FORMS OF EMPLOYEE STOCK OPTION, RESTRICTED STOCK, RESTRICTED DEFERRAL, AND INCENTIVE SHARE AGREEMENTS FORM OF STANDARD EMPLOYEE STOCK OPTION AGREEMENT THE PNC FINANCIAL SERVICES GROUP, INC. NONSTATUTORY STOCK OPTION AGREEMENT
Exhibit 10.30
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FORMS OF EMPLOYEE STOCK OPTION, RESTRICTED STOCK,
RESTRICTED DEFERRAL, AND INCENTIVE SHARE AGREEMENTS
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FORM OF STANDARD EMPLOYEE STOCK OPTION AGREEMENT
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THE PNC FINANCIAL SERVICES GROUP, INC.
1997 LONG-TERM INCENTIVE AWARD PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
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OPTIONEE: |
Β Β | <Name> |
GRANT DATE: |
Β Β | Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β , 200Β Β |
OPTION PRICE: |
Β Β | $ Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β per share |
COVEREDΒ SHARES: |
Β Β | Β«SharesΒ» |
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Terms defined in The PNC Financial Services Group, Inc. 1997 Long-Term Incentive Award Plan as amended from time to time (βPlanβ) are used in this Agreement (βAgreementβ) as defined in the Plan unless otherwise defined in the Agreement or an Annex thereto. In the Agreement, βPNCβ means The PNC Financial Services Group, Inc. and βCorporationβ means PNC and its Subsidiaries. For certain definitions, see Annex A attached hereto and incorporated herein by reference. Headings used in the Agreement and in the Annexes hereto are for convenience only and are not part of the Agreement and Annexes.
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1. Grant of Option. Pursuant to the Plan and subject to the terms of the Agreement, PNC hereby grants to Optionee an Option to purchase from PNC that number of shares of PNC common stock specified above as the βCovered Shares,β exercisable at the Option Price.
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2. Terms of the Option.
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2.1 Type of Option. The Option is intended to be a Nonstatutory Stock Option without Rights.
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2.2 Option Period. The Option is exercisable in whole or in part as to any Covered Shares as to which it is outstanding and has become exercisable (βvestedβ) at any time and from time to time through the Expiration Date.
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To the extent that the Option or relevant portion thereof is outstanding, the Option will vest as to Covered Shares as set forth in this Section 2.2.
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(a) Unless the Option has become fully vested pursuant to Section 2.2(b), 2.2(c), 2.2(d) or 2.2(e), the Option will become exercisable (βvestβ):
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(i) as to one-third (1/3rd) of the Covered Shares (rounded down to the nearest whole Share), commencing on the first (1st) anniversary date of the Grant Date provided that Optionee is still an employee of the Corporation on such vesting date or is a Retiree whose Retirement date occurred on or after the six (6) month anniversary date of the Grant Date;
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(ii) as to one-half (1/2) of the remaining Covered Shares (rounded down to the nearest whole Share), commencing on the second (2nd) anniversary date of the Grant Date provided that Optionee is still an employee of the Corporation on such vesting date or is a Retiree whose Retirement date occurred on or after the first (1st) anniversary date of the Grant Date; and
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(iii) as to the remaining Covered Shares, commencing on the third (3rd) anniversary date of the Grant Date provided that Optionee is still an employee of the Corporation on such vesting date or is a Retiree whose Retirement date occurred on or after the first (1st) anniversary date of the Grant Date.
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(b) If Optioneeβs employment is terminated by the Corporation by reason of Total and Permanent Disability and not for Cause, the Option will vest as to all outstanding Covered Shares as to which it has not otherwise vested commencing on Optioneeβs Termination Date.
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(c) If Optioneeβs employment with the Corporation is terminated by reason of Optioneeβs death, the Option will immediately vest as to all outstanding Covered Shares as to which it has not otherwise vested, and the Option may be exercised by Optioneeβs properly designated beneficiary, by the person or persons entitled to do so under Optioneeβs will, or by the person or persons entitled to do so under the applicable laws of descent and distribution.
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(d) If Optioneeβs employment with the Corporation is terminated during a Coverage Period by the Corporation without Cause or by Optionee with Good Reason, the Option will vest as to all outstanding Covered Shares as to which it has not otherwise vested commencing on Optioneeβs Termination Date.
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(e) Notwithstanding any other provision of this Section 2.2, to the extent that the Option is outstanding but not yet fully vested at the time a Change in Control occurs, the Option will vest as to all then outstanding Covered Shares as to which it has not otherwise vested, effective as of the day immediately prior to the occurrence of the Change in Control, provided that, at the time the Change in Control occurs, Optionee is either (i) an employee of the Corporation or (ii) a former employee of the Corporation whose unvested Option, or portion thereof, is then outstanding and continues to qualify for vesting pursuant to the terms of Section 2.2(a)(i), (ii) and/or (iii).
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If Optionee is employed by a Subsidiary that ceases to be a Subsidiary of PNC and Optionee does not continue to be employed by PNC or a Subsidiary, then for purposes of the Agreement, Optioneeβs employment with the Corporation terminates effective at the time this occurs.
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2.3 Nontransferability; Designation of Beneficiary. The Option is not transferable or assignable by Optionee other than by transfer to a properly designated beneficiary in the event of death, or by will or the laws of descent and distribution.
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During Optioneeβs lifetime, the Option may be exercised only by Optionee or, in the event of Optioneeβs legal incapacity, by his or her legal representative.
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During Optioneeβs lifetime, Optionee may file with PNC, at such address and in such manner as PNC may from time to time direct, on a form to be provided by PNC on request, a designation of a beneficiary or beneficiaries (a βproperly designated beneficiaryβ) to hold and exercise Optioneeβs stock options, to the extent outstanding and exercisable, in accordance with their respective stock option agreements and the Plan in the event of Optioneeβs death. In the absence of a properly designated beneficiary, the Option will be held and may be exercised by the person or persons entitled to do so under Optioneeβs will or under the applicable laws of descent and distribution.
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3. Capital Adjustments. The number and class of Covered Shares as to which the Option is outstanding and has not yet been exercised and the Option Price will be subject to such adjustment, if any, as the Committee in its sole discretion deems appropriate to reflect corporate transactions (including, without limitation, stock dividends, stock splits, spin-offs, split-offs, recapitalizations, mergers, consolidations or reorganizations of or by PNC (each, a βCorporate Transactionβ)), including without limitation cancellation of the Option immediately prior to the effective time of the Corporate Transaction and payment, in cash, in consideration therefor, of an amount equal to the product of (a) the excess, if any, of the per share value of the consideration payable to a PNC common shareholder in connection with such Corporate Transaction over the Option Price and (b) the total number of Covered Shares subject to the Option that were outstanding and unexercised immediately prior to the effective time of the Corporate Transaction.
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All determinations hereunder will be made by the Committee in its sole discretion and will be final, binding and conclusive for all purposes on all parties, including without limitation the holder of the Option.
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No fractional shares will be issued on exercise of the Option. PNC will determine the manner in which any fractional shares will be treated.
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4. Exercise of Option.
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4.1 Notice and Effective Date. The 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 Option Price with respect to that portion of the Option being exercised and satisfaction of any amounts required to be withheld pursuant to applicable tax laws in connection with such exercise.
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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.
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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.
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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.
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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, (b) using whole shares of PNC common stock (either by physical delivery to PNC of certificates for the shares or through PNCβs 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 (c) 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.
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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) 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) 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 PNCβs 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.
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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.
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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.
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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 regulations promulgated thereunder, (b) the staff of the SEC 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 PNC, required for the lawful disposition of such shares has been filed and has become effective; provided, however, that PNC is not obligated hereby to file any such registration or notification. PNC may place a legend embodying such restrictions on the certificate(s) evidencing such shares.
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6. Rights as Shareholder. Optionee will have no rights as a shareholder with respect to any Covered Shares until the Exercise Date and then only with respect to those shares of PNC common stock issued upon such exercise of the Option and not retained as provided in Section 4.3.
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7. Employment. Neither the granting of the Option evidenced by the Agreement nor any term or provision of the Agreement will constitute or be evidence of any understanding, expressed or implied, on the part of PNC or any Subsidiary to employ Optionee for any period.
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8. Subject to the Plan. The Option evidenced by the 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 will not be considered an enlargement of any benefits under the Agreement. In addition, the Option is subject to any rules and regulations promulgated by or under the authority of the Committee.
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9. Optionee Covenants.
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9.1 General. Optionee and PNC acknowledge and agree that Optionee has received adequate consideration with respect to enforcement of the provisions of Sections 9 and 10 hereof, that such provisions are reasonable and properly required for the adequate protection of the business of the Corporation, and that enforcement of such provisions will not prevent Optionee from earning a living.
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9.2 Non-Solicitation; No-Hire. Optionee agrees to comply with the provisions of subsections (a) and (b) of this Section 9.2 while employed by the Corporation and for a period of twelve (12) months after Optioneeβs Termination Date regardless of the reason for such termination of employment.
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(a) Non-Solicitation. Optionee shall not, directly or indirectly, either for Optioneeβs own benefit or purpose or for the benefit or purpose of any Person other than PNC or any Subsidiary, solicit, call on, do business with, or actively interfere with PNCβs or any Subsidiaryβs relationship with, or attempt to divert or entice away, any Person that Optionee should reasonably know (i) is a customer of PNC or any Subsidiary for which PNC or any Subsidiary provides any services as of the Termination Date, or (ii) was a customer of PNC or any Subsidiary for which PNC or any Subsidiary provided any services at any time during the twelve (12) months preceding the Termination Date, or (iii) was, as of the Termination Date, considering retention of PNC or any Subsidiary to provide any services.
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(b) No-Hire. Optionee shall not, directly or indirectly, either for Optioneeβs own benefit or purpose or for the benefit or purpose of any Person other than PNC or any Subsidiary, employ or offer to employ, call on,
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or actively interfere with PNCβs or any Subsidiaryβs relationship with, or attempt to divert or entice away, any employee of the Corporation, nor shall Optionee assist any other Person in such activities.
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Notwithstanding the above, if Optioneeβs employment with the Corporation is terminated by the Corporation without Cause or by Optionee with Good Reason and such Termination Date occurs during a Coverage Period (either as Coverage Period is defined in Section A.10 of Annex A or, if Optionee was a party to a CIC Severance Agreement that was in effect at the time of such termination of employment, as Coverage Period is defined in such CIC Severance Agreement, if longer), then commencing immediately after such Termination Date, the provisions of subsections (a) and (b) of this Section 9.2 shall no longer apply and shall be replaced with the following subsection (c):
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(c) No-Hire. Optionee agrees that Optionee shall not, for a period of twelve (12) months after the Termination Date, employ or offer to employ, solicit, actively interfere with PNCβs or any PNC affiliateβs relationship with, or attempt to divert or entice away, any officer of PNC or any PNC affiliate.
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9.3 Confidentiality. During Optioneeβs employment with the Corporation, and thereafter regardless of the reason for termination of such employment, Optionee will not disclose or use in any way any confidential business or technical information or trade secret acquired in the course of such employment, all of which is the exclusive and valuable property of the Corporation whether or not conceived of or prepared by Optionee, other than (a) information generally known in the Corporationβs industry or acquired from public sources, (b) as required in the course of employment by the Corporation, (c) as required by any court, supervisory authority, administrative agency or applicable law, or (d) with the prior written consent of PNC.
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9.4 Ownership of Inventions. Optionee shall promptly and fully disclose to PNC any and all inventions, discoveries, improvements, ideas or other works of inventorship or authorship, whether or not patentable, that have been or will be conceived and/or reduced to practice by Optionee during the term of Optioneeβs employment with the Corporation, whether alone or with others, and that are (a) related directly or indirectly to the business or activities of PNC or any Subsidiary or (b) developed with the use of any time, material, facilities or other resources of PNC or any Subsidiary (βDevelopmentsβ). Optionee agrees to assign and hereby does assign to PNC or its designee all of Optioneeβs right, title and interest, including copyrights and patent rights, in and to all Developments. Optionee shall perform all actions and execute all instruments that PNC or any Subsidiary shall deem necessary to protect or record PNCβs or its designeeβs interests in the Developments. The obligations of this Section 9.4 shall be performed by Optionee without further compensation and shall continue beyond the Termination Date.
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10. Enforcement Provisions. Optionee understands and agrees to the following provisions regarding enforcement of the Agreement.
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10.1 Governing Law and Jurisdiction. The Agreement is governed by and construed under the laws of the Commonwealth of Pennsylvania, without regard to conflict of laws rules. Any dispute or claim arising out of or relating to the Agreement or claim of breach hereof shall be brought exclusively in the federal court for the Western District of Pennsylvania or in the Court of Common Pleas of Allegheny County, Pennsylvania. By execution of the Agreement, Optionee and PNC hereby consent to the exclusive jurisdiction of such courts, and waive any right to challenge jurisdiction or venue in such courts with regard to any suit, action, or proceeding under or in connection with the Agreement.
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10.2 Equitable Remedies. A breach of the provisions of any of Sections 9.2, 9.3 or 9.4 will cause the Corporation irreparable harm, and the Corporation will therefore be entitled to issuance of immediate, as well as permanent, injunctive relief restraining Optionee, and each and every person and entity acting in concert or participating with Optionee, from initiation and/or continuation of such breach.
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10.3 Tolling Period. If it becomes necessary or desirable for the Corporation to seek compliance with the provisions of Section 9.2 by legal proceedings, the period during which Optionee shall comply with said provisions shall extend for a period of twelve (12) months from the date of the legal order requiring such compliance.
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10.4 No Waiver. Failure of PNC to demand strict compliance with any of the terms, covenants or conditions of the Agreement shall not be deemed a waiver of such term, covenant or condition, nor shall any waiver or relinquishment of any such term, covenant or condition on any occasion or on multiple occasions be deemed a waiver or relinquishment of such term, covenant or condition.
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10.5 Severability. The restrictions and obligations imposed by Sections 9.2, 9.3 and 9.4 are separate and severable, and it is the intent of Optionee and PNC that if any restriction or obligation imposed by any of these provisions is deemed by a court of competent jurisdiction to be void for any reason whatsoever, the remaining provisions, restrictions and obligations shall remain valid and binding upon Optionee.
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10.6 Reform. In the event any of Sections 9.2, 9.3 and 9.4 are determined by a court of competent jurisdiction to be unenforceable because unreasonable either as to length of time or area to which said restriction applies, it is the intent of Optionee and PNC that said court reduce and reform the provisions thereof so as to apply the greatest limitations considered enforceable by the court.
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10.7 Waiver of Jury Trial. Each of Optionee and PNC hereby waives any right to trial by jury with regard to any suit, action or proceeding under or in connection with any of Sections 9.2, 9.3 and 9.4.
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10.8 Applicable Law. Notwithstanding anything in the Agreement, PNC will not be required to comply with any term, covenant or condition of the Agreement if and to the extent prohibited by law, including but not limited to federal banking and securities regulations, or as otherwise directed by one or more regulatory agencies having jurisdiction over PNC or any of its subsidiaries. Further, to the extent, if any, applicable to Optionee, Optionee agrees to reimburse PNC for any amounts Optionee may be required to reimburse the Corporation pursuant to Section 304 of the Xxxxxxxx-Xxxxx Act of 2002, and agrees that PNC need not comply with any term, covenant or condition of the Agreement to the extent that doing so would require that Optionee reimburse PNC or its subsidiaries for such amounts pursuant to Section 304 of the Xxxxxxxx-Xxxxx Act of 2002.
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11. Amendment of Pre-2004 Options and Reloads. For purposes of all PNC stock options held by Optionee that were granted prior to January 1, 2004 and outstanding on February 18, 2004 (or, in the case of reload stock options, that were outstanding on February 18, 2004 or will be granted after February 18, 2004 in connection with the exercise of original stock options granted prior to January 1, 2004), the terms of each such option are amended to include, or shall include, as the case may be, the following provisions:
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(a) Notwithstanding any other provision of such option relating to vesting, to the extent that the such option is outstanding but not yet fully vested at the time a Change in Control occurs, the option will vest as to all then outstanding Covered Shares as to which it has not otherwise vested, effective as of the day immediately prior to the occurrence of the Change in Control, provided that, at the time the Change in Control occurs, the optionee either (i) is an employee of the Corporation or (ii) is a former employee of the Corporation whose unvested option, or portion thereof, is then outstanding and continues to qualify for vesting under the terms of the relevant stock option agreement as amended;
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(b) If there is a Change in Control, then notwithstanding any other provisions of such option relating to the date of expiration or expiration date of the option, to the extent that such option is outstanding and vested or vests at the time the Change in Control occurs, such option will not expire at the earliest before the close of business on the ninetieth (90th) day after the occurrence of the Change in Control (or the tenth (10th) anniversary of the Grant Date if earlier), provided that, either (i) the optionee is an employee of the Corporation at the time the Change in Control occurs and the optioneeβs employment with the Corporation is not terminated for Cause or (ii) the optionee is a former employee of the Corporation whose option, or portion thereof, is outstanding at the time the Change in Control occurs because it qualified and continues to qualify pursuant to the terms of the relevant stock option agreement as amended for an exception to the general rule that stock options expire at the time the optionee ceases to be an employee of the Corporation;
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(c) If, under the relevant stock option agreement as amended, more than one exception to the general rule that stock options expire on termination of the optioneeβs employment with the Corporation is applicable to such option or a portion thereof, then the option, or such portion of the option, will expire in accordance with the provision or provisions of said agreement that specify the latest expiration date;
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(d) If the terms of the relevant stock option agreement as amended provide for the early expiration of such stock option in certain circumstances where the optionee has engaged in competitive conduct or activity or in other conduct or activity that is inimical, contrary, harmful or detrimental to the Corporationβs interests (a βdetrimental conductβ provision), no determination that the optionee has engaged in such detrimental conduct may be made on or after the occurrence of a Change in Control; and
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(e) If the termination of the optioneeβs employment with the Corporation meets the definition of Retirement, then with respect to any portion of the option that is outstanding and vested on optioneeβs retirement date or that qualifies for post-employment vesting under the terms of the relevant stock option agreement and vests thereafter, such option will qualify for an exception to the general rule that options expire at the time the optionee ceases to be an employee and will expire on the tenth (10th) anniversary date of the Grant Date, subject to the operation of any detrimental conduct provision that may be applicable.
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The terms of PNC employee stock options granted after January 1, 2004 (including reload options granted after February 18, 2004) shall also include the capital adjustment provisions set forth in Section 3, unless and until the Committee determines otherwise.
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12. Effective Date. If Optionee does not accept the grant of the Option by executing and delivering a copy of the Agreement to PNC, without altering or changing the terms of the Agreement in any way, within sixty (60) days of receipt by Optionee of a copy of the Agreement, PNC may, in its sole discretion, withdraw its offer and cancel the Option and the Agreement at any time prior to Optioneeβs delivery to PNC of a copy of the Agreement executed by Optionee.
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Otherwise, upon execution and delivery of the Agreement by both PNC and Optionee and, in the event that Optionee is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to PNC securities, the filing with and acceptance by the SEC of a Form 4 reporting the Grant, the Option and the Agreement are effective as of the Grant Date.
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IN WITNESS WHEREOF, PNC has caused the Agreement to be signed on its behalf effective as of the Grant Date.
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THE PNC FINANCIAL SERVICES GROUP, INC. | ||
By: | Β | Β |
Β | Β | Chairman and Chief Executive Officer |
ATTEST: | ||
By: | Β | Β |
Β | Β | Corporate Secretary |
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Accepted and agreed to as of the Grant Date.
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Β Β |
Optionee |
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Annex A - Certain Definitions
Annex B - Notice of Exercise
Annex C - Tax Payment Election Form
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ANNEX A
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THE PNC FINANCIAL SERVICES GROUP, INC.
1997 LONG-TERM INCENTIVE AWARD PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
CERTAIN DEFINITIONS
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Except where the context otherwise indicates, the following definitions apply to the Nonstatutory Stock Option Agreement (βAgreementβ) to which this Annex A is attached.
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A.1 βBoardβ means the Board of Directors of PNC.
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A.2 βCause.β
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(a) βCauseβ during a Coverage Period. If the termination of Optioneeβs employment with the Corporation occurs during a Coverage Period, then, for purposes of the Agreement, βCauseβ means:
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(i) the willful and continued failure of Optionee to substantially perform Optioneeβs 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 Optionee by the Board or the CEO that specifically identifies the manner in which the Board or the CEO believes that Optionee has not substantially performed Optioneeβs duties; or
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(ii) the willful engaging by Optionee in illegal conduct or gross misconduct that is materially and demonstrably injurious to PNC or any Subsidiary.
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For purposes of the preceding clauses (i) and (ii), no act or failure to act, on the part of Optionee, shall be considered willful unless it is done, or omitted to be done, by Optionee in bad faith and without reasonable belief that Optioneeβs 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 CEO or Optioneeβs superior or based upon the advice of counsel for the Corporation, shall be conclusively presumed to be done, or omitted to be done, by Optionee in good faith and in the best interests of the Corporation.
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The cessation of employment of Optionee will be deemed to be a termination of Optioneeβs employment with the Corporation for Cause for purposes of the Agreement only if and when there shall have been delivered to Optionee, as part of the notice of Optioneeβs 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 on the basis of clear and convincing evidence that, in the good faith opinion of the Board, Optionee is guilty of conduct described in clause (i) or (ii) above and, in either case, specifying the particulars thereof in detail. Such resolution shall be adopted only after (1) reasonable notice of such Board meeting is provided to Optionee, together with written notice that PNC believes that Optionee is guilty of conduct described in clause (i) or (ii) above and, in either case, specifying the particulars thereof in detail, and (2) Optionee is given an opportunity, together with counsel, to be heard before the Board.
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(b) βCauseβ other than during a Coverage Period. If the termination of Optioneeβs employment with the Corporation occurs other than during a Coverage Period, then, for purposes of the Agreement, βCauseβ means:
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(i) the willful and continued failure of Optionee to substantially perform Optioneeβs 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 Optionee by PNC that
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specifically identifies the manner in which it is believed that Optionee has not substantially performed Optioneeβs duties;
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(ii) a material breach by Optionee of (1) any code of conduct of PNC or a Subsidiary or (2) other written policy of PNC or a Subsidiary, in either case required by law or established to maintain compliance with applicable law;
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(iii) any act of fraud, misappropriation, material dishonesty, or embezzlement by Optionee against PNC or a Subsidiary or any client or customer of PNC or a Subsidiary;
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(iv) any conviction (including a plea of guilty or of nolo contendere) of Optionee for, or entry by Optionee into a pre-trial disposition with respect to, the commission of a felony; or
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(v) entry of any order against Optionee, by any governmental body having regulatory authority with respect to the business of PNC or any Subsidiary, that relates to or arises out of Optioneeβs employment or other service relationship with the Corporation.
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The cessation of employment of Optionee will be deemed to have been a termination of Optioneeβs employment with the Corporation for Cause for purposes of the Agreement only if and when the CEO or his or her designee (or, if Optionee is the CEO, the Board) determines that Optionee is guilty of conduct described in clause (i), (ii) or (iii) above or that an event described in clause (iv) or (v) above has occurred with respect to Optionee and, if so, determines that the termination of Optioneeβs employment with the Corporation will be deemed to have been for Cause.
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A.3 βCEOβ means the chief executive officer of PNC.
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A.4 βChange in Controlβ means a change of control of PNC 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 PNC is then subject to such reporting requirement; provided, however, that without limitation, a Change in Control shall be deemed to have occurred if:
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(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 PNC representing twenty percent (20%) or more of the combined voting power of PNCβs 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;
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(b) PNC consummates a merger, consolidation, share exchange, division or other reorganization or transaction of PNC (a βFundamental Transactionβ) with any other corporation, other than a Fundamental Transaction that results in the voting securities of PNC 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) PNCβs outstanding securities, (ii) the surviving entityβs outstanding securities, or (iii) in the case of a division, the outstanding securities of each entity resulting from the division;
Β
(c) the shareholders of PNC approve a plan of complete liquidation or winding-up of PNC or an agreement for the sale or disposition (in one transaction or a series of transactions) of all or substantially all of PNCβs assets;
Β
-10-
(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 PNCβs shareholders in connection with such proxy contest was approved by a vote of at least two-thirds (2/3rds) 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);
Β
(e) during any period of twenty-four (24) 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 PNCβs shareholders was approved by a vote of at least two-thirds (2/3rds) 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
Β
(f) the Board determines that a Change in Control has occurred.
Β
Notwithstanding anything to the contrary herein, a divestiture or spin-off of a subsidiary or division of PNC or any of its Subsidiaries shall not by itself constitute a Change in Control.
Β
A.5 βCIC Failureβ means the following:
Β
(a) with respect to a CIC Triggering Event described in Section A.7(a), PNCβs shareholders vote against the transaction approved by the Board or the agreement to consummate the transaction is terminated; or
Β
(b) with respect to a CIC Triggering Event described in Section A.7(b), the proxy contest fails to replace or remove a majority of the members of the Board.
Β
A.6 βCIC Severance Agreementβ means the written agreement, if any, between Optionee and PNC providing, among other things, for certain change in control severance benefits.
Β
A.7 βCIC Triggering Eventβ means the occurrence of either of the following:
Β
(a) the Board or PNCβs shareholders approve a transaction described in Subsection (b) of the definition of Change in Control contained in Section A.4; or
Β
(b) the commencement of a proxy contest in which any Person seeks to replace or remove a majority of the members of the Board.
Β
A.8 βCompetitive Activityβ means, for purposes of the Agreement and for purposes of determining whether Optionee will be deemed to have violated the detrimental conduct clause of Prior Options, any participation in, employment by, ownership of any equity interest exceeding one percent (1%) in, or promotion or organization of, any Person other than PNC or any Subsidiary (1) engaged in business activities similar to some or all of the business activities of PNC or any Subsidiary as of Optioneeβs Termination Date or (2) engaged in business activities that Optionee knows PNC or any Subsidiary intends to enter within the first twelve (12) months after Optioneeβs Termination Date, in either case whether Optionee is acting as agent, consultant, independent contractor, employee, officer, director, investor, partner, shareholder, proprietor or in any other individual or representative capacity therein.
Β
A.9 βCorporationβ means PNC and its Subsidiaries.
Β
A.10 βCoverage Periodβ means a period (a) 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 (b) ending on the date that is two (2) years after the date of the Change in Control; provided, however, that in the event that a Coverage Period commences on the date of a CIC Triggering Event, such Coverage Period
Β
-11-
will terminate upon the earlier to occur of (x) the date of a CIC Failure and (y) the date that is two (2) 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 will commence upon the earlier to occur of clauses (a)(i) and (a)(ii) in the preceding sentence.
Β
A.11 βDetrimental Conduct.β For purposes of the Agreement and for purposes of determining whether Optionee will be deemed to have violated the detrimental conduct clause of Prior Options, βDetrimental Conductβ means:
Β
(i) Optionee has engaged, without the prior written consent of PNC (at PNCβs sole discretion), in any Competitive Activity in the continental United States at any time during the period commencing on Optioneeβs Termination Date through the first (1st) anniversary of Optioneeβs Termination Date;
Β
(ii) a material breach by Optionee of (1) any code of conduct of PNC or a Subsidiary or (2) other written policy of PNC or a Subsidiary, in either case required by law or established to maintain compliance with applicable law;
Β
(iii) any act of fraud, misappropriation, material dishonesty, or embezzlement by Optionee against PNC or a Subsidiary or any client or customer of PNC or a Subsidiary;
Β
(iv) any conviction (including a plea of guilty or of nolo contendere) of Optionee for, or entry by Optionee into a pre-trial disposition with respect to, the commission of a felony that relates to or arises out of Optioneeβs employment or other service relationship with the Corporation; or
Β
(v) entry of any order against Optionee, by any governmental body having regulatory authority with respect to the business of PNC or any Subsidiary, that relates to or arises out of Optioneeβs employment or other service relationship with the Corporation.
Β
Optionee will be deemed to have engaged in Detrimental Conduct, for purposes of the Agreement and for purposes of determining whether Optionee will be deemed to have violated the detrimental conduct clause of Prior Options, only if and when the CEO or his or her designee (or, if Optionee is the CEO, the Board) determines that Optionee has engaged in conduct described in clause (i) above, that Optionee is guilty of conduct described in clause (ii) or (iii) above, or that an event described in clause (iv) or (v) above has occurred with respect to Optionee and, if so, determines that Optionee will be deemed to have engaged in Detrimental Conduct.
Β
A.12 βExchange Actβ means the Securities Exchange Act of 1934 as amended and the rules and regulations promulgated thereunder.
Β
A.13 βExercise Dateβ means the date on which PNC receives written notice, in such form as PNC may from time to time prescribe, of the exercise, in whole or in part, of the Option pursuant to the terms of the Agreement, subject to full payment of the aggregate Option Price and satisfaction of all taxes required to be withheld in connection with such exercise as provided in Sections 4.1, 4.2 and 4.3 of the Agreement.
Β
A.14 βExpiration Date.β
Β
(a) Expiration Date. Expiration Date means the date on which the Option expires, which will be the tenth (10th) anniversary of the Grant Date unless the Option expires earlier pursuant to any of the provisions set forth in Sections A.14(b) through A.14(d);
Β
provided, however, if there is a Change in Control, then notwithstanding Sections A.14(c) and A.14(d), to the extent that the Option is outstanding and vested or vests at the time the Change in Control occurs, the Option will not expire at the earliest before the close of business on the
Β
-12-
ninetieth (90th) day after the occurrence of the Change in Control (or the tenth (10th) anniversary of the Grant Date if earlier), provided that either (1) Optionee is an employee of the Corporation at the time the Change in Control occurs and Optioneeβs employment with the Corporation is not terminated for Cause or (2) Optionee is a former employee of the Corporation whose Option, or portion thereof, is outstanding at the time the Change in Control occurs by virtue of the application of one or more of the exceptions set forth in Section A.14(c) and at least one of such exceptions is still applicable at the time the Change in Control occurs.
Β
In no event will the Option remain outstanding beyond the tenth (10th) anniversary of the Grant Date.
Β
(b) Termination for Cause. Upon a termination of Optioneeβs employment with the Corporation for Cause, unless the Committee determines otherwise, the Option will expire at the close of business on Optioneeβs Termination Date with respect to all Covered Shares, whether or not vested and whether or not Optionee is eligible to Retire or Optioneeβs employment also terminates for another reason.
Β
(c) Ceasing to be an Employee other than by Termination for Cause. If Optionee ceases to be an employee of the Corporation other than by termination of Optioneeβs employment for Cause, then unless the Committee determines otherwise, the Option will expire at the close of business on Optioneeβs Termination Date with respect to all Covered Shares, whether or not vested, except to the extent that the provisions set forth in subsection (1), (2), (3), (4) or (5) of this Section A.14(c) apply to Optioneeβs circumstances and such applicable subsection specifies a later expiration date for all or a portion of the Option. If more than one of such exceptions is applicable to the Option or a portion thereof, then the Option or such portion of the Option will expire in accordance with the provisions of the subsection that specifies the latest expiration date.
Β
(1) Retirement. If the termination of Optioneeβs employment with the Corporation meets the definition of Retirement, then the Option will expire on the tenth (10th) anniversary of the Grant Date with respect to any Covered Shares as to which the Option is vested on the Retirement date or thereafter vests pursuant to Section 2.2 of the Agreement.
Β
(2) Death. If Optioneeβs employment with the Corporation is terminated by reason of Optioneeβs death, then the Option will expire on the tenth (10th) anniversary of the Grant Date.
Β
(3) Termination during a Coverage Period without Cause or with Good Reason. If Optioneeβs employment with the Corporation is terminated (other than by reason of Optioneeβs death) during a Coverage Period by the Corporation without Cause or by Optionee with Good Reason, then the Option will expire on the third (3rd) anniversary of such Termination Date (but in no event later than on the tenth (10th) anniversary of the Grant Date).
Β
(4) Total and Permanent Disability. If Optioneeβs employment is terminated by the Corporation by reason of Total and Permanent Disability, then the Option will expire on the third (3rd) anniversary of such Termination Date (but in no event later than on the tenth (10th) anniversary of the Grant Date).
Β
(5) DEAP or Agreement or Arrangement in lieu of or in addition to DEAP. In the event that (a) Optioneeβs employment with the Corporation is terminated by the Corporation, and Optionee is offered and has entered into the standard Waiver and Release Agreement with PNC or a Subsidiary under an applicable PNC or Subsidiary Displaced Employee Assistance Plan, or any successor plan by whatever name known (βDEAPβ), or Optionee is offered and has entered into a similar waiver and release agreement between PNC or a Subsidiary and Optionee pursuant to the terms of an agreement or arrangement entered into by PNC or a Subsidiary and Optionee in
Β
-13-
lieu of or in addition to the DEAP, and (b) Optionee has not revoked such waiver and release agreement, and (c) the time for revocation of such waiver and release agreement by Optionee has lapsed, then the Option will expire at the close of business on the ninetieth (90th) day after Optioneeβs Termination Date (but in no event later than on the tenth (10th) anniversary of the Grant Date) with respect to any Covered Shares as to which the Option has already become vested; provided, however, that if Optionee returns to employment with the Corporation no later than said ninetieth (90th) day, then for purposes of the Agreement, the entire Option, whether vested or unvested, will be treated as if the termination of Optioneeβs employment with the Corporation had not occurred.
Β
If the vested portion of the Option (or the entire Option if fully vested) will expire on Optioneeβs Termination Date unless the conditions set forth in this Section A.14(c)(5) are met, then such vested Option or portion thereof will not terminate on the Termination Date, but Optionee will not be able to exercise the Option after such Termination Date unless and until all of the conditions set forth in this Section A.14(c)(5) have been met and the Option will terminate on the ninetieth (90th) day after Optioneeβs Termination Date (but in no event later than on the tenth (10th) anniversary of the Grant Date).
Β
(d) Detrimental Conduct. If the Option would otherwise remain outstanding after Optioneeβs Termination Date with respect to any of the Covered Shares pursuant to one or more of the exceptions set forth in the subsections of Section A.14(c), then notwithstanding the provisions of such exception or exceptions, the Option will expire on the date that PNC determines that Optionee has engaged in Detrimental Conduct, if earlier than the date on which the Option would otherwise expire; provided, however, that:
Β
(1) no determination that Optionee has engaged in Detrimental Conduct may be made on or after the date of Optioneeβs death, and Detrimental Conduct will not apply to conduct by or activities of beneficiaries or other successors to the Option in the event of Optioneeβs death;
Β
(2) in the event that Optioneeβs employment with the Corporation is terminated (other than by reason of Optioneeβs death) during a Coverage Period by the Corporation without Cause or by Optionee with Good Reason, whether or not another exception is applicable, no determination that Optionee has engaged in Detrimental Conduct may be made, for purposes of the Agreement and for purposes of determining whether Optionee will be deemed to have violated the detrimental conduct clause of Prior Options, on or after such Termination Date; and
Β
(3) no determination that Optionee has engaged in Detrimental Conduct may be made after the occurrence of a Change in Control.
Β
For purposes of Prior Options that contain a clause in the definition of expiration date or date of expiration providing for the early termination of the stock option in certain circumstances where the optionee has engaged in competitive conduct or activity or in other conduct or activity that is inimical, contrary, or harmful to the Corporationβs interests (the βdetrimental conduct clauseβ), the detrimental conduct clause of the Prior Options will be deemed to have the same meaning and application as this Section A.14(d), and the standard of conduct, standard of proof, and procedures to be followed when determining whether such detrimental conduct clause will apply and the impact on expiration of the stock option of making such determination will be the same as that provided for in this Section A.14(d).
Β
A.15 βGood Reasonβ means:
Β
(a) the assignment to Optionee of any duties inconsistent in any respect with Optioneeβs 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,
Β
-14-
or any other action by the Corporation that 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 Optionee;
Β
(b) a reduction by the Corporation in Optioneeβs annual base salary as in effect on the Grant Date, as the same may be increased from time to time;
Β
(c) the Corporationβs requiring Optionee to be based at any office or location that is more than fifty (50) miles from Optioneeβs office or location immediately prior to either the CIC Triggering Event or the Change in Control;
Β
(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 Optionee participates immediately prior to either the CIC Triggering Event or the Change in Control that is material to Optioneeβs 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 Optioneeβs 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 provided and the level of Optioneeβs participation relative to other participants, as existed immediately prior to the CIC Triggering Event or the Change in Control; or
Β
(e) the failure by the Corporation to continue to provide Optionee with benefits substantially similar to those received by Optionee under any of the Corporationβs pension (including, but not limited to, tax-qualified plans), life insurance, health, accident, disability or other welfare plans in which Optionee was participating, at costs substantially similar to those paid by Optionee, immediately prior to the CIC Triggering Event or the Change in Control.
Β
A.16 βGrant Dateβ means the date set forth as the Grant Date on page 1 of the Agreement.
Β
A.17 βOptionβ means the Nonstatutory Stock Option granted to Optionee in Section 1 of the Agreement pursuant to which Optionee may purchase shares of PNC common stock as provided in the Agreement.
Β
A.18 βOption Priceβ means the dollar amount per share of PNC common stock set forth as the Option Price on page 1 of the Agreement.
Β
A.19 βOptioneeβ means the person identified as Optionee on page 1 of the Agreement.
Β
A.20 βPersonβ 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.
Β
A.21 βPNCβ means The PNC Financial Services Group, Inc.
Β
A.22 βPrior Optionsβ means PNC stock options granted prior to January 1, 2001 or, in the case of reload stock options, that were or will be granted in connection with the exercise of original stock options issued prior to that date.
Β
A.23 βRetireeβ means an Optionee who has Retired.
Β
A.24 βRetireβ or βRetirementβ means termination of Optioneeβs employment with the Corporation (a) at any time on or after the first day of the first month coincident with or next following the date on which Optionee attains age fifty-five (55) and completes five (5) years of service (as determined in the same manner as the determination of five years of Vesting Service under the provisions of The PNC Financial Services Group, Inc. Pension Plan) with the Corporation and (b) for a reason other than termination by reason of Optioneeβs death or by the
Β
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Corporation for Cause or, unless the Committee determines otherwise, termination in connection with a divestiture of assets or of one or more Subsidiaries.
Β
A.25 βRight(s)β means stock appreciation right(s) in accordance with the terms of Article 7 of the Plan.
Β
A.26 βSECβ means the Securities and Exchange Commission.
Β
A.27 βTermination Dateβ means Optioneeβs last date of employment with the Corporation. If Optionee is employed by a Subsidiary that ceases to be a Subsidiary of PNC and Optionee does not continue to be employed by PNC or a Subsidiary, then for purposes of the Agreement, Optioneeβs employment with the Corporation terminates effective at the time this occurs.
Β
A.28 βTotal and Permanent Disabilityβ means, unless the Committee determines otherwise, Optioneeβs disability as determined to be total and permanent by the Corporation for purposes of the Agreement.
Β
-16-
FORM OF ADDENDUM TO STOCK OPTION AGREEMENT
FOR GRANTS WITH RELOAD FEATURE
Β
THE PNC FINANCIAL SERVICES GROUP, INC.
1997 LONG-TERM INCENTIVE AWARD PLAN
Β
ADDENDUM
TO
NONSTATUTORY STOCK OPTION AGREEMENT (βAGREEMENTβ)
DATED Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β , 200Β Β Β Β
Β
OPTIONEE: | Β Β | <EMPLOYEE> |
ORIGINAL OPTION GRANT DATE: | Β Β | Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β , 200Β Β Β Β |
ORIGINAL OPTION PRICE: | Β Β | $Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β per share |
ORIGINAL OPTION COVERED SHARES: | Β Β | <SHARES> |
Β
THIS ADDENDUM to the Agreement with respect to the original nonstatutory stock option referenced above (βOriginal Optionβ) is made and entered into by and between The PNC Financial Services Group, Inc. (βPNCβ) and the optionee identified above (βOptioneeβ) in order to provide for the grant of a certain additional stock option or options (βReload Optionβ) upon the terms and conditions set forth in this Addendum and the Reload Nonstatutory Stock Option Agreement for each such grant subsequently delivered to Optionee by PNC and signed by the parties.
Β
1. Definitions. Terms defined in The PNC Financial Services Group, Inc. 1997 Long-Term Incentive Award Plan as amended from time to time (βPlanβ), or in the Agreement or an Annex thereto, are used in this Addendum as defined in the Plan, or in the Agreement or an Annex thereto, unless otherwise defined in this Addendum.
Β
2. Grant of Reload Option. Provided that Optionee exercises all or a portion of the Original Option while employed by PNC or one of its Subsidiaries and in the manner specified in Section 3 of this Addendum, Optionee will be granted a Reload Option, as set forth in Section 4 of this Addendum, in connection with each such exercise. Such Reload Option will be granted upon the terms and conditions set forth in a Reload Nonstatutory Stock Option Agreement provided to Optionee for such grant by PNC following the exercise of the Original Option, subject to Optioneeβs timely acceptance of such grant in the manner specified in such Reload Nonstatutory Stock Option Agreement.
Β
3. Required Manner of Original Option Exercise. To receive a Reload Option, Optionee must exercise all or a portion of the Original Option while employed by PNC or one of its Subsidiaries, and must pay all or a portion of the aggregate Option Price for such exercise or satisfy all or a portion of the minimum, exercise-related withholding tax requirements incurred in connection with such exercise, or both, in the following manner:
Β
Β | β’ | Exercise Price: Pay all or a portion of the aggregate Option Price, in accordance with and subject to the limitations of Section 4.2 of the Agreement, for exercise of the Original Option or portion thereof using eligible previously-acquired shares of PNC common stock, either by physically delivering certificates for the shares to PNC or through PNCβs attestation procedure, where Optionee delivers an executed affidavit of share ownership form to PNC in which Optionee attests to ownership of a specified number of eligible previously-acquired shares of PNC common stock (which may be in certificated or non-certificated form). |
Β
Β | β’ | Exercise-Related Withholding Taxes: Satisfy all or a portion of the minimum, exercise-related withholding tax requirements incurred in connection with exercise of the Original Option or portion thereof, in accordance with and subject to the limitations of Section 4.3 of the Agreement, either (i) using eligible previously-acquired shares of PNC common stock (either by physical |
Β
-1-
Β | delivery of the share certificates to PNC or through PNCβs attestation procedure) or (ii) by having PNC retain shares otherwise issuable to Optionee on exercise of the Original Option or portion thereof and attesting to PNC that Optionee owns a number of eligible previously-acquired shares of PNC common stock at least equal to the number of shares retained. |
Β
Eligible Shares. In order for shares to be eligible previously-acquired shares of PNC common stock for purposes of this Section 3 of the Addendum (βEligible Sharesβ), Optionee must have owned those shares for at least six (6) months prior to the Original Option Exercise Date and, in the case of restricted stock, at least six (6) months must have passed since the restrictions lapsed, or, in either case, such other period as may be specified or permitted by PNC. In addition, to be Eligible Shares, those shares cannot be subject to any contractual restriction, pledge or other encumbrance.
Β
4. Nature of Reload Option.
Β
(a) A Reload Option will be an Option to purchase, at Fair Market Value as of the Original Option Exercise Date, a number of shares of PNC common stock equal to the aggregate number of whole Eligible Shares that Optionee, in the manner set forth in Section 3 of this Addendum, either used or attested to the ownership of in connection with the exercise of all or a portion of the Original Option, in order to pay all or a portion of the aggregate Option Price for such exercise, to satisfy all or a portion of the minimum, exercise-related withholding tax requirements incurred in connection with such exercise, or both.
Β
Any additional Eligible Shares that Optionee may decide to use for exercise-related tax withholding in excess of the minimum required withholding amount are not counted in determining the number of shares of PNC common stock underlying a Reload Option.
Β
(b) Subject generally to the lapse of a one-year vesting period beginning upon the Reload Optionβs Grant Date, a Reload Option will be exercisable only between its Grant Date and the Original Option Expiration Date, and only in accordance with the terms and conditions of the governing Reload Nonstatutory Stock Option Agreement.
Β
5. No Additional Reload Option. No Reload Option will entitle Optionee to receive another Reload Option upon its exercise.
Β
6. Applicable Law. Notwithstanding anything in this Addendum, PNC will not be required to comply with any term, covenant or condition of this Addendum if and to the extent prohibited by law, including but not limited to federal banking and securities regulations, or as otherwise directed by one or more regulatory agencies having jurisdiction over PNC or any of its subsidiaries. Further, to the extent, if any, applicable to Optionee, Optionee agrees to reimburse PNC for any amounts Optionee may be required to reimburse the Corporation pursuant to Section 304 of the Xxxxxxxx-Xxxxx Act of 2002, and agrees that PNC need not comply with any term, covenant or condition of this Addendum to the extent that doing so would require that Optionee reimburse PNC or its subsidiaries for such amounts pursuant to Section 304 of the Xxxxxxxx-Xxxxx Act of 2002.
Β
7. Effective Date. This Addendum will not be effective unless and until the Original Option Agreement is effective in accordance with its terms. Upon effectiveness of the Original Option Agreement and upon execution and delivery of this Addendum by both PNC and Optionee, this Addendum is effective as of the Original Option Grant Date.
Β
-2-
IN WITNESS WHEREOF, PNC has caused this Addendum to be signed on its behalf, effective as of the Original Option Grant Date.
Β
THE PNC FINANCIAL SERVICES GROUP, INC. | ||
By: | Β | Β |
Β | Β | Β |
Β | Β | Chairman and Chief Executive Officer |
ATTEST: | ||
By: | Β | Β |
Β | Β | Β |
Β | Β | Corporate Secretary |
Accepted and Agreed to as of the Original Option Grant Date: | ||
Β | ||
Optionee |
Β
-3-
Β
FORM OF STOCK OPTION AGREEMENT FOR
EXECUTIVE WITH 1-YEAR VESTING
Β
THE PNC FINANCIAL SERVICES GROUP, INC.
1997 LONG-TERM INCENTIVE AWARD PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
Β
OPTIONEE: |
Β | <Name> |
GRANT DATE: |
Β | Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β , 200Β Β |
OPTION PRICE: |
Β | $Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β per share |
COVERED SHARES: |
Β | Β«SharesΒ» |
Β
Terms defined in The PNC Financial Services Group, Inc. 1997 Long-Term Incentive Award Plan as amended from time to time (βPlanβ) are used in this Agreement (βAgreementβ) as defined in the Plan unless otherwise defined in the Agreement or an Annex thereto. In the Agreement, βPNCβ means The PNC Financial Services Group, Inc. and βCorporationβ means PNC and its Subsidiaries. For certain definitions, see Annex A attached hereto and incorporated herein by reference. Headings used in the Agreement and in the Annexes hereto are for convenience only and are not part of the Agreement and Annexes.
Β
1. Grant of Option. Pursuant to the Plan and subject to the terms of the Agreement, PNC hereby grants to Optionee an Option to purchase from PNC that number of shares of PNC common stock specified above as the βCovered Shares,β exercisable at the Option Price.
Β
2. Terms of the Option.
Β
2.1 Type of Option. The Option is intended to be a Nonstatutory Stock Option without Rights.
Β
2.2 Option Period. The Option is exercisable in whole or in part as to any Covered Shares as to which it is outstanding and has become exercisable (βvestedβ) at any time and from time to time through the Expiration Date.
Β
To the extent that the Option is otherwise outstanding, the Option will vest as to Covered Shares as set forth in this Section 2.2.
Β
(a) Unless the Option has become vested pursuant to Section 2.2(b), 2.2(c), 2.2(d) or 2.2(e), the Option will become exercisable (βvestβ) as to all outstanding Covered Shares commencing on the first (1st) anniversary date of the Grant Date provided that Optionee is still an employee of the Corporation on such vesting date.
Β
(b) If Optioneeβs employment is terminated by the Corporation by reason of Total and Permanent Disability and not for Cause, the Option will vest as to all outstanding Covered Shares as to which it has not otherwise vested commencing on Optioneeβs Termination Date.
Β
(c) If Optioneeβs employment with the Corporation is terminated by reason of Optioneeβs death, the Option will immediately vest as to all outstanding Covered Shares as to which it has not otherwise vested, and the Option may be exercised by Optioneeβs properly designated beneficiary, by the person or persons entitled to do so under Optioneeβs will, or by the person or persons entitled to do so under the applicable laws of descent and distribution.
Β
(d) If Optioneeβs employment with the Corporation is terminated during a Coverage Period by the Corporation without Cause or by Optionee with Good Reason, the Option will vest as to all outstanding Covered Shares as to which it has not otherwise vested commencing on Optioneeβs Termination Date.
Β
(e) Notwithstanding any other provision of this Section 2.2, to the extent that the Option is outstanding but not yet vested at the time a Change in Control occurs, the Option will vest as to all then outstanding Covered Shares, effective as of the day immediately prior to the occurrence of the Change in Control, provided that, at the time the Change in Control occurs, Optionee is an employee of the Corporation.
Β
If Optionee is employed by a Subsidiary that ceases to be a Subsidiary of PNC and Optionee does not continue to be employed by PNC or a Subsidiary, then for purposes of the Agreement, Optioneeβs employment with the Corporation terminates effective at the time this occurs.
Β
2.3 Nontransferability; Designation of Beneficiary. The Option is not transferable or assignable by Optionee other than by transfer to a properly designated beneficiary in the event of death, or by will or the laws of descent and distribution.
Β
During Optioneeβs lifetime, the Option may be exercised only by Optionee or, in the event of Optioneeβs legal incapacity, by his or her legal representative.
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During Optioneeβs lifetime, Optionee may file with PNC, at such address and in such manner as PNC may from time to time direct, on a form to be provided by PNC on request, a designation of a beneficiary or beneficiaries (a βproperly designated beneficiaryβ) to hold and exercise Optioneeβs stock options, to the extent outstanding and exercisable, in accordance with their respective stock option agreements and the Plan in the event of Optioneeβs death. In the absence of a properly designated beneficiary, the Option will be held and may be exercised by the person or persons entitled to do so under Optioneeβs will or under the applicable laws of descent and distribution.
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3. Capital Adjustments. The number and class of Covered Shares as to which the Option is outstanding and has not yet been exercised and the Option Price will be subject to such adjustment, if any, as the Committee in its sole discretion deems appropriate to reflect corporate transactions (including, without limitation, stock dividends, stock splits, spin-offs, split-offs, recapitalizations, mergers, consolidations or reorganizations of or by PNC (each, a βCorporate Transactionβ)), including without limitation cancellation of the Option immediately prior to the effective time of the Corporate Transaction and payment, in cash, in consideration therefor, of an amount equal to the product of (a) the excess, if any, of the per share value of the consideration payable to a PNC common shareholder in connection with such Corporate Transaction over the Option Price and (b) the total number of Covered Shares subject to the Option that were outstanding and unexercised immediately prior to the effective time of the Corporate Transaction.
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All determinations hereunder will be made by the Committee in its sole discretion and will be final, binding and conclusive for all purposes on all parties, including without limitation the holder of the Option.
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No fractional shares will be issued on exercise of the Option. PNC will determine the manner in which any fractional shares will be treated.
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4. Exercise of Option.
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4.1 Notice and Effective Date. The 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 Option Price with respect to that portion of the Option being exercised and satisfaction of any amounts required to be withheld pursuant to applicable tax laws in connection with such exercise.
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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.
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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.
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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.
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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, (b) using whole shares of PNC common stock (either by physical delivery to PNC of certificates for the shares or through PNCβs 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 (c) 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.
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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) 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) 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 PNCβs 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.
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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.
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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.
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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 regulations promulgated thereunder, (b) the staff of the SEC 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 PNC, required for the lawful disposition of such shares has been filed and has become effective; provided, however, that PNC is not obligated hereby to file any such registration or notification. PNC may place a legend embodying such restrictions on the certificate(s) evidencing such shares.
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6. Rights as Shareholder. Optionee will have no rights as a shareholder with respect to any Covered Shares until the Exercise Date and then only with respect to those shares of PNC common stock issued upon such exercise of the Option and not retained as provided in Section 4.3.
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7. Employment. Neither the granting of the Option evidenced by the Agreement nor any term or provision of the Agreement will constitute or be evidence of any understanding, expressed or implied, on the part of PNC or any Subsidiary to employ Optionee for any period.
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8. Subject to the Plan. The Option evidenced by the 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 will not be considered an enlargement of any benefits under the Agreement. In addition, the Option is subject to any rules and regulations promulgated by or under the authority of the Committee.
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9. Optionee Covenants.
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9.1 General. Optionee and PNC acknowledge and agree that Optionee has received adequate consideration with respect to enforcement of the provisions of Sections 9 and 10 hereof, that such provisions are reasonable and properly required for the adequate protection of the business of the Corporation, and that enforcement of such provisions will not prevent Optionee from earning a living.
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9.2 Non-Solicitation; No-Hire. Optionee agrees to comply with the provisions of subsections (a) and (b) of this Section 9.2 while employed by the Corporation and for a period of twelve (12) months after Optioneeβs Termination Date regardless of the reason for such termination of employment.
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(a) Non-Solicitation. Optionee shall not, directly or indirectly, either for Optioneeβs own benefit or purpose or for the benefit or purpose of any Person other than PNC or any Subsidiary, solicit, call on, do business with, or actively interfere with PNCβs or any Subsidiaryβs relationship with, or attempt to divert or entice away, any Person that Optionee should reasonably know (i) is a customer of PNC or any Subsidiary for which PNC or any Subsidiary provides any services as of the Termination Date, or (ii) was a customer of PNC or any Subsidiary for which PNC or any Subsidiary provided any services at any time during the twelve (12) months preceding the Termination Date, or (iii) was, as of the Termination Date, considering retention of PNC or any Subsidiary to provide any services.
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(b) No-Hire. Optionee shall not, directly or indirectly, either for Optioneeβs own benefit or purpose or for the benefit or purpose of any Person other than PNC or any Subsidiary, employ or offer to employ, call on, or actively interfere with PNCβs or any Subsidiaryβs relationship with, or attempt to divert or entice away, any employee of the Corporation, nor shall Optionee assist any other Person in such activities.
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Notwithstanding the above, if Optioneeβs employment with the Corporation is terminated by the Corporation without Cause or by Optionee with Good Reason and such Termination Date occurs during a Coverage Period (either as Coverage Period is defined in Section A.10 of Annex A or, if Optionee was a party to a CIC Severance Agreement that was in effect at the time of such termination of employment, as Coverage Period is defined in such CIC Severance Agreement, if longer), then commencing immediately after such Termination Date, the provisions of subsections (a) and (b) of this Section 9.2 shall no longer apply and shall be replaced with the following subsection (c):
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(c) No-Hire. Optionee agrees that Optionee shall not, for a period of twelve (12) months after the Termination Date, employ or offer to employ, solicit, actively interfere with PNCβs or any PNC affiliateβs relationship with, or attempt to divert or entice away, any officer of PNC or any PNC affiliate.
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9.3 Confidentiality. During Optioneeβs employment with the Corporation, and thereafter regardless of the reason for termination of such employment, Optionee will not disclose or use in any way any confidential business or technical information or trade secret acquired in the course of such employment, all of which is the exclusive and valuable property of the Corporation whether or not conceived of or prepared by Optionee, other than (a) information generally known in the Corporationβs industry or acquired from public
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sources, (b) as required in the course of employment by the Corporation, (c) as required by any court, supervisory authority, administrative agency or applicable law, or (d) with the prior written consent of PNC.
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9.4 Ownership of Inventions. Optionee shall promptly and fully disclose to PNC any and all inventions, discoveries, improvements, ideas or other works of inventorship or authorship, whether or not patentable, that have been or will be conceived and/or reduced to practice by Optionee during the term of Optioneeβs employment with the Corporation, whether alone or with others, and that are (a) related directly or indirectly to the business or activities of PNC or any Subsidiary or (b) developed with the use of any time, material, facilities or other resources of PNC or any Subsidiary (βDevelopmentsβ). Optionee agrees to assign and hereby does assign to PNC or its designee all of Optioneeβs right, title and interest, including copyrights and patent rights, in and to all Developments. Optionee shall perform all actions and execute all instruments that PNC or any Subsidiary shall deem necessary to protect or record PNCβs or its designeeβs interests in the Developments. The obligations of this Section 9.4 shall be performed by Optionee without further compensation and shall continue beyond the Termination Date.
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10. Enforcement Provisions. Optionee understands and agrees to the following provisions regarding enforcement of the Agreement.
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10.1 Governing Law and Jurisdiction. The Agreement is governed by and construed under the laws of the Commonwealth of Pennsylvania, without regard to conflict of laws rules. Any dispute or claim arising out of or relating to the Agreement or claim of breach hereof shall be brought exclusively in the federal court for the Western District of Pennsylvania or in the Court of Common Pleas of Allegheny County, Pennsylvania. By execution of the Agreement, Optionee and PNC hereby consent to the exclusive jurisdiction of such courts, and waive any right to challenge jurisdiction or venue in such courts with regard to any suit, action, or proceeding under or in connection with the Agreement.
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10.2 Equitable Remedies. A breach of the provisions of any of Sections 9.2, 9.3 or 9.4 will cause the Corporation irreparable harm, and the Corporation will therefore be entitled to issuance of immediate, as well as permanent, injunctive relief restraining Optionee, and each and every person and entity acting in concert or participating with Optionee, from initiation and/or continuation of such breach.
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10.3 Tolling Period. If it becomes necessary or desirable for the Corporation to seek compliance with the provisions of Section 9.2 by legal proceedings, the period during which Optionee shall comply with said provisions shall extend for a period of twelve (12) months from the date of the legal order requiring such compliance.
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10.4 No Waiver. Failure of PNC to demand strict compliance with any of the terms, covenants or conditions of the Agreement shall not be deemed a waiver of such term, covenant or condition, nor shall any waiver or relinquishment of any such term, covenant or condition on any occasion or on multiple occasions be deemed a waiver or relinquishment of such term, covenant or condition.
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10.5 Severability. The restrictions and obligations imposed by Sections 9.2, 9.3 and 9.4 are separate and severable, and it is the intent of Optionee and PNC that if any restriction or obligation imposed by any of these provisions is deemed by a court of competent jurisdiction to be void for any reason whatsoever, the remaining provisions, restrictions and obligations shall remain valid and binding upon Optionee.
