<PAGE> 1
As filed with the Securities and Exchange Commission on August 11, 1998
Registration No. 333-_________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
BAYONNE BANCSHARES, INC.
(exact name of registrant as specified in its certificate of incorporation)
DELAWARE 22-3511899
(state or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
568 BROADWAY
BAYONNE, NEW JERSEY 07002
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
BAYONNE BANCSHARES, INC. 1998 STOCK-BASED INCENTIVE PLAN
(Full Title of the Plan)
---------------------------------
MICHAEL NILAN COPIES TO:
PRESIDENT AND CHIEF EXECUTIVE OFFICER CHRISTINA M. GATTUSO, ESQUIRE
BAYONNE BANCSHARES, INC. MULDOON, MURPHY & FAUCETTE
568 BROADWAY 5101 WISCONSIN AVENUE, N.W.
BAYONNE, NEW JERSEY 07002 WASHINGTON, D.C. 20016
(202) 362-0840
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / X /
<TABLE>
<CAPTION>
=====================================================================================================
Title of each Class of Amount to be Proposed Purchase Estimated Aggregate Registration
Securities to be Registered Registered(1) Price Per Share Offering Price Fee
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 486,919 Shares
$.01 par Value (2) $16.2767 (3) $7,925,435 $2,338
- -----------------------------------------------------------------------------------------------------
Common Stock 194,768 Shares
$.01 par Value (4) $16.7119 (5) $3,254,943 $ 961
=====================================================================================================
</TABLE>
(1)Together with an indeterminate number of additional shares which may be
necessary to adjust the number of shares reserved for issuance pursuant to
the Bayonne Bancshares, Inc. 1998 Stock-Based Incentive Plan (the "Plan") as
the result of a stock split, stock dividend or similar adjustment of the
outstanding Common Stock of Bayonne Bancshares, Inc. pursuant to 17 C.F.R.
Section 230.416(a).
(2)Represents the total number of shares currently reserved or available for
issuance upon the exercise of stock options pursuant to the Plan.
(3)Represents the weighted average price determined by the average exercise
price of $16.3125 per share at which options for 208,248 shares under the
Plan have been granted to date and by $16.2500, the market value of the
Common Stock on August 7, 1998, as determined by the average of the high and
low prices listed on the Nasdaq National Stock Market as reported in the Wall
Street Journal, for 278,671 shares for which options have not yet been
granted under the Plan.
(4)Represents the total number of shares currently available for issuance as
stock awards under the Plan.
(5)The weighted average price determined by the aggregate purchase price of
$3,254,951 at which the 194,768 shares have been purchased for satisfying
awards under the Plan.
THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE IMMEDIATELY UPON FILING IN
ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, (THE
"SECURITIES ACT") AND 17 C.F.R. Section 230.462.
Number of Pages 30
Exhibit Index begins on Page 10
<PAGE> 2
BAYONNE BANCSHARES, INC.
PART I INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
ITEMS 1 & 2. The documents containing the information for the Bayonne
Bancshares, Inc. (the "Company" or the "Registrant") 1998 Stock-Based Incentive
Plan (the "Plan") required by Part I of the Registration Statement will be sent
or given to the participants in the Plan as specified by Rule 428(b)(1). Such
documents are not filed with the Securities and Exchange Commission (the "SEC")
either as a part of this Registration Statement or as a prospectus or prospectus
supplement pursuant to Rule 424 in reliance on Rule 428.
PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed or to be filed with the SEC are incorporated
by reference in this Registration Statement:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1998, which includes the consolidated statements of financial
condition of Bayonne Bancshares, Inc. and subsidiaries as of March 31, 1998 and
1997, and the related consolidated statements of operation, changes in
stockholders' equity, and cash flows for each of the years in the three year
period ended March 31, 1998, together with the related notes filed with the SEC
on June 29, 1998, and the Form 10-K/A filed by the Company with the SEC on July
29, 1998 (File No. 0-022499).
(b) The Form 8-K filed by the Registrant with the SEC on July 27, 1998
(File No. 0-022499).
(c) The description of Registrant's Common Stock contained in Registrant's
Form 8-A/12G (File No. 0-22499), as filed with the SEC on April 30, 1997
pursuant to Section 12(g) of the Securities Exchange Act of 1934 (the "Exchange
Act") and Rule 12b-15 promulgated thereunder.
(d) All documents filed by the Registrant pursuant to Section 13(a) and
(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the
filing of a post-effective amendment which deregisters all securities then
remaining unsold.
ANY STATEMENT CONTAINED IN THIS REGISTRATION STATEMENT, OR IN A DOCUMENT
INCORPORATED OR DEEMED TO BE INCORPORATED BY REFERENCE HEREIN, SHALL BE DEEMED
TO BE MODIFIED OR SUPERSEDED FOR PURPOSES OF THIS REGISTRATION STATEMENT TO THE
EXTENT THAT A STATEMENT CONTAINED HEREIN, OR IN ANY OTHER SUBSEQUENTLY FILED
DOCUMENT WHICH ALSO IS INCORPORATED OR DEEMED TO BE INCORPORATED BY REFERENCE
HEREIN, MODIFIES OR SUPERSEDES SUCH STATEMENT. ANY SUCH STATEMENT SO MODIFIED OR
SUPERSEDED SHALL NOT BE DEEMED, EXCEPT AS SO MODIFIED OR SUPERSEDED, TO
CONSTITUTE A PART OF THIS REGISTRATION STATEMENT.
