EXHIBIT 10.2

 

STOCK OPTION AGREEMENT

 

STOCK OPTION AGREEMENT, dated as of June 27, 2003, between New York Community
Bancorp, Inc., a Delaware corporation (“Grantee”), and Roslyn Bancorp, Inc., a
Delaware corporation (“Issuer”).

 

W I T N E S S E T H:

 

WHEREAS, Grantee and Issuer are entering into an Agreement and Plan of Merger
(the “Merger Agreement”);

 

WHEREAS, as a condition and an inducement to Grantee’s entering into the Merger
Agreement, Issuer is granting Grantee the Option (as hereinafter defined) and,
as a condition and an inducement to Issuer’s entering into the Merger Agreement,
Grantee is granting Issuer a Reciprocal Option (as hereinafter defined) on terms
and conditions substantially identical to those of this Agreement; and

 

WHEREAS, the Board of Directors of Issuer has approved the grant of the Option
and the Merger Agreement;

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements set forth herein and in the Merger Agreement, the parties hereto
agree as follows:

 

1.    Grant of Option.    Issuer hereby grants to Grantee an unconditional,
irrevocable option (the “Option”) to purchase, subject to the terms hereof, up
to an aggregate of 15,000,000 fully paid and nonassessable shares of the common
stock, par value $0.01 per share, of Issuer (“Common Stock”) at a price per
share equal to $20.85 (such price, as adjusted if applicable, the “Option
Price”); provided, however, that in no event shall the number of shares for
which this Option is exercisable (when exercisable) exceed 19.9% of the issued
and outstanding shares of Common Stock without giving effect to any shares
subject to or issued pursuant to this Option. The number of shares of Common
Stock that may be received upon the exercise of the Option and the Option Price
are subject to adjustment as herein set forth.

 

2.    Exercise of Option.    (a)  The Holder (as hereinafter defined) may
exercise the Option, in whole or part, if, but only if, both an Initial
Triggering Event (as hereinafter defined) and a Subsequent Triggering Event (as
hereinafter defined) shall have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined), provided that the Holder shall have
sent the written notice of such exercise (as provided in subsection (f) of this
Section 2) within six (6) months following such Subsequent Triggering Event (or
such later period as provided in Section 10). Each of the following shall be an
Exercise Termination Event: (i) the Effective Time of the Merger; (ii)
termination of the Merger Agreement in accordance with the provisions thereof if
such termination occurs prior to the occurrence of an Initial Triggering Event
except a termination by Grantee pursuant to Section 6.4 due to a willful breach
by Issuer (a “Listed Termination”); or (iii) the passage of nine (9) months (or
such longer period as provided in Section 10) after termination of the Merger
Agreement if such termination follows the occurrence of an Initial Triggering
Event or is a Listed Termination. The term “Holder” shall mean the holder or
holders of the Option. Notwithstanding anything to the contrary contained
herein, (i) the Option may not be exercised at any time when Grantee shall be in
material breach of any of its covenants or agreements contained in the Merger
Agreement such that Issuer shall be entitled to terminate the Merger Agreement
pursuant to Section 6.3 thereof and (ii) this Agreement shall automatically
terminate upon the proper termination of the Merger Agreement by Issuer pursuant
to Section 6.3 thereof as a result of the material breach by Grantee of its
covenants or agreements contained in the Merger Agreement.

 

(b)  The term “Initial Triggering Event” shall mean any of the following events
or transactions occurring on or after the date hereof:

 

(i)  Issuer or any of its Subsidiaries (as defined in Rule 1-02 of Regulation
S-X promulgated by the Securities and Exchange Commission (the “SEC”)) (each an
“Issuer Subsidiary”), without having

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received Grantee’s prior written consent, shall have entered into an agreement
to engage in an Acquisition Transaction (as hereinafter defined) with any person
(the term “person” for purposes of this Agreement having the meaning assigned
thereto in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934,
as amended (the “1934 Act”), and the rules and regulations thereunder) other
than Grantee or any of its Subsidiaries (each a “Grantee Subsidiary”) or the
Board of Directors of Issuer (the “Issuer Board”) shall have recommended that
the stockholders of Issuer approve or accept any Acquisition Transaction other
than the merger transaction contemplated by the Merger Agreement. For purposes
of this Agreement, “Acquisition Transaction” shall mean (x) a merger or
consolidation, or any similar transaction, involving Issuer or any Issuer
Subsidiary or group of Issuer Subsidiaries that is, or would on an aggregate
basis constitute, a Significant Subsidiary (as defined in Rule 1-02 of
Regulation S-X) (other than mergers, consolidations or similar transactions
involving solely Issuer and/or one or more wholly-owned Subsidiaries of the
Issuer provided that any such transaction is not entered into in violation of
the terms of the Merger Agreement), (y) a purchase, lease or other acquisition
of all or any substantial part of the assets or deposits of Issuer or any Issuer
Subsidiary or group of Issuer Subsidiaries that is, or would on an aggregate
basis constitute, a Significant Subsidiary, or (z) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) by any person of securities representing 25% or more of the voting
power of Issuer or any Issuer Subsidiary or group of Issuer Subsidiaries that
is, or would on an aggregate basis constitute, a Significant Subsidiary;

 

