2011 Forms of Stock Options
Exhibit 10.71
2011 FORMS OF EMPLOYEE STOCK OPTION, RESTRICTED STOCK,
RESTRICTED SHARE UNIT AND
PERFORMANCE UNIT AGREEMENTS
FORMS OF EMPLOYEE STOCK OPTION AGREEMENTS
THE PNC FINANCIAL SERVICES GROUP, INC.
2006 INCENTIVE AWARD PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
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| OPTIONEE: |
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[ Name ] |
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| GRANT DATE: |
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, 20 |
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| OPTION PRICE: |
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$ per share |
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| COVERED SHARES: |
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[ Shares ] |
1. Definitions; Grant of Option.
Certain terms used in this Nonstatutory Stock Option Agreement (the “Agreement”) are defined in Annex A hereto (which is incorporated herein as part of the Agreement) or elsewhere in the Agreement, and such definitions will apply except
where the context otherwise indicates.
Pursuant to The PNC Financial Services Group, Inc. 2006 Incentive Award Plan (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 “Covered Shares,” exercisable at the Option Price.
In the Agreement, “PNC” means The PNC Financial Services Group, Inc. and “Corporation” means PNC and its Consolidated Subsidiaries.
Headings used in the Agreement are for convenience only and are not part of the Agreement.
| 2.1 |
Type of Option. The Option is intended to be a Nonstatutory Stock Option. |
2.2 Option Period. Except as otherwise set forth in Section 2.3, the Option is exercisable in whole or in part as to any Covered Shares as to which it is outstanding and has become exercisable
at any time and from time to time through the Expiration Date as defined in Section A.18 of Annex A hereto, including and subject to the early termination provisions set forth in said definition.
To the extent that the Option or relevant portion thereof is then outstanding and the Expiration Date has not yet occurred, the Option will become
exercisable as to Covered Shares as set forth in this Section 2.2.
(a) Unless the Option has previously become exercisable pursuant to
another subsection of this Section 2.2, the Option will become exercisable as follows:
(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 anniversary date or is a Retiree whose Retirement date occurred on or after the six (6) month anniversary date of the Grant Date;
(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 anniversary date or is a Retiree whose Retirement date occurred on or after the first (1st) anniversary date of the Grant Date; and
(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
anniversary date or is a Retiree whose Retirement date occurred on or after the first (1st) anniversary date of the Grant Date.
(b) If Optionee’s employment is terminated by
the Corporation by reason of Disability and not for Cause, the Option will become exercisable as to all outstanding Covered Shares as to which it has not otherwise become exercisable commencing on Optionee’s Termination Date.
(c) If Optionee’s employment with the Corporation is terminated by reason of Optionee’s death, the Option will immediately become exercisable
as to all outstanding Covered Shares as to which it has not otherwise become exercisable, and the Option may be exercised by Optionee’s properly designated beneficiary, by the person or persons entitled to do so under Optionee’s will, or
by the person or persons entitled to do so under the applicable laws of descent and distribution.
(d) If, after the occurrence of a Change of
Control Triggering Event but prior to the occurrence of a Change of Control Failure or of the Change of Control triggered by the Change of Control Triggering Event, Optionee’s employment with the Corporation is terminated by the Corporation
without Cause or by Optionee with Good Reason, the Option will become exercisable as to all outstanding Covered Shares as to which it has not otherwise become exercisable commencing on Optionee’s Termination Date.
(e) Notwithstanding any other provision of this Section 2.2, to the extent that the Option is outstanding but has not yet become fully exercisable
at the time a Change of Control occurs, the Option will become exercisable as to all then outstanding Covered Shares as to which it has not otherwise become exercisable, effective as of the day immediately prior to the occurrence of the Change of
Control, provided that, at the time the Change of Control occurs, Optionee is either (i) an employee of the Corporation or (ii) a former employee of the Corporation whose Option, or portion thereof, has not yet become exercisable
but is then outstanding and continues to qualify for becoming exercisable pursuant to the terms of Section 2.2(a)(i), (ii) and/or (iii).
(f) The Committee or its delegate may in their sole discretion, but need not, accelerate the date as of which all or any portion of the Option first becomes exercisable subject, if applicable, to such
limitations as may be set forth in the Plan.
If Optionee is employed by a Consolidated Subsidiary that ceases to be a subsidiary of PNC or
ceases to be a consolidated subsidiary of PNC under generally accepted accounting principles and Optionee does not continue to be employed by PNC or a Consolidated Subsidiary, then for purposes of the Agreement, Optionee’s employment with the
Corporation terminates effective at the time this occurs.
2.3 Judicial Criminal Proceedings. If any criminal charges are brought
against Optionee, in an indictment or in other analogous formal charges commencing judicial criminal proceedings, alleging the commission of a felony that relates to or arises out of Optionee’s employment or other service relationship with the
Corporation, then to the extent that the Option is then outstanding and exercisable or would otherwise become exercisable, the Committee may determine to suspend the exercisability of the Option or to require the escrow of the proceeds of any
exercise of the Option.
Any such suspension or escrow is subject to the following restrictions:
(a) It may last only until the earliest to occur of the following:
(i) resolution of the criminal proceedings in a manner that results in a conviction (including a plea of
guilty or of nolo contendere) of Optionee for, or any entry by Optionee into a pre-trial disposition with respect to, the commission of a felony that relates to or arises out of Optionee’s employment or other service relationship with
the Corporation;
(ii) resolution of the criminal proceedings in one of the following ways: (A) the charges as they relate to such
alleged felony have been dismissed (with or without prejudice); (B) Optionee has been acquitted of such alleged felony; or (C) a criminal proceeding relating to such alleged felony has been completed without resolution (for example, as a
result of a mistrial) and the relevant time period for recommencing criminal proceedings relating to such alleged felony has expired without any such recommencement;
(iii) Optionee’s death;
(iv) the occurrence of a Change of Control; or
(v) termination of the suspension or escrow in the discretion of the Committee; and
(b) It may be imposed only if the Committee makes reasonable provision for the retention or realization of the value of the Option to Optionee as if no suspension or escrow had been imposed upon any
termination of the suspension or escrow under clauses (a)(ii) or (v) above.
2.4 Nontransferability; Designation of Beneficiary;
Payment to Legal Representative.
(a) The Option is not transferable or assignable by Optionee.
(b) During Optionee’s lifetime, the Option may be exercised only by Optionee or, in the event of Optionee’s legal incapacity, by his or her
legal representative, as determined in good faith by PNC.
(c) During Optionee’s 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 “properly designated beneficiary”) to hold and exercise Optionee’s stock options,
to the extent outstanding and exercisable, in accordance with their respective stock option agreements and the Plan in the event of Optionee’s death.
(d) If Optionee dies prior to the full exercise or expiration of the Option and has not filed a designation of beneficiary form as specified above, the Option will be held and may be exercised by the
person or persons entitled to do so under Optionee’s will or under the applicable laws of descent and distribution, as to which PNC will be entitled to rely in good faith on instructions from Optionee’s executor, administrator, or other
legal representative.
(e) Any delivery of shares or other payment made or action taken hereunder by PNC in good faith to or on the
instructions of Optionee’s executor, administrator, or other legal representative shall extinguish all right to payment hereunder.
3.
Capital Adjustments. Upon the occurrence 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 “Corporate Transaction”)), the Committee shall make those adjustments, if any, in the number, class or kind of Covered Shares as to which the Option is outstanding and has not yet been exercised and in the Option Price that it
deems appropriate in its discretion to reflect the Corporate Transaction(s) such that the rights of Optionee are neither enlarged nor diminished as a result of such Corporate Transaction or Transactions, 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.
All determinations hereunder shall be made by the Committee in its sole discretion and shall be final, binding and conclusive for all purposes on all parties, including without limitation the holder of
the Option.
No fractional shares will be issued on exercise of the Option. PNC shall determine the manner in which any fractional shares will
be treated.
4. Exercise of Option.
4.1 Notice and Effective Date. The Option, to the extent outstanding and exercisable, 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, and by paying in full the aggregate Option Price with respect to that portion of the Option being exercised and satisfying any amounts required to be withheld pursuant to applicable tax laws in connection with
such exercise.
In addition, notwithstanding Sections 4.2 and 4.3, Optionee may elect to complete his or her Option exercise through a
brokerage service/margin account pursuant to the broker-assisted cashless option exercise procedure under Regulation T of the Board of Governors of the Federal Reserve System and in such manner as may be permitted by PNC from time to time consistent
with said Regulation T.
The effective date of such exercise will be the Exercise Date. Until PNC notifies Optionee to the contrary, the form
attached to the Agreement as Annex B shall be used to exercise the Option and the form attached to the Agreement as Annex C shall be used to make tax payment elections.
In the event that the Option is exercised, pursuant to Section 2.4, by any person or persons other than Optionee, such notice of exercise must be accompanied by appropriate proof of the derivative
right of such person or persons to exercise the Option.
4.2 Payment of Option Price. Upon exercise of the Option, in whole or in part,
Optionee may pay the aggregate Option Price (a) in cash or (b) if and to the extent then permitted by PNC, using whole shares of PNC common stock (either by physical delivery to PNC of certificates for the shares or through PNC’s
share attestation procedure) having an aggregate Fair Market Value on the Exercise Date not exceeding that portion of the aggregate Option Price being paid using such shares, or through a combination of cash and shares of PNC common stock;
provided, however, that shares of PNC common stock used to pay all or any portion of the aggregate Option Price may not be subject to any contractual restriction, pledge or other encumbrance and must be shares that have been owned by
Optionee for at least six (6) months prior to the Exercise Date and, in the case of restricted stock, for which it has been at least six (6) months since the restrictions lapsed, or, in either case, for such other period as may be
specified or permitted by PNC.
4.3 Payment of Taxes. Optionee may elect to satisfy any or all applicable federal, state, or local tax
liabilities incurred in connection with exercise of the Option (a) by payment of cash, (b) if and to the extent then permitted by PNC and subject to such terms and conditions as PNC may from time to time establish, through the retention by
PNC of sufficient whole shares of PNC common stock otherwise issuable upon such exercise to satisfy the minimum amount of taxes required to be withheld in connection with such exercise, or (c) if and to the extent then permitted by PNC and
subject to such terms and conditions as PNC may from time to time establish, using whole shares of PNC common stock (either by physical delivery to PNC of certificates for the shares or through PNC’s share attestation procedure) that are not
subject to any contractual restriction, pledge or other encumbrance and that have been owned by Optionee for at least six (6) months prior to the Exercise Date and, in the case of restricted stock, for which it has been at least six
(6) months since the restrictions lapsed, or, in either case, for such other period as may be specified or permitted by PNC.
For
purposes of this Section 4.3, shares of PNC common stock that are used to satisfy applicable taxes will be valued at their Fair Market Value on the date the tax withholding obligation arises. In no event will the
Fair Market Value of the shares of PNC common stock otherwise issuable upon exercise of the Option but retained pursuant to Section 4.3(b) exceed the minimum amount of taxes required to be
withheld in connection with the Option exercise.
4.4 Effect. The exercise, in whole or in part, of the Option will cause a reduction
in the number of unexercised Covered Shares as to which the Option is outstanding equal to the number of shares of PNC common stock with respect to which the Option is exercised.
5. Restrictions on Exercise and on Shares Issued on Exercise. Notwithstanding any other provision of the Agreement, the Option may not be exercised at any time that PNC does not have in effect a
registration statement under the Securities Act of 1933 as amended relating to the offer of shares of PNC common stock under the Plan unless PNC agrees to permit such exercise. Upon the issuance of any shares of PNC common stock pursuant to exercise
of the Option at a time when such a registration statement is not in effect, Optionee will, upon the request of PNC, agree in writing that Optionee is acquiring such shares for investment only and not with a view to resale and that Optionee will not
sell, pledge, or otherwise dispose of such shares unless and until (a) PNC is furnished with an opinion of counsel to the effect that registration of such shares pursuant to the Securities Act of 1933 as amended is not required by that Act or
by rules and 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.
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 by PNC as provided in Section 4.3.
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.
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.
9. Optionee Covenants.
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 by virtue of receiving this Option, which gives Optionee an opportunity potentially to benefit from an increase in the future
value of PNC common stock (regardless of whether any such benefit is ultimately realized); that such provisions are reasonable and properly required for the adequate protection of the business of PNC and its subsidiaries; and that enforcement of
such provisions will not prevent Optionee from earning a living.
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 one year after Optionee’s Termination Date regardless of the reason for such termination of employment.
(a) Non-Solicitation. Optionee shall not, directly or indirectly, either for Optionee’s own benefit or purpose or for the benefit or purpose
of any Person other than PNC or any of its subsidiaries, solicit, call on, do business with, or actively interfere with PNC’s or any subsidiary’s 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.
(b) No-Hire. Optionee shall not, directly or
indirectly, either for Optionee’s own benefit or purpose or for the benefit or purpose of any Person other than PNC or any of its subsidiaries, employ or offer to employ, call on, or actively interfere with PNC’s or any subsidiary’s
relationship with, or attempt to divert or entice away, any employee of PNC or any of its subsidiaries, nor shall Optionee assist any other Person in such activities.
Notwithstanding the above, if Optionee’s 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 or, if Optionee was a party to a Change of Control Employment Agreement that was in effect at the time of such termination of employment, within three years after the occurrence of a Change of Control, 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):
(c) No-Hire. Optionee agrees that Optionee shall not, for a period of one year after the Termination Date, employ or offer to employ, solicit, actively interfere with PNC’s or any PNC
affiliate’s relationship with, or attempt to divert or entice away, any officer of PNC or any PNC affiliate.
9.3 Confidentiality.
During Optionee’s 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 Corporation’s 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.
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 Optionee’s 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 of its subsidiaries or (b) developed with the use of any time, material, facilities or other resources of PNC or any subsidiary
(“Developments”). Optionee agrees to assign and hereby does assign to PNC or its designee all of Optionee’s 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 PNC’s or its designee’s 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.
10. Enforcement Provisions. Optionee understands and agrees to
the following provisions regarding enforcement of the Agreement.
10.1 Governing Law and Jurisdiction. The Agreement is governed by and
construed under the laws of the Commonwealth of Pennsylvania, without reference to its conflict of laws provisions. 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.
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.
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 will extend for a period of twelve (12) months from the date the Corporation institutes legal proceedings for injunctive or other relief.
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.
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.
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.
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.
10.8
Compliance with Internal Revenue Code Section 409A. It is the intention of the parties that the Option and the Agreement comply with the provisions of Section 409A of the Internal Revenue Code to the extent, if any, that such
provisions are applicable to the Agreement, and the Agreement will be administered by PNC in a manner consistent with this intent.
If any
payments or benefits hereunder may be deemed to constitute nonconforming deferred compensation subject to taxation under the provisions of Section 409A, Optionee agrees that PNC may, without the consent of Optionee, modify the Agreement and the
Option to the extent and in the manner PNC deems necessary or advisable or take such other action or actions, including an amendment or action with retroactive effect, that PNC deems appropriate in order either to preclude any such payments or
benefits from being deemed “deferred compensation” within the meaning of Section 409A or to provide such payments or benefits in a manner that complies with the provisions of Section 409A such that they will not be taxable
thereunder.
10.9 Applicable Law; Clawback. 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, the Option, and any right to receive Shares or other value
pursuant to the Option and to retain such Shares or other value, shall be subject to rescission, cancellation or recoupment, in whole or in part, if and to the extent so provided under any “clawback” or similar policy of PNC in effect on
the Grant Date or that may be established thereafter and to any clawback or recoupment that may be required by applicable law.
11.
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 thirty (30) 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 Optionee’s delivery to PNC of a copy of the Agreement executed by Optionee.
Otherwise, upon execution and delivery of the Agreement by both PNC and Optionee, the Option and the
Agreement are effective as of the Grant Date.
IN WITNESS WHEREOF, PNC has caused the Agreement
to be signed on its behalf effective as of the Grant Date.
THE PNC FINANCIAL SERVICES GROUP, INC.
By:
Chairman and Chief
Executive Officer
ATTEST:
By:
Corporate Secretary
Accepted and agreed to as of the Grant Date
Optionee
Annex A - Certain Definitions
Annex B - Notice
of Exercise
Annex C - Tax Payment Election Form
ANNEX A
CERTAIN DEFINITIONS
* * *
A.1 “Agreement” means the Nonstatutory Stock Option Agreement between PNC and Optionee evidencing the grant of the Option to Optionee pursuant
to the Plan.
A.2 “Board” means the Board of Directors of PNC.
A.3 “Cause.”
(a) “Cause” during a Coverage Period. If the termination
of Optionee’s employment with the Corporation occurs during a Coverage Period, then, for purposes of the Agreement, “Cause” means:
(i) the willful and continued failure of Optionee to substantially perform Optionee’s 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
Optionee’s duties; or
(ii) the willful engaging by Optionee in illegal conduct or gross misconduct that is materially and demonstrably
injurious to PNC or any of its subsidiaries.
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 Optionee’s 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 Optionee’s 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.
The cessation of employment of Optionee will be deemed to be a termination of Optionee’s
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 Optionee’s 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.
(b) “Cause” other than during a Coverage Period. If the
termination of Optionee’s employment with the Corporation occurs other than during a Coverage Period, then, for purposes of the Agreement, “Cause” means:
(i) the willful and continued failure of Optionee to substantially perform Optionee’s 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
specifically identifies the manner in which it is believed that Optionee has not substantially performed Optionee’s duties;
(ii) a material breach by Optionee of (1) any code of conduct of PNC or one of its subsidiaries or (2) other written policy of PNC or a subsidiary, in either case required by law or established
to maintain compliance with applicable law;
(iii) any act of fraud, misappropriation, material dishonesty, or embezzlement by Optionee
against PNC or one of its subsidiaries or any client or customer of PNC or a subsidiary;
(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
(v) entry of any order against Optionee, by any governmental body having regulatory authority with respect to the business of PNC or any of its
subsidiaries, that relates to or arises out of Optionee’s employment or other service relationship with the Corporation.
The cessation
of employment of Optionee will be deemed to have been a termination of Optionee’s 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 Optionee’s employment with the Corporation will be deemed to have been for Cause.
A.4 “CEO” means the chief executive
officer of PNC.
A.5 “Change of Control” means:
(a) Any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”)
becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then-outstanding shares of common stock of PNC (the “Outstanding PNC Common Stock”) or (B) the
combined voting power of the then-outstanding voting securities of PNC entitled to vote generally in the election of directors (the “Outstanding PNC Voting Securities”); provided, however, that, for purposes of this Section
A.5(a), the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from PNC, (2) any acquisition by PNC, (3) any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by PNC or any company controlled by, controlling or under common control with PNC (an “Affiliated Company”), (4) any acquisition pursuant to an Excluded Combination (as defined in Section A.5(c)) or (5) an acquisition
of beneficial ownership representing between 20% and 40%, inclusive, of the Outstanding PNC Voting Securities or Outstanding PNC Common Stock shall not be considered a Change of Control if the Incumbent Board as of immediately prior to any such
acquisition approves such acquisition either prior to or immediately after its occurrence;
(b) Individuals who, as of the date hereof,
constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board (excluding any Board seat that is vacant or otherwise unoccupied); provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for election by PNC’s shareholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board shall be considered as though such
individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;
(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar
transaction involving PNC or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of PNC, or the acquisition of assets or stock of another entity by PNC or any of its subsidiaries (each, a “Business
Combination”), excluding, however, a Business Combination following which all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding PNC Common Stock and the Outstanding PNC Voting Securities
immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of the
then-outstanding voting securities entitled to vote generally in the election of directors (or, for a non-corporate entity, equivalent governing body), as the case may be, of the entity resulting from such Business Combination (including, without
limitation, an entity that, as a result of such transaction, owns PNC or all or substantially all of PNC’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to
such Business Combination of the Outstanding PNC Common Stock and the Outstanding PNC Voting Securities, as the case may be (such a Business Combination, an “Excluded Combination”); or
(d) Approval by the shareholders of PNC of a complete liquidation or dissolution of PNC.
A.6 “Change of Control Employment Agreement” means the written agreement, if any, between Optionee and PNC providing, among other things, for certain payments and benefits upon a qualifying
termination of employment following a change of control.
A.7 “Change of Control Failure” means the following:
(a) with respect to a Change of Control Triggering Event described in Section A.8(a), PNC’s shareholders vote against the transaction approved by the
Board or the agreement to consummate the transaction is terminated; or
(b) with respect to a Change of Control Triggering Event described in
Section A.8(b), the proxy contest fails to replace or remove a majority of the members of the Board.
A.8 “Change of Control Triggering
Event” means the occurrence of either of the following:
(a) the Board or PNC’s shareholders approve a transaction described in
Subsection (c) of the definition of Change of Control contained in Section A.5; or
(b) the commencement of a proxy contest in which any
Person seeks to replace or remove a majority of the members of the Board.
A.9 “Committee” means the Personnel and Compensation
Committee of the Board or such person or persons as may be designated or appointed by that committee as its delegate or designee.
A.10
“Competitive Activity” 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 of its
subsidiaries (1) engaged in business activities similar to some or all of the business activities of PNC or any subsidiary as of Optionee’s 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 Optionee’s Termination Date or, if later and if applicable, after the date specified in clause (ii) of Section A.15(a), 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.
A.11 “Consolidated Subsidiary” means a corporation, bank, partnership, business trust, limited
liability company or other form of business organization that (1) is a consolidated subsidiary of PNC under generally accepted accounting principles and (2) satisfies the definition of “service recipient” under Section 409A
of the Internal Revenue Code.
A.12 “Corporation” means PNC and its Consolidated Subsidiaries.
