PNC Bank 2005 Annual Report Download - page 186

4. Exercise of Reload Option.
4.1 Notice and Effective Date. The Reload Option may be exercised, in whole or in part, by delivering to
PNC written notice of such exercise, in such form as PNC may from time to time prescribe, accompanied
by full payment of the aggregate Reload Option Price with respect to that portion of the Reload Option
being exercised and satisfaction of any amounts required to be withheld pursuant to applicable tax laws in
connection with such exercise.
In addition, notwithstanding Sections 4.2 and 4.3, Optionee may elect to complete his or her Reload 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 Reload Agreement as Annex B shall be used to exercise the Reload Option and the
form attached to the Reload Agreement as Annex C shall be used to make tax payment elections.
In the event that the Reload 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 Reload Option.
4.2 Payment of Reload Option Price. Upon exercise of the Reload Option, in whole or in part, Optionee
may pay the aggregate Reload 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 Reload 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 Reload 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 Reload 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 Va lue of the shares of PNC common stock otherwise issuable upon exercise of the Reload
Option but retained pursuant to Section 4.3(b) exceed the minimum amount of taxes required to be
withheld in connection with the Reload Option exercise.
4.4 Effect. The exercise, in whole or in part, of the Reload Option will cause a reduction in the number of
unexercised Covered Shares as to which the Reload Option is outstanding equal to the number of shares of
PNC common stock with respect to which the Reload Option is exercised.