Financial Corp. 27.71%
Astoria Financial Corp. 11.20%
Independence Community Bank Corp. 9.97%
Staten Island Bancorp, Inc. 8.14%
Webster Financial Corp. 7.16%
St. Paul Bancorp, Inc. 6.61%
Queens County Bancorp, Inc. 5.13%
Bay View Capital Corp. 4.96%
JSB Financial, Inc. 4.52%
MAF Bancorp 4.24%
Anchor BanCorp Wisconsin 3.03%
InterWest Bancorp 2.88%
Reliance Bancorp, Inc. 2.76%
Haven Bancorp, Inc. 1.69%
</TABLE>
"Initial Index Price" means the sum of each per share closing 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
transactions 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 Bayonne Merger Agreement.
"Initial Richmond County Market Value" means the closing sales price
of
8
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Richmond County Common Stock, as reported on the Nasdaq National Market, on
the trading day immediately preceding the public announcement of the
Bayonne Merger Agreement, adjusted as indicated below.
"Richmond County Market Value" means the average of the closing sales
price on that day as reported on the Nasdaq National Market, for the 15
consecutive trading days immediately preceding the day on which the last of
the required regulatory approvals, as contemplated by the Bayonne Merger
Agreement, is obtained.
"Valuation Date" means the day on which the last required regulatory
approval, as contemplated by the Bayonne Merger Agreement, is obtained.
If Richmond County 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 the
Bayonne Merger Agreement and the Valuation Date, the prices for the common stock
of such company shall be appropriately adjusted to reflect the impact of the
resultant change in the number of shares of stock; or
(h) by Richmond County or Bayonne (provided that the party seeking
termination is not then in material breach of any representation, warranty,
covenant or other agreement contained in the Bayonne Merger Agreement), in the
event of (i) a failure to perform or comply by the other party with any covenant
or agreement of such other party contained in the Bayonne Merger Agreement,
which failure or non-compliance is material in the context of the transactions
contemplated by the Bayonne Merger Agreement, or (ii) subject to the materiality
thresholds established by Sections 2.2(a) and (b) of the Bayonne Merger
Agreement, any inaccuracies, omissions or breach in the representations,
warranties, covenants or agreements of the other party contained in the Bayonne
Merger Agreement the circumstances as to which either individually or in the
aggregate have, or reasonably could be expected to have, a Material Adverse
Effect on such other party; in either case which has not been or cannot be cured
within 30 calendar days after written notice thereof is given by the party
seeking to terminate to such other party.
As an inducement for Richmond County to enter into the Bayonne Merger
Agreement, Richmond County and Bayonne entered into a stock option agreement
(the "Bayonne Stock Option Agreement") pursuant to which, under certain
circumstances, Richmond County would have the option to purchase up to 19.9% of
Bayonne's issued and outstanding shares of common stock (without considering the
stock issued in connection with the exercise of the option). A copy of the
Bayonne Stock Option Agreement is attached hereto as Exhibit 10.2.
Richmond County shall cause its Board of Directors to be increased by one
member and shall appoint Francis F.X. Nilan as the nominee to fill such vacancy
on Richmond County's Board of Directors created by such increase. The term for
Mr. Nilan shall expire in the year 2000.
9
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Richmond County and Bayonne publicly announced the Bayonne Merger in a
press release dated July 20, 1998, a copy of which is attached hereto as Exhibit
99.2.
The foregoing description is qualified in its entirety by reference to the
Bayonne Merger Agreement and the Bayonne Stock Option Agreement themselves,
copies of which are attached hereto as Exhibits 2.2 and 10.2, respectively.
ITEM 6. NOT APPLICABLE.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
a. Financial Statements of Business Acquired.
Not Applicable
a. Pro Forma Financial Information.
Not Applicable
c. Exhibits: The following Exhibits are filed as part of this
report:
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<CAPTION>
EXHIBIT NO. DESCRIPTION
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<S> <C>
2.1 Agreement and Plan of Merger, dated as of
July 17, 1998, by and between Richmond
County Financial Corp. and Ironbound
Bankcorp, NJ.
2.2 Agreement and Plan of Merger, dated July 19,
1998, by and between Richmond County
Financial Corp. and Bayonne Bancshares, Inc.
10.1 Stock Option Agreement, dated July 17, 1998,
by and between Ironbound Bankcorp, NJ and
Richmond County Financial County Financial
Corp.
10.2 Stock Option Agreement, dated July 19, 1998,
by and between Bayonne Bancshares, Inc. and
Richmond County Financial Corp.
99.1 Press Release issued July 17, 1998.
99.2 Press Release issued July 20, 1998
99.3 Richmond County Financial Corp.'s
Presentation of the Bayonne Merger and the
Ironbound Merger, July 20, 1998
</TABLE>
10
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TEM 8. NOT APPLICABLE.
ITEM 9. NOT APPLICABLE.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RICHMOND COUNTY FINANCIAL CORP.
By: /s/ Michael F. Manzulli
-------------------------------------
Michael F. Manzulli
Chairman of the Board and
Chief Executive Officer
Dated: July 27, 1998
11
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LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
2.1 Agreement and Plan of Merger, dated as of July 17, 1998, by and
between Richmond County Financial Corp. and Ironbound Bankcorp,
NJ.
2.2 Agreement and Plan of Merger, dated July 19, 1998, by and between
Richmond County Financial Corp. and Bayonne Bancshares, Inc.
10.1 Stock Option Agreement, dated July 17, 1998, by and between
Ironbound Bankcorp, NJ and Richmond County Financial County
Financial Corp.
10.2 Stock Option Agreement, dated July 19, 1998, by and between
Bayonne Bancshares, Inc. and Richmond County Financial Corp.
99.1 Press Release issued July 17, 1998.
99.2 Press Release issued July 20, 1998
99.3 Richmond County Financial Corp.'s Presentation of the Bayonne
Merger and the Ironbound Merger, July 20, 1998
</TABLE>
12
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Exhibit 2.1
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
DATED AS OF JULY 17, 1998
BY AND BETWEEN
RICHMOND COUNTY FINANCIAL CORP.
AND
IRONBOUND BANKCORP, NJ
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE NO.
<S> <C>
Introductory Statement............................................................. 4
ARTICLE I
THE MERGER................................................................. 5
----------
Section 1.1. Structure of the Merger...................................... 5
-----------------------
Section 1.2. Effect on Outstanding Shares of Ironbound Common Stock....... 5
------------------------------------------------------
Section 1.3. Exchange Procedures.......................................... 6
-------------------
Section 1.4. Stock Options................................................ 8
-------------
Section 1.5. Bank Merger.................................................. 9
-----------
Section 1.6. Directors of RCFC after Effective Time....................... 9
--------------------------------------
Section 1.7. Alternative Structure........................................ 9
---------------------
Section 1.8. Dissenters' Rights........................................... 10
------------------
ARTICLE II
REPRESENTATIONS AND WARRANTIES............................................. 10
------------------------------
Section 2.1. Disclosure Letters........................................... 10
------------------
Section 2.2. Standards.................................................... 10
---------
Section 2.3. Representations and Warranties of Ironbound.................. 11
-------------------------------------------
Section 2.4. Representations and Warranties of RCFC....................... 25
--------------------------------------
ARTICLE III
CONDUCT PENDING THE MERGER................................................. 38
--------------------------
Section 3.1. Conduct of Ironbound's Business Prior to the Effective Time.. 38
-----------------------------------------------------------
Section 3.2. Forbearance by Ironbound..................................... 38
------------------------
Section 3.3. Conduct of RCFC's Business Prior to the Effective Time....... 42
------------------------------------------------------
ARTICLE IV
COVENANTS.................................................................. 42
---------
Section 4.1. Acquisition Proposals........................................ 42
---------------------
Section 4.2. Certain Policies of Ironbound................................ 43
-----------------------------
Section 4.3. Access and Information....................................... 44
----------------------
Section 4.4. Certain Filings, Consents and Arrangements................... 45
------------------------------------------
Section 4.5. Antitakeover Provisions...................................... 45
-----------------------
Section 4.6. Additional Agreements........................................ 46
---------------------
Section 4.7. Publicity.................................................... 46
---------
Section 4.8. Stockholders Meeting......................................... 46
--------------------
Section 4.9. Proxy Statements; Comfort Letters............................ 46
---------------------------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Section 4.10. Registration of RCFC Common Stock............................ 47
---------------------------------
Section 4.11. Affiliate Letters............................................ 47
-----------------
Section 4.12. Notification of Certain Matters.............................. 48
-------------------------------
Section 4.13. Employees, Directors and Officers............................ 48
---------------------------------
Section 4.14. Indemnification; Directors' and Officers' Insurance.......... 49
---------------------------------------------------
Section 4.15. Tax-Free Reorganization Treatment............................ 50
---------------------------------
Section 4.16. Savings and Loan Holding Company Structure................... 51
------------------------------------------
Section 4.17. Divisional Board............................................. 51
----------------
ARTICLE V
CONDITIONS TO CONSUMMATION................................................. 51
--------------------------
Section 5.1. Conditions to Each Party's Obligations....................... 51
--------------------------------------
Section 5.2. Conditions to the Obligations of RCFC and RCFC Bank.......... 52
---------------------------------------------------
Section 5.3. Conditions to the Obligations of Ironbound and
----------------------------------------------
Ironbound Bank............................................... 54
--------------
ARTICLE VI
TERMINATION................................................................ 56
-----------
Section 6.1. Termination.................................................. 56
-----------
ARTICLE VII
CLOSING, EFFECTIVE DATE AND EFFECTIVE TIME................................. 58
------------------------------------------
Section 7.1. Effective Date and Effective Time............................ 58
---------------------------------
Section 7.2. Deliveries at the Closing.................................... 58
-------------------------
Section 7.3. Adjustment to the Exchange Ratio............................. 58
--------------------------------
ARTICLE VIII
CERTAIN OTHER MATTERS...................................................... 58
---------------------
Section 8.1. Certain Definitions; Interpretation.......................... 58
-----------------------------------
Section 8.2. Survival..................................................... 59
--------
Section 8.3. Waiver; Amendment............................................ 59
-----------------
Section 8.4. Counterparts................................................. 59
------------
Section 8.5. Governing Law................................................ 59
-------------
Section 8.6. Expenses..................................................... 59
--------
Section 8.7. Notices...................................................... 59
-------
Section 8.8. Entire Agreement; etc. ...................................... 61
---------------------
Section 8.9. Assignment................................................... 61
----------
</TABLE>
3
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AGREEMENT AND PLAN OF MERGER
----------------------------
This is an AGREEMENT AND PLAN OF MERGER, dated as of the 17th day of
July, 1998 ("Agreement"), by and between Richmond County Financial Corp., a
Delaware corporation ("RCFC"), and Ironbound Bankcorp, NJ, a New Jersey
corporation ("Ironbound").
INTRODUCTORY STATEMENT
The Board of Directors of each of RCFC and Ironbound (i) has
determined that this Agreement and the business combination and related
transactions contemplated hereby are in the best interests of RCFC and
Ironbound, 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 RCFC's willingness to enter into this Agreement,
RCFC and Ironbound have entered into a stock option agreement (the "Option
Agreement"), pursuant to which Ironbound has granted to RCFC an option to
purchase shares of Ironbound's common stock, par value $5.00 per share
("Ironbound Common Stock"), upon the terms and conditions therein contained; and
certain officers and directors of Ironbound will each, within fourteen days of
the date of this Agreement, execute in favor of RCFC a Letter Agreement in the
form annexed as Exhibit A.
The parties hereto intend that the 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.
RCFC and Ironbound 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:
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ARTICLE I
THE MERGER
----------
Section 1.1. Structure of the Merger. On the Effective Date (as
-----------------------
defined in Section 7.1), Ironbound will merge with and into RCFC ("Merger"),
with RCFC 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 Ironbound shall cease. RCFC
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 Ironbound Common Stock.
------------------------------------------------------
(a) By virtue of the Merger, automatically and without any action on
the part of the holder thereof, each share of Ironbound Common Stock issued and
outstanding at the Effective Time (as defined in Section 7.1), other than (i)
shares the holder of which (the "Dissenting Shareholders") pursuant to any
applicable law providing for dissenters' or appraisal rights is entitled to
receive payment in accordance with the provisions of any such law, such holder
to have only the rights provided in any such law (the "Dissenters' Shares"),
(ii) shares held directly or indirectly by RCFC (other than shares held in a
fiduciary capacity or in satisfaction of a debt previously contracted), and
(iii) shares held by Ironbound as treasury stock (such shares referred to in
clauses (i), (ii) and (iii) being referred to herein as the "Excluded Shares")
shall become and be converted into the right to receive 1.45 shares of RCFC
Common Stock (the "Exchange Ratio") (subject to Section 7.3); provided, however,
that, notwithstanding any other provision hereof, no fraction of a share of RCFC
Common Stock and no certificates or scrip therefor will be issued in the Merger;
instead, RCFC shall pay to each holder of Ironbound Common Stock who would
otherwise be entitled to a fraction of a share of RCFC Common Stock an amount in
cash, rounded to the nearest cent, determined by multiplying such fraction by
the RCFC Market Value (collectively, the "Merger Consideration").
(b) As used in Sections 1.2(a), 6.1(g) and 7.3, "RCFC Market Value"
shall be the average of the closing sales price 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) In the event that, between the date hereof and prior to the
Effective Time, the outstanding shares of RCFC Common Stock shall have been
increased, decreased or changed into or exchanged for a different number or kind
of shares or securities by reorganization,
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recapitalization, reclassification, stock split or other like changes in the
capitalization of RCFC, or if a stock dividend is declared on RCFC Common Stock
with a record date (as to a stock split, the pay date) within such period, then
an appropriate and proportionate adjustment shall be made in the number and kind
of shares of RCFC Common Stock to be thereafter delivered pursuant to this
Agreement, and the Exchange Ratio set forth in Section 1.2 of this Article I, so
that each stockholder of Ironbound shall be entitled to receive such number of
shares of RCFC Common Stock or other securities as such stockholder would have
received pursuant to such reorganization, recapitalization, reclassification,
stock split, exchange of shares or readjustment or other like changes in the
capitalization of RCFC, or as a result of a stock dividend on RCFC Common Stock,
had the record (or pay) date therefor been immediately following the Effective
Time.
(d) As of the Effective Time, each Excluded Share, other than
Dissenters' Shares, shall be cancelled and retired and shall cease to exist, and
no exchange or payment shall be made with respect thereto. All shares of RCFC
Common Stock (as defined in Section 2.4(b)) that are held by Ironbound, if any,
other than shares held in a fiduciary capacity or in satisfaction of a debt
previously contracted, shall become treasury stock of RCFC.
Section 1.3. Exchange Procedures.
-------------------
(a) Appropriate transmittal materials ("Letter of Transmittal") in a
form satisfactory to RCFC and Ironbound, 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 Ironbound 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 Ironbound Common Stock
to be converted thereby.
(b) At and after the Effective Time, each certificate ("Ironbound
Certificate") previously representing shares of Ironbound 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, RCFC shall deposit, or shall cause to
be deposited, with such bank or trust company that is selected by RCFC and is
reasonably acceptable to Ironbound to act as exchange agent ("Exchange Agent"),
for the benefit of the holders of shares of Ironbound 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 RCFC shall reserve for issuance with its Transfer
Agent and Registrar a sufficient number of shares of RCFC Common Stock to
provide for payment of the Merger Consideration. On the Effective Time, RCFC
shall have granted the Exchange Agent the requisite power and authority to
effect for and on behalf of RCFC the issuance of the number of shares of RCFC
Common Stock issuable in the share exchange.
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(d) The Letter of Transmittal shall (i) specify that delivery shall be
effected, and risk of loss and title to the Ironbound Certificates shall pass,
only upon delivery of the Ironbound Certificates to the Exchange Agent, (ii) be
in a form and contain any other provisions as RCFC may reasonably determine and
(iii) include instructions for use in effecting the surrender of the Ironbound
Certificates in exchange for the Merger Consideration. Upon the proper
surrender of the Ironbound Certificates to the Exchange Agent, together with a
properly completed and duly executed Letter of Transmittal, the holder of such
Ironbound Certificates shall be entitled to receive in exchange therefor (m) a
certificate representing that number of whole shares of RCFC 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. Ironbound Certificates so surrendered shall forthwith be cancelled. As
soon as practicable, but no later than five (5) business days following receipt
of the properly completed Letter of Transmittal and any necessary accompanying
documentation, the Exchange Agent shall distribute RCFC 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 RCFC 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
ownership of any shares of Ironbound Common Stock not registered in the transfer
records of Ironbound, the Merger Consideration shall be issued to the transferee
thereof if the Ironbound Certificates representing such Ironbound Common Stock
are presented to the Exchange Agent, accompanied by all documents required, in
the reasonable judgment of RCFC 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 RCFC Common Stock shall be remitted to any person
entitled to receive shares of RCFC Common Stock hereunder until such person
surrenders his or her Ironbound Certificates in accordance with this Section
1.3. Upon the surrender of such person's Ironbound 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
RCFC Common Stock represented by such person's Ironbound Certificates.
(f) From and after the Effective Time there shall be no transfers on
the stock transfer records of Ironbound of any shares of Ironbound Common Stock.
If, after the Effective Time, Ironbound Certificates are presented to RCFC, 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
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stockholders of Ironbound for six months after the Effective Time shall be
repaid by the Exchange Agent to RCFC upon the written request of RCFC. After
such request is made, any stockholders of Ironbound who have not theretofore
complied with this Section 1.3 shall look only to RCFC for the Merger
Consideration deliverable in respect of each share of Ironbound Common Stock
such stockholder holds, as determined pursuant to Section 1.2 of this Agreement,
without any interest thereon. If outstanding Ironbound 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 RCFC (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 RCFC, RCFC Bank, the Exchange Agent or any other person shall be liable
to any former holder of Ironbound Common Stock for any amount delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
(h) RCFC and the Exchange Agent shall be entitled to rely upon
Ironbound'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 Ironbound Certificate, RCFC 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.
(i) If any Ironbound Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Ironbound 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 Ironbound Certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed Ironbound Certificate the
Merger Consideration deliverable in respect thereof pursuant to Section 1.2.
Section 1.4. Stock Options.
-------------
(a) Options to purchase shares of Ironbound Common Stock that have
been issued by Ironbound and are outstanding at the Effective Time (each, a
"Ironbound Option") pursuant to the Ironbound 1994 Stock Option Plan, the
Ironbound Bankcorp, NJ 1998 Stock Option Plan for Employees/Active Officers of
the Company's Wholly Owned Subsidiary, Ironbound Bank and the Ironbound
Bankcorp, NJ 1998 Stock Option Plan for Non-Employee Directors (collectively,
the "Ironbound Option Plans") shall be converted automatically into the right to
receive such number of shares (rounded to the nearest whole share) of RCFC
Common Stock as is equal in value (the RCFC Common Stock value shall be
determined as of the date hereof) to the amount equal to: the product of
(A) the Exchange Ratio and (B) the number of shares of Ironbound Common Stock
issuable upon exercise of the Ironbound Options
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immediately prior to the Effective Time multiplied by the spread between the
market price (as determined as of the date hereof) and the exercise price for
each Ironbound Option; provided however, that Section 1.4 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, RCFC
shall take, or cause to be taken, all necessary action to effect the intent of
the provisions set forth in this Section 1.4. RCFC, or at the option of RCFC,
Ironbound, shall make such payment at the Effective Time to each individual
provided that the individual delivers to RCFC his written acceptance, in a form
acceptable to RCFC, of such payment as full and complete consideration for the
cancellation of each Ironbound option held by him.
(b) Ironbound shall agree that any grants of options to purchase Ironbound
Common Stock, automatic or otherwise, made under the Ironbound Option Plans
shall be null and void ab initio, following the payment of the Stock Options in
-- ------
accordance with 1.4(a) above.
Section 1.5. Bank Merger. Concurrently with or as soon as
-----------
practicable after the execution and delivery of this Agreement, Richmond County
Savings Bank ("RCFC Bank"), a wholly-owned subsidiary of RCFC, and Ironbound
Bank, a wholly-owned subsidiary of Ironbound, shall enter into the Plan of Bank
Merger, in the form attached hereto as Exhibit C, 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 RCFC Bank as the surviving entity of the Bank Merger shall
be all of the directors of RCFC Bank serving immediately prior to the Bank
Merger and that it is the intent of RCFC Bank, subject to applicable statutes,
regulations or regulatory conditions, to operate the offices of Ironbound Bank
as a separate operational division of RCFC Bank.
Section 1.6. Directors of RCFC after Effective Time. At the
--------------------------------------
Effective Time, the directors of RCFC shall consist of the directors of RCFC
serving immediately prior to the Effective Time.
Section 1.7. Alternative Structure. RCFC may at any time prior to
---------------------
the Effective Time change the method of effecting the Merger and the Bank Merger
or any part thereof if and to the extent it deems such change to be necessary,
appropriate or desirable; provided, however, that no such change shall (i) alter
or change the Merger Consideration issued to holders of Ironbound Common stock
as provided for in the Agreement, (ii) adversely affect the tax treatment of
Ironbound's stockholders as a result of receiving the Merger Consideration or
the Company Merger qualifying for "pooling-of-interests" accounting treatment,
(iii) materially impeded or delay consummation of the Merger, (iv) result in any
representation or warranty of any party set forth in this Agreement becoming
incorrect in any material respect, or (v) diminish the benefits (including the
establishment of the Divisional Board) to be received by the directors, officers
or employees of Ironbound as set forth in the Agreement or in any other
agreements between the parties made in connection with this Agreement.
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Section 1.8. Dissenters' Rights.
------------------
(a) Any Dissenting Stockholder who shall be entitled to dissenters'
rights with respect to his or her Dissenters' Shares, as provided in Section
14A:11-1 of the New Jersey Statutes Annotated ("NJSA") shall not be entitled to
the Merger Consideration, unless and until the holder thereof shall have failed
to perfect or shall have effectively withdrawn or lost such holder's right to
dissent from the Merger under such law, and shall be entitled to receive only
the payment to the extent provided for therein with respect to such Dissenters'
Shares.
(b) Ironbound shall (i) give RCFC prompt written notice of the receipt
of any notice from a stockholder purporting to exercise any dissenters' rights,
(ii) not settle nor offer to settle any demand for payment without the prior
written consent of RCFC and (iii) not waive any failure to comply strictly with
any procedural requirements of the NJSA.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 2.1. Disclosure Letters. On or prior to the execution and
------------------
delivery of this Agreement, Ironbound and RCFC 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 Ironbound or RCFC 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. Ironbound'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 RCFC.
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(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 Ironbound or RCFC, 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 RCFC and RCFC Bank and Ironbound and Ironbound 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(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(aa) 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.
Section 2.3. Representations and Warranties of Ironbound. Subject
-------------------------------------------
to Sections 2.1 and 2.2, Ironbound represents and warrants to RCFC that, except
as disclosed in Ironbound's Disclosure Letter:
(a) Organization. (i) Ironbound is a corporation duly organized,
------------
validly existing and in good standing under the laws of the State of New Jersey
and is duly registered as a bank holding company under the Bank Holding Company
Act of 1956, as amended ("BHCA"). Ironbound Bank is a stock commercial bank duly
organized, validly existing and in good standing under the laws of the State of
New Jersey. Each Subsidiary (as defined below) of Ironbound 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 Ironbound 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 Ironbound 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) Ironbound's Disclosure Letter sets forth all of Ironbound's
Subsidiaries and all entities (whether corporations, partnerships or similar
organizations),
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including the corresponding percentage ownership, in which Ironbound owns,
directly or indirectly, 5% or more of the ownership interests as of the date of
this Agreement and indicates for each of Ironbound'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. Ironbound owns, either directly or
indirectly, all of the outstanding capital stock of each of its Subsidiaries.
No Subsidiary of Ironbound other than Ironbound 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 Ironbound or any of its other
Subsidiaries are fully paid, nonassessable and not subject to any preemptive
rights and are owned by Ironbound or a Subsidiary of Ironbound 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 Ironbound 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
-----------------
Ironbound consists of 4,000,000 shares of Ironbound Common Stock, par value
$5.00 per share. As of the date of this Agreement: (A) 998,315 shares of
Ironbound Common Stock were issued and outstanding, (B) no shares of Ironbound
Common Stock were reserved for issuance, except that 117,908 shares of Ironbound
Common Stock were reserved for issuance pursuant to the Ironbound Option Plans
and (C) 45,505 shares of Ironbound Common Stock were held by Ironbound in its
treasury or by its Subsidiaries. The authorized capital stock of Ironbound Bank
consists of 4,000,000 shares of common stock, par value $5.00 per share. As of
the date of the Agreement, 100 shares of such common stock were outstanding, no
shares of preferred stock were outstanding and all outstanding shares of such
common stock were, and as of the Effective Time will be, owned by Ironbound.
All outstanding shares of capital stock of Ironbound and Ironbound 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 Ironbound 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. Ironbound's Disclosure
Letter sets forth a complete and accurate list of all options to purchase
Ironbound Common Stock that have been granted pursuant to the Ironbound Option
Plans and all restricted stock grants under the Ironbound 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
Ironbound are issued or outstanding.
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(iii) As of the date of this Agreement, except for this Agreement
and the Ironbound Option Plans, neither Ironbound 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 Ironbound 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 Ironbound or any of
its Subsidiaries or obligating Ironbound 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 Ironbound or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of Ironbound
or any of its Subsidiaries.
(c) Authority. Each of Ironbound and Ironbound 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 Ironbound'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 Ironbound's stockholders, the consummation of the transactions contemplated
hereby, have been duly authorized by all necessary corporate actions on the part
of Ironbound and Ironbound Bank. This Agreement has been duly executed and
delivered by Ironbound and constitutes a valid and binding obligation of
Ironbound, 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 Approval; Fairness Opinion. The affirmative vote of a
--------------------------------------
majority of the votes cast by holders of Ironbound Common Stock entitled to vote
on this Agreement is the only vote of the stockholders of Ironbound required for
approval of this Agreement and the consummation of the Merger and the related
transactions contemplated hereby. Ironbound has received the written opinion of
Ostrowski & Company, Inc. to the effect that, as of the date hereof, the
Exchange Ratio to be received by Ironbound's stockholders is fair, from a
financial point of view, to such stockholders.
(e) No Violations. The execution, delivery and performance of this
-------------
Agreement and Option Agreement by Ironbound 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 Ironbound or any of its Subsidiaries, or
to which Ironbound 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 Ironbound 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
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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 Ironbound 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 Ironbound 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 votes cast by holders of
Ironbound Common Stock entitled to vote, (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, as amended ("HOLA"), the approval of the New Jersey
Department of Banking (the "NJBD") 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 Ironbound know of no reason pertaining to
Ironbound 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).
(f) Reports. (i) As of their respective dates, none of the reports
-------
or other statements filed by Ironbound or Ironbound Bank on or subsequent to
December 31, 1997 with the FRB, the FDIC (collectively, "Ironbound'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 Ironbound
included in Ironbound's Reports complied as to form, as of their respective
dates of filing with the FDIC, in all material respects with applicable
accounting requirements and with the published rules and regulations of the FDIC
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 the FDIC or the
FRB). Each of the consolidated statements of condition contained or
incorporated by reference in Ironbound'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
14
<PAGE>
consolidated statements of changes in stockholders' equity, contained or
incorporated by reference in Ironbound'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. Ironbound has made available to RCFC a true and complete copy of
each of Ironbound's Report filed with the FRB and FDIC since December 31, 1997.
(ii) Ironbound 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 NJBD, (B) the FDIC and (C) the FRB, and have paid
all fees and assessments due and payable in connection therewith.
(g) Absence of Certain Changes or Events. Except as disclosed in
------------------------------------
Ironbound's Reports filed on or prior to the date of this Agreement, since
December 31, 1997, (i) Ironbound and its Subsidiaries have not incurred any
liability, except in the ordinary course of their business consistent with past
practice, (ii) Ironbound 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 Ironbound.
(h) Absence of Claims. Except as set forth in Ironbound's Disclosure
-----------------
Letter, no litigation, proceeding, controversy, claim or action before any court
or governmental agency is pending against Ironbound or any of its Subsidiaries
and, to the best of Ironbound's knowledge, no such litigation, proceeding,
controversy, claim or action has been threatened.