2
<PAGE> 3
ITEM 4. DESCRIPTION OF SECURITIES
The common stock to be offered pursuant to the Plan has been registered
pursuant to Section 12 of the Exchange Act. Accordingly, a description of the
common stock is not required herein.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
None
The validity of the Common Stock offered hereby has been passed upon by
Muldoon, Murphy & Faucette, Washington, DC, for the Registrant.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Directors and officers of the Registrant are indemnified and held harmless
against liability to the fullest extent permissible by the general corporation
law of Delaware as it currently exists or as it may be amended provided any such
amendment provides broader indemnification provisions than currently exists.
This indemnification applies to the Board of Directors who administer the Plan.
In accordance with the General Corporation Law of the State of Delaware
(being Chapter 1 of Title 8 of the Delaware Code), Articles 10 and 11 of the
Registrant's Certificate of Incorporation provide as follows:
TENTH:
- -----
A. Each person who was or is made a party or is threatened to be made a party to
or is otherwise involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she is or was a Director or an Officer of the
Corporation or is or was serving at the request of the Corporation as a
Director, Officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a Director, Officer,
employee or agent or in any other capacity while serving as a Director, Officer,
employee or agent, shall be indemnified and held harmless by the Corporation to
the fullest extent authorized by the Delaware General Corporation Law, as the
same exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than such law permitted the Corporation to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such
indemnitee in connection therewith; provided, however, that, except as provided
in Section C hereof with respect to proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation.
B. The right to indemnification conferred in Section A of this Article TENTH
shall include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition (hereinafter
an "advancement of expenses"); provided, however, that, if the Delaware General
3
<PAGE> 4
Corporation Law requires, an advancement of expenses incurred by an indemnitee
in his or her capacity as a Director or Officer (and not in any other capacity
in which service was or is rendered by such indemnitee, including, without
limitation, services to an employee benefit plan) shall be made only upon
delivery to the Corporation of an undertaking (hereinafter an "undertaking"), by
or on behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal (hereinafter a "final adjudication") that such
indemnitee is not entitled to be indemnified for such expenses under this
Section or otherwise. The rights to indemnification and to the advancement of
expenses conferred in Sections A and B of this Article TENTH shall be contract
rights and such rights shall continue as to an indemnitee who has ceased to be a
Director, Officer, employee or agent and shall inure to the benefit of the
indemnitee's heirs, executors and administrators.
C. If a claim under Section A or B of this Article TENTH is not paid in full by
the Corporation within sixty days after a written claim has been received by the
Corporation, except in the case of a claim for an advancement of expenses, in
which case the applicable period shall be twenty days, the indemnitee may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim. If successful in whole or in part in any such suit, or in a suit
brought by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the indemnitee shall be entitled to be paid also the
expenses of prosecuting or defending such suit. In (i) any suit brought by the
indemnitee to enforce a right to indemnification hereunder (but not in a suit
brought by the indemnitee to enforce a right to an advancement of expenses) it
shall be a defense that, and (ii) in any suit by the Corporation to recover an
advancement of expenses pursuant to the terms of an undertaking the Corporation
shall be entitled to recover such expenses upon a final adjudication that, the
indemnitee has not met any applicable standard for indemnification set forth in
the Delaware General Corporation Law. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the burden of proving that the indemnitee is not
entitled to be indemnified, or to such advancement of expenses, under this
Article TENTH or otherwise shall be on the Corporation.
D. The rights to indemnification and to the advancement of expenses conferred in
this Article TENTH shall not be exclusive of any other right which any person
may have or hereafter acquire under any statute, the Corporation's Certificate
of Incorporation, Bylaws, agreement, vote of stockholders or Disinterested
Directors or otherwise.
E. The Corporation may maintain insurance, at its expense, to protect itself and
any Director, Officer, employee or agent of the Corporation or subsidiary or
Affiliate or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
4
<PAGE> 5
F. The Corporation may, to the extent authorized from time to time by the Board
of Directors, grant rights to indemnification and to the advancement of expenses
to any employee or agent of the Corporation to the fullest extent of the
provisions of this Article TENTH with respect to the indemnification and
advancement of expenses of Directors and Officers of the Corporation.
ELEVENTH:
- --------
A Director of this Corporation shall not be personally liable to the Corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
Director, except for liability: (i) for any breach of the Director's duty of
loyalty to the Corporation or its stockholders; (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law; (iii) under Section 174 of the Delaware General Corporation Law; or (iv)
for any transaction from which the Director derived an improper personal
benefit. If the Delaware General Corporation Law is amended to authorize
corporate action further eliminating or limiting the personal liability of
Directors, then the liability of a Director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the Delaware General
Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the stockholders of the
Corporation shall not adversely affect any right or protection of a Director of
the Corporation existing at the time of such repeal or modification.