(ii)  Any person (other than the Grantee or any Grantee Subsidiary or any Issuer
Subsidiary acting in a fiduciary capacity in the ordinary course of business)
shall have acquired beneficial ownership or the right to acquire beneficial
ownership of 10% or more of the outstanding shares of Common Stock (the term
“beneficial ownership” for purposes of this Agreement having the meaning
assigned thereto in Section 13(d) of the 1934 Act, and the rules and regulations
thereunder);

 

(iii)  The stockholders of Issuer shall have voted and failed to approve the
Merger Agreement and the Merger at a meeting which has been held for that
purpose or any adjournment or postponement thereof, or such meeting shall not
have been held in violation of the Merger Agreement or shall have been canceled
prior to termination of the Merger Agreement if, prior to such meeting (or if
such meeting shall not have been held or shall have been canceled, prior to such
termination), it shall have been publicly announced that any person (other than
Grantee or any of its Subsidiaries) shall have made, or disclosed an intention
to make, a proposal to engage in an Acquisition Transaction;

 

(iv)  The Issuer Board shall have withdrawn or modified or qualified (or
publicly announced its intention to withdraw or modify or qualify) or failed to
make in any manner adverse in any respect to Grantee its recommendation that the
stockholders of Issuer approve the transactions contemplated by the Merger
Agreement after it shall have been publicly announced that any person (other
than Grantee or any of its subsidiaries) shall have made, or disclosed an
intention to make, or any person (other than Grantee or any of its subsidiaries)
shall have otherwise made a bona fide proposal to engage in an Acquisition
Transaction, or Issuer or the Issuer Subsidiary shall have authorized,
recommended or proposed (or publicly announced its intention to authorize,
recommend or propose) an agreement to engage in an Acquisition Transaction with
any person other than Grantee or a Grantee Subsidiary;

 

(v)  Any person other than Grantee or any Grantee Subsidiary shall, without the
written consent of the Issuer, have filed with the SEC a registration statement
or tender offer materials with respect to a potential exchange or tender offer
that would constitute an Acquisition Transaction (or filed a preliminary proxy
statement with the SEC with respect to a potential vote by its stockholders to
approve the issuance of shares to be offered in such an exchange offer); or

 

(vi)  Any person other than Grantee or any Grantee Subsidiary shall, without the
written consent of the Issuer, have filed an application or notice with the
Board of Governors of the Federal Reserve System (the “Federal Reserve Board”)
or other federal or state bank regulatory or antitrust authority for approval to
engage in an Acquisition Transaction.

 

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(c)  The term “Subsequent Triggering Event” shall mean any of the following
events or transactions occurring after the date hereof:

 

(i)  The acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 25% or more of the then outstanding
Common Stock; or

 

(ii)  The occurrence of the Initial Triggering Event described in clause (i) of
subsection (b) of this Section 2.

 

(d)  The term “Reciprocal Option” shall mean the option granted pursuant to the
option agreement dated the date hereof between the Grantee, as issuer of such
option, and Issuer, as grantee of such option.

 

(e)  Issuer shall notify Grantee promptly in writing of the occurrence of any
Initial Triggering Event or Subsequent Triggering Event (together, a “Triggering
Event”), it being understood that the giving of such notice by Issuer shall not
be a condition to the right of the Holder to exercise the Option.

 

(f)  In the event the Holder is entitled to and wishes to exercise the Option
(or any portion thereof), it shall send to Issuer a written notice (the date of
which being herein referred to as the “Notice Date”) specifying (i) the total
number of shares it will purchase pursuant to such exercise and (ii) a place and
date not earlier than three business days nor later than 60 business days from
the Notice Date for the closing of such purchase (the “Closing Date”); provided
that if prior notification to or approval of the Federal Reserve Board or any
other regulatory or antitrust agency is required in connection with such
purchase, the Holder shall promptly file the required notice or application for
approval, shall promptly notify Issuer of such filing, and shall expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence shall run instead from the date on which any required notification
periods have expired or been terminated or such approvals have been obtained and
any requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto.

 

(g)  At the closing referred to in subsection (f) of this Section 2, the Holder
shall (i) pay to Issuer the aggregate purchase price for the shares of Common
Stock purchased pursuant to the exercise of the Option in immediately available
funds by wire transfer to a bank account designated by Issuer and (ii) present
and surrender this Agreement to Issuer at its principal executive offices,
provided that the failure or refusal of the Issuer to designate such a bank
account or accept surrender of this Agreement shall not preclude the Holder from
exercising the Option .

 

(h)  At such closing, simultaneously with the delivery of immediately available
funds as provided in subsection (g) of this Section 2, Issuer shall deliver to
the Holder a certificate or certificates representing the number of shares of
Common Stock purchased by the Holder and, if the Option should be exercised in
part only, a new Option evidencing the rights of the Holder thereof to purchase
the balance of the shares purchasable hereunder.

 

(i)  Certificates for Common Stock delivered at a closing hereunder may be
endorsed with a restrictive legend that shall read substantially as follows:

 

“The transfer of the shares represented by this certificate is subject to
certain provisions of an agreement, dated as of June 27, 2003, between the
registered holder hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on file at the
principal office of Issuer and will be provided to the holder hereof without
charge upon receipt by Issuer of a written request therefor.”