A.13 “Coverage Period” means a period (a) commencing on the earlier to occur of (i) the date of a Change of Control Triggering Event
and (ii) the date of a Change of Control and (b) ending on the date that is two (2) years after the date of the Change of Control; provided, however, that in the event that a Coverage Period commences on the date of a
Change of Control Triggering Event, such Coverage Period will terminate upon the earlier to occur of (x) the date of a Change of Control Failure and (y) the date that is two (2) years after the date of the Change of Control triggered
by the Change of Control 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.
A.14 “Covered Shares” means the number of shares of PNC common stock that Optionee has the option to purchase from PNC pursuant to the Option.
A.15 “Detrimental Conduct” means, for purposes of the Agreement:
(a) Optionee has engaged, without the prior written consent of PNC (with consent to be given at PNC’s sole discretion), in any
Competitive Activity in the continental United States at any time during the period commencing on Optionee’s Termination Date and extending through (and including) the first (1st) anniversary of the later of (i) Optionee’s Termination Date and, if different, (ii) the first
date after Optionee’s Termination Date as of which Optionee ceases to have a service relationship with the Corporation;
(b) any act of
fraud, misappropriation, or embezzlement by Optionee against PNC or one of its subsidiaries or any client or customer of PNC or one of its subsidiaries; or
(c) any conviction (including a plea of guilty or of nolo contendere) of Optionee for, or any entry by Optionee into a pre-trial disposition with respect to, the commission of a felony that relates
to or arises out of Optionee’s employment or other service relationship with the Corporation.
Optionee will be deemed to have engaged in
Detrimental Conduct for purposes of the Agreement only if and when the Committee (if Optionee was an “executive officer” of PNC as defined in SEC Regulation S-K when he or she ceased to be an employee of the Corporation) or the CEO or his
or her designee (if Optionee was not such an executive officer), whichever is applicable, determines that Optionee has engaged in conduct described in clause (a) or clause (b) above or that an event described in clause (c) above has
occurred with respect to Optionee, and, if so, determines that Optionee will be deemed to have engaged in Detrimental Conduct.
A.16
“Disabled” or “Disability” means, except as may otherwise be required by Section 409A of the Internal Revenue Code, that Optionee either (i) is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving (and has received for at least three months) income replacement benefits under any Corporation-sponsored
disability benefit plan. If Optionee has been determined to be eligible for Social Security disability benefits, Optionee shall be presumed to be Disabled as defined herein.
A.17 “Exercise Date” means the date (which must be a business day for PNC Bank, National
Association) 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 receipt by PNC of full payment of the
aggregate Option Price, calculation by PNC of the applicable withholding taxes, and receipt by PNC of payment for any taxes required to be withheld in connection with such exercise as provided in Sections 4.1, 4.2 and 4.3 of the Agreement.
A.18 “Expiration Date.”
(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.18(b) through A.18(d) (with the Option expiring on the first date determined under any of such sections);
provided, however, if there is a Change of Control, then notwithstanding Sections A.18(c) and A.18(d), to the extent that the
Option is outstanding and exercisable or becomes exercisable at the time the Change of 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 of 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 of Control occurs and Optionee’s 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 of Control occurs by virtue of the application of one or more of the exceptions set forth in Section A.18(c) and at least one of such exceptions is
still applicable at the time the Change of Control occurs.
In no event will the Option remain outstanding beyond the
tenth (10th) anniversary of the Grant Date.
(b) Termination for Cause. Upon a termination of Optionee’s employment with the Corporation for Cause, unless the Committee
determines otherwise, the Option will expire at the close of business on Optionee’s Termination Date with respect to all Covered Shares, whether or not the Option has become exercisable and whether or not Optionee is eligible to Retire or
Optionee’s employment also terminates for another reason.
(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 Optionee’s employment for Cause, then unless the Committee determines otherwise, the Option will expire at the close of business on Optionee’s Termination
Date with respect to all Covered Shares, whether or not the Option has become exercisable, except to the extent that the provisions set forth in subsection (1), (2), (3), (4) or (5) of this Section A.18(c) apply to Optionee’s
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.
(1)
Retirement. If the termination of Optionee’s 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 exercisable on the
Retirement date or thereafter becomes exercisable pursuant to Section 2.2 of the Agreement.
(2) Death.
If Optionee’s employment with the Corporation is terminated by reason of Optionee’s death, then the Option will expire on the tenth (10th) anniversary of the Grant Date.
(3) Termination during a Coverage Period without Cause or with Good
Reason. If Optionee’s employment with the Corporation is terminated (other than by reason of Optionee’s 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).
(4) Disability. If Optionee’s employment is terminated by the Corporation by reason of 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).
(5) Displacement Benefits Plan
or Agreement or Arrangement in lieu of or in addition to Displacement Benefits Plan. In the event that (a) Optionee’s 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 one of its subsidiaries under an applicable PNC or subsidiary Displacement Benefits Plan, or any successor plan by whatever name known (“Displacement Benefits Plan”), or Optionee is
offered and has entered into a similar waiver and release agreement between PNC or one of its subsidiaries 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 Displacement Benefits Plan, 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
Optionee’s 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 exercisable; 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 or not it has become exercisable, will be treated as if the termination of Optionee’s employment with the Corporation had not occurred.
If the Option (or portion thereof) has become exercisable while Optionee was still an employee of the Corporation but will expire on Optionee’s Termination Date unless the conditions set forth in
this Section A.18(c)(5) are met, then such 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.18(c)(5) have been met and the Option will terminate on the ninetieth (90th) day after Optionee’s Termination Date (but in no event later than on the tenth (10th) anniversary of the Grant Date).
(d) Detrimental Conduct. If the Option would otherwise remain outstanding after Optionee’s 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.18(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:
(1) no determination that Optionee has engaged in
Detrimental Conduct may be made on or after the date of Optionee’s death, and Detrimental Conduct will not apply to conduct by or activities of beneficiaries or other successors to the Option in the event of Optionee’s death;
(2) in the event that Optionee’s employment with the Corporation is terminated (other than by reason of Optionee’s death) during a Coverage
Period by the Corporation without Cause or by Optionee with Good Reason, no determination that Optionee has engaged in Detrimental Conduct for purposes of the Agreement may be made on or after such Termination Date; and
(3) no determination that Optionee has engaged in Detrimental Conduct may be made after the occurrence of a Change of Control.
A.19 “Fair Market Value” as it relates to a share of PNC common stock as of any given date means
the average of the reported high and low trading prices on the New York Stock Exchange (or such successor reporting system as PNC may select) for a share of PNC common stock on such date, or, if no PNC common stock trades have been reported on such
exchange for that day, the average of such prices on the next preceding day and the next following day for which there were reported trades.
A.20 “GAAP” or “generally accepted accounting principles” means accounting principles generally accepted in the United States of
America.
A.21 “Good Reason” means:
(a) (i) the assignment to Optionee of any duties inconsistent in any respect with, or any other diminution in, Optionee’s position (including status, offices, titles and reporting requirements),
authority, duties or responsibilities such that Optionee’s position, authority, duties or responsibilities are not at least commensurate in all material respects with the most significant of those held, exercised and assigned to Optionee at any
time during the 120-day period immediately preceding the Change of Control, or if a Change of Control has not yet occurred but there has been a Change of Control Triggering Event, (ii) the assignment to Optionee of any duties inconsistent in
any material respect with, or any other material diminution in, Optionee’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities immediately prior to the Change of Control Triggering
Event, excluding in either case for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and that is remedied by the Corporation promptly after receipt of notice thereof given by Optionee;
(b) a reduction by the Corporation in Optionee’s annual base salary to an annual rate (i) that is less than 12 times the highest monthly base
salary paid or payable, including any base salary that has been earned but deferred, to Optionee by the Corporation in respect of the 12-month period immediately preceding the month in which the Change of Control occurs or, if a Change of Control
has not yet occurred but there has been a Change of Control Triggering Event, (ii) that is less than 12 times the monthly base salary paid or payable, including any base salary that has been earned but deferred, to Optionee by the Corporation
in respect of the month immediately preceding the month in which the Change of Control Triggering Event occurs;
(c) the Corporation’s
requiring Optionee to be based at any office or location that is more than fifty (50) miles from Optionee’s office or location immediately prior to either the Change of Control Triggering Event or the Change of Control;
(d) other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and that is remedied by the Corporation promptly after
receipt of notice thereof given by Optionee, the failure by the Corporation to continue Optionee’s participation in annual bonus, long-term cash incentive, equity incentive, savings and retirement plans, practices, policies and programs that
provide Optionee with annual bonus opportunities, long-term incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable), savings opportunities and
retirement benefit opportunities, in each case, no less favorable, in the aggregate, than the most favorable of those provided by the Corporation for Optionee under such plans, practices, policies and programs as in effect (i) at any time
during the 120-day period immediately preceding the Change of Control, or if a Change of Control has not yet occurred but there has been a Change of Control Triggering Event, (ii) immediately prior to the Change of Control Triggering Event; or
(e) other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and that is remedied by the Corporation promptly
after receipt of notice thereof given by Optionee, the failure by the Corporation to continue to provide Optionee with benefits under welfare benefit plans, practices, policies and programs provided by the Corporation (including, without limitation,
medical, prescription, dental, vision, disability, employee life, group life, accidental
death and travel accident insurance plans and programs) no less favorable, in the aggregate, than those provided to Optionee under the most favorable of such plans, practices, policies and
programs in effect for Optionee (i) at any time during the 120-day period immediately preceding the Change of Control, or if a Change of Control has not yet occurred but there has been a Change of Control Triggering Event, (ii) immediately
prior to the Change of Control Triggering Event.
A.22 “Grant Date” means the date set forth as the Grant Date on page 1 of the
Agreement and is the date as of which the Option is authorized to be granted by the Committee in accordance with the Plan.
A.23
“Internal Revenue Code” means the Internal Revenue Code of 1986 as amended, and the rules and regulations promulgated thereunder.
A.24 “Option” means the option to purchase shares of PNC common stock granted to Optionee under the Plan in Section 1 of the Agreement in
accordance with the terms of Article 6 of the Plan.
A.25 “Option Period” means the period during which the Option may be exercised,
as set forth in Section 2.2 of the Agreement.
A.26 “Option Price” means the dollar amount per share of PNC common stock at
which the Option may be exercised. The Option Price is set forth on page 1 of the Agreement.
A.27 “Optionee” means the person to
whom the Option is granted and is identified as Optionee on page 1 of the Agreement.
A.28 “Plan” means The PNC Financial Services
Group, Inc. 2006 Incentive Award Plan.
A.29 “PNC” means The PNC Financial Services Group, Inc.
A.30 “Retire” or “Retirement” means, for purposes of this Option and all PNC stock options held by Optionee, whether granted under
the Plan or under an earlier PNC plan, termination of Optionee’s employment with the Corporation at any time and for any reason (other than termination by reason of Optionee’s death or by the Corporation for Cause and, if the Committee or
the CEO or his or her designee so determines prior to such divestiture, other than by reason of termination in connection with a divestiture of assets or a divestiture of one or more subsidiaries of the Corporation) on or after the first date on
which Optionee has both attained at least age fifty-five (55) and completed five (5) years of service, where a year of service is determined in the same manner as the determination of a year of vesting service calculated under the
provisions of The PNC Financial Services Group, Inc. Pension Plan.
A.31 “Retiree” means an Optionee who has Retired.
A.32 “SEC” means the U.S. Securities and Exchange Commission.
A.33 “Service relationship” or “having a service relationship with the Corporation” means being engaged by the Corporation in any capacity for which Optionee receives compensation from
the Corporation, including but not limited to acting for compensation as an employee, consultant, independent contractor, officer, director or advisory director.
A.34 “Share” means a share of authorized but unissued PNC common stock or a reacquired share of PNC common stock, including shares purchased by PNC on the open market for purposes of the Plan or
otherwise.
A.35 “Termination Date” means Optionee’s last date of employment with the Corporation. If
Optionee is employed by a Consolidated Subsidiary that ceases to be a subsidiary of PNC or ceases to be a consolidated subsidiary of PNC under generally accepted accounting principles and Optionee does not continue to be employed by PNC or a
Consolidated Subsidiary, then for purposes of the Agreement, Optionee’s employment with the Corporation terminates effective at the time this occurs.
THE PNC FINANCIAL SERVICES GROUP, INC.
2006 INCENTIVE AWARD PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
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| OPTIONEE: |
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[ Name ] |
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| GRANT DATE: |
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, 20 |
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| OPTION PRICE: |
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$ per share |
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| COVERED SHARES: |
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[ Shares ] |
1. Definitions; Grant of Option.
Certain terms used in this Nonstatutory Stock Option Agreement (the “Agreement”) are defined in Annex A hereto (which is incorporated herein as part of the Agreement) or elsewhere in the Agreement, and such definitions will apply except
where the context otherwise indicates.
Pursuant to The PNC Financial Services Group, Inc. 2006 Incentive Award Plan (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 “Covered Shares,” exercisable at the Option Price.
In the Agreement, “PNC” means The PNC Financial Services Group, Inc. and “Corporation” means PNC and its Consolidated Subsidiaries.
Headings used in the Agreement are for convenience only and are not part of the Agreement.
2. Terms of the Option.
2.1 Type of Option. The Option is intended to be a Nonstatutory Stock Option.
2.2 Option Period. Except as otherwise set forth in Section 2.3, the Option is exercisable in whole or in part as to any Covered Shares as to which it is outstanding and has become exercisable
at any time and from time to time through the Expiration Date as defined in Section A.18 of Annex A hereto, including and subject to the early termination provisions set forth in said definition.
To the extent that the Option is then outstanding and the Expiration Date has not yet occurred, the Option will become exercisable as to Covered Shares
as set forth in this Section 2.2.
(b) Unless the Option has previously become exercisable pursuant to another
subsection of this Section 2.2, the Option will become exercisable commencing on the third (3rd) anniversary date of the Grant Date, provided that Optionee is still an employee of the Corporation on such anniversary date.
(b) If Optionee’s employment is terminated by the Corporation by reason of Disability and not for Cause, the Option will become exercisable as to all outstanding Covered Shares as to which it has not
otherwise become exercisable commencing on Optionee’s Termination Date.
(c) If Optionee’s employment with the Corporation is
terminated by reason of Optionee’s death, the Option will immediately become exercisable as to all outstanding Covered Shares as to which it has not otherwise become exercisable, and the Option may be exercised by Optionee’s properly
designated beneficiary, by the person or persons entitled to do so under Optionee’s will, or by the person or persons entitled to do so under the applicable laws of descent and distribution.
(e) If, after the occurrence of a Change of Control Triggering Event but prior to the occurrence of a Change
of Control Failure or of the Change of Control triggered by the Change of Control Triggering Event, Optionee’s employment with the Corporation is terminated by the Corporation without Cause or by Optionee with Good Reason, the Option will
become exercisable as to all outstanding Covered Shares as to which it has not otherwise become exercisable commencing on Optionee’s Termination Date.
(e) Notwithstanding any other provision of this Section 2.2, to the extent that the Option is outstanding but has not yet become exercisable at the time a Change of Control occurs, the Option will
become exercisable as to all then outstanding Covered Shares as to which it has not otherwise become exercisable, effective as of the day immediately prior to the occurrence of the Change of Control, provided that, at the time the Change of
Control occurs, Optionee is an employee of the Corporation.
(f) The Committee or its delegate may in their sole discretion, but need not,
accelerate the date as of which all or any portion of the Option first becomes exercisable, subject, if applicable, to such limitations as may be set forth in the Plan.
If Optionee is employed by a Consolidated Subsidiary that ceases to be a subsidiary of PNC or ceases to be a consolidated subsidiary of PNC under generally accepted accounting principles and Optionee does
not continue to be employed by PNC or a Consolidated Subsidiary, then for purposes of the Agreement, Optionee’s employment with the Corporation terminates effective at the time this occurs.
2.3 Judicial Criminal Proceedings. If any criminal charges are brought against Optionee, in an indictment or in other analogous formal charges
commencing judicial criminal proceedings, alleging the commission of a felony that relates to or arises out of Optionee’s employment or other service relationship with the Corporation, then to the extent that the Option is then outstanding and
exercisable or would otherwise become exercisable, the Committee may determine to suspend the exercisability of the Option or to require the escrow of the proceeds of any exercise of the Option.
Any such suspension or escrow is subject to the following restrictions:
(a) It may last only until the earliest to occur of the following:
(i) resolution of the criminal
proceedings in a manner that results in a conviction (including a plea of guilty or of nolo contendere) of Optionee for, or any entry by Optionee into a pre-trial disposition with respect to, the commission of a felony that relates to or
arises out of Optionee’s employment or other service relationship with the Corporation;
(ii) resolution of the criminal proceedings in
one of the following ways: (A) the charges as they relate to such alleged felony have been dismissed (with or without prejudice); (B) Optionee has been acquitted of such alleged felony; or (C) a criminal proceeding relating to such
alleged felony has been completed without resolution (for example, as a result of a mistrial) and the relevant time period for recommencing criminal proceedings relating to such alleged felony has expired without any such recommencement;
(iii) Optionee’s death;
(iv) the
occurrence of a Change of Control; or
(v) termination of the suspension or escrow in the discretion of the Committee; and
(b) It may be imposed only if the Committee makes reasonable provision for the retention or realization of the value of the Option to Optionee as if no
suspension or escrow had been imposed upon any termination of the suspension or escrow under clauses (a)(ii) or (v) above.
2.4 Nontransferability; Designation of Beneficiary; Payment to Legal Representative.
(a) The Option is not transferable or assignable by Optionee.
(b) During Optionee’s lifetime, the Option may be exercised only by Optionee or, in the event of Optionee’s legal incapacity, by his or her legal representative, as determined in good faith by
PNC.
(c) During Optionee’s 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 “properly designated beneficiary”) to hold and exercise Optionee’s stock options, to the extent outstanding and exercisable, in accordance
with their respective stock option agreements and the Plan in the event of Optionee’s death.
(d) If Optionee dies prior to the full
exercise or expiration of the Option and has not filed a designation of beneficiary form as specified above, the Option will be held and may be exercised by the person or persons entitled to do so under Optionee’s will or under the applicable
laws of descent and distribution, as to which PNC will be entitled to rely in good faith on instructions from Optionee’s executor, administrator, or other legal representative.
(e) Any delivery of shares or other payment made or action taken hereunder by PNC in good faith to or on the instructions of Optionee’s executor, administrator, or other legal representative shall
extinguish all right to payment hereunder.
3. Capital Adjustments. Upon the occurrence 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 “Corporate Transaction”)), the Committee shall make those
adjustments, if any, in the number, class or kind of Covered Shares as to which the Option is outstanding and has not yet been exercised and in the Option Price that it deems appropriate in its discretion to reflect the Corporate Transaction(s) such
that the rights of Optionee are neither enlarged nor diminished as a result of such Corporate Transaction or Transactions, 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.
All determinations hereunder shall be made by the Committee in its sole discretion and shall be final, binding and conclusive for all purposes on all parties, including without limitation the holder of
the Option.
No fractional shares will be issued on exercise of the Option. PNC shall determine the manner in which any fractional shares will
be treated.
4. Exercise of Option.
4.1 Notice and Effective Date. The Option, to the extent outstanding and exercisable, 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, and by paying in full the aggregate Option Price with respect to that portion of the Option being exercised and satisfying any amounts required to be withheld pursuant to applicable tax laws in connection with
such exercise.
In addition, notwithstanding Sections 4.2 and 4.3, Optionee may elect to complete his or her Option exercise through a
brokerage service/margin account pursuant to the broker-assisted cashless option exercise procedure under Regulation T of the Board of Governors of the Federal Reserve System and in such manner as may be permitted by PNC from time to time consistent
with said Regulation T.
The effective date of such exercise will be the Exercise Date. Until PNC notifies Optionee to the contrary,
the form attached to the Agreement as Annex B shall be used to exercise the Option and the form attached to the Agreement as Annex C shall be used to make tax payment elections.
In the event that the Option is exercised, pursuant to Section 2.4, by any person or persons other than Optionee, such notice of exercise must be accompanied by appropriate proof of the derivative
right of such person or persons to exercise the Option.
4.2 Payment of Option Price. Upon exercise of the Option, in whole or in part,
Optionee may pay the aggregate Option Price (a) in cash or (b) if and to the extent then permitted by PNC, using whole shares of PNC common stock (either by physical delivery to PNC of certificates for the shares or through PNC’s
share attestation procedure) having an aggregate Fair Market Value on the Exercise Date not exceeding that portion of the aggregate Option Price being paid using such shares, or through a combination of cash and shares of PNC common stock;
provided, however, that shares of PNC common stock used to pay all or any portion of the aggregate Option Price may not be subject to any contractual restriction, pledge or other encumbrance and must be shares that have been owned by
Optionee for at least six (6) months prior to the Exercise Date and, in the case of restricted stock, for which it has been at least six (6) months since the restrictions lapsed, or, in either case, for such other period as may be
specified or permitted by PNC.
4.3 Payment of Taxes. Optionee may elect to satisfy any or all applicable federal, state, or local tax
liabilities incurred in connection with exercise of the Option (a) by payment of cash, (b) if and to the extent then permitted by PNC and subject to such terms and conditions as PNC may from time to time establish, through the retention by
PNC of sufficient whole shares of PNC common stock otherwise issuable upon such exercise to satisfy the minimum amount of taxes required to be withheld in connection with such exercise, or (c) if and to the extent then permitted by PNC and
subject to such terms and conditions as PNC may from time to time establish, using whole shares of PNC common stock (either by physical delivery to PNC of certificates for the shares or through PNC’s share attestation procedure) that are not
subject to any contractual restriction, pledge or other encumbrance and that have been owned by Optionee for at least six (6) months prior to the Exercise Date and, in the case of restricted stock, for which it has been at least six
(6) months since the restrictions lapsed, or, in either case, for such other period as may be specified or permitted by PNC.
