PNC Bank 2005 Annual Report Download - page 149

In addition, notwithstanding Sections 4.2 and 4.3, Optionee may elect to complete his or her Option
exercise through a brokerage service/margin account pursuant to the broker-assisted 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 PNC from time to time consistent with said Regulation T.
The effective date of such exercise will be the Exercise Date. Until PNC notifies Optionee to the contrary,
the form attached to the Agreement as Annex B shall be used to exercise the Option and the form attached
to the Agreement as Annex C shall be used to make tax payment elections.
In the event that the Option is exercised, pursuant to Section 2.3, by any person or persons other than
Optionee, such notice of exercise must be accompanied by appropriate proof of the derivative right of such
person or persons to exercise the Option.
4.2 Payment of Option Price. Upon exercise of the Option, in whole or in part, Optionee may pay the
aggregate Option Price (a) in cash or (b) if and to the extent then permitted by PNC, using whole shares of
PNC common stock (either by physical delivery to PNC of certificates for the shares or through PNC’ s
share attestation procedure) having an aggregate Fair Market Value on the Exercise Date not exceeding that
portion of the aggregate Option Price being paid using such shares, or through a combination of cash and
shares of PNC common stock; provided, however, that shares of PNC common stock used to pay all or any
portion of the aggregate Option Price may not be subject to any contractual restriction, pledge or other
encumbrance and must be shares that have been owned by Optionee for at least six (6) months prior to the
Exercise Date and, in the case of restricted stock, for which it has been at least six (6) months since the
restrictions lapsed, or, in either case, for such other period as may be specified or permitted by PNC.
4.3 Payment of Taxes. Optionee may elect to satisfy any or all applicable federal, state, or local tax
liabilities incurred in connection with exercise of the Option (a) by payment of cash, (b) if and to the extent
then permitted by PNC and subject to such terms and conditions as PNC may from time to time establish,
through the retention by PNC of sufficient whole shares of PNC common stock otherwise issuable upon
such exercise to satisfy the minimum amount of taxes required to be withheld in connection with such
exercise, or (c) if and to the extent then permitted by PNC and subject to such terms and conditions as PNC
may from time to time establish, using whole shares of PNC common stock (either by physical delivery to
PNC of certificates for the shares or through PNC’ s share attestation procedure) that are not subject to any
contractual restriction, pledge or other encumbrance and that have been owned by Optionee for at least six
(6) months prior to the Exercise Date and, in the case of restricted stock, for which it has been at least six
(6) months since the restrictions lapsed, or, in either case, for such other period as may be specified or
permitted by PNC.
For purposes of this Section 4.3, shares of PNC common stock that are used to satisfy applicable taxes will
be valued at their Fair Market Value on the date the tax withholding obligation arises. In no event will the
Fair Market Value of the shares of PNC common stock otherwise issuable upon exercise of the Option but
retained pursuant to Section 4.3(b) exceed the minimum amount of taxes required to be withheld in
connection with the Option exercise.
4.4 Effect. The exercise, in whole or in part, of the Option will cause a reduction in the number of
unexercised Covered Shares as to which the Option is outstanding equal to the number of shares of PNC
common stock with respect to which the Option is exercised.
5. Restrictions on Exercise and on Shares Issued on Exercise. Notwithstanding any other provision of
the Agreement, the Option may not be exercised at any time that PNC does not have in effect a registration
statement under the Securities Act of 1933 as amended relating to the offer of shares of PNC common
stock under the Plan unless PNC agrees to permit such exercise. Upon the issuance of any shares of PNC
common stock pursuant to exercise of the Option at a time when such a registration statement is not in
effect, Optionee will, upon the request of PNC, agree in writing that Optionee is acquiring such shares for
investment only and not with a view to resale and that Optionee will not sell, pledge, or otherwise dispose
of such shares unless and until (a) PNC 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