COMMERCE BANCSHARES, INC.
1987 NON-QUALIFIED STOCK OPTION PLAN
AMENDED AND RESTATED AS OF OCTOBER 4, 1996
Commerce Bancshares, Inc. (the "Company"), hereby
establishes this Non-Qualified Stock Option Plan, (the "Plan"),
for key employees of the Company and its subsidiaries. The Plan
is designed to meet the criteria of performance-based
compensation under Section 162 of the Internal Revenue Code, as
amended.
1. PURPOSE. The purpose of the Plan is to aid the Company and
its subsidiaries in obtaining and retaining qualified and
competent management personnel and to encourage significant
contributions by such personnel to the success of the
Company and its subsidiaries by providing additional,
long-term incentive to those employees who contribute
conspicuously to the successful and profitable operations of
the Company and its subsidiaries. It is believed that this
purpose will be furthered through the granting to key
employees of options to purchase shares of the common stock
of the Company ("options"), as provided herein, so that such
employees ("optionees") will be encouraged and enabled to
acquire a larger personal interest in the continued success
of the Company and its subsidiaries, thereby providing
additional incentive to such employees to operate the
Company and its subsidiaries in a manner to benefit all
shareholders.
2. ADMINISTRATION.
(a) GRANTS OF OPTIONS. All grants of options shall be made
by the Compensation and Benefits Committee (the
"Committee") of the Board of Directors of the Company
(the "Board of Directors"). The Board of Directors may
from time to time remove from or add members to the
Committee. The Committee 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 Internal Revenue Code of
1986, as amended, or any successor provision thereto.
(b) GENERAL ADMINISTRATION. The Committee shall have full
power and authority to administer and interpret the
Plan, subject to the provisions of the Plan and as to
such matters as are reserved under the Plan to the
Board of Directors. Any interpretation of the Plan or
other act of the Committee in administering the Plan
shall be final and binding on all employees. The
Committee may adopt such procedures as it deems
necessary or helpful in administering the Plan. No
member of the Committee shall be liable for action or
determination made in good faith with respect to the
Plan or any option granted under the Plan.
3. ELIGIBILITY. Officers and other key employees of the
Company and its subsidiaries who are making, and who are
expected to continue to make, substantial contributions to
the success of the Company and its subsidiaries shall be
eligible to receive grants of options. An option may not be
granted to a member of the Board of Directors who is not
also an employee of the Company or a subsidiary.
4. SHARES SUBJECT TO THE PLAN. Not more than 1,500,000 shares
of the common stock, $5 par value, of the Company (the
"Common Stock") shall be issuable in respect of options
granted under the Plan. Shares reserved under the Plan
shall be appropriately adjusted as provided in Section 7 in
the event of a change in the corporate structure or the
shares of Common Stock of the Company. Shares subject to
option under the Plan may be either authorized and unissued
shares or issued shares which are reacquired by the Company
and held in its treasury. Shares of common stock subject to
an option shall, upon the expiration or termination of such
option, to the extent unexercised, again be available for
grant under the Plan.
5. GRANTS TO EMPLOYEES. Options may be granted to eligible
employees with respect to such number of shares of common
stock and at such times during the term of this Plan as the
Committee shall determine; provided, however, that not more
than .5 percent of the outstanding shares of Common Stock as
of the preceding December 31 may be awarded in any one year
to any one person. The granting of options pursuant to the
Plan shall occur when the Committee by resolution, written
consent or other appropriate action determines to grant such
option to a particular employee. An optionee may be granted
additional options under the Plan without regard to whether
any option previously granted to such optionee has been
exercised in whole or in part.
6. TERMS AND CONDITIONS OF OPTIONS. Each option shall be
evidenced by a written grant (the "option grant") in a form
approved by the Committee, to be duly executed and delivered
by or on behalf of the Company to the optionee. The option
grant shall contain provisions not inconsistent with the
following:
(a) PRICE. The purchase price per share of common stock
deliverable upon the exercise of an option shall be the
last sale price as reported by the Automated Quotation
System of the National Association of Securities
Dealers on the date the option is granted. 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 the purchase price per
share.
(b) NUMBER OF SHARES. The option grant shall specify the
number of shares of common stock to which it pertains.
(c) WAITING PERIOD AND DURATION OF OPTIONS. Options shall
be exercisable at such times and under such conditions
as may be set forth in the option grant but in no event
shall any option be exercised subsequent to the tenth
annual anniversary of such date.
(d) EXERCISE OF OPTIONS. To the extent that the right to
purchase shares has accrued under the option grant,
options may be exercised by written notice to the
Company. Such notice shall be in such form and
directed to such person as the Committee shall
determine. An option may be exercised without regard
to whether any option previously granted to the same
optionee has been exercised in whole or in part.
(e) PAYMENT AND DELIVERY. Shares of common stock
purchased pursuant to an option grant shall be paid for
in full at the time of exercise, either (i) in cash
(including check, bank draft or money order), (ii) by
delivering common stock of the Company (including stock
acquired in a "cashless exercise"), or (iii) a
combination of common stock and cash. The fair market
value of the common stock so delivered 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 or delivered until full payment therefor has
been made.
(f) NON-TRANSFERABILITY. The Committee may make and
include in the option grant such provisions regarding
the transferability of options as it shall in its
discretion determine.
(g) PRIOR TO EXERCISE. An optionee shall have none of the
rights of a stockholder with respect to shares subject
to the option until such shares of common stock have
been purchased by the optionee.
