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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ____)*
T R Financial Corp.
________________________________________________________________________________
(Name of Issuer)
Common Stock, par value $0.01 per share
________________________________________________________________________________
(Title of Class of Securities)
872630108
_______________________________________________________________
(CUSIP Number)
Joseph L. Mancino, Roslyn Bancorp, Inc.,
1400 Old Northern Boulevard, Roslyn, New York 11576
________________________________________________________________________________
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
May 25, 1998
_______________________________________________________________
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of (S)(S) 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box [_].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule. See (S) 240.13d-7(b) for other parties to whom copies
are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
- -----------------------
CUSIP NO. 872630108
- -----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
ROSLYN BANCORP, INC.
I.R.S. Employer Indemnification No.: 11-3333218
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC (No shares have been purchased yet; see items 3 and 4)
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 3,990,578*
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
0
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 3,990,578*
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
3,990,578*
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
19.0%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
CO;HC
- ------------------------------------------------------------------------------
* As of the date of the filing of this Schedule 13D, Roslyn Bancorp, Inc.
("Roslyn Bancorp") owns 502,510 shares of T R Financial Corp. ("T R
Financial") Common Stock. Additionally, pursuant to the Stock Option Agreement
entered into by and between Roslyn Bancorp and T R Financial as of May 25,
1998 (the "Stock Option Agreement"), as an inducement for the parties to enter
into the Agreement and Plan of Merger dated as of May 25, 1998 by and between
Roslyn Bancorp, Inc. and T R Financial Corp., Roslyn Bancorp may have the
option to purchase (the "Option"), and therefore is the beneficial owner of,
an additional 3,488,068 shares of T R Financial Common Stock. The Option may
only be exercised upon the occurrence of certain events, as further referred
to in Item 4 and as fully described in the Stock Option Agreement attached
hereto as Exhibit 4.1, none of which has occurred as of the date hereof.
Roslyn Bancorp expressly disclaims beneficial ownership of any of the shares
of T R Financial which are purchasable upon exercise of the Option.
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Item 1. Security and Issuer.
-------------------
This statement relates to the common stock, par value $0.01 per share (the
"Common Stock"), of T R Financial Corp. ("T R Financial"). The principal
executive office of T R Financial Corp. is located at 1122 Franklin Avenue,
Garden City, New York 11530.
Item 2. Identity and Background.
-----------------------
This Schedule 13D is being filed by Roslyn Bancorp, Inc. ("Roslyn
Bancorp"), a Delaware corporation, which is the holding company for The Roslyn
Savings Bank (the "Bank"). Roslyn Bancorp's principal business is the business
of the Bank. The principal office of Roslyn Bancorp is located at 1400 Old
Northern Boulevard, Roslyn, New York 11576. During the past five years, Roslyn
Bancorp has not been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and has not as a
result of such proceeding been subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
Attached as Schedule I hereto and incorporated herein by reference is a
----------
list containing the (a) name, (b) business or residential address, and (c)
present principal occupation or employment and the name, principal business and
address of any corporation or other organization in which such employment is
conducted, of each director and executive officer of Roslyn Bancorp. To Roslyn
Bancorp's knowledge, each of the directors and executive officers of Roslyn
Bancorp is a United States citizen, and none of such directors and executive
officers has, during the past five years, been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
--------------------------------------------------
As summarized in Item 4 and as fully described in the Stock Option
Agreement attached hereto as Exhibit 4.1, T R Financial has granted to Roslyn
Bancorp an option pursuant to which Roslyn Bancorp has the right, upon the
occurrence of certain events (none of which has occurred), to purchase 3,488,068
of T R Financial Common Stock (subject to adjustment in certain circumstances)
at a price of $38.625 per share (the "Option"). If the Option was exercisable
and Roslyn Bancorp was to exercise the Option on the date hereof, the funds
required to purchase the shares issuable upon such exercise would be
approximately $134,726,665. It is currently anticipated that such funds would be
derived from working capital.
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Item 4. Purpose of Transaction/1/.
-----------------------
Roslyn Bancorp is seeking to acquire T R Financial pursuant to the
Agreement and Plan of Merger dated as of May 25, 1998 by and between Roslyn
Bancorp, Inc. and T R Financial Corp., (the "Merger Agreement," a copy of which
is attached hereto as Exhibit 2.1). The Merger Agreement provides for, among
other things, the merger of T R Financial with and into Roslyn Bancorp, with
Roslyn Bancorp being the surviving corporation (the "Merger"). At the effective
time of the Merger, (the "Effective Time"), each outstanding share of T R
Financial Common Stock becomes and converts into the right to receive 2.05
shares of Roslyn Bancorp Common Stock.
Consummation of the Merger is subject to the satisfaction of certain
conditions set forth in the Merger Agreement, including approval of the
shareholders of both Roslyn Bancorp and T R Financial, and the approval of
appropriate regulatory agencies.
Concurrently with the execution of the Merger Agreement, Roslyn Bancorp and
T R Financial entered into a Stock Option Agreement, dated as of May 25, 1998
(the "Stock Option Agreement"). The Stock Option Agreement is designed to
enhance the likelihood that the Merger will be successfully consummated in
accordance with the terms contemplated by the Merger Agreement and Roslyn
Bancorp insisted on such agreement for that reason. Pursuant to the Stock
Option Agreement, T R Financial granted Roslyn Bancorp the option to purchase
authorized but unissued shares (the "Option Shares") of up to 19.9% of the then
outstanding shares of T R Financial stock at a price of $38.625 per share,
subject to adjustment in certain circumstances (the "Option"). Each Option
Share issued upon exercise of the Option shall be accompanied by the related
preferred share purchase right ("Right") issued pursuant to the Shareholder
Rights Agreement dated July 19, 1994, as amended (the "Rights Amendment")
between T R Financial and Chemical Bank, as Rights Agent.
Provided that (i) Roslyn Bancorp shall not be in material breach of the
agreements or covenants contained in the Merger Agreement or the Stock Option
Agreement and (ii) no preliminary or permanent injunction or other order against
the delivery of the shares covered by the Option issued by any court of
competent jurisdiction in the United States shall be in effect, Roslyn Bancorp
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 defined below); provided,
however, that the Option shall terminate and be of no further force or effect
upon the earliest to occur of (A) the Effective Time, (B) termination of the
Merger Agreement in accordance with the terms thereof prior to the occurrence of
a Purchase Event or a Preliminary Purchase Event (as defined below) other than a
termination thereof by Roslyn Bancorp pursuant to Section 6.1(b)(ii) of the
Merger Agreement (such termination pursuant to Section 6.1(b)(ii) being referred
to herein as a "Default Termination"), (C) 18 months after a Default
Termination, or (D) 18 months after termination of the Merger Agreement (other
than a Default Termination) following the occurrence of a Purchase Event or a
Preliminary Purchase Event; provided, however, that any purchase of shares upon
exercise of the Option shall be subject to compliance with applicable law.
A "Purchase Event" means any of the following events:
(a) Without Roslyn Bancorp's prior written consent, T R
Financial shall have authorized, recommended, publicly proposed or publicly
announced an intention to authorize, recommend or propose, or T R Financial
shall have entered into an agreement with any person (other than Roslyn
Bancorp or any subsidiary of Roslyn Bancorp) to effect (A) a merger,
consolidation or similar transaction involving T R Financial or any of its
significant subsidiaries, (B) the disposition, by sale, lease, exchange or
otherwise, of assets or deposits of T R Financial or any of its significant
subsidiaries representing in either case 10% or more of the consolidated
assets or deposits of T R Financial and its Subsidiaries, other than in the
- -------------------------------
/1/ Unless otherwise designated, all capitalized terms used in this filing
shall have the meanings ascribed such terms in the T R Financial Stock
Option Agreement dated as of May 25, 1998 attached hereto as Exhibit 4.1.
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<PAGE>
ordinary course of business, (C) the issuance, sale or other disposition by T R
Financial of (including by way of merger, consolidation, share exchange or any
similar transaction) securities representing 10% or more of the voting power of
T R Financial or any of its significant subsidiaries (each of (A), (B) or (C),
an "Acquisition Transaction"); or
(b) Any person (other than Roslyn Bancorp or any subsidiary of
Roslyn Bancorp) shall have acquired beneficial ownership (as such term is
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) of, or the right to acquire beneficial ownership of,
or any "group" (as such term is defined in Section 13(d)(3) of the Exchange
Act), other than a group of which Roslyn Bancorp or any subsidiary of
Roslyn Bancorp is a member, shall have been formed which beneficially owns,
or has the right to acquire beneficial ownership of, 10% or more of the
voting power of T R Financial or any of its significant subsidiaries;
As used in the Stock Option Agreement, a "Preliminary Purchase Event"
means any of the following events:
(a) Any person (other than Roslyn Bancorp or any subsidiary of
Roslyn Bancorp) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act) or shall have filed a registration statement under
the Securities Act of 1933, as amended, (the "Securities Act"), with
respect to a tender offer or exchange offer to purchase any shares of T R
Financial Common Stock such that, upon consummation of such offer, such
person would own or control 10% or more of the then outstanding shares of T
R Financial Common Stock (such an offer being referred to herein as a
"Tender Offer" or an "Exchange Offer," respectively); or
(b) The stockholders of T R Financial shall not have approved the
Merger Agreement by the requisite vote at the meeting of the stockholders
of T R Financial required to be called to approve the Merger Agreement (the
"T R Financial Meeting"), the T R Financial Meeting shall not have been
held or shall have been canceled prior to termination of the Merger
Agreement or T R Financial's Board of Directors shall have withdrawn or
modified in a manner adverse to Roslyn Bancorp the recommendation of T R
Financial's Board of Directors with respect to the Merger Agreement, in
each case after it shall have been publicly announced that any person
(other than Roslyn Bancorp or any subsidiary of Roslyn Bancorp) shall have
(A) made, or disclosed an intention to make, a bona fide proposal to engage
in an Acquisition Transaction, (B) commenced a Tender Offer or filed a
registration statement under the Securities Act with respect to an Exchange
Offer or (C) filed an application (or given a notice), whether in draft or
final form, under the Bank Holding Company Act, as amended (the "BHC Act"),
the Home Owners' Loan Act of 1933, as amended ("HOLA"), the Bank Merger
Act, as amended (the"BMA") or the Change in
5 of 16
<PAGE>
Bank Control Act of 1978, as amended ("CBCA"), for approval to engage in an
Acquisition Transaction; or
(c) Any person (other than Roslyn Bancorp or any subsidiary of
Roslyn Bancorp) shall have made a bona fide proposal to T R Financial or
its stockholders by public announcement, or written communication that is
or becomes the subject of public disclosure, to engage in an Acquisition
Transaction; or
(d) After a proposal is made by a third party to T R Financial or
its stockholders to engage in an Acquisition Transaction, or such third
party states its intention to T R Financial to make such a proposal if the
Merger Agreement terminates, and thereafter T R Financial shall have
breached any representation, warranty, covenant or agreement contained in
the Merger Agreement and such breach would entitle Roslyn Bancorp to
terminate the Merger Agreement under Section 6.1(b) thereof (without regard
to the cure period provided for therein unless such cure is promptly
effected without jeopardizing consummation of the Merger pursuant to the
terms of the Merger Agreement).
As provided for in the Stock Option Agreement, in the event Holder (meaning
the holder of the Option from time to time, the initial Holder being Roslyn
Bancorp) wishes to exercise the Option, it shall send to T R Financial a written
notice (the "Option Notice," the date of which being herein referred to as the
("Notice Date") specifying (i) the total number of Option Shares it intends to
purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 45 business days from the Notice Date for the
closing (the "Closing") of such purchase (the "Closing Date"); provided, that
--------
the first Option Notice shall be sent to T R Financial within 180 days after the
first Applicable Purchase Event of which Roslyn Bancorp has been notified. If
prior notification to or approval of any regulatory authority is required in
connection with any such purchase, T R Financial shall cooperate with the Holder
in the filing of the required notice of application for approval and the
obtaining of such approval, and the Closing shall occur promptly following such
regulatory approvals and any mandatory waiting periods. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.
Neither the Stock Option Agreement nor any of the rights, interests or
obligations thereunder or under the Option shall be assigned by any of the
parties thereto (whether by operation of law or otherwise) without the prior
written consent of the other party, except that Holder may assign the Stock
Option 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, the Stock Option Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
In the event of any change in T R Financial Common Stock by reason of a
stock dividend, stock split, split-up, recapitalization, combination, exchange
of shares, exercise of
6 of 16
<PAGE>
the Company Rights or similar transaction, the type and number of shares or
securities subject to the Option, and the Purchase Price therefor, shall be
adjusted appropriately, and proper provision shall be made in the agreements
governing any such transaction so that Holder shall receive, upon exercise of
the Option, the number and class of shares or other securities or property that
Holder would have received in respect of T R Financial Common Stock if the
Option had been exercised immediately prior to such event, or the record date
therefor, as applicable. If any additional shares of T R Financial Common Stock
are issued after the date of the Stock Option Agreement (other than pursuant to
an event described in the first sentence of this paragraph, upon exercise of any
option to purchase T R Financial Common Stock outstanding on the date hereof or
upon conversion into T R Financial Common Stock of any convertible security of T
R Financial outstanding on the date thereof), the number of shares of T R
Financial Common Stock subject to the Option shall be adjusted so that, after
such issuance, it, together with any shares of T R Financial Common Stock
previously issued pursuant thereto, equals 19.9% of the number of shares of T R
Financial Common Stock then issued and outstanding, without giving effect to any
shares subject to or issued pursuant to the Option. None of the provisions of
the Stock Option Agreement reflected in this paragraph affect or change, or
constitute authorization for any violation of, any of the covenants or
representations in the Merger Agreement.
Subject to the last sentence of Section 3(a) of the Stock Option Agreement,
at the request of Holder (a "Repurchase Request") at any time commencing upon
the first occurrence of a Repurchase Event and ending 12 months immediately
thereafter, T R Financial shall repurchase from Holder (i) the Option and (ii)
all shares of T R Financial Common Stock purchased by Holder pursuant thereto
with respect to which Holder then has beneficial ownership. As defined in
Section 8(d) of the Stock Option Agreement, "Repurchase Event" shall occur if
(i) any person (other than Roslyn Bancorp or any subsidiary of Roslyn Bancorp)
shall have acquired beneficial ownership of (as such term is defined in
Rule 13d-3, promulgated under the Exchange Act), or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under the
Exchange Act) shall have been formed which beneficially owns or has the right
to acquire beneficial ownership of, more than 25% of the then outstanding shares
of T R Financial Common Stock, or (ii) any of the transactions described in
Section 7(b)(i), 7(b)(ii) or 7(b)(iii) of the Stock Option Agreement shall be
consummated. The date on which Holder exercises its rights under Section 8 of
the Stock Option Agreement is referred to as the "Request Date." Such repurchase
shall be at an aggregate price (the "Section 8 Repurchase Consideration") equal
to the sum of:
(a) The aggregate Purchase Price paid by Holder for any shares of
T R Financial Common Stock acquired pursuant to the Option with respect to
which Holder then has beneficial ownership;
(b) The excess, if any, of (A) the Applicable Price (as defined
below) for each share of T R Financial Common Stock over (B) the Purchase
Price (subject to adjustment pursuant to Section 7 of the Stock Option
Agreement), multiplied by the number of shares of T R Financial Common
Stock with respect to which the Option has not been exercised; and
(c) The excess, if any, of the Applicable Price over the Purchase
Price (subject to adjustment pursuant to Section 7 of the Stock Option
Agreement) paid (or, in the case of Option Shares with respect to which the
Option has been exercised but the Closing Date has not occurred, payable)
by Holder for each share of T R Financial Common Stock with respect to
which the Option has been exercised and
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with respect to which Holder then has beneficial ownership, multiplied by
the number of such shares.
If Holder makes a Repurchase Request, T R Financial shall, within 10
business days after the Request Date, pay the Section 8 Repurchase Consideration
to Holder in immediately available funds, and contemporaneously with such
payment, Holder shall surrender to T R Financial the Option and the certificates
evidencing the shares of T R Financial Common Stock purchased thereunder with
respect to which Holder then has beneficial ownership, and Holder shall warrant
that it has sole record and beneficial ownership of such shares and that the
same are then free and clear of all Liens. Notwithstanding the foregoing, to the
extent that prior notification to or approval of any regulatory authority is
required in connection with the payment of all or any portion of the Section 8
Repurchase Consideration, Holder shall have the ongoing option to revoke its
request for repurchase pursuant to Section 8 of the Stock Option Agreement, in
whole or in part, or to require that T R Financial deliver from time to time
that portion of the Section 8 Repurchase Consideration that it is not then so
prohibited from paying and promptly file the required notice or application for
approval and expeditiously process the same (and each party shall cooperate with
the other in the filing of any such notice or application and the obtaining of
any such approval). If any regulatory authority disapproves of any part of T R
Financial's proposed repurchase pursuant to Section 8 of the Stock Option
Agreement, T R Financial shall promptly give notice of such fact to Holder and
Holder shall have the right (i) to revoke the Repurchase Request or (ii) to the
extent permitted by such regulatory authority, determine whether the repurchase
should apply to the Option and/or Option Shares and to what extent to each, and
Holder shall thereupon have the right to exercise the Option as to the number of
Option Shares for which the Option was exercisable at the Request Date less the
number of shares covered by the Option in respect of which payment has been made
pursuant to Section 8(a)(ii) of the Stock Option Agreement. Holder shall notify
T R Financial of its determination under the preceding sentence within five
business days of receipt of notice of disapproval of the repurchase.
Notwithstanding anything therein to the contrary, in the event that T R
Financial delivers to the Holder written notice accompanied by a certification
of T R Financial's independent auditor each stating that a requested repurchase
of T R Financial Common Stock would result in the recapture of T R Financial's
bad debt reserves under the Internal Revenue Code of 1986, as amended, Holder's
repurchase request shall be deemed to be automatically revoked.
Notwithstanding anything herein to the contrary, all of Holder's rights
under Section 8 of the Stock Option Agreement shall terminate on the date of
termination of the Option pursuant to Section 3(a) of the Stock Option
Agreement.
For purposes of the Stock Option Agreement, the "Applicable Price" means
the highest of (i) the highest price per share of T R Financial Common Stock
paid for any such share by the person or groups described in Section 8(d)(i) of
the Stock Option Agreement, (ii) the price per share of T R Financial Common
Stock received by holders of T R Financial Common Stock in connection with any
merger, sale or other business combination transaction described
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in Section 7(b)(i), 7(b)(ii) or 7(b)(iii) of the Stock Option Agreement, or
(iii) the highest closing sales price per share of T R Financial Common Stock
quoted on the New York Stock Exchange ("NYSE"), the American Stock Exchange
("AMEX") or the National Market System of The Nasdaq Stock Market ("Nasdaq") (or
if T R Financial Common Stock is not quoted on the NYSE, AMEX or Nasdaq, the
highest bid price per share as quoted on the principal trading market or
securities exchange on which such shares are traded as reported by a recognized
source chosen by Holder) during the 40 business days preceding the Request Date;
provided, however, that in the event of a sale of less than all of T R
- -------- -------
Financial's assets, the Applicable Price shall be the sum of the price paid in
such sale for such assets and the current market value of the remaining assets
of T R Financial as determined by a nationally recognized investment banking
firm selected by Holder, divided by the number of shares of the T R Financial
Common Stock outstanding at the time of such sale. If the consideration to be
offered, paid or received pursuant to either of the foregoing clauses (i) or
(ii) shall be other than in cash, the value of such consideration shall be
determined in good faith by an independent nationally recognized investment
banking firm selected by Holder and reasonably acceptable to T R Financial,
which determination shall be conclusive for all purposes of the Stock Option
Agreement.
In the event that T R Financial shall enter into an agreement (i) to
consolidate with or merge into any person, other than Roslyn Bancorp or one of
its subsidiaries, and T R Financial shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any person, other
than Roslyn Bancorp or one of its subsidiaries, to merge into T R Financial and
T R Financial shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of T R Financial Common
Stock shall be changed into or exchanged for stock or other securities of T R
Financial or any other person or cash or any other property, or the outstanding
shares of T R Financial Common Stock immediately prior to such merger shall,
after such merger, represent less than 50% of the outstanding shares and share
equivalents of the merged company or (iii) to sell or otherwise transfer all or
substantially all of its assets or deposits to any person, other than Roslyn
Bancorp or one of its subsidiaries, then, and in each such case, the agreement
governing such transaction shall make proper provisions so that the Option
shall, upon the consummation of any such transaction and upon the terms and
conditions set forth herein, be converted into, or exchanged for, an option (the
"Substitute Option"), at the election of Holder, of either (A) the Acquiring
Corporation (as defined in Section 7(e)(i)) of the Stock Option Agreement, (B)
any
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person that controls the Acquiring Corporation or (C) in the case of a merger
described in clause (ii), T R Financial (such person being referred to as
"Substitute Option Issuer").
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 T R Financial shall also enter
into an agreement with Holder in substantially the same form as this Agreement,
which shall be applicable to the Substitute Option.
As used in the Stock Option Agreement, the term "person" shall have the
meaning specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
T R Financial shall notify Roslyn Bancorp promptly in writing of the
occurrence of any Preliminary Purchase Event or Purchase Event of which it has
knowledge, it being understood that the giving of such notice by T R Financial
shall not be a condition to the right of Holder to exercise the Option.
As more fully described in the Stock Option Agreement, the Substitute
Option shall have substantially the same terms as the Option, including the
ability to be repurchased, with adjustments in the exercise price as set forth
in the Stock Option Agreement.
Copies of the Stock Option Agreement and the Merger Agreement are filed as
exhibits to this Schedule 13D and are incorporated herein by reference. The
foregoing summary is not intended to be complete and is qualified in its
entirety by reference to such exhibits.
Other than as indicated above, and as set forth in the Stock Option
Agreement and the Merger Agreement, Roslyn Bancorp does not have any present
plans or proposals which relate to or would result in: (a) the acquisition by
any person of additional securities of T R Financial, or the disposition of
securities of T R Financial, or the disposition of securities of T R Financial;
(b) an extraordinary corporate transaction, such as merger, reorganization or
liquidation, involving T R Financial or any of its subsidiaries; (c) a sale or
transfer of a material amount of assets of T R Financial or any of its
subsidiaries; (d) any change in the present board of directors or management of
T R Financial, including any plans or proposals to change the number of terms of
directors or to fill any vacancies on the board; (e) any material change in the
present capitalization or dividend policy of T R Financial; (f) any other
material change in T R Financial's business or corporate structure; (g) any
change in T R Financial's organization certificate, bylaws, or other instruments
corresponding thereto or other actions which may impede the acquisition of
control of T R Financial by any person; (h) causing a class of securities of T R
Financial to be delisted from a national securities exchange or to be authorized
to be quoted in an inter-dealer quotation system of a registered national
securities association; (i) a class of equity securities of T R Financial
becoming eligible for termination of registration pursuant to Section 12(g)(4)
of the Securities Exchange Act of 1934, as amended, or (j) any action similar to
any of those enumerated above.
10 of 16
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The foregoing description is qualified in its entirety by reference to the
Merger Agreement and Stock Option Agreement themselves, copies of which are
attached hereto as Exhibits 2.1 and 4.1, respectively.
Item 5. Interest in Securities of T R Financial.
---------------------------------------
(a) (i) Roslyn Bancorp is the beneficial owner of 502,510 shares;
(ii) Roslyn Bancorp also may be deemed to be the beneficial owner of
the Option Shares. As provided in the Stock Option Agreement, Roslyn Bancorp may
exercise the Option only upon the happening of one or more events, none of which
as occurred. See Item 4 hereof. Since the Option is not presently exercisable,
Roslyn Bancorp expressly disclaims beneficial ownership of any of the Option
Shares. If the Option were exercised in full, the Option Shares would represent
approximately 16.6% of the currently outstanding shares (after giving effect to
the issuance of such Option Shares). Roslyn Bancorp has no right to vote or
dispose of the shares subject to the Option unless and until such time as the
Option is exercised. To the best knowledge of Roslyn Bancorp, none of the
persons listed on Schedule I hereto beneficially owns any shares of
T R Financial Common Stock.
(b) (i) Roslyn Bancorp has sole power to vote or direct the vote and
sole power to dispose or direct the disposition of 502,510 shares;
(ii) If Roslyn Bancorp were to exercise the Option, it would have
sole power to vote and, subject to the terms of the Option Agreement, sole power
to direct the disposition of 3,990,578 shares of T R Financial Corp. Common
Stock.
(iii) Joseph L. Mancino, President and Chief Executive Officer of
Roslyn Bancorp has the sole power to vote or direct the vote and the sole power
to dispose or direct the disposition of 400 shares.
(c) Roslyn Bancorp acquired the Option on May 25, 1998 in connection with
the execution of the Merger Agreement and the Stock Option Agreement, both of
which are attached hereto as Exhibits 2.1 and 4.1, respectively. See Item 4
hereof.
To the best knowledge of Roslyn Bancorp, none of the persons listed on
Schedule I hereto has effected any transactions in the shares during the past 60
days.
(d) No person other than Roslyn Bancorp has the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the sale of,
any shares of T R Financial Common Stock that may be deemed beneficially owned
by Roslyn Bancorp on account of the Option.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationship with Respect
--------------------------------------------------------------------
to Securities of T R Financial.
------------------------------
As described in Item 4 above and filed as Exhibits 2.1 and 4.1 hereto,
Roslyn Bancorp has entered into the Agreement and Plan of Merger and the Stock
Option Agreement with T R Financial Corp. Other than the foregoing, or as
referred to in the foregoing, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among the persons named in
11 of 16
<PAGE>
Item 2 of this statement or between such persons and any person with respect to
any securities of T R Financial Corp.
Item 7. Material to be Filed as Exhibits.
--------------------------------
Exhibit 2.1 - Agreement and Plan of Merger dated as of May 25, 1998
Exhibit 4.1 - Stock Option Agreement by and between T R Financial
Corp. and Roslyn Bancorp, Inc.
12 of 16
<PAGE>
SIGNATURE
---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
ROSLYN BANCORP, INC.
By: /s/ Joseph L. Mancino
----------------------------------------
Joseph L. Mancino
President and Chief Executive Officer
Date: June 3, 1998
13 of 16
<PAGE>
SCHEDULE I
Directors and Executive Officers of Roslyn Bancorp, Inc.
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<TABLE>
<CAPTION>
Name and Principal Occupation Business or Residence Address
- --------------------------------------------------------- -----------------------------
DIRECTORS:
<S> <C>
Floyd N. York Roslyn Bancorp, Inc.
Retired Chairman of the Board, President and 1400 Old Northern Boulevard
Chief Executive Officer of The Roslyn Savings Roslyn, New York 11576
Bank
Victor C. McCuaig Roslyn Bancorp, Inc.
Of counsel to and former partner in Payne, 1400 Old Northern Boulevard
Wood & Littlejohn, general counsel to The Roslyn, New York 11576
Roslyn Savings Bank
John P. Nicholson Roslyn Bancorp, Inc.
Chairman of Nicholson & Galloway, a local 1400 Old Northern Boulevard
construction firm specializing in roofing Roslyn, New York 11576
construction. Mr. Nicholson also serves as an
Advisory Director of Bank of New York, Long
Island, Division.
James E. Swiggett Roslyn Bancorp, Inc.
Retired Chairman of the Board, President and 1400 Old Northern Boulevard
Chief Executive Officer of Kollomorgen Corp., Roslyn, New York 11576
a diversified technology manufacturing
company.
Robert G. Freese Roslyn Bancorp, Inc.
Retired Vice Chairman and Chief Financial 1400 Old Northern Boulevard
Officer of Grumman Corporation, a defense Roslyn, New York 11576
contractor.
Joseph L. Mancino Roslyn Bancorp, Inc.
Chairman of the Board, President and Chief 1400 Old Northern Boulevard
Executive Officer of Roslyn Bancorp; Roslyn, New York 11576
Chairman of the Board, President and Chief
Executive Officer of The Roslyn Savings Bank.
Mr. Mancino also serves as a Director of the
Institutional Investors Mutual Fund, a
diversified open end mutual fund, the
Community Bankers Association of New York
State and the Savings Bank Life Insurance
Fund.
</TABLE>
14 of 16
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Occupation Business or Residence Address
- --------------------------------------------------------- -----------------------------
<S> <C>
Thomas J. Calabrese, Jr. Roslyn Bancorp, Inc.
Vice President, Daniel Gale Agency, Inc.; 1400 Old Northern Boulevard
retired Managing Director - Human Resources, Roslyn, New York 11576
NYNEX Corporation, a telecommunications
firm.
DIRECTORS:
Dr. Edwin W. Martin, Jr. Roslyn Bancorp, Inc.
President Emeritus and a Director of the 1400 Old Northern Boulevard
National Center for Disability Services, a non- Roslyn, New York 11576
profit education, rehabilitation and research
corporation since 1994. Prior to that,
Dr. Martin was President and Chief Executive
Officer of the National Center for Disability
Services. Dr. Martin is currently a Director of
National Captioning Institute, a non-profit
agency, a Director of Interboro Mutual
Indemnity Insurance Company, an insurance
company, and a Director of Pall Corp., a
manufacturer of industrial filters.
Richard C. Webel Roslyn Bancorp, Inc.
Managing Director, Innocenti & Webel, an 1400 Old Northern Boulevard
architectural firm. Also, President of Webel Roslyn, New York 11576
Corporation, a strategic planning company and
PlanAmerica, LLC, a software development
corporation. Mr. Webel also serves as a general
partner of Roundbush Associates, a real estate
development partnership.
John R. Bransfield, Jr. Roslyn Bancorp, Inc.
Vice President of Roslyn Bancorp; 1400 Old Northern Boulevard
Executive Vice President and Senior Lending Roslyn, New York 11576
Officer of The Roslyn Savings Bank since
1996. Mr. Bransfield, Jr. was Senior Vice
President and Senior Lending Officer of The
Roslyn Savings Bank from 1993 until 1996.
Prior to that, Mr. Bransfield was Executive Vice
President and President of the Long Island
Region of a New England-based commercial
bank.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS:
Michael P. Puorro Roslyn Bancorp, Inc.
Treasurer and Chief Financial Officer of 1400 Old Northern Boulevard
Roslyn Bancorp; Senior Vice President and Roslyn, New York 11576
Chief Financial Officer of The Roslyn Savings
Bank since 1996. Mr. Puorro has been
employed by the Bank since 1992.
</TABLE>
15 of 16
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Occupation Business or Residence Address
- --------------------------------------------------------- -----------------------------
<S> <C>
John L. Klag Roslyn Bancorp, Inc.
Senior Vice President and Investment Officer of 1400 Old Northern Boulevard
The Roslyn Savings Bank since 1996. Mr. Klag Roslyn, New York 11576
has been employed by the Bank since 1993.
Prior to that, Mr. Klag was a Vice President of a
New York-based savings bank.
Arthur W. Toohig Roslyn Bancorp, Inc.
Senior Vice President and Human Resources 1400 Old Northern Boulevard
Officer of The Roslyn Savings Bank since Roslyn, New York 11576
1992.
</TABLE>
16 of 16
<PAGE>
EXHIBIT 2.1
================================================================================
AGREEMENT AND PLAN OF MERGER
dated as of May 25, 1998
by and between
Roslyn Bancorp, Inc.
and
T R Financial Corp.
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
INTRODUCTORY STATEMENT...................................................... 1
ARTICLE I
THE MERGER
Section 1.1. Structure of the Merger..................................... 2
Section 1.2. Effect on Outstanding Shares of TRFC Common Stock........... 2
Section 1.3. Exchange Procedures......................................... 3
Section 1.4. Stock Options............................................... 5
Section 1.5. Bank Merger................................................. 6
Section 1.6. Directors of RBI after Effective Time....................... 6
Section 1.7. Alternative Structure....................................... 6
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1. Disclosure Letters.......................................... 7
Section 2.2. Standards................................................... 7
Section 2.3. Representations and Warranties of TRFC...................... 8
Section 2.4. Representations and Warranties of RBI....................... 22
ARTICLE III
CONDUCT PENDING THE MERGER
Section 3.1. Conduct of TRFC's Business Prior to the Effective Time...... 33
Section 3.2. Forbearance by TRFC......................................... 34
Section 3.3. Conduct of RBI's Business Prior to the Effective Time....... 36
Section 3.4. Forbearance by RBI.......................................... 36
ARTICLE IV
COVENANTS
Section 4.1. Acquisition Proposals...................................... 37
Section 4.2. Certain Policies of TRFC................................... 38
Section 4.3. Access and Information..................................... 39
Section 4.4. Certain Filings, Consents and Arrangements................. 40
Section 4.5. Antitakeover Provisions.................................... 40
Section 4.6. Additional Agreements...................................... 41
Section 4.7. Publicity.................................................. 41
Section 4.8. Stockholders Meetings...................................... 41
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C> <C>
Section 4.9. Proxy Statements; Comfort Letters.......................... 41
Section 4.10. Registration of RBI Common Stock........................... 42
Section 4.11. Affiliate Letters.......................................... 42
Section 4.12. Notification of Certain Matters............................ 43
Section 4.13. Directors and Officers..................................... 43
Section 4.14. Indemnification; Directors' and Officers' Insurance........ 44
Section 4.15. Pooling and Tax-Free Reorganization Treatment.............. 45
Section 4.16. Employees; Benefit Plans and Programs...................... 45
Section 4.17. Advisory Board............................................. 47
Section 4.18. Savings and Loan Holding Company Structure................. 47
Section 4.19. RBI Dividends.............................................. 47
ARTICLE V
CONDITIONS TO CONSUMMATION
Section 5.1. Conditions to Each Party's Obligations..................... 48
Section 5.2. Conditions to the Obligations of RBI and RBI Bank.......... 49
Section 5.3. Conditions to the Obligations of TRFC and TRFC Bank........ 51
ARTICLE VI
TERMINATION
Section 6.1. Termination................................................ 52
Section 6.2. Effect of Termination...................................... 56
ARTICLE VII
CLOSING, EFFECTIVE DATE AND EFFECTIVE TIME
Section 7.1. Effective Date and Effective Time.......................... 56
Section 7.2. Deliveries at the Closing.................................. 56
ARTICLE VIII
CERTAIN OTHER MATTERS
Section 8.1. Certain Definitions; Interpretation........................ 56
Section 8.2. Survival................................................... 57
Section 8.3. Waiver; Amendment.......................................... 57
Section 8.4. Counterparts............................................... 57
Section 8.5. Governing Law.............................................. 57
Section 8.6. Expenses................................................... 57
Section 8.7. Notices.................................................... 57
Section 8.8. Entire Agreement; etc...................................... 59
Section 8.9. Assignment................................................. 59
</TABLE>
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<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
This is an AGREEMENT AND PLAN OF MERGER, dated as of the 25th day of
May, 1998 ("Agreement"), by and between Roslyn Bancorp, Inc., a Delaware
corporation ("RBI"), and T R Financial Corp., a Delaware corporation ("TRFC").
INTRODUCTORY STATEMENT
The Board of Directors of each of RBI and TRFC (i) has determined that
this Agreement and the business combination and related transactions
contemplated hereby are in the best interests of RBI and TRFC, respectively, and
in the best long-term interests of their respective stockholders, (ii) has
determined that this Agreement and the transactions contemplated hereby are
consistent with, and in furtherance of, its respective business strategies and
(iii) has approved, at meetings of each of such Boards of Directors, this
Agreement.
