YARDVILLE NATIONAL BANCORP
EXHIBIT 10.18
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>21
<FILENAME>ex10-18.txt
<DESCRIPTION>EXHIBIT 10.18
<TEXT>
<PAGE>


                           YARDVILLE NATIONAL BANCORP
                             1988 STOCK OPTION PLAN

(1.) Purposes of Plan.

         This 1988 Stock Option Plan (the "Plan") is designed to assist
Yardville National Bancorp (the "Company") in attracting and retaining highly
qualified persons as Employees of the Company and its Subsidiaries and to
provide such key employees with incentives to contribute to the growth and
development of the business of the Company.

         This Plan will be effected through the granting of stock options on the
terms and conditions hereinafter provided, which options are intended to qualify
as "incentive stock options" within the meaning of section 422A of the Internal
Revenue Code of 1986, as amended.

(2.) Definitions

         Unless the context otherwise indicates the following terms have the
following meanings:

         "Board" - means the Board of Directors of the Company.

         "Code" - means the Internal Revenue Code of 1986, as the same may from
         time to time be amended.

         "Committee" - means the Committee referred to in Section 4 hereof.

         "Common Stock" - means the Common Stock, no par value, of the Company.

         "Designated Beneficiary" - means the person designated by an optionee
         to be entitled on his death to any remaining rights arising out of an
         option, such designation to be made in accordance with such regulations
         as the Committee may implement from time to time.

         "Employee" - means any employee (including an officer) of the Company
         or any subsidiary of the Company.

         "Fair Market Value" - means the fair market value of Common Stock as
         determined by the Committee in a manner consistent with the Code and
         any regulations thereunder.

         "Incentive Stock Options" - means stock options which constitute
         incentive stock options within the meaning of Section 422A, or any
         successor section, of the Code having the provisions specified in the
         Plan for such incentive stock options and otherwise qualifies as a "Non
         Employee director" under Rule 16b-3 under the Exchange Act.

         "Parent" - means "parent corporation" as defined in Section 425(e), or
         any successor section, of the Code.

<PAGE>

         "Stock Option Agreement"-- means a stock option agreement entered into
         pursuant to the Plan substantially in the form of Exhibit A hereto.

         "Subsidiary" - means "subsidiary corporation" as defined in Section
         425(f), or any successor section, of the Code.

         "Ten Percent Stockholder" - shall mean any person who, immediately
         after any option is granted to such person owns, within the meaning of
         Section 422A(b) (6) (or any successor section of the Code) more than
         10% of the total combined voting power of all classes of stock of the
         Company, its parent, if any, or its Subsidiaries.


(3.) Stock Subject to Plan.

         The shares to be issued upon exercise of the options granted under the
         Plan shall be Common Stock. The maximum number of shares of Common
         Stock for which options may be granted under the Plan shall be 22,000
         shares (subject to adjustment as provided in section 10 hereof). The
         Common Stock to be issued upon exercise of the options may be
         authorized but unissued shares or treasury shares, as determined from
         time to time by the Committee. If any option granted under the Plan
         shall expire or terminate for any reason whatsoever without having been
         exercised in full, the unpurchased shares of Common Stock previously
         subject to such option shall become available for new options.


(4.) Administration.

                  (a) The Plan shall be administered by a Stock Option
Committee of not less than two Directors. The Board shall annually appoint the
members of the Stock Option Committee at the annual organizing meeting of the
Board.

                  (b) The Board shall fill all vacancies on the Committee and
may remove any member of the Committee at any time with or without cause. The
Committee shall select its own chairman and shall adopt, alter or repeal such
rules and procedures as it may deem proper and shall hold its meetings at such
times and places as it may determine. The Committee shall keep minutes of its
proceedings. Action by a majority of the Committee members present at any
meeting at which a quorum is present, or action approved in writing by all
members of the Committee without a meeting, shall constitute the acts of the
Committee.