 

It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the “1933 Act”) in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement

 

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and under circumstances that do not require the retention of such reference in
the opinion of Counsel to the Holder; and (iii) the legend shall be removed in
its entirety if the conditions in the preceding clauses (i) and (ii) are both
satisfied. In addition, such certificates shall bear any other legend as may be
required by law.

 

(j)  Upon the giving by the Holder to Issuer of the written notice of exercise
of the Option provided for under subsection (f) of this Section 2 and the tender
of the applicable purchase price in immediately available funds, the Holder
shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. 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, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.

 

3.    Authorized Shares.    Issuer agrees: (i) that it shall at all times
maintain, free from preemptive rights, sufficient authorized but unissued or
treasury shares of Common Stock so that the Option may be exercised without
additional authorization of Common Stock after giving effect to all other
options, warrants, convertible securities and other rights to purchase 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; and (iii) promptly to take all action as may from time to time be
required (including (x) complying with all applicable premerger notification,
reporting and waiting period requirements specified in 15 U.S.C. Section 18a and
regulations promulgated thereunder and (y) in the event, under the Bank Holding
Company Act of 1956, as amended (the “BHCA”), or the Change in Bank Control Act
of 1978, as amended, or any state or other federal banking law, prior approval
of or notice to the Federal Reserve Board or to any state or other federal
regulatory authority is necessary before the Option may be exercised,
cooperating fully with the Holder in preparing such applications or notices and
providing such information to the Federal Reserve Board or such state or other
federal regulatory authority as they may require) in order to permit the Holder
to exercise the Option and Issuer duly and effectively to issue shares of Common
Stock pursuant hereto.

 

4.    Division of Option.    This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender of this Agreement at the principal office of Issuer, for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase, on the same terms and subject to the same conditions as are
set forth herein, in the aggregate the same number of shares of Common Stock
purchasable hereunder. The terms “Agreement” and “Option” as used herein include
any 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.

 

5.    Adjustment upon Certain Changes in Capitalization.    In the event of any
change in, or distributions in respect of, the Common Stock by reason of stock
dividends, split-ups, recapitalizations, stock combinations, subdivisions,
conversions, exchanges of shares or the like, this Option shall be automatically
adjusted so that Grantee shall receive, upon exercise of the Option, the number
and class of shares or other securities or property that Grantee would have
received in respect of Common Stock if the Option had been exercised immediately
prior to such event, or the record date therefor, as applicable and the exercise
price shall be, if necessary, appropriately adjusted. Notwithstanding the
foregoing, if the provisions of Section 10 are applicable, the adjustments
provided for in the preceding sentence shall not be made and the adjustments set
forth in Section 10 shall be made.

 

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6.    Registration Rights.    Upon the occurrence of a Subsequent Triggering
Event that occurs prior to an Exercise Termination Event, Issuer shall, at the
request of Grantee delivered within twelve (12) months (or such later period as
provided in Section 10) of such Subsequent Triggering Event (whether on its own
behalf or on behalf of any subsequent holder of this Option (or part thereof) or
any of the shares of Common Stock issued pursuant hereto), promptly prepare,
file and keep current a registration statement under the 1933 Act covering any
shares issued and issuable pursuant to this Option and shall use its reasonable
best efforts to cause such registration statement to become effective and remain
current in order to permit the sale or other disposition of any shares of Common
Stock issued upon total or partial exercise of this Option (“Option Shares”) in
accordance with any plan of disposition requested by Grantee. Issuer will use
its reasonable best efforts to cause such registration statement promptly to
become effective and then to remain effective for such period not in excess of
180 days from the day such registration statement first becomes effective or
such shorter time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such registrations. The
Issuer shall bear the costs of such registrations (including, but not limited
to, Issuer’s attorneys’ fees, printing costs and filing fees, except for
underwriting discounts or commissions, brokers’ fees and the fees and
disbursements of Grantee’s counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
Option Shares as provided above, Issuer is in registration with respect to an
underwritten public offering by Issuer of shares of Common Stock, and if in the
good faith judgment of the managing underwriter or managing underwriters, or, if
none, the sole underwriter or underwriters, of such offering the offer and sale
of the Option Shares would interfere with the successful marketing of the shares
of Common Stock offered by Issuer, the number of Option Shares otherwise to be
covered in the registration statement contemplated hereby may be reduced;
provided, however, that after any such required reduction the number of Option
Shares to be included in such offering for the account of the Holder shall
constitute at least 25% of the total number of shares to be sold by the Holder
and Issuer in the aggregate; and provided further, however, that if such
reduction occurs, then Issuer shall file a registration statement for the
balance as promptly as practicable thereafter as to which no reduction pursuant
to this Section 6 shall be permitted or occur and the Holder shall thereafter be
entitled to one additional registration and the twelve (12) month period
referred to in the first sentence of this section shall be increased to
twenty-four (24) months. Each such Holder shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement relating
to the sale of such shares, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and other agreements
customarily included in such underwriting agreements for Issuer. Upon receiving
any request under this Section 6 from any Holder, Issuer agrees to send a copy
thereof to any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies. Notwithstanding anything to the contrary contained herein, in no event
shall the number of registrations that Issuer is obligated to effect be
increased by reason of the fact that there shall be more than one Holder as a
result of any assignment or division of this Agreement.