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10.6 Reform. In the event any of Sections 9.2, 9.3 and 9.4 are determined by a court of competent jurisdiction to be unenforceable because unreasonable either as to length of time or area to which said restriction applies, it is the intent of Optionee and PNC that said court reduce and reform the provisions thereof so as to apply the greatest limitations considered enforceable by the court.
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10.7 Waiver of Jury Trial. Each of Optionee and PNC hereby waives any right to trial by jury with regard to any suit, action or proceeding under or in connection with any of Sections 9.2, 9.3 and 9.4.
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10.8 Applicable Law. Notwithstanding anything in the Agreement, PNC will not be required to comply with any term, covenant or condition of the Agreement if and to the extent prohibited by law, including but not limited to federal banking and securities regulations, or as otherwise directed by one or more regulatory agencies having jurisdiction over PNC or any of its subsidiaries. Further, to the extent, if any, applicable to Optionee, Optionee agrees to reimburse PNC for any amounts Optionee may be required to reimburse the Corporation pursuant to Section 304 of the Xxxxxxxx-Xxxxx Act of 2002, and agrees that PNC need not comply with any term, covenant or condition of the Agreement to the extent that doing so would require that Optionee reimburse PNC or its subsidiaries for such amounts pursuant to Section 304 of the Xxxxxxxx-Xxxxx Act of 2002.
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11. Amendment of Pre-2004 Options. For purposes of all PNC stock options held by Optionee that were granted prior to January 1, 2004 and outstanding on February 18, 2004, the terms of each such option are amended to include, or shall include, as the case may be, the following provisions:
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(a) Notwithstanding any other provision of such option relating to vesting, to the extent that the such option is outstanding but not yet fully vested at the time a Change in Control occurs, the option will vest as to all then outstanding Covered Shares as to which it has not otherwise vested, effective as of the day immediately prior to the occurrence of the Change in Control, provided that, at the time the Change in Control occurs, the optionee is an employee of the Corporation;
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(b) If there is a Change in Control, then notwithstanding any other provisions of such option relating to the date of expiration or expiration date of the option, to the extent that such option is outstanding and vested or vests at the time the Change in Control occurs, such option will not expire at the earliest before the close of business on the ninetieth (90th) day after the occurrence of the Change in Control (or the tenth (10th) anniversary of the Grant Date if earlier), provided that, either (i) the optionee is an employee of the Corporation at the time the Change in Control occurs and the optioneeβs employment with the Corporation is not terminated for Cause or (ii) the optionee is a former employee of the Corporation whose option, or portion thereof, is outstanding at the time the Change in Control occurs because it qualified and continues to qualify pursuant to the terms of the relevant stock option agreement as amended for an exception to the general rule that stock options expire at the time the optionee ceases to be an employee of the Corporation;
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(c) If, under the relevant stock option agreement as amended, more than one exception to the general rule that stock options expire on termination of the optioneeβs employment with the Corporation is applicable to such option or a portion thereof, then the option, or such portion of the option, will expire in accordance with the provision or provisions of said agreement that specify the latest expiration date;
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(d) If the terms of the relevant stock option agreement as amended provide for the early expiration of such stock option in certain circumstances where the optionee has engaged in competitive conduct or activity or in other conduct or activity that is inimical, contrary, harmful or detrimental to the Corporationβs interests (a βdetrimental conductβ provision), no determination that the optionee has engaged in such detrimental conduct may be made on or after the occurrence of a Change in Control; and
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(e) If the termination of the optioneeβs employment with the Corporation meets the definition of Retirement, then with respect to any portion of the option that is outstanding and vested on optioneeβs retirement date or that qualifies for post-employment vesting under the terms of the relevant stock option agreement and vests thereafter, such option will qualify for an exception to the general rule that options expire at the time the optionee ceases to be an employee and will expire on the tenth (10th) anniversary date of the Grant Date, subject to the operation of any detrimental conduct provision that may be applicable.
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The terms of PNC employee stock options granted after January 1, 2004 shall also include the capital adjustment provisions set forth in Section 3, unless and until the Committee determines otherwise.
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12. Effective Date. If Optionee does not accept the grant of the Option by executing and delivering a copy of the Agreement to PNC, without altering or changing the terms of the Agreement in any way, within sixty (60) days of receipt by Optionee of a copy of the Agreement, PNC may, in its sole discretion, withdraw its offer and cancel the Option and the Agreement at any time prior to Optioneeβs delivery to PNC of a copy of the Agreement executed by Optionee.
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Otherwise, upon execution and delivery of the Agreement by both PNC and Optionee and the filing with and acceptance by the SEC of a Form 4 reporting the Grant, the Option and the Agreement are effective as of the Grant Date.
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IN WITNESS WHEREOF, PNC has caused the Agreement to be signed on its behalf effective as of the Grant Date.
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THE PNC FINANCIAL SERVICES GROUP, INC. | ||
By: | Β | Β |
Β | Β | Chairman and Chief Executive Officer |
ATTEST: | ||
By: | Β | Β |
Β | Β | Corporate Secretary |
Accepted and agreed to as of the Grant Date. | ||
Β | ||
Optionee |
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Annex A - Certain Definitions
Annex B - Notice of Exercise
Annex C - Tax Payment Election Form
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Β
ANNEX A
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THE PNC FINANCIAL SERVICES GROUP, INC.
1997 LONG-TERM INCENTIVE AWARD PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
CERTAIN DEFINITIONS
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Except where the context otherwise indicates, the following definitions apply to the Nonstatutory Stock Option Agreement (βAgreementβ) to which this Annex A is attached.
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A.1 βBoardβ means the Board of Directors of PNC.
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A.2 βCause.β
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(a) βCauseβ during a Coverage Period. If the termination of Optioneeβs employment with the Corporation occurs during a Coverage Period, then, for purposes of the Agreement, βCauseβ means:
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(i) the willful and continued failure of Optionee to substantially perform Optioneeβs 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 Optionee by the Board or the CEO that specifically identifies the manner in which the Board or the CEO believes that Optionee has not substantially performed Optioneeβs duties; or
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(ii) the willful engaging by Optionee in illegal conduct or gross misconduct that is materially and demonstrably injurious to PNC or any Subsidiary.
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For purposes of the preceding clauses (i) and (ii), no act or failure to act, on the part of Optionee, shall be considered willful unless it is done, or omitted to be done, by Optionee in bad faith and without reasonable belief that Optioneeβs 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 CEO or Optioneeβs superior or based upon the advice of counsel for the Corporation, shall be conclusively presumed to be done, or omitted to be done, by Optionee in good faith and in the best interests of the Corporation.
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The cessation of employment of Optionee will be deemed to be a termination of Optioneeβs employment with the Corporation for Cause for purposes of the Agreement only if and when there shall have been delivered to Optionee, as part of the notice of Optioneeβs 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 on the basis of clear and convincing evidence that, in the good faith opinion of the Board, Optionee is guilty of conduct described in clause (i) or (ii) above and, in either case, specifying the particulars thereof in detail. Such resolution shall be adopted only after (1) reasonable notice of such Board meeting is provided to Optionee, together with written notice that PNC believes that Optionee is guilty of conduct described in clause (i) or (ii) above and, in either case, specifying the particulars thereof in detail, and (2) Optionee is given an opportunity, together with counsel, to be heard before the Board.
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(b) βCauseβ other than during a Coverage Period. If the termination of Optioneeβs employment with the Corporation occurs other than during a Coverage Period, then, for purposes of the Agreement, βCauseβ means:
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(i) the willful and continued failure of Optionee to substantially perform Optioneeβs duties with the Corporation (other than any such failure resulting from incapacity due to physical or mental
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illness), after a written demand for substantial performance is delivered to Optionee by PNC that specifically identifies the manner in which it is believed that Optionee has not substantially performed Optioneeβs duties;
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(ii) a material breach by Optionee of (1) any code of conduct of PNC or a Subsidiary or (2) other written policy of PNC or a Subsidiary, in either case required by law or established to maintain compliance with applicable law;
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(iii) any act of fraud, misappropriation, material dishonesty, or embezzlement by Optionee against PNC or a Subsidiary or any client or customer of PNC or a Subsidiary;
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(iv) any conviction (including a plea of guilty or of nolo contendere) of Optionee for, or entry by Optionee into a pre-trial disposition with respect to, the commission of a felony; or
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(v) entry of any order against Optionee, by any governmental body having regulatory authority with respect to the business of PNC or any Subsidiary, that relates to or arises out of Optioneeβs employment or other service relationship with the Corporation.
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The cessation of employment of Optionee will be deemed to have been a termination of Optioneeβs employment with the Corporation for Cause for purposes of the Agreement only if and when the CEO or his or her designee (or, if Optionee is the CEO, the Board) determines that Optionee is guilty of conduct described in clause (i), (ii) or (iii) above or that an event described in clause (iv) or (v) above has occurred with respect to Optionee and, if so, determines that the termination of Optioneeβs employment with the Corporation will be deemed to have been for Cause.
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A.3 βCEOβ means the chief executive officer of PNC.
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A.4 βChange in Controlβ means a change of control of PNC 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 PNC is then subject to such reporting requirement; provided, however, that without limitation, a Change in Control shall be deemed to have occurred if:
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(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 PNC representing twenty percent (20%) or more of the combined voting power of PNCβs 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;
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(b) PNC consummates a merger, consolidation, share exchange, division or other reorganization or transaction of PNC (a βFundamental Transactionβ) with any other corporation, other than a Fundamental Transaction that results in the voting securities of PNC 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) PNCβs outstanding securities, (ii) the surviving entityβs outstanding securities, or (iii) in the case of a division, the outstanding securities of each entity resulting from the division;
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(c) the shareholders of PNC approve a plan of complete liquidation or winding-up of PNC or an agreement for the sale or disposition (in one transaction or a series of transactions) of all or substantially all of PNCβs assets;
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(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 PNCβs shareholders in connection with such proxy contest was approved by a vote of at least two-thirds (2/3rds) 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);
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(e) during any period of twenty-four (24) 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 PNCβs shareholders was approved by a vote of at least two-thirds (2/3rds) 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
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(f) the Board determines that a Change in Control has occurred.
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Notwithstanding anything to the contrary herein, a divestiture or spin-off of a subsidiary or division of PNC or any of its Subsidiaries shall not by itself constitute a Change in Control.
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A.5 βCIC Failureβ means the following:
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(a) with respect to a CIC Triggering Event described in Section A.7(a), PNCβs shareholders vote against the transaction approved by the Board or the agreement to consummate the transaction is terminated; or
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(b) with respect to a CIC Triggering Event described in Section A.7(b), the proxy contest fails to replace or remove a majority of the members of the Board.
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A.6 βCIC Severance Agreementβ means the written agreement, if any, between Optionee and PNC providing, among other things, for certain change in control severance benefits.
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A.7 βCIC Triggering Eventβ means the occurrence of either of the following:
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(a) the Board or PNCβs shareholders approve a transaction described in Subsection (b) of the definition of Change in Control contained in Section A.4; or
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(b) the commencement of a proxy contest in which any Person seeks to replace or remove a majority of the members of the Board.
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A.8 βCompetitive Activityβ means, for purposes of the Agreement, any participation in, employment by, ownership of any equity interest exceeding one percent (1%) in, or promotion or organization of, any Person other than PNC or any Subsidiary (1) engaged in business activities similar to some or all of the business activities of PNC or any Subsidiary as of Optioneeβs Termination Date or (2) engaged in business activities that Optionee knows PNC or any Subsidiary intends to enter within the first twelve (12) months after Optioneeβs Termination Date, in either case whether Optionee is acting as agent, consultant, independent contractor, employee, officer, director, investor, partner, shareholder, proprietor or in any other individual or representative capacity therein.
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A.9 βCorporationβ means PNC and its Subsidiaries.
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A.10 βCoverage Periodβ means a period (a) 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 (b) ending on the date that is two (2) years after the date of the Change in Control; provided, however, that in the event that a Coverage Period commences on the date of a CIC Triggering Event, such Coverage Period will terminate upon the earlier to occur of (x) the date of a CIC Failure and (y) the date that is
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two (2) 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 will commence upon the earlier to occur of clauses (a)(i) and (a)(ii) in the preceding sentence.
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A.11 βDetrimental Conductβ means, for purposes of the Agreement:
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(i) Optionee has engaged, without the prior written consent of PNC (at PNCβs sole discretion), in any Competitive Activity in the continental United States at any time during the period commencing on Optioneeβs Termination Date through the first (1st) anniversary of Optioneeβs Termination Date;
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(ii) a material breach by Optionee of (1) any code of conduct of PNC or a Subsidiary or (2) other written policy of PNC or a Subsidiary, in either case required by law or established to maintain compliance with applicable law;
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(iii) any act of fraud, misappropriation, material dishonesty, or embezzlement by Optionee against PNC or a Subsidiary or any client or customer of PNC or a Subsidiary;
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(iv) any conviction (including a plea of guilty or of nolo contendere) of Optionee for, or entry by Optionee into a pre-trial disposition with respect to, the commission of a felony that relates to or arises out of Optioneeβs employment or other service relationship with the Corporation; or
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(v) entry of any order against Optionee, by any governmental body having regulatory authority with respect to the business of PNC or any Subsidiary, that relates to or arises out of Optioneeβs employment or other service relationship with the Corporation.
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Optionee will be deemed to have engaged in Detrimental Conduct for purposes of the Agreement only if and when the CEO or his or her designee (or, if Optionee is the CEO, the Board) determines that Optionee has engaged in conduct described in clause (i) above, that Optionee is guilty of conduct described in clause (ii) or (iii) above, or that an event described in clause (iv) or (v) above has occurred with respect to Optionee and, if so, determines that Optionee will be deemed to have engaged in Detrimental Conduct.
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A.12 βExchange Actβ means the Securities Exchange Act of 1934 as amended and the rules and regulations promulgated thereunder.
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A.13 βExercise Dateβ means the date on which PNC receives written notice, in such form as PNC may from time to time prescribe, of the exercise, in whole or in part, of the Option pursuant to the terms of the Agreement, subject to full payment of the aggregate Option Price and satisfaction of all taxes required to be withheld in connection with such exercise as provided in Sections 4.1, 4.2 and 4.3 of the Agreement.
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A.14 βExpiration Date.β
Β
(a) Expiration Date. Expiration Date means the date on which the Option expires, which will be the tenth (10th) anniversary of the Grant Date unless the Option expires earlier pursuant to any of the provisions set forth in Sections A.14(b) through A.14(d);
Β
provided, however, if there is a Change in Control, then notwithstanding Sections A.14(c) and A.14(d), to the extent that the Option is outstanding and vested or vests at the time the Change in Control occurs, the Option will not expire at the earliest before the close of business on the ninetieth (90th) day after the occurrence of the Change in Control (or the tenth (10th) anniversary of the Grant Date if earlier), provided that either (1) Optionee is an employee of the Corporation at the time the Change in Control occurs and Optioneeβs employment with the Corporation is not terminated for Cause or (2) Optionee is a former employee of the Corporation whose Option, or portion thereof, is outstanding at the time the Change in Control occurs by virtue of the
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application of one or more of the exceptions set forth in Section A.14(c) and at least one of such exceptions is still applicable at the time the Change in Control occurs.
Β
In no event will the Option remain outstanding beyond the tenth (10th) anniversary of the Grant Date.
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(b) Termination for Cause. Upon a termination of Optioneeβs employment with the Corporation for Cause, unless the Committee determines otherwise, the Option will expire at the close of business on Optioneeβs Termination Date with respect to all Covered Shares, whether or not vested and whether or not Optionee is eligible to Retire or Optioneeβs employment also terminates for another reason.
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(c) Ceasing to be an Employee other than by Termination for Cause. If Optionee ceases to be an employee of the Corporation other than by termination of Optioneeβs employment for Cause, then unless the Committee determines otherwise, the Option will expire at the close of business on Optioneeβs Termination Date with respect to all Covered Shares, whether or not vested, except to the extent that the provisions set forth in subsection (1), (2), (3), (4) or (5) of this Section A.14(c) apply to Optioneeβs circumstances and such applicable subsection specifies a later expiration date for all or a portion of the Option. If more than one of such exceptions is applicable to the Option or a portion thereof, then the Option or such portion of the Option will expire in accordance with the provisions of the subsection that specifies the latest expiration date.
Β
(1) Retirement. If the termination of Optioneeβs employment with the Corporation meets the definition of Retirement, then the Option will expire on the tenth (10th) anniversary of the Grant Date with respect to any Covered Shares as to which the Option is vested on the Retirement date.
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(2) Death. If Optioneeβs employment with the Corporation is terminated by reason of Optioneeβs death, then the Option will expire on the tenth (10th) anniversary of the Grant Date.
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(3) Termination during a Coverage Period without Cause or with Good Reason. If Optioneeβs employment with the Corporation is terminated (other than by reason of Optioneeβs death) during a Coverage Period by the Corporation without Cause or by Optionee with Good Reason, then the Option will expire on the third (3rd) anniversary of such Termination Date (but in no event later than on the tenth (10th) anniversary of the Grant Date).
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(4) Total and Permanent Disability. If Optioneeβs employment is terminated by the Corporation by reason of Total and Permanent Disability, then the Option will expire on the third (3rd) anniversary of such Termination Date (but in no event later than on the tenth (10th) anniversary of the Grant Date).
Β
(5) DEAP or Agreement or Arrangement in lieu of or in addition to DEAP. In the event that (a) Optioneeβs employment with the Corporation is terminated by the Corporation, and Optionee is offered and has entered into the standard Waiver and Release Agreement with PNC or a Subsidiary under an applicable PNC or Subsidiary Displaced Employee Assistance Plan, or any successor plan by whatever name known (βDEAPβ), or Optionee is offered and has entered into a similar waiver and release agreement between PNC or a Subsidiary and Optionee pursuant to the terms of an agreement or arrangement entered into by PNC or a Subsidiary and Optionee in lieu of or in addition to the DEAP, and (b) Optionee has not revoked such waiver and release agreement, and (c) the time for revocation of such waiver and release agreement by Optionee has lapsed, then the Option will expire at the close of business on the ninetieth (90th) day after Optioneeβs Termination Date (but in no event later than on the tenth (10th) anniversary of the Grant Date) with respect to any Covered Shares as to which the Option has already become vested; provided, however, that if Optionee returns to employment with the Corporation no later
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than said ninetieth (90th) day, then for purposes of the Agreement, the entire Option, whether vested or unvested, will be treated as if the termination of Optioneeβs employment with the Corporation had not occurred.
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If the Option is vested and will expire on Optioneeβs Termination Date unless the conditions set forth in this Section A.14(c)(5) are met, then such vested Option will not terminate on the Termination Date, but Optionee will not be able to exercise the Option after such Termination Date unless and until all of the conditions set forth in this Section A.14(c)(5) have been met and the Option will terminate on the ninetieth (90th) day after Optioneeβs Termination Date (but in no event later than on the tenth (10th) anniversary of the Grant Date).
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(d) Detrimental Conduct. If the Option would otherwise remain outstanding after Optioneeβs Termination Date with respect to any of the Covered Shares pursuant to one or more of the exceptions set forth in the subsections of Section A.14(c), then notwithstanding the provisions of such exception or exceptions, the Option will expire on the date that PNC determines that Optionee has engaged in Detrimental Conduct, if earlier than the date on which the Option would otherwise expire; provided, however, that:
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(1) no determination that Optionee has engaged in Detrimental Conduct may be made on or after the date of Optioneeβs death, and Detrimental Conduct will not apply to conduct by or activities of beneficiaries or other successors to the Option in the event of Optioneeβs death;
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(2) in the event that Optioneeβs employment with the Corporation is terminated (other than by reason of Optioneeβs death) during a Coverage Period by the Corporation without Cause or by Optionee with Good Reason, whether or not another exception is applicable, no determination that Optionee has engaged in Detrimental Conduct may be made for purposes of the Agreement on or after such Termination Date; and
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(3) no determination that Optionee has engaged in Detrimental Conduct may be made after the occurrence of a Change in Control.
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A.15 βGood Reasonβ means:
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(a) the assignment to Optionee of any duties inconsistent in any respect with Optioneeβs 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 that 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 Optionee;
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(b) a reduction by the Corporation in Optioneeβs annual base salary as in effect on the Grant Date, as the same may be increased from time to time;
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(c) the Corporationβs requiring Optionee to be based at any office or location that is more than fifty (50) miles from Optioneeβs office or location immediately prior to either the CIC Triggering Event or the Change in Control;
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(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 Optionee participates immediately prior to either the CIC Triggering Event or the Change in Control that is material to Optioneeβs 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 Optioneeβs participation in such plan (or in such substitute or alternative plan) on a basis at least as
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favorable, both in terms of the amount of benefits provided and the level of Optioneeβs participation relative to other participants, as existed immediately prior to the CIC Triggering Event or the Change in Control; or
Β
(e) the failure by the Corporation to continue to provide Optionee with benefits substantially similar to those received by Optionee under any of the Corporationβs pension (including, but not limited to, tax-qualified plans), life insurance, health, accident, disability or other welfare plans in which Optionee was participating, at costs substantially similar to those paid by Optionee, immediately prior to the CIC Triggering Event or the Change in Control.
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A.16 βGrant Dateβ means the date set forth as the Grant Date on page 1 of the Agreement.
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A.17 βOptionβ means the Nonstatutory Stock Option granted to Optionee in Section 1 of the Agreement pursuant to which Optionee may purchase shares of PNC common stock as provided in the Agreement.
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A.18 βOption Priceβ means the dollar amount per share of PNC common stock set forth as the Option Price on page 1 of the Agreement.
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A.19 βOptioneeβ means the person identified as Optionee on page 1 of the Agreement.
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A.20 βPersonβ 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.
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A.21 βPNCβ means The PNC Financial Services Group, Inc.
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A.22 βRetireeβ means an Optionee who has Retired.
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A.23 βRetireβ or βRetirementβ means termination of Optioneeβs employment with the Corporation (a) at any time on or after the first day of the first month coincident with or next following the date on which Optionee attains age fifty-five (55) and completes five (5) years of service (as determined in the same manner as the determination of five years of Vesting Service under the provisions of The PNC Financial Services Group, Inc. Pension Plan) with the Corporation and (b) for a reason other than termination by reason of Optioneeβs death or by the Corporation for Cause or, unless the Committee determines otherwise, termination in connection with a divestiture of assets or of one or more Subsidiaries.
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A.24 βRight(s)β means stock appreciation right(s) in accordance with the terms of Article 7 of the Plan.
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A.25 βSECβ means the Securities and Exchange Commission.
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A.26 βTermination Dateβ means Optioneeβs last date of employment with the Corporation. If Optionee is employed by a Subsidiary that ceases to be a Subsidiary of PNC and Optionee does not continue to be employed by PNC or a Subsidiary, then for purposes of the Agreement, Optioneeβs employment with the Corporation terminates effective at the time this occurs.
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A.27 βTotal and Permanent Disabilityβ means, unless the Committee determines otherwise, Optioneeβs disability as determined to be total and permanent by the Corporation for purposes of the Agreement.
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FORM OF NON-CEG ANNUAL LTI PROGRAM
RESTRICTED STOCK GRANT AGREEMENT
Β
200_ Long-Term Incentive Award Program Grant
Continued Employment Performance Goal
Restricted Period: Three Years (100%)
Β
THE PNC FINANCIAL SERVICES GROUP, INC.
1997 LONG-TERM INCENTIVE AWARD PLAN
* * *
200Β Β LONG-TERM INCENTIVE AWARD PROGRAM
* * *
* * *
Β
GRANTEE: |
Β Β | < name > |
GRANT DATE: |
Β Β | Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β , 200Β Β |
SHARES: |
Β Β | < number of whole shares> |
Β
1. Grant of Restricted Shares. Pursuant to Article 12 of The PNC Financial Services Group, Inc. 1997 Long-Term Incentive Award Plan as amended from time to time (βPlanβ), and subject to the terms and conditions of this Restricted Stock Agreement (βAgreementβ), The PNC Financial Services Group, Inc. (βPNCβ) hereby grants to the Grantee named above (βGranteeβ) an Incentive Share Award (as defined in the Plan) of the number of shares of PNC common stock set forth above, and, upon acceptance of the Grant by Grantee in accordance with Section 17, will cause the issuance of said shares to Grantee subject to the terms and conditions of the Agreement and the Plan. The shares granted and issued to Grantee hereby as an Incentive Share Award subject to the terms and conditions of the Agreement and the Plan are hereafter referred to as the βRestricted Shares.β
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2. Definitions. Terms defined in the Plan are used in the Agreement as defined in the Plan unless otherwise defined in Annex A (attached hereto and incorporated herein by reference) or elsewhere in the Agreement.
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3. Terms of Grant. The Grant will be subject to the following terms and conditions:
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Restricted Shares will be subject to a Restricted Period as provided in Section A.24 of Annex A. Restricted Shares will be deposited with PNC or its designee,
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or credited to a book-entry account, during the term of the Restricted Period unless and until forfeited pursuant to the terms of the Agreement.
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Any certificate or certificates representing such Restricted Shares will contain the following legend:
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βThis certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture and restrictions against transfer) contained in The PNC Financial Services Group, Inc. 1997 Long-Term Incentive Award Plan as amended and an Agreement entered into between the registered owner and The PNC Financial Services Group, Inc. Release from such terms and conditions will be made only in accordance with the provisions of such Plan and such Agreement, a copy of each of which is on file in the office of the Corporate Secretary of The PNC Financial Services Group, Inc.β
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Where a book-entry system is used with respect to Restricted Shares, appropriate notation of such forfeiture possibility and transfer restrictions will be made on the system with respect to the account or accounts to which the Restricted Shares are credited.
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Restricted Shares deposited with PNC or its designee during the term of the Restricted Period that become Awarded Shares will be released and issued or reissued to, or at the proper direction of, Grantee or Granteeβs legal representative pursuant to Section 9 as soon as administratively practicable following the end of the Restricted Period.
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4. Rights as Shareholder. Except as provided in Section 6 and subject to Section 7.6(c), if applicable, and to Section 17, Grantee will have all the rights and privileges of a shareholder with respect to the Restricted Shares including, but not limited to, the right to vote the Restricted Shares and the right to receive dividends thereon if and when declared by the Board; provided, however, that all such rights and privileges will cease immediately upon any forfeiture of such shares.
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5. Capital Adjustments. Restricted Shares awarded hereunder will, as issued and outstanding shares of PNC common stock, be subject to such adjustment as may be necessary to reflect corporate transactions, including, without limitation, stock dividends, stock splits, spin-offs, split-offs, recapitalizations, mergers, consolidations or reorganizations of or by PNC; provided, however, that any shares received as distributions on or in exchange for Unvested Shares will be subject to the terms and conditions of the Agreement as if they were Restricted Shares.
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6. Prohibitions Against Sale, Assignment, etc. Unvested Shares may not be sold, assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered, other than by will or the laws of descent and distribution or as may be required pursuant to Section 10.2, unless and until the Restricted Period terminates and the Awarded Shares are released and issued or reissued by PNC pursuant to Section 9.
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7. Forfeiture; Death; Qualifying Disability or Retirement Termination; Termination in Anticipation of Change in Control.
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7.1 Forfeiture on Termination of Employment. Except as otherwise provided in and subject to the conditions of Section 7.3, Section 7.4(a), Section 7.5(a), Section 7.5(c), Section 7.6(a), Section 7.6(b), or Section 8, if applicable, or unless the Committee determines otherwise, in the event that Granteeβs employment with the Corporation terminates prior to the third (3rd) anniversary of the Grant Date, all Restricted Shares that are Unvested Shares on Granteeβs Termination Date will be forfeited by Grantee to PNC without payment of any consideration by PNC.
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Upon forfeiture of Unvested Shares pursuant to the provisions of this Section 7.1 or the provisions of Section 7.2, Section 7.4(b), Section 7.5(b), Section 7.5(c) or Section 7.6(d), neither Grantee nor any successors, heirs, assigns or legal representatives of Grantee will thereafter have any further rights or interest in such Unvested Shares or any certificate or certificates representing such Unvested Shares.
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7.2 Forfeiture for Detrimental Conduct. Unvested Shares that would otherwise remain outstanding after Granteeβs Termination Date, if any, will be forfeited by Grantee to PNC without payment of any consideration by PNC in the event that, at any time prior to the date such shares become Awarded Shares, PNC determines that Grantee has engaged in Detrimental Conduct; provided, however, that: (a) this Section 7.2 will not apply to Restricted Shares that remain outstanding after Granteeβs Termination Date pursuant to Section 7.3 or Section 7.6, if any; (b) no determination that Grantee has engaged in Detrimental Conduct may be made on or after the date of Granteeβs death; (c) Detrimental Conduct will not apply to conduct by or activities of successors to the Restricted Shares by will or the laws of descent and distribution in the event of Granteeβs death; and (d) Detrimental Conduct will cease to apply to any Restricted Shares upon a Change in Control.
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7.3 Death. In the event of Granteeβs death while an employee of the Corporation and prior to the third (3rd) anniversary of the Grant Date, the Three-Year Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period with respect to the then outstanding Unvested Shares will terminate on the date of Granteeβs death.
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The Restricted Shares which thereby become Awarded Shares will be released and issued or reissued by PNC to, or at the proper direction of, Granteeβs legal representative pursuant to Section 9 as soon as administratively practicable following such date.
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7.4 Disability Termination.
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(a) In the event Granteeβs employment with the Corporation is terminated prior to the third (3rd) anniversary of the Grant Date by the Corporation by reason of Granteeβs Total and Permanent Disability, Unvested Shares will not be forfeited on
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Granteeβs Termination Date. Instead, Unvested Shares will, subject to the forfeiture provisions of Section 7.2, remain outstanding pending approval of the vesting of the Restricted Shares pursuant to this Section 7.4(a) by the Designated Person specified in Section A.13 of Annex A.
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If such Unvested Shares are still outstanding but the Designated Person has not made an affirmative determination to either approve or disapprove the vesting of the Unvested Shares by the day immediately preceding the third (3rd) anniversary of the Grant Date, then the Restricted Period will be automatically extended through the first to occur of: (1) the day the Designated Person makes an affirmative determination regarding such vesting; and (2) either (i) the ninetieth (90th) day following the third (3rd) anniversary of the Grant Date, if the Designated Person is the Chief Human Resources Officer of PNC, or (ii) the 180th day following such anniversary date if the Designated Person is the Committee, whichever is applicable.
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If the vesting of the then outstanding Unvested Shares is affirmatively approved by the Designated Person on or prior to the last day of the Restricted Period, including any extension of the Restricted Period, if applicable, then the Three-Year Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period with respect to any then outstanding Unvested Shares will terminate as of the end of the day on the date of such approval or the day immediately preceding the third (3rd) anniversary of the Grant Date, whichever is later. The Restricted Shares outstanding at the termination of the Restricted Period will become Awarded Shares and will be released and issued or reissued by PNC pursuant to Section 9.
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(b) If the Designated Person disapproves the vesting of the Unvested Shares that had remained outstanding after Granteeβs Termination Date pending approval of vesting, then all such Unvested Shares that are still outstanding will be forfeited by Grantee to PNC on such disapproval date without payment of any consideration by PNC.
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If by the end of the Restricted Period, including any extension of the Restricted Period pursuant to the second paragraph of Section 7.4(a), if applicable, the Designated Person has neither affirmatively approved nor disapproved the vesting of the Unvested Shares that had remained outstanding after Granteeβs Termination Date pending approval of vesting, then all such Unvested Shares that are still outstanding will be forfeited by Grantee to PNC at the close of business on the last day of the Restricted Period without payment of any consideration by PNC.
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7.5 Retirement.
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(a) In the event that Grantee Retires on or after the first (1st) anniversary of the Grant Date but prior to the third (3rd) anniversary of the Grant Date, Unvested Shares will not be forfeited on Granteeβs Termination Date. Instead, Unvested Shares will, subject to the forfeiture provisions of Section 7.2, remain outstanding pending approval of the vesting of the Restricted Shares pursuant to this Section 7.5(a) by the Designated Person specified in Section A.13 of Annex A.
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If such Unvested Shares are still outstanding but the Designated Person has not made an affirmative determination to either approve or disapprove the vesting of the Unvested Shares by the day immediately preceding the third (3rd) anniversary of the Grant Date, then the Restricted Period will be automatically extended through the first to occur of: (1) the day the Designated Person makes an affirmative determination regarding such vesting; and (2) either (i) the ninetieth (90th) day following the third (3rd) anniversary of the Grant Date, if the Designated Person is the Chief Human Resources Officer of PNC, or (ii) the 180th day following such anniversary date if the Designated Person is the Committee, whichever is applicable.
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If the vesting of the then outstanding Unvested Shares is affirmatively approved by the Designated Person on or prior to the last day of the Restricted Period, including any extension of the Restricted Period, if applicable, then the Three-Year Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period with respect to any then outstanding Unvested Shares will terminate as of the end of the day on the date of such approval or the day immediately preceding the third (3rd) anniversary of the Grant Date, whichever is later. The Restricted Shares outstanding at the termination of the Restricted Period will become Awarded Shares and will be released and issued or reissued by PNC pursuant to Section 9.
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(b) If the Designated Person disapproves the vesting of the Unvested Shares that had remained outstanding after Granteeβs Termination Date pending approval of vesting, then all such Unvested Shares that are still outstanding will be forfeited by Grantee to PNC on such disapproval date without payment of any consideration by PNC.
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If by the end of the Restricted Period, including any extension of the Restricted Period pursuant to the second paragraph of Section 7.5(a), if applicable, the Designated Person has neither affirmatively approved nor disapproved the vesting of the Unvested Shares that had remained outstanding after Granteeβs Termination Date pending approval of vesting, then all such Unvested Shares that are still outstanding will be forfeited by Grantee to PNC at the close of business on the last day of the Restricted Period without payment of any consideration by PNC.
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(c) In the event that Grantee Retires prior to the first (1st) anniversary of the Grant Date, all Restricted Shares that are Unvested Shares on Granteeβs Termination Date will be forfeited by Grantee to PNC on such date without payment of any consideration by PNC; provided, however, that the Committee may, in its sole discretion with respect to some or all of the Unvested Shares, treat such shares as if Grantee had retired on or after the first (1st) anniversary of the Grant Date.
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7.6 Termination in Anticipation of a Change in Control.
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(a) Notwithstanding anything in the Agreement to the contrary, if, after the occurrence of a CIC Triggering Event but prior to a CIC Failure and prior to the third (3rd) anniversary of the Grant Date, Granteeβs employment is terminated (other than by reason of Granteeβs death) by the Corporation without Cause or by Grantee for Good
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Reason, or if Granteeβs employment is deemed to have been so terminated pursuant to Section 7.6(b), then: (i) the Three-Year Continued Employment Performance Goal will be deemed to have been achieved and the Restricted Period with respect to any then outstanding Unvested Shares will terminate as of the end of the day on the day immediately preceding Granteeβs Termination Date (or, in the case of a qualifying termination pursuant to Section 7.6(b), the date all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.6(b) are met); and (ii) all Restricted Shares that thereby become Awarded Shares will be released and issued or reissued by PNC pursuant to Section 9 as soon as administratively practicable following such date.
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(b) Granteeβs employment will also be deemed to have been terminated by the Corporation without Cause after the occurrence of a CIC Triggering Event but prior to a CIC Failure for purposes of Section 7.6(a) if: (i) Granteeβs employment is terminated by the Corporation without Cause; (ii) such termination of employment (a) was at the request of a third party that has taken steps reasonably calculated to effect a Change in Control or (b) otherwise arose in anticipation of a Change in Control; and (iii) a CIC Triggering Event or a Change in Control occurs within three (3) months of such termination of employment.
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Granteeβs employment will also be deemed to have been terminated by Grantee for Good Reason after the occurrence of a CIC Triggering Event but prior to a CIC Failure for purposes of Section 7.6(a) if: (i) Grantee terminates Granteeβs employment with Good Reason; (ii) the circumstance or event that constitutes Good Reason (a) occurs at the request of a third party that has taken steps reasonably calculated to effect a Change in Control or (b) otherwise arose in anticipation of a Change in Control; and (iii) a CIC Triggering Event or a Change in Control occurs within three (3) months of such termination of employment.
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For purposes of this Section 7.6(b) only, Grantee will have the burden of proving that the requirements of clause (ii) of the first or second paragraph of this Section 7.6(b), as the case may be, have been met and the standard of proof to be met by Grantee will be clear and convincing evidence.
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For purposes of this Section 7.6(b) only, the definition of Change in Control in Section A.6 of Annex A will exclude the proviso in Section A.6(a).
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(c) If the Unvested Shares will be forfeited by Grantee to PNC by reason of Granteeβs termination of employment with the Corporation pursuant to Section 7.1 unless all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.6(b) are met, then in the event that the record date for any dividend payable with respect to the Unvested Shares occurs on or after Granteeβs Termination Date but prior to the time all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.6(b) have been met, such dividend will be held, without interest, pending satisfaction of all of such conditions. In the event that one or more of the conditions of Section 7.6(b) are not met, any dividend
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being held pending satisfaction of such conditions will be forfeited by Grantee to PNC without payment of any consideration by PNC.
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(d) If the Unvested Shares will be forfeited by Grantee to PNC by reason of Granteeβs termination of employment with the Corporation pursuant to Section 7.1 unless all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.6(b) are met, then the Restricted Shares will remain outstanding pending satisfaction of all of those conditions. Upon the failure of any required condition, all such Unvested Shares will be forfeited by Grantee to PNC on the date such failure occurs without payment of any consideration by PNC.
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8. Change in Control. Notwithstanding anything in the Agreement to the contrary, upon the occurrence of a Change in Control: (i) if Grantee is an employee of the Corporation as of the day immediately preceding the Change in Control, the Three-Year Continued Employment Performance Goal will be deemed to have been achieved and the Restricted Period will terminate with respect to all then outstanding Unvested Shares as of the day immediately preceding the Change in Control; (ii) if Granteeβs employment with the Corporation terminated prior to the occurrence of the Change in Control but the Unvested Shares remained outstanding after such termination of employment pursuant to Section 7.4 or Section 7.5 and are still outstanding pending approval of the vesting of such shares by the Designated Person specified in Section A.13 of Annex A, then with respect to all Unvested Shares outstanding as of the day immediately preceding the Change in Control, such vesting approval will be deemed to have been given, the Three-Year Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period will terminate, all as of the day immediately preceding the Change in Control; and (iii) all Restricted Shares that thereby become Awarded Shares will be released and issued or reissued by PNC pursuant to Section 9 as soon as administratively practicable following such date.
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9. Termination of Prohibitions. Following termination of the Restricted Period, PNC will release and issue or reissue the certificate or certificates representing the then outstanding whole Restricted Shares that have become Awarded Shares without the legend referred to in Section 3.
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Upon release and issuance or reissuance of shares that have become Awarded Shares, PNC or its designee will deliver the certificate or certificates for such whole shares to, or at the proper direction of, Grantee or Granteeβs legal representative.
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10. Payment of Taxes.
Β
10.1 Internal Revenue Code Section 83(b) Election. In the event that Grantee makes an Internal Revenue Code Section 83(b) election with respect to the Restricted Shares, Grantee shall satisfy all applicable federal, state or local withholding tax obligations arising from that election either: (a) by payment of cash; (b) by physical delivery to PNC of certificates for whole shares of PNC common stock that are not subject to any contractual restriction, pledge or other encumbrance and that have been
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owned by Grantee for at least six (6) months and, in the case of restricted stock, for which it has been at least six (6) months since the restrictions lapsed; or (c) by a combination of cash and such stock. Any such tax election shall be made pursuant to a form to be provided to Grantee by PNC on request. For purposes of this Section 10.1, shares of PNC common stock that are used to satisfy applicable withholding tax obligations will be valued at their Fair Market Value on the date the tax withholding obligation arises. Grantee will provide to PNC a copy of any Internal Revenue Code Section 83(b) election filed by Grantee with respect to the Restricted Shares not later than ten (10) days after the filing of such election.
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10.2 Other Tax Liabilities. Where Grantee has not previously satisfied all applicable withholding tax obligations, PNC will, at the time the tax withholding obligation arises, retain sufficient whole shares of PNC common stock from the shares granted pursuant to the Agreement to satisfy the minimum amount of taxes required to be withheld by the Corporation in connection with the Restricted Shares. For purposes of this Section 10.2, shares of PNC common stock retained to satisfy applicable withholding tax requirements will be valued at their Fair Market Value on the date the tax withholding obligation arises.
Β
PNC will not retain more than the number of shares sufficient to satisfy the minimum amount of taxes required to be withheld in connection with the Restricted Shares. If Grantee desires to have an additional amount, up to Granteeβs W-4 obligation, withheld above the required minimum and if PNC so permits, Grantee may elect to satisfy this additional withholding either: (a) by payment of cash; or (b) using whole shares of PNC common stock (either by physical delivery to PNC of certificates for the shares or through PNCβs attestation procedure) that are not subject to any contractual restriction, pledge or other encumbrance and that have been owned by Grantee for at least six (6) months and, in the case of restricted stock, for which it has been at least six (6) months since the restrictions lapsed. Any such tax election shall be made pursuant to a form provided by PNC. Shares of PNC common stock that are used for this purpose will be valued at their Fair Market Value on the date the tax withholding obligation arises.
Β
11. Employment. Neither the granting and issuance of the Restricted Shares nor any term or provision of the Agreement shall constitute or be evidence of any understanding, expressed or implied, on the part of PNC or any Subsidiary to employ Grantee for any period or in any way alter Granteeβs status as an employee at will.
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12. Subject to the Plan and the Committee. In all respects the Grant and the Agreement are subject to the terms and conditions of the Plan, which has been made available to Grantee and is incorporated herein by reference; provided, however, the terms of the Plan shall not be considered an enlargement of any benefits under the Agreement. Further, the Grant and the Agreement are subject to any interpretation of, and any rules and regulations issued by, the Committee or under the authority of the Committee, whether made or issued before or after the Grant Date.
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13. Headings; Entire Agreement. Headings used in the Agreement are provided for reference and convenience only, shall not be considered part of the Agreement, and shall not be employed in the construction of the Agreement. The Agreement constitutes the entire agreement between Grantee and PNC and supersedes all other discussions, negotiations, correspondence, representations, understandings and agreements between the parties with respect to the subject matter hereof.
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14. Grantee Covenants.
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14.1 General. Grantee and PNC acknowledge and agree that Grantee has received adequate consideration with respect to enforcement of the provisions of Sections 14 and 15, that such provisions are reasonable and properly required for the adequate protection of the business of the Corporation, and that enforcement of such provisions will not prevent Grantee from earning a living.
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14.2 Non-Solicitation; No-Hire. Grantee agrees to comply with the provisions of subsections (a) and (b) of this Section 14.2 while employed by the Corporation and for a period of twelve (12) months after Granteeβs Termination Date regardless of the reason for such termination of employment.
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(a) Non-Solicitation. Grantee shall not, directly or indirectly, either for Granteeβs own benefit or purpose or for the benefit or purpose of any Person other than PNC or any Subsidiary, solicit, call on, do business with, or actively interfere with PNCβs or any Subsidiaryβs relationship with, or attempt to divert or entice away, any Person that Grantee should reasonably know (i) is a customer of PNC or any Subsidiary for which PNC or any Subsidiary provides any services as of the Termination Date, or (ii) was a customer of PNC or any Subsidiary for which PNC or any Subsidiary provided any services at any time during the twelve (12) months preceding the Termination Date, or (iii) was, as of the Termination Date, considering retention of PNC or any Subsidiary to provide any services.
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(b) No-Hire. Grantee shall not, directly or indirectly, either for Granteeβs own benefit or purpose or for the benefit or purpose of any Person other than PNC or any Subsidiary, employ or offer to employ, call on, or actively interfere with PNCβs or any Subsidiaryβs relationship with, or attempt to divert or entice away, any employee of the Corporation, nor shall Grantee assist any other Person in such activities.
Β
Notwithstanding the above, if Granteeβs employment with the Corporation is terminated by the Corporation without Cause or by Grantee with Good Reason and such Termination Date occurs during a Coverage Period (either as Coverage Period is defined in Section A.12 of Annex A or, if Grantee was a party to a written agreement between Grantee and PNC providing, among other things, for certain change in control severance benefits (a βCIC Severance Agreementβ) that was in effect at the time of such termination of employment, as Coverage Period is defined in such CIC Severance Agreement, if longer), then commencing immediately after such Termination Date, the provisions of
Β
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subsections (a) and (b) of this Section 14.2 will no longer apply and will be replaced with the following subsection (c):
Β
(c) No-Hire. Grantee agrees that Grantee shall not, for a period of twelve (12) months after the Termination Date, employ or offer to employ, solicit, actively interfere with PNCβs or any PNC affiliateβs relationship with, or attempt to divert or entice away, any officer of PNC or any PNC affiliate.
Β
14.3 Confidentiality. During Granteeβs employment with the Corporation, and thereafter regardless of the reason for termination of such employment, Grantee will not disclose or use in any way any confidential business or technical information or trade secret acquired in the course of such employment, all of which is the exclusive and valuable property of the Corporation whether or not conceived of or prepared by Grantee, other than (a) information generally known in the Corporationβs industry or acquired from public sources, (b) as required in the course of employment by the Corporation, (c) as required by any court, supervisory authority, administrative agency or applicable law, or (d) with the prior written consent of PNC.
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14.4 Ownership of Inventions. Grantee shall promptly and fully disclose to PNC any and all inventions, discoveries, improvements, ideas or other works of inventorship or authorship, whether or not patentable, that have been or will be conceived and/or reduced to practice by Grantee during the term of Granteeβs employment with the Corporation, whether alone or with others, and that are (a) related directly or indirectly to the business or activities of PNC or any Subsidiary or (b) developed with the use of any time, material, facilities or other resources of PNC or any Subsidiary (βDevelopmentsβ). Grantee agrees to assign and hereby does assign to PNC or its designee all of Granteeβs right, title and interest, including copyrights and patent rights, in and to all Developments. Grantee shall perform all actions and execute all instruments that PNC or any Subsidiary shall deem necessary to protect or record PNCβs or its designeeβs interests in the Developments. The obligations of this Section 14.4 shall be performed by Grantee without further compensation and will continue beyond the Termination Date.
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15. Enforcement Provisions. Grantee understands and agrees to the following provisions regarding enforcement of the Agreement.
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15.1 Governing Law and Jurisdiction. The Agreement is governed by and construed under the laws of the Commonwealth of Pennsylvania, without regard to conflict of laws rules. Any dispute or claim arising out of or relating to the Agreement or claim of breach hereof shall be brought exclusively in the federal court for the Western District of Pennsylvania or in the Court of Common Pleas of Allegheny County, Pennsylvania. By execution of the Agreement, Grantee and PNC hereby consent to the exclusive jurisdiction of such courts, and waive any right to challenge jurisdiction or venue in such courts with regard to any suit, action, or proceeding under or in connection with the Agreement.
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15.2 Equitable Remedies. A breach of the provisions of any of Sections 14.2, 14.3 or 14.4 will cause the Corporation irreparable harm, and the Corporation will therefore be entitled to issuance of immediate, as well as permanent, injunctive relief restraining Grantee, and each and every person and entity acting in concert or participating with Grantee, from initiation and/or continuation of such breach.
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15.3 Tolling Period. If it becomes necessary or desirable for the Corporation to seek compliance with the provisions of Section 14.2 by legal proceedings, the period during which Grantee shall comply with said provisions will extend for a period of twelve (12) months from the date of the legal order requiring such compliance.
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15.4 No Waiver. Failure of PNC to demand strict compliance with any of the terms, covenants or conditions of the Agreement will not be deemed a waiver of such term, covenant or condition, nor will any waiver or relinquishment of any such term, covenant or condition on any occasion or on multiple occasions be deemed a waiver or relinquishment of such term, covenant or condition.
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15.5 Severability. The restrictions and obligations imposed by Sections 14.2, 14.3 and 14.4 are separate and severable, and it is the intent of Grantee and PNC that if any restriction or obligation imposed by any of these provisions is deemed by a court of competent jurisdiction to be void for any reason whatsoever, the remaining provisions, restrictions and obligations will remain valid and binding upon Grantee.
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15.6 Reform. In the event any of Sections 14.2, 14.3 and 14.4 are determined by a court of competent jurisdiction to be unenforceable because unreasonable either as to length of time or area to which said restriction applies, it is the intent of Grantee and PNC that said court reduce and reform the provisions thereof so as to apply the greatest limitations considered enforceable by the court.
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15.7 Waiver of Jury Trial. Each of Grantee and PNC hereby waives any right to trial by jury with regard to any suit, action or proceeding under or in connection with any of Sections 14.2, 14.3 and 14.4.
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15.8 Applicable Law. Notwithstanding anything in the Agreement, PNC will not be required to comply with any term, covenant or condition of the Agreement if and to the extent prohibited by law, including but not limited to federal banking and securities regulations, or as otherwise directed by one or more regulatory agencies having jurisdiction over PNC or any of its subsidiaries. Further, to the extent, if any, applicable to Grantee, Grantee agrees to reimburse PNC for any amounts Grantee may be required to reimburse PNC or its subsidiaries pursuant to Section 304 of the Xxxxxxxx-Xxxxx Act of 2002, and agrees that PNC need not comply with any term, covenant or condition of the Agreement to the extent that doing so would require that Grantee reimburse PNC or its subsidiaries for such amounts pursuant to Section 304 of the Xxxxxxxx-Xxxxx Act of 2002.
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16. Amendment of Pre-2004 Stock Options, Restricted Stock and Restricted Stock Deferrals. All nonstatutory stock options granted to employees under the Plan outstanding on February 18, 2004, all restricted stock grants to employees under the Plan or PNCβs 1996 Executive Incentive Award Plan outstanding but not yet vested on February 18, 2004, and all participant restricted stock deferral accounts under the PNC and Affiliates Deferred Compensation Plan that were in place but not yet vested on February 18, 2004, are subject to the amendments approved by the Committee on that date. These amendments are generally described in the Plan prospectus dated Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β , 200Β Β under the heading βRecent Amendmentsβ of the section titled βThe Plan.β A copy of this Plan prospectus accompanied or preceded delivery of the Agreement to Grantee.
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To the extent that Grantee is the holder of any such stock options or is the grantee of any such restricted stock or is a participant in the PNC and Affiliates Deferred Compensation Plan with such stock deferral account or accounts in place but not yet vested, Grantee hereby acknowledges and consents to such amendments.
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17. Acceptance of Grant; PNC Right to Cancel. If Grantee does not accept the Grant by executing and delivering a copy of the Agreement to PNC, without altering or changing the terms thereof in any way, within sixty (60) days of receipt by Grantee of a copy of the Agreement, PNC may, in its sole discretion, withdraw its offer and cancel the Grant at any time prior to Granteeβs delivery to PNC of a copy of the Agreement executed by Grantee. Otherwise, upon execution and delivery of the Agreement by both PNC and Grantee and, in the event that Grantee is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to PNC securities, the filing with and acceptance by the SEC of a Form 4 reporting the Grant, the Agreement is effective.
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Grantee will not have any of the rights of a shareholder with respect to the Restricted Shares as set forth in Section 4, and will not have the right to vote or to receive dividends on such shares, until the date the Agreement is effective and the Restricted Shares are issued in accordance with this Section 17.
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In the event that one or more record dates for dividends on PNC common stock occur after the Grant Date but before the date the Agreement is effective in accordance with this Section 17 and the Restricted Shares are issued, then upon the effectiveness of the Agreement, the Corporation will make a cash payment to Grantee equivalent to the amount of the dividends Grantee would have received had the Agreement been effective and the Restricted Shares had been issued on the Grant Date.
Β
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IN WITNESS WHEREOF, PNC has caused the Agreement to be signed on its behalf as of the Grant Date.
Β
THE PNC FINANCIAL SERVICES GROUP, INC. | ||
By: |
Β | Β |
Β | Β | Chairman and Chief Executive Officer |
ATTEST: | ||
By: |
Β | Β |
Β | Β | Corporate Secretary |
ACCEPTED AND AGREED TO by GRANTEE. | ||
Β | Β | Β |
Β | ||
Grantee |
Β
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200_ Long-Term Incentive Award Program Grant
Continued Employment Performance Goal
Restricted Period: Three Years (100%)
Β
ANNEX A
TO
THE PNC FINANCIAL SERVICES GROUP, INC.
1997 LONG-TERM INCENTIVE AWARD PLAN
200_ LONG-TERM INCENTIVE AWARD PROGRAM
Β
* * *
Β
CERTAIN DEFINITIONS
Β
Except where the context otherwise indicates, the following definitions apply for purposes of the Restricted Stock Agreement (βAgreementβ) to which this Annex A is attached:
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A.1 βAwarded Shares.β Provided that the Restricted Shares are then outstanding, Restricted Shares become βAwarded Sharesβ when both of the following have occurred: (a) the Three-Year Continued Employment Performance Goal has been achieved or is deemed to have been achieved pursuant to the terms of the Agreement; and (b) the Restricted Period has terminated.
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A.2 βBoardβ means the Board of Directors of PNC.
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A.3 βBusiness Dayβ means any day when the New York Stock Exchange is open for business.
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A.4 βCauseβ means:
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(a) the willful and continued failure of Grantee to substantially perform Granteeβs 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 Grantee by the Board or the CEO which specifically identifies the manner in which the Board or the CEO believes that Grantee has not substantially performed Granteeβs duties; or
Β
(b) the willful engaging by Grantee in illegal conduct or gross misconduct that is materially and demonstrably injurious to PNC or any Subsidiary.
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For purposes of the preceding clauses (a) and (b), no act or failure to act, on the part of Grantee, shall be considered willful unless it is done, or omitted to be done, by
Β
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Grantee in bad faith and without reasonable belief that Granteeβs 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 CEO or Granteeβs superior or based upon the advice of counsel for the Corporation, shall be conclusively presumed to be done, or omitted to be done, by Grantee in good faith and in the best interests of the Corporation.
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The cessation of employment of Grantee will be deemed to be a termination of Granteeβs employment with the Corporation for Cause for purposes of the Agreement only if and when there shall have been delivered to Grantee, as part of the notice of Granteeβs 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 on the basis of clear and convincing evidence that, in the good faith opinion of the Board, Grantee is guilty of conduct described in clause (a) or clause (b) above and, in either case, specifying the particulars thereof in detail. Such resolution shall be adopted only after (i) reasonable notice of such Board meeting is provided to Grantee, together with written notice that PNC believes that Grantee is guilty of conduct described in clause (a) or clause (b) above and, in either case, specifying the particulars thereof in detail, and (ii) Grantee is given an opportunity, together with counsel, to be heard before the Board.
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A.5 βCEOβ means the chief executive officer of PNC.
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A.6 βChange in Controlβ means a change of control of PNC 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 PNC is then subject to such reporting requirement; provided, however, that without limitation, a Change in Control will be deemed to have occurred if:
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(a) any Person, excluding employee benefits 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 PNC representing twenty percent (20%) or more of the combined voting power of PNCβs 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 will not be considered a Change in Control if the Board approves such acquisition either prior to or immediately after its occurrence;
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(b) PNC consummates a merger, consolidation, share exchange, division or other reorganization or transaction of PNC (a βFundamental Transactionβ) with any other corporation, other than a Fundamental Transaction that results in the voting securities of PNC 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) PNCβs outstanding securities, (ii) the surviving entityβs outstanding
Β
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securities, or (iii) in the case of a division, the outstanding securities of each entity resulting from the division;
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(c) the shareholders of PNC approve a plan of complete liquidation or winding-up of PNC or an agreement for the sale or disposition (in one transaction or a series of transactions) of all or substantially all of PNCβs assets;
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(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 PNCβs shareholders in connection with such proxy contest was approved by a vote of at least two-thirds (2/3rds) 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);
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(e) during any period of twenty-four (24) 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 PNCβs shareholders was approved by a vote of at least two-thirds (2/3rds) 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
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(f) the Board determines that a Change in Control has occurred.
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Notwithstanding anything to the contrary herein, a divestiture or spin-off of a subsidiary or division of PNC will not by itself constitute a Change in Control.
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A.7 βCIC Failureβ means the following:
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(a) with respect to a CIC Triggering Event described in Section A.8(a), PNCβs shareholders vote against the transaction approved by the Board or the agreement to consummate the transaction is terminated; or
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(b) with respect to a CIC Triggering Event described in Section A.8(b), the proxy contest fails to replace or remove a majority of the members of the Board.
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A.8 βCIC Triggering Eventβ means the occurrence of either of the following:
Β
(a) the Board or PNCβs shareholders approve a transaction described in Subsection (b) of the definition of Change in Control contained in Section A.6; or
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(b) the commencement of a proxy contest in which any Person seeks to replace or remove a majority of the members of the Board.
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A.9 βCommitteeβ means the Personnel and Compensation Committee of the Board.
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A.10 βCompetitive Activityβ means, for purposes of the Agreement, any participation in, employment by, ownership of any equity interest exceeding one percent (1%) in, or promotion or organization of, any Person other than PNC or any Subsidiary (a) engaged in business activities similar to some or all of the business activities of PNC or any Subsidiary as of Granteeβs Termination Date or (b) engaged in business activities which Grantee knows PNC or any Subsidiary intends to enter within the first twelve (12) months after Granteeβs Termination Date, in either case whether Grantee is acting as agent, consultant, independent contractor, employee, officer, director, investor, partner, shareholder, proprietor or in any other individual or representative capacity therein.
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A.11 βCorporationβ means PNC and its Subsidiaries.
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A.12 βCoverage Periodβ means a period (a) 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 (b) ending on the date that is three (3) years after the date of the Change in Control; provided, however, that in the event that a Coverage Period commences on the date of a CIC Triggering Event, such Coverage Period will terminate upon the earlier to occur of (x) the date of a CIC Failure and (y) the date that is three (3) 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 will commence upon the earlier to occur of clause (a)(i) and clause (a)(ii) in the preceding sentence.