The Registrant is also permitted to maintain directors' and officers'
liability insurance covering its directors and officers and has obtained a
directors' and officers' liability and corporation reimbursement policy which
(subject to certain limits and deductibles) (i) insures officers and directors
of the Registrant against loss arising from certain claims made against them by
reason of their being such directors or officers, and (ii) insures the
Registrant against loss which it may be required or permitted to pay as
indemnification due its directors or officers for certain claims.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Securities Act") may be permitted to directors, officers or
persons controlling the Registrant, the Registrant has been informed that in the
opinion of the Commission, such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
5
<PAGE> 6
ITEM 8. LIST OF EXHIBITS.
The following exhibits are filed with or incorporated by reference into
this Registration Statement on Form S-8 (numbering corresponds generally to
Exhibit Table in Item 601 of Regulation S-K):
3.1 Certificate of Incorporation of the Registrant.1
3.2 Bylaws of the Registrant.1
4.0 Form of Bayonne Bancshares, Inc. 1998 Stock-Based Incentive Plan.
5.0 Opinion of Muldoon, Murphy & Faucette as to the legality of the
Common Stock registered hereby.
23.0 Consent of Muldoon, Murphy & Faucette (contained in the opinion
included in Exhibit 5).
23.1 Consent of KPMG Peat Marwick LLP
24.0 Power of Attorney is located on the signature pages.
- -------------------------
1 Incorporated herein by reference from the Exhibit of the same number
contained in the Registration Statement on Form S-1 (SEC No. 333-23199), as
amended, filed with the SEC on March 13, 1997 and declared effective on
July 2, 1997.
ITEM 9. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this Registration
Statement to:
(i) Include any Prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) Reflect in the Prospectus any facts or events arising
after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent
a fundamental change in the information in the
Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would
not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent
no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration
Statement; and
6
<PAGE> 7
(iii) Include any material information with respect to the
plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference into this
Registration Statement.
(2) That, for the purpose of determining liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of the securities
at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities registered that remain unsold
at the termination of the Offering.
(b) The undersigned hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the
Registrant's or the Plan's annual report pursuant to Section 13(a)
or 15(d) of the Exchange Act that is incorporated by reference in
the Registration Statement shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
7
<PAGE> 8
CONFORMED
SIGNATURES
Pursuant to the requirements of the Securities Act, Bayonne
Bancshares, Inc. certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Bayonne, State of New Jersey, on August 3, 1998.
BAYONNE BANCSHARES, INC.
By: /s/ Michael Nilan
-----------------------------
Michael Nilan
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears
below (other than Mr. Nilan) constitutes and appoints Michael Nilan and Mr.
Nilan hereby constitutes and appoints Eugene Malinowski, as the true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities to sign any
or all amendments to the Form S-8 Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
U.S. Securities and Exchange Commission, respectively, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and things requisite and necessary to be done as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Name Title Date
---- ----- ----
/s/ Patrick F.X. Nilan Chairman of the Board August 3, 1998
- ------------------------
Patrick F.X. Nilan
/s/ Michael Nilan Director, President and August 3, 1998
- ------------------------ Chief Executive Officer
Michael Nilan (principal executive officer)
/s/ Eugene V. Malinowski Vice President and Chief Financial August 3, 1998
- ------------------------ Officer (principal accounting
Eugene V. Malinowski and financial officer)
/s/ Patrick D. Conaghan Director August 3, 1998
- ------------------------
Patrick D. Conaghan
8
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/s/ James F. Sisk Director August 3, 1998
- ------------------------
James F. Sisk
/s/ Frederick G. Whelply Director August 3, 1998
- ------------------------
Frederick G. Whelply
/s/ Joseph L. Wisniewski Director August 3, 1998
- ------------------------
Joseph L. Wisniewski
<PAGE> 10
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Numbered
Page
Exhibit No. Description Method of Filing Location
- ------------ ------------------ ------------------------------------- ----------
<S> <C> <C> <C>
3.1 Certificate of Incorporated by reference from the Exhibits of the --
Incorporation of the Registrant's Registration Statement on Form S-1
Registrant filed with the SEC on March 13, 1997 and declared
effective on July 2, 1997.
3.2 Bylaws of the Incorporated by reference from the Exhibits of the --
Registrant Registrant's Registration Statement on Form S-1
with the SEC on March 13, 1997 and
declared effective on July 2, 1997.
4.0 Bayonne Bancshares, Filed herewith. 12
Inc. 1998 Stock-Based
Incentive Plan
23.1 Consent of Muldoon, Contained in Exhibit 5 hereof. 27
Murphy & Faucette
23.2 Consent of KPMG Filed herewith. 30
Peat Marwick LLP
24 Power of Attorney Located on the signature page. --
</TABLE>
<PAGE> 1
EXHIBIT 4.0 BAYONNE BANCSHARES, INC. 1998 STOCK-BASED INCENTIVE PLAN
<PAGE> 2
BAYONNE BANCSHARES, INC.
1998 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, Limited Rights and Stock
Awards.
(c) "Award Agreement" means an agreement evidencing and setting forth the
terms of an Award.
(d) "Bank" means First Savings Bank of New Jersey, SLA.
(e) "Board of Directors" means the board of directors of the Holding
Company.
