<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ROSLYN BANCORP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
ROSLYN BANCORP, INC.
1400 Old Northern Boulevard
Roslyn, New York 11576
(516) 621-6000
June 6, 1997
Fellow Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders
(the "Annual Meeting") of Roslyn Bancorp, Inc. (the "Company"), the holding
company for The Roslyn Savings Bank (the "Bank"), Roslyn, New York, which will
be held on July 22, 1997, at 9:30 a.m., Eastern Daylight Savings Time, at the
Milleridge Cottage, 585 North Broadway, Jericho, New York 11753.
The attached Notice of the Annual Meeting and the Proxy Statement
describe the formal business to be transacted at the Annual Meeting. Directors
and officers of Roslyn Bancorp, Inc., as well as a representative of KPMG Peat
Marwick LLP, the Company's independent auditors, will be present at the Annual
Meeting to respond to any questions that our shareholders may have regarding the
business to be transacted.
The Board of Directors of Roslyn Bancorp, Inc. has determined that the
matters to be considered at the Annual Meeting are in the best interests of the
Company and its shareholders. For the reasons set forth in the Proxy Statement,
the Board unanimously recommends that you vote "FOR" each of the nominees as
Directors specified under Proposal 1 and "FOR" Proposals 2 and 3.
Please sign and return the enclosed proxy card promptly. Your
cooperation is appreciated since a majority of the Company's common stock must
be represented, either in person or by proxy, to constitute a quorum for the
conduct of business.
On behalf of the Board of Directors and all of the employees of the
Company and the Bank, I thank you for your continued interest and support.
Sincerely yours,
/s/ Joseph L. Mancino
Joseph L. Mancino
Chairman of the Board,
President and Chief Executive Officer
<PAGE>
ROSLYN BANCORP, INC.
1400 Old Northern Boulevard
Roslyn, New York 11576
----------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on July 22, 1997
----------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Annual Meeting") of Roslyn Bancorp, Inc. (the "Company") will be held on July
22, 1997, at 9:30 a.m., Eastern Daylight Savings Time, at the Milleridge
Cottage, 585 North Broadway, Jericho, New York 11753.
The purpose of the Annual Meeting is to consider and vote upon the
following matters:
1. The election of three Directors to three-year terms of office
each;
2. The approval of the Roslyn Bancorp, Inc. 1997 Stock-Based
Incentive Plan;
3. The ratification of the appointment of KPMG Peat Marwick LLP
as independent auditors of the Company for the fiscal year
ending December 31, 1997; and
4. Such other matters as may properly come before the Annual
Meeting and at any adjournments thereof, including whether or
not to adjourn the Annual Meeting.
The Board of Directors has established June 2, 1997, as the record date
for the determination of shareholders entitled to receive notice of and to vote
at the Annual Meeting and at any adjournments thereof. Only record holders of
the common stock of the Company as of the close of business on such record date
will be entitled to vote at the Annual Meeting or any adjournments thereof. In
the event there are not sufficient votes for a quorum, or to approve or ratify
any of the foregoing proposals at the time of the Annual Meeting, the Annual
Meeting may be adjourned in order to permit further solicitation of proxies by
the Company. A list of shareholders entitled to vote at the Annual Meeting will
be available at Roslyn Bancorp, Inc., 1400 Old Northern Boulevard, Roslyn, New
York 11576, for a period of ten days prior to the Annual Meeting and will also
be available at the Annual Meeting itself.
By Order of the Board of Directors
/s/ Mary M. Ehrich
Mary M. Ehrich
Corporate Secretary
Roslyn, New York
June 6, 1997
<PAGE>
ROSLYN BANCORP, INC.
-----------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
July 22, 1997
-----------------------
Solicitation and Voting of Proxies
This Proxy Statement is being furnished to shareholders of Roslyn
Bancorp, Inc. (the "Company") in connection with the solicitation by the Board
of Directors ("Board of Directors" or "Board") of proxies to be used at the
Annual Meeting of Shareholders to be held on July 22, 1997 (the "Annual
Meeting"), and at any adjournments thereof. The Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1996, including the consolidated
financial statements for the fiscal year ended December 31, 1996, accompanies
this Proxy Statement, which is first being mailed to record holders on or about
June 6, 1997.
Regardless of the number of shares of common stock owned, it is
important that record holders of a majority of the shares be represented by
proxy or in person at the Annual Meeting. Shareholders are requested to vote by
completing the enclosed proxy card and returning it signed and dated in the
enclosed postage-paid envelope. Shareholders are urged to indicate their vote in
the spaces provided on the proxy card. Proxies solicited by the Board of
Directors of the Company will be voted in accordance with the directions given
therein. Where no instructions are indicated, signed proxies will be voted FOR
the election of the nominees for director named in this proxy statement, FOR the
approval of the Roslyn Bancorp, Inc. 1997 Stock-Based Incentive Plan and FOR the
ratification of KPMG Peat Marwick LLP as independent auditors of the Company for
the fiscal year ending December 31, 1997.
Other than the matters listed on the attached Notice of Annual Meeting
of Shareholders, the Board of Directors knows of no additional matters that will
be presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxy holders discretionary authority to vote
the shares in accordance with their best judgment on such other business, if
any, that may properly come before the Annual Meeting and at any adjournments
thereof, including whether or not to adjourn the Annual Meeting.
A proxy may be revoked at any time prior to its exercise by filing a
written notice of revocation with the Corporate Secretary of the Company, by
delivering to the Company a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting in person. However, if you are a
shareholder whose shares are not registered in your own name, you will need
appropriate documentation from your record holder to vote personally at the
Annual Meeting.
The cost of solicitation of proxies on behalf of management will be
borne by the Company. In addition to the solicitation of proxies by mail, D.F.
King & Co., Inc. and Kissel-Blake Inc., proxy solicitation firms, will assist
the Company in soliciting proxies for the Annual
<PAGE>
Meeting and will be paid a fee, in the aggregate, of approximately $18,000, plus
out-of-pocket expenses. Proxies may also be solicited personally or by telephone
by Directors, officers and other employees of the Company and its subsidiaries,
without additional compensation therefor. The Company will also request persons,
firms and corporations holding shares in their names, or in the name of their
nominees, which are beneficially owned by others, to send proxy material to and
obtain proxies from such beneficial owners, and will reimburse such holders for
their reasonable expenses in doing so.
Voting Securities
The securities which may be voted at the Annual Meeting consist of
shares of common stock of the Company (the "Common Stock"), with each share
entitling its owner to one vote on all matters to be voted on at the Annual
Meeting, except as described below. There is no cumulative voting for the
election of Directors.
The close of business on June 2, 1997, has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
shareholders of record entitled to notice of and to vote at the Annual Meeting
and at any adjournments thereof. The total number of shares of Common Stock
outstanding on the Record Date was 43,642,459 shares.
As provided in the Company's Certificate of Incorporation, record
holders of Common Stock who beneficially own in excess of 10% of the outstanding
shares of Common Stock (the "Limit") are not entitled to any vote in respect of
the shares held in excess of the Limit. A person or entity is deemed to
beneficially own shares owned by an affiliate of, as well as persons acting in
concert with, such person or entity. The Company's Certificate of Incorporation
authorizes the Board of Directors (i) to make all determinations necessary to
implement and apply the Limit, including determining whether persons or entities
are acting in concert, and (ii) to demand that any person who is reasonably
believed to beneficially own stock in excess of the Limit to supply information
to the Company to enable the Board of Directors to implement and apply the
Limit.
The presence, in person or by proxy, of the holders of at least a
majority of the total number of shares of Common Stock entitled to vote (after
subtracting any shares in excess of the Limit pursuant to the Company's
Certificate of Incorporation) is necessary to constitute a quorum at the Annual
Meeting. In the event that there are not sufficient votes for a quorum, or to
approve or ratify any proposal at the time of the Annual Meeting, the Annual
Meeting may be adjourned in order to permit the further solicitation of proxies.
As to the election of Directors, the proxy card being provided by the
Board of Directors enables a shareholder to vote "FOR" the election of the
nominees proposed by the Board of Directors, or to "WITHHOLD" authority to vote
for one or more of the nominees being proposed. Under Delaware law and the
Company's Bylaws, Directors are elected by a plurality of votes cast, without
regard to either (i) broker non-votes, or (ii) proxies as to which authority to
vote for one or more of the nominees being proposed is withheld.
2
<PAGE>
As to the approval of the Roslyn Bancorp, Inc. 1997 Stock-Based
Incentive Plan (the "Incentive Plan"), by checking the appropriate box, you may:
(i) vote "FOR" the item; (ii) vote "AGAINST" the item; or (iii) "ABSTAIN" with
respect to the item.
As to the ratification of KPMG Peat Marwick LLP as independent auditors
of the Company and all other matters that may properly come before the Annual
Meeting, by checking the appropriate box, a stockholder may: (i) vote "FOR" the
item; (ii) vote "AGAINST" the item; or (iii) "ABSTAIN" from voting on such item.
Under Delaware law and the Company's Bylaws, the affirmative vote of a
majority of the votes cast at the Annual Meeting, in person or by proxy, and
entitled to vote, is required to constitute stockholder approval and
ratification of Proposals 2 and 3. Accordingly, shares as to which the "ABSTAIN"
box has been selected on the proxy card will not be counted as votes cast for
purposes of Delaware law and the Company's Bylaws. Shares underlying broker
non-votes or in excess of the Limit will not be counted as present and entitled
to vote or as votes cast and will have no effect. For further information on the
vote required to implement Proposal 2 during the first year following the
conversion from mutual to stock form of the Company's subsidiary, The Roslyn
Savings Bank (the "Bank"), which was completed on January 10, 1997 (the
"Conversion"), see the discussion under Proposal 2 herein.
Proxies solicited hereby will be returned to the Company's transfer
agent, Registrar and Transfer Company. The Board of Directors have designated
Registrar and Transfer Company to act as inspectors of election and tabulate the
votes at the Annual Meeting. Registrar and Transfer Company is not otherwise
employed by, or a Director of, the Company or any of its affiliates. After the
final adjournment of the Annual Meeting, the proxies will be returned to the
Company for safekeeping.
Security Ownership of Certain Beneficial Owners
The following table sets forth information as to those persons believed
by management to be beneficial owners of more than 5% of the Company's
outstanding shares of Common Stock on the Record Date, or as disclosed in
certain reports received to date regarding such ownership filed by such persons
with the Company and with the Securities and Exchange Commission ("SEC"), in
accordance with Sections 13(d) and 13(g) of the Securities Exchange Act of 1934,
as amended ("Exchange Act"). Other than those persons listed below, the Company
is not aware of any person, as such term is defined in the Exchange Act, that
owns more than 5% of the Company's Common Stock as of the Record Date.
3
<PAGE>
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent of
Title of Class Name and Address of Beneficial Owner Ownership Class
- -------------------------- ------------------------------------------------- --------------- ----------------
<S> <C> <C> <C>
Common Stock The Roslyn Savings Bank 3,491,397(1) 8.0%
Employee Stock Ownership Plan
("ESOP")
1400 Old Northern Boulevard
Roslyn, New York 11576
</TABLE>
- ---------------------------
(1) Marine Midland Bank has been appointed as the corporate trustee for the
ESOP ("ESOP Trustee"). The ESOP Trustee, subject to its fiduciary duty,
must vote all allocated shares held in the ESOP in accordance with the
instructions of the ESOP participants. As of June 2, 1997, 63,705
shares had been allocated under the ESOP and 3,427,692 shares remain
unallocated. With respect to unallocated shares, such unallocated
shares will be voted by the ESOP Trustee in a manner calculated to most
accurately reflect the voting instructions received from ESOP
participants, so long as such vote is in accordance with the provisions
of the Employee Retirement Income Security Act of 1974 ("ERISA"), as
amended.
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of nine (9)
Directors and is divided into three classes. Each of the nine members of the
Board of Directors of the Company also presently serves as a Director of The
Roslyn Savings Bank, which is a wholly-owned subsidiary of the Company.
Directors are elected for staggered terms of three years each, with the term of
office of only one of the three classes of Directors expiring each year.
Directors serve until their successors are elected and qualified.
The three nominees proposed for election at this Annual Meeting are
Thomas J. Calabrese, Jr., Dr. Edwin W. Martin, Jr. and Richard C. Webel. No
person being nominated as a Director is being proposed for election pursuant to
any agreement or understanding between any such person and the Company.
In the event that any such nominee is unable to serve, or declines to
serve for any reason, it is intended that the proxies will be voted for the
election of such other person as may be designated by the present Board of
Directors. The Board of Directors has no reason to believe that any of the
persons named will be unable or unwilling to serve. Unless authority to vote for
the nominee is withheld, it is intended that the shares represented by the
enclosed proxy card, if executed and returned, will be voted FOR the election of
the nominees proposed by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE
NOMINEES NAMED IN THIS PROXY STATEMENT.
4
<PAGE>
Information with Respect to the Nominees, Continuing Directors and Certain
Executive Officers of the Company
The following table sets forth, as of the Record Date, the names of the
nominees, continuing Directors and "named executive officers" of the Company, as
defined below; their ages; a brief description of their recent business
experience, including present occupations and employment; certain directorships
held by each; the year in which each became a Director and the year in which
their terms (or in the case of the nominees, their proposed terms) as Director
of the Company expire. The table also sets forth the amount of Common Stock and
the percent thereof beneficially owned by each Director and named executive
officer and all Directors and executive officers as a group as of the Record
Date.
<TABLE>
<CAPTION>
Shares of
Name and Principal Expiration Common Stock
Occupation at Present Director of Term as Beneficially Percent of
and for Past Five Years Age Since(1) Director Owned(2) Class
- ----------------------- --- -------- -------- -------- -----
<S> <C> <C> <C> <C> <C>
NOMINEES
Thomas J. Calabrese, Jr. 55 1994 2000 800 *
Managing Director - Human Resources,
NYNEX Corporation, a
telecommunications firm.
Dr. Edwin W. Martin, Jr. 65 1994 2000 1,300 *
President Emeritus and a Director of the
National Center for Disability Services,
a non-profit education, rehabilitation and
research corporation since 1994. Prior to
that, Dr. Martin was President and Chief
Executive Officer of the National Center for
Disability Services. Dr. Martin is
currently a Director of National Captioning
Institute, a non-profit agency, a Director
of Interboro Mutual Indemnity Insurance
Company, an insurance company, and a Director
of Pall Corp., a manufacturer of industrial
filters.