Concurrently with the execution and delivery of this Agreement, and as
a condition and inducement to RBI's willingness to enter into this Agreement,
RBI and TRFC have entered into a stock option agreement ("TRFC Option
Agreement"), pursuant to which TRFC has granted to RBI an option to purchase
shares of TRFC's common stock, par value $.01 per share ("TRFC Common Stock"),
upon the terms and conditions therein contained. In addition, concurrently with
the execution and delivery of this Agreement, and as a condition and inducement
to TRFC's willingness to enter into this Agreement, RBI and TRFC have entered
into a stock option agreement ("RBI Option Agreement"), pursuant to which RBI
has granted to TRFC an option to purchase shares of RBI's common stock, par
value $.01 per share ("RBI Common Stock"), upon the terms and conditions therein
contained.
Promptly following the consummation of the Merger (as defined below),
the parties hereto intend that Roosevelt Savings Bank, a wholly owned subsidiary
of TRFC ("TRFC Bank"), shall be merged with and into The Roslyn Savings Bank, a
wholly owned subsidiary of RBI ("RBI Bank"), with RBI Bank being the surviving
entity ("Bank Merger").
The parties hereto intend that the Merger and the Bank Merger shall
qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended ("Code"), for federal income tax
purposes, and that the Merger shall be accounted for as a pooling-of-interests
for accounting purposes.
RBI and TRFC desire to make certain representations, warranties and
agreements in connection with the business combination and related transactions
provided for herein and to prescribe various conditions to such transactions.
In consideration of their mutual promises and obligations hereunder,
the parties hereto adopt and make this Agreement and prescribe the terms and
conditions hereof and the manner and basis of carrying it into effect, which
shall be as follows:
<PAGE>
ARTICLE I
THE MERGER
----------
Section 1.1 Structure of the Merger. On the Effective Date (as
-----------------------
defined in Section 7.1), TRFC will merge with and into RBI ("Merger"), with RBI
being the surviving entity, pursuant to the provisions of, and with the effect
provided in, the Delaware General Corporation Law. Upon consummation of the
Merger, the separate corporate existence of TRFC shall cease. RBI shall
continue to be governed by the laws of the State of Delaware and its name and
separate corporate existence, with all of its rights, privileges, immunities,
powers and franchises, shall continue unaffected by the Merger.
Section 1.2 Effect on Outstanding Shares of TRFC Common Stock.
-------------------------------------------------
(a) By virtue of the Merger, automatically and without any action on
the part of the holder thereof, each share of TRFC Common Stock issued and
outstanding at the Effective Time (as defined in Section 7.1), other than (i)
shares held directly or indirectly by RBI (other than shares held in a fiduciary
capacity or in satisfaction of a debt previously contracted), (ii) shares held
by TRFC as treasury stock and (iii) unallocated shares held in TRFC's
Recognition and Retention Plan for Officers ("TRFC RRP") (such shares referred
to in clauses (i), (ii) and (iii) being referred to herein as the "Excluded
Shares"), together with the related preferred share purchase right ("TRFC
Preferred Share Purchase Right") issued pursuant to the Rights Agreement ("TRFC
Rights Agreement"), dated as of July 19, 1994, between TRFC and Chemical Bank,
as Rights Agent, shall become and be converted into the right to receive 2.05
shares of RBI Common Stock (the "Exchange Ratio"); provided, however, that,
notwithstanding any other provision hereof, no fraction of a share of RBI Common
Stock and no certificates or scrip therefor will be issued in the Merger;
instead, RBI shall pay to each holder of TRFC Common Stock who would otherwise
be entitled to a fraction of a share of RBI Common Stock an amount in cash,
rounded to the nearest cent, determined by multiplying such fraction by the RBI
Market Value (collectively, the "Merger Consideration").
(b) As used herein, "RBI Market Value" shall be the average of the
daily closing sales prices of a share of RBI Common Stock (and if there is no
closing sales price on any such day, then the mean between the closing bid and
the closing asked prices on that day), as reported on the National Market System
of The Nasdaq Stock Market, Inc. ("Nasdaq National Market"), for the 15
consecutive trading days immediately preceding the day that is the latest of (i)
the day of expiration of the last waiting period with respect to any of the
required regulatory approvals, as contemplated by Section 5.1(b), (ii) the day
on which the last of the required regulatory approvals, as contemplated by
Section 5.1(b), is obtained and (iii) the day on which the last of the required
stockholder approvals have been obtained (such date being referred to herein as
the "Valuation Date").
(c) If, between the date of this Agreement and the Effective Time,
the outstanding shares of RBI Common Stock shall have been changed into a
different number of shares or into a different class by reason of any stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares (each, a "Stock Adjustment"), the Merger Consideration shall
be adjusted correspondingly to the extent appropriate to reflect the Stock
Adjustment.
-2-
<PAGE>
(d) As of the Effective Time, each Excluded Share shall be cancelled
and retired and shall cease to exist, and no exchange or payment shall be made
with respect thereto. All shares of RBI Common Stock and RBI Preferred Stock
(as defined in Section 2.4(b)) that are held by TRFC, if any, other than shares
held in a fiduciary capacity or in satisfaction of a debt previously contracted,
shall become treasury stock of RBI.
Section 1.3 Exchange Procedures.
-------------------
(a) Appropriate transmittal materials ("Letter of Transmittal") shall
be mailed as soon as reasonably practicable after the Effective Time, and in no
event later than 5 business days thereafter, to each holder of record of TRFC
Common Stock as of the Effective Time. A Letter of Transmittal will be deemed
properly completed only if accompanied by certificates representing all shares
of TRFC Common Stock to be converted thereby.
(b) At and after the Effective Time, each certificate ("TRFC
Certificate") previously representing shares of TRFC Common Stock (except as
specifically set forth in Section 1.2) shall represent only the right to receive
the Merger Consideration.
(c) Prior to the Effective Time, RBI shall deposit, or shall cause to
be deposited, with such bank or trust company that is selected by RBI and is
reasonably acceptable to TRFC to act as exchange agent ("Exchange Agent"), for
the benefit of the holders of shares of TRFC Common Stock, for exchange in
accordance with this Section 1.3, an estimated amount of cash sufficient to pay
the aggregate amount of cash in lieu of fractional shares to be paid pursuant to
Section 1.2, and RBI shall reserve for issuance with its Transfer Agent and
Registrar a sufficient number of shares of RBI Common Stock to provide for
payment of the Merger Consideration.
(d) The Letter of Transmittal shall (i) specify that delivery shall
be effected, and risk of loss and title to the TRFC Certificates shall pass,
only upon delivery of the TRFC Certificates to the Exchange Agent, (ii) be in a
form and contain any other provisions as RBI may reasonably determine and (iii)
include instructions for use in effecting the surrender of the TRFC Certificates
in exchange for the Merger Consideration. Upon the proper surrender of the TRFC
Certificates to the Exchange Agent, together with a properly completed and duly
executed Letter of Transmittal, the holder of such TRFC Certificates shall be
entitled to receive in exchange therefor (m) a certificate representing that
number of whole shares of RBI Common Stock that such holder has the right to
receive pursuant to Section 1.2 and (n) a check in the amount equal to the cash
in lieu of fractional shares, if any, that such holder has the right to receive
pursuant to Section 1.2 and any dividends or other distributions to which such
holder is entitled pursuant to this Section 1.3. TRFC Certificates so
surrendered shall forthwith be cancelled. As soon as practicable, but no later
than 10 business days following receipt of the properly completed Letter of
Transmittal and any necessary accompanying documentation, the Exchange Agent
shall distribute RBI Common Stock and cash as provided herein. The Exchange
Agent shall not be entitled to vote or exercise any rights of ownership with
respect to the shares of RBI Common Stock held by it from time to time
hereunder, except that it shall receive and hold all dividends or other
distributions paid or distributed with respect to such shares for the account of
the persons entitled thereto. If there is a transfer of
-3-
<PAGE>
ownership of any shares of TRFC Common Stock not registered in the transfer
records of TRFC, the Merger Consideration shall be issued to the transferee
thereof if the TRFC Certificates representing such TRFC Common Stock are
presented to the Exchange Agent, accompanied by all documents required, in the
reasonable judgment of RBI and the Exchange Agent, (x) to evidence and effect
such transfer and (y) to evidence that any applicable stock transfer taxes have
been paid.
(e) No dividends or other distributions declared or made after the
Effective Time with respect to RBI Common Stock shall be remitted to any person
entitled to receive shares of RBI Common Stock hereunder until such person
surrenders his or her TRFC Certificates in accordance with this Section 1.3.
Upon the surrender of such person's TRFC Certificates, such person shall be
entitled to receive any dividends or other distributions, without interest
thereon, which theretofore had become payable with respect to shares of RBI
Common Stock represented by such person's TRFC Certificates.
(f) From and after the Effective Time there shall be no transfers on
the stock transfer records of TRFC of any shares of TRFC Common Stock. If,
after the Effective Time, TRFC Certificates are presented to RBI, they shall be
cancelled and exchanged for the Merger Consideration deliverable in respect
thereof pursuant to this Agreement in accordance with the procedures set forth
in this Section 1.3.
(g) Any portion of the aggregate amount of cash to be paid in lieu of
fractional shares pursuant to Section 1.2, any dividends or other distributions
to be paid pursuant to this Section 1.3 or any proceeds from any investments
thereof that remains unclaimed by the stockholders of TRFC for six months after
the Effective Time shall be repaid by the Exchange Agent to RBI upon the written
request of RBI. After such request is made, any stockholders of TRFC who have
not theretofore complied with this Section 1.3 shall look only to RBI for the
Merger Consideration deliverable in respect of each share of TRFC Common Stock
such stockholder holds, as determined pursuant to Section 1.2 of this Agreement,
without any interest thereon. If outstanding TRFC Certificates are not
surrendered prior to the date on which such payments would otherwise escheat to
or become the property of any governmental unit or agency, the unclaimed items
shall, to the extent permitted by any abandoned property, escheat or other
applicable laws, become the property of RBI (and, to the extent not in its
possession, shall be paid over to it), free and clear of all claims or interest
of any person previously entitled to such claims. Notwithstanding the
foregoing, none of RBI, RBI Bank, the Exchange Agent or any other person shall
be liable to any former holder of TRFC Common Stock for any amount delivered to
a public official pursuant to applicable abandoned property, escheat or similar
laws.
(h) RBI and the Exchange Agent shall be entitled to rely upon TRFC's
stock transfer books to establish the identity of those persons entitled to
receive the Merger Consideration, which books shall be conclusive with respect
thereto. In the event of a dispute with respect to ownership of stock
represented by any TRFC Certificate, RBI and the Exchange Agent shall be
entitled to deposit any Merger Consideration represented thereby in escrow with
an independent third party and thereafter be relieved with respect to any claims
thereto.
-4-
<PAGE>
(i) If any TRFC Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such TRFC Certificate to be lost, stolen or destroyed and, if required by the
Exchange Agent, the posting by such person of a bond in such amount as the
Exchange Agent may direct as indemnity against any claim that may be made
against it with respect to such TRFC Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed TRFC Certificate the Merger
Consideration deliverable in respect thereof pursuant to Section 1.2.
Section 1.4 Stock Options.
-------------
(a) Options to purchase shares of TRFC Common Stock that have been
issued by TRFC and are outstanding at the Effective Time (each, a "TRFC Option")
pursuant to the TRFC 1993 Incentive Stock Option Plan and the TRFC 1993 Stock
Option Plan for Outside Directors (collectively, the "TRFC Option Plans") shall
be converted into options to purchase shares of RBI Common Stock as follows:
(i) the aggregate number of shares of RBI Common Stock issuable
upon the exercise of converted TRFC Options after the Effective Time shall
be equal to the product of the Exchange Ratio multiplied by the number of
shares of TRFC Common Stock issuable upon exercise of the TRFC Options
immediately prior to the Effective Time, such product to be rounded to the
nearest whole share of RBI Common Stock; and
(ii) the exercise price per share of each converted TRFC Option
shall be equal to the quotient of the exercise price of such TRFC Option at
the Effective Time divided by the Exchange Ratio, such quotient to be
rounded to the nearest whole cent;
provided, however, that, in the case of any TRFC Option that is intended to
qualify as an incentive stock option under Section 422 of the Code, the number
of shares of RBI Common Stock issuable upon exercise of and the exercise price
per share for such converted TRFC Option determined in the manner provided above
shall be further adjusted in such manner as RBI may determine to be necessary to
conform to the requirements of Section 424(b) of the Code. Options to purchase
shares of RBI Common Stock that arise from the operation of this Section 1.4
shall be referred to as the "Converted Options." All Converted Options shall be
exercisable for the same period and otherwise have the same terms and conditions
applicable to the TRFC Options that they replace; provided, however, that such
exercise period, terms and conditions shall be further modified if and to the
extent necessary to enable the Merger to qualify for pooling-of-interests
accounting treatment. Prior to the Effective Time, RBI shall take, or cause to
be taken, all necessary action to effect the intent of the provisions set forth
in this Section 1.4.
(b) Prior to the date of the TRFC stockholders meeting contemplated
by Section 4.8, TRFC shall take, or cause to be taken, appropriate action under
the terms of any stock option plan, agreement or arrangement under which TRFC
Options have been granted to provide for the conversion of TRFC Options
outstanding at the Effective Time into Converted Options and to effect any other
modifications contemplated by Section 1.4(a).
-5-
<PAGE>
(c) Concurrently with the reservation of shares of RBI Common Stock
to provide for the payment of the Merger Consideration, RBI shall take all
corporate action necessary to reserve for future issuance a sufficient
additional number of shares of RBI Common Stock to provide for the satisfaction
of its obligations with respect to the Converted Options. On or before the
Effective Time, RBI shall (i) cause to be executed and delivered to each holder
of a Converted Option an agreement, certificate or other instrument, in such
form and of such substance as RBI may reasonably determine, evidencing such
holder's rights with respect to the Converted Options; and (ii) file a
registration statement on Form S-8 (or any successor or other appropriate form)
and make any state filings or obtain state exemptions with respect to the RBI
Common Stock issuable upon exercise of the Converted Options.
Section 1.5 Bank Merger. Concurrently with or as soon as
-----------
practicable after the execution and delivery of this Agreement, RBI Bank and
TRFC Bank shall enter into the Plan of Bank Merger, in the form attached hereto
as Exhibit A, pursuant to which the Bank Merger will be effected. The parties
hereto intend that the Bank Merger shall become effective on the Effective Date.
The Plan of Bank Merger shall provide that the directors of RBI Bank as the
surviving entity of the Bank Merger shall be (a) all of the directors of RBI
Bank serving immediately prior to the Bank Merger and (b) such additional
persons who shall become directors of RBI Bank in accordance with Section 4.13.
Section 1.6 Directors of RBI after Effective Time. At the
-------------------------------------
Effective Time, the directors of RBI shall consist of (a) the directors of RBI
serving immediately prior to the Effective Time and (b) such additional persons
who shall become directors of RBI in accordance with Section 4.13. Other than
as provided in Section 4.13 and 4.17, no director of TRFC shall be made a
director of RBI.
Section 1.7 Alternative Structure. Notwithstanding anything to the
---------------------
contrary contained in this Agreement, prior to the Effective Time, RBI may
specify that the structure of the transactions contemplated hereby be revised
and the parties shall enter into such alternative transactions as RBI may
determine to effect the purposes of this Agreement; provided, however, that such
revised structure shall not adversely affect the treatment of the transaction as
a pooling-of-interests for accounting purposes, the tax effects or economic
benefits of the transactions contemplated hereby to the holders of TRFC Common
Stock and shall not materially delay the Closing Date (as defined in Section
7.1). This Agreement and any related documents shall be appropriately amended
in order to reflect any such revised structure.
-6-
<PAGE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 2.1 Disclosure Letters. On or prior to the execution and
------------------
delivery of this Agreement, TRFC and RBI each shall have delivered to the other
a letter (each, its "Disclosure Letter") setting forth, among other things,
facts, circumstances and events the disclosure of which is required or
appropriate in relation to any or all of their respective representations and
warranties (and making specific reference to the Section of this Agreement to
which they relate), other than Section 2.3(g) and Section 2.4(g); provided, that
(a) no such fact, circumstance or event is required to be set forth in the
Disclosure Letter as an exception to a representation or warranty if its absence
is not reasonably likely to result in the related representation or warranty
being deemed untrue or incorrect under the standards established by Section 2.2
and (b) the mere inclusion of a fact, circumstance or event in a Disclosure
Letter shall not be deemed an admission by a party that such item represents a
material exception or that such item is reasonably likely to result in a
Material Adverse Effect (as defined in Section 2.2(b)).
Section 2.2 Standards.
---------
(a) No representation or warranty of TRFC or RBI contained in
Sections 2.3 or 2.4, respectively, shall be deemed untrue or incorrect, and no
party hereto shall be deemed to have breached a representation or warranty, on
account of the existence of any fact, circumstance or event unless, as a direct
or indirect consequence of such fact, circumstance or event, individually or
taken together with all other facts, circumstances or events inconsistent with
any paragraph of Sections 2.3 or 2.4, as applicable, there is reasonably likely
to exist a Material Adverse Effect. TRFC's representations, warranties and
covenants contained in this Agreement shall not be deemed to be untrue or
breached as a result of effects arising solely from actions taken in compliance
with a written request of RBI.
(b) As used in this Agreement, the term "Material Adverse Effect"
means either (i) an effect which is material and adverse to the business,
financial condition or results of operations of TRFC or RBI, as the context may
dictate, and its Subsidiaries taken as a whole; provided, however, that any such
effect resulting from any (A) changes in laws, rules or regulations or generally
accepted accounting principles or interpretations thereof that apply to both RBI
and RBI Bank and TRFC and TRFC Bank, as the case may be, or (B) changes in the
general level of market interest rates shall not be considered in determining if
a Material Adverse Effect has occurred; or (ii) the failure of (x) a
representation or warranty contained in Section 2.3(a)(i) and (iv), Section
2.3(c), Section 2.3(d), 2.3(g)(iii), 2.4(a)(i) and (iv), Section 2.4(c), 2.4(d),
2.4(g)(iii) or 2.4(l) to be true and correct or (y) a representation or warranty
contained in the last sentence of each of Section 2.3(e) or 2.4(e), the second
sentence of each of 2.3(f)(i) or 2.4(f)(i) and the first two sentences of each
of Section 2.3(bb) or 2.4(x) to be true and correct in all material respects.
(c) For purposes of this Agreement, "knowledge" shall mean, with
respect to a party hereto, actual knowledge of the members of the Board of
Directors of that party, its counsel or any officer of that party with the title
ranking not less than senior vice president.
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Section 2.3 Representations and Warranties of TRFC. Subject to
--------------------------------------
Sections 2.1 and 2.2, TRFC represents and warrants to RBI that, except as
disclosed in TRFC's Disclosure Letter:
(a) Organization. (i) TRFC is a corporation duly organized,
------------
validly existing and in good standing under the laws of the State of Delaware
and is duly registered as a bank holding company under the Bank Holding Company
Act of 1956, as amended ("BHCA"). TRFC Bank is a stock savings bank duly
organized, validly existing and in good standing under the laws of the State of
New York. Each Subsidiary (as defined below) of TRFC Bank is a corporation,
limited liability company or partnership duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization. Each of TRFC and its Subsidiaries has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. As used in this Agreement, unless the context requires
otherwise, the term "Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated, which
is consolidated with such party for financial reporting purposes or which is
controlled, directly or indirectly, by such party.
(ii) Each of TRFC and its Subsidiaries has the requisite corporate
power and authority, and is duly qualified and is in good standing, to do
business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary.
(iii) TRFC's Disclosure Letter sets forth all of TRFC's
Subsidiaries and all entities (whether corporations, partnerships or similar
organizations), including the corresponding percentage ownership, in which TRFC
owns, directly or indirectly, 5% or more of the ownership interests as of the
date of this Agreement and indicates for each of TRFC's Subsidiaries, as of such
date, its jurisdiction of organization and the jurisdiction(s) wherein it is
qualified to do business. All such Subsidiaries and ownership interests are in
compliance with all applicable laws, rules and regulations relating to direct
investments in equity ownership interests. TRFC owns, either directly or
indirectly, all of the outstanding capital stock of each of its Subsidiaries,
except for certain preferred shares issued by Roosevelt Asset Funding Corp.
("RAFC"). No Subsidiary of TRFC other than TRFC Bank is an "insured depository
institution" as defined in the Federal Deposit Insurance Act, as amended
("FDIA"), and the applicable regulations thereunder. All of the shares of
capital stock of each of the Subsidiaries held by TRFC or any of its other
Subsidiaries are fully paid, nonassessable and not subject to any preemptive
rights and are owned by TRFC or a Subsidiary of TRFC free and clear of any
claims, liens, encumbrances or restrictions (other than those imposed by
applicable federal and state securities laws), and there are no agreements or
understandings with respect to the voting or disposition of any such shares.
(iv) The deposits of TRFC Bank are insured by the Bank Insurance Fund
("BIF") of the Federal Deposit Insurance Corporation ("FDIC") to the extent
provided in the FDIA.
(b) Capital Structure. (i) The authorized capital stock of TRFC
-----------------
consists of 60,000,000 shares of TRFC Common Stock and 5,000,000 shares of
preferred stock, par value $.01 per share ("TRFC Preferred Stock"). As of the
date of this Agreement: (A) 17,527,983 shares
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of TRFC Common Stock were issued and outstanding, (B) no shares of TRFC
Preferred Stock were issued and outstanding, (C) no shares of TRFC Common Stock
were reserved for issuance, except that 2,654,277 shares of TRFC Common Stock
were reserved for issuance pursuant to the TRFC Option Plans, (D) no shares of
TRFC Preferred Stock were reserved for issuance except pursuant to the TRFC
Rights Agreement and (E) 5,196,017 shares of TRFC Common Stock were held by TRFC
in its treasury or by its Subsidiaries. The authorized capital stock of TRFC
Bank consists of 30,000,000 shares of common stock, par value $.01 per share,
and 5,000,000 shares of preferred stock, par value $.01 per share. As of the
date of the Agreement, 1,000 shares of such common stock were outstanding, no
shares of such preferred stock were outstanding and all outstanding shares of
such common stock were, and as of the Effective Time will be, owned by TRFC. All
outstanding shares of capital stock of TRFC and TRFC Bank are duly authorized
and validly issued, fully paid and nonassessable and not subject to any
preemptive rights and, with respect to shares held by TRFC in its treasury or by
its Subsidiaries, are free and clear of all liens, claims, encumbrances or
restrictions (other than those imposed by applicable federal and state
securities laws) and there are no agreements or understandings with respect to
the voting or disposition of any such shares. TRFC's Disclosure Letter sets
forth a complete and accurate list of all options to purchase TRFC Common Stock
that have been granted pursuant to the TRFC Option Plans and all restricted
stock grants under the TRFC RRP, including the dates of grant, exercise prices,
dates of vesting, dates of termination and shares subject to each grant.
(ii) No bonds, debentures, notes or other indebtedness having the
right to vote on any matters on which stockholders may vote ("Voting Debt") of
TRFC are issued or outstanding.
(iii) As of the date of this Agreement, except for this Agreement and
the TRFC Option Agreement, neither TRFC nor any of its Subsidiaries has or is
bound by any outstanding options, warrants, calls, rights, convertible
securities, commitments or agreements of any character obligating TRFC or any of
its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, any additional shares of capital stock of TRFC or any of its Subsidiaries
or obligating TRFC or any of its Subsidiaries to grant, extend or enter into any
such option, warrant, call, right, convertible security, commitment or
agreement. As of the date hereof, there are no outstanding contractual
obligations of TRFC or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of TRFC or any of its
Subsidiaries.
(c) Authority. Each of TRFC and TRFC Bank has all requisite
---------
corporate power and authority to enter into this Agreement and the Plan of Bank
Merger, respectively, and, subject to approval of this Agreement by the
requisite vote of TRFC's stockholders and receipt of all required regulatory or
governmental approvals, as contemplated by Section 5.1(b) of this Agreement, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement, and, subject to the approval of this Agreement by TRFC's
stockholders, the consummation of the transactions contemplated hereby, have
been duly authorized by all necessary corporate actions on the part of TRFC and
TRFC Bank. This Agreement has been duly executed and delivered by TRFC and
constitutes a valid and binding obligation of TRFC, enforceable in accordance
with its terms subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies
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<PAGE>
generally and subject, as to enforceability, to general principles of equity,
whether applied in a court of law or a court of equity.
(d) Stockholder Approval; Fairness Opinion. The affirmative vote of
--------------------------------------
a majority of the outstanding shares of TRFC Common Stock entitled to vote on
this Agreement is the only vote of the stockholders of TRFC required for
approval of this Agreement and the consummation of the Merger and the related
transactions contemplated hereby. TRFC has received the written opinion of
Goldman, Sachs & Co. to the effect that, as of the date hereof, the Merger
Consideration to be received by TRFC's stockholders is fair, from a financial
point of view, to such stockholders.
(e) No Violations. The execution, delivery and performance of this
-------------
Agreement by TRFC do not, and the consummation of the transactions contemplated
hereby will not, constitute (i) assuming receipt of all Requisite Regulatory
Approvals (as defined below) and requisite stockholder approvals, a breach or
violation of, or a default under, any law, rule or regulation or any judgment,
decree, order, governmental permit or license, or agreement, indenture or
instrument of TRFC or any of its Subsidiaries, or to which TRFC or any of its
Subsidiaries (or any of their respective properties) is subject, (ii) a breach
or violation of, or a default under, the certificate of incorporation or bylaws
of TRFC or the similar organizational documents of any of its Subsidiaries or
(iii) a breach or violation of, or a default under (or an event which, with due
notice or lapse of time or both, would constitute a default under), or result in
the termination of, accelerate the performance required by, or result in the
creation of any lien, pledge, security interest, charge or other encumbrance
upon any of the properties or assets of TRFC or any of its Subsidiaries, under,
any of the terms, conditions or provisions of any note, bond, indenture, deed of
trust, loan agreement or other agreement, instrument or obligation to which TRFC
or any of its Subsidiaries is a party, or to which any of their respective
properties or assets may be subject; and the consummation of the transactions
(including the Bank Merger) contemplated hereby (exclusive of the effect of any
changes effected pursuant to Section 1.7) will not require any approval, consent
or waiver under any such law, rule, regulation, judgment, decree, order,
governmental permit or license or the approval, consent or waiver of any other
party to any such agreement, indenture or instrument, other than (x) the
approval of the holders of a majority of the outstanding shares of TRFC Common
Stock, (y) the approval of the Banking Board of the State of New York ("Banking
Board") under Section 143-b of the Banking Law of the State of New York
("Banking Law"), the approval of the Superintendent of Banks of the State of New
York ("Superintendent") under Section 601 of the Banking Law and any other
requirement of the Banking Board or the Superintendent, the approval of the
Board of Governors of the Federal Reserve System ("FRB") under the BHCA, if
necessary (or the receipt of a waiver of such requirement), the approval of the
Office of Thrift Supervision ("OTS") under the Home Owners' Loan Act of 1933, as
amended ("HOLA"), and the approval of the appropriate regulatory authority under
Section 18(c) of the FDIA (collectively, the "Requisite Regulatory Approvals"),
and (z) such approvals, consents or waivers as are required under the federal
and state securities or "blue sky" laws in connection with the transactions
contemplated by this Agreement. As of the date hereof, the executive officers
of TRFC know of no reason pertaining to TRFC why any of the approvals referred
to in this Section 2.3(e) should not be obtained without the imposition of any
material condition or restriction described in the proviso to Section 5.1(b).
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<PAGE>
(f) Reports. (i) As of their respective dates, none of the reports
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or other statements filed by TRFC or TRFC Bank on or subsequent to December 31,
1997 with the Securities and Exchange Commission ("SEC") (collectively, "TRFC's
Reports"), contained, or will contain, any untrue statement of a material fact
or omitted or will omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading. Each of the financial statements of
TRFC included in TRFC's Reports complied as to form, as of their respective
dates of filing with the SEC, in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis during the periods
involved ("GAAP")(except as may be indicated in the notes thereto or, in the
case of the unaudited financial statements, as permitted by Form 10-Q of the
SEC). Each of the consolidated statements of condition contained or
incorporated by reference in TRFC's Reports (including in each case any related
notes and schedules) fairly presented, or will fairly present, as the case may
be (A) the financial position of the entity or entities to which it relates as
of its date and each of the consolidated statements of operations, consolidated
statements of cash flows and consolidated statements of changes in stockholders'
equity, contained or incorporated by reference in TRFC's Reports (including in
each case any related notes and schedules), and (B) the results of operations,
stockholders' equity and cash flows, as the case may be, of the entity or
entities to which it relates for the periods set forth therein (subject, in the
case of unaudited interim statements, to normal year-end audit adjustments that
are not material in amount or effect), in each case in accordance with GAAP,
except as may be noted therein. TRFC has made available to RBI a true and
complete copy of each of TRFC's Report filed with the SEC since December 31,
1997.
(ii) TRFC and each of its Subsidiaries have each timely filed
all material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file since
December 31, 1993 with (A) the Banking Department of the State of New York
("Banking Department"), (B) the FDIC, (C) the FRB, (D) the National Association
of Securities Dealers, Inc. ("NASD"), (E) the SEC and (F) any other self-
regulatory organization ("SRO"), and have paid all fees and assessments due and
payable in connection therewith.
(g) Absence of Certain Changes or Events. Except as disclosed in
------------------------------------
TRFC's Reports filed on or prior to the date of this Agreement, since
December 31, 1997, (i) TRFC and its Subsidiaries have not incurred any
liability, except in the ordinary course of their business consistent with past
practice, (ii) TRFC and its Subsidiaries have conducted their respective
businesses only in the ordinary and usual course of such businesses and
(iii) there has not been any Material Adverse Effect with respect to TRFC.
(h) Absence of Claims. Except as set forth in TRFC's Disclosure
-----------------
Letter, no litigation, proceeding, controversy, claim or action before any court
or governmental agency is pending against TRFC or any of its Subsidiaries and,
to the best of TRFC's knowledge, no such litigation, proceeding, controversy,
claim or action has been threatened.
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<PAGE>
(i) Absence of Regulatory Actions. Neither TRFC nor any of its
-----------------------------
Subsidiaries is a party to any cease and desist order, written agreement or
memorandum of understanding with, or any commitment letter or similar
undertaking to, or is subject to any action, proceeding, order or directive by,
or is a recipient of any extraordinary supervisory letter from any federal or
state governmental authority charged with the supervision or regulation of
depository institutions or depository institution holding companies or engaged
in the insurance of bank and/or savings and loan deposits ("Government
Regulators"), or has adopted any board resolutions at the request of any
Government Regulators, nor has it been advised by any Government Regulator that
it is contemplating issuing or requesting (or is considering the appropriateness
of issuing or requesting) any such action, proceeding, order, directive, written
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter, board resolutions or similar undertaking.
(j) Taxes. All federal, state, local and foreign tax returns
-----
required to be filed by or on behalf of TRFC or any of its Subsidiaries have
been timely filed or requests for extensions have been timely filed and any such
extension shall have been granted and not have expired, and all such filed
returns are complete and accurate in all material respects. All taxes shown on
such returns, all taxes required to be shown on returns for which extensions
have been granted and all other taxes required to be paid by TRFC or any of its
Subsidiaries have been paid in full or adequate provision has been made for any
such taxes on TRFC's balance sheet (in accordance with GAAP). For purposes of
this Section 2.3(j), the term "taxes" shall include all income, franchise, gross
receipts, real and personal property, real property transfer and gains, wage and
employment taxes. As of the date of this Agreement, there is no audit
examination, deficiency assessment, tax investigation or refund litigation with
respect to any taxes of TRFC or any of its Subsidiaries, and no claim has been
made by any authority in a jurisdiction where TRFC or any of its Subsidiaries do
not file tax returns that TRFC or any such Subsidiary is subject to taxation in
that jurisdiction. All taxes, interest, additions and penalties due with respect
to completed and settled examinations or concluded litigation relating to TRFC
or any of its Subsidiaries have been paid in full or adequate provision has been
made for any such taxes on TRFC's balance sheet (in accordance with GAAP).
Except as set forth in TRFC's Disclosure Letter, TRFC and its Subsidiaries have
not executed an extension or waiver of any statute of limitations on the
assessment or collection of any material tax due that is currently in effect.
TRFC and each of its Subsidiaries has withheld and paid all taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party,
and TRFC and each of its Subsidiaries has timely complied with all applicable
information reporting requirements under Part III, Subchapter A of Chapter 61 of
the Code and similar applicable state and local information reporting
requirements. Neither TRFC nor any of its Subsidiaries (i) has made an election
under Section 341(f) of the Code, (ii) has issued or assumed any obligation
under Section 279 of the Code, any high yield discount obligation as described
in Section 163(i) of the Code or any registration-required obligation within the
meaning of Section 163(f)(2) of the Code that is not in registered form or (iii)
is or has been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code.
(k) Agreements. (i) Except for the TRFC Option Agreement and
----------
arrangements made in the ordinary course of business, and except as set forth in
TRFC's Disclosure Letter, TRFC and its Subsidiaries are not bound by any
material contract (as defined in Item
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601(b)(10) of Regulation S-K) to be performed after the date hereof that has not
been filed with or incorporated by reference in TRFC's Reports. Except as
disclosed in TRFC's Disclosure Letter, neither TRFC nor any of its Subsidiaries
is a party to an oral or written (A) consulting agreement (other than data
processing, software programming and licensing contracts entered into in the
ordinary course of business) not terminable on 60 days' or less notice,
(B) agreement with any executive officer or other key employee of TRFC or any of
its Subsidiaries the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving TRFC or any
of its Subsidiaries of the nature contemplated by this Agreement or the TRFC
Option Agreement, (C) agreement with respect to any employee or director of TRFC
or any of its Subsidiaries providing any term of employment or compensation
guarantee extending for a period longer than 60 days or for the payment of in
excess of $50,000 per annum, (D) agreement or plan, including any stock option
plan, phantom stock or stock appreciation rights plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be increased, or the
vesting or payment of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the TRFC
Option Agreement or the value of any of the benefits of which will be calculated
on the basis of any of the transactions contemplated by this Agreement or the
TRFC Option Agreement or (E) agreement containing covenants that limit the
ability of TRFC or any of its Subsidiaries to compete in any line of business or
with any person, or that involve any restriction on the geographic area in
which, or method by which, TRFC (including any successor thereof) or any of its
Subsidiaries may carry on its business (other than as may be required by law or
any regulatory agency).
(ii) Neither TRFC nor any of its Subsidiaries is in default
under or in violation of any provision of any note, bond, indenture, mortgage,
deed of trust, loan agreement, lease or other agreement to which it is a party
or by which it is bound or to which any of its respective properties or assets
is subject.
(iii) TRFC and each of its Subsidiaries owns or possesses
valid and binding licenses and other rights to use without payment all patents,
copyrights, trade secrets, trade names, servicemarks and trademarks used in its
businesses, and neither TRFC nor any of its Subsidiaries has received any notice
of conflict with respect thereto that asserts the right of others. Each of TRFC
and its Subsidiaries has performed all the obligations required to be performed
by it and are not in default under any contact, agreement, arrangement or
commitment relating to any of the foregoing.
(l) Labor Matters. Neither TRFC nor any of its Subsidiaries is or
-------------
has ever been a party to, or is or has ever been bound by, any collective
bargaining agreement, contract or other agreement or understanding with a labor
union or labor organization with respect to its employees, nor is TRFC or any of
its Subsidiaries the subject of any proceeding asserting that it has committed
an unfair labor practice or seeking to compel it or any such Subsidiary to
bargain with any labor organization as to wages and conditions of employment,
nor is there any strike, other labor dispute or organizational effort involving
TRFC or any of its Subsidiaries pending or, to TRFC's knowledge, threatened.