                  (c) Subject to the provisions of the Plan, the Committee shall
have the full and final authority to (i) determine the Employees to whom, and
the times at which, options shall be granted and the number of shares subject to
each option; (ii) prescribe, amend and determine the provisions of options
granted under the Plan (which need not be identical) and, with the consent of
the holder thereof, amend or modify any option; (iii) determine the provisions

                                       2


<PAGE>
of options granted under the Plan (which need not be identical) and, with the
consent of the holder thereof, amend or modify any option; (iv) interpret the
Plan and the respective options; and (v) make all other determinations necessary
or advisable for administering the Plan. All determinations and interpretations
by the Committee shall be binding upon all parties. No member of the Committee
or the Board shall be liable for any action or determination made in good faith
in respect of the Plan or any option granted under it.

         (d) The provisions of this Section 4 shall survive any termination of
the Plan.

(5.) Eligibility for Award of Options.

         (a) Options may be granted only to officers and other key employees of
the Company and its Subsidiaries. Any reference in the Plan to "employment by
the Company" shall also be deemed to include employment by any Subsidiary of the
Company. Determination by the Committee or the Board as to who are eligible
employees shall be conclusive.

         (b) A person who is a director of the Company, or any subsidiary, shall
not be considered an officer or employee for the purpose of the Plan solely
because he or she is a director. However, a person who otherwise is an eligible
officer or employee shall not be disqualified by virtue of being a director of
the Company or any Subsidiary.

         (c) More than one option may be granted to any eligible Employee.

(6.) Option Price.

         (a) The purchase price of the Common Stock under each option shall be
determined by the Committee. The purchase price shall be at least 100 percent
(100%) of the fair market value of the Common Stock on the date of grant of the
option. The purchase price under an option granted to an officer or employee who
is a Ten Percent Stockholder shall be at least 110% of the fair market value of
the Common Stock on the date of the grant of the option.

         (b) It is anticipated that the purchase price of the Common Stock under
the option will be 100% of the fair market value, except that with respect to a
Ten Percent Stockholder the purchase price will be 110% of the fair market
value. The fair market value is expected to be the price most recently quoted by
the market makers in the Common Stock. If there is no asked quotation, the fair
market value is expected to be the bid quotation. If there is both a bid and
asked quotation, the fair market value is expected to be the average of the bid
and asked quotations. This paragraph shall not be binding on the Committee. The
Committee in its discretion may issue stock options with a purchase price in
excess of the fair market value and may utilize a different measure of the fair
market value than that set forth here.




                                        3



<PAGE>
(7.) Annual Limitation on Grants To One Officer or Employee.

         No option shall be granted during any calendar year to any individual
under the Plan if the aggregate fair market value (as of the time the option is
granted) of the Common Stock with respect to which incentive stock options are
exercisable for the first time by such individual during any calendar year
(under the Plan and any other plan of the Company, its Parent, if any, and its
Subsidiaries) exceeds $100,000.

(8.) Terms and Exercise of Options.

         (a) Maximum 10 year Termination Date. Each option shall expire no later
than ten years after the date on which it shall have been granted, but the
Committee in its discretion may prescribe a shorter period for any individual
option or options. Any Incentive Stock Option granted to a person who is a Ten
Percent Stockholder shall terminate no later than 5 years after the date on
which the option was granted. The date of termination pursuant to this paragraph
is referred to hereinafter as the "termination date of the option."

         (b) Vesting.

             (i) Options shall be exercisable at such times and in such
                 installments, if any, as the Committee may determine. In the
                 event any option is exercisable in installments, any shares
                 which may be purchased during any year or other period which
                 are not purchased during such year or other period may be
                 purchased at any time or from time to time during any
                 subsequent year or period during the term of the option unless
                 otherwise provided in the Stock Option Agreement.

            (ii) While the Committee may set any vesting schedule which it
                 wishes, it is the expectation of the Board in adopting this
                 Plan that the options vest during a period of up to five years
                 after the date of grant. For example, the Committee may provide
                 that only 25% of the shares granted under the option may be
                 purchased during the first year after the date of grant, an
                 additional 25% of the shares may be purchased commencing two
                 years after the date of grant, an additional 25% of the shares
                 may be purchased at any time three years after the date of
                 grant and 100% of the stock may be purchased only four years
                 after the date of grant.

           (iii) In connection with any proposed sale or conveyance of all or
                 substantially all of the assets of the Company or of any
                 proposed consolidation or merger of the Company or of any
                 proposed Change in Control of the Company, the Board in its
                 discretion may accelerate the vesting schedule of any or all
                 options. In the event the Board does determine to accelerate
                 the vesting schedule, it shall notify each holder of an option
                 whose vesting schedule has been accelerated.