Richard C. Webel 45 1995 2000 5,000 *
Managing Director, Innocenti & Webel,
an architectural firm. Mr. Webel is also
President of Webel Corporation, a
strategic planning company and
PlantAmerica, LLC, a software
development corporation. Mr. Webel
also serves as a general partner of
Roundbush Associates, a real estate
development partnership.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Shares of
Name and Principal Expiration Common Stock
Occupation at Present Director of Term as Beneficially Percent of
and for Past Five Years Age Since(1) Director Owned(2) Class
- ----------------------- --- -------- -------- -------- -----
<S> <C> <C> <C> <C> <C>
CONTINUING DIRECTORS
Joseph L. Mancino 59 1992 1998 67,389 *
Chairman of the Board, President and
Chief Executive Officer of the Company;
Chairman of the Board, President and
Chief Executive Officer of the Bank. Mr.
Mancino also serves as a Director of
the Institutional Investors Mutual Fund,
a diversified open end mutual fund,
the Community Bankers Association of
New York State and the Savings Bank Life
Insurance Fund.
James E. Swiggett 65 1980 1998 51,466 *
Retired Chairman of the Board, President
and Chief Executive Officer of
Kollomorgen Corp., a diversified
technology manufacturing company.
Robert G. Freese 67 1988 1998 2,000 *
Retired Vice Chairman and Chief
Financial Officer of Grumman
Corporation, a defense contractor.
Floyd N. York 74 1967 1999 40,000 *
Retired Chairman of the Board, President
and Chief Executive Officer of the Bank.
Victor C. McCuaig 68 1970 1999 11,000 *
Of counsel to and former partner in
Payne, Wood & Littlejohn, general counsel
to the Bank.
John P. Nicholson 72 1975 1999 8,620 *
Chairman of Nicholson & Galloway, a
local construction firm specializing in
roofing construction. Mr. Nicholson also
serves as an Advisory Director of Bank
of New York, Long Island Division.
NAMED EXECUTIVE OFFICERS
WHO ARE NOT DIRECTORS
Michael P. Puorro 38 -- -- 18,040 *
Treasurer and Chief Financial Officer of
the Company; Senior Vice President and
Chief Financial Officer of the Bank since
1996. Mr. Puorro has been employed by
the Bank since 1992.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Shares of
Name and Principal Expiration Common Stock
Occupation at Present Director of Term as Beneficially Percent of
and for Past Five Years Age Since(1) Director Owned(2) Class
- ----------------------- --- -------- -------- -------- -----
<S> <C> <C> <C> <C> <C>
John R. Bransfield, Jr. 55 -- -- 5,266 *
Vice President of the Company;
Executive Vice President and Senior
Lending Officer of the Bank since 1996.
Mr. Bransfield was Senior Vice
President and Senior Lending Officer of
the Bank from 1993 until 1996. Prior to
that, Mr. Bransfield was Executive Vice
President and President for the Long
Island Region of a New England-based
commercial bank.
John L. Klag 39 -- -- 7,534 *
Senior Vice President and Investment
Officer of the Bank since 1996. Mr.
Klag has been employed by the Bank
since 1993. Prior to that, Mr. Klag was
a Vice President of a New York-based
savings bank.
Arthur W. Toohig 54 -- -- 21,980 *
Senior Vice President and Human
Resources Officer of the Bank since
1992.
Directors and executive officers as a -- -- -- 272,490 *
Group (17 persons)
</TABLE>
- -------------------------------
* Represents less than 1.0% of the Company's voting securities.
(1) Includes years of service as a Director of the Bank.
(2) Each person effectively exercises sole (or shares with spouse or other
immediate family member) voting or dispositive power as to shares reported
herein (except as noted).
7
<PAGE>
Meetings and Committees of the Boards of the Bank and the Company
The Board of Directors of the Company conducts its business through
meetings of the Board of Directors and through activities of its committees. The
Board of Directors of the Company meets regularly and may have additional
meetings as needed. During fiscal 1996, the Board of Directors of the Company,
which was formed in July 1996, held four meetings primarily related to
organizational and other matters in connection with the formation of the Company
and its acquisition of the Bank during the Conversion. All of the Directors of
the Company attended at least 75% of the total number of the Company's Board
meetings held and committee meetings on which such Directors served during
fiscal 1996. The Board of Directors of the Company maintains committees, the
nature and composition of which are described below:
Audit Committee. The Audit Committee of the Company consists of Messrs.
Freese, Swiggett, Nicholson, York and Webel, who are outside Directors. The
purposes of this Committee are to review audit reports and management's actions
regarding the implementation of audit findings and to review compliance with all
relevant laws and regulations. Because the Company only became operational as of
January 10, 1997, the Audit Committee of the Company did not meet in fiscal
1996; however, the Bank's Audit Committee met four times in fiscal 1996.
Compensation Committee. The Compensation Committee of the Company
consists of Messrs. Calabrese, Jr., Freese, Swiggett, Nicholson and Martin, Jr.
The Compensation Committee meets to establish compensation and benefits for the
executive officers and to review the incentive compensation programs when
necessary. The Compensation Committee is also responsible for establishing
certain guidelines and limits for compensation for other salaried officers and
employees of the Company and the Bank. The Personnel Committee of the Bank,
which performs the functions similar to the Compensation Committee of the
Company and consists of all members of the Compensation Committee of the Company
as well as Mr. Mancino, met seven times in 1996. The full Board of Directors of
the Company met in the capacity of the Compensation Committee one time during
1996.
Directors' Compensation
Directors' Fees. As of May 1, 1997, Directors of the Company receive
fees of $1,700 per Board meeting attended and $800 per Committee meeting
attended, unless such meetings are held consecutively with Board or Committee
meetings of the Bank, in which case the Directors of the Company receive no
fees. Prior to May 1, 1997, no fees were paid to Directors of the Company for
their services as members of the Board of Directors of the Company or as
committee members. Directors of the Bank receive fees of $1,700 per Board
meeting attended and $800 per Committee meeting attended.
Incentive Plan. The Company is presenting to Shareholders for approval
the Incentive Plan, under which all Directors of the Company are eligible to
receive awards. See Proposal 2 for a summary of the material terms of the
Incentive Plan.
8
<PAGE>
Executive Compensation
The report of the Compensation Committee and the stock performance
graph shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the
Securities Act of 1933, as amended (the "Securities Act") or the Exchange Act,
except as to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
Compensation Committee Report on Executive Compensation. Under rules
established by the Securities and Exchange Commission ("SEC"), the Company is
required to provide certain data and information in regard to the compensation
and benefits provided to the Company's Chief Executive Officer and other
executive officers of the Company for the year ended December 31, 1996. Because
the Company had no significant assets, liabilities or operations until January
10, 1997, the following discussion addresses compensation information relating
to the Chief Executive Officer and the executive officers of the Bank for 1996
and sets forth the report of the Personnel Committee of the Board of Directors
of the Bank (the "Committee"). The disclosure requirements for the Chief
Executive Officer and other executive officers include the use of tables and a
report explaining the rationale and considerations that led to fundamental
compensation decisions affecting those individuals.
The Bank and the Company have begun a process to revise current
executive compensation policies to reflect the status of the Company as a public
company and assure competitive compensation levels. It is currently intended
that the new compensation policies of the Company and Bank will incorporate the
consolidated financial results of the Company and Bank and other factors related
to the performance of the Company's common stock.
The following policies and procedures were utilized to determine
executive compensation levels for fiscal 1996. As a result of the stock
conversion and other operational changes, subjective qualitative measures were
more heavily relied upon by the Committee than quantitative measures.
Compensation Policies and Procedures. The Committee is responsible for
administering the compensation and benefit programs for all of the Bank's
employees, including its executive officers. It is the responsibility of the
Committee to recommend to the full Board of Directors the amount and composition
of executive compensation paid to the executive officers, including the
President and Chief Executive Officer. It is the responsibility of the Board of
Directors to review and consider such compensation recommendations of the
Committee.
The Committee annually reviews and evaluates base salary and annual
bonuses for all executive officers, and in conducting such reviews places
primary consideration upon the recommendations by the President and Chief
Executive Officer, along with the rationale for such recommendations, with the
exception of the compensation review of the President and Chief Executive
Officer. The President and Chief Executive Officer does not participate in the
9
<PAGE>
Committee's decision as to his compensation package. In establishing individual
compensation levels, the Committee considers the Bank's overall objectives and
performance, peer group comparisons and individual performance.
The Committee adopted the following goals in establishing executive
compensation: (1) attracting, retaining and rewarding highly qualified and
productive persons; (2) relating compensation to both Bank and individual
performance; and (3) establishing compensation levels that are internally
equitable and externally competitive.
The Bank's compensation program for executive officers consists of (1)
a base salary and (2) an annual bonus. In addition, executive officers
participate in other benefit plans available to all employees, including the
Retirement Plan, the Employee Stock Ownership Plan, and the 401(K) Plan, and
executive officers may be selected to participate in supplemental benefit plans.
Base Salaries. Salary levels recommended by the Committee are intended
to be consistent and competitive with the practices of comparable financial
institutions, and each executive's level of responsibility. The Committee
generally utilizes internal and/or external surveys of compensation paid to
executive officers performing similar duties for depository institutions and
their holding companies with particular focus on the level of compensation paid
by comparable institutions in the metropolitan New York region. In this regard,
the Committee, from time to time, utilizes the services of compensation
consultants to assist it in its review. For 1996, the Committee engaged KPMG
Peat Marwick LLP to prepare survey information which was primarily utilized by
the Committee to establish base salary levels. The analysis compared both the
base and total cash compensation levels of the Bank in comparison to other
similarly situated financial institutions operating in the State of New York,
including the metropolitan New York region. The analysis addressed the
compensation of the executive officers in each institution and the financial
performance of such institutions in comparison to the Bank and concluded that
the executive officers of the Bank were generally compensated below their peer
group. After a thorough discussion by the Committee and Board of Directors, the
base salaries of each Named Executive Officer were increased, effective October
28, 1996, to amounts that attempted to make compensation levels commensurate
with the levels paid to officers of such similarly situated publicly traded
financial institutions.
Although the Committee's recommendations are discretionary and no
specific formula is used for decision making, salary increases are aimed at
reflecting the overall performance of the Bank and the performance of the
individual executive officer.
Bonus. For 1996, the Bank did not maintain a cash bonus plan and all
bonuses paid were discretionary and determined by the recommendations of the
Committee. In determining the amount of the bonuses, the Committee primarily
considered the profitability of the Bank and the entire compensation package of
the executive officers. Since the mid-1980's, the Bank has accrued a portion of
its net operating income for the purpose of paying any discretionary bonuses
recommended by the Committee and approved by the Bank's Board of Directors. For
1996, the
10
<PAGE>
Committee specifically considered the Bank's level of funds available for the
payment of bonuses, the base salary increase of each executive officer and
corporate events during 1996 which required additional effort by Bank personnel
and determined to grant a discretionary bonus to all employees, excluding the
Chief Executive Officer, in November 1996.
Chief Executive Officer. Effective December 1995, the Bank's Chief
Executive Officer was granted a salary increase of 14.3%, or $50,000, for a
resulting annual salary of $400,000. The determination to increase the Chief
Executive Officer's salary was based, in part, upon the Bank's internal analysis
of the Chief Executive Officer's salary as compared to local peer group
financial institutions and in consideration of normal cost of living
adjustments. Due to the Bank's determination to convert to a publicly-held stock
entity and additional responsibilities which would be incurred by the Bank's
officers, the Board determined in 1996 to review all officer salaries, including
the Chief Executive Officer's, in comparison to similarly-situated publicly
traded financial institutions operating in the metropolitan New York Region as
well as in the State of New York. KPMG Peat Marwick LLP was engaged to perform
such analysis. As a result, the Committee determined the Chief Executive
Officer's salary was below that of similarly situated peer institutions and
recommended a further adjustment of the salary of the Chief Executive Officer,
effective October 28, 1996, by 5%, to $420,000. Salary adjustments paid to Mr.
Mancino recognized his significant contributions to the Bank's successful
operations and reputation in its marketplace and attempted to maintain his
overall compensation on a competitive level with industry peers. Additionally,
when determining the Chief Executive Officer's base salary, the Committee
considered certain regulatory limitations on the payment of cash bonuses that
are applicable to executive officers who also serve as board members of New York
State chartered savings banks, such as Mr. Mancino. No specific formula is used
in connection with the Committee's decisions regarding the Chief Executive
Officer's annual salary nor did the Committee set specified salary levels based
on the achievement of particular quantifiable objectives or financial goals of
the Bank. Rather, the Committee considered the overall profitability of the Bank
and the contributions made to the Bank by the Chief Executive Officer. For 1996,
the Chief Executive Officer was paid a bonus of $404, representing a loan
referral bonus. Other than the loan referral bonus, the Chief Executive Officer
did not receive any other cash bonus.
The Compensation/Personnel Committee
Thomas J. Calabrese, Jr.
Robert G. Freese
Joseph L. Mancino
Dr. Edwin W. Martin, Jr.
John P. Nicholson
James E. Swiggett
11
<PAGE>
Stock Performance Graph. The following graph shows a comparison of
total shareholder return on the Company's Common Stock, based on the market
price of the Common Stock with the cumulative total return of companies in The
Nasdaq Market Index and the MG Index for Savings and Loans for the period
beginning on January 13, 1997, the day the Company's Common Stock began trading,
through April 30, 1997. The graph was derived from a very limited period of
time, and, as a result, may not be indicative of possible future performance of
the Company's Common Stock. The data was supplied by Media General Financial
Services.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Summary
1/13/97 1/31/97 2/28/97 3/31/97 4/30/97
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Roslyn Bancorp. Inc. 100.00 158.80 156.30 163.10 162.50
Nasdaq Market Index 100.00 107.31 101.49 94.94 98.02
MG Index For Savings and Loans 100.00 107.22 116.74 109.09 111.75
</TABLE>
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to 100.000 on 1/13/97, the first
day of trading for Roslyn Bancorp. Inc. Common Stock. For Roslyn
Bancorp. Inc. the index commenced with the initial public offering price
of $10.00 per share.
