AMENDED 1996 EMPLOYEE STOCK OPTION PLAN OF PENNSYLVANIA COMMERCE BANCORP, INC
AS APPROVED IN 2001
1. Purpose of Plan
---------------
The purpose of this Plan is to enable Pennsylvania Commerce Bancorp,
Inc. (hereinafter referred to as "Commerce") to continue to compete
successfully in attracting and retaining key employees with outstanding
abilities by making it possible for them to purchase shares of
Commerce's Common Stock on terms which will give them a more direct and
continuing interest in the future success of Commerce.
2. Definitions
------------
"Commerce" means Pennsylvania Commerce Bancorp, Inc., a Pennsylvania
corporation and bank holding company.
"Board" means the Board of Directors of Commerce.
"Committee" means a committee established by the Board. The Committee
shall consist of three or more members of the Board. No member of the
Committee may receive Options under the Plan. The Personnel Committee
may be the Committee if it meets these qualifications.
"Employees" means employees, including officers, regularly employed on
a salary basis by Commerce. "Employment with Commerce", or words to
that effect, shall include employment by any subsidiary or affiliate of
Commerce.
"Fair Market Value" of a share of Commerce's Common Stock shall mean
its closing sale price on the principal stock exchange on which the
stock is traded on the date as of which the value is being determined.
If there is no reported sale on that date, the Fair Market Value shall
be the closing sale on the next preceding day for which a sale was
reported. However, the Committee, in the good faith exercise of its
discretion, may determine that the closing sale price does not reflect
the true Fair Market Value of a share of Common Stock. If it so
determines, the Fair Market Value shall be the average closing sale
price on the principal stock exchange on which Commerce's Common Stock
is traded during the twenty (20) day period immediately preceding the
date on which Fair Market Value is being determined.
"ISO" means an incentive stock option described in Section 422 of the
Internal Revenue Code of 1986, as amended.
"NQSO" means a stock option, which is not described in Section 422 of
the Internal Revenue Code of 1986, as amended.
"Option" means an option, either in the form of an ISO or NQSO, granted
in accordance with the terms of this Plan.
"Optionee" means a person to whom an option has been granted under this
Plan, which has not expired or been fully exercised or surrendered.
"Shares" means shares of Common Stock of Commerce.
3. Limits on Number of Shares
--------------------------
The total number of Shares for which Options may be granted under this
Plan shall not exceed in the aggregate 527,369 Shares. This number
shall be appropriately adjusted if the number of issued Shares shall be
increased or reduced by change in par value, combination, or split-up,
reclassification, distribution of a dividend payable in stock, or the
like. Shares covered by Options, which have expired, or which have been
surrendered may again be optioned under this Plan. Options may be
granted in the form of ISOs or NQSOs.
4. Adjustment of Options
---------------------
The number of Shares optioned from time to time to individual Optionees
under the Plan, and the Option prices therefor, shall be appropriately
adjusted to reflect any changes in par value, combination, split-up,
reclassification, distribution of dividend payable in stock, or the
like.
5. Granting of Options
-------------------
The Board, or if the Board so determines, the Committee, is authorized
to grant Options to selected employees pursuant to this Plan during the
calendar year 1996 and in any calendar year thereafter to December 31,
2005. The number of Shares, if any, optioned in each year, the
employees to whom Options are granted, and the number of Shares
optioned to each employee selected shall be wholly within the
discretion of the Board or the Committee. The Board may grant both ISOs
and NQSOs to the same employee. Board action on Options and
administration of this Plan shall be only upon the advice and
recommendation of the Committee if the Board has appointed a Committee.
6. Terms of ISOs
-------------
ISOs granted under this Plan shall contain the following terms:
(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. 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 for the misconduct of Optionee, 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.
7. Terms of NQSOs.
---------------
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).
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 for the misconduct of Optionee, 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
------------------
(a) Options Granted Prior to January 1, 2005.