For
purposes of this Section 4.3, shares of PNC common stock that are used to satisfy applicable taxes will be valued at their Fair Market Value on the date the tax withholding obligation arises. In no event will the Fair Market Value of the shares
of PNC common stock otherwise issuable upon exercise of the Option but retained pursuant to Section 4.3(b) exceed the minimum amount of taxes required to be withheld in connection with the Option exercise.
4.4 Effect. The exercise, in whole or in part, of the Option will cause a reduction in the number of unexercised Covered Shares as to which the
Option is outstanding equal to the number of shares of PNC common stock with respect to which the Option is exercised.
5. Restrictions on
Exercise and on Shares Issued on Exercise. Notwithstanding any other provision of the Agreement, the Option may not be exercised at any time that PNC does not have in effect a registration statement under the Securities Act of 1933 as amended
relating to the offer of shares of PNC common stock under the Plan unless PNC agrees to permit such exercise. Upon the issuance of any shares of PNC common stock pursuant to exercise of the Option at a time when such a registration statement is not
in effect, Optionee will, upon the request of PNC, agree in writing that Optionee is acquiring such shares for investment only and not with a view to resale and that Optionee will not sell, pledge, or otherwise dispose of such shares unless and
until (a) PNC is furnished with an opinion of counsel to the effect that registration of such shares pursuant to the Securities Act of 1933 as amended is not required by that Act or by rules and 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.
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 by PNC as provided in Section 4.3.
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.
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.
9. Optionee
Covenants.
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 by virtue of receiving this Option, which gives Optionee an opportunity potentially to benefit from an increase in the future value of PNC common stock (regardless of whether any such benefit
is ultimately realized); that such provisions are reasonable and properly required for the adequate protection of the business of PNC and its subsidiaries; and that enforcement of such provisions will not prevent Optionee from earning a living.
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 one year after Optionee’s Termination Date regardless of the reason for such termination of employment.
(b) Non-Solicitation. Optionee shall not, directly or indirectly, either for Optionee’s own benefit or purpose or for the benefit or purpose of any Person other than PNC or any of its
subsidiaries, solicit, call on, do business with, or actively interfere with PNC’s or any subsidiary’s 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.
(b) No-Hire. Optionee shall not, directly or indirectly, either for Optionee’s own benefit or purpose or for the benefit or purpose of any Person other than PNC or any of its subsidiaries,
employ or offer to employ, call on, or actively interfere with PNC’s or any subsidiary’s relationship with, or attempt to divert or entice away, any employee of PNC or any of its subsidiaries, nor shall Optionee assist any other Person in
such activities.
Notwithstanding the above, if Optionee’s 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 or, if Optionee was a party to a Change of Control Employment Agreement that was in effect at the time of such termination of employment, within three years
after the occurrence of a Change of Control, 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):
(c) No-Hire. Optionee agrees that Optionee shall not, for a period of one year after the Termination Date, employ or
offer to employ, solicit, actively interfere with PNC’s or any PNC affiliate’s relationship with, or attempt to divert or entice away, any officer of PNC or any PNC affiliate.
9.3 Confidentiality. During Optionee’s 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 Corporation’s 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.
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 Optionee’s 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 of its subsidiaries or (b) developed with the use of any time, material, facilities or other resources of PNC or any subsidiary (“Developments”). Optionee agrees to assign and hereby does assign to
PNC or its designee all of Optionee’s 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 PNC’s or its designee’s 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.
10. Enforcement Provisions. Optionee understands and agrees to the following provisions regarding enforcement of the Agreement.
10.1 Governing Law and Jurisdiction. The Agreement is governed by and construed under the laws of the Commonwealth of Pennsylvania, without
reference to its conflict of laws provisions. 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.
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.
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 will extend for a period of twelve (12) months from
the date the Corporation institutes legal proceedings for injunctive or other relief.
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.
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.
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.
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.
10.8 Compliance with Internal Revenue Code Section 409A.
It is the intention of the parties that the Option and the Agreement comply with the provisions of Section 409A of the Internal Revenue Code to the extent, if any, that such provisions are applicable to the Agreement, and the Agreement will be
administered by PNC in a manner consistent with this intent.
If any payments or benefits hereunder may be deemed to constitute nonconforming
deferred compensation subject to taxation under the provisions of Section 409A, Optionee agrees that PNC may, without the consent of Optionee, modify the Agreement and the Option to the extent and in the manner PNC deems necessary or advisable
or take such other action or actions, including an amendment or action with retroactive effect, that PNC deems appropriate in order either to preclude any such payments or benefits from being deemed “deferred compensation” within the
meaning of Section 409A or to provide such payments or benefits in a manner that complies with the provisions of Section 409A such that they will not be taxable thereunder.
10.9 Applicable Law; Clawback. 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, the Option, and any right to receive Shares or other value pursuant to the Option and to retain
such Shares or other value, shall be subject to rescission, cancellation or recoupment, in whole or in part, if and to the extent so provided under any “clawback” or similar policy of PNC in effect on the Grant Date or that may be
established thereafter and to any clawback or recoupment that may be required by applicable law.
11. 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 thirty (30) 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 Optionee’s delivery to PNC of a copy of the Agreement executed by Optionee.
Otherwise, upon execution and delivery of the Agreement by both PNC and Optionee, the Option and the Agreement are effective as of the Grant Date.
IN WITNESS WHEREOF, PNC has caused the Agreement to be signed
on its behalf effective as of the Grant Date.
THE PNC FINANCIAL SERVICES GROUP, INC.
By:
Chairman and Chief
Executive Officer
ATTEST:
By:
Corporate Secretary
Accepted and agreed to as of the Grant Date
Optionee
Annex A - Certain Definitions
Annex B - Notice
of Exercise
Annex C - Tax Payment Election Form
ANNEX A
CERTAIN DEFINITIONS
* * *
A.1 “Agreement” means the Nonstatutory Stock Option Agreement between PNC and Optionee evidencing the grant of the Option to Optionee pursuant
to the Plan.
A.2 “Board” means the Board of Directors of PNC.
A.3 “Cause.”
(a) “Cause” during a Coverage Period. If the termination
of Optionee’s employment with the Corporation occurs during a Coverage Period, then, for purposes of the Agreement, “Cause” means:
(i) the willful and continued failure of Optionee to substantially perform Optionee’s 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
Optionee’s duties; or
(ii) the willful engaging by Optionee in illegal conduct or gross misconduct that is materially and demonstrably
injurious to PNC or any of its subsidiaries.
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 Optionee’s 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 Optionee’s 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.
The cessation of employment of Optionee will be deemed to be a termination of Optionee’s
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 Optionee’s 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.
(b) “Cause” other than during a Coverage Period. If the
termination of Optionee’s employment with the Corporation occurs other than during a Coverage Period, then, for purposes of the Agreement, “Cause” means:
(i) the willful and continued failure of Optionee to substantially perform Optionee’s 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 specifically identifies the manner in which it is believed that Optionee has not substantially
performed Optionee’s duties;
(ii) a material breach by Optionee of (1) any code of conduct of PNC or one of its subsidiaries or
(2) other written policy of PNC or a subsidiary, in either case required by law or established to maintain compliance with applicable law;
(iii) any act of fraud, misappropriation, material dishonesty, or embezzlement by Optionee against PNC or one of its subsidiaries or any client or
customer of PNC or a subsidiary;
(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
(v) entry of any order against Optionee, by any
governmental body having regulatory authority with respect to the business of PNC or any of its subsidiaries, that relates to or arises out of Optionee’s employment or other service relationship with the Corporation.
The cessation of employment of Optionee will be deemed to have been a termination of Optionee’s 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 Optionee’s employment with the Corporation will be deemed to have been for Cause.
A.4 “CEO” means the chief executive officer of PNC.
A.5 “Change of Control” means:
(a) Any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20%
or more of either (A) the then-outstanding shares of common stock of PNC (the “Outstanding PNC Common Stock”) or (B) the combined voting power of the then-outstanding voting securities of PNC entitled to vote generally in the
election of directors (the “Outstanding PNC Voting Securities”); provided, however, that, for purposes of this Section A.5(a), the following acquisitions shall not constitute a Change of Control: (1) any acquisition
directly from PNC, (2) any acquisition by PNC, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by PNC or any company controlled by, controlling or under common control with PNC (an
“Affiliated Company”), (4) any acquisition pursuant to an Excluded Combination (as defined in Section A.5(c)) or (5) an acquisition of beneficial ownership representing between 20% and 40%, inclusive, of the Outstanding PNC
Voting Securities or Outstanding PNC Common Stock shall not be considered a Change of Control if the Incumbent Board as of immediately prior to any such acquisition approves such acquisition either prior to or immediately after its occurrence;
(b) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at
least a majority of the Board (excluding any Board seat that is vacant or otherwise unoccupied); provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by PNC’s
shareholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board;
(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar
transaction involving PNC or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of PNC, or the acquisition of assets or stock of another entity by PNC or any of its subsidiaries (each, a “Business
Combination”), excluding, however, a Business Combination following which all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding PNC Common Stock and the Outstanding PNC Voting Securities
immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of the
then-outstanding voting securities entitled to vote generally in the election of directors (or, for a non-corporate entity, equivalent governing body), as the case may be, of the entity resulting from such Business Combination (including, without
limitation, an entity that, as a result of such transaction, owns PNC or all or substantially all of PNC’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to
such Business Combination of the Outstanding PNC Common Stock and the Outstanding PNC Voting Securities, as the case may be (such a Business Combination, an “Excluded Combination”); or
(d) Approval by the shareholders of PNC of a complete liquidation or dissolution of PNC.
A.6 “Change of Control Employment Agreement” means the written agreement, if any, between Optionee and PNC providing, among other things, for certain payments and benefits upon a qualifying
termination of employment following a change of control.
A.7 “Change of Control Failure” means the following:
(a) with respect to a Change of Control Triggering Event described in Section A.8(a), PNC’s shareholders vote against the transaction approved by the
Board or the agreement to consummate the transaction is terminated; or
(b) with respect to a Change of Control Triggering Event described in
Section A.8(b), the proxy contest fails to replace or remove a majority of the members of the Board.
A.8 “Change of Control Triggering
Event” means the occurrence of either of the following:
(a) the Board or PNC’s shareholders approve a transaction described in
Subsection (c) of the definition of Change of Control contained in Section A.5; or
(b) the commencement of a proxy contest in which any
Person seeks to replace or remove a majority of the members of the Board.
A.9 “Committee” means the Personnel and Compensation
Committee of the Board or such person or persons as may be designated or appointed by that committee as its delegate or designee.
A.10
“Competitive Activity” 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 of its
subsidiaries (1) engaged in business activities similar to some or all of the business activities of PNC or any subsidiary as of Optionee’s 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 Optionee’s Termination Date or, if later and if applicable, after the date specified in clause (ii) of Section A.15(a), 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.
A.11 “Consolidated Subsidiary” means a corporation, bank, partnership, business trust, limited
liability company or other form of business organization that (1) is a consolidated subsidiary of PNC under generally accepted accounting principles and (2) satisfies the definition of “service recipient” under Section 409A
of the Internal Revenue Code.
A.12 “Corporation” means PNC and its Consolidated Subsidiaries.
A.13 “Coverage Period” means a period (a) commencing on the earlier to occur of (i) the date of a Change of Control Triggering Event
and (ii) the date of a Change of Control and (b) ending on the date that is two (2) years after the date of the Change of Control; provided, however, that in the event that a Coverage Period commences on the date of a
Change of Control Triggering Event, such Coverage Period will terminate upon the earlier to occur of (x) the date of a Change of Control Failure and (y) the date that is two (2) years after the date of the Change of Control triggered
by the Change of Control 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.
A.14 “Covered Shares” means the number of shares of PNC common stock that Optionee has the option to purchase from PNC pursuant to the Option.
A.15 “Detrimental Conduct” means, for purposes of the Agreement:
(a) Optionee has engaged, without the prior written consent of PNC (with consent to be given at PNC’s sole discretion), in any
Competitive Activity in the continental United States at any time during the period commencing on Optionee’s Termination Date and extending through (and including) the first (1st) anniversary of the later of (i) Optionee’s Termination Date and, if different, (ii) the first
date after Optionee’s Termination Date as of which Optionee ceases to have a service relationship with the Corporation;
(b) any act of
fraud, misappropriation, or embezzlement by Optionee against PNC or one of its subsidiaries or any client or customer of PNC or one of its subsidiaries; or
(c) any conviction (including a plea of guilty or of nolo contendere) of Optionee for, or any entry by Optionee into a pre-trial disposition with respect to, the commission of a felony that relates
to or arises out of Optionee’s employment or other service relationship with the Corporation.
Optionee will be deemed to have engaged in
Detrimental Conduct for purposes of the Agreement only if and when the Committee (if Optionee was an “executive officer” of PNC as defined in SEC Regulation S-K when he or she ceased to be an employee of the Corporation) or the CEO or his
or her designee (if Optionee was not such an executive officer), whichever is applicable, determines that Optionee has engaged in conduct described in clause (a) or clause (b) above or that an event described in clause (c) above has
occurred with respect to Optionee, and, if so, determines that Optionee will be deemed to have engaged in Detrimental Conduct.
A.16
“Disabled” or “Disability” means, except as may otherwise be required by Section 409A of the Internal Revenue Code, that Optionee either (i) is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving (and has received for at least three months) income replacement benefits under any Corporation-sponsored
disability benefit plan. If Optionee has been determined to be eligible for Social Security disability benefits, Optionee shall be presumed to be Disabled as defined herein.
A.17 “Exercise Date” means the date (which must be a business day for PNC Bank, National
Association) 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 receipt by PNC of full payment of the
aggregate Option Price, calculation by PNC of the applicable withholding taxes, and receipt by PNC of payment for any taxes required to be withheld in connection with such exercise as provided in Sections 4.1, 4.2 and 4.3 of the Agreement.
A.18 “Expiration Date.”
(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.18(b) through A.18(d) (with the Option expiring on the first date determined under any of such sections);
provided, however, if there is a Change of Control, then notwithstanding Sections A.18(c) and A.18(d), to the extent that the
Option is outstanding and exercisable or becomes exercisable at the time the Change of 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 of 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 of Control occurs and Optionee’s employment with the Corporation is not terminated for Cause or (2) Optionee is a former
employee of the Corporation whose Option is outstanding at the time the Change of Control occurs by virtue of the application of one or more of the exceptions set forth in Section A.18(c) and at least one of such exceptions is still applicable at
the time the Change of Control occurs.
In no event will the Option remain outstanding beyond the tenth (10th) anniversary of the Grant Date.
(b) Termination for Cause. Upon a termination of Optionee’s employment with the Corporation for Cause, unless the Committee determines
otherwise, the Option will expire at the close of business on Optionee’s Termination Date with respect to all Covered Shares, whether or not the Option has become exercisable and whether or not Optionee is eligible to Retire or Optionee’s
employment also terminates for another reason.
(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 Optionee’s employment for Cause, then unless the Committee determines otherwise, the Option will expire at the close of business on Optionee’s Termination Date with respect
to all Covered Shares, whether or not the Option has become exercisable, except to the extent that the provisions set forth in subsection (1), (2), (3), (4) or (5) of this Section A.18(c) apply to Optionee’s circumstances and such
applicable subsection specifies a later expiration date for the Option. If more than one of such exceptions is applicable to the Option, then the Option will expire in accordance with the provisions of the subsection that specifies the latest
expiration date.
(1) Retirement. If the termination of Optionee’s employment with the Corporation
meets the definition of Retirement and the Option became exercisable while Optionee was still an employee of the Corporation, 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 exercisable on the
Retirement date.
(2) Death. If Optionee’s employment with the Corporation is terminated by reason of
Optionee’s death, then the Option will expire on the tenth (10th) anniversary of the Grant Date.
(3) Termination during a Coverage Period without Cause or with Good
Reason. If Optionee’s employment with the Corporation is terminated (other than by reason of Optionee’s 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).
(4) Disability. If Optionee’s employment is terminated by the Corporation by reason of 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).
(5) Displacement Benefits Plan
or Agreement or Arrangement in lieu of or in addition to Displacement Benefits Plan. In the event that the Option became exercisable while Optionee was still an employee of the Corporation and (a) Optionee’s 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 one of its subsidiaries under an applicable PNC or subsidiary Displacement Benefits Plan, or any
successor plan by whatever name known (“Displacement Benefits Plan”), or Optionee is offered and has entered into a similar waiver and release agreement between PNC or one of its subsidiaries 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 Displacement Benefits Plan, 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 Optionee’s 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 had already become exercisable; 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 or not it had become exercisable, will be
treated as if the termination of Optionee’s employment with the Corporation had not occurred.
If the Option became
exercisable while Optionee was still an employee of the Corporation but will expire on Optionee’s Termination Date unless the conditions set forth in this Section A.18(c)(5) are met, then such 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.18(c)(5) have been met and the Option will terminate on the ninetieth (90th) day after Optionee’s Termination Date (but in no event
later than on the tenth (10th) anniversary of the
Grant Date).
(d) Detrimental Conduct. If the Option would otherwise remain outstanding after Optionee’s 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.18(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:
(1) no determination that Optionee has engaged in Detrimental Conduct may be made on or after the date of Optionee’s death, and Detrimental Conduct will not apply to conduct by or activities of
beneficiaries or other successors to the Option in the event of Optionee’s death;
(2) in the event that Optionee’s employment with
the Corporation is terminated (other than by reason of Optionee’s death) during a Coverage Period by the Corporation without Cause or by Optionee with Good Reason, no determination that Optionee has engaged in Detrimental Conduct for purposes
of the Agreement may be made on or after such Termination Date; and
(3) no determination that Optionee has engaged in Detrimental Conduct may
be made after the occurrence of a Change of Control.
A.19 “Fair Market Value” as it relates to a share of PNC common stock as of any given date means
the average of the reported high and low trading prices on the New York Stock Exchange (or such successor reporting system as PNC may select) for a share of PNC common stock on such date, or, if no PNC common stock trades have been reported on such
exchange for that day, the average of such prices on the next preceding day and the next following day for which there were reported trades.
A.20 “GAAP” or “generally accepted accounting principles” means accounting principles generally accepted in the United States of
America.
A.21 “Good Reason” means:
(a) (i) the assignment to Optionee of any duties inconsistent in any respect with, or any other diminution in, Optionee’s position (including status, offices, titles and reporting requirements),
authority, duties or responsibilities such that Optionee’s position, authority, duties or responsibilities are not at least commensurate in all material respects with the most significant of those held, exercised and assigned to Optionee at any
time during the 120-day period immediately preceding the Change of Control, or if a Change of Control has not yet occurred but there has been a Change of Control Triggering Event, (ii) the assignment to Optionee of any duties inconsistent in
any material respect with, or any other material diminution in, Optionee’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities immediately prior to the Change of Control Triggering
Event, excluding in either case for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and that is remedied by the Corporation promptly after receipt of notice thereof given by Optionee;
(b) a reduction by the Corporation in Optionee’s annual base salary to an annual rate (i) that is less than 12 times the highest monthly base
salary paid or payable, including any base salary that has been earned but deferred, to Optionee by the Corporation in respect of the 12-month period immediately preceding the month in which the Change of Control occurs or, if a Change of Control
has not yet occurred but there has been a Change of Control Triggering Event, (ii) that is less than 12 times the monthly base salary paid or payable, including any base salary that has been earned but deferred, to Optionee by the Corporation
in respect of the month immediately preceding the month in which the Change of Control Triggering Event occurs;
(c) the Corporation’s
requiring Optionee to be based at any office or location that is more than fifty (50) miles from Optionee’s office or location immediately prior to either the Change of Control Triggering Event or the Change of Control;
(d) other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and that is remedied by the Corporation promptly after
receipt of notice thereof given by Optionee, the failure by the Corporation to continue Optionee’s participation in annual bonus, long-term cash incentive, equity incentive, savings and retirement plans, practices, policies and programs that
provide Optionee with annual bonus opportunities, long-term incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable), savings opportunities and
retirement benefit opportunities, in each case, no less favorable, in the aggregate, than the most favorable of those provided by the Corporation for Optionee under such plans, practices, policies and programs as in effect (i) at any time
during the 120-day period immediately preceding the Change of Control, or if a Change of Control has not yet occurred but there has been a Change of Control Triggering Event, (ii) immediately prior to the Change of Control Triggering Event; or
(e) other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and that is remedied by the Corporation promptly
after receipt of notice thereof given by Optionee, the failure by the Corporation to continue to provide Optionee with benefits under welfare benefit plans, practices, policies and programs provided by the Corporation (including, without
limitation, medical, prescription, dental, vision, disability, employee life, group life, accidental death and travel accident insurance plans and programs) no less favorable, in the aggregate,
than those provided to Optionee under the most favorable of such plans, practices, policies and programs in effect for Optionee (i) at any time during the 120-day period immediately preceding the Change of Control, or if a Change of Control has
not yet occurred but there has been a Change of Control Triggering Event, (ii) immediately prior to the Change of Control Triggering Event.
A.22 “Grant Date” means the date set forth as the Grant Date on page 1 of the Agreement and is the date as of which the Option is authorized to be granted by the Committee in accordance with the
Plan.
A.23 “Internal Revenue Code” means the Internal Revenue Code of 1986 as amended, and the rules and regulations promulgated
thereunder.
A.24 “Option” means the option to purchase shares of PNC common stock granted to Optionee under the Plan in
Section 1 of the Agreement in accordance with the terms of Article 6 of the Plan.