12
<PAGE>
Summary Compensation Table. The following table sets forth the cash
compensation paid by the Bank as well as certain other compensation paid or
accrued for services rendered in all capacities during the years ended December
31, 1996 and 1995, to the Chief Executive Officer and the four highest paid
executive officers of the Bank who received salary and bonus in excess of
$100,000 ("Named Executive Officers"). The Company was established in July 1996,
therefore, only compensation for 1996 and 1995 is included.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Long-Term Compensation
----------------------------------------
Annual Compensation(1) Awards Payouts
---------------------------------------------------------------------------
Other
Annual Restricted Securities
Compen- Stock Underlying LTIP All Other
Name and Principal Year Salary Bonus sation Awards Options/SARs Payouts Compensation
Positions ($) ($) ($)(2) ($)(3) (#)(4) ($)(5) ($)(6)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joseph L. Mancino 1996 $403,846 $ 404 $- $- - $- $19,616
Chairman of the Board of 1995 336,539 1,600 - - - - 20,433
Directors, President and
Chief Executive Officer
John R. Bransfield, Jr. 1996 $173,015 $144,000 $- $- - $- $10,774
Executive Vice President 1995 151,719 75,736 - - - - 10,578
and Senior Lending Officer
Arthur W. Toohig 1996 $101,992 $86,580 $- $- - $- $9,112
Senior Vice President and 1995 91,692 44,500 - - - - 7,400
Human Resources Officer
John L. Klag 1996 $101,100 $87,610 $- $- - $- $3,263
Senior Vice President and 1995 90,423 47,870 - - - - 3,004
Investment Officer
Michael P. Puorro 1996 $100,019 $83,475 $- $- - $- $3,077
Senior Vice President and 1995 85,846 43,340 - - - - 2,847
Chief Financial Officer
</TABLE>
- ------------------
(1) Under Annual Compensation, the column titled "Salary" includes amounts
deferred by the Named Executive Officer under the Bank's 401(k) Plan and the
column titled "Bonus" consists of board approved discretionary bonuses as
well as attendance bonuses, loan referral bonuses and recruitment bonuses.
(2) For 1996 and 1995, there were no (a) perquisites over the lesser of $50,000
or 10% of the individual's total salary and bonus for the year; (b) payments
of above-market preferential earnings on deferred compensation; (c) payments
of earnings with respect to long-term incentive plans prior to settlement or
maturation; (d) tax payment reimbursements; or (e) preferential discounts on
stock. For 1995, the Bank had no restricted stock or stock related plans in
existence.
(3) Does not include awards pursuant to the Incentive Plan since no
determination of such awards has been made at this time. For 1996 and 1995,
neither the Company nor the Bank had any stock plans in existence.
(4) No stock options or SARs were earned or granted in 1996 or 1995.
(5) For 1996 and 1995, there were no payouts or awards under any long-term
incentive plan.
(6) For 1996, such amounts include: (a) $9,000, $4,500, $3,033, $6,105 and
$2,857 contributed by the Bank under the Bank's 401(K) Plan to the accounts
of Messrs. Mancino, Bransfield, Jr., Klag, Toohig and Puorro, respectively;
(b) $4,725, $2,843, $230, $1,015 and $219 of imputed income from group term
life insurance on behalf of Messrs. Mancino, Bransfield, Jr., Klag, Toohig
and Puorro, respectively; and (c) $5,891, $3,430 and $1,192 of imputed
income relating to the use of company automobiles by Messrs. Mancino,
Bransfield, Jr. and Toohig, respectively.
13
<PAGE>
Employment Agreements
The Bank has entered into employment agreements with Messrs. Mancino,
Bransfield, Klag, Toohig and Puorro, and three other senior officers
(individually, the "Executive") and the Company has entered into employment
agreements with Messrs. Mancino, Bransfield and Puorro and one other senior
officer (collectively, the "Employment Agreements"), which became effective as
of January 10, 1997. The Employment Agreements are intended to ensure that the
Bank and the Company will be able to maintain a stable and competent management
base after the Conversion. The continued success of the Bank and the Company
depends to a significant degree on the skills and competence of the above
referenced officers.
The Employment Agreements provide for three-year terms for each
Executive. The terms of the Employment Agreements shall be extended on a daily
basis unless written notice of non-renewal is given by the Board of Directors.
The Employment Agreements provide that the Executive's base salary will be
reviewed annually. The current base salaries under such Employment Agreements
for Messrs. Mancino, Bransfield, Klag, Toohig and Puorro are $500,000, $252,000,
$137,200, $137,000 and $147,000, respectively. In addition to the base salary,
the Employment Agreements provide for, among other things, participation in
stock benefits plans and other fringe benefits applicable to executive
personnel. The Employment Agreements provide for termination by the Bank or the
Company for cause, as defined in the Employment Agreements, at any time. In the
event the Bank or the Company chooses to terminate the Executive's employment
for reasons other than for cause, or in the event of the Executive's resignation
from the Bank and the Company upon: (i) failure to re-elect the Executive to his
current offices; (ii) a material change in the Executive's functions, duties or
responsibilities; (iii) a relocation of the Executive's principal place of
employment by more than 25 miles; (iv) a reduction in the benefits and
perquisites being provided to the Executive under the Employment Agreement; (v)
liquidation or dissolution of the Bank or the Company; or (vi) a breach of the
agreement by the Bank or the Company, the Executive or, in the event of death,
his beneficiary would be entitled to receive an amount equal to the remaining
base salary payments due to the Executive for the remaining term of the
Employment Agreement and the contributions that would have been made on the
Executive's behalf to any employee benefit plans of the Bank and the Company
during the remaining term of the Agreement. The Bank and the Company would also
continue and pay for the Executive's life, health, dental and disability
coverage for the remaining term of the Agreement. Upon any termination of the
Executive, the Executive is subject to a one year non-competition agreement.
Under the Employment Agreements, if voluntary or involuntary
termination follows a change in control or acquisition of control of the Bank or
the Company, the Executive or, in the event of the Executive's death, his
beneficiary, would be entitled to a severance payment equal to the greater of:
(i) the payments due for the remaining terms of the Agreement; or (ii) three
times the average of the five preceding taxable years' annual compensation. The
Bank and the Company would also continue the Executive's life, health, and
disability coverage for thirty-six months. Notwithstanding that both the Bank
and Company Employment Agreements provide for a severance payment in the event
of a change in control, the Executive would only be entitled to receive a
severance payment under one Agreement.
14
<PAGE>
Payments to the Executive under the Bank's Employment Agreement are
guaranteed by the Company in the event that payments or benefits are not paid by
the Bank. Payment under the Company's Employment Agreement would be made by the
Company. All reasonable costs and legal fees paid or incurred by the Executive
pursuant to any dispute or question of interpretation relating to the Employment
Agreements shall be paid by the Bank or Company, respectively, if the Executive
is successful on the merits pursuant to a legal judgment, arbitration or
settlement. The Employment Agreements also provide that the Bank and Company
shall indemnify the Executive to the fullest extent allowable under federal and
Delaware law, respectively.
Payments under the Company Employment Agreement in the event of a
change in control may constitute some portion of a "parachute payment" for
federal income tax purposes, resulting in the possible payment of a federal
excise tax. In such case, the Company must pay to the Executive an amount so as
to enable the Executive to retain the payments he would have retained had he not
been subject to such excise tax.
Change in Control Agreements
The Bank has entered into two-year Change in Control Agreements (the
"CIC Agreements") with eleven officers of the Bank, none of whom are covered by
Employment Agreements. Commencing on the first anniversary date and continuing
on each anniversary thereafter, the CIC Agreements may be renewed by the Board
of Directors of the Bank for an additional year. The CIC Agreements provide that
in the event voluntary or involuntary termination follows a change in control of
the Bank, the officer would be entitled to receive a severance payment equal to
two times the officer's average annual compensation for the five most recent
taxable years. The Bank would also continue and pay for the officer's life,
health and disability coverage for 24 months following termination.
Employee Severance Compensation Plan
The Bank's Board of Directors has implemented The Roslyn Savings Bank
Employee Severance Compensation Plan ("Severance Plan"), which will provide
eligible employees with severance pay benefits in the event of a change in
control of the Bank or the Company. Management personnel with Employment
Agreements or CIC Agreements are not eligible to participate in the Severance
Plan. Generally, employees will be eligible to participate in the Severance Plan
if they have completed at least one year of service with the Bank. The Severance
Plan vests in each participant a contractual right to the benefits such
participant is entitled to thereunder. Under the Severance Plan, in the event of
a change in control of the Bank or the Company, eligible employees who are
terminated from or terminate their employment within one year (for reasons
specified under the Severance Plan), will be entitled to receive a severance
payment. If the participant, whose employment has terminated, has completed at
least one year of service, the participant will be entitled to a cash severance
payment equal to one-twelfth of his annual compensation (as defined in the
Severance Plan) for each year of service up to a maximum of 199% of his annual
compensation.
15
<PAGE>
Employee Benefit Plans
Incentive Plan. The Company is presenting to stockholders for approval
the Incentive Plan under which all employees of the Company and any affiliate,
including its subsidiaries, are eligible to receive awards. See the proposal for
material terms of the Incentive Plan.
Retirement Plan. The Bank maintains a defined benefit plan ("Retirement
Plan") for eligible employees. The Retirement Plan is intended to satisfy the
requirements of Section 401(a) of the Internal Revenue Code of 1986, as amended
(the "Code"). Eligible employees generally begin participating in the Retirement
Plan on the first day of the calendar month coincident with or next following
the date on which they have attained age 21 and have completed at least one year
of service with the Bank. All employees are eligible to participate in the
Retirement Plan other than (i) employees paid on an hourly-rate or contract
basis, (ii) employees regularly employed outside the Bank's own offices in
connection with the operation and maintenance of building and other property
acquired through foreclosure or deed, and (iii) leased employees. Participants
become vested in their benefits under the Retirement Plan upon completing five
years of vesting service.
The Retirement Plan provides for a monthly benefit to a participant
upon retirement at or after the later of (i) attainment of age 65 or (ii) the
fifth anniversary of initial participation in the Plan. The Retirement Plan also
provides for a benefit upon the participant's death or early retirement. The
annual normal retirement benefit for a participant under the Retirement Plan is
(i) 2% of average annual earnings multiplied by years of credited service (up to
a maximum of 30 years), plus (ii) 0.5% of average annual earnings multiplied by
the participant's number of years and months of credited service in excess of 30
years. For purposes of the Retirement Plan, average annual earnings means the
participant's average annual compensation (as defined in the Retirement Plan )
during the 36 consecutive calendar months within the final 120 consecutive
calendar months of the participant's credited service that yields the highest
average. A participant is eligible to receive an early retirement benefit upon
the completion of at least ten consecutive years of vested service in the
Retirement Plan and (i) attainment of age 60, or (ii) the sum of the
participant's age and years of service equals at least 75. Benefits are
generally paid in a straight life annuity for unmarried participants and in the
form of a 50% joint and survivor annuity (with the spouse as designated
beneficiary) for married participants. Other forms of benefit payments are
available under the Retirement Plan.
Benefit Restoration Plan. The Bank maintains the Benefit Restoration
Plan (the "BRP"). The BRP is a non-qualified plan designed to permit certain
employees to receive supplemental retirement income from the Bank. Participants
in the BRP receive a benefit equal to the amount the participant would have
received under the 401(k) Plan and the Retirement Plan, but for limitations
imposed on such benefits by certain provisions of the Code, including Sections
401(a)(17), 401(m), 401(k), 402(g) and 415 of the Code. The Bank amended the BRP
to provide BRP participants with additional benefits equal to the amount of
benefits the Participant would have received under the ESOP but for certain Code
limitations. The Plan is an unfunded plan, which provides participants only with
a contractual right to obtain the benefits provided thereunder from the general
assets of the Bank. Currently, only Messrs. Mancino and Bransfield are eligible
to participate in the BRP.
16
<PAGE>
The following table sets forth the estimated annual benefits payable
under the Retirement Plan upon a participant's retirement at age 65 for the year
ended December 31, 1996, expressed in the form of a straight life annuity, and
any related amounts payable under the BRP. The covered compensation under the
Retirement Plan and BRP includes the base salary for participants and does not
consider cash bonuses. The benefits listed in the table below for the Retirement
Plan and BRP are not subject to a reduction for social security benefits or any
other offset amount.
<TABLE>
<CAPTION>
Years of Service
-----------------------------------------------------------------------------------------------------
Final Average
Compensation 15 20 25 30 35 40
- ----------------------- ------------- ------------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
$50,000 $15,000 $20,000 $25,000 $30,000 $31,250 $32,500
100,000 30,000 40,000 50,000 60,000 62,500 65,000
150,000 45,000 60,000 75,000 90,000 93,750 97,500
200,000 60,000 80,000 100,000 120,000 125,000 130,000
250,000 75,000 100,000 125,000 150,000 156,250 162,500
300,000 90,000 120,000 150,000 180,000 187,500 195,000
350,000 105,000 140,000 175,000 210,000 218,750 227,500
400,000 120,000 160,000 200,000 240,000 250,000 260,000
450,000 135,000 180,000 225,000 270,000 281,250 290,500
</TABLE>
The approximate years of service, as of March 31, 1997, for the named
executive officers are as follows:
<TABLE>
<CAPTION>
Years of
Service
---------------
<S> <C>
Joseph L. Mancino 36
Arthur W. Toohig 20
John L. Klag 4
John R. Bransfield, Jr. 4
Michael P. Puorro 4
</TABLE>
401(k) Plan. The Bank maintains the 401(k) Savings Plan ("401(k)
Plan"), a tax-qualified profit sharing and salary reduction plan under Sections
401(a) and 401(k) of the Code. The 401(k) Plan provides participants with
retirement benefits and may also provide benefits upon death, disability or
termination of employment with the Bank. Salaried, and as of August 1995,
commission-paid employees, are eligible to participate in the 401(k) Plan
following the completion of one year of service. Participants may make elective
salary reduction contributions to the 401(k) Plan up to the lesser of 12% of the
participant's compensation (as defined in the 401(k) Plan) or the legally
permissible limit (currently $9,500) imposed by the Code. The Bank previously
made a matching employer contribution equal to an amount of up to 6% of a
17
<PAGE>
participant's annual compensation. The Bank now makes such matching employer
contributions under the ESOP. The 401(k) Plan permits participants to direct the
investment of their 401(k) plan account into various investment alternatives,
including Company Common Stock.