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A.13 βDesignated Personβ will be either: (a) the Committee, if Grantee is a member of the Corporate Executive Group (or equivalent successor classification) or is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to PNC securities; or (a) the Chief Human Resources Officer of PNC, if Grantee is not within one of the groups specified in Section A.13(a).
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A.14 βDetrimental Conductβ means:
Β
(a) Grantee has engaged, without the prior written consent of PNC (at PNCβs sole discretion), in any Competitive Activity in the continental United States at any time during the period commencing on Granteeβs Termination Date through the first (1st) anniversary of Granteeβs Termination Date;
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(b) a material breach by Grantee of (i) any code of conduct of PNC or a Subsidiary or (ii) other written policy of PNC or a Subsidiary, in either case required by law or established to maintain compliance with applicable law;
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(c) any act of fraud, misappropriation, material dishonesty, or embezzlement by Grantee against PNC or a Subsidiary or any client or customer of PNC or a Subsidiary;
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(d) any conviction (including a plea of guilty or of nolo contendere) of Grantee for, or entry by Grantee into a pre-trial disposition with respect to, the
Β
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commission of a felony which relates to or arises out of Granteeβs employment or other service relationship with the Corporation; or
Β
(e) entry of any order against Grantee by any governmental body having regulatory authority with respect to the business of PNC or any Subsidiary, which order relates to or arises out of Granteeβs employment or other service relationship with the Corporation.
Β
Grantee will be deemed to have engaged in Detrimental Conduct for purposes of the Agreement only if and when the Committee determines that Grantee has engaged in conduct described in clause (a) above, that Grantee is guilty of conduct described in clause (b) or clause (c) above, or that an event described in clause (d) or clause (e) above has occurred with respect to Grantee and, if so, determines that Grantee will be deemed to have engaged in Detrimental Conduct.
Β
A.15 βExchange Actβ means the Securities Exchange Act of 1934 as amended, and the rules and regulations promulgated thereunder.
Β
A.16 βFair Market Valueβ as it relates to PNC common stock means the average of the high and low sale prices of the PNC common stock as reported on the New York Stock Exchange (or such successor reporting system as PNC may select) on the relevant date or, if no sale of the PNC common stock has been reported for that day, the average of such prices on the next preceding day and the next following day for which there were reported sales.
Β
A.17 βGood Reasonβ means:
Β
(a) the assignment to Grantee of any duties inconsistent in any respect with Granteeβs 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 Grantee;
Β
(b) a reduction by the Corporation in Granteeβs annual base salary as in effect on the Grant Date, as the same may be increased from time to time;
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(c) the Corporationβs requiring Grantee to be based at any office or location that is more than fifty (50) miles from Granteeβs office or location immediately prior to either the CIC Triggering Event or the Change in Control;
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(d) the failure by the Corporation (i) to continue in effect any bonus, stock option or other cash or equity-based incentive plan or program in which Grantee participates immediately prior to either the CIC Triggering Event or the Change in Control that is material to Granteeβs total compensation, unless a substantially equivalent
Β
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arrangement (embodied in an ongoing substitute or alternative plan or program) has been made with respect to such plan or program, or (ii) to continue Granteeβs participation in such plan or program (or in such substitute or alternative plan or program) on a basis at least as favorable, both in terms of the amount of benefits provided and the level of Granteeβs participation relative to other participants, as existed immediately prior to the CIC Triggering Event or the Change in Control; or
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(e) the failure by the Corporation to continue to provide Grantee with benefits substantially similar to those received by Grantee under any of the Corporationβs pension (including, but not limited to, tax-qualified plans), life insurance, health, accident, disability or other welfare plans or programs in which Grantee was participating, at costs substantially similar to those paid by Grantee, immediately prior to the CIC Triggering Event or the Change in Control.
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A.18 βGrantβ means the Restricted Shares granted and issued to Grantee pursuant to Section 1 of the Agreement.
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A.19 βGrant Dateβ means the Grant Date set forth on page 1 of the Agreement.
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A.20 βGranteeβ means the person identified as Grantee on page 1 of the Agreement.
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A.21 βInternal Revenue Codeβ means the Internal Revenue Code of 1986 as amended, and the rules and regulations promulgated thereunder.
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A.22 βPersonβ 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.
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A.23 βPNCβ means The PNC Financial Services Group, Inc.
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A.24 βRestricted Periodβ means, subject to early termination if so determined by the Committee or pursuant to Section 7.6 of the Agreement, if applicable, the period from the Grant Date through (and including) the earlier of: (a) the date of Granteeβs death; (b) the day immediately preceding the day a Change in Control is deemed to have occurred; and (c) the day immediately preceding the third (3rd) anniversary of the Grant Date or, if later, the last day of any extension of the Restricted Period pursuant to Section 7.4(a) or Section 7.5(a) of the Agreement, if applicable.
Β
A.25 βRetireeβ means a Grantee who has Retired.
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A.26 βRetireβ or βRetirementβ means termination of Granteeβs employment with the Corporation at any time and for any reason (other than termination by reason of Granteeβs death or by the Corporation for Cause or, unless the Committee determines otherwise, termination in connection with a divestiture of assets or of one or more Subsidiaries) if such termination of employment occurs on or after the first (1st) day of
Β
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the first (1st) month coincident with or next following the date on which Grantee attains age fifty-five (55) and completes five (5) years of service (as determined in the same manner as the determination of five years of Vesting Service under the provisions of The PNC Financial Services Group, Inc. Pension Plan) with the Corporation.
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A.27 βSECβ means the United States Securities and Exchange Commission.
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A.28 βTermination Dateβ means Granteeβs last date of employment with the Corporation. If Grantee is employed by a Subsidiary that ceases to be a Subsidiary of PNC and Grantee does not continue to be employed by PNC or a Subsidiary, then for purposes of the Agreement, Granteeβs employment with the Corporation terminates effective at the time this occurs.
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A.29 βThree-Year Continued Employment Performance Goalβ means, subject to early achievement if so determined by the Committee or to deemed achievement pursuant to Section 7.3, Section 7.4, Section 7.5, Section 7.6, or Section 8 of the Agreement, if applicable, that Grantee has been continuously employed by the Corporation for the period from the Grant Date through (and including) the day immediately preceding the first of the following to occur: (a) the third (3rd) anniversary of the Grant Date; (b) the date of Granteeβs death; and (c) the day a Change in Control is deemed to have occurred.
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A.30 βTotal and Permanent Disabilityβ means, unless the Committee determines otherwise, Granteeβs disability as determined to be total and permanent by the Corporation for purposes of the Agreement.
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A.31 βUnvested Sharesβ means any Restricted Shares that are not Awarded Shares.
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FORM OF CEG LTI PROGRAM
RESTRICTED STOCK GRANT AGREEMENT
Β
CEG LTI Program Restricted Stock Grant
Continued Employment Performance Goal
Restricted Period: Through November Β Β Β Β , 200Β Β (100%) [restricted period usually ends in November and can be between two and four years]
Β
THE PNC FINANCIAL SERVICES GROUP, INC.
1997 LONG-TERM INCENTIVE AWARD PLAN
* * *
* * *
Β
GRANTEE: |
Β Β | < name > |
GRANTΒ DATE: |
Β Β | Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β , 200_ |
SHARES: |
Β Β | < number of whole shares> |
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1. Grant of Restricted Shares. Pursuant to Article 12 of The PNC Financial Services Group, Inc. 1997 Long-Term Incentive Award Plan as amended from time to time (βPlanβ), and subject to the terms and conditions of this Restricted Stock Agreement (βAgreementβ), The PNC Financial Services Group, Inc. (βPNCβ) hereby grants to the Grantee named above (βGranteeβ) an Incentive Share Award (as defined in the Plan) of the number of shares of PNC common stock set forth above, and, upon acceptance of the Grant by Grantee in accordance with Section 17, will cause the issuance of said shares to Grantee subject to the terms and conditions of the Agreement and the Plan. The shares granted and issued to Grantee hereby as an Incentive Share Award subject to the terms and conditions of the Agreement and the Plan are hereafter referred to as the βRestricted Shares.β
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2. Definitions. Terms defined in the Plan are used in the Agreement as defined in the Plan unless otherwise defined in Annex A (attached hereto and incorporated herein by reference) or elsewhere in the Agreement.
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3. Terms of Grant. The Grant will be subject to the following terms and conditions:
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Restricted Shares will be subject to a Restricted Period as provided in Section A.25 of Annex A. Restricted Shares will be deposited with PNC or its designee,
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or credited to a book-entry account, during the term of the Restricted Period unless and until forfeited pursuant to the terms of the Agreement.
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Any certificate or certificates representing such Restricted Shares will contain the following legend:
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βThis certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture and restrictions against transfer) contained in The PNC Financial Services Group, Inc. 1997 Long-Term Incentive Award Plan as amended and an Agreement entered into between the registered owner and The PNC Financial Services Group, Inc. Release from such terms and conditions will be made only in accordance with the provisions of such Plan and such Agreement, a copy of each of which is on file in the office of the Corporate Secretary of The PNC Financial Services Group, Inc.β
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Where a book-entry system is used with respect to Restricted Shares, appropriate notation of such forfeiture possibility and transfer restrictions will be made on the system with respect to the account or accounts to which the Restricted Shares are credited.
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Restricted Shares deposited with PNC or its designee during the term of the Restricted Period that become Awarded Shares will be released and issued or reissued to, or at the proper direction of, Grantee or Granteeβs legal representative pursuant to Section 9 as soon as administratively practicable following the end of the Restricted Period.
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4. Rights as Shareholder. Except as provided in Section 6 and subject to Section 7.5(c), if applicable, and to Section 17, Grantee will have all the rights and privileges of a shareholder with respect to the Restricted Shares including, but not limited to, the right to vote the Restricted Shares and the right to receive dividends thereon if and when declared by the Board; provided, however, that all such rights and privileges will cease immediately upon any forfeiture of such shares.
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5. Capital Adjustments. Restricted Shares awarded hereunder will, as issued and outstanding shares of PNC common stock, be subject to such adjustment as may be necessary to reflect corporate transactions, including, without limitation, stock dividends, stock splits, spin-offs, split-offs, recapitalizations, mergers, consolidations or reorganizations of or by PNC; provided, however, that any shares received as distributions on or in exchange for Unvested Shares will be subject to the terms and conditions of the Agreement as if they were Restricted Shares.
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6. Prohibitions Against Sale, Assignment, etc. Unvested Shares may not be sold, assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered, other than by will or the laws of descent and distribution or as may be required pursuant to Section 10.2, unless and until the Restricted Period terminates and the Awarded Shares are released and issued or reissued by PNC pursuant to Section 9.
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7. Forfeiture; Death; Qualifying Disability or Other Termination; Termination in Anticipation of Change in Control.
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7.1 Forfeiture on Termination of Employment. Except as otherwise provided in and subject to the conditions of Section 7.3, Section 7.4(a), Section 7.4(c), Section 7.5(a), Section 7.5(b), or Section 8, if applicable, or unless the Committee determines otherwise, in the event that Granteeβs employment with the Corporation terminates prior to November Β Β Β Β , 200Β Β , all Restricted Shares that are Unvested Shares on Granteeβs Termination Date will be forfeited by Grantee to PNC without payment of any consideration by PNC.
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Upon forfeiture of Unvested Shares pursuant to the provisions of this Section 7.1 or the provisions of Section 7.2, Section 7.4(b), Section 7.4(c) or Section 7.5(d), neither Grantee nor any successors, heirs, assigns or legal representatives of Grantee will thereafter have any further rights or interest in such Unvested Shares or any certificate or certificates representing such Unvested Shares.
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7.2 Forfeiture for Detrimental Conduct. Unvested Shares that would otherwise remain outstanding after Granteeβs Termination Date, if any, will be forfeited by Grantee to PNC without payment of any consideration by PNC in the event that, at any time prior to the date such shares become Awarded Shares, PNC determines that Grantee has engaged in Detrimental Conduct; provided, however, that: (a) this Section 7.2 will not apply to Restricted Shares that remain outstanding after Granteeβs Termination Date pursuant to Section 7.3 or Section 7.5, if any; (b) no determination that Grantee has engaged in Detrimental Conduct may be made on or after the date of Granteeβs death; (c) Detrimental Conduct will not apply to conduct by or activities of successors to the Restricted Shares by will or the laws of descent and distribution in the event of Granteeβs death; and (d) Detrimental Conduct will cease to apply to any Restricted Shares upon a Change in Control.
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7.3 Death. In the event of Granteeβs death while an employee of the Corporation and prior to November Β Β Β Β , 200Β Β , the Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period with respect to the then outstanding Unvested Shares will terminate on the date of Granteeβs death.
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The Restricted Shares which thereby become Awarded Shares will be released and issued or reissued by PNC to, or at the proper direction of, Granteeβs legal representative pursuant to Section 9 as soon as administratively practicable following such date.
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7.4 Disability or Other Termination.
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(a) In the event Granteeβs employment with the Corporation is terminated prior to November Β Β Β Β , 200Β Β by the Corporation by reason of Granteeβs Total and Permanent Disability, Unvested Shares will not be forfeited on Granteeβs Termination Date. Instead, Unvested Shares will, subject to the forfeiture provisions of Section 7.2,
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remain outstanding pending approval of the vesting of the Restricted Shares pursuant to this Section 7.4(a) by the Designated Person specified in Section A.14 of Annex A.
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If such Unvested Shares are still outstanding but the Designated Person has not made an affirmative determination to either approve or disapprove the vesting of the Unvested Shares by November Β Β Β Β , 200Β Β , then the Restricted Period will be automatically extended through the first to occur of: (1) the day the Designated Person makes an affirmative determination regarding such vesting; and (2) either (i) the ninetieth (90th) day following November Β Β Β Β , 200Β Β , if the Designated Person is the Chief Human Resources Officer of PNC, or (ii) the 180th day following November Β Β Β Β , 200Β Β if the Designated Person is the Committee, whichever is applicable.
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If the vesting of the then outstanding Unvested Shares is affirmatively approved by the Designated Person on or prior to the last day of the Restricted Period, including any extension of the Restricted Period, if applicable, then the Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period with respect to any then outstanding Unvested Shares will terminate as of the end of the day on the date of such approval or November Β Β Β Β , 200Β Β , whichever is later. The Restricted Shares outstanding at the termination of the Restricted Period will become Awarded Shares and will be released and issued or reissued by PNC pursuant to Section 9.
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(b) If the Designated Person disapproves the vesting of the Unvested Shares that had remained outstanding after Granteeβs Termination Date pending approval of vesting, then all such Unvested Shares that are still outstanding will be forfeited by Grantee to PNC on such disapproval date without payment of any consideration by PNC.
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If by the end of the Restricted Period, including any extension of the Restricted Period pursuant to the second paragraph of Section 7.4(a), if applicable, the Designated Person has neither affirmatively approved nor disapproved the vesting of the Unvested Shares that had remained outstanding after Granteeβs Termination Date pending approval of vesting, then all such Unvested Shares that are still outstanding will be forfeited by Grantee to PNC at the close of business on the last day of the Restricted Period without payment of any consideration by PNC.
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(c) In the event that Granteeβs employment with the Corporation is terminated prior to November Β Β Β Β , 200Β Β other than by reason of death, by the Corporation by reason of Granteeβs Total and Permanent Disability, or in circumstances that qualify for vesting pursuant to Section 7.5(a) or Section 7.5(b), all Restricted Shares that are Unvested Shares on Granteeβs Termination Date will be forfeited by Grantee to PNC on such date without payment of any consideration by PNC unless the Committee determines otherwise. The Committee may, in its sole discretion with respect to some or all of the Unvested Shares, treat such shares in the same manner that such shares would be treated pursuant to Section 7.4 if Granteeβs employment had been terminated by the Corporation by reason of Total and Permanent Disability.
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7.5 Termination in Anticipation of a Change in Control.
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(a) Notwithstanding anything in the Agreement to the contrary, if, after the occurrence of a CIC Triggering Event but prior to a CIC Failure and prior to November Β Β Β Β , 200Β Β , Granteeβs employment is terminated (other than by reason of Granteeβs death) by the Corporation without Cause or by Grantee for Good Reason, or if Granteeβs employment is deemed to have been so terminated pursuant to Section 7.5(b), then: (i) the Continued Employment Performance Goal will be deemed to have been achieved and the Restricted Period with respect to any then outstanding Unvested Shares will terminate as of the end of the day on the day immediately preceding Granteeβs Termination Date (or, in the case of a qualifying termination pursuant to Section 7.5(b), the date all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.5(b) are met); and (ii) all Restricted Shares that thereby become Awarded Shares will be released and issued or reissued by PNC pursuant to Section 9 as soon as administratively practicable following such date.
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(b) Granteeβs employment will also be deemed to have been terminated by the Corporation without Cause after the occurrence of a CIC Triggering Event but prior to a CIC Failure for purposes of Section 7.5(a) if: (i) Granteeβs employment is terminated by the Corporation without Cause; (ii) such termination of employment (a) was at the request of a third party that has taken steps reasonably calculated to effect a Change in Control or (b) otherwise arose in anticipation of a Change in Control; and (iii) a CIC Triggering Event or a Change in Control occurs within three (3) months of such termination of employment.
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Granteeβs employment will also be deemed to have been terminated by Grantee for Good Reason after the occurrence of a CIC Triggering Event but prior to a CIC Failure for purposes of Section 7.5(a) if: (i) Grantee terminates Granteeβs employment with Good Reason; (ii) the circumstance or event that constitutes Good Reason (a) occurs at the request of a third party that has taken steps reasonably calculated to effect a Change in Control or (b) otherwise arose in anticipation of a Change in Control; and (iii) a CIC Triggering Event or a Change in Control occurs within three (3) months of such termination of employment.
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For purposes of this Section 7.5(b) only, Grantee will have the burden of proving that the requirements of clause (ii) of the first or second paragraph of this Section 7.5(b), as the case may be, have been met and the standard of proof to be met by Grantee will be clear and convincing evidence.
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For purposes of this Section 7.5(b) only, the definition of Change in Control in Section A.6 of Annex A will exclude the proviso in Section A.6(a).
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(c) If the Unvested Shares will be forfeited by Grantee to PNC by reason of Granteeβs termination of employment with the Corporation pursuant to Section 7.1 unless all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.5(b) are met, then in the event that the record date for any dividend payable with respect to the Unvested Shares occurs on or after Granteeβs
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Termination Date but prior to the time all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.5(b) have been met, such dividend will be held, without interest, pending satisfaction of all of such conditions. In the event that one or more of the conditions of Section 7.5(b) are not met, any dividend being held pending satisfaction of such conditions will be forfeited by Grantee to PNC without payment of any consideration by PNC.
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(d) If the Unvested Shares will be forfeited by Grantee to PNC by reason of Granteeβs termination of employment with the Corporation pursuant to Section 7.1 unless all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.5(b) are met, then the Restricted Shares will remain outstanding pending satisfaction of all of those conditions. Upon the failure of any required condition, all such Unvested Shares will be forfeited by Grantee to PNC on the date such failure occurs without payment of any consideration by PNC.
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8. Change in Control. Notwithstanding anything in the Agreement to the contrary, upon the occurrence of a Change in Control: (i) if Grantee is an employee of the Corporation as of the day immediately preceding the Change in Control, the Continued Employment Performance Goal will be deemed to have been achieved and the Restricted Period will terminate with respect to all then outstanding Unvested Shares as of the day immediately preceding the Change in Control; (ii) if Granteeβs employment with the Corporation terminated prior to the occurrence of the Change in Control but the Unvested Shares remained outstanding after such termination of employment pursuant to Section 7.4 and are still outstanding pending approval of the vesting of such shares by the Designated Person specified in Section A.14 of Annex A, then with respect to all Unvested Shares outstanding as of the day immediately preceding the Change in Control, such vesting approval will be deemed to have been given, the Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period will terminate, all as of the day immediately preceding the Change in Control; and (iii) all Restricted Shares that thereby become Awarded Shares will be released and issued or reissued by PNC pursuant to Section 9 as soon as administratively practicable following such date.
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9. Termination of Prohibitions. Following termination of the Restricted Period, PNC will release and issue or reissue the certificate or certificates representing the then outstanding whole Restricted Shares that have become Awarded Shares without the legend referred to in Section 3.
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Upon release and issuance or reissuance of shares that have become Awarded Shares, PNC or its designee will deliver the certificate or certificates for such whole shares to, or at the proper direction of, Grantee or Granteeβs legal representative.
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10. Payment of Taxes.
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10.1 Internal Revenue Code Section 83(b) Election. In the event that Grantee makes an Internal Revenue Code Section 83(b) election with respect to the Restricted
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Shares, Grantee shall satisfy all applicable federal, state or local withholding tax obligations arising from that election either: (a) by payment of cash; (b) by physical delivery to PNC of certificates for whole shares of PNC common stock that are not subject to any contractual restriction, pledge or other encumbrance and that have been owned by Grantee for at least six (6) months and, in the case of restricted stock, for which it has been at least six (6) months since the restrictions lapsed; or (c) by a combination of cash and such stock. Any such tax election shall be made pursuant to a form to be provided to Grantee by PNC on request. For purposes of this Section 10.1, shares of PNC common stock that are used to satisfy applicable withholding tax obligations will be valued at their Fair Market Value on the date the tax withholding obligation arises. Grantee will provide to PNC a copy of any Internal Revenue Code Section 83(b) election filed by Grantee with respect to the Restricted Shares not later than ten (10) days after the filing of such election.
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10.2 Other Tax Liabilities. Where Grantee has not previously satisfied all applicable withholding tax obligations, PNC will, at the time the tax withholding obligation arises, retain sufficient whole shares of PNC common stock from the shares granted pursuant to the Agreement to satisfy the minimum amount of taxes required to be withheld by the Corporation in connection with the Restricted Shares. For purposes of this Section 10.2, shares of PNC common stock retained to satisfy applicable withholding tax requirements will be valued at their Fair Market Value on the date the tax withholding obligation arises.
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PNC will not retain more than the number of shares sufficient to satisfy the minimum amount of taxes required to be withheld in connection with the Restricted Shares. If Grantee desires to have an additional amount, up to Granteeβs W-4 obligation, withheld above the required minimum and if PNC so permits, Grantee may elect to satisfy this additional withholding either: (a) by payment of cash; or (b) using whole shares of PNC common stock (either by physical delivery to PNC of certificates for the shares or through PNCβs attestation procedure) that are not subject to any contractual restriction, pledge or other encumbrance and that have been owned by Grantee for at least six (6) months and, in the case of restricted stock, for which it has been at least six (6) months since the restrictions lapsed. Any such tax election shall be made pursuant to a form provided by PNC. Shares of PNC common stock that are used for this purpose will be valued at their Fair Market Value on the date the tax withholding obligation arises.
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11. Employment. Neither the granting and issuance of the Restricted Shares nor any term or provision of the Agreement shall constitute or be evidence of any understanding, expressed or implied, on the part of PNC or any Subsidiary to employ Grantee for any period or in any way alter Granteeβs status as an employee at will.
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12. Subject to the Plan and the Committee. In all respects the Grant and the Agreement are subject to the terms and conditions of the Plan, which has been made available to Grantee and is incorporated herein by reference; provided, however, the terms of the Plan shall not be considered an enlargement of any benefits under the Agreement. Further, the Grant and the Agreement are subject to any interpretation of,
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and any rules and regulations issued by, the Committee or under the authority of the Committee, whether made or issued before or after the Grant Date.
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13. Headings; Entire Agreement. Headings used in the Agreement are provided for reference and convenience only, shall not be considered part of the Agreement, and shall not be employed in the construction of the Agreement. The Agreement constitutes the entire agreement between Grantee and PNC and supersedes all other discussions, negotiations, correspondence, representations, understandings and agreements between the parties with respect to the subject matter hereof.
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14. Grantee Covenants.
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14.1 General. Grantee and PNC acknowledge and agree that Grantee has received adequate consideration with respect to enforcement of the provisions of Sections 14 and 15, that such provisions are reasonable and properly required for the adequate protection of the business of the Corporation, and that enforcement of such provisions will not prevent Grantee from earning a living.
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14.2 Non-Solicitation; No-Hire. Grantee agrees to comply with the provisions of subsections (a) and (b) of this Section 14.2 while employed by the Corporation and for a period of twelve (12) months after Granteeβs Termination Date regardless of the reason for such termination of employment.
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(a) Non-Solicitation. Grantee shall not, directly or indirectly, either for Granteeβs own benefit or purpose or for the benefit or purpose of any Person other than PNC or any Subsidiary, solicit, call on, do business with, or actively interfere with PNCβs or any Subsidiaryβs relationship with, or attempt to divert or entice away, any Person that Grantee should reasonably know (i) is a customer of PNC or any Subsidiary for which PNC or any Subsidiary provides any services as of the Termination Date, or (ii) was a customer of PNC or any Subsidiary for which PNC or any Subsidiary provided any services at any time during the twelve (12) months preceding the Termination Date, or (iii) was, as of the Termination Date, considering retention of PNC or any Subsidiary to provide any services.
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(b) No-Hire. Grantee shall not, directly or indirectly, either for Granteeβs own benefit or purpose or for the benefit or purpose of any Person other than PNC or any Subsidiary, employ or offer to employ, call on, or actively interfere with PNCβs or any Subsidiaryβs relationship with, or attempt to divert or entice away, any employee of the Corporation, nor shall Grantee assist any other Person in such activities.
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Notwithstanding the above, if Granteeβs employment with the Corporation is terminated by the Corporation without Cause or by Grantee with Good Reason and such Termination Date occurs during a Coverage Period (either as Coverage Period is defined in Section A.13 of Annex A or, if Grantee was a party to a written agreement between Grantee and PNC providing, among other things, for certain change in control severance benefits (a βCIC Severance Agreementβ) that was in effect at the time of such termination
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of employment, as Coverage Period is defined in such CIC Severance Agreement, if longer), then commencing immediately after such Termination Date, the provisions of subsections (a) and (b) of this Section 14.2 will no longer apply and will be replaced with the following subsection (c):
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(c) No-Hire. Grantee agrees that Grantee shall not, for a period of twelve (12) months after the Termination Date, employ or offer to employ, solicit, actively interfere with PNCβs or any PNC affiliateβs relationship with, or attempt to divert or entice away, any officer of PNC or any PNC affiliate.
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14.3 Confidentiality. During Granteeβs employment with the Corporation, and thereafter regardless of the reason for termination of such employment, Grantee will not disclose or use in any way any confidential business or technical information or trade secret acquired in the course of such employment, all of which is the exclusive and valuable property of the Corporation whether or not conceived of or prepared by Grantee, other than (a) information generally known in the Corporationβs industry or acquired from public sources, (b) as required in the course of employment by the Corporation, (c) as required by any court, supervisory authority, administrative agency or applicable law, or (d) with the prior written consent of PNC.
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14.4 Ownership of Inventions. Grantee shall promptly and fully disclose to PNC any and all inventions, discoveries, improvements, ideas or other works of inventorship or authorship, whether or not patentable, that have been or will be conceived and/or reduced to practice by Grantee during the term of Granteeβs employment with the Corporation, whether alone or with others, and that are (a) related directly or indirectly to the business or activities of PNC or any Subsidiary or (b) developed with the use of any time, material, facilities or other resources of PNC or any Subsidiary (βDevelopmentsβ). Grantee agrees to assign and hereby does assign to PNC or its designee all of Granteeβs right, title and interest, including copyrights and patent rights, in and to all Developments. Grantee shall perform all actions and execute all instruments that PNC or any Subsidiary shall deem necessary to protect or record PNCβs or its designeeβs interests in the Developments. The obligations of this Section 14.4 shall be performed by Grantee without further compensation and will continue beyond the Termination Date.
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15. Enforcement Provisions. Grantee understands and agrees to the following provisions regarding enforcement of the Agreement.
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15.1 Governing Law and Jurisdiction. The Agreement is governed by and construed under the laws of the Commonwealth of Pennsylvania, without regard to conflict of laws rules. Any dispute or claim arising out of or relating to the Agreement or claim of breach hereof shall be brought exclusively in the federal court for the Western District of Pennsylvania or in the Court of Common Pleas of Allegheny County, Pennsylvania. By execution of the Agreement, Grantee and PNC hereby consent to the exclusive jurisdiction of such courts, and waive any right to challenge jurisdiction or venue in such courts with regard to any suit, action, or proceeding under or in connection with the Agreement.
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15.2 Equitable Remedies. A breach of the provisions of any of Sections 14.2, 14.3 or 14.4 will cause the Corporation irreparable harm, and the Corporation will therefore be entitled to issuance of immediate, as well as permanent, injunctive relief restraining Grantee, and each and every person and entity acting in concert or participating with Grantee, from initiation and/or continuation of such breach.
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15.3 Tolling Period. If it becomes necessary or desirable for the Corporation to seek compliance with the provisions of Section 14.2 by legal proceedings, the period during which Grantee shall comply with said provisions will extend for a period of twelve (12) months from the date of the legal order requiring such compliance.
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15.4 No Waiver. Failure of PNC to demand strict compliance with any of the terms, covenants or conditions of the Agreement will not be deemed a waiver of such term, covenant or condition, nor will any waiver or relinquishment of any such term, covenant or condition on any occasion or on multiple occasions be deemed a waiver or relinquishment of such term, covenant or condition.
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15.5 Severability. The restrictions and obligations imposed by Sections 14.2, 14.3 and 14.4 are separate and severable, and it is the intent of Grantee and PNC that if any restriction or obligation imposed by any of these provisions is deemed by a court of competent jurisdiction to be void for any reason whatsoever, the remaining provisions, restrictions and obligations will remain valid and binding upon Grantee.
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15.6 Reform. In the event any of Sections 14.2, 14.3 and 14.4 are determined by a court of competent jurisdiction to be unenforceable because unreasonable either as to length of time or area to which said restriction applies, it is the intent of Grantee and PNC that said court reduce and reform the provisions thereof so as to apply the greatest limitations considered enforceable by the court.
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15.7 Waiver of Jury Trial. Each of Grantee and PNC hereby waives any right to trial by jury with regard to any suit, action or proceeding under or in connection with any of Sections 14.2, 14.3 and 14.4.
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15.8 Applicable Law. Notwithstanding anything in the Agreement, PNC will not be required to comply with any term, covenant or condition of the Agreement if and to the extent prohibited by law, including but not limited to federal banking and securities regulations, or as otherwise directed by one or more regulatory agencies having jurisdiction over PNC or any of its subsidiaries. Further, to the extent, if any, applicable to Grantee, Grantee agrees to reimburse PNC for any amounts Grantee may be required to reimburse PNC or its subsidiaries pursuant to Section 304 of the Xxxxxxxx-Xxxxx Act of 2002, and agrees that PNC need not comply with any term, covenant or condition of the Agreement to the extent that doing so would require that Grantee reimburse PNC or its subsidiaries for such amounts pursuant to Section 304 of the Xxxxxxxx-Xxxxx Act of 2002.
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16. Amendment of Pre-2004 Stock Options, Restricted Stock and Restricted Stock Deferrals. All nonstatutory stock options granted to employees under the Plan outstanding on February 18, 2004, all restricted stock grants to employees under the Plan or PNCβs 1996 Executive Incentive Award Plan outstanding but not yet vested on February 18, 2004, and all participant restricted stock deferral accounts under the PNC and Affiliates Deferred Compensation Plan that were in place but not yet vested on February 18, 2004, are subject to the amendments approved by the Committee on that date. These amendments are generally described in the Plan prospectus dated Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β , 200Β Β under the heading βRecent Amendmentsβ of the section titled βThe Plan.β A copy of this Plan prospectus accompanied or preceded delivery of the Agreement to Grantee.
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To the extent that Grantee is the holder of any such stock options or is the grantee of any such restricted stock or is a participant in the PNC and Affiliates Deferred Compensation Plan with such stock deferral account or accounts in place but not yet vested, Grantee hereby acknowledges and consents to such amendments.
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17. Acceptance of Grant; PNC Right to Cancel. If Grantee does not accept the Grant by executing and delivering a copy of the Agreement to PNC, without altering or changing the terms thereof in any way, within sixty (60) days of receipt by Grantee of a copy of the Agreement, PNC may, in its sole discretion, withdraw its offer and cancel the Grant at any time prior to Granteeβs delivery to PNC of a copy of the Agreement executed by Grantee. Otherwise, upon execution and delivery of the Agreement by both PNC and Grantee and, in the event that Grantee is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to PNC securities, the filing with and acceptance by the SEC of a Form 4 reporting the Grant, the Agreement is effective.
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Grantee will not have any of the rights of a shareholder with respect to the Restricted Shares as set forth in Section 4, and will not have the right to vote or to receive dividends on such shares, until the date the Agreement is effective and the Restricted Shares are issued in accordance with this Section 17.
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In the event that one or more record dates for dividends on PNC common stock occur after the Grant Date but before the date the Agreement is effective in accordance with this Section 17 and the Restricted Shares are issued, then upon the effectiveness of the Agreement, the Corporation will make a cash payment to Grantee equivalent to the amount of the dividends Grantee would have received had the Agreement been effective and the Restricted Shares had been issued on the Grant Date.
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IN WITNESS WHEREOF, PNC has caused the Agreement to be signed on its behalf as of the Grant Date.
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THE PNC FINANCIAL SERVICES GROUP, INC. | ||
By: |
Β | Β |
Β | Β | Chairman and Chief Executive Officer |
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ATTEST: | ||
By: |
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Β | Β | Corporate Secretary |
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ACCEPTED AND AGREED TO by GRANTEE. | ||
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Grantee |
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CEG LTI Program Restricted Stock Grant
Continued Employment Performance Goal
Restricted Period: Through November Β Β Β Β , 200Β Β (100%) [restricted period usually ends in November and can be between two and four years]
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ANNEX A
TO
THE PNC FINANCIAL SERVICES GROUP, INC.
1997 LONG-TERM INCENTIVE AWARD PLAN
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* * *
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CERTAIN DEFINITIONS
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Except where the context otherwise indicates, the following definitions apply for purposes of the Restricted Stock Agreement (βAgreementβ) to which this Annex A is attached:
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A.1 βAwarded Shares.β Provided that the Restricted Shares are then outstanding, Restricted Shares become βAwarded Sharesβ when both of the following have occurred: (a) the Continued Employment Performance Goal has been achieved or is deemed to have been achieved pursuant to the terms of the Agreement; and (b) the Restricted Period has terminated.
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A.2 βBoardβ means the Board of Directors of PNC.
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A.3 βBusiness Dayβ means any day when the New York Stock Exchange is open for business.
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A.4 βCauseβ means:
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(a) the willful and continued failure of Grantee to substantially perform Granteeβs 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 Grantee by the Board or the CEO which specifically identifies the manner in which the Board or the CEO believes that Grantee has not substantially performed Granteeβs duties; or
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(b) the willful engaging by Grantee in illegal conduct or gross misconduct that is materially and demonstrably injurious to PNC or any Subsidiary.
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For purposes of the preceding clauses (a) and (b), no act or failure to act, on the part of Grantee, shall be considered willful unless it is done, or omitted to be done, by Grantee in bad faith and without reasonable belief that Granteeβs 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 CEO or Granteeβs superior or based upon the advice of counsel for the Corporation, shall be conclusively presumed to be done, or omitted to be done, by Grantee in good faith and in the best interests of the Corporation.
Β
The cessation of employment of Grantee will be deemed to be a termination of Granteeβs employment with the Corporation for Cause for purposes of the Agreement only if and when there shall have been delivered to Grantee, as part of the notice of Granteeβs 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 on the basis of clear and convincing evidence that, in the good faith opinion of the Board, Grantee is guilty of conduct described in clause (a) or clause (b) above and, in either case, specifying the particulars thereof in detail. Such resolution shall be adopted only after (i) reasonable notice of such Board meeting is provided to Grantee, together with written notice that PNC believes that Grantee is guilty of conduct described in clause (a) or clause (b) above and, in either case, specifying the particulars thereof in detail, and (ii) Grantee is given an opportunity, together with counsel, to be heard before the Board.
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A.5 βCEOβ means the chief executive officer of PNC.
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A.6 βChange in Controlβ means a change of control of PNC 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 PNC is then subject to such reporting requirement; provided, however, that without limitation, a Change in Control will be deemed to have occurred if:
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(a) any Person, excluding employee benefits 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 PNC representing twenty percent (20%) or more of the combined voting power of PNCβs 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 will not be considered a Change in Control if the Board approves such acquisition either prior to or immediately after its occurrence;
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(b) PNC consummates a merger, consolidation, share exchange, division or other reorganization or transaction of PNC (a βFundamental Transactionβ) with any other corporation, other than a Fundamental Transaction that results in the voting securities of PNC 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
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Transaction of (i) PNCβs outstanding securities, (ii) the surviving entityβs outstanding securities, or (iii) in the case of a division, the outstanding securities of each entity resulting from the division;
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(c) the shareholders of PNC approve a plan of complete liquidation or winding-up of PNC or an agreement for the sale or disposition (in one transaction or a series of transactions) of all or substantially all of PNCβs assets;
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(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 PNCβs shareholders in connection with such proxy contest was approved by a vote of at least two-thirds (2/3rds) 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);
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(e) during any period of twenty-four (24) 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 PNCβs shareholders was approved by a vote of at least two-thirds (2/3rds) 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
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(f) the Board determines that a Change in Control has occurred.
Β
Notwithstanding anything to the contrary herein, a divestiture or spin-off of a subsidiary or division of PNC will not by itself constitute a Change in Control.
Β
A.7 βCIC Failureβ means the following:
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(a) with respect to a CIC Triggering Event described in Section A.8(a), PNCβs shareholders vote against the transaction approved by the Board or the agreement to consummate the transaction is terminated; or
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(b) with respect to a CIC Triggering Event described in Section A.8(b), the proxy contest fails to replace or remove a majority of the members of the Board.
Β
A.8 βCIC Triggering Eventβ means the occurrence of either of the following:
Β
(a) the Board or PNCβs shareholders approve a transaction described in Subsection (b) of the definition of Change in Control contained in Section A.6; or
Β
(b) the commencement of a proxy contest in which any Person seeks to replace or remove a majority of the members of the Board.
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A.9 βCommitteeβ means the Personnel and Compensation Committee of the Board.
Β
A.10 βCompetitive Activityβ means, for purposes of the Agreement, any participation in, employment by, ownership of any equity interest exceeding one percent (1%) in, or promotion or organization of, any Person other than PNC or any Subsidiary (a) engaged in business activities similar to some or all of the business activities of PNC or any Subsidiary as of Granteeβs Termination Date or (b) engaged in business activities which Grantee knows PNC or any Subsidiary intends to enter within the first twelve (12) months after Granteeβs Termination Date, in either case whether Grantee is acting as agent, consultant, independent contractor, employee, officer, director, investor, partner, shareholder, proprietor or in any other individual or representative capacity therein.
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A.11 βContinued Employment Performance Goalβ means, subject to early achievement if so determined by the Committee or to deemed achievement pursuant to Section 7.3, Section 7.4, Section 7.5, or Section 8 of the Agreement, if applicable, that Grantee has been continuously employed by the Corporation for the period from the Grant Date through (and including) the first of the following to occur: (a) November Β Β Β Β , 200Β Β ; (b) the day immediately preceding the date of Granteeβs death; and (c) the day immediately preceding the day a Change in Control is deemed to have occurred.
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A.12 βCorporationβ means PNC and its Subsidiaries.
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A.13 βCoverage Periodβ means a period (a) 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 (b) ending on the date that is three (3) years after the date of the Change in Control; provided, however, that in the event that a Coverage Period commences on the date of a CIC Triggering Event, such Coverage Period will terminate upon the earlier to occur of (x) the date of a CIC Failure and (y) the date that is three (3) 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 will commence upon the earlier to occur of clause (a)(i) and clause (a)(ii) in the preceding sentence.
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A.14 βDesignated Personβ will be either: (a) the Committee, if Grantee is a member of the Corporate Executive Group (or equivalent successor classification) or is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to PNC securities; or (a) the Chief Human Resources Officer of PNC, if Grantee is not within one of the groups specified in Section A.14(a).
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A.15 βDetrimental Conductβ means:
Β
(a) Grantee has engaged, without the prior written consent of PNC (at PNCβs sole discretion), in any Competitive Activity in the continental United States at any time during the period commencing on Granteeβs Termination Date through the first (1st) anniversary of Granteeβs Termination Date;
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(b) a material breach by Grantee of (i) any code of conduct of PNC or a Subsidiary or (ii) other written policy of PNC or a Subsidiary, in either case required by law or established to maintain compliance with applicable law;
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(c) any act of fraud, misappropriation, material dishonesty, or embezzlement by Grantee against PNC or a Subsidiary or any client or customer of PNC or a Subsidiary;
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(d) any conviction (including a plea of guilty or of nolo contendere) of Grantee for, or entry by Grantee into a pre-trial disposition with respect to, the commission of a felony which relates to or arises out of Granteeβs employment or other service relationship with the Corporation; or
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(e) entry of any order against Grantee by any governmental body having regulatory authority with respect to the business of PNC or any Subsidiary, which order relates to or arises out of Granteeβs employment or other service relationship with the Corporation.
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Grantee will be deemed to have engaged in Detrimental Conduct for purposes of the Agreement only if and when the Committee determines that Grantee has engaged in conduct described in clause (a) above, that Grantee is guilty of conduct described in clause (b) or clause (c) above, or that an event described in clause (d) or clause (e) above has occurred with respect to Grantee and, if so, determines that Grantee will be deemed to have engaged in Detrimental Conduct.
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A.16 βExchange Actβ means the Securities Exchange Act of 1934 as amended, and the rules and regulations promulgated thereunder.
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A.17 βFair Market Valueβ as it relates to PNC common stock means the average of the high and low sale prices of the PNC common stock as reported on the New York Stock Exchange (or such successor reporting system as PNC may select) on the relevant date or, if no sale of the PNC common stock has been reported for that day, the average of such prices on the next preceding day and the next following day for which there were reported sales.
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A.18 βGood Reasonβ means:
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(a) the assignment to Grantee of any duties inconsistent in any respect with Granteeβs 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 Grantee;
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(b) a reduction by the Corporation in Granteeβs annual base salary as in effect on the Grant Date, as the same may be increased from time to time;
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(c) the Corporationβs requiring Grantee to be based at any office or location that is more than fifty (50) miles from Granteeβs office or location immediately prior to either the CIC Triggering Event or the Change in Control;
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(d) the failure by the Corporation (i) to continue in effect any bonus, stock option or other cash or equity-based incentive plan or program in which Grantee participates immediately prior to either the CIC Triggering Event or the Change in Control that is material to Granteeβs total compensation, unless a substantially equivalent arrangement (embodied in an ongoing substitute or alternative plan or program) has been made with respect to such plan or program, or (ii) to continue Granteeβs participation in such plan or program (or in such substitute or alternative plan or program) on a basis at least as favorable, both in terms of the amount of benefits provided and the level of Granteeβs participation relative to other participants, as existed immediately prior to the CIC Triggering Event or the Change in Control; or
Β
(e) the failure by the Corporation to continue to provide Grantee with benefits substantially similar to those received by Grantee under any of the Corporationβs pension (including, but not limited to, tax-qualified plans), life insurance, health, accident, disability or other welfare plans or programs in which Grantee was participating, at costs substantially similar to those paid by Grantee, immediately prior to the CIC Triggering Event or the Change in Control.
Β
A.19 βGrantβ means the Restricted Shares granted and issued to Grantee pursuant to Section 1 of the Agreement.
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A.20 βGrant Dateβ means the Grant Date set forth on page 1 of the Agreement.
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A.21 βGranteeβ means the person identified as Grantee on page 1 of the Agreement.
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A.22 βInternal Revenue Codeβ means the Internal Revenue Code of 1986 as amended, and the rules and regulations promulgated thereunder.
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A.23 βPersonβ 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.
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A.24 βPNCβ means The PNC Financial Services Group, Inc.
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A.25 βRestricted Periodβ means, subject to early termination if so determined by the Committee or pursuant to Section 7.5 of the Agreement, if applicable, the period from the Grant Date through (and including) the earlier of: (a) the date of Granteeβs death; (b) the day immediately preceding the day a Change in Control is deemed to have
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occurred; and (c) November Β Β Β Β , 200Β Β or, if later, the last day of any extension of the Restricted Period pursuant to Section 7.4(a) of the Agreement, if applicable.
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A.26 βSECβ means the United States Securities and Exchange Commission.
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A.27 βTermination Dateβ means Granteeβs last date of employment with the Corporation. If Grantee is employed by a Subsidiary that ceases to be a Subsidiary of PNC and Grantee does not continue to be employed by PNC or a Subsidiary, then for purposes of the Agreement, Granteeβs employment with the Corporation terminates effective at the time this occurs.
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A.28 βTotal and Permanent Disabilityβ means, unless the Committee determines otherwise, Granteeβs disability as determined to be total and permanent by the Corporation for purposes of the Agreement.
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A.29 βUnvested Sharesβ means any Restricted Shares that are not Awarded Shares.
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FORM OF 5-YEAR RESTRICTED STOCK GRANT AGREEMENT
Β
Restricted Stock Grant
Continued Employment Performance Goals
Restricted Periods: Three Years (25%); Four Years (25%); Five Years (50%)
Β
THE PNC FINANCIAL SERVICES GROUP, INC.
1997 LONG-TERM INCENTIVE AWARD PLAN
* * *
* * *
Β
GRANTEE: |
Β Β | <Β nameΒ > |
GRANT DATE: |
Β Β | Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β , 200Β Β |
SHARES: |
Β Β | < number of whole shares> |
Β
1. Grant of Restricted Shares. Pursuant to Article 12 of The PNC Financial Services Group, Inc. 1997 Long-Term Incentive Award Plan as amended from time to time (βPlanβ), and subject to the terms and conditions of this Restricted Stock Agreement (βAgreementβ), The PNC Financial Services Group, Inc. (βPNCβ) hereby grants to the Grantee named above (βGranteeβ) an Incentive Share Award (as defined in the Plan) of the number of shares of PNC common stock set forth above, and, upon acceptance of the Grant by Grantee in accordance with Section 17, will cause the issuance of said shares to Grantee subject to the terms and conditions of the Agreement and the Plan.
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The shares granted and issued to Grantee hereby as an Incentive Share Award subject to the terms and conditions of the Agreement and the Plan are hereafter referred to as the βRestricted Shares.β
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For purposes of determining the Restricted Period and Continued Employment Performance Goal applicable to each portion of the Restricted Shares under the Agreement, the Restricted Shares are divided into three βTranchesβ as follows:
Β
(a) twenty-five percent (25%) of these shares (rounded down to the nearest whole share) are in the First Tranche of Restricted Shares;
Β
(b) another twenty-five percent (25%) of these shares (rounded down to the nearest whole share) are in the Second Tranche of Restricted Shares; and
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(c) the remaining fifty percent (50%) of these shares are in the Third Tranche of Restricted Shares.
Β
2. Definitions. Terms defined in the Plan are used in the Agreement as defined in the Plan unless otherwise defined in Annex A (attached hereto and incorporated herein by reference) or elsewhere in the Agreement.
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3. Terms of Grant. The Grant is subject to the following terms and conditions:
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Restricted Shares are subject to the Restricted Period applicable to such shares as provided in Section A.27 of Annex A. Restricted Shares will be deposited with PNC or its designee, or credited to a book-entry account, during the term of the applicable Restricted Period unless and until forfeited pursuant to the terms of the Agreement.
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Any certificate or certificates representing Restricted Shares will contain the following legend:
Β
βThis certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture and restrictions against transfer) contained in The PNC Financial Services Group, Inc. 1997 Long-Term Incentive Award Plan as amended and an Agreement entered into between the registered owner and The PNC Financial Services Group, Inc. Release from such terms and conditions will be made only in accordance with the provisions of such Plan and such Agreement, a copy of each of which is on file in the office of the Corporate Secretary of The PNC Financial Services Group, Inc.β
Β
Where a book-entry system is used with respect to Restricted Shares, appropriate notation of such forfeiture possibility and transfer restrictions will be made on the system with respect to the account or accounts to which the Restricted Shares are credited.
Β
Restricted Shares deposited with PNC or its designee during the term of the applicable Restricted Period that become Awarded Shares as provided in Section A.1 of Annex A will be released and issued or reissued to, or at the proper direction of, Grantee or Granteeβs legal representative pursuant to Section 9 as soon as administratively practicable following the end of the Restricted Period applicable to such shares.
Β
4. Rights as Shareholder. Except as provided in Section 6 and subject to Section 7.6(c), if applicable, and to Section 17, Grantee will have all the rights and privileges of a shareholder with respect to the Restricted Shares including, but not limited to, the right to vote the Restricted Shares and the right to receive dividends thereon if and when declared by the Board; provided, however, that all such rights and privileges will cease immediately upon any forfeiture of such shares.
Β
5. Capital Adjustments. Restricted Shares awarded hereunder will, as issued and outstanding shares of PNC common stock, be subject to such adjustment as may be
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necessary to reflect corporate transactions, including, without limitation, stock dividends, stock splits, spin-offs, split-offs, recapitalizations, mergers, consolidations or reorganizations of or by PNC; provided, however, that any shares received as distributions on or in exchange for Unvested Shares will be subject to the terms and conditions of the Agreement as if they were Restricted Shares, and will have the same Restricted Period and Performance Goal that are applicable to the Restricted Shares that such shares were a distribution on or for which such shares were exchanged.
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6. Prohibitions Against Sale, Assignment, etc. Unvested Shares may not be sold, assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered, other than by will or the laws of descent and distribution or as may be required pursuant to Section 10.2, unless and until the applicable Restricted Period terminates and the Awarded Shares are released and issued or reissued by PNC pursuant to Section 9.
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7. Forfeiture; Death; Disability Termination; Retirement; Termination in Anticipation of Change in Control.
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7.1 Forfeiture on Termination of Employment. Except as otherwise provided in and subject to the conditions of Section 7.3, Section 7.4(a), Section 7.5, Section 7.6(a), Section 7.6(b), or Section 8, if applicable, in the event that Granteeβs employment with the Corporation terminates prior to the fifth (5th) anniversary of the Grant Date, all Restricted Shares that are Unvested Shares on Granteeβs Termination Date will be forfeited by Grantee to PNC without payment of any consideration by PNC.
Β
Upon forfeiture of Unvested Shares pursuant to the provisions of this Section 7.1 or the provisions of Section 7.2, Section 7.4(b), Section 7.5, or Section 7.6(d), neither Grantee nor any successors, heirs, assigns or legal representatives of Grantee will thereafter have any further rights or interest in such Unvested Shares or any certificate or certificates representing such Unvested Shares.
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7.2 Forfeiture for Detrimental Conduct. Unvested Shares that would otherwise remain outstanding after Granteeβs Termination Date, if any, will be forfeited by Grantee to PNC without payment of any consideration by PNC in the event that, at any time prior to the date such shares become Awarded Shares, PNC determines that Grantee has engaged in Detrimental Conduct; provided, however, that: (a) this Section 7.2 will not apply to Restricted Shares that remain outstanding after Granteeβs Termination Date pursuant to Section 7.3 or Section 7.6, if any; (b) no determination that Grantee has engaged in Detrimental Conduct may be made on or after the date of Granteeβs death; (c) Detrimental Conduct will not apply to conduct by or activities of successors to the Restricted Shares by will or the laws of descent and distribution in the event of Granteeβs death; and (d) Detrimental Conduct will cease to apply to any Restricted Shares upon a Change in Control.
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7.3 Death. In the event of Granteeβs death while an employee of the Corporation and prior to the fifth (5th) anniversary of the Grant Date, all remaining applicable Continued Employment Performance Goals will be deemed to have been
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achieved, and the Restricted Period or Periods with respect to all then outstanding Unvested Shares, if any, will terminate on the date of Granteeβs death.
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The Restricted Shares which thereby become Awarded Shares will be released and issued or reissued by PNC to, or at the proper direction of, Granteeβs legal representative pursuant to Section 9 as soon as administratively practicable following such date.
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7.4 Disability Termination.
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(a) In the event Granteeβs employment with the Corporation is terminated prior to the fifth (5th) anniversary of the Grant Date by the Corporation by reason of Granteeβs Total and Permanent Disability, Unvested Shares will not be forfeited on Granteeβs Termination Date. Instead, Unvested Shares will, subject to the forfeiture provisions of Section 7.2, remain outstanding pending approval of the vesting of the Restricted Shares pursuant to this Section 7.4(a) by the Designated Person specified in Section A.14 of Annex A.
Β
If such Unvested Shares are still outstanding but the Designated Person has not made an affirmative determination to either approve or disapprove the vesting of the Unvested Shares or relevant portion thereof by the day immediately preceding the third (3rd) anniversary of the Grant Date in the case of First Tranche shares, or the fourth (4th) or fifth (5th) anniversary of the Grant Date in the case of Second or Third Tranche shares, respectively, then the Restricted Period applicable to such shares will be automatically extended through the first to occur of: (1) the day the Designated Person makes an affirmative determination regarding such vesting; and (2) either (i) the ninetieth (90th) day following the third (3rd) anniversary of the Grant Date in the case of First Tranche shares, or the fourth (4th) or fifth (5th) anniversary of the Grant Date in the case of Second or Third Tranche shares, respectively, if the Designated Person is the Chief Human Resources Officer of PNC, or (ii) the 180th day following such anniversary date if the Designated Person is the Committee, whichever is applicable.
Β
If the vesting of the then outstanding Unvested Shares or relevant portion thereof is affirmatively approved by the Designated Person on or prior to the last day of the applicable Restricted Period, including any extension of such Restricted Period, if applicable, then the applicable Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period with respect to any such Unvested Shares then outstanding will terminate as of the end of the day on the later of (i) the date of such approval and (ii) the day immediately preceding the third (3rd) anniversary of the Grant Date in the case of First Tranche shares, or the fourth (4th) or fifth (5th) anniversary of the Grant Date in the case of Second or Third Tranche shares, respectively. The Restricted Shares outstanding at the termination of such applicable Restricted Period will become Awarded Shares and will be released and issued or reissued by PNC pursuant to Section 9.
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(b) If the Designated Person disapproves the vesting of Unvested Shares that had remained outstanding after Granteeβs Termination Date pending approval of vesting, then all such Unvested Shares that are still outstanding will be forfeited by Grantee to PNC on such disapproval date without payment of any consideration by PNC.
Β
If by the end of the applicable Restricted Period, including any extension of such Restricted Period pursuant to the second paragraph of Section 7.4(a), if applicable, the Designated Person has neither affirmatively approved nor disapproved the vesting of Unvested Shares that had remained outstanding after Granteeβs Termination Date pending approval of vesting, then all such Unvested Shares that are still outstanding will be forfeited by Grantee to PNC at the close of business on the last day of the applicable Restricted Period without payment of any consideration by PNC.
Β
7.5 Retirement. In the event that Grantee Retires prior to the fifth (5th) anniversary of the Grant Date, all Restricted Shares that are Unvested Shares on Granteeβs Termination Date will be forfeited by Grantee to PNC on such date without payment of any consideration by PNC unless the Committee determines otherwise. The Committee may, in its sole discretion with respect to some or all of the Unvested Shares, treat such shares in the same manner that such shares would be treated pursuant to Section 7.4 if Granteeβs employment had been terminated by the Corporation by reason of Total and Permanent Disability.
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7.6 Termination in Anticipation of a Change in Control.
Β
(a) Notwithstanding anything in the Agreement to the contrary, if, after the occurrence of a CIC Triggering Event but prior to a CIC Failure and prior to the fifth (5th) anniversary of the Grant Date, Granteeβs employment is terminated (other than by reason of Granteeβs death) by the Corporation without Cause or by Grantee for Good Reason, or if Granteeβs employment is deemed to have been so terminated pursuant to Section 7.6(b), then: (i) all remaining applicable Continued Employment Performance Goals will be deemed to have been achieved and the Restricted Period or Periods with respect to all then outstanding Unvested Shares, if any, will terminate as of the end of the day on the day immediately preceding Granteeβs Termination Date (or, in the case of a qualifying termination pursuant to Section 7.6(b), the date all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.6(b) are met); and (ii) all Restricted Shares that thereby become Awarded Shares will be released and issued or reissued by PNC pursuant to Section 9 as soon as administratively practicable following such date.
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(b) Granteeβs employment will also be deemed to have been terminated by the Corporation without Cause after the occurrence of a CIC Triggering Event but prior to a CIC Failure for purposes of Section 7.6(a) if: (i) Granteeβs employment is terminated by the Corporation without Cause; (ii) such termination of employment (a) was at the request of a third party that has taken steps reasonably calculated to effect a Change in Control or (b) otherwise arose in anticipation of a Change in Control; and (iii) a CIC Triggering Event or a Change in Control occurs within three (3) months of such termination of employment.
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Granteeβs employment will also be deemed to have been terminated by Grantee for Good Reason after the occurrence of a CIC Triggering Event but prior to a CIC Failure for purposes of Section 7.6(a) if: (i) Grantee terminates Granteeβs employment with Good Reason; (ii) the circumstance or event that constitutes Good Reason (a) occurs at the request of a third party that has taken steps reasonably calculated to effect a Change in Control or (b) otherwise arose in anticipation of a Change in Control; and (iii) a CIC Triggering Event or a Change in Control occurs within three (3) months of such termination of employment.
Β
For purposes of this Section 7.6(b) only, Grantee will have the burden of proving that the requirements of clause (ii) of the first or second paragraph of this Section 7.6(b), as the case may be, have been met and the standard of proof to be met by Grantee will be clear and convincing evidence.
Β
For purposes of this Section 7.6(b) only, the definition of Change in Control in Section A.6 of Annex A will exclude the proviso in Section A.6(a).
