Exhibit 10.3
EXECUTION COPY
FIRST AMENDMENT TO
SHARE SURRENDER AGREEMENT
This First Amendment to the Share Surrender Agreement is made and
entered into as of February 15, 2006 by and between BlackRock, Inc., a Delaware
corporation ("BlackRock"), PNC Bancorp, Inc., a Delaware corporation (as
successor to PNC Asset Management, Inc., a Delaware corporation ("XXX") under
an Assignment and Assumption Agreement entered into as January 14, 2005 (the
"Assignment and Assumption Agreement")) ("Bancorp"), and The PNC Financial
Services Group, Inc., a Pennsylvania corporation ("PNC"). Bancorp is an
indirect wholly-owned subsidiary of PNC. Capitalized terms used in this First
Amendment and not defined have the meanings set forth in the Share Surrender
Agreement.
RECITALS
BlackRock, XXX and PNC entered into the Share Surrender Agreement as
of October 10, 2002 (the "Share Surrender Agreement") under which XXX agreed to
surrender shares of Common Stock held by it to Award Holders under the
BlackRock, Inc. 2002 Long-Term Retention and Incentive Plan (the "Plan") and to
make available for use in future long-term retention and incentive programs
approved by BlackRock's board of directors to retain BlackRock employees.
Bancorp, which now holds the shares of Common Stock formerly held by XXX, has,
pursuant to the Assignment and Assumption Agreement, assumed and agreed to be
liable for all responsibilities, duties, liabilities and obligations of XXX
under the Share Surrender Agreement.
BlackRock has entered into a Transaction Agreement and Plan of Merger
with Xxxxxxx Xxxxx & Co., Inc. and New Boise, Inc. (the "Transaction
Agreement") pursuant to which, on the terms and subject to the conditions set
forth therein, among other things, Xxxxxxx Xxxxx & Co., Inc. will contribute to
New Boise all of its interest in certain of its controlled affiliates in
consideration for shares of capital stock of New Boise (the "Transaction");
In light of the Transaction, BlackRock, XXX and PNC wish to confirm
PAM's obligations with respect to the Plan and amend the provisions relating to
PAM's obligations to make shares available for use in addition to those used in
connection with the Plan.
Accordingly, the parties to this First Amendment agree as follows:
1. Existing Plan Obligations. XXX shall, and PNC shall cause XXX to,
comply with its obligations to surrender to Award Holders the Payment Date
Shares in accordance with the terms of Section 1.2(a) of the Share Surrender
Agreement.
2. Future Share Surrender Obligations. Section 1.2(b) of the Share
Surrender Agreement is amended and restated in its entirety to read as follows:
"(b) The parties hereto also agree that if, pursuant to
Section 1.2(a)(1)(B), XXX delivers a number of shares of Common Stock
to Award Holders on the Payment Date calculated pursuant to Section
1.2(a)(1)(B), in addition, XXX shall, and PNC shall cause XXX to,
continue to own a number of shares of Common Stock (the "Remainder
Shares") equal to the excess, if any, of (1) 4,000,000 (as may be
adjusted pursuant to Section 1.4.1) over (2) the number of shares of
Common Stock surrendered on the Payment Date pursuant to Section
1.2(a)(1)(B) (as may be adjusted pursuant to Section 1.4.1). XXX
shall, and PNC shall cause XXX to, make the Remainder Shares available
for use in future incentive plans or programs approved by BlackRock's
Board of Directors for the benefit of BlackRock employees; provided
that any such future plans or programs ("Future Incentive Plans") will
have the following characteristics: (1) grants to employees under any
Future Incentive Plan will not be made effective before 2007, (2)
grants will be awards measured by, and satisfied through delivery of,
a number of shares of Common Stock, (3) the vesting of grants will be
dependent on BlackRock's achievement of performance goals to be
approved by the compensation committee of its Board of Directors, and
(4) although the vesting of grants may take place based on achievement
of either annual or multi-year performance goals, the grants will
finally vest and be paid in not less than three years following the
effectiveness of the grant, subject to customary acceleration
provisions relating to a change in control of BlackRock. BlackRock
will not make grants using Remainder Shares under any Future Incentive
Plans to the extent that such grants would result in PNC recognizing
in the aggregate more than $50 million in expense in any one year as a
result of the use of Remainder Shares in Future Incentive Plans. For
the purposes of the prior sentence, the aggregate expense recognized
by PNC in any year as a result of the use of Remainder Shares in
Future Incentive Plans will equal the sum of
(1) (x) the pre-tax expense recognized by BlackRock (under
generally accepted accounting principles as may be applicable
to BlackRock from time to time) in such year as a result of
the grant, whether in that or prior years, to its employees
of awards to be satisfied through the use of the Remainder
Shares multiplied by (y) PNC's ownership percentage in
BlackRock calculated on the basis used to determine PNC's
recognition of BlackRock's income under equity accounting
principles, and
(2) the pre-tax expense directly recognized by PNC (under
generally accepted accounting principles as may be applicable
to PNC from time to time) in such year as a result of its
making Remainder Shares available for use by BlackRock in
respect of grants, whether in that or prior years, under
Future Incentive Programs.