(i) Absence of Regulatory Actions. Neither Ironbound 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 Ironbound 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
15
<PAGE>
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 Ironbound or any of its Subsidiaries have been paid in full or
adequate provision has been made for any such taxes on Ironbound'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 Ironbound or any
of its Subsidiaries, and no claim has been made by any authority in a
jurisdiction where Ironbound or any of its Subsidiaries do not file tax returns
that Ironbound 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 Ironbound
or any of its Subsidiaries have been paid in full or adequate provision has been
made for any such taxes on Ironbound's balance sheet (in accordance with GAAP).
Except as set forth in Ironbound's Disclosure Letter, Ironbound 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. Ironbound 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 Ironbound 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 Ironbound 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 Option Agreement and
----------
arrangements made in the ordinary course of business, and except as set forth in
Ironbound's Disclosure Letter, Ironbound 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 Ironbound's Reports. Except as disclosed in Ironbound's Disclosure
Letter, neither Ironbound 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 Ironbound 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 Ironbound or any of its
Subsidiaries of the nature contemplated by this Agreement or the Option
Agreement, (C) agreement with respect to any employee or director of Ironbound
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 $30,000 per annum, (D) agreement or plan, including any stock option
plan, phantom
16
<PAGE>
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 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 Option Agreement or (E)
agreement containing covenants that limit the ability of Ironbound 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,
Ironbound (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 Ironbound 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) Ironbound 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 Ironbound nor any of its Subsidiaries has received any
notice of conflict with respect thereto that asserts the right of others. Each
of Ironbound 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 Ironbound 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 Ironbound 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 Ironbound or any of its Subsidiaries pending or, to Ironbound's
knowledge, threatened. Ironbound 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.
(m) Employee Benefit Plans. Ironbound'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 Ironbound or any of its
17
<PAGE>
Subsidiaries (hereinafter collectively referred to as the "Ironbound Employee
Plans"). Neither Ironbound nor any affiliate with which it would be aggregated
by reason of Section 414 of the Code, maintains, sponsors or participates in, or
has ever maintained, sponsored, or participated in, an "employee stock ownership
plan" (within the meaning of Section 407(d)(6) of ERISA and Sections 409 and
4975(e)(7) of the Code or employee pension benefit plan (other than the
[Ironbound 401(k) Plan] that is or was subject to any provision of ERISA or the
Code. All of the Ironbound 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 Ironbound or any of its Subsidiaries. Neither Ironbound nor any of its
Subsidiaries has provided, or is required to provide, security to any Ironbound
Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Code. Neither Ironbound, 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 Ironbound 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
"Ironbound Qualified Plan") has received a favorable determination letter from
the Internal Revenue Service ("IRS"), and Ironbound and its Subsidiaries are not
aware of any circumstances likely to result in revocation of any such favorable
determination letter. There is no pending or, to Ironbound's knowledge,
threatened litigation, administrative action or proceeding relating to any
Ironbound Employee Plan. There has been no announcement or commitment by
Ironbound or any of its Subsidiaries to create an additional Ironbound Employee
Plan, or to amend any Ironbound Employee Plan, except for amendments required by
applicable law which do not materially increase the cost of such Ironbound
Employee Plan; and, except as specifically identified in Ironbound's Disclosure
Letter, Ironbound and its Subsidiaries do not have any obligations for post-
retirement or post-employment benefits under any Ironbound 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 Ironbound or any of its
Subsidiaries, for the Employee Plans listed in Ironbound'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 Ironbound 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
Ironbound Employee Plan or accelerate the time of payment or vesting of any such
benefit. With respect to each Ironbound Employee Plan, Ironbound has supplied to
RCFC 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 Ironbound Employee Plan, including amendments
thereto, (C) each trust agreement, insurance contract or other funding
arrangement relating to such Ironbound Employee Plan, including amendments
thereto, (D) the most recent summary plan description and summary of material
modifications thereto for such Ironbound Employee Plan, if the Ironbound
Employee Plan is subject to Title I
18
<PAGE>
of ERISA, and (E) the most recent determination letter issued by the IRS if such
Employee Plan is a Qualified Plan.
(n) Title to Assets. Ironbound 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 Ironbound 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 Ironbound 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 Ironbound to be adequate for
the current business of Ironbound and its Subsidiaries.
(o) Compliance with Laws. Ironbound 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 Ironbound, no suspension or
cancellation of any of them is threatened. Since the date of its incorporation,
the corporate affairs of Ironbound 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 Securities and Exchange Commission
(the "SEC"), the NASD or any other SRO (each, a "Governmental Entity"). The
businesses of Ironbound 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.
(p) Fees. Other than financial advisory services performed for
----
Ironbound by Ostrowski & Company, Inc. pursuant to an agreement dated June 19,
1998, a true and complete copy of which has been previously delivered to RCFC,
neither Ironbound 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 Ironbound or any of its Subsidiaries in connection with this
Agreement or the transactions contemplated hereby.
(q) Environmental Matters. (i) With respect to Ironbound and each
---------------------
of its Subsidiaries:
(A) Each of Ironbound and its Subsidiaries, the Participation
Facilities (as defined herein), and, to Ironbound's knowledge, the Loan
Properties (as defined herein) are,
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<PAGE>
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
Ironbound'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;
(C) To Ironbound'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 Ironbound 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 Ironbound's knowledge, the properties currently owned or
operated by Ironbound 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 Ironbound 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 Ironbound's knowledge, there are no underground storage tanks
on, in or under any properties owned or operated by Ironbound 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 Ironbound
or any of its Subsidiaries or any Participation Facility; and
(G) To Ironbound's knowledge, during the period of (l) Ironbound's or
any of its Subsidiaries' ownership or operation of any of their respective
current properties or (m) Ironbound'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 Ironbound's knowledge, prior to the period of (x) Ironbound's or
20
<PAGE>
any of its Subsidiaries' ownership or operation of any of their respective
current properties or (y) Ironbound'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,
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
21
<PAGE>
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.
(r) Loan Portfolio; Allowance; Asset Quality. (i) With respect to
----------------------------------------
each loan owned by Ironbound or its Subsidiaries in whole or in part (each, a
"Loan"), to the best knowledge of Ironbound:
(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 Ironbound 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) Ironbound or a Subsidiary is the sole holder of legal and
beneficial title to each Loan (or Ironbound's applicable participation interest,
as applicable), except as otherwise referenced on the books and records of
Ironbound;
(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 Ironbound;
(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 Ironbound's
audited statement of condition at December 31, 1997 was, and the allowance for
possible losses shown on the balance sheets in Ironbound's Reports for periods
ending after December 31, 1997 will be,
22
<PAGE>
adequate, as of the dates thereof, under generally accepted accounting
principles applicable to stock banks consistently applied.
(iii) Ironbound'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 Ironbound and its
Subsidiaries that have been classified (whether regulatory or internal) as
"Special Mention," "Substandard," "Doubtful," "Loss" or words of similar import,
and Ironbound and its Subsidiaries shall promptly after the end of any month
inform RCFC 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 Ironbound 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.
(s) Deposits. None of the deposits of Ironbound or any of its
--------
Subsidiaries is a "brokered" deposit.
(t) Accounting Matters. Neither Ironbound 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 RCFC from
accounting for the business combination to be effected by the Merger as a
pooling-of-interests, and Ironbound has no knowledge of any fact or circumstance
that would prevent such accounting treatment.
(u) Antitakeover Provisions Inapplicable. Ironbound and its
------------------------------------
Subsidiaries have taken all actions required to exempt Ironbound, the Agreement,
the Merger and the Option Agreement from any provisions of an antitakeover
nature in their organization certificates and bylaws, and the provisions of any
federal or state "antitakeover," "fair price," "moratorium," "control share
acquisition" or similar laws or regulations.
(v) Material Interests of Certain Persons. Except as disclosed in
-------------------------------------
Ironbound's Proxy Statement for its 1998 Annual Meeting of Stockholders or in
Ironbound's Disclosure Letter, no officer or director of Ironbound, 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 Ironbound or
any of its Subsidiaries. No such interest has been created or modified since
the date of the last regulatory examination of Ironbound or its Subsidiaries.
(w) Insurance. Ironbound 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 Ironbound and its Subsidiaries are in full force and effect,
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<PAGE>
Ironbound and its Subsidiaries are not in default thereunder and all material
claims thereunder have been filed in due and timely fashion.
(x) Investment Securities; Borrowings. (i) None of the investments
---------------------------------
reflected in the consolidated balance sheet of Ironbound 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 Ironbound's Disclosure Letter, neither
Ironbound 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.
(iii) Set forth in Ironbound's Disclosure Letter is a true
and complete list of Ironbound's borrowed funds (excluding deposit accounts) as
of the date hereof.
(y) Indemnification. Except as provided in Ironbound's Disclosure
---------------
Letter, applicable New Jersey law, Ironbound's Employment Agreements or the
organization certificate or bylaws of Ironbound and its Subsidiaries, neither
Ironbound 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 Ironbound (a "Covered Person"), and, except as set forth in
Ironbound's Disclosure Letter, to the best knowledge of Ironbound, there are no
claims for which any Covered Person would be entitled to indemnification under
the organization certificate or bylaws of Ironbound or any of its Subsidiaries,
under any applicable law or regulation or under any indemnification agreement.
(z) Books and Records. The books and records of Ironbound 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.
(aa) Corporate Documents. Ironbound has delivered to RCFC true and
-------------------
complete copies of its certificate of incorporation and bylaws and of Ironbound
Bank's organization certificate and bylaws. The minute books of Ironbound and
Ironbound 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
24
<PAGE>
Ironbound'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.
(bb) Tax Treatment of the Merger. As of the date hereof, Ironbound
---------------------------
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.
(cc) Beneficial Ownership of RCFC Common Stock. As of the date
-----------------------------------------
hereof, Ironbound beneficially owns no shares of RCFC Common Stock and does not
have any option, warrant or right of any kind to acquire the beneficial
ownership of any shares of RCFC Common Stock.
(dd) Year 2000 Matters. Ironbound 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.
Ironbound'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, Ironbound
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 Ironbound or its Subsidiaries.
(ee) Registration Statement. The information regarding Ironbound to
----------------------
be supplied by Ironbound 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 RCFC for
the purpose of, among other things, registering the RCFC Common Stock to be
issued to Ironbound's stockholders in the Merger (as amended or supplemented
from time to time, the "Registration Statement"), or (ii) the proxy statement to
be distributed by Ironbound in connection with Ironbound'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 RCFC. Subject to
--------------------------------------
Sections 2.1 and 2.2, RCFC represents and warrants to Ironbound that, except as
specifically disclosed in RCFC's Disclosure Letter:
(a) Organization. (i) RCFC 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
25
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savings and loan holding company under HOLA. RCFC 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 RCFC 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 RCFC 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) RCFC 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) RCFC's Disclosure Letter sets forth all of RCFC's
Subsidiaries and all entities (whether corporations, partnerships or similar
organizations), including the corresponding percentage ownership, in which RCFC
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. RCFC owns, either directly or indirectly, all of
the outstanding capital stock of each of its Subsidiaries. No Subsidiary of RCFC
other than RCFC Bank is an "insured depository institution" as defined in the
FDIA and the applicable regulations thereunder. All of the shares of capital
stock of each of the Subsidiaries held by RCFC or any of its other Subsidiaries
are fully paid, nonassessable and not subject to any preemptive rights and are
owned by RCFC or a Subsidiary of RCFC 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 RCFC Bank are insured by the BIF and the Savings
Association Insurance Fund of the FDIC to the extent provided in the FDIA.
(b) Capital Structure. (i) The authorized capital stock of RCFC
-----------------
consists of 75,000,000 shares of RCFC Common Stock and 5,000,000 shares of
preferred stock, par value $.01 per share ("RCFC Preferred Stock"). As of the
date of this Agreement, (A) 26,423,600 shares of RCFC Common Stock were issued
and outstanding, (B) no shares of RCFC Preferred Stock were outstanding, (C) no
shares of RCFC Common Stock were reserved for issuance, except that 2,642,360
shares of RCFC Common Stock were reserved for issuance pursuant to the RCFC 1998
Stock-Based Incentive Plan and (D) no shares of RCFC Common Stock were held by
RCFC in its treasury or by its Subsidiaries. The authorized capital stock of
RCFC Bank consists of 75,000,000 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 this Agreement, 1,000 shares of such common stock were outstanding,
no shares of such preferred stock were outstanding and all
26
<PAGE>
outstanding shares of such common stock were, and as of the Effective Time will
be, owned by RCFC. All outstanding shares of capital stock of RCFC and RCFC Bank
are validly issued, fully paid and nonassessable and not subject to any
preemptive rights and, with respect to shares held by RCFC 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 RCFC is issued or outstanding.
(iii) As of the date of this Agreement, except for this
Agreement and the Option Agreement and as set forth in RCFC's Disclosure Letter,
neither RCFC 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 RCFC 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 RCFC or any of its Subsidiaries or obligating RCFC 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 RCFC or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of RCFC or any of its Subsidiaries.
(c) Authority. Each of RCFC and RCFC Bank has the requisite
---------
corporate power and authority to enter into this Agreement and the Plan of Bank
Merger, respectively, and subject to the 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 RCFC's
stockholders, the consummation of the transactions contemplated hereby, have
been duly authorized by all necessary corporate actions on the part of RCFC and
RCFC Bank. This Agreement has been duly executed and delivered by RCFC and
constitutes a valid and binding obligation of RCFC, 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) Fairness Opinion. RCFC has received the opinion of Sandler
----------------
O'Neill & Partner, L.P., to the effect that, as of the date hereof, the Exchange
Ratio is fair, from a financial point of view, to RCFC's stockholders.
(e) No Violations. The execution, delivery and performance of this
-------------
Agreement by RCFC does 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
RCFC or any of its Subsidiaries, or to which RCFC or any of its Subsidiaries (or
any of their respective properties) is subject, (ii) a breach or violation of,
or a default under, the
27
<PAGE>
certificate of incorporation or bylaws of RCFC 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 RCFC 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 RCFC 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 RCFC 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 RCFC know of no reason pertaining to
RCFC 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 RCFC or RCFC Bank on or subsequent to December 31,
1997, with the SEC, the Superintendent, the FDIC and the OTS (collectively,
"RCFC'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 RCFC included in RCFC'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
RCFC'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 RCFC'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. RCFC has made available to Ironbound a true and complete copy of
each of RCFC's Report filed with the SEC since December 31, 1997.
28
<PAGE>
(ii) RCFC 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
------------------------------------
RCFC's Reports filed on or prior to the date of this Agreement, since December
31, 1997, (i) RCFC and its Subsidiaries have not incurred any liability, except
in the ordinary course of their business consistent with past practice, (ii)
RCFC 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 RCFC.
(h) Absence of Claims. Except as set forth in RCFC's Disclosure
-----------------
Letter, no litigation, proceeding, controversy, claim or action before any court
or governmental agency is pending against RCFC or any of its Subsidiaries, and,
to the best of RCFC's knowledge, no such litigation, proceeding, controversy,
claim or action has been threatened.
(i) Absence of Regulatory Actions. Neither RCFC 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.
(j) Taxes. All federal, state, local and foreign tax returns required
-----
to be filed by or on behalf of RCFC 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 RCFC or any of its
Subsidiaries have been paid in full or adequate provision has been made for any
such taxes on RCFC'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 RCFC or any of its Subsidiaries, and no claim has been
made by any authority in a jurisdiction where RCFC or any of its Subsidiaries do
not file tax returns that RCFC or any such Subsidiary is subject to taxation in
that jurisdiction. All taxes, interest, additions and penalties due with
29
<PAGE>
respect to completed and settled examinations or concluded litigation relating
to RCFC or any of its Subsidiaries have been paid in full or adequate provision
has been made for any such taxes on RCFC's balance sheet (in accordance with
GAAP). Except as set forth in RCFC's Disclosure Letter, RCFC 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. RCFC 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 RCFC 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 RCFC 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 arrangements made in the ordinary
----------
course of business, and except as set forth in RCFC's Disclosure Letter, RCFC
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 RCFC's Report. Except as
disclosed in RCFC's Report filed prior to the date of this Agreement, neither
RCFC 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 RCFC 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 RCFC or any of its Subsidiaries of the nature
contemplated by this Agreement, (C) agreement with respect to any employee or
director of RCFC 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 $100,000 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 value of any of the benefits of which will be calculated on the
basis of any of the transactions contemplated by this Agreement or (E) agreement
containing covenants that limit the ability of RCFC 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, RCFC (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).
30
<PAGE>
(ii) Except as set forth in RCFC's Disclosure Letter, neither RCFC 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) RCFC 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 RCFC nor any of its Subsidiaries has received any notice
of conflict with respect thereto that asserts the right of others. Each of RCFC
and its Subsidiaries has performed all the obligations required to be performed
by it and are not in default under any contract, agreement, arrangement or
commitment relating to any of the foregoing.
(l) RCFC Common Stock. The shares of RCFC 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 RCFC 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 RCFC or any of its
Subsidiaries the subject of any proceeding asserting that it has committed an
unfair labor practice or seeking to compel RCFC 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
RCFC or any of its Subsidiaries pending or, to RCFC's knowledge, threatened.
RCFC 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. RCFC'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 RCFC or any of its Subsidiaries (hereinafter
referred to collectively as the "RCFC Employee Plans"). All of the RCFC
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 RCFC or any of its
Subsidiaries. No liability to the PBGC has been or is expected by RCFC or any
of its Subsidiaries to be incurred with respect to any RCFC Employee Plan which
31
<PAGE>
is subject to Title IV of ERISA ("RCFC Pension Plan"), or with respect to any
"single-employer plan" (as defined in Section 4001(a) of ERISA) currently or
formerly maintained by RCFC or any entity which is considered one employer with
RCFC under Section 4001(b)(1) of ERISA or Section 414 of the Code (an "ERISA
Affiliate"). No RCFC 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 RCFC Pension Plan exceeds the present value
of the "benefit liabilities" (as defined in Section 4001(a)(16) of ERISA) under
such RCFC Pension Plan as of the end of the most recent plan year with respect
to the respective RCFC 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 RCFC 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
RCFC Pension Plan within the 12-month period ending on the date hereof. Neither
RCFC nor any of its Subsidiaries has provided, or is required to provide,
security to any RCFC Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Code. Neither RCFC, 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 RCFC 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 "RCFC Qualified Plan") has received a favorable
determination letter from the IRS, and RCFC and its Subsidiaries are not aware
of any circumstances likely to result in revocation of any such favorable
determination letter. Each RCFC 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 RCFC
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 RCFC's knowledge,
threatened litigation, administrative action or proceeding relating to any RCFC
Employee Plan. There has been no announcement or commitment by RCFC or any of
its Subsidiaries to create an additional RCFC Employee Plan, or to amend any
RCFC Employee Plan, except for amendments required by applicable law which do
not materially increase the cost of such RCFC Employee Plan; and, except as
specifically identified in RCFC's Disclosure Letter, RCFC and its Subsidiaries
do not have any obligations for post-retirement or post-employment benefits
under any RCFC 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 RCFC or any of its Subsidiaries, for the Employee Plans listed in RCFC'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 RCFC 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 RCFC Employee Plan or accelerate the time of payment or vesting of any
such benefit. With
32
<PAGE>
respect to each RCFC Employee Plan, RCFC has supplied to Ironbound 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 RCFC Employee Plan, including amendments thereto, (C) each
trust agreement, insurance contract or other funding arrangement relating to
such RCFC Employee Plan, including amendments thereto, (D) the most recent
summary plan description and summary of material modifications thereto for such
RCFC Employee Plan, if the RCFC Employee Plan is subject to Title I of ERISA,
(E) the most recent actuarial report or valuation if such RCFC Employee Plan is
an RCFC 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 RCFC Employee Plan is a Qualified Plan.
(o) Title to Assets. RCFC 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 RCFC 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 RCFC 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 RCFC to be adequate for the current business
of RCFC and its Subsidiaries.
(p) Compliance with Laws. RCFC 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 RCFC, no suspension or
cancellation of any of them is threatened. Since the date of its incorporation,
the corporate affairs of RCFC have not been conducted in violation of any law,
ordinance, regulation, order, writ, rule, decree or approval of any Governmental
Entity. The businesses of RCFC 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
----
RCFC by Sandler O'Neill & Partners, L.P. pursuant to an agreement dated July 10,
1998, a true and complete copy of which has been previously delivered to
Ironbound, neither RCFC 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 RCFC 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 RCFC and each of its
---------------------
Subsidiaries:
(i) Each of RCFC and its Subsidiaries, the Participation Facilities
and, to RCFC'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
RCFC'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 RCFC'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 RCFC 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 RCFC's knowledge, the properties currently owned or operated
by RCFC 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 RCFC 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 RCFC's knowledge, there are no underground storage tanks on,
in or under any properties owned or operated by RCFC 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 RCFC or any of its
Subsidiaries or any Participation Facility; and
(vii) To RCFC's knowledge, during the period of (l) RCFC's or any of
its Subsidiaries' ownership or operation of any of their respective current
properties or (m) RCFC's or any of its Subsidiaries' participation in the
management of any Participation Facility,
34
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there has been no contamination by or release of Hazardous Materials in, on,
under or affecting such properties. To RCFC's knowledge, prior to the period of
(x) RCFC's or any of its Subsidiaries' ownership or operation of any of their
respective current properties or (y) RCFC'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 RCFC or its Subsidiaries in whole or in part, to the best
knowledge of RCFC:
(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 RCFC 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) RCFC or a Subsidiary is the sole holder of legal and beneficial
title to each Loan (or RCFC Bank's applicable participation interest, as
applicable); except as otherwise referenced on the books and records of RCFC;
(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 RCFC;
(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 RCFC Bank's
audited statement of condition at June 30, 1997 was, and the allowance for
possible losses shown on the balance sheets in RCFC's Reports for periods ending
after June 30, 1998 will be adequate,
35
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as of the dates thereof, under generally accepted accounting principles
applicable to stock savings banks consistently applied.
(iii) RCFC'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 RCFC 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 RCFC
and its Subsidiaries shall promptly after the end of any month inform Ironbound
of any such classification arrived at any time after the date hereof. The OREO
included in any non-performing assets of RCFC 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 RCFC 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 RCFC from
accounting for the business combination to be effected by the Merger as a
pooling-of-interests, and RCFC 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 balance sheet of RCFC Bank
for the year ended June 30, 1997, and none of the investment securities held by
RCFC or any of its Subsidiaries since June 30, 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 RCFC's Disclosure Letter, neither RCFC 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 RCFC's Disclosure Letter or disclosed in RCFC's Report filed on or
prior to the date hereof.
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<PAGE>
(iii) Set forth in RCFC's Disclosure Letter is a true and complete
list of RCFC's borrowed funds (excluding deposit accounts) as of the date
hereof.
(v) Registration Statement. The information regarding RCFC to be
----------------------
supplied by RCFC 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 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 RCFC 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. RCFC has delivered to Ironbound true and
-------------------
complete copies of its organization certificate and bylaws and of RCFC Bank's
organization certificate and bylaws. The minute books of RCFC and RCFC 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 RCFC'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 Ironbound Common Stock. As of the date
----------------------------------------------
hereof, RCFC beneficially owns no shares of Ironbound Common Stock and, other
than as contemplated by the Option Agreement, does not have any option, warrant
or right of any kind to acquire the beneficial ownership of any shares of
Ironbound Common Stock.
(z) Tax Treatment of the Merger. As of the date hereof, RCFC 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. RCFC 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. RCFC'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, RCFC 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 RCFC or its Subsidiaries.
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<PAGE>
(bb) Deposits. None of the deposits of RCFC or any of its Subsidiaries is a
--------
"brokered deposit."
ARTICLE III
CONDUCT PENDING THE MERGER
--------------------------
Section 3.1. Conduct of Ironbound'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, Ironbound 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
adversely affect or delay the ability of Ironbound or RCFC 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 Ironbound,
Ironbound Bank, RCFC or RCFC 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 Ironbound or Ironbound Bank.
Section 3.2. Forbearance by Ironbound. 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, Ironbound shall not, and shall not permit any of its
Subsidiaries to, without the prior consent of RCFC, which consent shall not be
unreasonably withheld:
(a) change any provisions of the certificate of incorporation or
bylaws of Ironbound 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
Ironbound except pursuant to 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;
(c) make, declare or pay any cash or stock 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, other than
the $0.05 regular quarterly cash dividend payable by Ironbound. As promptly as
practicable following the date of this Agreement, the Board of Directors of
Ironbound shall cause its regular quarterly dividend record dates and payment
dates to be the
38
<PAGE>
same as RCFC's regular quarterly dividend record dates and payments dates for
RCFC Common Stock, and Ironbound shall not thereafter change its regular
dividend payment dates and record dates. Nothing contained in this Section
3.2(c) or in any other Section of this Agreement shall be construed to permit
holders of shares of Ironbound Common Stock to receive two dividends from either
Ironbound or from Ironbound and RCFC in any one quarter. Subject to applicable
regulatory restrictions, if any, Ironbound Bank may pay a cash dividend that is,
in the aggregate, sufficient to fund any dividend by Ironbound permitted
hereunder;
(d) 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 Ironbound 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 RCFC;
(e) except to the extent required by law or as disclosed in Section
3.2(e) of Ironbound's Disclosure Letter or specifically provided for elsewhere
herein, increase in any manner the compensation or fringe benefits of any of its
employees or directors, other than general increases in compensation for non-
officer employees in the ordinary course of business consistent with past
practice that do not cause the annualized compensation of any of Ironbound's
non-officer employees following such increase to exceed by more than 5% the
total annual compensation expenses of Ironbound with respect to such person for
the twelve month period ended March 31, 1998 and other than promotions of non-
officer employees as a result of enhanced job classification and duties, made in
the ordinary course of business which results in an increase in the compensation
thereof so long as such increase does not cause the annual rate of such
individual's compensation to increase by more than 10% of such person's
compensation at March 31, 1998; pay, unless approved in advance by RCFC, any
reasonable "stay in place" pay where necessary or appropriate to retain key
employees; 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 Ironbound 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; make any discretionary
continuation to any Employee Plan; hire any employee with an annual total
compensation payment in excess of $35,000 or enter into any employment contract;
terminate or increase the costs to Ironbound or any Subsidiary of any Employee
Plan;
(f) except as contemplated by Section 4.2, change its method of
accounting as in effect at June 30, 1997, except as required by changes in GAAP
as concurred in by Ironbound's independent auditors;
(g) settle any claim, action or proceeding involving any liability of
Ironbound or any of its Subsidiaries for money damages in excess of $25,000 or
impose material restrictions upon the operations of Ironbound or any of its
Subsidiaries;
39
<PAGE>
(h) 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 Ironbound, except in satisfaction of debts
previously contracted;
(i) except pursuant to commitments existing at the date hereof which
have previously been disclosed to RCFC, make any real estate loans secured by
undeveloped land or real estate located outside the State of New Jersey (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 Jersey;
(j) 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 except as disclosed in the Ironbound Disclosure Schedule;
(k) 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;
(l) other than in the ordinary course of business consistent with past
practice in individual amounts not to exceed $50,000 and other than investments
for Ironbound's portfolio made in accordance with Section 3.2(m), make any
investment either by purchase of stock or securities, contributions to capital,
property transfers, or purchase of any property or assets of any other
individual, corporation or other entity;
(m) make any investment in any debt security, including mortgage-
backed and mortgage-related securities, other than US government and US
government agency securities with final maturities not greater than five years,
mortgage-backed or mortgage related securities which would not be considered
"high risk" securities pursuant to Thrift Bulletin Number 52 issued by the OTS
or securities of the FHLB, in each case that are purchased in the ordinary
course of business consistent with past practice;
(n) enter into or terminate any contract or agreement, or make any
change in any of its leases or contracts, other than with respect to those
involving aggregate payments of less than, or the provision of goods or services
with a market value of less than, $20,000 per annum and other than contracts or
agreements covered by Section 3.2(o);
(o) settle any claim, action or proceeding involving any liability of
Ironbound or any of its Subsidiaries for money damages in excess of $25,000 or
material restrictions upon the operations of Ironbound or any of its
Subsidiaries;
40
<PAGE>
(p) make, grant or purchase any loan or commitment to lend in excess
of $500,000 to any individual borrower, unless such loan is fully secured by
real estate or liquid collateral and conforms in all material respects with the
Bank's existing loan policy. The Bank is also permitted to renew currently
outstanding loans or amounts above $500,000 provided the loan has a satisfactory
payment history and the renewal is not in excess of the original loan principal
amount.
