1
EXHIBIT 10.6
FORM
OPTIONEE: _______________________
DATE OF GRANT: __________________
OPTION PRICE: ___________________
COVERED SHARES: _________________
PNC BANK CORP.
1992 LONG-TERM INCENTIVE AWARD PLAN
* * *
NONSTATUTORY STOCK OPTION AGREEMENT
1. Definitions. Terms defined in the 1992 Long-Term Incentive Award
Plan ("Plan") of PNC Bank Corp. ("Corporation") are used in this Agreement as
defined in the Plan unless otherwise defined in this Agreement. In addition,
except where the context otherwise indicates, the following definitions apply:
1.1 "Cause" means:
(a) the willful and continued failure of the Optionee to
substantially perform the Optionee's duties with the Corporation (other than
any such failure resulting from incapacity due to physical or mental illness),
after a written demand for substantial performance is delivered to the Optionee
by the Board or the Chief Executive Officer of the Corporation which
specifically identifies the manner in which the Board or Chief Executive
Officer believes that the Optionee has not substantially performed the
Optionee's duties; or
(b) the willful engaging by the Optionee in illegal conduct
or gross misconduct that is materially and demonstrably injurious to the
Corporation.
For purposes of the preceding clauses (a) and (b), no act or failure to act, on
the part of the Optionee, shall be considered "willful" unless it is done, or
omitted to be done, by the Optionee in bad faith and without reasonable belief
that the Optionee's action or omission was in the best interests of the
Corporation. Any act, or failure to act, based upon the instructions or prior
approval of the Board, the Chief Executive Officer or the Optionee's superior
or based upon the advice of counsel for the Corporation, shall be conclusively
presumed to be done, or omitted to be done, by the Optionee in good faith and
in the best interests of the Corporation. The cessation of employment of the
Optionee shall not be deemed to be for Cause unless and until there shall have
been delivered to the Optionee, as part of the notice of the Optionee's
termination, a copy of a resolution duly adopted by the affirmative vote of not
less than a majority of the entire membership of the Board, at a Board meeting
called and held for the purpose of considering such termination, finding that,
in the good faith opinion of the Board, the Optionee is guilty of the conduct
described in clause (a) or (b) above and specifying the particulars thereof in
detail. Such resolution shall be adopted only after reasonable notice of such
Board meeting is provided to the Optionee and the Optionee is given an
opportunity, together with counsel, to be heard before the Board.
1.2 "Change in Control" means a change of control of the Corporation
of a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A (or in response to any similar item on any
similar schedule or form) promulgated under the Exchange Act, whether or not
the Corporation is then subject to such reporting requirement; provided,
however, that without limitation, a Change in Control shall be deemed to have
occurred if:
1
2
(a) any Person, excluding employee benefit plans of the
Corporation, is or becomes the "beneficial owner" (as defined in Rules 13d-3
and 13d-5 under the Exchange Act or any successor provisions thereto), directly
or indirectly, of securities of the Corporation representing twenty percent
(20%) or more of the combined voting power of the Corporation's then
outstanding securities, provided, however, that such an acquisition of
beneficial ownership representing between twenty percent (20%) and forty
percent (40%), inclusive, of such voting power shall not be considered a Change
in Control if the Board approves such acquisition either prior to or
immediately after its occurrence;
(b) the Corporation consummates a merger, consolidation,
share exchange, division or other reorganization or transaction of the
Corporation (a "Fundamental Transaction") with any other corporation, other
than a Fundamental Transaction that results in the voting securities of the
Corporation outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities
of the surviving entity) at least sixty percent (60%) of the combined voting
power immediately after such Fundamental Transaction of (i) the Corporation's
outstanding securities, (ii) the surviving entity's outstanding securities, or
(iii) in the case of a division, the outstanding securities of each entity
resulting from the division;
(c) the shareholders of the Corporation approve a plan of
complete liquidation or winding-up of the Corporation or an agreement for the
sale or disposition (in one transaction or a series of transactions) of all or
substantially all of the Corporation's assets;
(d) as a result of a proxy contest, individuals who prior
to the conclusion thereof constituted the Board (including for this purpose any
new director whose election or nomination for election by the Corporation's
shareholders in connection with such proxy contest was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who were directors
prior to such proxy contest) cease to constitute at least a majority of the
Board (excluding any Board seat that is vacant or otherwise unoccupied);
(e) during any period of twenty-four consecutive months,
individuals who at the beginning of such period constituted the Board
(including for this purpose any new director whose election or nomination for
election by the Corporation's shareholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who were directors at
the beginning of such period) cease for any reason to constitute at least a
majority of the Board (excluding any Board seat that is vacant or otherwise
unoccupied); or
(f) the Board determines that a Change in Control has
occurred.