(f) "Change in Control" means a change in control of the Holding Company
or the Bank 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 Association or the Holding Company representing 20% or more of
the Association's or the Holding Company's outstanding securities except for any
securities of the Association purchased by the Holding Company and any
securities purchased by any tax-qualified employee benefit plan of the
Association; 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 substantially
all the assets of the Association or the Holding Company or similar transaction
occurs in which the Association 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
Association 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 Association or the Holding Company; or (E) a tender offer is made for 20% or
more of the voting securities of the Association 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,
pursuant to Section 2 of the Plan, to administer the Plan.
(i) "Common Stock" means the Common Stock of the Holding Company, par
value, $.01 per share.
A-1
<PAGE> 3
(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 prevents the Participant from fulfilling his duties or
responsibilities to the Holding Company or an Affiliate.
(l) "Effective Date" means the earlier of the date the Plan is approved by
shareholders or August 23, 1998.
(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 Participant may purchase a
share of Common Stock pursuant to an Option.
(p) "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 exchanquestion, 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. The
--------------------------
Committee's determination of Fair Market Value shall be conclusive and binding
on all persons.
(q) "Holding Company" means Bayonne Bancshares, Inc.
(r) "Incentive Stock Option" means a stock 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.
(s) "Limited Right" means an Award granted to a Participant pursuant to
Section 8 of the Plan.
(t) "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.
(u) "Option" means an Incentive Stock Option or Non-Statutory Stock
Option.
A-2
<PAGE> 4
(v) "Outside Director" means a member of the Boards of Directors of the
Holding Company or an Affiliate who is not also an Employee of the Holding
Company or an Affiliate.
(w) "Participant" means any person who holds an outstanding Award.
(x) "Performance Award" means an Award granted to a Participant pursuant
to Section 10 of the Plan.
(y) "Plan" means the Bayonne Bancshares, Inc. 1998 Stock-Based Incentive
Plan.
(z) "Retirement" means retirement from employment with the Holding Company
or an Affiliate in accordance with the retirement policies of the Holding
Company or Affiliate, as applicable, then in effect. "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.
(aa) "Stock Award" means an Award granted to a Participant pursuant to
Section 9 of the Plan.
(bb) "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,
unless defined differently under any employment agreement with the Holding
Company or an Affiliate, termination of employment, because of a material loss
to the Holding Company or an Affiliate, as determined by and in the sole
discretion of the Board of Directors or its designee(s).
(cc) "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.
(dd) "Trustee" means any person or entity approved by the Board of
Directors to hold any of the Trust assets.
2. ADMINISTRATION.
--------------
(a) The Committee shall administer the Plan. 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 or for whom Awards are not intended to satisfy the provisions of Section
162(m) of the Code.
(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
A-3
<PAGE> 5
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 and
at a minimum, the Committee shall set forth in each Award Agreement (i) the type
of Award granted (ii) the Exercise Price of any Option, (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 officers as shall be designated by the Committee is
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.
(d) 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 satisfaction of any conditions of a Performance Award.
However, only the Committee or a portion of the Committee may certify the
attainment of any conditions of a Performance Award intended to satisfy the
requirements of Section 162(m) of the Code.
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.
4. STOCK SUBJECT TO THE PLAN.
-------------------------
Subject to adjustment as provided in Section 15 of the Plan, the maximum
number of shares reserved for Awards under the Plan is 681,687, which number
shall not exceed 7.53% of the outstanding shares of the Common Stock determined
immediately as of the Effective Date. Subject to adjustment as provided in
Section 15 of the Plan, the maximum number of shares reserved hereby for
purchase pursuant to the exercise of Options and Option-related Awards granted
under the Plan is 486,919, which number shall not exceed 5.38% of the
outstanding shares of Common Stock as of the Effective Date. The maximum number
of the shares reserved for Stock Awards is 194,768, which number shall not
exceed 2.15% 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 Bank, 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 vested or without having been 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 of an
Affiliate.
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<PAGE> 6
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 not previously awarded under
the Plan, grant Non-Statutory Stock Options to eligible individuals upon such
terms and conditions as it may determine to the extent such terms and conditions
are consistent with the following provisions:
(a) Exercise Price. The Committee shall determine the Exercise Price of
---------------
each Non-Statutory Stock Option. However, the Exercise Price shall not be less
than 100% of the Fair Market Value of the Common Stock on the Date of Grant.
(b) Terms of Non-statutory Stock Options. The Committee shall determine
--------------------------------------
the term during which a Participant may exercise a Non-Statutory Stock Option,
but in no event may a Participant exercise a Non-Statutory Stock Option, in
whole or in part, more than ten (10) years from the Date of Grant. The Committee
shall also determine the date on which each Non-Statutory Stock Option, or any
part thereof, first becomes exercisable and any terms or conditions a
Participant must satisfy in order to exercise each Non-Statutory Stock Option.
The shares of Common Stock underlying each Non-Statutory Stock Option may be
purchased in whole or in part by the Participant at any time during the term of
such Non-Statutory Stock Option, or any portion thereof, becomes exercisable.
(c) Non-Transferability. Unless otherwise determined by the Committee in
-------------------
accordance with this Section 6(c), a Participant may not transfer, assign,
hypothecate, or dispose of in any manner, other than by will or the laws of
intestate succession, a Non-Statutory Stock Option. 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.