TRFC and its Subsidiaries are in compliance with applicable laws regarding
employment of employees and retention of independent contractors and are in
compliance with applicable employment tax laws.
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<PAGE>
(m) Employee Benefit Plans. TRFC's Disclosure Letter contains a
----------------------
complete and accurate list of all pension, retirement, stock option, stock
purchase, stock ownership, savings, stock appreciation right, profit sharing,
deferred compensation, consulting, bonus, group insurance, severance and other
benefit plans, contracts, agreements and arrangements, including, but not
limited to, "employee benefit plans," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), incentive and
welfare policies, contracts, plans and arrangements and all trust agreements
related thereto with respect to any present or former directors, officers or
other employees of TRFC or any of its Subsidiaries (hereinafter collectively
referred to as the "TRFC Employee Plans"). All of the TRFC Employee Plans
comply in all material respects with all applicable requirements of ERISA, the
Code and other applicable laws; there has occurred no "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code) which is likely
to result in the imposition of any penalties or taxes under Section 502(i) of
ERISA or Section 4975 of the Code upon TRFC or any of its Subsidiaries. No
liability to the Pension Benefit Guaranty Corporation ("PBGC") has been or is
expected by TRFC or any of its Subsidiaries to be incurred with respect to any
TRFC Employee Plan which is subject to Title IV of ERISA (" TRFC Pension Plan"),
or with respect to any "single-employer plan" (as defined in Section 4001(a) of
ERISA) currently or formerly maintained by TRFC or any entity which is
considered one employer with TRFC under Section 4001(b)(1) of ERISA or Section
414 of the Code (an "ERISA Affiliate"). No TRFC Pension Plan had an "accumulated
funding deficiency" (as defined in Section 302 of ERISA), whether or not waived,
as of the last day of the end of the most recent plan year ending prior to the
date hereof; the fair market value of the assets of each TRFC Pension Plan
exceeds the present value of the "benefit liabilities" (as defined in Section
4001(a)(16) of ERISA) under such TRFC Pension Plan as of the end of the most
recent plan year with respect to the respective TRFC Pension Plan ending prior
to the date hereof, calculated on the basis of the actuarial assumptions used in
the most recent actuarial valuation for such TRFC Pension Plan as of the date
hereof; and no notice of a "reportable event" (as defined in Section 4043 of
ERISA) for which the 30-day reporting requirement has not been waived has been
required to be filed for any TRFC Pension Plan within the 12-month period ending
on the date hereof. Neither TRFC nor any of its Subsidiaries has provided, or
is required to provide, security to any TRFC Pension Plan or to any single-
employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
Neither TRFC, its Subsidiaries, nor any ERISA Affiliate has contributed to any
"multiemployer plan," as defined in Section 3(37) of ERISA, on or after
September 26, 1980. Each TRFC Employee Plan that is an "employee pension benefit
plan" (as defined in Section 3(2) of ERISA) and which is intended to be
qualified under Section 401(a) of the Code (a "TRFC Qualified Plan") has
received a favorable determination letter from the Internal Revenue Service
("IRS"), and TRFC and its Subsidiaries are not aware of any circumstances likely
to result in revocation of any such favorable determination letter. Each TRFC
Qualified Plan that is an "employee stock ownership plan" (as defined in Section
4975(e)(7) of the Code) has satisfied all of the applicable requirements of
Sections 409 and 4975(e)(7) of the Code and the regulations thereunder in all
respects and any assets of any such TRFC Qualified Plan that are not allocated
to participants' individual accounts are pledged as security for, and may be
applied to satisfy, any securities acquisition indebtedness. There is no
pending or, to TRFC's knowledge, threatened litigation, administrative action or
proceeding relating to any TRFC Employee Plan. There has been no announcement
or commitment by TRFC or any of its Subsidiaries to create an additional TRFC
Employee Plan, or to amend any TRFC Employee Plan, except for amendments
required by applicable law which do not materially increase the cost
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<PAGE>
of such TRFC Employee Plan; and, except as specifically identified in TRFC's
Disclosure Letter, TRFC and its Subsidiaries do not have any obligations for
post-retirement or post-employment benefits under any TRFC Employee Plan that
cannot be amended or terminated upon 60 days' notice or less without incurring
any liability thereunder, except for coverage required by Part 6 of Title I of
ERISA or Section 4980B of the Code, or similar state laws, the cost of which is
borne by the insured individuals. With respect to TRFC or any of its
Subsidiaries, for the Employee Plans listed in TRFC's Disclosure Letter, the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not result in any payment or series of
payments by TRFC or any of its Subsidiaries to any person which is an "excess
parachute payment" (as defined in Section 280G of the Code), increase or secure
(by way of a trust or other vehicle) any benefits payable under any TRFC
Employee Plan or accelerate the time of payment or vesting of any such benefit.
With respect to each TRFC Employee Plan, TRFC has supplied to RBI a true and
correct copy of (A) the annual report on the applicable form of the Form 5500
series filed with the IRS for the most recent three plan years, if required to
be filed, (B) such TRFC Employee Plan, including amendments thereto, (C) each
trust agreement, insurance contract or other funding arrangement relating to
such TRFC Employee Plan, including amendments thereto, (D) the most recent
summary plan description and summary of material modifications thereto for such
TRFC Employee Plan, if the TRFC Employee Plan is subject to Title I of ERISA,
(E) the most recent actuarial report or valuation if such TRFC Employee Plan is
a TRFC Pension Plan and any subsequent changes to the actuarial assumptions
contained therein and (F) the most recent determination letter issued by the IRS
if such Employee Plan is a Qualified Plan.
(n) Termination Benefits. TRFC's Disclosure Letter contains a
--------------------
schedule identifying the types of benefits and other payments due under the
Specified Compensation and Benefit Programs (as defined herein) for each Named
Individual (as defined herein), and TRFC has previously provided to RBI a
reasonable, good faith estimate of the amounts payable and certain of the
benefits to be provided pursuant to the Employment Agreements between TRFC and
each of Messrs. Tsimbinos, Nutt, Henchy, Kuhn, Kramer and DeRusso and pursuant
to the Employment Agreements between TRFC Bank and each of Messrs. Tsimbinos,
Nutt, Henchy, Kuhn, Kramer and DeRusso. For purposes hereof, "Specified
Compensation and Benefit Programs" shall include all employment agreements,
change in control agreements, severance or special termination agreements,
severance plans, pension, retirement or deferred compensation plans for non-
employee directors, supplemental executive retirement programs, tax
indemnification agreements, outplacement programs, cash bonus programs, deferred
compensation plans, all performance and/or bonus plans, stock appreciation
right, phantom stock or stock unit plan, and health, life, disability and other
insurance or welfare plans, but shall not include any tax-qualified pension,
profit-sharing or employee stock ownership plan or any TRFC Option Plans or TRFC
RRP. For purposes hereof, "Named Individual" shall include each non-employee
director of TRFC or any of its Subsidiaries and each executive officer of TRFC.
(o) Title to Assets. TRFC and each of its Subsidiaries has good and
---------------
marketable title to its properties and assets (including any intellectual
property asset such as any trademark, service mark, tradename or copyright) and
property acquired in a judicial foreclosure proceeding or by way of a deed in
lieu of foreclosure or similar transfer, other than property as to which it is
lessee, in which case the related lease is valid and in full force and effect.
Each lease pursuant to which
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TRFC or any of its Subsidiaries is lessor is valid and in full force and effect
and no lessee under any such lease is in default or in violation of any
provisions of any such lease. All material tangible properties of TRFC and each
of its Subsidiaries are in a good state of maintenance and repair, conform with
all applicable ordinances, regulations and zoning laws and are considered by
TRFC to be adequate for the current business of TRFC and its Subsidiaries.
(p) Compliance with Laws. TRFC and each of its Subsidiaries has all
--------------------
permits, licenses, certificates of authority, orders and approvals of, and has
made all filings, applications and registrations with, all federal, state, local
and foreign governmental or regulatory bodies that are required in order to
permit it to carry on its business as it is presently conducted; all such
permits, licenses, certificates of authority, orders and approvals are in full
force and effect, and, to the best knowledge of TRFC, no suspension or
cancellation of any of them is threatened. Since the date of its incorporation,
the corporate affairs of TRFC have not been conducted in violation of any law,
ordinance, regulation, order, writ, rule, decree or approval of any federal or
state regulatory authority having jurisdiction over insured depositary
institutions or their holding companies, the SEC, the NASD or any other SRO
(each, a "Governmental Entity"). The businesses of TRFC and its Subsidiaries
are not being conducted in violation of any law, ordinance, regulation, order,
writ, rule, decree or condition to approval of any Governmental Entity.
(q) Fees. Other than financial advisory services performed for TRFC
----
by Goldman, Sachs & Co. pursuant to an agreement dated May 22, 1998, a true and
complete copy of which has been previously delivered to RBI, neither TRFC nor
any of its Subsidiaries, nor any of their respective officers, directors,
employees or agents, has employed any broker or finder or incurred any liability
for any financial advisory fees, brokerage fees, commissions or finder's fees,
and no broker or finder has acted directly or indirectly for TRFC or any of its
Subsidiaries in connection with this Agreement or the transactions contemplated
hereby.
(r) Environmental Matters. (i) With respect to TRFC and each of
---------------------
its Subsidiaries:
(A) Each of TRFC and its Subsidiaries, the Participation
Facilities (as defined herein), and, to TRFC's knowledge, the Loan
Properties (as defined herein) are, and have been, in substantial
compliance with, and are not liable under, all Environmental Laws (as
defined herein);
(B) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to
TRFC's knowledge, threatened, before any court, governmental agency or
board or other forum against it or any of its Subsidiaries or any
Participation Facility (x) for alleged noncompliance (including by any
predecessor) with, or liability under, any Environmental Law or (y)
relating to the presence of or release (as defined herein) into the
environment of any Hazardous Material (as defined herein), whether or not
occurring at or on a site owned, leased or operated by it or any of its
Subsidiaries or any Participation Facility;
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<PAGE>
(C) To TRFC's knowledge, there is no suit, claim, action,
demand, executive or administrative order, directive, investigation or
proceeding pending or threatened before any court, governmental agency or
board or other forum relating to or against any Loan Property (or TRFC or
any of its Subsidiaries in respect of such Loan Property) (x) relating to
alleged noncompliance (including by any predecessor) with, or liability
under, any Environmental Law or (y) relating to the presence of or release
into the environment of any Hazardous Material, whether or not occurring at
or on a site owned, leased or operated by a Loan Property;
(D) To TRFC's knowledge, the properties currently owned or
operated by TRFC or any of its Subsidiaries (including, without limitation,
soil, groundwater or surface water on, under or adjacent to the properties,
and buildings thereon) are not contaminated with and do not otherwise
contain any Hazardous Material other than as permitted under applicable
Environmental Law;
(E) Neither TRFC nor any of its Subsidiaries has received any
notice, demand letter, executive or administrative order, directive or
request for information from any federal, state, local or foreign
governmental entity or any third party indicating that it may be in
violation of, or liable under, any Environmental Law;
(F) To TRFC's knowledge, there are no underground storage tanks
on, in or under any properties owned or operated by TRFC or any of its
Subsidiaries or any Participation Facility, and no underground storage
tanks have been closed or removed from any properties owned or operated by
TRFC or any of its Subsidiaries or any Participation Facility; and
(G) To TRFC's knowledge, during the period of (l) TRFC's or any
of its Subsidiaries' ownership or operation of any of their respective
current properties or (m) TRFC's or any of its Subsidiaries' participation
in the management of any Participation Facility, there has been no
contamination by or release of Hazardous Materials in, on, under or
affecting such properties. To TRFC's knowledge, prior to the period of (x)
TRFC's or any of its Subsidiaries' ownership or operation of any of their
respective current properties or (y) TRFC's or any of its Subsidiaries'
participation in the management of any Participation Facility, there was no
contamination by or release of Hazardous Material in, on, under or
affecting such properties.
(ii) The following definitions apply for purposes of this
Section 2.3(r) and Section 2.4(r): (w) "Loan Property" means any property in
which the applicable party (or a Subsidiary of it) holds a security interest,
and, where required by the context, includes the owner or operator of such
property, but only with respect to such property; (x) "Participation Facility"
means any facility in which the applicable party (or a Subsidiary of it)
participates in the management (including all property held as trustee or in any
other fiduciary capacity) and, where required by the context, includes the owner
or operator of such property, but only with respect to such property;
(y) "Environmental Law" means (i) any federal, state or local law, statute,
ordinance, rule, regulation,
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code, license, permit, authorization, approval, consent, legal doctrine, order,
directive, executive or administrative order, judgment, decree, injunction,
legal requirement or agreement with any governmental entity relating to (A) the
protection, preservation or restoration of the environment (which includes,
without limitation, air, water vapor, surface water, groundwater, drinking water
supply, structures, soil, surface land, subsurface land, plant and animal life
or any other natural resource), or to human health or safety as it relates to
Hazardous Materials, or (B) the exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of, Hazardous Materials, in each case as amended
and as now in effect. The term Environmental Law includes all federal, state and
local laws, rules, regulations or requirements relating to the protection of the
environment or health and safety, including, without limitation, (i) the Federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Superfund Amendments and Reauthorization Act of 1986, the Federal Water
Pollution Control Act of 1972, the Federal Clean Air Act, the Federal Clean
Water Act, the Federal Resource Conservation and Recovery Act of 1976
(including, but not limited to, the Hazardous and Solid Waste Amendments thereto
and Subtitle I relating to underground storage tanks), the Federal Solid Waste
Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide,
Fungicide and Rodenticide Act, the Federal Occupational Safety and Health Act of
1970 as it relates to Hazardous Materials, the Federal Hazardous Substances
Transportation Act, the Emergency Planning and Community Right-To-Know Act, the
Safe Drinking Water Act, the Endangered Species Act, the National Environmental
Policy Act, the Rivers and Harbors Appropriation Act or any so-called
"Superfund" or "Superlien" law, each as amended and as now or hereafter in
effect, and (ii) any common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as negligence, nuisance,
trespass and strict liability) that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the presence of or
exposure to any Hazardous Material; and (z) "Hazardous Material" means any
substance (whether solid, liquid or gas) which is or could be detrimental to
human health or safety or to the environment, currently or hereafter listed,
defined, designated or classified as hazardous, toxic, radioactive or dangerous,
or otherwise regulated, under any Environmental Law, whether by type or by
quantity, including any substance containing any such substance as a component.
Hazardous Material includes, without limitation, any toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous waste, special
waste, industrial substance, oil or petroleum, or any derivative or by-product
thereof, radon, radioactive material, asbestos, asbestos-containing material,
urea formaldehyde foam insulation, lead and polychlorinated biphenyl.
(s) Loan Portfolio; Allowance; Asset Quality. (i) With respect to
----------------------------------------
each loan owned by TRFC or its Subsidiaries in whole or in part (each, a
"Loan"), to the best knowledge of TRFC:
(A) the note and the related security documents are each legal,
valid and binding obligations of the maker or obligor thereof, enforceable
against such maker or obligor in accordance with their terms;
(B) neither TRFC nor any of its Subsidiaries, nor any prior
holder of a Loan, has modified the note or any of the related security
documents in any material
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<PAGE>
respect or satisfied, canceled or subordinated the note or any of the
related security documents except as otherwise disclosed by documents in
the applicable Loan file;
(C) TRFC or a Subsidiary is the sole holder of legal and
beneficial title to each Loan (or TRFC's applicable participation interest,
as applicable), except as otherwise referenced on the books and records of
TRFC;
(D) the note and the related security documents, copies of which
are included in the Loan files, are true and correct copies of the
documents they purport to be and have not been suspended, amended,
modified, canceled or otherwise changed except as otherwise disclosed by
documents in the applicable Loan file;
(E) there is no pending or threatened condemnation proceeding or
similar proceeding affecting the property that serves as security for a
Loan, except as otherwise referenced on the books and records of TRFC;
(F) there is no litigation or proceeding pending or threatened
relating to the property that serves as security for a Loan that would have
a Material Adverse Effect upon the related Loan; and
(G) with respect to a Loan held in the form of a participation,
the participation documentation is legal, valid, binding and enforceable.
(ii) The allowance for possible losses reflected in TRFC's
audited statement of condition at December 31, 1997 was, and the allowance for
possible losses shown on the balance sheets in TRFC's Reports for periods ending
after December 31, 1997 will be, adequate, as of the dates thereof, under
generally accepted accounting principles applicable to stock savings banks
consistently applied.
(iii) TRFC's Disclosure Letter sets forth by category the
amounts of all loans, leases, advances, credit enhancements, other extensions of
credit, commitments and interest-bearing assets of TRFC and its Subsidiaries
that have been classified (whether regulatory or internal) as "Special Mention,"
"Substandard," "Doubtful," "Loss" or words of similar import, and TRFC and its
Subsidiaries shall promptly after the end of any month inform RBI of any such
classification arrived at any time after the date hereof. The other real estate
owned ("OREO") included in any non-performing assets of TRFC or any of its
Subsidiaries is carried net of reserves at the lower of cost or fair value, less
estimated selling costs, based on current independent appraisals or evaluations
or current management appraisals or evaluations; provided, however, that
"current" shall mean within the past 12 months.
(t) Deposits. None of the deposits of TRFC or any of its
--------
Subsidiaries is a "brokered" deposit.
(u) Accounting Matters. Neither TRFC nor any of its Subsidiaries or,
------------------
to the best of its knowledge, any of its other affiliates has, through the date
hereof, taken or agreed to take any
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<PAGE>
action that would prevent RBI from accounting for the business combination to be
effected by the Merger as a pooling-of-interests, and TRFC has no knowledge of
any fact or circumstance that would prevent such accounting treatment.
(v) Antitakeover Provisions Inapplicable. TRFC and its Subsidiaries
------------------------------------
have taken all actions required to exempt TRFC, the Agreement, the Merger and
the TRFC Option Agreement from any provisions of an antitakeover nature in their
organization certificates and bylaws, the TRFC Rights Agreement, and the
provisions of any federal or state "antitakeover," "fair price," "moratorium,"
"control share acquisition" or similar laws or regulations.
(w) Material Interests of Certain Persons. Except as disclosed in
-------------------------------------
TRFC's Proxy Statement for its 1998 Annual Meeting of Stockholders, no officer
or director of TRFC, or any "associate" (as such term is defined in Rule 12b-2
under the Securities Exchange Act of 1934, as amended ("Exchange Act")) of any
such officer or director, has any material interest in any material contract or
property (real or personal), tangible or intangible, used in or pertaining to
the business of TRFC or any of its Subsidiaries. No such interest has been
created or modified since the date of the last regulatory examination of TRFC or
its Subsidiaries.
(x) Insurance. TRFC and its Subsidiaries are presently insured, and
---------
since December 31, 1995, have been insured, for reasonable amounts with
financially sound and reputable insurance companies, against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured. All of the insurance policies and bonds
maintained by TRFC and its Subsidiaries are in full force and effect, TRFC and
its Subsidiaries are not in default thereunder and all material claims
thereunder have been filed in due and timely fashion.
(y) Investment Securities; Borrowings. (i) Except for investments in
---------------------------------
Federal Home Loan Bank ("FHLB") Stock and pledges to secure FHLB borrowings and
reverse repurchase agreements entered into in arms-length transactions pursuant
to normal commercial terms and conditions and entered into in the ordinary
course of business and restrictions that exist for securities to be classified
as "held to maturity," none of the investments reflected in the consolidated
balance sheet of TRFC included in TRFC's Report on Form 10-K for the year ended
December 31, 1997, and none of the investment securities held by it or any of
its Subsidiaries since December 31, 1997, is subject to any restriction
(contractual or statutory) that would materially impair the ability of the
entity holding such investment freely to dispose of such investment at any time.
(ii) Neither TRFC nor any Subsidiary is a party to or has agreed
to enter into an exchange-traded or over-the-counter equity, interest rate,
foreign exchange or other swap, forward, future, option, cap, floor or collar or
any other contract that is a derivative contract (including various combinations
thereof) (each, a "Derivatives Contract") or owns securities that (A) are
referred to generically as "structured notes," "high risk mortgage derivatives,"
"capped floating rate notes" or "capped floating rate mortgage derivatives" or
(B) are likely to have changes in value as a result of interest or exchange rate
changes that significantly exceed normal changes in value attributable to
interest or exchange rate changes.
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<PAGE>
(iii) Set forth in TRFC's Disclosure Letter is a true and
complete list of TRFC's borrowed funds (excluding deposit accounts) as of the
date hereof.
(z) Indemnification. Except as provided in TRFC's Disclosure Letter,
---------------
TRFC's Employment Agreements, TRFC Bank's Indemnification Agreements or the
organization certificate or bylaws of TRFC and its Subsidiaries, neither TRFC
nor any Subsidiary is a party to any indemnification agreement with any of its
present or future directors, officers, employees, agents or other persons who
serve or served in any other capacity with any other enterprise at the request
of TRFC (a "Covered Person"), and, except as set forth in TRFC's Disclosure
Letter, to the best knowledge of TRFC, there are no claims for which any Covered
Person would be entitled to indemnification under the organization certificate
or bylaws of TRFC or any of its Subsidiaries, under any applicable law or
regulation or under any indemnification agreement.
(aa) Books and Records. The books and records of TRFC and its
-----------------
Subsidiaries on a consolidated basis have been, and are being, maintained in
accordance with applicable legal and accounting requirements and reflect in all
material respects the substance of events and transactions that should be
included therein.
(bb) Corporate Documents. TRFC has delivered to RBI true and
-------------------
complete copies of its certificate of incorporation and bylaws and of TRFC
Bank's and RAFC's organization certificate and bylaws. The minute books of TRFC,
TRFC Bank and RAFC constitute a complete and correct record of all actions taken
by their respective boards of directors (and each committee thereof) and their
stockholders. The minute books of each of TRFC's Subsidiaries constitutes a
complete and correct record of all actions taken by the respective boards of
directors (and each committee thereof) and the stockholders of each such
Subsidiary.
(cc) Liquidation Account. The Merger will not result in any payment
-------------------
or distribution payable out of the liquidation account of TRFC Bank established
in connection with TRFC Bank's conversion from mutual to stock form.
(dd) Tax Treatment of the Merger. As of the date hereof, TRFC has no
---------------------------
knowledge of any fact or circumstance that would prevent the transactions
contemplated by this Agreement from qualifying as a tax-free reorganization
under the Code.
(ee) Beneficial Ownership of RBI Common Stock. As of the date
----------------------------------------
hereof, TRFC beneficially owns 65,000 shares of RBI Common Stock and, other than
as contemplated by the RBI Option Agreement, does not have any option, warrant
or right of any kind to acquire the beneficial ownership of any shares of RBI
Common Stock.
(ff) Year 2000 Matters. TRFC has completed a review of its computer
-----------------
systems to identify systems that could be affected by the "Year 2000" issue and
reasonably believes it has identified all such Year 2000 problems. TRFC's
management has developed and commenced implementation of a plan to respond to
this issue which is designed to complete any required initial changes to its
computer systems and to complete testing of those changes by December 31, 1998.
Between the date of this Agreement and the Effective Time, TRFC shall use
commercially
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<PAGE>
practicable efforts to implement and/or continue to undertake such plan. Year
2000 issues have not had, and are not reasonably expected to have, a Material
Adverse Effect on TRFC or its Subsidiaries.
(gg) Registration Statement. The information regarding TRFC to be
----------------------
supplied by TRFC for inclusion in (i) the Registration Statement on Form S-4
and/or such other form(s) as may be appropriate to be filed under the Securities
Act of 1933, as amended ("Securities Act"), with the SEC by RBI for the purpose
of, among other things, registering the RBI Common Stock to be issued to TRFC's
stockholders in the Merger (as amended or supplemented from time to time, the
"Registration Statement"), or (ii) the proxy statement to be filed with the SEC
by TRFC and RBI under the Exchange Act and distributed in connection with TRFC's
meeting of stockholders to vote upon this Agreement (as amended or supplemented
from time to time, the "Proxy Statement," and together with the prospectus
included in the Registration Statement, as amended or supplemented from time to
time, the "Proxy Statement-Prospectus") will not, at the time such Registration
Statement becomes effective, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
Section 2.4 Representations and Warranties of RBI. Subject to
-------------------------------------
Sections 2.1 and 2.2, RBI represents and warrants to TRFC that, except as
specifically disclosed in RBI's Disclosure Letter:
(a) Organization. (i) RBI is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Delaware and is
duly registered as a savings and loan holding company under HOLA. RBI Bank is a
stock savings bank duly organized, validly existing and in good standing under
the laws of the State of New York. Each Subsidiary of RBI Bank is a
corporation, limited liability company or partnership duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization. Each of RBI and its Subsidiaries has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted.
(ii) RBI and each of its Subsidiaries has the requisite
corporate power and authority, and is duly qualified and is in good standing, to
do business in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary.
(iii) RBI's Disclosure Letter sets forth all of RBI's
Subsidiaries and all entities (whether corporations, partnerships or similar
organizations), including the corresponding percentage ownership, in which RBI
owns, directly or indirectly, 5% or more of the ownership interests as of the
date of this Agreement and indicates for each Subsidiary, as of the such date,
its jurisdiction of organization and the jurisdiction(s) wherein it is qualified
to do business. All such Subsidiaries and ownership interests are in compliance
with all applicable laws, rules and regulations relating to direct investments
in equity ownership interests. RBI owns, either directly or indirectly, all of
the outstanding capital stock of each of its Subsidiaries, except for certain
preferred shares issued by Roslyn Capital Corp. No Subsidiary of RBI other than
RBI Bank is an "insured depository institution" as defined in the FDIA and the
applicable regulations thereunder. All of the shares of
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<PAGE>
capital stock of each of the Subsidiaries held by RBI or any of its other
Subsidiaries are fully paid, nonassessable and not subject to any preemptive
rights and are owned by RBI or a Subsidiary of RBI free and clear of any claims,
liens, encumbrances or restrictions (other than those imposed by applicable
federal and state securities laws) and there are no agreements or understandings
with respect to the voting or disposition of any such shares.
(iv) The deposits of RBI Bank are insured by the BIF of the FDIC
to the extent provided in the FDIA.
(b) Capital Structure. (i) The authorized capital stock of RBI
-----------------
consists of 100,000,000 shares of RBI Common Stock and 10,000,000 shares of
preferred stock, par value $.01 per share ("RBI Preferred Stock"). As of the
date of this Agreement, (A) 41,399,959 shares of RBI Common Stock were issued
and outstanding, (B) no shares of RBI Preferred Stock were outstanding, (C) no
shares of RBI Common Stock were reserved for issuance, except that 4,364,246
shares of RBI Common Stock were reserved for issuance pursuant to the RBI 1997
Stock-Based Incentive Plan and (D) 2,242,500 shares of RBI Common Stock were
held by RBI in its treasury or by its Subsidiaries. The authorized capital
stock of RBI Bank consists of 100,000,000 shares of common stock, par value $.01
per share, and 10,000,000 shares of preferred stock, par value $.01 per share.
As of the date of this Agreement, 1,000 shares of such common stock were
outstanding, no shares of such preferred stock were outstanding and all
outstanding shares of such common stock were, and as of the Effective Time will
be, owned by RBI. All outstanding shares of capital stock of RBI and RBI Bank
are validly issued, fully paid and nonassessable and not subject to any
preemptive rights and, with respect to shares held by RBI in its treasury or by
its Subsidiaries, are free and clear of all liens, encumbrances or restrictions
(other than those imposed by applicable federal or state securities laws) and
there are no agreements or understandings with respect to the voting or
disposition of any such shares.
(ii) No Voting Debt of RBI is issued or outstanding.
(iii) As of the date of this Agreement, except for this
Agreement, the RBI Option Agreement and as set forth in RBI's Disclosure Letter,
neither RBI nor any of its Subsidiaries has or is bound by any outstanding
options, warrants, calls, rights, convertible securities, commitments or
agreements of any character obligating RBI or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, any additional shares
of capital stock of RBI or any of its Subsidiaries or obligating RBI or any of
its Subsidiaries to grant, extend or enter into any such option, warrant, call,
right, convertible security, commitment or agreement. As of the date hereof,
there are no outstanding contractual obligations of RBI or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of RBI or any of its Subsidiaries.
(c) Authority. Each of RBI and RBI Bank has the requisite corporate
---------
power and authority to enter into this Agreement and the Plan of Bank Merger,
respectively and, subject to approval of this Agreement and the amendment to
RBI's Certificate of Incorporation to increase the number of authorized shares
of RBI Common Stock (the "Amendment") by the requisite vote of RBI's
stockholders and receipt of all required regulatory or governmental approvals,
as contemplated by Section 5.1(b) of this Agreement, to consummate the
transactions contemplated hereby. The
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<PAGE>
execution and delivery of this Agreement, and, subject to the approval of this
Agreement by RBI's stockholders, the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
actions on the part of RBI and RBI Bank. This Agreement has been duly executed
and delivered by RBI and constitutes a valid and binding obligation of RBI,
enforceable in accordance with its terms subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity, whether
applied in a court of law or a court of equity.
(d) Stockholder Approvals; Fairness Opinion. The affirmative vote
---------------------------------------
of a majority of the outstanding shares of the RBI Common Stock entitled to vote
on this Agreement and the Amendment are the only votes of the stockholders of
RBI required for approval of this Agreement and the consummation of the Merger
and the related transactions contemplated hereby. RBI has received the opinion
of Sandler O'Neill & Partners, L.P. to the effect that, as of the date hereof,
the Merger Consideration is fair, from a financial point of view, to RBI's
stockholders.
(e) No Violations. The execution, delivery and performance of this
-------------
Agreement by RBI do not, and the consummation of the transactions contemplated
hereby will not, constitute (i) assuming receipt of all Requisite Regulatory
Approvals and requisite stockholder approvals, a breach or violation of, or a
default under, any law, rule or regulation or any judgment, decree, order,
governmental permit or license, or agreement, indenture or instrument of RBI or
any of its Subsidiaries, or to which RBI or any of its Subsidiaries (or any of
their respective properties) is subject, (ii) a breach or violation of, or a
default under, the certificate of incorporation or bylaws of RBI or the similar
organizational documents of any of its Subsidiaries or (iii) a breach or
violation of, or a default under (or an event which, with due notice or lapse of
time or both, would constitute a default under), or result in the termination
of, accelerate the performance required by, or result in the creation of any
lien, pledge, security interest, charge or other encumbrance upon any of the
properties or assets of RBI or any of its Subsidiaries, under, any of the terms,
conditions or provisions of any note, bond, indenture, deed of trust, loan
agreement or other agreement, instrument or obligation to which RBI or any of
its Subsidiaries is a party, or to which any of their respective properties or
assets may be subject; and the consummation of the transactions (including the
Bank Merger) contemplated hereby (exclusive of the effect of any changes
effected pursuant to Section 1.7) will not require any approval, consent or
waiver under any such law, rule, regulation, judgment, decree, order,
governmental permit or license or the approval, consent or waiver of any other
party to any such agreement, indenture or instrument, other than (x) the
approval of the holders of a majority of the outstanding shares of RBI Common
Stock, (y) the Requisite Regulatory Approvals and (z) such approvals, consents
or waivers as are required under the federal and state securities or "blue sky"
laws in connection with the transactions contemplated by this Agreement. As of
the date hereof, the executive officers of RBI know of no reason pertaining to
RBI why any of the approvals referred to in this Section 2.4(e) should not be
obtained without the imposition of any material condition or restriction
described in the proviso to Section 5.1(b).
(f) Reports. (i) As of their respective dates, none of the reports
-------
or other statements filed by RBI or RBI Bank on or subsequent to December 31,
1997, with the SEC (collectively, "RBI's Reports"), contained, or will contain,
any untrue statement of a material fact or omitted or will omit to state a
material fact required to be stated therein or necessary to make the
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<PAGE>
statements made therein, in light of the circumstances under which they were
made, not misleading. Each of the financial statements of RBI included in RBI's
Report complied as to form, as of their respective dates of filing with the SEC,
in all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto and have been
prepared in accordance with GAAP (except as may be indicated in the notes
thereto or, in the case of unaudited financial statements, as permitted by Form
10-Q of the SEC). Each of the consolidated statements of condition contained or
incorporated by reference in RBI's Reports (including in each case any related
notes and schedules) fairly presented, or will fairly present, as the case may
be, (A) the financial position of the entity or entities to which it relates as
of its date and each of the statements of operations, consolidated statements of
cash flows and consolidated statements of changes in stockholders' equity,
contained or incorporated by reference in RBI's Reports (including in each case
any related notes and schedules), and (B) the results of operations,
stockholders' equity and cash flows, as the case may be, of the entity or
entities to which it relates for the periods set forth therein (subject, in the
case of unaudited interim statements, to normal year-end audit adjustments that
are not material in amount or effect), in each case in accordance with GAAP,
except as may be noted therein. RBI has made available to TRFC a true and
complete copy of each of RBI's Report filed with the SEC since December 31,
1997.
(ii) RBI and each of its Subsidiaries have each timely filed all
material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file since
December 31, 1993 with (A) the OTS, (B) the SEC, (C) the NASD and (D) any other
SRO, and have paid all fees and assessments due and payable in connection
therewith.
(g) Absence of Certain Changes or Events. Except as disclosed in
------------------------------------
RBI's Reports filed on or prior to the date of this Agreement, since December
31, 1997, (i) RBI and its Subsidiaries have not incurred any liability, except
in the ordinary course of their business consistent with past practice, (ii) RBI
and its Subsidiaries have conducted their respective businesses only in the
ordinary and usual course of such businesses and (iii) there has not been any
Material Adverse Effect with respect to RBI.
(h) Absence of Claims. Except as set forth in RBI's Disclosure
-----------------
Letter, no litigation, proceeding, controversy, claim or action before any court
or governmental agency is pending against RBI or any of its Subsidiaries, and,
to the best of RBI's knowledge, no such litigation, proceeding, controversy,
claim or action has been threatened.
(i) Absence of Regulatory Actions. Neither RBI nor any of its
-----------------------------
Subsidiaries is a party to any cease and desist order, written agreement or
memorandum of understanding with, or any commitment letter or similar written
undertaking to, or is subject to any action, proceeding, order or directive by,
or is a recipient of any extraordinary supervisory letter from any Government
Regulator, or has adopted any board resolutions at the request of any Government
Regulator, nor has it been advised by any Governmental Regulator that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such action, proceeding, order, directive, written
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter, board resolutions or similar written undertaking.
-25-
<PAGE>
(j) Taxes. All federal, state, local and foreign tax returns
-----
required to be filed by or on behalf of RBI or any of its Subsidiaries have been
timely filed or requests for extensions have been timely filed and any such
extension shall have been granted and not have expired, and all such filed
returns are complete and accurate in all material respects. All taxes shown on
such returns, all taxes required to be shown on returns for which extensions
have been granted and all other taxes required to be paid by RBI or any of its
Subsidiaries have been paid in full or adequate provision has been made for any
such taxes on RBI's balance sheet (in accordance with GAAP). For purposes of
this Section 2.4(j), the term "taxes" shall include all income, franchise, gross
receipts, real and personal property, real property transfer and gains, wage and
employment taxes. As of the date of this Agreement, there is no audit
examination, deficiency assessment, tax investigation or refund litigation with
respect to any taxes of RBI or any of its Subsidiaries, and no claim has been
made by any authority in a jurisdiction where RBI or any of its Subsidiaries do
not file tax returns that RBI or any such Subsidiary is subject to taxation in
that jurisdiction. All taxes, interest, additions and penalties due with respect
to completed and settled examinations or concluded litigation relating to RBI or
any of its Subsidiaries have been paid in full or adequate provision has been
made for any such taxes on RBI's balance sheet (in accordance with GAAP). Except
as set forth in RBI's Disclosure Letter, RBI and its Subsidiaries have not
executed an extension or waiver of any statute of limitations on the assessment
or collection of any material tax due that is currently in effect. RBI and each
of its Subsidiaries has withheld and paid all taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party, and RBI and
each of its Subsidiaries has timely complied with all applicable information
reporting requirements under Part III, Subchapter A of Chapter 61 of the Code
and similar applicable state and local information reporting requirements.