                                        4




<PAGE>
          (c) Means of Exercise of Option. An option shall be exercised by
written notice to the Secretary or Treasurer of the Company at its principal
office. The notice shall specify the number of shares as to which the
option is being exercised and shall be accompanied by payment in full of the
purchase price for such shares. An optionee at his discretion may, in lieu of
cash payment, deliver Common Stock already owned, with a Fair Market Value (on
the date of exercise) equal to the purchase price for the shares being acquired
pursuant to exercise of the option, as payment for the exercise of any option.
In the event an option is being exercised in whole or in part, by any person
other than the optionee, a notice of election shall be accompanied by proof
satisfactory to the Company of the rights of such person to exercise said
option. An optionee shall not, by virtue of granting of an option, be entitled
to any rights of a shareholder in the Company and he shall not be considered a
record holder of shares purchased by him until the date on which he shall
actually be recorded as the holder of such shares upon the stock records of the
Company. The Company shall not be required to issue any fractional shares upon
exercise of any option and shall not be required to pay to the person exercising
the option the cash equivalent of any fractional share interest unless so
determined by the Committee.

         (d) Options Are Non-Transferrable. No stock options may be transferred
by the optionee (except in connection with death or disability as provided in
Section 8 (f) and (g).

         (e) Options Lapse 3 Months After Termination of Employment. In the
event of the termination of an optionee's employment by the Company or its
Subsidiaries at any time for any reason (excluding disability or death), his
options and all rights thereunder shall be exercisable by the optionee at any
time within three (3) months thereafter but only to the extent exercisable by
him on the date of termination of his employment and in no event later than the
termination date of his option.

         (f) Option Exercisable 12 Months After Termination in Event of
Disability. In the event an employee is permanently and totally disabled (within
the meaning of Section 422(c)(6), or any successor section, of the Code), his
option and all rights thereunder shall be exercisable by the optionee at any
time within twelve (12) months of his termination of employment, but in no event
later than the termination date of the option.

         (g) Options Exercisable 12 Months After Date of Death. If an optionee
shall die while in the employ of the Company or any of its Subsidiaries, his
options may be exercised at any time within twelve (12), months after the date
of his death, but only to the extent exercisable by the optionee at his death
and the option may not be exercised later than the termination date of the
option.

         (h) No Right to Continued Employment. Nothing in the Plan or in any
option granted pursuant hereto shall confer on any individual any right to
continue in the employ of the Company or any of its Subsidiaries or prevent or
interfere in any way with the right of the Company or its Subsidiaries to
terminate his employment at any time, with or without cause.


                                        5

<PAGE>


         (i) Options Must Be Evidenced by Writing. Each option granted pursuant
to the Plan shall be evidenced by a written Stock Option Agreement, duly
executed by the Company and the optionee, in such form and containing such
provisions as the Committee or Board may from time to time authorize or approve.

         (j) In the event of an Employee's death or disability (within the
meaning of Section 422(c)(6) or any successor section, of the Code), such
Employee's Designated Beneficiaries, legal representative or executor shall have
the right to exercise such Employee's options to the same extent as such
Employee would have under Section 8(e), (f) or (g), as applicable, as of the
date on which such Employee's employment by the Company or any Subsidiary
terminated.

(9.) Adjustments.

         The Stock Option Agreement shall contain appropriate provisions for the
adjustment of the kind and number of shares subject to each outstanding option
and the purchase price under each option in the event of any changes in the
outstanding Common Stock of the Company by reason of stock dividends, stock
splits, recapitalization, reorganizations, mergers, consolidations, combinations
or exchange of shares, and the like. In the event of any such change or changes
in the outstanding Common Stock, and as often as the same shall occur, the kind
and aggregate number of shares available under the Plan shall be appropriately
adjusted by the Committee or Board, whose determination shall be binding and
conclusive.

(10.) Amendment and Termination.

