ex10-3.htm


    


    EXHIBIT
10.3

     

     

    THIRD AMENDMENT
TO

    SHARE SURRENDER
AGREEMENT

     

    This
Third Amendment to the Share Surrender Agreement is made and entered into as of
February 27, 2009, by and between BlackRock, Inc., a Delaware corporation
("BlackRock"), PNC Bancorp, Inc. ("Bancorp"), a Delaware corporation (as
successor to PNC Asset Management, Inc., a Delaware corporation ("PAM") under an
Assignment and Assumption Agreement entered into as January 14, 2005 (the
"Assignment and Assumption Agreement")), and The PNC Financial Services Group,
Inc., a Pennsylvania corporation ("PNC").  Bancorp is a wholly-owned
subsidiary of PNC.  Capitalized terms used in this Third Amendment and
not defined have the meanings set forth in the Amended Share Surrender Agreement
(as defined below).

     

    RECITALS

     

    BlackRock,
PAM and PNC entered into the Share Surrender Agreement as of October 10, 2002
(the "Share Surrender Agreement"), as amended by the First Amendment to the
Share Surrender Agreement as of February 15, 2006, between BlackRock, Bancorp
and PNC (the "First Amendment") and the Second Amendment to the Share Surrender
Agreement as of June 11, 2007 between BlackRock, Bancorp and PNC (the "Second
Amendment" and, collectively with the First Amendment and the Share Surrender
Agreement, the "Amended Share Surrender Agreement"), under which PAM agreed to
surrender shares of the Common Stock of BlackRock ("BlackRock 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 to retain BlackRock
employees. Bancorp, which now holds the shares of BlackRock Common Stock
formerly held by PAM, has, pursuant to the Assignment and Assumption Agreement,
assumed and agreed to be liable for all responsibilities, duties, liabilities
and obligations of PAM under the Amended Share Surrender Agreement.

     

    BlackRock
has entered into an Exchange Agreement with PNC (the "Exchange Agreement")
pursuant to which, among other things, on the terms and subject to the
conditions set forth therein Bancorp will exchange (the "Exchange") up to
2,940,866 shares of Common Stock for a like number of shares of BlackRock's
series C non-voting convertible participating preferred stock, par value $0.01
per share (the "Series C Preferred Stock");

     

    In
light of the Exchange, BlackRock, Bancorp and PNC wish to amend the provisions
relating to PAM's obligations to make shares available for use to fulfill its
obligations under the Amended Share Surrender Agreement.

     

    Accordingly,
the parties to this Third Amendment agree as follows:

    


    1.           Amendment to Section 1.1.1
(Defined Terms).  The definition of "Series C Preferred Stock"
shall be inserted following the definition for "Plan Period" and prior to


     

    
      
        
        

      

      
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the
definition for "Vesting Event" (which shall be redesignated as clause (r) of
Section 1.1.1) and shall read as follows:

    

    


    "(q)
"Series C Preferred Stock" shall mean series C convertible participating
preferred stock, par value $0.01 per share, of BlackRock and any securities
issued in respect thereof, or in substitution therefor, in connection with any
stock split, dividend or combination, or any reclassification, recapitalization,
merger, consolidation, exchange or other similar reorganization."

    


    3.           Future Share Surrender
Obligations.  (a)  Section 1.2(a) of the Amended Share
Surrender Agreement is amended and restated in its entirety to read as
follows:

     

    "(a)           The
parties hereto agree that upon a Payment Date (as defined in the Plan) PAM
shall, and PNC shall cause PAM to, as soon as is reasonably practicable
(1)  surrender and assign, transfer, convey and deliver to BlackRock,
free and clear of all Encumbrances, all of PAM's right, title and interest to
and in such number of shares (i) if prior to February 27, 2009, of Common
Stock and (ii) if on or after February 27, 2009, of Series C Preferred Stock (in
either case, the "Payment Date Shares"), equal in the aggregate to the lesser of
(A) the product of (I) 4,000,000 (as may be adjusted pursuant to Section 1.4.1)
multiplied by (II) the Applicable Vesting Percentage and (B) the product of (I)
a number of shares of Common Stock and/or Series C Preferred Stock having a
value as of the Payment Date equal to the aggregate value of Awards (as defined
in the Plan) to be paid to Award Holders pursuant to the Plan, as directed by
BlackRock, multiplied by (II) 0.8333; in either case less an aggregate number of
shares of Series C Preferred Stock and/or Common Stock having a value as of the
Payment Date equal to the amount of federal, state and local taxes BlackRock is
required to withhold with respect to the Awards (such shares, collectively, the
"Tax Withholding Shares"); and (2)  surrender and assign, transfer,
convey and deliver to BlackRock, as directed by BlackRock, free and clear of all
Encumbrances, all of PAM's right, title and interest to and in the Tax
Withholding Shares.  The Parties hereby agree that for purposes of
this Section 1.2, the value per share of Series C Preferred Stock shall be equal
to the value per share of Common Stock on such Payment Date."

