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Exhibit 99.2
MC STOCK OPTION AGREEMENT
This MC STOCK OPTION AGREEMENT ("Option Agreement") dated
as of July 10, 1995, between MIDLANTIC CORPORATION ("MC"), a New Jersey
corporation registered as a bank holding company under the Bank Holding Company
Act of 1956, as amended ("Bank Holding Company Act"), and PNC BANK CORP.
("PNC"), a Pennsylvania corporation registered as a bank holding company under
the Bank Holding Company Act.
WITNESSETH
WHEREAS, the Boards of Directors of MC and PNC, together
with the Board of Directors of PNC Bancorp, Inc., have approved an Agreement
and Plan of Reorganization ("Reorganization Agreement") and have adopted a
related Agreement and Plan of Merger dated as of the date hereof (together
referred to herein as the "Merger Agreements"), providing for certain
transactions pursuant to which MC would be merged with and into PNC Bancorp,
Inc., a subsidiary of PNC;
WHEREAS, as a condition to PNC's entry into the Merger
Agreements and to induce such entry, MC has agreed to grant to PNC the option
set forth herein to purchase authorized but unissued shares of MC Common Stock;
NOW, THEREFORE, in consideration of the premises herein
contained, the parties agree as follows:
1. Definitions.
Capitalized terms defined in the Merger Agreements and used
herein shall have the same meanings as in the Merger Agreements.
2. Grant of Option.
Subject to the terms and conditions set forth herein, MC
hereby grants to PNC an option ("Option") to purchase up to 10,425,000 shares
of MC Common Stock, at a price of $48 per share payable in cash as provided in
Section 4 hereof; provided, however, that in the event MC issues or agrees to
issue any shares of MC Common Stock in breach of its obligations under the
Merger Agreements at a price less than $48 per share (as adjusted pursuant to
Section 6 hereof), the exercise price shall be equal to such lesser price.
Notwithstanding anything else in this Agreement to the contrary, the number of
shares of MC Common Stock subject to the Option shall be reduced to such lesser
number, if any, as may from time-to-time be necessary, but only for so long as
may be necessary, to cause PNC
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not to (a) become an interested stockholder for purposes of the New Jersey
Shareholders Protection Act, (b) become an Acquiring Person as such term is
defined in the MC Rights Agreement or (c) become an "Interested Shareholder" or
an "Affiliate" or "Associate" thereof for purposes of Article EIGHTH of the
Restated Certificate of Incorporation of MC.
3. Exercise of Option.
(a) PNC may exercise the Option, in whole or
part, at any time or from time to time if a Purchase Event (as defined below)
shall have occurred and be continuing; provided that to the extent the Option
shall not have been exercised, it shall terminate and be of no further force
and effect upon the earliest to occur of (i) the Effective Date of the Merger
or (ii) termination of the Merger Agreements in accordance with the provisions
thereof prior to the occurrence of a Purchase Event (other than a termination
resulting from a willful breach by MC of any covenant contained therein) or
(iii) six months after termination of the Merger Agreements if such termination
follows the occurrence of a Purchase Event or is due to a willful breach by MC
of any covenant contained therein; and provided further that any such exercise
shall be subject to compliance with applicable provisions of law.
(b) As used herein, a "Purchase Event" shall mean
any of the following events or transactions occurring after the date hereof:
(i) MC or any MC Subsidiary, without having
received PNC's prior written consent, shall
have entered into an agreement with any person
(other than PNC or any PNC Subsidiary) to (x)
merge or consolidate, or enter into any similar
transaction, with MC or any MC Subsidiary, (y)
purchase, lease or otherwise acquire all or
substantially all of the assets of MC or any MC
Subsidiary or (z) purchase or otherwise acquire
(including by way of merger, consolidation,
share exchange or any similar transaction)
securities representing 20% or more of the
voting power of MC or any MC Subsidiary;
provided, however, that in no event shall any
merger, consolidation, purchase or similar
transaction involving only MC and one or more
of its Subsidiaries or
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involving only any two or more of such
Subsidiaries, be deemed to be a Purchase
Event, provided any such transaction is not
entered into in violation of the terms
of the Merger Agreements;
(ii) any person (other than MC, any MC Subsidiary,
the MC Subsidiaries in a fiduciary capacity,
PNC, affiliates of PNC or subsidiaries of PNC
in a fiduciary capacity) shall have acquired
beneficial ownership or the right to acquire
beneficial ownership of 20% or more of the
outstanding shares of MC Common Stock (the term
"beneficial ownership" for purposes of this
Option Agreement having the meaning assigned
thereto in Section 13(d) of the Exchange Act
and the regulations promulgated thereunder); or
(iii) any person (other than MC, any MC Subsidiary,
PNC or any PNC affiliate) (x) shall have made a
bona fide proposal to MC by public announcement
or written communication that is or becomes the
subject of public disclosure to acquire MC or
any MC Subsidiary by merger, consolidation,
purchase of all or substantially all of its
assets or any other similar transaction, (y)
shall have commenced a bona fide tender or
exchange offer to purchase shares of MC Common
Stock such that upon consummation of such offer
such person would own or control 20% or more of
the outstanding shares of MC Common Stock, or
(z) shall have filed an application or notice
with the Federal Reserve Board or any other
federal or state regulatory agency for
clearance or approval to engage in any
transaction described in clause (i) or (ii)
above, and thereafter the holders of MC Common
Stock shall have not approved the Merger
Agreements and the transactions contemplated
thereby at the meeting of such stockholders
held for such purpose or such meeting shall not
have been held or shall have been cancelled
prior to termination of the Merger Agreements.
