**EXHIBIT 10.1**

 

**STOCK OPTION AGREEMENT**

 

STOCK OPTION AGREEMENT, dated as of June 27, 2003, between Roslyn Bancorp, Inc., a Delaware corporation (“*Grantee*”), and New York Community 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 acondition 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 isgranting 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 covenantsand 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 27,000,000 fully paid and nonassessable shares of the common stock, par value $0.01 per share, of Issuer (“*Common Stock*”) at a price pershare equal to $27.10 (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 theissued 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 aresubject 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 hereinafterdefined) 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 suchexercise (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) theEffective 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 Section6.3 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 theoccurrence 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 exercisedat 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 6.4 thereof and (ii) this Agreementshall automatically terminate upon the proper termination of the Merger Agreement by Issuer pursuant to Section 6.4 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 followingevents 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 “*IssuerSubsidiary*”), without having received Grantee’s prior written consent, shall have entered into an agreement to engage in an Acquisition Transaction (as hereinafter defined) with any person (the term “*person*” forpurposes 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 anyof 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 otherthan 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 IssuerSubsidiary 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 (i) involving solelyIssuer and/or one or more wholly-owned Subsidiaries of the Issuer or (ii) after which the common stockholders of the Issuer immediately prior thereto in the aggregate own or continue to own at least 50% of the common stock of the Issuer or thepublicly held surviving or successor corporation or a parent thereof immediately following consummation thereof (an “*Excepted Transaction*”), *provided*that any such transaction is not entered into in violation of the terms ofthe 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, aSignificant Subsidiary, or (z) a purchase or other acquisition (including by way of merger, consolidation, share exchange or otherwise) by any person of securities representing 50% or more of the voting power of Issuer or any Issuer Subsidiary orgroup 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 inthe ordinary course of business) shall have acquired beneficial ownership or the right to acquire beneficial ownership of 50% or more of the outstanding shares of Common Stock (the term “*beneficial ownership*” for purposes of thisAgreement 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 whichhas 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 suchmeeting (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 anintention 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 Granteeits 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, ordisclosed 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 GranteeSubsidiary 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 apreliminary proxy 

 

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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 Granteeor 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 bankregulatory or antitrust authority for approval to engage in an Acquisition Transaction. 

 

(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 thanGrantee or any Grantee Subsidiary) of beneficial ownership of 50% 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 theoption 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 shallsend 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 threebusiness 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 regulatoryor 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 oftime 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 shallhave 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 theshares 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 executiveoffices, *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 ofimmediately 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 beexercised 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 asfollows: 

 

“The transfer of the sharesrepresented 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 ofsuch 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.” 

 

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It is understood and agreed that: (i) the reference to the resale restrictions of the Securities Act of1933, 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 anopinion 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 bydelivery of substitute certificate(s) without such reference if the shares have been sold or transferred in compliance with the provisions of this Agreement and under circumstances that do not require the retention of such reference in the opinionof 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 Holderto 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 ofthe 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 theHolder 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 thatthe 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 throughreorganization, 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 byIssuer; 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 regulationspromulgated 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 ornotice 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 tothe 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 ofOption*.    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 otherAgreements 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 Stockpurchasable 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 Issuerof 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 thisAgreement, 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 Agreementso 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 

 

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Grantee shall receive, upon exercise of the Option, the number and class of shares or other securities or property that Grantee would have received inrespect 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 theprovisions 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. 

 

6.*    Registration Rights*.    Upon the occurrence of a Subsequent TriggeringEvent 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 oron 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 andissuable 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 totalor 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 becomeeffective 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. Granteeshall 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 orcommissions, 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 inregistration 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 suchoffering 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 maybe 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 theHolder 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 thisSection 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. Eachsuch 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 anyunderwriting 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. Uponreceiving 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, postageprepaid, 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 ofthe 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 occurrenceof 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 

 

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Termination Event (or such later period as provided in Section 10), Issuer (or any successor thereto) shall repurchase such number of the Option Shares fromthe 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*” shallmean 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 highestclosing price for shares of Common Stock within the one-month period immediately preceding the date the Holder gives notice of the required repurchase of this Option or the Owner gives notice of the required repurchase of Option Shares, as the casemay 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 Issueras 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/offerprice, 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 theOption 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 noticesstating 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 fivebusiness 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/orto 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 ofadministrative 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 deliveringto 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 legalapprovals 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 theprohibition, 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 fromdelivering; 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 thesurrendered 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 whichis 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 thefirst 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 expirationof such 30-day period. 