    


    (b)
Section 1.2(b) of the Amended 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), PAM
delivers a number of shares of Series C Preferred Stock and/or Common Stock
to BlackRock on the Payment Date calculated pursuant to Section
1.2(a)(1)(B), in addition, PAM shall, and PNC shall cause PAM to, continue to
own a number of shares of Series C Preferred Stock (collectively, the "Remainder
Shares") in the aggregate equal to the excess, if any, of (1) 4,000,000 (as may
be adjusted pursuant to Section 1.4.1) over (2) the aggregate number of shares
of Series C Preferred Stock and Common Stock surrendered on 

     

    
      
        
        

      

      
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      the
Payment Date pursuant to Section 1.2(a)(1)(B) (as may be adjusted pursuant to
Section 1.4.1).  PAM shall, and PNC shall cause PAM 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 will be
awards measured by, and satisfied through delivery by BlackRock of, a number of
shares of Common Stock (regardless of whether the Remainder Shares are Series C
Preferred Stock), (2) 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 (3) 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.  Subject to the terms
set forth in the Second Amendment, 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. PAM shall, and PNC shall cause PAM 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


     

    
      
        
        

      

      
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    the
grant of other incentive awards to BlackRock employees, including other awards
using Common Stock other than the Remainder Shares."

    


    (c)           Section
1.3.1 of the Amended Share Surrender Agreement is amended and restated in its
entirety to read as follows:

    


    "Covenants
of PNC and PAM. PAM and PNC agree that any and all shares of Series C Preferred
Stock and Common Stock surrendered and assigned, transferred, conveyed and
delivered by PAM to Award Holders and to BlackRock, as directed by BlackRock,
pursuant to this agreement shall be contributed free and clear of any and all
Encumbrances.  PNC and PAM shall take such steps as may be necessary
to assure that at all times PAM directly owns for its own account sufficient
shares of Common Stock or Series C Preferred Stock as may be required to be
surrendered pursuant to the terms hereof."

    


    3.           Acknowledgement. For
the avoidance of doubt, PNC and PAM agree and acknowledge that the Exchange
shall not constitute satisfaction of such parties' respective obligations under
Section 1.2(a) of the Amended Share Surrender Agreement, as amended
hereby.

    


    4           No Other
Amendments.  Except as expressly amended by this Third
Amendment, the Amended Share Surrender Agreement shall remain in full force and
effect in accordance with its terms.

    


    


    [SIGNATURE
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    IN
WITNESS WHEREOF, the parties have duly executed this Third Amendment as of the
date first above mentioned.

     

    
      


      
        
          	 
      	
                  BLACKROCK,
      INC.

                
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                  By:

                	/s/
      Daniel R. Waltcher
	 
      	 
      	
                  Name:

                	
                  Daniel
      R. Waltcher

                
	 
      	 
      	
                  Title:

                	
                  Managing
      Director and

                
	 
      	 
      	 
      	
                  Deputy
      General Counsel

                


        

      

      


      
        
          	 
      	
                  PNC
      BANCORP, INC.

                
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                  By:

                	/s/
      George P. Long, III
	 
      	 
      	
                  Name:

                	George
      P. Long, III
	 
      	 
      	
                  Title:

                	Assistant
      Secretary
	 
      	 
      	 
      	 
      


        

      

      


      
        
          	 
      	
                  THE
      PNC FINANCIAL SERVICES GROUP, INC.

                
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	
                  By:

                	/s/
      Samuel R. Patterson
	 
      	 
      	
                  Name:

                	Samuel R. Patterson
	 
      	 
      	
                  Title:

                	Controller
	 
      	 
      	 
      	 
      


        

      

      


    

     

    
      
        
        

      

      
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    Exhibit
A:  Illustrative Expense Calculation

    


    Hypothetical
2007 Future Incentive Plan award:

    


    
      	
              ·

            	
              BLK
      undertakes $200 million grant with four-year
  vesting

            


    

    


    
      	
              ·

            	
              Hypothetical
      per share BLK stock
price:  $150

            


    

    


    
      	
              ·

            	
              Total
      shares based on grant and stock
  price:  1,333,333

            


    

    


    


    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	
                                        BLK
      Books

                                         

                                      	 
      
	
                                        BLK
      annual pre-tax GAAP expense/year

                                      	
                                        $50,000,000

                                      
	
                                        PNC's
      hypothetical ownership percentage

                                      	
                                        34%

                                      
	
                                        Amount
      calculated under clause (1)

                                      	
                                        $17,000,000

                                      
	 
      	 
      
	
                                        PNC
      Books

                                         

                                      	 
      
	
                                        Remainder
      shares provided for 2007 grant

                                      	
                                        1,333,333
      shares

                                      
	
                                        Total
      hypothetical BLK shares outstanding on grant date

                                      	
                                         

                                        130,000,000
      shares

                                      
	
                                        %
      of LTIP

                                      	
                                        1.0256%

                                      
	
                                        BLK
      Hypothetical Book Equity at grant date

                                      	
                                        $8,500,000,000

                                      
	
                                        PNC
      total pre-tax GAAP expense over vesting period

                                      	
                                        $87,179,487

                                      
	
                                        Amount
      calculated under clause (2)

                                      	
                                        $21,794,872

                                      
	
                                        Total
      amount counted against $50 million limitation under Section 1.2(b) (i.e.,
      sum of amounts calculated under clauses (1) and (2)):

                                      	
                                        $38,794,871.79

                                      


                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    


     

     

     

     

    
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