Neither RBI nor any of its Subsidiaries (i) has made an election under Section
341(f) of the Code, (ii) has issued or assumed any obligation under Section 279
of the Code, any high yield discount obligation as described in Section 163(i)
of the Code or any registration-required obligation within the meaning of
Section 163(f)(2) of the Code that is not in registered form or (iii) is or has
been a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code.
(k) Agreements. (i) Except for the RBI Option Agreement and
----------
arrangements made in the ordinary course of business, and except as set forth in
RBI's Disclosure Letter, RBI and its Subsidiaries are not bound by any material
contract (as defined in Item 601(b)(10) of Regulation S-K) to be performed after
the date hereof that has not been filed with or incorporated by reference in
RBI's Report. Except as disclosed in RBI's Report filed prior to the date of
this Agreement, neither RBI nor any of its Subsidiaries is a party to an oral or
written (A) consulting agreement (other than data processing, software
programming and licensing contracts entered into in the ordinary course of
business) not terminable on 60 days' or less notice, (B) agreement with any
executive officer or other key employee of RBI or any of its Subsidiaries the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction involving RBI or any of its Subsidiaries of
the nature contemplated by this Agreement or the RBI Option Agreement, (C)
agreement with respect to any employee or director of RBI or any of its
Subsidiaries providing any term of employment or compensation guarantee
extending for a period longer than 60 days or for the payment of in excess of
$50,000 per annum, (D) agreement or plan, including any stock option plan,
phantom stock or stock appreciation rights
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<PAGE>
plan, restricted stock plan or stock purchase plan, any of the benefits of which
will be increased, or the vesting or payment of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement or the RBI Option Agreement or the value of any of the benefits of
which will be calculated on the basis of any of the transactions contemplated by
this Agreement or the RBI Option Agreement or (E) agreement containing covenants
that limit the ability of RBI or any of its Subsidiaries to compete in any line
of business or with any person, or that involve any restriction on the
geographic area in which, or method by which, RBI (including any successor
thereof) or any of its Subsidiaries may carry on its business (other than as may
be required by law or any regulatory agency).
(ii) Except as set forth in RBI's Disclosure Letter, neither RBI
nor any of its Subsidiaries is in default under or in violation of any provision
of any note, bond, indenture, mortgage, deed of trust, loan agreement, lease or
other agreement to which it is a party or by which it is bound or to which any
of its respective properties or assets is subject.
(iii) RBI and each of its Subsidiaries owns or possesses
valid and binding licenses and other rights to use without payment all patents,
copyrights, trade secrets, trade names, servicemarks and trademarks used in its
businesses, and neither RBI nor any of its Subsidiaries has received any notice
of conflict with respect thereto that asserts the right of others. Each of RBI
and its Subsidiaries has performed all the obligations required to be performed
by it and are not in default under any contact, agreement, arrangement or
commitment relating to any of the foregoing.
(l) RBI Common Stock. The shares of RBI Common Stock to be issued
----------------
pursuant to this Agreement, when issued in accordance with the terms of this
Agreement, will be duly authorized, validly issued, fully paid and non-
assessable and subject to no preemptive rights.
(m) Labor Matters. Neither RBI nor any of its Subsidiaries is or has
-------------
ever been a party to, or is or has ever been bound by, any collective bargaining
agreement, contract or other agreement or understanding with a labor union or
labor organization with respect to its employees, nor is RBI or any of its
Subsidiaries the subject of any proceeding asserting that it has committed an
unfair labor practice or seeking to compel RBI or any of its Subsidiaries to
bargain with any labor organization as to wages and conditions of employment,
nor is there any strike, other labor dispute or organizational effort involving
RBI or any of its Subsidiaries pending or, to RBI's knowledge, threatened. RBI
and its Subsidiaries are in compliance with applicable laws regarding employment
of employees and retention of independent contractors and are in compliance with
applicable employment tax laws.
(n) Employee Benefit Plans. RBI's Disclosure Letter contains a
----------------------
complete and accurate list of all pension, retirement, stock option, stock
purchase, stock ownership, savings, stock appreciation right, profit sharing,
deferred compensation, consulting, bonus, group insurance, severance and other
benefit plans, contracts, agreements and arrangements, including, but not
limited to, "employee benefit plans," as defined in Section 3(3) of ERISA,
incentive and welfare policies, contracts, plans and arrangements and all trust
agreements related thereto with respect to any present or former directors,
officers or other employees of RBI or any of its Subsidiaries (hereinafter
referred to collectively as the "RBI Employee Plans"). All of the RBI Employee
Plans comply in all material
-27-
<PAGE>
respects with all applicable requirements of ERISA, the Code and other
applicable laws; there has occurred no "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Code) which is likely to result in
the imposition of any penalties or taxes under Section 502(i) of ERISA or
Section 4975 of the Code upon RBI or any of its Subsidiaries. No liability to
the PBGC has been or is expected by RBI or any of its Subsidiaries to be
incurred with respect to any RBI Employee Plan which is subject to Title IV of
ERISA ("RBI Pension Plan"), or with respect to any "single-employer plan" (as
defined in Section 4001(a) of ERISA) currently or formerly maintained by RBI or
any entity which is considered one employer with RBI under Section 4001(b)(1) of
ERISA or Section 414 of the Code (an "ERISA Affiliate"). No RBI Pension Plan had
an "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, as of the last day of the end of the most recent plan
year ending prior to the date hereof; the fair market value of the assets of
each RBI Pension Plan exceeds the present value of the "benefit liabilities" (as
defined in Section 4001(a)(16) of ERISA) under such RBI Pension Plan as of the
end of the most recent plan year with respect to the respective RBI Pension Plan
ending prior to the date hereof, calculated on the basis of the actuarial
assumptions used in the most recent actuarial valuation for such RBI Pension
Plan as of the date hereof; and no notice of a "reportable event" (as defined in
Section 4043 of ERISA) for which the 30-day reporting requirement has not been
waived has been required to be filed for any RBI Pension Plan within the 12-
month period ending on the date hereof. Neither RBI nor any of its Subsidiaries
has provided, or is required to provide, security to any RBI Pension Plan or to
any single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of
the Code. Neither RBI, its Subsidiaries, nor any ERISA Affiliate has contributed
to any "multiemployer plan," as defined in Section 3(37) of ERISA, on or after
September 26, 1980. Each RBI Employee Plan that is an "employee pension benefit
plan" (as defined in Section 3(2) of ERISA) and which is intended to be
qualified under Section 401(a) of the Code (an "RBI Qualified Plan") has
received a favorable determination letter from the IRS, and RBI and its
Subsidiaries are not aware of any circumstances likely to result in revocation
of any such favorable determination letter. Each RBI Qualified Plan that is an
"employee stock ownership plan" (as defined in Section 4975(e)(7) of the Code)
has satisfied all of the applicable requirements of Sections 409 and 4975(e)(7)
of the Code and the regulations thereunder in all respects and any assets of any
such RBI Qualified Plan that are not allocated to participants' individual
accounts are pledged as security for, and may be applied to satisfy, any
securities acquisition indebtedness. There is no pending or, to RBI's knowledge,
threatened litigation, administrative action or proceeding relating to any RBI
Employee Plan. Except as relating to the employee(s) of The Roslyn Savings
Foundation, there has been no announcement or commitment by RBI or any of its
Subsidiaries to create an additional RBI Employee Plan, or to amend any RBI
Employee Plan, except for amendments required by applicable law which do not
materially increase the cost of such RBI Employee Plan; and, except as
specifically identified in RBI's Disclosure Letter, RBI and its Subsidiaries do
not have any obligations for post-retirement or post-employment benefits under
any RBI Employee Plan that cannot be amended or terminated upon 60 days' notice
or less without incurring any liability thereunder, except for coverage required
by Part 6 of Title I of ERISA or Section 4980B of the Code, or similar state
laws, the cost of which is borne by the insured individuals. With respect to RBI
or any of its Subsidiaries, for the Employee Plans listed in RBI's Disclosure
Letter, the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not result in any payment or series of
payments by RBI or any of its Subsidiaries to any person which is an "excess
parachute payment" (as defined in Section 280G of the Code), increase or secure
(by way of a trust
-28-
<PAGE>
or other vehicle) any benefits payable under any RBI Employee Plan or accelerate
the time of payment or vesting of any such benefit. With respect to each RBI
Employee Plan, RBI has supplied to TRFC a true and correct copy of (A) the
annual report on the applicable form of the Form 5500 series filed with the IRS
for the most recent three plan years, if required to be filed, (B) such RBI
Employee Plan, including amendments thereto, (C) each trust agreement, insurance
contract or other funding arrangement relating to such RBI Employee Plan,
including amendments thereto, (D) the most recent summary plan description and
summary of material modifications thereto for such RBI Employee Plan, if the RBI
Employee Plan is subject to Title I of ERISA, (E) the most recent actuarial
report or valuation if such RBI Employee Plan is an RBI Pension Plan and any
subsequent changes to the actuarial assumptions contained therein and (F) the
most recent determination letter issued by the IRS if such RBI Employee Plan is
a Qualified Plan.
(o) Title to Assets. RBI and each of its Subsidiaries has good and
---------------
marketable title to its properties and assets (including any intellectual
property asset such as any trademark, service mark, tradename or copyright) and
property acquired in a judicial foreclosure proceeding or by way of a deed in
lieu of foreclosure or similar transfer, other than property as to which it is
lessee, in which case the related lease is valid and in full force and effect.
Each lease pursuant to which RBI or any of its Subsidiaries is lessor is valid
and in full force and effect and no lessee under any such lease is in default or
in violation of any provisions of any such lease. All material tangible
properties of RBI and each of its Subsidiaries are in a good state of
maintenance and repair, conform with all applicable ordinances, regulations and
zoning laws and are considered by RBI to be adequate for the current business of
RBI and its Subsidiaries.
(p) Compliance with Laws. RBI and each of its Subsidiaries has all
--------------------
permits, licenses, certificates of authority, orders and approvals of, and has
made all filings, applications and registrations with, all federal, state, local
and foreign governmental or regulatory bodies that are required in order to
permit it to carry on its business as it is presently conducted; all such
permits, licenses, certificates of authority, orders and approvals are in full
force and effect, and, to the best knowledge of RBI, no suspension or
cancellation of any of them is threatened. Since the date of its incorporation,
the corporate affairs of RBI have not been conducted in violation of any law,
ordinance, regulation, order, writ, rule, decree or approval of any Governmental
Entity. The businesses of RBI and its Subsidiaries are not being conducted in
violation of any law, ordinance, regulation, order, writ, rule, decree or
condition to approval of any Governmental Entity.
(q) Fees. Other than the financial advisory services performed for
----
RBI by Sandler O'Neill & Partners, L.P. pursuant to an agreement dated May 22,
1998, a true and complete copy of which has been previously delivered to TRFC,
neither RBI nor any of its Subsidiaries, nor any of their respective officers,
directors, employees or agents, has employed any broker or finder or incurred
any liability for any financial advisory fees, brokerage fees, commissions or
finder's fees, and no broker or finder has acted directly or indirectly for RBI
or any of its Subsidiaries in connection with this Agreement or the transactions
contemplated hereby.
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<PAGE>
(r) Environmental Matters. With respect to RBI and each of its
---------------------
Subsidiaries:
(i) Each of RBI and its Subsidiaries, the Participation
Facilities and, to RBI's knowledge, the Loan Properties are, and have been,
in substantial compliance with, and are not liable under, all Environmental
Laws;
(ii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to
RBI's knowledge, threatened, before any court, governmental agency or board
or other forum against it or any of its Subsidiaries or any Participation
Facility (x) for alleged noncompliance (including by any predecessor) with,
or liability under, any Environmental Law or (y) relating to the presence
of or release into the environment of any Hazardous Material, whether or
not occurring at or on a site owned, leased or operated by it or any of its
Subsidiaries or any Participation Facility;
(iii) To RBI's knowledge, there is no suit, claim, action,
demand, executive or administrative order, directive, investigation or
proceeding pending or threatened before any court, governmental agency or
board or other forum relating to or against any Loan Property (or RBI or
any of its Subsidiaries in respect of such Loan Property) (x) relating to
alleged noncompliance (including by any predecessor) with, or liability
under, any Environmental Law or (y) relating to the presence of or release
into the environment of any Hazardous Material, whether or not occurring at
or on a site owned, leased or operated by a Loan Property;
(iv) To RBI's knowledge, the properties currently owned or
operated by RBI or any of its Subsidiaries (including, without limitation,
soil, groundwater or surface water on, under or adjacent to the properties,
and buildings thereon) are not contaminated with and do not otherwise
contain any Hazardous Material other than as permitted under applicable
Environmental Law;
(v) Neither RBI nor any of its Subsidiaries has received any
notice, demand letter, executive or administrative order, directive or
request for information from any federal, state, local or foreign
governmental entity or any third party indicating that it may be in
violation of, or liable under, any Environmental Law;
(vi) To RBI's knowledge, there are no underground storage tanks
on, in or under any properties owned or operated by RBI or any of its
Subsidiaries or any Participation Facility, and no underground storage
tanks have been closed or removed from any properties owned or operated by
RBI or any of its Subsidiaries or any Participation Facility; and
(vii) To RBI's knowledge, during the period of (l) RBI's or any
of its Subsidiaries' ownership or operation of any of their respective
current properties or (m) RBI's or any of its Subsidiaries' participation
in the management of any Participation Facility, there has been
contamination by or release of Hazardous Materials in, on, under or
affecting such
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<PAGE>
properties. To RBI's knowledge, prior to the period of (x) RBI's or any of
its Subsidiaries' ownership or operation of any of their respective current
properties or (y) RBI's or any of its Subsidiaries' participation in the
management of any Participation Facility, there was no contamination by or
release of Hazardous Material in, on, under or affecting such property,
Participation Facility or Loan Property.
(s) Loan Portfolio; Allowance; Asset Quality. (i) With respect to
----------------------------------------
each Loan owned by RBI or its Subsidiaries in whole or in part, to the best
knowledge of RBI:
(A) the note and the related security documents are each legal,
valid and binding obligations of the maker or obligor thereof, enforceable
against such maker or obligor in accordance with their terms;
(B) neither RBI nor any of its Subsidiaries nor any prior holder
of a Loan has modified the note or any of the related security documents in
any material respect or satisfied, canceled or subordinated the note or any
of the related security documents except as otherwise disclosed by
documents in the applicable Loan file;
(C) RBI or a Subsidiary is the sole holder of legal and
beneficial title to each Loan (or RBI Bank's applicable participation
interest, as applicable); except as otherwise referenced on the books and
records of RBI;
(D) the note and the related security documents, copies of which
are included in the Loan files, are true and correct copies of the
documents they purport to be and have not been suspended, amended,
modified, canceled or otherwise changed except as otherwise disclosed by
documents in the applicable Loan file;
(E) there is no pending or threatened condemnation proceeding or
similar proceeding affecting the property that serves as security for a
Loan; except as otherwise referenced on the books and records of RBI;
(F) there is no litigation or proceeding pending or threatened,
relating to the property that serves as security for a Loan that would have
a Material Adverse Effect upon the related Loan; and
(G) with respect to a Loan held in the form of a participation,
the participation documentation is legal, valid, binding and enforceable.
(ii) The allowance for possible losses reflected in RBI's
audited statement of condition at December 31, 1997 was, and the allowance for
possible losses shown on the balance sheets in RBI's Reports for periods ending
after December 31, 1997 will be, adequate, as of the dates thereof, under
generally accepted accounting principles applicable to stock savings banks
consistently applied.
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<PAGE>
(iii) RBI's Disclosure Letter sets forth by category the
amounts of all loans, leases, advances, credit enhancements, other extensions of
credit, commitments and interest-bearing assets of RBI and its Subsidiaries that
have been classified (whether regulatory or internal) as "Other Loans Specially
Mentioned," "Special Mention," "Substandard," "Doubtful," "Loss," "Classified,"
"Criticized," "Credit Risk Assets," "Concerned Loans" (in the latter two cases,
to the extent available) or words of similar import, and RBI and its
Subsidiaries shall promptly after the end of any month inform TRFC of any such
classification arrived at any time after the date hereof. The OREO included in
any non-performing assets of RBI or any of its Subsidiaries is carried net of
reserves at the lower of cost or fair value, less estimated selling costs, based
on current independent appraisals or evaluations or current management
appraisals or evaluations; provided, however, that "current" shall mean within
the past 12 months.
(t) Accounting Matters. Neither RBI nor any of its Subsidiaries or,
------------------
to the best of its knowledge, any of its other affiliates has, through the date
hereof, taken or agreed to take any action that would prevent RBI from
accounting for the business combination to be effected by the Merger as a
pooling-of-interests, and RBI has no knowledge of any fact or circumstance that
would prevent such accounting treatment.
(u) Investment Securities; Borrowing. (i) Except for investments in
--------------------------------
FHLB Stock and pledges to secure FHLB borrowings and reverse repurchase
agreements entered into in arms-length transactions pursuant to normal
commercial terms and conditions and entered into in the ordinary course of
business and restrictions that exist for securities to be classified as "held to
maturity," none of the investments reflected in the consolidated balance sheet
of RBI included in RBI's Report on Form 10-K for the year ended December 31,
1997, and none of the investment securities held by it or any of its
Subsidiaries since December 31, 1997 is subject to any restriction (contractual
or statutory) that would materially impair the ability of the entity holding
such investment freely to dispose of such investment at any time.
(ii) Except as set forth in RBI's Disclosure Letter, neither RBI
nor any Subsidiary is a party to or has agreed to enter into any Derivatives
Contract or owns securities that (A) are referred to generically as "structured
notes," "high risk mortgage derivatives," "capped floating rate notes" or
"capped floating rate mortgage derivatives" or (B) are likely to have changes in
value as a result of interest or exchange rate changes that significantly exceed
normal changes in value attributable to interest or exchange rate changes,
except for those Derivatives Contracts and other instruments legally purchased
or entered into in the ordinary course of business, consistent with safe and
sound banking practices and regulatory guidance, and listed (as of the date
hereof) in RBI's Disclosure Letter or disclosed in RBI's Report filed on or
prior to the date hereof.
(iii) Set forth in RBI's Disclosure Letter is a true and
complete list of RBI's borrowed funds (excluding deposit accounts) as of the
date hereof.
(v) Registration Statement. The information regarding RBI to be
----------------------
supplied by RBI for inclusion in (i) the Registration Statement or (ii) the
Proxy Statement will not, at the time such Registration Statement becomes
effective, contain any untrue statement of a material fact or omit
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<PAGE>
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading.
(w) Books and Records. The books and records of RBI and its
-----------------
Subsidiaries on a consolidated basis have been, and are being, maintained in
accordance with applicable legal and accounting requirements and reflect in all
material respects the substance of events and transactions that should be
included therein.
(x) Corporate Documents. RBI has delivered to TRFC true and complete
-------------------
copies of its organization certificate and bylaws and of RBI Bank's organization
certificate and bylaws. The minute books of RBI and RBI Bank constitute a
complete and correct record of all actions taken by their respective boards of
directors (and each committee thereof) and their stockholders. The minute books
of each of RBI's Subsidiaries constitutes a complete and correct record of all
actions taken by the respective boards of directors (and each committee thereof)
and the stockholders of each such Subsidiary.
(y) Beneficial Ownership of TRFC Common Stock. As of the date
-----------------------------------------
hereof, RBI beneficially owns 502.510 shares of TRFC Common Stock and, other
than as contemplated by the TRFC Option Agreement, does not have any option,
warrant or right of any kind to acquire the beneficial ownership of any shares
of TRFC Common Stock.
(z) Tax Treatment of the Merger. As of the date hereof, RBI has no
---------------------------
knowledge of any fact or circumstance that would prevent the transactions
contemplated by this Agreement from qualifying as a tax-free reorganization
under the Code.
(aa) Year 2000 Matters. RBI has completed a review of its computer
-----------------
systems to identify systems that could be affected by the "Year 2000" issue and
reasonably believes it has identified all Year 2000 problems. RBI's management
has developed and commenced implementation of a plan which is designed to
complete any required initial changes to its computer systems and to complete
testing of those changes by December 31, 1998. Between the date of this
Agreement and the Effective Time, RBI shall use commercially practicable efforts
to implement and/or continue to undertake such plan. Year 2000 issues have not
had, and are not reasonably expected to have, a Material Adverse Effect on RBI
or its Subsidiaries.
ARTICLE III
CONDUCT PENDING THE MERGER
--------------------------
Section 3.1 Conduct of TRFC's Business Prior to the Effective Time.
------------------------------------------------------
Except as expressly provided in this Agreement, during the period from the date
of this Agreement to the Effective Time, TRFC shall, and shall cause its
Subsidiaries to, use commercially reasonable efforts to (i) conduct its business
in the regular, ordinary and usual course consistent with past practice;
(ii) maintain and preserve intact its business organization, properties, leases,
employees and advantageous business relationships and retain the services of its
officers and key employees,
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(iii) take no action which would adversely affect or delay the ability of TRFC
or RBI to perform their respective covenants and agreements on a timely basis
under this Agreement, (iv) take no action which would adversely affect or delay
the ability of TRFC, TRFC Bank, RBI or RBI Bank to obtain any necessary
approvals, consents or waivers of any governmental authority required for the
transactions contemplated hereby or which would reasonably be expected to result
in any such approvals, consents or waivers containing any material condition or
restriction, and (v) take no action that results in or is reasonably likely to
have a Material Adverse Effect on TRFC or TRFC Bank.
Section 3.2 Forbearance by TRFC. Without limiting the covenants
-------------------
set forth in Section 3.1 hereof, except as otherwise provided in this Agreement
and except to the extent required by law or regulation or any Government
Regulators, during the period from the date of this Agreement to the Effective
Time, TRFC shall not, and shall not permit any of its Subsidiaries to, without
the prior consent of RBI, which consent shall not be unreasonably withheld:
(a) change any provisions of the certificate of incorporation or
bylaws of TRFC or the similar governing documents of its Subsidiaries;
(b) issue any shares of capital stock or change the terms of any
outstanding stock options or warrants or issue, grant or sell any option,
warrant, call, commitment, stock appreciation right, right to purchase or
agreement of any character relating to the authorized or issued capital stock of
TRFC except pursuant to (i) the exercise of stock options or warrants
outstanding as of the date of this Agreement in the ordinary course of business
and consistent with past practice, (ii) the TRFC Option Agreement or (iii) the
terms of the TRFC Rights Agreement; adjust, split, combine or reclassify any
capital stock; make, declare or pay any dividend (except for TRFC's regular
quarterly dividend, which shall not be increased by more than $.02 per share
from the prior quarter's dividend) or make any other distribution on, or
directly or indirectly redeem, purchase or otherwise acquire, any shares of its
capital stock or any securities or obligations convertible into or exchangeable
for any shares of its capital stock. As promptly as practicable following the
date of this Agreement, the Board of Directors of TRFC shall cause its regular
quarterly dividend record dates and payment dates to be the same as RBI's
regular quarterly dividend record dates and payments dates for RBI Common Stock,
and TRFC shall not thereafter change its regular dividend payment dates and
record dates. Nothing contained in this Section 3.2(b) or in any other Section
of this Agreement shall be construed to permit holders of shares of TRFC Common
Stock to receive two dividends from either TRFC or from TRFC and RBI in any one
quarter or to deny or prohibit such holders from receiving one dividend from
either TRFC or RBI in any quarter. Subject to applicable regulatory
restrictions, if any, TRFC Bank may pay a cash dividend that is, in the
aggregate, sufficient to fund any dividend by TRFC permitted hereunder;
(c) other than in the ordinary course of business consistent with
past practice and pursuant to policies currently in effect, sell, transfer,
mortgage, encumber or otherwise dispose of any of its material properties,
leases or assets to any individual, corporation or other entity other than a
direct or indirect wholly owned Subsidiary of TRFC or cancel, release or assign
any indebtedness of any such individual, corporation or other entity, except
pursuant to contracts or agreements in force at the date of this Agreement and
which have been disclosed to RBI;
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(d) except to the extent required by law or as disclosed in Section
3.2(d) of TRFC's Disclosure Letter or specifically provided for elsewhere
herein, increase the compensation or fringe benefits of any of its employees or
directors, other than general increases in compensation for employees other than
executive officers in the ordinary course of business consistent with past
practice and, upon consultation with RBI, the payment of reasonable "stay in
place" pay where necessary or appropriate to retain key employees, or pay any
pension or retirement allowance not required by any existing plan or agreement
to any such employees or directors, or become a party to, amend or commit itself
to fund or otherwise establish any trust or account related to any TRFC Employee
Plan (as defined in Section 2.3(m)) with or for the benefit of any employee or
director; voluntarily accelerate the vesting of any stock options or other
compensation or benefit;
(e) except as contemplated by Section 4.2, change its method of
accounting as in effect at December 31, 1997, except as required by changes in
GAAP as concurred in by TRFC's independent auditors;
(f) settle any claim, action or proceeding involving any liability of
TRFC or any of its Subsidiaries for money damages in excess of $500,000 or
impose material restrictions upon the operations of TRFC or any of its
Subsidiaries;
(g) acquire or agree to acquire, by merging or consolidating with, or
by purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets, in each case which are material,
individually or in the aggregate, to TRFC, except in satisfaction of debts
previously contracted;
(h) except pursuant to commitments existing at the date hereof which
have previously been disclosed to RBI, make any real estate loans secured by
undeveloped land or real estate located outside the State of New York (other
than real estate secured by one-to-four family homes) or make any construction
loan (other than construction loans secured by one-to-four family homes) outside
the State of New York;
(i) establish or commit to the establishment of any new branch or
other office facilities other than those for which all regulatory approvals have
been obtained;
(j) take any action that would prevent or impede the Merger from
qualifying (A) for pooling-of-interests accounting treatment, or (B) as a
reorganization under the Code; provided, however, that nothing contained herein
shall limit the ability of TRFC to exercise its rights under the RBI Option
Agreement; and
(k) agree or commit to take any action that is prohibited by this
Section 3.2.
In the event that RBI does not respond in writing to TRFC within three
business days of receipt by RBI of a written request for TRFC to engage in any
of the actions for which RBI's prior written consent is required pursuant to
this Section 3.2, RBI shall be deemed to have consented to
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such action. Any request by TRFC or response thereto by RBI shall be made in
accordance with the notice provisions of Section 8.7, shall note that it is a
request pursuant to this Section 3.2 and shall state that a failure to respond
within three business days shall constitute consent.
Section 3.3 Conduct of RBI's Business Prior to the Effective Time.
-----------------------------------------------------
Except as expressly provided in this Agreement, during the period from the date
of this Agreement to the Effective Time, RBI shall, and shall cause its
Subsidiaries to, use commercially reasonable efforts to (i) conduct its
business in the regular, ordinary and usual course consistent with past
practice; (ii) maintain and preserve intact its business organization,
properties, leases, employees and advantageous business relationships and retain
the services of its officers and key employees, (iii) take no action which would
materially adversely affect or delay the ability of TRFC or RBI to perform their
respective covenants and agreements on a timely basis under this Agreement, (iv)
take no action which would adversely affect or delay the ability of TRFC, RBI,
TRFC Bank or RBI Bank to obtain any necessary approvals, consents or waivers of
any governmental authority required for the transactions contemplated hereby or
which would reasonably be expected to result in any such approvals, consents or
waivers containing any material condition or restriction, and (v) take no action
that results in or is reasonably likely to have a Material Adverse Effect on
RBI.
Section 3.4 Forbearance by RBI. Without limiting the covenants set
------------------
forth in Section 3.3 hereof, during the period from the date of this Agreement
to the Effective Time, RBI shall not, and shall not permit any of its
Subsidiaries to, without the prior written consent of TRFC, which consent shall
not be unreasonably withheld, to:
(a) change any provisions of the certificate of incorporation or
bylaws of RBI or the similar governing documents of its Subsidiaries, other than
to increase the authorized capital stock of RBI;
(b) issue any shares of capital stock or change the terms of any
outstanding stock options or warrants or issue, grant or sell any option,
warrant, call, commitment, stock appreciation right, right to purchase or
agreement of any character relating to the authorized or issued capital stock of
RBI except pursuant to (i) the exercise of stock options or warrants as set
forth in RBI's Disclosure Letter or consistent with Section 1.4 of this
Agreement; (ii) the RBI Option Agreement; (iii) pursuant to the terms of any RBI
Rights Agreement; adjust, split, combine or reclassify any capital stock; or
make, declare or pay any dividend (except for RBI's regular quarterly dividend,
which shall not be increased by more than $.03 per share from the prior
quarter's dividend) or make any other distribution on, or directly or indirectly
redeem, purchase or otherwise acquire, any shares of its capital stock or any
securities or obligations convertible into or exchangeable for any shares of its
capital stock;
(c) make any acquisition or take any other action that individually
or in the aggregate could materially adversely affect the ability of RBI to
consummate the transactions contemplated hereby, or enter into any agreement
providing for, or otherwise participate in, any merger, consolidation or other
transaction in which RBI or any surviving corporation may be required not to
consummate the Merger or any of the other transactions contemplated hereby in
accordance with the terms of this Agreement;
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(d) take any action that would prevent or impede the Merger from
qualifying (A) for pooling-of-interests accounting treatment or (B) as a
reorganization under the Code; provided, however, that nothing contained herein
shall limit the ability of RBI to exercise its rights under the TRFC Option
Agreement;
(e) enter into an agreement with respect to an Acquisition
Transaction with a third party; provided, that the foregoing shall not prevent
RBI or any of its Subsidiaries from acquiring any other assets or businesses or
from discontinuing or disposing of any of its assets or business if such action
is, in the reasonable judgment of RBI desirable in the conduct of the business
of RBI and its Subsidiaries and would not, in the reasonable judgment of RBI
likely delay the Effective Time to a date subsequent to the date set forth in
Section 7.1(e) of this Agreement or adversely affect the Merger Consideration to
be received pursuant to this Agreement. For purposes of this Agreement,
"Acquisition Transaction" shall mean (x) a merger or consolidation, or any
similar transaction, involving RBI, (y) a purchase, lease or other acquisition
of all or substantially all of the assets of RBI or (z) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of securities representing 10% or more of the voting power of RBI;
provided, that the term "Acquisition Transaction" does not include any internal
merger or consolidation involving only RBI and its Subsidiaries; or
(f) agree or commit to take any action that is prohibited by this
Section 3.4.
ARTICLE IV
COVENANTS
---------
Section 4.1 Acquisition Proposals. TRFC agrees that neither it nor
---------------------
any of its Subsidiaries, nor any of the respective officers and directors of
TRFC or any of its Subsidiaries, shall, and TRFC shall direct and use its best
efforts to cause its employees, agents and representatives (including, without
limitation, any investment banker, attorney or accountant retained by it or any
of its Subsidiaries) not to, (a) initiate, solicit or encourage, directly or
indirectly, any inquiries or the making of any proposal or offer (including,
without limitation, any proposal or offer to TRFC's stockholders) with respect
to a merger, consolidation or similar transaction involving, or any purchase of
all or any significant portion of the assets or any equity securities of, TRFC
or any of its material Subsidiaries (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal") or (b) engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal; provided, however, that nothing contained in this Agreement shall
prevent TRFC or its Board of Directors from (i) complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal or
(ii) (A) providing information in response to a request therefor by a person who
has made an unsolicited bona fide written Acquisition Proposal (an "Unsolicited
Acquisition Proposal") if the Board of Directors receives from the person so
requesting such information an executed confidentiality agreement on terms
substantially equivalent to those contained in the
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confidentiality agreement between RBI and TRFC, dated as of May 13, 1998; or (B)
engaging in any negotiations or discussions with any person who has made an
Unsolicited Acquisition Proposal, if and only to the extent that, in each such
case referred to in clause (A) or (B) above, (x) TRFC has given prior written
notice to RBI, (y) the Board of Directors of TRFC, after consultation with and
based upon a written opinion of outside legal counsel, in good faith deems such
action to be legally necessary for the proper discharge of its fiduciary duties
under applicable law and (z) the Board of Directors of TRFC, after consultation
with its financial advisor, determines in good faith that such Acquisition
Proposal, if accepted, is reasonably likely to be consummated, taking into
account all legal, financial and regulatory aspects of the proposal and the
person making the proposal and would, if consummated, result in a more favorable
transaction than the transaction contemplated by this Agreement, taking into
account the long-term prospects and interests of TRFC and its stockholders. TRFC
will notify RBI immediately orally (within one day) and in writing (within three
days) if any such Acquisition Proposals are received by, any such information is
requested from or any such negotiations or discussions are sought to be
initiated or continued with TRFC after the date hereof, the identity of the
person making such inquiry, proposal or offer and the substance thereof and will
keep RBI informed of any developments with respect thereto immediately upon the
occurrence thereof. In the event of an Unsolicited Acquisition Proposal, RBI
shall have the right to agree to increase the Merger Consideration (the "Revised
Terms") and if RBI does so, TRFC may continue to engage in the activities
enumerated in clauses (b)(ii)(A) or (B) above only if TRFC's Board of Directors
takes the actions specified in clauses (y) and (z) above, after consideration of
the Revised Terms. Subject to the foregoing, TRFC will immediately cease and
cause to be terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing. TRFC will
take the necessary steps to inform the appropriate individuals or entities
referred to in the first sentence hereof of the obligations undertaken in this
Section 4.1. TRFC will promptly request each person (other than RBI) that has
executed a confidentiality agreement prior to the date hereof in connection with
its consideration of a business combination with TRFC or any of its Subsidiaries
to return or destroy all confidential information previously furnished to such
person by or on behalf of TRFC or any of its Subsidiaries.
Section 4.2 Certain Policies of TRFC.
------------------------
(a) At the request of RBI, TRFC shall cause TRFC Bank to modify and
change its loan, litigation and real estate valuation policies and practices
(including loan classifications and levels of reserves) and investment and
asset/liability management policies and practices after the date on which all
Requisite Regulatory Approvals and stockholder approvals are received, and after
receipt of written confirmation from RBI that it is not aware of any fact or
circumstance that would prevent completion of the Merger, and prior to the
Effective Time so as to be consistent on a mutually satisfactory basis with
those of RBI Bank; provided, however, that TRFC shall not be required to take
such action more than 30 days prior to the Effective Date; and provided,
further, that such policies and procedures are not prohibited by GAAP or any
applicable laws and regulations.
(b) TRFC's representations, warranties and covenants contained in
this Agreement shall not be deemed to be untrue or breached in any respect for
any purpose as a consequence of any modifications or changes undertaken solely
on account of this Section 4.2. RBI agrees to hold harmless, indemnify and
defend TRFC and its Subsidiaries, and their respective directors, officers
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and employees, for any loss, claim, liability or other damage caused by or
resulting from compliance with this Section 4.2.
Section 4.3 Access and Information.