A.25 “Option Period” means the period during
which the Option may be exercised, as set forth in Section 2.2 of the Agreement.
A.26 “Option Price” means the dollar amount
per share of PNC common stock at which the Option may be exercised. The Option Price is set forth on page 1 of the Agreement.
A.27
“Optionee” means the person to whom the Option is granted and is identified as Optionee on page 1 of the Agreement.
A.28
“Plan” means The PNC Financial Services Group, Inc. 2006 Incentive Award Plan.
A.29 “PNC” means The PNC Financial
Services Group, Inc.
A.30 “Retire” or “Retirement” means, for purposes of this Option and all PNC stock options held by
Optionee, whether granted under the Plan or under an earlier PNC plan, termination of Optionee’s employment with the Corporation at any time and for any reason (other than termination by reason of Optionee’s death or by the Corporation for
Cause and, if the Committee or the CEO or his or her designee so determines prior to such divestiture, other than by reason of termination in connection with a divestiture of assets or a divestiture of one or more subsidiaries of the Corporation) on
or after the first date on which Optionee has both attained at least age fifty-five (55) and completed five (5) years of service, where a year of service is determined in the same manner as the determination of a year of vesting service
calculated under the provisions of The PNC Financial Services Group, Inc. Pension Plan.
A.31 “Retiree” means an Optionee who has
Retired.
A.32 “SEC” means the U.S. Securities and Exchange Commission.
A.33 “Service relationship” or “having a service relationship with the Corporation” means being engaged by the Corporation in any capacity for which Optionee receives compensation from
the Corporation, including but not limited to acting for compensation as an employee, consultant, independent contractor, officer, director or advisory director.
A.34 “Share” means a share of authorized but unissued PNC common stock or a reacquired share of PNC common stock, including shares purchased by PNC on the open market for purposes of the Plan or
otherwise.
A.35 “Termination Date” means Optionee’s last date of employment with the Corporation. If
Optionee is employed by a Consolidated Subsidiary that ceases to be a subsidiary of PNC or ceases to be a consolidated subsidiary of PNC under generally accepted accounting principles and Optionee does not continue to be employed by PNC or a
Consolidated Subsidiary, then for purposes of the Agreement, Optionee’s employment with the Corporation terminates effective at the time this occurs.
Reload Option Agreement Form for
Original Options Granted 2003-2004
THE PNC FINANCIAL SERVICES GROUP, INC.
1997 LONG-TERM INCENTIVE AWARD PLAN
RELOAD NONSTATUTORY STOCK OPTION AGREEMENT
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| OPTIONEE: |
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[Employee] |
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| ORIGINAL OPTION GRANT DATE: |
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| RELOAD OPTION GRANT DATE: |
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| RELOAD OPTION PRICE: |
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$ per share |
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| COVERED SHARES: |
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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 (“Plan”) are used in this reload nonstatutory stock option agreement (“Reload Agreement”) as defined in the Plan unless otherwise defined in the Reload Agreement or an Annex thereto. In the Reload Agreement,
“PNC” means The PNC Financial Services Group, Inc. and “Corporation” means PNC and its Subsidiaries. For certain definitions, see Annex A attached hereto and incorporated herein by reference. Headings used in the Reload Agreement
and in the Annexes hereto are for convenience only and are not part of the Reload Agreement and Annexes.
1. Grant of Reload Option.
Optionee, having exercised all or a portion of the Option granted to Optionee under the Plan as of , 200 (the “Original Option”)
while employed by the Corporation and in a manner specified in the Addendum to the Original Option stock option agreement, is hereby granted, pursuant to the Plan and subject to the terms of the Reload Agreement, a Reload Option (“Reload
Option”) to purchase from PNC that number of shares of PNC common stock specified above as the “Covered Shares,” exercisable at the Reload Option Price.
2. Terms of the Reload Option.
2.1 Type of Option. The Reload Option is intended to
be a Nonstatutory Stock Option without Rights.
2.2 Reload Option Period. The Reload Option is exercisable in whole or in part as to
any Covered Shares as to which it is outstanding and has become exercisable at any time and from time to time through the Expiration Date as defined in Section A.15 of Annex A hereto, including and subject to the early termination provisions set
forth in said definition.
To the extent that the Reload Option is otherwise outstanding and the Expiration Date has not yet occurred, the
Reload Option will become exercisable as to Covered Shares as set forth in this Section 2.2.
(a) Unless the Reload
Option has previously become exercisable pursuant to another subsection of this Section 2.2, the Reload Option will become exercisable commencing on the first (1st) anniversary date of the Reload Option Grant Date provided that Optionee is still an employee of the
Corporation on such anniversary date or is a Retiree whose Retirement date occurred on or after the six (6) month anniversary date of the Reload Option Grant Date.
(b) If Optionee’s employment is terminated by the Corporation by reason of Disability and not for
Cause, the Reload Option will become exercisable as to all outstanding Covered Shares as to which it has not otherwise become exercisable commencing on Optionee’s Termination Date.
(c) If Optionee’s employment with the Corporation is terminated by reason of Optionee’s death, the Reload Option will immediately become exercisable as to all outstanding Covered Shares as to
which it has not otherwise become exercisable, and the Reload Option may be exercised by Optionee’s properly designated beneficiary, by the person or persons entitled to do so under Optionee’s will, or by the person or persons entitled to
do so under the applicable laws of descent and distribution.
(f) If, after the occurrence of a Change of Control Triggering Event but prior
to the occurrence of a Change of Control Failure or of the Change of Control triggered by the Change of Control Triggering Event, Optionee’s employment with the Corporation is terminated by the Corporation without Cause or by Optionee with Good
Reason, the Reload Option will become exercisable as to all outstanding Covered Shares as to which it has not otherwise become exercisable commencing on Optionee’s Termination Date.
(e) Notwithstanding any other provision of this Section 2.2, to the extent that the Reload Option is outstanding but has not yet become fully exercisable at the time a Change of Control occurs, the
Reload Option will become exercisable as to all then outstanding Covered Shares as to which it has not otherwise become exercisable, effective as of the day immediately prior to the occurrence of the Change of Control, provided that, at the
time the Change of Control occurs, Optionee is either (i) an employee of the Corporation or (ii) a former employee of the Corporation whose Reload Option, or portion thereof, has not yet become exercisable but is then outstanding and
continues to qualify for becoming exercisable pursuant to the terms of Section 2.2(a).
(f) The Committee or its delegate may in their
sole discretion, but need not, accelerate the date as of which all or any portion of the Reload Option first becomes exercisable, subject, if applicable, to such limitations as may be set forth in the Plan.
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 Reload Agreement, Optionee’s employment with the Corporation terminates effective at the time this occurs.
2.3
Nontransferability; Designation of Beneficiary; Payment to Legal Representative.
(a) The Reload Option is not transferable or
assignable by Optionee.
(b) During Optionee’s lifetime, the Reload Option may be exercised only by Optionee or, in the event of
Optionee’s legal incapacity, by his or her legal representative, as determined in good faith by PNC.
(c) During Optionee’s
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 “properly designated beneficiary”)
to hold and exercise Optionee’s stock options, to the extent outstanding and exercisable, in accordance with their respective stock option agreements and the Plan in the event of Optionee’s death.
(d) If Optionee dies prior to the full exercise or expiration of the Reload Option and has not filed a designation of beneficiary form as specified
above, the Reload Option will be held and may be exercised by the person or persons entitled to do so under Optionee’s will or under the applicable laws of descent and distribution, as to which PNC will be entitled to rely in good faith on
instructions from Optionee’s executor, administrator, or other legal representative.
(e) Any delivery of shares or other payment made or
action taken hereunder by PNC in good faith to or on the instructions of Optionee’s executor, administrator, or other legal representative shall extinguish all right to payment hereunder.
3. Capital Adjustments. Upon the occurrence 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 “Corporate Transaction”)), the Committee shall make those adjustments, if any, in
the number, class or kind of Covered Shares as to which the Reload Option is outstanding and has not yet been exercised and in the Reload Option Price that it deems appropriate in its discretion to reflect the Corporate Transaction(s) such that the
rights of Optionee are neither enlarged nor diminished as a result of such Corporate Transaction or Transactions, including without limitation cancellation of the Reload 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
Reload Option Price and (b) the total number of Covered Shares subject to the Reload Option that were outstanding and unexercised immediately prior to the effective time of the Corporate Transaction.
All determinations hereunder shall be made by the Committee in its sole discretion and shall be final, binding and conclusive for all purposes on all
parties, including without limitation the holder of the Reload Option.
No fractional shares will be issued on exercise of the Reload Option.
PNC shall determine the manner in which any fractional shares will be treated.
4. Exercise of Reload Option.
4.1 Notice and Effective Date. The Reload Option, to the extent outstanding and exercisable, 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, and by paying in full the aggregate Reload Option Price with respect to that portion of the Reload Option being exercised and satisfying any amounts
required to be withheld pursuant to applicable tax laws in connection with such exercise.
In addition, notwithstanding Sections 4.2 and 4.3,
Optionee may elect to complete his or her Reload Option exercise through a brokerage service/margin account pursuant to the broker-assisted cashless option exercise procedure under Regulation T of the Board of Governors of the Federal Reserve System
and in such manner as may be permitted by PNC from time to time consistent with said Regulation T.
The effective date of such exercise will
be the Exercise Date. Until PNC notifies Optionee to the contrary, the form attached to the Reload Agreement as Annex B shall be used to exercise the Reload Option and the form attached to the Reload Agreement as Annex C shall be used to make tax
payment elections.
In the event that the Reload Option is exercised, pursuant to Section 2.3, by any person or persons other than
Optionee, such notice of exercise must be accompanied by appropriate proof of the derivative right of such person or persons to exercise the Reload Option.
4.2 Payment of Reload Option Price. Upon exercise of the Reload Option, in whole or in part, Optionee may pay the aggregate Reload Option Price (a) in cash or (b) if and to the extent
then permitted by PNC, using whole shares of PNC common stock (either by physical delivery to PNC of certificates for the shares or through PNC’s share attestation procedure) having an aggregate Fair Market Value on the Exercise Date not
exceeding that portion of the aggregate Reload Option Price being paid using such shares, or through a combination of cash and shares of PNC common stock; provided, however, that shares of PNC common stock used to pay all or any
portion of the aggregate Reload Option Price may not be subject to any contractual restriction, pledge or other encumbrance and must be shares that have been owned by Optionee for at least six (6) months prior to the Exercise Date and, in the
case of restricted stock, for which it has been at least six (6) months since the restrictions lapsed, or, in either case, for such other period as may be specified or permitted by PNC.
4.3 Payment of Taxes. Optionee may elect to satisfy any or all applicable federal, state, or local tax liabilities incurred in connection with exercise of the Reload Option (a) by payment of
cash, (b) if and to
the extent then permitted by PNC and subject to such terms and conditions as PNC may from time to time establish, through the retention by PNC of sufficient whole shares of PNC common stock
otherwise issuable upon such exercise to satisfy the minimum amount of taxes required to be withheld in connection with such exercise, or (c) if and to the extent then permitted by PNC and subject to such terms and conditions as PNC may from
time to time establish, using whole shares of PNC common stock (either by physical delivery to PNC of certificates for the shares or through PNC’s share attestation procedure) that are not subject to any contractual restriction, pledge or other
encumbrance and that have been owned by Optionee for at least six (6) months prior to the Exercise Date and, in the case of restricted stock, for which it has been at least six (6) months since the restrictions lapsed, or, in either case,
for such other period as may be specified or permitted by PNC.
For purposes of this Section 4.3, shares of PNC common stock that are
used to satisfy applicable taxes will be valued at their Fair Market Value on the date the tax withholding obligation arises. In no event will the Fair Market Value of the shares of PNC common stock otherwise issuable upon exercise of the Reload
Option but retained pursuant to Section 4.3(b) exceed the minimum amount of taxes required to be withheld in connection with the Reload Option exercise.
4.4 Effect. The exercise, in whole or in part, of the Reload Option will cause a reduction in the number of unexercised Covered Shares as to which the Reload Option is outstanding equal to the
number of shares of PNC common stock with respect to which the Reload Option is exercised.
5. Restrictions on Exercise and on Shares
Issued on Exercise. Notwithstanding any other provision of the Reload Agreement, the Reload 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 Reload 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.
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 Reload Option and not retained by PNC as provided in Section 4.3.
7. Employment. Neither the granting of the Reload Option evidenced by the Reload Agreement nor any term or provision of the Reload 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.
8. Subject to the Plan. The Reload
Option evidenced by the Reload 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 Reload Agreement. In addition, the Reload Option is subject to any rules and regulations promulgated by or under the authority of the Committee.
9. Optionee Covenants.
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 by virtue of receiving this Reload Option, which gives Optionee an opportunity potentially to benefit from an increase
in the future value of PNC common stock (regardless of whether any such benefit is ultimately realized); 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.
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 one year after Optionee’s Termination Date
regardless of the reason for such termination of employment.
(c) Non-Solicitation. Optionee shall not, directly or indirectly, either
for Optionee’s 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 PNC’s or any Subsidiary’s 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.
(b) No-Hire. Optionee shall not, directly or indirectly, either for Optionee’s 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 PNC’s or any Subsidiary’s relationship with, or attempt to divert or entice away, any employee of the
Corporation, nor shall Optionee assist any other Person in such activities.
Notwithstanding the above, if Optionee’s 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 or, if Optionee was a party to a Change of Control Employment Agreement that was in effect at the
time of such termination of employment, within three years after the occurrence of a Change of Control, 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):
(c) No-Hire. Optionee agrees that Optionee shall not, for a
period of one year after the Termination Date, employ or offer to employ, solicit, actively interfere with PNC’s or any PNC affiliate’s relationship with, or attempt to divert or entice away, any officer of PNC or any PNC affiliate.
9.3 Confidentiality. During Optionee’s 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 Corporation’s 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.
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 Optionee’s 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 (“Developments”). Optionee agrees to assign and hereby does assign to PNC or its designee all of Optionee’s 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 PNC’s or its designee’s
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.
10. Enforcement Provisions. Optionee understands and agrees to the following provisions regarding enforcement of the Reload Agreement.
10.1 Governing Law and Jurisdiction. The Reload Agreement is governed by and construed under the laws
of the Commonwealth of Pennsylvania, without reference to its conflict of laws provisions. Any dispute or claim arising out of or relating to the Reload 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 Reload 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 Reload Agreement.
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.
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 will extend for a period of twelve (12) months from the date the Corporation institutes legal proceedings for injunctive or other relief.
10.4 No Waiver. Failure of PNC to demand strict compliance with any of the terms, covenants or conditions of the Reload 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.
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.
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.
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.
10.8 Compliance with
Internal Revenue Code Section 409A. It is the intention of the parties that the Reload Option and the Agreement comply with the provisions of Section 409A of the Internal Revenue Code of 1986 as amended, and the rules and regulations
promulgated thereunder, (“Section 409A”) to the extent, if any, that such provisions are applicable to the Agreement, and the Agreement will be administered by PNC in a manner consistent with this intent.
If any payments or benefits hereunder may be deemed to constitute nonconforming deferred compensation subject to taxation under the provisions of
Section 409A, Optionee agrees that PNC may, without the consent of Optionee, modify the Agreement and the Reload Option to the extent and in the manner PNC deems necessary or advisable or take such other action or actions, including an
amendment or action with retroactive effect, that PNC deems appropriate in order either to preclude any such payments or benefits from being deemed “deferred compensation” within the meaning of Section 409A or to provide such payments
or benefits in a manner that complies with the provisions of Section 409A such that they will not be taxable thereunder.
10.9
Applicable Law; Clawback. Notwithstanding anything in the Reload Agreement, PNC will not be required to comply with any term, covenant or condition of the Reload 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, the Reload Option, and any right to receive shares or other value
pursuant to the Reload Option and to retain such shares or other value, shall be subject to rescission, cancellation or recoupment, in whole or in part, if and to the extent so provided under any “clawback” or similar policy of PNC in
effect on the Reload Option Grant Date or that may be established thereafter and to any clawback or recoupment that may be required by applicable law.
11. No Additional Reload Option. Exercise of the Reload Option will not entitle Optionee to receive an additional reload option, regardless of the manner in which the Reload Option is exercised.
12. Effective Date. If Optionee does not accept the grant of the Reload Option by executing and delivering a copy of the Reload
Agreement to PNC, without altering or changing the terms of the Reload Agreement in any way, within thirty (30) days of receipt by Optionee of a copy of the Reload Agreement, PNC may, in its sole discretion, withdraw its offer and cancel the
Reload Option and the Reload Agreement at any time prior to Optionee’s delivery to PNC of a copy of the Reload Agreement executed by Optionee.
Otherwise, upon execution and delivery of the Reload Agreement by both PNC and Optionee, the Reload Option and the Reload Agreement are effective as of the Reload Option Grant Date.
IN WITNESS WHEREOF, PNC has caused the Reload Agreement to be
signed on its behalf effective as of the Reload Option Grant Date.
THE PNC FINANCIAL SERVICES GROUP, INC.
By:
Chairman and Chief Executive Officer
ATTEST:
By:
Corporate Secretary
Accepted and agreed to as
of the Reload Option Grant Date
Optionee
Annex A - Certain Definitions
Annex B - Notice of Exercise
Annex
C - Tax Payment Election Form
ANNEX A
CERTAIN DEFINITIONS
* * *
Except where the context otherwise indicates, the following definitions apply to the Reload Nonstatutory Stock Option Agreement (“Reload
Agreement”) to which this Annex A is attached.
A.1 “Board” means the Board of Directors of PNC.
A.2 “Cause.”
(a)
“Cause” during a Coverage Period. If the termination of Optionee’s employment with the Corporation occurs during a Coverage Period, then, for purposes of the Reload Agreement, “Cause” means:
(i) the willful and continued failure of Optionee to substantially perform Optionee’s 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 Optionee’s duties; or
(ii) the willful engaging by Optionee in illegal conduct or gross
misconduct that is materially and demonstrably injurious to PNC or any Subsidiary.
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 Optionee’s 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 Optionee’s 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.
The cessation of employment of Optionee will be deemed to
be a termination of Optionee’s employment with the Corporation for Cause for purposes of the Reload Agreement only if and when there shall have been delivered to Optionee, as part of the notice of Optionee’s 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.
(b)
“Cause” other than during a Coverage Period. If the termination of Optionee’s employment with the Corporation occurs other than during a Coverage Period, then, for purposes of the Reload Agreement, “Cause” means:
(i) the willful and continued failure of Optionee to substantially perform Optionee’s 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
specifically identifies the manner in which it is believed that Optionee has not substantially performed Optionee’s duties;
(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;
(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;
(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
(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 Optionee’s employment or other service relationship with the Corporation.
The cessation of employment of Optionee will be deemed to have been a termination of Optionee’s employment with the Corporation for Cause for
purposes of the Reload 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 Optionee’s employment with the Corporation will be deemed to have been for Cause.
A.3 “CEO” means the chief executive officer of PNC.
A.4 “Change of Control” means:
(a) Any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20%
or more of either (A) the then-outstanding shares of common stock of PNC (the “Outstanding PNC Common Stock”) or (B) the combined voting power of the then-outstanding voting securities of PNC entitled to vote generally in the
election of directors (the “Outstanding PNC Voting Securities”); provided, however, that, for purposes of this Section A.4(a), the following acquisitions shall not constitute a Change of Control: (1) any acquisition
directly from PNC, (2) any acquisition by PNC, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by PNC or any company controlled by, controlling or under common control with PNC (an
“Affiliated Company”), (4) any acquisition pursuant to an Excluded Combination (as defined in Section A.4(c)) or (5) an acquisition of beneficial ownership representing between 20% and 40%, inclusive, of the Outstanding PNC
Voting Securities or Outstanding PNC Common Stock shall not be considered a Change of Control if the Incumbent Board as of immediately prior to any such acquisition approves such acquisition either prior to or immediately after its occurrence;
(b) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at
least a majority of the Board (excluding any Board seat that is vacant or otherwise unoccupied); provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by PNC’s
shareholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board;
(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar
transaction involving PNC or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of PNC, or the acquisition of assets or stock of another entity by PNC or any of its subsidiaries (each, a “Business
Combination”), excluding, however, a Business Combination following which all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding PNC Common Stock and the Outstanding PNC Voting Securities
immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of the
then-outstanding voting securities entitled to vote generally in the election of directors (or, for a non-corporate entity, equivalent governing body), as the case may be, of the entity resulting from such Business Combination (including, without
limitation, an entity that, as a result of such transaction, owns PNC or all or substantially all of PNC’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to
such Business Combination of the Outstanding PNC Common Stock and the Outstanding PNC Voting Securities, as the case may be (such a Business Combination, an “Excluded Combination”); or
(d) Approval by the shareholders of PNC of a complete liquidation or dissolution of PNC.
A.5 “Change of Control Employment Agreement” means the written agreement, if any, between Optionee and PNC providing, among other things, for certain payments and benefits upon a qualifying
termination of employment following a change of control.
A.6 “Change of Control Failure” means the following:
(a) with respect to a Change of Control Triggering Event described in Section A.7(a), PNC’s shareholders vote against the transaction approved by
the Board or the agreement to consummate the transaction is terminated; or
(b) with respect to a Change of Control Triggering Event described
in Section A.7(b), the proxy contest fails to replace or remove a majority of the members of the Board.
A.7 “Change of Control
Triggering Event” means the occurrence of either of the following:
(a) the Board or PNC’s shareholders approve a transaction
described in Subsection (c) of the definition of Change of Control contained in Section A.4; or
(b) the commencement of a proxy
contest in which any Person seeks to replace or remove a majority of the members of the Board.