For purposes of this Section 6(c), "Immediate Family" includes, but is not
necessarily limited to, a Participant's parents, grandparents, spouse, children,
grandchildren, siblings (including half bothers and sisters), and individuals
who are family members by adoption. 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 other conditions proscribed by the Committee with
respect to such Non-Statutory Stock Option.
(d) Termination of Employment or Service (General). Unless otherwise
-------------------------------------------------
determined by the Committee, upon the termination of a Participant's employment
or other service for any reason other than Retirement, Disability or death, a
Change in Control, or Termination for Cause, the Participant may exercise only
those Non-Statutory Stock Options that were immediately exercisable by the
Participant at the date of such termination and only for a period of three (3)
months following the date of such termination.
(e) Termination of Employment or Service (Retirement). In the event of a
--------------------------------------------------
Participant's Retirement, the Participant's may exercise only those
Non-Statutory Stock Options that were immediately exercisable by the Participant
at the date of Retirement and only for a period of one (1) year following the
date of Retirement; PROVIDED, HOWEVER, that upon the Participant's Retirement,
the Committee, in its discretion, may determine that all NonStatutory Stock
Options that were not exercisable by the Participant as of such date shall
continue to become exercisable in accordance with the terms of the Award
Agreement if the Participant is immediately engaged by the
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<PAGE> 7
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.
(f) Termination of Employment or Service (Disability or death). Unless
------------------------------------------------------------
otherwise determined by the Committee, in the event of the termination of a
Participant's employment or other 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 one (1) year following the date
of such termination.
(g) Termination of Employment or Service (Change in Control). Unless
------------------------------------------------------------
otherwise determined by the Committee, in the event of the termination of a
Participant's employment or service due to a Change in Control, the Participant
may exercise only those Non-Statutory Stock Options that were immediately
exercisable by the Participant at the date of such termination and only for a
period of one (1) year following the date of such termination.
(h) Termination of Employment or Service (Termination for Cause). Unless
-------------------------------------------------------------
otherwise determined by the Committee, in the event of a Participant's
Termination for Cause, all rights with respect to the Participant's NonStatutory
Stock Options shall expire immediately upon the effective date of such
Termination for Cause.
(i) Payment. Payment due to a Participant upon the exercise of a
-------
Non-Statutory Stock Option shall be made in the form of shares of Common Stock.
(j) 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.
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 upon such terms and conditions as
it may determine to the extent such terms and conditions are consistent with the
following provisions:
(a) Exercise Price. The Committee shall determine the Exercise Price of
---------------
each Incentive Stock Option. However, the Exercise Price shall not be less than
100% of the Fair Market Value of the Common Stock on the Date of Grant;
PROVIDED, HOWEVER, that 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.
(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 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 Committee shall determine the
---------------------------------
term during which a Participant may exercise an Incentive Stock Option, but in
no event may a Participant exercise an Incentive Stock Option, in whole or in
part, more than ten (10) years from the Date of Grant; PROVIDED, HOWEVER, that
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 also determine the date on which each Incentive Stock Option, or
any part thereof, first becomes exercisable and any terms or conditions a
Participant must satisfy in order to exercise each Incentive Stock Option. The
shares of Common Stock underlying each Incentive Stock Option may be purchased
in whole or in part at any time during the term of such Incentive Stock Option
after such Option becomes exercisable.
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<PAGE> 8
(d) Non-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 the Committee grants the
Incentive Stock Option. The designation of a beneficiary does not constitute a
transfer of an Incentive Stock Option.
(e) Termination of Employment (General). Unless otherwise determined by
------------------------------------
the Committee, upon the termination of a Participant's employment or other
service for any reason other than Retirement, Disability or death, a Change in
Control, or Termination for Cause, the Participant may exercise only those
Incentive Stock Options that were immediately exercisable by the Participant at
the date of such termination and only for a period of three (3) months following
the date of such termination.
(f) Termination of Employment (Retirement). In the event of a
-------------------------------------------
Participant's Retirement, the Participant may exercise only those Incentive
Stock Options that were immediately exercisable by the Participant at the date
of Retirement and only for a period of one (1) year following the date of
Retirement; PROVIDED HOWEVER, that upon the Participant's Retirement, the
Committee, in its discretion, may determine that all Incentive Stock Options
that were not otherwise exercisable by the Participant as of such date shall
continue to become exercisable in accordance with the terms of 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. Any Option originally
designated as an Incentive Stock Option shall be treated as a Non-Statutory
Stock Options to the extent the Participant exercises such Option more than
three (3) months following the Date of the Participant's Retirement.
(g) Termination of Employment (Disability or Death). Unless otherwise
-------------------------------------------------
determined by the Committee, in the event of the termination of a Participant's
employment or other service due to Disability or death, all Incentive Stock
Options held by such Participant shall immediately become exercisable and remain
exercisable for a period one (1) year following the date of such termination.
(h) Termination of Employment (Change in Control). Unless otherwise
-------------------------------------------------
determined by the Committee, in the event of the termination of a Participant's
employment or service due to a Change in Control, the Participant may exercise
only those Incentive Stock Options that were immediately exercisable by the
Participant at the date of such termination and only for a period of three (3)
months following the date of such termination.