ESOP. In connection with the conversion, the Bank established an
employee stock ownership plan. The ESOP provides eligible employees with the
opportunity to receive a Bank-funded retirement benefit based on the value of
the Company Common Stock. All full-time salaried employees of the Bank who have
completed one year of service with the Bank are eligible to participate in the
ESOP portion of the combined plan. The ESOP is a tax qualified retirement plan
designed to invest primarily in the Company Common Stock and a trust established
to hold ESOP assets ("ESOP Trust") was funded with 3,491,387 shares of Company
Common Stock. The Company Common Stock held by the ESOP was primarily funded
with a loan from the Company which is to be repaid over a thirty-year term and
is collateralized by the shares held by the ESOP. The pledged shares are
released on an annual basis in an amount proportional to the loan repayment. The
released shares are allocated to the accounts of ESOP participants as follows:
first, for each eligible ESOP participant, a portion of the shares released for
the plan year will be allocated to a special "matching" account under the ESOP
equal in value to the amount of matching contribution, if any, that such
participant would be entitled to under the terms of the 401(k) Plan for the plan
year; and second, the remaining shares which have been released for the plan
year will be allocated to each eligible participant's general ESOP account based
on the ratio of each such participant's base compensation to the total base
compensation of all eligible ESOP participants. Participants vest in their ESOP
account at a rate of 20% annually commencing after the completion of one year of
service, with 100% vesting upon the completion of 5 years of service.
Participants will also completely vest if their service is terminated due to
death, permanent disability, retirement or upon the occurrence of a change in
control. Forfeitures will be reallocated among remaining participating
employees, in the same proportions as contributions. Benefits are payable upon
death, retirement, early retirement, or separation from service.
Management Supplemental Executive Retirement Plan. The Bank has
implemented a non-qualified Management Supplemental Executive Retirement Plan
("SERP") to provide certain officers and highly compensated employees with
additional retirement benefits. The SERP benefit is intended to make up for
benefits lost under the ESOP allocation procedures to participants who retire
prior to the complete repayment of the ESOP loan. At the retirement of a
participant, the benefits under the SERP are determined by first: (i) projecting
the number of shares that would have been allocated to the participant under the
ESOP if they had been employed throughout the period of the ESOP loan (measured
from the participant's first date of ESOP participation); and (ii) reducing the
number determined by (i) above by the number of shares actually allocated to the
participant's account under the ESOP; and second, by multiplying the number of
shares that represent the difference between such figures by the average fair
market value of the Common Stock over the preceding five years. Benefits under
the SERP vest in 20% annual increments over a five year period commencing as of
the date of a participant's participation in the SERP. The vested portion of the
SERP participant's benefits are payable upon the retirement of the participant.
18
<PAGE>
Transactions With Certain Related Persons
The Bank's policies do not permit the Bank to make loans to any of its
Directors and executive officers. The Company intends that all transactions
between the Company and its executive officers, Directors, holders of 10% or
more of the shares of any class of its Common Stock and affiliates thereof, will
contain terms no less favorable to the Company than could have been obtained by
it in arms-length negotiations with unaffiliated persons and will be approved by
a majority of independent outside Directors of the Company not having any
interest in the transaction.
PROPOSAL 2. APPROVAL OF THE ROSLYN BANCORP, INC.
1997 STOCK-BASED INCENTIVE PLAN
The Board of Directors of the Company is presenting for stockholder
approval the Roslyn Bancorp, Inc. 1997 Stock-Based Incentive Plan ("Incentive
Plan"), in the form attached hereto as Appendix A. The purpose of the Incentive
Plan is to attract and retain qualified personnel in key positions, provide
officers, employees and non-employee Directors ("Outside Directors") with a
proprietary interest in the Company as an incentive to contribute to the success
of the Company, promote the attention of management to other stockholders'
concerns and reward employees for outstanding performance. The following is a
summary of the material terms of the Incentive Plan, which is qualified in its
entirety by the complete provisions of the Incentive Plan attached as Appendix
A.
General
The Incentive Plan authorizes the granting of options to purchase
Common Stock, option-related awards and awards of Common Stock (collectively,
"Awards"). Subject to certain adjustments to prevent dilution of Awards to
participants, the maximum number of shares reserved for Awards denominated in
Common Stock under the Incentive Plan is 6,109,944 shares, provided such number
is not in excess of 14% of the outstanding shares of the Common Stock as of the
effective date of the Incentive Plan. The maximum number of shares reserved for
purchase pursuant to the exercise of options and option-related Awards which may
be granted under the Incentive Plan is 4,364,246 shares, provided such number is
not in excess of 10% of the outstanding shares of Common Stock, as of the
effective date of the Incentive Plan. The maximum number of the shares reserved
for the award of shares of Common Stock ("Stock Awards") is 1,745,698 shares,
provided such number is not in excess of 4% of the outstanding shares of Common
Stock as of the effective date of the Incentive Plan. All officers, other
employees and Outside Directors of the Company and its affiliates, including the
Bank and its subsidiaries, are eligible to receive Awards under the Incentive
Plan. The Incentive Plan will be administered by a committee of non-employee
directors of the Company (the "Committee"). Authorized but unissued shares or
shares previously issued and reacquired by the Company may be used to satisfy
Awards under the Incentive Plan. If authorized but unissued shares are utilized
to fund the grant of stock awards or the exercise of options granted under the
Incentive Plan, it would result in an increase in the number of shares then
outstanding, and will have a dilutive effect on the holdings of existing
stockholders.
19
<PAGE>
Types of Awards
General. The Incentive Plan authorizes the grant of Awards to officers,
employees and Outside Directors in the form of: (i) options to purchase the
Company's Common Stock intended to qualify as incentive stock options under
Section 422 of the Code (options which afford tax benefits to the recipients
upon compliance with certain conditions and which do not result in tax
deductions to the Company), referred to as "Incentive Stock Options"; (ii)
options that do not so qualify (options which do not afford income tax benefits
to recipients, but which may provide tax deductions to the Company), referred to
as "Non-Statutory Stock Options"; (iii) limited rights which are exercisable
only upon a change in control of the Company or Bank (as defined in the
Incentive Plan) ("Limited Rights"); (iv) Stock Awards, and (v) Stock
Appreciation Rights. Each type of Award granted under the Plan may be subject to
vesting requirements or other conditions imposed by the Committee.
Options. The Incentive Plan provides for the granting of options to
purchase Common Stock of the Company ("Options") to employees, officers and
Outside Directors for up to 4,364,246 shares. Pursuant to the Incentive Plan,
the Committee has the authority to determine the date, or dates, on which
Options shall become exercisable and any other conditions which must be met
prior to becoming exercisable. The exercise price of an Option may be paid in
cash or in Common Stock at the discretion of the Committee. See "Payout
Alternatives" and "Alternative Option Payments."
All options granted to employees will be qualified as Incentive Stock
Options to the extent permitted under Section 422 of the Code. Incentive Stock
Options, at the discretion of the Committee with the concurrence of the holder,
may be converted into Non-Statutory Stock Options. The exercise price of all
Incentive Stock Options must be 100% of the fair market value of the underlying
Common Stock at the time of grant, except as provided below. In order to qualify
as Incentive Stock Options under Section 422 of the Code, the option must be
granted to an employee, the exercise price must not be less than 100% of the
fair market value on the date of grant, the term of the option may not exceed
ten years from the date of grant, and no more than $100,000 of options may
become exercisable or vest in any fiscal year. Incentive Stock Options granted
to any person who is the beneficial owner of more than 10% of the outstanding
voting stock may be exercised only for a period of five years from the date of
grant and the exercise price must be at least equal to 110% of the fair market
value of the underlying Common Stock on the date of grant.
Each Outside Director of the Company or its affiliates will be eligible
to receive Non- statutory Stock Options to purchase shares of Common Stock.
Additionally, officers and employees are eligible to receive Non-Statutory Stock
Options under the Plan to the extent they are ineligible to receive Incentive
Stock Options. The exercise price of each Non-Statutory Stock option shall equal
the fair market value of the Common Stock on the date the option is granted.
Options granted under the Incentive Plan may be exercised at such times
as the Committee determines, but in no event shall an Option be exercisable more
than ten years from the date of grant (or five years from date of grant for a
10% owner). Unless otherwise determined by the Committee, upon termination of an
optionee's services for any reason other than death, disability, change in
control, retirement or termination for cause, all then exercisable Options shall
remain
20
<PAGE>
exercisable for a period of three months following termination and all
unexercised Options shall be cancelled. Unless otherwise determined by the
Committee, in the event of the death, disability, or retirement of the optionee
or a change in control of the Company or Bank, all unexercisable Options held by
such optionee will become fully exercisable and remain exercisable for up to one
year thereafter. In the event of termination for cause, all exercisable and
unexercisable options held by the optionee shall be cancelled. In the event of
the retirement of an optionee, the Committee shall have the discretion to (1)
determine that all unexercisable options shall become exercisable and remain
exercisable for one year, or (2) allow unexercisable options to continue to vest
in accordance with their original terms, provided the optionee is engaged as a
consultant, advisor or advisory director of the Company or any of its
affiliates.
Limited Rights. The Incentive Plan also provides the Committee with the
ability to grant a Limited Right concurrently with any Option. Limited Rights
are related to specific Options granted and become exercisable only upon a
change in control of the Bank or the Company. Upon exercise, the holder will be
entitled to receive in lieu of purchasing the stock underlying the Option, a
lump sum cash payment equal to the difference between the exercise price of the
related Option and the fair market value of the shares of Common Stock subject
to the Option on the date of exercise of the right less any applicable tax
withholding.
Stock Awards. The Incentive Plan also authorizes the granting of Stock
Awards to employees and Outside Directors, in an amount not to exceed 1,745,698
shares in the aggregate. The Committee has the authority to determine the dates
on which Stock Awards granted will vest or any other conditions which must be
satisfied prior to vesting.
When stock awards are distributed in accordance with the Incentive
Plan, the recipients will also receive amounts equal to accumulated cash and
stock dividends (if any) with respect thereto plus earnings thereon minus any
required tax withholding amounts. Prior to vesting, recipients of Awards may
direct the voting of shares of Common Stock granted to them and held in a trust
established to hold shares of Common Stock which may be granted under the
Incentive Plan. Shares of Common Stock held by the Incentive Plan trust which
have not been allocated or for which voting has not been directed are voted by
the trustee in the same proportion as the awarded shares are voted in accordance
with the directions given by all recipients of Awards.
Unless otherwise determined by the Committee, upon termination of the
services of a holder of a Stock Award for any reason other than death,
disability, change in control, retirement or termination for cause, all such
holder's rights in unvested Stock Awards shall be cancelled. Unless otherwise
determined by the Committee, in the event of the death, disability, or
retirement of the holder of the Stock Award or termination of the holder's
service within 36 months following a change in control of the Company or Bank,
all unvested Stock Awards held by such individual will become fully vested. In
the event of termination for cause of a holder of a Stock Award, all unvested
Stock Awards held by such individual shall be cancelled. In the event of a Stock
Award holder's retirement, the Committee shall have the discretion to: (1)
determine that all unvested Stock Awards shall become immediately vested, or (2)
determine that all unvested Stock Awards shall continue to vest in accordance
with their original terms, provided the holder is engaged as a consultant,
advisor or advisory director of the Company or any of its affiliates.
21
<PAGE>
Stock Appreciation Rights. The Incentive Plan authorizes the Committee
to grant Stock Appreciation Rights ("SARs") which entitles the holder to receive
a payment, equal in value to the excess of the fair market value of a specified
number of shares of Common Stock on the date the SAR is exercised over the grant
price of such SAR, as determined by the Committee.
Tax Treatment
Options. An optionee will generally not be deemed to have recognized
taxable income upon grant or exercise of any Incentive Stock Option, provided
that shares transferred in connection with the exercise are not disposed of by
the optionee for at least one year after the date the shares are transferred in
connection with the exercise of the option and two years after the date of grant
of the option. If certain holding periods are satisfied, upon disposal of the
shares, the aggregate difference between the per share option exercise price and
the fair market value of the Common Stock is recognized as income taxable at
long term capital gains rates. No compensation deduction may be taken by the
Company as a result of the grant or exercise of Incentive Stock Options,
assuming these holding periods are met.
In the case of the exercise of a Non-statutory Stock Option, an
optionee will be deemed to have received ordinary income upon exercise of the
stock option in an amount equal to the aggregate amount by which the per share
exercise price is exceeded by the fair market value of the Common Stock. In the
event shares received through the exercise of an Incentive Stock Option are
disposed of prior to the satisfaction of the holding periods (a "disqualifying
disposition"), the exercise of the option will be treated as the exercise of a
Non-statutory Stock Option, except that the optionee will recognize the ordinary
income for the year in which the disqualifying disposition occurs. The amount of
any ordinary income deemed to have been received by an optionee upon the
exercise of a Non-statutory Stock Option or due to a disqualifying disposition
will be a deductible expense of the Company for tax purposes.
Limited Rights. In the case of Limited Rights, the holder would have to
include the amount paid to him upon the exercise of the Limited Right in his
gross income for federal income tax purposes in the year in which the payment is
made and the Company would be entitled to a deduction for federal income tax
purposes of the amount paid.
Stock Awards. When shares of Common Stock, as Stock Awards, are
distributed, the recipient is deemed to receive ordinary income equal to the
fair market value of such shares at the date of distribution plus any dividends
and earnings on such shares (provided such date is more than six months after
the date of grant) and the Company is permitted a commensurate compensation
expense deduction for income tax purposes.
Stock Appreciation Rights. In the case of SARs, the holder would have
to include the amount paid to him upon the exercise of the SARs in his gross
income for federal income tax purposes in the year in which the payment is made
and the Company would be entitled to a deduction for federal income tax purposes
of the amount paid.
22
<PAGE>
Performance Awards.