         (a) Unless the Plan shall have been sooner terminated as provided
herein, no incentive stock option shall be granted hereunder after February 24,
1998. The Board may at any time prior to that date alter, suspend or terminate
the Plan as it may deem advisable, except that it may not without further
shareholder approval (i) increase the maximum number of shares subject to the
Plan (except for changes pursuant to Section 10), (ii) extend the period during
which options may be granted or exercised or (iii) make any other change unless
the Board determines that the change would not materially increase the cost of
the Plan to the Company. Except as otherwise hereinafter provided, no
alteration, suspension or termination of the Plan may, without the consent of
the employee to whom any option shall have theretofore been granted (or the
person or persons entitled to exercise such option under Section 8(f) or (g) of
the Plan), terminate his option or adversely affect his rights thereunder.


         (b) Anything herein to the contrary notwithstanding, in the event that
the Board shall at any time declare it advisable to do so in connection with any


                                       6


<PAGE>


proposed sale or conveyance of all or substantially all of the assets of the
Company or of any proposed consolidation or merger of the Company, the Company
may give written notice to the holder of any option that his option may be
exercised only within thirty (30) days after the date of such notice but not
thereafter, and all rights under said option which shall not have been so
exercised shall terminate at the expiration of such thirty (30) days, provided
that the proposed sale, conveyance, consolidation or merger to which such notice
shall relate shall be consummated within six (6) months after the date of such
notice. In the event such notice shall have been given, any such option may be
exercised either in whole or in part notwithstanding the vesting period required
under the terms of the option for the exercise thereof. If such proposed sale,
conveyance, consolidation or merger shall not be consummated within said time
period, no unexercised rights under any option shall be affected by such notice
except that such option may not be exercised between the date of expiration of
such thirty (30) days and the date of the expiration of such six (6) months.

(11.) Indemnification.

         Any member of the Committee or the Board who is made, or threatened to
be made, a party to any action or proceeding, whether civil or criminal, by
reason of the fact that he is or was a member of the Committee or the Board
insofar as relates to the Plan shall be indemnified by the Company, and the
Company may advance his related expenses, to the full extent permitted by law
and/or the By-Laws of the Company.

(12.) Effective Date of the Plan.

         The Plan shall become effective on, and options may be granted
thereunder after February 24 1988, provided, however, that if the Plan shall not
be approved by the holders of a majority of the outstanding voting stock of the
Company within twelve months of said date, the Plan and all options granted
thereunder shall be and become null and void, and provided, further, that no
options granted by the Committee may be exercised prior to the approval of the
Plan by shareholders.

(13.) Expenses.

         The Company shall pay all fees and expenses incurred in connection with
the establishment and administration of the Plan.


(14.) Government Regulations, Registration and Listing of Stock.

         (a) The Plan, and the grant and exercise of options thereunder, and the
Company's obligation to sell and deliver stock under such options, shall be
subject to all applicable federal and state laws, rules and regulations and to
such approvals by any regulatory or governmental agency as may be required.


                                        7

<PAGE>

         (b) Unless a registration statement under the Securities Act
of 1933 and the applicable rules and regulations thereunder (collectively the
"Act") is then in effect with respect to shares issued upon exercise of any
option (which registration shall not be required), the Company shall require
that the offer and sale of such shares be exempt from the registration
provisions of said Act. In furtherance of such exemption, the Company may
require, as a condition precedent to the exercise of any option, that the person
exercising the option give to the Company a written representation and
undertaking, satisfactory form and substance to the Company, that he is
acquiring the shares for his own resale thereof and otherwise establish to the
Company's satisfaction that the offer or sale of the shares issuable upon
exercise of the option will not constitute or result in any breach or violation
of the Act or any similar state act or statute or any rules or regulations
thereunder. In the event a registration statement under the Act is not then in
effect with respect to the shares of Common Stock issued upon exercise of an
option, the Company shall place upon any stock certificate an appropriate legend
referring to the restrictions or disposition under the Act.

         (c) In the event the class of shares issuable upon the exercise of any
option is listed on any national securities exchange, the Company shall not be
required to issue or deliver any certificate for shares upon the exercise of any
option prior to the listing of the shares so issuable on such national
securities exchange and prior to the registration of the same under the
Securities Exchange Act of 1934 or any similiar act or statute.

</TEXT>
</DOCUMENT>