Β
(c) If Unvested Shares will be forfeited by Grantee to PNC by reason of Granteeβs termination of employment with the Corporation pursuant to Section 7.1 unless all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.6(b) are met, then in the event that the record date for any dividend payable with respect to such Unvested Shares occurs on or after Granteeβs Termination Date but prior to the time all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.6(b) have been met, such dividend will be held, without interest, pending satisfaction of all of such conditions. In the event that one or more of the conditions of Section 7.6(b) are not met, any dividend being held pending satisfaction of such conditions will be forfeited by Grantee to PNC without payment of any consideration by PNC.
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(d) If Unvested Shares will be forfeited by Grantee to PNC by reason of Granteeβs termination of employment with the Corporation pursuant to Section 7.1 unless all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.6(b) are met, then such Restricted Shares will remain outstanding pending satisfaction of all of those conditions. Upon the failure of any required condition, all such Unvested Shares will be forfeited by Grantee to PNC on the date such failure occurs without payment of any consideration by PNC.
Β
8. Change in Control. Notwithstanding anything in the Agreement to the contrary, upon the occurrence of a Change in Control: (i) if Grantee is an employee of the Corporation as of the day immediately preceding the Change in Control, all remaining applicable Continued Employment Performance Goals will be deemed to have been achieved and the Restricted Period or Periods with respect to all then outstanding Unvested Shares will terminate as of the day immediately preceding the Change in Control; (ii) if Granteeβs employment with the Corporation terminated prior to the occurrence of the Change in Control but Unvested Shares remained outstanding after
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such termination of employment pursuant to Section 7.4 or Section 7.5 and are still outstanding pending approval of the vesting of such shares by the Designated Person specified in Section A.14 of Annex A, then with respect to all such Unvested Shares outstanding as of the day immediately preceding the Change in Control, such vesting approval will be deemed to have been given, the applicable Continued Employment Performance Goal or Goals will be deemed to have been achieved, and the applicable Restricted Period or Periods will terminate, all as of the day immediately preceding the Change in Control; and (iii) all Restricted Shares that thereby become Awarded Shares will be released and issued or reissued by PNC pursuant to Section 9 as soon as administratively practicable following such date.
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9. Termination of Prohibitions. Following termination of the Restricted Period applicable to such shares, PNC will release and issue or reissue the certificate or certificates representing the then outstanding whole Restricted Shares that have become Awarded Shares without the legend referred to in Section 3.
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Upon release and issuance or reissuance of shares that have become Awarded Shares, PNC or its designee will deliver the certificate or certificates for such whole shares to, or at the proper direction of, Grantee or Granteeβs legal representative.
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10. Payment of Taxes.
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10.1 Internal Revenue Code Section 83(b) Election. In the event that Grantee makes an Internal Revenue Code Section 83(b) election with respect to the Restricted Shares, Grantee shall satisfy all applicable federal, state or local withholding tax obligations arising from that election either: (a) by payment of cash; (b) by physical delivery to PNC of certificates for whole shares of PNC common stock that are not subject to any contractual restriction, pledge or other encumbrance and that have been owned by Grantee for at least six (6) months and, in the case of restricted stock, for which it has been at least six (6) months since the restrictions lapsed; or (c) by a combination of cash and such stock. Any such tax election shall be made pursuant to a form to be provided to Grantee by PNC on request. For purposes of this Section 10.1, shares of PNC common stock that are used to satisfy applicable withholding tax obligations will be valued at their Fair Market Value on the date the tax withholding obligation arises. Grantee will provide to PNC a copy of any Internal Revenue Code Section 83(b) election filed by Grantee with respect to the Restricted Shares not later than ten (10) days after the filing of such election.
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10.2 Other Tax Liabilities. Where Grantee has not previously satisfied all applicable withholding tax obligations, PNC will, at the time the tax withholding obligation arises with respect to any Restricted Shares, retain sufficient whole shares of PNC common stock from the shares granted pursuant to the Agreement to satisfy the minimum amount of taxes required to be withheld by the Corporation in connection with such shares. For purposes of this Section 10.2, shares of PNC common stock retained to satisfy applicable withholding tax requirements will be valued at their Fair Market Value on the date the tax withholding obligation arises.
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PNC will not retain more than the number of shares sufficient to satisfy the minimum amount of taxes required to be withheld in connection with the Restricted Shares. If Grantee desires to have an additional amount, up to Granteeβs W-4 obligation, withheld above the required minimum and if PNC so permits, Grantee may elect to satisfy this additional withholding either: (a) by payment of cash; or (b) using whole shares of PNC common stock (either by physical delivery to PNC of certificates for the shares or through PNCβs attestation procedure) that are not subject to any contractual restriction, pledge or other encumbrance and that have been owned by Grantee for at least six (6) months and, in the case of restricted stock, for which it has been at least six (6) months since the restrictions lapsed. Any such tax election shall be made pursuant to a form provided by PNC. Shares of PNC common stock that are used for this purpose will be valued at their Fair Market Value on the date the tax withholding obligation arises.
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11. Employment. Neither the granting and issuance of the Restricted Shares nor any term or provision of the Agreement shall constitute or be evidence of any understanding, expressed or implied, on the part of PNC or any Subsidiary to employ Grantee for any period or in any way alter Granteeβs status as an employee at will.
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12. Subject to the Plan and the Committee. In all respects the Grant and the Agreement are subject to the terms and conditions of the Plan, which has been made available to Grantee and is incorporated herein by reference; provided, however, the terms of the Plan shall not be considered an enlargement of any benefits under the Agreement. Further, the Grant and the Agreement are subject to any interpretation of, and any rules and regulations issued by, the Committee or under the authority of the Committee, whether made or issued before or after the Grant Date.
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13. Headings; Entire Agreement. Headings used in the Agreement are provided for reference and convenience only, shall not be considered part of the Agreement, and shall not be employed in the construction of the Agreement. The Agreement constitutes the entire agreement between Grantee and PNC and supersedes all other discussions, negotiations, correspondence, representations, understandings and agreements between the parties with respect to the subject matter hereof.
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14. Grantee Covenants.
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14.1 General. Grantee and PNC acknowledge and agree that Grantee has received adequate consideration with respect to enforcement of the provisions of Sections 14 and 15, that such provisions are reasonable and properly required for the adequate protection of the business of the Corporation, and that enforcement of such provisions will not prevent Grantee from earning a living.
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14.2 Non-Solicitation; No-Hire. Grantee agrees to comply with the provisions of subsections (a) and (b) of this Section 14.2 while employed by the Corporation and for a period of twelve (12) months after Granteeβs Termination Date regardless of the reason for such termination of employment.
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(a) Non-Solicitation. Grantee shall not, directly or indirectly, either for Granteeβs own benefit or purpose or for the benefit or purpose of any Person other than PNC or any Subsidiary, solicit, call on, do business with, or actively interfere with PNCβs or any Subsidiaryβs relationship with, or attempt to divert or entice away, any Person that Grantee should reasonably know (i) is a customer of PNC or any Subsidiary for which PNC or any Subsidiary provides any services as of the Termination Date, or (ii) was a customer of PNC or any Subsidiary for which PNC or any Subsidiary provided any services at any time during the twelve (12) months preceding the Termination Date, or (iii) was, as of the Termination Date, considering retention of PNC or any Subsidiary to provide any services.
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(b) No-Hire. Grantee shall not, directly or indirectly, either for Granteeβs own benefit or purpose or for the benefit or purpose of any Person other than PNC or any Subsidiary, employ or offer to employ, call on, or actively interfere with PNCβs or any Subsidiaryβs relationship with, or attempt to divert or entice away, any employee of the Corporation, nor shall Grantee assist any other Person in such activities.
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Notwithstanding the above, if Granteeβs employment with the Corporation is terminated by the Corporation without Cause or by Grantee with Good Reason and such Termination Date occurs during a Coverage Period (either as Coverage Period is defined in Section A.13 of Annex A or, if Grantee was a party to a written agreement between Grantee and PNC providing, among other things, for certain change in control severance benefits (a βCIC Severance Agreementβ) that was in effect at the time of such termination of employment, as Coverage Period is defined in such CIC Severance Agreement, if longer), then commencing immediately after such Termination Date, the provisions of subsections (a) and (b) of this Section 14.2 will no longer apply and will be replaced with the following subsection (c):
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(c) No-Hire. Grantee agrees that Grantee shall not, for a period of twelve (12) months after the Termination Date, employ or offer to employ, solicit, actively interfere with PNCβs or any PNC affiliateβs relationship with, or attempt to divert or entice away, any officer of PNC or any PNC affiliate.
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14.3 Confidentiality. During Granteeβs employment with the Corporation, and thereafter regardless of the reason for termination of such employment, Grantee will not disclose or use in any way any confidential business or technical information or trade secret acquired in the course of such employment, all of which is the exclusive and valuable property of the Corporation whether or not conceived of or prepared by Grantee, other than (a) information generally known in the Corporationβs industry or acquired from public sources, (b) as required in the course of employment by the Corporation, (c) as required by any court, supervisory authority, administrative agency or applicable law, or (d) with the prior written consent of PNC.
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14.4 Ownership of Inventions. Grantee shall promptly and fully disclose to PNC any and all inventions, discoveries, improvements, ideas or other works of
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inventorship or authorship, whether or not patentable, that have been or will be conceived and/or reduced to practice by Grantee during the term of Granteeβs employment with the Corporation, whether alone or with others, and that are (a) related directly or indirectly to the business or activities of PNC or any Subsidiary or (b) developed with the use of any time, material, facilities or other resources of PNC or any Subsidiary (βDevelopmentsβ). Grantee agrees to assign and hereby does assign to PNC or its designee all of Granteeβs right, title and interest, including copyrights and patent rights, in and to all Developments. Grantee shall perform all actions and execute all instruments that PNC or any Subsidiary shall deem necessary to protect or record PNCβs or its designeeβs interests in the Developments. The obligations of this Section 14.4 shall be performed by Grantee without further compensation and will continue beyond the Termination Date.
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15. Enforcement Provisions. Grantee understands and agrees to the following provisions regarding enforcement of the Agreement.
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15.1 Governing Law and Jurisdiction. The Agreement is governed by and construed under the laws of the Commonwealth of Pennsylvania, without regard to conflict of laws rules. Any dispute or claim arising out of or relating to the Agreement or claim of breach hereof shall be brought exclusively in the federal court for the Western District of Pennsylvania or in the Court of Common Pleas of Allegheny County, Pennsylvania. By execution of the Agreement, Grantee and PNC hereby consent to the exclusive jurisdiction of such courts, and waive any right to challenge jurisdiction or venue in such courts with regard to any suit, action, or proceeding under or in connection with the Agreement.
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15.2 Equitable Remedies. A breach of the provisions of any of Sections 14.2, 14.3 or 14.4 will cause the Corporation irreparable harm, and the Corporation will therefore be entitled to issuance of immediate, as well as permanent, injunctive relief restraining Grantee, and each and every person and entity acting in concert or participating with Grantee, from initiation and/or continuation of such breach.
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15.3 Tolling Period. If it becomes necessary or desirable for the Corporation to seek compliance with the provisions of Section 14.2 by legal proceedings, the period during which Grantee shall comply with said provisions will extend for a period of twelve (12) months from the date of the legal order requiring such compliance.
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15.4 No Waiver. Failure of PNC to demand strict compliance with any of the terms, covenants or conditions of the Agreement will not be deemed a waiver of such term, covenant or condition, nor will any waiver or relinquishment of any such term, covenant or condition on any occasion or on multiple occasions be deemed a waiver or relinquishment of such term, covenant or condition.
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15.5 Severability. The restrictions and obligations imposed by Sections 14.2, 14.3 and 14.4 are separate and severable, and it is the intent of Grantee and PNC that if any restriction or obligation imposed by any of these provisions is deemed by a court of
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competent jurisdiction to be void for any reason whatsoever, the remaining provisions, restrictions and obligations will remain valid and binding upon Grantee.
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15.6 Reform. In the event any of Sections 14.2, 14.3 and 14.4 are determined by a court of competent jurisdiction to be unenforceable because unreasonable either as to length of time or area to which said restriction applies, it is the intent of Grantee and PNC that said court reduce and reform the provisions thereof so as to apply the greatest limitations considered enforceable by the court.
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15.7 Waiver of Jury Trial. Each of Grantee and PNC hereby waives any right to trial by jury with regard to any suit, action or proceeding under or in connection with any of Sections 14.2, 14.3 and 14.4.
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15.8 Applicable Law. Notwithstanding anything in the Agreement, PNC will not be required to comply with any term, covenant or condition of the Agreement if and to the extent prohibited by law, including but not limited to federal banking and securities regulations, or as otherwise directed by one or more regulatory agencies having jurisdiction over PNC or any of its subsidiaries. Further, to the extent, if any, applicable to Grantee, Grantee agrees to reimburse PNC for any amounts Grantee may be required to reimburse PNC or its subsidiaries pursuant to Section 304 of the Xxxxxxxx-Xxxxx Act of 2002, and agrees that PNC need not comply with any term, covenant or condition of the Agreement to the extent that doing so would require that Grantee reimburse PNC or its subsidiaries for such amounts pursuant to Section 304 of the Xxxxxxxx-Xxxxx Act of 2002.
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16. Amendment of Pre-2004 Stock Options, Restricted Stock and Restricted Stock Deferrals. All nonstatutory stock options granted to employees under the Plan outstanding on February 18, 2004, all restricted stock grants to employees under the Plan or PNCβs 1996 Executive Incentive Award Plan outstanding but not yet vested on February 18, 2004, and all participant restricted stock deferral accounts under the PNC and Affiliates Deferred Compensation Plan that were in place but not yet vested on February 18, 2004, are subject to the amendments approved by the Committee on that date. These amendments are generally described in the Plan prospectus dated Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β , 200Β Β under the heading βRecent Amendmentsβ of the section titled βThe Plan.β A copy of this Plan prospectus accompanied or preceded delivery of the Agreement to Grantee.
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To the extent that Grantee is the holder of any such stock options or is the grantee of any such restricted stock or is a participant in the PNC and Affiliates Deferred Compensation Plan with such stock deferral account or accounts in place but not yet vested, Grantee hereby acknowledges and consents to such amendments.
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17. Acceptance of Grant; PNC Right to Cancel. If Grantee does not accept the Grant by executing and delivering a copy of the Agreement to PNC, without altering or changing the terms thereof in any way, within sixty (60) days of receipt by Grantee of a copy of the Agreement, PNC may, in its sole discretion, withdraw its offer and cancel the Grant at any time prior to Granteeβs delivery to PNC of a copy of the Agreement
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executed by Grantee. Otherwise, upon execution and delivery of the Agreement by both PNC and Grantee and, in the event that Grantee is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to PNC securities, the filing with and acceptance by the SEC of a Form 4 reporting the Grant, the Agreement is effective.
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Grantee will not have any of the rights of a shareholder with respect to the Restricted Shares as set forth in Section 4, and will not have the right to vote or to receive dividends on such shares, until the date the Agreement is effective and the Restricted Shares are issued in accordance with this Section 17.
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In the event that one or more record dates for dividends on PNC common stock occur after the Grant Date but before the date the Agreement is effective in accordance with this Section 17 and the Restricted Shares are issued, then upon the effectiveness of the Agreement, the Corporation will make a cash payment to Grantee equivalent to the amount of the dividends Grantee would have received had the Agreement been effective and the Restricted Shares had been issued on the Grant Date.
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IN WITNESS WHEREOF, PNC has caused the Agreement to be signed on its behalf as of the Grant Date.
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THE PNC FINANCIAL SERVICES GROUP, INC. | ||
By: | Β | Β |
Β | Β | Chairman and Chief Executive Officer |
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ATTEST: | ||
By: | Β | Β |
Β | Β | Corporate Secretary |
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ACCEPTED AND AGREED TO by GRANTEE. | ||
Β | Β | Β |
Β | Β | Β |
Grantee |
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Β
Restricted Stock Grant
Continued Employment Performance Goals
Restricted Periods: Three Years (25%); Four Years (25%); Five Years (50%);
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ANNEX A
TO
THE PNC FINANCIAL SERVICES GROUP, INC.
1997 LONG-TERM INCENTIVE AWARD PLAN
RESTRICTED STOCK AGREEMENT
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* * *
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CERTAIN DEFINITIONS
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Except where the context otherwise indicates, the following definitions apply for purposes of the Restricted Stock Agreement (βAgreementβ) to which this Annex A is attached:
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A.1 βAwarded Shares.β Provided that the Restricted Shares are then outstanding, Restricted Shares become βAwarded Sharesβ when both of the following have occurred: (a) the Continued Employment Performance Goal applicable to such Restricted Shares has been achieved or is deemed to have been achieved pursuant to the terms of the Agreement; and (b) the Restricted Period applicable to such Restricted Shares has terminated.
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A.2 βBoardβ means the Board of Directors of PNC.
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A.3 βBusiness Dayβ means any day when the New York Stock Exchange is open for business.
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A.4 βCauseβ means:
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(a) the willful and continued failure of Grantee to substantially perform Granteeβs 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 Grantee by the Board or the CEO which specifically identifies the manner in which the Board or the CEO believes that Grantee has not substantially performed Granteeβs duties; or
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(b) the willful engaging by Grantee in illegal conduct or gross misconduct that is materially and demonstrably injurious to PNC or any Subsidiary.
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For purposes of the preceding clauses (a) and (b), no act or failure to act, on the part of Grantee, shall be considered willful unless it is done, or omitted to be done, by Grantee in bad faith and without reasonable belief that Granteeβs 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 CEO or Granteeβs superior or based upon the advice of counsel for the Corporation, shall be conclusively presumed to be done, or omitted to be done, by Grantee in good faith and in the best interests of the Corporation.
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The cessation of employment of Grantee will be deemed to be a termination of Granteeβs employment with the Corporation for Cause for purposes of the Agreement only if and when there shall have been delivered to Grantee, as part of the notice of Granteeβs 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 on the basis of clear and convincing evidence that, in the good faith opinion of the Board, Grantee is guilty of conduct described in clause (a) or clause (b) above and, in either case, specifying the particulars thereof in detail. Such resolution shall be adopted only after (i) reasonable notice of such Board meeting is provided to Grantee, together with written notice that PNC believes that Grantee is guilty of conduct described in clause (a) or clause (b) above and, in either case, specifying the particulars thereof in detail, and (ii) Grantee is given an opportunity, together with counsel, to be heard before the Board.
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A.5 βCEOβ means the chief executive officer of PNC.
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A.6 βChange in Controlβ means a change of control of PNC 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 PNC is then subject to such reporting requirement; provided, however, that without limitation, a Change in Control will be deemed to have occurred if:
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(a) any Person, excluding employee benefits 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 PNC representing twenty percent (20%) or more of the combined voting power of PNCβs 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 will not be considered a Change in Control if the Board approves such acquisition either prior to or immediately after its occurrence;
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(b) PNC consummates a merger, consolidation, share exchange, division or other reorganization or transaction of PNC (a βFundamental Transactionβ) with any other corporation, other than a Fundamental Transaction that results in the voting securities of PNC 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
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Transaction of (i) PNCβs outstanding securities, (ii) the surviving entityβs outstanding securities, or (iii) in the case of a division, the outstanding securities of each entity resulting from the division;
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(c) the shareholders of PNC approve a plan of complete liquidation or winding-up of PNC or an agreement for the sale or disposition (in one transaction or a series of transactions) of all or substantially all of PNCβs assets;
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(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 PNCβs shareholders in connection with such proxy contest was approved by a vote of at least two-thirds (2/3rds) 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);
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(e) during any period of twenty-four (24) 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 PNCβs shareholders was approved by a vote of at least two-thirds (2/3rds) 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
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(f) the Board determines that a Change in Control has occurred.
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Notwithstanding anything to the contrary herein, a divestiture or spin-off of a subsidiary or division of PNC will not by itself constitute a Change in Control.
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A.7 βCIC Failureβ means the following:
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(a) with respect to a CIC Triggering Event described in Section A.8(a), PNCβs shareholders vote against the transaction approved by the Board or the agreement to consummate the transaction is terminated; or
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(b) with respect to a CIC Triggering Event described in Section A.8(b), the proxy contest fails to replace or remove a majority of the members of the Board.
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A.8 βCIC Triggering Eventβ means the occurrence of either of the following:
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(a) the Board or PNCβs shareholders approve a transaction described in Subsection (b) of the definition of Change in Control contained in Section A.6; or
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(b) the commencement of a proxy contest in which any Person seeks to replace or remove a majority of the members of the Board.
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A.9 βCommitteeβ means the Personnel and Compensation Committee of the Board.
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A.10 βCompetitive Activityβ means, for purposes of the Agreement, any participation in, employment by, ownership of any equity interest exceeding one percent (1%) in, or promotion or organization of, any Person other than PNC or any Subsidiary (a) engaged in business activities similar to some or all of the business activities of PNC or any Subsidiary as of Granteeβs Termination Date or (b) engaged in business activities which Grantee knows PNC or any Subsidiary intends to enter within the first twelve (12) months after Granteeβs Termination Date, in either case whether Grantee is acting as agent, consultant, independent contractor, employee, officer, director, investor, partner, shareholder, proprietor or in any other individual or representative capacity therein.
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A.11 βContinued Employment Performance Goalβ means: (a) with respect to shares in the First Tranche of Restricted Shares, the Three-Year Continued Employment Performance Goal; (b) with respect to shares in the Second Tranche of Restricted Shares, the Four-Year Continued Employment Performance Goal; and (c) with respect to shares in the Third Tranche of Restricted Shares, the Five-Year Continued Employment Performance Goal, as applicable.
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A.12 βCorporationβ means PNC and its Subsidiaries.
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A.13 βCoverage Periodβ means a period (a) 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 (b) ending on the date that is three (3) years after the date of the Change in Control; provided, however, that in the event that a Coverage Period commences on the date of a CIC Triggering Event, such Coverage Period will terminate upon the earlier to occur of (x) the date of a CIC Failure and (y) the date that is three (3) 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 will commence upon the earlier to occur of clause (a)(i) and clause (a)(ii) in the preceding sentence.
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A.14 βDesignated Personβ will be either: (a) the Committee, if Grantee is a member of the Corporate Executive Group (or equivalent successor classification) or is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to PNC securities; or (a) the Chief Human Resources Officer of PNC, if Grantee is not within one of the groups specified in Section A.14(a).
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A.15 βDetrimental Conductβ means:
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(a) Grantee has engaged, without the prior written consent of PNC (at PNCβs sole discretion), in any Competitive Activity in the continental United States at any time during the period commencing on Granteeβs Termination Date through the first (1st) anniversary of Granteeβs Termination Date;
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(b) a material breach by Grantee of (i) any code of conduct of PNC or a Subsidiary or (ii) other written policy of PNC or a Subsidiary, in either case required by law or established to maintain compliance with applicable law;
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(c) any act of fraud, misappropriation, material dishonesty, or embezzlement by Grantee against PNC or a Subsidiary or any client or customer of PNC or a Subsidiary;
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(d) any conviction (including a plea of guilty or of nolo contendere) of Grantee for, or entry by Grantee into a pre-trial disposition with respect to, the commission of a felony which relates to or arises out of Granteeβs employment or other service relationship with the Corporation; or
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(e) entry of any order against Grantee by any governmental body having regulatory authority with respect to the business of PNC or any Subsidiary, which order relates to or arises out of Granteeβs employment or other service relationship with the Corporation.
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Grantee will be deemed to have engaged in Detrimental Conduct for purposes of the Agreement only if and when the Committee determines that Grantee has engaged in conduct described in clause (a) above, that Grantee is guilty of conduct described in clause (b) or clause (c) above, or that an event described in clause (d) or clause (e) above has occurred with respect to Grantee and, if so, determines that Grantee will be deemed to have engaged in Detrimental Conduct.
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A.16 βExchange Actβ means the Securities Exchange Act of 1934 as amended, and the rules and regulations promulgated thereunder.
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A.17 βFair Market Valueβ as it relates to PNC common stock means the average of the high and low sale prices of the PNC common stock as reported on the New York Stock Exchange (or such successor reporting system as PNC may select) on the relevant date or, if no sale of the PNC common stock has been reported for that day, the average of such prices on the next preceding day and the next following day for which there were reported sales.
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A.18 βFive-Year Continued Employment Performance Goalβ means, subject to early achievement if so determined by the Committee or to deemed achievement pursuant to Section 7.3, Section 7.4, Section 7.5, Section 7.6, or Section 8 of the Agreement, if applicable, that Grantee has been continuously employed by the Corporation for the period from the Grant Date through (and including) the day immediately preceding the first of the following to occur: (a) the fifth (5th) anniversary of the Grant Date; (b) the date of Granteeβs death; and (c) the day a Change in Control is deemed to have occurred.
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A.19 βFour-Year Continued Employment Performance Goalβ means, subject to early achievement if so determined by the Committee or to deemed achievement pursuant to Section 7.3, Section 7.4, Section 7.5, Section 7.6, or Section 8 of the Agreement, if
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applicable, that Grantee has been continuously employed by the Corporation for the period from the Grant Date through (and including) the day immediately preceding the first of the following to occur: (a) the fourth (4th) anniversary of the Grant Date; (b) the date of Granteeβs death; and (c) the day a Change in Control is deemed to have occurred.
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A.20 βGood Reasonβ means:
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(a) the assignment to Grantee of any duties inconsistent in any respect with Granteeβs 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 Grantee;
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(b) a reduction by the Corporation in Granteeβs annual base salary as in effect on the Grant Date, as the same may be increased from time to time;
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(c) the Corporationβs requiring Grantee to be based at any office or location that is more than fifty (50) miles from Granteeβs office or location immediately prior to either the CIC Triggering Event or the Change in Control;
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(d) the failure by the Corporation (i) to continue in effect any bonus, stock option or other cash or equity-based incentive plan or program in which Grantee participates immediately prior to either the CIC Triggering Event or the Change in Control that is material to Granteeβs total compensation, unless a substantially equivalent arrangement (embodied in an ongoing substitute or alternative plan or program) has been made with respect to such plan or program, or (ii) to continue Granteeβs participation in such plan or program (or in such substitute or alternative plan or program) on a basis at least as favorable, both in terms of the amount of benefits provided and the level of Granteeβs participation relative to other participants, as existed immediately prior to the CIC Triggering Event or the Change in Control; or
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(e) the failure by the Corporation to continue to provide Grantee with benefits substantially similar to those received by Grantee under any of the Corporationβs pension (including, but not limited to, tax-qualified plans), life insurance, health, accident, disability or other welfare plans or programs in which Grantee was participating, at costs substantially similar to those paid by Grantee, immediately prior to the CIC Triggering Event or the Change in Control.
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A.21 βGrantβ means the Restricted Shares granted and issued to Grantee pursuant to Section 1 of the Agreement.
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A.22 βGrant Dateβ means the Grant Date set forth on page 1 of the Agreement.
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A.23 βGranteeβ means the person identified as Grantee on page 1 of the Agreement.
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A.24 βInternal Revenue Codeβ means the Internal Revenue Code of 1986 as amended, and the rules and regulations promulgated thereunder.
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A.25 βPersonβ 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.
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A.26 βPNCβ means The PNC Financial Services Group, Inc.
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A.27 βRestricted Period.β The applicable Restricted Period for Restricted Shares means, subject to early termination if so determined by the Committee or pursuant to Section 7.6 of the Agreement, if applicable, the period set forth in the applicable subsection below:
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(a) For First Tranche Shares: with respect to shares in the First Tranche of Restricted Shares, the period from the Grant Date through (and including) the earlier of: (i) the date of Granteeβs death; (ii) the day immediately preceding the day a Change in Control is deemed to have occurred; and (iii) the day immediately preceding the third (3rd) anniversary of the Grant Date or, if later, the last day of any extension of the Restricted Period pursuant to Section 7.4(a) or Section 7.5 of the Agreement, if applicable;
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(b) For Second Tranche Shares: with respect to shares in the Second Tranche of Restricted Shares, the period from the Grant Date through (and including) the earlier of: (i) the date of Granteeβs death; (ii) the day immediately preceding the day a Change in Control is deemed to have occurred; and (iii) the day immediately preceding the fourth (4th) anniversary of the Grant Date or, if later, the last day of any extension of the Restricted Period pursuant to Section 7.4(a) or Section 7.5 of the Agreement, if applicable; and
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(c) For Third Tranche Shares: with respect to shares in the Third Tranche of Restricted Shares, the period from the Grant Date through (and including) the earlier of: (i) the date of Granteeβs death; (ii) the day immediately preceding the day a Change in Control is deemed to have occurred; and (iii) the day immediately preceding the fifth (5th) anniversary of the Grant Date or, if later, the last day of any extension of the Restricted Period pursuant to Section 7.4(a) or Section 7.5 of the Agreement, if applicable.
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A.28 βRetireeβ means a Grantee who has Retired.
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A.29 βRetireβ or βRetirementβ means termination of Granteeβs employment with the Corporation at any time and for any reason (other than termination by reason of Granteeβs death or by the Corporation for Cause or, unless the Committee determines
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otherwise, termination in connection with a divestiture of assets or of one or more Subsidiaries) if such termination of employment occurs on or after the first (1st) day of the first (1st) month coincident with or next following the date on which Grantee attains age fifty-five (55) and completes five (5) years of service (as determined in the same manner as the determination of five years of Vesting Service under the provisions of The PNC Financial Services Group, Inc. Pension Plan) with the Corporation.
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A.30 βSECβ means the United States Securities and Exchange Commission.
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A.31 βTermination Dateβ means Granteeβs last date of employment with the Corporation. If Grantee is employed by a Subsidiary that ceases to be a Subsidiary of PNC and Grantee does not continue to be employed by PNC or a Subsidiary, then for purposes of the Agreement, Granteeβs employment with the Corporation terminates effective at the time this occurs.
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A.32 βThree-Year Continued Employment Performance Goalβ means, subject to early achievement if so determined by the Committee or to deemed achievement pursuant to Section 7.3, Section 7.4, Section 7.5, Section 7.6, or Section 8 of the Agreement, if applicable, that Grantee has been continuously employed by the Corporation for the period from the Grant Date through (and including) the day immediately preceding the first of the following to occur: (a) the third (3rd) anniversary of the Grant Date; (b) the date of Granteeβs death; and (c) the day a Change in Control is deemed to have occurred.
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A.33 βTotal and Permanent Disabilityβ means, unless the Committee determines otherwise, Granteeβs disability as determined to be total and permanent by the Corporation for purposes of the Agreement.
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A.34 βTranche(s)β or βFirst, Second or Third Trancheβ has the meaning set forth in Section 1 of the Agreement.
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A.35 βUnvested Sharesβ means any Restricted Shares that are not Awarded Shares.
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Β
FORM OF NON-NEO ANNUAL 25/25 PROGRAM
RESTRICTED STOCK GRANT AGREEMENT
Β
Annual 25/25 Program - 200_ Restricted Stock Grant
Continued Employment Performance Goal
Restricted Period: Three Years (100%)
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THE PNC FINANCIAL SERVICES GROUP, INC.
1997 LONG-TERM INCENTIVE AWARD PLAN
* * *
ANNUAL 25/25 PROGRAM
200_ RESTRICTED STOCK GRANT
* * *
RESTRICTED STOCK AGREEMENT
* * *
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GRANTEE: |
Β | < name > | Β Β | Β | Β Β | Β |
GRANT DATE: |
Β | February Β Β Β Β , 200Β Β | Β Β | Β | Β Β | Β |
SHARES: |
Β | < number of whole shares> | Β Β | Β | Β Β | Β |
Β
1. Grant of Restricted Shares. Pursuant to Article 12 of The PNC Financial Services Group, Inc. 1997 Long-Term Incentive Award Plan as amended from time to time (βPlanβ), and subject to the terms and conditions of this Restricted Stock Agreement (βAgreementβ), The PNC Financial Services Group, Inc. (βPNCβ) hereby grants to the Grantee named above (βGranteeβ) an Incentive Share Award (as defined in the Plan) of the number of shares of PNC common stock set forth above, and, upon acceptance of the Grant by Grantee in accordance with Section 17, will cause the issuance of said shares to Grantee subject to the terms and conditions of the Agreement and the Plan. The shares granted and issued to Grantee hereby as an Incentive Share Award subject to the terms and conditions of the Agreement and the Plan are hereafter referred to as the βRestricted Shares.β
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2. Definitions. Terms defined in the Plan are used in the Agreement as defined in the Plan unless otherwise defined in Annex A (attached hereto and incorporated herein by reference) or elsewhere in the Agreement.
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3. Terms of Grant. The Grant will be subject to the following terms and conditions:
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Restricted Shares will be subject to a Restricted Period as provided in Section A.24 of Annex A. Restricted Shares will be deposited with PNC or its designee, or credited to a book-entry account, during the term of the Restricted Period unless and until forfeited pursuant to the terms of the Agreement.
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Any certificate or certificates representing such Restricted Shares will contain the following legend:
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βThis certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture and restrictions against transfer) contained in The PNC Financial Services Group, Inc. 1997 Long-Term Incentive Award Plan as amended and an Agreement entered into between the registered owner and The PNC Financial Services Group, Inc. Release from such terms and conditions will be made only in accordance with the provisions of such Plan and such Agreement, a copy of each of which is on file in the office of the Corporate Secretary of The PNC Financial Services Group, Inc.β
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Where a book-entry system is used with respect to Restricted Shares, appropriate notation of such forfeiture possibility and transfer restrictions will be made on the system with respect to the account or accounts to which the Restricted Shares are credited.
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Restricted Shares deposited with PNC or its designee during the term of the Restricted Period that become Awarded Shares will be released and issued or reissued to, or at the proper direction of, Grantee or Granteeβs legal representative pursuant to Section 9 as soon as administratively practicable following the end of the Restricted Period.
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4. Rights as Shareholder. Except as provided in Section 6 and subject to Section 7.6(b) or Section 7.7(c), if applicable, and to Section 17, Grantee will have all the rights and privileges of a shareholder with respect to the Restricted Shares including, but not limited to, the right to vote the Restricted Shares and the right to receive dividends thereon if and when declared by the Board; provided, however, that all such rights and privileges will cease immediately upon any forfeiture of such shares.
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5. Capital Adjustments. Restricted Shares awarded hereunder will, as issued and outstanding shares of PNC common stock, be subject to such adjustment as may be necessary to reflect corporate transactions, including, without limitation, stock dividends, stock splits, spin-offs, split-offs, recapitalizations, mergers, consolidations or reorganizations of or by PNC; provided, however, that any shares received as distributions on or in exchange for Unvested Shares will be subject to the terms and conditions of the Agreement as if they were Restricted Shares.
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6. Prohibitions Against Sale, Assignment, etc. Unvested Shares may not be sold, assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered, other than by will or the laws of descent and distribution or as may be required pursuant
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to Section 10.2, unless and until the Restricted Period terminates and the Awarded Shares are released and issued or reissued by PNC pursuant to Section 9.
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7. Forfeiture; Death; Qualifying Disability, Retirement or DEAP Termination; Termination in Anticipation of CIC.
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7.1 Forfeiture on Termination of Employment. Except as otherwise provided in and subject to the conditions of Section 7.3, Section 7.4(a), Section 7.5(a), Section 7.6(a), Section 7.7(a), Section 7.7(b), or Section 8, if applicable, or unless the Committee determines otherwise, in the event that Granteeβs employment with the Corporation terminates prior to the third (3rd) anniversary of the Grant Date, all Restricted Shares that are Unvested Shares on Granteeβs Termination Date will be forfeited by Grantee to PNC without payment of any consideration by PNC.
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Upon forfeiture of Unvested Shares pursuant to the provisions of this Section 7.1 or the provisions of Section 7.2, Section 7.4(b), Section 7.5(b), Section 7.6(c) or Section 7.7(d), neither Grantee nor any successors, heirs, assigns or legal representatives of Grantee will thereafter have any further rights or interest in such Unvested Shares or any certificate or certificates representing such Unvested Shares.
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7.2 Forfeiture for Detrimental Conduct. Unvested Shares that would otherwise remain outstanding after Granteeβs Termination Date, if any, will be forfeited by Grantee to PNC without payment of any consideration by PNC in the event that, at any time prior to the date such shares become Awarded Shares, PNC determines that Grantee has engaged in Detrimental Conduct; provided, however, that: (a) this Section 7.2 will not apply to Restricted Shares that remain outstanding after Granteeβs Termination Date pursuant to Section 7.3 or Section 7.7, if any; (b) no determination that Grantee has engaged in Detrimental Conduct may be made on or after the date of Granteeβs death; (c) Detrimental Conduct will not apply to conduct by or activities of successors to the Restricted Shares by will or the laws of descent and distribution in the event of Granteeβs death; and (d) Detrimental Conduct will cease to apply to any Restricted Shares upon a Change in Control.
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7.3 Death. In the event of Granteeβs death while an employee of the Corporation and prior to the third (3rd) anniversary of the Grant Date, the Three-Year Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period with respect to the then outstanding Unvested Shares will terminate on the date of Granteeβs death.
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The Restricted Shares which thereby become Awarded Shares will be released and issued or reissued by PNC to, or at the proper direction of, Granteeβs legal representative pursuant to Section 9 as soon as administratively practicable following such date.
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7.4 Disability Termination.
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(a) In the event Granteeβs employment with the Corporation is terminated prior to the third (3rd) anniversary of the Grant Date by the Corporation by reason of Granteeβs Total and Permanent Disability, Unvested Shares will not be forfeited on Granteeβs Termination Date. Instead, Unvested Shares will, subject to the forfeiture provisions of Section 7.2, remain outstanding pending approval of the vesting of the Restricted Shares pursuant to this Section 7.4(a) by the Designated Person specified in Section A.13 of Annex A.
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If such Unvested Shares are still outstanding but the Designated Person has not made an affirmative determination to either approve or disapprove the vesting of the Unvested Shares by the day immediately preceding the third (3rd) anniversary of the Grant Date, then the Restricted Period will be automatically extended through the first to occur of: (1) the day the Designated Person makes an affirmative determination regarding such vesting; and (2) either (i) the ninetieth (90th) day following the third (3rd) anniversary of the Grant Date, if the Designated Person is the Chief Human Resources Officer of PNC, or (ii) the 180th day following such anniversary date if the Designated Person is the Committee, whichever is applicable.
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If the vesting of the then outstanding Unvested Shares is affirmatively approved by the Designated Person on or prior to the last day of the Restricted Period, including any extension of the Restricted Period, if applicable, then the Three-Year Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period with respect to any then outstanding Unvested Shares will terminate as of the end of the day on the date of such approval or the day immediately preceding the third (3rd) anniversary of the Grant Date, whichever is later. The Restricted Shares outstanding at the termination of the Restricted Period will become Awarded Shares and will be released and issued or reissued by PNC pursuant to Section 9.
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(b) If the Designated Person disapproves the vesting of the Unvested Shares that had remained outstanding after Granteeβs Termination Date pending approval of vesting, then all such Unvested Shares that are still outstanding will be forfeited by Grantee to PNC on such disapproval date without payment of any consideration by PNC.
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If by the end of the Restricted Period, including any extension of the Restricted Period pursuant to the second paragraph of Section 7.4(a), if applicable, the Designated Person has neither affirmatively approved nor disapproved the vesting of the Unvested Shares that had remained outstanding after Granteeβs Termination Date pending approval of vesting, then all such Unvested Shares that are still outstanding will be forfeited by Grantee to PNC at the close of business on the last day of the Restricted Period without payment of any consideration by PNC.
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7.5 Retirement.
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(a) In the event that Grantee Retires prior to the third (3rd) anniversary of the Grant Date, Unvested Shares will not be forfeited on Granteeβs Termination Date. Instead, Unvested Shares will, subject to the forfeiture provisions of Section 7.2, remain outstanding pending approval of the vesting of the Restricted Shares pursuant to this Section 7.5(a) by the Designated Person specified in Section A.13 of Annex A.
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If such Unvested Shares are still outstanding but the Designated Person has not made an affirmative determination to either approve or disapprove the vesting of the Unvested Shares by the day immediately preceding the third (3rd) anniversary of the Grant Date, then the Restricted Period will be automatically extended through the first to occur of: (1) the day the Designated Person makes an affirmative determination regarding such vesting; and (2) either (i) the ninetieth (90th) day following the third (3rd) anniversary of the Grant Date, if the Designated Person is the Chief Human Resources Officer of PNC, or (ii) the 180th day following such anniversary date if the Designated Person is the Committee, whichever is applicable.
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If the vesting of the then outstanding Unvested Shares is affirmatively approved by the Designated Person on or prior to the last day of the Restricted Period, including any extension of the Restricted Period, if applicable, then the Three-Year Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period with respect to any then outstanding Unvested Shares will terminate as of the end of the day on the date of such approval or the day immediately preceding the third (3rd) anniversary of the Grant Date, whichever is later. The Restricted Shares outstanding at the termination of the Restricted Period will become Awarded Shares and will be released and issued or reissued by PNC pursuant to Section 9.
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(b) If the Designated Person disapproves the vesting of the Unvested Shares that had remained outstanding after Granteeβs Termination Date pending approval of vesting, then all such Unvested Shares that are still outstanding will be forfeited by Grantee to PNC on such disapproval date without payment of any consideration by PNC.
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If by the end of the Restricted Period, including any extension of the Restricted Period pursuant to the second paragraph of Section 7.5(a), if applicable, the Designated Person has neither affirmatively approved nor disapproved the vesting of the Unvested Shares that had remained outstanding after Granteeβs Termination Date pending approval of vesting, then all such Unvested Shares that are still outstanding will be forfeited by Grantee to PNC at the close of business on the last day of the Restricted Period without payment of any consideration by PNC.
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7.6 DEAP Termination.
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(a) In the event that Granteeβs employment with the Corporation is terminated prior to the third (3rd) anniversary of the Grant Date by the Corporation and Grantee is
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offered and has entered into the standard Waiver and Release Agreement with PNC or a Subsidiary under an applicable PNC or Subsidiary Displaced Employee Assistance Plan, or any successor plan by whatever name known (βDEAPβ), or Grantee is offered and has entered into a similar waiver and release agreement between PNC or a Subsidiary and Grantee pursuant to the terms of an agreement or arrangement entered into by PNC or a Subsidiary and Grantee in lieu of or in addition to the DEAP, then Unvested Shares will not be forfeited on Granteeβs Termination Date. Instead, Unvested Shares will, subject to the forfeiture provisions of Section 7.2, remain outstanding pending approval of the vesting of the Restricted Shares pursuant to this Section 7.6(a) by the Designated Person specified in Section A.13 of Annex A, provided that Grantee does not revoke such waiver and release agreement within the time for revocation of such waiver and release agreement by Grantee.
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If such Unvested Shares are still outstanding but the Designated Person has not made an affirmative determination to either approve or disapprove the vesting of the Unvested Shares by the day immediately preceding the third (3rd) anniversary of the Grant Date, then the Restricted Period will be automatically extended through the first to occur of: (1) the day the Designated Person makes an affirmative determination regarding such vesting; and (2) either (i) the ninetieth (90th) day following the third (3rd) anniversary of the Grant Date, if the Designated Person is the Chief Human Resources Officer of PNC, or (ii) the 180th day following such anniversary date if the Designated Person is the Committee, whichever is applicable.
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If the vesting of the then outstanding Unvested Shares is affirmatively approved by the Designated Person on or prior to the last day of the Restricted Period, including any extension of the Restricted Period, if applicable, then the Three-Year Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period with respect to any then outstanding Unvested Shares will terminate as of the end of the day on the date of such approval or the day immediately preceding the third (3rd) anniversary of the Grant Date, whichever is later. The Restricted Shares outstanding at the termination of the Restricted Period will become Awarded Shares and will be released and issued or reissued by PNC pursuant to Section 9.
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(b) In the event that the record date for any dividend payable with respect to the Unvested Shares occurs on or after Granteeβs Termination Date but prior to the lapse of the time for revocation by Grantee of the waiver and release agreement specified in the first paragraph of Section 7.6(a), then such dividend will be held, without interest, pending satisfaction of the condition of Section 7.6(a) that Grantee enter into the offered waiver and release agreement and not revoke such waiver and release agreement within the time for revocation of such agreement by Grantee. In the event that this condition is not met, any dividend being held pending satisfaction of such condition will be forfeited by Grantee to PNC without payment of any consideration by PNC.
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(c) If (i) Grantee does not enter into, or enters into but revokes, the waiver and release agreement specified in the first paragraph of Section 7.6(a) or (ii) the Designated Person disapproves the vesting of the Unvested Shares that had remained outstanding
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after Granteeβs Termination Date pending the non-revocation of, and the lapse of the time within which Grantee may revoke, such waiver and release agreement and pending approval of the vesting of such shares, then all such Unvested Shares that are still outstanding will be forfeited by Grantee to PNC on the date such failure to satisfy the conditions of Section 7.6(a) occurs without payment of any consideration by PNC.
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If, by the end of the Restricted Period, including any extension of the Restricted Period pursuant to the second paragraph of Section 7.6(a), if applicable, such Unvested Shares are still outstanding but the Designated Person has neither affirmatively approved nor disapproved the vesting of such shares, then all such Unvested Shares will be forfeited by Grantee to PNC at the close of business on the last day of the Restricted Period without payment of any consideration by PNC.
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7.7 Termination in Anticipation of a Change in Control.
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(a) Notwithstanding anything in the Agreement to the contrary, if, after the occurrence of a CIC Triggering Event but prior to a CIC Failure and prior to the third (3rd) anniversary of the Grant Date, Granteeβs employment is terminated (other than by reason of Granteeβs death) by the Corporation without Cause or by Grantee for Good Reason, or if Granteeβs employment is deemed to have been so terminated pursuant to Section 7.7(b), then: (i) the Three-Year Continued Employment Performance Goal will be deemed to have been achieved and the Restricted Period with respect to any then outstanding Unvested Shares will terminate as of the end of the day on the day immediately preceding Granteeβs Termination Date (or, in the case of a qualifying termination pursuant to Section 7.7(b), the date all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.7(b) are met); and (ii) all Restricted Shares that thereby become Awarded Shares will be released and issued or reissued by PNC pursuant to Section 9 as soon as administratively practicable following such date.
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(b) Granteeβs employment will also be deemed to have been terminated by the Corporation without Cause after the occurrence of a CIC Triggering Event but prior to a CIC Failure for purposes of Section 7.7(a) if: (i) Granteeβs employment is terminated by the Corporation without Cause; (ii) such termination of employment (a) was at the request of a third party that has taken steps reasonably calculated to effect a Change in Control or (b) otherwise arose in anticipation of a Change in Control; and (iii) a CIC Triggering Event or a Change in Control occurs within three (3) months of such termination of employment.
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Granteeβs employment will also be deemed to have been terminated by Grantee for Good Reason after the occurrence of a CIC Triggering Event but prior to a CIC Failure for purposes of Section 7.7(a) if: (i) Grantee terminates Granteeβs employment with Good Reason; (ii) the circumstance or event that constitutes Good Reason (a) occurs at the request of a third party that has taken steps reasonably calculated to effect a Change in Control or (b) otherwise arose in anticipation of a Change in Control; and (iii) a CIC Triggering Event or a Change in Control occurs within three (3) months of such termination of employment.
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For purposes of this Section 7.7(b) only, Grantee will have the burden of proving that the requirements of clause (ii) of the first or second paragraph of this Section 7.7(b), as the case may be, have been met and the standard of proof to be met by Grantee will be clear and convincing evidence.
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For purposes of this Section 7.7(b) only, the definition of Change in Control in Section A.6 of Annex A will exclude the proviso in Section A.6(a).
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(c) If the Unvested Shares will be forfeited by Grantee to PNC by reason of Granteeβs termination of employment with the Corporation pursuant to Section 7.1 unless all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.7(b) are met, then in the event that the record date for any dividend payable with respect to the Unvested Shares occurs on or after Granteeβs Termination Date but prior to the time all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.7(b) have been met, such dividend will be held, without interest, pending satisfaction of all of such conditions. In the event that one or more of the conditions of Section 7.7(b) are not met, any dividend being held pending satisfaction of such conditions will be forfeited by Grantee to PNC without payment of any consideration by PNC.
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(d) If the Unvested Shares will be forfeited by Grantee to PNC by reason of Granteeβs termination of employment with the Corporation pursuant to Section 7.1 unless all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.7(b) are met, then the Restricted Shares will remain outstanding pending satisfaction of all of those conditions. Upon the failure of any required condition, all such Unvested Shares will be forfeited by Grantee to PNC on the date such failure occurs without payment of any consideration by PNC.
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8. Change in Control. Notwithstanding anything in the Agreement to the contrary, upon the occurrence of a Change in Control: (i) if Grantee is an employee of the Corporation as of the day immediately preceding the Change in Control, the Three-Year Continued Employment Performance Goal will be deemed to have been achieved and the Restricted Period will terminate with respect to all then outstanding Unvested Shares as of the day immediately preceding the Change in Control; (ii) if Granteeβs employment with the Corporation terminated prior to the occurrence of the Change in Control but the Unvested Shares remained outstanding after such termination of employment pursuant to Section 7.4, Section 7.5 or Section 7.6 and are still outstanding pending approval of the vesting of such shares by the Designated Person specified in Section A.13 of Annex A, then with respect to all Unvested Shares outstanding as of the day immediately preceding the Change in Control, such vesting approval will be deemed to have been given, the Three-Year Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period will terminate, all as of the day immediately preceding the Change in Control, provided, however, in the case of Unvested Shares that remained outstanding post-employment solely pursuant to Section 7.6(a), that Grantee entered into and does not revoke the
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waiver and release agreement specified in Section 7.6(a); and (iii) all Restricted Shares that thereby become Awarded Shares will be released and issued or reissued by PNC pursuant to Section 9 as soon as administratively practicable following such date.
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9. Termination of Prohibitions. Following termination of the Restricted Period, PNC will release and issue or reissue the certificate or certificates representing the then outstanding whole Restricted Shares that have become Awarded Shares without the legend referred to in Section 3.
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Upon release and issuance or reissuance of shares that have become Awarded Shares, PNC or its designee will deliver the certificate or certificates for such whole shares to, or at the proper direction of, Grantee or Granteeβs legal representative.
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10. Payment of Taxes.
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10.1 Internal Revenue Code Section 83(b) Election. In the event that Grantee makes an Internal Revenue Code Section 83(b) election with respect to the Restricted Shares, Grantee shall satisfy all applicable federal, state or local withholding tax obligations arising from that election either: (a) by payment of cash; (b) by physical delivery to PNC of certificates for whole shares of PNC common stock that are not subject to any contractual restriction, pledge or other encumbrance and that have been owned by Grantee for at least six (6) months and, in the case of restricted stock, for which it has been at least six (6) months since the restrictions lapsed; or (c) by a combination of cash and such stock. Any such tax election shall be made pursuant to a form to be provided to Grantee by PNC on request. For purposes of this Section 10.1, shares of PNC common stock that are used to satisfy applicable withholding tax obligations will be valued at their Fair Market Value on the date the tax withholding obligation arises. Grantee will provide to PNC a copy of any Internal Revenue Code Section 83(b) election filed by Grantee with respect to the Restricted Shares not later than ten (10) days after the filing of such election.
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10.2 Other Tax Liabilities. Where Grantee has not previously satisfied all applicable withholding tax obligations, PNC will, at the time the tax withholding obligation arises, retain sufficient whole shares of PNC common stock from the shares granted pursuant to the Agreement to satisfy the minimum amount of taxes required to be withheld by the Corporation in connection with the Restricted Shares. For purposes of this Section 10.2, shares of PNC common stock retained to satisfy applicable withholding tax requirements will be valued at their Fair Market Value on the date the tax withholding obligation arises.
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PNC will not retain more than the number of shares sufficient to satisfy the minimum amount of taxes required to be withheld in connection with the Restricted Shares. If Grantee desires to have an additional amount, up to Granteeβs W-4 obligation, withheld above the required minimum and if PNC so permits, Grantee may elect to satisfy this additional withholding either: (a) by payment of cash; or (b) using whole shares of PNC common stock (either by physical delivery to PNC of certificates for the
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shares or through PNCβs attestation procedure) that are not subject to any contractual restriction, pledge or other encumbrance and that have been owned by Grantee for at least six (6) months and, in the case of restricted stock, for which it has been at least six (6) months since the restrictions lapsed. Any such tax election shall be made pursuant to a form provided by PNC. Shares of PNC common stock that are used for this purpose will be valued at their Fair Market Value on the date the tax withholding obligation arises.
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11. Employment. Neither the granting and issuance of the Restricted Shares nor any term or provision of the Agreement shall constitute or be evidence of any understanding, expressed or implied, on the part of PNC or any Subsidiary to employ Grantee for any period or in any way alter Granteeβs status as an employee at will.
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12. Subject to the Plan and the Committee. In all respects the Grant and the Agreement are subject to the terms and conditions of the Plan, which has been made available to Grantee and is incorporated herein by reference; provided, however, the terms of the Plan shall not be considered an enlargement of any benefits under the Agreement. Further, the Grant and the Agreement are subject to any interpretation of, and any rules and regulations issued by, the Committee or under the authority of the Committee, whether made or issued before or after the Grant Date.
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13. Headings; Entire Agreement. Headings used in the Agreement are provided for reference and convenience only, shall not be considered part of the Agreement, and shall not be employed in the construction of the Agreement. The Agreement constitutes the entire agreement between Grantee and PNC and supersedes all other discussions, negotiations, correspondence, representations, understandings and agreements between the parties with respect to the subject matter hereof.
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14. Grantee Covenants.
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14.1 General. Grantee and PNC acknowledge and agree that Grantee has received adequate consideration with respect to enforcement of the provisions of Sections 14 and 15, that such provisions are reasonable and properly required for the adequate protection of the business of the Corporation, and that enforcement of such provisions will not prevent Grantee from earning a living.
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14.2 Non-Solicitation; No-Hire. Grantee agrees to comply with the provisions of subsections (a) and (b) of this Section 14.2 while employed by the Corporation and for a period of twelve (12) months after Granteeβs Termination Date regardless of the reason for such termination of employment.
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(a) Non-Solicitation. Grantee shall not, directly or indirectly, either for Granteeβs own benefit or purpose or for the benefit or purpose of any Person other than PNC or any Subsidiary, solicit, call on, do business with, or actively interfere with PNCβs or any Subsidiaryβs relationship with, or attempt to divert or entice away, any Person that Grantee should reasonably know (i) is a customer of PNC or any Subsidiary for which PNC or any Subsidiary provides any services as of the Termination Date, or (ii) was a
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customer of PNC or any Subsidiary for which PNC or any Subsidiary provided any services at any time during the twelve (12) months preceding the Termination Date, or (iii) was, as of the Termination Date, considering retention of PNC or any Subsidiary to provide any services.
Β
(b) No-Hire. Grantee shall not, directly or indirectly, either for Granteeβs own benefit or purpose or for the benefit or purpose of any Person other than PNC or any Subsidiary, employ or offer to employ, call on, or actively interfere with PNCβs or any Subsidiaryβs relationship with, or attempt to divert or entice away, any employee of the Corporation, nor shall Grantee assist any other Person in such activities.
Β
Notwithstanding the above, if Granteeβs employment with the Corporation is terminated by the Corporation without Cause or by Grantee with Good Reason and such Termination Date occurs during a Coverage Period (either as Coverage Period is defined in Section A.12 of Annex A or, if Grantee was a party to a written agreement between Grantee and PNC providing, among other things, for certain change in control severance benefits (a βCIC Severance Agreementβ) that was in effect at the time of such termination of employment, as Coverage Period is defined in such CIC Severance Agreement, if longer), then commencing immediately after such Termination Date, the provisions of subsections (a) and (b) of this Section 14.2 will no longer apply and will be replaced with the following subsection (c):
Β
(c) No-Hire. Grantee agrees that Grantee shall not, for a period of twelve (12) months after the Termination Date, employ or offer to employ, solicit, actively interfere with PNCβs or any PNC affiliateβs relationship with, or attempt to divert or entice away, any officer of PNC or any PNC affiliate.
Β
14.3 Confidentiality. During Granteeβs employment with the Corporation, and thereafter regardless of the reason for termination of such employment, Grantee will not disclose or use in any way any confidential business or technical information or trade secret acquired in the course of such employment, all of which is the exclusive and valuable property of the Corporation whether or not conceived of or prepared by Grantee, other than (a) information generally known in the Corporationβs industry or acquired from public sources, (b) as required in the course of employment by the Corporation, (c) as required by any court, supervisory authority, administrative agency or applicable law, or (d) with the prior written consent of PNC.
Β
14.4 Ownership of Inventions. Grantee shall promptly and fully disclose to PNC any and all inventions, discoveries, improvements, ideas or other works of inventorship or authorship, whether or not patentable, that have been or will be conceived and/or reduced to practice by Grantee during the term of Granteeβs employment with the Corporation, whether alone or with others, and that are (a) related directly or indirectly to the business or activities of PNC or any Subsidiary or (b) developed with the use of any time, material, facilities or other resources of PNC or any Subsidiary (βDevelopmentsβ). Grantee agrees to assign and hereby does assign to PNC or its designee all of Granteeβs right, title and interest, including copyrights and patent rights, in and to all
Β
-11-
Developments. Grantee shall perform all actions and execute all instruments that PNC or any Subsidiary shall deem necessary to protect or record PNCβs or its designeeβs interests in the Developments. The obligations of this Section 14.4 shall be performed by Grantee without further compensation and will continue beyond the Termination Date.
Β
15. Enforcement Provisions. Grantee understands and agrees to the following provisions regarding enforcement of the Agreement.
Β
15.1 Governing Law and Jurisdiction. The Agreement is governed by and construed under the laws of the Commonwealth of Pennsylvania, without regard to conflict of laws rules. Any dispute or claim arising out of or relating to the Agreement or claim of breach hereof shall be brought exclusively in the federal court for the Western District of Pennsylvania or in the Court of Common Pleas of Allegheny County, Pennsylvania. By execution of the Agreement, Grantee and PNC hereby consent to the exclusive jurisdiction of such courts, and waive any right to challenge jurisdiction or venue in such courts with regard to any suit, action, or proceeding under or in connection with the Agreement.