(q) incur any additional borrowings beyond those set forth in the
Ironbound Disclosures Schedule other than short-term (six months or less) FHLB
borrowings and reverse repurchase agreements consistent with past practice, or
pledge any of its assets to secure any borrowings other than as required
pursuant to the terms of borrowings of Ironbound or any Subsidiary in effect at
the date hereof or in connection with borrowings or reverse repurchase
agreements permitted hereunder. Deposits shall not be deemed to be borrowings
within the meaning of this paragraph;
(r) make any capital expenditures in excess of $50,000 per expenditure
from the date of this Agreement until the Effective Date other than pursuant to
binding commitments existing on the date hereof disclosed in the Ironbound
Disclosure Schedule, other than expenditures necessary to maintain existing
assets in good repair or to make payment of necessary taxes;
(s) organize, capitalize, lend to or otherwise invest in any
Subsidiary, or invest in or acquire any equity or voting interest in any firm,
corporation or business enterprise (other than securities of the FHLB that are
purchased in the ordinary course of business consistent with past practice);
(t) elect to the Board of Directors of Ironbound or, except as
disclosed in Ironbound's Disclosure Letter, to any office any person who is not
a member of the Board of Directors of Ironbound or an officer of Ironbound as of
the date of this Agreement;
(u) accept any proposed deposits by any municipality or government
agency the terms of which exceed 90 days; or
(v) agree or make any commitment to take any action that is prohibited
by this Section 3.2.
In the event that RCFC does not respond in writing to Ironbound within
three business days of receipt by RCFC of a written request for Ironbound to
engage in any of the actions for which RCFC's prior written consent is required
pursuant to this Section 3.2, RCFC shall be deemed to have consented to such
action. Any request by Ironbound or response thereto by RCFC 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.
41
<PAGE>
Section 3.3. Conduct of RCFC'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, RCFC 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 Ironbound or RCFC 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 Ironbound, RCFC, Ironbound Bank or RCFC 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 RCFC.
ARTICLE IV
COVENANTS
---------
Section 4.1. Acquisition Proposals. From and after the date hereof
---------------------
until the termination of this Agreement, neither Ironbound or Ironbound Bank,
nor any of their respective officers, directors, employees, representatives,
agents or affiliates (including, without limitation, any investment banker,
attorney or accountant retained by Ironbound or any of its subsidiaries), will,
directly or indirectly, initiate, solicit or knowingly encourage (including by
way of furnishing non-public information or assistance), or facilitate
knowingly, any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal (as defined below),
or enter into or maintain or continue discussions or negotiate with any person
or entity in furtherance of such inquiries or to obtain an Acquisition Proposal
or agree to or endorse any Acquisition Proposal, or authorize or permit any of
its officers, directors or employees or any of its subsidiaries or any
investment banker, financial advisor, attorney, accountant or other
representative retained by any of its subsidiaries to take any such action, and
Ironbound shall notify RCFC orally (within one business day) and in writing (as
promptly as practicable) of all of the relevant details relating to all
inquiries and proposals which it or any of its subsidiaries or any such officer,
director, employee, investment banker, financial advisor, attorney, accountant
or other representative may receive relating to any of such matters and if such
inquiry or proposal is in writing, Ironbound shall deliver to RCFC a copy of
such inquiry or proposal promptly; provided, however, that nothing contained in
this Section 4.1 shall prohibit the Board of Directors of Ironbound from (i)
furnishing information to, or entering into discussions or negotiations with any
person or entity that makes an unsolicited written, bona fide proposal, to
acquire Ironbound pursuant to a merger, consolidation, share exchange, business
combination, tender or exchange offer or other similar transaction, if, and only
to the extent that, (A) the Board of Directors of Ironbound receives a written
opinion from its independent financial advisor that such proposal may be
superior to the Merger from a
42
<PAGE>
financial point-of-view to Ironbound's stockholders, (B) the Board of Directors
of Ironbound, after consultation with and based upon the written advice of
independent legal counsel, determines in good faith that such action is
necessary for the Board of Directors of Ironbound to comply with its fiduciary
duties to stockholders under applicable law (such proposal that satisfies (A)
and (B) being referred to herein as a "Superior Proposal") and (C) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person or entity, Ironbound (x) provides reasonable notice to RCFC to
the effect that it is furnishing information to, or entering into discussions or
negotiations with, such person or entity and (y) receives from such person or
entity an executed confidentiality agreement in reasonably customary form, (ii)
complying with Rule 14e-2 promulgated under the Exchange Act with regard to a
tender or exchange offer or (iii) failing to make or withdrawing or modifying
its recommendation and entering into a Superior Proposal if there exists a
Superior Proposal and the Board of Directors of Ironbound, after consultation
with and based upon the written advice of independent legal counsel, determines
in good faith that such action is necessary for the Board of Directors of
Ironbound to comply with its fiduciary duties to stockholders under applicable
law. For purposes of this Agreement, "Acquisition Proposal" shall mean any of
the following (other than the transactions contemplated hereunder) involving
Ironbound or any of its subsidiaries: (i) any merger, consolidation, share
exchange, business combination, or other similar transaction; (ii) any sale,
lease, exchange, mortgage, pledge, transfer or other disposition of 10% or more
of the assets of Ironbound or Ironbound Bank, taken as a whole, in a single
transaction or series of transactions; (iii) any tender offer or exchange offer
for 10% or more of the outstanding shares of capital stock of Ironbound or the
filing of a registration statement under the Securities Act in connection
therewith; or (iv) any public announcement of a proposal, plan or intention to
do any of the foregoing or any agreement to engage in any of the foregoing.
Section 4.2. Certain Policies of Ironbound.
-----------------------------
(a) At the request of RCFC, Ironbound shall cause Ironbound 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 RCFC 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 RCFC Bank; provided, however, that Ironbound shall not be required to
take such action more than five business 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) Ironbound'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. RCFC agrees to hold harmless, indemnify and
defend Ironbound and its Subsidiaries, and their
43
<PAGE>
respective directors, officers 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, Ironbound and RCFC 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, Ironbound shall make available to RCFC 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. RCFC and Ironbound 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 RCFC and Ironbound 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, the
NYBD and the NJBD (but in no event earlier than 30 days prior to the Effective
Time) and continuing to the Effective Time, including weekends and holidays,
Ironbound shall cause Ironbound Bank to provide RCFC, RCFC Bank and their
authorized agents and representatives full access to Ironbound Bank's offices
after normal business hours for the purpose of installing necessary wiring and
equipment (at RCFC's expense) to be utilized by RCFC Bank after the Effective
Time; provided, that:
(i) reasonable advance notice of each entry shall be given to
Ironbound Bank and Ironbound Bank approves of each entry, which approval shall
not be unreasonably withheld;
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(ii) Ironbound Bank shall have the right to have its employees or
contractors present to inspect the work being done;
(iii) to the extent practicable, such work shall be done in a
manner that will not interfere with Ironbound 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 RCFC Bank shall be responsible for the
procurement, at RCFC Bank's expense, of all required governmental or
administrative permits and approvals;
(v) RCFC Bank shall maintain appropriate insurance satisfactory to
Ironbound Bank in connection with any work done by RCFC Bank's agents and
representatives pursuant to this Section 4.3;
(vi) RCFC Bank shall reimburse Ironbound Bank for any material out-of-
pocket costs or expenses incurred by Ironbound Bank in connection with this
undertaking; and
(vii) in the event this Agreement is terminated in accordance
with Article VI hereof, RCFC 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. RCFC and
------------------------------------------
Ironbound 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; (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. Ironbound 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 RCFC, the Agreement, the Merger, the Bank Merger and the
Option Agreement from any provisions of an antitakeover nature in Ironbound's or
its Subsidiaries' organization certificates and bylaws and the provisions of any
federal or state antitakeover laws, and (ii) upon the request of RCFC, to assist
in any challenge to the applicability to the Agreement, the Merger, the Bank
Merger or the Option Agreement of any federal or state antitakeover laws.
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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 Ironbound and RCFC 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 Meeting. Ironbound shall take all action
--------------------
necessary, in accordance with applicable law and its corporate documents, to
convene a meeting of its stockholders (the "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 in writing by such Board's counsel, the Board of Directors of
Ironbound 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.
Section 4.9. Proxy Statements; Comfort Letters. (i) As soon as
---------------------------------
practicable after the date hereof, RCFC and Ironbound 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 and the FDIC, respond to comments of the staff
of the SEC and the FDIC and, promptly after the Registration Statement is
declared effective by the SEC and the FDIC, 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 Ironbound and RCFC. RCFC and Ironbound each
represents and covenants to the other that the Proxy Statement-Prospectus, and
any amendment or supplement thereto, with respect 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 the FDIC 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.
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(ii) RCFC shall cause Ernst & Young LLP, its independent public
accounting firm, to deliver to Ironbound, and Ironbound shall cause Deloitte &
Touche LLP, its independent public accounting firm, to deliver to RCFC 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 Ironbound and the date of mailing of the Proxy
Statement for the Stockholders meeting of RCFC, 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 RCFC Common Stock.
---------------------------------
(a) RCFC 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 RCFC
and Ironbound shall use all reasonable efforts to have the Registration
Statement declared effective under the Securities Act as promptly as practicable
after such filing. RCFC will advise Ironbound promptly after RCFC 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. RCFC will provide
Ironbound with as many copies of such Registration Statement and all amendments
thereto promptly upon the filing thereof as Ironbound may reasonably request.
(b) RCFC 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) RCFC shall use its best efforts to list, prior to the Effective
Time, on the Nasdaq National Market, or on such other exchange as RCFC Common
Stock shall then be trading, subject only to official notice of issuance, the
shares of RCFC Common Stock to be issued by RCFC in exchange for the shares of
Ironbound Common Stock.
Section 4.11. Affiliate Letters. Promptly, but in any event within
-----------------
two weeks after the execution and delivery of this Agreement, Ironbound shall
deliver to RCFC a letter identifying all persons who, to the knowledge of
Ironbound, may be deemed to be "affiliates" of Ironbound under Rule 145 of the
Securities Act and the pooling-of-interests accounting rules, including, without
limitation, all directors and executive officers of Ironbound. Within two weeks
after delivery of such letter, Ironbound shall deliver executed letter
agreements, each substantially in the form attached hereto as Exhibit A,
executed by each such person so identified as an affiliate of Ironbound agreeing
(i) to comply with Rule 145, (ii) to refrain from transferring
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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 Ironbound
Stockholders Meeting. Within two weeks after the date hereof, RCFC shall cause
its directors and executive officers to enter into letter agreements, in the
form attached hereto as Exhibit C, with RCFC concerning the pooling-of-interests
accounting rules.
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 Ironbound and
RCFC 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. Employees, Directors and Officers.
---------------------------------
(a) All persons who are employees of Ironbound Bank immediately prior
to the Effective Time (Ironbound's Employees) and whose employment is not
specifically terminated at or prior to the Effective Time (a "Continuing
Employee") shall, at the Effective Time, become employees of RCFC or RCFC Bank,
respectively; provided, however, that in no event shall any of Ironbound's
Employees be officers of RCFC or RCFC Bank, or have or exercise any power or
duty conferred upon such an officer, unless and until duly elected or appointed
to such position in accordance with the bylaws of RCFC or RCFC Bank. All of
Ironbound's Employees who remain following the Effective Date shall be employed
at the will of RCFC or RCFC Bank. No contractual right to employment shall
inure to such employees because of this Agreement. Subject to paragraph (e) of
this Section 4.13, no employee of Ironbound will become a contractual employee
of RCFC or RCFC Bank unless such contract is in writing and executed by the
President or Chief Executive Officer of RCFC or RCFC Bank.
(b) Except as provided in paragraph (c) of this Section 4.13,
appropriate steps shall be taken to terminate all Ironbound Employee Plans as of
the Effective Time or as promptly as practical thereafter. Except as provided
in paragraph (c) of this Section 4.13, immediately following the Effective Time,
each Continuing Employee shall be eligible to participate in RCFC Employee
Plans, on the same basis as and subject as are applicable to any newly-hired
employee of RCFC or RCFC Bank (it being understood that inclusion of Continuing
Employee in RCFC Employee Plans may occur at different times with respect to
different plans); provided, however, that with respect to each RCFC Employee
Plan, other than the Richmond County Savings Bank Employee Stock Ownership Plan
(the "RCFC Bank ESOP") and the Retirement Plan of
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Richmond County Savings Bank in RSI Trust (the "RCFC Bank Retirement Plan"), for
purposes of determining eligibility to participate, vesting, and entitlement to
benefits, service with Ironbound or Ironbound Bank shall be treated as service
with RCFC or RCFC Bank; provided further however, that such service shall not be
recognized to the extent such recognition would result in a duplication of
benefits. Such service shall also apply for purposes of satisfying any waiting
periods, evidence of insurability requirements, or the application of any
preexisting condition limitation with respect to any RCFC or RCFC Bank welfare
benefit plan. For purposes of determining eligibility to participate, vesting,
and entitlement to benefits (including accrual of benefits) under the RCFC Bank
ESOP or RCFC Bank Retirement Plan, Continuing Employees shall be treated as
newly-hired employees of RCFC or RCFC Bank as of the Effective Date and credit
for service shall begin accruing as of that date.
(c) As of the Effective Time, each Ironbound Employee who is a
participant in the Ironbound 401(k) Plan (the "Ironbound 401(k) Plan") shall
become fully vested in his or her account balance in the Ironbound 401(k) Plan
and the Ironbound 401(k) Plan will either be merged into the Richmond County
Savings Bank 401(k) Savings Plan (the "RCFC Bank 401(k) Plan") effective as of a
date following the Effective Time selected by RCFC Bank or, if so elected by
RCFC Bank, terminated immediately prior to, on, or after the Effective Time.
The determination as to whether the Ironbound Savings Plan shall be terminated
or merged into the RCFC Bank 401(k) Plan shall be made by RCFC Bank. Effective
as of the date of the merger of the Ironbound 401(k) Plan into the RCFC 401(k)
Plan or the termination of the Ironbound 401(k) Plan (or the Effective Time, if
subsequent to such termination), Ironbound Employees who are then participating
in the Ironbound 401(k) Plan shall become participants in the RCFC Bank 401(k)
Plan.
(d) RCFC agrees to honor existing employment agreements, including the
change in control provisions of such agreements, between Ironbound and Ironbound
Bank and certain employees, stock option plans and restricted stock plans, and
other benefit plans as described in Section 4.13 (collectively "Employment
Agreements") and to the payment of benefits by Ironbound as of the Effective
Time or earlier as agreed to by Ironbound and RCFC under such agreements and
plans as such amounts are calculated and disclosed on Disclosure Schedule
4.13(d). Payments under the Employment Agreements shall be made by Ironbound,
as set forth in the Ironbound Disclosure Letter, immediately prior to the
Effective Time .
(e) At the Effective Time, RCFC Bank shall enter into an employment
agreement with Michael J. Gagliardi and Thomas Lupo, substantially in the form
attached hereto as Exhibit D.
Section 4.14. Indemnification; Directors' and Officers' Insurance.
---------------------------------------------------
(a) From and after the Effective Time through the third anniversary of
the Effective Date, RCFC agrees to indemnify and hold harmless each present and
former director and officer of Ironbound and its Subsidiaries and each officer
or employee of Ironbound and its
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Subsidiaries that is serving or has served as a director or trustee of another
entity expressly at Ironbound'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), 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 Ironbound 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 RCFC thereof, but the failure to so notify
shall not relieve RCFC 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) RCFC shall have the right to assume the defense
thereof with counsel reasonably acceptable to the Indemnified Party and RCFC
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 RCFC 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 RCFC and
the Indemnified Party (and counsel for RCFC does not disagree), the Indemnified
Party may retain counsel satisfactory to such Indemnified Party, and RCFC shall
remain responsible 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 RCFC 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) RCFC 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) RCFC 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.
Section 4.15. Tax-Free Reorganization Treatment. Prior to the
---------------------------------
Effective Time, neither RCFC nor Ironbound shall intentionally take, fail to
take, or cause to be taken or not
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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 reorganization within the meaning of Section
368(a) of the Code. Subsequent to the Effective Time, RCFC 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. Savings and Loan Holding Company Structure. If
------------------------------------------
requested by RCFC in order to facilitate the transactions contemplated in this
Agreement and assuming all other material conditions have been met, Ironbound
will take such steps as are necessary to become a savings and loan holding
company pursuant to HOLA, assuming Ironbound so qualifies.
Section 4.17. Divisional Board. RCFC shall, promptly following the
----------------
Effective Time, cause all of the members of Ironbound's Board of Directors as of
the date of this Agreement, who are willing to so serve, to be elected to or
appointed as members of Ironbound's divisional board ("Divisional Board"), the
function of which shall be to advise RCFC with respect to deposit and lending
activities in Ironbound's market area and to maintain and develop customer
relationships. The members of the Board who are willing to so serve shall be
elected to serve a term of three years. Beginning immediately after the
Effective Time, each non-employee member of the Divisional Board (except the
Chairman of the Divisional Board) shall receive an annual retainer fee of
$5,000, plus an attendance fee of $750 for each Divisional Board meeting
attended, and the Chairman of the Divisional Board shall receive an annual
retainer fee of $10,000 plus an attendance fee of $750 for each Divisional Board
meeting attended, and each non-employee member of the Divisional Board shall be
prohibited from competing directly with RCFC for the duration of the term for
which they were elected or appointed. Such Divisional Board annual retainer fee
shall be payable in quarterly installments or in one lump sum at any time in
advance at the option of RCFC.
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
Ironbound's stockholders in accordance with applicable laws 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
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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
Ironbound and its Subsidiaries taken as a whole or (ii) on RCFC 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) Ironbound and its Subsidiaries taken as a whole or (y) RCFC 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;
(f) [Reserved]
(g) RCFC shall have received the letter agreement referred to in
Section 4.11 from each affiliate of Ironbound; and
(h) RCFC shall have caused to be listed on the Nasdaq National Market,
or on such other market on which shares of RCFC Common Stock shall then be
trading, subject only to official notice of issuance, the shares of RCFC Common
Stock to be issued by RCFC in exchange for the shares of Ironbound Common Stock.
Section 5.2. Conditions to the Obligations of RCFC and RCFC Bank.
---------------------------------------------------
The obligations of RCFC and RCFC 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 RCFC:
(a) each of the obligations of Ironbound and Ironbound 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 Ironbound and
Ironbound 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). RCFC
shall have received a certificate to the
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foregoing effect signed by the chief executive officer and the chief financial
or principal accounting officer of Ironbound;
(b) all action required to be taken by, or on the part of, Ironbound
and Ironbound Bank to authorize the execution, delivery and performance of this
Agreement and the consummation by Ironbound and Ironbound Bank of the
transactions contemplated hereby shall have been duly and validly taken by the
Board of Directors and stockholders of Ironbound or Ironbound Bank, as the case
may be, and RCFC shall have received certified copies of the resolutions
evidencing such authorization;
(c) Ironbound 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 Ironbound or its Subsidiaries under any loan or
credit agreement, note, mortgage, indenture, lease, license or other agreement
or instrument to which Ironbound 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
RCFC (after giving effect to the consummation of the transactions contemplated
hereby) or upon the consummation of the transactions contemplated hereby.
(d) RCFC 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 Ironbound and its
Subsidiaries;
(e) RCFC shall have received an opinion of Muldoon, Murphy & Faucette.
counsel to RCFC, dated as of the Effective Date, in form and substance customary
in transactions of the type contemplated hereby, and reasonably satisfactory to
RCFC, 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 RCFC, RCFC Bank,
Ironbound or Ironbound Bank as a result of the Merger;
(ii) Except to the extent of any cash received in lieu of a
fractional share interest in RCFC Common Stock, no gain or loss will be
recognized by the stockholders of Ironbound who exchange their Ironbound
Common Stock for RCFC Common Stock pursuant to the Merger;
(iii) The tax basis of RCFC Common Stock received by
stockholders who exchange their Ironbound Common Stock for RCFC Common Stock
in the Merger will
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be the same as the tax basis of Ironbound 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 RCFC Common Stock received by each
stockholder in the Merger will include the holding period of Ironbound Common
Stock exchanged therefor, provided that such stockholder held such Ironbound
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 RCFC, RCFC
Bank, Ironbound, Ironbound Bank, stockholders of RCFC or Ironbound, or any
combination of such persons and (y) certificates provided at the request of
Muldoon, Murphy & Faucette by officers of RCFC, RCFC Bank. Ironbound, Ironbound
Bank and other appropriate persons.
(f) The consummation of the sale of Ironbound's executive office is
completed subject to terms disclosed in Ironbound's Disclosure Letter.
Section 5.3. Conditions to the Obligations of Ironbound and
----------------------------------------------
Ironbound Bank. The obligations of Ironbound and Ironbound 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 Ironbound:
(a) each of the obligations of RCFC and RCFC 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 RCFC and RCFC 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). Ironbound shall have
received a certificate to the foregoing effect signed by the chief executive
officer and the chief financial or principal accounting officer of RCFC;
(b) all action required to be taken by, or on the part of, RCFC and
RCFC Bank to authorize the execution, delivery and performance of this Agreement
and the consummation by RCFC and RCFC Bank of the transactions contemplated
hereby shall have been duly and validly taken by the Board of Directors and
stockholders of RCFC or RCFC Bank, as the case may be, and Ironbound shall have
received certified copies of the resolutions evidencing such authorization;
(c) RCFC 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
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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 RCFC 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 RCFC (after giving effect to the transactions
contemplated hereby) or upon the consummation of the transactions contemplated
hereby.
(d) Ironbound 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 RCFC
and its Subsidiaries;
(e) Ironbound shall have received an opinion of Luse Lehman Gorman
Pomerenk & Schick, P.C., counsel to Ironbound, dated as of the Effective Date,
in form and substance customary in transactions of the type contemplated hereby,
and reasonably satisfactory to Ironbound, 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 RCFC, RCFC Bank,
Ironbound or Ironbound Bank as a result of the Merger;
(ii) Except to the extent of any cash received in lieu of a
fractional share interest in RCFC Common Stock, no gain or loss will be
recognized by the stockholders of Ironbound who exchange their Ironbound
Common Stock for RCFC Common Stock pursuant to the Merger;
(iii) The tax basis of RCFC Common Stock received by
stockholders who exchange their Ironbound Common Stock for RCFC Common Stock in
the Merger will be the same as the tax basis of Ironbound 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 RCFC Common Stock received by each
stockholder in the Merger will include the holding period of Ironbound Common
Stock exchanged therefor, provided that such stockholder held such Ironbound
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 Luse Lehman Gorman Pomerenk & Schick, P.C. considers
appropriate, (x) representations made at the request of Luse Lehman Gorman
Pomerenk & Schick, P.C. by RCFC, RCFC Bank, Ironbound, Ironbound Bank,
stockholders of RCFC or Ironbound, or any combination of such persons and (y)
certificates provided at the request of
55
<PAGE>
Luse Lehman Gorman Pomerenk & Schick, P.C. by officers of RCFC, RCFC Bank,
Ironbound 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 Ironbound.
(a) by the mutual consent of RCFC and Ironbound in a written
instrument, if the Board of Directors of each so determines by vote of a
majority of the members of its entire Board;
(b) by RCFC or Ironbound, if its Board of Directors so determines by
vote of a majority of the members of its entire Board, in the event of the
failure of the stockholders of Ironbound to approve the Agreement at its
Stockholder Meeting called to consider such approval;
(c) by RCFC or Ironbound, 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 RCFC or Ironbound, 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 April 30, 1999 ("Initial Termination Date"); 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 RCFC, if the Board of Directors of Ironbound does not publicly
recommend in the Proxy Statement that Ironbound's stockholders approve and adopt
this Agreement or if, after recommending in the Proxy that stockholders approve
and adopt this Agreement, the Board of Directors of Ironbound shall have
withdrawn, modified or amended such recommendation in any respect materially
adverse to RCFC; or
(f) by RCFC by written notice to Ironbound, or by Ironbound by written
notice to RCFC in the event that there has occurred since the date of this
Agreement an event, condition, change or occurrence which, individually or in
the aggregate, has had or could reasonably be expected to result in a Material
Adverse Effect on Ironbound or RCFC, as the case
56
<PAGE>
may be; provided that one party shall have given the other thirty (30) calendar
days prior written notice of such termination, and the breaching party shall not
have remedied such event, condition, change or occurrence by the end of such
thirty-day period;
(g) by Ironbound, if its board of directors so determines by the
requisite vote of members of its entire board, at any time during the five-day
period commencing with the Valuation Date, in accordance with (i) below:
(i) if RCFC Market Value is less than $14.00, adjusted as
indicated in the last sentence of this Section 6.1(g).
If RCFC 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, in
the manner specified in Section 1.2(c) of this Agreement, for the purposes of
applying this Section 6.1(g); or
(h) by RCFC or Ironbound (provided that the party seeking termination
is not then in material breach of any representation, warranty, covenant or
other agreement contained herein), in the event of (i) a failure to perform or
comply by the other party with any covenant or agreement of such other party
contained in this Agreement, which failure or non-compliance is material in the
context of the transactions contemplated by this Agreement, or (ii) subject to
Sections 2.2(a) and (b), any inaccuracies, omissions or breach in the
representations, warranties, covenants or agreements of the other party
contained in this Agreement the circumstances as to which either individually or
in the aggregate have, or reasonably could be expected to have, a Material
Adverse Effect on such other party; in either case which has not been or cannot
be cured within 30 calendar days after written notice thereof is given by the
party seeking to terminate to such other party.
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
Richmond County Financial Corp., 1214 Castleton Avenue, Staten Island, New York
10310, unless another place is agreed to by RCFC and Ironbound, 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,
RCFC and Ironbound shall execute a Certificate of Merger in accordance with all
appropriate legal requirements, which shall be filed as required by
57
<PAGE>
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 RCFC and
Ironbound the documents and instruments required to be delivered under Article
V.
Section 7.3. Adjustment of Exchange Ratio. If RCFC Market Value is
----------------------------
less than $15.945, but equal to or greater than $14.00, adjusted as indicated in
the last sentence of Section 6.1(g), the Exchange Ratio shall be adjusted such
that the value of the consideration (valued at the Valuation Date) to be paid in
respect of each share of Ironbound Common Stock to be converted into RCFC Common
Stock and cash in lieu of fractional shares upon consummation of the Merger is
$23.12.
ARTICLE VIII
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 RCFC or Ironbound (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.
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.
58
<PAGE>
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 Ironbound or RCFC, 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.
59
<PAGE>
If to Ironbound, to:
Ironbound Bankcorp
36 Pacific Street
Newark, New Jersey 07105
Facsimile: (973) 589-7686
Attention: Edward Cruz
Chairman of the Board
and
Michael J. Gagliardi
President and Chief Executive Officer
and
Luse Lehman Gorman Pomerenk & Schick, P.C.
5335 Wisconsin Avenue, N.W.
Suite 400
Washington, D.C. 20015
John J. Gorman, Esq.
Alan Schick, Esq.
Facsimile: (202) 362-2902
If to RCFC, to:
Richmond County Financial Corp.
1214 Castleton Avenue
Staten Island, New York 10310
Facsimile: (718) 273-8078
Attention: Michael F. Manzulli
Chairman of the Board and
Chief Executive Officer
60
<PAGE>
With copies to:
Richmond County Financial Corp.
1214 Castleton Avenue
Staten Island, New York 10310
Facsimile: (718) 390-0224
Attention: Thomas R. Cangemi
Senior Vice President, Chief Financial
Officer and Secretary
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, 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.
61
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the 17th day of July, 1998.
RICHMOND COUNTY FINANCIAL CORP.
By: /s/ Michael F. Manzulli
---------------------------
Michael F. Manzulli
Chairman of the Board and
Chief Executive Officer
IRONBOUND BANKCORP, NJ
By: /s/ Edward Cruz
---------------------------
Edward Cruz
Chairman of the Board
62
<PAGE>
Exhibit 2.2
================================================================================
AGREEMENT AND PLAN OF MERGER
DATED AS OF JULY 19, 1998
BY AND BETWEEN
RICHMOND COUNTY FINANCIAL CORP.
AND
BAYONNE BANCSHARES, INC.