No Option granted under this Plan may be exercised within one year from
the date of the grant of the Option. Options held more than one year
may be exercised based upon years of service or upon the Option holding
period, whichever is sooner, pursuant to the following schedule:
Years of Service Percent Vested
---------------- --------------
Less than 3 years 25%
More than 3 years and less than 6 years 50
More than 6 years and less than 8 years 75
More than 8 years 100
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
(b) Options Granted After January 1, 2005.
No Option granted under this Plan may be exercised within one year from
the date of the grant of the Option. Options held more than one year
may be exercised based upon the Option holding period, pursuant to the
following schedule:
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
----------------------------------------------------------------
Options granted under this Plan less than one year prior to date of
termination of employment are not exercisable under any circumstances.
Options granted at least one year prior to termination of employment
must be exercised prior to the expiration date of the Option and within
the period set forth below depending upon the reason for termination:
Exercise Eligibility
Options Eligible Period for Option
Termination Reason for Exercise Tax Treatment
------------------ -------------- -----------------
Retirement 100% of outstanding 3 years from
Options retirement date
Death while employed 100% of outstanding 3 years from
Options date of death
Total & permanent 100% of outstanding 1 year from term-
disability Options ination date
Misconduct None Not applicable
Any other reason Any Option 100% vest- 3 months from
ed plus the vested termination date
portion of the next
oldest Option
10. Reorganization of Commerce
--------------------------
In the event that Commerce is succeeded by another corporation or bank
in a reorganization, merger, consolidation, acquisition of property or
stock, separation or liquidation, the successor corporation or bank
shall assume the outstanding Options granted under this Plan or shall
substitute new Options for them.
11. Delivery of Shares
--------------------------
No Shares shall be delivered upon the exercise of an Option until the
Option price has been paid in full in cash or, at the discretion of the
Board or the Committee, in whole or in part in Commerce's Common Stock
owned by the Optionee valued at fair market value on the date of
exercise. If required by the Board, no Shares will be delivered upon
the exercise of an Option until the Optionee has given Commerce a
satisfactory written statement that he is purchasing the Shares for
investment and not with a view to the sale or distribution of Shares.
12. Continuation of Employment
--------------------------
Neither this Plan nor any Option granted under this Plan shall confer
upon any employee any right to continue in the employ of Commerce or
limit in any respect the right of Commerce or to terminate the
employee's employment at any time.
13. Administration
The Board or the Committee may make rules and regulations and establish
procedures as it deems appropriate for the administration of this Plan.
In the event of a disagreement as to the interpretation of this Plan,
any amendment thereto, any rule, regulation or procedure thereunder, or
as to any right or obligation arising from or related to this Plan, the
decision of the Board or the Committee shall be final and binding upon
all persons in interest, including Commerce, Optionees, and
shareholders of Commerce.
14. Reservation of Shares
----------------------
Shares delivered upon the exercise of an Option shall, in the
discretion of the Board or the Committee, be either authorized but
unissued Shares, or previously issued Shares acquired by Commerce
through purchase in the open market or otherwise, or a combination of
both. Commerce shall be under no obligation to reserve or to retain in
its treasury any particular number of Shares at any time, and no
particular Shares, whether unissued or held as treasury Shares, shall
be identified as those optioned under this Plan.
15. Amendment of Plan
-----------------
The Board without further action by the shareholders may amend this
Plan from time to time as it deems desirable. However, no amendment
shall increase the maximum number of Shares for which Options may be
granted, reduce the minimum Option price, extend the maximum Option
period, or permit the granting of Options after December 31, 2005.
16. Termination of the Plan
-----------------------
The Board may, in its discretion, terminate this Plan at any time prior
to December 31, 2005. Termination of the Plan shall not deprive
Optionees of Options granted prior to termination of the Plan.
17. Effective Date - Shareholder Approval
-------------------------------------
This Plan shall become effective as of January 2, 1996, and Options may
be granted at any time on or after that date. However, no Option may be
exercised unless this Plan is approved by a vote of the holders of a
majority of the outstanding Shares of Commerce's Common Stock at a
meeting of shareholders of Commerce held within twelve months after
January 2, 1996.