Β
15.2 Equitable Remedies. A breach of the provisions of any of Sections 14.2, 14.3 or 14.4 will cause the Corporation irreparable harm, and the Corporation will therefore be entitled to issuance of immediate, as well as permanent, injunctive relief restraining Grantee, and each and every person and entity acting in concert or participating with Grantee, from initiation and/or continuation of such breach.
Β
15.3 Tolling Period. If it becomes necessary or desirable for the Corporation to seek compliance with the provisions of Section 14.2 by legal proceedings, the period during which Grantee shall comply with said provisions will extend for a period of twelve (12) months from the date of the legal order requiring such compliance.
Β
15.4 No Waiver. Failure of PNC to demand strict compliance with any of the terms, covenants or conditions of the Agreement will not be deemed a waiver of such term, covenant or condition, nor will any waiver or relinquishment of any such term, covenant or condition on any occasion or on multiple occasions be deemed a waiver or relinquishment of such term, covenant or condition.
Β
15.5 Severability. The restrictions and obligations imposed by Sections 14.2, 14.3 and 14.4 are separate and severable, and it is the intent of Grantee and PNC that if any restriction or obligation imposed by any of these provisions is deemed by a court of competent jurisdiction to be void for any reason whatsoever, the remaining provisions, restrictions and obligations will remain valid and binding upon Grantee.
Β
15.6 Reform. In the event any of Sections 14.2, 14.3 and 14.4 are determined by a court of competent jurisdiction to be unenforceable because unreasonable either as to length of time or area to which said restriction applies, it is the intent of Grantee and PNC that said court reduce and reform the provisions thereof so as to apply the greatest limitations considered enforceable by the court.
Β
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15.7 Waiver of Jury Trial. Each of Grantee and PNC hereby waives any right to trial by jury with regard to any suit, action or proceeding under or in connection with any of Sections 14.2, 14.3 and 14.4.
Β
15.8 Applicable Law. Notwithstanding anything in the Agreement, PNC will not be required to comply with any term, covenant or condition of the Agreement if and to the extent prohibited by law, including but not limited to federal banking and securities regulations, or as otherwise directed by one or more regulatory agencies having jurisdiction over PNC or any of its subsidiaries. Further, to the extent, if any, applicable to Grantee, Grantee agrees to reimburse PNC for any amounts Grantee may be required to reimburse PNC or its subsidiaries pursuant to Section 304 of the Xxxxxxxx-Xxxxx Act of 2002, and agrees that PNC need not comply with any term, covenant or condition of the Agreement to the extent that doing so would require that Grantee reimburse PNC or its subsidiaries for such amounts pursuant to Section 304 of the Xxxxxxxx-Xxxxx Act of 2002.
Β
16. Amendment of Pre-2004 Stock Options, Restricted Stock and Restricted Stock Deferrals. All nonstatutory stock options granted to employees under the Plan outstanding on February 18, 2004, all restricted stock grants to employees under the Plan or PNCβs 1996 Executive Incentive Award Plan outstanding but not yet vested on February 18, 2004, and all participant restricted stock deferral accounts under the PNC and Affiliates Deferred Compensation Plan that were in place but not yet vested on February 18, 2004, are subject to the amendments approved by the Committee on that date. These amendments are generally described in the Plan prospectus dated Β Β Β Β Β Β Β Β Β Β Β Β , 200Β Β under the heading βRecent Amendmentsβ of the section titled βThe Plan.β A copy of this Plan prospectus accompanied or preceded delivery of the Agreement to Grantee.
Β
To the extent that Grantee is the holder of any such stock options or is the grantee of any such restricted stock or is a participant in the PNC and Affiliates Deferred Compensation Plan with such stock deferral account or accounts in place but not yet vested, Grantee hereby acknowledges and consents to such amendments.
Β
17. Acceptance of Grant; PNC Right to Cancel. If Grantee does not accept the Grant by executing and delivering a copy of the Agreement to PNC, without altering or changing the terms thereof in any way, within sixty (60) days of receipt by Grantee of a copy of the Agreement, PNC may, in its sole discretion, withdraw its offer and cancel the Grant at any time prior to Granteeβs delivery to PNC of a copy of the Agreement executed by Grantee. Otherwise, upon execution and delivery of the Agreement by both PNC and Grantee and, in the event that Grantee is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to PNC securities, the filing with and acceptance by the SEC of a Form 4 reporting the Grant, the Agreement is effective.
Β
Grantee will not have any of the rights of a shareholder with respect to the Restricted Shares as set forth in Section 4, and will not have the right to vote or to receive
Β
-13-
dividends on such shares, until the date the Agreement is effective and the Restricted Shares are issued in accordance with this Section 17.
Β
In the event that one or more record dates for dividends on PNC common stock occur after the Grant Date but before the date the Agreement is effective in accordance with this Section 17 and the Restricted Shares are issued, then upon the effectiveness of the Agreement, the Corporation will make a cash payment to Grantee equivalent to the amount of the dividends Grantee would have received had the Agreement been effective and the Restricted Shares had been issued on the Grant Date.
Β
IN WITNESS WHEREOF, PNC has caused the Agreement to be signed on its behalf as of the Grant Date.
Β
THE PNC FINANCIAL SERVICES GROUP, INC. | ||
By: |
Β | Β |
Β | Β | Chairman and Chief Executive Officer |
Β
ATTEST: | ||
By: |
Β | Β |
Β | Β | Corporate Secretary |
Β
ACCEPTED AND AGREED TO by GRANTEE. | ||
Β | ||
Grantee |
Β
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Β
Annual 25/25 Program - 200Β Β Restricted Stock Grant
Continued Employment Performance Goal
Restricted Period: Three Years (100%)
Β
ANNEX A
TO
THE PNC FINANCIAL SERVICES GROUP, INC.
1997 LONG-TERM INCENTIVE AWARD PLAN
ANNUAL 25/25 PROGRAM β 200Β Β RESTRICTED STOCK GRANT
RESTRICTED STOCK AGREEMENT
Β
* * *
Β
CERTAIN DEFINITIONS
Β
Except where the context otherwise indicates, the following definitions apply for purposes of the Restricted Stock Agreement (βAgreementβ) to which this Annex A is attached:
Β
A.1 βAwarded Shares.β Provided that the Restricted Shares are then outstanding, Restricted Shares become βAwarded Sharesβ when both of the following have occurred: (a) the Three-Year Continued Employment Performance Goal has been achieved or is deemed to have been achieved pursuant to the terms of the Agreement; and (b) the Restricted Period has terminated.
Β
A.2 βBoardβ means the Board of Directors of PNC.
Β
A.3 βBusiness Dayβ means any day when the New York Stock Exchange is open for business.
Β
A.4 βCauseβ means:
Β
(a) the willful and continued failure of Grantee to substantially perform Granteeβs 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 Grantee by the Board or the CEO which specifically identifies the manner in which the Board or the CEO believes that Grantee has not substantially performed Granteeβs duties; or
Β
(b) the willful engaging by Grantee in illegal conduct or gross misconduct that is materially and demonstrably injurious to PNC or any Subsidiary.
Β
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For purposes of the preceding clauses (a) and (b), no act or failure to act, on the part of Grantee, shall be considered willful unless it is done, or omitted to be done, by Grantee in bad faith and without reasonable belief that Granteeβs 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 CEO or Granteeβs superior or based upon the advice of counsel for the Corporation, shall be conclusively presumed to be done, or omitted to be done, by Grantee in good faith and in the best interests of the Corporation.
Β
The cessation of employment of Grantee will be deemed to be a termination of Granteeβs employment with the Corporation for Cause for purposes of the Agreement only if and when there shall have been delivered to Grantee, as part of the notice of Granteeβs 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 on the basis of clear and convincing evidence that, in the good faith opinion of the Board, Grantee is guilty of conduct described in clause (a) or clause (b) above and, in either case, specifying the particulars thereof in detail. Such resolution shall be adopted only after (i) reasonable notice of such Board meeting is provided to Grantee, together with written notice that PNC believes that Grantee is guilty of conduct described in clause (a) or clause (b) above and, in either case, specifying the particulars thereof in detail, and (ii) Grantee is given an opportunity, together with counsel, to be heard before the Board.
Β
A.5 βCEOβ means the chief executive officer of PNC.
Β
A.6 βChange in Controlβ means a change of control of PNC 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 PNC is then subject to such reporting requirement; provided, however, that without limitation, a Change in Control will be deemed to have occurred if:
Β
(a) any Person, excluding employee benefits 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 PNC representing twenty percent (20%) or more of the combined voting power of PNCβs 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 will not be considered a Change in Control if the Board approves such acquisition either prior to or immediately after its occurrence;
Β
(b) PNC consummates a merger, consolidation, share exchange, division or other reorganization or transaction of PNC (a βFundamental Transactionβ) with any other corporation, other than a Fundamental Transaction that results in the voting securities of PNC 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
Β
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Transaction of (i) PNCβs outstanding securities, (ii) the surviving entityβs outstanding securities, or (iii) in the case of a division, the outstanding securities of each entity resulting from the division;
Β
(c) the shareholders of PNC approve a plan of complete liquidation or winding-up of PNC or an agreement for the sale or disposition (in one transaction or a series of transactions) of all or substantially all of PNCβs assets;
Β
(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 PNCβs shareholders in connection with such proxy contest was approved by a vote of at least two-thirds (2/3rds) 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);
Β
(e) during any period of twenty-four (24) 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 PNCβs shareholders was approved by a vote of at least two-thirds (2/3rds) 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
Β
(f) the Board determines that a Change in Control has occurred.
Β
Notwithstanding anything to the contrary herein, a divestiture or spin-off of a subsidiary or division of PNC will not by itself constitute a Change in Control.
Β
A.7 βCIC Failureβ means the following:
Β
(a) with respect to a CIC Triggering Event described in Section A.8(a), PNCβs shareholders vote against the transaction approved by the Board or the agreement to consummate the transaction is terminated; or
Β
(b) with respect to a CIC Triggering Event described in Section A.8(b), the proxy contest fails to replace or remove a majority of the members of the Board.
Β
A.8 βCIC Triggering Eventβ means the occurrence of either of the following:
Β
(a) the Board or PNCβs shareholders approve a transaction described in Subsection (b) of the definition of Change in Control contained in Section A.6; or
Β
(b) the commencement of a proxy contest in which any Person seeks to replace or remove a majority of the members of the Board.
Β
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A.9 βCommitteeβ means the Personnel and Compensation Committee of the Board.
Β
A.10 βCompetitive Activityβ means, for purposes of the Agreement, any participation in, employment by, ownership of any equity interest exceeding one percent (1%) in, or promotion or organization of, any Person other than PNC or any Subsidiary (a) engaged in business activities similar to some or all of the business activities of PNC or any Subsidiary as of Granteeβs Termination Date or (b) engaged in business activities which Grantee knows PNC or any Subsidiary intends to enter within the first twelve (12) months after Granteeβs Termination Date, in either case whether Grantee is acting as agent, consultant, independent contractor, employee, officer, director, investor, partner, shareholder, proprietor or in any other individual or representative capacity therein.
Β
A.11 βCorporationβ means PNC and its Subsidiaries.
Β
A.12 βCoverage Periodβ means a period (a) 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 (b) ending on the date that is three (3) years after the date of the Change in Control; provided, however, that in the event that a Coverage Period commences on the date of a CIC Triggering Event, such Coverage Period will terminate upon the earlier to occur of (x) the date of a CIC Failure and (y) the date that is three (3) 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 will commence upon the earlier to occur of clause (a)(i) and clause (a)(ii) in the preceding sentence.
Β
A.13 βDesignated Personβ will be either: (a) the Committee, if Grantee is a member of the Corporate Executive Group (or equivalent successor classification) or is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to PNC securities; or (a) the Chief Human Resources Officer of PNC, if Grantee is not within one of the groups specified in Section A.13(a).
Β
A.14 βDetrimental Conductβ means:
Β
(a) Grantee has engaged, without the prior written consent of PNC (at PNCβs sole discretion), in any Competitive Activity in the continental United States at any time during the period commencing on Granteeβs Termination Date through the first (1st) anniversary of Granteeβs Termination Date;
Β
(b) a material breach by Grantee of (i) any code of conduct of PNC or a Subsidiary or (ii) other written policy of PNC or a Subsidiary, in either case required by law or established to maintain compliance with applicable law;
Β
(c) any act of fraud, misappropriation, material dishonesty, or embezzlement by Grantee against PNC or a Subsidiary or any client or customer of PNC or a Subsidiary;
Β
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(d) any conviction (including a plea of guilty or of nolo contendere) of Grantee for, or entry by Grantee into a pre-trial disposition with respect to, the commission of a felony which relates to or arises out of Granteeβs employment or other service relationship with the Corporation; or
Β
(e) entry of any order against Grantee by any governmental body having regulatory authority with respect to the business of PNC or any Subsidiary, which order relates to or arises out of Granteeβs employment or other service relationship with the Corporation.
Β
Grantee will be deemed to have engaged in Detrimental Conduct for purposes of the Agreement only if and when the Committee determines that Grantee has engaged in conduct described in clause (a) above, that Grantee is guilty of conduct described in clause (b) or clause (c) above, or that an event described in clause (d) or clause (e) above has occurred with respect to Grantee and, if so, determines that Grantee will be deemed to have engaged in Detrimental Conduct.
Β
A.15 βExchange Actβ means the Securities Exchange Act of 1934 as amended, and the rules and regulations promulgated thereunder.
Β
A.16 βFair Market Valueβ as it relates to PNC common stock means the average of the high and low sale prices of the PNC common stock as reported on the New York Stock Exchange (or such successor reporting system as PNC may select) on the relevant date or, if no sale of the PNC common stock has been reported for that day, the average of such prices on the next preceding day and the next following day for which there were reported sales.
Β
A.17 βGood Reasonβ means:
Β
(a) the assignment to Grantee of any duties inconsistent in any respect with Granteeβs 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 Grantee;
Β
(b) a reduction by the Corporation in Granteeβs annual base salary as in effect on the Grant Date, as the same may be increased from time to time;
Β
(c) the Corporationβs requiring Grantee to be based at any office or location that is more than fifty (50) miles from Granteeβs office or location immediately prior to either the CIC Triggering Event or the Change in Control;
Β
(d) the failure by the Corporation (i) to continue in effect any bonus, stock option or other cash or equity-based incentive plan or program in which Grantee
Β
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participates immediately prior to either the CIC Triggering Event or the Change in Control that is material to Granteeβs total compensation, unless a substantially equivalent arrangement (embodied in an ongoing substitute or alternative plan or program) has been made with respect to such plan or program, or (ii) to continue Granteeβs participation in such plan or program (or in such substitute or alternative plan or program) on a basis at least as favorable, both in terms of the amount of benefits provided and the level of Granteeβs participation relative to other participants, as existed immediately prior to the CIC Triggering Event or the Change in Control; or
Β
(e) the failure by the Corporation to continue to provide Grantee with benefits substantially similar to those received by Grantee under any of the Corporationβs pension (including, but not limited to, tax-qualified plans), life insurance, health, accident, disability or other welfare plans or programs in which Grantee was participating, at costs substantially similar to those paid by Grantee, immediately prior to the CIC Triggering Event or the Change in Control.
Β
A.18 βGrantβ means the Restricted Shares granted and issued to Grantee pursuant to Section 1 of the Agreement.
Β
A.19 βGrant Dateβ means the Grant Date set forth on page 1 of the Agreement.
Β
A.20 βGranteeβ means the person identified as Grantee on page 1 of the Agreement.
Β
A.21 βInternal Revenue Codeβ means the Internal Revenue Code of 1986 as amended, and the rules and regulations promulgated thereunder.
Β
A.22 βPersonβ 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.
Β
A.23 βPNCβ means The PNC Financial Services Group, Inc.
Β
A.24 βRestricted Periodβ means, subject to early termination if so determined by the Committee or pursuant to Section 7.7 of the Agreement, if applicable, the period from the Grant Date through (and including) the earlier of: (a) the date of Granteeβs death; (b) the day immediately preceding the day a Change in Control is deemed to have occurred; and (c) the day immediately preceding the third (3rd) anniversary of the Grant Date or, if later, the last day of any extension of the Restricted Period pursuant to Section 7.4(a), Section 7.5(a) or Section 7.6(a) of the Agreement, if applicable.
Β
A.25 βRetireeβ means a Grantee who has Retired.
Β
A.26 βRetireβ or βRetirementβ means termination of Granteeβs employment with the Corporation at any time and for any reason (other than termination by reason of Granteeβs death or by the Corporation for Cause or, unless the Committee determines
Β
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otherwise, termination in connection with a divestiture of assets or of one or more Subsidiaries) if such termination of employment occurs on or after the first (1st) day of the first (1st) month coincident with or next following the date on which Grantee attains age fifty-five (55) and completes five (5) years of service (as determined in the same manner as the determination of five years of Vesting Service under the provisions of The PNC Financial Services Group, Inc. Pension Plan) with the Corporation.
Β
A.27 βSECβ means the United States Securities and Exchange Commission.
Β
A.28 βTermination Dateβ means Granteeβs last date of employment with the Corporation. If Grantee is employed by a Subsidiary that ceases to be a Subsidiary of PNC and Grantee does not continue to be employed by PNC or a Subsidiary, then for purposes of the Agreement, Granteeβs employment with the Corporation terminates effective at the time this occurs.
Β
A.29 βThree-Year Continued Employment Performance Goalβ means, subject to early achievement if so determined by the Committee or to deemed achievement pursuant to Section 7.3, Section 7.4, Section 7.5, Section 7.6, Section 7.7, or Section 8 of the Agreement, if applicable, that Grantee has been continuously employed by the Corporation for the period from the Grant Date through (and including) the day immediately preceding the first of the following to occur: (a) the third (3rd) anniversary of the Grant Date; (b) the date of Granteeβs death; and (c) the day a Change in Control is deemed to have occurred.
Β
A.30 βTotal and Permanent Disabilityβ means, unless the Committee determines otherwise, Granteeβs disability as determined to be total and permanent by the Corporation for purposes of the Agreement.
Β
A.31 βUnvested Sharesβ means any Restricted Shares that are not Awarded Shares.
Β
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Β
FORM OF NEO ANNUAL 25/25 PROGRAM
RESTRICTED STOCK GRANT AGREEMENT
Β
Annual 25/25 Program (NEOs) - 200Β Β Restricted Stock Grant
Continued Employment Performance Goal
Restricted Period: Three Years (100%)
Β
THE PNC FINANCIAL SERVICES GROUP, INC.
1996 EXECUTIVE INCENTIVE AWARD PLAN
Β
* * *
RESTRICTED STOCK AGREEMENT
Β
GRANTEE: |
Β Β | <name> |
GRANT DATE: |
Β Β | February Β Β Β Β , 200Β Β |
SHARES: |
Β Β | <number of whole shares> |
Β
1. Grant of Restricted Shares. Pursuant to Sections 5 and 6 of The PNC Financial Services Group, Inc. 1996 Executive Incentive Award Plan, as amended from time to time (βPlanβ), and subject to the terms and conditions of this Restricted Stock Agreement (βAgreementβ), The PNC Financial Services Group, Inc. (βPNCβ) hereby grants to the Grantee named above (βGranteeβ) a restricted stock award of the number of shares of PNC common stock set forth above, and, upon acceptance of the Grant by Grantee in accordance with Section 18, will cause the issuance of said shares to Grantee subject to the terms and conditions of the Agreement and the Plan. The shares granted and issued to Grantee hereby as a restricted stock award subject to the terms and conditions of the Agreement and the Plan are hereafter referred to as the βRestricted Shares.β The Restricted Shares are being granted and issued to Grantee as part of an Incentive Award and include Additional Stock as defined in the Plan.
Β
2. Definitions. Terms defined in the Plan are used in the Agreement as defined in the Plan unless otherwise defined in Annex A (attached hereto and incorporated herein by reference) or elsewhere in the Agreement.
Β
3. Terms of Grant. The Grant will be subject to the following terms and conditions:
Β
Restricted Shares will be subject to a Restricted Period as provided in Section A.24 of Annex A. Restricted Shares will be deposited with PNC or its designee,
Β
-1-
or credited to a book-entry account, during the term of the Restricted Period unless and until forfeited pursuant to the terms of the Agreement.
Β
Any certificate or certificates representing such Restricted Shares will contain the following legend:
Β
βThis certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture and restrictions against transfer) contained in The PNC Financial Services Group, Inc. 1996 Executive Incentive Award Plan as amended and an Agreement entered into between the registered owner and The PNC Financial Services Group, Inc. Release from such terms and conditions will be made only in accordance with the provisions of such Plan and such Agreement, a copy of each of which is on file in the office of the Corporate Secretary of The PNC Financial Services Group, Inc.β
Β
Where a book-entry system is used with respect to Restricted Shares, appropriate notation of such forfeiture possibility and transfer restrictions will be made on the system with respect to the account or accounts to which the Restricted Shares are credited.
Β
Restricted Shares deposited with PNC or its designee during the term of the Restricted Period that become Awarded Shares will be released and issued or reissued to, or at the proper direction of, Grantee or Granteeβs legal representative pursuant to Section 9 as soon as administratively practicable following the end of the Restricted Period.
Β
4. Rights as Shareholder. Except as provided in Section 6 and subject to Section 7.6(b) or Section 7.7(c), if applicable, and to Section 18, Grantee will have all the rights and privileges of a shareholder with respect to the Restricted Shares including, but not limited to, the right to vote the Restricted Shares and the right to receive dividends thereon if and when declared by the Board; provided, however, that all such rights and privileges will cease immediately upon any forfeiture of such shares.
Β
5. Capital Adjustments. Restricted Shares awarded hereunder will, as issued and outstanding shares of PNC common stock, be subject to such adjustment as may be necessary to reflect corporate transactions, including, without limitation, stock dividends, stock splits, spin-offs, split-offs, recapitalizations, mergers, consolidations or reorganizations of or by PNC; provided, however, that any shares received as distributions on or in exchange for Unvested Shares will be subject to the terms and conditions of the Agreement as if they were Restricted Shares.
Β
6. Prohibitions Against Sale, Assignment, etc. Unvested Shares may not be sold, assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered, other than by will or the laws of descent and distribution or as may be required pursuant to Section 10.2, unless and until the Restricted Period terminates and the Awarded Shares are released and issued or reissued by PNC pursuant to Section 9.
Β
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7. Forfeiture; Death; Qualifying Disability, Retirement, or DEAP Termination; Termination in Anticipation of Change in Control.
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7.1 Forfeiture on Termination of Employment. Except as otherwise provided in and subject to the conditions of Section 7.3, Section 7.4(a), Section 7.5(a), Section 7.6(a), Section 7.7(a), Section 7.7(b), or Section 8, if applicable, or unless the Committee determines otherwise, in the event that Granteeβs employment with the Corporation terminates prior to the third (3rd) anniversary of the Grant Date, all Restricted Shares that are Unvested Shares on Granteeβs Termination Date will be forfeited by Grantee to PNC without payment of any consideration by PNC.
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Upon forfeiture of Unvested Shares pursuant to the provisions of this Section 7.1 or the provisions of Section 7.2, Section 7.4(b), Section 7.5(b), Section 7.6(c) or Section 7.7(d), neither Grantee nor any successors, heirs, assigns or legal representatives of Grantee will thereafter have any further rights or interest in such Unvested Shares or any certificate or certificates representing such Unvested Shares.
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7.2 Forfeiture for Detrimental Conduct. Unvested Shares that would otherwise remain outstanding after Granteeβs Termination Date, if any, will be forfeited by Grantee to PNC without payment of any consideration by PNC in the event that, at any time prior to the date such shares become Awarded Shares, PNC determines that Grantee has engaged in Detrimental Conduct; provided, however, that: (a) this Section 7.2 will not apply to Restricted Shares that remain outstanding after Granteeβs Termination Date pursuant to Section 7.3 or Section 7.7, if any; (b) no determination that Grantee has engaged in Detrimental Conduct may be made on or after the date of Granteeβs death; (c) Detrimental Conduct will not apply to conduct by or activities of successors to the Restricted Shares by will or the laws of descent and distribution in the event of Granteeβs death; and (d) Detrimental Conduct will cease to apply to any Restricted Shares upon a Change in Control.
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7.3 Death. In the event of Granteeβs death while an employee of the Corporation and prior to the third (3rd) anniversary of the Grant Date, the Three-Year Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period with respect to the then outstanding Unvested Shares will terminate on the date of Granteeβs death.
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The Restricted Shares which thereby become Awarded Shares will be released and issued or reissued by PNC to, or at the proper direction of, Granteeβs legal representative pursuant to Section 9 as soon as administratively practicable following such date.
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7.4 Disability Termination.
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(a) In the event Granteeβs employment with the Corporation is terminated prior to the third (3rd) anniversary of the Grant Date by the Corporation by reason of Granteeβs Total and Permanent Disability, Unvested Shares will not be forfeited on
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Granteeβs Termination Date. Instead, Unvested Shares will, subject to the forfeiture provisions of Section 7.2, remain outstanding pending approval of the vesting of the Restricted Shares pursuant to this Section 7.4(a) by the Designated Person specified in Section A.13 of Annex A.
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If such Unvested Shares are still outstanding but the Designated Person has not made an affirmative determination to either approve or disapprove the vesting of the Unvested Shares by the day immediately preceding the third (3rd) anniversary of the Grant Date, then the Restricted Period will be automatically extended through the first to occur of: (1) the day the Designated Person makes an affirmative determination regarding such vesting; and (2) either (i) the 180th day following the third (3rd) anniversary of the Grant Date, if the Designated Person is the Committee, or (ii) the ninetieth (90th) day following such anniversary date, if the Designated Person is the Chief Human Resources Officer of PNC, whichever is applicable.
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If the vesting of the then outstanding Unvested Shares is affirmatively approved by the Designated Person on or prior to the last day of the Restricted Period, including any extension of the Restricted Period, if applicable, then the Three-Year Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period with respect to any then outstanding Unvested Shares will terminate as of the end of the day on the date of such approval or the day immediately preceding the third (3rd) anniversary of the Grant Date, whichever is later. The Restricted Shares outstanding at the termination of the Restricted Period will become Awarded Shares and will be released and issued or reissued by PNC pursuant to Section 9.
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(b) If the Designated Person disapproves the vesting of the Unvested Shares that had remained outstanding after Granteeβs Termination Date pending approval of vesting, then all such Unvested Shares that are still outstanding will be forfeited by Grantee to PNC on such disapproval date without payment of any consideration by PNC.
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If by the end of the Restricted Period, including any extension of the Restricted Period pursuant to the second paragraph of Section 7.4(a), if applicable, the Designated Person has neither affirmatively approved nor disapproved the vesting of the Unvested Shares that had remained outstanding after Granteeβs Termination Date pending approval of vesting, then all such Unvested Shares that are still outstanding will be forfeited by Grantee to PNC at the close of business on the last day of the Restricted Period without payment of any consideration by PNC.
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7.5 Retirement.
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(a) In the event that Grantee Retires prior to the third (3rd) anniversary of the Grant Date, Unvested Shares will not be forfeited on Granteeβs Termination Date. Instead, Unvested Shares will, subject to the forfeiture provisions of Section 7.2, remain outstanding pending approval of the vesting of the Restricted Shares pursuant to this Section 7.5(a) by the Designated Person specified in Section A.13 of Annex A.
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If such Unvested Shares are still outstanding but the Designated Person has not made an affirmative determination to either approve or disapprove the vesting of the Unvested Shares by the day immediately preceding the third (3rd) anniversary of the Grant Date, then the Restricted Period will be automatically extended through the first to occur of: (1) the day the Designated Person makes an affirmative determination regarding such vesting; and (2) either (i) the 180th day following the third (3rd) anniversary of the Grant Date, if the Designated Person is the Committee, or (ii) the ninetieth (90th) day following such anniversary date, if the Designated Person is the Chief Human Resources Officer of PNC, whichever is applicable.
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If the vesting of the then outstanding Unvested Shares is affirmatively approved by the Designated Person on or prior to the last day of the Restricted Period, including any extension of the Restricted Period, if applicable, then the Three-Year Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period with respect to any then outstanding Unvested Shares will terminate as of the end of the day on the date of such approval or the day immediately preceding the third (3rd) anniversary of the Grant Date, whichever is later. The Restricted Shares outstanding at the termination of the Restricted Period will become Awarded Shares and will be released and issued or reissued by PNC pursuant to Section 9.
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(b) If the Designated Person disapproves the vesting of the Unvested Shares that had remained outstanding after Granteeβs Termination Date pending approval of vesting, then all such Unvested Shares that are still outstanding will be forfeited by Grantee to PNC on such disapproval date without payment of any consideration by PNC.
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If by the end of the Restricted Period, including any extension of the Restricted Period pursuant to the second paragraph of Section 7.5(a), if applicable, the Designated Person has neither affirmatively approved nor disapproved the vesting of the Unvested Shares that had remained outstanding after Granteeβs Termination Date pending approval of vesting, then all such Unvested Shares that are still outstanding will be forfeited by Grantee to PNC at the close of business on the last day of the Restricted Period without payment of any consideration by PNC.
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7.6 DEAP Termination.
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(a) In the event that Granteeβs employment with the Corporation is terminated prior to the third (3rd) anniversary of the Grant Date by the Corporation and Grantee is offered and has entered into the standard Waiver and Release Agreement with PNC or a Subsidiary under an applicable PNC or Subsidiary Displaced Employee Assistance Plan, or any successor plan by whatever name known (βDEAPβ), or Grantee is offered and has entered into a similar waiver and release agreement between PNC or a Subsidiary and Grantee pursuant to the terms of an agreement or arrangement entered into by PNC or a Subsidiary and Grantee in lieu of or in addition to the DEAP, then Unvested Shares will not be forfeited on Granteeβs Termination Date. Instead, Unvested Shares will, subject to the forfeiture provisions of Section 7.2, remain outstanding pending approval of the vesting of the Restricted Shares pursuant to this Section 7.6(a) by the Designated Person
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specified in Section A.13 of Annex A, provided that Grantee does not revoke such waiver and release agreement within the time for revocation of such waiver and release agreement by Grantee.
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If such Unvested Shares are still outstanding but the Designated Person has not made an affirmative determination to either approve or disapprove the vesting of the Unvested Shares by the day immediately preceding the third (3rd) anniversary of the Grant Date, then the Restricted Period will be automatically extended through the first to occur of: (1) the day the Designated Person makes an affirmative determination regarding such vesting; and (2) either (i) the 180th day following the third (3rd) anniversary of the Grant Date, if the Designated Person is the Committee, or (ii) the ninetieth (90th) day following such anniversary date, if the Designated Person is the Chief Human Resources Officer of PNC, whichever is applicable.
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If the vesting of the then outstanding Unvested Shares is affirmatively approved by the Designated Person on or prior to the last day of the Restricted Period, including any extension of the Restricted Period, if applicable, then the Three-Year Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period with respect to any then outstanding Unvested Shares will terminate as of the end of the day on the date of such approval or the day immediately preceding the third (3rd) anniversary of the Grant Date, whichever is later. The Restricted Shares outstanding at the termination of the Restricted Period will become Awarded Shares and will be released and issued or reissued by PNC pursuant to Section 9.
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(b) In the event that the record date for any dividend payable with respect to the Unvested Shares occurs on or after Granteeβs Termination Date but prior to the lapse of the time for revocation by Grantee of the waiver and release agreement specified in the first paragraph of Section 7.6(a), then such dividend will be held, without interest, pending satisfaction of the condition of Section 7.6(a) that Grantee enter into the offered waiver and release agreement and not revoke such waiver and release agreement within the time for revocation of such agreement by Grantee. In the event that this condition is not met, any dividend being held pending satisfaction of such condition will be forfeited by Grantee to PNC without payment of any consideration by PNC.
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(c) If (i) Grantee does not enter into, or enters into but revokes, the waiver and release agreement specified in the first paragraph of Section 7.6(a) or (ii) the Designated Person disapproves the vesting of the Unvested Shares that had remained outstanding after Granteeβs Termination Date pending the non-revocation of, and the lapse of the time within which Grantee may revoke, such waiver and release agreement and pending approval of the vesting of such shares, then all such Unvested Shares that are still outstanding will be forfeited by Grantee to PNC on the date such failure to satisfy the conditions of Section 7.6(a) occurs without payment of any consideration by PNC.
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If, by the end of the Restricted Period, including any extension of the Restricted Period pursuant to the second paragraph of Section 7.6(a), if applicable, such Unvested Shares are still outstanding but the Designated Person has neither affirmatively approved
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nor disapproved the vesting of such shares, then all such Unvested Shares will be forfeited by Grantee to PNC at the close of business on the last day of the Restricted Period without payment of any consideration by PNC.
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7.7 Termination in Anticipation of a Change in Control.
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(a) Notwithstanding anything in the Agreement to the contrary, if, after the occurrence of a CIC Triggering Event but prior to a CIC Failure and prior to the third (3rd) anniversary of the Grant Date, Granteeβs employment is terminated (other than by reason of Granteeβs death) by the Corporation without Cause or by Grantee for Good Reason, or if Granteeβs employment is deemed to have been so terminated pursuant to Section 7.7(b), then: (i) the Three-Year Continued Employment Performance Goal will be deemed to have been achieved and the Restricted Period with respect to any then outstanding Unvested Shares will terminate as of the end of the day on the day immediately preceding Granteeβs Termination Date (or, in the case of a qualifying termination pursuant to Section 7.7(b), the date all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.7(b) are met); and (ii) all Restricted Shares that thereby become Awarded Shares will be released and issued or reissued by PNC pursuant to Section 9 as soon as administratively practicable following such date.
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(b) Granteeβs employment will also be deemed to have been terminated by the Corporation without Cause after the occurrence of a CIC Triggering Event but prior to a CIC Failure for purposes of Section 7.7(a) if: (i) Granteeβs employment is terminated by the Corporation without Cause; (ii) such termination of employment (a) was at the request of a third party that has taken steps reasonably calculated to effect a Change in Control, or (b) otherwise arose in anticipation of a Change in Control; and (iii) a CIC Triggering Event or a Change in Control occurs within three (3) months of such termination of employment.
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Granteeβs employment will also be deemed to have been terminated by Grantee for Good Reason after the occurrence of a CIC Triggering Event but prior to a CIC Failure for purposes of Section 7.7(a) if: (i) Grantee terminates Granteeβs employment with Good Reason; (ii) the circumstance or event that constitutes Good Reason (a) occurs at the request of a third party that has taken steps reasonably calculated to effect a Change in Control or (b) otherwise arose in anticipation of a Change in Control; and (iii) a CIC Triggering Event or a Change in Control occurs within three (3) months of such termination of employment.
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For purposes of this Section 7.7(b) only, Grantee will have the burden of proving that the requirements of clause (ii) of the first or second paragraph of this Section 7.7(b), as the case may be, have been met and the standard of proof to be met by Grantee will be clear and convincing evidence.
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For purposes of this Section 7.7(b) only, the definition of Change in Control in Section A.6 of Annex A will exclude the proviso in Section A.6(a).
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(c) If the Unvested Shares will be forfeited by Grantee to PNC by reason of Granteeβs termination of employment with the Corporation pursuant to Section 7.1 unless all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.7(b) are met, then in the event that the record date for any dividend payable with respect to the Unvested Shares occurs on or after Granteeβs Termination Date but prior to the time all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.7(b) have been met, such dividend will be held, without interest, pending satisfaction of all of such conditions. In the event that one or more of the conditions of Section 7.7(b) are not met, any dividend being held pending satisfaction of such conditions will be forfeited by Grantee to PNC without payment of any consideration by PNC.
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(d) If the Unvested Shares will be forfeited by Grantee to PNC by reason of Granteeβs termination of employment with the Corporation pursuant to Section 7.1 unless all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.7(b) are met, then the Restricted Shares will remain outstanding pending satisfaction of all of those conditions. Upon the failure of any required condition, all such Unvested Shares will be forfeited by Grantee to PNC on the date such failure occurs without payment of any consideration by PNC.
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8. Change in Control. Notwithstanding anything in the Agreement to the contrary, upon the occurrence of a Change in Control: (i) if Grantee is an employee of the Corporation as of the day immediately preceding the Change in Control, the Three-Year Continued Employment Performance Goal will be deemed to have been achieved and the Restricted Period will terminate with respect to all then outstanding Unvested Shares as of the day immediately preceding the Change in Control; (ii) if Granteeβs employment with the Corporation terminated prior to the occurrence of the Change in Control but the Unvested Shares remained outstanding after such termination of employment pursuant to Section 7.4, Section 7.5 or Section 7.6 and are still outstanding pending approval of the vesting of such shares by the Designated Person specified in Section A.13 of Annex A, then with respect to all Unvested Shares outstanding as of the day immediately preceding the Change in Control, such vesting approval will be deemed to have been given, the Three-Year Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period will terminate, all as of the day immediately preceding the Change in Control, provided, however, in the case of Unvested Shares that remained outstanding post-employment solely pursuant to Section 7.6(a), that Grantee entered into and does not revoke the waiver and release agreement specified in Section 7.6(a); and (iii) all Restricted Shares that thereby become Awarded Shares will be released and issued or reissued by PNC pursuant to Section 9 as soon as administratively practicable following such date.
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9. Termination of Prohibitions. Following termination of the Restricted Period, PNC will release and issue or reissue the certificate or certificates representing the then outstanding whole Restricted Shares that have become Awarded Shares without the legend referred to in Section 3.
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Upon release and issuance or reissuance of shares that have become Awarded Shares, PNC or its designee will deliver the certificate or certificates for such whole shares to, or at the proper direction of, Grantee or Granteeβs legal representative.
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10. Payment of Taxes.
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10.1 Internal Revenue Code Section 83(b) Election. In the event that Grantee makes an Internal Revenue Code Section 83(b) election with respect to the Restricted Shares, Grantee shall satisfy all applicable federal, state or local withholding tax obligations arising from that election either: (a) by payment of cash; (b) by physical delivery to PNC of certificates for whole shares of PNC common stock that are not subject to any contractual restriction, pledge or other encumbrance and that have been owned by Grantee for at least six (6) months and, in the case of restricted stock, for which it has been at least six (6) months since the restrictions lapsed; or (c) by a combination of cash and such stock. Any such tax election shall be made pursuant to a form to be provided to Grantee by PNC on request. For purposes of this Section 10.1, shares of PNC common stock that are used to satisfy applicable withholding tax obligations will be valued at their Fair Market Value on the date the tax withholding obligation arises. Grantee will provide to PNC a copy of any Internal Revenue Code Section 83(b) election filed by Grantee with respect to the Restricted Shares not later than ten (10) days after the filing of such election.
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10.2 Other Tax Liabilities. Where Grantee has not previously satisfied all applicable withholding tax obligations, PNC will, at the time the tax withholding obligation arises, retain sufficient whole shares of PNC common stock from the shares granted pursuant to the Agreement to satisfy the minimum amount of taxes required to be withheld by the Corporation in connection with the Restricted Shares. For purposes of this Section 10.2, shares of PNC common stock retained to satisfy applicable withholding tax requirements will be valued at their Fair Market Value on the date the tax withholding obligation arises.
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PNC will not retain more than the number of shares sufficient to satisfy the minimum amount of taxes required to be withheld in connection with the Restricted Shares. If Grantee desires to have an additional amount, up to Granteeβs W-4 obligation, withheld above the required minimum and if PNC so permits, Grantee may elect to satisfy this additional withholding either: (a) by payment of cash; or (b) using whole shares of PNC common stock (either by physical delivery to PNC of certificates for the shares or through PNCβs attestation procedure) that are not subject to any contractual restriction, pledge or other encumbrance and that have been owned by Grantee for at least six (6) months and, in the case of restricted stock, for which it has been at least six (6) months since the restrictions lapsed. Any such tax election shall be made pursuant to a form provided by PNC. Shares of PNC common stock that are used for this purpose will be valued at their Fair Market Value on the date the tax withholding obligation arises.
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11. Employment. Neither the granting and issuance of the Restricted Shares nor any term or provision of the Agreement shall constitute or be evidence of any
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understanding, expressed or implied, on the part of PNC or any Subsidiary to employ Grantee for any period or in any way alter Granteeβs status as an employee at will.
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12. Subject to the Plan and the Committee. In all respects the Grant and the Agreement are subject to the terms and conditions of the Plan, which has been made available to Grantee and is incorporated herein by reference; provided, however, the terms of the Plan shall not be considered an enlargement of any benefits under the Agreement. Further, the Grant and the Agreement are subject to any interpretation of, and any rules and regulations issued by, the Committee or under the authority of the Committee, whether made or issued before or after the Grant Date.
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13. Headings; Entire Agreement. Headings used in the Agreement are provided for reference and convenience only, shall not be considered part of the Agreement, and shall not be employed in the construction of the Agreement. The Agreement constitutes the entire agreement between Grantee and PNC and supersedes all other discussions, negotiations, correspondence, representations, understandings and agreements between the parties with respect to the subject matter hereof.
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14. Grantee Covenants.
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14.1 General. Grantee and PNC acknowledge and agree that Grantee has received adequate consideration with respect to enforcement of the provisions of Sections 14 and 15, that such provisions are reasonable and properly required for the adequate protection of the business of the Corporation, and that enforcement of such provisions will not prevent Grantee from earning a living.
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14.2 Non-Solicitation; No-Hire. Grantee agrees to comply with the provisions of subsections (a) and (b) of this Section 14.2 while employed by the Corporation and for a period of twelve (12) months after Granteeβs Termination Date regardless of the reason for such termination of employment.
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(a) Non-Solicitation. Grantee shall not, directly or indirectly, either for Granteeβs own benefit or purpose or for the benefit or purpose of any Person other than PNC or any Subsidiary, solicit, call on, do business with, or actively interfere with PNCβs or any Subsidiaryβs relationship with, or attempt to divert or entice away, any Person that Grantee should reasonably know (i) is a customer of PNC or any Subsidiary for which PNC or any Subsidiary provides any services as of the Termination Date, or (ii) was a customer of PNC or any Subsidiary for which PNC or any Subsidiary provided any services at any time during the twelve (12) months preceding the Termination Date, or (iii) was, as of the Termination Date, considering retention of PNC or any Subsidiary to provide any services.
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(b) No-Hire. Grantee shall not, directly or indirectly, either for Granteeβs own benefit or purpose or for the benefit or purpose of any Person other than PNC or any Subsidiary, employ or offer to employ, call on, or actively interfere with PNCβs or any
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Subsidiaryβs relationship with, or attempt to divert or entice away, any employee of the Corporation, nor shall Grantee assist any other Person in such activities.
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Notwithstanding the above, if Granteeβs employment with the Corporation is terminated by the Corporation without Cause or by Grantee with Good Reason and such Termination Date occurs during a Coverage Period (either as Coverage Period is defined in Section A.12 of Annex A or, if Grantee was a party to a written agreement between Grantee and PNC providing, among other things, for certain change in control severance benefits (a βCIC Severance Agreementβ) that was in effect at the time of such termination of employment, as Coverage Period is defined in such CIC Severance Agreement, if longer), then commencing immediately after such Termination Date, the provisions of subsections (a) and (b) of this Section 14.2 will no longer apply and will be replaced with the following subsection (c):
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(c) No-Hire. Grantee agrees that Grantee shall not, for a period of twelve (12) months after the Termination Date, employ or offer to employ, solicit, actively interfere with PNCβs or any PNC affiliateβs relationship with, or attempt to divert or entice away, any officer of PNC or any PNC affiliate.
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14.3 Confidentiality. During Granteeβs employment with the Corporation, and thereafter regardless of the reason for termination of such employment, Grantee will not disclose or use in any way any confidential business or technical information or trade secret acquired in the course of such employment, all of which is the exclusive and valuable property of the Corporation whether or not conceived of or prepared by Grantee, other than (a) information generally known in the Corporationβs industry or acquired from public sources, (b) as required in the course of employment by the Corporation, (c) as required by any court, supervisory authority, administrative agency or applicable law, or (d) with the prior written consent of PNC.
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14.4 Ownership of Inventions. Grantee shall promptly and fully disclose to PNC any and all inventions, discoveries, improvements, ideas or other works of inventorship or authorship, whether or not patentable, that have been or will be conceived and/or reduced to practice by Grantee during the term of Granteeβs employment with the Corporation, whether alone or with others, and that are (a) related directly or indirectly to the business or activities of PNC or any Subsidiary or (b) developed with the use of any time, material, facilities or other resources of PNC or any Subsidiary (βDevelopmentsβ). Grantee agrees to assign and hereby does assign to PNC or its designee all of Granteeβs right, title and interest, including copyrights and patent rights, in and to all Developments. Grantee shall perform all actions and execute all instruments that PNC or any Subsidiary shall deem necessary to protect or record PNCβs or its designeeβs interests in the Developments. The obligations of this Section 14.4 shall be performed by Grantee without further compensation and will continue beyond the Termination Date.
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15. Enforcement Provisions. Grantee understands and agrees to the following provisions regarding enforcement of the Agreement.
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15.1 Governing Law and Jurisdiction. The Agreement is governed by and construed under the laws of the Commonwealth of Pennsylvania, without regard to conflict of laws rules. Any dispute or claim arising out of or relating to the Agreement or claim of breach hereof shall be brought exclusively in the federal court for the Western District of Pennsylvania or in the Court of Common Pleas of Allegheny County, Pennsylvania. By execution of the Agreement, Grantee and PNC hereby consent to the exclusive jurisdiction of such courts, and waive any right to challenge jurisdiction or venue in such courts with regard to any suit, action, or proceeding under or in connection with the Agreement.
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15.2 Equitable Remedies. A breach of the provisions of any of Sections 14.2, 14.3 or 14.4 will cause the Corporation irreparable harm, and the Corporation will therefore be entitled to issuance of immediate, as well as permanent, injunctive relief restraining Grantee, and each and every person and entity acting in concert or participating with Grantee, from initiation and/or continuation of such breach.
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15.3 Tolling Period. If it becomes necessary or desirable for the Corporation to seek compliance with the provisions of Section 14.2 by legal proceedings, the period during which Grantee shall comply with said provisions will extend for a period of twelve (12) months from the date of the legal order requiring such compliance.
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15.4 No Waiver. Failure of PNC to demand strict compliance with any of the terms, covenants or conditions of the Agreement will not be deemed a waiver of such term, covenant or condition, nor will any waiver or relinquishment of any such term, covenant or condition on any occasion or on multiple occasions be deemed a waiver or relinquishment of such term, covenant or condition.
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15.5 Severability. The restrictions and obligations imposed by Sections 14.2, 14.3 and 14.4 are separate and severable, and it is the intent of Grantee and PNC that if any restriction or obligation imposed by any of these provisions is deemed by a court of competent jurisdiction to be void for any reason whatsoever, the remaining provisions, restrictions and obligations will remain valid and binding upon Grantee.
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15.6 Reform. In the event any of Sections 14.2, 14.3 and 14.4 are determined by a court of competent jurisdiction to be unenforceable because unreasonable either as to length of time or area to which said restriction applies, it is the intent of Grantee and PNC that said court reduce and reform the provisions thereof so as to apply the greatest limitations considered enforceable by the court.
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15.7 Waiver of Jury Trial. Each of Grantee and PNC hereby waives any right to trial by jury with regard to any suit, action or proceeding under or in connection with any of Sections 14.2, 14.3 and 14.4.
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15.8 Applicable Law. Notwithstanding anything in the Agreement, PNC will not be required to comply with any term, covenant or condition of the Agreement if and to the extent prohibited by law, including but not limited to federal banking and securities
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regulations, or as otherwise directed by one or more regulatory agencies having jurisdiction over PNC or any of its subsidiaries. Further, to the extent, if any, applicable to Grantee, Grantee agrees to reimburse PNC for any amounts Grantee may be required to reimburse PNC or its subsidiaries pursuant to Section 304 of the Xxxxxxxx-Xxxxx Act of 2002, and agrees that PNC need not comply with any term, covenant or condition of the Agreement to the extent that doing so would require that Grantee reimburse PNC or its subsidiaries for such amounts pursuant to Section 304 of the Xxxxxxxx-Xxxxx Act of 2002.
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16. Modification; Interpretation; Rules and Regulations. The Committee may modify or amend the terms of the Agreement or the Grant; provided, however, no modification or amendment of the Agreement or the Grant shall, without the consent of Grantee, adversely affect the rights or obligations of Grantee.
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The Committee will have the power to construe and interpret the Agreement. The Grant and the Agreement are also subject to any administrative guidelines and other rules and regulations relating to the Grant or the Agreement promulgated by or under the authority of the Committee. The Committeeβs determinations on matters within its authority will be conclusive and binding on Grantee.
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17. Amendment of Pre-2004 Stock Options, Restricted Stock and Restricted Stock Deferrals. All nonstatutory stock options granted to employees under PNCβs 1997 Long-Term Incentive Award Plan outstanding on February 18, 2004, all restricted stock grants to employees under the Plan or PNCβs 1997 Long-Term Incentive Award Plan outstanding but not yet vested on February 18, 2004, and all participant restricted stock deferral accounts under the PNC and Affiliates Deferred Compensation Plan that were in place but not yet vested on February 18, 2004, are subject to the amendments approved by the Committee on that date. These amendments are generally described in the Plan prospectus dated Β Β Β Β Β Β Β Β Β Β Β Β , 200Β Β under the heading βRecent Amendmentsβ of the section titled β2004 Restricted Stock Grants.β A copy of this Plan prospectus accompanied or preceded delivery of the Agreement to Grantee.
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To the extent that Grantee is the holder of any such stock options or is the grantee of any such restricted stock or is a participant in the PNC and Affiliates Deferred Compensation Plan with such stock deferral account or accounts in place but not yet vested, Grantee hereby acknowledges and consents to such amendments.
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18. Acceptance of Grant; PNC Right to Cancel. If Grantee does not accept the Grant by executing and delivering a copy of the Agreement to PNC, without altering or changing the terms thereof in any way, within sixty (60) days of receipt by Grantee of a copy of the Agreement, PNC may, in its sole discretion, withdraw its offer and cancel the Grant at any time prior to Granteeβs delivery to PNC of a copy of the Agreement executed by Grantee. Otherwise, upon execution and delivery of the Agreement by both PNC and Grantee and, in the event that Grantee is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to PNC securities, the filing with and acceptance by the SEC of a Form 4 reporting the Grant, the Agreement is effective.
Β
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Grantee will not have any of the rights of a shareholder with respect to the Restricted Shares as set forth in Section 4, and will not have the right to vote or to receive dividends on such shares, until the date the Agreement is effective and the Restricted Shares are issued in accordance with this Section 18.
Β
In the event that one or more record dates for dividends on PNC common stock occur after the Grant Date but before the date the Agreement is effective in accordance with this Section 18 and the Restricted Shares are issued, then upon the effectiveness of the Agreement, the Corporation will make a cash payment to Grantee equivalent to the amount of the dividends Grantee would have received had the Agreement been effective and the Restricted Shares had been issued on the Grant Date.
Β
IN WITNESS WHEREOF, PNC has caused the Agreement to be signed on its behalf as of the Grant Date.
Β
THE PNC FINANCIAL SERVICES GROUP, INC. | ||
By: | Β | Β |
Β | Β | Chairman and Chief Executive Officer |
Β
ATTEST: | ||
By: | Β | Β |
Β | Β | Corporate Secretary |
Β
ACCEPTED AND AGREED TO by GRANTEE. | ||
Β | ||
Grantee |
Β
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Β
Annual 25/25 Program (NEOs) - 200Β Β Restricted Stock Grant
Continued Employment Performance Goal
Restricted Period: Three Years (100%)
Β
ANNEX A
TO
THE PNC FINANCIAL SERVICES GROUP, INC.
1996 EXECUTIVE INCENTIVE AWARD PLAN
RESTRICTED STOCK AGREEMENT
Β
* * *
Β
CERTAIN DEFINITIONS
Β
Except where the context otherwise indicates, the following definitions apply for purposes of the Restricted Stock Agreement (βAgreementβ) to which this Annex A is attached:
Β
A.1 βAwarded Shares.β Provided that the Restricted Shares are then outstanding, Restricted Shares become βAwarded Sharesβ when both of the following have occurred: (a) the Three-Year Continued Employment Performance Goal has been achieved or is deemed to have been achieved pursuant to the terms of the Agreement; and (b) the Restricted Period has terminated.
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A.2 βBoardβ means the Board of Directors of PNC.
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A.3 βBusiness Dayβ means any day when the New York Stock Exchange is open for business.
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A.4 βCauseβ means:
Β
(a) the willful and continued failure of Grantee to substantially perform Granteeβs 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 Grantee by the Board or the CEO which specifically identifies the manner in which the Board or the CEO believes that Grantee has not substantially performed Granteeβs duties; or
Β
(b) the willful engaging by Grantee in illegal conduct or gross misconduct that is materially and demonstrably injurious to PNC or any Subsidiary.
Β
For purposes of the preceding clauses (a) and (b), no act or failure to act, on the part of Grantee, shall be considered willful unless it is done, or omitted to be done, by
Β
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Grantee in bad faith and without reasonable belief that Granteeβs 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 CEO or Granteeβs superior or based upon the advice of counsel for the Corporation, shall be conclusively presumed to be done, or omitted to be done, by Grantee in good faith and in the best interests of the Corporation.
Β
The cessation of employment of Grantee will be deemed to be a termination of Granteeβs employment with the Corporation for Cause for purposes of the Agreement only if and when there shall have been delivered to Grantee, as part of the notice of Granteeβs 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 on the basis of clear and convincing evidence that, in the good faith opinion of the Board, Grantee is guilty of conduct described in clause (a) or clause (b) above and, in either case, specifying the particulars thereof in detail. Such resolution shall be adopted only after (i) reasonable notice of such Board meeting is provided to Grantee, together with written notice that PNC believes that Grantee is guilty of conduct described in clause (a) or clause (b) above and, in either case, specifying the particulars thereof in detail, and (ii) Grantee is given an opportunity, together with counsel, to be heard before the Board.
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A.5 βCEOβ means the chief executive officer of PNC.
Β
A.6 βChange in Controlβ means a change of control of PNC 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 PNC is then subject to such reporting requirement; provided, however, that without limitation, a Change in Control will be deemed to have occurred if:
Β
(a) any Person, excluding employee benefits 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 PNC representing twenty percent (20%) or more of the combined voting power of PNCβs 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 will not be considered a Change in Control if the Board approves such acquisition either prior to or immediately after its occurrence;
Β
(b) PNC consummates a merger, consolidation, share exchange, division or other reorganization or transaction of PNC (a βFundamental Transactionβ) with any other corporation, other than a Fundamental Transaction that results in the voting securities of PNC 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) PNCβs outstanding securities, (ii) the surviving entityβs outstanding
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securities, or (iii) in the case of a division, the outstanding securities of each entity resulting from the division;
Β
(c) the shareholders of PNC approve a plan of complete liquidation or winding-up of PNC or an agreement for the sale or disposition (in one transaction or a series of transactions) of all or substantially all of PNCβs assets;
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(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 PNCβs shareholders in connection with such proxy contest was approved by a vote of at least two-thirds (2/3rds) 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);
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(e) during any period of twenty-four (24) 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 PNCβs shareholders was approved by a vote of at least two-thirds (2/3rds) 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
Β
(f) the Board determines that a Change in Control has occurred.
Β
Notwithstanding anything to the contrary herein, a divestiture or spin-off of a subsidiary or division of PNC will not by itself constitute a Change in Control.
Β
A.7 βCIC Failureβ means the following:
Β
(a) with respect to a CIC Triggering Event described in Section A.8(a), PNCβs shareholders vote against the transaction approved by the Board or the agreement to consummate the transaction is terminated; or
Β
(b) with respect to a CIC Triggering Event described in Section A.8(b), the proxy contest fails to replace or remove a majority of the members of the Board.
Β
A.8 βCIC Triggering Eventβ means the occurrence of either of the following:
Β
(a) the Board or PNCβs shareholders approve a transaction described in Subsection (b) of the definition of Change in Control contained in Section A.6; or
Β
(b) the commencement of a proxy contest in which any Person seeks to replace or remove a majority of the members of the Board.
Β
A.9 βCommitteeβ means the Personnel and Compensation Committee of the Board.
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A.10 βCompetitive Activityβ means, for purposes of the Agreement, any participation in, employment by, ownership of any equity interest exceeding one percent (1%) in, or promotion or organization of, any Person other than PNC or any Subsidiary (a) engaged in business activities similar to some or all of the business activities of PNC or any Subsidiary as of Granteeβs Termination Date or (b) engaged in business activities which Grantee knows PNC or any Subsidiary intends to enter within the first twelve (12) months after Granteeβs Termination Date, in either case whether Grantee is acting as agent, consultant, independent contractor, employee, officer, director, investor, partner, shareholder, proprietor or in any other individual or representative capacity therein.
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A.11 βCorporationβ means PNC and its Subsidiaries.
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A.12 βCoverage Periodβ means a period (a) 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 (b) ending on the date that is three (3) years after the date of the Change in Control; provided, however, that in the event that a Coverage Period commences on the date of a CIC Triggering Event, such Coverage Period will terminate upon the earlier to occur of (x) the date of a CIC Failure and (y) the date that is three (3) 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 will commence upon the earlier to occur of clause (a)(i) and clause (a)(ii) in the preceding sentence.
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A.13 βDesignated Personβ will be either: (a) the Committee, if Grantee is a member of the Corporate Executive Group (or equivalent successor classification) or is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to PNC securities; or (a) the Chief Human Resources Officer of PNC, if Grantee is not within one of the groups specified in Section A.13(a).
Β
A.14 βDetrimental Conductβ means:
Β
(a) Grantee has engaged, without the prior written consent of PNC (at PNCβs sole discretion), in any Competitive Activity in the continental United States at any time during the period commencing on Granteeβs Termination Date through the first (1st) anniversary of Granteeβs Termination Date;
Β
(b) a material breach by Grantee of (i) any code of conduct of PNC or a Subsidiary or (ii) other written policy of PNC or a Subsidiary, in either case required by law or established to maintain compliance with applicable law;
Β
(c) any act of fraud, misappropriation, material dishonesty, or embezzlement by Grantee against PNC or a Subsidiary or any client or customer of PNC or a Subsidiary;
Β
(d) any conviction (including a plea of guilty or of nolo contendere) of Grantee for, or entry by Grantee into a pre-trial disposition with respect to, the
Β
-18-
commission of a felony which relates to or arises out of Granteeβs employment or other service relationship with the Corporation; or
Β
(e) entry of any order against Grantee by any governmental body having regulatory authority with respect to the business of PNC or any Subsidiary, which order relates to or arises out of Granteeβs employment or other service relationship with the Corporation.