----------------------
(a) Upon reasonable notice, TRFC and RBI shall (and shall cause their
respective Subsidiaries to) afford to the other and their respective
representatives (including, without limitation, directors, officers and
employees of such party and its affiliates and counsel, accountants and other
professionals retained by such party) such reasonable access during normal
business hours throughout the period prior to the Effective Time to the books,
records (including, without limitation, tax returns and work papers of
independent auditors), properties, personnel and to such other information as
either party may reasonably request; provided, however, that no investigation
pursuant to this Section 4.3 shall affect or be deemed to modify any
representation or warranty made herein. In furtherance, and not in limitation
of the foregoing, TRFC shall make available to RBI all information necessary or
appropriate for the preparation and filing of all real property and real estate
transfer tax returns and reports required by reason of the Merger or the Bank
Merger. RBI and TRFC will not, and will cause their respective representatives
not to, use any information obtained pursuant to this Section 4.3 for any
purpose unrelated to the consummation of the transactions contemplated by this
Agreement. Subject to the requirements of applicable law, each of RBI and TRFC
will keep confidential, and will cause their respective representatives to keep
confidential, all information and documents obtained pursuant to this Section
4.3 unless such information (i) was already known to such party or an affiliate
of such party, other than pursuant to a confidentiality agreement or other
confidential relationship, (ii) becomes available to such party or an affiliate
of such party from other sources not known by such party to be bound by a
confidentiality agreement or other obligation of secrecy, (iii) is disclosed
with the prior written approval of the other party or (iv) is or becomes readily
ascertainable from published information or trade sources. In the event that
this Agreement is terminated or the transactions contemplated by this Agreement
shall otherwise fail to be consummated, each party shall promptly cause all
copies of documents or extracts thereof containing information and data as to
another party hereto (or an affiliate of any party hereto) to be returned to the
party that furnished the same.
(b) During the period of time beginning on the day application
materials for the Bank Merger are initially filed with the OTS, the FDIC and the
Banking Department and continuing to the Effective Time, including weekends and
holidays, TRFC shall cause TRFC Bank to provide RBI, RBI Bank and their
authorized agents and representatives full access to TRFC Bank's offices after
normal business hours for the purpose of installing necessary wiring and
equipment to be utilized by RBI Bank after the Effective Time; provided, that:
(i) reasonable advance notice of each entry shall be given to
TRFC Bank and TRFC Bank approves of each entry, which approval shall not be
unreasonably withheld;
(ii) TRFC Bank shall have the right to have its employees or
contractors present to inspect the work being done;
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(iii) to the extent practicable, such work shall be done in a
manner that will not interfere with TRFC Bank's business conducted at any
affected branch offices;
(iv) all such work shall be done in compliance with all
applicable laws and government regulations, and RBI Bank shall be
responsible for the procurement, at RBI Bank's expense, of all required
governmental or administrative permits and approvals;
(v) RBI Bank shall maintain appropriate insurance satisfactory
to TRFC Bank in connection with any work done by RBI Bank's agents and
representatives pursuant to this Section 4.3;
(vi) RBI Bank shall reimburse TRFC Bank for any material out-of-
pocket costs or expenses incurred by TRFC Bank in connection with this
undertaking; and
(vii) in the event this Agreement is terminated in accordance
with Article VI hereof, RBI Bank, within a reasonable time period and at
its sole cost and expense, will restore such offices to their condition
prior to the commencement of any such installation.
Section 4.4 Certain Filings, Consents and Arrangements. RBI and
------------------------------------------
TRFC shall (a) as soon as practicable (and in any event within 45 days after the
date hereof) make, or cause to be made, any filings and applications and provide
any notices required to be filed or provided in order to obtain all approvals,
consents and waivers of governmental authorities and third parties necessary or
appropriate for the consummation of the transactions contemplated hereby or by
the TRFC Option Agreement or the RBI Option Agreement; (b) cooperate with one
another in promptly (i) determining what filings and notices are required to be
made or approvals, consents or waivers are required to be obtained under any
relevant federal or state law or regulation or under any relevant agreement or
other document and (ii) making any such filings and notices, furnishing
information required in connection therewith and seeking timely to obtain any
such approvals, consents or waivers; and (c) deliver to the other copies of the
publicly available portions of all such filings, notices and applications
promptly after they are filed.
Section 4.5 Antitakeover Provisions.
-----------------------
(a) TRFC and its Subsidiaries shall take all steps required by any
relevant federal or state law or regulation or under any relevant agreement or
other document (i) to exempt or continue to exempt RBI, the Agreement, the
Merger, the Bank Merger and the TRFC Option Agreement from any provisions of an
antitakeover nature in TRFC's or its Subsidiaries' organization certificates and
bylaws and the provisions of any federal or state antitakeover laws and the TRFC
Rights Agreements, and (ii) upon the request of RBI, to assist in any challenge
to the applicability to the Agreement, the Merger, the Bank Merger or the TRFC
Option Agreement of any federal or state antitakeover laws.
(b) Except for amendments approved in writing by RBI, TRFC will not,
following the date hereof, amend or waive any of the provisions of, or take any
action to exempt any other persons from the provisions of, the TRFC Rights
Agreement in any manner that adversely affects
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RBI or RBI Bank with respect to the consummation of the Merger or, except as
provided in the next sentence, redeem the rights thereunder; provided, however,
that nothing herein shall prevent TRFC from amending or otherwise taking any
action under the TRFC Rights Agreement to delay the Distribution Date (as
permitted under Section 3(b)(ii) of the TRFC Rights Agreement). If requested by
RBI, but not otherwise, TRFC will redeem all outstanding TRFC Preferred Share
Purchase Rights at a redemption price of not more than $.01 per TRFC Preferred
Share Purchase Right effective immediately prior to the Effective Time.
Section 4.6 Additional Agreements. Subject to the terms and
---------------------
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take promptly, or cause to be taken promptly, all actions
and to do promptly, or cause to be done promptly, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including the Bank
Merger, as expeditiously as possible, including using efforts to obtain all
necessary actions or non-actions, extensions, waivers, consents and approvals
from all applicable governmental entities, effecting all necessary
registrations, applications and filings (including, without limitation, filings
under any applicable state securities laws) and obtaining any required
contractual consents and regulatory approvals.
Section 4.7 Publicity. The initial press release announcing this
---------
Agreement shall be a joint press release and thereafter TRFC and RBI shall
consult with each other in issuing any press releases or otherwise making public
statements with respect to the Merger and any other transaction contemplated
hereby and in making any filings with any governmental entity or with any
national securities exchange with respect thereto.
Section 4.8 Stockholders Meetings. TRFC and RBI each shall take
---------------------
all action necessary, in accordance with applicable law and its respective
corporate documents, to convene a meeting of its respective stockholders (each,
a "Stockholder Meeting") as promptly as practicable for the purpose of
considering and voting on approval and adoption of the transactions provided for
in this Agreement. Except to the extent legally required for the discharge by
the Board of Directors of its fiduciary duties as advised by such Board's
counsel, the Board of Directors of each of TRFC and RBI shall (a) recommend at
its Stockholder Meeting that the stockholders vote in favor of and approve the
transactions provided for in this Agreement and (b) use its best efforts to
solicit such approvals. TRFC and RBI, in consultation with the other, shall
each employ professional proxy solicitors to assist in contacting stockholders
in connection with soliciting favorable votes on the Merger. TRFC and RBI shall
coordinate and cooperate with respect to the timing of their respective
Stockholder Meetings.
Section 4.9 Proxy Statements; Comfort Letters. (i) As soon as
---------------------------------
practicable after the date hereof, RBI and TRFC shall cooperate with respect to
the preparation of a Proxy Statement-Prospectus for the purpose of taking
stockholder action on the Merger and this Agreement and file the Proxy
Statement-Prospectus with the SEC, respond to comments of the staff of the SEC
and, promptly after the Registration Statement is declared effective by the SEC,
mail the Proxy Statement-Prospectus to the respective holders of record (as of
the applicable record date) of shares of voting stock of each of TRFC and RBI.
RBI and TRFC each represents and covenants to the other that the Proxy
Statement-Prospectus, and any amendment or supplement thereto, with respect
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to the information pertaining to it or its Subsidiaries at the date of mailing
to its stockholders and the date of its Stockholder Meeting will be in
compliance with the Exchange Act and all relevant rules and regulations of the
SEC and will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(ii) RBI shall cause KPMG Peat Marwick LLP, its independent
public accounting firm, to deliver to TRFC, and TRFC shall cause KPMG Peat
Marwick LLP, its independent public accounting firm, to deliver to RBI and to
its officers and directors who sign the Registration Statement for this
transaction, a "comfort letter" or "agreed upon procedures" letter, in the form
customarily issued by such accountants at such time in transactions of this
type, dated (a) the date of the mailing of the Proxy Statement-Prospectus for
the Stockholders Meeting of TRFC and the date of mailing of the Proxy Statement
for the Stockholders meeting of RBI, respectively, and (b) a date not earlier
than five business days preceding the date of the Closing (as defined in
Section 7.1).
Section 4.10 Registration of RBI Common Stock.
--------------------------------
(a) RBI shall, as promptly as practicable following the preparation
thereof, file the Registration Statement (including any pre-effective or post-
effective amendments or supplements thereto) with the SEC under the Securities
Act in connection with the transactions contemplated by this Agreement, and RBI
and TRFC shall use all reasonable efforts to have the Registration Statement
declared effective under the Securities Act as promptly as practicable after
such filing. RBI will advise TRFC promptly after RBI receives notice of the time
when the Registration Statement has become effective or any supplement or
amendment has been filed, of the issuance of any stop order or the suspension of
the qualification of the shares of capital stock issuable pursuant to the
Registration Statement, or the initiation or threat of any proceeding for any
such purpose, or of any request by the SEC for the amendment or supplement of
the Registration Statement or for additional information. RBI will provide TRFC
with as many copies of such Registration Statement and all amendments thereto
promptly upon the filing thereof as TRFC may reasonably request.
(b) RBI shall use its best efforts to obtain, prior to the effective
date of the Registration Statement, all necessary state securities laws or "blue
sky" permits and approvals required to carry out the transactions contemplated
by this Agreement.
(c) RBI shall use its best efforts to list, prior to the Effective
Time, on the Nasdaq National Market, or on such other exchange as RBI Common
Stock shall then be trading, subject only to official notice of issuance, the
shares of RBI Common Stock to be issued by RBI in exchange for the shares of
TRFC Common Stock.
Section 4.11 Affiliate Letters. Promptly, but in any event within
-----------------
two weeks after the execution and delivery of this Agreement, TRFC shall deliver
to RBI a letter identifying all persons who, to the knowledge of TRFC, may be
deemed to be "affiliates" of TRFC under Rule 145 of the Securities Act and the
pooling-of-interests accounting rules, including, without limitation, all
directors and executive officers of TRFC. Within two weeks after delivery of
such letter, TRFC
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shall deliver executed letter agreements, each substantially in the form
attached hereto as Exhibit B, executed by each such person so identified as an
affiliate of TRFC agreeing (i) to comply with Rule 145, (ii) to refrain from
transferring shares as required by the pooling-of-interests accounting rules and
(iii) to be present in person or by proxy and vote in favor of the Merger at the
TRFC Stockholders Meeting. Within two weeks after the date hereof, RBI shall
cause its directors and executive officers to enter into letter agreements, in
the form attached hereto as Exhibit C, with RBI concerning the pooling-of-
interests accounting rules. RBI hereby agrees to publish, or file a Form 8-K,
Form 10-K or Form 10-Q containing, financial results covering at least 30 days
of post-Merger combined operations of RBI and TRFC as soon as practicable, but
RBI shall use its best efforts to publish no later than 30 days, following the
close of the first calendar month ending 30 days after the Effective Time, in
form and substance sufficient to remove the restrictions set forth in paragraph
"B" of each of Exhibit B and Exhibit C attached hereto.
Section 4.12 Notification of Certain Matters. Each party shall
-------------------------------
give prompt notice to the others of: (a) any event or notice of, or other
communication relating to, a default or event that, with notice or lapse of time
or both, would become a default, received by it or any of its Subsidiaries
subsequent to the date of this Agreement and prior to the Effective Time, under
any contract material to the financial condition, properties, businesses or
results of operations of each party and its Subsidiaries taken as a whole to
which each party or any Subsidiary is a party or is subject; and (b) any event,
condition, change or occurrence which individually or in the aggregate has, or
which, so far as reasonably can be foreseen at the time of its occurrence, is
reasonably likely to result in a Material Adverse Event. Each of TRFC and RBI
shall give prompt notice to the other party of any notice or other communication
from any third party alleging that the consent of such third party is or may be
required in connection with any of the transactions contemplated by this
Agreement.
Section 4.13 Directors and Officers.
----------------------
(a) RBI agrees to cause four members of the TRFC Board of Directors
(on the date hereof) selected by TRFC and acceptable to RBI, who are willing so
to serve ("New RBI Directors"), to be elected or appointed as directors of RBI
and RBI Bank at, or as promptly as practicable after, the Effective Time (such
appointment or election of New RBI Directors to be as evenly distributed as
possible among the classes of RBI directors). The directors of RBI Bank,
following the Bank Merger, shall be the current directors of RBI Bank plus the
four individuals described above in the immediately preceding sentence.
(b) At the Effective Time, RBI shall enter into an employment
agreement with John M. Tsimbinos, substantially in the form attached hereto as
Exhibit D, as well as an employment agreement with each of two additional
executive officers of TRFC to be determined by RBI and TRFC.
(c) RBI shall honor (i) the Employment Agreements between TRFC and,
respectively, John M. Tsimbinos, A. Gordon Nutt, Dennis E. Henchy, William R.
Kuhn, Ira H. Kramer and John J. DeRusso, each as amended and restated as of
January 23, 1997, and (ii) the Employment Agreements between TRFC Bank and,
respectively, John M. Tsimbinos, A. Gordon Nutt, Dennis E. Henchy, William R.
Kuhn, Ira H. Kramer and John J. DeRusso, each as amended
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and restated as of January 23, 1997, by paying to each such individual on the
Closing Date in the form of a lump sum the amounts that would be due under each
agreement less withholding as if each such individual had effectively terminated
employment immediately after the Effective Time with full entitlement to lump
sum cash benefits following a "change of control" as defined in such Employment
Agreements, regardless of any other requirements in the Employment Agreements
and whether or not the individual died or became disabled prior to the Effective
Time.
(d) As of the Effective Time, John M. Tsimbinos shall be named
Chairman of the Board of RBI and a member of the committee of the Board of
Directors of RBI and RBI Bank responsible for selecting or nominating directors
of RBI and RBI Bank and a Vice Chairman of RBI Bank. If within four years
following the Effective Time, RBI's President and Chief Executive Officer shall
cease to be the Chief Executive Officer of RBI or RBI Bank, by reason of death,
disability, retirement or otherwise, John M. Tsimbinos shall be named as the
interim Chief Executive Officer of RBI or RBI Bank, or both, as the case may be,
until such time as each of the Boards of Directors of RBI and RBI Bank,
respectively, appoint a new chief executive officer.
Section 4.14 Indemnification; Directors' and Officers' Insurance.
---------------------------------------------------
(a) From and after the Effective Time through the sixth anniversary
of the Effective Date, RBI agrees to indemnify and hold harmless each present
and former director and officer of TRFC and its Subsidiaries and each officer or
employee of TRFC and its Subsidiaries that is serving or has served as a
director or trustee of another entity expressly at TRFC's request or direction
(each, an "Indemnified Party"), against any costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages or
liabilities (collectively, "Costs") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of matters existing or occurring at
or prior to the Effective Time (including the transactions contemplated by this
Agreement, including the entering into of the TRFC Option Agreement), whether
asserted or claimed prior to, at or after the Effective Time, and to advance any
such Costs to each Indemnified Party as they are from time to time incurred, in
each case to the fullest extent such Indemnified Party would have been
indemnified as a director, officer or employee of TRFC and its Subsidiaries and
as then permitted under applicable law.
(b) Any Indemnified Party wishing to claim indemnification under
Section 4.14(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify RBI thereof, but the failure to so notify
shall not relieve RBI of any liability it may have hereunder to such Indemnified
Party if such failure does not materially and substantially prejudice the
indemnifying party. In the event of any such claim, action, suit, proceeding or
investigation, (i) RBI shall have the right to assume the defense thereof with
counsel reasonably acceptable to the Indemnified Party and RBI shall not be
liable to such Indemnified Party for any legal expenses of other counsel
subsequently incurred by such Indemnified Party in connection with the defense
thereof, except that if RBI does not elect to assume such defense within a
reasonable time or counsel for the Indemnified Party at any time advises that
there are issues which raise conflicts of interest between RBI and the
Indemnified Party (and counsel for RBI does not disagree), the Indemnified Party
may retain counsel satisfactory to such Indemnified Party, and RBI shall remain
responsible
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for the reasonable fees and expenses of such counsel as set forth above, to be
paid promptly as statements therefor are received; provided, however, that RBI
shall be obligated pursuant to this paragraph (b) to pay for only one firm of
counsel for all Indemnified Parties in any one jurisdiction with respect to any
given claim, action, suit, proceeding or investigation unless the use of one
counsel for such Indemnified Parties would present such counsel with a conflict
of interest; (ii) the Indemnified Party will reasonably cooperate in the defense
of any such matter; and (iii) RBI shall not be liable for any settlement
effected by an Indemnified Party without its prior written consent, which
consent may not be withheld unless such settlement is unreasonable in light of
such claims, actions, suits, proceedings or investigations against, or defenses
available to, such Indemnified Party.
(c) RBI shall pay all reasonable Costs, including attorneys' fees,
that may be incurred by any Indemnified Party in successfully enforcing the
indemnity and other obligations provided for in this Section 4.14 to the fullest
extent permitted under applicable law. The rights of each Indemnified Party
hereunder shall be in addition to any other rights such Indemnified Party may
have under applicable law.
(d) For a period of six years after the Effective Time, RBI shall
cause to be maintained in effect for the former directors and officers of TRFC
coverage under RBI's policy of directors and officers liability insurance no
less advantageous to the beneficiaries thereof than the current policies of
directors' and officers' liability insurance maintained by TRFC; provided,
however, that in no event shall RBI be obligated to expend, in order to maintain
or provide insurance coverage pursuant to this Subsection 4.14(d), any premium
per annum in excess of 175% of the amount of the annual premiums paid as of the
date hereof by TRFC for such insurance ("Maximum Agreement"); provided, further,
that if the amount of the annual premiums necessary to maintain or procure such
insurance coverage exceeds the Maximum Amount, RBI shall obtain the most
advantageous coverage of directors' and officers' insurance obtainable for an
annual premium equal to the Maximum Amount; and provided, further, that officers
and directors of TRFC may be required to make application and provide customary
representations and warranties to RBI's insurance carrier for the purpose of
obtaining such insurance.
Section 4.15 Pooling and Tax-Free Reorganization Treatment. Prior
---------------------------------------------
to the Effective Time, neither RBI nor TRFC shall intentionally take, fail to
take, or cause to be taken or not taken, or cause or permit any of their
respective Subsidiaries to take, fail to take, or cause to be taken or not
taken, any action within its control that would disqualify the Merger as a
pooling-of-interests for accounting purposes or as a reorganization within the
meaning of Section 368(a) of the Code. Subsequent to the Effective Time, RBI
shall not take any action within its control that would disqualify the Merger as
a pooling-of-interests for accounting purposes or as a reorganization under the
Code.
Section 4.16 Employees; Benefit Plans and Programs.
-------------------------------------
(a) Each person, other than an executive officer, who is employed by
TRFC or TRFC Bank immediately prior to the Effective Time (a "TRFC Employee")
and the executive officers listed on TRFC's Disclosure Letter shall, at the
Effective Time, become an employee of RBI or RBI Bank. Beginning at the
Effective Time, each of the TRFC Employees shall serve RBI or RBI
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Bank in the same capacity in which he or she served immediately prior to the
Effective Time and upon the same terms and conditions generally applicable to
other employees of RBI or RBI Bank with comparable positions, with the following
special provisions:
(i) No TRFC Employee shall be, or have or exercise the authority
of, an officer of RBI or RBI Bank unless and until elected or appointed an
officer of RBI or RBI Bank in accordance with RBI's or RBI Bank's bylaws;
(ii) At or as soon as practicable following the Effective Time,
RBI and RBI Bank shall establish and implement a program of compensation
and benefits designed to cover all similarly situated employees on a
uniform basis ("New Compensation and Benefits Program"). The New
Compensation and Benefits Program may contain any combination of new plans,
continuations of plans maintained by RBI or RBI Bank immediately prior to
the Effective Time and continuation of plans maintained by TRFC or TRFC
Bank immediately prior to the Effective Time as RBI or RBI Bank, in its
discretion, may determine. To the extent that it is not practicable to
implement any constituent part of the New Compensation and Benefits Program
at the Effective Time, RBI and RBI Bank shall continue in effect any
comparable plan maintained immediately prior to the Effective Time for the
respective employees of RBI, TRFC, RBI Bank and TRFC Bank for a transition
period. During the transition period, the persons who were employees of
TRFC or TRFC Bank immediately prior to the Effective Time who become
employees of RBI or RBI Bank at the Effective Time shall continue to
participate in the plans of TRFC and TRFC Bank that are continued for
transitional purposes, and all other employees of RBI or RBI Bank will
participate only in the comparable plans of RBI and RBI Bank that are
continued for transitional purposes.
(iii) Each constituent part of the New Compensation and Benefits
Program shall recognize, in the case of persons employed by RBI, RBI Bank,
TRFC or TRFC Bank immediately prior to the Effective Time who are also
employed by RBI or RBI Bank immediately after the Effective Time, all
service with RBI, RBI Bank, TRFC or TRFC Bank as service with RBI and RBI
Bank for all purposes, including eligibility, vesting, benefit accrual and
level of matching contributions; provided, however, that such service shall
not be recognized to the extent that such recognition would result in a
duplication of benefits.
(iv) In the case of any constituent part of the New Compensation
and Benefits Program which is a life, health or long-term disability
insurance plan: (A) such plan shall not apply any preexisting condition
limitations for conditions covered under the applicable life, health or
long-term disability insurance plans maintained by RBI, RBI Bank, TRFC and
TRFC Bank as of the Effective Time, (B) each such plan which is a health
insurance plan shall honor any deductible and out of pocket expenses
incurred under the applicable life health plans maintained by RBI, RBI
Bank, TRFC and TRFC Bank as of the Effective Time and (C) each such plan
which is a life or long-term disability insurance plan shall waive any
medical certification otherwise required in order to assure the
continuation of coverage at a level not less than that in effect
immediately prior to the implementation of
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<PAGE>
such plan (but subject to any overall limit on the maximum amount of
coverage under such plans).
(b) (i) RBI shall assume the obligations of TRFC and TRFC Bank with
respect to any severance plans or agreements identified in TRFC's Disclosure
Letter, as they may be in effect as of the date hereof, and shall pay amounts
thereunder when due; provided, however, that in the event of the termination of
employment of officers and employees of TRFC or TRFC Bank within one year
following the Effective Time, such persons shall be provided severance benefits
equal to the greater of those provided under the TRFC Bank Severance Plan or
those provided by the RBI Bank Employee Severance Compensation Plan as in effect
as of the date of this Agreement; provided, however, that severance benefits
payable to such persons under the RBI Bank Employee Severance Compensation Plan
shall be limited to a maximum of 52 weeks of Annual Compensation, as defined in
such plan.
(ii) The amounts payable under the Performance Compensation Plan
and Performance Compensation Program of TRFC Bank shall be determined for the
period from January 1, 1998 through the Closing Date, except that (A) the
adjusted pre-tax net income and target goals shall be adjusted and pro-rated for
the portion of the year from January 1, 1998 through the Closing Date and (B)
payments thereunder, as so adjusted, shall be made as of the Closing Date. Such
amounts shall be paid in accordance with the terms of such plans and consistent
with past practice.
Section 4.17 Advisory Board. RBI shall, promptly following the
--------------
Effective Time, cause all of the members of TRFC's Board of Directors as of the
date of this Agreement, other than the New RBI Directors, who are willing to so
serve to be elected or appointed as members of RBI's advisory board ("Advisory
Board"), the function of which shall be to advise RBI with respect to deposit
and lending activities in TRFC's former market area and to maintain and develop
customer relationships. The members of the Advisory Board who are willing to so
serve shall be elected to serve a term of three years beginning on the Effective
Date. Beginning immediately after the Effective Time, each member of the
Advisory Board shall receive an annual retainer fee for such service equal to
the estimated average fees payable during that year (including annual or
retainer fees and fees for attending board or committee meetings) to a member of
RBI's Board of Directors. Such Advisory Board annual retainer fee shall be
payable in quarterly installments or in one lump sum at any time in advance at
the option of RBI. The Advisory Board shall terminate three years after the
Effective Date unless extended by RBI. In the event one or more of the New RBI
Directors ceases to be a director of RBI or RBI Bank within three years after
the Effective Time, RBI shall use good faith efforts, within the confines of its
fiduciary duties, to replace that New RBI Director with an Advisory Board
member.
Section 4.18 Savings and Loan Holding Company Structure. If
------------------------------------------
requested by RBI in order to facilitate the transactions contemplated in this
Agreement and assuming all other material conditions have been met, TRFC will
take such steps as are necessary to become a savings and loan holding company
pursuant to HOLA, assuming TRFC so qualifies.
Section 4.19 RBI Dividends. After the Effective Time, RBI shall use
-------------
its reasonable best efforts to cause to be paid to its stockholders a quarterly
cash dividend of at least
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$.09 per share of RBI Common Stock; provided, however, that the declaration and
payment of such dividend shall be subject to all applicable laws and
regulations, RBI's fiduciary duties and financial and economic conditions.
ARTICLE V
CONDITIONS TO CONSUMMATION
--------------------------
Section 5.1 Conditions to Each Party's Obligations. The respective
--------------------------------------
obligations of each party to effect the Merger, the Bank Merger and any other
transactions contemplated by this Agreement shall be subject to the satisfaction
of the following conditions:
(a) this Agreement shall have been approved by the requisite vote of
each of TRFC's and RBI's stockholders in accordance with applicable laws and
regulations and the Amendment shall have been approved by the requisite vote of
RBI's stockholders in accordance with applicable law and regulations;
(b) the Requisite Regulatory Approvals and any necessary regulatory
consents and waivers with respect to this Agreement and the transactions
contemplated hereby shall have been obtained and shall remain in full force and
effect, and all statutory waiting periods shall have expired; and all other
consents, waivers and approvals of any third parties which are necessary to
permit the consummation of the Merger and the other transactions contemplated
hereby shall have been obtained or made except for those the failure to obtain
would not have a Material Adverse Effect (i) on TRFC and its Subsidiaries taken
as a whole or (ii) on RBI and its Subsidiaries taken as a whole. None of the
approvals or waivers referred to herein shall contain any term or condition
which would have a Material Adverse Effect on (x) TRFC and its Subsidiaries
taken as a whole or (y) RBI and its Subsidiaries taken as a whole;
(c) no party hereto shall be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of the Merger, the Bank Merger or any other
transactions contemplated by this Agreement;
(d) no statute, rule or regulation shall have been enacted, entered,
promulgated, interpreted, applied or enforced by any governmental authority
which prohibits, restricts or makes illegal consummation of the Merger, the Bank
Merger or any other transactions contemplated by this Agreement;
(e) the Registration Statement shall have been declared effective by
the SEC and no proceedings shall be pending or threatened by the SEC to suspend
the effectiveness of the Registration Statement; all required approvals by state
securities or "blue sky" authorities with respect to the transactions
contemplated by this Agreement shall have been obtained;
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<PAGE>
(f) RBI shall have received a letter, dated as of the Effective Date,
from its independent certified public accountants, reasonably satisfactory to
RBI and TRFC, to the effect that the Merger shall be qualified to be treated as
a pooling-of-interests for accounting purposes by RBI;
(g) RBI shall have received the letter agreement referred to in
Section 4.11 from each affiliate of TRFC; and
(h) RBI shall have caused to be listed on the Nasdaq National Market,
or on such other market on which shares of RBI Common Stock shall then be
trading, subject only to official notice of issuance, the shares of RBI Common
Stock to be issued by RBI in exchange for the shares of TRFC Common Stock.
Section 5.2 Conditions to the Obligations of RBI and RBI Bank. The
-------------------------------------------------
obligations of RBI and RBI Bank to effect the Merger, the Bank Merger and any
other transactions contemplated by this Agreement shall be further subject to
the satisfaction of the following additional conditions, any one or more of
which may be waived by RBI:
(a) each of the obligations of TRFC and TRFC Bank, respectively,
required to be performed by it at or prior to the Closing pursuant to the terms
of this Agreement shall have been duly performed and complied with in all
material respects and the representations and warranties of TRFC and TRFC Bank
contained in this Agreement shall be true and correct, subject to Sections 2.1
and 2.2, as of the date of this Agreement and as of the Effective Time as though
made at and as of the Effective Time (except as to any representation or
warranty which specifically relates to an earlier date). RBI shall have
received a certificate to the foregoing effect signed by the chief executive
officer and the chief financial or principal accounting officer of TRFC;
(b) all action required to be taken by, or on the part of, TRFC and
TRFC Bank to authorize the execution, delivery and performance of this Agreement
and the consummation by TRFC and TRFC Bank of the transactions contemplated
hereby shall have been duly and validly taken by the Board of Directors and
stockholders of TRFC or TRFC Bank, as the case may be, and RBI shall have
received certified copies of the resolutions evidencing such authorization;
(c) TRFC shall have obtained the consent or approval of each person
(other than the governmental approvals or consents referred to in Section
5.1(b)) whose consent or approval shall be required in order to permit the
succession by the surviving corporation pursuant to the Merger to any
obligation, right or interest of TRFC or its Subsidiaries under any loan or
credit agreement, note, mortgage, indenture, lease, license or other agreement
or instrument to which TRFC or its Subsidiaries is a party or is otherwise
bound, except those for which failure to obtain such consents and approvals
would not, individually or in the aggregate, have a Material Adverse Effect on
RBI (after giving effect to the consummation of the transactions contemplated
hereby) or upon the consummation of the transactions contemplated hereby.
(d) Neither a Distribution Date nor a Shares Acquisition Date, as
such terms are defined in the TRFC Rights Agreement, shall have occurred, and
the TRFC Preferred Share Purchase Rights shall not have become nonredeemable and
shall not become nonredeemable upon
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<PAGE>
consummation of the Merger, and the TRFC Preferred Share Purchase Rights shall
not become exercisable for capital stock of RBI upon consummation of the Merger.
(e) RBI shall have received certificates (such certificates to be
dated as of a day as close as practicable to the Closing Date) from appropriate
authorities as to the corporate existence and good standing of TRFC and its
Subsidiaries;
(f) RBI shall have received an opinion of Muldoon, Murphy & Faucette,
counsel to RBI, dated as of the Effective Date, in form and substance customary
in transactions of the type contemplated hereby, and reasonably satisfactory to
RBI, substantially to the effect that on the basis of the facts, representations
and assumptions set forth in such opinion which are consistent with the state of
facts existing at the Effective Time, the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section 368(a) of
the Code and that accordingly:
(i) No gain or loss will be recognized by RBI, RBI Bank, TRFC or
TRFC Bank as a result of the Merger;
(ii) Except to the extent of any cash received in lieu of a
fractional share interest in RBI Common Stock, no gain or loss will be
recognized by the stockholders of TRFC who exchange their TRFC Common Stock
for RBI Common Stock pursuant to the Merger;
(iii) The tax basis of RBI Common Stock received by stockholders
who exchange their TRFC Common Stock for RBI Common Stock in the Merger
will be the same as the tax basis of TRFC Common Stock surrendered pursuant
to the Merger, reduced by any amount allocable to a fractional share
interest for which cash is received and increased by any gain recognized on
the exchange; and
(iv) The holding period of RBI Common Stock received by each
stockholder in the Merger will include the holding period of TRFC Common
Stock exchanged therefor, provided that such stockholder held such TRFC
Common Stock as a capital asset on the Effective Date.
Such opinion may be based on, in addition to the review of such
matters of fact and law as Muldoon, Murphy & Faucette considers appropriate, (x)
representations made at the request of Muldoon, Murphy & Faucette by RBI, RBI
Bank, TRFC, TRFC Bank, stockholders of RBI or TRFC, or any combination of such
persons and (y) certificates provided at the request of Muldoon, Murphy &
Faucette by officers of RBI, RBI Bank, TRFC, TRFC Bank and other appropriate
persons.
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Section 5.3 Conditions to the Obligations of TRFC and TRFC Bank.
---------------------------------------------------
The obligations of TRFC and TRFC Bank to effect the Merger, the Bank Merger and
any other transactions contemplated by this Agreement shall be further subject
to the satisfaction of the following additional conditions, any one or more of
which may be waived by TRFC:
(a) each of the obligations of RBI and RBI Bank, respectively,
required to be performed by it at or prior to the Closing pursuant to the terms
of this Agreement shall have been duly performed and complied with in all
material respects and the representations and warranties of RBI and RBI Bank
contained in this Agreement shall be true and correct, subject to Sections 2.1
and 2.2, as of the date of this Agreement and as of the Effective Time as though
made at and as of the Effective Time (except as to any representation or
warranty which specifically relates to an earlier date). TRFC shall have
received a certificate to the foregoing effect signed by the chief executive
officer and the chief financial or principal accounting officer of RBI;
(b) all action required to be taken by, or on the part of, RBI and
RBI Bank to authorize the execution, delivery and performance of this Agreement
and the consummation by RBI and RBI Bank of the transactions contemplated hereby
shall have been duly and validly taken by the Board of Directors and
stockholders of RBI or RBI Bank, as the case may be, and TRFC shall have
received certified copies of the resolutions evidencing such authorization;
(c) RBI shall have obtained the consent or approval of each person
(other than the governmental approvals or consents referred to in Section
5.1(b)) whose consent or approval shall be required in connection with the
transactions contemplated hereby under any loan or credit agreement, note,
mortgage, indenture, lease, license or other agreement or instrument to which
RBI or its Subsidiaries is a party or is otherwise bound, except those for which
failure to obtain such consents and approvals would not, individually or in the
aggregate, have a Material Adverse Effect on RBI (after giving effect to the
transactions contemplated hereby) or upon the consummation of the transactions
contemplated hereby.
(d) TRFC shall have received certificates (such certificates to be
dated as of a day as close as practicable to the Closing Date) from appropriate
authorities as to the corporate existence and good standing of RBI and its
Subsidiaries;
(e) TRFC shall have received an opinion of Thacher Proffitt & Wood,
counsel to TRFC, dated as of the Effective Date, in form and substance customary
in transactions of the type contemplated hereby, and reasonably satisfactory to
TRFC, substantially to the effect that on the basis of the facts,
representations and assumptions set forth in such opinion which are consistent
with the state of facts existing at the Effective Time, the Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code and that accordingly:
(i) No gain or loss will be recognized by RBI, RBI Bank, TRFC or
TRFC Bank as a result of the Merger;
(ii) Except to the extent of any cash received in lieu of a
fractional share interest in RBI Common Stock, no gain or loss will be
recognized by the stockholders of
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TRFC who exchange their TRFC Common Stock for RBI Common Stock pursuant to
the Merger;
(iii) The tax basis of RBI Common Stock received by stockholders
who exchange their TRFC Common Stock for RBI Common Stock in the Merger
will be the same as the tax basis of TRFC Common Stock surrendered pursuant
to the Merger, reduced by any amount allocable to a fractional share
interest for which cash is received and increased by any gain recognized on
the exchange; and
(iv) The holding period of RBI Common Stock received by each
stockholder in the Merger will include the holding period of TRFC Common
Stock exchanged therefor, provided that such stockholder held such TRFC
Common Stock as a capital asset on the Effective Date.