 

7.    Repurchase of Option at the Election of Grantee.    (a)  At any time after
the occurrence of a Repurchase Event (as defined below) and prior to the date
that is twelve (12) months immediately thereafter (i) at the request of the
Holder, delivered prior to an Exercise Termination Event (or such later period
as provided in Section 10), Issuer (or any successor thereto) shall repurchase
the Option from the Holder at a price (the “Option Repurchase Price”) equal to
the amount by which (A) the market/offer price (as defined below) exceeds (B)
the Option Price, multiplied by the number of shares for which this Option may
then be exercised and (ii) at the request of the owner of Option Shares from
time to time (the “Owner”), delivered prior to an Exercise Termination Event (or
such later period as provided in Section 10), Issuer (or any successor thereto)
shall repurchase such number of the Option Shares from the Owner as the Owner
shall designate at a price (the “Option Share Repurchase Price”) equal to the
market/offer price multiplied by the number of Option Shares so designated. The
term “market/offer price” shall mean the highest of (i) the price per share of
Common Stock at which a tender or exchange offer therefor has been made, (ii)
the price per share of Common Stock to be paid by any third party pursuant to an
agreement with Issuer, (iii) the highest closing price for shares of Common
Stock within the one-month period immediately preceding the date the Holder
gives notice of the required repurchase

 

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of this Option or the Owner gives notice of the required repurchase of Option
Shares, as the case may be, or (iv) in the event of a sale of all or any
substantial part of Issuer’s assets or deposits, the sum of the net price paid
in such sale for such assets or deposits and the current market value of the
remaining net assets of Issuer as determined by a nationally recognized
investment banking firm selected by the Holder or the Owner, as the case may be
divided by the number of shares of Common Stock of Issuer outstanding at the
time of such sale. In determining the market/offer price, the value of
consideration other than cash shall be determined by a nationally recognized
investment banking firm selected by the Holder or Owner, as the case may be.

 

(b)  The Holder and the Owner, as the case may be, may exercise its right to
require Issuer to repurchase the Option and any Option Shares pursuant to this
Section 7 by surrendering for such purpose to Issuer, at its principal office, a
copy of this Agreement or certificates for Option Shares, as applicable,
accompanied by a written notice or notices stating that the Holder or the Owner,
as the case may be, elects to require Issuer to repurchase this Option and/or
the Option Shares in accordance with the provisions of this Section 7. As
promptly as practicable, and in any event within five business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto, Issuer shall deliver or
cause to be delivered to the Holder the Option Repurchase Price and/or to the
Owner the Option Share Repurchase Price therefor or the portion thereof that
Issuer is not then prohibited under applicable law and regulation from so
delivering.

 

(c)  To the extent that Issuer is prohibited under applicable law or regulation,
or as a consequence of administrative policy, from repurchasing the Option
and/or the Option Shares in full, Issuer shall immediately so notify the Holder
and/or the Owner and thereafter deliver or cause to be delivered, from time to
time, to the Holder and/or the Owner, as appropriate, the portion of the Option
Repurchase Price and the Option Share Repurchase Price, respectively, that it is
no longer prohibited from delivering, within five business days after the date
on which Issuer is no longer so prohibited; provided, however, that if Issuer at
any time after delivery of a notice of repurchase pursuant to paragraph (b) of
this Section 7 is prohibited under applicable law or regulation, or as a
consequence of administrative policy, from delivering to the Holder and/or the
Owner, as appropriate, the Option Repurchase Price and the Option Share
Repurchase Price, respectively, in full (and Issuer hereby undertakes to use its
reasonable best efforts to obtain all required regulatory and legal approvals
and to file any required notices as promptly as practicable in order to
accomplish such repurchase), the Holder or Owner may revoke its notice of
repurchase of the Option and/or the Option Shares whether in whole or to the
extent of the prohibition, whereupon, in the latter case, Issuer shall promptly
(i) deliver to the Holder and/or the Owner, as appropriate, that portion of the
Option Repurchase Price and/or the Option Share Repurchase Price that Issuer is
not prohibited from delivering; and (ii) deliver, as appropriate, either (A) to
the Holder, a new Agreement evidencing the right of the Holder to purchase that
number of shares of Common Stock obtained by multiplying the number of shares of
Common Stock for which the surrendered Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator of which is
the Option Repurchase Price less the portion thereof theretofore delivered to
the Holder and the denominator of which is the Option Repurchase Price, and/or
(B) to the Owner, a certificate for the Option Shares it is then so prohibited
from repurchasing. If an Exercise Termination Event shall have occurred prior to
the date of the notice by Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the expiration
of a period ending on the thirtieth day after such date, the Holder shall
nonetheless have the right to exercise the Option until the expiration of such
30-day period.

 

(d)  Issuer shall not enter into any agreement relating to or facilitating an
Acquisition Transaction, unless the other party or parties thereto agree that,
if the Issuer is prohibited from repurchasing (in whole or in part) the Option
and/or Option Shares pursuant to Section 7(c) or the Substitute Option and/or
Substitute Option Shares pursuant to Section 9(c) or from paying (in whole or in
part) the Surrender Price pursuant to Section 14(c), such other party or parties
will make such payment unless it or they is prohibited from doing so by
applicable law or regulation.