Β
Grantee will be deemed to have engaged in Detrimental Conduct for purposes of the Agreement only if and when the Committee determines that Grantee has engaged in conduct described in clause (a) above, that Grantee is guilty of conduct described in clause (b) or clause (c) above, or that an event described in clause (d) or clause (e) above has occurred with respect to Grantee and, if so, determines that Grantee will be deemed to have engaged in Detrimental Conduct.
Β
A.15 βExchange Actβ means the Securities Exchange Act of 1934 as amended, and the rules and regulations promulgated thereunder.
Β
A.16 βFair Market Valueβ as it relates to PNC common stock means the average of the high and low sale prices of the PNC common stock as reported on the New York Stock Exchange (or such successor reporting system as PNC may select) on the relevant date or, if no sale of the PNC common stock has been reported for that day, the average of such prices on the next preceding day and the next following day for which there were reported sales.
Β
A.17 βGood Reasonβ means:
Β
(a) the assignment to Grantee of any duties inconsistent in any respect with Granteeβs 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 Grantee;
Β
(b) a reduction by the Corporation in Granteeβs annual base salary as in effect on the Grant Date, as the same may be increased from time to time;
Β
(c) the Corporationβs requiring Grantee to be based at any office or location that is more than fifty (50) miles from Granteeβs office or location immediately prior to either the CIC Triggering Event or the Change in Control;
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(d) the failure by the Corporation (i) to continue in effect any bonus, stock option or other cash or equity-based incentive plan or program in which Grantee participates immediately prior to either the CIC Triggering Event or the Change in Control that is material to Granteeβs total compensation, unless a substantially equivalent
Β
-19-
arrangement (embodied in an ongoing substitute or alternative plan or program) has been made with respect to such plan or program, or (ii) to continue Granteeβs participation in such plan or program (or in such substitute or alternative plan or program) on a basis at least as favorable, both in terms of the amount of benefits provided and the level of Granteeβs participation relative to other participants, as existed immediately prior to the CIC Triggering Event or the Change in Control; or
Β
(e) the failure by the Corporation to continue to provide Grantee with benefits substantially similar to those received by Grantee under any of the Corporationβs pension (including, but not limited to, tax-qualified plans), life insurance, health, accident, disability or other welfare plans or programs in which Grantee was participating, at costs substantially similar to those paid by Grantee, immediately prior to the CIC Triggering Event or the Change in Control.
Β
A.18 βGrantβ means the Restricted Shares granted and issued to Grantee pursuant to Section 1 of the Agreement.
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A.19 βGrant Dateβ means the Grant Date set forth on page 1 of the Agreement.
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A.20 βGranteeβ means the person identified as Grantee on page 1 of the Agreement.
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A.21 βInternal Revenue Codeβ means the Internal Revenue Code of 1986 as amended, and the rules and regulations promulgated thereunder.
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A.22 βPersonβ 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.
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A.23 βPNCβ means The PNC Financial Services Group, Inc.
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A.24 βRestricted Periodβ means, subject to early termination if so determined by the Committee or pursuant to Section 7.7 of the Agreement, if applicable, the period from the Grant Date through (and including) the earlier of: (a) the date of Granteeβs death; (b) the day immediately preceding the day a Change in Control is deemed to have occurred; and (c) the day immediately preceding the third (3rd) anniversary of the Grant Date or, if later, the last day of any extension of the Restricted Period pursuant to Section 7.4(a), Section 7.5(a) or Section 7.6(a) of the Agreement, if applicable.
Β
A.25 βRetireeβ means a Grantee who has Retired.
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A.26 βRetireβ or βRetirementβ means termination of Granteeβs employment with the Corporation at any time and for any reason (other than termination by reason of Granteeβs death or by the Corporation for Cause or, unless the Committee determines otherwise, termination in connection with a divestiture of assets or of one or more Subsidiaries) if such termination of employment occurs on or after the first (1st) day of
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the first (1st) month coincident with or next following the date on which Grantee attains age fifty-five (55) and completes five (5) years of service (as determined in the same manner as the determination of five years of Vesting Service under the provisions of The PNC Financial Services Group, Inc. Pension Plan) with the Corporation.
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A.27 βSECβ means the United States Securities and Exchange Commission.
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A.28 βTermination Dateβ means Granteeβs last date of employment with the Corporation. If Grantee is employed by a Subsidiary that ceases to be a Subsidiary of PNC and Grantee does not continue to be employed by PNC or a Subsidiary, then for purposes of the Agreement, Granteeβs employment with the Corporation terminates effective at the time this occurs.
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A.29 βThree-Year Continued Employment Performance Goalβ means, subject to early achievement if so determined by the Committee or to deemed achievement pursuant to Section 7.3, Section 7.4, Section 7.5, Section 7.6, Section 7.7, or Section 8 of the Agreement, if applicable, that Grantee has been continuously employed by the Corporation for the period from the Grant Date through (and including) the day immediately preceding the first of the following to occur: (a) the third (3rd) anniversary of the Grant Date; (b) the date of Granteeβs death; and (c) the day a Change in Control is deemed to have occurred.
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A.30 βTotal and Permanent Disabilityβ means, unless the Committee determines otherwise, Granteeβs disability as determined to be total and permanent by the Corporation for purposes of the Agreement.
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A.31 βUnvested Sharesβ means any Restricted Shares that are not Awarded Shares.
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Β
FORM OF ANNUAL 25/25 PROGRAM
RESTRICTED AWARD DEFERRAL ACCOUNT AGREEMENT
Β
Annual 25/25 Program - 200Β Β Restricted Deferred Award
Continued Employment Performance Goal
Restricted Period: Three Years (100%)
Β
THE PNC FINANCIAL SERVICES GROUP, INC. AND AFFILIATES
DEFERRED COMPENSATION PLAN
* * *
ANNUAL 25/25 PROGRAM
200Β Β RESTRICTED DEFERRED AWARD
* * *
RESTRICTED AWARD DEFERRAL ACCOUNT AGREEMENT
* * *
Β
PARTICIPANT: | Β Β | < name > |
GRANT DATE: | Β Β | February Β Β Β Β , 200Β Β |
DEFERRED SHARES: | Β Β | < number of shares, including fractions> |
Β
1. Definitions. Terms defined in The PNC Financial Services Group, Inc. and Affiliates Deferred Compensation Plan, as amended from time to time (βPlanβ), are used in this Restricted Award Deferral Account Agreement (βAgreementβ) as defined in the Plan unless otherwise defined in Annex A (attached hereto and incorporated herein by reference) or elsewhere in the Agreement.
Β
2. 200Β Β Restricted Award Deferral Account. Subject to the terms and conditions of the Agreement, The PNC Financial Services Group, Inc. (βPNCβ) has, in connection with the Corporationβs Annual 25/25 Program for 200Β Β , granted to the Participant named above (βParticipantβ) a restricted stock award in the amount of the number of shares of PNC common stock set forth above under βDeferred Shares.β In accordance with Participantβs prior Deferral Election, such award has been deferred under the Plan, subject to the terms and conditions of the Agreement.
Β
Upon acceptance of the award of the Deferred Shares (βAwardβ) and the terms and conditions of the deferral of such shares under the Plan and the Agreement in accordance with Section 17, a separate subaccount of Participantβs Plan Account will be established for Participant under the Plan to reflect the deferral of such shares (β200Β Β Restricted Award Deferral Accountβ). The Deferral Amounts credited to such
Β
subaccount will be deemed to be invested in the phantom PNC Common Stock Fund, such that the initial balance of the 200_ Restricted Award Deferral Account will be a number of units of phantom PNC common stock equal to the number of Deferred Shares set forth above (βDeferred Share Unitsβ). Except as otherwise provided in the Agreement, the 200Β Β Restricted Award Deferral Account will be treated in the same manner and will be subject to the same terms and conditions as a subaccount established under the Plan for Participant for cash deferrals.
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3. Restricted Period. The 200Β Β Restricted Award Deferral Account will be subject to the following terms and conditions:
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The 200Β Β Restricted Award Deferral Account and the Deferred Share Units will be subject to forfeiture and transfer restrictions pursuant to the terms and conditions of the Agreement during the term of a Restricted Period as provided in Section A.23 of Annex A.
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An appropriate notation that the 200Β Β Restricted Award Deferral Account and the Deferred Share Units are subject to the terms and conditions of the Agreement, including such forfeiture possibility and restrictions against transfer, will be made on the Plan system with respect to the 200Β Β Restricted Award Deferral Account and the Deferred Share Units. It will also be noted that release from such terms and conditions will be made only in accordance with the provisions of the Agreement, a copy of which is on file in the office of the Corporate Secretary of The PNC Financial Services Group, Inc.
Β
To the extent that the Deferred Share Units become Awarded Share Units and are not forfeited pursuant to Section 7, the 200Β Β Restricted Award Deferral Account and Deferred Share Units will be released from the terms and conditions of the Agreement and the 200Β Β Restricted Award Deferral Account will become a regular subaccount under the Plan pursuant to Section 9 as soon as administratively practicable following termination of the Restricted Period.
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4. Phantom Dividends. Subject to Section 7.6(b) or Section 7.7(c), if applicable, and to Section 17, any earnings credited to Participant under the Plan with respect to the Deferred Share Units in the 200Β Β Restricted Award Deferral Account will not be restricted by the Agreement and will be credited to the subaccount of Participantβs Plan Account that reflects deferrals of cash annual incentive awards for 200Β Β .
Β
5. Capital Adjustments. Deferred Share Units, as units of phantom PNC common stock, will be subject to such adjustment as may be necessary to reflect the effect on such units of corporate transactions, including, without limitation, stock dividends, stock splits, spin-offs, split-offs, recapitalizations, mergers, consolidations or reorganizations of or by PNC, on shares of PNC common stock; provided, however, that any share units credited to Participant as deemed distributions on or in exchange for Unvested Share Units will be credited to the 200Β Β Restricted Award Deferral Account as Deferred Share Units and will be subject to the terms and conditions of the Agreement as such.
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6. Prohibitions Against Transfer and Other Limitations. Deferred Share Units may not be transferred to a subaccount other than the 200_ Restricted Award Deferral Account unless and until they become Awarded Share Units and are released from the terms and conditions of the Agreement pursuant to Section 9 following termination of the Restricted Period.
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Participant may not elect to begin distributions or make hardship withdrawals from the 200_ Restricted Award Deferral Account until that subaccount has been released from the terms and conditions of the Agreement pursuant to Section 9. Any accelerated or other distribution of the 200_ Restricted Award Deferral Account that would otherwise occur pursuant to the Plan, or otherwise, will be delayed until that subaccount has been released from the terms and conditions of the Agreement pursuant to Section 9.
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7. Forfeiture; Death; Qualifying Disability, Retirement or DEAP Termination; Termination in Anticipation of CIC.
Β
7.1 Forfeiture on Termination of Employment. Except as otherwise provided in and subject to the conditions of Section 7.3, Section 7.4(a), Section 7.5(a), Section 7.6(a), Section 7.7 (a), Section 7.7(b), or Section 8, if applicable, or unless the Committee determines otherwise, in the event that Participantβs employment with the Corporation terminates prior to the third (3rd) anniversary of the Grant Date, all Deferred Share Units that are Unvested Share Units on Participantβs Termination Date will be forfeited by Participant to PNC without payment of any consideration by PNC.
Β
Upon forfeiture of Unvested Share Units pursuant to the provisions of this Section 7.1 or the provisions of Section 7.2, Section 7.4(b), Section 7.5(b), Section 7.6(c) or Section 7.7(d), neither Participant nor any successors, heirs, assigns or legal representatives of Participant will thereafter have any further rights or interest in such Unvested Share Units.
Β
7.2 Forfeiture for Detrimental Conduct. Unvested Share Units that would otherwise remain in effect after Participantβs Termination Date, if any, will be forfeited by Participant to PNC without payment of any consideration by PNC in the event that, at any time prior to the date such units become Awarded Share Units, PNC determines that Participant has engaged in Detrimental Conduct; provided, however, that: (a) this Section 7.2 will not apply to Deferred Share Units that remain outstanding after Participantβs Termination Date pursuant to Section 7.3 or Section 7.7, if any; (b) no determination that Participant has engaged in Detrimental Conduct may be made on or after the date of Participantβs death; (c) Detrimental Conduct will not apply to conduct by or activities of successors to Participantβs interests under the Plan in the event of Participantβs death; and (d) Detrimental Conduct will cease to apply to any Deferred Share Units upon a Change in Control.
Β
7.3 Death. In the event of Participantβs death while an employee of the Corporation and prior to the third (3rd) anniversary of the Grant Date, the Three-Year
Β
-3-
Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period with respect to those Unvested Share Units then in effect will terminate on the date of Participantβs death.
Β
The Deferred Share Units which thereby become Awarded Share Units will be released from the terms and conditions of the Agreement pursuant to Section 9 as soon as administratively practicable following such date.
Β
7.4 Disability Termination.
Β
(a) In the event Participantβs employment with the Corporation is terminated prior to the third (3rd) anniversary of the Grant Date by the Corporation by reason of Participantβs Total and Permanent Disability, Unvested Share Units will not be forfeited on Participantβs Termination Date. Instead, Unvested Share Units will, subject to the forfeiture provisions of Section 7.2, remain in effect pending approval of the vesting of the Deferred Share Units pursuant to this Section 7.4(a) by the Designated Person specified in Section A.14 of Annex A.
Β
If such Unvested Share Units are still in effect but the Designated Person has not made an affirmative determination to either approve or disapprove the vesting of the Unvested Share Units by the day immediately preceding the third (3rd) anniversary of the Grant Date, then the Restricted Period will be automatically extended through the first to occur of: (1) the day the Designated Person makes an affirmative determination regarding such vesting; and (2) either (i) the ninetieth (90th) day following the third (3rd) anniversary of the Grant Date, if the Designated Person is the Chief Human Resources Officer of PNC, or (ii) the 180th day following such anniversary date if the Designated Person is the Committee, whichever is applicable.
Β
If the vesting of the Unvested Share Units that are then in effect is affirmatively approved by the Designated Person on or prior to the last day of the Restricted Period, including any extension of the Restricted Period, if applicable, then the Three-Year Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period with respect to any Unvested Share Units then in effect will terminate as of the end of the day on the date of such approval or the day immediately preceding the third (3rd) anniversary of the Grant Date, whichever is later. The Deferred Share Units in effect at the termination of the Restricted Period will become Awarded Share Units and will be released from the terms and conditions of the Agreement pursuant to Section 9.
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(b) If the Designated Person disapproves the vesting of the Unvested Share Units that had remained in effect after Participantβs Termination Date pending approval of vesting, then all such Unvested Share Units that are still in effect will be forfeited by Participant to PNC on such disapproval date without payment of any consideration by PNC.
Β
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If by the end of the Restricted Period, including any extension of the Restricted Period pursuant to the second paragraph of Section 7.4(a), if applicable, the Designated Person has neither affirmatively approved nor disapproved the vesting of the Unvested Share Units that had remained in effect after Participantβs Termination Date pending approval of vesting, then all such Unvested Share Units that are still in effect will be forfeited by Participant to PNC at the close of business on the last day of the Restricted Period without payment of any consideration by PNC.
Β
7.5 Retirement.
Β
(a) In the event that Participant Retires prior to the third (3rd) anniversary of the Grant Date, Unvested Share Units will not be forfeited on Participantβs Termination Date. Instead, Unvested Share Units will, subject to the forfeiture provisions of Section 7.2, remain in effect pending approval of the vesting of the Deferred Share Units pursuant to this Section 7.5(a) by the Designated Person specified in Section A.14 of Annex A.
Β
If such Unvested Share Units are still in effect but the Designated Person has not made an affirmative determination to either approve or disapprove the vesting of the Unvested Share Units by the day immediately preceding the third (3rd) anniversary of the Grant Date, then the Restricted Period will be automatically extended through the first to occur of: (1) the day the Designated Person makes an affirmative determination regarding such vesting; and (2) either (i) the ninetieth (90th) day following the third (3rd) anniversary of the Grant Date, if the Designated Person is the Chief Human Resources Officer of PNC, or (ii) the 180th day following such anniversary date if the Designated Person is the Committee, whichever is applicable.
Β
If the vesting of the Unvested Share Units that are then in effect is affirmatively approved by the Designated Person on or prior to the last day of the Restricted Period, including any extension of the Restricted Period, if applicable, then the Three-Year Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period with respect to any Unvested Share Units then in effect will terminate as of the end of the day on the date of such approval or the day immediately preceding the third (3rd) anniversary of the Grant Date, whichever is later. The Deferred Share Units in effect at the termination of the Restricted Period will become Awarded Shares and will be released and issued or reissued by PNC pursuant to Section 9.
Β
(b) If the Designated Person disapproves the vesting of the Unvested Share Units that had remained in effect after Participantβs Termination Date pending approval of vesting, then all such Unvested Share Units that are still in effect will be forfeited by Participant to PNC on such disapproval date without payment of any consideration by PNC.
Β
If by the end of the Restricted Period, including any extension of the Restricted Period pursuant to the second paragraph of Section 7.5(a), if applicable, the Designated Person has neither affirmatively approved nor disapproved the vesting of the Unvested Share Units that had remained outstanding after Participantβs Termination Date pending
Β
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approval of vesting, then all such Unvested Share Units that are still in effect will be forfeited by Participant to PNC at the close of business on the last day of the Restricted Period without payment of any consideration by PNC.
Β
7.6 DEAP Termination.
Β
(a) In the event that Participantβs employment with the Corporation is terminated prior to the third (3rd) anniversary of the Grant Date by the Corporation and Participant is offered and has entered into the standard Waiver and Release Agreement with PNC or a Subsidiary under an applicable PNC or Subsidiary Displaced Employee Assistance Plan, or any successor plan by whatever name known (βDEAPβ), or Participant is offered and has entered into a similar waiver and release agreement between PNC or a Subsidiary and Participant pursuant to the terms of an agreement or arrangement entered into by PNC or a Subsidiary and Participant in lieu of or in addition to the DEAP, then Unvested Share Units will not be forfeited on Participant Termination Date. Instead, Unvested Share Units will, subject to the forfeiture provisions of Section 7.2, remain in effect pending approval of the vesting of the Deferred Share Units pursuant to this Section 7.6(a) by the Designated Person specified in Section A.14 of Annex A, provided that Participant does not revoke such waiver and release agreement within the time for revocation of such waiver and release agreement by Participant.
Β
If such Unvested Share Units are still in effect but the Designated Person has not made an affirmative determination to either approve or disapprove the vesting of the Unvested Share Units by the day immediately preceding the third (3rd) anniversary of the Grant Date, then the Restricted Period will be automatically extended through the first to occur of: (1) the day the Designated Person makes an affirmative determination regarding such vesting; and (2) either (i) the ninetieth (90th) day following the third (3rd) anniversary of the Grant Date, if the Designated Person is the Chief Human Resources Officer of PNC, or (ii) the 180th day following such anniversary date if the Designated Person is the Committee, whichever is applicable.
Β
If the vesting of the Unvested Share Units that are then in effect is affirmatively approved by the Designated Person on or prior to the last day of the Restricted Period, including any extension of the Restricted Period, if applicable, then the Three-Year Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period with respect to any Unvested Share Units then in effect will terminate as of the end of the day on the date of such approval or the day immediately preceding the third (3rd) anniversary of the Grant Date, whichever is later. The Deferred Share Units in effect at the termination of the Restricted Period will become Awarded Share Units and will be released from the terms and conditions of the Agreement pursuant to Section 9.
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(b) In the event that the record date for any phantom dividend to be credited to Participantβs Plan Account with respect to the Unvested Share Units occurs on or after Participantβs Termination Date but prior to the lapse of the time for revocation by Participant of the waiver and release agreement specified in the first paragraph of
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Section 7.6(a), then such phantom dividend will be held, without interest, pending satisfaction of the condition of Section 7.6(a) that Participant enter into the offered waiver and release agreement and not revoke such waiver and release agreement within the time for revocation of such agreement by Participant. In the event that this condition is not met, any phantom dividend being held pending satisfaction of such condition will be forfeited by Participant to PNC without payment of any consideration by PNC.
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(c) If (i) Participant does not enter into, or enters into but revokes, the waiver and release agreement specified in the first paragraph of Section 7.6(a) or (ii) the Designated Person disapproves the vesting of the Unvested Share Units that had remained in effect after Participantβs Termination Date pending the non-revocation of, and the lapse of the time within which Participant may revoke, such waiver and release agreement and pending approval of the vesting of such share units, then all such Unvested Share Units that are still in effect will be forfeited by Participant to PNC on the date such failure to satisfy the conditions of Section 7.6(a) occurs without payment of any consideration by PNC.
Β
If, by the end of the Restricted Period, including any extension of the Restricted Period pursuant to the second paragraph of Section 7.6(a), if applicable, such Unvested Share Units are still outstanding but the Designated Person has neither affirmatively approved nor disapproved the vesting of such shares units, then all such Unvested Share Units will be forfeited by Participant to PNC at the close of business on the last day of the Restricted Period without payment of any consideration by PNC.
Β
7.7 Termination in Anticipation of a Change in Control.
Β
(a) Notwithstanding anything in the Agreement to the contrary, if, after the occurrence of a CIC Triggering Event but prior to a CIC Failure and prior to the third (3rd) anniversary of the Grant Date, Participantβs employment is terminated (other than by reason of Participantβs death) by the Corporation without Cause or by Participant for Good Reason, or if Participantβs employment is deemed to have been so terminated pursuant to Section 7.7(b), then: (i) the Three-Year Continued Employment Performance Goal will be deemed to have been achieved and the Restricted Period with respect to any Unvested Share Units then in effect will terminate as of the end of the day on the day immediately preceding Participantβs Termination Date (or, in the case of a qualifying termination pursuant to Section 7.7(b), the date all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.7(b) are met); and (ii) all Deferred Share Units that thereby become Awarded Share Units will be released from the terms and conditions of the Agreement pursuant to Section 9 as soon as administratively practicable following such date.
Β
(b) Participantβs employment will also be deemed to have been terminated by the Corporation without Cause after the occurrence of a CIC Triggering Event but prior to a CIC Failure for purposes of Section 7.7(a) if: (i) Participantβs employment is terminated by the Corporation without Cause; (ii) such termination of employment (a) was at the request of a third party that has taken steps reasonably calculated to effect a Change in Control or (b) otherwise arose in anticipation of a Change in Control; and
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(iii) a CIC Triggering Event or a Change in Control occurs within three (3) months of such termination of employment.
Β
Participantβs employment will also be deemed to have been terminated by Participant for Good Reason after the occurrence of a CIC Triggering Event but prior to a CIC Failure for purposes of Section 7.7(a) if: (i) Participant terminates Participantβs employment with Good Reason; (ii) the circumstance or event that constitutes Good Reason (a) occurs at the request of a third party that has taken steps reasonably calculated to effect a Change in Control or (b) otherwise arose in anticipation of a Change in Control; and (iii) a CIC Triggering Event or a Change in Control occurs within three (3) months of such termination of employment.
Β
For purposes of this Section 7.7(b) only, Participant will have the burden of proving that the requirements of clause (ii) of the first or second paragraph of this Section 7.7(b), as the case may be, have been met and the standard of proof to be met by Participant will be clear and convincing evidence.
Β
For purposes of this Section 7.7(b) only, the definition of Change in Control in Section A.6 of Annex A will exclude the proviso in Section A.6(a).
Β
(c) If the Unvested Share Units will be forfeited by Participant to PNC by reason of Participantβs termination of employment with the Corporation pursuant to Section 7.1 unless all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.7(b) are met, then in the event that the record date for any phantom dividend to be credited to Participantβs Plan Account with respect to the Unvested Share Units occurs on or after Participantβs Termination Date but prior to the time all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.7(b) are met, such phantom dividend will be held, without interest, pending satisfaction of all of such conditions. In the event that one or more of the conditions of Section 7.7(b) are not met, any phantom dividend being held pending satisfaction of such conditions will be forfeited by Participant to PNC without payment of any consideration by PNC.
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(d) If the Unvested Share Units will be forfeited by Participant to PNC by reason of Participantβs termination of employment with the Corporation pursuant to Section 7.1 unless all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.7(b) are met, then the Deferred Share Units will remain in effect pending satisfaction of all of those conditions. Upon the failure of any required condition, all such Unvested Share Units will be forfeited by Participant to PNC on the date such failure occurs without payment of any consideration by PNC.
Β
8. Change in Control. Notwithstanding anything in the Agreement to the contrary, upon the occurrence of a Change in Control: (i) if Participant is an employee of the Corporation as of the day immediately preceding the Change in Control, the Three-Year Continued Employment Performance Goal will be deemed to have been
Β
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achieved and the Restricted Period will terminate with respect to all Unvested Share Units then in effect as of the day immediately preceding the Change in Control; (ii) if Participantβs employment with the Corporation terminated prior to the occurrence of the Change in Control but the Unvested Share Units remained in effect after such termination of employment pursuant to Section 7.4, Section 7.5 or Section 7.6 and are still in effect pending approval of the vesting of such share units by the Designated Person specified in Section A.14 of Annex A, then with respect to all Unvested Share Units in effect as of the day immediately preceding the Change in Control, such vesting approval will be deemed to have been given, the Three-Year Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period will terminate, all as of the day immediately preceding the Change in Control, provided, however, in the case of Unvested Share Units that remained outstanding post-employment solely pursuant to Section 7.6(a), that Participant entered into and does not revoke the waiver and release agreement specified in Section 7.6(a); and (iii) all Deferred Share Units that thereby become Awarded Share Units will be released from the terms and conditions of the Agreement pursuant to Section 9 as soon as administratively practicable following such date.
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9. Release of Agreement Restrictions. To the extent that the Deferred Share Units become Awarded Share Units and are not forfeited pursuant to Section 7, PNC will release the 200_ Restricted Award Deferral Account and Deferred Share Units from the terms and conditions of the Agreement and the 200_ Restricted Award Deferral Account will become a regular subaccount under the Plan as soon as administratively practicable following termination of the Restricted Period.
Β
10. FICA Withholding Taxes. During the term of the Restricted Period, any earnings credited to Participantβs Plan Account with respect to the Deferred Share Units in the 200_ Restricted Award Deferral Account (phantom dividends) will be treated as wages for purposes of the Federal Insurance Contributions Act (βFICAβ) in the year they are credited to Participant and will be subject to Social Security and Medicare withholding at that time. Otherwise, the Deferred Shares amount will be treated as wages for FICA purposes and will be subject to Social Security and Medicare withholding at the time the 200_ Restricted Award Deferral Account and Deferred Share Units are released from the terms and conditions of the Agreement pursuant to Section 9.
Β
11. Employment. Neither the granting of the Award, the release of the 200_ Restricted Award Deferral Account and Deferred Share Units from the terms and conditions of the Agreement pursuant to Section 9, nor any term or provision of the Agreement shall constitute or be evidence of any understanding, expressed or implied, on the part of PNC or any Subsidiary to employ Participant for any period or in any way alter Participantβs status as an employee at will.
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12. Subject to the Plan. Except as otherwise provided in the Agreement, the 200_ Restricted Award Deferral Account and Deferred Share Units are in all respects subject to the terms and conditions of the Plan, which has been made available to Participant and is incorporated herein by reference.
Β
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13. Headings; Entire Agreement. Headings used in the Agreement are provided for reference and convenience only, shall not be considered part of the Agreement, and shall not be employed in the construction of the Agreement. The Agreement constitutes the entire agreement between Participant and PNC and supersedes all other discussions, negotiations, correspondence, representations, understandings and agreements between the parties with respect to the subject matter hereof.
Β
Β | 14. | Participant Covenants. |
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14.1 General. Participant and PNC acknowledge and agree that Participant has received adequate consideration with respect to enforcement of the provisions of Sections 14 and 15, that such provisions are reasonable and properly required for the adequate protection of the business of the Corporation, and that enforcement of such provisions will not prevent Participant from earning a living.
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14.2 Non-Solicitation; No-Hire. Participant agrees to comply with the provisions of subsections (a) and (b) of this Section 14.2 while employed by the Corporation and for a period of twelve (12) months after Participantβs Termination Date regardless of the reason for such termination of employment.
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(a) Non-Solicitation. Participant shall not, directly or indirectly, either for Participantβs own benefit or purpose or for the benefit or purpose of any Person other than PNC or any Subsidiary, solicit, call on, do business with, or actively interfere with PNCβs or any Subsidiaryβs relationship with, or attempt to divert or entice away, any Person that Participant should reasonably know (i) is a customer of PNC or any Subsidiary for which PNC or any Subsidiary provides any services as of the Termination Date, or (ii) was a customer of PNC or any Subsidiary for which PNC or any Subsidiary provided any services at any time during the twelve (12) months preceding the Termination Date, or (iii) was, as of the Termination Date, considering retention of PNC or any Subsidiary to provide any services.
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(b) No-Hire. Participant shall not, directly or indirectly, either for Participantβs own benefit or purpose or for the benefit or purpose of any Person other than PNC or any Subsidiary, employ or offer to employ, call on, or actively interfere with PNCβs or any Subsidiaryβs relationship with, or attempt to divert or entice away, any employee of the Corporation, nor shall Participant assist any other Person in such activities.
Β
Notwithstanding the above, if Participantβs employment with the Corporation is terminated by the Corporation without Cause or by Participant with Good Reason and such Termination Date occurs during a Coverage Period (either as Coverage Period is defined in Section A.12 of Annex A or, if Participant was a party to a written agreement between Participant and PNC providing, among other things, for certain change in control severance benefits (a βCIC Severance Agreementβ) that was in effect at the time of such termination of employment, as Coverage Period is defined in such CIC Severance
Β
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Agreement, if longer), then commencing immediately after such Termination Date, the provisions of subsections (a) and (b) of this Section 14.2 will no longer apply and will be replaced with the following subsection (c):
Β
(c) No-Hire. Participant agrees that Participant shall not, for a period of twelve (12) months after the Termination Date, employ or offer to employ, solicit, actively interfere with PNCβs or any PNC affiliateβs relationship with, or attempt to divert or entice away, any officer of PNC or any PNC affiliate.
Β
14.3 Confidentiality. During Participantβs employment with the Corporation, and thereafter regardless of the reason for termination of such employment, Participant will not disclose or use in any way any confidential business or technical information or trade secret acquired in the course of such employment, all of which is the exclusive and valuable property of the Corporation whether or not conceived of or prepared by Participant, other than (a) information generally known in the Corporationβs industry or acquired from public sources, (b) as required in the course of employment by the Corporation, (c) as required by any court, supervisory authority, administrative agency or applicable law, or (d) with the prior written consent of PNC.
Β
14.4 Ownership of Inventions. Participant shall promptly and fully disclose to PNC any and all inventions, discoveries, improvements, ideas or other works of inventorship or authorship, whether or not patentable, that have been or will be conceived and/or reduced to practice by Participant during the term of Participantβs employment with the Corporation, whether alone or with others, and that are (a) related directly or indirectly to the business or activities of PNC or any Subsidiary or (b) developed with the use of any time, material, facilities or other resources of PNC or any Subsidiary (βDevelopmentsβ). Participant agrees to assign and hereby does assign to PNC or its designee all of Participantβs right, title and interest, including copyrights and patent rights, in and to all Developments. Participant shall perform all actions and execute all instruments that PNC or any Subsidiary shall deem necessary to protect or record PNCβs or its designeeβs interests in the Developments. The obligations of this Section 14.4 shall be performed by Participant without further compensation and will continue beyond the Termination Date.
Β
15. Enforcement Provisions. Participant understands and agrees to the following provisions regarding enforcement of the Agreement.
Β
15.1 Governing Law and Jurisdiction. The Agreement is governed by and construed under the laws of the Commonwealth of Pennsylvania, without regard to conflict of laws rules. Any dispute or claim arising out of or relating to the Agreement or claim of breach hereof shall be brought exclusively in the federal court for the Western District of Pennsylvania or in the Court of Common Pleas of Allegheny County, Pennsylvania. By execution of the Agreement, Participant and PNC hereby consent to the exclusive jurisdiction of such courts, and waive any right to challenge jurisdiction or venue in such courts with regard to any suit, action, or proceeding under or in connection with the Agreement.
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15.2 Equitable Remedies. A breach of the provisions of any of Sections 14.2, 14.3 or 14.4 will cause the Corporation irreparable harm, and the Corporation will therefore be entitled to issuance of immediate, as well as permanent, injunctive relief restraining Participant, and each and every person and entity acting in concert or participating with Participant, from initiation and/or continuation of such breach.
Β
15.3 Tolling Period. If it becomes necessary or desirable for the Corporation to seek compliance with the provisions of Section 14.2 by legal proceedings, the period during which Participant shall comply with said provisions will extend for a period of twelve (12) months from the date of the legal order requiring such compliance.
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15.4 No Waiver. Failure of PNC to demand strict compliance with any of the terms, covenants or conditions of the Agreement will not be deemed a waiver of such term, covenant or condition, nor will any waiver or relinquishment of any such term, covenant or condition on any occasion or on multiple occasions be deemed a waiver or relinquishment of such term, covenant or condition.
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15.5 Severability. The restrictions and obligations imposed by Sections 14.2, 14.3 and 14.4 are separate and severable, and it is the intent of Participant and PNC that if any restriction or obligation imposed by any of these provisions is deemed by a court of competent jurisdiction to be void for any reason whatsoever, the remaining provisions, restrictions and obligations will remain valid and binding upon Participant.
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15.6 Reform. In the event any of Sections 14.2, 14.3 and 14.4 are determined by a court of competent jurisdiction to be unenforceable because unreasonable either as to length of time or area to which said restriction applies, it is the intent of Participant and PNC that said court reduce and reform the provisions thereof so as to apply the greatest limitations considered enforceable by the court.
Β
15.7 Waiver of Jury Trial. Each of Participant and PNC hereby waives any right to trial by jury with regard to any suit, action or proceeding under or in connection with any of Sections 14.2, 14.3 and 14.4.
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15.8 Applicable Law. Notwithstanding anything in the Agreement, PNC will not be required to comply with any term, covenant or condition of the Agreement if and to the extent prohibited by law, including but not limited to federal banking and securities regulations, or as otherwise directed by one or more regulatory agencies having jurisdiction over PNC or any of its subsidiaries. Further, to the extent, if any, applicable to Participant, Participant agrees to reimburse PNC for any amounts Participant may be required to reimburse PNC or its subsidiaries pursuant to Section 304 of the Xxxxxxxx-Xxxxx Act of 2002, and agrees that PNC need not comply with any term, covenant or condition of the Agreement to the extent that doing so would require that Participant reimburse PNC or its subsidiaries for such amounts pursuant to Section 304 of the Xxxxxxxx-Xxxxx Act of 2002.
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16. Amendment of Pre-2004 Stock Options, Restricted Stock and Restricted Stock Deferrals. All nonstatutory stock options granted to employees under the Plan outstanding on February 18, 2004, all restricted stock grants to employees under PNCβs 1997 Long-Term Incentive Award Plan or 1996 Executive Incentive Award Plan outstanding but not yet vested on February 18, 2004, and all participant restricted stock deferral accounts under the PNC and Affiliates Deferred Compensation Plan that were in place but not yet vested on February 18, 2004, are subject to the amendments approved by the Committee on that date. These amendments are generally described in the prospectus supplement dated Β Β Β Β Β Β Β Β Β Β Β Β , 200Β Β under the heading βRecent Amendments.β A copy of this prospectus supplement accompanied or preceded delivery of the Agreement to Participant.
Β
To the extent that Participant is the holder of any such stock options or is the grantee of any such restricted stock or is a participant in the PNC and Affiliates Deferred Compensation Plan with such stock deferral account or accounts in place but not yet vested, Participant hereby acknowledges and consents to such amendments.
Β
17. Acceptance of Award; PNC Right to Cancel. If Participant does not accept the Award and the terms and conditions of the deferral of the Deferred Shares by executing and delivering a copy of the Agreement to PNC, without altering or changing the terms thereof in any way, within sixty (60) days of receipt by Participant of a copy of the Agreement, PNC may, in its sole discretion, withdraw its offer and cancel the Award at any time prior to Participantβs delivery to PNC of a copy of the Agreement executed by Participant. Otherwise, upon execution and delivery of the Agreement by both PNC and Participant and, in the event that Participant is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to PNC securities, the filing with and acceptance by the SEC of a Form 4 reporting the Award, the Award and the Agreement are effective.
Β
The 200Β Β Restricted Award Deferral Account will not be established and Participantβs Plan Account will not be credited with any phantom dividends with respect to the Deferred Share Units as set forth in Section 4 unless and until the date the Award and the terms and conditions of the deferral of the Deferred Shares are accepted and are effective in accordance with this Section 17.
Β
In the event that one or more record dates for dividends on PNC common stock occur after the Grant Date but before the date the Award and the terms and conditions of the deferral of the Deferred Shares are accepted and are effective in accordance with this Section 17, then upon the effectiveness of the Award and the Agreement, Participantβs Plan Account will be credited with an amount equivalent to the amount that would have been credited to such Plan Account with respect to phantom dividends had the Agreement been effective and the Deferred Share Units had been credited to Participantβs 200Β Β Restricted Award Deferral Account on the Grant Date.
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IN WITNESS WHEREOF, PNC has caused the Agreement to be signed on its behalf as of the Grant Date.
Β
THE PNC FINANCIAL SERVICES GROUP, INC. | ||
By: | Β | Β |
Β | Β | Chairman and Chief Executive Officer |
ATTEST: | ||
By: | Β | Β |
Β | Β | Corporate Secretary |
ACCEPTED AND AGREED TO by PARTICIPANT. | ||
Β | Β | Β |
Participant |
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Β
Annual 25/25 Program - 200Β Β Restricted Deferred Award
Continued Employment Performance Goal
Restricted Period: Three Years (100%)
Β
ANNEX A
TO
THE PNC FINANCIAL SERVICES GROUP, INC. AND AFFILIATES
DEFERRED COMPENSATION PLAN
ANNUAL 25/25 PROGRAM β 200Β Β RESTRICTED DEFERRED AWARD
RESTRICTED AWARD DEFERRAL ACCOUNT AGREEMENT
Β
* * *
Β
CERTAIN DEFINITIONS
Β
Except where the context otherwise indicates, the following definitions apply for purposes of the Restricted Award Deferral Account Agreement (βAgreementβ) to which this Annex A is attached:
Β
A.1 βAwarded Share Units.β Provided that the Deferred Share Units have not been forfeited pursuant to Section 7 of the Agreement, Deferred Share Units become βAwarded Share Unitsβ when both of the following have occurred: (a) the Three-Year Continued Employment Performance Goal has been achieved or is deemed to have been achieved pursuant to the terms of the Agreement; and (b) the Restricted Period has terminated.
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A.2 βBoardβ means the Board of Directors of PNC.
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A.3 βBusiness Dayβ means any day when the New York Stock Exchange is open for business.
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A.4 βCauseβ means:
Β
(a) the willful and continued failure of Participant to substantially perform Participantβs 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 Participant by the Board or the CEO which specifically identifies the manner in which the Board or the CEO believes that Participant has not substantially performed Participantβs duties; or
Β
(b) the willful engaging by Participant in illegal conduct or gross misconduct that is materially and demonstrably injurious to PNC or any Subsidiary.
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For purposes of the preceding clauses (a) and (b), no act or failure to act, on the part of Participant, shall be considered willful unless it is done, or omitted to be done, by Participant in bad faith and without reasonable belief that Participantβs 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 CEO or Participantβs superior or based upon the advice of counsel for the Corporation, shall be conclusively presumed to be done, or omitted to be done, by Participant in good faith and in the best interests of the Corporation.
Β
The cessation of employment of Participant will be deemed to be a termination of Participantβs employment with the Corporation for Cause for purposes of the Agreement only if and when there shall have been delivered to Participant, as part of the notice of Participantβs 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 on the basis of clear and convincing evidence that, in the good faith opinion of the Board, Participant is guilty of conduct described in clause (a) or clause (b) above and, in either case, specifying the particulars thereof in detail. Such resolution shall be adopted only after (i) reasonable notice of such Board meeting is provided to Participant, together with written notice that PNC believes that Participant is guilty of conduct described in clause (a) or clause (b) above and, in either case, specifying the particulars thereof in detail, and (ii) Participant is given an opportunity, together with counsel, to be heard before the Board.
Β
A.5 βCEOβ means the chief executive officer of PNC.
Β
A.6 βChange in Controlβ means a change of control of PNC 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 PNC is then subject to such reporting requirement; provided, however, that without limitation, a Change in Control will be deemed to have occurred if:
Β
(a) any Person, excluding employee benefits 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 PNC representing twenty percent (20%) or more of the combined voting power of PNCβs 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 will not be considered a Change in Control if the Board approves such acquisition either prior to or immediately after its occurrence;
Β
(b) PNC consummates a merger, consolidation, share exchange, division or other reorganization or transaction of PNC (a βFundamental Transactionβ) with any other corporation, other than a Fundamental Transaction that results in the voting securities of PNC outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least
Β
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sixty percent (60%) of the combined voting power immediately after such Fundamental Transaction of (i) PNCβs outstanding securities, (ii) the surviving entityβs outstanding securities, or (iii) in the case of a division, the outstanding securities of each entity resulting from the division;
Β
(c) the shareholders of PNC approve a plan of complete liquidation or winding-up of PNC or an agreement for the sale or disposition (in one transaction or a series of transactions) of all or substantially all of PNCβs assets;
Β
(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 PNCβs shareholders in connection with such proxy contest was approved by a vote of at least two-thirds (2/3rds) 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);
Β
(e) during any period of twenty-four (24) 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 PNCβs shareholders was approved by a vote of at least two-thirds (2/3rds) 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
Β
(f) the Board determines that a Change in Control has occurred.
Β
Notwithstanding anything to the contrary herein, a divestiture or spin-off of a subsidiary or division of PNC will not by itself constitute a Change in Control.
Β
A.7 βCIC Failureβ means the following:
Β
(a) with respect to a CIC Triggering Event described in Section A.8(a), PNCβs shareholders vote against the transaction approved by the Board or the agreement to consummate the transaction is terminated; or
Β
(b) with respect to a CIC Triggering Event described in Section A.8(b), the proxy contest fails to replace or remove a majority of the members of the Board.
Β
A.8 βCIC Triggering Eventβ means the occurrence of either of the following:
Β
(a) the Board or PNCβs shareholders approve a transaction described in Subsection (b) of the definition of Change in Control contained in Section A.6; or
Β
(b) the commencement of a proxy contest in which any Person seeks to replace or remove a majority of the members of the Board.
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A.9 βCommitteeβ means the Personnel and Compensation Committee of the Board.
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A.10 βCompetitive Activityβ means, for purposes of the Agreement, any participation in, employment by, ownership of any equity interest exceeding one percent (1%) in, or promotion or organization of, any Person other than PNC or any Subsidiary (a) engaged in business activities similar to some or all of the business activities of PNC or any Subsidiary as of Participantβs Termination Date or (b) engaged in business activities which Participant knows PNC or any Subsidiary intends to enter within the first twelve (12) months after Participantβs Termination Date, in either case whether Participant is acting as agent, consultant, independent contractor, employee, officer, director, investor, partner, shareholder, proprietor or in any other individual or representative capacity therein.
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A.11 βCorporationβ means PNC and its Subsidiaries.
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A.12 βCoverage Periodβ means a period (a) 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 (b) ending on the date that is three (3) years after the date of the Change in Control; provided, however, that in the event that a Coverage Period commences on the date of a CIC Triggering Event, such Coverage Period will terminate upon the earlier to occur of (x) the date of a CIC Failure and (y) the date that is three (3) 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 will commence upon the earlier to occur of clause (a)(i) and clause (a)(ii) in the preceding sentence.
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A.13 βDeferred Share Unitsβ means the units of phantom PNC common stock credited to Participantβs 200_ Restricted Award Deferral Account.
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A.14 βDesignated Personβ will be either: (a) the Committee, if Participant is a member of the Corporate Executive Group (or equivalent successor classification) or is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to PNC securities; or (a) the Chief Human Resources Officer of PNC, if Participant is not within one of the groups specified in Section A.14(a).
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A.15 βDetrimental Conductβ means:
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(a) Participant has engaged, without the prior written consent of PNC (at PNCβs sole discretion), in any Competitive Activity in the continental United States at any time during the period commencing on Participantβs Termination Date through the first (1st) anniversary of Participantβs Termination Date;
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(b) a material breach by Participant of (i) any code of conduct of PNC or a Subsidiary or (ii) other written policy of PNC or a Subsidiary, in either case required by law or established to maintain compliance with applicable law;
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(c) any act of fraud, misappropriation, material dishonesty, or embezzlement by Participant against PNC or a Subsidiary or any client or customer of PNC or a Subsidiary;
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(d) any conviction (including a plea of guilty or of nolo contendere) of Participant for, or entry by Participant into a pre-trial disposition with respect to, the commission of a felony which relates to or arises out of Participantβs employment or other service relationship with the Corporation; or
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(e) entry of any order against Participant by any governmental body having regulatory authority with respect to the business of PNC or any Subsidiary, which order relates to or arises out of Participantβs employment or other service relationship with the Corporation.
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Participant will be deemed to have engaged in Detrimental Conduct for purposes of the Agreement only if and when the Committee determines that Participant has engaged in conduct described in clause (a) above, that Participant is guilty of conduct described in clause (b) or clause (c) above, or that an event described in clause (d) or clause (e) above has occurred with respect to Participant and, if so, determines that Participant will be deemed to have engaged in Detrimental Conduct.
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A.16 βExchange Actβ means the Securities Exchange Act of 1934 as amended, and the rules and regulations promulgated thereunder.
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A.17 βGood Reasonβ means:
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(a) the assignment to Participant of any duties inconsistent in any respect with Participantβs 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 Participant;
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(b) a reduction by the Corporation in Participantβs annual base salary as in effect on the Grant Date, as the same may be increased from time to time;
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(c) the Corporationβs requiring Participant to be based at any office or location that is more than fifty (50) miles from Participantβs office or location immediately prior to either the CIC Triggering Event or the Change in Control;
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(d) the failure by the Corporation (i) to continue in effect any bonus, stock option or other cash or equity-based incentive plan or program in which Participant participates immediately prior to either the CIC Triggering Event or the Change in Control that is material to Participantβs total compensation, unless a substantially
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equivalent arrangement (embodied in an ongoing substitute or alternative plan or program) has been made with respect to such plan or program, or (ii) to continue Participantβs participation in such plan or program (or in such substitute or alternative plan or program) on a basis at least as favorable, both in terms of the amount of benefits provided and the level of Participantβs participation relative to other participants, as existed immediately prior to the CIC Triggering Event or the Change in Control; or
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(e) the failure by the Corporation to continue to provide Participant with benefits substantially similar to those received by Participant under any of the Corporationβs pension (including, but not limited to, tax-qualified plans), life insurance, health, accident, disability or other welfare plans or programs in which Participant was participating, at costs substantially similar to those paid by Participant, immediately prior to the CIC Triggering Event or the Change in Control.
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A.18 βGrant Dateβ means the Grant Date set forth on page 1 of the Agreement.
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A.19 βInternal Revenue Codeβ means the Internal Revenue Code of 1986 as amended, and the rules and regulations promulgated thereunder.
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A.20 βParticipantβ means the Participant named on page 1 of the Agreement.
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A.21 βPersonβ 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.
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A.22 βPNCβ means The PNC Financial Services Group, Inc.
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A.23 βRestricted Periodβ means, subject to early termination if so determined by the Committee or pursuant to Section 7.7 of the Agreement, if applicable, the period from the Grant Date through (and including) the earlier of: (a) the date of Participantβs death; (b) the day immediately preceding the day a Change in Control is deemed to have occurred; and (c) the day immediately preceding the third (3rd) anniversary of the Grant Date or, if later, the last day of any extension of the Restricted Period pursuant to Section 7.4(a), Section 7.5(a) or Section 7.6(a) of the Agreement, if applicable.
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A.24 βRetireeβ means a Participant who has Retired.
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A.25 βRetireβ or βRetirementβ means termination of Participantβs employment with the Corporation at any time and for any reason (other than termination by reason of Participantβs death or by the Corporation for Cause or, unless the Committee determines otherwise, termination in connection with a divestiture of assets or of one or more Subsidiaries) if such termination of employment occurs on or after the first (1st) day of the first (1st) month coincident with or next following the date on which Participant attains age fifty-five (55) and completes five (5) years of service (as determined in the same manner as the determination of five years of Vesting Service under the provisions of The PNC Financial Services Group, Inc. Pension Plan) with the Corporation.
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A.26 βSECβ means the United States Securities and Exchange Commission.
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A.27 βTermination Dateβ means Participantβs last date of employment with the Corporation. If Participant is employed by a Subsidiary that ceases to be a Subsidiary of PNC and Participant does not continue to be employed by PNC or a Subsidiary, then for purposes of the Agreement, Participantβs employment with the Corporation terminates effective at the time this occurs.
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A.28 βThree-Year Continued Employment Performance Goalβ means, subject to early achievement if so determined by the Committee or to deemed achievement pursuant to Section 7.3, Section 7.4, Section 7.5, Section 7.6, Section 7.7, or Section 8 of the Agreement, if applicable, that Participant has been continuously employed by the Corporation for the period from the Grant Date through (and including) the day immediately preceding the first of the following to occur: (a) the third (3rd) anniversary of the Grant Date; (b) the date of Participantβs death; and (c) the day a Change in Control is deemed to have occurred.
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A.29 βTotal and Permanent Disabilityβ means, unless the Committee determines otherwise, Participantβs disability as determined to be total and permanent by the Corporation for purposes of the Agreement.
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A.30 β200_ Restricted Award Deferral Accountβ means the subaccount of Participantβs Plan Account established for Participant under the Plan in accordance with Section 2 of the Agreement.
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A.31 βUnvested Share Unitsβ means any Deferred Share Units that are not Awarded Share Units.
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Β
FORM OF 2003 INCENTIVE SHARE AGREEMENT
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2003 LTI Program Incentive Share Grant
Three Year Performance Period (January 1, 2003 - December 31, 2005)
Performance Goals: Relative PNC Return on Common Equity and Relative PNC Total Shareholder Return
50%: Vest on Award; 50%: Restricted Period Through December 31, 2006
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THE PNC FINANCIAL SERVICES GROUP, INC.
1997 LONG-TERM INCENTIVE AWARD PLAN
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* * *
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2003 INCENTIVE SHARE AGREEMENT
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GRANTEE: |
Β Β | < name > |
GRANT DATE: |
Β Β | January 3, 2003 |
TARGET INCENTIVE SHARES: |
Β Β | < number of whole shares> |
PREMIUM INCENTIVE SHARES: |
Β Β | < number of whole shares> [50% of the number of Target Incentive Shares] |
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1. Grant of Incentive Shares. Pursuant to Article 12 of The PNC Financial Services Group, Inc. 1997 Long-Term Incentive Award Plan, as amended from time to time (βPlanβ), The PNC Financial Services Group, Inc. (βPNCβ) hereby grants to the Grantee named above (βGranteeβ) an Incentive Share Award (as defined in the Plan) of the number of shares of PNC Common Stock set forth above as βTarget Incentive Sharesβ and βPremium Incentive Shares,β subject to the terms and conditions of this 2003 Incentive Share Agreement (βAgreementβ) and the Plan and to acceptance of the Grant by Grantee in accordance with Section 15. The Target Incentive Shares and Premium Incentive Shares are hereafter collectively referred to as βIncentive Shares.β
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2. Definitions. Terms defined in the Plan are used in the Agreement as defined in the Plan unless otherwise defined in Annex A (attached hereto and incorporated herein by reference) or elsewhere in the Agreement.
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3. Terms and Conditions of Grant. The Grant will be subject to the following terms and conditions:
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Β | 3.1 | Certification of Attainment of PNC Performance Goals; Award of Incentive Shares. |
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(a) As soon as practicable after December 31, 2005, PNC will calculate the ROCE and TSR for the Performance Period for PNC and for the other members of the Peer Group and present to the Committee information concerning the extent, if any, to which PNC has attained each of the PNC Performance Goals. Upon certification of the level of achievement of the PNC Performance Goals by the Committee and provided that the Grant is still outstanding, the Committee will have the authority, subject to Section 3.2, to award to Grantee (βawardβ) and direct PNC to issue Incentive Shares as follows:
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Β | (i) | up to and including 50% of the Target Incentive Shares if PNCβs level of ROCE performance for the Performance Period is within the top half of the ROCE performance of the members of the Peer Group at the time the award is determined (βTarget ROCE Performance Goalβ); |
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Β | (ii) | up to and including 50% of the Target Incentive Shares if PNCβs level of TSR performance for the Performance Period is within the top half of the TSR performance of the members of the Peer Group at the time the award is determined (βTarget TSR Performance Goalβ); |
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Β | (iii) | up to and including 50% of the Premium Incentive Shares if PNCβs level of ROCE performance for the Performance Period is within the top quartile of the ROCE performance of the members of the Peer Group at the time the award is determined (βPremium ROCE Performance Goalβ); and |
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Β | (iv) | up to and including 50% of the Premium Incentive Shares if PNCβs level of TSR performance for the Performance Period is within the top quartile of the TSR performance of the members of the Peer Group at the time the award is determined (βPremium TSR Performance Goalβ). |
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Attainment of each PNC Performance Goal shall be determined separately, and Grantee may be awarded Incentive Shares under one or more of subsections (i), (ii), (iii) and (iv) of this Section 3.1(a) as indicated above. For purposes of determining PNCβs level of performance, PNC will be within the top half or the top quartile, respectively, if its Peer Group ranking with respect to the performance being measured is at least equal to the number of members of the Peer Group at the time the award is determined divided by 2 or 4, as the case may be, rounded up to the nearest whole number (e.g., if there are eleven Peer Group members, ranking 6th or higher would be in the top half and ranking 3rd or higher would be in the top quartile).
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The date on which the Committee makes its determination as to whether the respective PNC Performance Goals have been achieved and whether to award Incentive Shares hereunder is hereafter referred to as the βAward Date.β
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(b) Except as otherwise set forth in Section 3.1(d), if applicable, or unless the Committee determines otherwise, in the event that Granteeβs employment with the Corporation terminates on or prior to the Award Date, the Grant will terminate as of Granteeβs Termination Date (and therefore no Incentive Shares may be awarded by the Committee pursuant to the Grant).
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(c) In the event of Granteeβs death while an employee of the Corporation and on or prior to the Award Date, or in the event that Granteeβs employment with the Corporation is terminated on or prior to the Award Date by reason of Granteeβs Total and Permanent Disability or as otherwise determined by the Committee, the Committee may in its sole discretion, but need not, permit the Grant to remain outstanding in light of the facts and circumstances applicable to Grantee notwithstanding such termination of employment and may consider Grantee for an award of Incentive Shares on the Award Date if and to the extent that the PNC Performance Goals have been achieved.
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(d) Notwithstanding anything in the Agreement to the contrary, if Granteeβs employment is terminated prior to January 1, 2006 (other than by reason of Granteeβs death) during a Coverage Period by the Corporation without Cause or by Grantee for Good Reason, Grantee will be deemed to have been awarded all of the Target Incentive Shares as of the end of the day on the day immediately preceding Granteeβs Termination Date, such shares shall all be Vested Shares from the time of issuance, and PNC shall issue a certificate or certificates for all of such shares to Grantee or Granteeβs legal representative without further restriction under the Agreement as soon as administratively practicable following such award date.
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Further, notwithstanding anything in the Agreement to the contrary, if Granteeβs employment is terminated (other than by reason of Granteeβs death) during a Coverage Period by the Corporation without Cause or by Grantee for Good Reason on or after January 1, 2006 but on or before the Award Date, Grantee shall be awarded the maximum number of Incentive Shares authorized by Section 3.1(a) for the level of performance attained by PNC with respect to the PNC Performance Goals, such shares shall all be Vested Shares from the time of issuance, and PNC shall issue a certificate or certificates for all of such shares to Grantee or Granteeβs legal representative without further restriction under the Agreement as soon as administratively practicable following the Award Date.
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Granteeβs employment shall also be deemed to have been terminated by the Corporation without Cause during a Coverage Period for purposes of this Section 3.1(d) if: (i) Granteeβs employment is terminated by the Corporation other than during a Coverage Period without Cause (as defined in Section A.4(a) of Annex A); (ii) such termination of employment (a) was at the request of a third party that has taken steps reasonably calculated to effect a Change in Control, or (b) otherwise arose in anticipation of a Change in Control; and (iii) a Coverage Period commences within three (3) months of such termination of employment.
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Granteeβs employment shall also be deemed to have been terminated by Grantee for Good Reason during a Coverage Period for purposes of this Section 3.1(d) if: (i) Grantee terminates Granteeβs employment other than during a Coverage Period with Good Reason (as defined in Section A.18 of Annex A); (ii) the circumstance or event that constitutes Good Reason (a) occurs at the request of a third party that has taken steps reasonably calculated to effect a Change in Control or (b) otherwise arose in anticipation of a Change in Control; and (iii) a Coverage Period commences within three (3) months of such termination of employment.
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For purposes of this Section 3.1(d) only, Grantee shall have the burden of proving that the requirements of clauses (ii)(a) and (ii)(b) of the third or fourth paragraph of this Section 3.1(d), as the case may be, have been met and the standard of proof to be met by Grantee shall be clear and convincing evidence.
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For purposes of this Section 3.1(d) only, the definition of Change in Control in Section A.6 of Annex A shall exclude the proviso in Section A.6(a).