(i) Termination of Employment (Termination for Cause). 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.
(j) Payment. Payment due to a Participant upon the exercise of an
-------
Incentive Stock Option shall be made in the form of shares of Common Stock.
(k) 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.
(l) Disqualifying Dispositions. Each Award Agreement with respect to an
---------------------------
Incentive Stock Option shall require the Participant to notify the Committee of
any disposition of shares of Common Stock issued pursuant to the exercise of
such Option under the circumstances described in Section 421(b) of the Code
(relating to certain disqualifying dispositions), within 10 days of such
disposition. As of the Effective Date of this Plan, a disqualifying disposition
means any disposition of the shares of Common Stock within two years from the
date of the grant of the Incentive Stock Option to which such shares relate or
within one year of the date such shares are transferred to the Participant
pursuant to his exercise of the Incentive Stock Option.
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<PAGE> 9
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, 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 grants of Stock Awards, which shall consist of the grant
of some number of shares of Common Stock, to a Participant upon such terms and
conditions as it may determine to the extent such terms and conditions are
consistent with the following provisions:
(a) Grants of the Stock Awards. 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 Stock Award or
portion thereof. Any such terms or conditions shall be determined by the
Committee as of the Date of Grant.
(c) Termination of Employment or Service (General). Unless otherwise
-------------------------------------------------
determined by the Committee, upon the termination of a Participant's employment
or service for any reason other than Retirement, Disability or death, a Change
in Control, or Termination for Cause, any Stock Awards in which the Participant
has not become vested as of the date of such termination shall be forfeited and
any rights the Participant had to such Stock Awards shall become null and void.
(d) Termination of Employment or Service (Retirement). In the event of a
--------------------------------------------------
Participant's Retirement, any Stock Awards in which the Participant has not
become vested 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 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.
(e) Termination of Employment or Service (Disability or death). Unless
------------------------------------------------------------
otherwise determined by the Committee, in the event of a termination of the
Participant's service due to Disability or death all unvested Stock Awards held
by such Participant shall immediately vest as of the date of such termination.
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<PAGE> 10
(f) Termination of Employment or Service (Change in Control). Unless
------------------------------------------------------------
otherwise determined by the Committee, in the event of a termination of the
Participant's service due to a Change in Control any Stock Awards in which the
Participant has not become vested as of the date of such termination shall be
forfeited and any rights the Participant had to such unvested Stock Awards shall
become null and void.
(g) Termination of Employment or Service (Termination for Cause). Unless
-------------------------------------------------------------
otherwise determined by the Committee, or in the event of the Participant's
Termination for Cause, all Stock Awards in which the Participant had not become
vested 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.
(h) Maximum Individual Award. No individual Employee shall be granted an
-------------------------
amount of Stock Awards which exceeds 25% of all Options eligible to be granted
under the Plan within any 60 month period.
(i) Issuance of Certificates. Unless otherwise held in Trust and
--------------------------
registered in the name of the Trustee, (i) reasonably promptly after the Date of
Grant with respect to shares of Common Stock pursuant to a Stock Award, the
Holding Company shall cause to be issued a stock certificate, registered in the
name of the Participant to whom such Stock Award was granted, evidencing such
shares; provided, that the Holding Company shall not cause such a stock
certificate to be issued unless it has received a stock power duly endorsed in
blank with respect to such shares.
Each such stock certificate shall bear the following legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and
conditions (including forfeiture provisions and restrictions against
transfer) contained in the Bayonne Bancshares, Inc. 1998 Stock-Based
Incentive Plan and Award Agreement entered into between the
registered owner of such shares and Bayonne Bancorp, Inc. or its
Affiliates. A copy of the Plan and Award Agreement is on file in the
office of the Corporate Secretary of Bayonne Bancorp, Inc. located
at 568 Broadway, Bayonne, NJ 07002.
Such legend shall not be removed until the Participant becomes vested in such
shares pursuant to the terms of the Plan and Award Agreement. Each certificate
issued pursuant to this Section 9(h), in connection with a Stock Award, shall be
held by the Holding Company or its Affiliates, unless the Committee determines
otherwise.
(j) 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.
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<PAGE> 11
(k) Accrual of Dividends. To the extent Stock Awards are held in Trust and
--------------------
registered in the name of the Trustee, 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 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.
(l) 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.
(m) Payment. Payment due to a Participant upon the redemption of a Stock
-------
Award shall be made in the form of shares of Common Stock.
10. PERFORMANCE AWARDS.
------------------
(a) The Committee may determine to make any Award under the Plan
contingent upon the satisfaction of any conditions related to the performance of
the Holding Company, an Affiliate of the Participant. Each Performance Award
shall be evidenced in the Award Agreement, which shall set forth the applicable
conditions, the maximum amounts payable and such other terms and conditions as
are applicable to the Performance Award. Unless otherwise determined by the
Committee, each Performance Award shall be granted and administered to comply
with the requirements of Section 162(m) of the Code and subject to the following
provisions:
(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 applicable conditions 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 satisfaction of the conditions 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 satisfaction of any
condition shall be distributed or considered to be earned or vested until the
Committee certifies in writing that the conditions to which the distribution,
earning or vesting of such Award is subject have been achieved.
