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Stock Option Plan

Stock Option Plan

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Stock Option Plan

Subject to shareholder approval at the annual meeting, BCB Bancorp, Inc. has established the BCB Bancorp, Inc. 2011 Stock Option Plan (the “Stock Option Plan”). Under the Stock Option Plan, options to purchase up to 900,000 shares of BCB Bancorp, Inc. common stock. The Board of Directors believes that it is appropriate to adopt a flexible and comprehensive stock option plan as a method of providing certain employees and directors of BCB Bancorp, Inc. and BCB Community Bank with a proprietary interest in BCB Bancorp, Inc. in a manner designed to encourage such persons to remain with BCB Bancorp, Inc. and/or BCB Community Bank, and to provide further incentives to achieve corporate objectives. Awards to be issued to employees and directors pursuant to the Stock Option Plan have not yet been determined.

The following discussion is qualified in its entirety by reference to the Stock Option Plan, the text of which is attached hereto as Appendix A. The complete text of the Stock Option Plan is attached as Appendix A to this proxy statement. The principal features of the Stock Option Plan are summarized below.

Principal Features of the Stock Option Plan

The Stock Option Plan provides for awards in the form of stock options. Each award shall be on such terms and conditions, consistent with the Stock Option Plan, as the committee administering the Stock Option Plan may determine.

The term of stock options generally will not exceed ten years from the date of grant. Stock options granted under the Stock Option Plan may be either “Incentive Stock Options” as defined under Section 422 of the Internal Revenue Code or stock options not intended to qualify as such (“non-qualified stock options”). Shares issued upon the exercise of a stock option under the Stock Option Plan shall generally be issued from authorized but unissued shares, treasury shares or shares acquired by BCB Bancorp, Inc. in open market purchases or private transactions. Any shares subject to an award that expires or is terminated unexercised will remain available for issuance under the Stock Option Plan.

The Stock Option Plan will be administered by a committee designated by the Board (the “Committee”) who are disinterested Board members. Pursuant to the terms of the Stock Option Plan, directors and employees of BCB Community Bank. or BCB Bancorp, Inc, Inc. are eligible to participate. Subject to the provisions of the Stock Option Plan, the Committee will determine to whom the awards will be granted, in what amounts, and the period over which such awards will vest. Unless otherwise determined by the Committee, the vesting amount may not be more than 20% per year. Subject to the terms of the Stock Option Plan, the maximum number of shares of common stock that may be subject to stock options granted to any one participant, in the aggregate, shall be 90,000, all of which may be awarded as Incentive Stock Options. The Committee may accelerate the time period for exercising options.

In granting awards under the Stock Option Plan, the Committee will consider, among other things, position and years of service, individual performance evaluations and the value of the individual’s services to BCB Bancorp, Inc. and BCB Community Bank. The exercise price of stock options will not be less than 100% of the fair market value of the underlying share of common stock at the time of grant, provided, however that the exercise price of an Incentive Stock Option will not be less than 110% of the fair market value of the underlying share of common stock at the time of grant if granted to a 10% shareholder. Once granted, stock options may not be re-priced (i.e., the exercise price may not be changed other than adjustments for stock splits, stock dividends and similar events). The exercise price may be paid in cash, common stock, a net settlement of the options, or via a broker-assisted “cashless exercise.”