A.8 “Committee” means the Personnel
and Compensation Committee of the Board or such person or persons as may be designated or appointed by that committee as its delegate or designee.
A.9 “Competitive Activity” means, for purposes of the Reload 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 Optionee’s 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 Optionee’s Termination Date or, if later and if applicable, after the date specified in clause (2) of Section A.12(i), 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.
A.10 “Corporation” means PNC and its Subsidiaries.
A.11 “Coverage Period” means a period (a) commencing on the earlier to occur of (i) the
date of a Change of Control Triggering Event and (ii) the date of a Change of Control and (b) ending on the date that is two (2) years after the date of the Change of Control; provided, however, that in the event that a
Coverage Period commences on the date of a Change of Control Triggering Event, such Coverage Period will terminate upon the earlier to occur of (x) the date of a Change of Control Failure and (y) the date that is two (2) years after
the date of the Change of Control triggered by the Change of Control 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.
A.12 “Detrimental Conduct” means, for purposes of the Reload Agreement:
(i) Optionee has engaged, without the prior written consent of PNC (at PNC’s sole discretion), in any Competitive Activity in
the continental United States at any time during the period commencing on Optionee’s Termination Date and extending through the first (1st) anniversary of the later of (1) Optionee’s Termination Date and, if different, (2) the first date
after Optionee’s Termination Date as of which Optionee ceases to have a service relationship with the Corporation;
(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;
(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;
(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 Optionee’s employment or other service relationship with the Corporation; or
(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 Optionee’s
employment or other service relationship with the Corporation.
Optionee will be deemed to have engaged in Detrimental Conduct for purposes of
the Reload 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.
A.13 “Disabled” or “Disability” means, except as may otherwise be required by Section 409A of the Internal Revenue Code, that
Optionee either (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not
less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving (and has
received for at least three months) income replacement benefits under any Corporation-sponsored disability benefit plan. If Optionee has been determined to be eligible for Social Security disability benefits, Optionee shall be presumed to be
Disabled as defined herein.
A.14 “Exercise Date” means the date (which must be a business day for PNC Bank, National Association)
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 Reload Option pursuant to the terms of the Reload Agreement, subject to receipt by PNC of full payment of the
aggregate Reload Option
Price, calculation by PNC of the applicable withholding taxes, and receipt by PNC of payment for any taxes required to be withheld in connection with such exercise as provided in
Sections 4.1, 4.2 and 4.3 of the Reload Agreement.
A.15 “Expiration Date.”
(a) Expiration Date. Expiration Date means the date on which the Reload Option expires, which will be the tenth (10th) anniversary of the Original Option Grant Date unless the
Reload Option expires earlier pursuant to any of the provisions set forth in Sections A.15(b) through A.15(d) (with the Reload Option expiring on the first date determined under any of such sections);
provided, however, if there is a Change of Control, then notwithstanding Sections A.15(c) and A.15(d), to the extent that the
Reload Option is outstanding and exercisable or becomes exercisable at the time the Change of Control occurs, the Reload Option will not expire at the earliest before the close of business on the ninetieth (90th) day after the occurrence of the Change of Control (or the
tenth (10th) anniversary of the Original Option Grant
Date if earlier), provided that either (1) Optionee is an employee of the Corporation at the time the Change of Control occurs and Optionee’s employment with the Corporation is not terminated for Cause or (2) Optionee is a
former employee of the Corporation whose Reload Option, or portion thereof, is outstanding at the time the Change of Control occurs by virtue of the application of one or more of the exceptions set forth in Section A.15(c) and at least one of such
exceptions is still applicable at the time the Change of Control occurs.
In no event will the Reload Option remain
outstanding beyond the tenth (10th) anniversary of
the Original Option Grant Date.
(b) Termination for Cause. Upon a termination of Optionee’s employment with the Corporation for
Cause, unless the Committee determines otherwise, the Reload Option will expire at the close of business on Optionee’s Termination Date with respect to all Covered Shares, whether or not the Reload Option has become exercisable and whether or
not Optionee is eligible to Retire or Optionee’s employment also terminates for another reason.
(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 Optionee’s employment for Cause, then unless the Committee determines otherwise, the Reload Option will expire at the close
of business on Optionee’s Termination Date with respect to all Covered Shares, whether or not the Reload Option has become exercisable, except to the extent that the provisions set forth in subsection (1), (2), (3), (4) or (5) of this
Section A.15(c) apply to Optionee’s circumstances and such applicable subsection specifies a later expiration date for all or a portion of the Reload Option. If more than one of such exceptions is applicable to the Reload Option or a
portion thereof, then the Reload Option or such portion of the Reload Option will expire in accordance with the provisions of the subsection that specifies the latest expiration date.
(1) Retirement. If the termination of Optionee’s employment with the Corporation meets the definition of
Retirement, then the Reload Option will expire on the tenth (10th) anniversary of the Original Option Grant Date with respect to any Covered Shares as to which the Reload Option is exercisable on the Retirement date or thereafter becomes exercisable pursuant to
Section 2.2 of the Reload Agreement.
(2) Death. If Optionee’s employment with the Corporation is
terminated by reason of Optionee’s death, then the Reload Option will expire on the tenth (10th) anniversary of the Original Option Grant Date.
(3) Termination during a Coverage Period without Cause or with Good
Reason. If Optionee’s employment with the Corporation is terminated (other than by reason of Optionee’s death) during a Coverage Period by the Corporation without Cause or by Optionee with Good Reason, then the Reload 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 Original Option Grant Date).
(4)
Disability. If Optionee’s employment is terminated by the Corporation by reason of Disability, then the Reload 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 Original Option Grant Date).
(5) Displacement Benefits Plan or Agreement or Arrangement in lieu of or in addition to Displacement Benefits Plan. In
the event that (a) Optionee’s 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 Displacement Benefits Plan, or any successor plan by whatever name known (“Displacement Benefits Plan”), 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 Displacement Benefits Plan, 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 Reload Option will expire at the close of business on the ninetieth (90th) day after Optionee’s Termination Date (but in no event later than on the tenth (10th) anniversary of the Original Option Grant Date) with respect to
any Covered Shares as to which the Reload Option has already become exercisable; provided, however, that if Optionee returns to employment with the Corporation no later than said ninetieth (90th) day, then for purposes of the Reload Agreement, the entire
Reload Option, whether or not it has become exercisable, will be treated as if the termination of Optionee’s employment with the Corporation had not occurred.
If the Reload Option (or portion thereof) has become exercisable while Optionee was still an employee of the Corporation but will expire on Optionee’s Termination Date unless the conditions set forth
in this Section A.15(c)(5) are met, then such Reload Option or portion thereof will not terminate on the Termination Date, but Optionee will not be able to exercise the Reload Option after such Termination Date unless and until all of the
conditions set forth in this Section A.15(c)(5) have been met and the Reload Option will terminate on the ninetieth
(90th) day after Optionee’s Termination Date
(but in no event later than on the tenth
(10th) anniversary of the Original Option Grant
Date).
(d) Detrimental Conduct. If the Reload Option would otherwise remain outstanding after Optionee’s 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.15(c), then notwithstanding the provisions of such exception or exceptions, the Reload Option will expire on the date that PNC
determines that Optionee has engaged in Detrimental Conduct, if earlier than the date on which the Reload Option would otherwise expire; provided, however, that:
(1) no determination that Optionee has engaged in Detrimental Conduct may be made on or after the date of Optionee’s death, and Detrimental Conduct will not apply to conduct by or activities of
beneficiaries or other successors to the Reload Option in the event of Optionee’s death;
(2) in the event that Optionee’s
employment with the Corporation is terminated (other than by reason of Optionee’s death) during a Coverage Period by the Corporation without Cause or by Optionee with Good Reason, no determination that Optionee has engaged in Detrimental
Conduct for purposes of the Reload Agreement may be made on or after such Termination Date; and
(3) no determination that Optionee has engaged in Detrimental Conduct may be made after the occurrence of a Change of Control.
A.16 “Fair Market Value” as it relates to a share of PNC common stock as of any given date means the average of the reported high and low trading prices on the New York Stock Exchange (or such
successor reporting system as PNC may select) for a share of PNC common stock on such date, or, if no PNC common stock trades have been reported on such exchange for that day, the average of such prices on the next preceding day and the next
following day for which there were reported trades.
A.17 “Good Reason” means:
(a) (i) the assignment to Optionee of any duties inconsistent in any respect with, or any other diminution in, Optionee’s position (including
status, offices, titles and reporting requirements), authority, duties or responsibilities such that Optionee’s position, authority, duties or responsibilities are not at least commensurate in all material respects with the most significant of
those held, exercised and assigned to Optionee at any time during the 120-day period immediately preceding the Change of Control, or if a Change of Control has not yet occurred but there has been a Change of Control Triggering Event, (ii) the
assignment to Optionee of any duties inconsistent in any material respect with, or any other material diminution in, Optionee’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities
immediately prior to the Change of Control Triggering Event, excluding in either case for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and that is remedied by the Corporation promptly after receipt of notice
thereof given by Optionee;
(b) a reduction by the Corporation in Optionee’s annual base salary to an annual rate (i) that is less
than 12 times the highest monthly base salary paid or payable, including any base salary that has been earned but deferred, to Optionee by the Corporation in respect of the 12-month period immediately preceding the month in which the Change of
Control occurs or, if a Change of Control has not yet occurred but there has been a Change of Control Triggering Event, (ii) that is less than 12 times the monthly base salary paid or payable, including any base salary that has been earned but
deferred, to Optionee by the Corporation in respect of the month immediately preceding the month in which the Change of Control Triggering Event occurs;
(c) the Corporation’s requiring Optionee to be based at any office or location that is more than fifty (50) miles from Optionee’s office or location immediately prior to either the Change
of Control Triggering Event or the Change of Control;
(d) other than an isolated, insubstantial and inadvertent failure not occurring in bad
faith and that is remedied by the Corporation promptly after receipt of notice thereof given by Optionee, the failure by the Corporation to continue Optionee’s participation in annual bonus, long-term cash incentive, equity incentive, savings
and retirement plans, practices, policies and programs that provide Optionee with annual bonus opportunities, long-term incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that
such distinction is applicable), savings opportunities and retirement benefit opportunities, in each case, no less favorable, in the aggregate, than the most favorable of those provided by the Corporation for Optionee under such plans, practices,
policies and programs as in effect (i) at any time during the 120-day period immediately preceding the Change of Control, or if a Change of Control has not yet occurred but there has been a Change of Control Triggering Event,
(ii) immediately prior to the Change of Control Triggering Event; or
(e) other than an isolated, insubstantial and inadvertent failure
not occurring in bad faith and that is remedied by the Corporation promptly after receipt of notice thereof given by Optionee, the failure by the Corporation to continue to provide Optionee with benefits under welfare
benefit plans, practices, policies and programs provided by the Corporation (including, without limitation, medical, prescription, dental, vision, disability, employee life, group life,
accidental death and travel accident insurance plans and programs) no less favorable, in the aggregate, than those provided to Optionee under the most favorable of such plans, practices, policies and programs in effect for Optionee (i) at any
time during the 120-day period immediately preceding the Change of Control, or if a Change of Control has not yet occurred but there has been a Change of Control Triggering Event, (ii) immediately prior to the Change of Control Triggering
Event.
A.18 “Optionee” means the person identified as Optionee on page 1 of the Reload Agreement.
A.19 “Original Option” has the meaning set forth in Section 1 of the Reload Agreement.
A.20 “Original Option Grant Date” is the date as of which the Original Option was granted.
A.21 “PNC” means The PNC Financial Services Group, Inc.
A.22 “Reload Option” means the Nonstatutory Stock Option granted to Optionee in Section 1 of the Reload Agreement pursuant to which Optionee may purchase shares of PNC common stock as
provided in the Reload Agreement.
A.23 “Reload Option Grant Date” means the date set forth as the Reload Option Grant Date on page
1 of the Reload Agreement, which is the date the Original Option was exercised in accordance with the terms of the Addendum to the Original Option stock option agreement.
A.24 “Reload Option Price” means the dollar amount per share of PNC common stock set forth as the Reload Option Price on page 1 of the Reload Agreement.
A.25 “Retiree” means an Optionee who has Retired.
A.26 “Retire” or “Retirement” means termination of Optionee’s employment with the Corporation at any time and for any reason (other than termination by reason of Optionee’s
death or by the Corporation for Cause and, if the Committee or the CEO or his or her designee so determines prior to such divestiture, other than by reason of termination in connection with a divestiture of assets or a divestiture of one or more
Subsidiaries of the Corporation) on or after the first date on which Optionee has both attained at least age fifty-five (55) and completed five (5) years of service, where a year of service is determined in the same manner as the
determination of a year of vesting service calculated under the provisions of The PNC Financial Services Group, Inc. Pension Plan.
A.27
“Right(s)” means stock appreciation right(s) in accordance with the terms of Article 7 of the Plan.
A.28 “SEC” means the
U.S. Securities and Exchange Commission.
A.29 “Service relationship” or “having a service relationship with the
Corporation” means being engaged by the Corporation in any capacity for which Optionee receives compensation from the Corporation, including but not limited to acting for compensation as an employee, consultant, independent contractor, officer,
director or advisory director.
A.30 “Subsidiary” has the meaning set forth in the Plan; provided, however, that in order to be a
“Subsidiary” for purposes of the Agreement the entity must also satisfy the definition of “service recipient” under Section 409A of the Internal Revenue Code of 1986 as amended.
A.31 “Termination Date” means Optionee’s 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 Reload Agreement, Optionee’s employment with the Corporation terminates effective at the time this occurs.
FORMS OF EMPLOYEE RESTRICTED STOCK,
RESTRICTED SHARE UNIT AND PERFORMANCE UNIT AGREEMENTS
20 Long-Term Incentive Award Program
Continued Employment
Performance Goal
Restricted Period: Three Years (100%)
THE PNC FINANCIAL SERVICES GROUP, INC.
2006 INCENTIVE AWARD PLAN
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20 LONG-TERM INCENTIVE AWARD PROGRAM
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RESTRICTED STOCK AWARD AGREEMENT
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| GRANTEE: |
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[ name ] |
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| AWARD DATE: |
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, 20 |
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| RESTRICTED SHARES: |
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[ number of whole shares ] |
1. Definitions. Certain
terms used in this Restricted Stock Award Agreement (the “Agreement”) are defined in Annex A (which is incorporated herein as part of the Agreement) or elsewhere in the Agreement, and such definitions will apply except where the context
otherwise indicates.
In the Agreement, “PNC” means The PNC Financial Services Group, Inc. and
“Corporation” means PNC and its Consolidated Subsidiaries.
2. Restricted Shares Award. Pursuant to The PNC
Financial Services Group, Inc. 2006 Incentive Award Plan (the “Plan”), and subject to the terms and conditions of the Agreement, PNC grants to the Grantee named above (“Grantee”) a Restricted Shares Award of the number of
restricted shares of PNC common stock set forth above (the “Award” and the “Restricted Shares”), all subject to acceptance of the Award by Grantee in accordance with Section 16 and subject to the terms and conditions of the
Agreement and the Plan.
3. Terms of Award. The Award is subject to the following terms and conditions.
Restricted Shares are subject to a Restricted Period as provided in Section A.20 of Annex A. During the Restricted Period and until
all of the conditions of the Agreement have been satisfied and the shares become Awarded Shares, Restricted Shares are subject to forfeiture and to transfer restrictions pursuant to the terms and conditions of the Agreement.
Once issued in accordance with Section 16, Restricted Shares will be deposited with PNC or its designee in a restricted account or
credited to a restricted book-entry account. Restricted Shares will be held in a restricted account until either all of the conditions of the Agreement have been satisfied or the shares are forfeited pursuant to the terms of the Agreement.
Restricted Shares that are forfeited by Grantee pursuant to and in accordance with the terms of Section 7 will be cancelled without payment of any consideration by PNC.
Any certificate or certificates representing the Restricted Shares will contain the following legend:
“This 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. 2006 Incentive Award Plan 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.”
Where a book-entry system is used with respect to the issuance of 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.
Restricted Shares deposited with PNC or its designee that become Awarded Shares as provided in Section A.3 of Annex A upon satisfaction of all of the conditions of the Agreement will be released from the
restricted account and reissued to, or at the proper direction of, Grantee or Grantee’s legal representative pursuant to Section 9.
4. Rights as Shareholder. Except as provided in Sections 6 through 9 and subject to Section 16, 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.
5. Capital Adjustments. Restricted Shares issued pursuant to the Award shall, 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 Restricted Shares that have not yet been released from the terms of the Agreement shall be subject to
the terms and conditions of the Agreement as if they were Restricted Shares.
6. Prohibitions Against Sale, Assignment,
etc.; Payment to Legal Representative.
(a) Restricted Shares may not be sold, assigned, transferred, exchanged, pledged,
hypothecated or otherwise encumbered, other than as may be required pursuant to Section 10.2, unless and until the Restricted Period terminates and the Awarded Shares are released and reissued by PNC pursuant to Section 9.
(b) If Grantee is deceased at the time Restricted Shares become Awarded Shares, PNC will deliver such shares to the executor or
administrator of Grantee’s estate or to Grantee’s other legal representative as determined in good faith by the Committee.
(c) Any delivery of shares or other payment made in good faith by PNC to Grantee’s executor, administrator or other legal representative shall extinguish all right to payment hereunder.
7. Forfeiture Provisions.
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,
Section 7.7, or Section 8, if applicable, in the event that Grantee’s employment with the Corporation terminates prior to the third (3rd) anniversary of the Award Date, all Restricted Shares that are Unvested Shares on Grantee’s Termination Date
will be forfeited by Grantee to PNC without payment of any consideration by PNC.
Upon any forfeiture of Unvested Shares
pursuant to the provisions of this Section 7.1 or the provisions of Section 7.2, Section 7.4(b) or Section 7.5(b), 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.
7.2 Detrimental Conduct; Judicial Criminal Proceedings.
(a) Detrimental Conduct. Unvested Shares that would otherwise remain outstanding after Grantee’s 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: (i) this Section 7.2(a) will not apply to Restricted Shares that remain outstanding after Grantee’s Termination Date pursuant to Section 7.3 or Section 7.6, if any; (ii) no determination that Grantee
has engaged in Detrimental Conduct may be made on or after the date of Grantee’s death; (iii) 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 Grantee’s death; and (iv) Detrimental Conduct will cease to apply to any Restricted Shares upon a Change of Control.
(b) Judicial Criminal Proceedings. If any criminal charges are brought against Grantee, in an indictment or in other analogous formal charges commencing judicial criminal proceedings, alleging the
commission of a felony that relates to or arises out of Grantee’s employment or other service relationship with the Corporation, then to the extent that the Restricted Shares are still outstanding and have not yet become Awarded Shares, the
Committee may determine to suspend the vesting of the Restricted Shares or to require the escrow of the proceeds of the shares.
Any such suspension or escrow is subject to the following restrictions:
(1) It may last only until the earliest to occur of the following:
(A) resolution of the criminal proceedings in a manner that results in a conviction (including a plea of guilty or of nolo
contendere) of Grantee for, or any entry by Grantee into a pre-trial disposition with respect to, the commission of a felony that relates to or arises out of Grantee’s employment or other service relationship with the Corporation;
(B) resolution of the criminal proceedings in one of the following ways: (i) the charges as they relate to such alleged
felony have been dismissed (with or without prejudice); (ii) Grantee has been acquitted of such alleged felony; or (iii) a criminal proceeding relating to such alleged felony has been completed without resolution (for example, as a result
of a mistrial) and the relevant time period for recommencing criminal proceedings relating to such alleged felony has expired without any such recommencement;
(C) Grantee’s death;
(D) the occurrence of a Change of Control; or
(E) termination of the suspension or escrow in the discretion of the Committee; and
(2) It may be imposed only if the Committee makes reasonable provision for the retention or realization of the value of the Restricted
Shares to Grantee as if no suspension or escrow had been imposed upon any termination of the suspension or escrow under clauses (1)(B) or (E) above.
If the suspension is terminated by the occurrence of an event set forth in clause (1)(A) above, the Restricted Shares will, upon such occurrence, be automatically forfeited by Grantee to PNC and
cancelled without payment of any consideration by PNC.
7.3 Death. In the event of Grantee’s
death while an employee of the Corporation and prior to the third (3rd) anniversary of the Award Date, the Three-Year Continued Employment Performance Goal
will be deemed to have been achieved, and the Restricted Period with respect to all then outstanding Unvested Shares, if any, will terminate on the date of Grantee’s death.
The Restricted Shares which thereby become Awarded Shares will be released and reissued by PNC to, or at the proper direction
of, Grantee’s legal representative pursuant to Section 9 as soon as administratively practicable following such date.
7.4 Qualifying Disability Termination.
(a) In the event Grantee’s employment with the Corporation is terminated prior to the third (3rd) anniversary of the Award Date by the Corporation by reason of
Grantee’s Disability, Unvested Shares will not be automatically forfeited on Grantee’s Termination Date. Instead, Unvested Shares will, subject to the forfeiture provisions of Section 7.2 and Section 7.4(b), remain outstanding
pending and subject to affirmative approval of the vesting of the Restricted Shares pursuant to this Section 7.4(a) by the Designated Person specified in Section A.12 of Annex A.
If such Unvested Shares are still outstanding but the Designated Person has not made a specific determination to
either approve or disapprove the vesting of the Unvested Shares by the day immediately preceding the third
(3rd) anniversary of the Award Date, then the
Restricted Period will be automatically extended through the first to occur of: (1) the day the Designated Person makes a specific determination regarding such vesting; and (2) either (i) the ninetieth (90th) day following the third (3rd) anniversary of the Award 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 or its delegate, whichever is applicable; provided, however, if the Committee has acted to suspend the vesting of the Restricted Shares pursuant to Section 7.2(b), the Restricted Period will be
extended until the terms of such suspension have been satisfied.