Notwithstanding anything to the contrary herein, a divestiture or spin-off of
a subsidiary or division of the Corporation shall not by itself constitute a
"Change in Control."
1.3 "CIC Failure" means the following:
(a) with respect to a CIC Triggering Event described in
Section 1.4(a), the Corporation's shareholders vote against the transaction
approved by the Board or the agreement to consummate the transaction is
terminated; or
(b) with respect to a CIC Triggering Event described in
Section 1.4(b), the proxy contest fails to replace or remove a majority of the
members of the Board.
1.4 "CIC Triggering Event" means the occurrence of either of the
following:
(a) the Board or the Corporation's shareholders approve a
transaction described in Subsection (b) of the definition of Change in Control
contained in Section 1.2 hereof; or
(b) the commencement of a proxy contest in which any Person
seeks to replace or remove a majority of the members of the Board.
1.5 "Coverage Period" means a period commencing on the earlier to
occur of (i) the date of a CIC Triggering Event and (ii) the date of a Change
in Control, and ending on the date that is two years after the date of the
Change in Control,
2
3
provided, however, that in the event that a Coverage Period commences on the
date of a CIC Triggering Event such Coverage Period shall terminate upon the
earlier to occur of (x) the date of a CIC Failure and (y) the date that is two
years after the date of the Change in Control triggered by the CIC Triggering
Event. After the termination of any Coverage Period, another Coverage Period
shall commence upon the earlier to occur of clauses (i) and (ii) in the
preceding sentence.
1.6 "Date of Exercise" means the date on which the Corporation
receives written notice of the exercise in such form as the Committee may from
time to time prescribe, in whole or in part, of the Option pursuant to the
terms of this Agreement.
1.7 "Date of Expiration" means the date on which the Option shall
expire, which shall be the earliest of the following times:
(a) upon retirement of the Optionee from employment with
the Corporation prior to the date that the Option becomes exercisable pursuant
to Section 3.2 hereof;
(b) upon termination of the Optionee's employment with the
Corporation for Cause;
(c) upon termination of the Optionee's employment with the
Corporation for any reason other than (i) Cause, (ii) retirement, (iii) death,
(iv) permanent and total disability or (v) termination during a Coverage Period
by the Corporation without Cause or by the Optionee with Good Reason, unless
the Committee determines otherwise;
(d) one year after termination of the Optionee's employment
with the Corporation by reason of death;
(e) three years after the termination of the Optionee's
employment with the Corporation by reason of (i) retirement on or after the
date that the Option becomes exercisable pursuant to Section 3.2 hereof, (ii)
permanent and total disability, or (iii) termination during a Coverage Period
by the Corporation without Cause or by the Optionee with Good Reason; and
(f) ten years after the Date of Xxxxx.
1.8 "Date of Grant" means the date set forth as the "Date of Grant"
on page 1 of this Agreement.