If more than one of the transactions giving rise to a Purchase Event under this
Section 3(b) is undertaken or
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effected, then all such transactions shall give rise only to one Purchase
Event, which Purchase Event shall be deemed continuing for all purposes
hereunder until all such transactions are abandoned. As used in this Option
Agreement, "person" shall have the meanings specified in Sections 3(a)(9) and
13(d)(3) of the Exchange Act.
(c) In the event PNC wishes to exercise the
Option, it shall send to MC a written notice (the date of which being herein
referred to as "Notice Date") specifying (i) the total number of shares it will
purchase pursuant to such exercise, and (ii) a place and date not earlier than
three business days nor later than 60 business days from the Notice Date for
the closing of such purchase ("Closing Date"); provided that if prior
notification to or approval of any federal or state regulatory agency is
required in connection with such purchase, PNC shall promptly file the required
notice or application for approval and shall expeditiously process the same and
the period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which any required notification period has expired or
been terminated or such approval has been obtained and any requisite waiting
period shall have passed.
4. Payment and Delivery of Certificates.
(a) At the closing referred to in Section 3
hereof, PNC shall pay to MC the aggregate purchase price for the shares of MC
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by a wire transfer to a bank account designated by MC.
(b) At such closing, simultaneously with the
delivery of cash as provided in subsection (a), MC shall deliver to PNC a
certificate or certificates representing the number of shares of MC Common
Stock purchased by PNC, and PNC shall deliver to MC a letter agreeing that PNC
will not offer to sell or otherwise dispose of such shares in violation of
applicable law or the provisions of this Option Agreement.
(c) Certificates for MC Common Stock delivered
at a closing hereunder may be endorsed with a restrictive legend which shall
read substantially as follows:
"The transfer of the shares represented by this certificate is
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subject to certain provisions of an agreement between the registered
holder hereof and Midlantic Corporation and to resale restrictions
arising under the Securities Act of 1933, as amended, a copy of which
agreement is on file at the principal office of Midlantic Corporation.
A copy of such agreement will be provided to the holder hereof without
charge upon receipt by Midlantic Corporation of a written request."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if PNC shall have delivered to
MC a copy of a letter from the staff of the Commission, or an opinion of
counsel, in form and substance satisfactory to MC, to the effect that such
legend is not required for purposes of the Securities Act.
5. Representations.
MC hereby represents, warrants and covenants to PNC as
follows:
(a) MC shall at all times maintain sufficient
authorized but unissued shares of MC Common Stock so that the Option may be
exercised without authorization of additional shares of MC Common Stock.
(b) The shares to be issued upon due exercise, in
whole or in part, of the Option, when paid for as provided herein, will be duly
authorized, validly issued, fully paid and nonassessable.
6. Adjustment Upon Changes in Capitalization.
In the event of any change in MC Common Stock by reason of
stock dividends, split-ups, recapitalizations, combinations, exchanges of
shares or the like, the type and number of shares subject to the Option, and
the purchase price per share, as the case may be, shall be adjusted
appropriately. In the event that any additional shares of MC Common Stock are
issued or otherwise become outstanding after the date of this Option Agreement
(other than pursuant to this Option Agreement), the number of shares of MC
Common Stock subject to the Option shall be adjusted so that, after such
issuance, it equals 19.99% of the number of shares of MC Common Stock then
issued and outstanding
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without giving effect to any shares subject or issued pursuant to the Option.
Nothing contained in this Section 6 shall be deemed to authorize MC to breach
any provision of the Merger Agreements.