 

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(e)  For purposes of this Section 7, a “Repurchase Event” shall be deemed to
have occurred upon the occurrence of any of the following events or transactions
after the date hereof and prior to the occurrence of an Exercise Termination
Event:

 

(i)  the acquisition by any person (other than Grantee or any Grantee
Subsidiary) of beneficial ownership of 50% or more of the then outstanding
Common Stock; or

 

(ii)  the consummation of any Acquisition Transaction described in Section
2(b)(i) hereof, except that the percentage referred to in clause (z) shall be
50%.

 

8.    Substitute Option.    (a)  In the event that prior to an Exercise
Termination Event, Issuer shall enter into an agreement (i) to consolidate with
or merge into any person, other than Grantee or a Grantee Subsidiary, or engage
in a plan of exchange with any person, other than Grantee or a Grantee
Subsidiary and Issuer shall not be the continuing or surviving corporation of
such consolidation or merger or the acquirer in such plan of exchange, (ii) to
permit any person, other than Grantee or a Grantee Subsidiary, to merge into
Issuer or be acquired by Issuer in a plan of exchange and Issuer shall be the
continuing or surviving or acquiring corporation, or (iii) to sell or otherwise
transfer all or substantially all of its assets or deposits on a consolidated
basis to any person, other than Grantee or a Grantee Subsidiary, then, and in
each such case, the agreement governing such transaction shall make proper
provision 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
the Holder, of either (x) the Acquiring Corporation (as hereinafter defined) or
(y) any person that controls the Acquiring Corporation.

 

(b)  The following terms have the meanings indicated:

 

(i)  “Acquiring Corporation” shall mean (i) the continuing or surviving person
of a consolidation or merger with Issuer (if other than Issuer), (ii) the
acquiring person in a plan of exchange in which Issuer is acquired, (iii) the
Issuer in a merger or plan of exchange in which Issuer is the continuing or
surviving or acquiring person, and (iv) the transferee of all or a substantial
part of Issuer’s consolidated assets or deposits.

 

(ii)  “Substitute Common Stock” shall mean the common stock issued by the issuer
of the Substitute Option upon exercise of the Substitute Option.

 

(iii)  “Assigned Value” shall mean the market/offer price, as defined in Section
7.

 

(iv)  “Average Price” shall mean the average closing price of a share of the
Substitute Common Stock for 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 the person merging into Issuer or by any company which controls or is
controlled by such person, as the Holder may elect.

 

(c)  Subject to paragraph (d) of this Section 8, 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 the Holder. The
issuer of the Substitute Option shall also enter into an agreement with the then
Holder or Holders of the Substitute Option in substantially the same form as
this Agreement (after giving effect for such purpose to the provisions of
Section 9), which agreement shall be applicable to the Substitute Option.

 

(d)  The Substitute Option shall be exercisable for such number of shares of
Substitute Common Stock as is equal to the Assigned Value multiplied by the
number of shares of Common Stock for which the Option was exercisable
immediately prior to the event described in the first sentence of Section 8(a),
divided by the Average Price. The exercise price of the Substitute Option per
share of Substitute Common Stock shall then be equal to the Option Price
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock for which the Option was exercisable immediately prior to the
event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.

 

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(e)  In no event, pursuant to any of the foregoing paragraphs, shall the
Substitute Option be exercisable for more than 19.9% 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
shares of Substitute Common Stock outstanding prior to exercise but for this
clause (e), the issuer of the Substitute Option (the “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 this clause (e)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined by a
nationally recognized investment banking firm selected by the Holder.

 

(f)  Issuer shall not enter into any transaction described in subsection (a) of
this Section 8, or into any agreement that is designed to, or has the purpose of
facilitating such a transaction, unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.

 

9.    Repurchase of Substitute Option.    (a)  At the request of the holder of
the Substitute Option (the “Substitute Option Holder”) made prior to an Exercise
Termination Event, the issuer of the Substitute Option (the “Substitute Option
Issuer”) shall repurchase the Substitute Option from the Substitute Option
Holder at a price (the “Substitute Option Repurchase Price”) equal to the amount
by which (i) the Highest Closing Price (as hereinafter defined) exceeds (ii) the
exercise price of the Substitute Option, multiplied by the number of shares of
Substitute Common Stock for which the Substitute Option may then be exercised,
and at the request made prior to an Exercise Termination Event of any present or
former substitute Option Holder (each, a “Substitute Share Owner”) who at the
time owns shares of Substitute Common Stock issued upon total or partial
exercise of the Substitute Option (the “Substitute Shares”), the Substitute
Option Issuer shall repurchase the Substitute Shares at a price (the “Substitute
Share Repurchase Price”) equal to the Highest Closing Price multiplied by the
number of Substitute Shares to be so repurchased. The term “Highest Closing
Price” shall mean the highest closing price for shares of Substitute Common
Stock within the one-month period immediately preceding the date the Substitute
Option Holder gives notice of the required repurchase of the Substitute Option
or the Substitute Share Owner gives notice of the required repurchase of the
Substitute Shares, as applicable.