Such opinion may be based on, in addition to the review of such
matters of fact and law as Thacher Proffitt & Wood considers appropriate, (x)
representations made at the request of Thacher Proffitt & Wood by RBI, RBI Bank,
TRFC, TRFC Bank, stockholders of RBI or TRFC, or any combination of such persons
and (y) certificates provided at the request of Thacher Proffitt & Wood by
officers of RBI, RBI Bank, TRFC and other appropriate persons.
ARTICLE VI
TERMINATION
-----------
Section 6.1 Termination. This Agreement may be terminated, and
-----------
the Merger abandoned, at or prior to the Effective Date, either before or after
its approval by the stockholders of TRFC and RBI:
(a) by the mutual consent of RBI and TRFC, if the Board of Directors
of each so determines by vote of a majority of the members of its entire Board;
(b) by RBI or TRFC, if its Board of Directors so determines by vote
of a majority of the members of its entire Board, in the event of (i) the
failure of the stockholders of TRFC or RBI to approve the Agreement at its
Stockholder Meeting called to consider such approval; provided, however, that
TRFC or RBI, as the case may be, shall only be entitled to terminate the
Agreement pursuant to this clause (i) if it has complied in all material
respects with its obligations under Sections 4.8 and 4.9, or (ii) a material
breach by the other party hereto of any representation, warranty, covenant or
agreement contained herein which causes the conditions set forth in Section
5.2(a) (in the case of termination by RBI) and Section 5.3(a) (in the case of
the termination by TRFC) not to be satisfied and such breach is not cured within
25 business days after written notice of such breach is given to the party
committing such breach by the other party or which breach is not capable of
being cured by the date set forth in Section 6.1(d) or any extension thereof;
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(c) by RBI or TRFC, by written notice to the other party, if either
(i) any approval, consent or waiver of a governmental agency required to permit
consummation of the transactions contemplated hereby shall have been denied or
(ii) any governmental authority of competent jurisdiction shall have issued a
final, unappealable order enjoining or otherwise prohibiting consummation of the
transactions contemplated by this Agreement;
(d) by RBI or TRFC, if its Board of Directors so determines by vote
of a majority of the members of its entire Board, in the event that the Merger
is not consummated by January 31, 1999 ("Initial Termination Date"); provided,
that if, as of such date, all necessary regulatory or governmental approvals,
consents or waivers required to consummate the transactions contemplated hereby
shall not have been obtained but all other conditions to the consummation of the
Merger (other than the delivery of executed documents at the Closing) shall be
fulfilled, the Initial Termination Date shall be extended to March 31, 1999,
unless the failure to so consummate by such time is due to the breach of any
representation, warranty or covenant contained in this Agreement by the party
seeking to terminate; or
(e) by TRFC, if its Board of Directors so determines by a majority
vote of the members of its entire Board, at any time during the five-day period
commencing on the Valuation Date, such termination to be effective on the 30/th/
day following such Valuation Date ("Effective Termination Date"), if the RBI
Market Value on the Valuation Date is less than $20.72 or if both of the
following conditions are satisfied:
(i) The RBI Market Value on the Valuation Date is less than
$22.10; and
(ii) (A) the number obtained by dividing the RBI Market Value
on the Valuation Date by the Initial RBI Market Value ("RBI Ratio") shall
be less than (B) the number obtained by dividing the Final Index Price by
the Initial Index Price and subtracting 0.15 from the quotient in this
clause (ii)(B) ("Index Ratio");
subject, however, to the following three sentences. If TRFC elects to exercise
its termination right pursuant to this Section 6.1(e), it shall give prompt
written notice thereof to RBI; provided, that such notice of election to
terminate may be withdrawn at any time prior to the Effective Termination Date.
During the five-day period commencing with its receipt of such notice, RBI shall
have the option to increase the consideration to be received by the holders of
RBI Common Stock hereunder by adjusting the Exchange Ratio to equal the lesser
of (x) a number equal to a fraction, the numerator of which is 2.05 multiplied
by the Initial RBI Market Value and the denominator of which is the RBI Market
Value, and (y) a number equal to a fraction, the numerator of which is the Index
Ratio multiplied by 2.05 and the denominator of which is the RBI Ratio. If RBI
so elects, it shall give, within such five-day period, written notice to TRFC of
such election and the revised Exchange Ratio, whereupon no termination shall be
deemed to have occurred pursuant to this Section 6.1(e) and this Agreement shall
remain in full force and effect in accordance with its terms (except as the
Exchange Ratio shall have been so modified).
For purposes of this Section 6.1(e), the following terms shall have
the meanings indicated below:
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"Acquisition Transaction" shall have the meaning set forth in
Section 3.4(e).
"Final Index Price" means the sum of the Final Prices for each company
comprising the Index Group multiplied by the weighting set forth opposite such
company's name in the definition of Index Group below.
"Final Price," with respect to any company belonging to the Index
Group, means the average of the daily closing sales prices of a share of common
stock of such company (and if there is no closing sales price on any such day,
then the mean between the closing bid and the closing asked prices on that day),
as reported on the consolidated transaction reporting system for the market or
exchange on which such common stock is principally traded, for the 30
consecutive trading days immediately preceding the Valuation Date.
"Index Group" means the 25 financial institution holding companies
listed below, the common stock of all of which shall be publicly traded and as
to which there shall not have been an Acquisition Transaction involving such
company publicly announced at any time during the period beginning on the date
of this Agreement and ending on the Valuation Date. In the event that the
common stock of any such company ceases to be publicly traded or an Acquisition
Proposal involving any such company is announced at any time during the period
beginning on the date of this Agreement and ending on the Valuation Date, such
company will be removed from the Index Group, and the weights attributed to the
remaining companies will be adjusted proportionately for purposes of determining
the Final Index Price and the Initial Index Price. The 25 financial institution
holding companies and the weights attributed to them are as follows:
<TABLE>
<CAPTION>
Holding Company Weighting
---------------------------------- ----------
<S> <C>
Anchor Bancorp Wisconsin 1.24%
ALBANK Financial Corporation 2.19%
Astoria Financial Corporation 4.76%
Bank United Corp. 5.17%
Bay View Capital Corp. 2.10%
Commonwealth Bancorp, Inc. 1.26%
Charter One Financial, Inc. 14.81%
Commercial Federal Corp. 4.43%
Dime Bancorp, Inc. 10.67%
Dime Community Bancorp, Inc. 1.14%
GreenPoint Financial Corp. 11.10%
Haven Bancorp, Inc. 0.74%
</TABLE>
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<TABLE>
<CAPTION>
Holding Company Weighting
---------------------------------- ----------
<S> <C>
Independence Community Bank Corp 4.35%
InterWest Bancorp Inc. 1.23%
JSB Financial Inc. 1.86%
MAF Bancorp 1.83%
Peoples Heritage Financial 4.22%
Queens County Bancorp, Inc. 2.14%
Reliance Bancorp, Inc. 1.19%
Richmond County Financial Corp. 1.60%
Sovereign Bancorp, Inc. 8.01%
St. Paul Bancorp 2.76%
Staten Island Bancorp, Inc. 3.26%
Washington Federal Inc. 4.99%
Webster Financial Corporation 2.95%
</TABLE>
"Initial Index Price" means the sum of the per share closing sales
price of the common stock of each company comprising the Index Group multiplied
by the applicable weighting, as such prices are reported on the consolidated
transaction reporting system for the market or exchange on which such common
stock is principally traded on the trading day immediately preceding the public
announcement of this Agreement.
"Initial RBI Market Value" means the closing sales price of a share of
RBI Common Stock, as reported on the Nasdaq National Market, on the trading day
immediately preceding the public announcement of this Agreement, adjusted as
indicated in the last sentence of this Section 6.1(e).
"RBI Market Value" shall have the meaning set forth in Section 1.2(b)
hereof.
"Valuation Date" shall have the meaning set forth in Section 1.2(b)
hereof.
If RBI or any company belonging to the Index Group declares or effects
a stock dividend, reclassification, recapitalization, split-up, combination,
exchange of shares or similar transaction between the date of this Agreement and
the Valuation Date, the prices for the common stock of such company shall be
appropriately adjusted for the purposes of applying this Section 6.1(e).
-55-
<PAGE>
Section 6.2 Effect of Termination. In the event of the
---------------------
termination of this Agreement by either RBI or TRFC, as provided above, this
Agreement shall thereafter become void and there shall be no liability on the
part of any party hereto or their respective officers or directors, except that
(a) any such termination shall be without prejudice to the rights of any party
hereto arising out of the breach by any other party of any covenant,
representation or obligation contained in this Agreement and (b) the obligations
of the parties under Section 4.3(a) and Section 8.6 shall survive.
ARTICLE VII
CLOSING, EFFECTIVE DATE AND EFFECTIVE TIME
------------------------------------------
Section 7.1 Effective Date and Effective Time. The closing of the
---------------------------------
transactions contemplated hereby ("Closing") shall take place at the offices of
Thacher Proffitt & Wood, Two World Trade Center, New York, New York 10048,
unless another place is agreed to by RBI and TRFC, on a date ("Closing Date")
that is no later than five business days following the date on which the
expiration of the last applicable waiting period in connection with notices to
and approvals of governmental authorities shall occur and all conditions to the
consummation of this Agreement are satisfied or waived, or on such other date as
may be agreed to by the parties. Prior to the Closing Date, RBI and TRFC shall
execute a Certificate of Merger in accordance with all appropriate legal
requirements, which shall be filed as required by law on the Closing Date, and
the Merger provided for therein shall become effective upon such filing or on
such date as may be specified in such Certificate of Merger. The date of such
filing or such later effective date as specified in the Certificate of Merger is
herein referred to as the "Effective Date." The "Effective Time" of the Merger
shall be as set forth in the Certificate of Merger.
Section 7.2 Deliveries at the Closing. Subject to the provisions
-------------------------
of Articles V and VI, on the Closing Date there shall be delivered to RBI and
TRFC the documents and instruments required to be delivered under Article V.
ARTICLE VII
CERTAIN OTHER MATTERS
---------------------
Section 8.1 Certain Definitions; Interpretation. As used in this
-----------------------------------
Agreement, the following terms shall have the meanings indicated:
"material" means material to RBI or TRFC (as the case may be) and its
respective Subsidiaries, taken as a whole.
"person" includes an individual, corporation, limited liability
company, partnership, association, trust or unincorporated organization.
-56-
<PAGE>
When a reference is made in this Agreement to Sections, Exhibits or
Schedules, such reference shall be to a Section of, Exhibit or Schedule to, this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for ease of reference only and shall not affect
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation." Any singular term in this Agreement
shall be deemed to include the plural, and any plural term the singular. Any
reference to gender in this Agreement shall be deemed to include any other
gender.
Section 8.2 Survival. Only those agreements and covenants of the
--------
parties that are by their terms applicable in whole or in part after the
Effective Time, including Sections 4.3(a), 4.13, 4.14, 4.16, 4.17, 4.19 and 8.6
of this Agreement, shall survive the Effective Time. All other representations,
warranties, agreements and covenants shall be deemed to be conditions of the
Agreement and shall not survive the Effective Time. If the Agreement shall be
terminated, the agreements of the parties in the last three sentences of Section
4.3(a) and Section 8.6 shall survive such termination.
Section 8.3 Waiver; Amendment. Prior to the Effective Time, any
-----------------
provision of this Agreement may be: (i) waived in writing by the party
benefitted by the provision or (ii) amended or modified at any time (including
the structure of the transaction) by an agreement in writing between the parties
hereto except that, after the vote by the stockholders of TRFC or RBI, no
amendment or modification may be made that would reduce the Merger Consideration
or contravene any provision of the Delaware General Corporation Law or the
federal banking laws, rules and regulations.
Section 8.4 Counterparts. This Agreement may be executed in
------------
counterparts each of which shall be deemed to constitute an original, but all of
which together shall constitute one and the same instrument.
Section 8.5 Governing Law. This Agreement shall be governed by,
-------------
and interpreted in accordance with, the laws of the State of New York, without
regard to conflicts of laws principles.
Section 8.6 Expenses. Each party hereto will bear all expenses
--------
incurred by it in connection with this Agreement and the transactions
contemplated hereby.
Section 8.7 Notices. All notices, requests, acknowledgments and
-------
other communications hereunder to a party shall be in writing and shall be
deemed to have been duly given when delivered by hand, overnight courier or
facsimile transmission (confirmed in writing) to such party at its address or
facsimile number set forth below or such other address or facsimile transmission
as such party may specify by notice to the other party hereto.
-57-
<PAGE>
If to TRFC, to:
T R Financial Corp.
1122 Franklin Avenue
Garden City, New York 11530
Facsimile: (516) 742-8941
Attention: John M. Tsimbinos
Chairman of the Board and Chief Executive Officer
With copies to:
T R Financial Corp.
1122 Franklin Avenue
Garden City, New York 11530
Facsimile: (516) 742-5329
Attention: Ira H. Kramer
Senior Vice President and Corporate Secretary
and
Douglas J. McClintock, Esq.
Thacher Proffitt & Wood, 39th Floor
Two World Trade Center
New York, New York 10048
Facsimile: (212) 432-2898
If to RBI, to:
Roslyn Bancorp, Inc.
1400 Old Northern Boulevard
Roslyn, New York 11576
Facsimile: (516) 621-9351
Attention: Joseph L. Mancino
Chairman of the Board, President and
Chief Executive Officer
-58-
<PAGE>
With copies to:
Roslyn Bancorp, Inc.
1400 Old Northern Boulevard
Roslyn, New York 11576
Facsimile: (516) 625-3274
Attention: John R. Bransfield, Jr.
Vice President
and
Douglas P. Faucette, Esq.
Muldoon, Murphy & Faucette
5101 Wisconsin Avenue, N.W.
Washington, D.C. 20016
Facsimile: (202) 966-9409
Section 8.8 Entire Agreement; etc. This Agreement, together with
---------------------
the Plan of Bank Merger, the TRFC Option Agreement, the RBI Option Agreement and
the Disclosure Letters, represents the entire understanding of the parties
hereto with reference to the transactions contemplated hereby and supersedes any
and all other oral or written agreements heretofore made. All terms and
provisions of this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
Except for Section 4.13 and 4.14, which confer rights on the parties described
therein, nothing in this Agreement is intended to confer upon any other person
any rights or remedies of any nature whatsoever under or by reason of this
Agreement.
Section 8.9 Assignment. This Agreement may not be assigned by
----------
either party hereto without the written consent of the other party.
-59-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the 25th day of May, 1998.
ROSLYN BANCORP, INC.
By: /s/ Joseph L. Mancino
---------------------------------------------
Joseph L. Mancino
Chairman of the Board, President and
Chief Executive Officer
T R FINANCIAL CORP.
By: /s/ John M. Tsimbinos
---------------------------------------------
John M. Tsimbinos
Chairman of the Board and
Chief Executive Officer
-60-
<PAGE>
EXHIBIT A
PLAN OF BANK MERGER
This is a PLAN OF BANK MERGER, dated as of the 25th day of May, 1998
(the "Agreement"), by and between Roosevelt Savings Bank ("TRFC Bank"), a
savings bank organized under the laws of the State of New York and a wholly
owned subsidiary of T R Financial Corp., a Delaware corporation ("TRFC"), and
The Roslyn Savings Bank ("RBI Bank"), a savings bank organized under the laws of
the State of New York and a wholly owned subsidiary of Roslyn Bancorp, Inc. a
Delaware corporation ("RBI"). The principal banking office of TRFC Bank is
located at 1122 Franklin Avenue, Garden City, New York 11530. The principal
banking office of RBI Bank is located at 1400 Old Northern Boulevard, Roslyn,
New York 11576.
WHEREAS, the Boards of Directors of RBI and TRFC have approved, and
deem it advisable and in the best interests of their respective stockholders to
consummate, the business combination transaction set forth in the Agreement and
Plan of Merger, dated as of May 25, 1998 (the "Merger Agreement"), by and
between TRFC and RBI, pursuant to which, among other things, TRFC will merge
with and into RBI (the "Merger"); and
WHEREAS, not less than (a) a majority of the entire Board of Directors
of TRFC Bank and (b) a majority of the entire Board of Directors of RBI Bank
have approved, and deem it advisable to consummate, the merger between TRFC Bank
and RBI Bank (the "Bank Merger") provided for herein, in accordance with the
provisions of the New York Banking Code;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE I
THE MERGER
1.1 Effective Time of the Bank Merger. Subject to the provisions of
---------------------------------
this Agreement, the Bank Merger shall become effective in accordance with the
terms of the Certificate of Merger (the "Certificate of Merger") to be issued by
the Superintendent of Banks of the State of New York (the "Commissioner"). The
term "Bank Merger Effective Time" shall mean the date and time when the Bank
Merger becomes effective, as specified on the Certificate of Merger, which shall
be immediately following the effective time of the Merger.
1.2 Closing. Notwithstanding anything to the contrary contained in
-------
the Merger Agreement, the closing of the Bank Merger will take place immediately
following the Merger on the date and at the location specified in the Merger
Agreement or at such other time, date or place as may be agreed to by the
parties hereto (the "Bank Merger Closing Date").
1.3 Effects of the Merger. (a) At the Bank Merger Effective Time,
---------------------
(i) the separate existence of TRFC Bank shall cease and TRFC Bank shall be
merged with and into RBI Bank (RBI Bank is sometimes referred to herein as the
"Surviving Bank") and TRFC Bank's Charter shall be
<PAGE>
deemed cancelled as of the Bank Merger Effective Time and shall be surrendered
to the New York State Banking Board as soon as practicable thereafter, (ii) the
Charter of RBI Bank as in effect immediately prior to the Bank Merger Effective
Time shall be the Charter of the Surviving Bank until duly amended in accordance
with applicable law, (iii) the name of the Surviving Bank shall be "The Roslyn
Savings Bank," (iv) the Bylaws of RBI Bank as in effect immediately prior to the
Bank Merger Effective Time shall be the Bylaws of the Surviving Bank, (v) the
main office and other offices of TRFC Bank established and authorized
immediately prior to the Bank Merger Effective Time shall become established and
authorized offices of the Surviving Bank and (vi) except as set forth in Section
1.6, the directors and executive officers of RBI Bank immediately prior to the
Bank Merger Effective Time shall be the directors and executive officers of the
Surviving Bank, each to hold office in accordance with the Charter and Bylaws of
the Surviving Bank until their respective successors are duly elected or
appointed and qualified.
(b) At and after the Bank Merger Effective Time, the Bank Merger
shall have all the effects set forth in Section 602 of the Banking Law of the
State of New York and other applicable laws.
1.4 Headquarters. The principal banking office of the Surviving Bank
------------
shall be at 1400 Old Northern Boulevard, Roslyn, New York 11576, and the other
offices of the Surviving Bank shall be located as listed in Appendix 1.4 hereto.
1.5 Savings Accounts. After the Bank Merger Effective Time, the
----------------
Surviving Bank will continue to issue savings accounts on the same basis as
immediately prior to the Bank Merger Effective Time.
1.6 Board of Directors. At the Bank Merger Effective Time, the Board
------------------
of Directors of RBI Bank shall be expanded by four members and RBI Bank agrees
to cause four members of TRFC Bank's Board of Directors, selected by TRFC and
agreed to by RBI, who are willing to so serve ("New RBI Bank Directors") to be
appointed as directors of Surviving Bank at, or promptly as practicable after,
the Bank Merger Effective Time.
ARTICLE II
CAPITAL STOCK OF THE CONSTITUENT
BANKS AND THE SURVIVING BANK
2.1 TRFC Bank Capital Stock. At the Merger Effective Time, by virtue
-----------------------
of the Merger and without any action on the part of the holder of any shares of
common stock, $.01 par value per share, of TRFC Bank ("TRFC Bank Common Stock"),
all shares of TRFC Bank Common Stock shall automatically be cancelled and
retired and shall cease to exist.
2.2 RBI Bank Common Stock. The shares of common stock, $.01 par
---------------------
value per share, of RBI Bank issued and outstanding immediately prior to the
Bank Merger Effective Time shall remain outstanding and unchanged after the Bank
Merger.
A-2
<PAGE>
2.3 Capital Stock of Surviving Bank. The authorized capital stock of
-------------------------------
the Surviving Bank shall be 100 million shares of common stock, par value .01
per share, and 10 million shares of preferred stock, par value .01 per share.
ARTICLE III
COVENANTS
3.1 Covenants of RBI Bank and TRFC Bank. During the period from the
-----------------------------------
date of this Agreement and continuing until the Bank Merger Effective Time, each
of the parties hereto agrees to observe and perform all agreements and covenants
of RBI and TRFC in the Merger Agreement that pertain or are applicable to TRFC
Bank and RBI Bank, respectively. Each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, subject to and in accordance with the applicable provisions of
the Merger Agreement.
3.2 Liquidation Account. For the purposes of granting a limited
-------------------
priority claim to the assets of the Surviving Bank in the unlikely event (and
only upon such event) of a complete liquidation of the Surviving Bank to persons
who continue to maintain savings accounts with the Surviving Bank after the Bank
Merger and who, immediately prior to the Bank Merger, had a subaccount balance
with respect to the liquidation account of TRFC Bank, the Surviving Bank shall,
at the time of the Bank Merger, establish a liquidation account in an amount
equal to the liquidation account of TRFC Bank immediately prior to the Bank
Merger, which liquidation account shall participate pari passu with RBI Bank's
---- -----
existing liquidation account in accordance with the requirements of Part 86 of
the General Regulations of the New York State Banking Board, or any successor
law or regulation thereto.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Conditions to Each Party's Obligation to Effect the Bank Merger.
---------------------------------------------------------------
The respective obligations of each party to effect the Bank Merger shall be
subject to the satisfaction prior to the Bank Merger Closing Date of the
following conditions:
(a) Consummation of The Merger. The Merger shall have been
--------------------------
consummated in accordance with the terms and conditions of the Merger Agreement.
(b) No Injunctions or Restraints; Illegality. No order, injunction
----------------------------------------
or decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Bank Merger shall be
in effect. No statute, rule, regulation, order, injunction or decree shall have
been enacted, entered, promulgated or enforced by any Governmental Entity which
prohibits, restricts or makes illegal the consummation of the Bank Merger.
A-3
<PAGE>
(c) Stockholder Approvals. This Agreement and the transactions
---------------------
contemplated hereby shall have been duly approved, ratified and confirmed by the
required vote of the stockholders of each of RBI Bank and TRFC Bank.
(d) Other Approvals and Notifications. All requisite regulatory
---------------------------------
approvals and clearances of the Bank Merger shall have been obtained and shall
continue to be in full force and effect, and all applicable waiting periods
shall have expired. In addition, all consents, approvals and permits of and
notices to non-governmental third parties that are necessary to consummate the
Bank Merger shall have been filed and/or obtained and shall continue to be in
full force and effect.
ARTICLE V
TERMINATION AND AMENDMENT
5.1 Termination. This Agreement shall be terminated immediately and
-----------
without any further action on the part of TRFC Bank or RBI Bank upon any
termination of the Merger Agreement. This Agreement may be terminated at any
time prior to the Bank Merger Effective Time by mutual consent of TRFC Bank and
RBI Bank in a written instrument, if the Board of Directors of each so
determines by a vote of a majority of the members of its entire Board.
5.2 Effect of Termination. In the event of termination of this
---------------------
Agreement as provided in Section 5.1 hereof, this Agreement shall forthwith
become void and there shall be no liability or obligation under this Agreement
on the part of TRFC Bank, RBI Bank or their respective officers, directors or
affiliates, except that no party shall be relieved or released from any damages
or liabilities arising out of any willful breach of this Agreement.
5.3 Amendment. This Agreement may be amended by the parties hereto,
---------
by action taken or authorized by their respective Boards of Directors. This
Agreement may not be amended except by instrument in writing signed on behalf of
each of the parties hereto.
ARTICLE VI
GENERAL PROVISIONS
6.1 Definitions. All capitalized terms which are used but not
-----------
defined herein shall have the meanings set forth in the Merger Agreement.
6.2 Nonsurvival of Agreements. None of the agreements in this
-------------------------
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Bank Merger Effective Time, except to the extent set forth herein or
in the Merger Agreement.
6.3 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 RBI Bank or TRFC Bank, respectively, at
A-4
<PAGE>
the addresses for notices to TRFC or RBI respectively, as set forth in the
Merger Agreement, with copies to the persons referred to therein.
6.4 Counterparts. This Agreement may be adopted, certified and
------------
executed in separate counterparts, each of which shall be considered one and the
same agreement and shall become effective when all counterparts have been signed
by each of the parties and delivered to the other party, it being understood
that both parties need not sign the same counterpart.
6.5 Entire Agreement. Except as otherwise set forth in this
----------------
Agreement or the Merger Agreement (including the documents and the instruments
referred to herein or therein), this Agreement constitutes the entire agreement,
and supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof.
6.6 Governing Law. This Agreement shall be governed and construed in
-------------
accordance with the laws of the State of New York without regard to any
applicable conflicts of law.
6.7 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder 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.
A-5
<PAGE>
IN WITNESS WHEREOF, The Roslyn Savings Bank and Roosevelt Savings Bank have
caused this Plan of Bank Merger to be executed by their duly authorized officers
as of the 25th day of May, 1998.
THE ROSLYN SAVINGS BANK
By:
-------------------------------------
Name: Joseph L. Mancino
Title: Chairman, President and
Chief Executive Officer
ATTEST:
- ---------------------------------
Name: Mary M. Ehrich
Title: Senior Vice President
and Secretary
ROOSEVELT SAVINGS BANK
By:
-------------------------------------
Name: John M. Tsimbinos
Title: Chairman of the Board and
Chief Executive Officer
ATTEST:
- ---------------------------------
Name: Ira H. Kramer
Title: Senior Vice President and
Corporate Secretary
A-6
<PAGE>
EXHIBIT B
FORM OF AFFILIATE LETTER FOR T R FINANCIAL CORP. AFFILIATES
________, 1998
Roslyn Bancorp, Inc.
1400 Old Northern Boulevard
Roslyn, New York 11576
Gentlemen:
I have been advised that I might be considered to be an "affiliate" of T R
Financial Corp., a Delaware corporation ("TRFC"), for purposes of paragraphs (c)
and (d) of Rule 145 promulgated by the Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "Act"), and for
purposes of generally accepted accounting principles ("GAAP") as such term
relates to pooling of interests accounting treatment for certain business
combinations under GAAP and the interpretations of the SEC or its staff,
including, without limitation, Section 201.01 of the SEC's Codification of
Financial Reporting Policies ("Section 201.01") and the SEC's Staff Accounting
Bulletin Nos. 65 and 76.
Roslyn Bancorp, Inc., a Delaware corporation ("RBI"), and TRFC have entered
into an Agreement and Plan of Merger, dated as of May 25, 1998 (the "Merger
Agreement"), pursuant to which, among other things, TRFC will merge with and
into RBI (the "Merger"). Upon consummation of the Merger, I will be entitled to
receive shares of common stock, par value $0.01 per share, of RBI ("RBI Common
Stock") for my shares of common stock, par value $.01 per share, of TRFC ("TRFC
Common Stock"). This agreement is hereinafter referred to as the "Letter
Agreement."
A. I represent and warrant to, and agree with, the RBI as follows:
1. I have read this Letter Agreement and the Merger Agreement and
have discussed their requirements and other applicable limitations upon my
ability to sell, pledge, transfer or otherwise dispose of shares of the RBI
Common Stock and any other capital stock of RBI, and TRFC Common Stock and any
other capital stock of TRFC, to the extent I felt necessary, with my counsel or
counsel for TRFC.
2. I shall not make any offer, sale, pledge, transfer or other
disposition in violation of the act or the rules and regulations of the SEC
thereunder of the shares of RBI Common Stock I receive pursuant to the Merger.
3. Notwithstanding the foregoing and any other agreements on my part
in connection with the RBI Common Stock and any other capital stock of RBI and
TRFC Common Stock and any other capital stock of TRFC, I hereby agree that,
without the consent of the RBI, I will not sell or otherwise reduce my risk
relative to any shares of TRFC Common Stock, RBI Common Stock or any other
capital stock of TRFC or RBI during the period beginning thirty days prior to
the effective date of the Merger and continuing until financial results covering
at least thirty days of combined operations have been published following the
effective date of the Merger within the meaning of Section 201.01, provided,
--------
however, that this paragraph shall not prevent me from selling, transferring or
- -------
disposing (in each case, with prior approval of RBI) of such number of shares of
RBI
<PAGE>
Common Stock or TRFC Common Stock and will not, in the reasonable judgment
of the accountants to RBI, interfere with or prevent the Merger from being
accounted for as a pooling-of-interests, taking into account the nature, extent
and timing of such sale, transfer or disposition and of similar sales, transfers
or dispositions by all other affiliates of RBI and all other affiliates of TRFC.
B. I understand and agree that:
1. I have been advised that any issuance of shares of RBI Common
Stock to me pursuant to the Merger will be registered with the SEC. I have also
been advised, however, that, because I may be an "affiliate" of TRFC at the time
the Merger will be submitted for a vote of the stockholders of TRFC and my
disposition of such shares has not been registered under the Act, I must hold
such shares indefinitely unless (i) such disposition of such shares is subject
to an effective registration statement and to the availability of a prospectus
under the Act, (ii) a sale of such shares is made in conformity with the
provisions of Rule 145(d) under the Act (and I agree to provide those
representations as RBI may request in order to determine such conformity) or
(iii) in a transaction which, in the opinion of counsel, in form and substance
reasonably satisfactory to RBI, is not required to be registered under the Act.
2. Stop transfer instructions will be given to the transfer agents
of TRFC, with respect to the shares of TRFC Common Stock and with respect to the
shares of RBI Common Stock and any other shares of capital stock of TRFC and RBI
in connection with the restrictions set forth herein, and there will be placed
on the certificate representing shares of RBI Common Stock I receive pursuant to
the Merger, or any certificates delivered in substitution therefor, a legend
stating in substance:
The shares represented by this certificate were issued in a
transaction to which Rule 145 under the Securities Act of 1933
applies. The shares represented by this certificate may only be
transferred in accordance with the terms of letter agreement between
the registered holder hereof and Roslyn Bancorp, Inc., a copy of
which agreement is on file at the principal offices of Roslyn
Bancorp, Inc. A copy of such agreement shall be provided to the
holder hereof without charge upon receipt by Roslyn Bancorp, Inc.
of a written request.
3. Unless a transfer of my shares of RBI Common Stock is a sale made
in conformity with the provisions of Rule 145(d), or made pursuant to any
effective registration statement under the Act, RBI reserves the right to put an
appropriate legend on the certificates issued to my transferee.
4. I understand that RBI is under no obligation to register the RBI
Common Stock that I may wish to sell, transfer, or otherwise dispose of or to
take any other action necessary in order to make compliance with an exemption
from registration available.
It is understood and agreed that this Letter Agreement shall terminate
and be of no further force and effect if the Merger Agreement is terminated in
accordance with its terms. It is also understood and agreed that this Letter
Agreement shall terminate and be of no further force and effect and the stop
transfer instructions set forth in Paragraph B.2. above shall be lifted
forthwith upon the later of (i) such time as financial results covering at least
thirty days of combined operations following the effective date of the Merger
have been published within the meaning of Section 201.01
B-2
<PAGE>
and (ii) delivery by the undersigned to RBI of a copy of a letter from the staff
of the SEC, an opinion of counsel in form and substance reasonably satisfactory
to RBI, or other evidence reasonably satisfactory to RBI, to the effect that a
transfer of my shares of RBI Common Stock will not violate the Act or any of the
rules and regulations of the SEC thereunder. In addition, it is understood and
agreed that the legend set forth in Paragraph B.2. above shall be removed
forthwith from the certificate or certificates representing my shares of RBI
Common Stock if I shall have delivered to RBI a copy of a letter from the staff
of the SEC, an opinion of counsel in form and substance reasonably satisfactory
to RBI, or other evidence satisfactory to RBI that a transfer of my shares of
RBI Common Stock represented by such certificate or certificates will be a sale
made in conformity with the provisions of Rule 145(d), or made pursuant to an
effective registration statement under the Act.
5. I recognize and agree that the foregoing provisions also apply to
(i) my spouse, (ii) any relative of mine or my spouse occupying my home, (iii)
any trust or estate in which I, my spouse or any such relative owns at least 10%
beneficial interest or of which any of us serves as trustee, executor or in any
similar capacity and (iv) any corporation or other organization in which I, my
spouse or any such relative owns at least 10% of any class of equity securities
or of the equity interest.
6. I further recognize that in the event I become a director or
officer of RBI upon consummation of the Merger, any purchase or sale of the
capital stock of RBI by me may be subject to liability pursuant to Section 16(b)
of the Securities Exchange Act of 1934, as amended.
7. Execution of this letter should not construed as an admission on
my part that I am an "affiliate" of TRFC as described in the first paragraph of
this letter or as a waiver of any rights I may have to object to any claim that
I am such an affiliate on or after the date of this letter.
This Letter Agreement shall be binding on my heirs, legal
representative and successors.
Very truly yours,
_____________________________
Accepted this ____ day
of _____________, 1998
Roslyn Bancorp, Inc.
By:
----------------------------
Joseph L. Mancino
Chairman of the Board, President
and Chief Executive Officer
B-3
<PAGE>
EXHIBIT C
FORM OF AFFILIATE LETTER FOR ROSLYN BANCORP, INC. AFFILIATES
________, 1998
T R Financial Corp.
1122 Franklin Avenue
Garden City, New York 11530
Gentlemen:
I have been advised that I might be considered to be an "affiliate" of
Roslyn Bancorp, Inc., a Delaware corporation (the "RBI"), for purposes of
paragraphs (c) and (d) of Rule 145 promulgated by the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the "Act"),
and for purposes of generally accepted accounting principles ("GAAP") as such
term relates to pooling of interests accounting treatment for certain business
combinations under GAAP and the interpretations of the SEC or its staff,
including, without limitation, Section 201.01 of the SEC's Codification of
Financial Reporting Policies ("Section 201.01") and the SEC's Staff Accounting
Bulletin Nos. 65 and 76.
RBI and T R Financial Corp., a Delaware corporation ("TRFC") have entered
into an Agreement and Plan of Merger, dated as of May 25, 1998 (the "Merger
Agreement"), pursuant to which, among other things, TRFC will merge with and
into RBI (the "Merger"). This agreement is hereinafter referred to as the
"Letter Agreement."
I represent and warrant to, and agree with, TRFC as follows:
1. I have read this Letter Agreement and the Merger Agreement and
have discussed their requirements and other applicable limitations upon my
ability to sell, pledge, transfer or otherwise dispose of shares of the common
stock, par value $.01 per share, of RBI ("RBI Common Stock") and any other
capital stock of RBI, and the shares of common stock, par value $.01 per share,
of TRFC ("TRFC Common Stock") and any other capital stock of TRFC, to the extent
I felt necessary, with my counsel or counsel for RBI.
2. Notwithstanding the foregoing and any other agreements on my part
in connection with RBI Common Stock and any other capital stock of RBI and TRFC
Common Stock and any other capital stock of TRFC, I hereby agree that, without
the consent of TRFC, I will not sell or otherwise reduce my risk relative to any
shares of TRFC Common Stock, RBI Common Stock or any other capital stock of TRFC
or RBI during the period beginning thirty days prior to the effective date of
the Merger and continuing until financial results covering at least thirty days
of combined operations have been published following the effective date of the
Merger.