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
<S> <C> <C>
Introductory Statement 4
ARTICLE I
THE MERGER .................................................................................. 5
----------
Section 1.1. Structure of the Merger ................................................. 5
-----------------------
Section 1.2. Effect on Outstanding Shares of Bayonne Common Stock .................... 5
----------------------------------------------------
Section 1.3. Exchange Procedures ..................................................... 6
-------------------
Section 1.4. Stock Options ........................................................... 8
-------------
Section 1.5. Bank Merger ............................................................. 9
-----------
Section 1.6. Directors of RCFC after Effective Time .................................. 9
--------------------------------------
Section 1.7. Alternative Structure ................................................... 9
---------------------
Section 1.8. Certificate of Incorporation and Bylaws of the Surviving Corporation .... 9
--------------------------------------------------------------------
ARTICLE II
REPRESENTATIONS AND WARRANTIES .............................................................. 10
------------------------------
Section 2.1. Disclosure Letters ...................................................... 10
------------------
Section 2.2. Standards ............................................................... 10
---------
Section 2.3. Representations and Warranties of Bayonne ............................... 11
-----------------------------------------
Section 2.4. Representations and Warranties of RCFC .................................. 26
--------------------------------------
ARTICLE III
CONDUCT PENDING THE MERGER .................................................................. 38
--------------------------
Section 3.1. Conduct of Bayonne's Business Prior to the Effective Time ............... 38
---------------------------------------------------------
Section 3.2. Forbearance by Bayonne .................................................. 39
----------------------
Section 3.3. Conduct of RCFC's Business Prior to the Effective Time .................. 42
------------------------------------------------------
ARTICLE IV
COVENANTS ................................................................................... 42
---------
Section 4.1. Acquisition Proposals ................................................... 42
---------------------
Section 4.2. Certain Policies of Bayonne ............................................. 44
---------------------------
Section 4.3. Access and Information .................................................. 44
----------------------
Section 4.4. Certain Filings, Consents and Arrangements .............................. 45
------------------------------------------
Section 4.5. Antitakeover Provisions ................................................. 46
-----------------------
Section 4.6. Additional Agreements ................................................... 46
---------------------
Section 4.7. Publicity ............................................................... 46
---------
Section 4.8. Stockholders Meetings ................................................... 46
---------------------
Section 4.9. Proxy Statements; Comfort Letters ....................................... 47
---------------------------------
Section 4.10. Registration of RCFC Common Stock ....................................... 47
---------------------------------
Section 4.11. Affiliate Letters ....................................................... 48
-----------------
Section 4.12. Notification of Certain Matters ......................................... 48
-------------------------------
Section 4.13. Employees, Directors and Officers ....................................... 49
---------------------------------
Section 4.14. Indemnification ......................................................... 50
---------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PAGE NO.
<S> <C> <C>
Section 4.15. Pooling and Tax-Free Reorganization Treatment ........................... 52
---------------------------------------------
Section 4.16. Divisional Board ........................................................ 52
----------------
ARTICLE V
CONDITIONS TO CONSUMMATION .................................................................. 53
--------------------------
Section 5.1. Conditions to Each Party's Obligations .................................. 53
--------------------------------------
Section 5.2. Conditions to the Obligations of RCFC and RCFC Bank ..................... 54
---------------------------------------------------
Section 5.3. Conditions to the Obligations of Bayonne and First Savings .............. 56
----------------------------------------------------------
ARTICLE VI
TERMINATION ................................................................................. 57
-----------
Section 6.1. Termination ............................................................. 57
-----------
Section 6.2. Effect of Termination ................................................... 61
---------------------
ARTICLE VII
CLOSING, EFFECTIVE DATE AND EFFECTIVE TIME .................................................. 61
------------------------------------------
Section 7.1. Effective Date and Effective Time ....................................... 61
---------------------------------
Section 7.2. Deliveries at the Closing ............................................... 61
-------------------------
ARTICLE VIII
CERTAIN OTHER MATTERS ....................................................................... 61
---------------------
Section 8.1. Certain Definitions; Interpretation ..................................... 61
-----------------------------------
Section 8.2. Survival ................................................................ 62
--------
Section 8.3. Waiver; Amendment ....................................................... 62
-----------------
Section 8.4. Counterparts ............................................................ 62
------------
Section 8.5. Governing Law ........................................................... 62
-------------
Section 8.6. Expenses ................................................................ 62
--------
Section 8.7. Notices ................................................................. 63
-------
Section 8.8. Entire Agreement; etc ................................................... 64
---------------------
Section 8.9. Assignment .............................................................. 64
----------
</TABLE>
3
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
This is an AGREEMENT AND PLAN OF MERGER, dated as of the 19/th/ day of
July, 1998 ("Agreement"), by and between Richmond County Financial Corp., a
Delaware corporation ("RCFC"), and Bayonne Bancshares, Inc., a Delaware
corporation ("Bayonne").
INTRODUCTORY STATEMENT
The Board of Directors of each of RCFC and Bayonne (i) has determined
that this Agreement and the business combination and related transactions
contemplated hereby are in the best interests of RCFC and Bayonne, 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 RCFC's willingness to enter into this Agreement,
RCFC and Bayonne have entered into a stock option agreement (the "Option
Agreement"), pursuant to which Bayonne has granted to RCFC an option to purchase
shares of Bayonne's common stock, par value $0.01 per share ("Bayonne Common
Stock"), upon the terms and conditions therein contained; and Bayonne will use
its best efforts to have certain executive officers and directors of Bayonne,
within twenty-one days of the date of this Agreement, execute in favor of RCFC a
Letter Agreement in the form annexed as Exhibit A.
The parties hereto intend that the Merger as defined herein 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.
RCFC and Bayonne 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:
4
<PAGE>
ARTICLE I
THE MERGER
----------
Section 1.1. Structure of the Merger. On the Effective Date (as
-----------------------
defined in Section 7.1), Bayonne will merge with and into RCFC ("Merger"), with
RCFC being the surviving entity, pursuant to the provisions of, and with the
effect provided in, the Delaware General Corporation Law ("DGCL"). Upon
consummation of the Merger, the separate corporate existence of Bayonne shall
cease. RCFC 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. From and after the Effective Time, RCFC shall possess all of the
properties and rights and subject to all of the liabilities and obligations of
Bayonne, all as more fully described in the DGCL.
Section 1.2. Effect on Outstanding Shares of Bayonne Common Stock.
----------------------------------------------------
(a) By virtue of the Merger, automatically and without any action on
the part of the holder thereof, each share of Bayonne Common Stock issued and
outstanding at the Effective Time (as defined in Section 7.1), other than (i)
shares the holder of which (the "Dissenting Shareholders") pursuant to any
applicable law providing for dissenters' or appraisal rights is entitled to
receive payment in accordance with the provisions of any such law, such holder
to have only the rights provided in any such law (the "Dissenters' Shares"),
(ii) shares held directly or indirectly by RCFC (other than shares held in a
fiduciary capacity or in satisfaction of a debt previously contracted), (iii)
shares held by Bayonne as treasury stock and (iv) unallocated shares held in the
Amended and Restated Bayonne Bancshares, Inc. 1995 Recognition and Retention
Plan ("Bayonne RRP") (such shares referred to in clauses (i), (ii), (iii) and
(iv) being referred to herein as the "Excluded Shares") shall become and be
converted into the right to receive 1.05 shares of RCFC Common Stock (the
"Exchange Ratio"); provided, however, that, notwithstanding any other provision
hereof, no fraction of a share of RCFC Common Stock and no certificates or scrip
therefor will be issued in the Merger; instead, RCFC shall pay to each holder of
Bayonne Common Stock who would otherwise be entitled to a fraction of a share of
RCFC Common Stock an amount in cash, rounded to the nearest cent, determined by
multiplying such fraction by the RCFC Market Value (as defined herein)
(collectively, the "Merger Consideration").
(b) As used herein, "RCFC Market Value" shall be the average of the
closing sales price 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 on which the last of the required
regulatory approvals, as contemplated by Section 5.1(b), is 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 RCFC 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,
5
<PAGE>
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.
(d) As of the Effective Time, each Excluded Share, other than
Dissenters' Shares, shall be cancelled and retired and shall cease to exist, and
no exchange or payment shall be made with respect thereto. All shares of RCFC
Common Stock and RCFC Preferred Stock (as defined in Section 2.4(b)) that are
held by Bayonne, if any, other than shares held in a fiduciary capacity or in
satisfaction of a debt previously contracted, shall become treasury stock of
RCFC.
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 Bayonne
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 Bayonne Common Stock to be converted thereby.
(b) At and after the Effective Time, each certificate ("Bayonne
Certificate") previously representing shares of Bayonne 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, RCFC shall deposit, or shall cause
to be deposited, with such bank or trust company that is selected by RCFC and is
reasonably acceptable to Bayonne to act as exchange agent ("Exchange Agent"),
for the benefit of the holders of shares of Bayonne 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 RCFC shall reserve for issuance with its Transfer
Agent and Registrar a sufficient number of shares of RCFC Common Stock to
provide for payment of the Merger Consideration. On the Closing Date, RCFC shall
have granted the Exchange Agent the requisite power and authority to effect for
and on behalf of RCFC the issuance of the number of shares of RCFC Common Stock
issuable in the share exchange.
(d) The Letter of Transmittal shall (i) specify that delivery shall
be effected, and risk of loss and title to the Bayonne Certificates shall pass,
only upon delivery of the Bayonne Certificates to the Exchange Agent, (ii) be in
a form and contain any other provisions as RCFC may reasonably determine and
(iii) include instructions for use in effecting the surrender of the Bayonne
Certificates in exchange for the Merger Consideration. Upon the proper surrender
of the Bayonne Certificates to the Exchange Agent, together with a properly
completed and duly executed Letter of Transmittal, the holder of such Bayonne
Certificates shall be entitled to receive in exchange therefor (m) a certificate
representing that number of whole shares of RCFC Common Stock that such holder
has the right to receive pursuant to Section 1.2 and (n) a
6
<PAGE>
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. Bayonne 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 RCFC 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 RCFC 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
ownership of any shares of Bayonne Common Stock not registered in the transfer
records of Bayonne, the Merger Consideration shall be issued to the transferee
thereof if the Bayonne Certificates representing such Bayonne Common Stock are
presented to the Exchange Agent, accompanied by all documents required, in the
reasonable judgment of RCFC 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 RCFC Common Stock shall be remitted to any person
entitled to receive shares of RCFC Common Stock hereunder until such person
surrenders his or her Bayonne Certificates in accordance with this Section 1.3.
Upon the surrender of such person's Bayonne 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 RCFC
Common Stock represented by such person's Bayonne Certificates.
(f) From and after the Effective Time there shall be no transfers on
the stock transfer records of Bayonne of any shares of Bayonne Common Stock.
If, after the Effective Time, Bayonne Certificates are presented to RCFC, 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 Bayonne for 6 months after
the Effective Time shall be repaid by the Exchange Agent to RCFC upon the
written request of RCFC. After such request is made, any stockholders of Bayonne
who have not theretofore complied with this Section 1.3 shall look only to RCFC
for the Merger Consideration deliverable in respect of each share of Bayonne
Common Stock such stockholder holds, as determined pursuant to Section 1.2 of
this Agreement, without any interest thereon. If outstanding Bayonne
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 RCFC (and, to the
extent not in its possession,
7
<PAGE>
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,
neither the Exchange Agent nor any party to this Agreement (or any affiliate
thereof) shall be liable to any former holder of Bayonne Common Stock for any
amount delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(h) RCFC and the Exchange Agent shall be entitled to rely upon
Bayonne'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 Bayonne Certificate, RCFC 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.
(i) If any Bayonne Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Bayonne 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 Bayonne Certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed Bayonne Certificate the
Merger Consideration deliverable in respect thereof pursuant to Section 1.2.
Section 1.4. Stock Options.
-------------
(a) At the Effective Time, by virtue of the Merger, and without any
action on the part of any holder of an option, each option to acquire shares of
Bayonne Common Stock granted pursuant to either the 1995 Stock Option Plan or
the 1998 Stock-Based Incentive Plan (a "Bayonne Option") that is then
outstanding and unexercised shall be converted into and become an option to
acquire RCFC Common Stock on the same terms and conditions as are in effect with
respect to the Bayonne Option immediately prior to the Effective Time, except
that (i) the number of shares of RCFC Common Stock subject to such Bayonne
Option shall be equal to the number of shares of Bayonne Common Stock subject to
such Bayonne Option immediately prior to the Effective Time multiplied by the
Exchange Ratio, the product being rounded, if necessary, up or down to the
nearest whole share, and (ii) the per share exercise price of the option shall
be adjusted by dividing the per share exercise price of the Bayonne Option by
the Exchange Ratio, and rounding up to the nearest cent. It is intended that
the foregoing assumption shall be effected in a manner which is consistent with
the requirements of Section 424 of the Internal Revenue Code of 1986, as
amended, as to any Bayonne Option that is an incentive stock option.
Section 1.5. Bank Merger. Concurrently with or as soon as
-----------
practicable after the execution and delivery of this Agreement, Richmond County
Savings Bank ("RCFC Bank"), a wholly-owned subsidiary of RCFC, and First Savings
Bank of New Jersey, SLA ("First Savings"), a wholly-owned subsidiary of Bayonne,
shall enter into the Plan of Bank Merger, in
8
<PAGE>
the form attached hereto as Exhibit B, 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 RCFC Bank as the surviving entity of the Bank Merger shall be all of the
directors of RCFC Bank serving immediately prior to the Bank Merger.
Section 1.6. Directors of RCFC after Effective Time. At the
--------------------------------------
Effective Time, the directors of RCFC shall consist of (a) the directors of RCFC
serving immediately prior to the Effective Time and (b) one additional person
who shall become a director of RCFC in accordance with Section 4.13. Other than
as provided in Section 4.13, no director of Bayonne shall become a director of
RCFC.
Section 1.7. Alternative Structure. Notwithstanding anything to the
---------------------
contrary contained in this Agreement, prior to the Effective Time, RCFC may
specify that the structure of the transactions contemplated hereby be revised
and the parties shall enter into such alternative transactions as RCFC may
determine to effect the purposes of this Agreement; provided, however, that such
revised structure shall not (i) adversely affect the treatment of the
transaction as a pooling-of-interests for accounting purposes, (ii) adversely
affect the tax effects or alter or change the amount or kind of the Merger
Consideration or the treatment of Bayonne Options or the economic benefits of
the transactions contemplated hereby to the holders of Bayonne Common Stock,
(iii) diminish the benefits to be received by the directors, officers or
employees of Bayonne or First Savings as set forth in or as contemplated by this
Agreement, and (iv) materially impede or delay the receipt of any approval
referred to in this Agreement (as defined in Section 7.1). This Agreement and
any related documents shall be appropriately amended in order to reflect any
such revised structure.
Section 1.8. Certificate of Incorporation and Bylaws of the
----------------------------------------------
Surviving Corporation. The Certificate of Incorporation and Bylaws of RCFC in
- ---------------------
effect immediately prior to the Effective Time shall be the Certificate of
Incorporation and Bylaws of the surviving corporation.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 2.1. Disclosure Letters. On or prior to the execution and
------------------
delivery of this Agreement, Bayonne and RCFC 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
9
<PAGE>
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 Bayonne or RCFC 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. Bayonne'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 connection
with this Agreement or in compliance with a written request of RCFC.
(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 Bayonne or RCFC, as the context
may dictate, and its Subsidiaries (as defined herein) 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 regulatory
accounting requirements or interpretations thereof that apply to both RCFC and
RCFC Bank and Bayonne and First Savings, as the case may be, or to similarly
situated financial and/or depository institutions or (B) changes in economic
conditions affecting financial institutions generally, including but not limited
to, 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(g)(iii), Sections 2.4(a)(i) and (iv), Section
2.4(c), Section 2.4(g)(iii) or Section 2.4(l) to be true and correct in all
material respects or (y) a representation or warranty contained in the last
sentence of each of Section 2.3(e) or Section 2.4(e), the second sentence of
each of Section 2.3(f)(i) or Section 2.4(f)(i) and the first two sentences of
each of Section 2.3(aa) or Section 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 or any officer of that party with the title ranking not
less than senior vice president.
Section 2.3. Representations and Warranties of Bayonne. Subject to
-----------------------------------------
Sections 2.1 and 2.2, Bayonne represents and warrants to RCFC that, except as
disclosed in Bayonne's Disclosure Letter:
10
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(a) Organization. (i) Bayonne 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 the Home
Owners' Loan Act, as amended ("HOLA") . First Savings is a stock savings
association duly organized, validly existing and in good standing under the laws
of the State of New Jersey. Each Subsidiary (as defined below) of First Savings
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 Bayonne and its Subsidiaries has all
requisite corporate 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 Bayonne 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) Bayonne's Disclosure Letter sets forth all of Bayonne's
Subsidiaries and all entities (whether corporations, partnerships or similar
organizations), including the corresponding percentage ownership, in which
Bayonne owns, directly or indirectly, 5% or more of the ownership interests as
of the date of this Agreement and indicates for each of Bayonne'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. Bayonne owns,
either directly or indirectly, all of the outstanding capital stock of each of
its Subsidiaries. No Subsidiary of Bayonne other than First Savings 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 Bayonne or any of
its other Subsidiaries are fully paid, nonassessable and not subject to any
preemptive rights and are owned by Bayonne or a Subsidiary of Bayonne 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 First Savings are insured by the Savings
Association Insurance Fund ("SAIF") of the Federal Deposit Insurance Corporation
("FDIC") to the extent provided in the FDIA.
(b) Capital Structure. (i) The authorized capital stock of Bayonne
-----------------
consists of 22,000,000 shares of Bayonne Common Stock and 2,000,000 shares of
preferred stock, par value $.01 per share ("Bayonne Preferred Stock"). As of
the date of this Agreement:
11
<PAGE>
(A) 9,094,495 shares of Bayonne Common Stock were issued and outstanding, (B) no
shares of Bayonne Preferred Stock were issued and outstanding, (C) no shares of
Bayonne Common Stock were reserved for issuance, except that 945,085 shares of
Bayonne Common Stock were reserved for issuance pursuant to the Bayonne Option
Plans, (D) no shares of Bayonne Preferred Stock were reserved for issuance and
(E) 194,768 shares of Bayonne Common Stock were held by Bayonne in its treasury
or by its Subsidiaries. The authorized capital stock of First Savings consists
of 20,000,000 shares of common stock, par value $.10 per share, and 10,000,000
shares of preferred stock, par value $.10 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 Bayonne. All outstanding
shares of capital stock of Bayonne and First Savings are duly authorized and
validly issued, fully paid and nonassessable and not subject to any preemptive
rights and, with respect to shares held by Bayonne 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. Bayonne's Disclosure Letter sets
forth a complete and accurate list of all options to purchase Bayonne Common
Stock that have been granted pursuant to the Bayonne Option Plans and all
restricted stock grants under the Bayonne 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 Bayonne are issued or outstanding.
(iii) As of the date of this Agreement, except for this
Agreement, the Option Agreement and the Bayonne Option Plans, neither Bayonne
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 Bayonne 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 Bayonne or any of its Subsidiaries or obligating Bayonne 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 Bayonne or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of Bayonne or any of its Subsidiaries.
(c) Authority. Each of Bayonne and First Savings 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 Bayonne'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 the Bank Plan of Merger, and, subject to the approval of
this Agreement by Bayonne's stockholders, the consummation of the transactions
contemplated hereby, have been
12
<PAGE>
duly authorized by all necessary corporate actions on the part of Bayonne and
First Savings. This Agreement has been duly executed and delivered by Bayonne
and constitutes a valid and binding obligation of Bayonne, 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 Approval; Fairness Opinion. The affirmative vote
--------------------------------------
of a majority of the outstanding shares of Bayonne Common Stock entitled to vote
on this Agreement is the only vote of the stockholders of Bayonne required for
approval of this Agreement and the consummation of the Merger and the related
transactions contemplated hereby. Bayonne has received the written opinion of
Sandler O'Neill & Partners, L.P. to the effect that, as of the date hereof, the
Exchange Ratio to be received by Bayonne's stockholders is fair, from a
financial point of view, to such stockholders.
(e) No Violations. The execution, delivery and performance of this
-------------
Agreement and Option Agreement by Bayonne 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 Bayonne or any of its Subsidiaries, or to
which Bayonne 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 Bayonne 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 Bayonne 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 Bayonne or any of its Subsidiaries is a party,
or to which any of their respective properties or assets may be subject; and the
consummation by Bayonne and First Savings 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 Bayonne
Common Stock entitled to vote, (y) the approval of the Office of Thrift
Supervision ("OTS") under HOLA, and (z) the approval of the New Jersey
Department of Banking (the "NJBD") and the approval of the appropriate
regulatory authority under Section 18(c) of the FDIA. As of the date hereof,
the executive officers of Bayonne know of no reason pertaining to Bayonne 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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<PAGE>
(f) Reports. (i) As of their respective dates, none of the reports
-------
or other statements filed by Bayonne or First Savings on or subsequent to March
31, 1998 with the FDIC or the Securities and Exchange Commission ("SEC")
(collectively, "Bayonne'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 Bayonne included in Bayonne'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 the SEC). Each of the consolidated statements of condition
contained or incorporated by reference in Bayonne's Reports (including in each
case any related notes and schedules) 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
Bayonne'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 (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. Bayonne has made
available to RCFC a true and complete copy of each of Bayonne's Reports filed
with the SEC since March 31, 1998.
(ii) Bayonne 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
March 31, 1995 with (A) the NJBD, (B) the FDIC, (C) the OTS, (D) the National
Association of Securities Dealers, Inc. ("NASD"), (E) the SEC and (F) any other
self-regulatory organization ("SRO"), and, to Bayonne's knowledge, have paid all
fees and assessments due and payable in connection therewith.
(g) Absence of Certain Changes or Events. Except as disclosed in
------------------------------------
Bayonne's Reports filed on or prior to the date of this Agreement, since March
31, 1998, (i) Bayonne and its Subsidiaries have not incurred any liability,
except in the ordinary course of their business consistent with past practice,
(ii) Bayonne 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 Bayonne.
(h) Absence of Claims. Except as set forth in Bayonne's Disclosure
-----------------
Letter, no litigation, proceeding, controversy, claim or action before any court
or governmental agency is pending against Bayonne or any of its Subsidiaries
and, to the best of Bayonne's knowledge, no such litigation, proceeding,
controversy, claim or action has been threatened.
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<PAGE>
(i) Absence of Regulatory Actions. Neither Bayonne 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 Regulator, 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 Bayonne 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 Bayonne or any of
its Subsidiaries have been paid in full or adequate provision has been made for
any such taxes on Bayonne'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 Bayonne or any of its Subsidiaries, and
no claim has been made by any authority in a jurisdiction where Bayonne or any
of its Subsidiaries do not file tax returns that Bayonne 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 Bayonne or any of its Subsidiaries have been paid in full
or adequate provision has been made for any such taxes on Bayonne's balance
sheet (in accordance with GAAP). Bayonne 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. Bayonne 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 Bayonne
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 Bayonne 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.
15
<PAGE>
(k) Agreements. (i) Except for the Option Agreement and
----------
arrangements made in the ordinary course of business, and except as set forth in
Bayonne's Disclosure Letter, Bayonne 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 Bayonne's Report. Except as disclosed in Bayonne's Disclosure
Letter, neither Bayonne 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 Bayonne 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 Bayonne or any of its
Subsidiaries of the nature contemplated by this Agreement or the Option
Agreement, (C) agreement with respect to any employee or director of Bayonne 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 $30,000 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
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
Option Agreement or (E) agreement containing covenants that limit the ability of
Bayonne 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, Bayonne (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 Bayonne 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) Bayonne 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 Bayonne nor any of its Subsidiaries has received any
notice of conflict with respect thereto that asserts the right of others. Each
of Bayonne 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 Bayonne 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 Bayonne or any
of its Subsidiaries the subject of any proceeding asserting that
16
<PAGE>
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 Bayonne or any of its Subsidiaries pending or, to Bayonne's
knowledge, threatened. Bayonne 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.
(m) Employee Benefit Plans. Bayonne'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 Bayonne or any of its Subsidiaries (hereinafter collectively
referred to as the "Bayonne Employee Plans"). All of the Bayonne 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 Bayonne or any of its Subsidiaries.
Neither Bayonne nor any of its Subsidiaries has provided, or is required to
provide, security to any Bayonne Pension Plan or to any single-employer plan of
an ERISA Affiliate pursuant to Section 401(a)(29) of the Code. Neither Bayonne,
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 Bayonne 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 "Bayonne Qualified Plan") has received a favorable
determination letter from the Internal Revenue Service ("IRS"), and Bayonne and
its Subsidiaries are not aware of any circumstances likely to result in
revocation of any such favorable determination letter. There is no pending or,
to Bayonne's knowledge, threatened litigation, administrative action or
proceeding relating to any Bayonne Employee Plan. There has been no
announcement or commitment by Bayonne or any of its Subsidiaries to create an
additional Bayonne Employee Plan, or to amend any Bayonne Employee Plan, except
for amendments required by applicable law which do not materially increase the
cost of such Bayonne Employee Plan; and, except as specifically identified in
Bayonne's Disclosure Letter, Bayonne and its Subsidiaries do not have any
obligations for post-retirement or post-employment benefits under any Bayonne
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 Bayonne or
any of its Subsidiaries, for the Employee Plans listed in Bayonne'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 Bayonne or any of its Subsidiaries to any person which is an "excess
parachute
17
<PAGE>
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 Bayonne Employee Plan
or accelerate the time of payment or vesting of any such benefit. With respect
to each Bayonne Employee Plan, Bayonne has supplied to RCFC 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 Bayonne Employee Plan, including amendments thereto, (C) each
trust agreement, insurance contract or other funding arrangement relating to
such Bayonne Employee Plan, including amendments thereto, (D) the most recent
summary plan description and summary of material modifications thereto for such
Bayonne Employee Plan, if the Bayonne Employee Plan is subject to Title I of
ERISA, and (E) the most recent determination letter issued by the IRS if such
Employee Plan is a Qualified Plan.
(n) Title to Assets. Bayonne 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 Bayonne 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 Bayonne 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 Bayonne to be adequate for the current
business of Bayonne and its Subsidiaries.
(o) Compliance with Laws. Bayonne 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 Bayonne, no suspension or
cancellation of any of them is threatened. Since the date of its incorporation,
the corporate affairs of Bayonne 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 Bayonne 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.
(p) Fees. Other than financial advisory services performed for
----
Bayonne by Sandler O'Neill & Partners, L.P., neither Bayonne 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
18
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broker or finder has acted directly or indirectly for Bayonne or any of its
Subsidiaries in connection with this Agreement or the transactions contemplated
hereby.
(q) Environmental Matters. (i) With respect to Bayonne and each
---------------------
of its Subsidiaries:
(A) Each of Bayonne and its Subsidiaries, the Participation
Facilities (as defined herein), and, to Bayonne'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
Bayonne'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;
(C) To Bayonne'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 Bayonne 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 Bayonne's knowledge, the properties currently owned or
operated by Bayonne 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 Bayonne 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 Bayonne's knowledge, there are no underground storage
tanks on, in or under any properties owned or operated by Bayonne or any of its
Subsidiaries or any Participation Facility and no underground storage tanks have
been closed or removed from any
19
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properties owned or operated by Bayonne or any of its Subsidiaries or any
Participation Facility; and
(G) To Bayonne's knowledge, during the period of (l) Bayonne's
or any of its Subsidiaries' ownership or operation of any of their respective
current properties or (m) Bayonne'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
Bayonne's knowledge, prior to the period of (x) Bayonne's or any of its
Subsidiaries' ownership or operation of any of their respective current
properties or (y) Bayonne'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, 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
20
<PAGE>
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.
(r) Loan Portfolio; Allowance; Asset Quality. (i) With respect to
----------------------------------------
each loan owned by Bayonne or its Subsidiaries in whole or in part (each, a
"Loan"), to Bayonne's knowledge:
(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 Bayonne 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) Bayonne or a Subsidiary is the sole holder of legal and
beneficial title to each Loan (or Bayonne's applicable participation interest,
as applicable), except as otherwise referenced on the books and records of
Bayonne;
(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 Bayonne;
(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
21
<PAGE>
(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 Bayonne's
audited statement of condition at March 31, 1998 was, and the allowance for
possible losses shown on the balance sheets in Bayonne's Reports for periods
ending after December 31, 1997 will, in the opinion of management, be adequate,
as of the dates thereof, under generally accepted accounting principles
applicable to stock savings associations consistently applied.
(iii) Bayonne'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 Bayonne and its Subsidiaries
that have been classified (whether regulatory or internal) as "Special Mention,"
"Substandard," "Doubtful," "Loss" or words of similar import, and Bayonne and
its Subsidiaries shall promptly after the end of any month inform RCFC of any
such classification arrived at any time after the date hereof. The other real
estate owned ("OREO") or words of similar import included in any non-performing
assets of Bayonne 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.
(s) Deposits. None of the deposits of Bayonne or any of its
--------
Subsidiaries is a "brokered" deposit, except as disclosed in Bayonne's
Disclosure Letter.
