UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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 under ss. 240.14a-12
PENNSYLVANIA COMMERCE BANCORP, INC.
(Name of Registrant as Specified In Its Charter)
N/A
(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)(1) and 0-11.
(1) | Title of each class of securities to which transaction applies: |
N/A |
(2) | Aggregate number of securities to which transaction applies: |
N/A |
(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): |
N/A |
(4) | Proposed maximum aggregate value of transaction: |
N/A |
(5) | Total fee paid: |
N/A |
[ ] | 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: |
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Date: | May 20, 2005 | |
Time: | 9:00 a.m. | |
Place: | Radisson Penn Harris Hotel | |
1150 Camp Hill Bypass | ||
Camp Hill, PA 17011 |
1. | Election of Directors. Election of eight (8) directors to serve until the 2006 Annual Meeting. |
2. | Approval of 2006 Employee Stock Option Plan. Approval of the Pennsylvania Commerce Bancorp, Inc. 2006 Employee Stock Option Plan. |
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· | giving Commerce’s secretary a written notice revoking your proxy card; or |
· | signing, dating and returning to us a new proxy card. |
Name of Beneficial Owner or Identity of Group | Number of Shares Beneficially Owned | 1 | Percentage of Common Stock Beneficially Owned | 1 | |
James R. Adair | 23,519 | 2 | * | ||
John J. Cardello, CPA | 6,051 | 3 | * | ||
Douglas S. Gelder | 141,045 | 4 | 2.37% | ||
Alan R. Hassman | 234,963 | 5 | 3.95% | ||
Howell C. Mette | 135,623 | 6 | 2.28% | ||
Gary L. Nalbandian | 557,122 | 7 | 9.02% | ||
Michael A. Serluco | 172,927 | 8 | 2.92% | ||
Samir J. Srouji, M.D. | 156,723 | 9 | 2.63% | ||
Named Executive Officers Who are not Directors | |||||
Rory G. Ritrievi | 35,346 | 10 | * | ||
David B. Skerpon | 12,012 | 11 | * | ||
Mark A. Zody | 106,201 | 12 | 1.77% | ||
All Directors and Executive Officers | |||||
of Commerce, as a group (12 Persons) | 1,680,774 | 13 | 25.91% | ||
Other Five Percent Beneficial Shareholders | |||||
Commerce Bancorp, Inc. | |||||
Commerce Atrium | |||||
1701 Route 70 East | |||||
Cherry Hill, NJ 08034 | 666,800 | 11.26% | |||
Wellington Management Company, LLP | |||||
75 State Street | |||||
Boston, MA 02109 | 333,600 | 5.63% | |||
---------------------- | |||||
* less than 1% | |||||
1 | The securities “beneficially owned” by an individual are determined in accordance with the definition of “beneficial ownership” set forth in the regulations of the Securities and Exchange Commission. Accordingly, they may include securities owned by or for, among others, the wife and/or minor children of the individual and any other relative who has the same home as such individual, as well as securities as to which the individual has or shares voting or investment power or has the right to acquire under outstanding stock options within 60 days after March 28, 2005. Shares subject to outstanding stock options, which an individual has the right to acquire within 60 days after March 28, 2005, are deemed to be outstanding for the purpose of computing the percentage of outstanding securities of the class of stock owned by such individual or any group including such individual only. Beneficial ownership may be disclaimed as to certain of the securities. |
2 | Includes 164 shares owned by Mr. Adair’s wife, Carol Adair. Also includes 10,773 shares of Commerce common stock issuable upon the exercise of stock options granted under Commerce’s 2001 Stock Option Plan for Non-Employee Directors. |
3 | Includes 3,591 shares of Commerce common stock issuable upon the exercise of stock options granted under Commerce’s 2001 Stock Option Plan for Non-Employee Directors. |
4 | Includes 32,319 shares of Commerce common stock issuable upon the exercise of stock options granted under Commerce’s 1990 and 2001 Stock Option Plans for Non-Employee Directors. |