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<PAGE> 12
11. DEFERRED PAYMENTS.
-----------------
The Committee, in its discretion, may permit a Participant to elect to
defer receipt of all or any part of any cash or stock payment under the Plan, or
the Committee may determine to defer receipt by some or all Participants, of all
or part of any such payment. The Committee shall determine the terms and
conditions of any such deferral, including the period of deferral, the manner of
deferral, and the method for measuring appreciation on deferred amounts until
their payout.
12. METHOD OF EXERCISE OF OPTIONS.
-----------------------------
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.
13. 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.
14. 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.
15. 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 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;
(c) adjustments in the Exercise Price of outstanding Incentive and/or
Non-statutory Stock Options, or any Limited Rights attached to such
Options.
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<PAGE> 13
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. Notwithstanding the above, in the event of an extraordinary capital
distribution, any adjustment under this Section 15 shall be subject to required
approval by the Office of Thrift Supervision.
16. TAX WITHHOLDING.
---------------
(a) Whenever under this Plan, cash or shares of Common Stock are to be
delivered upon exercise or payment of an Award or any other event with respect
to rights and benefits hereunder, the Committee shall be entitled to require as
a condition of delivery (i) that the Participant remit an amount sufficient to
satisfy all federal, state, and local withholding tax requirements related
thereto, (ii) that the withholding of such sums come from compensation otherwise
due to the Participant or from any shares of Common Stock due to the Participant
under this Plan or (iii) any combination of the foregoing PROVIDED, HOWEVER,
that no amount shall be withheld from any cash payment or shares of Common Stock
relating to an Award which was transferred by the Participant in accordance with
this Plan.
(b) If any disqualifying disposition described in Section 7(k) is made
with respect to shares of Common Stock acquired under an Incentive Stock Option
granted pursuant to this Plan, or any transfer described in Section 6(c) is
made, or any election described in Section 17 is made, then the person making
such disqualifying disposition, transfer, or election shall remit to the Holding
Company or its Affiliates an amount sufficient to satisfy all federal, state,
and local withholding taxes thereby incurred; provided that, in lieu of or in
addition to the foregoing, the Holding Company or its Affiliates shall have the
right to withhold such sums from compensation otherwise due to the Participant,
or, except in the case of any transfer pursuant to Section 6(c), from any shares
of Common Stock due to the Participant under this Plan.
17. NOTIFICATION UNDER SECTION 83(b).
--------------------------------
The Committee may, on the Date of Grant or any later date, prohibit a
Participant from making the election described below. If the Committee has not
prohibited such Participant from making such election, and the Participant
shall, in connection with the exercise of any Option, or the grant of any Stock
Award, make the election permitted under Section 83(b) of the Code (i.e., an
election to include in such Participant's gross income in the year of transfer
the amounts specified in Section 83(b) of the Code), such Participant shall
notify the Committee of such election within 10 days of filing notice of the
election with the Internal Revenue Service, in addition to any filing and
notification required pursuant to regulations issued under the authority of
Section 83(b) of the Code.
18. AMENDMENT OF THE PLAN AND AWARDS.
--------------------------------
(a) Except as provided in paragraph (c) of this Section 18, 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 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) Except as provided in paragraph (c) of this Section 18, 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.
(c) In no event shall the Board of Directors amend the Plan or shall the
Committee amend an Award Agreement in any manner that has the effect of:
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<PAGE> 14
(i) Allowing any Option to be granted with an exercise below the
Fair Market Value of the Common Stock on the Date of Grant.
(ii) Allowing the exercise price of any Option previously granted
under the Plan to be reduced subsequent to the Date of Award.
19. EFFECTIVE DATE OF PLAN.
----------------------
The Plan shall become effective upon approval by the Holding Company's
shareholders in accordance with OTS and Internal Revenue Service ("IRS")
regulations or August 23, 1998, whichever is earlier. The failure to obtain
shareholder ratification 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 ratified 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 NonStatutory 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.
20. 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.
21. APPLICABLE LAW.
--------------
The Plan will be administered in accordance with the laws of the state of
New Jersey and applicable federal law.
22. COMPLIANCE WITH OTS CONVERSION REGULATIONS.
------------------------------------------
Notwithstanding any other provision contained in this Plan:
(e) no Award under the Plan shall be made which would be prohibited by
12 CFR Section 563b.3(g)(4).
(f) unless the Plan is approved by a majority vote of the outstanding
shares of the total votes eligible to be cast at a duty called
meeting of stockholders to consider the Plan, as required by 12 CFR
ss.563b.3(g)(4)(vii), the Plan shall not become effective or
implemented prior to one year from the date of the Bank's
reorganization;
(g) no Award granted prior to one year from the date of the Bank's
reorganization shall become vested or exercisable at a rate in
excess of 20% per year of the total number of Stock Awards or
Options (whichever may be the case) granted to such Participant,
provided, that Awards shall become fully vested or immediately
exercisable in the event of a Participant's termination of service
due to death or Disability;
(d) no Award granted to any individual Employee prior to one year from
the date of the Bank's reorganization may exceed 25% of the total
amount of Awards which may be granted under the Plan;
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<PAGE> 15
(e) no Award granted to any individual Outside Director prior to one
year from the date of the Bank's reorganization may exceed 5% of the
total amount of Awards which may be granted under the Plan; and
(f) the aggregate amount of Awards granted to all Outside Directors
prior to one year from the date of the Bank's reorganization may not
exceed 30% of the total amount of Awards which may be granted under
the Plan.
