AMENDED AND RESTATED
COMMERCE BANCSHARES, INC.
1996 INCENTIVE STOCK OPTION PLAN
This 1996 INCENTIVE STOCK OPTION PLAN (hereinafter the
"Plan") originally adopted by Commerce Bancshares, Inc.
(hereinafter the "Company") on the 3rd day of February, 1995, and
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 Internal Revenue Code, is
hereby restated with all amendments as of October 4, 1996.
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 "Common Stock" shall mean the Common Stock, $5 Par
Value per share, of the Company.
1.3 "Committee" shall mean the Compensation and Benefits
Committee appointed by the Board in accordance with Section IV of
the Plan.
1.4 "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.
1.5 "Option" shall mean an incentive stock option granted
pursuant to the Plan.
1.6 "Optionee" shall mean any employee who is granted an
option under the Plan.
1.7 "Share" shall mean 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 their continued 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.
SECTION IV
LIMITS ON OPTIONS AND SHARES
4.1 The total number of Shares for which Options may be
granted under this Plan shall not exceed 2,000,000 Shares,
subject 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 option shall be granted under the Plan to an
Employee who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company.
SECTION V
ADMINISTRATION OF PLAN AND GRANTING OF OPTIONS
5.1 The Plan shall be administered by the Compensation and
Benefits Committee of the Board, 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 Internal
Revenue Code of 1986, as amended, or any successor provision
thereto. 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.
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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;
(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 The Option price for Shares to be issued pursuant to
any Option granted under the Plan shall be the last sale price as
reported by the Automated Quotation System of the National
Association of Securities Dealers 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.
6.2 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. Notice of the determination
shall be given to each Employee to whom an Option is so granted
within a reasonable time after the date of such grant.
6.3 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.
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.
6.4 In the event that an Optionee should cease to be
employed by the Company for any reason other than death or
permanent disability, the Optionee shall have the right to
exercise the Option to the extent the Option was then exercisable
at any time within three (3) months after the termination of
employment; provided, however, if an Optionee's employment is
terminated voluntarily by the Optionee or is terminated because
of the Optionee's dishonesty, theft,
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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
Option or unexercised portion thereof granted to said Optionee
shall expire upon termination of employment.
6.5 If an Optionee shall die while an Employee and shall
not have fully exercised the Option, an Option may be exercised
to the extent that the Optionee's right to exercise such Option
had accrued at the time of his death and had not previously been
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 Option directly
from the Optionee by bequest or inheritance.
6.6 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), an Option may be exercised to the
extent that the Optionee's right to exercise such Option had
accrued immediately prior to said disability, and had not
previously been exercised, at any time within one (1) year from
the date such Optionee ceased being an Employee.
6.7 The fair market value of Common Stock for which any
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 Options granted under the Plan (or any other incentive
stock option plan of the Company or any subsidiary) are first
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. Until the issuance
of the stock certificates, 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, except as provided in Section VIII of
the Plan.
SECTION VIII
REORGANIZATION OF THE COMPANY
8.1 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
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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 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
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(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.
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.
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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.
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