 

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(d)  Issuer shall not enter into any agreement relating to or facilitating an AcquisitionTransaction, 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 Sharespursuant 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 are prohibited from doing so by applicable law or regulation.

 

(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 thanGrantee 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. 

 

8.*    SubstituteOption*.    (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 engagein 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 that is not an Excepted Transaction, or (iii) to sell orotherwise 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 properprovision 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 theHolder, 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 mergerwith 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) thetransferee 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 uponexercise 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 oneyear 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 Issueris 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, theSubstitute 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 advantageousto 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 provisionsof Section 9), which agreement shall be applicable to the Substitute Option. 

 

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(d)  The Substitute Option shall be exercisable for such number of shares ofSubstitute 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 AveragePrice. 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 wasexercisable 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. 

 

(e)  In no event, pursuant to any of the foregoingparagraphs, 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 than19.9% 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 bya 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 theAcquiring 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 SubstituteOption (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 SubstituteOption 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 thenumber 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 ShareOwner*”) 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 ata 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 highestclosing 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 noticeof 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 theSubstitute 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 theSubstitute 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 representingSubstitute 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 ShareOwner 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 OptionIssuer is prohibited under applicable law or regulation, or as a consequence of administrative policy, from repurchasing the Substitute Option and/or the Substitute 

 

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Shares in part or in full, the Substitute Option Issuer shall immediately so notify the Substitute Option Holder and/or the Substitute Share Owner andthereafter 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 anytime 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 theSubstitute 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 requiredregulatory 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 Shareseither 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 OptionRepurchase 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 rightof 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 ofdelivery 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 OptionRepurchase 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 theSubstitute 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 shallnevertheless 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 exerciseand (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 promptlyfollowing 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 authorityto 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 theIssuer 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 anddelivered by Issuer. 

 

(ii)  Issuerhas 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 theexercise 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,

 

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validly issued, fully paid, nonassessable, and will be delivered free and clear of all claims, liens, encumbrance and security interests and not subject toany preemptive rights. 

 

(b)  Granteehereby 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 Granteeand 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 forGrantee to perform its obligation hereunder. This Agreement has been duly and validly executed and delivered by Grantee. 

 

12.    *Assignment*.    Neither of the parties hereto may assign any of its rights or obligations under thisAgreement 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, subjectto 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 hasapproved 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 partyacquires 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’sbehalf 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 allfilings 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 theBHCA 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 deemsappropriate to do so. 

 

14.*    Surrenderof 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 haspreviously 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 OptionShares 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 intowhich 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 allHolders 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 relinquishthe 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 Granteeelects 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 businessday 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 

 

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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 prohibitedfrom 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 prohibitedunder 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 tofile 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 noticeof surrender by delivery of a notice of revocation to Issuer and, upon delivery of such notice of revocation, the Exercise Termination Date shall be extended to a date six months from the date on which the Exercise Termination Date would haveoccurred 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.*    SpecificPerformance*.    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 eitherparty 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 shallGrantee’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 ofshares 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 valuedat 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 theOption 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 foregoingactions. 

 

(b)  Notwithstanding anyother 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 MaximumProfit 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 NotionalTotal 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 byGrantee 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 amountsreceived 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 ofcash previously paid to Issuer pursuant to Section 16(a)(3) and the value of 

 

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all Option Shares or Substitute Option Shares (or other securities) previously delivered to Issuer for cancellation pursuant to Section 16(a)(2), which valueshall 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 thedate 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 atthe 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). Forpurposes 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.

 

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 beinvalid, 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 suchcourt 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 CommonStock (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 suchlesser 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 inaccordance 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 morecounterparts, 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 bearand 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-PartyBeneficiaries*.    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 transactionscontemplated 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 theirrespective 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 themeanings 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. 

 

*******[next page is a signature page]*******

 

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

 
NEW YORK COMMUNITY BANCORP, INC.
By:
 
/s/    JOSEPH R.FICALORA        
  **Name:** **Joseph R. Ficalora**  **Title:** **President and Chief Executive Officer**ROSLYN BANCORP, INC.
By:
 
/s/    JOSEPH L.MANCINO        
  **Name:** **Joseph L. Mancino**  **Title:** **President, Chief Executive Officer and**