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Exhibit 99.3
PNC STOCK OPTION AGREEMENT
This PNC 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
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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 MC's entry into the Merger
Agreements and to induce such entry, PNC has agreed to grant to MC the option
set forth herein to purchase authorized but unissued shares of PNC Common
Stock;
NOW, THEREFORE, in consideration of the premises herein
contained, the parties agree as follows:
1. Definitions.
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Capitalized terms defined in the Merger Agreements and used
herein shall have the same meanings as in the Merger Agreements.
2. Grant of Option.
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Subject to the terms and conditions set forth herein, PNC
hereby grants to MC an option ("Option") to purchase up to 45,500,000 shares of
PNC Common Stock, at a price of $35 per share payable in cash as provided in
Section 4 hereof; provided, however, that in the event PNC issues or agrees to
issue any shares of PNC Common Stock in breach of its obligations under the
Merger Agreements at a price less than $35 per share (as adjusted pursuant to
Section 6 hereof), the exercise price shall be equal to such lesser price.
3. Exercise of Option.
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(a) MC may exercise the Option, in whole or
part, at any time or from time to time if a Purchase
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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 PNC 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 PNC 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) PNC or any PNC Subsidiary, without having
received MC's prior written consent and except
as permitted by the Merger Agreements, shall
have entered into an agreement with any person
(other than MC or any MC Subsidiary) to (x)
merge or consolidate, or enter into any similar
transaction, with PNC or any PNC Subsidiary,
(y) purchase, lease or otherwise acquire all or
substantially all of the assets of PNC or any
PNC 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 PNC or any PNC
Subsidiary; provided, however, that in no event
shall any merger, consolidation, purchase or
similar transaction involving only PNC and one
or more of its Subsidiaries or 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 PNC, any PNC Subsidiary,
the PNC Subsidiaries in a fiduciary capacity,
MC, affiliates of MC or subsidiaries of MC in a
fiduciary
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capacity) shall have acquired beneficial
ownership or the right to acquire beneficial
ownership of 20% or more of the outstanding
shares of PNC 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 PNC, any PNC Subsidiary,
MC or any MC affiliate) (x) shall have made a
bona fide proposal to PNC by public
announcement or written communication that is
or becomes the subject of public disclosure to
acquire PNC or any PNC 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 PNC Common Stock such that upon
consummation of such offer such person would
own or control 20% or more of the outstanding
shares of PNC 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 PNC 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 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 MC wishes to exercise the
Option, it shall send to PNC a written notice (the
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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, MC 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.
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(a) At the closing referred to in Section 3
hereof, MC shall pay to PNC the aggregate purchase price for the shares of PNC
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by a wire transfer to a bank account designated by PNC.
(b) At such closing, simultaneously with the
delivery of cash as provided in subsection (a), PNC shall deliver to MC a
certificate or certificates representing the number of shares of PNC Common
Stock purchased by MC, and MC shall deliver to PNC a letter agreeing that MC
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 PNC 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 subject to certain provisions of an
agreement between the registered holder hereof and
PNC Bank Corp. 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 PNC Bank Corp. A copy of such agreement
will be provided to the holder hereof
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without charge upon receipt by PNC Bank Corp. 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 MC shall have delivered to
PNC a copy of a letter from the staff of the Commission, or an opinion of
counsel, in form and substance satisfactory to PNC, to the effect that such
legend is not required for purposes of the Securities Act.
5. Representations.
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PNC hereby represents, warrants and covenants to MC as
follows:
(a) PNC shall at all times maintain sufficient
authorized but unissued shares of PNC Common Stock so that the Option may be
exercised without authorization of additional shares of PNC 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.
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In the event of any change in PNC 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 PNC 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 PNC
Common Stock subject to the Option shall be adjusted so that, after such
issuance, it equals 19.99% of the number of shares of PNC Common Stock then
issued and outstanding without giving effect to any shares subject or issued
pursuant to the Option. Nothing contained in this Section 6 shall be deemed to
authorize PNC to breach any provision of the Merger Agreements.
7. Registration Rights.
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PNC shall, if requested by MC, as expeditiously as possible
following the occurrence of a Purchase Event and prior to the second
anniversary thereof, file
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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 PNC
Common Stock that have been acquired upon exercise of the Option in accordance
with the intended method of sale or other disposition requested by MC. MC
shall provide all information reasonably requested by PNC for inclusion in any
registration statement to be filed hereunder. PNC 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 PNC 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 PNC 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 PNC. The first registration effected under this Section 7
shall be at PNC's expense except for underwriting commissions and the fees and
disbursements of MC's counsel attributable to the registration of such PNC
Common Stock. A second registration may be requested hereunder at MC's
expense. In no event shall PNC 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 PNC of PNC Common Stock. If requested by
MC, in connection with any such registration, PNC 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 MC or assignee thereof under this
Section 7, PNC agrees to send a copy thereof to MC and to any assignee thereof
known to PNC, 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.
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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
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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 PNC Common Stock provided in Section 2
hereof (as adjusted pursuant to Section 6 hereof), it is the express intention
of PNC to allow the holder to acquire or to require PNC to repurchase such
lesser number of shares as may be permissible, without any amendment or
modification hereof.
9. Miscellaneous.
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(a) Expenses. Except as otherwise provided
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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
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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 MC to enter into this Agreement and
exercise all of its rights hereunder, including its right to acquire PNC 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 liabilities under or by reason of this Option
Agreement, except as expressly provided herein.
(c) Assignment. Neither of the parties hereto
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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 MC may assign in whole or in part its rights
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and obligations hereunder; provided, however, that until the date 30 days
following the date on which the Federal Reserve Board approves an application
by MC under the Bank Holding Company Act to acquire the shares of PNC Common
Stock subject to the Option, MC 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 PNC, (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 MC's behalf, or (iv) any other manner approved by the Federal
Reserve Board.
(d) Notices. All notices or other communications
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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
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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
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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
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be governed by and construed in accordance with the laws of Pennsylvania
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