(t) Accounting Matters. Neither Bayonne nor any of its Subsidiaries
------------------
or, to the best of Bayonne's knowledge, any of its other affiliates has, through
the date hereof, taken or agreed to take any action that would prevent RCFC from
accounting for the business combination contemplated herein as a pooling-of-
interests, and Bayonne has no knowledge of any fact or circumstance relating to
it that would prevent such accounting treatment.
(u) Antitakeover Provisions Inapplicable. Bayonne and its
------------------------------------
Subsidiaries have taken all actions required to exempt Bayonne, the Agreement,
the Merger and the Option Agreement from any provisions of an antitakeover
nature in their organization certificates and bylaws, and the provisions of any
federal or state "antitakeover," "fair price," "moratorium," "control share
acquisition" or similar laws or regulations.
(v) Material Interests of Certain Persons. Except as disclosed in
-------------------------------------
Bayonne's Disclosure Letter, no officer or director of Bayonne, 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 Bayonne or any
of its Subsidiaries. No such interest has been created or modified since the
date of completion of the last regulatory examination of Bayonne or its
Subsidiaries.
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<PAGE>
(w) Insurance. In the opinion of management, Bayonne and its
---------
Subsidiaries are presently insured, and since December 31, 1995, have been
insured, for amounts deemed reasonable by management with, to Bayonne's
knowledge, financially sound 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 Bayonne and its Subsidiaries are in full force and effect, Bayonne
and its Subsidiaries are not in default thereunder and all material claims
thereunder have been filed in due and timely fashion.
(x) Investment Securities; Borrowings. (i) Except for investments
---------------------------------
in Federal Home Loan Bank ("FHLB") Stock, 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 Bayonne for the year ended March 31, 1998, and none of the
investment securities held by it or any of its Subsidiaries since March 31,
1998, 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 Bayonne's Disclosure Letter, Bayonne
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.
(iii) Set forth in Bayonne's Disclosure Letter is a true and
complete list of Bayonne's borrowed funds (excluding deposit accounts) as of the
date hereof.
(y) Indemnification. Except as provided in Bayonne's Employment
---------------
Agreements or the organization certificate or bylaws of Bayonne and its
Subsidiaries, neither Bayonne 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 Bayonne (a "Covered Person"), and,
to the best knowledge of Bayonne, there are no claims for which any Covered
Person would be entitled to indemnification under the organization certificate
or bylaws of Bayonne or any of its Subsidiaries, under any applicable law or
regulation or under any indemnification agreement.
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<PAGE>
(z) Books and Records. The books and records of Bayonne 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.
(aa) Corporate Documents. Bayonne has delivered to RCFC true and
-------------------
complete copies of its certificate of incorporation and bylaws and of First
Savings's organization certificate and bylaws. The minute books of Bayonne and
First Savings 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 Bayonne'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.
(bb) Tax Treatment of the Merger. As of the date hereof, Bayonne has
---------------------------
no knowledge of any fact or circumstance relating to it that would prevent the
transactions contemplated by this Agreement from qualifying as a tax-free
reorganization under the Code.
(cc) Beneficial Ownership of RCFC Common Stock. As of the date
-----------------------------------------
hereof, Bayonne beneficially owns no shares of RCFC Common Stock and does not
have any option, warrant or right of any kind to acquire the beneficial
ownership of any shares of RCFC Common Stock.
(dd) Year 2000 Matters. Bayonne 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.
Bayonne'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, Bayonne 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 Bayonne and its Subsidiaries, taken as a whole.
(ee) Registration Statement. The information regarding Bayonne to be
----------------------
supplied by Bayonne 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 RCFC for the purpose
of, among other things, registering the RCFC Common Stock to be issued to
Bayonne'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 RCFC and Bayonne under the Exchange Act and distributed in
connection with Bayonne's meeting of stockholders and RCFC'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
24
<PAGE>
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.
(ff) Community Reinvestment Act ("CRA") Compliance. First Savings is
---------------------------------------------
in material compliance with the applicable provisions of the CRA and the
regulations promulgated thereunder, and First Savings currently has a CRA rating
of satisfactory or better. To Bayonne's knowledge, there is no fact or
circumstance or set of facts or circumstances that would cause First Savings to
fail to comply with such provisions or cause the CRA rating of First Savings to
fall below satisfactory.
Section 2.4. Representations and Warranties of RCFC. Subject to
--------------------------------------
Sections 2.1 and 2.2, RCFC represents and warrants to Bayonne that, except as
specifically disclosed in RCFC's Disclosure Letter:
(a) Organization. (i) RCFC 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. RCFC
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 RCFC 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 RCFC and its Subsidiaries has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as now being conducted.
(ii) RCFC 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) RCFC's Disclosure Letter sets forth all of RCFC's
Subsidiaries and all entities (whether corporations, partnerships or similar
organizations), including the corresponding percentage ownership, in which RCFC
owns, directly or indirectly, 5% or more of the ownership interests as of the
date of this Agreement and indicates for each of RCFC'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. RCFC owns, either directly or
indirectly, all of the outstanding capital stock of each of its Subsidiaries.
No Subsidiary of RCFC other than RCFC Bank is an "insured depository
institution" as defined in the FDIA and the applicable regulations thereunder.
All of the shares of capital stock of each of the Subsidiaries held by RCFC or
any of its other Subsidiaries are fully paid, nonassessable and not subject to
any preemptive rights and are owned by RCFC or a Subsidiary of RCFC free and
clear of any claims, liens, encumbrances or restrictions (other than
25
<PAGE>
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 RCFC Bank are insured by the Bank Insurance
Fund ("BIF") of the FDIC and the SAIF of the FDIC to the extent provided in the
FDIA.
(b) Capital Structure. (i) The authorized capital stock of RCFC
-----------------
consists of 75,000,000 shares of RCFC Common Stock and 5,000,000 shares of
preferred stock, par value $.01 per share ("RCFC Preferred Stock"). As of the
date of this Agreement, (A) 26,423,600 shares of RCFC Common Stock were issued
and outstanding, (B) no shares of RCFC Preferred Stock were outstanding, (C) no
shares of RCFC Common Stock were reserved for issuance, except that 2,642,360
shares of RCFC Common Stock were reserved for issuance pursuant to the RCFC 1998
Stock-Based Incentive Plan and (D) no shares of RCFC Common Stock were held by
RCFC in its treasury or by its Subsidiaries. The authorized capital stock of
RCFC Bank consists of 75,000,000 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 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 RCFC.
All outstanding shares of capital stock of RCFC and RCFC Bank are validly
issued, fully paid and nonassessable and not subject to any preemptive rights
and, with respect to shares held by RCFC 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 RCFC is issued or outstanding.
(iii) As of the date of this Agreement, except for this
Agreement and as set forth in RCFC's Disclosure Letter, neither RCFC 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 RCFC 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 RCFC
or any of its Subsidiaries or obligating RCFC 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 RCFC or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of RCFC or
any of its Subsidiaries.
(c) Authority. Each of RCFC and RCFC Bank has the requisite
---------
corporate power and authority to enter into this Agreement, the Option Agreement
and the Plan of Bank Merger, respectively and, subject to approval of this
Agreement, by the requisite vote of RCFC'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 the Option Agreement, and, subject
to the approval of this Agreement by RCFC's stockholders, the consummation of
the transactions contemplated
26
<PAGE>
hereby, have been duly authorized by all necessary corporate actions on the part
of RCFC and RCFC Bank. This Agreement and the Option Agreement have been duly
executed and delivered by RCFC and constitutes a valid and binding obligations
of RCFC, 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 Approval; Fairness Opinion. The affirmative vote of
--------------------------------------
a majority of the outstanding shares of RCFC Common Stock entitled to vote on
this Agreement is the only vote of the stockholders of RCFC required for
approval of the Agreement and the consummation of the Merger and the related
transactions contemplated hereby. RCFC has received the opinion of Tucker
Anthony Incorporated, to the effect that, as of the date hereof, the Exchange
Ratio is fair, from a financial point of view, to RCFC's stockholders.
(e) No Violations. The execution, delivery and performance of this
-------------
Agreement by RCFC does 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
RCFC or any of its Subsidiaries, or to which RCFC 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 RCFC 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 RCFC 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 RCFC 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 RCFC 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 Sate of New York ("Banking
Law"), the approval of the Superintendent of Banks of the State of New York (the
"Superintendent") under Section 601 of the Banking Law and any other requirement
of the Banking Board or the Superintendent, the approval of the OTS, under HOLA,
the approval of the NJBD and the approval of the appropriate regulatory
authority under Section 18(c) of the FDIC (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
27
<PAGE>
RCFC know of no reason pertaining to RCFC 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 RCFC or RCFC Bank on or subsequent to December 31,
1997, with the FDIC or the SEC (collectively, "RCFC'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 RCFC included in
RCFC'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 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 RCFC's Reports (including in each case
any related notes and schedules) 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 RCFC'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 (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. RCFC has made available
to Bayonne a true and complete copy of each of RCFC's Reports filed with the SEC
since December 31, 1997.
(ii) RCFC 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 FDIC, (B) the SEC, (C) the NASD, (D) the NYBD and
(E) any other SRO, and, to RCFC's knowledge, have paid all fees and assessments
due and payable in connection therewith.
(g) Absence of Certain Changes or Events. Except as disclosed in
------------------------------------
RCFC's Reports filed on or prior to the date of this Agreement, since December
31, 1997, (i) RCFC and its Subsidiaries have not incurred any liability, except
in the ordinary course of their business consistent with past practice, (ii)
RCFC 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 RCFC.
(h) Absence of Claims. Except as set forth in RCFC's Disclosure
-----------------
Letter, no litigation, proceeding, controversy, claim or action before any court
or governmental agency is
28
<PAGE>
pending against RCFC or any of its Subsidiaries, and, to the best of RCFC's
knowledge, no such litigation, proceeding, controversy, claim or action has been
threatened.
(i) Absence of Regulatory Actions. Neither RCFC 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.
(j) Taxes. All federal, state, local and foreign tax returns
-----
required to be filed by or on behalf of RCFC 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 RCFC or any of its
Subsidiaries have been paid in full or adequate provision has been made for any
such taxes on RCFC'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 RCFC or any of its Subsidiaries, and no claim has been
made by any authority in a jurisdiction where RCFC or any of its Subsidiaries do
not file tax returns that RCFC 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 RCFC
or any of its Subsidiaries have been paid in full or adequate provision has been
made for any such taxes on RCFC's balance sheet (in accordance with GAAP).
Except as set forth in RCFC's Disclosure Letter, RCFC 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.
RCFC 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 RCFC 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 RCFC 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
29
<PAGE>
(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 arrangements made in the ordinary
----------
course of business, and except as set forth in RCFC's Disclosure Letter, RCFC
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 RCFC's Reports. Except as
disclosed in RCFC's Reports filed prior to the date of this Agreement, neither
RCFC 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 RCFC 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 RCFC or any of its Subsidiaries of the nature
contemplated by this Agreement, (C) agreement with respect to any employee or
director of RCFC 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 $100,000 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 a transaction involving RCFC or any of its
Subsidiaries of the nature contemplated by this Agreement or the value of any of
the benefits of which will be calculated on the basis of a transaction of the
nature contemplated by this Agreement or (E) agreement containing covenants that
limit the ability of RCFC 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, RCFC (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 RCFC 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) RCFC 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 RCFC nor any of its Subsidiaries has received any notice
of conflict with respect thereto that asserts the right of others. Each of RCFC
and its Subsidiaries has performed all the obligations required to be performed
by it and are not in default under any contract, agreement, arrangement or
commitment relating to any of the foregoing.
(l) RCFC Common Stock. The shares of RCFC Common Stock to be issued
-----------------
pursuant to this Agreement, when issued in accordance with the terms of this
Agreement, will be
30
<PAGE>
duly authorized, validly issued, fully paid and non-assessable and subject to no
preemptive rights.
(m) Labor Matters. Neither RCFC 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 RCFC or any of
its Subsidiaries the subject of any proceeding asserting that it has committed
an unfair labor practice or seeking to compel RCFC 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
RCFC or any of its Subsidiaries pending or, to RCFC's knowledge, threatened.
RCFC 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. RCFC'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 RCFC or any of its Subsidiaries (hereinafter
referred to collectively as the "RCFC Employee Plans"). All of the RCFC
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 RCFC or any of its
Subsidiaries. No liability to the PBGC has been or is expected by RCFC or any
of its Subsidiaries to be incurred with respect to any RCFC Employee Plan which
is subject to Title IV of ERISA ("RCFC Pension Plan"), or with respect to any
"single-employer plan" (as defined in Section 4001(a) of ERISA) currently or
formerly maintained by RCFC or any entity which is considered one employer with
RCFC under Section 4001(b)(1) of ERISA or Section 414 of the Code (an "ERISA
Affiliate"). No RCFC 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 RCFC Pension Plan exceeds the present value
of the "benefit liabilities" (as defined in Section 4001(a)(16) of ERISA) under
such RCFC Pension Plan as of the end of the most recent plan year with respect
to the respective RCFC 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 RCFC 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
RCFC Pension Plan within the 12-month period ending on the date hereof. Neither
RCFC nor any of its Subsidiaries has provided, or is required to provide,
security to any RCFC Pension Plan or to any single-employer plan of an
31
<PAGE>
ERISA Affiliate pursuant to Section 401(a)(29) of the Code. Neither RCFC, 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 RCFC 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 "RCFC Qualified Plan") has received a favorable
determination letter from the IRS, and RCFC and its Subsidiaries are not aware
of any circumstances likely to result in revocation of any such favorable
determination letter. Each RCFC 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 RCFC
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 RCFC's knowledge,
threatened litigation, administrative action or proceeding relating to any RCFC
Employee Plan. There has been no announcement or commitment by RCFC or any of
its Subsidiaries to create an additional RCFC Employee Plan, or to amend any
RCFC Employee Plan, except for amendments required by applicable law which do
not materially increase the cost of such RCFC Employee Plan; and, except as
specifically identified in RCFC's Disclosure Letter, RCFC and its Subsidiaries
do not have any obligations for post-retirement or post-employment benefits
under any RCFC 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 RCFC or any of its Subsidiaries, for the Employee Plans listed in RCFC'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 RCFC 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 RCFC Employee Plan or accelerate the time of payment or vesting of any
such benefit. With respect to each RCFC Employee Plan, RCFC has supplied to
Bayonne 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 RCFC Employee Plan, including amendments
thereto, (C) each trust agreement, insurance contract or other funding
arrangement relating to such RCFC Employee Plan, including amendments thereto,
(D) the most recent summary plan description and summary of material
modifications thereto for such RCFC Employee Plan, if the RCFC Employee Plan is
subject to Title I of ERISA, (E) the most recent actuarial report or valuation
if such RCFC Employee Plan is an RCFC 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 RCFC Employee Plan is a Qualified
Plan.
(o) Title to Assets. RCFC 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
32
<PAGE>
which it is lessee, in which case the related lease is valid and in full force
and effect. Each lease pursuant to which RCFC 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 RCFC 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 RCFC to be adequate for the current business
of RCFC and its Subsidiaries.
(p) Compliance with Laws. RCFC 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 RCFC, no suspension or
cancellation of any of them is threatened. Since the date of its incorporation,
the corporate affairs of RCFC have not been conducted in violation of any law,
ordinance, regulation, order, writ, rule, decree or approval of any Governmental
Entity. The businesses of RCFC 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. The businesses of RCFC and
its Subsidiaries are not being conducted in violation of any law, ordinance,
regulation, order, writ, rule, decree or condition to approve of any Government
Entity.
(q) Fees. Other than the financial advisory services performed for
----
RCFC by Tucker Anthony Incorporated pursuant to an agreement with RCFC dated
July 19, 1998, a true and complete copy of which has been previously delivered
to Bayonne, neither RCFC 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 RCFC or any of its Subsidiaries in connection with this
Agreement or the transactions contemplated hereby.
(r) Environmental Matters. With respect to RCFC and each of its
---------------------
Subsidiaries:
(i) Each of RCFC and its Subsidiaries, the Participation
Facilities and, to RCFC'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
RCFC'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;
33
<PAGE>
(iii) To RCFC'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 RCFC 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 RCFC's knowledge, the properties currently owned or
operated by RCFC 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 RCFC 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 RCFC's knowledge, there are no underground storage tanks
on, in or under any properties owned or operated by RCFC 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 RCFC or any of
its Subsidiaries or any Participation Facility; and
(vii) To RCFC's knowledge, during the period of (l) RCFC's or
any of its Subsidiaries' ownership or operation of any of their respective
current properties or (m) RCFC'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 RCFC's knowledge, prior to the period of (x) RCFC's or any of its
Subsidiaries' ownership or operation of any of their respective current
properties or (y) RCFC'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 RCFC or its Subsidiaries in whole or in part, to RCFC's best
knowledge:
(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;
34
<PAGE>
(B) neither RCFC 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) RCFC or a Subsidiary is the sole holder of legal and
beneficial title to each Loan (or RCFC Bank's applicable participation interest,
as applicable); except as otherwise referenced on the books and records of RCFC;
(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 RCFC;
(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 RCFC Bank's
audited statement of condition at June 30, 1997 was, and the allowance for
possible losses shown on the balance sheets in RCFC's Reports for periods ending
after June 30, 1997 will, in the opinion of management, be adequate, as of the
dates thereof, under generally accepted accounting principles applicable to
stock savings associations consistently applied.
(iii) RCFC'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 RCFC 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 RCFC
and its Subsidiaries shall promptly after the end of any month inform Bayonne of
any such classification arrived at any time after the date hereof. The OREO or
words of similar import included in any non-performing assets of RCFC 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.
35
<PAGE>
(t) Accounting Matters. Neither RCFC nor any of its Subsidiaries or,
------------------
to the best of RCFC's knowledge, any of its other affiliates has, through the
date hereof, taken or agreed to take any action that would prevent RCFC from
accounting for the business combination contemplated herein as a pooling-of-
interests, and RCFC has no knowledge of any fact or circumstance relating to it
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 RCFC included in RCFC'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 RCFC's Disclosure Letter, neither
RCFC 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 RCFC's Disclosure Letter or
disclosed in RCFC's Report filed on or prior to the date hereof.
(iii) Set forth in RCFC's Disclosure Letter is a true and
complete list of RCFC's borrowed funds (excluding deposit accounts) as of the
date hereof.
(v) Registration Statement. The information regarding RCFC to be
----------------------
supplied by RCFC for inclusion in (i) the Registration Statement, (ii) the Proxy
Statement or (iii) any other documents to be filed with any Regulatory Authority
in connection with the transactions contemplated hereby 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. All documents that
RCFC is responsible for filing in connection with the transactions contemplated
hereby will comply as to form in all material respects with the provisions of
applicable law.
(w) Books and Records. The books and records of RCFC and its
-----------------
Subsidiaries on a consolidated basis have been, and are being, maintained in
accordance with applicable legal
36
<PAGE>
and accounting requirements and reflect in all material respects the substance
of events and transactions that should be included therein.
(x) Corporate Documents. RCFC has delivered to Bayonne true and
-------------------
complete copies of its organization certificate and bylaws and of RCFC Bank's
organization certificate and bylaws. The minute books of RCFC and RCFC 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 RCFC'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 Bayonne Common Stock. As of the date
--------------------------------------------
hereof, RCFC beneficially owns 442,500 shares of Bayonne Common Stock and, other
than as contemplated by the Option Agreement, does not have any option, warrant
or right of any kind to acquire the beneficial ownership of any shares of
Bayonne Common Stock.
(z) Tax Treatment of the Merger. As of the date hereof, RCFC has no
---------------------------
knowledge of any fact or circumstance relating to it that would prevent the
transactions contemplated by this Agreement from qualifying as a tax-free
reorganization under the Code.
(aa) Year 2000 Matters. RCFC 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. RCFC'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, RCFC 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 RCFC and its Subsidiaries, taken as a whole.
(bb) Community Reinvestment Act ("CRA") Compliance. RCFC Bank is in
---------------------------------------------
material compliance with the applicable provisions of the CRA and the
regulations promulgated thereunder, and RCFC Bank currently has a CRA rating of
satisfactory or better. To RCFC's knowledge, there is no fact or circumstance
or set of facts or circumstances that would cause RCFC Bank to fail to comply
with such provisions or cause the CRA rating of RCFC Bank to fall below
satisfactory.
ARTICLE III
CONDUCT PENDING THE MERGER
--------------------------
Section 3.1. Conduct of Bayonne'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, Bayonne shall, and shall cause
its Subsidiaries to, use
37
<PAGE>
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 adversely affect or delay the
ability of Bayonne or RCFC 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 Bayonne, First Savings, RCFC or RCFC
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 Bayonne
or First Savings.
Section 3.2. Forbearance by Bayonne. 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, Bayonne shall not, and shall not permit any of its Subsidiaries to,
without the prior consent of RCFC, which consent shall not be unreasonably
withheld:
(a) unless required by applicable law or regulation or regulatory
directive, change any provisions of the certificate of incorporation or bylaws
of Bayonne 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
Bayonne except pursuant to the exercise of stock options or warrants outstanding
as of the date of this Agreement;
(c) other than regular quarterly dividends, make, declare or pay any
cash or stock 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 Bayonne shall cause its regular
quarterly dividend record dates and payment dates to be the same as RCFC's
regular quarterly dividend record dates and payments dates for RCFC Common
Stock, and Bayonne shall not thereafter change its regular dividend payment
dates and record dates. Nothing contained in this Section 3.2(c) or in any
other Section of this Agreement shall be construed to permit holders of shares
of Bayonne Common Stock to receive two dividends from either Bayonne or from
Bayonne and RCFC in any one quarter. Subject to applicable regulatory
restrictions, if any, First Savings may pay a cash dividend that is, in the
aggregate, sufficient to fund any dividend by Bayonne permitted hereunder;
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(d) other than in the ordinary course of business consistent with
past practice, (i) 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
Bayonne or (ii) cancel, release or assign any indebtedness of any such
individual, corporation or other entity;
(e) except to the extent required by law or as specifically provided
for elsewhere herein, increase in any manner the compensation or fringe benefits
of any of its employees or directors, other than general increases in
compensation for non-executive officer employees in the ordinary course of
business consistent with past practice that do not cause the annualized
compensation of any of Bayonne's non-executive officer employees following such
increase to exceed by more than 5% the total annual compensation expenses of
Bayonne with respect to such person for the twelve-month period ended March 31,
1998 and that do not cause the annual rate of base salary of any of Bayonne's
non-executive officer employees to increase by more than 5% over such person's
base salary at March 31, 1998; pay, unless approved in advance by RCFC, any
reasonable "stay in place" pay where necessary or appropriate to retain key
employees; 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 Bayonne 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; make any discretionary
continuation to any Employee Plan; hire any employee with an annual total
compensation payment in excess of $35,000 or enter into any employment contract;
terminate or materially increase the costs to Bayonne or any Subsidiary of any
Employee Plan;
(f) except as contemplated by Section 4.2, change its method of
accounting as in effect at March 31, 1998, except as required by changes in GAAP
as concurred in by Bayonne's independent auditors;
(g) settle any claim, action or proceeding involving any liability of
Bayonne or any of its Subsidiaries for money damages in excess of $50,000 or
impose material restrictions upon the operations of Bayonne or any of its
Subsidiaries;
(h) 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 Bayonne, except in satisfaction of debts
previously contracted;
(i) except pursuant to commitments existing at the date hereof which
have previously been disclosed to RCFC, make any real estate loans secured by
undeveloped land or real estate located outside the State of New Jersey (other
than real estate secured by one-to-four
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family homes) or make any construction loan (other than construction loans
secured by one-to-four family homes) outside the State of New Jersey;
(j) 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 except as disclosed in the Bayonne Disclosure Schedule;
(k) [RESERVED];
(l) other than in the ordinary course of business consistent with
past practice in individual amounts not to exceed $50,000 and other than
investments for Bayonne's portfolio made in accordance with Section 3.2(m), make
any investment either by purchase of stock or securities, contributions to
capital, property transfers, or purchase of any property or assets of any other
individual, corporation or other entity;
(m) make any investment in any debt security, including mortgage-
backed and mortgage-related securities, other than US government and US
government agency securities with final maturities not greater than five years,
mortgage-backed or mortgage related securities which would not be considered
"high risk" securities pursuant to Thrift Bulletin Number 52 issued by the OTS
or securities of the FHLB, in each case that are purchased in the ordinary
course of business consistent with past practice;
(n) enter into or terminate any contract or agreement, or make any
change in any of its leases or contracts, other than with respect to those
involving aggregate payments of less than, or the provision of goods or services
with a market value of less than, $20,000 per annum and other than contracts or
agreements covered by Section 3.2(g);
(o) make, renegotiate, renew, increase, extend or purchase any
(i) loan, lease (credit equivalent), advance, credit enhancement or other
extension of credit, or make any commitment in respect of any of the foregoing,
except (A) in conformity with existing lending practices in amounts not to
exceed $500,000 to any individual borrower or (B) loans or advances as to which
Bayonne has a binding obligation to make such loan or advances as of the date
hereof and a description of which has been provided by Bayonne in the Bayonne
Disclosure Schedule;
(p) incur any additional borrowings beyond those set forth in the
Bayonne Disclosures Schedule other than short-term (six months or less) FHLB
borrowings and reverse repurchase agreements consistent with past practice, or
pledge any of its assets to secure any borrowings other than as required
pursuant to the terms of borrowings of Bayonne or any Subsidiary in effect at
the date hereof or in connection with borrowings or reverse repurchase
agreements permitted hereunder. Deposits shall not be deemed to be borrowings
within the meaning of this paragraph;
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(q) make any capital expenditures in excess of $20,000 per
expenditure from the date of this Agreement until the Effective Date other than
pursuant to binding commitments existing on the date hereof disclosed in the
Bayonne Disclosure Schedule, other than expenditures necessary to maintain
existing assets in good repair or to make payment of necessary taxes;
(r) organize, capitalize, lend to or otherwise invest in any
subsidiary (other than securities of the FHLB that are purchased in the ordinary
course of business consistent with past practice);
(s) elect to any senior executive office any person who is not a
member of the senior executive officer team of Bayonne as of the date of this
Agreement or elect to the Board of Directors of Bayonne any person who is not a
member of the Board of Directors of Bayonne;
(t) agree or make any commitment to take any action that is
prohibited by this Section 3.2.
In the event that RCFC does not respond in writing to Bayonne within
3 business days of receipt by RCFC of a written request for Bayonne to engage in
any of the actions for which RCFC's prior written consent is required pursuant
to this Section 3.2, RCFC shall be deemed to have consented to such action. Any
request by Bayonne or response thereto by RCFC 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 3 business
days shall constitute consent.
Section 3.3. Conduct of RCFC'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, RCFC 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 Bayonne or RCFC 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 Bayonne, RCFC, First Savings or RCFC 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 RCFC.
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ARTICLE IV
COVENANTS
---------
Section 4.1. Acquisition Proposals. From and after the date hereof
---------------------
until the termination of this Agreement, neither Bayonne or First Savings, nor
any of their respective officers, directors, employees, representatives, agents
or affiliates (including, without limitation, any investment banker, attorney or
accountant retained by Bayonne or any of its Subsidiaries), will, directly or
indirectly, initiate, solicit or knowingly encourage (including by way of
furnishing non-public information or assistance), or facilitate knowingly, any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Acquisition Proposal (as defined below), or enter into
or maintain or continue discussions or negotiate with any person or entity in
furtherance of such inquiries or to obtain an Acquisition Proposal or agree to
or endorse any Acquisition Proposal, or authorize or permit any of its officers,
directors or employees or any of its Subsidiaries or any investment banker,
financial advisor, attorney, accountant or other representative retained by any
of its Subsidiaries to take any such action, and Bayonne shall notify RCFC
orally (within 1 business day) and in writing (as promptly as practicable) of
such inquiries and proposals which it or any of its subsidiaries or any such
officer, director, employee, investment banker, financial advisor, attorney,
accountant or other representative may receive relating to any of such matters
and if such inquiry or proposal is in writing, Bayonne shall deliver to RCFC a
copy of such inquiry or proposal promptly; provided, however, that nothing
contained in this Section 4.1 shall prohibit the Board of Directors of Bayonne
from (i) furnishing information to, or entering into discussions or negotiations
with any, person or entity that makes an unsolicited written, bona fide proposal
to acquire Bayonne pursuant to a merger, consolidation, share exchange, business
combination, tender or exchange offer or other similar transaction, if, and only
to the extent that, (A) the Board of Directors of Bayonne receives a written
opinion from its independent financial advisor that such proposal may be
superior to the Merger from a financial point-of-view to Bayonne's stockholders,
(B) the Board of Directors of Bayonne, after consultation with independent legal
counsel, determines in good faith that such action is necessary for the Board of
Directors of Bayonne to comply with its fiduciary duties to stockholders under
applicable law (such proposal that satisfies (A) and (B) being referred to
herein as a "Superior Proposal") and (C) prior to furnishing such information
to, or entering into discussions or negotiations with, such person or entity,
Bayonne (x) provides reasonable notice to RCFC to the effect that it is
furnishing information to, or entering into discussions or negotiations with,
another partyand (y) receives from such person or entity an executed
confidentiality agreement in reasonably customary form, (ii) complying with Rule
14e-2 promulgated under the Exchange Act with regard to a tender or exchange
offer or (iii) failing to make or withdrawing or modifying its recommendation
and entering into a Superior Proposal if there exists a Superior Proposal and
the Board of Directors of Bayonne, after consultation with independent legal
counsel, determines in good faith that such action is necessary for the Board of
Directors of Bayonne to comply with its fiduciary duties to stockholders under
applicable law. For purposes of this Agreement, "Acquisition Proposal" shall
mean any of the following (other than the transactions contemplated hereunder)
involving Bayonne or any of its Subsidiaries: (i) any merger, consolidation,
share exchange, business
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combination, or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 15% or more of the assets of
Bayonne or First Savings, taken as a whole, in a single transaction or series of
transactions; (iii) any tender offer or exchange offer for 10% or more of the
outstanding shares of capital stock of Bayonne or the filing of a registration
statement under the Securities Act in connection therewith; or (iv) any public
announcement of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing.