IN WITNESS WHEREOF, Bayonne Bancshares, Inc. has established this Plan, as
adopted by the Board of Directors of Bayonne Bancshares, Inc. on
__________________, 1998.
ADOPTED BY BAYONNE BANCSHARES, INC.
THE BOARD OF DIRECTORS:
_________________________ By: __________________________________
Date Michael Nilan
For the Entire Board of Directors
APPROVED BY SHAREHOLDERS:
_________________________ By: _________________________________
Date Thomas M. Coughlin
Corporate Secretary
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<PAGE> 1
EXHIBIT 5.0 OPINION OF MULDOON, MURPHY & FAUCETTE RE: LEGALITY
<PAGE> 2
August 11, 1998
Board of Directors
Bayonne Bancshares, Inc.
568 Broadway
Bayonne, New Jersey 07002
Re: Bayonne Bancshares, Inc. 1998 Stock-Based Incentive Plan
Registration Statement on Form S-8 for Offer and Sale of
681,687 Additional Shares of Common Stock
Gentlemen:
We have been requested by Bayonne Bancshares, Inc. (the "Company") to
issue a legal opinion in connection with the registration under the Securities
Act of 1933, as amended, on Form S-8 of 681,687 shares of the Company's Common
Stock, $.01 par value (the "Shares"), that may be issued under the Bayonne
Bancshares, Inc. 1998 Stock-Based Incentive Plan (the "Plan").
We have made such legal and factual examinations and inquiries as we
deemed advisable for the purpose of rendering this opinion. In our examination,
we have assumed and have not verified (i) the genuineness of all signatures,
(ii) the authenticity of all documents submitted to us as originals, (iii) the
conformity with the originals of all documents supplied to us as copies, and
(iv) the accuracy and completeness of all corporate records and documents and of
all certificates and statements of fact, in each case given or made available to
us by the Company or its subsidiary, First Savings Bank of New Jersey, SLA.
Based on the foregoing and limited in all respects to Delaware law, it is
our opinion that the Shares reserved under the Plan have been duly authorized
and will be legally issued, fully paid and nonassessable upon payment for and
issuance of stock options in the manner described in the Plan or upon issuance
of stock awards in consideration for past services pursuant to the Plan.
The following provisions of the Certificate of Incorporation may not be
given effect by a court applying Delaware law, but in our opinion the failure to
give effect to such provisions will not affect the duly authorized, validly
issued, fully paid and nonassessable status of the Shares:
<PAGE> 3
Board of Directors
August 11, 1998
Page 2
(a) Subsections C.3 and C.6 of Article FOURTH and Section D of Article
EIGHTH, which grant the Board the authority to construe and apply the provisions
of those Articles, subsection C.4 of Article FOURTH, to the extent that
subsection obligates any person to provide to the Board the information such
subsection authorizes the Board to demand, and the provision of subsection C.7
of Article EIGHTH authorizing the Board to determine the Fair Market Value of
property offered or paid for the Company's stock by an Interested Stockholder,
in each case to the extent, if any, that a court applying Delaware law were to
impose equitable limitations upon such authority; and
(b) Article NINTH of the Certificate of Incorporation, which authorizes
the Board to consider the effect of any offer to acquire the Company on
constituencies other than stockholders in evaluating any such offer.
This opinion is rendered to you solely for your benefit in connection with
the issuance of the Shares as described above. This opinion may not be relied
upon by any other person or for any other purpose, and it should not be quoted
in whole or in part or otherwise referred to or be furnished to any governmental
agency (other than the Securities and Exchange Commission in connection with the
aforementioned registration statement on Form S-8 in which this opinion is
contained) or any other person or entity without the prior written consent of
this firm.
We hereby consent to the filing of this opinion as an exhibit to the
Company's Registration Statement on Form S-8, and we consent to the use of the
name of our firm under the heading "Interests of Named Experts and Counsel."
Sincerely,
/s/ MULDOON, MURPHY & FAUCETTE
<PAGE> 1
EXHIBIT 23.2 CONSENT OF KPMG PEAT MARWICK LLP
<PAGE> 2
INDEPENDENT ACCOUNTANT'S CONSENT
--------------------------------
The Board of Directors
Bayonne Bancshares, Inc.:
We consent to the incorporation by reference in this registration statement on
Form S-8 of Bayonne Bancshares, Inc. of our report dated April 27, 1998,
relating to the consolidated statements of financial condition of Bayonne
Bancshares, Inc. and subsidiaries as of March 31, 1998 and 1997, and the related
consolidated statements of operation, stockholders' equity, and cash flows for
each of the years in the three-year period ended March 31, 1998, which report
appears in the March 31, 1998 annual report on Form 10-K of Bayonne Bancshares,
Inc. and subsidiaries.
Short Hills, New Jersey /s/ KPMG Peat Marwick LLP
July 21, 1998