3. Stop transfer instructions will be given to the transfer agents
of RBI, with respect to the shares of RBI Common Stock and any other shares of
capital stock of RBI, and of TRFC, with respect to the shares of TRFC Common
Stock and any other shares of capital stock of TRFC, in connection with the
restrictions set forth herein.
It is understood and agreed that this Letter Agreement shall terminate
and be of no further force and effect if the Merger Agreement is terminated in
accordance with its terms. It is also
<PAGE>
understood and agreed that this Letter Agreement shall terminate and be of no
further force and effect when financial results covering at least thirty days of
combined operations following the effective date of the Merger have been
published within the meaning of Section 201.01, provided, however, that this
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paragraph shall not prevent me from selling, transferring or disposing (in each
case, with prior approval of RBI) of such number of shares of RBI Common Stock
or TRFC Common Stock as will not, in the reasonable judgment of the accountants
of RBI, interfere with or prevent the Merger from being accounted for as a
pooling-of-interests, taking into account the nature, extent and timing of such
sale, transfer or disposition and of similar sales, transfers or dispositions by
all other affiliates of RBI and all other affiliates of TRFC.
Execution of this letter should not construed as an admission on my
part that I am an "affiliate" of RBI as described in the first paragraph of this
letter or as a waiver of any rights I may have to object to any claim that I am
such an affiliate on or after the date of this letter.
This Letter Agreement shall be binding on my heirs, legal
representative and successors.
Very truly yours,
_____________________________
Accepted this ____ day
of _____________, 1998
T R Financial Corp.
By:
-----------------------------
John M. Tsimbinos
Chairman of the Board and
Chief Executive Officer
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<PAGE>
EXHIBIT D
ROSLYN BANCORP, INC.
EMPLOYMENT AGREEMENT
This AGREEMENT ("Agreement") is made effective as of [Effective Date
under the Agreement and Plan of Merger], by and between Roslyn Bancorp, Inc.
(the "Company"), a corporation organized under the laws of Delaware, with its
principal offices at 1400 Old Northern Boulevard, Roslyn, New York, and John M.
Tsimbinos ("Executive"). Any reference to "Institution" herein shall mean The
Roslyn Savings Bank or any successor thereto.
WHEREAS, the Company wishes to assure itself of the services of
Executive for the period provided in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of the
Company on a full-time basis for said period.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of Executive's employment hereunder, Executive
agrees to serve as the Chairman of the Board of the Company and Vice Chairman of
the Institution. The Executive shall render administrative and management
services to the Company and the Institution such as are customarily performed by
persons in a similar executive officer capacity. During said period, Executive
also agrees to serve as a director of the Company and the Institution and, if
elected, as an officer and director of any subsidiary of the Company.
2. TERMS.
(a) The period of Executive's employment under this Agreement shall
be deemed to have commenced as of the date first above written and shall
continue through the period ending on the last day of the month in which he
attains age 65, that is, June 30, 2002.
(b) During the period of Executive's employment hereunder, except for
periods of absence occasioned by illness, reasonable vacation periods, and
reasonable leaves of absence, Executive shall devote substantial time,
attention, skill and efforts to the performance of his duties hereunder
including activities and services related to the organization, operation and
management of the Company and its direct or indirect subsidiaries
("Subsidiaries") and participation in community and civic organizations;
provided, however, that, with the approval of the Board of Directors of the
- -------- -------
Company, as evidenced by a resolution of such Board, from time to time,
Executive may serve, or continue to serve, on the boards of directors of, and
hold any other offices or positions in, companies or organizations, which, in
such Board's judgment, will not present any conflict of interest with the
Company or its Subsidiaries, or materially affect the performance of Executive's
duties pursuant to this Agreement.
(c) Notwithstanding anything herein contained to the contrary,
Executive's employment with the Company may be terminated by the Company or
Executive during the term of this Agreement, subject to the terms and conditions
of this Agreement. However, Executive shall not perform, in any respect,
directly or indirectly, during the pendency of his temporary or permanent
suspension or termination from the Institution, duties and responsibilities
formerly
<PAGE>
performed at the Institution as part of his duties and responsibilities as
Chairman of the Board of the Company and Vice Chairman of the Institution.
3. COMPENSATION AND REIMBURSEMENT.
(a) The Executive shall be entitled to an annual rate of salary from
the Company or its Subsidiaries equal to the greater of (i) $500,000 per year or
(ii) if higher, the annual rate of salary payable by the Company and its
Subsidiaries to the second highest paid officer or employee taking into account
all forms of cash compensation ("Base Salary"). Base Salary shall include any
amounts of compensation deferred by Executive under any qualified or unqualified
plan maintained by the Company and its Subsidiaries. Such Base Salary shall be
payable bi-weekly. During the period of this Agreement, Executive's Base Salary
shall be reviewed at least annually; the first such review will be made no later
than one year from the date of this Agreement. Such review shall be conducted
by the Board or by a Committee of the Board delegated such responsibility by the
Board. The Committee or the Board may increase Executive's Base Salary. Any
increase in Base Salary shall become the "Base Salary" for purposes of this
Agreement. In addition to the Base Salary provided in this Section 3(a), the
Company shall also provide Executive, at no premium cost to Executive, with all
such other benefits as provided uniformly to permanent full-time employees of
the Company and its Subsidiaries.
(b) In exchange for the Executive's agreement not to compete with the
Company or the Institution set forth in Section 10(a) hereof, the Executive
shall, in addition to the Base Salary provided for by paragraph (a) of this
Section 3, be entitled to additional compensation during the term of this
Agreement at an annual rate equal to $175,000. Such noncompete compensation
shall be payable bi-weekly.
(c) Executive shall be entitled to participate in or receive benefits
under any employee benefit plans, including, but not limited to, retirement
plans, supplemental retirement plans, pension plans, profit-sharing plans, stock
or option plans, health-and-accident plans, medical coverage or any other
employee benefit plan or arrangement made available by the Company and its
Subsidiaries at present or in the future to its senior executives and key
management employees, subject to and on a basis consistent with the terms,
conditions and overall administration of such plans and arrangements. Executive
shall be entitled to incentive compensation and bonuses as provided in any plan
or arrangement of the Company and its Subsidiaries in which Executive is
eligible to participate. Subject to the provisions of Section 3(e) of this
Agreement, nothing paid to the Executive under any such plan or arrangement will
be deemed to be in lieu of other compensation to which the Executive is entitled
under this Agreement.
(d) In addition to the Base Salary provided for by paragraph (a) of
this Section 3, the noncompete compensation provided for by paragraph (b) of
this Section 3 and other compensation provided for by paragraph (c) of this
Section 3, the Company shall pay or reimburse Executive for all reasonable
travel and other reasonable expenses incurred in the performance of Executive's
obligations under this Agreement and may provide such additional compensation in
such form and such amounts as the Board may from time to time determine.
(e) The total aggregate present value of the compensation and
benefits provided to the Executive by the Company and its Subsidiaries under
Subsections (a), (b), (c) and (e) of this Section 3 shall not be less than or
greater than $1,000,000 per year (approximately prorated for any applicable
portion of a calendar year) (the "Limit"). To the extent that the compensation
provided for in Subsections (a), (b), (c) and (e) of this Section 3 each year
during the term of this Agreement
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<PAGE>
does not at least equal the Limit, the Company or its Subsidiaries shall provide
the Executive with grants of stock options, option-related awards or awards of
the Company's common stock under The Roslyn Bancorp, Inc. 1997 Stock-Based
Incentive Plan or other plan or arrangement, valued using a generally accepted
valuation methodology (such as market value for common stock grants and Black-
Scholes or alternative option pricing methods) acceptable to the Company and the
Executive, or cash payments under incentive or other plans, such that the
estimated aggregate present value of the compensation provided to the Executive
by the Company and its Subsidiaries under Subsections (a), (b), (c) and (e) of
this Section 3 shall equal the Limit.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein
defined) during the Executive's term of employment under this Agreement, the
provisions of this Section shall apply. As used in this Agreement, an "Event of
Termination" shall mean and include any of the following: (i) the termination by
the Company of Executive's full-time employment hereunder for any reason other
than termination governed by Section 5(a) hereof, or for Cause, as defined in
Section 7 hereof; (ii) Executive's resignation from the Company's employ, upon,
any (A) unless consented to by the Executive, failure to elect or reelect or to
appoint or reappoint Executive as Chairman of the Board of the Company and Vice
Chairman of the Institution or failure to nominate or renominate Executive as a
Director of the Institution or the Company as of the date of this Agreement,
(B) a material change in Executive's function, duties, or responsibilities with
the Company or its Subsidiaries, which change would cause Executive's position
to become one of lesser responsibility, importance, or scope from the position
and attributes thereof described in Section 1, above, unless consented to by the
Executive, (C) a relocation of Executive's principal place of employment by more
than 25 miles from its location at the effective date of this Agreement, unless
consented to by the Executive, (D) a reduction in the benefits and perquisites
to the Executive from those being provided as of the effective date of this
Agreement, unless consented to by the Executive, (E) a liquidation or
dissolution of the Company or the Institution, or (F) breach of this Agreement
by the Company. Upon the occurrence of any event described in clauses (A), (B),
(C), (D), (E) or (F), above, Executive shall have the right to elect to
terminate his employment under this Agreement by resignation upon not less than
sixty (60) days prior written notice given within six full calendar months after
the event giving rise to said right to elect.
(b) Upon the occurrence of an Event of Termination, on the Date of
Termination, as defined in Section 8, the Company shall be obligated to pay
Executive, or, in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, a sum equal to the sum of:
(i) the amount (subject to the Limit) of the remaining payments that the
Executive would have earned if he had continued his employment with the
Institution during the remaining term of this Agreement at the Executive's Base
Salary at the Date of Termination; (ii) (subject to the Limit) the amount equal
to the annual contributions or payments that would have been made on Executive's
behalf to any employee benefit plans of the Institution or the Company during
the remaining term of this Agreement based on contributions or payments made (on
an annualized basis) at the Date of Termination and (iii) the amount (subject to
the Limit) of the noncompete compensation that would have been payable during
the remaining term of this Agreement based on contributions or payments made (on
an annualized basis) at the Date of Termination. At the election of the
Executive, which election is to be made prior to an Event of Termination, such
payment shall be made: (a) in a lump sum as of the Executive's Date of
Termination, (b) on a bi-weekly basis in approximately equal installments during
the remaining term of the Agreement, or (c) on an annual basis in approximately
equal installments during the remaining term of the Agreement. Such payments
shall not be reduced in the event the Executive obtains other employment
following termination of employment.
D-3
<PAGE>
5. CHANGE IN CONTROL.
(a) For purposes of this Agreement, a "Change in Control" of the
Company shall be deemed to have occurred at such time as (A) any "person" (as
the term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended ("Exchange Act")) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of voting
securities of the Institution or the Company representing 25% or more of the
Institution's or the Company's outstanding voting securities or right to acquire
such securities except for any voting securities of the Institution purchased by
the Company and any voting securities purchased by any employee benefit plan of
the Company or its Subsidiaries, or (B) individuals who constitute the Board on
the date hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election was approved by a vote of at least
three-quarters of the directors comprising the Incumbent Board, or whose
nomination for election by the Company's stockholders was approved by a
Nominating Committee solely composed of members which are Incumbent Board
members, shall be, for purposes of this clause (B), considered as though he were
a member of the Incumbent Board, or (C) a plan of reorganization, merger,
consolidation, sale of all or substantially all the assets of the Company or
similar transaction (a "Transaction") occurs or is effectuated, other than a
Transaction following which: (i) more than 50% of the equity ownership
interests of the entity resulting from such Transaction are beneficially owned
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) in
substantially the same relative proportions by persons who, immediately prior to
such Transaction, beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) more than 50% of the outstanding equity
ownerships interests in the Company; and (ii) more than 50% of the securities
entitled to vote generally in the election of directors of the entity resulting
from such Transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such Transaction, beneficially
owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act) more
than 50% of the securities entitled to vote generally in the election of
directors of the Company.
(b) If a Change in Control has occurred pursuant to Section 5(a) or
the Board has determined that a Change in Control has occurred, Executive shall
be entitled to the benefits provided in paragraphs (c) and (d), of this Section
5 upon his subsequent termination of employment at any time during the term of
this Agreement due to (i) Executive's dismissal, or (ii) Executive's voluntary
resignation following any demotion, loss of title, office or significant
authority or responsibility, reduction in the annual compensation or material
reduction in benefits or relocation of his principal place of employment by more
than 25 miles from its location immediately prior to the change in control,
unless such termination is because of his death or termination for Cause.
(c) Upon the Executive's entitlement to benefits pursuant to Section
5(b), the Company shall pay Executive, or in the event of his subsequent death,
his beneficiary or beneficiaries, or his estate, as the case may be, as
severance pay or liquidated damages, or both, a sum equal to the greater of: (i)
the payments due for the remaining term of the Agreement, including the amount
of the noncompete compensation that would have been payable during the remaining
term of this Agreement; or (ii) three (3) times Executive's annual compensation
for the most recently completed year. Such annual compensation shall include
Base Salary, commissions, bonuses, contributions or accruals on behalf of
Executive to any pension and profit sharing plan, any benefits to be paid or
received under any stock-based benefit plan, severance payments, directors or
committee fees and fringe benefits paid or to be paid to the Executive during
such years. At the election of the Executive, which election is to be made
prior to a Change in Control, such payment
D-4
<PAGE>
shall be made: (a) in a lump sum, (b) on a bi-weekly basis in approximately
equal installments over a period of thirty-six (36) months following the
Executive's termination, or (c) on an annual basis in approximately equal
installments over a period of thirty-six (36) months following the Executive's
termination. Such payments shall not be reduced in the event Executive obtains
other employment following termination of employment.
(d) Upon the Executive's entitlement to benefits pursuant to Section
5(b), the Company will cause to be continued life, medical, dental and long-term
or other disability coverage substantially equivalent to the coverage maintained
by the Institution for Executive at no premium cost to Executive prior to his
severance. Such coverage and payments shall cease upon the expiration of
thirty-six (36) months following the Change in Control.
6. CHANGE OF CONTROL RELATED PROVISIONS.
In each calendar year that Executive is entitled to receive payments
or benefits under the provisions of this Employment Agreement, the Company shall
determine if an excess parachute payment (as defined in Section 4999 of the
Internal Revenue Code of 1986, as amended, and any successor provision thereto,
(the "Code")) exists. Such determination shall be made after taking any
reductions permitted pursuant to Section 280G of the Code and the regulations
thereunder. Any amount determined to be an excess parachute payment after taking
into account such reductions shall be hereafter referred to as the "Initial
Excess Parachute Payment". As soon as practicable after a Change in Control,
the Initial Excess Parachute Payment shall be determined. Upon the Date of
Termination following a Change in Control, the Company shall pay Executive,
subject to applicable withholding requirements under applicable state or federal
law, an amount equal to:
(1) twenty (20) percent of the Initial Excess Parachute Payment (or
such other amount equal to the tax imposed under Section 4999 of
the Code); and
(2) such additional amount (tax allowance) as may be necessary to
compensate Executive for the payment by Executive of state and
federal income and excise taxes on the payment provided under
clause (1) and on any payments under this Clause (2). In
computing such tax allowance, the payment to be made under Clause
(1) shall be multiplied by the "gross up percentage" ("GUP"). The
GUP shall be determined as follows:
Tax Rate
GUP = _________
1- Tax Rate
The "Tax Rate" for purposes of computing the GUP shall be the sum
of the highest marginal federal and state income and employment-
related tax rates, including any applicable excise tax rates,
applicable to the Executive in the year in which the payment
under Clause (1) is made.
(3) Notwithstanding the foregoing, if it shall subsequently be
determined in a final judicial determination or a final administrative
settlement to which Executive is a party that the excess parachute payment as
defined in Section 4999 of the Code, reduced as described above, is more than
the Initial Excess Parachute Payment (such different amount being hereafter
referred to as the "Determinative Excess Parachute Payment") then the Company's
independent accountants shall determine the amount (the "Adjustment Amount") the
Company must pay to the Executive in
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order to put the Executive in the same position as the Executive would have been
if the Initial Excess Parachute Payment had been equal to the Determinative
Excess Parachute Payment. In determining the Adjustment Amount, independent
accountants of the Company shall take into account any and all taxes (including
any penalties and interest) paid by or for Executive or refunded to Executive or
for Executive's benefit. As soon as practicable after the Adjustment Amount has
been so determined, the Company shall pay the Adjustment Amount to Executive. In
no event however, shall Executive make any payment under this paragraph to the
Company.
7. TERMINATION FOR CAUSE.
The term "Termination for Cause" shall mean termination because of: 1)
Executive's personal dishonesty, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated duties, willful
violation of any law, rule, regulation (other than traffic violations or similar
offenses), final cease and desist order or material breach of any provision of
this Agreement which results in a material loss to the Institution or the
Company, or 2) Executive's conviction of a crime or act involving moral
turpitude or a final judgement rendered against Executive based upon actions of
Executive which involve moral turpitude. For the purposes of this Section, no
act, or the failure to act, on Executive's part shall be "willful" unless done,
or omitted to be done, not in good faith and without reasonable belief that the
action or omission was in the best interests of the Bank or its affiliates.
Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
Notice of Termination which shall include a copy of a resolution duly adopted by
the affirmative vote of not less than three-fourths of the members of the Board
at a meeting of the Board called and held for that purpose (after reasonable
notice to Executive and an opportunity for him, together with counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
Executive was guilty of conduct justifying Termination for Cause and specifying
the particulars thereof in detail. The Executive shall not have the right to
receive compensation or other benefits for any period after Termination for
Cause. During the period beginning on the date of the Notice of Termination for
Cause pursuant to Section 8 hereof through the Date of Termination, stock
options and related limited rights granted to Executive under any stock option
plan shall not be exercisable nor shall any unvested awards granted to Executive
under any stock benefit plan of the Institution, the Company or any subsidiary
or affiliate thereof, vest. At the Date of Termination, such stock options and
related limited rights and any such unvested awards shall become null and void
and shall not be exercisable by or delivered to Executive at any time subsequent
to such Termination for Cause.
8. NOTICE.
(a) Any purported termination by the Company or by Executive shall be
communicated by Notice of Termination to the other party hereto. For purposes of
this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
(b) "Date of Termination" shall mean the date specified in the Notice
of Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given);
provided, however, that if a dispute regarding the Executive's termination
exists, the "Date of Termination" shall be determined in accordance with Section
8(c) of this Agreement.
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(c) If, within thirty (30) days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, except upon the occurrence of
a Change in Control and voluntary termination by the Executive in which case the
Date of Termination shall be the date specified in the Notice, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been perfected)
and; provided, further, that the Date of Termination shall be extended by a
notice of dispute only if such notice is given in good faith and the party
giving such notice pursues the resolution of such dispute with reasonable
diligence. Notwithstanding the pendency of any such dispute, the Company will
continue to pay Executive his full compensation in effect when the notice giving
rise to the dispute was given (including, but not limited to, Base Salary) and
continue him as a participant in all compensation, benefit and insurance plans
in which he was participating when the notice of dispute was given, until the
dispute is finally resolved in accordance with this Agreement. Amounts paid
under this Section are in addition to all other amounts due under this Agreement
and shall not be offset against or reduce any other amounts due under this
Agreement.
9. POST-TERMINATION OBLIGATIONS.
All payments and benefits to Executive under this Agreement shall be
subject to Executive's compliance with this Section 9 for one (1) full year
after the earlier of the expiration of this Agreement or termination of
Executive's employment with the Company. Executive shall, upon reasonable
notice, furnish such information and assistance to the Company as may reasonably
be required by the Company in connection with any litigation in which it or any
of its subsidiaries or affiliates is, or may become, a party.
10. NON-COMPETITION AND NON-DISCLOSURE.
(a) Upon any termination of Executive's employment hereunder pursuant
to Section 4 hereof, Executive agrees not to compete with the Company or its
Subsidiaries for a period of one (1) year following such termination in any
city, town or county in which the Executive's normal business office is located
and the Company or any of its Subsidiaries has an office or has filed an
application for regulatory approval to establish an office, determined as of the
effective date of such termination, except as agreed to pursuant to a resolution
duly adopted by the Board. Executive agrees that during such period and within
said cities, towns and counties, Executive shall not work for or advise, consult
or otherwise serve with, directly or indirectly, any entity whose business
materially competes with the depository, lending or other business activities of
the Company or its Subsidiaries. The parties hereto, recognizing that
irreparable injury will result to the Company or its Subsidiaries, its business
and property in the event of Executive's breach of this Subsection 10(a) agree
that in the event of any such breach by Executive, the Company or its
Subsidiaries, will be entitled, in addition to any other remedies and damages
available, to an injunction to restrain the violation hereof by Executive,
Executive's partners, agents, servants, employees and all persons acting for or
under the direction of Executive. Executive represents and admits that in the
event of the termination of his employment pursuant to Section 7 hereof,
Executive's experience and capabilities are such that Executive can obtain
employment in a business engaged in other lines and/or of a different nature
than the Company or its Subsidiaries, and that the enforcement of a remedy by
way of injunction will not prevent Executive from earning a livelihood. Nothing
herein will be construed as prohibiting the Company or its Subsidiaries from
pursuing any other remedies available to the Company or its Subsidiaries for
such breach or threatened breach, including the recovery of damages from
Executive.
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(b) Executive recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the Company and its
Subsidiaries as it may exist from time to time, is a valuable, special and
unique asset of the business of the Company and its Subsidiaries. Executive
will not, during or after the term of his employment, disclose any knowledge of
the past, present, planned or considered business activities of the Company and
its Subsidiaries thereof to any person, firm, corporation, or other entity for
any reason or purpose whatsoever unless expressly authorized by the Board of
Directors or required by law. Notwithstanding the foregoing, Executive may
disclose any knowledge of banking, financial and/or economic principles,
concepts or ideas which are not solely and exclusively derived from the business
plans and activities of the Company. Further, Executive may disclose
information regarding the business activities of the Bank or Company to the
Superintendent of Banks of the State of New York, the New York Banking
Department, OTS and the Federal Deposit Insurance Corporation ("FDIC") pursuant
to a formal regulatory request. In the event of a breach or threatened breach
by the Executive of the provisions of this Section, the Company will be entitled
to an injunction restraining Executive from disclosing, in whole or in part, the
knowledge of the past, present, planned or considered business activities of the
Company or its Subsidiaries or from rendering any services to any person, firm,
corporation, other entity to whom such knowledge, in whole or in part, has been
disclosed or is threatened to be disclosed. Nothing herein will be construed as
prohibiting the Company from pursuing any other remedies available to the
Company for such breach or threatened breach, including the recovery of damages
from Executive.
11. SOURCE OF PAYMENTS.
(a) All payments provided in this Agreement shall be timely paid in
cash or check from the general funds of the Company subject to Section 11(b).
(b) Notwithstanding any provision herein to the contrary, payments
pursuant to this Agreement shall be allocated in proportion to the level of
activity and the time expended on such activities by the Executive as determined
by the Company and the Institution on a quarterly basis.
12. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties
hereto and supersedes any prior employment agreement between the Company or any
predecessor of the Company and Executive, except that this Agreement shall not
affect or operate to reduce any benefit or compensation inuring to the Executive
under the Employment Agreements dated as of January 23, 1997 between the
Executive and T R Financial Corp. or Roosevelt Savings Bank, respectively. No
provision of this Agreement shall be interpreted to mean that Executive is
subject to receiving fewer benefits than those available to him without
reference to this Agreement.
13. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under
this Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit
of, Executive and the Company and their respective successors and assigns.
D-8
<PAGE>
14. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have
been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.
15. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of
any provision, is held invalid, such invalidity shall not affect any other
provision of this Agreement or any part of such provision not held so invalid,
and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.
16. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
17. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of New York,
unless otherwise specified herein.
18. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by the Executive within
fifty (50) miles from the location of the Institution, in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that Executive shall be entitled to seek specific performance of his
right to be paid until the Date of Termination during the pendency of any
dispute or controversy arising under or in connection with this Agreement.
19. PAYMENT OF COSTS AND LEGAL FEES AND REINSTATEMENT OF BENEFITS.
In the event any dispute or controversy arising under or in connection
with Executive's termination is resolved in favor of the Executive, whether by
judgment, arbitration or settlement, Executive shall be entitled to the payment
of: (1) all legal fees incurred by Executive in resolving such dispute or
controversy, and (2) any back-pay, including salary, bonuses and any other cash
compensation, fringe benefits and any compensation and benefits due Executive
under this Agreement.
D-9
<PAGE>
20. INDEMNIFICATION.
The Company shall provide Executive (including his heirs, executors
and administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense and shall indemnify Executive (and his
heirs, executors and administrators) to the fullest extent permitted under
Delaware law against all expenses and liabilities reasonably incurred by him in
connection with or arising out of any action, suit or proceeding in which he may
be involved by reason of his having been a director or officer of the Company
(whether or not he continues to be a director or officer at the time of
incurring such expenses or liabilities), such expenses and liabilities to
include, but not be limited to, judgments, court costs and attorneys' fees and
the cost of reasonable settlements.
21. SUCCESSOR TO THE COMPANY.
The Company shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all the business or assets of the Institution or the Company,
expressly and unconditionally to assume and agree to perform the Company's
obligations under this Agreement, in the same manner and to the same extent that
the Company would be required to perform if no such succession or assignment had
taken place.
SIGNATURES
IN WITNESS WHEREOF, Roslyn Bancorp, Inc. has caused this Agreement to
be executed and its seal to be affixed hereunto by its duly authorized officer
and its directors, and Executive has signed this Agreement, on the ___/th/ day
of ___________, 1998.
ATTEST: ROSLYN BANCORP, INC.
By:
- ------------------------------ ------------------------------------------
Mary M. Ehrich Joseph L. Mancino
Secretary For the Board of Directors
[SEAL]
WITNESS:
By:
- ------------------------------ ------------------------------------------
John M. Tsimbinos
Executive
D-10
<PAGE>
EXHIBIT 4.1
T R FINANCIAL CORP.
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of May 25, 1998 (the "Agreement"), by
and between T R Financial Corp., a Delaware corporation ("Issuer"), and Roslyn
Bancorp, Inc., a Delaware corporation ("Grantee").
RECITALS
A. The Agreement and Plan of Merger. Grantee and Issuer have
--------------------------------
entered into an Agreement and Plan of Merger, dated as of May 25, 1998 (the
"Merger Agreement"), providing for, among other things, the merger of Issuer
with and into Grantee, with Grantee being the surviving corporation.
B. Condition to Agreement and Plan of Merger. As a condition and an
-----------------------------------------
inducement to Grantee's execution and delivery of the Merger Agreement, Grantee
has required that Issuer agree, and Issuer has agreed, to grant Grantee the
Option (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, and intending to be legally bound hereby, Issuer and
Grantee agree as follows:
1. Defined Terms. Capitalized terms which are used but not defined
-------------
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. Grant of Option. Subject to the terms and conditions set forth
---------------
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 3,488,068 shares of common stock, par value $.01 per share
("Issuer Common Stock"), of Issuer (as adjusted as set forth herein, the "Option
Shares," which shall include the Option Shares before and after any transfer of
such Option Shares, but in no event shall the number of Option Shares for which
this Option is exercisable exceed 19.9% of the issued and outstanding shares of
Issuer Common Stock), at a purchase price per Option Share (as adjusted as set
forth herein, the "Purchase Price") equal to $38.625. Each Option Share issued
upon exercise of the Option shall be accompanied by the related preferred share
purchase right ("Right") issued pursuant to the Shareholder Rights Agreement,
dated July 19, 1994, as amended (the "Rights Agreement") between Issuer and
Chemical Bank, as Rights Agent.
3. Exercise of Option.
------------------
(a) Provided that (i) Grantee or Holder (as hereinafter defined), as
applicable, shall not be in material breach of the agreements or covenants
contained in this Agreement or the Merger Agreement, and (ii) no preliminary or
permanent injunction or other order against the delivery of shares covered by
the Option issued by any court of competent jurisdiction in the United States
shall be in effect, the Holder may exercise the Option, in whole or in part, at
any
<PAGE>
time and from time to time, following the occurrence of a Purchase Event (as
hereinafter defined); provided, that, the Option shall terminate and be of no
--------
further force or effect upon the earliest to occur of (A) the Effective Time,
(B) termination of the Merger Agreement in accordance with the terms thereof
prior to the occurrence of a Purchase Event or a Preliminary Purchase Event
other than a termination thereof by Grantee pursuant to Section 6.1(b)(ii) of
the Merger Agreement (a termination of the Merger Agreement by Grantee pursuant
to Section 6.1(b)(ii) of the Merger Agreement, being referred to herein as a
"Default Termination"), (C) 18 months after a Default Termination or (D) 18
months after termination of the Merger Agreement (other than a Default
Termination) following the occurrence of a Purchase Event or a Preliminary
Purchase Event; provided, however, that any purchase of shares upon exercise of
-------- -------
the Option shall be subject to compliance with applicable law; provided further,
-------- -------
however, that if the Option cannot be exercised on any day because of an
- -------
injunction, order or similar restraint issued by a court of competent
jurisdiction, the period during which the Option may be exercised shall be
extended so that the Option shall expire no earlier than the tenth business day
after such injunction, order or restraint shall have been dissolved or when such
injunction, order or restraint shall have become permanent and no longer subject
to appeal, as the case may be. The term "Holder" shall mean the holder or
holders of the Option from time to time, and which initially is Grantee. The
rights set forth in Sections 8 and 9 of this Agreement shall terminate when the
right to exercise the Option and Substitute Option terminate (other than as a
result of a complete exercise of the Option) as set forth herein.
(b) As used herein, a "Purchase Event" means any of the following
events:
(i) Without Grantee's prior written consent, Issuer shall have
authorized, recommended, publicly proposed or publicly announced an
intention to authorize, recommend or propose, or Issuer shall have entered
into an agreement with any person (other than Grantee or any subsidiary of
Grantee) to effect (A) a merger, consolidation or similar transaction
involving Issuer or any of its significant subsidiaries, (B) the
disposition, by sale, lease, exchange or otherwise, of assets or deposits
of Issuer or any of its significant subsidiaries representing in either
case 10% or more of the consolidated assets or deposits of the Issuer and
its Subsidiaries, other than in the ordinary course of business, or (C) the
issuance, sale or other disposition by Issuer of (including by way of
merger, consolidation, share exchange or any similar transaction)
securities representing 10% or more of the voting power of Issuer or any of
its significant subsidiaries (each of (A), (B) or (C), an "Acquisition
Transaction"); or
(ii) Any person (other than Grantee or any subsidiary of Grantee)
shall have acquired beneficial ownership (as such term is defined in Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) of, or the right to acquire beneficial ownership of, or any "group"
(as such term is defined in Section 13(d)(3) of the Exchange Act), other
than a group of which Grantee or any subsidiary of Grantee is a member,
shall have been formed which beneficially owns, or has the right to acquire
beneficial ownership of, 10% or more of the voting power of Issuer or any
of its significant subsidiaries.
-2-
<PAGE>
(c) As used herein, a "Preliminary Purchase Event" means any of the
following events:
(i) Any person (other than Grantee or any subsidiary of Grantee)
shall have commenced (as such term is defined in Rule 14d-2 under the
Exchange Act) or shall have filed a registration statement under the
Securities Act of 1933, as amended, (the "Securities Act"), with respect
to, a tender offer or exchange offer to purchase any shares of Issuer
Common Stock such that, upon consummation of such offer, such person would
own or control 10% or more of the then outstanding shares of Issuer Common
Stock (such an offer being referred to herein as a "Tender Offer" or an
"Exchange Offer," respectively); or
(ii) The stockholders of Issuer shall not have approved the
Merger Agreement by the requisite vote at the meeting of the stockholders
of the Issuer required to be called to approve the Merger Agreement (the
"Issuer Meeting"), the Issuer Meeting shall not have been held or shall
have been canceled prior to termination of the Merger Agreement or Issuer's
Board of Directors shall have withdrawn or modified in a manner adverse to
Grantee the recommendation of Issuer's Board of Directors with respect to
the Merger Agreement, in each case after it shall have been publicly
announced that any person (other than Grantee or any subsidiary of Grantee)
shall have (A) made, or disclosed an intention to make, a bona fide
proposal to engage in an Acquisition Transaction, (B) commenced a Tender
Offer or filed a registration statement under the Securities Act with
respect to an Exchange Offer or (C) filed an application (or given a
notice), whether in draft or final form, under the Bank Holding Company
Act, as amended (the "BHC Act"), the Home Owners' Loan Act of 1933, as
amended ("HOLA"), the Bank Merger Act, as amended (the"BMA") or the Change
in Bank Control Act of 1978, as amended ("CBCA"), for approval to engage in
an Acquisition Transaction; or
(iii) Any person (other than Grantee or any subsidiary of
Grantee) shall have made a bona fide proposal to Issuer or its stockholders
by public announcement, or written communication that is or becomes the
subject of public disclosure, to engage in an Acquisition Transaction; or
(iv) After a proposal is made by a third party to Issuer or its
stockholders to engage in an Acquisition Transaction, or such third party
states its intention to the Issuer to make such a proposal if the Merger
Agreement terminates, and thereafter Issuer shall have breached any
representation, warranty, covenant or agreement contained in the Merger
Agreement and such breach would entitle Grantee to terminate the Merger
Agreement under Section 6.1(b) thereof (without regard to the cure period
provided for therein unless such cure is promptly effected without
jeopardizing consummation of the Merger pursuant to the terms of the Merger
Agreement).
As used in this Agreement, the term "person" shall have the meaning
specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
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<PAGE>
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Preliminary Purchase Event or Purchase Event of which it has knowledge,
it being understood that the giving of such notice by Issuer shall not be a
condition to the right of Holder to exercise the Option.
(e) In the event Holder wishes to exercise the Option, it shall send
to Issuer a written notice (the "Option Notice," the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of Option
Shares it intends to purchase pursuant to such exercise and (ii) a place and
date not earlier than three business days nor later than 45 business days from
the Notice Date for the closing (the "Closing") of such purchase (the "Closing
Date"); provided, that the first Option Notice shall be sent to Issuer within
--------
180 days after the first Purchase Event of which Grantee has been notified. If
prior notification to or approval of any Regulatory Authority is required in
connection with any such purchase, Issuer shall cooperate with the Holder in the
filing of the required notice of application for approval and the obtaining of
such approval, and the Closing shall occur promptly following such regulatory
approvals and any mandatory waiting periods. Any exercise of the Option shall
be deemed to occur on the Notice Date relating thereto.
4. Payment and Delivery of Certificates.
------------------------------------
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of Option
Shares to be purchased on such Closing Date and (ii) present and surrender this
Agreement to the Issuer at the address of the Issuer specified in Section 13(f)
of this Agreement.
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section 4(a) of
this Agreement, (i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such Closing,
which Option Shares shall be free and clear of all liens (as defined in the
Merger Agreement) and subject to no preemptive rights, and (B) if the Option is
exercised in part only, an executed new agreement with the same terms as this
Agreement evidencing the right to purchase the balance of the shares of Issuer
Common Stock purchasable hereunder, and (ii) Holder shall deliver to Issuer a
letter agreeing that Holder shall not offer to sell or otherwise dispose of such
Option Shares in violation of applicable federal and state law or of the
provisions of this Agreement.
(c) In addition to any other legend that is required by applicable
law, certificates for the Option Shares delivered at each Closing shall be
endorsed with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND PURSUANT
TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF MAY 25, 1998. A COPY OF
SUCH AGREEMENT WILL BE PROVIDED
-4-
<PAGE>
TO THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN
REQUEST THEREFOR.