General. The Incentive Plan provides the Committee with the ability to
condition or restrict the vesting or exercisability of any Award upon the
achievement of performance targets or goals as set forth under the Incentive
Plan. Any Award subject to such conditions or restrictions is considered to be a
"Performance Award." Subject to the express provisions of the Plan and as
discussed in this paragraph, the Committee has discretion to determine the terms
of any Performance Award, including the amount of the award, or a formula for
determining such, the performance criteria and level of achievement related to
these criteria which determine the amount of the award granted, issued,
retainable and/or vested, the period as to which performance shall be measured
for determining achievement of performance (a "performance period"), the timing
of delivery of any awards earned, forfeiture provisions, the effect of
termination of employment for various reasons, and such further terms and
conditions, in each case not inconsistent with the Plan, as may be determined
from time to time by the Committee. The performance criteria upon which
Performance Awards are granted, issued, retained and/or vested may be based on
financial performance and/or personal performance evaluations, except that for
any Performance Award that is intended by the Committee to satisfy the
requirements for "performance based compensation" under Code Section 162(m), the
performance criteria shall be a measure based on one or more Qualifying
Performance Criteria (as defined below). Notwithstanding satisfaction of any
performance goals, the number of Shares granted, issued, retainable and/or
vested under a Performance Award may be adjusted by the Committee on the basis
of such further considerations as the Committee in its sole discretion shall
determine. However, the Committee may not increase the amount earned upon
satisfaction of any performance goal by any Participant who is a "covered
employee" within the meaning of Section 162(m) of the Code.
Qualifying Performance Criteria and Section 162(m) Limits. Subject to
stockholder approval of the Plan, the performance criteria for any Performance
Award that is intended to satisfy the requirements for "performance based
compensation" under the Code Section 162(m) shall be based upon any one or more
of the following performance criteria, either individually, alternatively or in
any combination, applied to either the Company as a whole or to a business unit
or subsidiary, either individually, alternatively or in any combination, and
measured either on an absolute basis or relative to a pre-established target, to
previous years' results or to a designated comparison group, in each case as
preestablished by the Committee under the terms of the Award: net income, as
adjusted for non-recurring items; cash earnings; earnings per share; cash
earnings per share; return on equity; return on assets; assets; stock price;
total shareholder return; capital; net interest income; market share; cost
control or efficiency ratio; and asset growth.
The aggregate amount of Options granted under the Plan during any 60
month period to any one Participant may not exceed 25% of the total amount of
options available to be granted under the Incentive Plan. The aggregate amount
of shares of Common Stock issuable under a Stock Award granted under the Plan
for any 60 month period to any one Participant may not exceed 25% of the total
amount of Stock Awards available to be granted under the Incentive Plan.
23
<PAGE>
Payout Alternatives
The Committee has the discretion to determine the form of payment it
shall use in distributing payments for all Awards. If the Committee requests any
or all participants to make an election as to form of payment, it shall not be
considered bound by the election. Any shares of Common Stock tendered in payment
of an obligation arising under the Incentive Plan or applied to tax withholding
amounts shall be valued at the fair market value of the Common Stock. The
Committee may use treasury stock, authorized but unissued stock or it may direct
the market purchase of shares of Common Stock to satisfy its obligations under
the Incentive Plan.
Alternate Option Payments
Subject to the terms of the Incentive Plan, the Committee also has
discretion to determine the form of payment for the exercise of an Option. The
Committee may indicate acceptable forms in the Award Agreement covering such
Options or may reserve its decision to the time of exercise. No Option is to be
considered exercised until payment in full is accepted by the Committee. The
Committee may permit the following forms of payment for Options: (a) in cash or
by certified or cashiers check, or (b) by tendering previously acquired shares
of Common Stock. Any shares of Common Stock tendered in payment of the exercise
price of an Option shall be valued at the Fair Market Value of the Common Stock
on the date prior to the date of exercise.
Amendment
The Board of Directors may amend the Incentive Plan in any respect, at
any time, provided that no amendment may affect the rights of the holder of an
Award without his or her permission. The Board of Directors intends to amend the
Incentive Plan in the future to authorize the Committee to amend previously
granted options or Stock Awards to provide for accelerated vesting upon the
occurrence of a change in control of the Company or the Bank (as defined in the
Incentive Plan).
Adjustments
In the event of any change in the outstanding shares of Common Stock of
the Company by reason of any stock dividend or split, recapitalization, merger,
consolidation, spin-off, reorganization, combination or exchange of shares, or
other similar corporate change, or other increase or decrease in such shares
without receipt or payment of consideration by the Company, or in the event an
extraordinary capital distribution is made, including the payment of an
extraordinary dividend, the Committee may make such adjustments to previously
granted Awards, to prevent dilution, diminution or enlargement of the rights of
the holder. All Awards under this Incentive Plan shall be binding upon any
successors or assigns of the Company.
Nontransferability
Unless determined otherwise by the Committee, awards under the
Incentive Plan shall not be transferable by the recipient other than by will or
the laws of intestate succession or pursuant to a domestic relations order. With
the consent of the Committee, a participant may designate
24
<PAGE>
a person or his or her estate as beneficiary of any award to which the recipient
would then be entitled, in the event of the death of the participant.
Stockholder Approval and Effective Date of Plan
The Incentive Plan is subject to the regulations of the New York
Banking Board ("NYBB") and the Federal Deposit Insurance Corporation ("FDIC").
However, neither the NYBB nor the FDIC has endorsed or approved the Incentive
Plan. Pursuant to NYBB and FDIC regulations, the Incentive Plan may not be
implemented during the first year after the Bank's Conversion unless approved by
a majority of the Company's stockholders at a duly called meeting of
stockholders to be held no sooner than six months after the completion of the
Conversion.
The Incentive Plan provides that it shall become effective upon the
earlier of the date that it is approved by the Company's stockholders, as
defined by applicable NYBB and FDIC regulation, or January 11, 1998.
Accordingly, if the Incentive Plan is not approved by a majority of stockholders
at the Annual Meeting, the Incentive Plan shall become effective on January 11,
1998 without further stockholder approval unless it is terminated by the Board
of Directors. In the absence of the approval of the Incentive Plan by a majority
of shares cast at the Annual Meeting, the Options granted under the Incentive
Plan would not qualify as Incentive Stock Options under the Code and the Common
Stock of the Company would no longer be eligible for listing on the NASDAQ
National Market but may be eligible for listing on the NASDAQ SmallCap Market.
NEW PLAN BENEFITS
As of the date of this Proxy Statement, no determination had been made
regarding the granting of Awards or Options under the Incentive Plan.
Unless marked to the contrary, the shares represented by the enclosed
proxy card, if executed and returned, will be voted "FOR" the approval of the
Roslyn Bancorp, Inc. 1997 Stock-Based Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF
THE ROSLYN BANCORP, INC. 1997 STOCK-BASED INCENTIVE PLAN.
PROPOSAL 3. RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended December
31, 1996 were KPMG Peat Marwick LLP. The Company's Board of Directors has
reappointed KPMG Peat Marwick LLP to continue as independent auditors for the
Bank and the Company for the year ending December 31, 1997, subject to
ratification of such appointment by the shareholders.
25
<PAGE>
Representatives of KPMG Peat Marwick LLP will be present at the Annual
Meeting. They will be given an opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions from
shareholders present at the Annual Meeting.
Unless marked to the contrary, the shares represented by the enclosed
proxy card will be voted FOR ratification of the appointment of KPMG Peat
Marwick LLP as the independent auditors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE
INDEPENDENT AUDITORS OF THE COMPANY.
ADDITIONAL INFORMATION
Shareholder Proposals
To be considered for inclusion in the Company's proxy statement and
form of proxy relating to the 1998 Annual Meeting of Shareholders, presently
anticipated to be held on April 30, 1998, a shareholder proposal must be
received by the Corporate Secretary of the Company at the address set forth on
the first page of this Proxy Statement not later than November 28, 1997. Any
such proposal will be subject to 17 C.F.R. ss. 240.14a-8 of the Rules and
Regulations under the Securities Exchange Act of 1934, as amended.
Notice of Business to be Conducted at an Annual Meeting
The Bylaws of the Company provide an advance notice procedure for a
shareholder to properly bring business before an Annual Meeting. The shareholder
must give written advance notice to the Corporate Secretary of the Company not
less than ninety (90) days before the date originally fixed for such meeting;
provided, however, that in the event that less than one hundred (100) days
notice or prior public disclosure of the date of the meeting is given or made to
shareholders, notice by the shareholder to be timely must be received not later
than the close of business on the tenth day following the date on which the
Company's notice to shareholders of the annual meeting date was mailed or such
public disclosure was made. The advance notice by shareholders must include the
shareholder's name and address, as they appear on the Company's record of
shareholders, a brief description of the proposed business, the reason for
conducting such business at the Annual Meeting, the class and number of shares
of the Company's capital stock that are beneficially owned by such shareholder
and any material interest of such shareholder in the proposed business. In the
case of nominations to the Board of Directors, certain information regarding the
nominee must be provided. Nothing in this paragraph shall be deemed to require
the Company to include in its proxy statement or the proxy relating to an annual
meeting any shareholder proposal which does not meet all of the requirements for
inclusion established by the SEC in effect at the time such proposal is
received.
26
<PAGE>
Other Matters Which May Properly Come Before the Meeting
The Board of Directors knows of no business which will be presented for
consideration at the Meeting other than as stated in the Notice of Annual
Meeting of Shareholders. If, however, other matters are properly brought before
the Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote the shares represented thereby on such matters in accordance with
their best judgment.
Whether or not you intend to be present at the Annual Meeting, you are
urged to return your proxy card promptly. If you are then present at the Annual
Meeting and wish to vote your shares in person, your original proxy may be
revoked by voting at the Annual Meeting.
By Order of the Board of Directors
/s/ Mary M. Ehrich
Mary M. Ehrich
Corporate Secretary
Roslyn, New York
June 6, 1997
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE
REQUESTED TO SIGN, DATE AND PROMPTLY RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
27
<PAGE>
APPENDIX A
ROSLYN BANCORP, INC.
1997 STOCK-BASED INCENTIVE PLAN
1. DEFINITIONS.
-----------
(a) "Affiliate" means any "subsidiary corporation" of the Holding Company,
as such term is defined in Section 424(f) of the Code.
(b) "Award" means, individually or collectively, a grant under the Plan of
Non-statutory Stock Options, Incentive Stock Options, Stock Appreciation Rights,
Limited Rights, and Stock Awards.
(c) "Award Agreement" means an agreement evidencing and setting forth the
terms of an Award granted under the Plan, in such form as the Committee may,
from time to time, approve.
(d) "Bank" means The Roslyn Savings Bank, Roslyn, New York.
(e) "Board of Directors" means the board of directors of the Holding
Company.
(f) "Change in Control" means a change in control of the Bank or Holding
Company of a nature that (i) would be required to be reported in response to
Item 1 of the current report on Form 8-K, as in effect on the date hereof,
pursuant to Sections 13 or 15(d) of the Exchange Act; (ii) results in a "change
of control" or "acquisition of control" within the meaning of the regulations
promulgated by the Office of Thrift Supervision ("OTS") (or its predecessor
agency) found at 12 C.F.R. Part 574, as in effect on the date hereof; provided,
however, that in applying the definition of change in control as set forth under
such regulations the Board of Directors shall substitute its judgment for that
of the OTS; or (iii) without limitation Change in Control shall be deemed to
have occurred at such time as (A) any "person" (as the term is used in Sections
13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Bank or the Holding Company representing 20% or more of the
Bank's or the Holding Company's outstanding securities except for any securities
of the Bank purchased by the Holding Company and any securities purchased by any
tax-qualified employee benefit plan of the Bank; or (B) individuals who
constitute the Board of Directors on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof, provided that
any person becoming a director subsequent to the date hereof whose election was
approved by a vote of at least three-quarters of the directors comprising the
Incumbent Board, or whose nomination for election by the Holding Company's
stockholders was approved by a nominating committee serving under the Incumbent
Board, shall be, for purposes of this clause (B), considered as though he were a
member of the Incumbent Board; or (C) a plan of reorganization, merger,
consolidation, sale of all or
A-1
<PAGE>
substantially all the assets of the Bank or the Holding Company or similar
transaction occurs in which the Bank or Holding Company is not the resulting
entity; or (D) a solicitation of shareholders of the Holding Company, by someone
other than the current management of the Holding Company, seeking stockholder
approval of a plan of reorganization, merger or consolidation of the Holding
Company or Bank or similar transaction with one or more corporations, as a
result of which the outstanding shares of the class of securities then subject
to the plan are exchanged for or converted into cash or property or securities
not issued by the Bank or the Holding Company; or (E) a tender offer is made for
20% or more of the voting securities of the Bank or the Holding Company.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Committee" means the committee designated by the Board of Directors to
administer the Plan pursuant to Section 2 of the Plan.
(i) "Common Stock" means the Common Stock of the Holding Company, par
value, $.01 per share.
(j) "Date of Grant" means the effective date of an Award.
(k) "Disability" means any mental or physical condition with respect to
which the Participant qualifies for and receives benefits for under a long-term
disability plan of the Holding Company or an Affiliate, or in the absence of
such a long-term disability plan or coverage under such a plan, "disability"
shall mean a physical or mental condition which, in the sole discretion of the
Committee, is reasonably expected to be of indefinite duration and to
substantially prevent the Participant from fulfilling his duties or
responsibilities to the Holding Company or Affiliate.
(l) "Effective Date" means the date the Plan is approved by stockholders,
as defined by applicable NYSBB and FDIC regulation, or January 11, 1998,
whichever is earlier.
(m) "Employee" means any person employed by the Holding Company or an
Affiliate. Directors who are employed by the Holding Company or an Affiliate
shall be considered Employees under the Plan.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(o) "Exercise Price" means the price at which a share of Common Stock may
be purchased by a Participant pursuant to an Option.
(p) "Extraordinary Dividend" means a distribution to stockholders by the
Holding Company of earnings or stockholders' equity which: (i) exceeds net
earnings for the period for which the distribution is paid or (ii) such
distribution or any portion thereof will be treated by the stockholders
receiving such distribution as a return of capital for federal income tax
purposes.
A-2
<PAGE>
(q) "Fair Market Value" means the market price of Common Stock, determined
by the Committee as follows:
(i) If the Common Stock was traded on the date in question on The
Nasdaq Stock Market then the Fair Market Value shall be equal to
the last transaction price quoted for such date by The Nasdaq
Stock Market;
(ii) If the Common Stock was traded on a stock exchange on the date in
question, then the Fair Market Value shall be equal to the
closing price reported by the applicable composite transactions
report for such date; and
(iii) If neither of the foregoing provisions is applicable, then the
Fair Market Value shall be determined by the Committee in good
faith on such basis as it deems appropriate.