5 | Includes 55,358 shares owned by Mr. Hassman’s wife, Gloria Hassman. Also includes 32,319 shares of Commerce common stock issuable upon the exercise of stock options granted under Commerce’s 1990 and 2001 Stock Option Plans for Non-Employee Directors. |
6 | Includes 32,319 shares of Commerce common stock issuable upon the exercise of stock options granted under Commerce’s 1990 and 2001 Stock Option Plans for Non-Employee Directors. |
7 | Includes 107,130 shares held by Mr. Nalbandian’s individually directed participant account in the NAI/CIR Profit Sharing Trust with respect to which Mr. Nalbandian has sole voting power; 21,065 shares held in trust by Mr. Nalbandian or Dorothy Nalbandian for the benefit of Mr. Nalbandian’s children; and 6,950 shares owned by Mr. Nalbandian’s wife, Jamie Nalbandian. Also includes 255,667 shares of Commerce common stock issuable upon the exercise of stock options granted under Commerce’s 1986 and 1996 Employee Stock Option Plans. |
8 | Includes 10,773 shares of Commerce common stock issuable upon the exercise of stock options granted under Commerce’s 1990 and 2001 Stock Option Plans for Non-Employee Directors. |
9 | Includes 22,750 shares owned by Dr. Srouji’s wife, Gillian Srouji, 1,162 shares owned jointly by Dr. Srouji and his wife, and 24,784 shares held by Dr. Srouji’s self-directed participant account in the Plastic Surgery P.C. Profit Sharing Plan. Also includes 32,319 shares of Commerce common stock issuable upon the exercise of stock options granted under Commerce’s 1990 and 2001 Stock Option Plans for Non-Employee Directors. |
10 | Includes 494 shares owned jointly by Mr. Ritrievi and his wife. Also includes 28,867 shares of Commerce common stock issuable upon the exercise of stock options granted under Commerce’s 1996 Employee Stock Option Plan. |
11 | Includes 11,074 shares of Commerce common stock issuable upon the exercise of stock options granted under Commerce’s 1996 Employee Stock Option Plan. |
12 | Includes 8,752 shares owned jointly by Mr. Zody and his wife. Also includes 75,858 shares of Commerce common stock issuable upon the exercise of stock options granted under Commerce’s 1986 and 1996 Employee Stock Option Plans. |
13 | Includes an aggregate of 565,380 shares of Commerce common stock issuable to directors and executive officers of Commerce under Commerce’s 1990 and 2001 Stock Option Plans for Non-Employee Directors and Commerce’s 1986 and 1996 Employee Stock Option Plans. This total also includes 99,242 shares beneficially owned by Peter J. Ressler, Corporate Secretary. Mr. Ressler has been Secretary of the Bank since 1985 and of Commerce since 1999. Mr. Ressler is a shareholder in the law firm, Mette, Evans & Woodside in Harrisburg, PA. |
· | the board of directors may, from time to time, fix the number of directors; |
· | the board will consist of not less than five nor more than twenty-five directors; and |
· | directors will be elected for a one-year term. |
Name & Age | Position | Director Since | ||
Gary L. Nalbandian, 62 | Chairman, President and CEO of Commerce and the Bank | 1985 | ||
James R. Adair, 57 | Director of Commerce and the Bank | 2001 | ||
John J. Cardello, 44 | Director of Commerce and the Bank | 2004 | ||
Douglas S. Gelder, 55 | Director of Commerce and the Bank | 1988 | ||
Alan R. Hassman, 65 | Director of Commerce and the Bank | 1985 | ||
Howell C. Mette, 77 | Director of Commerce and the Bank | 1985 | ||
Michael A. Serluco, 64 | Director of Commerce and the Bank | 1985 | ||
Samir J. Srouji, M.D., 68 | Director of Commerce and the Bank | 1985 |
· | maintaining the computer wide area network; |
· | proof and encoding; |
· | deposit and loan account statement rendering; |
· | ATM/VISA Check Card processing; |
· | data processing; |
· | advertising support; and |
· | call center support. |
· | the Audit Committee; |
· | the Nominating and Corporate Governance Committee; |
· | the Compensation Committee; |
· | the Executive Committee; and |
· | the Real Estate Committee. |