It is understood and agreed that the portion of the above legend relating to the
Securities Act shall be removed by delivery of substitute certificate(s) without
such legend if Holder shall have delivered to Issuer a copy of a letter from the
staff of the Securities Exchange Commission (the "SEC"), or an opinion of
counsel in form and substance reasonably satisfactory to Issuer and its counsel,
to the effect that such legend is not required for purposes of the Securities
Act.
(d) Upon the giving by Holder to Issuer of an Option Notice, the
tender of the applicable purchase price in immediately available funds and the
tender of this Agreement to Issuer, Holder shall be deemed to be the holder of
record of the shares of Issuer Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Issuer Common Stock shall not then
be actually delivered to Holder. Issuer shall pay all expenses, and any and all
United States federal, state and local taxes and other charges that may be
payable in connection with the preparation, issuance and delivery of stock
certificates under this Section 4 in the name of Holder or its assignee,
transferee or designee.
(e) Issuer agrees (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Issuer Common Stock so that the Option may be exercised without additional
authorization of Issuer Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Issuer Common
Stock, (ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act, avoid or seek to avoid the observance or performance of any of the
covenants, stipulations or conditions to be observed or performed hereunder by
Issuer, (iii) promptly to take all action as may from time to time be required
(including (A) complying with all premerger notification, reporting and waiting
period requirements and (B) in the event prior approval of or notice to any
Regulatory Authority is necessary before the Option may be exercised,
cooperating fully with Holder in preparing such applications or notices and
providing such information to such Regulatory Authority as it may require) in
order to permit Holder to exercise the Option and Issuer duly and effectively to
issue shares of the Issuer Common Stock pursuant hereto and (iv) promptly to
take all action provided herein to protect the rights of Holder against
dilution.
5. Representations and Warranties of Issuer. Issuer hereby
----------------------------------------
represents and warrants to Grantee (and Holder, if different than Grantee) as
follows:
(a) Corporate Authority. Issuer has full corporate power and
-------------------
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby; the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Issuer, and no other corporate
proceedings on the part of Issuer are necessary to authorize this Agreement or
to consummate the transactions contemplated by this Agreement. This Agreement
has been duly and validly executed and delivered by Issuer.
-5-
<PAGE>
(b) Beneficial Ownership. To the best knowledge of Issuer, as of the
--------------------
date of this Agreement, no person or group has beneficial ownership of more than
10% of the issued and outstanding shares of Issuer Common Stock, other than the
Issuer's Employee Stock Ownership Plan.
(c) Shares Reserved for Issuance; Capital Stock. Issuer has taken
-------------------------------------------
all necessary corporate action to authorize and reserve and permit it to issue,
and at all times from the date hereof through the termination of this Agreement
in accordance with its terms, will have reserved for issuance upon the exercise
of the Option, that number of shares of Issuer Common Stock equal to the maximum
number of shares of Issuer Common Stock at any time and from time to time
purchasable upon exercise of the Option, and all such shares, upon issuance
pursuant to the Option, will be duly authorized, validly issued, fully paid and
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests (other than those created by this Agreement)
and not subject to any preemptive rights.
(d) No Violations. The execution, delivery and performance of this
-------------
Agreement does not and will not, and the consummation by Issuer of any of the
transactions contemplated hereby will not, constitute or result in (i) a breach
or violation of, or a default under, its Certificate of Incorporation or By-
Laws, or the comparable governing instruments of any of its subsidiaries, or
(ii) a breach or violation of, or a default under, any agreement, lease,
contract, note, mortgage, indenture, arrangement or other obligation of it or
any of its subsidiaries (with or without the giving of notice, the lapse of time
or both) or under any law, rule, ordinance or regulation or judgment, decree,
order, award or governmental or non-governmental permit or license to which it
or any of its subsidiaries is subject, that would, in any case, give any other
person the ability to prevent or enjoin Issuer's performance under this
Agreement in any material respect.
6. Representations and Warranties of Grantee. Grantee hereby
-----------------------------------------
represents and warrants to Issuer that Grantee has full corporate power and
authority to enter into this Agreement and, subject to obtaining the approvals
referred to in this Agreement, to consummate the transactions contemplated by
this Agreement; the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Grantee; and this Agreement has
been duly executed and delivered by Grantee.
7. Adjustment upon Changes in Issuer Capitalization, Etc.
-----------------------------------------------------
(a) In the event of any change in Issuer Common Stock by reason of a
stock dividend, stock split, split-up, recapitalization, combination, exchange
of shares, exercise of the Company Rights or similar transaction, the type and
number of shares or securities subject to the Option, and the Purchase Price
therefor, shall be adjusted appropriately, and proper provision shall be made in
the agreements governing any such transaction so that Holder shall receive, upon
exercise of the Option, the number and class of shares or other securities or
property that Holder would have received in respect of Issuer Common Stock if
the Option had been exercised immediately prior to such event, or the record
date therefor, as applicable. If any additional
-6-
<PAGE>
shares of Issuer Common Stock are issued after the date of this Agreement (other
than pursuant to an event described in the first sentence of this Section 7(a),
upon exercise of any option to purchase Issuer Common Stock outstanding on the
date hereof or upon conversion into Issuer Common Stock of any convertible
security of Issuer outstanding on the date hereof), the number of shares of
Issuer Common Stock subject to the Option shall be adjusted so that, after such
issuance, it, together with any shares of Issuer Common Stock previously issued
pursuant hereto, equals 19.9% of the number of shares of Issuer Common Stock
then issued and outstanding, without giving effect to any shares subject to or
issued pursuant to the Option. No provision of this Section 7 shall be deemed to
affect or change, or constitute authorization for any violation of, any of the
covenants or representations in the Merger Agreement.
(b) In the event that Issuer shall enter into an agreement (i) to
consolidate with or merge into any person, other than Grantee or one of its
subsidiaries, and Issuer shall not be the continuing or surviving corporation of
such consolidation or merger, (ii) to permit any person, other than Grantee or
one of its subsidiaries, to merge into Issuer and Issuer shall be the continuing
or surviving corporation, but, in connection with such merger, the then
outstanding shares of Issuer Common Stock shall be changed into or exchanged for
stock or other securities of Issuer or any other person or cash or any other
property, or the outstanding shares of Issuer Common Stock immediately prior to
such merger shall, after such merger, represent less than 50% of the outstanding
shares and share equivalents of the merged company or (iii) to sell or otherwise
transfer all or substantially all of its assets or deposits to any person, other
than Grantee or one of its subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provisions so that the
Option shall, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of Holder, of either (A) the
Acquiring Corporation (as hereinafter defined), (B) any person that controls the
Acquiring Corporation or (C) in the case of a merger described in clause (ii),
Issuer (such person being referred to as "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option,
provided, that, if the terms of the Substitute Option cannot, for legal reasons,
- --------
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to Holder. Substitute Option Issuer shall also enter
into an agreement with Holder in substantially the same form as this Agreement,
which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock (as hereinafter defined) as is equal to the
Assigned Value (as hereinafter defined) multiplied by the number of shares of
Issuer Common Stock for which the Option was theretofore exercisable, divided by
the Average Price (as hereinafter defined). The exercise price of the
Substitute Option per share of Substitute Common Stock (the "Substitute Option
Price") shall then be equal to the Purchase Price multiplied by a fraction in
which the numerator is the number of shares of Issuer Common Stock for which the
Option was theretofore exercisable and the denominator is the number of shares
of the Substitute Common Stock for which the Substitute Option is exercisable.
-7-
<PAGE>
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (A) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other
than Issuer), (B) Issuer in a merger in which Issuer is the continuing or
surviving person, or (C) the transferee of all or substantially all of
Issuer's assets (or a substantial part of the assets of its subsidiaries
taken as a whole).
(ii) "Substitute Common Stock" shall mean the shares of capital
stock (or similar equity interest) with the greatest voting power in
respect of the election of directors (or persons similarly responsible for
the direction of the business and affairs) of the Substitute Option Issuer.
(iii) "Assigned Value" shall mean the highest of (A) the price
per share of Issuer Common Stock at which a Tender Offer or an Exchange
Offer therefor has been made, (B) the price per share of Issuer Common
Stock to be paid by any third party pursuant to an agreement with Issuer,
(C) the highest closing price for shares of Issuer Common Stock within the
sixty-day period immediately preceding the consolidation, merger or sale in
question and (D) in the event of a sale of all or substantially all of
Issuer's assets or deposits, an amount equal to (x) the sum of the price
paid in such sale for such assets (and/or deposits) and the current market
value of the remaining assets of Issuer, as determined by a nationally
recognized investment banking firm selected by Holder, divided by (y) the
number of shares of Issuer Common Stock outstanding at such time. In the
event that a Tender Offer or an Exchange Offer is made for Issuer Common
Stock or an agreement is entered into for a merger or consolidation
involving consideration other than cash, the value of the securities or
other property issuable or deliverable in exchange for Issuer Common Stock
shall be determined by a nationally recognized investment banking firm
selected by Holder.
(iv) "Average Price" shall mean the average closing price of a
share of Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding
such consolidation, merger or sale; provided, that, if Issuer is the issuer
--------
of the Substitute Option, the Average Price shall be computed with respect
to a share of common stock issued by Issuer, the person merging into Issuer
or by any company which controls such person, as Holder may elect.
(f) In no event, pursuant to any of the foregoing paragraphs, shall
the Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 19.9% of the aggregate of the shares of Substitute Common Stock
but for the limitation in the first sentence of this Section 7(f), Substitute
Option Issuer shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in the
first sentence of this Section 7(f) over (ii) the value of the Substitute Option
after giving effect to the limitation in the first sentence of this Section
7(f). This
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<PAGE>
difference in value shall be determined by a nationally recognized investment
banking firm selected by Holder.
(g) Issuer shall not enter into any transaction described in Section
7(b) of this Agreement unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including, without
limitation, any action that may be necessary so that the holders of the other
shares of common stock issued by Substitute Option Issuer are not entitled to
exercise any rights by reason of the issuance or exercise of the Substitute
Option and the shares of Substitute Common Stock are otherwise in no way
distinguishable from or have lesser economic value (other than any diminution in
value resulting from the fact that the shares Substitute Common Stock are
restricted securities, as defined in Rule 144, promulgated under the Securities
Act ("Rule 144"), or any successor provision) than other shares of common stock
issued by Substitute Option Issuer).
8. Repurchase at the Option of Holder.
----------------------------------
(a) Subject to the last sentence of Section 3(a) of this Agreement,
at the request of Holder at any time commencing upon the first occurrence of a
Repurchase Event (as defined in Section 8(d) hereof) and ending 12 months
immediately thereafter, Issuer shall repurchase from Holder (i) the Option and
(ii) all shares of Issuer Common Stock purchased by Holder pursuant hereto with
respect to which Holder then has beneficial ownership. The date on which Holder
exercises its rights under this Section 8 is referred to as the "Request Date."
Such repurchase shall be at an aggregate price (the "Section 8 Repurchase
Consideration") equal to the sum of:
(i) The aggregate Purchase Price paid by Holder for any shares of
Issuer Common Stock acquired pursuant to the Option with respect to which
Holder then has beneficial ownership;
(ii) The excess, if any, of (A) the Applicable Price (as defined
below) for each share of Issuer Common Stock over (B) the Purchase Price
(subject to adjustment pursuant to Section 7 of this Agreement), multiplied
by the number of shares of Issuer Common Stock with respect to which the
Option has not been exercised; and
(iii) The excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7 of this
Agreement) paid (or, in the case of Option Shares with respect to which the
Option has been exercised but the Closing Date has not occurred, payable)
by Holder for each share of Issuer Common Stock with respect to which the
Option has been exercised and with respect to which Holder then has
beneficial ownership, multiplied by the number of such shares.
(b) If Holder exercises its rights under this Section 8, Issuer shall,
within 10 business days after the Request Date, pay the Section 8 Repurchase
Consideration to Holder in immediately available funds, and contemporaneously
with such payment, Holder shall surrender to Issuer the Option and the
certificates evidencing the shares of Issuer Common Stock purchased
-9-
<PAGE>
thereunder with respect to which Holder then has beneficial ownership, and
Holder shall warrant that it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all Liens. Notwithstanding
the foregoing, to the extent that prior notification to or approval of any
Regulatory Authority is required in connection with the payment of all or any
portion of the Section 8 Repurchase Consideration, Holder shall have the ongoing
option to revoke its request for repurchase pursuant to this Section 8, in whole
or in part, or to require that Issuer deliver from time to time that portion of
the Section 8 Repurchase Consideration that it is not then so prohibited from
paying and promptly file the required notice or application for approval and
expeditiously process the same (and each party shall cooperate with the other in
the filing of any such notice or application and the obtaining of any such
approval). If any Regulatory Authority disapproves of any part of Issuer's
proposed repurchase pursuant to this Section 8, Issuer shall promptly give
notice of such fact to Holder and Holder shall have the right (i) to revoke the
repurchase request or (ii) to the extent permitted by such Regulatory Authority,
determine whether the repurchase should apply to the Option and/or Option Shares
and to what extent to each, and Holder shall thereupon have the right to
exercise the Option as to the number of Option Shares for which the Option was
exercisable at the Request Date less the number of shares covered by the Option
in respect of which payment has been made pursuant to Section 8(a)(ii) of this
Agreement. Holder shall notify Issuer of its determination under the preceding
sentence within five business days of receipt of notice of disapproval of the
repurchase. Notwithstanding anything herein to the contrary, in the event that
Issuer delivers to the Holder written notice accompanied by a certification of
Issuer's independent auditor each stating that a requested repurchase of Issuer
Common Stock would result in the recapture of Issuer's bad debt reserves under
the Internal Revenue Code of 1986, as amended, Holder's repurchase request shall
be deemed to be automatically revoked.
Notwithstanding anything herein to the contrary, all of Holder's
rights under this Section 8 shall terminate on the date of termination of this
Option pursuant to Section 3(a) of this Agreement.
(c) For purposes of this Agreement, the "Applicable Price" means the
highest of (i) the highest price per share of Issuer Common Stock paid for any
such share by the person or groups described in Section 8(d)(i) hereof, (ii) the
price per share of Issuer Common Stock received by holders of Issuer Common
Stock in connection with any merger, sale or other business combination
transaction described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii) of this
Agreement, or (iii) the highest closing sales price per share of Issuer Common
Stock quoted on the New York Stock Exchange ("NYSE"), the American Stock
Exchange ("AMEX") or the National Market System of The Nasdaq Stock Market
("Nasdaq") (or if Issuer Common Stock is not quoted on the NYSE, AMEX or Nasdaq,
the highest bid price per share as quoted on the principal trading market or
securities exchange on which such shares are traded as reported by a recognized
source chosen by Holder) during the 40 business days preceding the Request Date;
provided, however, that in the event of a sale of less than all of Issuer's
- -------- -------
assets, the Applicable Price shall be the sum of the price paid in such sale for
such assets and the current market value of the remaining assets of Issuer as
determined by a nationally recognized investment banking firm selected by
Holder, divided by the number of shares of the Issuer Common Stock outstanding
at the time of such sale. If the consideration to be offered, paid or received
pursuant to either of the foregoing clauses (i) or (ii)
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<PAGE>
shall be other than in cash, the value of such consideration shall be determined
in good faith by an independent nationally recognized investment banking firm
selected by Holder and reasonably acceptable to Issuer, which determination
shall be conclusive for all purposes of this Agreement.
(d) As used herein, "Repurchase Event" shall occur if (i) any person
(other than Grantee or any subsidiary of Grantee) shall have acquired beneficial
ownership of (as such term is defined in Rule 13d-3, promulgated under the
Exchange Act), or the right to acquire beneficial ownership of, or any "group"
(as such term is defined under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of, more than
25% of the then outstanding shares of Issuer Common Stock, or (ii) any of the
transactions described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii) of this
Agreement shall be consummated.
9. Repurchase of Substitute Option.
-------------------------------
(a) Subject to the last sentence of Section 3(a) of this Agreement,
at the request of Holder at any time commencing upon the first occurrence of a
Repurchase Event (as defined in Section 8(d) hereof) and ending 12 months
immediately thereafter, Substitute Option Issuer (or any successor entity
thereof) shall repurchase from Holder (i) the Substitute Option and (ii) all
shares of Substitute Common Stock purchased by Holder pursuant hereto with
respect to which Holder then has beneficial ownership. The date on which Holder
exercises its rights under this Section 9 is referred to as the "Section 9
Request Date." Such repurchase shall be at an aggregate price (the "Section 9
Repurchase Consideration") equal to the sum of:
(i) The aggregate Purchase Price paid by Holder for any shares of
Substitute Common Stock acquired pursuant to the Substitute Option with
respect to which Holder then has beneficial ownership;
(ii) The excess, if any, of (A) the Highest Closing Price (as
defined below) for each share of Substitute Common Stock over (B) the
Purchase Price (subject to adjustment pursuant to Section 7 of this
Agreement), multiplied by the number of shares of Substitute Common Stock
with respect to which the Substitute Option has not been exercised; and
(iii) The excess, if any, of the Highest Closing Price over the
Purchase Price (subject to adjustment pursuant to Section 7 of this
Agreement) paid (or, in the case of Substitute Option Shares with respect
to which the Substitute Option has been exercised but the Closing Date has
not occurred, payable) by Holder for each share of Substitute Common Stock
with respect to which the Substitute Option has been exercised and with
respect to which Holder then has beneficial ownership, multiplied by the
number of such shares.
(b) If Holder exercises its rights under this Section 9, Substitute
Option Issuer shall, within 10 business days after the Section 9 Request Date,
pay the Section 9 Repurchase Consideration to Holder in immediately available
funds, and contemporaneously with such payment, Holder shall surrender to
Substitute Option Issuer the Substitute Option and the
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<PAGE>
certificates evidencing the shares of Substitute Common Stock purchased
thereunder with respect to which Holder then has beneficial ownership, and
Holder shall warrant that it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all Liens. Notwithstanding
the foregoing, to the extent that prior notification to or approval of any
Regulatory Authority is required in connection with the payment of all or any
portion of the Section 9 Repurchase Consideration, Holder shall have the ongoing
option to revoke its request for repurchase pursuant to this Section 9, in whole
or in part, or to require that Substitute Option Issuer deliver from time to
time that portion of the Section 9 Repurchase Consideration that it is not then
so prohibited from paying and promptly file the required notice or application
for approval and expeditiously process the same (and each party shall cooperate
with the other in the filing of any such notice or application and the obtaining
of any such approval). If any Regulatory Authority disapproves of any part of
Substitute Option Issuer's proposed repurchase pursuant to this Section 9,
Substitute Option Issuer shall promptly give notice of such fact to Holder and
Holder shall have the right (i) to revoke the repurchase request or (ii) to the
extent permitted by such Regulatory Authority, determine whether the repurchase
should apply to the Substitute Option and/or Substitute Option Shares and to
what extent to each, and Holder shall thereupon have the right to exercise the
Substitute Option as to the number of Substitute Option Shares for which the
Substitute Option was exercisable at the Section 9 Request Date less the number
of shares covered by the Substitute Option in respect of which payment has been
made pursuant to Section 9(a)(ii) of this Agreement. Holder shall notify
Substitute Option Issuer of its determination under the preceding sentence
within five business days of receipt of notice of disapproval of the repurchase.
Notwithstanding anything herein to the contrary, in the event that Substitute
Option Issuer delivers to the Holder written notice accompanied by a
certification of Substitute Option Issuer's independent auditor each stating
that a requested repurchase of Substitute Common Stock would result in the
recapture of Substitute Option Issuer's bad debt reserves under the Internal
Revenue Code of 1986, as amended, Holder's repurchase request shall be deemed to
be automatically revoked.
Notwithstanding anything herein to the contrary, all of Holder's
rights under this Section 9 shall terminate on the date of termination of this
Substitute Option pursuant to Section 3(a) of this Agreement.
(c) For purposes of this Agreement, the "Highest Closing Price" means
the highest of closing sales price for shares of Substitute Common Stock quoted
on the Nasdaq (or if the Substitute Common Stock is not quoted on the Nasdaq, on
the principal trading market on which such shares are traded as reported by a
recognized source) during the six-month period preceding the Section 9 Request
Date.
10. Registration Rights.
-------------------
(a) Demand Registration Rights. Issuer shall, subject to the
--------------------------
conditions of Section 10(c) of this Agreement, if requested by any Holder,
including Grantee and any permitted transferee ("Selling Shareholder"), as
expeditiously as possible, prepare and file and keep current a registration
statement under the Securities Act if such registration is necessary in order to
permit the sale or other disposition of any or all shares of Issuer Common Stock
or other securities that
-12-
<PAGE>
have been acquired by or are issuable to the Selling Shareholder upon exercise
of the Option in accordance with the intended method of sale or other
disposition stated by the Selling Shareholder in such request, including without
limitation a "shelf" registration statement under Rule 415, promulgated under
the Securities Act, or any successor provision, and Issuer shall use its best
efforts to qualify such shares or other securities for sale under any applicable
state securities laws.
(b) Additional Registration Rights. If Issuer at any time after the
------------------------------
exercise of the Option proposes to register any shares of Issuer Common Stock
under the Securities Act in connection with an underwritten public offering of
such Issuer Common Stock, Issuer will promptly give written notice to the
Selling Shareholders of its intention to do so and, upon the written request of
any Selling Shareholder given within 30 days after receipt of any such notice
(which request shall specify the number of shares of Issuer Common Stock
intended to be included in such underwritten public offering by the Selling
Shareholder), Issuer will cause all such shares for which a Selling Shareholder
requests participation in such registration, to be so registered and included in
such underwritten public offering; provided, however, that Issuer may elect to
-------- -------
not cause some or all of such shares to be so registered (i) if the underwriters
in the Public Offering in good faith object for valid business reasons, or (ii)
in the case of a registration solely to implement an employee benefit agreement
or a registration filed on Form S-4 of the Securities Act or any equivalent or
successor Form. If some, but not all the shares of Issuer Common Stock, with
respect to which Issuer shall have received requests for registration pursuant
to this Section 10(b), shall be excluded from such registration, Issuer shall
make appropriate allocation of shares to be registered among the Selling
Shareholders desiring to register their shares pro rata in the proportion that
the number of shares requested to be registered by each such Selling Shareholder
bears to the total number of shares requested to be registered by all such
Selling Shareholders then desiring to have Issuer Common Stock registered for
sale.
(c) Conditions to Required Registration. Issuer shall use all
-----------------------------------
reasonable efforts to cause each registration statement referred to in Section
10(a) of this Agreement to become effective and to obtain all consents or
waivers of other parties which are required therefor and to keep such
registration statement effective, provided, however, that Issuer may delay any
-------- -------
registration of Option Shares required pursuant to Section 10(a) of this
Agreement for a period not exceeding 90 days provided Issuer shall in good faith
determine that any such registration would adversely affect an offering or
contemplated offering of other securities by Issuer, and Issuer shall not be
required to register Option Shares under the Securities Act pursuant to Section
10(a) hereof:
(i) Prior to the earliest of (A) termination of the Merger
Agreement pursuant to Article VI thereof, (B) failure to obtain the
requisite stockholder approval pursuant to Section 6.1(b) of the Merger
Agreement, and (C) a Purchase Event or a Preliminary Purchase Event;
(ii) On more than one occasion during any calendar year;
(iii) Within 90 days after the effective date of a registration
referred to in Section 10(b) of this Agreement pursuant to which the
Selling Shareholder or Selling
-13-
<PAGE>
Shareholders concerned were afforded the opportunity to register such
shares under the Securities Act and such shares were registered as
requested; and
(iv) Unless a request therefor is made to Issuer by Selling
Shareholders that hold at least 25% or more of the aggregate number of
Option Shares (including shares of Issuer Common Stock issuable upon
exercise of the Option) then outstanding.
In addition to the foregoing, Issuer shall not be required to maintain
the effectiveness of any registration statement after the expiration of nine
months from the effective date of such registration statement. Issuer shall use
all reasonable efforts to make any filings, and take all steps, under all
applicable state securities laws to the extent necessary to permit the sale or
other disposition of the Option Shares so registered in accordance with the
intended method of distribution for such shares; provided, however, that Issuer
-------- -------
shall not be required to consent to general jurisdiction or qualify to do
business in any state where it is not otherwise required to so consent to such
jurisdiction or to so qualify to do business.
(d) Expenses. Except where applicable state law prohibits such
--------
payments, Issuer will pay all expenses (including without limitation
registration fees, qualification fees, blue sky fees and expenses (including the
fees and expenses of counsel), legal expenses, including the reasonable fees and
expenses of one counsel to the holders whose Option Shares are being registered,
printing expenses and the costs of special audits or "cold comfort" letters,
expenses of underwriters, excluding discounts and commissions but including
liability insurance if Issuer so desires or the underwriters so require, and the
reasonable fees and expenses of any necessary special experts) in connection
with each registration pursuant to Section 10(a) or 10(b) of this Agreement
(including the related offerings and sales by holders of Option Shares) and all
other qualifications, notifications or exemptions pursuant to Section 10(a) or
10(b) of this Agreement.
(e) Indemnification. In connection with any registration under
---------------
Section 10(a) or 10(b) of this Agreement, Issuer hereby indemnifies the Selling
Shareholders, and each underwriter thereof, including each person, if any, who
controls such holder or underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, losses, claims, damages and liabilities
caused by any untrue, or alleged untrue, statement of a material fact contained
in any registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) or any preliminary prospectus,
or caused by any omission, or alleged omission, to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such expenses, losses, claims, damages or
liabilities of such indemnified party are caused by any untrue statement or
alleged untrue statement that was included by Issuer in any such registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) in reliance upon and in conformity with,
information furnished in writing to Issuer by such indemnified party expressly
for use therein, and Issuer and each officer, director and controlling person of
Issuer shall be indemnified by such Selling Shareholders, or by such
underwriter, as the case may be, for all such expenses, losses, claims, damages
and liabilities caused by any untrue, or alleged untrue, statement, that was
included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance
-14-
<PAGE>
upon, and in conformity with, information furnished in writing to Issuer by such
holder or such underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this Section 10(e)
of notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this Section 10(e), such indemnified party shall notify
the indemnifying party in writing of the commencement of such action, but the
failure so to notify the indemnifying party shall not relieve it of any
liability which it may otherwise have to any indemnified party under this
Section 10(e). In case notice of commencement of any such action shall be given
to the indemnifying party as above provided, the indemnifying party shall be
--------
entitled to participate in and, to the extent it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense of such
action at its own expense, with counsel chosen by it and satisfactory to such
indemnified party. The indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel (other than reasonable costs of
investigation) shall be paid by the indemnified party unless (i) the
indemnifying party either agrees to pay the same, (ii) the indemnifying party
fails to assume the defense of such action with counsel satisfactory to the
indemnified party, or (iii) the indemnified party has been advised by counsel
that one or more legal defenses may be available to the indemnifying party that
may be contrary to the interest of the indemnified party, in which case the
indemnifying party shall be entitled to assume the defense of such action
notwithstanding its obligation to bear fees and expenses of such counsel. No
indemnifying party shall be liable for any settlement entered into without its
consent, which consent may not be unreasonably withheld.
If the indemnification provided for in this Section 10(e) is
unavailable to a party otherwise entitled to be indemnified in respect of any
expenses, losses, claims, damages or liabilities referred to herein, then the
indemnifying party, in lieu of indemnifying such party otherwise entitled to be
indemnified, shall contribute to the amount paid or payable by such party to be
indemnified as a result of such expenses, losses, claims, damages or liabilities
in such proportion as is appropriate to reflect the relative benefits received
by Issuer, the Selling Shareholders and the underwriters from the offering of
the securities and also the relative fault of Issuer, the Selling Shareholders
and the underwriters in connection with the statements or omissions which
resulted in such expenses, losses, claims, damages or liabilities, as well as
any other relevant equitable considerations. The amount paid or payable by a
party as a result of the expenses, losses, claims, damages and liabilities
referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim; provided, however, that in no case shall any Selling
-------- -------
Shareholder be responsible, in the aggregate, for any amount in excess of the
net offering proceeds attributable to its Option Shares included in the
offering. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. Any
obligation by any holder to indemnify shall be several and not joint with other
holders.
-15-
<PAGE>
In connection with any registration pursuant to Section 10(a) or 10(b)
of this Agreement, Issuer and each Selling Shareholder (other than Grantee)
shall enter into an agreement containing the indemnification provisions of
Section 10(e) of this Agreement.
(f) Miscellaneous Reporting. Issuer shall comply with all reporting
-----------------------
requirements and will do all such other things as may be necessary to permit the
expeditious sale at any time of any Option Shares by the Selling Shareholders
thereof in accordance with and to the extent permitted by any rule or regulation
promulgated by the SEC from time to time, including, without limitation, Rule
144. Issuer shall at its expense provide the Selling Shareholders with any
information necessary in connection with the completion and filing of any
reports or forms required to be filed by them under the Securities Act or the
Exchange Act, or required pursuant to any state securities laws or the rules of
any stock exchange.
(g) Issue Taxes. Issuer will pay all stamp taxes in connection with
-----------
the issuance and the sale of the Option Shares and in connection with the
exercise of the Option, and will save the Selling Shareholders harmless, without
limitation as to time, against any and all liabilities, with respect to all such
taxes.
11. Quotation; Listing. If Issuer Common Stock or any other
------------------
securities to be acquired in connection with the exercise of the Option are then
authorized for quotation or trading or listing on the NYSE or Nasdaq or any
securities exchange, Issuer, upon the request of Holder, will promptly file an
application, if required, to authorize for quotation or trading or listing the
shares of Issuer Common Stock or other securities to be acquired upon exercise
of the Option on the NYSE or Nasdaq or such other securities exchange and will
use its best efforts to obtain approval, if required, of such quotation or
listing as soon as practicable.
12. Division of Option. This Agreement (and the Option granted
------------------
hereby) are exchangeable, without expense, at the option of Holder, upon
presentation and surrender of this Agreement at the principal office of Issuer
for other Agreements providing for Options of different denominations entitling
the holder thereof to purchase in the aggregate the same number of shares of
Issuer Common Stock purchasable hereunder. The terms "Agreement" and "Option"
as used herein include any other Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon receipt by
Issuer of evidence reasonably satisfactory to it of the loss, theft, destruction
or mutilation of this Agreement, and (in the case of loss, theft or destruction)
of reasonably satisfactory indemnification, and upon surrender and cancellation
of this Agreement, if mutilated, Issuer will execute and deliver a new Agreement
of like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
13. Profit Limitation.
-----------------
(a) Notwithstanding any other provision of this agreement, in no
event shall Grantee's Total Profit (as hereinafter defined) exceed $50 million,
plus Grantee's documented, reasonable out-of-pocket expenses (including fees and
expenses of legal, financial and accounting
-16-
<PAGE>
advisors) incurred in connection with the transactions contemplated by the
Merger Agreement, and, if it otherwise would exceed such amount, Grantee, at its
sole election, shall either (a) deliver to Robin for cancellation Shares
previously purchased by Grantee, (b) pay cash or other consideration to Robin or
(c) undertake any combination thereof, so that Grantee's Total Profit shall not
exceed $50 million, plus Grantee's documented, reasonable out-of-pocket expenses
(including fees and expenses of legal, financial and accounting advisors)
incurred in connection with the transactions contemplated by the Merger
Agreement, after taking into account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, this
Option may not be exercised for a number of Shares as would, as of the Notice
Date, result in a Notional Total Profit (as defined below) of more than $50
million, plus Grantee's documented, reasonable out-of-pocket expenses (including
fees and expenses of legal, financial and accounting advisors) incurred in
connection with the transactions contemplated by the Merger Agreement, and, if
exercise of the Option otherwise would exceed such amount, Grantee, at its
discretion, may increase the Purchase Price for that number of Shares set forth
in the Stock Exercise Notice so that the Notional Total Profit shall not exceed
$50 million, plus Grantee's documented, reasonable out-of-pocket expenses
(including fees and expenses of legal, financial and accounting advisors)
incurred in connection with the transactions contemplated by the Merger
Agreement; provided, that nothing in this sentence shall restrict any exercise
--------
of the Option permitted hereby on any subsequent date at the Purchase Price set
forth in Section 2 hereof.
(c) As used herein, the term "Total Profit" shall mean the aggregate
amount (before taxes) of the following: (i) the amount of cash received by
Grantee pursuant to Section 8(a)(ii) hereof, (ii) (x) the amount received by
Grantee pursuant to the repurchase of Option Shares pursuant to Section 8 or
Section 9 hereof, less (y) Grantee's purchase price for such Option Shares, and
(iii) (z) the net cash amounts received by Grantee pursuant to the sale of
Option Shares (or any other securities into which such Option Shares are
converted or exchanged) to any unaffiliated party, less (y) Grantee's purchase
price for such Option Shares.
(d) As used herein, the term "Notional Total Profit" with respect to
any number of Option Shares as to which Grantee may propose to exercise this
Option shall be the Total Profit determined as of the date of the Stock Exercise
Notice assuming that this Option were exercised on such date for such number of
Shares and assuming that such Option Shares, together with all other Option
Shares held by Grantee and its affiliates as of such date, were sold for cash at
the closing market price for the Common Stock as of the close of business on the
preceding trading day (less customary brokerage commissions).
14. Miscellaneous.
-------------
(a) Expenses. Except to the extent expressly provided for herein,
--------
each of the parties hereto shall bear and pay all costs and expenses incurred by
it or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
-17-
<PAGE>
(b) Waiver and Amendment. Any provision of this Agreement may be
--------------------
waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(c) Entire Agreement; No Third-Party Beneficiaries; Severability.
------------------------------------------------------------
This Agreement, together with the Merger Agreement and the other documents and
instruments referred to herein and therein, between Grantee and Issuer (i)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (ii) is not intended to confer upon any person other
than the parties hereto (other than the indemnified parties under Section 10(e)
of this Agreement and any transferees of the Option Shares or any permitted
transferee of this Agreement pursuant to Section 14(h) of this Agreement) any
rights or remedies hereunder. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or Regulatory
Authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated. If
for any reason such court or Regulatory Authority determines that the Option
does not permit Holder to acquire, or does not require Issuer to repurchase, the
full number of shares of Issuer Common Stock as provided in Section 3 of this
Agreement (as may be adjusted herein), it is the express intention of Issuer to
allow Holder to acquire or to require Issuer to repurchase such lesser number of
shares as may be permissible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and construed in
-------------
accordance with the laws of the State of New York without regard to any
applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained herein
--------------------
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be
-------
in writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the addresses set forth in the Merger Agreement (or
at such other address for a party as shall be specified by like notice).
(g) Counterparts. This Agreement and any amendments hereto may be
------------
executed in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed, it
being understood that both parties need not sign the same counterpart.
(h) Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder or under the Option shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other party, except that Holder may assign this
Agreement to a wholly-owned subsidiary of Holder and Holder may assign
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<PAGE>
its rights hereunder in whole or in part after the occurrence of a Purchase
Event. Subject to the preceding sentence, this Agreement shall be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
(i) Further Assurances. In the event of any exercise of the Option
------------------
by the Holder, Issuer, and the Holder shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
(j) Specific Performance. The parties hereto agree that this
--------------------
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection with
the obtaining of any such equitable relief and that this provision is without
prejudice to any other rights that the parties hereto may have for any failure
to perform this Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
T R FINANCIAL CORP.
By: /s/ John M. Tsimbinos
----------------------------------------------
John M. Tsimbinos
Chairman of the Board and
Chief Executive Officer
ROSLYN BANCORP, INC.
By: /s/ Joseph L. Mancino
----------------------------------------------
Joseph L. Mancino
Chairman of the Board, President
and Chief Executive Officer
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