(h) ADJUSTMENTS FOR STOCK SPLITS, ETC. The number of
shares of common stock subject to an option and the
option price shall be appropriately adjusted as
provided in Section 7 in the event of a change in the
corporation structure or shares of the Company.
(i) INVESTMENT PURPOSE. The Committee may require any
optionee to furnish to the Company at the time of any
exercise of the option a written representation (in
form satisfactory to the Committee) that he is
acquiring the shares resulting from such exercise with
the intention of holding the same for investment and
not for public distribution.
(j) CONTINUED EMPLOYMENT. Nothing contained in the Plan,
or in any option granted pursuant to the Plan, shall
confer upon any optionee any right with respect to
continuance of employment by the Company, or a
subsidiary of the Company, or interfere in any way with
the right of the Company, or a subsidiary of the
Company, to terminate the optionee's employment at any
time, with or without cause.
(k) EMPLOYMENT STATUS AT EXERCISE. Except as provided in
Section 6(1), no option may be exercised unless the
optionee is in the employ of the Company, or a
subsidiary of the Company, at the time of such
exercise. The Committee may make such provision as it
deems appropriate with respect to optionees on leave of
absence.
(l) TERMINATION OF EMPLOYMENT. Each option shall be
subject to the following provisions in the case of the
termination of the optionee's employment the term of
the option:
(i) RETIREMENT. If an optionee shall cease to be
employed by the Company, or a subsidiary of
the Company, by reason of retirement pursuant
to a pension or retirement plan of the
Company, or of a subsidiary of the Company,
the optionee may within a period of not more
than thirty-six (36) months next succeeding
such cessation of employment (but in no event
after the expiration of the option period),
exercise any and all of the optionee's
options with respect to all or any part of
the shares as to which such options remain
unexercised.
(ii) DISABILITY. If an optionee shall cease to be
employed by the Company, or a subsidiary of
the Company, by reason of permanent
disability as determined by the optionee
establishing the optionee's eligibility to
receive Social Security disability benefits,
the optionee may within a period of not more
than thirty-six (36) months next succeeding
such cessation of employment (but in no event
after the expiration of the option period),
exercise the optionee's option with respect
to all or any part of the shares as to which
such option remains unexercised.
(iii) DEATH OF OPTIONEE. In the event of the death
of an optionee while in the employ of the
Company, or a subsidiary of the Company, or
within twelve (12) months after the date of
termination of such employment under "(i)
Retirement," or under "(ii) Disability," any
option granted to the optionee shall be
exercisable with respect to all or any part
of the shares as to which such option remains
unexercised by the optionee's legal
representative or other person or persons to
whom the optionee's rights under the option
shall pass by the optionee's will or the laws
of descent and distribution, but only before
the expiration of the option period or of the
twelve (12) month period next succeeding the
optionee's termination of employment,
whichever first occurs.
(iv) OTHER REASONS. If an optionee shall cease to
be employed by the Company, or a subsidiary
of the Company, for any reason other than
those provided above under "(i) Retirement,"
"(ii) Disability," or "(iii) Death of
Optionee," the optionee (or, in the event of
the optionee's death, such optionee's legal
representative) may within a period of not
more than three (3) months next succeeding
such cessation of employment (but in no event
after the expiration of the option period)
exercise the optionee's option if and to the
extent it was exercisable at the date of such
cessation of employment. Notwithstanding the
foregoing, if an optionee's employment is
terminated voluntarily by the optionee or is
terminated due to the optionee's theft,
embezzlement, 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 option or
unexercised portion thereof granted to the
optionee shall immediately expire upon
termination of employment.
(m) WITHHOLDING FOR TAXES. At the time of exercise of an
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 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. Stock 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 stock, the optionee shall satisfy
the remaining amount to be withheld by remitting such
amount in cash to the Company.
7.1. CHANGE IN STOCK, ADJUSTMENTS, ETC. If the shares of common
stock of the Company 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 of common stock
shall be increased through the payment of a stock dividend
or stock split, there shall be substituted for or added to
each share of common stock of the Company theretofore
reserved for the purposes of the Plan, whether or not such
shares are at the time subjects to outstanding options, the
number and kind of shares of stock or other securities into
which each outstanding share of common stock of the Company
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 of common stock of the Company, 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 7.1, fractional shares
shall be ignored.
7.2 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
(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 a plan of
complete liquidation or dissolution of the Company or
there is consummated 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. DURATION; AMENDMENT; TERMINATION. The Plan shall be
effective if approved by the holders of a majority of the
outstanding shares of the Company present or represented and
voting thereon at the Annual Meeting of the Stockholders of
the Company scheduled for April 19, 1995, or at any
adjournment thereof and, if approved, shall continue until
December 31, 2005, unless terminated before that time by the
Board of Directors. Options shall not be awarded or
granted after the end of such period or the earlier
termination of the Plan, but options theretofore granted
shall continue after that date unless terminated in
accordance with the terms of the Plan. The Board of
Directors may at any time terminate the Plan, and may from
time to time alter or amend the Plan or any part thereof
provided that, except as permitted by Sections 6 and 7, no
amendment shall (a) increase the total number of shares of
common stock issuable upon the exercise of options granted
under the Plan, (b) reduce the minimum option price, or (c)
impair any outstanding option.
9. CONSTRUCTION. The Plan shall be interpreted and construed
in accordance with the laws of the State of Missouri.