 

(b)  The Substitute Option Holder and the Substitute Share Owner, as the case
may be, may exercise its respective rights to require the Substitute Option
Issuer to repurchase the Substitute Option and the Substitute Shares pursuant to
this Section 9 by surrendering for such purpose to the Substitute Option Issuer,
at its principal office, the agreement for such Substitute Option (or, in the
absence of such an agreement, a copy of this Agreement) and/or certificates for
Substitute Shares accompanied by a written notice or notices stating that the
Substitute Option Holder or the Substitute Share Owner, as the case may be,
elects to require the Substitute Option Issuer to repurchase the Substitute
Option and/or the Substitute Shares in accordance with the provisions of this
Section 9. As promptly as practicable and in any event within five business days
after the surrender of the Substitute Option and/or certificates representing
Substitute Shares and the receipt of such notice or notices relating thereto,
the Substitute Option Issuer shall deliver or cause to be delivered to the
Substitute Option Holder the Substitute Option Repurchase Price and/or to the
Substitute Share Owner the Substitute Share Repurchase Price therefor or the
portion thereof which the Substitute Option Issuer is not then prohibited under
applicable law and regulation from so delivering.

 

(c)  To the extent that the Substitute Option Issuer is prohibited under
applicable law or regulation, or as a consequence of administrative policy, from
repurchasing the Substitute Option and/or the Substitute Shares in part or in
full, the Substitute Option Issuer shall immediately so notify the Substitute
Option Holder and/or the Substitute Share Owner and thereafter deliver or cause
to be delivered, from time to time, to the Substitute Option Holder and/or the
Substitute Share Owner, as appropriate, the portion of the Substitute Option
Repurchase Price and/or the Substitute Share Repurchase Price, respectively,
which it is no longer prohibited from delivering, within five (5) business days
after the date on which the Substitute Option Issuer is no longer so prohibited;
provided, however, that if the Substitute Option Issuer is at any time after
delivery of a notice of repurchase pursuant to subsection (b) of this Section 9
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to the Substitute Option Holder and/or
the Substitute

 

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Share Owner, as appropriate, the Substitute Option Repurchase Price and the
Substitute Share Repurchase Price, respectively, in full (and the Substitute
Option Issuer shall use its reasonable best efforts to receive all required
regulatory and legal approvals as promptly as practicable in order to accomplish
such repurchase), the Substitute Option Holder and/or Substitute Share Owner may
revoke its notice of repurchase of the Substitute Option or the Substitute
Shares either in whole or to the extent of prohibition, whereupon, in the latter
case, the Substitute Option Issuer shall promptly (i) deliver to the Substitute
Option Holder or Substitute Share Owner, as appropriate, that portion of the
Substitute Option Repurchase Price or the Substitute Share Repurchase Price that
the Substitute Option Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock obtained by
multiplying the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Substitute
Option Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder and the denominator of which is the Substitute Option
Repurchase Price, and/or (B) to the Substitute Share Owner, a certificate for
the Substitute Option Shares it is then so prohibited from repurchasing. If an
Exercise Termination Event shall have occurred prior to the date of the notice
by the Substitute Option Issuer described in the first sentence of this
subsection (c), or shall be scheduled to occur at any time before the expiration
of a period ending on the thirtieth day after such date, the Substitute Option
Holder shall nevertheless have the right to exercise the Substitute Option until
the expiration of such 30-day period.

 

10.    Certain Time Periods.    The time periods for exercise of certain rights
under Sections 2, 6, 7, 9, 12 and 14 shall be extended in any given case: (i) to
the extent necessary to obtain all regulatory approvals for the exercise of such
rights (for so long as the Holder, Owner, Substitute Option Holder or Substitute
Share Owner, as the case may be, is using commercially reasonable efforts to
obtain such regulatory approvals), and for the expiration of all statutory
waiting periods; (ii) to the extent necessary to avoid liability under Section
16(b) of the 1934 Act by reason of such exercise and (iii) during any period in
which Grantee is precluded from exercising such rights due to an injunction or
other legal restriction, plus in each case, such additional period as is
reasonably necessary for the exercise of such rights promptly following the
obtaining of such approvals or the expiration of such periods.

 

11.    Representations and Warranties.    (a)  Issuer hereby represents and
warrants to Grantee as follows:

 

(i)  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 Issuer Board
prior to the date hereof and no other corporate proceedings on the part of
Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.

 

(ii)  Issuer has taken all necessary corporate action to authorize and reserve
and to permit it to issue, and at all times from the date hereof through the
termination of this Agreement in accordance with its terms will have reserved
for issuance upon the exercise of the Option, that number of shares of Common
Stock equal to the maximum number of shares of Common Stock at any time and from
time to time issuable hereunder, and all such shares, upon issuance pursuant
thereto, will be duly authorized, validly issued, fully paid, nonassessable, and
will be delivered free and clear of all claims, liens, encumbrance and security
interests and not subject to any preemptive rights.

 

(b)  Grantee hereby represents and warrants to Issuer as follows: Grantee has
the requisite corporate power and authority to execute and deliver this
Agreement and to perform its obligation hereunder. The execution and delivery of
this Agreement by the Grantee and the performance of its obligations hereunder
by the Grantee have been duly and validly authorized by the Board of Directors
of Grantee and no other corporate proceedings on the part of the Grantee are
necessary to authorize this Agreement or for Grantee to perform its obligation
hereunder. This Agreement has been duly and validly executed and delivered by
Grantee.