Whenever possible, the determination of Fair Market Value by the Committee
shall be based on the prices reported in The Wall Street Journal. Such
-----------------------
determination shall be conclusive and binding on all persons.
(r) "Holding Company" means Roslyn Bancorp, Inc.
(s) "Incentive Stock Option" means an Option granted to a Participant
pursuant to Section 7 of the Plan that is intended to meet the requirements of
Section 422 of the Code.
(t) "Limited Right" means an Award granted to a Participant pursuant to
Section 8 of the Plan.
(u) "Non-statutory Stock Option" means a stock option granted to a
Participant pursuant to the terms of the Plan but which is not intended to be
and is not identified as an Incentive Stock Option or a stock option granted
under the Plan which is intended to be and is identified as an Incentive Stock
Option but which does not meet the requirements of Section 422 of the Code.
(v) "Option" means an Incentive Stock Option or Non-statutory Stock Option.
(w) "Outside Director" means a member of the Board of Directors of the
Holding Company or an Affiliate, who is not also an Employee of the Holding
Company or an Affiliate.
(x) "Participant" means any person who holds an outstanding Award pursuant
to the Plan.
(y) "Performance Award" means an Award granted to a Participant pursuant to
Section 11 of the Plan.
A-3
<PAGE>
(z) "Performance Goal" means an objective for the Holding Company or any
Affiliate or any unit thereof or any individual that may be established by the
Committee for a Performance Award to become vested, earned or exercisable.
Performance Goals applicable to Performance Awards are intended to constitute
"performance-based" compensation within the meaning of Section 162(m) of the
Code and shall be based on one or more of the following criteria:
(i) net income, as adjusted for non-recurring items
(ii) cash earnings
(iii) earnings per share
(iv) cash earnings per share
(v) return on equity
(vi) return on assets
(vii) assets
(viii) stock price
(ix) total shareholder return
(x) capital
(xi) net interest income
(xii) market share
(xiii) cost control or efficiency ratio
(xiv) asset growth
(aa) "Plan" means the Roslyn Bancorp, Inc. 1997 Stock-Based Incentive Plan.
(bb) "Retirement" means a termination of employment (i) from the Holding
Company or an Affiliate at an age and with employment service that would entitle
the individual to a pension under The Retirement Plan of The Roslyn Savings Bank
in RSI Retirement Trust if the individual were a participant in such Pension
Plan or (ii) under circumstances designated as a Retirement by the Committee.
"Retirement" with respect to an Outside Director means the termination of
service from the Board of Directors of the Holding Company and any Affiliate
following written notice to the Board of Directors of such Outside Director's
intention to retire.
(cc) "Stock Appreciation Right" means an Award granted to a Participant,
alone or in connection with a related Option, pursuant to Section 10 of the
Plan.
(dd) "Stock Award" means an Award granted to a Participant pursuant to
Section 9 of the Plan.
(ee) "Termination for Cause" shall mean, in the case of an Outside
Director, removal from the Board of Directors or, in the case of an Employee,
termination of employment, because of a material loss to the Holding Company or
one of its Affiliates caused by the Participant's intentional failure to perform
stated duties, personal dishonesty, willful violation of any law, rule,
regulation (other than traffic violations or similar offenses) or final cease
and desist order, as determined by the Board of Directors. No act, or failure
to act, on a Participant's part shall be "willful" unless done, or omitted to be
done, not in good faith and
A-4
<PAGE>
without reasonable belief that the action or omission was in the best interest
of the Holding Company or an Affiliate.
(ff) "Trust" means a trust established by the Board of Directors in
connection with this Plan to hold Plan assets for the purposes set forth herein.
(gg) "Trustee" means any person or entity approved by the Board of
Directors to hold legal title to any of the Trust assets for the purposes set
forth under the Plan.
2. ADMINISTRATION.
--------------
(a) The Plan shall be administered by the Committee. The Committee shall
consist of two or more disinterested directors of the Holding Company, who shall
be appointed by the Board of Directors. A member of the Board of Directors shall
be deemed to be "disinterested" only if he satisfies (i) such requirements as
the Securities and Exchange Commission may establish for non-employee directors
administering plans intended to qualify for exemption under Rule 16b-3 (or its
successor) under the Exchange Act and (ii) such requirements as the Internal
Revenue Service may establish for outside directors acting under plans intended
to qualify for exemption under Section 162(m)(4)(C) of the Code. The Board of
Directors may also appoint one or more separate committees of the Board of
Directors, each composed of one or more directors of the Holding Company or an
Affiliate who need not be disinterested and who may grant Awards and administer
the Plan with respect to Employees and Outside Directors who are not considered
officers or directors of the Holding Company under Section 16 of the Exchange
Act.
(b) The Committee shall (i) select the Employees and Outside Directors who
are to receive Awards under the Plan, (ii) determine the type, number, vesting
requirements and other features and conditions of such Awards, (iii) interpret
the Plan and (iv) make all other decisions relating to the operation of the
Plan. The Committee may adopt such rules or guidelines as it deems appropriate
to implement the Plan. The Committee's determinations under the Plan shall be
final and binding on all persons.
(c) Each Award shall be evidenced by a written agreement ("Award
Agreement") containing such provisions as may be approved by the Committee. Each
Award Agreement shall constitute a binding contract between the Holding Company
or an Affiliate and the Participant, and every Participant, upon acceptance of
the Award Agreement, shall be bound by the terms and restrictions of the Plan
and the Award Agreement. The terms of each Award Agreement shall be in
accordance with the Plan, but each Award Agreement may include such additional
provisions and restrictions determined by the Committee, in its discretion,
provided that such additional provisions and restrictions are not inconsistent
with the terms of the Plan. In particular, the Committee shall set forth in each
Award Agreement (i) the type of Award granted (ii) the Exercise Price of an
Option or Stock Appreciation Right, (iii) the number of shares subject to the
Award; (iv) the expiration date of the Award, (v) the manner, time, and rate
(cumulative or otherwise) of exercise or vesting of such Award, and (vi) the
restrictions, if any, placed upon such Award, or upon shares which may be issued
upon exercise of such Award. The Chairman of the Committee and such other
directors and
A-5
<PAGE>
officers as shall be designated by the Committee are hereby authorized to
execute Award Agreements on behalf of the Company or an Affiliate and to cause
them to be delivered to the recipients of Awards.
3. TYPES OF AWARDS AND RELATED RIGHTS.
-----------------------------------
The following Awards may be granted under the Plan:
(a) Non-statutory Stock Options
(b) Incentive Stock Options
(c) Limited Rights
(d) Stock Awards
(e) Stock Appreciation Rights
4. STOCK SUBJECT TO THE PLAN.
-------------------------
Subject to adjustment as provided in Section 17 hereof, the maximum number
of shares reserved for Awards under the Plan is 6,109,994, which number shall
not exceed 14% of the outstanding shares of the Common Stock determined
immediately as of the Effective Date. Subject to adjustment as provided in
Section 17 hereof, the maximum number of shares reserved hereby for purchase
pursuant to the exercise of Options and Option-related Awards granted under the
Plan is 4,364,246, which number shall not exceed 10% of the outstanding shares
of Common Stock as of the Effective Date. The maximum number of shares reserved
for Stock Awards is 1,745,698, which number shall not exceed 4% of the
outstanding shares of Common Stock as of the Effective Date. The shares of
Common Stock issued under the Plan may be either authorized but unissued shares
or authorized shares previously issued and acquired or reacquired by the Trust
or the Holding Company, respectively. To the extent that Options and Stock
Awards are granted under the Plan, the shares underlying such Awards will be
unavailable for any other use including future grants under the Plan except
that, to the extent that Stock Awards or Options terminate, expire, or are
forfeited without having been vested or exercised (in the case of Limited
Rights, exercised for cash), new Awards may be made with respect to these
shares.
5. ELIGIBILITY.
-----------
Subject to the terms of the Plan, all Employees and Outside Directors shall
be eligible to receive Awards under the Plan. In addition, the Committee may
grant eligibility to consultants and advisors of the Holding Company or any
Affiliate.
6. NON-STATUTORY STOCK OPTIONS.
---------------------------
The Committee may, subject to the limitations of this Plan and the
availability of shares of Common Stock reserved but unawarded under this Plan,
grant Non-statutory Stock Options upon such terms and conditions as it may
determine. Non-statutory Stock Options granted under this Plan are subject to
the following terms and conditions:
A-6
<PAGE>
(a) Exercise Price. The Exercise Price of each Non-statutory Stock Option
--------------
shall be determined by the Committee on the Date of Grant. Such Exercise Price
shall not be less than 100% of the Fair Market Value of the Common Stock on the
Date of Grant. Shares of Common Stock underlying a Non-statutory Stock Option
may be purchased only upon full payment of the Exercise Price in a manner
provided for in Section 14 of the Plan.
(b) Terms of Non-statutory Stock Options. The term during which each Non-
------------------------------------
statutory Stock Option may be exercised shall be determined by the Committee,
but in no event shall a Non-statutory Stock Option be exercisable in whole or in
part more than ten (10) years from the Date of Grant. The Committee shall
determine the date on which each Non-statutory Stock Option shall become
exercisable and any terms or conditions which must be satisfied prior to each
Non-statutory Stock Option becoming exercisable. Any such terms or conditions
shall be determined by the Committee as of the Date of Grant. The shares of
Common Stock underlying each Non-statutory Stock Option installment may be
purchased in whole or in part by the Participant at any time during the term of
such Non-statutory Stock Option after such installment becomes exercisable.
(c) Non-Transferability. Unless otherwise determined by the Committee in
-------------------
accordance with this Section 6(c), Non-statutory Stock Options shall not be
transferred, assigned, hypothecated, or disposed of in any manner by a
Participant other than by will or the laws of intestate succession. The
Committee may, however, in its sole discretion, permit transferability or
assignment of a Non-statutory Stock Option if such transfer or assignment is, in
its sole determination, for valid estate planning purposes and such transfer or
assignment is permitted under the Code and Rule 16b-3 under the Exchange Act.
For purposes of this Section 6(c), a transfer for valid estate planning purposes
includes, but is not limited to: (a) a transfer to a revocable intervivos trust
as to which the Participant is both the settlor and trustee, (b) a transfer for
no consideration to: (i) any member of the Participant's Immediate Family, (ii)
any trust solely for the benefit of members of the Participant's Immediate
Family, (iii) any partnership whose only partners are members of the
Participant's Immediate Family, and (iv) any limited liability corporation or
corporate entity whose only members or equity owners are members of the
Participant's Immediate Family, or (c) the Roslyn Savings Foundation. For
purposes of this Section 6(c), "Immediate Family" includes, but is not
necessarily limited to, a Participant's parents, spouse, children, grandchildren
and great-grandchildren. Nothing contained in this Section 6(c) shall be
construed to require the Committee to give its approval to any transfer or
assignment of any Non-statutory Stock Option or portion thereof, and approval to
transfer or assign any Non-statutory Stock Option or portion thereof does not
mean that such approval will be given with respect to any other Non-statutory
Stock Option or portion thereof. The transferee or assignee of any Non-statutory
Stock Option shall be subject to all of the terms and conditions applicable to
such Non-statutory Stock Option immediately prior to the transfer or assignment
and shall be subject to any conditions proscribed by the Committee with respect
to such Non-statutory Stock Option.
(d) Termination of Employment or Service or Change in Control. Unless
---------------------------------------------------------
otherwise determined by the Committee, upon the termination of a Participant's
employment or service for any reason other than Disability, death, Retirement,
Change in Control or Termination for
A-7
<PAGE>
Cause, the Participant's Non-statutory Stock Options shall be exercisable only
as to those shares that were immediately exercisable by the Participant at the
date of termination and only for a period of three (3) months following
termination. In the event of a Participant's Retirement, the Participant's Non-
statutory Stock Options shall be exercisable only as to those shares that were
immediately exercisable by the Participant at the date of Retirement and remain
exercisable for a period of three (3) years; provided however, that upon the
Participant's Retirement, the Committee, in its discretion, may determine that
(i) all unexercisable Non-statutory Stock Options held by the Participant as of
that date shall become immediately exercisable and shall remain exercisable for
a period of three (3) years or (ii) all unexercisable Non-statutory Stock
Options shall continue to become exercisable in accordance with the Award
Agreement if the Participant is immediately engaged by the Holding Company or an
Affiliate as a consultant or advisor or continues to serve the Holding Company
or an Affiliate as a director or advisory director. Unless otherwise determined
by the Committee, in the event of a Change in Control or the termination of a
Participant's employment or service due to Disability or death, all Non-
statutory Stock Options held by such Participant shall immediately become
exercisable and remain exercisable for a period of three (3) years. Unless
otherwise determined by the Committee in the event of a Termination for Cause,
all rights under the Participant's Non-statutory Stock Options shall expire
immediately upon such Termination for Cause.
(e) Maximum Individual Award. No individual Employee shall be granted an
------------------------
amount of Non-statutory Stock Options which exceeds 25% of all Options eligible
to be granted under the Plan within any 60 month period and no individual
Outside Director shall be granted an amount of Non-statutory Stock Options which
exceeds 5% of all Options eligible to be granted under the Plan within any 60
month period.
7. INCENTIVE STOCK OPTIONS.
-----------------------
The Committee may, subject to the limitations of the Plan and the
availability of shares of Common Stock reserved but unawarded under this Plan,
grant Incentive Stock Options to an Employee. Incentive Stock Options granted
pursuant to the Plan shall be subject to the following terms and conditions:
(a) Exercise Price. The Exercise Price of each Incentive Stock Option
--------------
shall be not less than 100% of the Fair Market Value of the Common Stock on the
Date of Grant. However, if at the time an Incentive Stock Option is granted,
the Employee owns or is treated as owning, for purposes of Section 422 of the
Code, Common Stock representing more than 10% of the total combined voting
securities of the Holding Company ("10% owner"), the Exercise Price shall not be
less than 110% of the Fair Market Value of the Common Stock on the Date of
Grant. Shares of Common Stock may be purchased only upon payment of the full
Exercise Price in a manner provided for in Section 14 of the Plan.