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 all then outstanding Unvested Shares, if any, will terminate as of the end of the day on the date of such approval. The Restricted Shares outstanding at the termination of the Restricted
Period will become Awarded Shares and will be released and reissued by PNC pursuant to Section 9.
(b) If the Designated
Person disapproves the vesting of the Unvested Shares that had remained outstanding after Grantee’s Termination Date pending and subject to affirmative 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.
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 specifically disapproved the vesting of the
Unvested Shares that had remained outstanding after Grantee’s Termination Date pending and subject to affirmative 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.
7.5 Qualifying
Retirement.
(a) In the event that Grantee Retires on or after the first (1st) anniversary of the Award Date but prior to the third (3rd) anniversary of the Award Date, Unvested Shares will not be
automatically forfeited on Grantee’s Termination Date. Instead, Unvested Shares will, subject to the forfeiture provisions of Section 7.2 and Section 7.5(b), remain outstanding pending and subject to affirmative approval of the
vesting of the Restricted Shares pursuant to this Section 7.5(a) by the Designated Person specified in Section A.12 of Annex A.
If such Unvested Shares are still outstanding but the Designated Person
has not made a specific determination to either approve or disapprove the vesting of the Unvested Shares by the day immediately preceding the third (3rd) anniversary of the Award Date, then the Restricted Period will be automatically extended through the first to
occur of: (1) the day the Designated Person makes a specific determination regarding such vesting; and (2) either (i) the ninetieth (90th) day following the third (3rd) anniversary of the Award 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 or its delegate, whichever is applicable; provided, however, if the Committee has acted to suspend the vesting of the Restricted Shares pursuant to Section 7.2(b), the Restricted Period will
be extended until the terms of such suspension have been satisfied.
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 all then outstanding Unvested Shares, if any, will terminate as of the end of the day on the date of such approval. The Restricted Shares outstanding at the termination of the Restricted
Period will become Awarded Shares and will be released and reissued by PNC pursuant to Section 9.
(b) If the Designated
Person disapproves the vesting of the Unvested Shares that had remained outstanding after Grantee’s Termination Date pending and subject to affirmative 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.
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 specifically disapproved the vesting of the
Unvested Shares that had remained outstanding after Grantee’s Termination Date pending and subject to affirmative 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.
7.6
Termination in Anticipation of a Change of Control. Notwithstanding anything in the Agreement to the contrary, if Grantee’s employment with the Corporation is terminated by the Corporation prior to the third (3rd) anniversary of the Award Date and such termination is
an Anticipatory Termination as defined in Section A.2 of Annex A, 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 Grantee’s Termination Date; and (ii) all Restricted Shares that thereby become Awarded Shares will be released and reissued by PNC pursuant to Section 9
as soon as administratively practicable following such date.
7.7 Other Committee Authority. Prior
to the third (3rd) anniversary of the Award Date, the
Committee or its delegate may in their sole discretion, but need not, determine that, with respect to some or all of Grantee’s outstanding Unvested Shares, the Three-Year Continued Employment Performance Goal will be deemed to have been
achieved and the Restricted Period with respect to such shares will terminate, all subject to such restrictions, terms or conditions as the Committee or its delegate may in their sole discretion determine.
8. Change of Control. Notwithstanding anything in the Agreement to the contrary, upon the occurrence of a Change of Control:
(i) if Grantee is an employee of the Corporation as of the day immediately preceding the Change of 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, if any, as of the day immediately preceding the Change of Control; (ii) if Grantee’s employment with the Corporation terminated prior to the occurrence of the Change of
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 and subject to affirmative approval of the vesting of such shares by the
Designated Person specified in Section A.12 of Annex A, then with respect to all
Unvested Shares outstanding as of the day immediately preceding the Change of Control, such affirmative 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 of Control; and (iii) all Restricted Shares that thereby become Awarded Shares
will be released and reissued by PNC pursuant to Section 9 as soon as administratively practicable following such date.
9. Termination of Restrictions; Payment to Legal Representative. Except as otherwise directed by the Committee pursuant to the
suspension or escrow provisions of Section 7.2(b), if and to the extent applicable, PNC will release and issue or reissue the outstanding whole Restricted Shares that have not been forfeited and have become Awarded Shares following termination
of the Restricted Period, without the legend referred to in Section 3.
Upon release of shares that have satisfied all of
the conditions of the Agreement and have become Awarded Shares in accordance with this Section 9, PNC or its designee will deliver such whole shares to, or at the proper direction of, Grantee or Grantee’s legal representative.
Any delivery of shares or other payment made in good faith by PNC to Grantee’s executor, administrator or other legal representative
shall extinguish all right to payment hereunder.
10. Payment of Taxes.
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 then applicable federal, state or local withholding tax obligations arising from that election (a) by payment of cash or (b) if and to the extent then permitted by
PNC and subject to such terms and conditions as PNC may from time to time establish, 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 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.
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 Restricted Shares that have become Awarded Shares to satisfy the minimum amount of taxes
then 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.
PNC will not retain more than the number of shares
sufficient to satisfy the minimum amount of taxes then required to be withheld in connection with the Restricted Shares. If Grantee desires to have an additional amount withheld above the required minimum, up to Grantee’s W-4 obligation if
higher, and if PNC so permits, Grantee may elect to satisfy this additional withholding either: (a) by payment of cash; or (b) if and to the extent then permitted by PNC and subject to such terms and conditions as PNC may from time to time
establish, using whole shares of PNC common stock (either by physical delivery to PNC of certificates for the shares or through PNC’s share attestation procedure) that are not subject to any contractual restriction, pledge or other encumbrance
and that have been owned by 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. If Grantee’s W-4 obligation does not exceed the required minimum withholding in connection with the Restricted Shares, no additional withholding may be
made.
11. Employment. Neither the Award and the 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 Grantee’s status as an employee at will.
12. Subject to the Plan and the Committee. In all respects the Award 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 Award and the
Agreement are subject to any interpretation of, and any rules and regulations issued by, the Committee or its delegate or under the authority of the Committee, whether made or issued before or after the Award Date.
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.
14. Grantee
Covenants.
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 by virtue of receiving this Award (regardless of whether the Restricted Shares ultimately become Awarded Shares); that such provisions are reasonable and properly required for
the adequate protection of the business of PNC and its subsidiaries; and that enforcement of such provisions will not prevent Grantee from earning a living.
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 one
year after Grantee’s Termination Date regardless of the reason for such termination of employment.
(a)
Non-Solicitation. Grantee shall not, directly or indirectly, either for Grantee’s own benefit or purpose or for the benefit or purpose of any Person other than PNC or any of its subsidiaries, solicit, call on, do business with, or
actively interfere with PNC’s or any subsidiary’s 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.
(b)
No-Hire. Grantee shall not, directly or indirectly, either for Grantee’s own benefit or purpose or for the benefit or purpose of any Person other than PNC or any of its subsidiaries, employ or offer to employ, call on, or actively
interfere with PNC’s or any subsidiary’s relationship with, or attempt to divert or entice away, any employee of PNC or any of its subsidiaries, nor shall Grantee assist any other Person in such activities.
Notwithstanding the above, if Grantee’s employment with the Corporation is terminated by the Corporation and such termination is an
Anticipatory Termination, 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):
(c) No-Hire. Grantee agrees that Grantee shall not, for a period of one year after the Termination Date, employ or offer to
employ, solicit, actively interfere with PNC’s or any PNC affiliate’s relationship with, or attempt to divert or entice away, any officer of PNC or any PNC affiliate.
14.3 Confidentiality. During Grantee’s 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 Corporation’s 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.
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 Grantee’s 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 of its subsidiaries or (b) developed with the use of any time, material, facilities or other resources of PNC or any subsidiary
(“Developments”). Grantee agrees to assign and hereby does assign to PNC or its designee all of Grantee’s 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 PNC’s or its designee’s 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.
15. Enforcement Provisions. Grantee understands and agrees
to the following provisions regarding enforcement of the Agreement.
15.1 Governing Law and Jurisdiction. The Agreement
is governed by and construed under the laws of the Commonwealth of Pennsylvania, without reference to its conflict of laws provisions. 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.
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.
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 the Corporation institutes legal proceedings for injunctive or other relief.
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.
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.
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.
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.
15.8 Compliance with Internal
Revenue Code Section 409A. It is the intention of the parties that the Award and the Agreement comply with the provisions of Section 409A of the Internal Revenue Code to the extent, if any, that such provisions are applicable to the
Agreement, and the Agreement will be administered by PNC in a manner consistent with this intent.
If any payments or benefits
hereunder may be deemed to constitute nonconforming deferred compensation subject to taxation under the provisions of Section 409A, Grantee agrees that PNC may, without the consent of Grantee, modify the Agreement and the Award to the extent
and in the manner PNC deems necessary or advisable or take such other action or actions, including an amendment or action with retroactive effect, that PNC deems appropriate in order either to preclude any such payments or benefits from being deemed
“deferred compensation” within the meaning of Section 409A or to provide such payments or benefits in a manner that complies with the provisions of Section 409A such that they will not be taxable thereunder.
15.9 Applicable Law; Clawback. 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, the Award, and any right to receive Shares or
other value pursuant to the Award and to retain such Shares or other value, shall be subject to rescission, cancellation or recoupment, in whole or in part, if and to the extent so provided under any “clawback” or similar policy of PNC in
effect on the Award Date or that may be established thereafter and to any clawback or recoupment that may be required by applicable law.
16. Acceptance of Award; PNC Right to Cancel. If Grantee does not accept the Award by executing and delivering a copy of the Agreement to PNC, without altering or changing the terms thereof in any
way, within thirty (30) days of receipt by Grantee of a copy of the Agreement, PNC may, in its sole discretion, withdraw its offer and cancel the Award at any time prior to Grantee’s 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 as of the Award Date and the Restricted Shares will be issued as soon thereafter as administratively practicable.
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 in connection with such shares, until the date the Agreement is effective and the Restricted Shares are issued in accordance with this Section 16.
In the event that one or more record dates for dividends on PNC common stock occur after the Award Date but before the Agreement is
effective in accordance with this Section 16 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 Restricted Shares been issued on the Award Date. Any such amount will be payable in accordance with applicable regular payroll practice as in effect from time to time for similarly situated employees.
IN WITNESS WHEREOF, PNC has caused the
Agreement to be signed on its behalf as of the Award Date.
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| THE PNC FINANCIAL SERVICES GROUP, INC. |
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| By: |
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| Chairman and Chief Executive Officer |
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| ATTEST: |
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| By: |
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| Corporate Secretary |
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| ACCEPTED AND AGREED TO by GRANTEE |
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| Grantee |
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ANNEX A
CERTAIN DEFINITIONS
* * *
A.1 “Agreement,” “Award,” and “Award Date.” “Agreement” means the Restricted
Stock Award Agreement between PNC and Grantee evidencing the Award made to Grantee pursuant to the Plan. “Award” means the Award made to Grantee pursuant to the Plan and evidenced by the Agreement. “Award Date” means the Award
Date set forth on page 1 of the Agreement and is the date as of which the Restricted Shares are authorized to be granted by the Committee or its delegate in accordance with the Plan.
A.2 “Anticipatory Termination.” If Grantee’s employment with the Corporation is terminated by the Corporation other
than for Cause, death or Disability prior to the date on which a Change of Control occurs, and if it is reasonably demonstrated by Grantee that such termination of employment (i) was at the request of a third party that has taken steps
reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with or anticipation of a Change of Control, such a termination of employment is an “Anticipatory Termination.”
For purposes of this definition, “Cause” shall mean:
(a) the willful and continued failure of Grantee to substantially perform Grantee’s 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 Grantee’s
duties; or
(b) the willful engaging by Grantee in illegal conduct or gross misconduct that is materially and demonstrably
injurious to PNC or any of its subsidiaries.
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 Grantee’s 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 Grantee’s 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.
The cessation of employment of Grantee will be deemed to be a
termination of Grantee’s 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 Grantee’s 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.
A.3
“Awarded Shares.” Provided that the Restricted Shares are then outstanding and have not been forfeited, Restricted Shares become “Awarded Shares” when all 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; (b) the Restricted Period has terminated; and (c) if the Committee has acted to suspend the vesting
of the Restricted Shares pursuant to Section 7.2(b) of the
Agreement, the terms of such suspension have been satisfied and the Restricted Shares have not been forfeited.
A.4 “Board” means the Board of Directors of PNC.
A.5
“Cause.” Except as otherwise provided in Section A.2, “Cause” means:
(a) the willful and continued
failure of Grantee to substantially perform Grantee’s 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 that specifically identifies the manner in which it is believed that Grantee has not substantially performed Grantee’s duties;
(b) a material breach by Grantee of (1) any code of conduct of PNC or one of its subsidiaries or (2) other written policy of PNC or a subsidiary, in either case required by law or established to
maintain compliance with applicable law;
(c) any act of fraud, misappropriation, material dishonesty, or embezzlement by
Grantee against PNC or one of its subsidiaries or any client or customer of PNC or a subsidiary;
(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; or
(e) entry of any order against Grantee, by any governmental body having regulatory authority with respect to the business of PNC or any of its subsidiaries, that relates to or arises out of Grantee’s
employment or other service relationship with the Corporation.
Except as otherwise provided in Section A.2, the cessation of
employment of Grantee will be deemed to have been a termination of Grantee’s employment with the Corporation for Cause for purposes of the Agreement only if and when the CEO or his or her designee (or, if Grantee is the CEO, the Board)
determines that Grantee is guilty of conduct described in clause (a), (b) or (c) above or that an event described in clause (d) or (e) above has occurred with respect to Grantee and, if so, determines that the termination of
Grantee’s employment with the Corporation will be deemed to have been for Cause.
A.6 “CEO” means the
chief executive officer of PNC.
A.7 “Change of Control” means:
(a) Any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) (a “Person”) becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then-outstanding shares of common stock of PNC
(the “Outstanding PNC Common Stock”) or (B) the combined voting power of the then-outstanding voting securities of PNC entitled to vote generally in the election of directors (the “Outstanding PNC Voting Securities”);
provided, however, that, for purposes of this Section A.7(a), the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from PNC, (2) any acquisition by PNC, (3) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by PNC or any company controlled by, controlling or under common control with PNC (an “Affiliated Company”), (4) any acquisition pursuant to an Excluded Combination
(as defined in Section A.7(c)) or (5) an acquisition of beneficial ownership representing between 20% and 40%, inclusive, of the Outstanding PNC Voting Securities or Outstanding PNC Common Stock shall not be considered a Change of Control if
the Incumbent Board as of immediately prior to any such acquisition approves such acquisition either prior to or immediately after its occurrence;
(b) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board (excluding any Board seat that is
vacant or otherwise unoccupied); provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by PNC’s shareholders, was approved by a vote of at
least two-thirds of the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board;
(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or
similar transaction involving PNC or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of PNC, or the acquisition of assets or stock of another entity by PNC or any of its subsidiaries (each, a
“Business Combination”), excluding, however, a Business Combination following which all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding PNC Common Stock and the Outstanding PNC Voting
Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of
the then-outstanding voting securities entitled to vote generally in the election of directors (or, for a non-corporate entity, equivalent governing body), as the case may be, of the entity resulting from such Business Combination (including,
without limitation, an entity that, as a result of such transaction, owns PNC or all or substantially all of PNC’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately
prior to such Business Combination of the Outstanding PNC Common Stock and the Outstanding PNC Voting Securities, as the case may be (such a Business Combination, an “Excluded Combination”); or
(d) Approval by the shareholders of PNC of a complete liquidation or dissolution of PNC.
A.8 “Committee” means the Personnel and Compensation Committee of the Board or such person or persons as may be
designated or appointed by that committee as its delegate or designee.
A.9 “Competitive Activity” means 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 of its subsidiaries (a) engaged in business activities similar to some or
all of the business activities of PNC or any subsidiary as of Grantee’s 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
Grantee’s Termination Date or, if later and if applicable, after the date specified in clause (ii) of Section A.13(a), 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.
A.10
“Consolidated Subsidiary” means a corporation, bank, partnership, business trust, limited liability company or other form of business organization that (1) is a consolidated subsidiary of PNC under generally accepted accounting
principles and (2) satisfies the definition of “service recipient” under Section 409A of the Internal Revenue Code.
A.11 “Corporation” means PNC and its Consolidated Subsidiaries.
A.12 “Designated Person” will be either: (a) the Committee or its delegate, if Grantee was a member of the
Corporate Executive Group (or equivalent successor classification) or was subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to PNC securities when he or she ceased to be an employee of the Corporation; or
(b) the Chief Human Resources Officer of PNC, if Grantee is not within one of the groups specified in Section A.12(a).
A.13 “Detrimental Conduct” means:
(a) Grantee has engaged, without the prior written consent of PNC (with consent to be given at PNC’s sole
discretion), in any Competitive Activity in the continental United States at any time during the period commencing on Grantee’s Termination Date and extending through (and including) the first (1st)
anniversary of the later of (i) Grantee’s Termination Date and, if different, (ii) the first date after Grantee’s Termination Date as of which Grantee ceases to have a service
relationship with the Corporation;
(b) any act of fraud, misappropriation, or embezzlement by Grantee against PNC or one of
its subsidiaries or any client or customer of PNC or one of its subsidiaries; or
(c) any conviction (including a plea of
guilty or of nolo contendere) of Grantee for, or any entry by Grantee into a pre-trial disposition with respect to, the commission of a felony that relates to or arises out of Grantee’s employment or other service relationship with the
Corporation.
Grantee will be deemed to have engaged in Detrimental Conduct for purposes of the Agreement only if and when the
Committee (if Grantee was an “executive officer” of PNC as defined in SEC Regulation S-K when he or she ceased to be an employee of the Corporation) or the CEO or his or her designee (if Grantee was not such an executive officer),
whichever is applicable, determines that Grantee has engaged in conduct described in clause (a) or clause (b) above or that an event described in clause (c) above has occurred with respect to Grantee, and, if so, determines that
Grantee will be deemed to have engaged in Detrimental Conduct.
A.14 “Disabled” or
“Disability” means, except as may otherwise be required by Section 409A of the Internal Revenue Code, that Grantee either (i) is unable to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving (and has received for at least three months) income replacement benefits under any Corporation-sponsored disability benefit plan. If
Grantee has been determined to be eligible for Social Security disability benefits, Grantee shall be presumed to be Disabled as defined herein.
A.15 “Fair Market Value” as it relates to a share of PNC common stock as of any given date means the average of the reported high and low trading prices on the New York Stock Exchange (or
such successor reporting system as PNC may select) for a share of PNC common stock on such date, or, if no PNC common stock trades have been reported on such exchange for that day, the average of such prices on the next preceding day and the next
following day for which there were reported trades.
A.16 “GAAP” or “generally accepted accounting
principles” means accounting principles generally accepted in the United States of America.
A.17
“Grantee” means the person to whom the Restricted Stock Award is granted, and is identified as Grantee on page 1 of the Agreement.
A.18 “Internal Revenue Code” means the Internal Revenue Code of 1986 as amended, and the rules and regulations promulgated thereunder.
A.19 “PNC” means The PNC Financial Services Group, Inc.
A.20 “Restricted Period” means, subject to early termination if so determined by the Committee or
its delegate or pursuant to Section 7.6 of the Agreement, if applicable, the period from the Award Date through (and including) the earlier of: (a) the date of Grantee’s death; (b) the day immediately preceding the day a Change
of Control is deemed to have occurred; and (c) the day immediately preceding the third (3rd) anniversary of the Award 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.
A.21 “Retire” or “Retirement” means termination of Grantee’s employment with the Corporation
at any time and for any reason (other than termination by reason of Grantee’s death or by the Corporation for Cause and, if the Committee or the CEO or his or her designee so determines prior to such
divestiture, other than by reason of termination in connection with a divestiture of assets or a divestiture of one or more subsidiaries of the Corporation) on or after the first date on which
Grantee has both attained at least age fifty-five (55) and completed five (5) years of service, where a year of service is determined in the same manner as the determination of a year of vesting service calculated under the provisions of
The PNC Financial Services Group, Inc. Pension Plan.
A.22 “Retiree” means a Grantee who has Retired.
A.23 “SEC” means the United States Securities and Exchange Commission.
A.24 “Service relationship” or “having a service relationship with the Corporation” means being engaged
by the Corporation in any capacity for which Grantee receives compensation from the Corporation, including but not limited to acting for compensation as an employee, consultant, independent contractor, officer, director or advisory director.
A.25 “Termination Date” means Grantee’s last date of employment with the Corporation. If Grantee is
employed by a Consolidated Subsidiary that ceases to be a subsidiary of PNC or ceases to be a consolidated subsidiary of PNC under generally accepted accounting principles and Grantee does not continue to be employed by PNC or a Consolidated
Subsidiary, then for purposes of the Agreement, Grantee’s employment with the Corporation terminates effective at the time this occurs.
A.26 “Three-Year Continued Employment Performance Goal” means, subject to early achievement if so determined by the Committee or its delegate 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 Award Date through (and including) the
day immediately preceding the first of the following to occur: (a) the third (3rd) anniversary of the Award Date; (b) the date of Grantee’s death; and (c) the day a Change of Control is deemed to have occurred.
A.27 “Unvested Shares” means any Restricted Shares that are outstanding but have not yet become Awarded Shares in
accordance with the terms of the Agreement.
THE PNC FINANCIAL SERVICES GROUP, INC.