 

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12.    Assignment.    Neither of the parties hereto may assign any of its rights
or obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event an Initial Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder; provided, however,
that until the date 15 days following the date on which the Federal Reserve
Board or other regulatory authority has approved an application by Grantee to
acquire the shares of Common Stock subject to the Option, Grantee may not assign
its rights under the Option except in (i) a widely dispersed public
distribution, (ii) a private placement in which no one party acquires the right
to purchase in excess of 2% of the voting shares of Issuer, (iii) an assignment
to a single party (e.g., a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on Grantee’s behalf or (iv)
any other manner approved by the Federal Reserve Board or other regulatory
authority.

 

13.    Further Assurances.    Each of Grantee and Issuer will use its reasonable
best efforts to make all filings with, and to obtain consents of, all third
parties and governmental authorities necessary to the consummation of the
transactions contemplated by this Agreement, including, without limitation,
applying to the Federal Reserve Board under the BHCA for approval to acquire the
shares issuable hereunder, but Grantee shall not be obligated to apply to state
banking authorities for approval to acquire the shares of Common Stock issuable
hereunder until such time, if ever, as it deems appropriate to do so.

 

14.    Surrender of Options.    (a)  Grantee may, at any time following a
Repurchase Event and prior to the occurrence of an Exercise Termination Event
(or such later period as provided in Section 10), relinquish the Option
(together with any Option Shares issued to and then owned by Grantee) to Issuer
in exchange for a cash fee equal to the Surrender Price; provided, however, that
Grantee may not exercise its rights pursuant to this Section 14(a) if Issuer has
previously repurchased the Option or any portion of the Option Shares pursuant
to Section 7. The “Surrender Price” shall be equal to $39,000,000 (i) plus, if
applicable, Grantee’s purchase price with respect to any Option Shares being so
relinquished and (ii) minus, if applicable, the sum of (1) the excess of (A) the
net price, if any, received by Grantee or a Grantee Subsidiary pursuant to the
arm’s-length sale of Option Shares (or any other securities into which such
Option Shares were converted or exchanged) to any unaffiliated party, or to
Issuer pursuant to Section 7, over (B) Grantee’s purchase price of such Option
Shares. For purposes of this Section 14, the term Grantee shall include all
Holders and in no event shall the aggregate amounts paid or payable pursuant to
this Section 14 to all Holders exceed the amount set forth in the preceding
sentence as payable to Grantee.

 

(b)  Grantee may exercise its right to relinquish the Option and any Option
Shares pursuant to this Section 14 by surrendering to Issuer, at its principal
office, a copy of this Agreement together with certificates for Option Shares,
if any, accompanied by a written notice stating (i) that Grantee elects to
relinquish the Option and Option Shares, if any, in accordance with the
provisions of this Section 14 and (ii) the Surrender Price. The Surrender Price
shall be payable in immediately available funds on or before the second business
day following receipt of such notice by Issuer.

 

(c)  To the extent that Issuer is prohibited under applicable law or regulation,
or as a consequence of administrative policy, from paying the Surrender Price to
Grantee in full, Issuer shall immediately so notify Grantee and thereafter
deliver or cause to be delivered, from time to time, to Grantee, the portion of
the Surrender Price that it is no longer prohibited from paying, within five
business days after the date on which Issuer is no longer so prohibited;
provided, however, that if Issuer at any time after delivery of a notice of
surrender pursuant to paragraph (b) of this Section 14 is prohibited under
applicable law or regulation, or as a consequence of administrative policy, from
paying to Grantee the Surrender Price in full, (i) Issuer shall (A) use its
reasonable best efforts to obtain all required regulatory and legal approvals
and to file any required notices as promptly as practicable in order to make
such payments, (B) within five days of the submission or receipt of any
documents relating to any such regulatory and legal approvals, provide Grantee
with copies of the same, and (C) keep Grantee advised of both the status of any
such request for regulatory and legal approvals, as well as any discussions with
any relevant regulatory or other third party reasonably related to the same and
(ii) Grantee may revoke such notice of surrender by delivery of a notice of
revocation to Issuer and, upon delivery of such notice

 

10

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of revocation, the Exercise Termination Date shall be extended to a date six
months from the date on which the Exercise Termination Date would have occurred
if not for the provisions of this Section 14(c) (during which period Grantee may
exercise any of its rights hereunder, including any and all rights pursuant to
this Section 14).

 

(d)  Grantee shall have rights substantially identical to those set forth in
Sections 14(a), 14(b) and 14(c) with respect to the Substitute Option and the
Substitute Option Issuer during any period in which the Substitute Option Issuer
would be required to repurchase the Substitute Option pursuant to Section 9.

 

15.    Specific Performance.    The parties hereto acknowledge that damages
would be an inadequate remedy for a breach of this Agreement by either party
hereto and that the obligations of the parties hereto shall be enforceable by
either party hereto through injunctive or other equitable relief. In connection
therewith both parties waive the posting of any bond or similar requirement.