Stock Options. Incentive Stock Options can only be granted to employees of BCB Bancorp, Inc. and BCB Community Bank, or an “affiliate” (i.e., a parent or subsidiary corporation of BCB Bancorp, Inc or BCB Community Bank). Outside directors will be granted non-qualified stock options. No option granted to an employee in connection with the Stock Option Plan will be exercisable as an Incentive Stock Option subject to incentive tax treatment if exercised more than three months after the date on which the optionee terminates employment with BCB Bancorp, Inc. or BCB Community Bank except as set forth below. In the event a participant ceases to maintain continuous service by reason of death, disability, normal retirement, or in the event of a change in control of BCB Bancorp, Inc. or BCB Community Bank, options still subject to restrictions will vest and be free of these restrictions and can be exercised for the remainder of the options’ original term. Incentive Stock Options exercised more than three months following the date the optionee terminates employment shall be treated as a non-qualified stock option as described above; provided, however, that in the event of disability, Incentive Stock Options may be exercised and receive incentive tax treatment for up to at least one year following termination of employment due to disability, subject to the requirements of the Internal Revenue Code. In the event a participant ceases to maintain continuous service for any other reason, the participant will forfeit all nonvested options. The participant’s vested options will remain exercisable for up to three months. Notwithstanding the foregoing, in the event a participant is terminated for cause, all stock options granted to the participant under the Stock Option Plan not exercised or vested will be forfeited.

Effect of Adjustments. Shares as to which awards may be granted under the Stock Option Plan, and shares then subject to awards, will be adjusted in the event of any merger, consolidation, reorganization, recapitalization, stock dividend, stock split, combination or exchange of shares or other change in the corporate structure of BCB Bancorp, Inc. without receipt of payment or consideration by BCB Bancorp, Inc. In the case of any merger, consolidation or combination of BCB Bancorp, Inc. with or into another holding company or other entity, whereby holders of common stock will receive cash for each share of common stock exchanged in the transaction, any participant with exercisable options will receive an amount equal to the difference between (i) the cash payment times the number of shares of common stock subject to such options and (ii) the aggregate exercise price of all surrendered options.

Amendment and Termination. The Board of Directors may at any time amend, suspend or terminate the Stock Option Plan or any portion thereof, provided, however, that no such amendment, suspension or termination shall impair the rights of any participant, without his or her consent, in any award made pursuant to the Stock Option Plan. In addition, no amendment may (i) materially increase the benefits accruing to participants under the Stock Option Plan; (ii) materially increase the aggregate number of securities that may be issued under the Stock Option Plan, other than pursuant to corporate transactions described in the Stock Option Plan, or (iii) materially modify the requirements for participation in the Stock Option Plan, unless the amendment under (i), (ii) or (iii) above is approved by our shareholders. However, the Committee may make any amendment to the Stock Option Plan or an award agreement to conform the Stock Option Plan or the award agreement to applicable law or regulation, to revise the Plan in response to amendments required by any bank regulatory agency, or to avoid accounting treatments that would materially affect the financial condition or results of operations of BCB Bancorp, Inc. The Stock Option Plan will remain in effect as long as any awards under it are outstanding; however, no awards may be granted under the Stock Option Plan on or after the ten-year anniversary of the effective date of the Stock Option Plan.

Federal Income Tax Consequences. The following brief description of the tax consequences of stock option grants under the Stock Option Plan is based on federal income tax laws currently in effect and does not purport to be a complete description of such federal income tax consequences. The exercise of a stock option that is an “Incentive Stock Option” within the meaning of Section 422 of the Code will generally not, by itself, result in the recognition of taxable income to the individual nor entitle BCB Bancorp, Inc. to a deduction at the time of such exercise. However, the difference between the exercise price and the fair market value of the option shares on the date of exercise is an adjustment to alternative minimum taxable income which may, in certain situations, trigger the alternative minimum tax. The alternative minimum tax is incurred only when it exceeds the regular income tax. The sale of an Incentive Stock Option share prior to the end of the applicable holding period, i.e., the longer of two years from the date of grant or one year from the date of exercise, will cause any gain to be taxed at ordinary income tax rates, with respect to the spread between the exercise price and the fair market value of the share on the date of exercise and at applicable capital gains rates with respect to any post exercise appreciation in the value of the share.

The exercise of a non-qualified stock option will result in the recognition of ordinary income on the date of exercise in an amount equal to the difference between the exercise price and the fair market value of the shares on the date of exercise. BCB Bancorp, Inc. will be allowed a deduction at the time, and in the amount of, any ordinary income recognized by the individual under the various circumstances described above, provided that we meet our federal withholding tax obligations.

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