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3.2 Negative Committee Discretion.
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(a) The Committee may, other than during a Coverage Period, exercise negative discretion with respect to the Grant and determine, in light of such Corporation or individual performance factors as the Committee may deem appropriate, that, notwithstanding the achievement of one or more of the applicable PNC Performance Goals, the Committee will not award, and PNC will not issue, some or all of the Incentive Shares that the Committee is authorized to award pursuant to Section 3.1(a).
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(b) If the time for the Committee to make its determination as to whether the PNC Performance Goals have been achieved and whether to award Incentive Shares occurs during a Coverage Period, the Committee may not exercise negative discretion with respect to the Grant, and in the event that PNC has achieved one or more of the applicable PNC Performance Goals and the Grant is still outstanding, Grantee shall be awarded and PNC shall issue the maximum number of Incentive Shares authorized by Section 3.1(a) for the level of performance attained by PNC with respect to the PNC Performance Goals.
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3.3 Termination of Grant. The Grant is subject to termination prior to the Award Date without the issuance of Incentive Shares pursuant to Section 3.1(b). If and to the extent that the Committee determines at the Award Date (a) that the PNC Performance Goals applicable to the issuance of some or all of the Incentive Shares have not been achieved or (b) to exercise negative discretion with respect to the Grant pursuant to Section 3.2 (a) and not award some or all of the Incentive Shares, the Grant shall terminate as to such Incentive Shares and such shares shall not be issued to Grantee.
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3.4 Issuance of Awarded Shares; Dividend Equivalents. PNC will cause the issuance to Grantee of such Incentive Shares as have been awarded to Grantee by the Committee as soon as practicable after the Award Date; provided, however, that other
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than during a Coverage Period, the Committee may, in its sole discretion, defer the issuance of Incentive Shares to Grantee when, in the judgment of the Committee, such deferral may be required in order to obtain or preserve more favorable tax treatment for the Corporation, including deductions for compensation.
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One half of the Awarded Shares will be Vested Shares at the time of issuance, and PNC will issue a certificate or certificates to Grantee or Granteeβs legal representative for such shares without further restriction under the Agreement. Except as otherwise provided in Section 3.1(d), if applicable, the remaining Awarded Shares will be issued as βRestricted Sharesβ and will continue to be subject to the terms and conditions of the Agreement, including forfeiture provisions and restrictions against transfer, unless and until they become Vested Shares and are released and reissued by PNC to Grantee or Granteeβs legal representative pursuant to Section 8.
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In the event that one or more record dates for dividends on PNC Common Stock occur after the end of the Performance Period but before the date the Awarded Shares are issued, PNC will make a cash payment to Grantee equivalent to the amount of the dividends Grantee would have received had the Awarded Shares been issued and outstanding on January 1, 2005.
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3.5 Restricted Shares. Restricted Shares will be subject to a Restricted Period as provided in Section A.25 of Annex A. Restricted Shares will be deposited with PNC or its designee, or credited to a book-entry account, during the term of the Restricted Period unless and until forfeited pursuant to the terms of the Agreement.
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Any certificate or certificates representing such Restricted Shares will contain the following legend:
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βThis certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture and restrictions against transfer) contained in The PNC Financial Services Group, Inc. 1997 Long-Term Incentive Award Plan, as amended, and an Agreement entered into between the registered owner and The PNC Financial Services Group, Inc. Release from such terms and conditions will be made only in accordance with the provisions of such Plan and such Agreement, a copy of each of which is on file in the office of the Corporate Secretary of The PNC Financial Services Group, Inc.β
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Where a book-entry system is used with respect to Restricted Shares, appropriate notation of such forfeiture possibility and transfer restrictions will be made on the system with respect to the account or accounts to which the Restricted Shares are credited.
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Restricted Shares deposited with PNC or its designee during the term of the Restricted Period that become Vested Shares will be released and reissued to Grantee or Granteeβs legal representative pursuant to Section 8 as soon as administratively practicable following the end of the Restricted Period.
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4. Rights as Shareholder. Except as provided in Section 6 and subject to Section 7.5(c), if applicable, and to Section 15, Grantee will have all the rights and privileges of a shareholder with respect to Awarded Shares once they have been issued including, but not limited to, the right to vote the shares and the right to receive dividends thereon if and when declared by the Board; provided, however, all such rights and privileges will cease immediately upon any forfeiture of such shares.
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5. Capital Adjustments. The number and class of Incentive Shares subject to award under the Agreement will 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 of or by PNC. Restricted Shares awarded under the Agreement will, as issued and outstanding shares of PNC Common Stock, be subject to such adjustment as may be necessary to reflect such events as stock dividends, stock splits, recapitalizations, mergers, consolidations or reorganizations of or by PNC; provided, however, that any shares received as distributions on or in exchange for Unvested Shares will be subject to the terms and conditions of the Agreement as if they were unvested Restricted Shares.
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6. Prohibitions Against Sale, Assignment, etc. The Grant may not be sold, assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered, other than by will or the laws of descent and distribution if permitted by the Committee pursuant to Section 7.1. Unvested Shares may not be sold, assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered, other than by will or the laws of descent and distribution, unless and until the Restricted Period terminates and the Vested Shares are released and reissued by PNC to Grantee or Granteeβs legal representative pursuant to Section 8.
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7. Forfeiture of Unvested Shares; Death; Qualifying Disability or Other Termination; Qualifying CIC Termination.
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7.1 Forfeiture on Termination of Employment. Except as otherwise set forth in Section 7.3, Section 7.4 or Section 7.5, if applicable, or unless the Committee determines otherwise, in the event that Granteeβs employment with the Corporation terminates prior to January 1, 2007, all Restricted Shares that are Unvested Shares on Granteeβs Termination Date will be forfeited by Grantee to PNC without payment of any consideration by PNC. Neither Grantee nor any successors, heirs, assigns or legal representatives of Grantee will thereafter have any further rights or interest in such Unvested Shares or the certificate or certificates representing such Unvested Shares.
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7.2 Forfeiture for Detrimental Conduct. Unvested Shares that would otherwise remain outstanding after Granteeβs Termination Date, if any, will be forfeited by Grantee to PNC without payment of any consideration by PNC in the event that, at any time prior to the date such shares become Vested Shares, PNC determines that Grantee has engaged in Detrimental Conduct; provided, however, that no determination that Grantee has engaged in Detrimental Conduct may be made on or after the date of Granteeβs death, and Detrimental Conduct will not apply to conduct by or activities of
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successors to the Restricted Shares by will or the laws of descent and distribution in the event of Granteeβs death.
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This Section 7.2 will not apply to Restricted Shares that remain outstanding after Granteeβs Termination Date pursuant to Section 7.3 or Section 7.5, if any.
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7.3 Death. In the event of Granteeβs death while an employee of the Corporation and prior to January 1, 2007, the Continued Employment Performance Goal shall be deemed to have been achieved, and the Restricted Period with respect to the then outstanding Restricted Shares will terminate on the date of Granteeβs death.
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The Restricted Shares which thereby become Vested Shares will be released and reissued by PNC to Granteeβs legal representative pursuant to Section 8 as soon as administratively practicable following such date.
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7.4 Qualifying Disability or Other Termination. In the event Granteeβs employment with the Corporation is terminated prior to January 1, 2007 by the Corporation by reason of Granteeβs Total and Permanent Disability or as otherwise determined by the Committee, then the Continued Employment Performance Goal shall be deemed to have been achieved, in the case of Granteeβs Total and Permanent Disability, with respect to all Unvested Shares, and otherwise, to the extent determined by the Committee.
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The Committee may, but need not, accelerate termination of the Restricted Period. The Restricted Shares outstanding at the termination of the Restricted Period will become Vested Shares and will be released and reissued to Grantee pursuant to Section 8.
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7.5 Qualifying CIC Termination.
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(a) Notwithstanding anything in the Agreement to the contrary, the Continued Employment Performance Goal shall be deemed to have been achieved and the Restricted Period with respect to the then outstanding Restricted Shares will terminate at the end of the day on the day immediately preceding Granteeβs Termination Date if Granteeβs employment is terminated (other than by reason of Granteeβs death) during a Coverage Period by the Corporation without Cause or by Grantee for Good Reason.
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The Restricted Shares which thereby become Vested Shares will be released and reissued to Grantee pursuant to Section 8 as soon as administratively practicable following such date.
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(b) Granteeβs employment shall also be deemed to have been terminated by the Corporation without Cause during a Coverage Period for purposes of Section 7.5 if: (i) Granteeβs employment is terminated by the Corporation other than during a Coverage Period without Cause (as defined in Section A.4(a) of Annex A); (ii) such termination of employment (a) was at the request of a third party that has taken steps reasonably calculated to effect a Change in Control, or (b) otherwise arose in anticipation of a
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Change in Control; and (iii) a Coverage Period commences within three (3) months of such termination of employment.
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Granteeβs employment shall also be deemed to have been terminated by Grantee for Good Reason during a Coverage Period for purposes of Section 7.5 if: (i) Grantee terminates Granteeβs employment other than during a Coverage Period with Good Reason (as defined in Section A.18 of Annex A); (ii) the circumstance or event that constitutes Good Reason (a) occurs at the request of a third party that has taken steps reasonably calculated to effect a Change in Control or (b) otherwise arose in anticipation of a Change in Control; and (iii) a Coverage Period commences within three (3) months of such termination of employment.
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For purposes of Section 7.5(b) only, Grantee shall have the burden of proving that the requirements of clauses (ii)(a) and (ii)(b) of the first or second paragraph of Section 7.5(b), as the case may be, have been met and the standard of proof to be met by Grantee shall be clear and convincing evidence.
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For purposes of Section 7.5(b) only, the definition of Change in Control in Section A.6 of Annex A shall exclude the proviso in Section A.6(a).
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(c) If the Restricted Shares will be forfeited by Grantee to PNC on Granteeβs Termination Date pursuant to Section 7.1 unless all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.5(b) are met, then in the event that the record date for any dividends payable with respect to the Restricted Shares occurs on or after Granteeβs Termination Date but prior to the time all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.5(b) are met, such dividends will be held, without interest, pending satisfaction of such conditions. In the event that the conditions of Section 7.5(b) are not met, any dividends being held pending satisfaction of such conditions will be forfeited by Grantee to PNC without payment of any consideration by PNC.
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8. Termination of Prohibitions on Restricted Stock. Following termination of the Restricted Period, PNC will release and issue or reissue the certificate or certificates representing the then outstanding whole Restricted Shares that have become Vested Shares without the legend referred to in Section 3.5. PNC or its designee will deliver such certificate or certificates for whole shares to, or at the proper direction of, Grantee or Granteeβs legal representative.
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9. Payment of Taxes.
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9.1 Code Section 83(b) Election. Grantee may satisfy any or all applicable federal, state or local withholding tax obligations arising from a Code Section 83(b) election with respect to the Restricted Shares (a) by payment of cash or (b) through the surrender (including by means of an attestation procedure) of whole shares of PNC Common Stock that are not subject to any contractual restriction, pledge or other encumbrance and that have been owned by Grantee for at least six (6) months and, in the
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case of restricted stock, for which it has been at least six (6) months since the restrictions lapsed. Any such tax election shall be made pursuant to a form to be provided to Grantee by PNC on request. For purposes of this Section 9.1, shares of PNC Common Stock that are surrendered to satisfy applicable withholding tax obligations will be valued at their Fair Market Value on the date the tax withholding obligation arises. Grantee will provide to PNC a copy of any Code Section 83(b) election filed by Grantee with respect to the Restricted Shares not later than ten (10) days after the filing of such election.
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9.2 Other Tax Liabilities. Where Grantee has not previously satisfied all applicable withholding tax obligations, PNC will retain sufficient whole Awarded Shares to satisfy the minimum amount of taxes required to be withheld in connection with the issuance of Awarded Shares hereunder, or the release and issuance or reissuance of Restricted Shares hereunder, as the case may be. For purposes of this Section 9.2, shares of PNC Common Stock retained to satisfy applicable withholding taxes will be valued at their Fair Market Value on the date the tax withholding obligation arises.
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10. Employment. Neither the Grant nor the award and issuance of Awarded Shares nor any term or provision of the Agreement shall constitute or be evidence of any understanding, expressed or implied, on the part of PNC or any Subsidiary to employ Grantee for any period or in any way alter Granteeβs status as an employee at will.
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11. Subject to the Plan and the Committee. In all respects the Grant and the Agreement are subject to the terms and conditions of the Plan, which has been made available to Grantee and is incorporated herein by reference; provided, however, the terms of the Plan shall not be considered an enlargement of any benefits under the Agreement. Further, the Grant and the Agreement are subject to any interpretation of, and any rules and regulations issued by, the Committee or under the authority of the Committee, whether made or issued before or after the Grant Date.
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12. Headings; Entire Agreement. Headings used in the Agreement are provided for reference and convenience only, shall not be considered part of the Agreement, and shall not be employed in the construction of the Agreement. The Agreement constitutes the entire agreement between Grantee and PNC and supersedes all other discussions, negotiations, correspondence, representations, understandings and agreements between the parties with respect to the subject matter hereof.
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13. Grantee Covenants.
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13.1 General. Grantee and PNC acknowledge and agree that Grantee has received adequate consideration with respect to enforcement of the provisions of Sections 13 and 14, that such provisions are reasonable and properly required for the adequate protection of the business of the Corporation, and that enforcement of such provisions will not prevent Grantee from earning a living.
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13.2 Non-Solicitation; No-Hire. Grantee agrees to comply with the provisions of subsections (a) and (b) of this Section 13.2 while employed by the Corporation and for
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a period of twelve (12) months after Granteeβs Termination Date regardless of the reason for such termination of employment.
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(a) Non-Solicitation. Grantee shall not, directly or indirectly, either for Granteeβs own benefit or purpose or for the benefit or purpose of any Person other than PNC or any Subsidiary, solicit, call on, do business with, or actively interfere with PNCβs or any Subsidiaryβs relationship with, or attempt to divert or entice away, any Person which Grantee should reasonably know (i) is a customer of PNC or any Subsidiary for which PNC or any Subsidiary provides any services as of the Termination Date, or (ii) was a customer of PNC or any Subsidiary for which PNC or any Subsidiary provided any services at any time during the twelve (12) months preceding the Termination Date, or (iii) was, as of the Termination Date, considering retention of PNC or any Subsidiary to provide any services.
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(b) No-Hire. Grantee shall not, directly or indirectly, either for Granteeβs own benefit or purpose or for the benefit or purpose of any Person other than PNC or any Subsidiary, employ or offer to employ, call on, or actively interfere with PNCβs or any Subsidiaryβs relationship with, or attempt to divert or entice away, any employee of the Corporation, nor shall Grantee assist any other Person in such activities.
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Notwithstanding the above, if Granteeβs employment with the Corporation is terminated by the Corporation without Cause or by Grantee with Good Reason and such Termination Date occurs during a Coverage Period (either as Coverage Period is defined in Section A.14 of Annex A or, if Grantee was a party to a written agreement between Grantee and PNC providing, among other things, for certain change in control severance benefits (a βCIC Severance Agreementβ) that was in effect at the time of such termination of employment, as Coverage Period is defined in such CIC Severance Agreement, if longer), then commencing immediately after such Termination Date, the provisions of subsections (a) and (b) of this Section 13.2 shall no longer apply and shall be replaced with the following subsection (c):
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(c) No-Hire. Grantee agrees that Grantee shall not, for a period of twelve (12) months after the Termination Date, employ or offer to employ, solicit, actively interfere with PNCβs or any PNC affiliateβs relationship with, or attempt to divert or entice away, any officer of PNC or any PNC affiliate.
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13.3 Confidentiality. During Granteeβs employment with the Corporation, and thereafter regardless of the reason for termination of such employment, Grantee will not disclose or use in any way any confidential business or technical information or trade secret acquired in the course of such employment, all of which is the exclusive and valuable property of the Corporation whether or not conceived of or prepared by Grantee, other than (a) information generally known in the Corporationβs industry or acquired from public sources, (b) as required in the course of employment by the Corporation, (c) as required by any court, supervisory authority, administrative agency or applicable law, or (d) with the prior written consent of PNC.
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13.4 Ownership of Inventions. Grantee shall promptly and fully disclose to PNC any and all inventions, discoveries, improvements, ideas or other works of inventorship or authorship, whether or not patentable, that are conceived and/or reduced to practice by Grantee during the term of Granteeβs employment with the Corporation, whether alone or with others, and that are (a) related directly or indirectly to the business or activities of PNC or any Subsidiary or (b) developed with the use of any time, material, facilities or other resources of PNC or any Subsidiary (βDevelopmentsβ). Grantee agrees to assign and hereby does assign to PNC or its designee all of Granteeβs right, title and interest, including copyrights and patent rights, in and to all Developments. Grantee shall perform all actions and execute all instruments that PNC or any Subsidiary shall deem necessary to protect or record PNCβs or its designeeβs interests in the Developments. The obligations of this Section 13.4 shall be performed by Grantee without further compensation and shall continue beyond the Termination Date.
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14. Enforcement Provisions. Grantee understands and agrees to the following provisions regarding enforcement of the Agreement.
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14.1 Governing Law and Jurisdiction. The Agreement is governed by and construed under the laws of the Commonwealth of Pennsylvania, without regard to conflict of laws rules. Any dispute or claim arising out of or relating to the Agreement or claim of breach hereof shall be brought exclusively in the federal court for the Western District of Pennsylvania or in the Court of Common Pleas of Allegheny County, Pennsylvania. By execution of the Agreement, Grantee and PNC hereby consent to the exclusive jurisdiction of such courts, and waive any right to challenge jurisdiction or venue in such courts with regard to any suit, action, or proceeding under or in connection with the Agreement.
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14.2 Equitable Remedies. A breach of the provisions of any of Sections 13.2, 13.3 or 13.4 will cause the Corporation irreparable harm, and the Corporation will therefore be entitled to issuance of immediate, as well as permanent, injunctive relief restraining Grantee, and each and every person and entity acting in concert or participating with Grantee, from initiation and/or continuation of such breach.
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14.3 Tolling Period. If it becomes necessary or desirable for the Corporation to seek compliance with the provisions of Section 13.2 by legal proceedings, the period during which Grantee shall comply with said provisions shall extend for a period of twelve (12) months from the date of the legal order requiring such compliance.
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14.4 No Waiver. Failure of PNC to demand strict compliance with any of the terms, covenants or conditions of the Agreement shall not be deemed a waiver of such term, covenant or condition, nor shall any waiver or relinquishment of any such term, covenant or condition on any occasion or on multiple occasions be deemed a waiver or relinquishment of such term, covenant or condition.
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14.5 Severability. The restrictions and obligations imposed by Sections 13.2, 13.3 and 13.4 are separate and severable, and it is the intent of Grantee and PNC that if
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any restriction or obligation imposed by any of these provisions is deemed by a court of competent jurisdiction to be void for any reason whatsoever, the remaining provisions, restrictions and obligations shall remain valid and binding upon Grantee.
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14.6 Reform. In the event any of Sections 13.2, 13.3 and 13.4 are determined by a court of competent jurisdiction to be unenforceable because unreasonable either as to length of time or area to which said restriction applies, it is the intent of Grantee and PNC that said court reduce and reform the provisions thereof so as to apply the greatest limitations considered enforceable by the court.
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14.7 Waiver of Jury Trial. Each of Grantee and PNC hereby waives any right to trial by jury with regard to any suit, action or proceeding under or in connection with any of Sections 13.2, 13.3 and 13.4.
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14.8 Applicable Law. Notwithstanding anything in the Agreement, PNC will not be required to comply with any term, covenant or condition of the Agreement if and to the extent prohibited by law, including but not limited to federal banking and securities regulations, or as otherwise directed by one or more regulatory agencies having jurisdiction over PNC or any of its subsidiaries. Further, to the extent, if any, applicable to Grantee, Grantee agrees to reimburse PNC for any amounts Grantee may be required to reimburse PNC or its subsidiaries pursuant to Section 304 of the Xxxxxxxx-Xxxxx Act of 2002, and agrees that PNC need not comply with any term, covenant or condition of the Agreement to the extent that doing so would require that Grantee reimburse PNC or its subsidiaries for such amounts pursuant to Section 304 of the Xxxxxxxx-Xxxxx Act of 2002.
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15. Acceptance of Grant; PNC Right to Cancel. If Grantee does not accept the Grant by executing and delivering a copy of the Agreement to PNC within sixty (60) days of receipt by Grantee of a copy of the Agreement, PNC may, in its sole discretion, withdraw its offer and cancel the Grant at any time prior to Granteeβs delivery to PNC of a copy of the Agreement executed by Grantee. Otherwise, upon execution and delivery of the Agreement by both PNC and Grantee, the Agreement is effective.
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IN WITNESS WHEREOF, PNC has caused the Agreement to be signed on its behalf as of the Grant Date.
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THE PNC FINANCIAL SERVICES GROUP, INC. | ||
By: | Β | Β |
Β | Β | Chairman and Chief Executive Officer |
ATTEST: | ||
By: | Β | Β |
Β | Β | Corporate Secretary |
ACCEPTED AND AGREED TO by GRANTEE. | ||
Β | ||
<name> |
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Β
2003 LTI Program Incentive Share Grant
Three Year Performance Period (January 1, 2003 - December 31, 2005)
Performance Goals: Relative PNC Return on Common Equity and Relative PNC Total Shareholder Return
50%: Vest on Award; 50%: Restricted Period Through December 31, 2006
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ANNEX A
TO
THE PNC FINANCIAL SERVICES GROUP, INC.
1997 LONG-TERM INCENTIVE AWARD PLAN
2003 INCENTIVE SHARE AGREEMENT
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* * *
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CERTAIN DEFINITIONS
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Except where the context otherwise indicates, the following definitions apply for purposes of the 2003 Incentive Share Agreement (βAgreementβ) to which this Annex A is attached:
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A.1 βAwarded Sharesβ means any Incentive Shares that have been awarded by the Committee, or are deemed to have been awarded, pursuant to Section 3 of the Agreement and have been issued in accordance with Section 3.1(d) or Section 3.4 of the Agreement.
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A.2 βBoardβ means the Board of Directors of The PNC Financial Services Group, Inc.
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A.3 βBusiness Dayβ means any day when the New York Stock Exchange is open for business.
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A.4 βCause.β
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(a) βCauseβ during a Coverage Period. If the termination of Granteeβs employment occurs during a Coverage Period, then, for purposes of the Agreement, βCauseβ means:
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(i) the willful and continued failure of Grantee to substantially perform Granteeβs 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 Grantee by the Board or the CEO which specifically
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identifies the manner in which the Board or the CEO believes that Grantee has not substantially performed Granteeβs duties; or
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(ii) the willful engaging by Grantee in illegal conduct or gross misconduct that is materially and demonstrably injurious to PNC or any Subsidiary.
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For purposes of the preceding clauses (i) and (ii), no act or failure to act, on the part of Grantee, shall be considered willful unless it is done, or omitted to be done, by Grantee in bad faith and without reasonable belief that Granteeβs 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 CEO or Granteeβs superior or based upon the advice of counsel for the Corporation, shall be conclusively presumed to be done, or omitted to be done, by Grantee in good faith and in the best interests of the Corporation.
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The cessation of employment of Grantee will be deemed to be a termination of Granteeβs employment with the Corporation for Cause for purposes of the Agreement only if and when there shall have been delivered to Grantee, as part of the notice of Granteeβs 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 on the basis of clear and convincing evidence that, in the good faith opinion of the Board, Grantee is guilty of conduct described in clause (i) or clause (ii) above and, in either case, specifying the particulars thereof in detail. Such resolution shall be adopted only after (1) reasonable notice of such Board meeting is provided to Grantee, together with written notice that PNC believes that Grantee is guilty of conduct described in clause (i) or clause (ii) above and, in either case, specifying the particulars thereof in detail, and (2) Grantee is given an opportunity, together with counsel, to be heard before the Board.
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(b) βCauseβ other than during a Coverage Period. If the termination of Granteeβs employment with the Corporation occurs other than during a Coverage Period, then, for purposes of the Agreement, βCauseβ means:
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(i) the willful and continued failure of Grantee to substantially perform Granteeβs 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 Grantee by PNC which specifically identifies the manner in which it is believed that Grantee has not substantially performed Granteeβs duties;
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(ii) a material breach by Grantee of (1) any code of conduct of PNC or a Subsidiary or (2) other written policy of PNC or a Subsidiary, in either case required by law or established to maintain compliance with applicable law;
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(iii) any act of fraud, misappropriation, material dishonesty, or embezzlement by Grantee against PNC or a Subsidiary or any client or customer of PNC or a Subsidiary;
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(iv) any conviction (including a plea of guilty or of nolo contendere) of Grantee for, or entry by Grantee into a pre-trial disposition with respect to, the commission of a felony; or
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(v) entry of any order against Grantee by any governmental body having regulatory authority with respect to the business of PNC or any Subsidiary, which order relates to or arises out of Granteeβs employment or other service relationship with the Corporation.
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The cessation of employment of Grantee will be deemed to have been a termination of Granteeβs employment with the Corporation for Cause for purposes of the Agreement only if and when the Committee determines that Grantee is guilty of conduct described in clause (i), (ii) or (iii) above or that an event described in clause (iv) or (v) above has occurred with respect to Grantee and, if so, determines that the termination of Granteeβs employment with the Corporation will be deemed to have been for Cause.
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A.5 βCEOβ means the chief executive officer of The PNC Financial Services Group, Inc.
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A.6 βChange in Controlβ means a change of control of PNC 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 PNC is then subject to such reporting requirement; provided, however, that without limitation, a Change in Control shall be deemed to have occurred if:
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(a) any Person, excluding employee benefits 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 PNC representing twenty percent (20%) or more of the combined voting power of PNCβs 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;
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(b) PNC consummates a merger, consolidation, share exchange, division or other reorganization or transaction of PNC (a βFundamental Transactionβ) with any other corporation, other than a Fundamental Transaction that results in the voting securities of PNC 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) PNCβs outstanding securities, (ii) the surviving entityβs outstanding securities, or (iii) in the case of a division, the outstanding securities of each entity resulting from the division;
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(c) the shareholders of PNC approve a plan of complete liquidation or winding-up of PNC or an agreement for the sale or disposition (in one transaction or a series of transactions) of all or substantially all of PNCβs assets;
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(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 PNCβs shareholders in connection with such proxy contest was approved by a vote of at least two-thirds (2/3rds) 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);
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(e) during any period of twenty-four (24) 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 PNCβs shareholders was approved by a vote of at least two-thirds (2/3rds) 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
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(f) the Board determines that a Change in Control has occurred.
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Notwithstanding anything to the contrary herein, a divestiture or spin-off of a subsidiary or division of PNC shall not by itself constitute a Change in Control.
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A.7 βCIC Failureβ means the following:
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(a) with respect to a CIC Triggering Event described in Section A.8(a), PNCβs shareholders vote against the transaction approved by the Board or the agreement to consummate the transaction is terminated; or
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(b) with respect to a CIC Triggering Event described in Section A.8(b), the proxy contest fails to replace or remove a majority of the members of the Board.
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A.8 βCIC Triggering Eventβ means the occurrence of either of the following:
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(a) the Board or PNCβs shareholders approve a transaction described in Subsection (b) of the definition of Change in Control contained in Section A.6; or
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(b) the commencement of a proxy contest in which any Person seeks to replace or remove a majority of the members of the Board.
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A.9 βCodeβ means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.
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A.10 βCommitteeβ means the Personnel and Compensation Committee of the Board of Directors of The PNC Financial Services Group, Inc.
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A.11 βCompetitive Activityβ means, for purposes of the Agreement, any participation in, employment by, ownership of any equity interest exceeding one percent (1%) in, or promotion or organization of, any Person other than PNC or any Subsidiary (a) engaged in business activities similar to some or all of the business activities of PNC or any Subsidiary as of Granteeβs Termination Date or (b) engaged in business activities which Grantee knows PNC or any Subsidiary intends to enter within the first twelve (12) months after Granteeβs Termination Date, in either case whether Grantee is acting as agent, consultant, independent contractor, employee, officer, director, investor, partner, shareholder, proprietor or in any other individual or representative capacity therein.
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A.12 βContinued Employment Performance Goalβ means, subject to early achievement if so determined by the Committee or pursuant to Section 7.5 of the Agreement, if applicable, that Grantee has been continuously employed by the Corporation for the period commencing on the Award Date through (and including) December 31, 2006 or, if earlier, through (and including) the day immediately preceding the first of the following to occur: (a) the date Granteeβs employment is terminated by the Corporation by reason of Total and Permanent Disability or as otherwise determined by the Committee; and (b) the date of Granteeβs death.
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A.13 βCorporationβ means PNC and its Subsidiaries.
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A.14 βCoverage Periodβ means a period (a) 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 (b) ending on the date that is three (3) years after the date of the Change in Control; 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 three (3) 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 clause (a)(i) and clause (a)(ii) in the preceding sentence.
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A.15 βDetrimental Conduct.β
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(a) βDetrimental Conductβ during a Coverage Period. If the determination of whether Grantee has engaged in Detrimental Conduct occurs during a Coverage Period, then for purposes of the Agreement, βDetrimental Conductβ means:
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(i) Grantee has engaged, without the prior written consent of PNC (at PNCβs sole discretion), in any Competitive Activity in the continental United States at any time during the period commencing on Granteeβs Termination Date through (and including) the first (1st) anniversary of Granteeβs Termination Date; or
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(ii) Grantee has willfully engaged in illegal conduct or gross misconduct that is materially and demonstrably injurious to PNC or any Subsidiary.
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For purposes of the preceding clause (ii), no act or failure to act, on the part of Grantee, shall be considered willful unless it is done, or omitted to be done, by Grantee in bad faith and without reasonable belief that Granteeβs 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 CEO or Granteeβs superior while employed by the Corporation or based upon the advice of counsel for the Corporation, shall be conclusively presumed to be done, or omitted to be done, by Grantee in good faith and in the best interests of the Corporation.
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Grantee will be deemed to have engaged in Detrimental Conduct for purposes of the Agreement only if and when there shall have been delivered to Grantee 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 determination, finding on the basis of clear and convincing evidence that, in the good faith opinion of the Board, Grantee has engaged in conduct described in clause (i) above or is guilty of conduct described in clause (ii) above and, in either case, specifying the particulars thereof in detail. Such resolution shall be adopted only after (1) reasonable notice of such Board meeting is provided to Grantee, together with written notice that PNC believes that Grantee has engaged in conduct described in clause (i) above or is guilty of conduct described in clause (ii) above and, in either case, specifying the particulars thereof in detail, and (2) Grantee is given an opportunity, together with counsel, to be heard before the Board.
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(b) βDetrimental Conductβ other than during a Coverage Period. If the determination of whether Grantee has engaged in Detrimental Conduct occurs other than during a Coverage Period, then for purposes of the Agreement, βDetrimental Conductβ means:
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(i) Grantee has engaged, without the prior written consent of PNC (at PNCβs sole discretion), in any Competitive Activity in the continental United States at any time during the period commencing on Granteeβs Termination Date through (and including) the first (1st) anniversary of Granteeβs Termination Date;
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(ii) a material breach by Grantee of (1) any code of conduct of PNC or a Subsidiary or (2) other written policy of PNC or a Subsidiary, in either case required by law or established to maintain compliance with applicable law;
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(iii) any act of fraud, misappropriation, material dishonesty, or embezzlement by Grantee against PNC or a Subsidiary or any client or customer of PNC or a Subsidiary;
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(iv) any conviction (including a plea of guilty or of nolo contendere) of Grantee for, or entry by Grantee into a pre-trial disposition with respect to, the commission of a felony which relates to or arises out of Granteeβs employment or other service relationship with the Corporation; or
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(v) entry of any order against Grantee by any governmental body having regulatory authority with respect to the business of PNC or any Subsidiary, which order relates to or arises out of Granteeβs employment or other service relationship with the Corporation.
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Grantee will be deemed to have engaged in Detrimental Conduct for purposes of the Agreement only if and when the Committee determines that Grantee has engaged in conduct described in clause (i) above, that Grantee is guilty of conduct described in clause (ii) or clause (iii) above, or that an event described in clause (iv) or clause (v) above has occurred with respect to Grantee and, if so, determines that Grantee will be deemed to have engaged in Detrimental Conduct.
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A.16 βExchange Actβ means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
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A.17 βFair Market Valueβ as it relates to PNC Common Stock means the average of the high and low sale prices of the PNC Common Stock as reported on the New York Stock Exchange (or such successor reporting system as PNC may select) on the relevant date or, if no sale of the PNC Common Stock has been reported for that day, the average of such prices on the next preceding day and the next following day for which there were reported sales.
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A.18 βGood Reasonβ means:
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(a) the assignment to Grantee of any duties inconsistent in any respect with Granteeβs 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 Grantee;
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(b) a reduction by the Corporation in Granteeβs annual base salary as in effect on the Grant Date, as the same may be increased from time to time;
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(c) the Corporationβs requiring Grantee to be based at any office or location that is more than fifty (50) miles from Granteeβs office or location immediately prior to either the CIC Triggering Event or the Change in Control;
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(d) the failure by the Corporation (i) to continue in effect any bonus, stock option or other cash or equity-based incentive plan or program in which Grantee participates immediately prior to either the CIC Triggering Event or the Change in Control that is material to Granteeβs total compensation, unless a substantially equivalent arrangement (embodied in an ongoing substitute or alternative plan or program) has been made with respect to such plan or program, or (ii) to continue Granteeβs participation in such plan or program (or in such substitute or alternative plan or program) on a basis at
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least as favorable, both in terms of the amount of benefits provided and the level of Granteeβs participation relative to other participants, as existed immediately prior to the CIC Triggering Event or the Change in Control; or
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(e) the failure by the Corporation to continue to provide Grantee with benefits substantially similar to those received by Grantee under any of the Corporationβs pension (including, but not limited to, tax-qualified plans), life insurance, health, accident, disability or other welfare plans or programs in which Grantee was participating, at costs substantially similar to those paid by Grantee, immediately prior to the CIC Triggering Event or the Change in Control.
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A.19 βGrantβ means the grant of Incentive Shares to Grantee pursuant to Section 1 of the Agreement.
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A.20 βGrant Dateβ means the Grant Date set forth on page 1 of the Agreement.
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A.21 βPeer Groupβ means U.S. Bancorp, National City Corporation, PNC, Fifth Third Bancorp, Xxxxx Fargo & Company, The Bank of New York Company, Inc., SunTrust Banks, Inc., Bank One Corporation, KeyCorp, Wachovia Corporation and FleetBoston Financial Corporation, as such group may be adjusted from time to time by the Committee to reflect mergers, consolidations, or other material corporate reorganizations or changes affecting one or more members of the Peer Group or other changes in PNCβs Peer Group.
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A.22 βPerformance Periodβ means the period commencing January 1, 2003 through (and including) December 31, 2005.
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A.23 βPersonβ 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.
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A.24 βPNC Performance Goalβ means: (a) with respect to one half (1/2) of the Target Incentive Shares, the Target ROCE Performance Goal; (b) with respect to the remaining half (1/2) of the Target Incentive Shares, the Target TSR Performance Goal; (c) with respect to one half (1/2) of the Premium Incentive Shares, the Premium ROCE Performance Goal; and (d) with respect to the remaining half (1/2) of the Premium Incentive Shares, the Premium TSR Performance Goal, as applicable.
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A.25 βRestricted Periodβ means, subject to early termination pursuant to Section 7.4 or Section 7.5 of the Agreement, if applicable, the period commencing on the Award Date through (and including) the earlier of (a) the date of Granteeβs death and (b) December 31, 2006.
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A.26 βROCEβ or βReturn on Common Equityβ means, with respect to each of PNC and the other members of the Peer Group, the annualized cumulative return on common equity for the period commencing January 1, 2003 through (and including)
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December 31, 2005. The Return on Common Equity of PNC or any other Peer Group member may be adjusted to reflect significant nonrecurring items, including, without limitation, merger-related charges or gains or losses on a sale of a business unit, as approved by the Committee. ROCE will be expressed as a percent rounded to the nearest one-hundredth (e.g., 0.00%, with 0.005% being rounded upward to 0.01%).
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A.27 βTermination Dateβ means Granteeβs last date of employment with the Corporation. If Grantee is employed by a Subsidiary that ceases to be a Subsidiary of PNC and Grantee does not continue to be employed by PNC or a Subsidiary, then for purposes of the Agreement, Granteeβs employment with the Corporation terminates effective at the time this occurs.
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A.28 βTotal and Permanent Disabilityβ means, unless the Committee determines otherwise, Granteeβs disability as determined to be total and permanent by the Corporation for purposes of the Agreement.
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A.29 βTSRβ or βTotal Shareholder Returnβ means, with respect to PNC, the cumulative total shareholder return on its common stock and, with respect to each other member of the Peer Group, the cumulative total shareholder return on a class of common stock of such other Peer Group member registered under Section 12 of the Exchange Act. For each of PNC and the other members of the Peer Group, cumulative total shareholder return will be calculated by dividing: (a) the sum of: (i) the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, with dividends reinvested on a monthly basis at the dividend yield rate using share price at month end and ex-date dividends per share, and (ii) the difference between the share price at the end and the beginning of the measurement period; by (b) the closing share price on December 31, 2002. The term βmeasurement periodβ will be the period beginning at the βmeasurement pointβ established by the market close on December 31, 2002 and continuing through (and including) the market close on December 31, 2005. With respect to dividends, it will be assumed that dividends are reinvested into additional shares of the same class of equity securities at the frequency with which dividends are paid on such securities during the applicable period. TSR will be expressed as a percent rounded to the nearest one-hundredth (e.g., 0.00%, with 0.005% being rounded upward to 0.01%).
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A.30 βUnvested Sharesβ means any Restricted Shares that are not Vested Shares.
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A.31 βVested Shares.β Awarded Shares that are not issued as Restricted Shares pursuant to the Agreement are βVested Sharesβ upon issuance and are not subject to further restriction under the Agreement. Awarded Shares that are issued as Restricted Shares pursuant to Section 3.4 of the Agreement become βVested Sharesβ if and when both of the following have occurred, provided that the Restricted Shares are then outstanding: (a) the Continued Employment Performance Goal has been achieved or is deemed to have been achieved pursuant to the Agreement; and (b) the Restricted Period has terminated.
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FORM OF 2004 INCENTIVE SHARE AGREEMENT
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2004 Incentive Share Grant
Two Year Performance Period (January 1, 2004 - December 31, 2005)
PNC Performance Goals: Relative PNC Return on Common Equity and Total Shareholder Return
50%: Vests on Award; 50%: Restricted Period From Award Through December 31, 2006
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THE PNC FINANCIAL SERVICES GROUP, INC.
1997 LONG-TERM INCENTIVE AWARD PLAN
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* * *
2004 INCENTIVE SHARE AGREEMENT
* * *
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GRANTEE: |
Β Β | < name > |
GRANT DATE: |
Β Β | January 6, 2004 |
TARGET ROCE INCENTIVE SHARES: |
Β Β | < number of whole shares> |
TARGET TSR INCENTIVE SHARES: |
Β Β | < number of whole shares> |
MAXIMUM ROCE INCENTIVE SHARES: |
Β Β | 200% of Adjusted Target ROCE Incentive Shares |
MAXIMUM TSR INCENTIVE SHARES: |
Β Β | 200% of Adjusted Target TSR Incentive Shares |
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1. Grant of 2004 Incentive Shares. Pursuant to Article 12 of The PNC Financial Services Group, Inc. 1997 Long-Term Incentive Award Plan as amended from time to time (βPlanβ), The PNC Financial Services Group, Inc. (βPNCβ) hereby grants to the Grantee named above (βGranteeβ) an Incentive Share Award (as defined in the Plan) opportunity of the number of shares of PNC common stock described above and defined in Sections A.31 and A.32 of Annex A as the βMaximum ROCE Incentive Sharesβ and βMaximum TSR Incentive Shares,β subject to the terms and conditions of this 2004 Incentive Share Agreement (βAgreementβ) and the Plan and to acceptance of the Grant by Grantee in accordance with Section 17. The Maximum ROCE Incentive Shares and Maximum TSR Incentive Shares are hereafter collectively referred to as the β2004 Incentive Shares,β as provided in Section A.3 of Annex A.
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In general, the Grant of incentive shares pursuant to the Agreement and the Plan is an opportunity for Grantee to receive an award of unrestricted and restricted shares of PNC common stock, not to exceed collectively the number of 2004 Incentive Shares, as
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determined by the Committee or otherwise in accordance with the terms of the Agreement, provided that Grantee satisfies or is deemed to have satisfied the continued employment conditions specified in the Agreement and the other conditions of the Agreement are met. The number of the 2004 Incentive Shares that may be awarded to Grantee by the Committee is limited to a percentage of the target incentive share numbers specified above, as adjusted for phantom dividends on target shares converted to additional target incentive shares, less the number of the 2003 Incentive Shares, if any, awarded to Grantee pursuant to the 2003 Incentive Share Agreement, and is subject to the Committeeβs negative discretion. The potential payout percentages applicable to the adjusted target incentive shares are determined by the levels of performance of the PNC Performance Goals achieved by PNC relative to its peers over the Performance Period. The potential payout percentage could be as high as 200% of the adjusted target incentive shares for each performance measure, if PNC outperforms its peers in both performance measure categories, or could be zero for one or both categories of target incentive shares if PNC fails to achieve at least the threshold level of performance specified in the Agreement. The Grant is subject to the terms and conditions set forth in the Agreement and to the Plan.
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2. Definitions. Terms defined in the Plan are used in the Agreement as defined in the Plan unless otherwise defined in Annex A (attached hereto and incorporated herein by reference) or elsewhere in the Agreement.
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3. Terms and Conditions of Grant. The Grant will be subject to the following terms and conditions:
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3.1 Certification of Attainment of Threshold Performance Goals and Final Potential Payout Percentages; Award of 2004 Incentive Shares.
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(a) After the end of each year of the Performance Period, PNC will determine the Return on Common Equity (ROCE) and Total Shareholder Return (TSR) for that year for each member of the Peer Group, including PNC, and will calculate the Adjusted Annual Potential Payout Percentage with respect to each PNC Performance Measure for that year.
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(b) As soon as practicable after December 31, 2005, PNC will present to the Committee information concerning the levels of ROCE and TSR performance achieved by PNC and the other members of the Peer Group for the Performance Period, whether or not PNC has achieved at least the Threshold ROCE Performance Goal and/or the Threshold TSR Performance Goal, and, if so, the Final Potential Payout Percentages for ROCE and/or TSR performance calculated on the basis of the levels of such performance achieved by PNC relative to the other Peers.
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Upon certification of PNCβs levels of achievement of the PNC Performance Goals and the resulting Final Potential Payout Percentages by the Committee, and provided that the Grant is still outstanding, that the continued employment requirement set forth in Section 3.1(c) has been met or is deemed to have been met pursuant to the terms of the Agreement, and that at least the threshold level of performance of at least one of the
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Goals has been met, the Committee will have the authority, subject to the exercise of negative discretion by the Committee pursuant to Section 3.2 and subject to Section 3.4, if applicable, to award to Grantee (βawardβ), and direct PNC to issue pursuant to Section 3.5, a number of the 2004 Incentive Shares as follows:
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Β | (i) | up to and including the number that is the Final ROCE Potential Payout Percentage of the Adjusted Target ROCE Incentive Shares, provided that PNC has achieved at least the Threshold ROCE Performance Goal; plus |
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Β | (ii) | up to and including the number that is the Final TSR Potential Payout Percentage of the Adjusted Target TSR Incentive Shares, provided that PNC has achieved at least the Threshold TSR Performance Goal; minus |
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Β | (iii) | the aggregate number of unrestricted and restricted shares of PNC common stock awarded to Grantee pursuant to the 2003 Incentive Share Agreement. |
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The date on which the Committee makes its determination as to whether, and if so, the extent to which, an award of the 2004 Incentive Shares may be made pursuant to the Agreement, and within those limits, whether to award any of the 2004 Incentive Shares hereunder, and if so, how many to award, is hereafter referred to as the βAward Date.β The Award Date cannot occur any earlier that the date on which the Committee makes its award determination pursuant to the 2003 Incentive Share Agreement.
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(c) Except as otherwise provided in and subject to the conditions of Section 3.1(d), Section 3.1(e), or Section 3.4, if applicable, or unless the Committee determines otherwise: (i) Grantee must remain an employee of the Corporation through the Award Date to be eligible to receive an award of any 2004 Incentive Shares; and (ii) in the event that Granteeβs employment with the Corporation terminates on or prior to the Award Date, the Grant will terminate as of Granteeβs Termination Date (and therefore no 2004 Incentive Shares may be awarded to Grantee pursuant to the Grant).
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(d) In the event of Granteeβs death while an employee of the Corporation and on or prior to the Award Date, or in the event that Granteeβs employment with the Corporation is terminated on or prior to the Award Date by reason of Granteeβs Total and Permanent Disability or as otherwise determined by the Committee, the Committee may in its sole discretion, but need not, deem the continued employment requirement of Section 3.1(c) to have been met and permit the Grant or a portion thereof to remain outstanding in light of the facts and circumstances applicable to Grantee notwithstanding such termination of employment.
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To the extent that the Grant is outstanding on the Award Date and if at least one of the threshold levels of PNC performance has been achieved, the Committee may consider Grantee for an award of 2004 Incentive Shares pursuant to Section 3.1(b) within the limits determined by the Final Potential Payout Percentages and subject to reduction for any award of 2003 Incentive Shares to Grantee. Any award that the Committee may
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determine to make after Granteeβs death will be delivered to Granteeβs legal representative.
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(e) (i) Notwithstanding anything in the Agreement to the contrary, if, prior to the Award Date, (1) Granteeβs employment is terminated (other than by reason of Granteeβs death) by the Corporation without Cause or by Grantee for Good Reason after the occurrence of a CIC Triggering Event but prior to a CIC Failure, or if Granteeβs employment is deemed to have been so terminated pursuant to Section 3.1(e)(ii), and (2) a Change in Control occurs within three (3) months of Granteeβs Termination Date, then the continued employment requirement of Section 3.1(c) will be deemed to have been met and Grantee will receive an award pursuant to Section 3.4.
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(ii) Granteeβs employment will be deemed to have been terminated by the Corporation without Cause after the occurrence of a CIC Triggering Event but prior to a CIC Failure for purposes of Section 3.1(e)(i) if: (1) Granteeβs employment is terminated by the Corporation without Cause; (2) such termination of employment (a) was at the request of a third party that has taken steps reasonably calculated to effect a Change in Control or (b) otherwise arose in anticipation of a Change in Control; and (3) a Change in Control occurs within three (3) months of such termination of employment.
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Granteeβs employment will be deemed to have been terminated by Grantee for Good Reason after the occurrence of a CIC Triggering Event but prior to a CIC Failure for purposes of Section 3.1(e)(i) if: (1) Grantee terminates Granteeβs employment with Good Reason; (2) the circumstance or event that constitutes Good Reason (a) occurs at the request of a third party that has taken steps reasonably calculated to effect a Change in Control or (b) otherwise arose in anticipation of a Change in Control; and (3) a Change in Control occurs within three (3) months of such termination of employment.
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For purposes of this Section 3.1(e)(ii) only, Grantee will have the burden of proving that the requirements of clause (2) of the first or second paragraph of this Section 3.1(e)(ii), as the case may be, have been met and the standard of proof to be met by Grantee will be clear and convincing evidence.
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For purposes of this Section 3.1(e)(ii) only, the definition of Change in Control in Section A.12 of Annex A will exclude the proviso in Section A.12(a).
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(iii) If the Grant will terminate by reason of Granteeβs termination of employment with the Corporation pursuant to Section 3.1(c) unless all of the conditions set forth in Section 3.1(e)(i), including Section 3.1(e)(ii), if applicable, are met, then the Grant will remain outstanding pending satisfaction of all of those conditions. Upon the failure of any required condition, including the condition that a Change in Control occur within three (3) months of Granteeβs Termination Date, the Grant will terminate on the date such failure occurs.
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3.2 Negative Committee Discretion. The Committee may exercise negative discretion with respect to the Grant and determine, in light of such Corporation or
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individual performance factors as the Committee may deem appropriate, that, notwithstanding the level of ROCE and/or TSR performance achieved by PNC relative to the other members of the Peer Group, the Committee will not award, and PNC will not issue, some or all of the number of the 2004 Incentive Shares that the Committee is authorized to award pursuant to Section 3.1(b); provided, however, that the Committee may not exercise such negative discretion upon or after the occurrence of a Change in Control.
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3.3 Termination of Grant. Except as otherwise provided in Section 3.1(d), Section 3.1(e), or Section 3.4, if applicable, the Grant is subject to termination on or prior to the Award Date pursuant to Section 3.1(c) without the issuance of any of the 2004 Incentive Shares.
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Once the Committee has made its determinations at the Award Date, the Grant will terminate as to any portion of the 2004 Incentive Shares that the Committee is not authorized to award pursuant to Section 3.1(b) and as to any portion that the Committee could but elects not to award by exercise of its negative discretion pursuant to Section 3.2, and such shares shall not be issued to Grantee. In the event that an award of a number of the 2004 Incentive Shares is made pursuant to Section 3.4, the Grant will terminate as to any portion of the 2004 Incentive Shares not so awarded.
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Termination of all or a portion of the Grant will in no way affect Granteeβs covenants or the other provisions of Section 14 and Section 15.
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3.4 Change in Control Prior to Award Date. Notwithstanding anything in the Agreement to the contrary, upon the occurrence of a Change in Control at any time prior to the Award Date, the Performance Period, if not already ended, will end as of the end of the day on the day the Change in Control is deemed to occur, and, provided that either (i) Grantee is an employee of the Corporation as of the day immediately preceding the day the Change in Control is deemed to occur, or (ii) if Granteeβs employment with the Corporation terminated prior to the occurrence of the Change in Control, the Grant is still outstanding and the continued employment requirement is deemed to have been met pursuant to Section 3.1(e)(i) or because the Committee so determined pursuant to Section 3.1(c) or Section 3.1(d), then Grantee will be deemed to have been awarded, and PNC will cause the issuance pursuant to this Section 3.4 to Grantee as Awarded Shares as soon as administratively practicable following such Change in Control date, an award of the number of the 2004 Incentive Shares determined as follows:
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Β | (a) | the sum of: |
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Β | (i) | the percentage of the number of Adjusted Target ROCE Incentive Shares that is the greater of (1) 100% of such shares, and (2) the percentage of such shares determined as described below on the basis of PNCβs level of ROCE performance relative to its peers through the date of the Change in Control if the Change in Control occurs before December 31, 2005 (or the Final ROCE Potential |
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Β | Payout Percentage of such shares if the Change in Control occurs on or after December 31, 2005 but before the Award Date); plus |
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Β | (ii) | the percentage of the number of Adjusted Target TSR Incentive Shares that is the greater of (1) 100% of such shares, and (2) the percentage of such shares determined as described below on the basis of PNCβs level of TSR performance relative to its peers through the date of the Change in Control if the Change in Control occurs before December 31, 2005 (or the Final TSR Potential Payout Percentage of such shares if the Change in Control occurs on or after December 31, 2005 but before the Award Date); |
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Β | (b) | prorated by multiplying the sum determined in Section 3.4(a) above by a fraction (not to exceed 1) equal to the number of days from and including January 1, 2004 through and including the day the Change in Control is deemed to have occurred, divided by 731 (the number of days in the 2-year performance period); |
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Β | (c) | then reduced by the aggregate number of shares of PNC common stock, if any, that Grantee receives as an award upon the occurrence of the Change in Control pursuant to the 2003 Incentive Share Agreement. |
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For purposes of Section 3.4(a)(i)(2) and (a)(ii)(2) above, the percentages to be determined on the basis of PNCβs levels of ROCE and TSR performance relative to its peers through the date of the Change in Control (if the Change in Control occurs before December 31, 2005) will be calculated using the same methodology as that set forth in Section A.4 of Annex A for calculating the Adjusted Annual ROCE and TSR Potential Payout Percentages with respect to a given year, but (1) in calculating the ROCE performance of PNC and the other then existing members of the Peer Group to be used in the calculation of the percentage for purposes of Section 3.4(a)(i)(2), using the period commencing January 1, 2004 through and including the end of the last completed calendar quarter prior to the occurrence of the Change in Control rather than the period specified in the definition of Return on Common Equity set forth in Section A.41 of Annex A for 2004 or 2005, and (2) in calculating the TSR performance of PNC and the other then existing members of the Peer Group to be used in the calculation of the percentage for purposes of Section 3.4(a)(ii)(2), using the period beginning at the measuring point established by the market close on December 31, 2003 and continuing through (and including) the market close on the day the Change in Control is deemed to have occurred as the measurement period and using the closing share price on December 31, 2003 for the closing share price in clause (b), respectively, of the definition of Total Shareholder Return set forth in Section A.49 of Annex A rather than the measurement period and the closing share price, respectively, specified in that definition for the 2004 or 2005 measurement period.
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All of the Awarded Shares that are awarded pursuant to this Section 3.4 will be Vested Shares at the time of issuance, and PNC will issue a certificate or certificates to,
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or at the proper direction of, Grantee or Granteeβs legal representative for such shares without further restriction under the Agreement; provided, however, that no fractional shares will be issued, and if the award includes a fractional interest, such fractional interest will be liquidated on the basis of the then current market value of PNC common stock and paid to Grantee or Granteeβs legal representative in cash at the time the Awarded Shares are issued.
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In the event that a record date for dividends on PNC common stock occurs after the date the Change in Control is deemed to have occurred (or after January 1, 2006, if earlier) but before the date the Awarded Shares are issued, the Corporation will make a cash payment to Grantee equivalent to the amount of the dividends Grantee would have received had the Awarded Shares been issued and outstanding on the date the Change in Control is deemed to have occurred (or on January 1, 2006, if earlier).
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In the event of a corporate transaction or transactions (including, without limitation, stock dividends, stock splits, spin-offs, split-offs, recapitalizations, mergers, consolidations or reorganizations of or by PNC (each, a βCorporate Transactionβ)), the Committee may, subject to the last paragraph of this Section 3.4, make such adjustments in the number and class of the 2004 Incentive Shares subject to award pursuant to this Section 3.4 as it deems appropriate in its sole discretion to reflect the Corporate Transaction(s), including without limitation payment of the award in cash in an amount equal to the product of (a) the per share value of the consideration payable to a PNC common shareholder in connection with such Corporate Transaction and (b) the total number of the 2004 Incentive Shares awarded to Grantee pursuant to this Section 3.4.
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The Committee may not exercise any negative discretion pursuant to Section 3.2 or otherwise exercise discretion pursuant to the Agreement in any way that would serve to reduce an award to Grantee pursuant to this Section 3.4.
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3.5 Issuance of Awarded Shares; Dividend Equivalents. Unless a Change in Control occurs prior to the Award Date and Section 3.4 is applicable, PNC will cause the issuance pursuant to this Section 3.5 to Grantee as Awarded Shares of such number of the 2004 Incentive Shares as have been awarded to Grantee by the Committee as soon as practicable after the Award Date; provided, however, that the Committee may in its sole discretion, other than during a Coverage Period, defer the issuance of an award of 2004 Incentive Shares to Grantee when, in the judgment of the Committee, such deferral may be required in order to obtain or preserve more favorable tax treatment for the Corporation, including deductions for compensation.
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One half (1/2) of the Awarded Shares issued pursuant to this Section 3.5 will be Vested Shares at the time of issuance, and PNC will issue a certificate or certificates to, or at the proper direction of, Grantee or Granteeβs legal representative for such shares without further restriction under the Agreement.
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The remaining Awarded Shares issued pursuant to this Section 3.5 will be issued as Restricted Shares and will continue to be subject to the terms and conditions of the
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Agreement, including forfeiture provisions and restrictions against transfer, unless and until they become Vested Shares and are released and reissued by PNC to, or at the proper direction of, Grantee or Granteeβs legal representative pursuant to Section 9.
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No fractional shares will be issued. If an award includes a fractional interest or if the division of the award into unrestricted shares and Restricted Shares results in fractional interests, any such fractional interest or interests will be liquidated on the basis of the then current market value of PNC common stock and paid to Grantee in cash at the time the Awarded Shares are issued.
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In the event that one or more record dates for dividends on PNC common stock occur after the end of the Performance Period but before the date the Awarded Shares are issued pursuant to this Section 3.5, the Corporation will make a cash payment to Grantee equivalent to the amount of the dividends Grantee would have received had the Awarded Shares been issued and outstanding on January 1, 2006.
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3.6 Restricted Shares. Restricted Shares will be subject to a Restricted Period as provided in Section A.39 of Annex A. Restricted Shares will be deposited with PNC or its designee, or credited to a book-entry account, during the term of the Restricted Period and until released pursuant to Section 9 unless and until forfeited pursuant to the terms of the Agreement.
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Any certificate or certificates representing such Restricted Shares will contain the following legend:
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βThis certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture and restrictions against transfer) contained in The PNC Financial Services Group, Inc. 1997 Long-Term Incentive Award Plan as amended and an Agreement entered into between the registered owner and The PNC Financial Services Group, Inc. Release from such terms and conditions will be made only in accordance with the provisions of such Plan and such Agreement, a copy of each of which is on file in the office of the Corporate Secretary of The PNC Financial Services Group, Inc.β
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Where a book-entry system is used with respect to Restricted Shares, appropriate notation of such forfeiture possibility and transfer restrictions will be made on the system with respect to the account or accounts to which the Restricted Shares are credited.
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Restricted Shares deposited with PNC or its designee during the term of the Restricted Period that become Vested Shares will be released and reissued to, or at the proper direction of, Grantee or Granteeβs legal representative pursuant to Section 9 as soon as administratively practicable following the end of the Restricted Period.
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4. Rights as Shareholder. Except as provided in Section 6, if applicable, and subject to Section 7.5(c), if applicable, Grantee will have all the rights and privileges of a shareholder with respect to Awarded Shares once they have been issued including, but
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not limited to, the right to vote the shares and the right to receive dividends thereon if and when declared by the Board; provided, however, that all such rights and privileges will cease immediately upon any forfeiture of Awarded Shares that have not become Vested Shares.