7. Registration Rights.
MC shall, if requested by PNC, as expeditiously as possible
following the occurrence of a Purchase Event and prior to the second
anniversary thereof, file a registration statement on a form of general use
under the Securities Act if necessary in order to permit the sale or other
disposition of the shares of MC Common Stock that have been acquired upon
exercise of the Option in accordance with the intended method of sale or other
disposition requested by PNC. PNC shall provide all information reasonably
requested by MC for inclusion in any registration statement to be filed
hereunder. MC will use its best efforts to cause such registration statement
first to become effective and then to remain effective for such period not in
excess of 180 days from the day such registration statement first becomes
effective as may be reasonably necessary to effect such sales or other
dispositions. The obligations of MC hereunder to file a registration statement
and to maintain its effectiveness may be suspended for one or more periods of
time not exceeding 60 days in the aggregate if the Board of Directors of MC
shall have determined that the filing of such registration statement or the
maintenance of its effectiveness would require disclosure of nonpublic
information that would materially and adversely affect MC. The first
registration effected under this Section 7 shall be at MC's expense except for
underwriting commissions and the fees and disbursements of PNC's counsel
attributable to the registration of such MC Common Stock. A second
registration may be requested hereunder at PNC's expense. In no event shall MC
be required to effect more than two registrations hereunder. The filing of any
registration statement hereunder may be delayed for such period of time as may
reasonably be required to facilitate any public distribution by MC of MC Common
Stock. If requested by PNC, in connection with any such registration, MC will
become a party to any underwriting agreement relating to the sale of such
shares, but only to the extent of obligating itself in respect of
representations, warranties, indemnities and other agreements customarily
included in such underwriting agreements. Upon receiving any request from PNC
or assignee thereof under this Section 7, MC agrees to send a copy thereof to
PNC and to any
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assignee thereof known to MC, in each case by promptly mailing the same,
postage prepaid, to the address of record of the persons entitled to receive
such copies.
8. Severability.
If any term, provision, covenant or restriction contained
in this Option Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Option Agreement shall remain in full force and effect, and shall in no
way be affected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Option will not permit the holder to
acquire the full number of shares of MC Common Stock provided in Section 2
hereof (as adjusted pursuant to Section 6 hereof), it is the express intention
of MC to allow the holder to acquire or to require MC to repurchase such lesser
number of shares as may be permissible, without any amendment or modification
hereof.
9. Miscellaneous.
(a) Expenses. Except as otherwise provided
herein, each of the parties hereto shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
(b) Entire Agreement. Except as otherwise
expressly provided herein, this Option Agreement contains the entire agreement
between the parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereto,
written or oral. Notwithstanding anything to the contrary contained in this
Agreement or the Merger Agreements, this Agreement shall be deemed to amend the
Confidentiality Agreement so as to permit PNC to enter into this Agreement and
exercise all of its rights hereunder, including its right to acquire MC Common
Stock upon exercise of the Option. The terms and conditions of this Option
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns. Nothing in this Option Agreement,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors and assigns, any rights,
remedies, obligations or
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liabilities under or by reason of this Option Agreement, except as expressly
provided herein.
(c) Assignment. Neither of the parties hereto
may assign any of its rights or obligations under this Option Agreement or the
Option created hereunder to any other person, without the express written
consent of the other party, except that in the event a Purchase Event shall
have occurred and be continuing PNC may assign in whole or in part its rights
and obligations hereunder; provided, however, that until the date 30 days
following the date on which the Federal Reserve Board approves an application
by PNC under the Bank Holding Company Act to acquire the shares of MC Common
Stock subject to the Option, PNC may not assign its rights under the Option
except in (i) a widely dispersed public distribution, (ii) a private placement
in which no one party acquires the right to purchase in excess of 2% of the
voting shares of MC, (iii) an assignment to a single party (e.g., a broker or
investment banker) for the purpose of conducting a widely dispersed public
distribution on PNC's behalf, or (iv) any other manner approved by the Federal
Reserve Board.
(d) Notices. All notices or other communications
which are required or permitted hereunder shall be in writing and sufficient if
delivered personally or sent by overnight express or by registered or certified
mail, postage prepaid, addressed as provided in the Reorganization Agreement.
A party may change its address for notice purposes by written notice to the
other party hereto.
(e) Counterparts. This Option Agreement may be
executed in any number of counterparts, and each such counterpart shall be
deemed to be an original instrument, but all such counterparts together shall
constitute but one agreement.
(f) Specific Performance. The parties agree that
damages would be an inadequate remedy for a breach of the provisions of this
Option Agreement by either party hereto and that this Option Agreement may be
enforced by either party hereto through injunctive or other equitable relief.
(g) Governing Law. This Option Agreement shall
be governed by and construed in accordance with the laws of New Jersey
applicable to agreements made and entirely to be performed within such state
and such federal laws as may be applicable.
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IN WITNESS WHEREOF, each of the parties hereto has executed
this Option Agreement as of the day and year first written above.
PNC BANK CORP.
By /s/ THOMAS H. O'BRIEN
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Thomas H. O'Brien
Chairman and Chief
Executive Officer
MIDLANTIC CORPORATION
By /s/ GARRY J. SCHEURING
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Garry J. Scheuring
Chairman, President and
Chief Executive Officer