1.9 "Good Reason" means
(a) the assignment to the Optionee of any duties
inconsistent in any respect with the Optionee's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities immediately prior to either the CIC Triggering Event or the
Change in Control, or any other action by the Corporation which results in a
diminution in any respect in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith that is remedied by the Corporation
promptly after receipt of notice thereof given by the Optionee;
(b) a reduction by the Corporation in the Optionee's annual
base salary as in effect on the Date of Grant, as the same may be increased
from time to time;
(c) the Corporation's requiring the Optionee to be based at
any office or location that is more than fifty (50) miles from the Optionee's
office or location immediately prior to either the CIC Triggering Event or the
Change in Control;
(d) the failure by the Corporation (i) to continue in
effect any bonus, stock option or other cash or equity-based incentive plan in
which the Optionee participates immediately prior to either the CIC Triggering
Event or the Change in Control that is material to the Optionee's total
compensation, unless a substantially equivalent arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to such
plan, or (ii) to continue the Optionee's participation in such plan (or in such
substitute or alternative plan) on a basis at least as favorable, both in terms
of the amount of benefits
3
4
provided and the level of the Optionee's participation relative to other
participants, as existed immediately prior to the CIC Triggering Event or the
Change in Control; or
(e) the failure by the Corporation to continue to provide
the Optionee with benefits substantially similar to those received by the
Optionee under any of the Corporation's pension (including, but not limited to,
tax-qualified plans), life insurance, health, accident, disability or other
welfare plans in which the Optionee was participating, at costs substantially
similar to those paid by the Optionee, immediately prior to the CIC Triggering
Event or the Change in Control.
1.10 "Option" means the Nonstatutory Stock Option granted to the
Optionee in Section 2 of this Agreement pursuant to which the Optionee may
purchase Shares as provided in this Agreement.
1.11 "Option Price" means the dollar amount per Share set forth as
the "Option Price" on page 1 of this Agreement.
1.12 "Optionee" means the person identified as the "Optionee" on
page 1 of this Agreement.
1.13 "Person" has the meaning given in Section 3(a)(9) of the
Exchange Act and also includes any syndicate or group deemed to be a "person"
under Section 13(d)(3) of the Exchange Act.
2. Grant of Option. Pursuant to the Plan and subject to the terms of
this Agreement, the Corporation hereby grants to the Optionee an Option to
purchase from the Corporation that number of Shares specified on page 1 of this
Agreement as the "Covered Shares," exercisable at the Option Price.
3. Terms of the Option.
3.1 Type of Option. The Option is intended to be a Nonstatutory
Stock Option without Rights.
3.2 Option Period. The Option is exercisable, in whole or in part,
at any time and from time to time upon the earliest to occur of (i) the first
anniversary of the Date of Grant, (ii) the date of termination of the
Optionee's employment with the Corporation by reason of death or permanent and
total disability, and (iii) the date of termination of the Optionee's
employment during a Coverage Period either by the Corporation without Cause or
by the Optionee with Good Reason, provided in the case of clause (iii) that
such termination is at least six months after the Date of Grant and, if such
termination is prior to November 22, 1998, that the Corporation receives advice
from its outside auditors that such acceleration of exercisability would not
prevent accounting for a business combination as a pooling of interests if such
accounting treatment is desired by the Corporation. The Option shall remain
exercisable until the Date of Expiration.
3.3 Nontransferability. The Option is not transferable by the
Optionee other than by will or by the laws of descent and distribution, and is
exercisable, during the Optionee's lifetime, only by the Optionee or, in the
event of the Optionee's legal disability, by the Optionee's legal
representative.
4. Capital Adjustments. The number and class of unexercised Covered
Shares and the Option Price shall be subject to such adjustment, if any, as the
Committee in its sole discretion deems appropriate to reflect such events as
stock dividends, stock splits, recapitalizations, mergers, consolidations or
reorganizations.
5. Exercise of Option.
5.1 Notice and Effective Date. The Option may be exercised, in whole
or in part, by delivering to the Corporation written notice of such exercise,
in such form as the Committee may from time to time prescribe, accompanied by
full payment of (a) the Option Price with respect to that portion of the Option
being exercised and (b) any amounts required to be withheld pursuant to
applicable tax laws in connection with such exercise. In addition, the Optionee
may elect to use the cashless exercise procedure provided for pursuant to
Section 5.2 hereof. The effective date of such exercise shall be the Date
4
5
of Exercise. Until the Committee notifies the Optionee to the contrary, the
form attached to this Agreement as Annex A shall be used to exercise the Option
granted hereunder.