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5. Capital Adjustments. Except as otherwise provided in Section 3.4, the number and class of 2004 Incentive Shares subject to award under the Agreement will be subject to such adjustment, if any, as the Committee in its sole discretion deems appropriate to reflect corporation transactions including, without limitation, stock dividends, stock splits, spin-offs, split-offs, recapitalizations, mergers, consolidations or reorganizations of or by PNC (each, a βCorporate Transactionβ). Awarded Shares issued as Restricted Shares pursuant to Section 3.5 will, as issued and outstanding shares of PNC common stock, be subject to such adjustment as may be necessary to reflect Corporate Transactions; provided, however, that any shares received as distributions on or in exchange for Unvested Shares will be subject to the terms and conditions of the Agreement as if they were unvested Restricted Shares.
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6. Prohibitions Against Sale, Assignment, etc. The Grant may not be sold, assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered, other than by will or the laws of descent and distribution if permitted by the Committee pursuant to Section 3.5(d). Unvested Shares may not be sold, assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered, other than by will or the laws of descent and distribution or as may be required pursuant to Section 10.2, unless and until the Restricted Period terminates and the Vested Shares are released and reissued by PNC pursuant to Section 9.
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7. Forfeiture of Unvested Shares; Death; Certain Disability or Other Terminations; Termination in Anticipation of a Change in Control.
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7.1 Forfeiture on Termination of Employment. Except as otherwise provided in and subject to the conditions of Section 7.3, Section 7.4(a), Section 7.4(c), Section 7.5, or Section 8, if applicable, or unless the Committee determines otherwise, in the event that Granteeβs employment with the Corporation terminates prior to January 1, 2007, all Restricted Shares that are Unvested Shares on Granteeβs Termination Date will be forfeited by Grantee to PNC without payment of any consideration by PNC.
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Upon forfeiture of Unvested Shares pursuant to the provisions of this Section 7.1 or the provisions of Section 7.2, Section 7.4(b), Section 7.4(c) or Section 7.5(d), neither Grantee nor any successors, heirs, assigns or legal representatives of Grantee will thereafter have any further rights or interest in such Unvested Shares or in any certificate or certificates representing such Unvested Shares.
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7.2 Forfeiture for Detrimental Conduct. Unvested Shares that would otherwise remain outstanding after Granteeβs Termination Date, if any, will be forfeited by Grantee to PNC without payment of any consideration by PNC in the event that, at any time prior to the date such shares become Vested Shares, PNC determines that
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Grantee has engaged in Detrimental Conduct; provided, however, that: (a) this Section 7.2 will not apply to Restricted Shares that remain outstanding after Granteeβs Termination Date pursuant to Section 7.3 or Section 7.5, if any; (b) no determination that Grantee has engaged in Detrimental Conduct may be made on or after the date of Granteeβs death; (c) Detrimental Conduct will not apply to conduct by or activities of successors to the Restricted Shares by will or the laws of descent and distribution in the event of Granteeβs death; and (d) Detrimental Conduct will cease to apply to any Restricted Shares upon a Change in Control.
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7.3 Death. In the event of Granteeβs death while an employee of the Corporation and prior to January 1, 2007, the Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period with respect to the then outstanding Unvested Shares will terminate on the date of Granteeβs death.
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The Restricted Shares which thereby become Vested Shares will be released and reissued by PNC to, or at the proper direction of, Granteeβs legal representative pursuant to Section 9 as soon as administratively practicable following such date.
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7.4 Disability or Other Termination.
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(a) In the event Granteeβs employment with the Corporation is terminated prior to January 1, 2007 by the Corporation by reason of Granteeβs Total and Permanent Disability, Unvested Shares will not be forfeited on Granteeβs Termination Date. Instead, Unvested Shares will, subject to the forfeiture provisions of Section 7.2, remain outstanding pending approval of the vesting of the Restricted Shares pursuant to this Section 7.4(a) by the Designated Person specified in Section A.20 of Annex A.
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If such Unvested Shares are still outstanding but the Designated Person has not made an affirmative determination to either approve or disapprove the vesting of the Unvested Shares by December 31, 2006, then the Restricted Period will be automatically extended through the first to occur of: (1) the day the Designated Person makes an affirmative determination regarding such vesting; and (2) either (i) the ninetieth (90th) day following January 1, 2007, if the Designated Person is the Chief Human Resources Officer of PNC, or (ii) the 180th day following January 1, 2007 if the Designated Person is the Committee, whichever is applicable.
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If the vesting of the then outstanding Unvested Shares is affirmatively approved by the Designated Person on or prior to the last day of the Restricted Period, including any extension of the Restricted Period if applicable, then the Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period with respect to any then outstanding Unvested Shares will terminate as of the end of the day on the date of such approval or December 31, 2006, whichever is later. The Restricted Shares outstanding at the termination of the Restricted Period will become Vested Shares and will be released and reissued by PNC pursuant to Section 9.
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(b) If the Designated Person disapproves the vesting of the Unvested Shares that had remained outstanding after Granteeβs Termination Date pending approval of vesting, then all such Unvested Shares that are still outstanding will be forfeited by Grantee to PNC on such disapproval date without payment of any consideration by PNC.
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If by the end of the Restricted Period, including any extension of the Restricted Period pursuant to the second paragraph of Section 7.4(a) if applicable, the Designated Person has neither affirmatively approved nor disapproved the vesting of the Unvested Shares that had remained outstanding after Granteeβs Termination Date pending approval of vesting, then all such Unvested Shares that are still outstanding will be forfeited by Grantee to PNC at the close of business on the last day of the Restricted Period without payment of any consideration by PNC.
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(c) In the event that Granteeβs employment with the Corporation is terminated prior to January 1, 2007 other than by reason of death, by the Corporation by reason of Granteeβs Total and Permanent Disability, or in circumstances that qualify for vesting pursuant to Section 7.5(a) or Section 7.5(b), all Restricted Shares that are Unvested Shares on Granteeβs Termination Date will be forfeited by Grantee to PNC on such date without payment of any consideration by PNC unless the Committee determines otherwise. The Committee may in its sole discretion, with respect to some or all of the Unvested Shares, treat such shares in the same manner that such shares would be treated pursuant to Section 7.4 if Granteeβs employment had been terminated by the Corporation by reason of Total and Permanent Disability.
Β
7.5 Termination in Anticipation of a Change in Control.
Β
(a) Notwithstanding anything in the Agreement to the contrary, if, after the occurrence of a CIC Triggering Event but prior to a CIC Failure and prior to January 1, 2007, Granteeβs employment is terminated (other than by reason of Granteeβs death) by the Corporation without Cause or by Grantee for Good Reason, or if Granteeβs employment is deemed to have been so terminated pursuant to Section 7.5(b), then: (i) the Continued Employment Performance Goal will be deemed to have been achieved and the Restricted Period with respect to any then outstanding Unvested Shares will terminate as of the end of the day on the day immediately preceding Granteeβs Termination Date (or, in the case of a qualifying termination pursuant to Section 7.5(b), the date all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.5(b) are met); and (ii) all Restricted Shares that thereby become Vested Shares will be released and reissued by PNC pursuant to Section 9 as soon as administratively practicable following such date.
Β
(b) Granteeβs employment will also be deemed to have been terminated by the Corporation without Cause after the occurrence of a CIC Triggering Event but prior to a CIC Failure for purposes of Section 7.5(a) if: (i) Granteeβs employment is terminated by the Corporation without Cause; (ii) such termination of employment (a) was at the request of a third party that has taken steps reasonably calculated to effect a Change in Control or (b) otherwise arose in anticipation of a Change in Control; and (iii) a CIC
Β
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Triggering Event or a Change in Control occurs within three (3) months of such termination of employment.
Β
Granteeβs employment will also be deemed to have been terminated by Grantee for Good Reason after the occurrence of a CIC Triggering Event but prior to a CIC Failure for purposes of Section 7.5(a) if: (i) Grantee terminates Granteeβs employment with Good Reason; (ii) the circumstance or event that constitutes Good Reason (a) occurs at the request of a third party that has taken steps reasonably calculated to effect a Change in Control or (b) otherwise arose in anticipation of a Change in Control; and (iii) a CIC Triggering Event or a Change in Control occurs within three (3) months of such termination of employment.
Β
For purposes of this Section 7.5(b) only, Grantee will have the burden of proving that the requirements of clause (ii) of the first or second paragraph of this Section 7.5(b), as the case may be, have been met and the standard of proof to be met by Grantee will be clear and convincing evidence.
Β
For purposes of this Section 7.5(b) only, the definition of Change in Control in Section A.12 of Annex A will exclude the proviso in Section A.12(a).
Β
(c) If the Unvested Shares will be forfeited by Grantee to PNC by reason of Granteeβs termination of employment with the Corporation pursuant to Section 7.1 unless all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.5(b) are met, then in the event that the record date for any dividend payable with respect to the Unvested Shares occurs on or after Granteeβs Termination Date but prior to the time all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.5(b) have been met, such dividend will be held, without interest, pending satisfaction of all of such conditions. In the event that one or more of the conditions of Section 7.5(b) are not met, any dividend being held pending satisfaction of such conditions will be forfeited by Grantee to PNC without payment of any consideration by PNC.
Β
(d) If the Unvested Shares will be forfeited by Grantee to PNC by reason of Granteeβs termination of employment with the Corporation pursuant to Section 7.1 unless all of the conditions set forth in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may be, of Section 7.5(b) are met, then the Restricted Shares will remain outstanding pending satisfaction of all of those conditions. Upon the failure of any required condition, all such Unvested Shares will be forfeited by Grantee to PNC on the date such failure occurs without payment of any consideration by PNC.
Β
8. Change in Control on or After Award Date. Notwithstanding anything in the Agreement to the contrary, upon the occurrence of a Change in Control: (i) if Grantee is an employee of the Corporation as of the day immediately preceding the Change in Control, the Continued Employment Performance Goal will be deemed to have been achieved and the Restricted Period will terminate with respect to all then outstanding Unvested Shares as of the day immediately preceding the Change in Control;
Β
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(ii) if Granteeβs employment with the Corporation terminated prior to the occurrence of the Change in Control but the Unvested Shares remained outstanding after such termination of employment pursuant to Section 7.4 and are still outstanding pending approval of the vesting of such shares by the Designated Person specified in Section A.20 of Annex A, then with respect to all Unvested Shares outstanding as of the day immediately preceding the Change in Control, such vesting approval will be deemed to have been given, the Continued Employment Performance Goal will be deemed to have been achieved, and the Restricted Period will terminate, all as of the day immediately preceding the Change in Control; and (iii) all Restricted Shares that thereby become Vested Shares will be released and reissued by PNC pursuant to Section 9 as soon as administratively practicable following such date.
Β
9. Termination of Prohibitions on Restricted Shares. Following termination of the Restricted Period, PNC will release and issue or reissue the certificate or certificates representing the then outstanding whole Restricted Shares that have become Vested Shares without the legend referred to in Section 3.5; any fractional interest will be liquidated on the basis of the then current market value of the PNC common stock.
Β
Upon release and reissuance of shares that have become Vested Shares, PNC or its designee will deliver the certificate or certificates for such whole shares, together with the proceeds of any such fractional interest to, or at the proper direction of, Grantee or Granteeβs legal representative.
Β
10. Payment of Taxes.
Β
10.1 Internal Revenue Code Section 83(b) Election. In the event that Grantee makes an Internal Revenue Code Section 83(b) election with respect to the Restricted Shares, Grantee will satisfy all applicable federal, state or local withholding and payroll tax obligations (βwithholding tax obligationsβ) arising from that election either: (a) by payment of cash; (b) by physical delivery to PNC of certificates for whole shares of PNC common stock that are not subject to any contractual restriction, pledge or other encumbrance and that have been owned by Grantee for at least six (6) months and, in the case of restricted stock, for which it has been at least six (6) months since the restrictions lapsed; or (c) by a combination of cash and such stock. Any such tax election will be made pursuant to a form to be provided to Grantee by PNC on request. For purposes of this Section 10.1, shares of PNC common stock that are used to satisfy applicable withholding tax obligations will be valued at their Fair Market Value on the date the tax withholding obligation arises. Grantee will provide to PNC a copy of any Internal Revenue Code Section 83(b) election filed by Grantee with respect to the Restricted Shares not later than ten (10) days after the filing of such election.
Β
10.2 Other Tax Liabilities. Where Grantee has not previously satisfied all applicable withholding tax obligations, PNC will, at the time the tax withholding obligation arises, retain sufficient whole shares of PNC common stock from the shares awarded to Grantee pursuant to the Agreement to satisfy the minimum amount of taxes required to be withheld by the Corporation in connection with the Awarded Shares. For
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purposes of this Section 10.2, shares of PNC common stock retained to satisfy applicable withholding tax requirements will be valued at their Fair Market Value on the date the tax withholding obligation arises.
Β
PNC will not retain more than the number of shares sufficient to satisfy the minimum amount of taxes required to be withheld in connection with the Awarded Shares. If Grantee desires to have an additional amount, up to Granteeβs W-4 obligation, withheld above the required minimum and if PNC so permits, Grantee may elect to satisfy this additional withholding either: (a) by payment of cash; or (b) using whole shares of PNC common stock (either by physical delivery to PNC of certificates for the shares or through PNCβs share attestation procedure) that are not subject to any contractual restriction, pledge or other encumbrance and that have been owned by Grantee for at least six (6) months and, in the case of restricted stock, for which it has been at least six (6) months since the restrictions lapsed. PNC will not be responsible for determining whether shares of PNC common stock so used by Grantee for this purpose satisfy the requirements set forth in this paragraph, and will be entitled to rely on Granteeβs share attestation or certification for all purposes, including but not limited to taxes and tax withholding. Any such tax election will be made pursuant to a form provided by PNC. Shares of PNC common stock that are used for this purpose will be valued at their Fair Market Value on the date the tax withholding obligation arises.
Β
11. Employment. Neither the Grant nor the award and issuance of Awarded Shares nor any term or provision of the Agreement shall constitute or be evidence of any understanding, expressed or implied, on the part of PNC or any Subsidiary to employ Grantee for any period or in any way alter Granteeβs status as an employee at will.
Β
12. Subject to the Plan and the Committee. In all respects the Grant, any Awarded Shares and the Agreement are subject to the terms and conditions of the Plan, which has been made available to Grantee and is incorporated herein by reference; provided, however, the terms of the Plan shall not be considered an enlargement of any benefits under the Agreement. Further, the Grant, any Awarded Shares and the Agreement are subject to any interpretation of, and any rules and regulations issued by, the Committee or under the authority of the Committee, whether made or issued before or after the Grant Date.
Β
13. Headings; Entire Agreement. Headings used in the Agreement are provided for reference and convenience only, shall not be considered part of the Agreement, and shall not be employed in the construction of the Agreement. The Agreement constitutes the entire agreement between Grantee and PNC and supersedes all other discussions, negotiations, correspondence, representations, understandings and agreements between the parties with respect to the subject matter hereof.
Β
14. Grantee Covenants.
Β
14.1 General. Grantee and PNC acknowledge and agree that Grantee has received adequate consideration with respect to enforcement of the provisions of
Β
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Sections 14 and 15, that such provisions are reasonable and properly required for the adequate protection of the business of the Corporation, and that enforcement of such provisions will not prevent Grantee from earning a living.
Β
14.2 Non-Solicitation; No-Hire. Grantee agrees to comply with the provisions of subsections (a) and (b) of this Section 14.2 while employed by the Corporation and for a period of twelve (12) months after Granteeβs Termination Date regardless of the reason for such termination of employment.
Β
(a) Non-Solicitation. Grantee shall not, directly or indirectly, either for Granteeβs own benefit or purpose or for the benefit or purpose of any Person other than PNC or any Subsidiary, solicit, call on, do business with, or actively interfere with PNCβs or any Subsidiaryβs relationship with, or attempt to divert or entice away, any Person that Grantee should reasonably know (i) is a customer of PNC or any Subsidiary for which PNC or any Subsidiary provides any services as of the Termination Date, or (ii) was a customer of PNC or any Subsidiary for which PNC or any Subsidiary provided any services at any time during the twelve (12) months preceding the Termination Date, or (iii) was, as of the Termination Date, considering retention of PNC or any Subsidiary to provide any services.
Β
(b) No-Hire. Grantee shall not, directly or indirectly, either for Granteeβs own benefit or purpose or for the benefit or purpose of any Person other than PNC or any Subsidiary, employ or offer to employ, call on, or actively interfere with PNCβs or any Subsidiaryβs relationship with, or attempt to divert or entice away, any employee of the Corporation, nor shall Grantee assist any other Person in such activities.
Β
Notwithstanding the above, if Granteeβs employment with the Corporation is terminated by the Corporation without Cause or by Grantee with Good Reason and such Termination Date occurs during a Coverage Period (either as Coverage Period is defined in Section A.19 of Annex A or, if Grantee was a party to a written agreement between Grantee and PNC providing, among other things, for certain change in control severance benefits (a βCIC Severance Agreementβ) that was in effect at the time of such termination of employment, as Coverage Period is defined in such CIC Severance Agreement, if longer), then commencing immediately after such Termination Date, the provisions of subsections (a) and (b) of this Section 14.2 will no longer apply and will be replaced with the following subsection (c):
Β
(c) No-Hire. Grantee agrees that Grantee shall not, for a period of twelve (12) months after the Termination Date, employ or offer to employ, solicit, actively interfere with PNCβs or any PNC affiliateβs relationship with, or attempt to divert or entice away, any officer of PNC or any PNC affiliate.
Β
14.3 Confidentiality. During Granteeβs employment with the Corporation, and thereafter regardless of the reason for termination of such employment, Grantee will not disclose or use in any way any confidential business or technical information or trade secret acquired in the course of such employment, all of which is the exclusive and
Β
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valuable property of the Corporation whether or not conceived of or prepared by Grantee, other than (a) information generally known in the Corporationβs industry or acquired from public sources, (b) as required in the course of employment by the Corporation, (c) as required by any court, supervisory authority, administrative agency or applicable law, or (d) with the prior written consent of PNC.
Β
14.4 Ownership of Inventions. Grantee shall promptly and fully disclose to PNC any and all inventions, discoveries, improvements, ideas or other works of inventorship or authorship, whether or not patentable, that have been or will be conceived and/or reduced to practice by Grantee during the term of Granteeβs employment with the Corporation, whether alone or with others, and that are (a) related directly or indirectly to the business or activities of PNC or any Subsidiary or (b) developed with the use of any time, material, facilities or other resources of PNC or any Subsidiary (βDevelopmentsβ). Grantee agrees to assign and hereby does assign to PNC or its designee all of Granteeβs right, title and interest, including copyrights and patent rights, in and to all Developments. Grantee shall perform all actions and execute all instruments that PNC or any Subsidiary shall deem necessary to protect or record PNCβs or its designeeβs interests in the Developments. The obligations of this Section 14.4 shall be performed by Grantee without further compensation and will continue beyond the Termination Date.
Β
15. Enforcement Provisions. Grantee understands and agrees to the following provisions regarding enforcement of the Agreement.
Β
15.1 Governing Law and Jurisdiction. The Agreement is governed by and construed under the laws of the Commonwealth of Pennsylvania, without regard to conflict of laws rules. Any dispute or claim arising out of or relating to the Agreement or claim of breach hereof shall be brought exclusively in the federal court for the Western District of Pennsylvania or in the Court of Common Pleas of Allegheny County, Pennsylvania. By execution of the Agreement, Grantee and PNC hereby consent to the exclusive jurisdiction of such courts, and waive any right to challenge jurisdiction or venue in such courts with regard to any suit, action, or proceeding under or in connection with the Agreement.
Β
15.2 Equitable Remedies. A breach of the provisions of any of Sections 14.2, 14.3 or 14.4 will cause the Corporation irreparable harm, and the Corporation will therefore be entitled to issuance of immediate, as well as permanent, injunctive relief restraining Grantee, and each and every person and entity acting in concert or participating with Grantee, from initiation and/or continuation of such breach.
Β
15.3 Tolling Period. If it becomes necessary or desirable for the Corporation to seek compliance with the provisions of Section 14.2 by legal proceedings, the period during which Grantee shall comply with said provisions will extend for a period of twelve (12) months from the date of the legal order requiring such compliance.
Β
15.4 No Waiver. Failure of PNC to demand strict compliance with any of the terms, covenants or conditions of the Agreement will not be deemed a waiver of such
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term, covenant or condition, nor will any waiver or relinquishment of any such term, covenant or condition on any occasion or on multiple occasions be deemed a waiver or relinquishment of such term, covenant or condition.
Β
15.5 Severability. The restrictions and obligations imposed by Sections 14.2, 14.3 and 14.4 are separate and severable, and it is the intent of Grantee and PNC that if any restriction or obligation imposed by any of these provisions is deemed by a court of competent jurisdiction to be void for any reason whatsoever, the remaining provisions, restrictions and obligations will remain valid and binding upon Grantee.
Β
15.6 Reform. In the event any of Sections 14.2, 14.3 and 14.4 are determined by a court of competent jurisdiction to be unenforceable because unreasonable either as to length of time or area to which said restriction applies, it is the intent of Grantee and PNC that said court reduce and reform the provisions thereof so as to apply the greatest limitations considered enforceable by the court.
Β
15.7 Waiver of Jury Trial. Each of Grantee and PNC hereby waives any right to trial by jury with regard to any suit, action or proceeding under or in connection with any of Sections 14.2, 14.3 and 14.4.
Β
15.8 Applicable Law. Notwithstanding anything in the Agreement, PNC will not be required to comply with any term, covenant or condition of the Agreement if and to the extent prohibited by law, including but not limited to federal banking and securities regulations, or as otherwise directed by one or more regulatory agencies having jurisdiction over PNC or any of its subsidiaries. Further, to the extent, if any, applicable to Grantee, Grantee agrees to reimburse PNC for any amounts Grantee may be required to reimburse PNC or its subsidiaries pursuant to Section 304 of the Xxxxxxxx-Xxxxx Act of 2002, and agrees that PNC need not comply with any term, covenant or condition of the Agreement to the extent that doing so would require that Grantee reimburse PNC or its subsidiaries for such amounts pursuant to Section 304 of the Xxxxxxxx-Xxxxx Act of 2002.
Β
16. Amendment of Change in Control Provisions of 2003 Incentive Share Agreement. The terms and conditions of the 2003 Incentive Share Agreement are hereby amended as follows:
Β
(1) | Section 3.1(d) is amended and restated in its entirety to read as follows: |
Β
β(d)(1)
Β
(i) Notwithstanding anything in the Agreement to the contrary, if, prior to the Award Date, (1) Granteeβs employment is terminated (other than by reason of Granteeβs death) by the Corporation without Cause or by Grantee for Good Reason after the occurrence of a CIC Triggering Event but prior to a CIC Failure, or if Granteeβs employment is deemed to have been so terminated pursuant to Section 3.1(d)(1)(ii), and (2) a Change in Control occurs within three
Β
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(3) months of Granteeβs Termination Date, then the continued employment requirement of Section 3.1(b) will be deemed to have been met and Grantee will receive an award pursuant to Section 3.1(d)(2).
Β
(ii) Granteeβs employment will be deemed to have been terminated by the Corporation without Cause after the occurrence of a CIC Triggering Event but prior to a CIC Failure for purposes of Section 3.1(d)(1)(i) if: (1) Granteeβs employment is terminated by the Corporation without Cause (as defined in Section A.4(a) of Annex A; (2) such termination of employment (a) was at the request of a third party that has taken steps reasonably calculated to effect a Change in Control or (b) otherwise arose in anticipation of a Change in Control; and (3) a Change in Control occurs within three (3) months of such termination of employment.
Β
Granteeβs employment will be deemed to have been terminated by Grantee for Good Reason after the occurrence of a CIC Triggering Event but prior to a CIC Failure for purposes of Section 3.1(d)(1)(i) if: (1) Grantee terminates Granteeβs employment with Good Reason (as defined in Section A.18 of Annex A); (2) the circumstance or event that constitutes Good Reason (a) occurs at the request of a third party that has taken steps reasonably calculated to effect a Change in Control or (b) otherwise arose in anticipation of a Change in Control; and (3) a Change in Control occurs within three (3) months of such termination of employment.
Β
For purposes of this Section 3.1(d)(1)(ii) only, Grantee will have the burden of proving that the requirements of clause (2) of the first or second paragraph of this Section 3.1(d)(1)(ii), as the case may be, have been met and the standard of proof to be met by Grantee will be clear and convincing evidence.
Β
For purposes of this Section 3.1(d)(1)(ii) only, the definition of Change in Control in Section A.6 of Annex A will exclude the proviso in Section A.6(a).
Β
(iii) If the Grant will terminate by reason of Granteeβs termination of employment with the Corporation pursuant to Section 3.1(b) unless all of the conditions set forth in Section 3.1(d)(1)(i) (including those set forth in Section 3.1(d)(1)(ii), if applicable) are met, then the Grant will remain outstanding pending satisfaction of all of those conditions. Upon the failure of any required condition, including the condition that a Change in Control occur within three (3) months of Granteeβs Termination Date, the Grant will terminate on the date such failure occurs.
Β
(d)(2)
Β
Notwithstanding anything in the Agreement to the contrary, upon the occurrence of a Change in Control at any time prior to the Award Date, the Performance Period, if not already ended, will end as of the end of the day on the
Β
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day the Change in Control is deemed to occur, and, provided that either (i) Grantee is an employee of the Corporation as of the day immediately preceding the day the Change in Control is deemed to occur, or (ii) if Granteeβs employment with the Corporation terminated prior to the occurrence of the Change in Control, the Grant is still outstanding and the continued employment requirement is deemed to have been met pursuant to Section 3.1(d)(1) or because the Committee so determined pursuant to Section 3.1(b) or Section 3.1(c), then Grantee will be deemed to have been awarded, and PNC will cause the issuance pursuant to this Section 3.1(d)(2) to Grantee as Awarded Shares as soon as administratively practicable following such Change in Control date, an award of the number of the Incentive Shares determined as follows:
Β
Β | (a) | the sum of: |
Β
Β | (i) | 100% of the Target Incentive Shares; plus |
Β
Β | (ii) | 50% of the Premium Incentive Shares if PNCβs level of ROCE performance relative to its peers, determined as described below, through the date of the Change in Control is within the top quartile of the ROCE performance of the members of the Peer Group at that time; plus |
Β
Β | (iii) | 50% of the Premium Incentive Shares if PNCβs level of TSR performance relative to its peers, determined as described below, through the date of the Change in Control is within the top quartile of the TSR performance of the members of the Peer Group at that time; |
Β
Β | (b) | prorated by multiplying the sum determined in Section 3.1(d)(2)(a) above by a fraction (not to exceed 1) equal to the number of days from and including January 1, 2003 through and including the day the Change in Control is deemed to have occurred, divided by 1,096 (the number of days in the 3-year performance period). |
Β
In determining the levels of ROCE performance of PNC and the other then existing members of the Peer Group for purposes of Section 3.1(d)(2)(a)(ii) above, the period commencing January 1, 2003 through and including the end of the last completed calendar quarter prior to the occurrence of the Change in Control will be used in the definition of Return on Common Equity set forth in Section A.26 of Annex A rather than the period specified in that definition.
Β
In determining the levels of TSR performance of PNC and the other then existing members of the Peer Group for purposes of Section 3.1(d)(2)(a)(iii) above, the period beginning at the measuring point established by the market close on December 31, 2002 and continuing through (and including) the market close on the day the Change in Control is deemed to have occurred will be used as
Β
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the measurement period in the definition of Total Shareholder Return set forth in Section A.29 of Annex A rather than the period specified in that definition.
Β
All of the Awarded Shares that are awarded pursuant to this Section 3.1(d)(2) will be Vested Shares at the time of issuance, and PNC will issue a certificate or certificates to, or at the proper direction of, Grantee or Granteeβs legal representative for such shares without further restriction under the Agreement; provided, however, that no fractional shares will be issued, and if the award includes a fractional interest, such fractional interest will be liquidated on the basis of the then current market value of PNC Common Stock and paid to Grantee or Granteeβs legal representative in cash at the time the Awarded Shares are issued.
Β
In the event that a record date for dividends on PNC Common Stock occurs after the date the Change in Control is deemed to have occurred (or after January 1, 2006, if earlier) but before the date the Awarded Shares are issued, the Corporation will make a cash payment to Grantee equivalent to the amount of the dividends Grantee would have received had the Awarded Shares been issued and outstanding on the date the Change in Control is deemed to have occurred (or on January 1, 2006, if earlier).
Β
In the event of a corporate transaction or transactions (including, without limitation, stock dividends, stock splits, spin-offs, split-offs, recapitalizations, mergers, consolidations or reorganizations of or by PNC (each, a βCorporate Transactionβ)), the Committee may, subject to the last paragraph of this Section 3.1(d)(2), make such adjustments in the number and class of Incentive Shares subject to award pursuant to this Section 3.1(d)(2) as it deems appropriate in its sole discretion to reflect the Corporate Transaction(s), including without limitation payment of the award in cash in an amount equal to the product of (a) the per share value of the consideration payable to a PNC Common Stock shareholder in connection with such Corporate Transaction and (b) the total number of the Incentive Shares awarded to Grantee pursuant to this Section 3.1(d)(2).
Β
The Committee may not exercise any negative discretion pursuant to Section 3.2 or otherwise exercise discretion pursuant to the Agreement in any way that would serve to reduce an award to Grantee pursuant to this Section 3.1(d)(2).β
Β
(2) | Section 3.2 is amended by: (i) deleting the phrase βother than during a Coverage Periodβ from the first line of Section 3.2(a) and adding the following proviso to the end of Section 3.2(a): βprovided, however, that the Committee may not exercise such negative discretion upon or after the occurrence of a Change in Controlβ; and (ii) deleting Section 3.2(b) in its entirety. |
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(3) | Section 3.3 is amended by adding the following to the end of the section: βIn the event that an award of a number of Incentive Shares is made pursuant to Section 3.1(d)(2), the Grant will terminate as to any portion of the Incentive Shares not so awarded. Termination of all or a portion of the Grant will in no way affect Granteeβs covenants or the other provisions of Section 13 and Section 14.β |
Β
(4) | Section 3.4 is amended to correct the typographical error in the last line of the section by changing β2005β to β2006.β |
Β
(5) | A new Section 8A that reads as follows is added immediately prior to Section 8: |
Β
β8A. Change in Control on or After Award Date. Notwithstanding anything in the Agreement to the contrary, upon the occurrence of a Change in Control: (i) if Grantee is an employee of the Corporation as of the day immediately preceding the Change in Control, the Continued Employment Performance Goal will be deemed to have been achieved and the Restricted Period will terminate with respect to all then outstanding Unvested Shares as of the day immediately preceding the Change in Control; (ii) if Granteeβs employment with the Corporation terminated prior to the occurrence of the Change in Control but Unvested Shares remained outstanding after such termination of employment pursuant to Section 7.4, then with respect to all such Unvested Shares outstanding as of the day immediately preceding the Change in Control, the Restricted Period will terminate as of the day immediately preceding the Change in Control; and (iii) all Restricted Shares that thereby become Vested Shares will be released and reissued by PNC pursuant to Section 8 as soon as administratively practicable following such date.β
Β
(6) | The following amendments are made to the definitions in Annex A: |
Β
The definition of Continued Employment Performance Goal in Section A.12 is amended by: (i) replacing the phrase βor pursuant to Section 7.5 of the Agreementβ with the phrase βor to deemed achievement pursuant to Section 7.5 or Section 8A of the Agreementβ; and (ii) deleting the word βandβ immediately preceding subsection (b) and adding the following subsection (c) at the end of the definition: βand (c) the day a Change in Control is deemed to have occurred.β
Β
The definition of Performance Period in Section A.22 is amended by adding the phrase βsubject to early termination pursuant to Section 3.1(d)(2) of the Agreement,β after the word βmeans.β
Β
The definition of Restricted Period in Section A.25 is amended by deleting the word βandβ immediately preceding subsection (b), and by adding the following subsection (c) at the end of the definition: βand (c) the day immediately preceding the day a Change in Control is deemed to have occurred.β
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17. Acceptance of Grant; PNC Right to Cancel; Effectiveness of Agreement. If Grantee does not accept the Grant by executing and delivering a copy of the Agreement to PNC, without altering or changing the terms thereof in any way, within sixty (60) days of receipt by Grantee of a copy of the Agreement, PNC may, in its sole discretion, withdraw its offer and cancel the Grant at any time prior to Granteeβs delivery to PNC of a copy of the Agreement executed by Grantee. Otherwise, upon execution and delivery of the Agreement by both PNC and Grantee, the Agreement is effective.
Β
IN WITNESS WHEREOF, PNC has caused the Agreement to be signed on its behalf as of the Grant Date.
Β
THE PNC FINANCIAL SERVICES GROUP, INC. | ||
By: | Β | Β |
Β | Β | Chairman and Chief Executive Officer |
Β
ATTEST: | ||
By: | Β | Β |
Β | Β | Corporate Secretary |
Β
ACCEPTED AND AGREED TO by GRANTEE. |
Β Β |
Grantee |
Β
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Β
2004 Incentive Share Grant
Two Year Performance Period (January 1, 2004 - December 31, 2005)
PNC Performance Goals: Relative PNC Return on Common Equity and Total Shareholder Return
50%: Vests on Award; 50%: Restricted Period From Award Through December 31, 2006
Β
ANNEX A
TO
THE PNC FINANCIAL SERVICES GROUP, INC.
1997 LONG-TERM INCENTIVE AWARD PLAN
2004 INCENTIVE SHARE AGREEMENT
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CERTAIN DEFINITIONS
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Except where the context otherwise indicates, the following definitions apply for purposes of the 2004 Incentive Share Agreement (βAgreementβ) to which this Annex A is attached:
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A.1 β2003 Incentive Share Agreementβ means the 2003 Incentive Share Agreement between Grantee and PNC relating to the January 3, 2003 grant of a certain incentive share award opportunity (the 2003 Incentive Shares) to Grantee, as amended.
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A.2 β2003 Incentive Sharesβ means the incentive share award opportunity granted to Grantee January 3, 2003 pursuant to the 2003 Incentive Share Agreement and subject to the terms and conditions of that agreement, as amended, and the Plan.
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A.3 β2004 Incentive Sharesβ means, collectively, the Maximum ROCE Incentive Shares and the Maximum TSR Incentive Shares, representing the maximum number of shares of PNC common stock that could be awarded to Grantee as Awarded Shares, subject to the terms and conditions of the Agreement and the Plan.
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A.4 βAdjusted Annual Potential Payout Percentage(s).β The Adjusted Annual Potential Payout Percentage for a given year within the Performance Period (2004 or 2005) with respect to a given Performance Measure (ROCE or TSR) (the βAdjusted Annual ROCE Potential Payout Percentageβ or the βAdjusted Annual TSR Potential Payout Percentage,β as the case may be) is the percentage determined as follows.
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If PNC achieves the best ROCE or TSR performance, as the case may be, of any of the then existing members of the Peer Group for a given year (Top Performer ranking), the Adjusted Annual Potential Payout Percentage for that Performance Measure for that year will be 200%. If PNCβs ROCE or TSR performance for a given year compared to the ROCE or TSR performance, as the case may be, of the other then existing Peers for that year ranks PNC as #10 or lower, however many Peers are then in the Peer Group, the
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Adjusted Annual Potential Payout Percentage for that Performance Measure for that year will be 0%.
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Otherwise, the Adjusted Annual Potential Payout Percentage for a given year with respect to a given Performance Measure will be equal to: the sum of the unadjusted potential payout percentage set forth in the schedule below (βScheduleβ) for the Peer ranking immediately below PNC (βPeer Bβ) plus X%, where X is (1) the difference between the unadjusted potential payout percentage set forth in the Schedule for the Peer ranking immediately above PNC (βPeer Aβ) and the unadjusted potential payout percentage set forth in the Schedule for Peer B, times (2) a fraction equal to (i) the difference between PNCβs ROCE or TSR performance, as the case may be, for the given year and Peer Bβs ROCE or TSR performance for the given year, divided by (ii) the difference between Peer Aβs ROCE or TSR performance, as the case may be, for the given year and Peer Bβs ROCE or TSR performance for the given year. If there is no Peer B at that time, the Adjusted Annual Potential Payout Percentage for the given year will be the same as the unadjusted potential payout percentage set forth in the Schedule for PNCβs ranking.
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SCHEDULE
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Peer Group Position |
Β | Unadjusted Potential Payout Percentage |
Top Performer |
Β | 200% |
#2 |
Β | 180% |
#3 |
Β | 160% |
#4 |
Β | 140% |
#5 |
Β | 120% |
#6 |
Β | 100% |
#7 |
Β | Β Β 80% |
#8 |
Β | Β Β 60% |
#9 |
Β | Β Β 40% |
#10 or lower |
Β | Β Β Β Β 0% |
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Peer Group positions in the Schedule will be determined by calculating the ROCE or TSR performance, as the case may be, achieved by each then existing member of the Peer Group for the given year and then ranking each such member of the Peer Group by that performance, with the Peer with the best performance being ranked the Top Performer, the Peer with the second best performance being ranked #2, and so on.
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The unadjusted potential payout percentages by Peer Group position in the Schedule will not change even if the number of Peers in the Peer Group increases or is reduced, for example, due to industry consolidation.
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A.5 βAdjusted Target ROCE Incentive Sharesβ means the number of incentive shares equal to the Target ROCE Incentive Shares plus the Dividend Adjustment Shares related to target ROCE incentive shares for all PNC common stock cash dividend payment dates that occur from and after the Grant Date through and including December 31, 2005 or, if earlier, the day a Change in Control is deemed to have occurred.
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A.6 βAdjusted Target TSR Incentive Sharesβ means the number of incentive shares equal to the Target TSR Incentive Shares plus the Dividend Adjustment Shares related to target TSR incentive shares for all PNC common stock cash dividend payment dates that occur from and after the Grant Date through and including December 31, 2005 or, if earlier, the day a Change in Control is deemed to have occurred.
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A.7 βAward Dateβ means the date on which the Committee makes its determination as to whether, and if so, the extent to which, an award of the 2004 Incentive Shares may be made pursuant to the Agreement, and within those limits, whether to award any of the 2004 Incentive Shares pursuant to Section 3.1(b) of the Agreement, and if so, how many to award.
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A.8 βAwarded Sharesβ means any 2004 Incentive Shares that have been (a) awarded by the Committee and issued in accordance with Section 3.5 of the Agreement as Vested Shares or Restricted Shares or (b) deemed awarded and issued pursuant to Section 3.4 of the Agreement as Vested Shares.
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A.9 βBoardβ means the Board of Directors of PNC.
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A.10 βCauseβ means:
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(a) the willful and continued failure of Grantee to substantially perform Granteeβs 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 Grantee by the Board or the CEO which specifically identifies the manner in which the Board or the CEO believes that Grantee has not substantially performed Granteeβs duties; or
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(b) the willful engaging by Grantee in illegal conduct or gross misconduct that is materially and demonstrably injurious to PNC or any Subsidiary.
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For purposes of the preceding clauses (a) and (b), no act or failure to act, on the part of Grantee, shall be considered willful unless it is done, or omitted to be done, by Grantee in bad faith and without reasonable belief that Granteeβs 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 CEO or Granteeβs superior or based upon
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the advice of counsel for the Corporation, shall be conclusively presumed to be done, or omitted to be done, by Grantee in good faith and in the best interests of the Corporation.
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The cessation of employment of Grantee will be deemed to be a termination of Granteeβs employment with the Corporation for Cause for purposes of the Agreement only if and when there shall have been delivered to Grantee, as part of the notice of Granteeβs 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 on the basis of clear and convincing evidence that, in the good faith opinion of the Board, Grantee is guilty of conduct described in clause (a) or clause (b) above and, in either case, specifying the particulars thereof in detail. Such resolution shall be adopted only after (i) reasonable notice of such Board meeting is provided to Grantee, together with written notice that PNC believes that Grantee is guilty of conduct described in clause (a) or clause (b) above and, in either case, specifying the particulars thereof in detail, and (ii) Grantee is given an opportunity, together with counsel, to be heard before the Board.
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A.11 βCEOβ means the chief executive officer of PNC.
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A.12 βChange in Controlβ means a change of control of PNC 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 PNC is then subject to such reporting requirement; provided, however, that without limitation, a Change in Control will be deemed to have occurred if:
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(a) any Person, excluding employee benefits 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 PNC representing twenty percent (20%) or more of the combined voting power of PNCβs 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 will not be considered a Change in Control if the Board approves such acquisition either prior to or immediately after its occurrence;
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(b) PNC consummates a merger, consolidation, share exchange, division or other reorganization or transaction of PNC (a βFundamental Transactionβ) with any other corporation, other than a Fundamental Transaction that results in the voting securities of PNC 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) PNCβs outstanding securities, (ii) the surviving entityβs outstanding securities, or (iii) in the case of a division, the outstanding securities of each entity resulting from the division;
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(c) the shareholders of PNC approve a plan of complete liquidation or winding-up of PNC or an agreement for the sale or disposition (in one transaction or a series of transactions) of all or substantially all of PNCβs assets;
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(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 PNCβs shareholders in connection with such proxy contest was approved by a vote of at least two-thirds (2/3rds) 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);
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(e) during any period of twenty-four (24) 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 PNCβs shareholders was approved by a vote of at least two-thirds (2/3rds) 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
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(f) the Board determines that a Change in Control has occurred.
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Notwithstanding anything to the contrary herein, a divestiture or spin-off of a subsidiary or division of PNC will not by itself constitute a Change in Control.
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A.13 βCIC Failureβ means the following:
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(a) with respect to a CIC Triggering Event described in Section A.14(a), PNCβs shareholders vote against the transaction approved by the Board or the agreement to consummate the transaction is terminated; or
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(b) with respect to a CIC Triggering Event described in Section A.14(b), the proxy contest fails to replace or remove a majority of the members of the Board.
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A.14 βCIC Triggering Eventβ means the occurrence of either of the following:
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(a) the Board or PNCβs shareholders approve a transaction described in Subsection (b) of the definition of Change in Control contained in Section A.12; or
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(b) the commencement of a proxy contest in which any Person seeks to replace or remove a majority of the members of the Board.
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A.15 βCommitteeβ means the Personnel and Compensation Committee of the Board.
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A.16 βCompetitive Activityβ means, for purposes of the Agreement, any participation in, employment by, ownership of any equity interest exceeding one percent
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(1%) in, or promotion or organization of, any Person other than PNC or any Subsidiary (a) engaged in business activities similar to some or all of the business activities of PNC or any Subsidiary as of Granteeβs Termination Date or (b) engaged in business activities which Grantee knows PNC or any Subsidiary intends to enter within the first twelve (12) months after Granteeβs Termination Date, in either case whether Grantee is acting as agent, consultant, independent contractor, employee, officer, director, investor, partner, shareholder, proprietor or in any other individual or representative capacity therein.
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A.17 βContinued Employment Performance Goalβ means, subject to early achievement if so determined by the Committee or to deemed achievement pursuant to Section 7.3, Section 7.4, Section 7.5, or Section 8 of the Agreement, if applicable, that Grantee has been continuously employed by the Corporation for the period commencing on the Award Date through (and including) the first of the following to occur: (a) December 31, 2006; (b) the day immediately preceding the date of Granteeβs death; and (c) the day immediately preceding the day a Change in Control is deemed to have occurred.
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A.18 βCorporationβ means PNC and its Subsidiaries.
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A.19 βCoverage Periodβ means a period (a) 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 (b) ending on the date that is three (3) years after the date of the Change in Control; provided, however, that in the event that a Coverage Period commences on the date of a CIC Triggering Event, such Coverage Period will terminate upon the earlier to occur of (x) the date of a CIC Failure and (y) the date that is three (3) 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 will commence upon the earlier to occur of clause (a)(i) and clause (a)(ii) in the preceding sentence.
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A.20 βDesignated Personβ will be either: (a) the Committee, if Grantee is a member of the Corporate Executive Group (or equivalent successor classification) or is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to PNC securities; or (a) the Chief Human Resources Officer of PNC, if Grantee is not within one of the groups specified in Section A.20(a).
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A.21 βDetrimental Conductβ means:
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(a) Grantee has engaged, without the prior written consent of PNC (at PNCβs sole discretion), in any Competitive Activity in the continental United States at any time during the period commencing on Granteeβs Termination Date through (and including) the first (1st) anniversary of Granteeβs Termination Date;
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(b) a material breach by Grantee of (i) any code of conduct of PNC or a Subsidiary or (ii) other written policy of PNC or a Subsidiary, in either case required by law or established to maintain compliance with applicable law;
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(c) any act of fraud, misappropriation, material dishonesty, or embezzlement by Grantee against PNC or a Subsidiary or any client or customer of PNC or a Subsidiary;
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(d) any conviction (including a plea of guilty or of nolo contendere) of Grantee for, or entry by Grantee into a pre-trial disposition with respect to, the commission of a felony which relates to or arises out of Granteeβs employment or other service relationship with the Corporation; or
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(e) entry of any order against Grantee by any governmental body having regulatory authority with respect to the business of PNC or any Subsidiary, which order relates to or arises out of Granteeβs employment or other service relationship with the Corporation.
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Grantee will be deemed to have engaged in Detrimental Conduct for purposes of the Agreement only if and when the Committee determines that Grantee has engaged in conduct described in clause (a) above, that Grantee is guilty of conduct described in clause (b) or clause (c) above, or that an event described in clause (d) or clause (e) above has occurred with respect to Grantee and, if so, determines that Grantee will be deemed to have engaged in Detrimental Conduct.
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A.22 βDividend Adjustment Shares.β Once the Agreement has become effective in accordance with Section 17 of the Agreement, for each PNC common stock cash dividend payment date that occurs during the period from and after the Grant Date through and including December 31, 2005 or, if earlier, the day a Change in Control is deemed to have occurred, there will be added, subject to any applicable Plan limits, as of that dividend payment date to the number of Target ROCE Incentive Shares and to the number of Target TSR Incentive Shares, respectively, a number of incentive shares (including fractional shares) equal to (i) the amount of the cash dividends that would have been paid on that dividend payment date on the target number of ROCE or TSR incentive shares, as the case may be, as adjusted for all previous additions to such target number pursuant to this Section A.22, had such target incentive shares been issued and outstanding shares of PNC common stock on the record date for such dividend, divided by (ii) the Fair Market Value of a share of PNC common stock on that dividend payment date.
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Cumulatively, these additional ROCE or TSR incentive shares are referred to as the βDividend Adjustment Sharesβ related to the target ROCE incentive shares or the target TSR incentive shares, as the case may be, and the Target ROCE Incentive Shares and Target TSR Incentive Shares as adjusted for the addition of all Dividend Adjustment Shares related to such respective target incentive shares are referred to as the βAdjusted Target ROCE Incentive Sharesβ and the βAdjusted Target TSR Incentive Shares.β
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A.23 βExchange Actβ means the Securities Exchange Act of 1934 as amended, and the rules and regulations promulgated thereunder.
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A.24 βFair Market Valueβ as it relates to PNC common stock means the average of the high and low sale prices of PNC common stock as reported on the New York Stock Exchange (or such successor reporting system as PNC may select) on the relevant date or, if no sale of PNC common stock has been reported for that day, the average of such prices on the next preceding day and the next following day for which there were reported sales.
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A.25 βFinal Potential Payout Percentage(s).β The Final Potential Payout Percentage with respect to each Performance Measure (ROCE or TSR) (the βFinal ROCE Potential Payout Percentageβ or the βFinal TSR Potential Payout Percentage,β as the case may be) will be the percentage that is the average of the Adjusted Annual Potential Payout Percentages for that Performance Measure (ROCE or TSR) for the years in the Performance Period (2004 and 2005).
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If the Adjusted Annual Potential Payout Percentage for a Performance Measure is 0% for one of the years in the Performance Period but is a positive number for the other year, then the Final Potential Payout Percentage for that Performance Measure will be the percentage that is one-half (1/2) of that positive number.
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If the Adjusted Annual Potential Payout Percentage for a Performance Measure is 0% for both of the years in the Performance Period, then the Final Potential Payout Percentage for that Performance Measure will be 0%.
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A.26 βGood Reasonβ means:
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(a) the assignment to Grantee of any duties inconsistent in any respect with Granteeβs 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 Grantee;
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(b) a reduction by the Corporation in Granteeβs annual base salary as in effect on the Grant Date, as the same may be increased from time to time;
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(c) the Corporationβs requiring Grantee to be based at any office or location that is more than fifty (50) miles from Granteeβs office or location immediately prior to either the CIC Triggering Event or the Change in Control;
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(d) the failure by the Corporation (i) to continue in effect any bonus, stock option or other cash or equity-based incentive plan or program in which Grantee participates immediately prior to either the CIC Triggering Event or the Change in Control that is material to Granteeβs total compensation, unless a substantially equivalent arrangement (embodied in an ongoing substitute or alternative plan or program) has been made with respect to such plan or program, or (ii) to continue Granteeβs participation in
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such plan or program (or in such substitute or alternative plan or program) on a basis at least as favorable, both in terms of the amount of benefits provided and the level of Granteeβs participation relative to other participants, as existed immediately prior to the CIC Triggering Event or the Change in Control; or
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(e) the failure by the Corporation to continue to provide Grantee with benefits substantially similar to those received by Grantee under any of the Corporationβs pension (including, but not limited to, tax-qualified plans), life insurance, health, accident, disability or other welfare plans or programs in which Grantee was participating, at costs substantially similar to those paid by Grantee, immediately prior to the CIC Triggering Event or the Change in Control.
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A.27 βGrantβ means the grant, subject to the terms and conditions of the Agreement and the Plan, of the 2004 Incentive Shares award opportunity to Grantee pursuant to Section 1 of the Agreement.
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A.28 βGrant Dateβ means the Grant Date set forth on page 1 of the Agreement.
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A.29 βGranteeβ means the person identified as Grantee on page 1 of the Agreement.
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A.30 βInternal Revenue Codeβ means the Internal Revenue Code of 1986 as amended, and the rules and regulations promulgated thereunder.
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A.31 βMaximum ROCE Incentive Sharesβ is the number of incentive shares that is 200% of the Adjusted Target ROCE Incentive Shares, and represents Granteeβs maximum incentive share award opportunity pursuant to the Agreement with respect to the PNC ROCE Performance Goal.
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A.32 βMaximum TSR Incentive Sharesβ is the number of incentive shares that is 200% of the Adjusted Target TSR Incentive Shares, and represents Granteeβs maximum incentive share award opportunity pursuant to the Agreement with respect to the PNC TSR Performance Goal.
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A.33 βPeer Groupβ means The Bank of New York Company, Inc., Bank One Corporation, Fifth Third Bancorp, FleetBoston Financial Corporation, KeyCorp, National City Corporation, PNC, SunTrust Banks, Inc., U.S. Bancorp, Wachovia Corporation, and Xxxxx Fargo & Company as such group may be adjusted from time to time by the Committee to reflect mergers, consolidations, or other material corporate reorganizations or changes affecting one or more members of the Peer Group or other changes in PNCβs peer group. A member of the Peer Group is sometimes referred to as a βPeer.β
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A.34 βPerformance Measure(s).β The Performance Measures are Return on Common Equity and Total Shareholder Return.
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A.35 βPerformance Periodβ means, subject to early termination pursuant to Section 3.4 of the Agreement, the period commencing January 1, 2004 through (and including) December 31, 2005. The two years in the Performance Period are 2004 and 2005.
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A.36 βPersonβ 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.
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A.37 βPNCβ means The PNC Financial Services Group, Inc.
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A.38 βPNC Performance Goal(s).β The PNC Performance Goals are the level of PNC Return on Common Equity (βPNC ROCE Performance Goalβ) and the level of PNC Total Shareholder Return (βPNC TSR Performance Goalβ) relative to the levels of ROCE and TSR performance, respectively, of the other members of the Peer Group.
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A.39 βRestricted Periodβ means, subject to early termination if so determined by the Committee or pursuant to Section 7.5 of the Agreement, if applicable, the period commencing on the Award Date through (and including) the earlier of: (a) the date of Granteeβs death; (b) the day immediately preceding the day a Change in Control is deemed to have occurred; and (c) December 31, 2006 or, if later, the last day of any extension of the Restricted Period pursuant to Section 7.4(a) of the Agreement, if applicable.
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A.40 βRestricted Sharesβ are shares of PNC common stock that have been awarded to Grantee by the Committee as Awarded Shares and issued as Restricted Shares pursuant to Section 3.5 of the Agreement. Restricted Shares are subject to the terms and conditions of the Agreement, including forfeiture provisions and restrictions against transfer, unless and until they become Vested Shares as set forth in Section A.51 and are released and reissued by PNC pursuant to Section 9 of the Agreement. Restricted Shares that have not yet become Vested Shares are sometimes referred to as βUnvested Shares.β
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A.41 βReturn on Common Equityβ or βROCEβ means, with respect to each of PNC and the other members of the Peer Group: (a) for 2004, the annualized cumulative return on common equity for the period commencing January 1, 2004 through (and including) December 31, 2004; and (b) for 2005, the annualized cumulative return on common equity for the period commencing January 1, 2005 through (and including) December 31, 2005. The Return on Common Equity of PNC or any other Peer may be adjusted to reflect significant nonrecurring items, including, without limitation, merger-related charges or gains or losses on a sale of a business unit, as approved by the Committee. ROCE will be expressed as a percent rounded to the nearest one-hundredth (e.g., 0.00%, with 0.005% being rounded upward to 0.01%).
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A.42 βSECβ means the United States Securities and Exchange Commission.
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A.43 βTarget ROCE Incentive Sharesβ means the number of incentive shares specified on page 1 of the Agreement as Target ROCE Incentive Shares.
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A.44 βTarget TSR Incentive Sharesβ means the number of incentive shares specified on page 1 of the Agreement as Target TSR Incentive Shares.
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A.45 βTermination Dateβ means Granteeβs last date of employment with the Corporation. If Grantee is employed by a Subsidiary that ceases to be a Subsidiary of PNC and Grantee does not continue to be employed by PNC or a Subsidiary, then for purposes of the Agreement, Granteeβs employment with the Corporation terminates effective at the time this occurs.
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A.46 βThreshold ROCE Performance Goal.β PNC will have achieved the Threshold ROCE Performance Goal if PNCβs ranking relative to the other then existing members of the Peer Group with respect to ROCE performance was ninth (9th) or better for at least one year of the Performance Period (2004 or 2005), where Peer Group positions for a given year were determined by calculating the ROCE performance achieved by each then existing member of the Peer Group for the given year and then ranking each such member of the Peer Group by that performance, with the Peer with the best performance being ranked the Top Performer, the Peer with the second best performance being ranked second (2nd), and so on. The ranking required to achieve this threshold will not change whether or not the number of then existing members of the Peer Group changes.
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A.47 βThreshold TSR Performance Goal.β PNC will have achieved the Threshold TSR Performance Goal if PNCβs ranking relative to the other then existing members of the Peer Group with respect to TSR performance was ninth (9th) or better for at least one year of the Performance Period (2004 or 2005), where Peer Group positions for a given year were determined by calculating the TSR performance achieved by each then existing member of the Peer Group for the given year and then ranking each such member of the Peer Group by that performance, with the Peer with the best performance being ranked the Top Performer, the Peer with the second best performance being ranked second (2nd), and so on. The ranking required to achieve this threshold will not change whether or not the number of then existing members of the Peer Group changes.
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A.48 βTotal and Permanent Disabilityβ means, unless the Committee determines otherwise, Granteeβs disability as determined to be total and permanent by the Corporation for purposes of the Agreement.
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A.49 βTotal Shareholder Returnβ or βTSRβ means, with respect to PNC, the cumulative total shareholder return on PNCβs common stock and, with respect to each other member of the Peer Group, the cumulative total shareholder return on a class of such other Peerβs common stock that is registered under Section 12 of the Exchange Act. For each of PNC and the other members of the Peer Group, cumulative total shareholder return will be calculated by dividing: (a) the sum of: (i) the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, with dividends
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reinvested on a monthly basis at the dividend yield rate using share price at month end and ex-date dividends per share, and (ii) the difference between the share price at the end and the beginning of the measurement period; by (b) the closing share price on December 31, 2003, for the 2004 measurement period, or the closing share price on December 31, 2004, for the 2005 measurement period. The term βmeasurement periodβ will be: (1) for the 2004 measurement period, the period beginning at the measurement point established by the market close on December 31, 2003 and continuing through (and including) the market close on December 31, 2004; and (2) for the 2005 measurement period, the period beginning at the measurement point established by the market close on December 31, 2004 and continuing through (and including) the market close on December 31, 2005. With respect to dividends, it will be assumed that dividends are reinvested into additional shares of the same class of equity securities at the frequency with which dividends are paid on such securities during the applicable period. TSR will be expressed as a percent rounded to the nearest one-hundredth (e.g., 0.00%, with 0.005% being rounded upward to 0.01%).
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A.50 βUnvested Sharesβ means any Restricted Shares that have not yet become Vested Shares.
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A.51 βVested Shares.β Vested Shares are Awarded Shares that are not subject to further restriction under the Agreement.
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Awarded Shares that are issued pursuant to Section 3.5 of the Agreement as Restricted Shares become Vested Shares and are released and reissued by PNC pursuant to Section 9 of the Agreement if and when both of the following have occurred, provided that the Restricted Shares are then outstanding: (a) the Continued Employment Performance Goal has been achieved or is deemed to have been achieved pursuant to the terms of the Agreement; and (b) the Restricted Period has terminated.
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Awarded Shares issued pursuant to Section 3.5 of the Agreement that are not issued as Restricted Shares are Vested Shares upon issuance and are not subject to further restriction under the Agreement.
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All Awarded Shares issued pursuant to Section 3.4 of the Agreement will be Vested Shares upon issuance.
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