2006 INCENTIVE AWARD PLAN
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CASH-PAYABLE RESTRICTED SHARE UNITS AGREEMENT
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| GRANTEE: |
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[Name] |
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| AWARD DATE: |
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, 20 |
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| SHARE UNITS: |
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[Number] |
1. Definitions. Certain
terms used in this Cash-Payable Restricted Share Units Agreement (the “Agreement”) are defined in Annex A (which is incorporated herein as part of the Agreement) or elsewhere in the Agreement, and such definitions will apply except where
the context otherwise indicates.
In the Agreement, “PNC” means The PNC Financial Services Group, Inc. and
“Corporation” means PNC and its Consolidated Subsidiaries.
2. Restricted Share Units with Dividend Equivalents
Award. Pursuant to The PNC Financial Services Group, Inc. 2006 Incentive Award Plan (the “Plan”), and subject to the terms and conditions of the Agreement, PNC grants to the Grantee named above (“Grantee”) an award of
Restricted Share Units (“Restricted Share Units”) of the number of share units of PNC common stock set forth above, together with Dividend Equivalents (“Dividend Equivalents”), payable in cash, with respect to the same number of
shares of PNC common stock as the number of share units set forth above (together, the “Award”), all subject to acceptance of the Award by Grantee in accordance with Section 15 and subject to the terms and conditions of the Agreement
and the Plan.
3. Terms of Award. The Award is subject to the following terms and conditions.
Restricted Share Units and Dividend Equivalents are not transferable. The Restricted Share Units and ongoing Dividend Equivalents are
subject to forfeiture pursuant to the terms and conditions of the Agreement prior to vesting; provided, however, that there shall be no forfeiture of Dividend Equivalents with respect to dividend payment dates that occur prior to a
forfeiture of the Restricted Share Units to which they relate.
Restricted Share Units that vest in accordance with the terms
of Section 6 will be settled pursuant to and in accordance with the terms of that Section. Unvested Share Units that are forfeited by Grantee pursuant to and in accordance with the terms of Section 5 will be cancelled without payment of
any consideration by PNC.
The right to ongoing Dividend Equivalents is granted in connection with the Restricted Share Units
and therefore shall terminate, without payment of any consideration by PNC, upon the settlement of Vested Share Units or the cancellation of Unvested Share Units, whichever is applicable.
4. Dividend Equivalents. From and after the Award Date until such time as the Restricted Share Units granted in connection with
such Dividend Equivalents are either (i) settled pursuant to and in accordance with the terms of Section 6 or (ii) cancelled upon forfeiture in accordance with the terms of Section 5, the Corporation will make cash payments to
Grantee equivalent to the amounts of the quarterly cash dividends Grantee would have received, if any, had the Restricted Share Units to which such Dividend
Equivalents relate been shares of PNC common stock issued and outstanding on the record dates for cash dividends on PNC common stock that occur during such period.
The Corporation will make such payments to Grantee pursuant to this Section 4 each quarter following the dividend payment date that
relates to each such record date, if any. Such amounts shall be paid in cash in accordance with applicable regular payroll practice as in effect from time to time for similarly situated employees within 30 days after the applicable dividend payment
date.
Termination or cancellation of Dividend Equivalents will have no effect on cash payments made pursuant to this
Section 4 prior to such termination or cancellation.
If the right to ongoing Dividend Equivalents terminates because the
Restricted Share Units to which they relate have been settled pursuant to and in accordance with the terms of Section 6 and such termination occurs after the dividend record date for a quarter but before the related dividend payment date, the
Corporation will nonetheless make such a quarterly dividend equivalent payment to Grantee with respect to that record date, if any.
5. Forfeiture Events.
(a) Termination for
Cause. In the event that Grantee’s employment with the Corporation is terminated by the Corporation for Cause prior to the 3rd anniversary of the Award Date and prior to the occurrence of a Change of Control, if any, all Restricted Share Units
that are Unvested Share Units on Grantee’s Termination Date, together with the right to Dividend Equivalents granted in connection with such Restricted Share Units, will be forfeited by Grantee to PNC and cancelled without payment of any
consideration by PNC.
(b) Competitive Activities. Unvested Share Units that would otherwise remain outstanding after
Grantee’s Termination Date, if any, together with the right to Dividend Equivalents granted in connection with such Restricted Share Units, will be forfeited by Grantee to PNC and cancelled without payment of any consideration by PNC in the
event that, at any time prior to the date such units vest in accordance with Section 6, PNC, by PNC’s Designated Person, determines in its sole discretion that Grantee has engaged in Competitive Activities; provided, however, that
no determination that Grantee has engaged in Competitive Activities may be made on or after the date of Grantee’s death or on or after the date of a Change of Control.
For purposes of this Section 5(b), “Competitive Activities” shall mean any participation in, employment by, ownership of any equity interest exceeding 1% in, or promotion or organization
of, any Person (other than PNC or any of its subsidiaries) engaged in financial services activities, including but not limited to a bank, bank affiliate, broker, dealer, or hedge fund, 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.
(c) Upon forfeiture and cancellation pursuant to the provisions of this Section 5 of Unvested Share Units and the right to Dividend Equivalents granted in connection with such Restricted Share Units,
the Award will terminate and neither Grantee nor any successors, heirs, assigns or legal representatives of Grantee will thereafter have any further rights or interest in such Unvested Share Units or Dividend Equivalents.
6. Vesting; Cash Settlement of Vested Share Units.
(a) Vesting. For the purpose of determining the vesting date applicable to each portion of the Award, the Restricted Share Units are divided into three “Tranches” as follows: (1) 1/3
of the share units (rounded down to the nearest whole share unit) are in the First Tranche of the Restricted Share Units; (2) another 1/3 of the share units (rounded down to the nearest whole share unit) are in the Second Tranche of the
Restricted Share Units; and (3) the remaining share units are in the Third Tranche of the Restricted Share Units.
Unless Unvested Share Units have been forfeited pursuant to the provisions of
Section 5, Grantee’s Unvested Share Units will vest upon the earliest to occur of the following:
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(i) |
the 1st anniversary of the Award Date in the case of the First Tranche share units, the 2nd anniversary of the Award Date in the case of the Second Tranche share units, and the 3rd anniversary of the Award Date in the case of the Third Tranche share
units, respectively; |
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(ii) |
Grantee’s death; and |
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(iii) |
the occurrence of a Change of Control. |
(b) Settlement. Vested Share Units will be settled at the time set forth in this Section 6(b) by the payment to Grantee of cash in an amount equal to the number of Vested Share Units being
settled multiplied by the Fair Market Value of a share of PNC common stock on the settlement date or as otherwise determined pursuant to Section 8 if applicable.
Payment will be made to Grantee with respect to the settlement of Vested Share Units as soon as practicable, but in no event later than 30 days, following the settlement date, which shall be the earliest
to occur of the following:
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(i) |
the 1st, 2nd, or
3rd anniversary of the Award Date, as the case may be,
with respect to the First, Second or Third Tranche of the Restricted Share Units, as applicable; |
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(ii) |
the date of Grantee’s death; and |
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(iii) |
the occurrence of a Change of Control, but only if such Change of Control is a permissible payment event under Section 409A of the Internal Revenue Code and any
regulations, revenue procedures or revenue rulings issued by the Secretary of the United States Treasury applicable to such Section 409A. |
7. No Rights as Shareholder. Grantee will have no rights as a shareholder of PNC by virtue of this Award.
8. Capital Adjustments. Upon the occurrence of a corporate transaction or transaction (including, without limitation, stock dividends, stock splits, spin-offs, split-offs, recapitalizations,
mergers, consolidations or reorganizations of or by PNC (each, a “Corporate Transaction”)), the Compensation Committee or its delegate shall make those adjustments, if any, in the number, class or kind of Restricted Share Units and related
Dividend Equivalents then outstanding under the Award that it deems appropriate in its discretion to reflect the Corporate Transaction(s) such that the rights of Grantee are neither enlarged nor diminished as a result of such Corporate Transaction
or Transactions, including without limitation measuring the value per share unit by reference to the per share value of the consideration payable to a PNC common shareholder in connection with such Corporate Transaction.
All determinations hereunder shall be made by the Compensation Committee or its delegate in its sole discretion and shall be final,
binding and conclusive for all purposes on all parties, including without limitation Grantee.
9. Prohibitions Against
Sale, Assignment, etc.; Payment to Legal Representative.
(a) Restricted Share Units and Dividend Equivalents may not be
sold, assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered.
(b) If Grantee is deceased at the time
vested Restricted Share Units are settled in accordance with the terms of Section 6, such payment will be made to the executor or administrator of Grantee’s estate or to Grantee’s other legal representative as determined in good faith
by PNC.
(c) Any payment made in good faith by PNC to Grantee’s executor, administrator or other
legal representative shall extinguish all right to payment hereunder.
10. Withholding Taxes.
Where Grantee has not previously satisfied all applicable withholding tax obligations, PNC will, at the time the tax withholding
obligation arises in connection herewith, retain an amount sufficient to satisfy the minimum amount of taxes then required to be withheld by the Corporation in connection therewith from any amounts then payable hereunder to Grantee. If any
withholding is required prior to the time amounts are payable to Grantee hereunder, the withholding will be taken from other compensation then payable to Grantee or as otherwise determined by PNC.
If Grantee desires to have an additional amount withheld above the required minimum, up to Grantee’s W-4 obligation if higher, and
if PNC so permits, Grantee may elect to satisfy this additional withholding by payment of cash. If Grantee’s W-4 obligation does not exceed the required minimum withholding in connection herewith, no additional withholding may be made.
11. Employment. Neither the granting of the Restricted Share Units and Dividend Equivalents 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 Grantee’s status as an employee at will.
12. Subject to the Plan and the Compensation Committee. In all respects the Award 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
Award and the Agreement are subject to any interpretation of, and any rules and regulations issued by, the Compensation Committee or its delegate or under the authority of the Compensation Committee, whether made or issued before or after the Award
Date.
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 with respect to the subject matters addressed herein, and
supersedes all other discussions, negotiations, correspondence, representations, understandings and agreements between the parties concerning the subject matters hereof.
14. Enforcement Provisions. Grantee understands and agrees to the following provisions regarding enforcement of the Agreement.
14.1 Governing Law and Jurisdiction. The Agreement is governed by and construed under the laws of the Commonwealth of
Pennsylvania, without reference to its conflict of laws provisions. 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.
14.2 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.
14.3 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 Sarbanes-Oxley 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 Sarbanes-Oxley Act of 2002.
14.4. Compliance with Internal Revenue Code Section 409A. It is the intention of the parties that the Award and
the Agreement comply with the provisions of Section 409A of the Internal Revenue Code to the extent, if any, that such provisions are applicable to the Agreement, and the Agreement will be administered by PNC in a manner consistent with this
intent.
If any payments or benefits hereunder may be deemed to constitute nonconforming deferred compensation subject to
taxation under the provisions of Section 409A, Grantee agrees that PNC may, without the consent of Grantee, modify the Agreement and the Award to the extent and in the manner PNC deems necessary or advisable or take such other action or
actions, including an amendment or action with retroactive effect, that PNC deems appropriate in order either to preclude any such payments or benefits from being deemed “deferred compensation” within the meaning of Section 409A or to
provide such payments or benefits in a manner that complies with the provisions of Section 409A such that they will not be taxable thereunder.
15. Acceptance of Award; PNC Right to Cancel. If Grantee does not accept the Award by executing and delivering a copy of the Agreement to PNC, without altering or changing the terms thereof in any
way, within 30 days of receipt by Grantee of a copy of the Agreement, PNC may, in its sole discretion, withdraw its offer and cancel the Award at any time prior to Grantee’s 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.
In the event
that one or more record dates for dividends on PNC common stock occur after the Award Date but before the date the Agreement is effective in accordance with this Section 15, then upon the effectiveness of the Agreement, the Corporation will
make a cash payment to Grantee equal to the amount of the dividend equivalent payment Grantee would have received had the Agreement been effective on the Award Date.
IN WITNESS WHEREOF, PNC has caused the
Agreement to be signed on its behalf as of the Award Date.
THE PNC FINANCIAL SERVICES GROUP, INC.
By:
Chairman and Chief Executive Officer
ATTEST:
By:
Corporate Secretary
ACCEPTED
AND AGREED TO by GRANTEE
ANNEX A
CERTAIN DEFINITIONS
* * *
A.1 “Agreement” means the Cash-Payable Restricted Share Units Agreement between PNC and Grantee evidencing the
Restricted Share Units with Dividend Equivalents award granted to Grantee pursuant to the Plan.
A.2 “Award”
and “Award Date.” “Award” means the Restricted Share Units with Dividend Equivalents award granted to Grantee pursuant to the Plan and evidenced by the Agreement. “Award Date” means the Award Date set forth on
page 1 of the Agreement and is the date as of which the Restricted Share Units with Dividend Equivalents are authorized to be granted by the Compensation Committee or its delegate in accordance with the Plan.
A.3 “Board” means the Board of Directors of PNC.
A.4 “Cause” means:
(a) the willful and continued failure of Grantee to substantially perform Grantee’s 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 that specifically identifies the manner in which it is believed that Grantee has not substantially performed Grantee’s duties;
(b) a material breach by Grantee of (1) any code of conduct of PNC or one of its subsidiaries or (2) other written policy of
PNC or a subsidiary, in either case required by law or established to maintain compliance with applicable law;
(c) any act of
fraud, misappropriation, material dishonesty, or embezzlement by Grantee against PNC or one of its subsidiaries or any client or customer of PNC or a subsidiary;
(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; or
(e) entry of any order against Grantee, by any governmental body having regulatory authority with respect to the business of PNC or any
of its subsidiaries, that relates to or arises out of Grantee’s employment or other service relationship with the Corporation.
The cessation of employment of Grantee will be deemed to have been a termination of Grantee’s employment with the Corporation for Cause for purposes of the Agreement only if and when PNC, by
PNC’s Designated Person, determines that Grantee is guilty of conduct described in clause (a), (b) or (c) above or that an event described in clause (d) or (e) above has occurred with respect to Grantee and, if so,
determines that the termination of Grantee’s employment with the Corporation will be deemed to have been for Cause.
A.5
“Change of Control” means:
(a) Any individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either
(A) the then-outstanding shares of common stock of PNC (the “Outstanding PNC Common Stock”) or (B) the combined voting power of the then-outstanding voting securities of PNC entitled to vote generally in the election of directors
(the “Outstanding PNC Voting Securities”); provided, however, that, for purposes of this Section A.5(a), the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from PNC,
(2) any acquisition by PNC, (3) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by PNC or any company controlled by, controlling or under common control with PNC (an “Affiliated Company”), (4) any acquisition
pursuant to an Excluded Combination (as defined in Section A.5(c)) or (5) an acquisition of beneficial ownership representing between 20% and 40%, inclusive, of the Outstanding PNC Voting Securities or Outstanding PNC Common Stock shall not be
considered a Change of Control if the Incumbent Board as of immediately prior to any such acquisition approves such acquisition either prior to or immediately after its occurrence;
(b) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at
least a majority of the Board (excluding any Board seat that is vacant or otherwise unoccupied); provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by PNC’s
shareholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board;
(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar
transaction involving PNC or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of PNC, or the acquisition of assets or stock of another entity by PNC or any of its subsidiaries (each, a “Business
Combination”), excluding, however, a Business Combination following which all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding PNC Common Stock and the Outstanding PNC Voting Securities
immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of the
then-outstanding voting securities entitled to vote generally in the election of directors (or, for a non-corporate entity, equivalent governing body), as the case may be, of the entity resulting from such Business Combination (including, without
limitation, an entity that, as a result of such transaction, owns PNC or all or substantially all of PNC’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to
such Business Combination of the Outstanding PNC Common Stock and the Outstanding PNC Voting Securities, as the case may be (such a Business Combination, an “Excluded Combination”); or
(d) Approval by the shareholders of PNC of a complete liquidation or dissolution of PNC.
A.6 “Compensation Committee” means the Personnel and Compensation Committee of the Board or such person or persons as
may be designated or appointed by that committee as its delegate or designee.
A.7 “Consolidated Subsidiary”
means a corporation, bank, partnership, business trust, limited liability company or other form of business organization that (1) is a consolidated subsidiary of PNC under generally accepted accounting principles and (2) satisfies the
definition of “service recipient” under Section 409A of the Internal Revenue Code.
A.8
“Corporation” means PNC and its Consolidated Subsidiaries.
A.9 “Designated Person” shall
mean PNC’s CEO or any other executive officer of PNC.
A.10 “Fair Market Value” as it relates to a share
of PNC common stock as of any given date means the average of the reported high and low trading prices on the New York Stock Exchange (or such successor reporting system as PNC may select) for a share of PNC common stock on such date, or, if no PNC
common stock trades have been reported on such exchange for that day, the average of such prices on the next preceding day and the next following day for which there were reported trades.
A.11 “GAAP” or “generally accepted accounting principles” means accounting principles generally accepted in
the United States of America.
A.12 “Grantee” means the person to whom the Restricted Share Units with
Dividend Equivalents award is granted, and is identified as Grantee on page 1 of the Agreement.
A.13 “Internal
Revenue Code” means the Internal Revenue Code of 1986 as amended, and the rules and regulations promulgated thereunder.
A.14 “PNC” means The PNC Financial Services Group, Inc.
A.15
“SEC” means the United States Securities and Exchange Commission.
A.16 “Termination Date”
means Grantee’s last date of employment with the Corporation. If Grantee is employed by a Consolidated Subsidiary that ceases to be a subsidiary of PNC or ceases to be a consolidated subsidiary of PNC under generally accepted accounting
principles and Grantee does not continue to be employed by PNC or a Consolidated Subsidiary, then for purposes of the Agreement, Grantee’s employment with the Corporation terminates effective at the time this occurs.
A.17 “Unvested Share Units” means any Restricted Share Units that are outstanding but have not vested in accordance with
the terms of Section 6 of the Agreement.
A.18 “Vested Share Units.” Provided that the Restricted Share
Units have not been forfeited pursuant to the terms of Section 5 of the Agreement and are then outstanding, Restricted Share Units will vest in accordance with the terms of Section 6 of the Agreement. Restricted Share Units that have
vested and become Vested Share Units are no longer subject to forfeiture under the terms of the Agreement.
THE PNC FINANCIAL SERVICES GROUP, INC.
2006 INCENTIVE AWARD PLAN
* * *
CASH-PAYABLE RESTRICTED SHARE UNITS AWARD AGREEMENT
* * *
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| GRANTEE: |
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[ Name ] |
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| AWARD DATE: |
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, 20 |
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| SHARE UNITS: |
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[ Number ] share units |
1. Definitions. Certain
terms used in this Cash-Payable Restricted Share Units Agreement (the “Agreement”) are defined in Annex A (which is incorporated herein as part of the Agreement) or elsewhere in the Agreement, and such definitions will apply except where
the context otherwise indicates.
In the Agreement, “PNC” means The PNC Financial Services Group, Inc. and
“Corporation” means PNC and its Consolidated Subsidiaries.
2. Restricted Share Units with Dividend Equivalents
Award. Pursuant to The PNC Financial Services Group, Inc. 2006 Incentive Award Plan (the “Plan”), and subject to the terms and conditions of the Agreement, PNC grants to the Grantee named above (“Grantee”) an award of
Restricted Share Units (“Restricted Share Units”) of the number of share units of PNC common stock set forth above, together with Dividend Equivalents (“Dividend Equivalents”), payable in cash, with respect to the same number of
shares of PNC common stock as the number of share units set forth above (together, the “Award”), all subject to acceptance of the Award by Grantee in accordance with Section 16 and subject to the terms and conditions of the Agreement
and the Plan.
3. Terms of Award. The Award is subject to the following terms and conditions.
Restricted Share Units and Dividend Equivalents are not transferable. The Restricted Share Units and ongoing Dividend Equivalents are
subject to forfeiture pursuant to the terms and conditions of the Agreement prior to vesting; provided, however, that there shall be no forfeiture of Dividend Equivalents with respect to dividend payment dates that occur prior to a
forfeiture of the Restricted Share Units to which they relate.
Restricted Share Units that vest in accordance with the terms
of Section 6 will be settled pursuant to and in accordance with the terms of that Section. Unvested Share Units that are forfeited by Grantee pursuant to and in accordance with the terms of Section 5 will be cancelled without payment of
any consideration by PNC.
The right to ongoing Dividend Equivalents is granted in connection with the Restricted Share Units
and therefore shall terminate, without payment of any consideration by PNC, upon the settlement of Vested Share Units or the cancellation of Unvested Share Units, whichever is applicable.
4. Dividend Equivalents. From and after the Award Date until such time as the Restricted Share Units granted in connection with
such Dividend Equivalents are either (i) settled pursuant to and in accordance with the terms of Section 6 or (ii) cancelled upon forfeiture in accordance with the terms of Section 5, the Corporation will make cash payments to
Grantee equivalent to the amounts of the quarterly cash dividends Grantee would have received, if any, had the Restricted Share Units to which such Dividend
Equivalents relate been shares of PNC common stock issued and outstanding on the record dates for cash
dividends on PNC common stock that occur during such period.
The Corporation will make such payments to Grantee pursuant to
this Section 4 each quarter following the dividend payment date that relates to each such record date, if any. Such amounts shall be paid in cash in accordance with applicable regular payroll practice as in effect from time to time for
similarly situated employees within 30 days after the applicable dividend payment date.
Termination or cancellation of
Dividend Equivalents will have no effect on cash payments made pursuant to this Section 4 prior to such termination or cancellation.