For illustrative purposes only, an example of such
calculation is set forth as Exhibit A.
If BlackRock should at any time make grants in excess of this
limitation, BlackRock will promptly take whatever steps are
appropriate to correct this situation so that PNC is not required to
recognize such expense in excess of the $50 million per year maximum.
XXX shall, and PNC shall cause XXX to, deliver shares in accordance
with the terms of any such Future Incentive Plans that satisfy the
criteria set forth herein. Nothing in this Agreement restricts in any
way the grant of other incentive awards to BlackRock employees,
including other awards using Common Stock other than the Remainder
Shares."
3. Adjustment. Section 1.4.1 of the Share Surrender Agreement is
amended and restated in its entirety to read as follows:
"Adjustment. The number of shares and class of Common Stock
or substitute consideration therefor subject to this Agreement shall
be appropriately adjusted to reflect any stock dividends, stock
splits, reverse stock splits, recapitalizations, reclassifications,
reorganizations, consolidations, mergers, share exchanges or similar
business combinations or any other similar changes to the capital
structure of BlackRock."
4. Sale of BlackRock. If BlackRock is acquired by another company or
enters into any other transaction as a result of which the Remainder Shares are
being converted into the right to receive cash or other property, including the
securities of any issuer other than BlackRock, other than in connection with
the creation of New Boise as contemplated in the Transaction Agreement, then
(1) the Board of Directors of BlackRock shall be permitted (either in the
original terms of any Future Incentive Plan or otherwise) to provide for the
acceleration of the vesting of the entitlement to any Remainder Shares then
subject to outstanding grants under any Future Incentive Plan to a point in
time immediately prior to the closing of such a transaction, and (2) PAM's
obligation under Section 1.2(b) of the Share Surrender Agreement (as amended by
this First Amendment) to retain and make available for use in Future Incentive
Plans any Remainder Shares not then subject to any outstanding grants under any
Future Incentive Plan shall immediately terminate.
5. Change in Control of PNC. Upon a change of control of PNC, as that
term is defined in the Implementation and Stockholder Agreement among XXX,
BlackRock and New Boise, all Remainder Shares not previously delivered to
employees of BlackRock will be transferred to BlackRock or otherwise as
directed by the compensation committee of its Board of Directors for use in
satisfying then pending grants and otherwise as determined by BlackRock's Board
of Directors.
6. Impact of Transaction. The formation of New Boise and conversion of
shares contemplated to occur on the closing as set forth in the Transaction
Agreement shall not require any adjustment under Section 1.4.1 of the
Agreement.
7. Voting Support. To the extent required in order to adopt a Future
Incentive Plan meeting the specifications set forth herein, PNC shall, and
shall cause any of its Affiliates, to vote or act by written consent all of the
shares of New Boise Capital Stock Beneficially Owned (such terms as defined in
the Implementation and Stockholder Agreement, of even date herewith, by and
among PNC, BlackRock and New Boise Inc.) by it in favor of such plan.
8. No Other Amendments. Except as expressly amended by this First
Amendment, the Share Surrender Agreement shall remain in full force and effect
in accordance with its terms.
9. Termination. This First Amendment shall immediately terminate and
be of no further effect, and the Share Surrender Agreement shall continue in
effect as if not amended by this First Amendment, upon any termination of the
Transaction Agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have duly executed this First
Amendment as of the date first above mentioned.
BLACKROCK, INC.
By: /s/ Xxxxxxxx X. Xxxx
-----------------------------------
Name: Xxxxxxxx X. Xxxx
Title: Chairman & Chief Executive Officer
PNC BANCORP, INC.
By: /s/ Xxxxx X. Xxxx
___________________________________
Name: Xxxxx X. Xxxx
___________________________________
Title: Chairman and Chief Executive Officer
___________________________________
THE PNC FINANCIAL SERVICES GROUP, INC.
By: /s/ Xxxxx X. Xxxx
___________________________________
Name: Xxxxx X. Xxxx
___________________________________
Title: Chairman and Chief Executive Officer
___________________________________