 

16.    Maximum Profit.    (a)  Notwithstanding any other provision herein, in no
event shall Grantee’s Total Profit (as defined in Section 16(c)) exceed
$47,000,000 (the “Maximum Profit”), and, if the Total Profit would otherwise
exceed such amount, Grantee, at its sole election, shall either (1) reduce the
number of shares subject to the Option (and any Substitute Option), (2) deliver
to Issuer, or Substitute Issuer, as the case may be, for cancellation shares of
Common Stock or Substitute Common Stock, as the case may be, previously
purchased by Grantee valued at fair market value at the time of delivery, (3)
pay cash to Issuer, or Substitute Issuer, as the case may be, (4) increase or
otherwise adjust the Option Price or Substitute Option Price (or any portion
thereof), (5) reduce the amount of the Option Repurchase Price or Substitute
Option Repurchase Price, or (6) undertake any combination of the foregoing, so
that Grantee’s actually realized Total Profit shall not exceed the Maximum
Profit after taking into account the foregoing actions.

 

(b)  Notwithstanding any other provision of this Agreement, the Option (and any
Substitute Option) may not be exercised for a number of shares as would, as of
the date of exercise, result in a Notional Total Profit (as defined in Section
16(d)) of more than the Maximum Profit and, if exercise of the Option (and any
Substitute Option) would otherwise result in the Notional Total Profit exceeding
such amount, Grantee, in its discretion, may take any of the actions specified
in Section 16(a) so that the Notional Total Profit shall not exceed the Maximum
Profit; provided, that nothing in this sentence shall restrict any subsequent
exercise of the Option (and any Substitute Option) which at such time complies
with this sentence.

 

(c)  For purposes of this Agreement, the term “Total Profit” shall mean the
aggregate amount (before taxes) of the following: (1) the amount received by
grantee pursuant to Issuer’s repurchase of the Option (or any portion thereof)
pursuant to Section 7 or Section 14 plus (2) (x) the amount received by Grantee
pursuant to Issuer’s repurchase of Option Shares pursuant to Section 7 or
Section 14, less (y) the Grantee’s purchase price for such Option Shares, plus
(3) (x) 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) the Grantee’s purchase price of
such Option Shares, plus (4) any amounts received by Grantee on the transfer of
the Option (or any portion thereof) to any unaffiliated party, plus (5) any
amount equivalent to the foregoing with respect to the Substitute Option and the
Substitute Common Stock minus (6) all amounts of cash previously paid to Issuer
pursuant to Section 16(a)(3) and the value of all Option Shares or Substitute
Option Shares (or other securities) previously delivered to Issuer for
cancellation pursuant to Section 16(a)(2), which value shall be as set forth in
clause (2) of Section 16(a).

 

(d)  For purposes of this Agreement, the term “Notional Total Profit” with
respect to any number of shares as to which Grantee may propose to exercise the
Option shall be the Total Profit, determined as of the date of such proposed
exercise assuming (1) that the Option were exercised on such date for such
number of shares, (2) that such 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) and (3) the effect
of any adjustments made by or to be made by Grantee pursuant to Section 16(a).
For purposes of this Section 16, the term “Grantee” will include all Holders and
transactions by any affiliate transferee of Grantee in respect of the Option or
Option Shares transferred to it shall be treated as if made by Grantee.

 

11

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17.    Severability.    If any term, provision, covenant or restriction
contained in this Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Holder is not permitted to acquire, or Issuer is not
permitted to repurchase pursuant to Section 7 (or the Substitute Issuer to
repurchase pursuant to Section 9), the full number of shares of Common Stock (or
Substitute Common Stock) provided in Section l hereof (as adjusted pursuant to
Section 5 hereof), it is the express intention of Issuer to allow the Holder to
acquire or to require Issuer (or the Substitute Issuer) to repurchase such
lesser number of shares as may be permissible, without any amendment or
modification hereof.

 

18.    Notices.    All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by fax, telecopy, or by registered or certified mail (postage
prepaid, return receipt requested) at the respective addresses of the parties
set forth in the Merger Agreement.

 

19.    Governing Law.    This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to the conflict
of law principles thereof (except to the extent that mandatory provisions of
Federal law are applicable).

 

20.    Counterparts.    This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.

 

21.    Expenses.    Except as otherwise expressly provided 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.

 

22.    Entire Agreement; No Third-Party Beneficiaries.    Except as otherwise
expressly provided herein, in the Reciprocal Option or in the Merger Agreement,
this Agreement contains the entire agreement between the parties with respect to
the transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereof, written or oral. The terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assignees. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party, other
than the parties hereto, and their respective successors except as assignees,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided herein.

 

23.    Interpretation.    Capitalized terms used in this Agreement and not
defined herein shall have the meanings assigned thereto in the Merger Agreement.
Nothing contained in this Agreement shall be deemed to authorize Issuer to issue
shares in breach of (or otherwise act in breach of) any provision of the Merger
Agreement.

 

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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
on its behalf by its officers thereunto duly authorized, all as of the date
first above written.

 

ROSLYN BANCORP, INC.

By:

 

/s/    JOSEPH L. MANCINO        

--------------------------------------------------------------------------------

    Name:   Joseph L. Mancino     Title:   President, Chief Executive Officer
and Vice Chairman of the Board

NEW YORK COMMUNITY BANCORP, INC.

By:

 

/s/    JOSEPH R. FICALORA        

--------------------------------------------------------------------------------

    Name:   Joseph R. Ficalora     Title:   President and Chief Executive
Officer

 

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