· | a representation that you are a holder of record of common stock of Commerce entitled to vote at such meeting and intend to appear in person or by proxy at the meeting to vote for the person or persons nominated; |
· | the name, address and age of the nominee; |
· | the principal occupation of the nominee; |
· | the number of shares of Commerce’s common stock owned by the nominee; |
· | the total number of shares that, to your knowledge, will be voted for the nominee; |
· | a description of all arrangements and understandings between you and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination was made by you; |
· | such other information regarding each nominee proposed by you as would be required to be included in a proxy statement filed pursuant to the proxy rules of the SEC had the nominee been nominated by the Nominating and Corporate Governance Committee; and |
· | the consent of each nominee to serve as a director of Commerce if so elected. |
Positions with Commerce and/or its Subsidiaries | ||||
Name | Age | Principal Occupation | ||
Gary L. Nalbandian | 62 | Chairman, President and CEO of Commerce andthe Bank1 | ||
Rory G. Ritrievi | 41 | Executive Vice President and Chief Lending Officerof Commerce and the Bank | ||
David B. Skerpon | 44 | Executive Vice President and Chief Retail Officerof Commerce and the Bank2 | ||
Mark A. Zody | 41 | Chief Financial Officer and Treasurer of Commerceand the Bank | ||
1 | Mr. Nalbandian became Chairman/President/CEO of Commerce and the Bank in February 2002. Prior thereto, Mr. Nalbandian was the Chairman of the Board since 1985. |
2 | Mr. Skerpon became Executive Vice President/Chief Retail Officer of Commerce and the Bank on March 4, 2002. Mr. Skerpon served as Senior Vice President of the Bank from September 2000 to August 2001. Prior to joining the Bank in September 2000, Mr. Skerpon served as President of the Commonwealth Region of Mellon Bank. |
Annual Compensation | Long Term Compensation | ||||||||||||||||||
Name and Principal Position | Year | Salary | Bonus | Other Annual Compensation | Securities Underlying Options1 | All Other Compensation2 | |||||||||||||
Gary L. Nalbandian | 2004 | $ | 250,000 | $ | 65,000 | - | 30,000 | $ | 20,363 | ||||||||||
Chairman, President and | 2003 | 215,000 | 40,000 | - | 31,500 | 19,400 | |||||||||||||
CEO of Commerce | 2002 | 150,000 | 40,000 | - | - | 17,584 | |||||||||||||
and the Bank | |||||||||||||||||||
Rory G. Ritrievi | 2004 | $ | 185,000 | $ | 30,000 | - | 10,000 | $ | 13,525 | ||||||||||
Executive Vice President | 2003 | 175,000 | 15,000 | - | 10,500 | 13,734 | |||||||||||||
and Chief Lending Officer | 2002 | 167,000 | 15,000 | - | - | 13,493 | |||||||||||||
of Commerce and the Bank | |||||||||||||||||||
David B. Skerpon | 2004 | $ | 175,000 | $ | 20,000 | - | 8,500 | $ | 1,938 | ||||||||||
Executive Vice President | 2003 | 168,000 | 10,000 | - | 13,650 | 2,146 | |||||||||||||
and Chief Retail Officer | 2002 | 160,000 | 9,000 | - | - | - | |||||||||||||
of Commerce and the Bank3 | |||||||||||||||||||
Mark A. Zody | 2004 | $ | 147,500 | $ | 20,000 | - | 8,500 | $ | 6,030 | ||||||||||
Chief Financial Officer and | 2003 | 132,500 | 10,000 | - | 8,400 | 6,086 | |||||||||||||
Treasurer of Commerce | 2002 | 118,000 | 10,000 | - | - | 5,674 | |||||||||||||
and the Bank |
1 | Adjusted to reflect the two-for-one stock split paid on February 25, 2005. In mid-2002, Commerce changed its policy for granting Incentive Stock Options to executive officers so that all such options are now granted in the first quarter of each year. As a result, there were no stock options granted to executive officers in calendar 2002. |
2 | Includes (a) annual retainer fee and monthly director meeting fees for Mr. Nalbandian of $17,600 in 2004, $16,400 in 2003, and $15,900 in 2002; (b) contributions by the Bank to the 401(k) Retirement Savings Plan for (i) Mr. Nalbandian - $2,763 in 2004, $3,000 in 2003, and $1,684 in 2002; (ii) Mr. Ritrievi - $2,085 in 2004, $2,294 in 2003, and $2,053 in 2002; (iii) Mr. Skerpon - $1,938 in 2004 and $2,146 in 2003; and (iv) Mr. Zody - $1,585 in 2004, $1,801 in 2003, and $1,481 in 2002; (c) tuition reimbursement for Mr. Ritrievi of $11,440 in 2004, 2003 and 2002; (d) life insurance premiums for Mr. Zody - $2,402 in 2004, $2,343 in 2003 and 2002; and (e) long-term disability premiums for Mr. Zody - $2,043 in 2004, $1,942 in 2003, $1,850 in 2002. |
3 | Mr. Skerpon became Executive Vice President/Chief Retail Officer of Commerce and the Bank on March 4, 2002. The amount listed reflects his annualized salary for the year 2002. Prior to joining the Bank, Mr. Skerpon served as President of the Commonwealth Region of Mellon Bank. |
Name | Number of Securities Underlying Options Granted1 | % of Total Options Granted to Employees in Fiscal Year | Exercise or Base Price ($/Share)1 | Expiration Date | Grant Date Present Value2 | ||||||||||||||
Gary L. Nalbandian | 30,000 | 20.49% | $ | 25.38 | 2/20/2014 | $ | 292,443 | ||||||||||||
Rory G. Ritrievi | 10,000 | 6.83% | 25.38 | 2/20/2014 | 91,131 | ||||||||||||||
David B. Skerpon | 8,500 | 5.80% | 25.38 | 2/20/2014 | 74,762 | ||||||||||||||
Mark A. Zody | 8,500 | 5.80% | 25.38 | 2/20/2014 | 82,859 | ||||||||||||||
1 | Adjusted to reflect the two-for-one stock split paid on February 25, 2005. |
2 | We used the Black-Scholes option-pricing model to estimate the grant date present value of the options. We are not endorsing the accuracy of this model. All stock option valuation models, including the Black-Scholes model, require a prediction about future stock prices. The assumptions used in calculating the values shown above were expected volatility of .207, a risk free rate of return of 3.56%, weighted-average life of ten years and no cash dividends. The real value of the options will depend upon the actual performance of Commerce common stock during the applicable period. |
Number of Securities Underlying Unexercised Options at Year End 20042 | Value of Unexercised In-the-Money Options at Year End 20043 | ||||||||||||||||||
Name | Shares Acquired on Exercise | Value Realized1 | Exercisable | Unexercisable | Exerciseable | Unexercisable | |||||||||||||
Gary L. Nalbandian | 32,576 | $ | 812,120 | 225,667 | 30,000 | $ | 4,615,145 | $ | 183,600 | ||||||||||
Rory G. Ritrievi | 1,000 | 12,860 | 23,867 | 18,145 | 401,912 | 178,355 | |||||||||||||
David B. Skerpon | - | - | 3,412 | 18,737 | 46,130 | 190,424 | |||||||||||||
Mark A. Zody | 6,514 | 172,165 | 67,358 | 8,500 | 1,395,843 | 52,020 | |||||||||||||
1 | Represents the number of shares acquired upon exercise multiplied by the difference between the fair market value of Commerce’s common stock on the date of exercise and the exercise price paid by the executive officer. |
2 | Exercisable stock options are fully vested. Stock options to vest in the future are reported as unexercisable. |
3 | The dollar values were calculated by determining the difference between the closing trading price of Commerce common stock at December 31, 2004, which was $31.50 per share (adjusted for the 2-for-1 stock split paid on February 25, 2005), and the exercise price of each stock option as of December 31, 2004. |
· | integrate compensation with Commerce’s and the Bank’s annual and long-term performance goals; |
· | reward exceptional performance; |
· | recognize individual initiative and achievements; |
· | attract and retain qualified executives; |
· | provide compensation packages competitive with those offered by other similar bank holding companies and banks; and |
· | encourage stock ownership by executive officers. |
· | asset size; |
· | the salaries of the chief executive officer and other executive officers; |
· | return on average assets; and |
· | return on average equity. |
· | level of individual performance; |
· | contribution to the organization; and |
· | salary history. |
· | the earnings of Commerce and the Bank; |
· | the peer group compensation information discussed above; |
· | individual performance factors; and |
· | its subjective evaluation of the services provided by each Named Executive Officer. |
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Total Number of Shares Covered | 500,000, subject to adjustment for stock dividends and stock splits. | |
Administration | The Compensation Committee or anothercommittee designated by the Board willadminister the plan. | |
Eligible Persons | Officers and employees of Commerce andthe Bank. Approximately 700 employeesare eligible to participate in the plan. | |
Exercise Price | Generally the fair market value ofCommerce’s common stock on the date wegrant the option. | |
Terms of Options | No more than 10 years from date of grant,not exercisable for 12 months after date ofgrant. | |
Vesting of Options | Options granted under the plan will besubject to a vesting schedule based uponthe holding period from the date of grant. | |
Exercise of Options | The holder of an option can pay theexercise price of the option in cash, or atthe Board of Directors’ or CompensationCommittee’s discretion, with Commercecommon stock (valued at the price of thecommon stock on the exercise date) or acombination of cash and Commerce stock. | |
Transferability | Options are not transferable except by will or by laws of descent and distribution. | |
Term of Plan | The Plan will expire on December 31, 2015, unless we terminate it earlier. |
New Option Grants | Number of Shares Underlying Options Granted1 | Exercise Price1 | Expiration Date | Grant Date Present Value ($) | |||||||||
Executive Officer Group | 57,000 | $ | 25.38 | 2014 | $ | 541,195 | |||||||
Non-Executive Officer & Employee Group | 96,090 | $ | 25.25-$25.38 | 2014 | 810,310 |
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)1 | Weighted average exercise price of outstanding options, warrants and rights (b) | Number of sercurities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)2 | |||||||
Equity compensation plans approved bysecurity holders | 944,967 | $ | 14.12 | 414,485 | ||||||
Equity compensationplans not approvedby security holders | N/A | N/A | N/A | |||||||
TOTAL | 944,967 | $ | 14.12 | 414,485 |
1 | Adjusted to reflect the two-for-one stock split paid February 25, 2005. |
2 | Includes total shares available for employees through the Employee Stock Purchase Plan and also shares available for all shareholders under the Commerce’s Dividend Reinvestment and Stock Purchase Plan. |
2004 | 2003 | ||||||
Audit Fees1 | $ | 177,888 | $ | 86,755 | |||
Audit-Related Fees2 | 9,900 | 8,000 | |||||
Tax Fees3 | 10,986 | 7,375 | |||||
$ | 198,774 | $ | 102,130 | ||||
1 | Includes professional services rendered for the audit of the Commerce’s annual financial statements and review of financial statements included in Forms 10-Q, or services normally provided in connection with statutory and regulatory filings (i.e., attest services required by FDICIA and student loan audits and procedures relating to the 2004 S-1 filing which totaled $80,469), including out-of-pockets expenses. |
2 | Assurance and related services reasonably related to the performance of the audit or review of financial statements, including employee benefit plan audits and accounting research. |
3 | Tax fees include the preparation of state and federal tax returns and assistance with IRS notices and payroll tax matters and change in accounting method elections for prepaid expenses and deferred loan costs. |
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1. | Purpose of Plan |
2. | Definitions |
3. | Aggregate Number of Shares |
4. | Adjustment of Options |
5. | Granting of Options |
6. | Terms of ISOs |
(a) | The ISO price shall be fixed by the Board or the Committee but shall in no event be less than 100% of the fair market value of the Shares subject to the ISO on the date the ISO is granted. The ISO price, in the case of an Optionee who, at the time the Option is granted, owns more than 10% of the outstanding Shares of Commerce's common stock shall be at least 110% of the fair market value of the Shares subject to the ISO on the date the ISO is granted. |
(b) | ISOs shall not be transferable otherwise than by will or by the laws of descent and distribution. No ISO shall be subject, in whole or in part, to attachment, execution or levy of any kind. |
(c) | Each ISO shall expire and all rights under the ISO shall end at the expiration of the exercise period for the ISO, which shall not be more than ten years after the date on which it was granted. Provided, however, that in the case of an Optionee who, at the time the Option is granted, owns more than 10% of the outstanding shares of Commerce's common stock, ISOs shall expire no more than five years after the date on which the ISO was granted. |
(d) | ISOs shall be exercisable only by the Optionee during the Optionee’s lifetime. ISOs may be exercised only while employed by Commerce or within (i) three years after retirement, or (ii) three months after termination of employment (but in any event not later than the end of the period fixed by the Board or the Committee of the Board in accordance with the provisions of paragraph (c) of Section 6). In all other respects, an ISO is exercisable by retired or terminated Optionees only to the extent the ISO was exercisable by the Optionee on the last day of his or her employment with Commerce. For purposes of this paragraph (d), retirement shall mean termination of employment by an Optionee who has attained age 62. If an Optionee retires due to disability, the ISOs granted to the Optionee shall be exercisable within 12 months of the date of retirement (but in any event not later than the end of the period fixed by the Board or the Committee of the Board in accordance with the provisions of paragraph (c) of this Section 6). |
(e) | If an Optionee dies within a period during which an ISO could have been exercised by the Optionee, the ISO may be exercised within three years after the Optionee’s death (but not later than the end of the period fixed by the Board or the Committee of the Board in accordance with the provisions of paragraph (c) of this Section 6) by those entitled under the Optionee’s will or the laws of descent and distribution, but only if and to the extent the ISO was exercisable by the Optionee immediately prior to the Optionee’s death. |
(f) | If Optionee's employment with Commerce is terminated by Commerce due to the misconduct of Optionee, as determined in the reasonable judgment of management of Commerce, all ISOs granted to the Optionee prior to termination shall be forfeited by Optionee and rendered unexercisable. |
(g) | ISOs may be exercised in whole or in part from time to time, subject to the provisions of this Plan and to such additional or different terms regarding the exercise of the ISOs as the Board or the Committee of the Board may fix at the time of grant. |
(h) | ISOs shall not be granted to any individual pursuant to this Plan, the effect of which would be to permit that individual first to exercise ISOs, in any calendar year, for the purchase of Shares having a fair market value in excess of $100,000 (determined at the time of the grant of the ISOs). Any Optionee may exercise ISOs for the purchase of Shares valued in excess of $100,000 (determined at the grant of the ISOs) in any calendar year, but only if the right to exercise the ISOs shall have first become available in prior calendar years. |
(i) | An ISO shall be automatically converted to an NQSO in the event all requirements of Section 422 of the Code are not met. |
NQSOs granted under this Plan shall contain the following terms: |
(a) | The NQSO price shall be fixed by the Board or the Committee, and may be less than 100% of the fair market of the Shares subject to the NQSO on the date the NQSO is granted. |
(b) | NQSOs shall not be transferable otherwise than by will or by the laws of descent and distribution. No NQSO shall be subject, in whole or in part, to attachment, execution or levy of any kind. |
(c) | Each NQSO shall expire and all rights under the NQSO shall end at the expiration of the exercise period for the NQSO, which shall not be more than ten years after the date on which it was granted. The Board or the Committee shall establish the exercise period for each NQSO, subject in all cases to paragraphs (d), (e) and (f) of this Section 7. |
(d) | NQSOs shall be exercisable only by the Optionee during the Optionee’s lifetime. NQSOs may be exercised only while employed by Commerce or within (i) three years after retirement, or (ii) three months after termination of employment (but in any event not later than the end of the period fixed by the Board or the Committee of the Board in accordance with the provisions of paragraph (c) of Section 7). In all other respects, an NQSO is exercisable by retired or terminated Optionees only to the extent the NQSO was exercisable by the Optionee on the last day of his or her employment with Commerce. For purposes of this paragraph (d), retirement shall mean termination of employment by an Optionee who has attained age 62. If an Optionee retires due to disability, the NQSOs granted to the Optionee shall be exercisable within 12 months of the date of retirement (but in any event not later than the end of the period fixed by the Board or the Committee of the Board in accordance with the provisions of paragraph (c) of this Section 7). |
(e) | If an Optionee dies within a period during which an NQSO could have been exercised by the Optionee, the NQSO may be exercised within three years after the Optionee’s death (but not later than the end of the period fixed by the Board or the Committee of the Board in accordance with the provisions of paragraph (c) of this Section 7) by those entitled under the Optionee’s will or the laws of descent and distribution, but only if and to the extent the NQSO was exercisable by the Optionee immediately prior to the Optionee’s death. |
(f) | If Optionee's employment with Commerce is terminated by Commerce due to the misconduct of Optionee, as determined in the reasonable judgment of management of Commerce, all NQSOs granted to the Optionee prior to termination shall be forfeited by Optionee and rendered unexercisable. |
(g) | NQSOs may be exercised in whole or in part from time to time, subject to the provisions of this Plan and to such additional or different terms regarding the exercise of the NQSOs as the Board or the Committee of the Board may fix at the time of grant. |
8. | Vesting of Options |
Option Holding Period | Percent Vested |
Less than 1 year | 0% |
More than 1 year and less than 2 years | 25 |
More than 2 years and less than 3 years | 50 |
More than 3 years and less than 4 years | 75 |
More than 4 years | 100 |
9. | Exercise Eligibility Period Following Termination of Employment |
Termination Reason | Options Eligible for Exercise | Exercise Eligibility Period |
Retirement | 100% of outstandingOptions | 3 years fromretirement date |
Death while employed | 100% of outstandingOptions | 3 years fromdate of death |
Total & permanentdisability | 100% of outstandingOptions | 1 year from terminationdate |
Misconduct | None | Not applicable |
Any other reason | Any Option 100% vestedplus the vested portionof the next oldest Option | 3 months fromtermination date |
10. | Reorganization of Commerce |
11. | Delivery of Shares |
12. | Continuation of Employment |
13. | Administration |
14. | Reservation of Shares |
15. | Amendment of Plan |
16. | Termination of the Plan |
17. | Effective Date - Shareholder Approval |
For all Nominees Listed Below ________ | Withhold Authority_________ |
(except as indicated below) |
INSTRUCTION: | To withhold authority to vote for any individual nominee(s), write that nominee's name(s) in the space immediately below. |
Dated this day of , 2005. | (SEAL) |
Signature | |
(SEAL) | |
Signature | |
When shares are held by joint tenants, both should sign. If signing as attorney, executor, administrator, trustee, guardian, custodian, corporate official or in any other fiduciary or representative capacity, please give your full title as such. | |