(b) Amounts of Incentive Stock Options. To the extent the aggregate Fair
----------------------------------
Market Value of shares of Common Stock with respect to which Incentive Stock
Options that are exercisable for the first time by an Employee during any
calendar year under the Plan and any other stock option plan of the Holding
Company or an Affiliate exceeds $100,000, or such
A-8
<PAGE>
higher value as may be permitted under Section 422 of the Code, such Options in
excess of such limit shall be treated as Non-statutory Stock Options. Fair
Market Value shall be determined as of the Date of Grant with respect to each
such Incentive Stock Option.
(c) Terms of Incentive Stock Options. The term during which each Incentive
--------------------------------
Stock Option may be exercised shall be determined by the Committee, but in no
event shall an Incentive Stock Option be exercisable in whole or in part more
than ten (10) years from the Date of Grant. If at the time an Incentive Stock
Option is granted to an Employee who is a 10% Owner, the Incentive Stock Option
granted to such Employee shall not be exercisable after the expiration of five
(5) years from the Date of Grant. The Committee shall determine the date on
which each Incentive Stock Option shall become exercisable and any terms or
conditions which must be satisfied prior to the Incentive Stock Option becoming
exercisable. Any such terms or conditions shall be determined by the Committee
as of the Date of Grant. The shares of Common Stock underlying each Incentive
Stock Option installment may be purchased in whole or in part at any time during
the term of such Incentive Stock Option after such installment becomes
exercisable.
(d) Transferability. No Incentive Stock Option shall be transferable
---------------
except by will or the laws of descent and distribution and is exercisable,
during his lifetime, only by the Employee to whom it is granted. The
designation of a beneficiary does not constitute a transfer.
(e) Termination of Employment or Change in Control. Unless otherwise
----------------------------------------------
determined by the Committee, upon the termination of an Employee's employment
for any reason other than Disability, death, Retirement, Change in Control or
Termination for Cause, the Employee's Incentive Stock Options shall be
exercisable only as to those Incentive Stock Options that were immediately
exercisable by the Employee at the date of termination and only for a period of
three (3) months following such termination. In the event of an Employee's
Retirement, the Employee's Incentive Stock Options shall be exercisable only as
to those shares that were immediately exercisable by the Employee at the date of
Retirement and remain exercisable for a period of three (3) years; provided
however, that upon the Employee's Retirement, the Committee, in its discretion,
may determine that (i) all unexercisable Incentive Stock Options held by the
Employee as of that date shall become immediately exercisable and shall remain
exercisable for a period of three (3) years or (ii) all unexercisable Incentive
Stock Options shall continue to become exercisable in accordance with the Award
Agreement if the Employee is immediately engaged by the Holding Company or an
Affiliate as a consultant or advisor or continues to serve the Holding Company
or an Affiliate as a director or advisory director. Unless otherwise determined
by the Committee, in the event of a Change in Control or termination of an
Employee's employment for Disability or death, all unvested Incentive Stock
Options held by such Employee shall immediately become exercisable and shall
remain exercisable for three (3) years after such termination. Unless otherwise
determined by the Committee, in the event of an Employee's Termination for
Cause, all rights under such Employee's Incentive Stock Options shall expire
immediately upon the effective date of such Termination for Cause. Any Option
which, by operation of this provision, does not meet the requirements of Section
422 of the Code, shall be considered a Non-statutory Stock Option.
A-9
<PAGE>
(f) Maximum Individual Award. No individual Employee shall be granted an
------------------------
amount of Incentive Stock Options which exceeds 25% of all Options eligible to
be granted under the Plan within any 60 month period.
8. LIMITED RIGHTS.
--------------
Simultaneously with the grant of any Option, the Committee may grant a
Limited Right with respect to all or some of the shares of Common Stock covered
by such Option. Limited Rights granted under this Plan are subject to the
following terms and conditions:
(a) Terms of Rights. In no event shall a Limited Right be exercisable in
---------------
whole or in part before the expiration of six (6) months from the Date of Grant
of the Limited Right. A Limited Right may be exercised only in the event of a
Change in Control. The Limited Right may be exercised only when the underlying
Option is eligible to be exercised, and only when the Fair Market Value of the
underlying shares on the day of exercise is greater than the Exercise Price of
the underlying Option. Upon exercise of a Limited Right, the underlying Option
shall cease to be exercisable and shall be terminated. Upon exercise or
termination of an Option, any related Limited Rights shall terminate. The
Limited Right is transferable only when the underlying Option is transferable
and under the same conditions.
(b) Payment. Upon exercise of a Limited Right, the holder shall promptly
-------
receive from the Holding Company or an Affiliate an amount of cash equal to the
difference between the Exercise Price of the underlying Option and the Fair
Market Value of the Common Stock subject to such Option on the date the Limited
Right is exercised, multiplied by the number of shares with respect to which
such Limited Right is being exercised.
9. STOCK AWARDS.
------------
The Committee may, subject to the limitations of the Plan, make Stock
Awards which shall consist of the grant of some number of shares of Common Stock
to a Participant. Stock Awards shall be made subject to the following terms and
conditions:
(a) Payment of the Stock Award. Stock Awards may only be made in whole
--------------------------
shares of Common Stock. Stock Awards may only be granted from shares reserved
under the Plan and available for award at the time the Stock Award is made to
the Participant.
(b) Terms of the Stock Awards. The Committee shall determine the dates on
-------------------------
which Stock Awards granted to a Participant shall vest and any terms or
conditions which must be satisfied prior to the vesting of any installment or
portion of the Stock Award. Any such terms, or conditions shall be determined
by the Committee as of the Date of Grant.
(c) Termination of Employment or Service or Change in Control. Unless
---------------------------------------------------------
otherwise determined by the Committee, upon the termination of a Participant's
employment or service for any reason other than Disability, death, Retirement,
Change in Control or Termination for Cause, the Participant's unvested Stock
Awards as of the date of termination shall be forfeited and any rights the
Participant had to such unvested Stock Awards shall become null and void.
A-10
<PAGE>
In the event of a Participant's Retirement, the Participant's unvested Stock
Awards as of the date of Retirement shall be forfeited and any rights the
Participant had to such unvested Stock Awards shall become null and void;
provided however, that upon the Participant's Retirement, the Committee, in its
discretion, may determine that (i) all unvested Stock Awards held by the
Participant as of that date shall become immediately vested or (ii) all unvested
Stock Awards shall continue to vest in accordance with the Award Agreement if
the Participant is immediately engaged by the Holding Company or an Affiliate as
a consultant or advisor or continues to serve the Holding Company or an
Affiliate as a director or advisory director. Unless otherwise determined by the
Committee, in the event of a termination of the Participant's service due to
Disability, death or within 36 months following a Change in Control, all
unvested Stock Awards held by such Participant shall immediately vest. Unless
otherwise determined by the Committee, or in the event of the Participant's
Termination for Cause, all unvested Stock Awards held by such Participant as of
the effective date of such Termination for Cause shall be forfeited and any
rights such Participant had to such unvested Stock Awards shall become null and
void.
(d) Non-Transferability. Except to the extent permitted by the Code, the
-------------------
rules promulgated under Section 16(b) of the Exchange Act or any successor
statutes or rules:
(i) The recipient of a Stock Award shall not sell, transfer, assign,
pledge, or otherwise encumber shares subject to the Stock Award
until full vesting of such shares has occurred. For purposes of
this section, the separation of beneficial ownership and legal
title through the use of any "swap" transaction is deemed to be a
prohibited encumbrance.
(ii) Unless determined otherwise by the Committee and except in the
event of the Participant's death or pursuant to a domestic
relations order, a Stock Award is not transferable and may be
earned in his lifetime only by the Participant to whom it is
granted. Upon the death of a Participant, a Stock Award is
transferable by will or the laws of descent and distribution.
The designation of a beneficiary shall not constitute a transfer.
(iii) If a recipient of a Stock Award is subject to the provisions of
Section 16 of the Exchange Act, shares of Common Stock subject to
such Stock Award may not, without the written consent of the
Committee (which consent may be given in the Award Agreement), be
sold or otherwise disposed of within six (6) months following the
date of grant of the Stock Award.
(e) Accrual of Dividends. Whenever shares of Common Stock underlying a
--------------------
Stock Award are distributed to a Participant or beneficiary thereof under the
Plan, such Participant or beneficiary shall also be entitled to receive, with
respect to each such share distributed, a payment equal to any cash dividends
and the number of shares of Common Stock equal to any stock dividends, declared
and paid with respect to a share of the Common Stock if the record date for
determining shareholders entitled to receive such dividends falls between the
A-11
<PAGE>
date the relevant Stock Award was granted and the date the relevant Stock Award
or installment thereof is issued. There shall also be distributed an appropriate
amount of net earnings, if any, of the Trust with respect to any dividends paid
out on the shares related to the Stock Award.
(f) Voting of Stock Awards. After a Stock Award has been granted but for
-----------------------
which the shares covered by such Stock Award have not yet been vested, earned
and distributed to the Participant pursuant to the Plan, the Participant shall
be entitled to vote or to direct the Trustee to vote, as the case may be, such
shares of Common Stock which the Stock Award covers subject to the rules and
procedures adopted by the Committee for this purpose and in a manner consistent
with the Trust agreement.
(g) Maximum Individual Award. No individual Employee shall be granted an
------------------------
amount of Stock Awards which exceeds 25% of all Stock Awards eligible to be
granted under the Plan within any 60 month period and no individual Outside
Director shall be granted an amount of Stock Awards which exceeds 5% of all
Stock Awards eligible to be granted under the Plan within any 60 month period.
10. STOCK APPRECIATION RIGHTS
-------------------------
The Committee may, subject to the limitation of the Plan, grant a Stock
Appreciation Right ("SAR") to any Participant. A Stock Appreciation Right shall
entitle the Participant to the right to receive a payment, equal in value to
the excess of the Fair Market Value of a specified number of shares of Common
Stock on the date the SAR is exercised over the grant price of such SAR, which
shall not be less than 100% of the Fair Market Value on the Date of Grant of
such SAR, as determined by the Committee, provided that, in the case of a SAR
granted retroactively in tandem with or as substitution for another award
granted under any plan of the Company or an Affiliate, the grant price may be
the same as the exercise or designated price of such other award.
(a) Maximum Individual Award. No individual Employee or Outside Director
------------------------
shall be granted a number of Stock Appreciation Rights which exceeds the maximum
number of Options such individual may be granted under the Plan, pursuant to
Section 6(e) hereof, within any 60 month period.
11. PERFORMANCE AWARDS
------------------
(a) The Committee may determine to make any award under the Plan a
Performance Award by making such Award contingent upon the achievement of a
Performance Goal or any combination of Performance Goals. Each Performance
Award shall be evidenced in the Award Agreement, which shall set forth the
Performance Goals applicable to the Award, the maximum amounts payable and such
other terms and conditions as are applicable to the Performance Award. Each
Performance Award shall be granted and administered to comply with the
requirements of Section 162(m) of the Code.
A-12
<PAGE>
(b) Any Performance Award shall be made not later than 90 days after the
start of the period for which the Performance Award relates and shall be made
prior to the completion of 25% of such period. All determinations regarding the
achievement of any Performance Goals will be made by the Committee. The
Committee may not increase during a year the amount of a Performance Award that
would otherwise be payable upon achievement of the Performance Goals but may
reduce or eliminate the payments as provided for in the Award Agreement.
(c) Nothing contained in the Plan will be deemed in any way to limit or
restrict the Committee from making any Award or payment to any person under any
other plan, arrangement or understanding, whether now existing or hereafter in
effect.
(d) A Participant who receives a Performance Award payable in Common Stock
shall have no rights as a shareholder until the Company Stock is issued pursuant
to the terms of the Award Agreement. The Common Stock may be issued without
cash consideration.
(e) A Participant's interest in a Performance Award may not be sold,
assigned, transferred, pledged, hypothecated, or otherwise encumbered.
(f) No Award or portion thereof that is subject to the attainment or
satisfaction of a condition or Performance Goal shall be distributed or
considered to be earned or vested until the Committee certifies in writing that
the conditions or Performance Goal to which the distribution, earning or vesting
of such Award is subject has been achieved.
12. DEFERRED PAYMENTS
-----------------
Notwithstanding any other provision of this Plan, any Participant may
elect, with the concurrence of the Committee and consistent with any rules and
regulations established by the Committee, to defer the delivery of the proceeds
of the exercise of any Non-statutory Stock Option not transferred under the
provisions of Section 6(c), Stock Appreciation Rights, and Stock Awards.
(a) Election Timing. The election to defer the delivery of the proceeds
---------------
from any eligible Non-statutory Stock Option or Stock Appreciation Right must be
made at least six (6) months prior to the date such Award is exercised or at
such other time as the Committee may specify. The election to defer the delivery
of any Stock Award must be made no later than the last day of the calendar year
preceding the calendar year in which the Participant would otherwise have an
unrestricted right to receive such Award. Deferrals of eligible Awards shall
only be allowed for exercises of Options and lapses of restrictions on Stock
Awards that occur while the Participant is in active service with the Holding
Company or an Affiliate. Any election to defer the proceeds from an eligible
Award shall be irrevocable as long as the Participant remains an Employee or an
Outside Director of the Holding Company or an Affiliate.
(b) Stock Option Deferral. The deferral of the proceeds of Non-statutory
---------------------
Stock Options may be elected by a Participant subject to the rules and
regulations established by the
A-13
<PAGE>
Committee. The proceeds from such an exercise shall be credited to a deferred
stock option account established for the Participant. The proceeds shall be
credited to the deferred stock option account as a number of deferred shares or
share units equivalent in value to those proceeds. Deferred share units shall be
valued at the Fair Market Value on the date of exercise. Subsequent to exercise,
the deferred shares or share units shall be valued at the Fair Market Value of
Common Stock; provided, however, that at the discretion of the Committee, the
Participant may elect to have the value of his deferred stock option account
valued on some other basis of measurement approved by the Committee. Unless the
Participant's deferred stock option account is valued using a basis of
measurement other than Common Stock, deferred share units shall accrue dividends
at the rate paid upon the Common Stock credited in the form of additional
deferred share units. Deferred shares or share units shall be distributed in
shares of Common Stock or cash, at the discretion of the Committee, upon the
Participant's termination of service or at such other date, as may be approved
by the Committee, over a period of no more than ten (10) years.