If the right to ongoing Dividend Equivalents terminates because the Restricted Share Units to which they relate have been settled pursuant to and in accordance with the terms of Section 6 and such
termination occurs after the dividend record date for a quarter but before the related dividend payment date, the Corporation will nonetheless make such a quarterly dividend equivalent payment to Grantee with respect to that record date, if any.
However, if the right to ongoing Dividend Equivalents terminates because the Restricted Share Units to which they relate have been cancelled upon forfeiture in accordance with the terms of Section 5, Grantee will not receive any dividend
equivalent payments after such forfeiture date, whether or not a dividend record date had occurred prior to such date.
5.
Forfeiture Events.
5.1 Termination for Cause. In the event that Grantee’s employment
with the Corporation is terminated by the Corporation for Cause prior to the 3rd anniversary of the Award Date, all Restricted Share Units that are Unvested Share Units on Grantee’s Termination Date, together with the right to Dividend Equivalents granted in connection with such
Restricted Share Units, will be forfeited by Grantee to PNC and cancelled without payment of any consideration by PNC; provided, however, this Section 5.1 shall only apply if the Termination Date occurs prior to the occurrence of a
Change of Control, if any.
5.2 Termination Other than for Death or Disability. In the event that
Grantee’s employment with the Corporation terminates prior to 3rd anniversary of the Award Date for any reason other than (i) Grantee’s death or (ii) termination of Grantee’s employment by the Corporation by reason of Grantee’s Disability, all
Restricted Share Units that are Unvested Share Units on Grantee’s Termination Date, together with the right to Dividend Equivalents granted in connection with such Restricted Share Units, will be forfeited by Grantee to PNC and cancelled
without payment of any consideration by PNC; provided, however, this Section 5.2 shall only apply if the Termination Date occurs prior to the occurrence of a Change of Control, if any.
5.3 Detrimental Conduct. Unvested Share Units that would otherwise remain outstanding after Grantee’s Termination Date, if
any, together with the right to Dividend Equivalents granted in connection with such Restricted Share Units, will be forfeited by Grantee to PNC and cancelled without payment of any consideration by PNC in the event that, at any time prior to the
date such units vest in accordance with Section 6, PNC, by PNC’s Designated Person, determines in its sole discretion 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 Grantee’s death or on or after the date of a Change of Control.
5.4 Judicial Criminal Proceedings. If any criminal charges are brought against Grantee, in an indictment or in other analogous
formal charges commencing judicial criminal proceedings, alleging the commission of a felony that relates to or arises out of Grantee’s employment or other service relationship with the Corporation, then to the extent that the Restricted Share
Units are still outstanding and have not yet vested, the vesting of the Unvested Share Units shall be automatically suspended.
Such suspension of vesting shall continue until the earliest to occur of the following:
(1) resolution of the criminal proceedings in a manner that results in a conviction
(including a plea of guilty or of nolo contendere) of Grantee for, or any entry by Grantee into a pre-trial disposition with respect to, the commission of a felony that relates to or arises out of Grantee’s employment or other service
relationship with the Corporation;
(2) resolution of the criminal proceedings in one of the following ways: (i) the
charges as they relate to such alleged felony have been dismissed (with or without prejudice); (ii) Grantee has been acquitted of such alleged felony; or (iii) a criminal proceeding relating to such alleged felony has been completed
without resolution (for example, as a result of a mistrial) and the relevant time period for recommencing criminal proceedings relating to such alleged felony has expired without any such recommencement;
(3) Grantee’s death; or
(4) the occurrence of a Change of Control.
If the suspension is terminated by
the occurrence of an event set forth in clause (1) above, the Restricted Share Units, together with all Dividend Equivalents granted in connection with such Restricted Share Units, will, upon such occurrence, be automatically forfeited by
Grantee to PNC and cancelled without payment of any consideration by PNC.
If the suspension is terminated by the occurrence
of an event set forth in clause (2), (3) or (4) above, vesting and settlement shall proceed in accordance with Section 6, as applicable.
5.5 Termination of Award Upon Forfeiture of Units. The Award will terminate, and neither Grantee nor any successors, heirs, assigns or legal representatives of Grantee will thereafter have any
further rights or interest in the Restricted Share Units or the related right to Dividend Equivalents evidenced by the Agreement, upon forfeiture and cancellation pursuant to the provisions of Section 5 of such Restricted Share Units and
related right to Dividend Equivalents.
6. Vesting; Cash Settlement of Vested Share Units.
6.1 Vesting. Unless Unvested Share Units have been forfeited pursuant to the provisions of Section 5, Grantee’s Unvested
Share Units will vest upon the earliest to occur of the following:
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(i) |
the 3rd anniversary of the Award Date or, if later, on the date as of which any suspension imposed pursuant to Section 5.4 is lifted and the units vest, as applicable; |
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(ii) |
Grantee’s death; and |
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(iii) |
the occurrence of a Change of Control. |
6.2 Settlement. Vested Share Units will be settled at the time set forth in this Section 6.2 by the payment to Grantee of cash in an amount equal to the number of Vested Share Units being
settled multiplied by the Fair Market Value of a share of PNC common stock on the settlement date or as otherwise determined pursuant to Section 8 if applicable.
Payment will be made to Grantee with respect to the settlement of Vested Share Units as soon as practicable, but in no event later than 30 days, following the settlement date, which shall be the earliest
to occur of the following:
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(iv) |
the 3rd anniversary of the Award Date or, if later, the date as of which any suspension imposed pursuant to Section 5.4 is lifted and the units vest, as applicable; |
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(v) |
the date of Grantee’s death; and |
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(vi) |
the occurrence of a Change of Control, but only if such Change of Control is a permissible payment event under Section 409A of the Internal Revenue Code and any
regulations, revenue procedures or revenue rulings issued by the Secretary of the United States Treasury applicable to such Section 409A. |
In the event that the settlement date is the date as of which any suspension imposed pursuant to Section 5.4 is lifted, payment will be made no later than the earlier of (a) 30 days after the
settlement date and (b) December 31 of the year in which the settlement date occurs.
7. No Rights as
Shareholder. Grantee will have no rights as a shareholder of PNC by virtue of this Award.
8. Capital Adjustments.
Upon the occurrence of a corporate transaction or transaction (including, without limitation, stock dividends, stock splits, spin-offs, split-offs, recapitalizations, mergers, consolidations or reorganizations of or by PNC (each, a “Corporate
Transaction”)), the Compensation Committee or its delegate shall make those adjustments, if any, in the number, class or kind of Restricted Share Units and related Dividend Equivalents then outstanding under the Award that it deems appropriate
in its discretion to reflect the Corporate Transaction(s) such that the rights of Grantee are neither enlarged nor diminished as a result of such Corporate Transaction or Transactions, including without limitation measuring the value per share unit
by reference to the per share value of the consideration payable to a PNC common shareholder in connection with such Corporate Transaction.
All determinations hereunder shall be made by the Compensation Committee or its delegate in its sole discretion and shall be final, binding and conclusive for all purposes on all parties, including
without limitation Grantee.
9. Prohibitions Against Sale, Assignment, etc.; Payment to Legal Representative.
(a) Restricted Share Units and Dividend Equivalents may not be sold, assigned, transferred, exchanged, pledged, hypothecated
or otherwise encumbered.
(b) If Grantee is deceased at the time vested Restricted Share Units are settled in accordance with
the terms of Section 6, such payment will be made to the executor or administrator of Grantee’s estate or to Grantee’s other legal representative as determined in good faith by PNC.
(c) Any payment made in good faith by PNC to Grantee’s executor, administrator or other legal representative shall extinguish all
right to payment hereunder.
10. Withholding Taxes. Where Grantee has not previously satisfied all applicable
withholding tax obligations, PNC will, at the time the tax withholding obligation arises in connection herewith, retain an amount sufficient to satisfy the minimum amount of taxes then required to be withheld by the Corporation in connection
therewith from any amounts then payable hereunder to Grantee. If any withholding is required prior to the time amounts are payable to Grantee hereunder, the withholding will be taken from other compensation then payable to Grantee or as otherwise
determined by PNC.
If Grantee desires to have an additional amount withheld above the required minimum, up to Grantee’s
W-4 obligation if higher, and if PNC so permits, Grantee may elect to satisfy this additional withholding by payment of cash. If Grantee’s W-4 obligation does not exceed the required minimum withholding in connection herewith, no additional
withholding may be made.
11. Employment. Neither the granting of the Restricted Share Units and Dividend Equivalents
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 Grantee’s status as an employee at
will.
12. Subject to the Plan and the Compensation Committee. In all respects the Award 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 Award and the Agreement are subject to any interpretation of, and any rules and regulations issued by, the Compensation Committee or its delegate or under the authority of the Compensation Committee,
whether made or issued before or after the Award Date.
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 with respect to
the subject matters addressed herein, and supersedes all other discussions, negotiations, correspondence, representations, understandings and agreements between the parties concerning the subject matters hereof.
14. Grantee Covenants.
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 by virtue of receiving
this Restricted Share Units and Dividend Equivalents Award (regardless of whether such share units ultimately vest and settle); that such provisions are reasonable and properly required for the adequate protection of the business of PNC and its
subsidiaries; and that enforcement of such provisions will not prevent Grantee from earning a living.
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 Grantee’s
Termination Date regardless of the reason for such termination of employment.
(a) Non-Solicitation. Grantee shall not,
directly or indirectly, either for Grantee’s own benefit or purpose or for the benefit or purpose of any Person other than PNC or any of its subsidiaries, solicit, call on, do business with, or actively interfere with PNC’s or any
subsidiary’s 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.
(b) No-Hire. Grantee shall not, directly or
indirectly, either for Grantee’s own benefit or purpose or for the benefit or purpose of any Person other than PNC or any of its subsidiaries, employ or offer to employ, call on, or actively interfere with PNC’s or any subsidiary’s
relationship with, or attempt to divert or entice away, any employee of PNC or any of its subsidiaries, nor shall Grantee assist any other Person in such activities.
14.3 Confidentiality. During Grantee’s 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 Corporation’s 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.
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 Grantee’s 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 of its subsidiaries or (b) developed with the use of any time, material, facilities or other resources of PNC or any subsidiary
(“Developments”). Grantee agrees to assign and hereby does assign to PNC or its designee all of Grantee’s 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 PNC’s or its designee’s 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.
15. Enforcement Provisions. Grantee understands and agrees
to the following provisions regarding enforcement of the Agreement.
15.1 Governing Law and Jurisdiction. The Agreement
is governed by and construed under the laws of the Commonwealth of Pennsylvania, without reference to its conflict of laws provisions. 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.
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.
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 the Corporation institutes legal proceedings for injunctive or other relief.
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.
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.
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.
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.
15.8 Compliance with Internal Revenue Code Section 409A. It is the intention of the parties that the Award and the Agreement
comply with the provisions of Section 409A of the Internal Revenue Code to the extent, if any, that such provisions are applicable to the Agreement, and the Agreement will be administered by PNC in a manner consistent with this intent.
If any payments or benefits hereunder may be deemed to constitute nonconforming deferred compensation subject to taxation
under the provisions of Section 409A, Grantee agrees that PNC may,
without the consent of Grantee, modify the Agreement and the Award to the extent and in the manner PNC deems
necessary or advisable or take such other action or actions, including an amendment or action with retroactive effect, that PNC deems appropriate in order either to preclude any such payments or benefits from being deemed “deferred
compensation” within the meaning of Section 409A or to provide such payments or benefits in a manner that complies with the provisions of Section 409A such that they will not be taxable thereunder.
15.9 Applicable Law; Clawback. 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, the Award, and any right to receive and retain
any value pursuant to the Award, shall be subject to rescission, cancellation or recoupment, in whole or in part, if and to the extent so provided under any “clawback” or similar policy of PNC in effect on the Award Date or that may be
established thereafter and to any clawback or recoupment that may be required by applicable law.
16. Acceptance of Award;
PNC Right to Cancel. If Grantee does not accept the Award by executing and delivering a copy of the Agreement to PNC, without altering or changing the terms thereof in any way, within 30 days of receipt by Grantee of a copy of the Agreement, PNC
may, in its sole discretion, withdraw its offer and cancel the Award at any time prior to Grantee’s 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.
In the event that one or more record dates for dividends on PNC common stock occur after the
Award Date but before the date the Agreement is effective in accordance with this Section 16, then upon the effectiveness of the Agreement, the Corporation will make a cash payment to Grantee equal to the amount of the dividend equivalent
payment Grantee would have received had the Agreement been effective on the Award Date.
IN WITNESS WHEREOF, PNC has caused the
Agreement to be signed on its behalf as of the Award Date.
THE PNC FINANCIAL SERVICES GROUP, INC.
By:
Chairman and Chief Executive Officer
ATTEST:
By:
Corporate Secretary
ACCEPTED
AND AGREED TO by GRANTEE
ANNEX A
CERTAIN DEFINITIONS
* * *
A.1 “Agreement” means the Cash-Payable Restricted Share Units Agreement between PNC and Grantee evidencing the
Restricted Share Units with Dividend Equivalents award granted to Grantee pursuant to the Plan.
A.2 “Award”
and “Award Date.” “Award” means the Restricted Share Units with Dividend Equivalents award granted to Grantee pursuant to the Plan and evidenced by the Agreement. “Award Date” means the Award Date set forth on
page 1 of the Agreement and is the date as of which the Restricted Share Units with Dividend Equivalents are authorized to be granted by the Compensation Committee or its delegate in accordance with the Plan.
A.3 “Board” means the Board of Directors of PNC.
A.4 “Cause” means:
(a) The willful and continued failure of Grantee to substantially perform Grantee’s 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 that specifically identifies the manner in which it is believed that Grantee has not substantially performed Grantee’s duties;
(b) A material breach by Grantee of (1) any code of conduct of PNC or one of its subsidiaries or (2) other written policy of
PNC or a subsidiary, in either case required by law or established to maintain compliance with applicable law;
(c) Any act of
fraud, misappropriation, material dishonesty, or embezzlement by Grantee against PNC or one of its subsidiaries or any client or customer of PNC or a subsidiary;
(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; or
(e) Entry of any order against Grantee, by any governmental body having regulatory authority with respect to the business of PNC or any
of its subsidiaries, that relates to or arises out of Grantee’s employment or other service relationship with the Corporation.
The cessation of employment of Grantee will be deemed to have been a termination of Grantee’s employment with the Corporation for Cause for purposes of the Agreement only if and when PNC, by
PNC’s Designated Person, determines that Grantee is guilty of conduct described in clause (a), (b) or (c) above or that an event described in clause (d) or (e) above has occurred with respect to Grantee and, if so,
determines that the termination of Grantee’s employment with the Corporation will be deemed to have been for Cause.
A.5
“CEO” means the chief executive officer of PNC.
A.6 “Change of Control” means:
(a) Any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) (a “Person”) becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then-outstanding shares of common stock of PNC
(the “Outstanding PNC Common Stock”) or (B) the combined voting power of the then-outstanding voting securities of PNC entitled to vote generally in
the election of directors (the “Outstanding PNC Voting Securities”); provided, however, that, for purposes of this Section A.6(a), the following acquisitions shall not
constitute a Change of Control: (1) any acquisition directly from PNC, (2) any acquisition by PNC, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by PNC or any company controlled by,
controlling or under common control with PNC (an “Affiliated Company”), (4) any acquisition pursuant to an Excluded Combination (as defined in Section A.6(c)) or (5) an acquisition of beneficial ownership representing between 20%
and 40%, inclusive, of the Outstanding PNC Voting Securities or Outstanding PNC Common Stock shall not be considered a Change of Control if the Incumbent Board as of immediately prior to any such acquisition approves such acquisition either prior to
or immediately after its occurrence;
(b) Individuals who, as of the date hereof, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board (excluding any Board seat that is vacant or otherwise unoccupied); provided, however, that any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by PNC’s shareholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board;
(c) Consummation of a reorganization, merger, statutory
share exchange or consolidation or similar transaction involving PNC or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of PNC, or the acquisition of assets or stock of another entity by PNC or any of
its subsidiaries (each, a “Business Combination”), excluding, however, a Business Combination following which all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding PNC Common Stock and
the Outstanding PNC Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and
the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors (or, for a non-corporate entity, equivalent governing body), as the case may be, of the entity resulting from such Business
Combination (including, without limitation, an entity that, as a result of such transaction, owns PNC or all or substantially all of PNC’s assets either directly or through one or more subsidiaries) in substantially the same proportions as
their ownership immediately prior to such Business Combination of the Outstanding PNC Common Stock and the Outstanding PNC Voting Securities, as the case may be (such a Business Combination, an “Excluded Combination”); or
(d) Approval by the shareholders of PNC of a complete liquidation or dissolution of PNC.
A.7 “Compensation Committee” means the Personnel and Compensation Committee of the Board or such person or persons as
may be designated or appointed by that committee as its delegate or designee.
A.8 “Competitive Activity”
means 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 of its subsidiaries (a) engaged in business activities similar to
some or all of the business activities of PNC or any subsidiary as of Grantee’s 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 Grantee’s Termination Date or, if later and if applicable, after the date specified in clause (ii) of Section A.12(a), 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.
A.9
“Consolidated Subsidiary” means a corporation, bank, partnership, business trust, limited liability company or other form of business organization that (1) is a consolidated subsidiary of PNC under generally accepted accounting
principles and (2) satisfies the definition of “service recipient” under Section 409A of the Internal Revenue Code.
A.10 “Corporation” means PNC and its Consolidated Subsidiaries.
A.11 “Designated Person” shall mean PNC’s CEO or any other executive officer of PNC.
A.12 “Detrimental Conduct” means:
(a) Grantee has engaged, without the prior written consent of PNC (with consent to be given at PNC’s sole
discretion), in any Competitive Activity in the continental United States at any time during the period commencing on Grantee’s Termination Date and extending through (and including) the first (1st) anniversary of the later of (i) Grantee’s
Termination Date and, if different, (ii) the first date after Grantee’s Termination Date as of which Grantee ceases to have a service relationship with the Corporation;
(b) any act of fraud, misappropriation, or embezzlement by Grantee against PNC or one of its subsidiaries or any client or customer of
PNC or one of its subsidiaries; or
(c) any conviction (including a plea of guilty or of nolo contendere) of Grantee
for, or any entry by Grantee into a pre-trial disposition with respect to, the commission of a felony that relates to or arises out of Grantee’s employment or other service relationship with the Corporation.
Grantee will be deemed to have engaged in Detrimental Conduct for purposes of the Agreement only if and when PNC, by PNC’s
Designated Person, determines that Grantee has engaged in conduct described in clause (a) or clause (b) above or that an event described in clause (c) above has occurred with respect to Grantee and, if so, determines that Grantee will
be deemed to have engaged in Detrimental Conduct.
A.13 “Disabled” or “Disability” means,
except as may otherwise be required by Section 409A of the Internal Revenue Code, that Grantee either (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that
can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can
be expected to last for a continuous period of not less than 12 months, receiving (and has received for at least three months) income replacement benefits under any Corporation-sponsored disability benefit plan. If Grantee has been determined to be
eligible for Social Security disability benefits, Grantee shall be presumed to be Disabled as defined herein.
A.14
“Fair Market Value” as it relates to a share of PNC common stock as of any given date means the average of the reported high and low trading prices on the New York Stock Exchange (or such successor reporting system as PNC may
select) for a share of PNC common stock on such date, or, if no PNC common stock trades have been reported on such exchange for that day, the average of such prices on the next preceding day and the next following day for which there were reported
trades.
A.15 “GAAP” or “generally accepted accounting principles” means accounting principles
generally accepted in the United States of America.
A.16 “Grantee” means the person to whom the Restricted
Share Units with Dividend Equivalents award is granted, and is identified as Grantee on page 1 of the Agreement.
A.17
“Internal Revenue Code” means the Internal Revenue Code of 1986 as amended, and the rules and regulations promulgated thereunder.
A.18 “PNC” means The PNC Financial Services Group, Inc.
A.19
“SEC” means the United States Securities and Exchange Commission.
A.20 “Service
relationship” or “having a service relationship with the Corporation” means being engaged by the Corporation in any capacity for which Grantee receives compensation from the
Corporation, including but not limited to acting for compensation as an employee, consultant, independent contractor, officer, director or advisory director.
A.21 “Termination Date” means Grantee’s last date of employment with the Corporation. If Grantee is employed by a
Consolidated Subsidiary that ceases to be a subsidiary of PNC or ceases to be a consolidated subsidiary of PNC under generally accepted accounting principles and Grantee does not continue to be employed by PNC or a Consolidated Subsidiary, then for
purposes of the Agreement, Grantee’s employment with the Corporation terminates effective at the time this occurs.
A.22
“Unvested Share Units” means any Restricted Share Units that are outstanding but have not vested in accordance with the terms of Section 6 of the Agreement.
A.23 “Vested Share Units.” Provided that the Restricted Share Units have not been forfeited pursuant to the terms of
Section 5 of the Agreement and are then outstanding, Restricted Share Units will vest in accordance with the terms of Section 6 of the Agreement.
Restricted Stock Award
Continued Employment Performance Goals
Restricted Periods: Three Years (25%); Four Years (25%);
Five Years (50%)
THE PNC FINANCIAL SERVICES GROUP, INC.
2006 INCENTIVE AWARD PLAN
* * *
RESTRICTED STOCK AWARD AGREEMENT
* * *
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| GRANTEE: |
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[ name ] |
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| AWARD DATE: |
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, 20 |
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| RESTRICTED SHARES: |
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[ number of whole shares ] |
1. Definitions. Certain
terms used in this Restricted Stock Award Agreement (the “Agreement”) are defined in Annex A (which is incorporated herein as part of the Agreement) or elsewhere in the Agreement, and such definitions will apply except where the context
otherwise indicates.
In the Agreement, “PNC” means The PNC Financial Services Group, