Exhibit 10(c)
COMMERCE BANCSHARES, INC.
1996 INCENTIVE STOCK OPTION PLAN
2001 RESTATEMENT
This 1996 INCENTIVE STOCK OPTION PLAN (hereinafter the "Plan") originally
was adopted by Commerce Bancshares, Inc. (hereinafter the "Company") on the 3rd
day of February, 1995. As originally adopted, the Plan was designed to provide
incentive stock options within the meaning of Section 422 and meet the criteria
of performance-based compensation under Section 162 of the Code (as hereinafter
defined). The Company subsequently amended and restated the Plan on October 4,
1996, incorporating amendments to provide for the immediate acceleration of
options granted under the Plan in the event of a "change in control," and to
conform the provisions of the Plan regarding the Committee (as hereinafter
defined) to the requirements of applicable tax and securities laws.
The Company now desires to amend and restate the Plan to allow for the
grant of Nonqualified Stock Options (as hereinafter defined) under the Plan.
NOW THEREFORE, the Plan is hereby amended and restated as follows:
SECTION I
DEFINITIONS
As used herein, the following definitions shall apply:
1.1. "Board" shall mean the Board of Directors of the Company.
1.2. "Code" shall mean the Internal Revenue Code of 1986, as amended.
Reference to a specific section of the Code or regulation thereunder
shall include such section or regulation, any valid regulation
promulgated under such section, and any comparable provision of any
future legislation or regulation amending, supplementing, or
superseding such section or regulation.
1.3. "Common Stock" shall mean the common stock, $5 Par Value per share, of
the Company.
1.4. "Committee" shall mean the Compensation and Benefits Committee of the
Board, appointed in accordance with Section V of the Plan.
1
1.5. "Employee" shall mean officers and other key employees employed by the
Company, or any subsidiary of the Company which now exists, is
hereafter organized, or is acquired by the Company.
1.6. "Incentive Stock Option" shall mean an option granted under the Plan
to purchase Shares that is designated as an Incentive Stock Option,
and is intended to meet the requirements of Section 422 of the Code.
1.7. "Nonqualified Stock Option" shall mean an option granted under the
Plan to purchase shares that is not an Incentive Stock Option. 1.8.
"Option" shall mean an Incentive Stock Option or a Nonqualified Stock
Option.
1.8. "Option" shall mean an Incentive Stock Option or a Nonqualified Stock
Option.
1.9. "Option Grant" shall mean a written agreement evidencing an Option
granted hereunder in a form approved by the Committee, which shall be
duly executed and delivered by or on behalf of the Company to the
Optionee, and shall contain such provisions as are not inconsistent
with Section VI of the Plan.
1.10. "Optionee" shall mean any Employee who is granted an Option under the
Plan.
1.11. "Retirement" shall mean an Optionee's ceasing to be an Employee by
reason of retirement pursuant to a pension or retirement plan of the
Company or a subsidiary of the Company (as determined by the Committee
in its sole discretion).
1.12. "Share" shall mean a share of the Common Stock of the Company as
adjusted in accordance with Section VIII of the Plan.
SECTION II
PURPOSE
2.1. The Plan is designed to encourage officers and other key employees to
acquire a proprietary interest in the Company, thereby aligning their interests
with those of the shareholders. It is also seeks to encourage officers and other
key employees to continue employment with the Company and to render outstanding
performance during such employment by providing additional, long-term incentive
to such employees.
SECTION III
ELIGIBILITY
3.1. Options may be granted only to Employees.
3.2. No director, other than a director who is also an Employee, shall be
eligible to receive an Option under the Plan.
2
SECTION IV
LIMITS ON OPTIONS AND SHARES
4.1. The total number of Shares for which Options may be granted under this
Plan was 2,000,000 Shares as of February 3, 1995, which was the original
effective date of the Plan. The number of authorized Shares has and shall
continue to be adjusted subsequent to the original effective date pursuant to
the provisions of Section VIII. Such Shares may be authorized but unissued or
may be Treasury Shares.
4.2. If an Option should expire or terminate without having been exercised
in full, the Shares allocable to the unexercised portion of such Option shall
become available for other Options under the Plan unless the Plan shall have
been terminated.
4.3. No Incentive Stock Option shall be granted under the Plan to an
Employee who, at the time the Incentive Stock Option is granted, owns Shares
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or a subsidiary corporation of the Company.
4.4. No grant of Incentive Stock Options and Nonqualified Stock Options to
any one Employee in any one year shall be in excess of one-half of one percent
(0.5%) of the outstanding Shares as of the preceding December 31.
SECTION V
ADMINISTRATION OF PLAN AND GRANTING OF OPTIONS
5.1. The Plan shall be administered by the Committee, which shall consist
solely of two or more directors who are both (a) "non-employee directors" under
Rule 16b-3(b)(3) promulgated under the Securities Exchange Act of 1934, as
amended, or any successor provision thereto and (b) "outside directors" under
Section 162(m) of the Code. The Board may from time to time remove members from
or add members to the Committee. Vacancies on the Committee, howsoever caused,
shall be filled by the Board.
5.2. The Committee shall hold meetings at such times and places as it may
determine and a majority of the Committee at which a quorum is present, or acts
reduced to or approved in writing by a majority of the members of the Committee,
shall be the valid acts of the Committee.
5.3. Subject to the provisions of the Plan, the Committee shall have
authority:
(a) To determine the Employees to whom and the time or times at which
Options shall be granted and the number of Shares to be
represented by each Option;
(b) To interpret the Plan;
3
(c) To prescribe, amend, and rescind rules and regulations relating
to the Plan;
(d) To authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Option granted by
the Committee; and
(e) To make all other determinations deemed necessary or advisable
for the administration of the Plan.
5.4. The decisions, determinations, and interpretations of the Committee
shall be final and binding on all Optionees and any other holders of any Option
granted under the Plan. No member of the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
Option granted under the Plan.
SECTION VI
TERMS OF STOCK OPTIONS
6.1. Each Option shall be evidenced by an Option Grant, which shall
specify, among other things, the date of grant of the Option and the number of
Shares to which the Option pertains.
6.2. The exercise price for Shares to be issued pursuant to any Option
granted under the Plan shall be the last sale price as reported by the NASDAQ
National Market (or the principal securities exchange or other market on which
the Common Stock is then being traded) on the date of the grant. In the event a
sale shall not have been effected on the date of the grant, the last sale price
first reported prior to the date of grant shall be used.
6.3. The date of grant of an Option under the Plan shall, for all purposes,
be the date on which the Committee makes a determination granting such Option.
6.4. The Committee shall fix the term or duration of all Options under this
Plan provided that no term shall exceed ten (10) years after the date on which
the Option was granted. Incentive Stock Options granted under the Plan shall not
be transferable other than by will or the laws of descent and distribution and
shall be exercisable during the Optionee's lifetime only by the Optionee.
Nonqualified Stock Options shall be subject to such transferability provisions
as the Committee in its discretion shall determine and include in the Option
Grant.
6.5. Termination (Other Than Death or Permanent Disability).
6.5.1. In the event that an Optionee holding an Incentive Stock
Option should cease to be employed by the Company for any
reason (including Retirement) other than death or permanent
disability, the Incentive Stock Option may be exercised at
any time within three (3) months after the termination of
employment (but in no event after the expiration of the
4
option period) if and to the extent it was exercisable as of
the date of termination and had not previously been
exercised. Notwithstanding the foregoing, if an Optionee's
employment is terminated voluntarily by the Optionee (other
than due to Retirement) or is terminated because of the
Optionee's dishonesty, theft, embezzlement from the Company,
willful violation of any rules of the Company pertaining to
the conduct of Employees or the commission of a willful
felonious act while an Employee, then any Incentive Stock
Option or unexercised portion thereof granted to said
Optionee shall expire upon termination of employment.
6.5.2. In the event that an Optionee holding a Nonqualified Stock
Option should cease to be employed by the Company for any
reason other than Retirement, death or permanent disability,
then the Nonqualified Stock Option may be exercised within a
period of not more than three (3) months after the
termination of employment (but in no event after the
expiration of the option period), if and to the extent it
was exercisable as of the date of termination and had not
previously been exercised. If an Optionee holding a
Nonqualified Stock Option shall cease to be an Employee by
reason of Retirement, the Optionee shall have the right to
exercise the Nonqualified Stock Option with respect to all
or any part of the Shares as to which such Nonqualified
Stock Option remained unexercised within a period of not
more than thirty-six (36) months from the date such Optionee
ceased to be an Employee (but in no event after the
expiration of the Nonqualified Stock Option period), if and
to the extent it was exercisable as of the date of
termination and had not previously been exercised.
Notwithstanding the foregoing, if an Optionee's employment
is terminated voluntarily by the Optionee other than due to
Retirement or is terminated because of the Optionee's
dishonesty, theft, embezzlement from the Company, willful
violation of any rules of the Company pertaining to the
conduct of Employees or the commission of a willful
felonious act while an Employee, then any Nonqualified Stock
Option or unexercised portion thereof granted to said
Optionee shall expire upon termination of employment.
6.6. If an Optionee shall die and shall not have fully exercised his
Option, the Option may be exercised as follows, if and to the extent it was
exercisable as of the date of death and had not previously been exercised:
6.6.1. With respect to an Incentive Stock Option, if the Optionee
died while an Employee, the Incentive Stock Option may be
exercised at any time within one (1) year after the
Optionee's death by the executors or administrators of the
Optionee or by any person or persons who shall have acquired
the Incentive Stock Option directly from the Optionee by
bequest or inheritance.
5
6.6.2. With respect to a Nonqualified Stock Option, if the Optionee
died while an Employee, or within twelve (12) months after the
date of termination of such employment due to disability (as
described in Section 6.7.2 below) or Retirement (as described
in Section 6.5.2 above), the Nonqualified Stock Option granted
to the Optionee shall be exercisable with respect to all or
any part of the Shares as to which such Nonqualified Stock
Option remains unexercised by the Optionee's legal
representative or other person or persons to whom the
Optionee's rights under the Nonqualified Stock Option shall
pass by the Optionee's will or the laws of descent and
distribution, but only before the expiration of the
Nonqualified Stock Option period or of the twelve (12) month
period next succeeding the Optionee's death, whichever first
occurs.
6.7. If an Optionee shall cease to be an Employee by reason of a permanent
disability (as determined by the Optionee officially establishing his
eligibility to receive Social Security disability benefits), the Optionee may
exercise his Option as follows, if and to the extent it was exercisable as of
the date the Optionee ceased to be an Employee by reason of such a permanent
disability, and had not previously been exercised:
6.7.1. An Incentive Stock Option may be exercised at any time within
one (1) year from the date such Optionee ceased being an
Employee.
6.7.2. A Nonqualified Stock Option may be exercised with respect to
all or any part of the Shares within a period of not more than
thirty-six (36) months from the date such Optionee ceased to
be an Employee (but in no event after the expiration of the
Nonqualified Stock Option period).
6.8. The fair market value of Common Stock for which any Incentive Stock
Option may be granted in any calendar year under the Plan shall be in such
amount as the Committee shall determine; provided, however, that the aggregate
fair market value of Common Stock for which Incentive Stock Options granted
under the Plan (or any other incentive stock option plan of the Company or any
subsidiary) first become exercisable in any one calendar year by an Optionee may
not exceed $100,000 (determined as of the date of grant).
SECTION VII
EXERCISE OF OPTION
7.1. An Option shall be deemed to be exercised when written notice of such
exercise has been received by the Company in accordance with the terms of the
Option by the person entitled to exercise the Option, and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Payment may be made (i) in cash, (ii) by delivering Common Stock of the
Company already owned by the Optionee, or (iii) a combination of cash and Common
Stock. The fair market value of Common Stock delivered for payment shall be the
last sale price as reported by the Automated Quotation System of the National
Association of Securities Dealers on the date of exercise. No shares shall be
issued, delivered, or recorded on the records of the Company or its transfer
agents or registrars until full
6
payment therefore has been made. Until the issuance of the stock certificates or
entry on the records of the Company or its transfer agents or registrars is
made, no right to vote or receive dividends or any other rights as a shareholder
shall exist with respect to the Shares as to which the Option has been
exercised. No adjustment will be made for a dividend or other rights for which a
record date is established prior to the date the stock certificates are issued
or record entry is made, except as provided in Section 8.1 of the Plan.
7.2. At the time of exercise of a Nonqualified Stock Option granted under
this Plan, the Optionee shall provide for the payment to the Company of federal,
state, local and payroll withholding taxes attributable to such exercise. The
Optionee shall advise the Company at the time of exercise of the amount of
desired withholding but such withholding may not be less than the minimum
required by law, which minimum amount shall be withheld in the absence of other
instruction from the Optionee. The Optionee may direct the Company to withhold
from the exercise of the Nonqualified Stock Option that number of whole shares
of Common Stock as shall equal in value the nearest whole share equivalent of
the indicated tax withholding requirement. Shares to be used for withholding
shall be valued at the last sale price as reported by the Automated Quotation
System of the National Association of Securities Dealers on the date of
exercise. To the extent the withholding amount is not satisfied in Shares, the
Optionee shall satisfy the remaining amount to be withheld by remitting such
amount in cash to the Company contemporaneously with the exercise of the Option.
7.3. Notwithstanding any other provision of this Plan, the Committee may
postpone any exercise of an Option for such period as the Committee in its
discretion may deem necessary in order to permit the Company (i) to effect or
maintain registration of the Plan or the Shares issuable upon the exercise of an
Option under the Securities Act of 1933, as amended, or the securities laws of
any applicable jurisdiction, (ii) to permit any action to be taken in order to
comply with restrictions or regulations incident to the maintenance of a public
market for its Shares or to list the Shares thereon; or (iii) to determine that
such Shares and the Plan are exempt from such registration or that no action of
the kind referred to in (ii) above need be taken; and the Company shall not be
obligated by virtue of any terms and conditions of any Option Grant or any
provision of the Plan to permit the exercise of an Option to sell or deliver
Shares in violation of the Securities Act of 1933 or other applicable law. Any
such postponement shall not extend the term of an Option and neither the Company
nor its directors or officers or any of them shall have any obligation or
liability to the Optionee or to any other person with respect to any Shares as
to which an Option shall lapse because of such postponement.
SECTION VIII
REORGANIZATION, CHANGE IN CONTROL
8.1. If the Shares shall be changed into or exchanged for a different
number or kind of shares of stock or other securities of the Company or of
another corporation (whether by reason of merger, consolidation,
recapitalization, reclassification, split-up, combination of shares, or
otherwise), or if the number of such Shares shall be increased through the
payment of a stock dividend or stock split, there shall be substituted for or
added to each Share theretofore reserved
7
for the purposes of the Plan, whether or not such Shares are at the time subject
to outstanding Options, the number and kind of shares of stock or other
securities into which each outstanding Share shall be so changed or for which it
shall be so exchanged, or to which each such Share shall be entitled, as the
case may be. Outstanding Options shall also be considered to be appropriately
amended as to price and other terms as may be necessary or appropriate to
reflect the foregoing events. If there shall be any other change in the number
or kind of the outstanding Shares, or of any stock or other securities into
which such Common Stock shall have been changed, or for which it shall have been
exchanged, then if the Board of Directors shall in its sole discretion determine
that such change equitably requires an adjustment in the number or kind or
option price of the Shares then reserved for the purposes of the Plan, or in any
Option theretofore granted or which may be granted under the Plan, such
adjustment shall be made by the Board of Directors and shall be effective and
binding for all purposes of the Plan. In making any such substitution or
adjustment pursuant to this Section 8.1, fractional shares shall be ignored.
8.2. Notwithstanding any other provision of the Plan to the contrary, in
the event of a Change in Control, Options outstanding as of the date of such
Change in Control and not then exercisable and vested shall become fully
exercisable and vested.
For purposes of the Plan, a "Change in Control" shall mean the happening of
any of the following events:
(a) any Person is or becomes the "beneficial owner" (within the
meaning of Rule 13d-3 promulgated under Section 13 of the
Securities Exchange Act of 1934 (the "Exchange Act")), directly
or indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities
acquired directly from the Company or its affiliates other than
in connection with the acquisition by the Company or its
affiliates of a business) representing 20% or more of either the
then outstanding shares of common stock of the Company or the
combined voting power of the Company's then outstanding
securities; or
(b) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals
who, on August 2, 1996, constitute the Board and any new director
(other than a director whose initial assumption of office is in
connection with an actual or threatened election contest,
including but not limited to a consent solicitation, relating to
the election of directors of the Company) whose appointment or
election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors
on August 2, 1996 or whose appointment, election or nomination
for election was previously so approved; or
8
(c) there is consummated a merger or consolidation of the Company (or
any direct or indirect subsidiary of the Company) with any other
corporation, other than (i) a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent
thereof), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan
of the Company, at least 80% of the combined voting power of the
voting securities of the Company or such surviving entity or any
parent thereof outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no Person is or becomes the beneficial
owner, directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its subsidiaries
other than in connection with the acquisition by the Company or
its subsidiaries of a business) representing 20% or more of
either the then outstanding shares of common stock of the Company
or the combined voting power of the Company's then outstanding
securities; or
(d) the stockholders of the Company approve (i) a plan of complete
liquidation or dissolution of the Company or (ii) a sale or
disposition by the Company of all or substantially all of the
Company's assets, other than a sale or disposition by the Company
of all or substantially all of the Company's assets to an entity,
at least 80% of the combined voting power of the voting
securities of which are owned by Persons in substantially the
same proportions as their ownership of the Company immediately
prior to such sale.
For purposes of the above definition of Change in Control, "Person" shall
have the meaning set forth in Section 3(a)(9) of the Exchange Act, as modified
and used in Sections 13(d) and 14(d) thereof, except that such term shall not
include (i) the Company or any of its subsidiaries, (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
any of its subsidiaries, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company.
8.3. In the event of a Change in Control under Section 8.2(c) or (d)(ii) (a
"Section 8.3 Event") the Committee shall have the discretion (a) to arrange for
the successor to assume each outstanding Option, (b) to arrange for the
substitution of outstanding Options with equivalent awards by the successor
corporation or a parent or subsidiary of the successor corporation, (c) to
terminate each outstanding Option in exchange for payment of an amount based on
a price not less than the fair market value of the consideration (whether stock,
cash, or other securities or
9
property) received or to be received in the Section 8.3 Event by holders of each
Share of common stock held on the effective date of the transaction (and if
holders of Shares were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares),
less the exercise price with respect to the Option, or (d) to take such other
action with respect to the Option as determined by the Committee in its sole
discretion.
SECTION IX
AMENDMENT AND TERMINATION OF PLAN
9.1. The Board may amend the Plan from time to time as it deems desirable
and shall make any amendments which may be required so that Options intended to
be Incentive Stock Options shall at all times continue to be Incentive Stock
Options for purposes of the Internal Revenue Code.
9.2. This Plan shall terminate on December 31, 2005, provided that the
Board may in its discretion terminate this Plan at any time prior thereto.
9.3. Any amendment to or the termination of the Plan shall not affect
Options already granted and such Options shall remain in full force and effect
as if this Plan had not been amended or terminated.
9.4. This Plan is effective on January 1, 1996, and Options hereunder may
be granted thereafter, subject to the terms of the Plan, provided this Plan is
approved by a vote of the holders of a majority of the outstanding shares of the
Company at a meeting of shareholders of the Company held within twelve (12)
months following the adoption date.
9.5. This Plan shall be interpreted and construed in accordance with the
laws of the State of Missouri.
10