Section 4.2. Certain Policies of Bayonne.
---------------------------
(a) At the request of RCFC, Bayonne shall cause First Savings 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 RCFC 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 RCFC Bank; provided, however, that Bayonne 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) Bayonne'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. RCFC agrees to hold harmless, indemnify and
defend Bayonne and its Subsidiaries, and their respective directors, officers
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, Bayonne and RCFC 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, Bayonne shall make available to RCFC 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. RCFC and Bayonne 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
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consummation of the transactions contemplated by this Agreement. Subject to the
requirements of applicable law, each of RCFC and Bayonne 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, the
NYBD and the NJBD and continuing to the Effective Time, including weekends and
holidays, Bayonne shall cause First Savings to provide RCFC, RCFC Bank and their
authorized agents and representatives full access to First Savings's offices
after normal business hours for the purpose of installing necessary wiring and
equipment to be utilized by RCFC Bank after the Effective Time; provided, that:
(i) reasonable advance notice of each entry shall be given to
First Savings and First Savings approves of each entry, which approval shall not
be unreasonably withheld;
(ii) First Savings shall have the right to have its employees or
contractors present to inspect the work being done;
(iii) to the extent practicable, such work shall be done in a
manner that will not interfere with First Savings'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 RCFC Bank shall be responsible
for the procurement, at RCFC Bank's expense, of all required governmental or
administrative permits and approvals;
(v) RCFC Bank shall maintain appropriate insurance satisfactory
to First Savings in connection with any work done by RCFC Bank's agents and
representatives pursuant to this Section 4.3;
(vi) RCFC Bank shall reimburse First Savings for any material
out-of-pocket costs or expenses incurred by First Savings in connection with
this undertaking; and
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(vii) in the event this Agreement is terminated in accordance
with Article VI hereof, RCFC 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. RCFC
------------------------------------------
shall (a) as soon as practicable and in cooperation with Bayonne (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; (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 prior to filing.
Section 4.5. Antitakeover Provisions. Bayonne 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 to exempt or continue to
exempt RCFC, the Agreement, the Merger, the Bank Merger and the Option Agreement
from any provisions of an antitakeover nature in Bayonne's or its Subsidiaries'
organization certificates and bylaws and the provisions of any federal or state
antitakeover laws.
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 Bayonne and RCFC 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. RCFC and Bayonne shall take
---------------------
all action necessary, in accordance with applicable law and their respective
corporate documents, to
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convene a meeting of their 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 RCFC and Bayonne 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. RCFC and Bayonne, in consultation with each other, shall each employ
professional proxy solicitors to assist in contacting stockholders in connection
with soliciting favorable votes on the Merger. RCFC and Bayonne shall coordinate
and cooperate with respect to the timing of their respective stockholders
meetings.
Section 4.9. Proxy Statements; Comfort Letters. (i) As soon as
---------------------------------
practicable after the date hereof, RCFC shall, in cooperation with Bayonne,
prepare a Proxy Statement-Prospectus for the purpose of taking stockholder
action on the Merger and this Agreement and subject to the provisions of Section
4.4, 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 Bayonne and RCFC. RCFC and Bayonne each represents and covenants to
the other that the Proxy Statement-Prospectus, and any amendment or supplement
thereto, with respect 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.
(ii) RCFC shall use its reasonable best efforts to cause Ernst &
Young LLP, its independent public accounting firm, to deliver to Bayonne, and
Bayonne shall use its reasonable best efforts to cause KPMG Peat Marwick LLP,
its independent public accounting firm, to deliver to RCFC 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 Bayonne and the date of mailing of the Proxy Statement
for the Stockholders meeting of RCFC, respectively, and (b) a date not earlier
than fourteen days preceding the date of the Closing (as defined in
Section 7.1).
Section 4.10. Registration of RCFC Common Stock.
---------------------------------
(a) RCFC shall, as promptly as practicable following the preparation
thereof, file the Registration Statement in which the Proxy Statement-Prospectus
will be included (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 RCFC and Bayonne shall use
all reasonable efforts to have the Registration Statement declared effective
under the Securities Act as promptly as practicable after such filing. RCFC
will advise
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Bayonne promptly after RCFC 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. RCFC will provide Bayonne with as many copies of such
Registration Statement and all amendments thereto promptly upon the filing
thereof as Bayonne may reasonably request.
(b) RCFC 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) RCFC shall use its best efforts to list, prior to the Effective
Time, on the Nasdaq National Market, or on such other exchange as RCFC Common
Stock shall then be trading, subject only to official notice of issuance, the
shares of RCFC Common Stock to be issued by RCFC in exchange for the shares of
Bayonne Common Stock.
Section 4.11. Affiliate Letters. Promptly, but in any event within
-----------------
7 days after the execution and delivery of this Agreement, Bayonne shall deliver
to RCFC a letter identifying all persons who, to the knowledge of Bayonne, may
be deemed to be "affiliates" of Bayonne under Rule 145 of the Securities Act and
the pooling-of-interests accounting rules, including, without limitation, all
directors and executive officers of Bayonne. Within 21 days after delivery of
such letter, Bayonne shall use its best efforts to deliver executed letter
agreements, each substantially in the form attached hereto as Exhibit A,
executed by each such person so identified as an affiliate of Bayonne agreeing
(i) to comply with Rule 145, and (ii) to refrain from transferring shares as
required by the pooling-of-interests accounting rules. Within 2 weeks after the
date hereof, RCFC shall cause its directors and executive officers to enter into
letter agreements with RCFC concerning the pooling-of-interests accounting rules
in the Form attached as Exhibit C.
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 Bayonne and
RCFC 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.
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Section 4.13. Employees, Directors and Officers.
---------------------------------
(a) All persons who are employees of First Savings immediately prior
to the Effective Time ("Bayonne's Employees") and whose employment is not
specifically terminated at or prior to the Effective Time (a "Continuing
Employee") shall, at the Effective Time, become employees of RCFC or RCFC Bank,
respectively; provided, however, that in no event shall any of Bayonne's
Employees be officers of RCFC or RCFC Bank, or have or exercise any power or
duty conferred upon such an officer, unless and until duly elected or appointed
to such position in accordance with the bylaws of RCFC or RCFC Bank. Subject to
paragraph (e) of this Section 4.13, all of Bayonne's Employees who remain
following the Effective Date shall be employed at the will of RCFC or RCFC Bank
and no contractual right to employment shall inure to such employees because of
this Agreement. Except as provided in paragraph (e) of this Section 4.13, no
employee of Bayonne will become a contractual employee of RCFC or RCFC Bank
unless such contract is in writing and executed by the President or Chief
Executive Officer of RCFC or RCFC Bank.
(b) Except as otherwise provided in paragraphs (c), (f) and (g) of
this Section 4.13, appropriate steps shall be taken to terminate all Bayonne
Employee Plans as of the Effective Time or as promptly as practical thereafter.
Except as provided in paragraph (c) of this Section 4.13, immediately following
the Effective Time, each Continuing Employee shall be eligible to participate in
RCFC Employee Plans, on the same basis as any newly-hired employee of RCFC or
RCFC Bank (it being understood that inclusion of Continuing Employees in RCFC
Employee Plans may occur at different times with respect to different plans);
provided, however, that with respect to each RCFC Employee Plan, other than the
Richmond County Savings Bank Employee Stock Ownership Plan (the "RCFC Bank
ESOP") and the Retirement Plan of Richmond County Savings Bank in RSI Trust (the
"RCFC Bank Retirement Plan"), for purposes of determining eligibility to
participate, vesting, and entitlement to benefits, service with Bayonne or First
Savings shall be treated as service with RCFC or RCFC Bank; provided further
however, that such service shall not be recognized to the extent such
recognition would result in a duplication of benefits. Such service shall also
apply for purposes of satisfying any waiting periods, evidence of insurability
requirements, or the application of any preexisting condition limitation with
respect to any RCFC or RCFC Bank welfare benefit plan. For purposes of
determining eligibility to participate, vesting, and entitlement to benefits
(including accrual of benefits) under the RCFC Bank ESOP or RCFC Bank Retirement
Plan, Continuing Employees shall be treated as newly-hired employees of RCFC or
RCFC Bank as of the Effective Date and credit for service shall begin accruing
as of that date.
(c) As of the Effective Time, each Bayonne Employee who is a
participant in the Bayonne 401(k) Plan (the "Bayonne 401(k) Plan") shall become
fully vested in his or her account balance in the Bayonne 401(k) Plan and the
Bayonne 401(k) Plan will either be merged into the Richmond County Savings Bank
401(k) Savings Plan (the "RCFC Bank 401(k) Plan") effective as of a date
following the Effective Time selected by RCFC Bank or, if so elected by RCFC
Bank, terminated immediately prior to, on, or after the Effective Time. The
determination
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as to whether the Bayonne Savings Plan shall be terminated or merged into the
RCFC Bank 401(k) Plan shall be made by RCFC Bank. Effective as of the date of
the merger of the Bayonne 401(k) Plan into the RCFC 401(k) Plan, if applicable,
or the termination of the Bayonne 401(k) Plan (or the Effective Time, if
subsequent to such termination), if applicable, Bayonne Employees who are then
participating in the Bayonne 401(k) Plan shall become participants in the RCFC
Bank 401(k) Plan.
(d) RCFC agrees to honor existing employment agreements, including
the change in control provisions of such agreements, between Bayonne and First
Savings and certain employees, stock option plans and restricted stock plans,
and other benefit plans as set forth in Bayonne's Disclosure Letter
(collectively "Employment Agreements") and to the payment of benefits by Bayonne
as of the Effective Time or earlier as agreed to by Bayonne and RCFC under such
agreements and plans as described in the Bayonne Disclosure Schedule. Payments
under the Employment Agreements may be made by Bayonne if so agreed to by RCFC.
(e) At the Effective Time, RCFC Bank shall enter into an employment
agreement with Michael J. Nilan, substantially in the form attached hereto as
Exhibit D.
(f) [RESERVED]
(g) Immediately following execution of this Agreement, Bayonne shall
take all appropriate steps necessary to "freeze" benefit accruals under the tax-
qualified defined benefit plan sponsored by Bayonne.
(h) RCFC shall cause its Board of Directors to be increased by one
member and shall appoint Patrick F.X. Nilan as the nominee to fill such vacancy
on RCFC's Board of Directors created by such increase. The term for Mr. Patrick
F.X. Nilan shall expire in the year 2000 and he shall receive only RCFC Board
fees and no Divisional Board fees during this term.
(i) Immediately upon execution of this Agreement, the Board of
Directors of Bayonne shall provide notice to Patrick F.X. Nilan of termination
of the consulting agreement between Bayonne and Patrick F.X. Nilan. Such notice
of termination shall be effective as of the Effective Date. Consideration to be
paid pursuant to the termination of the consulting agreement is to be made as
disclosed in the Bayonne Disclosure Letter.
(j) Upon request, Bayonne shall supply RCFC with all documentation
regarding all actions taken in accordance with this Section 4.13.
Section 4.14. Indemnification.
---------------
(a) From and after the Effective Time through the sixth anniversary
of the Effective Date, RCFC (and any successor) agrees to indemnify and hold
harmless each present and former director, officer and employee of Bayonne and
its Subsidiaries and each officer or employee of Bayonne and its Subsidiaries
that is serving or has served as a director or trustee of
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<PAGE>
another entity expressly at Bayonne's request or direction (each, an
"Indemnified Party"), against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, amount paid in settlement, 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), 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 Bayonne and
its Subsidiaries and as then permitted under the DGCL.
(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 RCFC thereof, but the failure to so notify
shall not relieve RCFC 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) RCFC shall have the right to assume the defense
thereof with counsel reasonably acceptable to the Indemnified Party and RCFC
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 RCFC 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 RCFC and
the Indemnified Party (and counsel for RCFC does not disagree), the Indemnified
Party may retain counsel satisfactory to such Indemnified Party, and RCFC shall
remain responsible 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 RCFC 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) RCFC 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) RCFC 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 the DGCL. The rights of each Indemnified Party hereunder
shall be in addition to any other rights such Indemnified Party may have under
applicable law.
(d) RCFC shall maintain Bayonne's existing directors and officers'
insurance policy (or provide a policy providing comparable coverage and amounts
on terms no less favorable to the persons currently covered by Bayonne's
existing policy, including RCFC's
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<PAGE>
existing policy if its meets the foregoing standard) covering persons who are
currently covered by such insurance for a period of 3 years after the effective
date.
(e) In the event RCFC or any of its successors or assigns
(i) consolidates with or merges into any other person or entity and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any person or entity, then, and in each such case, to the extent
necessary, proper provision shall be made so that the successors and assigns of
RCFC assume the obligations set forth in this Section 4.14.
(f) The provisions of this Section 4.14 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
representatives.
Section 4.15. Pooling and Tax-Free Reorganization Treatment. Prior
---------------------------------------------
to the Effective Time, neither RCFC nor Bayonne 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, RCFC
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. Divisional Board. RCFC shall, promptly following the
----------------
Effective Time, cause all of the members of Bayonne's Board of Directors as of
the date of this Agreement, who are willing to so serve, to be elected to or
appointed as members of RCFC's divisional board ("Divisional Board"), the
function of which shall be to advise RCFC with respect to deposit and lending
activities in Bayonne's market area and to maintain and develop customer
relationships. The members of the Board who are willing to so serve shall be
elected to serve a term not to exceed April 30, 2003. Beginning immediately
after the Effective Time, each member of the Divisional Board shall receive an
annual retainer fee of $12,000 and a $1,000 attendance fee for each board
meeting attended. Each member of the Divisional Board shall be prohibited from
competing with RCFC for the duration of the term for which they were elected or
appointed. Such Divisional Board annual retainer fee shall be payable in
quarterly installments or in one lump sum at any time in advance at the option
of RCFC. The responsibilities and obligations of members of the Divisional
Board shall be determined by RCFC. Service on the Divisional Board shall be
deemed to constitute service for purposes of the vesting provisions of the
Bayonne Option Plans and the Bayonne RRP. In the event RCFC or any of its
successors or assigns (i) consolidates with or merges into any other person or
entity and shall not be the continuing or surviving corporation or entity of
such consolidation or merger, or (ii) transfers or conveys all or substantially
all of its properties and assets to any person or entity, then, and in each such
case, to the extent necessary, proper provision shall be made so that the
successors and assigns of RCFC assume the obligations set forth in this
Section 4.16.
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<PAGE>
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
Bayonne's and RCFC's stockholders in accordance with applicable laws and
regulations;
(b) the Requisite Regulatory Approvals and any 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 Bayonne and its Subsidiaries taken as a whole or (ii) on RCFC and its
Subsidiaries taken as a whole. No such approval or consent shall have imposed
any condition or requirement that would so materially and adversely impact the
economic or business benefits to RCFC or Bayonne of the transactions
contemplated hereby that, had such condition or requirement been known, such
party would not, in its reasonable judgment, have entered into this Agreement.
(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; RCFC shall have received all
required approvals by state securities or "blue sky" authorities with respect to
the transactions contemplated by this Agreement;
(f) RCFC shall have received a letter, dated as of the Effective
Date, from its independent certified public accountants, reasonably satisfactory
to RCFC, to the effect that such auditors are not aware of any facts or
circumstances that might cause the Merger not to qualify for pooling of
interests accounting treatment;
(g) Bayonne shall have received a letter, dated as of the Effective
Date, from its independent certified public accountants, reasonably satisfactory
to RCFC, to the effect that
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<PAGE>
such auditors are not aware of any facts and circumstances that might cause the
Merger not to qualify for pooling of interests accounting treatment; and
(h) RCFC shall have caused to be listed on the Nasdaq National
Market, or on such other market on which shares of RCFC Common Stock shall then
be trading, subject only to official notice of issuance, the shares of RCFC
Common Stock to be issued by RCFC in exchange for the shares of Bayonne Common
Stock.
Section 5.2. Conditions to the Obligations of RCFC and RCFC Bank.
---------------------------------------------------
The obligations of RCFC and RCFC 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 RCFC:
(a) each of the obligations of Bayonne and First Savings,
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 Bayonne and
First Savings 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). RCFC
shall have received a certificate to the foregoing effect signed by the chief
executive officer and the chief financial or principal accounting officer of
Bayonne;
(b) all action required to be taken by, or on the part of, Bayonne
and First Savings to authorize the execution, delivery and performance of this
Agreement and the consummation by Bayonne and First Savings of the transactions
contemplated hereby shall have been duly and validly taken by the Board of
Directors and stockholders of Bayonne or First Savings, as the case may be, and
RCFC shall have received certified copies of the resolutions evidencing such
authorization;
(c) Bayonne 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 Bayonne or its Subsidiaries under any loan or
credit agreement, note, mortgage, indenture, lease, license or other agreement
or instrument to which Bayonne 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
RCFC (after giving effect to the consummation of the transactions contemplated
hereby) or upon the consummation of the transactions contemplated hereby.
(d) RCFC 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 Bayonne and its
Subsidiaries;
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<PAGE>
(e) RCFC shall have received an opinion of Muldoon, Murphy &
Faucette, counsel to RCFC, dated as of the Effective Date, in form and substance
customary in transactions of the type contemplated hereby, and reasonably
satisfactory to RCFC, 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 RCFC, RCFC Bank,
Bayonne or First Savings as a result of the Merger;
(ii) Except to the extent of any cash received in lieu of a
fractional share interest in RCFC Common Stock, no gain or loss will be
recognized by the stockholders of Bayonne who exchange their Bayonne Common
Stock for RCFC Common Stock pursuant to the Merger;
(iii) The tax basis of RCFC Common Stock received by
stockholders who exchange their Bayonne Common Stock for RCFC Common Stock in
the Merger will be the same as the tax basis of Bayonne 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 RCFC Common Stock received by each
stockholder in the Merger will include the holding period of Bayonne Common
Stock exchanged therefor, provided that such stockholder held such Bayonne
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 RCFC,
RCFC Bank, Bayonne, First Savings, stockholders of RCFC or Bayonne, or any
combination of such persons and (y) certificates provided at the request of
Muldoon, Murphy & Faucette by officers of RCFC, RCFC Bank, Bayonne, First
Savings and other appropriate persons.
Section 5.3. Conditions to the Obligations of Bayonne and First
--------------------------------------------------
Savings. The obligations of Bayonne and First Savings 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 Bayonne:
(a) each of the obligations of RCFC and RCFC 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 RCFC and RCFC 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
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<PAGE>
though made at and as of the Effective Time (except as to any representation or
warranty which specifically relates to an earlier date). Bayonne shall have
received a certificate to the foregoing effect signed by the chief executive
officer and the chief financial or principal accounting officer of RCFC;
(b) all action required to be taken by, or on the part of, RCFC and
RCFC Bank to authorize the execution, delivery and performance of this Agreement
and the consummation by RCFC and RCFC Bank of the transactions contemplated
hereby shall have been duly and validly taken by the Board of Directors and
stockholders of RCFC or RCFC Bank, as the case may be, and Bayonne shall have
received certified copies of the resolutions evidencing such authorization;
(c) RCFC 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
RCFC 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 RCFC (after giving effect to
the transactions contemplated hereby) or upon the consummation of the
transactions contemplated hereby.
(d) Bayonne 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 RCFC and its
Subsidiaries;
(e) Bayonne shall have received an opinion of Breyer & Aguggia LLP,
counsel to Bayonne, dated as of the Effective Date, in form and substance
customary in transactions of the type contemplated hereby, and reasonably
satisfactory to Bayonne, 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 RCFC, RCFC Bank,
Bayonne or First Savings as a result of the Merger;
(ii) Except to the extent of any cash received in lieu of a
fractional share interest in RCFC Common Stock, no gain or loss will be
recognized by the stockholders of Bayonne who exchange their Bayonne Common
Stock for RCFC Common Stock pursuant to the Merger;
(iii) The tax basis of RCFC Common Stock received by
stockholders who exchange their Bayonne Common Stock for RCFC Common Stock in
the Merger will be the same as the tax basis of Bayonne Common Stock surrendered
pursuant to the Merger,
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<PAGE>
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 RCFC Common Stock received by each
stockholder in the Merger will include the holding period of Bayonne Common
Stock exchanged therefor, provided that such stockholder held such Bayonne
Common Stock as a capital asset on the Effective Date.
(f) RCFC shall have provided to the Exchange Agent (i) certificates
representing at least the aggregate number of shares of RCFC Common Stock to be
issued to the shareholders of Bayonne pursuant to the terms hereof, and (ii)
sufficient cash to pay Bayonne shareholders their fractional share interest as
provided herein.
Such opinion may be based on, in addition to the review of such
matters of fact and law as Breyer & Aguggia, LLP considers appropriate, (x)
representations made at the request of Breyer & Aguggia LLP by RCFC, RCFC Bank,
Bayonne, First Savings, stockholders of RCFC or Bayonne, or any combination of
such persons and (y) certificates provided at the request of Breyer & Aguggia
LLP by officers of RCFC, RCFC Bank, Bayonne 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
any requisite stockholder approval:
(a) by the mutual consent of RCFC and Bayonne in a written
instrument, if the Board of Directors of each so determines by vote of a
majority of the members of its entire Board; or
(b) by RCFC or Bayonne, if its Board of Directors so determines by
vote of a majority of the members of its entire Board, in the event of the
failure of the stockholders of Bayonne or RCFC to approve the Agreement at its
Stockholder Meeting called to consider such approval; provided, however, that
Bayonne or RCFC, as the case may be, shall only be entitled to terminate the
Agreement pursuant to this clause if it has complied in all material respects
with its obligations under Section 4.8; or
(c) by RCFC or Bayonne, 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; or
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<PAGE>
(d) by RCFC or Bayonne, 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 April 30, 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
July 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 RCFC, if the Board of Directors of Bayonne does not publicly
recommend in the Proxy Statement that Bayonne's stockholders approve and adopt
this Agreement or if, after recommending in the Proxy that stockholders approve
and adopt this Agreement, the Board of Directors of Bayonne shall have
withdrawn, modified or amended such recommendation in any respect materially
adverse to RCFC; or
(f) by RCFC or Bayonne by written notice to the other party in the
event that there has occurred since the date of this Agreement an event,
condition, change or occurrence which, individually or in the aggregate, has had
or could reasonably be expected to result in a Material Adverse Effect on
Bayonne or RCFC as the case may be; provided that each party shall have given
the other 30 calendar days prior written notice of such termination, and such
party shall not have remedied such event, condition, change or occurrence by the
end of such 30-day period;
(g) by Bayonne, if its Board of Directors so determines by the
requisite vote of members of its entire board, at any time during the 5-day
period commencing with the Valuation Date, if both of the following conditions
are satisfied:
(i) Richmond Market Value is less than $15.41, adjusted as
indicated in the last sentence of this Section 6.1(g); and
(ii) (A) the number obtained by dividing Richmond Market Value on
such Valuation Date by the Initial RCFC Market Value (the "Richmond
Ratio") is 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) (the "Index Ratio");
subject, however, to the following three sentences: (1) if Bayonne elects to
exercise its termination right pursuant to this Section 6.1(g), it shall give
prompt written notice to Richmond (provided, further, that such notice of
election to terminate may be withdrawn at any time during the 5-day period); (2)
for a period of 7 days commencing with its receipt of such notice, RCFC shall
have the option to increase the consideration to be received by the holders of
Bayonne
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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 1.05 multiplied by
the Initial RCFC Market Value multiplied by .85 and the denominator of which is
the Richmond Market Value, and (y) a number equal to a fraction, the numerator
of which is the Index Ratio multiplied by 1.05 and the denominator of which is
Richmond Ratio; and (3) if RCFC so elects it shall give prompt written notice to
Bayonne of such election and the adjusted Merger Consideration, whereupon no
termination shall have occurred pursuant to this Section 6.1(g) and this
Agreement shall remain in effect in accordance with its terms (except as the
Merger Consideration shall have been so adjusted).
For purposes of this Section 6.1(g), the following terms shall have the
meanings indicated below:
"Final Index Price" means the sum of the Final Prices for each company
comprising the Index Group multiplied by the applicable weighting.
"Final Price," with respect to any company being a member of the Index
Group, means the average of the daily closing sales prices of a share of
common stock of such company, as reported on the consolidated transaction
reporting system for the market or exchange on which such common stock is
principally traded, during the period of 15 trading days ending on the
Valuation Date, adjusted as indicated in the last sentence of this Section
6.1(g).
"Index Group" means the 14 financial institution holding companies
listed below, the common stock of all of which are publicly traded and as
to which there have not been any publicly announced proposal at any time
during the period beginning on the date of this Agreement and ending on the
Valuation Date for any such company to be acquired. In the event that the
common stock of any such company ceases to be publicly traded or a proposal
to acquire 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 shall be removed from the Index Group, and the weights
attributed to the remaining companies shall be adjusted proportionately for
purposes of determining the Final Index Price and the Initial Index Price.
The 14 financial institution holding companies and the weights attributed
to them are as follows:
<TABLE>
<CAPTION>
Holding Company Weighting
--------------- ---------
<S> <C>
GreenPoint Financial Corp. 27.71%
Astoria Financial Corp. 11.20%
Independence Community Bank Corp. 9.97%
Staten Island Bancorp, Inc. 8.14%
Webster Financial Corp. 7.16%
St. Paul Bancorp, Inc. 6.61%
Queens County Bancorp, Inc. 5.13%
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Holding Company Weighting
--------------- ---------
<S> <C>
Bay View Capital Corp. 4.96%
JSB Financial, Inc. 4.52%
MAF Bancorp 4.24%
Anchor BanCorp Wisconsin 3.03%
InterWest Bancorp 2.88%
Reliance Bancorp, Inc. 2.76%
Haven Bancorp, Inc. 1.69%
</TABLE>
"Initial Index Price" means the sum of each per share closing 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
transactions 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 RCFC Market Value" means the closing sales price of RCFC
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 Section 6.1(e).
"Richmond Market Value" shall have the meaning set forth in Section
1.2(c) hereof.
"Valuation Date" means the Valuation Date, as defined in Section
1.2(c) hereof.
If RCFC 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, in the manner specified in Section 1.2(b) of this
Agreement, for the purposes of applying this Section 6.1(g).
(h) by RCFC or Bayonne (provided that the party seeking termination
is not then in material breach of any representation, warranty, covenant or
other agreement contained herein), in the event of (i) a failure to perform or
comply by the other party with any covenant or agreement of such other party
contained in this Agreement, which failure or non-compliance is material in the
context of the transactions contemplated by this Agreement, or (ii) subject to
Section 2.2(b), any inaccuracies, omissions or breach in the representations,
warranties, covenants or agreements of the other party contained in this
Agreement the circumstances as to which either individually or in the aggregate
have, or reasonably could be expected to have, a Material Adverse Effect on such
other party; in either case which has not been or cannot be cured within 30
calendar days after written notice thereof is given by the party seeking to
terminate to such other party.