(c) Stock Appreciation Right Deferral. The deferral of the proceeds of
---------------------------------
Stock Appreciation Rights may be made by a Participant subject to the rules and
regulations established by the Committee. Upon exercise, the Committee will
credit the Participant's deferred stock option account with a number of deferred
shares or share units equivalent in value to the difference between the Fair
Market Value of a share of Common Stock on the exercise date and the Exercise
Price of the Stock Appreciation Right multiplied by the number of shares
exercised. Deferred shares or share units shall be valued at the Fair Market
Value on the date of exercise. Subsequent to exercise, the deferred shares or
share units shall be valued at the Fair Market Value of Common Stock; provided,
however, that at the discretion of the Committee, the Participant may elect to
have the value of his deferred stock option account valued on some other basis
of measurement approved by the Committee. Unless the Participant's deferred
stock option account is valued using a basis of measurement other than Common
Stock, deferred shares or share units shall accrue dividends at the rate paid
upon the Common Stock credited in the form of additional deferred shares or
share units. Deferred shares or share units shall be distributed in shares of
Common Stock or cash, at the discretion of the Committee, upon the Participant's
termination of service or at such other date, as may be approved by the
Committee, over a period of no more than ten (10) years.
(d) Stock Award Deferrals. The deferral of Stock Awards may be elected by
---------------------
a Participant subject to the rules and regulations established by the Committee.
Upon the lapsing of restrictions on such an Award, the Committee shall credit to
a deferred stock award account established for the Participant a number of
deferred shares or share units equivalent in value to the number of deferred
Stock Awards multiplied by the Fair Market Value of Common Stock. Deferred
shares or share units shall be valued at the Fair Market Value on the date all
restriction on the Stock Award lapse or are waived. Subsequent to the lapsing of
all restrictions, the deferred shares or share units shall be valued at the Fair
Market Value of Common Stock; provided, however, that at the discretion of the
Committee, the Participant may elect to have the value of his deferred stock
award account valued on some other basis of measurement approved by the
Committee. Unless the Participant's deferred stock award account is valued using
a basis of measurement other than Common Stock, deferred shares or share units
shall accrue dividends at the rate paid upon the Common Stock credited in the
A-14
<PAGE>
form of additional deferred share units. Deferred share units shall be
distributed in shares of Common Stock or cash, at the discretion of the
Committee, upon the Participant's termination of service or at such other date,
as may be approved by the Committee, over a period of no more than ten (10)
years.
(e) Accelerated Distributions. The Committee may, at its sole discretion,
-------------------------
allow for the early payment of a Participant's deferred stock option account
and/or deferred stock award account in the event of an "unforeseeable emergency"
or in the event of the death or Disability of the Participant. An "unforeseeable
emergency" means an unanticipated emergency caused by an event beyond the
control of the Participant that would result in severe financial hardship if the
distribution were not permitted. Such distributions shall be limited to the
amount necessary to sufficiently address the financial hardship. Any
distributions under this provision, shall be consistent with the Code and the
regulations promulgated thereunder. Additionally, the Committee may use its
discretion to cause stock option deferral accounts and/or deferred stock award
accounts to be distributed when continuing the program is no longer in the best
interest of the Holding Company or any Affiliate.
(f) Assignability. No rights to deferred stock option accounts or deferred
-------------
stock award accounts may be assigned or subject to any encumbrance, pledge or
charge of any nature except that a Participant may designate a beneficiary
pursuant to any rules established by the Committee.
(g) Unfunded Status. No Participant or other person shall have any
---------------
interest in any fund or in any specific asset of the Holding Company or an
Affiliate by reason of any amount credited hereunder. Any amounts payable
hereunder shall be paid from the general assets of the Holding Company or its
Affiliates and no Participant or other person shall have any rights to such
assets beyond the rights afforded general creditors of the Holding Company and
its Affiliates. However, the Holding Company or any Affiliate shall have the
right to establish a reserve, trust or make any investment for the purpose of
satisfying the obligations created under this Section 12 of the Plan; provided,
however, that no Participant or other person shall have any interest in such
reserve, trust or investment.
13. PAYOUT ALTERNATIVES
-------------------
(a) Payments due to a Participant upon the exercise or redemption of an
Option or Stock Award shall be made in the form of shares of Common Stock.
Payments due to a Participant upon the exercise or redemption of a Stock
Appreciation Right or Limited Right shall be made in the form of cash.
(b) Any shares of Common Stock tendered in satisfaction of an obligation
arising under this Plan shall be valued at the Fair Market Value of the Common
Stock on the day preceding the date of the issuance of such stock to the
Participant.
A-15
<PAGE>
14. METHOD OF EXERCISE
------------------
Subject to any applicable Award Agreement, any Option may be exercised by
the Participant in whole or in part at such time or times, and the Participant
may make payment of the Exercise Price in such form or forms, including, without
limitation, payment by delivery of cash, Common Stock or other consideration
(including, where permitted by law and the Committee, Awards) having a Fair
Market Value on the exercise date equal to the total Exercise Price, or by any
combination of cash, shares of Common Stock and other consideration, including
exercise by means of a cashless exercise arrangement with a qualifying broker-
dealer, as the Committee may specify in the applicable Award Agreement.
15. RIGHTS OF PARTICIPANTS.
-----------------------
No Participant shall have any rights as a shareholder with respect to any
shares of Common Stock covered by an Option until the date of issuance of a
stock certificate for such Common Stock. Nothing contained herein or in any
Award Agreement confers on any person any right to continue in the employ or
service of the Holding Company or an Affiliate or interferes in any way with the
right of the Holding Company or an Affiliate to terminate a Participant's
services.
16. DESIGNATION OF BENEFICIARY.
--------------------------
A Participant may, with the consent of the Committee, designate a person or
persons to receive, in the event of death, any Award to which the Participant
would then be entitled. Such designation will be made upon forms supplied by and
delivered to the Holding Company and may be revoked in writing. If a Participant
fails effectively to designate a beneficiary, then the Participant's estate will
be deemed to be the beneficiary.
17. DILUTION AND OTHER ADJUSTMENTS.
------------------------------
In the event of any change in the outstanding shares of Common Stock by
reason of any stock dividend or split, recapitalization, merger, consolidation,
spin-off, reorganization, combination or exchange of shares, or other similar
corporate change, or other increase or decrease in such shares without receipt
or payment of consideration by the Holding Company, or in the event an
extraordinary capital distribution, including an Extraordinary Dividend, is
made, the Committee may make such adjustments to previously granted Awards, to
prevent dilution, diminution, or enlargement of the rights of the Participant,
including any or all of the following:
(a) adjustments in the aggregate number or kind of shares of Common Stock
or other securities that may underlie future Awards under the Plan;
(b) adjustments in the aggregate number or kind of shares of Common Stock
or other securities underlying Awards already made under the Plan;
A-16
<PAGE>
(c) adjustments in the Exercise Price of outstanding Incentive and/or Non-
statutory Stock Options, or any Limited Rights attached to such
Options.
Alternatively, the Committee may provide the Participant with a cash
benefit for shares underlying vested, but unexercised Options, in order to
achieve the aforementioned effect.
No such adjustments may, however, materially change the value of benefits
available to a Participant under a previously granted Award. All Awards under
this Plan shall be binding upon any successors or assigns of the Holding
Company.
18. TAX WITHHOLDING.
---------------
Notwithstanding any other provision of the Plan, Awards under this Plan
shall be subject to tax withholding to the extent required by any governmental
authority. Any withholding shall comply with Rule 16b-3 or any amendment or
successive rule. Shares of Common Stock withheld to pay for tax withholding
amounts shall be valued at their Fair Market Value on the date the Award is
deemed taxable to the Participant. Participants granted Non-statutory Stock
Options shall be responsible for any required withholding applicable to any Non-
statutory Stock Option which has been transferred pursuant to Section 6(c)
hereof, unless otherwise inconsistent with current tax law.
19. AMENDMENT OF THE PLAN AND AWARDS.
--------------------------------
(a) The Board of Directors may at any time, and from time to time, modify
or amend the Plan in any respect, prospectively or retroactively; provided
however, that provisions governing grants of Incentive Stock Options, unless
permitted by the rules and regulations or staff pronouncements promulgated under
the Code shall be submitted for shareholder approval to the extent required by
such law, regulation or interpretation.
Failure to ratify or approve amendments or modifications by shareholders
shall be effective only as to the specific amendment or modification requiring
such ratification. Other provisions of this Plan will remain in full force and
effect.
No such termination, modification or amendment may adversely affect the
rights of a Participant under an outstanding Award without the written
permission of such Participant.
(b) The Committee may amend any Award Agreement, prospectively or
retroactively; provided, however, that no such amendment shall adversely affect
the rights of any Participant under an outstanding Award without the written
consent of such Participant.
A-17
<PAGE>
20. EFFECTIVE DATE OF PLAN.
----------------------
The Plan shall become effective upon approval by the Holding Company's
stockholders in accordance with Federal Deposit Insurance Corporation ("FDIC"),
New York State Banking Board ("NYSBB") and the Internal Revenue Service ("IRS")
regulations or January 11, 1998, whichever is earlier. The failure to obtain
shareholder approval for such purposes will not effect the validity of the Plan
and any Awards made under the Plan; provided, however, that if the Plan is not
approved by stockholders in accordance with IRS regulations, the Plan shall
remain in full force and effect, and any Incentive Stock Options granted under
the Plan shall be deemed to be Non-statutory Stock Options and any Award
intended to comply with Section 162(m) of the Code shall not comply with Section
162(m) of the Code.
21. TERMINATION OF THE PLAN.
-----------------------
The right to grant Awards under the Plan will terminate upon the earlier
of: (i) ten (10) years after the Effective Date; (ii) the issuance of a number
of shares of Common Stock pursuant to the exercise of Options or the
distribution of Stock Awards which together with the exercise of Limited Rights
is equivalent to the maximum number of shares reserved under the Plan as set
forth in Section 4 hereof. The Board of Directors has the right to suspend or
terminate the Plan at any time, provided that no such action will, without the
consent of a Participant, adversely affect a Participant's vested rights under a
previously granted Award.
22. APPLICABLE LAW.
--------------
The Plan will be administered in accordance with the laws of the state of
Delaware and applicable federal law.
23. COMPLIANCE WITH NYSBB AND FDIC CONVERSION REGULATIONS
-----------------------------------------------------
Notwithstanding any other provision contained in this Plan:
(a) unless the Plan is approved by a majority vote of stockholders of the
Holding Company at a duly called meeting of stockholders, the Plan and
any Awards under the Plan shall not become effective or implemented
prior to January 11, 1998;
(b) no Award granted to any individual Employee prior to January 11, 1998
may exceed 25% of the total amount of Awards which may be granted under
the Plan;
(c) no Award granted to any individual Outside Director prior to January
11, 1998 may exceed 5% of the total amount of Awards which may be
granted under the Plan;
A-18
<PAGE>
(d) the aggregate amount of Awards granted to all Outside Directors prior
to January 11, 1998 may not exceed 30% of the total amount of Awards
which may be granted under the Plan; and
(e) no Option granted prior to January 11, 1998 may be granted with an
exercise price which is less than the Fair Market Value of the common
stock underlying the stock option on the Date of Grant.
24. DELEGATION OF AUTHORITY
-----------------------
The Committee may delegate all authority for: (i) the determination of
forms of payment to be made by or received by the Plan and (ii) the execution of
any Award Agreement. The Committee may rely on the descriptions,
representations, reports and estimates provided to it by the management of the
Holding Company or an Affiliate for determinations to be made pursuant to the
Plan, including the attainment of Performance Goals. However, only the Committee
or a portion of the Committee may certify the attainment of a Performance Goal.
A-19
<PAGE>
[X] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE ROSLYN BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
July 22, 1997
9:30 a.m., Eastern Daylight Savings Time
This Proxy is Solicited on Behalf of The Board of Directors
The undersigned hereby appoints the official proxy committee of the Board
of Directors of Roslyn Bancorp, Inc. (the "Company"), each with full power of
substitution, to act as proxies for the undersigned, and to vote all shares of
Common stock of the Company which the undersigned is entitled to vote at the
Annual Meeting of Stockholders, to be held on July 22, 1997 at 9:30 a.m.,
Eastern Daylight Savings Time, at the Milleridge Cottage, 585 North Broadway,
Jericho, New York 11753 and at any and all adjournments thereof as indicated.
-------------------------------------
Please be sure to sign and date Date
this Proxy in the box below.
- --------------------------------------------------------------------------------
- -----Stockholder sign above------------------Co-holder (if any) sign above------
With- For All
For hold Except
1. The election as directors of all [_] [_] [_]
nominees listed to three-year
terms (except as marked to the
contrary below);
Thomas J. Calabrass, Jr., Dr. Edwin Martin, Jr., Richard C. Webel
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" and write that nominee's names in the space provided below.
- --------------------------------------------------------------------------------
For Against Abstain
2. The approval of the Company's 1997 [_] [_] [_]
Stock-Based Incentive Plan.
3. The ratification of the appointment [_] [_] [_]
of KPMG Peat Marwick LLP as indepen-
dent auditors of the Company for the
fiscal year ending December 31, 1997.
4. Such other matters as may properly come before the meeting and at any
adjournments thereof, including whether or not to adjourn the meeting.
PLEASE CHECK BOX IF YOU PLAN TO ATTEND THE MEETING. -------------- [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" EACH OF THE LISTED PROPOSALS.
This proxy is revocable and will be voted as directed, but if no
instructions are specified, this proxy will be voted FOR each of the proposals
listed above, if any other business is presented at the Annual Meeting, this
proxy will be voted by the Proxy Committee of the Board of Directors in their
discretion. At the present time, the Board of Directors knows of no other
business to be presented at the Annual Meeting.
. Detach above card, sign, date and mail in postage paid envelope provided.
ROSLYN BANCORP, INC.
- --------------------------------------------------------------------------------
IMPORTANT: The undersigned acknowledges receipt from the Company prior to
the execution of this proxy of a Notice of Annual Meeting of Stockholders and of
a Proxy Statement dated June 6, 1997.
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder may sign but only one signature
is required.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
- --------------------------------------------------------------------------------