5.2 Payment of the Option Price. Upon exercise of the Option, in
whole or in part, the Optionee may pay the aggregate Option Price in cash, by
delivering duly endorsed certificates representing whole Shares having
aggregate Fair Market Value on the Date of Exercise not exceeding that portion
of the Option Price being paid by delivery of such Shares, or through a
combination of cash and Shares; provided, however, that no Shares may be used
to pay any portion of the Option Price that have not been held for at least six
months prior to the Date of Exercise or such other period as may be specified
by the Committee. Notwithstanding the foregoing, the Optionee may elect to
complete his or her option exercise through a brokerage service/margin account
pursuant to the cashless option exercise procedure under Regulation T of the
Board of Governors of the Federal Reserve System and in such manner as may be
permitted by the Committee from time to time, consistent with said Regulation.
5.3 Payment of Taxes. The Optionee may elect to satisfy applicable
tax withholding requirements by payment of cash or, subject to such terms and
conditions as the Committee may from time to time establish to satisfy any or
all federal, state, or local tax liabilities incurred upon such exercise,
through retention by the Corporation of Shares otherwise issuable upon such
exercise or by delivery to the Corporation of previously acquired Shares. Until
the Committee notifies the Optionee to the contrary, the form attached to this
Agreement as Annex B shall be used to make such election.
5.4 Effect. The exercise, in whole or in part, of the Option shall
cause a reduction in the number of unexercised Covered Shares equal to the
number of Shares with respect to which the Option is exercised.
6. Restrictions on Exercise and Upon Shares Issued Upon Exercise.
Notwithstanding any other provision of this Agreement, the Optionee agrees, for
himself (herself) and his (her) successors, that the Option may not be
exercised at any time that the Corporation does not have in effect a
registration statement under the Securities Act of 1933, as amended, relating
to the offer of Shares under the Plan, unless the Corporation agrees to permit
such exercise. The Optionee further agrees, for himself (herself) and his
(her) successors, that, upon the issuance of any Shares pursuant to the
exercise of the Option, he (she) will, upon the request of the Corporation,
agree in writing that he (she) is acquiring such Shares for investment only and
not with a view to resale, and that he (she) will not sell, pledge, or
otherwise dispose of such Shares unless and until (a) the Corporation is
furnished with an opinion of counsel to the effect that registration of such
Shares pursuant to the Securities Act of 1933, as amended, is not required by
that Act or by rules and regulations promulgated thereunder; (b) the staff of
the Securities and Exchange Commission has issued a "no-action" letter with
respect to such disposition; or (c) such registration or notification as is, in
the opinion of counsel for the Corporation, required for the lawful disposition
of such Shares has been filed and has become effective; provided, however, that
the Corporation is not obligated hereby to file any such registration or
notification. The Optionee further agrees that the Corporation may place a
legend embodying such restriction on the certificates evidencing such Shares.
7. Rights as Shareholder. The Optionee shall have no rights as a
Shareholder with respect to any Covered Shares until such time as the Option is
exercised and then only with respect to those Shares issued upon such exercise.
8. Employment. Neither the granting of the Option evidenced by this
Agreement nor any term or provision of this Agreement shall constitute or be
evidence of any understanding, expressed or implied, on the part of the
Corporation or any of its subsidiaries to employ the Optionee for any period.
References in this Agreement to the employment of the Optionee with the
Corporation shall include employment with any subsidiary of the Corporation.
9. Subject to the Plan. The Option evidenced by this Agreement and
the exercise thereof are subject to the terms and conditions of the Plan, which
is incorporated by reference herein and made a part hereof, but the terms of
the Plan shall not be considered an enlargement of any benefits under this
Agreement. In addition, the Option is subject to any rules and regulations
promulgated by the Committee.
5
6
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
signed on its behalf effective as of the Date of Grant.
ATTEST: PNC BANK CORP.
________________________________ By: ___________________________________
Secretary Chairman and
Chief Executive Officer
Accepted and agreed to as of the Date of Xxxxx.
__________________________________
Optionee
6