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(i) by Bayonne, if the Board of Directors of RCFC does not publicly
recommend in the Proxy Statement-Prospectus that RCFC's stockholders approve and
adopt this Agreement or if, after recommending in the Proxy Statement-Prospectus
that stockholders approve and adopt this Agreement, the Board of Directors of
RCFC shall have withdrawn, modified or amended such recommendation in any
respect materially adverse to Bayonne.
(j) by Bayonne, if the Board of Directors of Bayonne reasonably
determines that a proposal made by a third party to acquire, directly or
indirectly, including pursuant to a tender offer, exchange offer, merger,
consolidation, business combination, recapitalization, liquidation, dissolution
or similar transaction, for consideration consisting of cash and/or securities,
more than 65% of the combined voting power of the shares of Bayonne Common Stock
then outstanding or all or substantially all of the assets of Bayonne
constitutes a Superior Proposal and that such proposal must be accepted;
provided, however, that prior to any such termination, Bayonne shall use its
reasonable efforts to negotiate in good faith with RCFC to make such adjustments
in the terms and conditions of this agreement a would enable Bayonne to proceed
with the transactions contemplated herein.
Section 6.2. Effect of Termination. In the event of termination of
---------------------
this Agreement by either RCFC or Bayonne as provided in Section 6.1, this
Agreement shall forthwith become void and have no effect except (i) Sections
4.3(a), 8.6 and 8.7, shall survive any termination of this Agreement, (ii) that
notwithstanding anything to the contrary contained in this Agreement, no party
shall be relieved or released from any liabilities or damages arising out of its
willful breach of any provision of this Agreement.
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
Muldoon, Murphy & Faucette, 5101 Wisconsin Ave. N.W., Washington, D.C. 20016,
unless another place is agreed to by RCFC and Bayonne, on a date ("Closing
Date") that is no later than 14 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, RCFC and Bayonne
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.
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<PAGE>
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 RCFC and
Bayonne the documents and instruments required to be delivered under Article V.
ARTICLE VIII
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 RCFC or Bayonne (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.
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, 4.15, 4.16 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.
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 Bayonne or RCFC, no
amendment or modification may be made that would reduce the amount or alter or
change the kind of consideration to be received by holders of Bayonne Common
Stock or contravene any provision of the DGCL 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.
61
<PAGE>
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; provided, however, that RCFC shall pay all printing and
mailing expenses and filing fees associated with the registrations and approvals
required hereunder.
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 (in accordance with this provision) to the
other party hereto.
If to Bayonne, to:
Bayonne Bancshares, Inc.
586 Broadway
Bayonne, New Jersey 07002
Facsimile: (201) 437-2912
Attention: Patrick F.X. Nilan
Chairman of the Board
With copies to:
Bayonne Bancshares, Inc.
586 Broadway
Bayonne, New Jersey 07002
Facsimile: (201) 437-5958
Attention: Thomas M. Coughlin
Corporate Secretary
and
Paul M. Aguggia, Esq.
Breyer & Aguggia LLP
1300 I Street, N.W., Suite 470 East
Washington, DC 20005
Facsimile: (201) (737-7979)
62
<PAGE>
If to RCFC, to:
Richmond County Financial Corp.
1214 Castleton Avenue
Staten Island, New York 10310
Facsimile: (718) 390-0224
Attention: Michael F. Manzulli
Chairman of the Board and
Chief Executive Officer
With copies to:
Richmond County Financial Corp.
1214 Castleton Avenue
Staten Island, New York 10310
Facsimile: (718) 390-0224
Attention: Thomas R. Cangemi
Senior Vice President, Chief Financial
Officer and Secretary
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, 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, 4.14 and
4.16, 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.
63
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the 19/th/ day of July,
1998.
RICHMOND COUNTY FINANCIAL CORP.
By: /s/ Michael F. Manzulli
-----------------------------------
Michael F. Manzulli
Chairman of the Board and
Chief Executive Officer
BAYONNE BANCSHARES, INC.
By: /s/ Patrick F.X. Nilan
--------------------------------------
Patrick F.X. Nilan
Chairman of the Board
64
<PAGE>
EXHIBIT 10.1
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 17, 1998, between IRONBOUND
BANKCORP, NJ, a New Jersey corporation ("Issuer"), and RICHMOND COUNTY
FINANCIAL CORP., a Delaware corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger of even date herewith (the "Merger Agreement"), which agreement has been
executed by the parties hereto immediately prior to this Agreement; and
WHEREAS, as a condition to Grantee's entering into the Merger Agreement and
in consideration therefor, Issuer has agreed to grant Grantee the Option (as
hereinafter defined):
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to 198,664
fully paid and nonassessable shares of Issuer's Common Stock, par value $5.00
per share ("Common Stock"), at a price of $20.00 per share; provided, however,
that in no event shall the number of shares for which this Option is exercisable
exceed 19.9% of the Issuer's issued and outstanding common shares. The number
of shares of Common Stock that may be received upon the exercise of the Option
and the Option Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are issued or
otherwise become outstanding after the date hereof (or any treasury shares held
by Issuer have been or are sold after July 16, 1998) (other than pursuant to
this Agreement or as set forth in the Merger Agreement), the number of shares of
Common Stock subject to the Option shall be increased so that, after such
issuance, its equals 19.9% of the number of shares of Common Stock then issued
and outstanding without giving effect to any shares subject to or issued
pursuant to the Option. Nothing contained in this Section 1(b) or elsewhere in
this Agreement shall be deemed to authorize Issuer to breach any provision of
the Merger Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, and from time to time, if, but only if, a Triggering Event (as
hereinafter defined) has occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined), provided that the Holder shall have
sent the written notice of such exercise (as provided in subsection (e) of this
Section 2) within 30 days following such Triggering Event. Each of the
following shall be an Exercise Termination Event: (i) the Effective Time of the
Merger; (ii) termination of the Merger Agreement in accordance with the
provisions thereof if such termination occurs prior to the occurrence of a
Triggering Event; or (iii) the passage of 12 months after termination of the
Merger Agreement if such termination follows the occurrence of
<PAGE>
a Triggering Event; or (iv) the passage of 12 months after termination of the
Merger Agreement, if such termination is pursuant to Sections 6.1(e) or 6.1(h)
and a Triggering Event shall not have occurred during such time. The "Last
Triggering Event" shall mean the last Triggering Event to occur. The term
"Holder" shall mean the holder or holders of the Option.
(b) The term "Triggering Event" shall mean any of the following events or
transactions occurring after the date hereof:
(i) (a) Issuer or any of its Subsidiaries (each an "Issuer
Subsidiary"), without having received Grantee's prior written consent,
shall have entered into an agreement to engage in an Acquisition
Transaction (as hereinafter defined) with any person (the term "person" for
purposes of this Agreement having the meaning assigned thereto in Sections
3(a)(9) and 13(d)(3) of the Exchange Act, and the rules and regulations
thereunder) other than Grantee or any of its Subsidiaries (each a "Grantee
Subsidiary") or (b) the Board of Directors of Issuer shall have recommended
that the stockholders of Issuer approve or accept any Acquisition
Transaction other than as contemplated by the Merger Agreement. For
purposes of this Agreement, "Acquisition Transaction" shall mean (x) a
merger or consolidation, or any similar transaction, involving Issuer or
any of its subsidiaries ("Issuer Subsidiary"), (y) a purchase, lease or
other acquisition representing 15% or more of the consolidated assets of
Issuer and its subsidiaries, 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 Issuer or any of
Issuer Subsidiary;
(ii) Issuer or any Issuer Subsidiary, without having received
Grantee's prior written consent, shall have authorized, recommended,
proposed or publicly announced its intention to authorize, recommend or
propose, an agreement to engage in an Acquisition Transaction with any
person other than Grantee or a Grantee Subsidiary, or the Board of
Directors of Issuer shall have withdrawn or modified, or publicly announced
its interest to withdraw or modify, its recommendation that the
stockholders of Issuer approve the transactions contemplated by the Merger
Agreement, followed by the acquisition by any person of beneficial
ownership of 25% or more of the then outstanding common stock of the
Issuer;
(iii) Any person, other than Grantee, any Grantee Subsidiary or any
Issuer Subsidiary acting in a fiduciary capacity, shall have acquired
beneficial ownership or the right to acquire beneficial ownership of 15% or
more of the outstanding shares of Common Stock; (the term "beneficial
ownership" for purposes of this Agreement having the meaning assigned
thereto in Section 13(d) of the Exchange Act, and the rules and regulations
thereunder) and the Issuer's shareholders shall not approve the Merger, or
the Issuer shall not have called a meeting of shareholders, or Issuer shall
not have held a meeting of shareholders to vote on the Merger no later than
January 31, 1999, or the Issuer shall have called a meeting of shareholders
or shall have distributed a proxy statement or other solicitation materials
in connection with an Acquisition Transaction,
2
<PAGE>
followed by the acquisition by any person of beneficial ownership of 25% or
more of the then outstanding common stock of the Issuer;
(iv) Any person other than Grantee or any Grantee Subsidiary, other
than in connection with a transaction to which the Grantee has given its
prior written consent, 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, followed by the acquisition by any person of beneficial
ownership of 25% or more of the then outstanding common stock of the
Issuer;
(v) After a proposal is made by a third party to Issuer or its
stockholders to engage in an Acquisition Transaction, Issuer shall have
willfully breached any representation, warranty, covenant or obligation
contained in the Merger Agreement and such breach (x) would entitle Grantee
to terminate the Merger Agreement and (y) shall not have been cured prior
to the Notice Date (as defined below); or
(vi) Any person other than Grantee or any Grantee Subsidiary, other
than in connection with a transaction to which Grantee has given its prior
written consent, shall have filed an application or notice with the Federal
Reserve Board of Governors ("FRB"), the Federal Deposit Insurance
Corporation (the "FDIC"), or other federal or state bank regulatory
authority, which application or notice has been accepted for processing,
for approval to engage in an Acquisition Transaction, followed by the
acquisition by any person of beneficial ownership of 25% or more of the
then outstanding common stock of the Issuer.
(vii) The holders of Issuer Common Stock shall not have approved the
Merger Agreement and the transactions contemplated thereby, at the meeting
of such stockholders held for the purpose of voting on such agreement, or
such meeting shall not have been held or shall have been cancelled prior to
termination of the Merger Agreement, in each case after it shall have been
publicly announced that any person (other than Grantee or any affiliate of
Grantee or any person acting in concert in any respect with Grantee) shall
have made, or disclosed an intention to make, a proposal to engage in an
Acquisition Transaction, followed by the acquisition by any person of
beneficial ownership of 25% or more of the then outstanding common stock of
the Issuer; or
(viii) Issuer's Board of Directors shall not have recommended to the
stockholders of Issuer that such stockholders vote in favor of the approval
of the Merger Agreement and the transactions contemplated thereby or shall
have withdrawn or modified such recommendation in a manner adverse to
Grantee, followed by the acquisition by any person of beneficial ownership
of 25% or more of the then outstanding common stock of the Issuer.
3
<PAGE>
(c) Issuer shall notify Grantee promptly in writing of the occurrence of a
Triggering Event, it being understood that the giving of such notice by Issuer
shall not be a condition to the right of the Holder to exercise the Option.
(d) In the event the Holder is entitled to and wishes to exercise the
Option, it shall send to Issuer a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares it
will purchase pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 60 business days from the Notice Date
for the closing of such purchase (the "Closing Date"); provided, that if the
closing of the purchase and sale pursuant to the Option (the "Closing") cannot
be consummated by reason of any applicable judgment, decree, order, law or
regulation, the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which such restriction on
consummation has expired or been terminated; and provided further, without
limiting the foregoing, that if prior notification to or approval of the OTS or
any other regulatory agency is required in connection with such purchase, the
Holder shall promptly file the required notice or application for approval and
shall expeditiously process the same and the period of time that otherwise would
run pursuant to this sentence shall run instead from the date on which any
required notification periods have expired or been terminated or such approvals
have been obtained and any requisite waiting period or periods shall have
passed. Any exercise of the Option shall be deemed to occur on the Notice Date
relating thereto. Notwithstanding this subsection (e), in no event shall any
Closing Date be more than 18 months after the related Notice Date, and if the
Closing Date shall not have occurred within 18 months after the related Notice
Date due to the failure to obtain any such required approval, the exercise of
the Option effected on the Notice Date shall be deemed to have expired. In the
event (i) Grantee receives official notice that an approval of the FRB, FDIC or
any other regulatory authority required for the purchase of Option Shares (as
hereinafter defined) would not be issued or granted, (ii) a Closing Date shall
not have occurred within 18 months after the related Notice Date due to the
failure to obtain any such required approval or (iii) Holder shall have the
right pursuant to the last sentence of Section 7 to exercise the Option, Grantee
shall nevertheless be entitled to exercise its right as set forth in Section 7
and, Grantee or Holder shall be entitled to exercise the Option in connection
with the resale of Issuer Common Stock or other securities pursuant to a
registration statement as provided in Section 6.
(e) At the Closing referred to in subsection (d) of this Section 2, the
Holder shall pay to Issuer the aggregate purchase price for the shares of Common
Stock purchased pursuant to the exercise of the Option in immediately available
funds by wire transfer to a bank account designated by Issuer, provided that
failure or refusal of Issuer to designate such a bank account shall not preclude
the Holder from exercising the Option.
(f) At such Closing, simultaneously with the delivery of immediately
available funds as provided in subsection (e) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder, and the Holder
shall deliver
4
<PAGE>
to Issuer a copy of this Agreement and a letter agreeing that the Holder will
not offer to sell or otherwise dispose of such shares in violation of applicable
law or the provisions of this Agreement.
(g) Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject to
certain provisions of an agreement between the registered holder hereof and
Issuer and to resale restrictions arising under the Securities Act of 1933,
as amended. A copy of such agreement is on file at the principal office of
Issuer and will be provided to the holder hereof without charge upon
receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act in the above legend shall be removed by delivery of
substitute certificate(s) without such reference if the Holder shall have
delivered to Issuer a copy of a letter from the staff of the SEC, or an opinion
of counsel, in form and substance reasonably satisfactory to Issuer, to the
effect that such legend is not required for purposes of the Securities Act; (ii)
the reference to the provisions of this Agreement in the above legend shall be
removed by delivery of substitute certificate(s) without such reference if the
shares have been sold or transferred in compliance with the provisions of this
Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
(h) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (d) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of 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
Common Stock shall not then be actually delivered to the Holder or the Issuer
shall have failed or refused to designate the bank account described in
subsection (e) of this Section 2. 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 2 in the name of the Holder or its assignee,
transferee or designee.
(i) Notwithstanding anything to the contrary contained in this Agreement,
the Issuer shall not be obligated to issue shares of common stock upon the
exercise of the Option (i) in the absence of any required governmental or
regulatory approval or consent necessary for the Issuer to issue shares or for
the Grantee to exercise the Option, (ii) in the event the Grantee is in material
breach of its representations, warranties, covenants or obligations under the
Merger Agreement or (iii) so long as any injunction or decree or ruling issued
by a court of competent jurisdiction is in effect which prohibits the sale or
delivery of the common stock.
5
<PAGE>
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock (and other securities issuable pursuant to Section 5(a)) so that
the Option may be exercised without additional authorization of Common Stock (or
such other securities) after giving effect to all other options, warrants,
convertible securities and other rights to purchase Common Stock (or such other
securities); (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 (x) complying with all premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. 18a and regulations
promulgated thereunder and (y) in the event that under the Change in Bank
Control Act of 1978, as amended, or any state banking law, prior approval of or
notice to the FRB or FDIC, or to any state regulatory authority is necessary
before the Option may be exercised, cooperating fully with the Holder in
preparing such applications or notices and providing such information to the FRB
or FDIC, or such state regulatory authority as they may require) in order to
permit the Holder to exercise the Option and the Issuer duly and effectively to
issue shares of Common Stock pursuant hereto; and (iv) promptly to take all
action provided herein to protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are exchangeable,
without expense, at the option of the 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,
on the same terms and subject to the same conditions as are set forth herein, in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
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.
5. In addition to the adjustment in the number of shares of Common Stock
that are purchasable upon exercise of the Option pursuant to Section 1 of this
Agreement, the number of shares of Common Stock purchasable upon the exercise of
the Option shall be subject to adjustment from time to time as provided in this
Section 5.
(a) In the event of any change in Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares or the like, the type and
number of shares of Common Stock purchasable upon exercise hereof shall be
appropriately adjusted so that Grantee shall receive upon exercise of the
Option and payment of the aggregate Option Price hereunder the number and
class of shares or other securities or property that Grantee would have
received in respect of Common Stock if the Option had been exercised in
full immediately prior to such event, or the record date therefor, as
applicable.
6
<PAGE>
(b) Whenever the number of shares of Common Stock purchasable upon
exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the
numerator of which shall be equal to the number of shares of Common Stock
purchasable prior to the adjustment and the denominator of which shall be
equal to the number of shares of Common Stock purchasable after the
adjustment.
6. (a) Upon the occurrence of a Triggering Event that occurs prior to an
Exercise Termination Event (or as otherwise provided in the last sentence of
Section 2(e)), Issuer shall, at the request of Grantee delivered within 30 days
after such Triggering Event (or such trigger date as is provided in the last
sentence of Section 2(e)) (whether on its own behalf or on behalf of any
subsequent holder of this Option (or part thereof) or any of the shares of
Common Stock issued pursuant hereto), promptly prepare, file and keep current a
shelf registration statement under the Securities Act covering any shares issued
and issuable pursuant to this Option and shall use its best efforts to cause
such registration statement to become effective and remain current in order to
permit the sale or other disposition of any shares of Common Stock issued upon
total or partial exercise of this Option ("Option Shares") in accordance with
any plan of disposition requested by Grantee. Issuer will use its best efforts
to cause such registration statement first to become effective and then to
remain effective for such period not in excess of 180 days from the day such
registration statement first becomes effective or such shorter time as may be
reasonably necessary to effect such sales or other dispositions. Grantee for a
period of 18 months following such first request shall have the right to demand
a second such registration if reasonably necessary to effect such sales or
dispositions. Holder shall not be obligated to pay, liable for or otherwise
bear any payments, fees or expenses associated with the first registration
contemplated by this Section 6, all of which such payments, fees or expenses
shall be borne by the Issuer. The foregoing notwithstanding, if, at the time of
any request by Grantee for registration of Option Shares as provided above,
Issuer is in registration with respect to an underwritten public offering of
shares of Common Stock, and if in the good faith judgment of the managing
underwriter or managing underwriters, or, if none, the sole underwriter or
underwriters, of such offering the inclusion of the Holder's Option or Option
Shares would interfere with the successful marketing of the shares of Common
Stock offered by Issuer, the number of Option Shares otherwise to be covered in
the registration statement contemplated hereby may be reduced; and provided,
however, that after any such required reduction in the number of Option Shares
to be included in such offering for the account of the Holder shall constitute
at least 25% of the total number of shares to be sold by the Holder and Issuer
in the aggregate; and provided further, however, that if such reduction occurs,
then the Issuer shall file a registration statement for the balance as promptly
as practical and no reduction shall thereafter occur (and such registration
shall not be charged against the Holder). Each such Holder shall provide all
information reasonably requested by Issuer for inclusion in any registration
statement to be filed hereunder. If requested by any such Holder in connection
with such registration, Issuer shall become a party to any underwriting
agreement relating to the sale of such shares, but only to the extent of
obligating itself in respect of representations, warranties, indemnities and
other agreements customarily included in such underwriting agreements for the
Issuer. Upon receiving any request under this Section 6 from any Holder, Issuer
agrees to send a copy thereof to any other person known to
7
<PAGE>
Issuer to be entitled to registration rights under this Section 6, in each case
by promptly mailing the same, postage prepaid, to the address of record of the
persons entitled to receive such copies.
(b) The Issuer will indemnify and hold harmless Grantee, any
underwriter (as defined in the Securities Act) for Grantee, and each person, if
any, who controls Grantee or such underwriter (within the meaning of the
Securities Act) from and against any and all loss, damage, liability, cost and
expense to which Grantee or any such underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
damages, liabilities, costs or expenses arise out of or are caused by any untrue
statement or alleged untrue statement of any material fact contained in such
registration statement, any prospectus or preliminary prospectus contained
therein or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading; provided, however,
that the Issuer will not be liable in any such case to the extent that any such
loss, damage, liability, cost or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by Grantee, such underwriter or
such controlling person in writing specifically for use in the preparation
thereof.
7. (a) Upon the occurrence of a Triggering Event that occurs prior to an
Exercise Termination Event, (i) at the request of the Holder, delivered within
30 days after such occurrence (or such later period as provided in Section 8 or
the last sentence of Section 2(e)), Issuer (or any successor thereto) shall
repurchase the Option from the Holder at a price (the "Option Repurchase Price")
equal to the amount by which (A) the market/offer price (as defined below)
exceeds (B) the Option Price, multiplied by the number of shares for which this
Option may then be exercised and (ii) at the request of the owner of Option
Shares from time to time (the "Owner"), delivered within 30 days after such
occurrence (or such later period as provided in Section 8), Issuer shall
repurchase such number of the Option Shares from the Owner as the Owner shall
designate at a price (the "Option Share Repurchase Price") equal to the
market/offer price multiplied by the number of Option Shares so designated. The
term "market/offer price" shall mean the highest of (i) the highest price per
share of Common Stock at which a tender offer or exchange offer therefor has
been made, (ii) the highest price per share of Common Stock to be paid by any
third party pursuant to an agreement with Issuer, (iii) the average of the
Closing Price of the Common Stock of Issuer for the ten days preceding the
Triggering Event. In determining the market/offer price, the value of
consideration other than cash, to the extent consideration other than cash is
accepted by the Holder or the Owner, shall be determined by a nationally
recognized investment banking firm selected by the Holder or Owner, as the case
may be.
(b) The Holder and the Owner, as the case may be, may exercise its
right to require Issuer to repurchase the Option and any Option Shares pursuant
to this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that the Holder
or the Owner, as the case may be, elects to require Issuer to repurchase this
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Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within five business
days after the surrender of the Option and/or certificates representing Option
Shares and the receipt of such notice or notices relating thereto. Issuer shall
deliver or cause to be delivered to the Holder the Option Repurchase Price
and/or to the Owner the Option Share Repurchase Price therefor or the portion
thereof that Issuer is not then prohibited under applicable law and regulation
from delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the portion of the
Option Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five business days after
the date on which Issuer is no longer so prohibited; provided, however, that if
Issuer at any time after delivery of a notice of repurchase pursuant to
paragraph (b) of this Section 7 is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to the
Holder and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full (and Issuer hereby
undertakes to use its best efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable in order
to accomplish such repurchase), the Holder or Owner may revoke its notice of
repurchase of the Option or the Option Shares either in whole or to the extent
of the prohibition, whereupon, in the latter case, Issuer shall promptly (i)
deliver to the Holder and/or the Owner, as appropriate, that portion of the
Option Repurchase Price or the Option Share Repurchase Price that Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Holder, a new Stock Option Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Stock Option
Agreement was exercisable at the time of delivery of the notice of repurchase by
a fraction, the numerator of which is the Option Repurchase Price less the
portion thereof theretofore delivered to the Holder and the denominator of which
is the Option Repurchase Price, or (B) to the Owner, a certificate for the
Option Shares it is then so prohibited from repurchasing. If an Exercise
Termination Event shall have occurred prior to the date of the notice by Issuer
described in the first sentence of this subsection (c), or shall be scheduled to
occur at any time before the expiration of a period ending on the thirtieth day
after such date, the Holder shall nonetheless have the right to exercise the
Option until the expiration of such 30 day period.
8. The 30-day period for exercise of certain rights under Sections 2, 6,
7, and 11 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights, and for the expiration of
all statutory waiting periods provided such approvals are obtained within 9
months of the submission of an application by the Holder or Grantee; and (ii) to
the extent necessary to avoid liability under Section 16(b) of the Exchange Act
by reason of such exercise.
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9. Issuer hereby represents and warrants to Grantee as follows:
(a) 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 so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer. This Agreement is the valid and legally binding
obligation of Issuer, enforceable against Issuer in accordance with its terms.
(b) Issuer has taken all necessary corporate action to authorize and
reserve and to 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
Common Stock equal to the maximum number of shares of Common Stock at any time
and from time to time issuable hereunder, and all such shares, upon issuance
pursuant hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
(c) The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, conflict with, or
result in any violation pursuant to any provisions of the Certificate of
Incorporation or by-laws of Issuer or any Subsidiary of Issuer or, subject to
obtaining any approvals or consents contemplated hereby, result in any violation
of any loan or credit agreement, note, mortgage, indenture, lease, Plan or other
agreement, obligation, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Issuer or any Subsidiary of Issuer or their respective properties or assets
which Violation would have a Material Adverse Effect on Issuer.
(d) Issuer reaffirms with respect to this Agreement and the transactions
contemplated hereby the representations and warranties contained in Section 2.3
of the Merger Agreement.
10. Grantee hereby represents and warrants to Issuer as follows:
(a) Grantee has all requisite corporate power and authority to enter
into this Option Agreement and consummate the transactions
contemplated hereby. 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 the Grantee. This Agreement has been duly executed and
delivered by Grantee.
(b) This Option is not being and any shares or other securities
acquired by Grantee upon exercise of the Option will not be
acquired with a view to
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the public distribution thereof and will not be transferred or
otherwise disposed of except in compliance with the Securities
Act.
11. Neither of the parties hereto may assign any of its rights or
obligations under this Option Agreement or the Option created hereunder to any
other person, without the express written consent of the other party, except
that in the event a Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder within 30 days
following such Triggering Event (or such later period as provided in Section 8).
12. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including without limitation applying to the OTS for approval to
acquire the shares issuable hereunder, but Grantee shall not be obligated to
apply to state banking authorities for approval to acquire the shares of Common
Stock issuable hereunder until such time, if ever, as it deems appropriate to do
so.
13. Notwithstanding anything to the contrary herein, in the event that the
Holder or Owner or any Related Person thereof is a person making without the
prior written consent of Issuer an offer or proposal to engage in an Acquisition
Transaction (other than the transaction contemplated by the Merger Agreement),
then (i) in the case of a Holder or any Related Person thereof, the Option held
by it shall immediately terminate and be of no further force or effect, and (ii)
in the case of an Owner or any Related Person thereof, the Option Shares held by
it shall be immediately repurchasable by Issuer at the Option Price. A Related
Person of a Holder or Owner means any Affiliate (as defined in Rule 12b-2 of the
rules and regulations under the Exchange Act) of the Holder or Owner and any
person that is the beneficial owner of 20% or more of the voting power of the
Holder or Owner, as the case may be.
14. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through specific performance, injunctive or other equitable relief.
15. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in 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 agency determines
that the Holder is not permitted to acquire the full number of shares of Common
Stock provided in Section 1(a) hereof (as adjusted pursuant to Section 1(b) or
Section 5 hereof), it is the express intention of Issuer to allow the Holder to
acquire or to require Issuer to repurchase such lesser number of shares as may
be permissible, without any amendment or modification hereof.
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16. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
cable, telegram, telecopy or telex, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.
17. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
18. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
19. Except as otherwise expressly provided herein or in the Merger
Agreement, each party shall bear and pay all costs and expenses incurred by it
or on their behalf in connection with the transactions contemplated hereunder,
including fees and expenses of their own financial consultants, investment
bankers, accountants and counsel.
20. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
assigns, any rights, remedies obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein. 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.
21. In the event of any exercise of the Option by Grantee, Issuer and
Grantee 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.
22. Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned thereto in the Merger Agreement.
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IN WITNESS WHEREOF, Richmond County Financial Corp. and Ironbound Bankcorp,
NJ have caused this Agreement to be signed by their respective officers
thereunto duly authorized, all as of the date first written above.
RICHMOND COUNTY FINANCIAL CORP.
By: /s/ Michael F. Manzulli
------------------------------------
Michael F. Manzulli
Chairman and Chief Executive Officer
IRONBOUND BANKCORP, NJ
By: /s/ Edward Cruz
------------------------------------
Edward Cruz
Chairman of the Board
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EXHIBIT 10.2
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 19, 1998 (the "Agreement"), by and
between Bayonne Bancshares, Inc., a Delaware corporation ("Issuer"), and
Richmond County Financial Corp., a Delaware corporation ("Grantee").
WHEREAS, Grantee and Issuer have entered into an Agreement and Plan of
Merger dated as of July 19, 1998 (the "Plan"), providing for, among other
things, the merger of Issuer with and into Grantee, with Grantee as the
surviving corporation; and
WHEREAS, as a condition and inducement to Grantee's execution of the Plan,
Grantee has required that Issuer agree, and Issuer has agreed, to grant Grantee
the Option (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Plan, 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 Plan.
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 1,809,804 shares (as adjusted as set forth herein, the "Option
Shares", which shall include the Option Shares before and after any transfer of
such Option Shares) of common stock, par value $0.01 per share ("Issuer Common
Stock"), of Issuer at a purchase price per Option Share (the "Purchase Price")
equal to $15.50.
3. EXERCISE OF OPTION.
(a) Provided that (i) Grantee or Holder (as defined below), as applicable,
shall not be in material breach of the agreements or covenants contained in this
Agreement or the Plan, 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 and effect upon the
earliest to occur of (A) the Effective Time, (B) termination of the Plan by
Issuer in accordance with the terms thereof prior to the occurrence of a
Purchase Event or a Preliminary Purchase Event (as hereinafter defined) (an
"Issuer Termination"), (C) 12 months after the termination of the Plan by Issuer
other than pursuant to an Issuer Termination, (D) 12 months after the
termination of the Plan by Grantee in
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accordance with the terms thereof, and (E) 12 months after the first occurrence
of a Purchase Event; PROVIDED, HOWEVER, that any purchase of shares upon
exercise of the Option shall be subject to compliance with applicable law,
including, without limitation, the Home Owners' Loan Act, as amended (the
"HOLA"); 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.
(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 entered into an agreement
with any person (other than Grantee or any subsidiary of Grantee) to effect
an Acquisition Transaction. As used herein, the term "Acquisition
Transaction" shall mean (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 20% or more of the consolidated assets or deposits of Issuer and its
subsidiaries, or (C) the issuance, sale or other disposition of (including
by way of merger, consolidation, share exchange or any similar transaction)
securities representing 15% or more of the voting power of Issuer or any of
its significant subsidiaries other than the issuance of Issuer Common Stock
upon the exercise of outstanding options; 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 promulgated under the Exchange Act) of 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, 15% 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:
(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
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 15% 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
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(ii) the holders of Issuer Common Stock shall not have approved the
Plan at the Meeting, the Meeting shall not have been held or shall have
been canceled prior to termination of the Plan, 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 Plan,
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 proposal to engage in an Acquisition
Transaction, or (B) commenced a Tender Offer or filed a registration
statement under the Securities Act with respect to an Exchange Offer; 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 bona fide proposal is made by a third party to Issuer or
its stockholders to engage in an Acquisition Transaction, Issuer shall have
breached any covenant or obligation contained in the Plan and such breach
would entitle Grantee to terminate the Plan under Section 6.1(h) thereof
(without regard to the cure period provided for therein unless such cure is
promptly effected without jeopardizing consummation of the Mergers pursuant
to the terms of the Plan); or
(v) any person, other than Grantee or any subsidiary of Grantee, other
than in connection with a transaction to which Grantee has given its prior
written consent, shall have filed an application or notice with the Office
of Thrift Supervision (the "OTS"), or other federal or state bank
regulatory authority, for approval to engage in an Acquisition Transaction.
As used in this Agreement, "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 (in either case, a "Triggering
Event"), 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 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,
HOWEVER, if any required application for listing such shares on the Nasdaq
National Market has not been approved by the date so specified, such date shall
be extended for a period not to exceed 21 days from the
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Notice Date. If prior notification to or approval of the OTS or any other
regulatory authority is required in connection with such purchase, Issuer shall
cooperate with the Holder in the filing of the required notice or application
for approval and the obtaining of such approval and the Closing shall occur
immediately 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 subsection (f) of
Section 11 hereof.
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in subsection (a) of
this Section 4, (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, claims, charges and
encumbrances of any kind whatsoever 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 JULY 19, 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.
It is understood and agreed that the above legend 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 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.
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(d) Upon the giving by Holder to Issuer of the written notice of exercise
of the Option provided for under subsection (e) of Section 3 hereof, 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 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 specified in 15 U.S.C. (S)18a and regulations promulgated
thereunder and (B) in the event, under the HOLA, or the Change in Bank Control
Act of 1978, as amended, or a state banking law, prior approval of or notice to
the OTS or to any state 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 the OTS or such state regulatory
authority as they 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) Due Authorization. Issuer has all requisite corporate power and
-----------------
authority to enter into this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. 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 Issuer. This Agreement has been duly executed
and delivered by Issuer.
(b) Authorized Stock. Issuer has taken all necessary corporate and other
----------------
action to authorize and reserve and to permit it to issue, and, at all times
from the date hereof until the obligation to deliver Issuer Common Stock upon
the exercise of the Option terminates, will have reserved for issuance, upon
exercise of the Option, the number of shares of Issuer Common Stock necessary
for Holder to exercise the Option, and Issuer will take all necessary corporate
action to
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authorize and reserve for issuance all additional shares of Issuer Common Stock
or other securities which may be issued pursuant to Section 7 upon exercise of
the Option. The shares of Issuer Common Stock to be issued upon due exercise of
the Option, including all additional shares of Issuer Common Stock or other
securities which may be issuable pursuant to Section 7, upon issuance pursuant
hereto, shall be duly and validly issued, fully paid and nonassessable, and
shall be delivered free and clear of all liens, claims, charges and encumbrances
of any kind or nature whatsoever, including any preemptive rights of any
stockholder of Issuer.
(c) 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, degree,
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:
(a) Due Authorization. Grantee has all requisite corporate power and
-----------------
authority to enter into this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. 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. This Agreement has been duly executed
and delivered by Grantee.
(b) Purchase not for Distribution. This Option is not being, and any
-----------------------------
Option Shares or other securities acquired by Grantee upon exercise of the
Option will not be, acquired with a view to the public distribution thereof and
will not be transferred or otherwise disposed of except in a transaction
registered or exempt from registration under the Securities Act.
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 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
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
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date therefor, as applicable. If any additional 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 subsection (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 Plan.
(b) In the event that Issuer shall enter in an agreement (i) to consolidate
with or merge into any person, other than Grantee or one of its subsidiaries,
and 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 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 (x) the Acquiring Corporation (as
hereinafter defined), (y) any person that controls the Acquiring Corporation, or
(z) 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 Substitute Option
per share of Substitute Common Stock (the "Substitute Option Price") shall then
be equal to the Option 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
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<PAGE>
the number of shares of the Substitute Common Stock for which the Substitute
Option is exercisable.
(e) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing or surviving
corporation of a consolidation or merger with Issuer (if other than
Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
surviving person, or (iii) 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).
(2) "Substitute Common Stock" shall mean the common stock issued by
Substitute Option Issuer upon exercise of the Substitute Option.
(3) "Assigned Value" shall mean the highest of (x) the price per share
of Issuer Common Stock at which a Tender Offer or an Exchange Offer
therefor has been made, (y) the price per share of Issuer Common Stock
to be paid by any third party pursuant to an agreement with Issuer,
and (z) the highest per share closing price for shares of Issuer
Common Stock within the six-month period immediately preceding the
consolidation, merger, or sale in question. 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 or Owner, as the case may be (and if there are both
a Holder and an Owner, the Holder).
(4) "Average Price" shall mean the average closing price per 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.
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(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 subsection (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 subsection (f) over (ii) the value of the Substitute
Option after giving effect to the limitation in the first sentence of this
subsection (f). This 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 subsection (b)
of this Section 7 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 dimunition in
value resulting from the fact that the Substitute Common Stock are restricted
securities, as defined in Rule 144 under the Securities Act) than other shares
of common stock issued by Substitute Option Issuer).
8. REGISTRATION RIGHTS.
(a) Demand Registration Rights. Issuer shall, subject to the conditions
--------------------------
of subparagraph (c) below, if requested by any Holder or Owner, as applicable,
including Grantee and any permitted transferee ("Selling Shareholder"), as
expeditiously as possible prepare and file 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 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 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. Grantee shall have the right to demand no more than two
registrations pursuant to this paragraph. If requested by Grantee in connection
with any such registration, Issuer and Grantee shall provide each other with
representatives, warranties, indemnities and other agreements customarily given
in connection with such registration. If requested by Grantee in connection with
any such registration, Issuer and Grantee shall become party to any underwriting
agreement relating to the sale of the Option Shares, but only to the extent of
obligating themselves in respect of representations, warranties, indemnities and
other agreement customarily included in such underwriting agreements.
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(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 any such shares to be so registered (i) if the underwriters in good
faith object for valid business reasons, or (ii) in the case of a registration
solely to implement an employee benefit plan or a registration filed on Form S-
4; PROVIDED, FURTHER, HOWEVER, that such election pursuant to (i) may only be
made two times. 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 subsection (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 subparagraph (a)
above 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 subparagraph (a) above for a period not exceeding 180 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 subsection (a) above:
(i) prior to the earliest of (a) termination of the Plan pursuant to
Section 6.1 thereof, (b) failure to obtain the requisite stockholder
approval pursuant to Section 4.8 of the Plan, 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 subsection (b) above pursuant to which the Selling
Shareholder or Selling 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.
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<PAGE>
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 subsection (a) or (b) above (including the
related offerings and sales by holders of Option Shares) and all other
qualifications, notifications or exemptions pursuant to subsection (a) or (b)
above.
(e) Indemnification. In connection with any registration under Section
---------------
8(a) or 8(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 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 8(e) of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or
E-11
<PAGE>
reimbursement may be sought against any indemnifying party under this Section
8(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 8(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 8(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.
In connection with any registration pursuant to Section 8(a) or 8(b) of
this Agreement, Issuer and each Selling Shareholder (other than Grantee) shall
enter into an agreement containing the indemnification provisions of Section
8(e) of this Agreement.
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<PAGE>
(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
144A. 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) Issuer 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.
9. 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 Nasdaq National Market 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 Nasdaq National Market 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.
10. 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.
11. MISCELLANEOUS.
(a) Expenses. 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.
E-13
<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 Beneficiary; Severability. This
----------------------------------------------------------
Agreement, together with the Plan and the other documents and instruments
referred to herein and therein, between Grantee and Issuer (a) 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 (b) is not intended to confer upon any person other than the parties hereto
(other than any transferees of the Option Shares or any permitted transferee of
this Agreement pursuant to subsection (h) of this Section 11 and other than
indemnified parties under subsection (e) of Section 8) any rights or remedies
hereunder. If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or a federal or state regulatory
agency 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 agency determines that the Option does
not permit Holder or Owner to acquire, or does not require Issuer to repurchase,
the full number of shares of Issuer Common Stock as provided in Section 3 (as
adjusted pursuant to Section 7), it is the express intention of Issuer to allow
Holder or Owner 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 Delaware 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 following addresses (or at such other address
for a party as shall be specified by like notice):
If to Issuer, to: Bayonne Bancshares, Inc.
586 Broadway
Bayonne, New Jersey 07002
Facsimile: (201) 437-2912
Attention: Patrick F.X. Nilan
Chairman of the Board
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<PAGE>
With copies to: Bayonne Bancshares, Inc.
586 Broadway
Bayonne, New Jersey 07002
Facsimile: (201) 437-5958
Attention: Thomas M. Coughlin
Corporate Secretary
and Paul M. Aguggia, Esq.
Breyer & Aguggia LLP
1300 I Street, N.W., Suite 470 East
Washington, DC 20005
Facsimile: (201) (737-7979)
If to Grantee, to: Richmond County Financial Corp.
1214 Castleton Avenue
Staten Island, New York 10310
Facsimile: (718) 390-0224
Attention: Michael F. Manzulli
Chairman of the Board and
Chief Executive Officer
With copies to: Richmond County Financial Corp.
1214 Castleton Avenue
Staten Island, New York 10310
Facsimile: (718) 390-0224
Attention: Thomas R. Cangemi
Senior Vice President, Chief Financial
Officer and Secretary
and Douglas P. Faucette, Esq.
Muldoon, Murphy & Faucette
5101 Wisconsin Avenue, N.W.
Washington, D.C. 20016
Facsimile: (202) 966-9409
(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
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<PAGE>
assign this Agreement to a wholly-owned subsidiary of Holder and Holder may
assign 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.
BAYONNE BANCSHARES, INC.
By: /s/ Patrick F.X. Nilan
-----------------------------------------------
NAME: Patrick F.X. Nilan
TITLE: Chairman of the Board
RICHMOND COUNTY FINANCIAL CORP.
By: /s/ Michael F. Manzulli
-----------------------------------------------
NAME: Michael F. Manzulli
TITLE: Chairman of the Board and
Chief Executive Officer
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<PAGE>
EXHIBIT 99.1
PRESS RELEASE
FOR IMMEDIATE RELEASE
CONTACTS:
ANTHONY E. BURKE MICHAEL J. GAGLIARDI
Richmond County Financial Corp. Ironbound Bankcorp
President and COO President and CEO
THOMAS R. CANGEMI THOMAS R. LUPO
Richmond County Financial Corp. Ironbound Bankcorp
Senior Vice President and CFO Executive Vice President
Tel: (718) 448-2800; (718) 815-7048 Tel: (973) 589-3800
RICHMOND COUNTY FINANCIAL CORP. ENTERS INTO AGREEMENT
TO MERGE WITH IRONBOUND BANKCORP
"INITIATING ITS ENTRY INTO THE NEW JERSEY MARKET"
Staten Island, New York, July 17, 1998
Richmond County Financial Corp. (NASDAQ/NMS: RCBK) ("Richmond") based in Staten
Island, New York, and Ironbound Bankcorp, NJ (NASDAQ/NMS: IBDB) ("Ironbound"),
based in Newark, New Jersey, the holding company of Ironbound Bank, jointly
announced today that they have entered into a definitive agreement pursuant to
which Ironbound, a $113.7 million commercial bank, will merge with and into
Richmond. The transaction received the unanimous approval of the Boards of
Directors of Richmond and Ironbound and due diligence by both companies have
been completed.
Under the terms of the agreement, each of the 997,158 outstanding shares of
Ironbound common stock will be exchanged for 1.45 shares of Richmond common
stock. Based upon the closing price of Richmond's common stock as of July 16,
1998, Ironbound's shareholders would receive common stock valued at $26.55. The
total transaction value is estimated to be $26.5 million. The merger is
expected to be completed in the first quarter of calendar year 1999, and is
subject to the approval of the stockholders of Ironbound and regulatory
authorities. The transaction is intended to be a tax-free merger accounted for
as a pooling of interest. Richmond estimates that operational efficiencies
generated as a result of the transaction will produce cost savings equal to 30%
of Ironbound's non-interest expense and that the transaction will be accretive
to earnings per share in fiscal 1999. In connection with the transaction,
Ironbound has granted Richmond an option to purchase shares
<PAGE>
equal to 19.9% of Ironbound's outstanding common stock under certain conditions.
Michael F. Manzulli, Chairman and Chief Executive Officer of Richmond commented,
"We are extremely pleased to have the opportunity to add the Ironbound franchise
to our organization. This merger establishes our initial entry into the New
Jersey market and is consistent with our stated strategy of increasing both
earnings per share and shareholder value. The merger of Ironbound with its
strong history of service to its communities will bring commercial banking
relationships to Richmond and accelerate our efforts to become more active in
commercial lending. The merger is consistent with our goal of becoming a full
service community bank and complements our existing lending and deposit services
and strengthens our commercial banking services."
Edward Cruz, Chairman of the Board of Ironbound stated, "that ten years ago,
upon the formation of the Bank, two primary goals were established. First, to
provide quality banking services to the local communities served by the Bank and
second, to enhance shareholder value. The merger with Richmond achieves both of
these objectives. Richmond's community banking orientation is similar to
Ironbound's and the merger results in a significant enhancement of shareholder
value. The customers and communities served by Richmond and Ironbound will
benefit from the combined talents of our people. The expanded franchise will
enable us to better serve our business customers with a wider banking network
and increased lending capacity. Ironbound will be operated as a division of
Richmond and Ironbound's Board members will continue serving, as members of a
new Divisional Board. Michael Gagliardi and Thomas Lupo, the management team
which has revitalized Ironbound during the past five years will continue as
officers of Richmond, providing their commercial banking expertise to the merged
institution."
Richmond County Financial Corp. is the holding company for Richmond County
Savings Bank, a state chartered savings bank, organized in 1886 which operates
12 full service banking offices on Staten Island, one full service banking
office in Brooklyn and a multifamily loan processing center in Jericho, Long
Island. As of June 30, 1998 total assets were $1.6 billion, deposits were $950.8
million and total stockholders' equity was $328.6 million.
Ironbound operates 3 full service commercial banking offices, in the New Jersey
Counties of Union and Essex with two additional commercial banking offices
expected to open in calendar 1999. As of June 30, 1998, total assets of
Ironbound were $113.7 million, deposits were $107.8 million and total
stockholders' equity was $11.3 million.
Statements contained in this news release contains certain forward looking
statements with respect to the financial condition, results of operations and
business of Richmond following the consummation of the merger that are subject
to various factors which could cause actual results to differ materially from
such projections or estimates. Such factors include, but are not limited to,
the possibility that anticipated cost savings and revenue enhancements might not
be realized and that adverse general economic conditions or adverse interest
rate environment could develop.
<PAGE>
EXHIBIT 99.2
PRESS RELEASE
FOR IMMEDIATE RELEASE
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<TABLE>
<CAPTION>
CONTACTS:
<S> <C>
ANTHONY E. BURKE MICHAEL NILAN
Richmond County Financial Corp. Bayonne Bancshares, Inc.
President and COO President and CEO
THOMAS R. CANGEMI EUGENE V. MALINOWSKI
Richmond County Financial Corp. Bayonne Bancshares, Inc.
Senior Vice President and CFO Vice President and CFO
Tel: (718) 448-2800; (718) 815-7048 Tel: (201) 437-1000
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RICHMOND COUNTY FINANCIAL CORP. ENTERS INTO AGREEMENT TO MERGE WITH BAYONNE
BANCSHARES, INC.
"CONTINUES ITS ENTRY INTO THE NEW JERSEY MARKET"
Staten Island, New York, July 20, 1998
Richmond County Financial Corp. (NASDAQ/NMS: RCBK) ("Richmond") based in Staten
Island, New York, and Bayonne Bancshares, Inc., NJ (NASDAQ/NMS: FSNJ)
("Bayonne"), based in Bayonne, New Jersey, the holding company of First Savings
Bank of New Jersey, SLA, jointly announced today that they have entered into a
definitive agreement pursuant to which Bayonne, a $646.1 million savings bank,
will merge with and into Richmond. The transaction received the unanimous
approval of the Boards of Directors of Richmond and Bayonne and due diligence by
both companies have been completed.
Under the terms of the agreement, each of the outstanding shares of Bayonne
common stock will be exchanged for 1.05 shares of Richmond common stock. Based
upon the closing price of Richmond's common stock as of July 17, 1998, Bayonne's
shareholders would receive common stock valued at $19.03. The total transaction
value is estimated to be $173.0 million. The merger is expected to be
completed in the first quarter of calendar year 1999, and is subject to the
approval by shareholders of each company and regulatory authorities. The
transaction is intended to be a tax-free merger
<PAGE>
accounted for as a pooling of interests. Richmond estimates that operational
efficiencies generated as a result of the transaction will produce cost savings
equal to 40% of Bayonne's non-interest expense. Based upon the synergies
anticipated, Richmond believes that the transaction will be accretive to
earnings per share in fiscal 1999. The effective core deposit premium paid is
17.5% as compared to 21.6% in nationwide transactions. In connection with the
transaction, Bayonne has granted Richmond an option to purchase shares equal to
19.9% of Bayonne's outstanding shares at $15.50 per share should certain events
occur.
Michael F. Manzulli, Chairman and Chief Executive Officer of Richmond stated,
"This transaction represents a substantial move in our planned expansion into
New Jersey. Bayonne brings to Richmond its valuable core deposit franchise and
will provide a stable low-cost funding base to generate quality assets." Mr.
Manzulli further noted, "This 'in-market' merger is a natural extension for
Richmond, with their banking offices closer to our main headquarters than many
of our existing banking offices on Staten Island. We are confident that the
addition of the Bayonne deposit base, the operational efficiencies generated
from the transaction and Richmond's introduction of commercial banking to this
market will enhance Richmond's earnings and long term shareholder value."
"We are extremely pleased to participate with Richmond in their planned
expansion into New Jersey," stated Bayonne's Chairman, Patrick F.X. Nilan, who
will be joining the Board of Richmond. This combination of two strong community
minded financial institutions will provide Richmond with the market share
necessary to significantly capitalize on cross-selling its array of lending and
deposit products to our customers. Bayonne's Board members will continue
serving as members of a new Divisional Board. We are pleased to provide our
shareholders with an attractive return on their investment and our organization
with the opportunity to join forces with our new colleagues at Richmond."
The merger announcement with Bayonne comes within a few days of Richmond's
announced merger with Ironbound Bankcorp, NJ (NASDAQ/NMS: IBDB), a $113.7
million commercial bank, based in Newark, New Jersey in a transaction valued at
approximately $26.5 million in Richmond stock.
Following the merger of Bayonne and Ironbound, Richmond will have approximately
$2.4 billion in assets, $1.5 billion in deposits and shareholders' equity of
$438.5 million.
Richmond has planned for an analyst conference call TODAY AT 1.00 P.M. EST, to
elaborate on the strategic rationale and financial implications of the mergers.
The telephone number to call in the United States is 1-888-276-0005.
Richmond County Financial Corp. is the holding company for Richmond County
Savings Bank, a
<PAGE>
state chartered savings bank, organized in 1886 which operates 12 full service
banking offices on Staten Island, one full service banking office in Brooklyn
and a multifamily loan processing center in Jericho, Long Island. As of June 30,
1998 total assets were $1.6 billion, deposits were $950.8 million and total
stockholders' equity was $328.6 million.
Bayonne operates 4 full service banking offices in Bayonne, New Jersey, and is a
community oriented savings institution holding approximately 40% of all deposits
held in Bayonne and approximately 6% of such deposits held in Hudson County. As
of March 31, 1998, total assets of Bayonne were $646.1 million, deposits were
$423.5 million and total stockholders' equity was $98.6 million.
Statements contained in this news release contains certain forward looking
statements with respect to the financial condition, results of operations and
business of Richmond following the consummation of the merger that are subject
to various factors which could cause actual results to differ materially from
such projections or estimates. Such factors include, but are not limited to,
the possibility that anticipated cost savings and revenue enhancements might not
be realized and that adverse general economic conditions or adverse interest
rate environment could develop.
<PAGE>
EXHIBIT 99.3
RICHMOND COUNTY FINANCIAL CORP.
MERGER PRESENTATION
BAYONNE BANCSHARES, INC.
IRONBOUND BANKCORP, NJ
RCBK - FSNJ - IBDB
"A Bridge to Community Banking"
JULY 20, 1998
<PAGE>
FORWARD-LOOKING INFORMATION
This presentation contains estimates of future operating results for 1998 and
1999 for both Richmond County Financial Corp. (RCBK), Bayonne Bancshares, Inc.
(FSNJ) and Ironbound Bankcorp, NJ (IBDB) on a stand-alone and pro forma combined
basis, as well as estimates of financial condition, operating efficiencies and
revenue creation on a combined basis. These estimates constitute forward-looking
statements (within the meaning of the Private Securities Litigation reform Act
of 1995), which involve significant risks and uncertainties. Actual results may
differ materially from the results discussed in these forward-looking
statements. Factors that might cause such a difference include, but are not
limited to: (1) expected cost savings from the mergers, cannot be fully realized
or realized within the expected time frame; (2) revenues following the mergers
are lower than expected; (3) competitive pressures among depository institutions
increase significantly; (4) costs or difficulties related to the integration of
the businesses are greater than expected; (5) changes in the interest rate
environment reduce interest margins; (6) general economic conditions, either
nationally or in the states in which the combined company will be doing business
are less favorable than expected, and (7) legislation or regulatory changes
adversely affect the businesses in which the combined company would be engaged.
2
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PRO FORMA RICHMOND COUNTY FINANCIAL CORP.
BRANCH LOCATIONS
[MAP APPEARS HERE]
3
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SNAPSHOT
FSNJ - IBDB
> RCBK's entry into New Jersey
> FSNJ has four (4) retail banking offices in Bayonne, New Jersey with
$646.1 million in assets and $424 million in deposits. It has an
estimated 40% deposit market share in the City of Bayonne and an
estimated 6% deposit market share in Hudson County
> IBDB is a $114 million commercial bank located in the Ironbound section
of Newark, New Jersey. It has three (3) banking offices and $102
million of retail deposits
> Both mergers accounted for as pooling-of-interests
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SNAPSHOT OF COMBINATIONS
> Unitary thrift holding company
> 20 retail banking offices - 12 in Staten Island, 1 in Brooklyn and 7 in
New Jersey
> Acquired New Jersey banking offices within 10 miles of RCBK headquarters
("in-market")
> $2.4 billion in assets, $1.5 billion in deposits and $438.5 million
in equity
> 18.6% equity/assets
> $888 million in core deposits (60.18% of Total Deposits)
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<PAGE>
DEAL ECONOMICS
> Total value of both deals approximately $200 million, 10,989,068 shares
to be issued
> 175% FSNJ's book value and 235% of IBDB's book value
> 17.54% premium to FSNJ's deposits and 14.96% premium to IBDB's deposits
> 27.58 x FSNJ's LTM EPS and 21.2 x IBDB's LTM EPS
> 17.1 x FSNJ's next twelve months EPS (inclusive of 40% estimated cost
savings)
> 12.5 x IBDB's next twelve months EPS (inclusive of 30% estimated cost
savings)
> 40% estimated cost savings at FSNJ and 30% estimated cost savings at
IBDB
> Estimated to be accretive in Fiscal June 30, 1999 earnings by 1 to 2%
> First 12 months of combined operations estimated accretion of 3 to 5%
> One time charges of approximately $7.8 million, after taxes
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DEAL PRICING
<TABLE>
<CAPTION>
RECENT RECENT
RCBK - FSNJ THRIFT RCBK - IBDB COMMERCIAL
MERGER (a) MERGERS (b) MERGER (a) BANK MERGERS (b)
------------ ----------- ----------- ----------------
<S> <C> <C> <C> <C>
MERGERS (b)
Last Twelve
Month Net Income 27.58x 26.5x 19.96x 37.7x
Price to
Tangible Book Value 175% 230% 235% 259%
Premium to Deposits 17.54% 21.6% 14.96% 25.0%
</TABLE>
(a) Based on RCBK closing price of $18.125 on July 17, 1998
(b) Selected Mid-Atlantic Commercial Bank Transactions since January 1, 1998
less than $100 million deal value
Selected Nationwide Savings Institution Transactions since January 1, 1998
greater than $15 million in deal value (FSNJ Comparison)
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DEAL STRUCTURE
> Tax free exchange
> FSNJ deal - 1.05 RCBK share for each FSNJ share
> IBDB deal - 1.45 RCBK share for each IBDB share
> Pooling of interests - accounting
8
<PAGE>
DEAL STATUS
> Due diligence completed
> Definitive agreements signed
> Pending regulatory and shareholder approval
> Targeting completion - late 1998, early 1999
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STRATEGIC BENEFITS
> Initial footprint into New Jersey market to capitalize on and add value
to local community franchises
> Significant cost savings
> Acquiring low cost funding
> Addition of commercial banking expertise
> Maintain one bank structure for efficiency
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PROJECTED COST SAVINGS/SYNERGIES
<TABLE>
<CAPTION>
FSNJ IBDB
- ------------------------------------------ ------------------------------------------
(In Thousands) (In Thousands)
<S> <C> <C> <C>
Salaries and Benefits $3,300 Salaries and Benefits $ 366
Audit/Tax/Legal/Consulting 572 Occupancy and Equipment 185
Data Processing 500 Audit/Tax/Legal/Consulting 145
Shareholder Expenses 125 Data Processing 130
Other Expenses 200 Deposit Premiums 135
-----------
$4,697 Shareholder Expenses 80
===========
Other Expenses 130
-----------
$1,171
===========
Approximately 40% Approximately 30%
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<PAGE>
PRO FORMA HIGHLIGHTS
(In Thousands)
<TABLE>
<CAPTION>
RCBK FSNJ IBDB RICHMOND
June 30, 1998 March 31, 1998 June 30, 1998 PRO FORMA
<S> <C> <C> <C> <C>
Total Assets $1,595,844 $646,058 $113,744 $2,355,646
Total Deposits 950,808 423,545 101,760 1,476,113
Core Deposits 625,460 191,235 71,606 888,301
Core Deposits % to Total Deposits 65.78% 45.15% 70.37% 60.18%
Total Loans, Net 644,469 235,465 41,187 921,121
Total Borrowings 306,000 115,000 - 421,000
Total Shareholders' Equity 328,595 98,649 11,252 438,496
</TABLE>
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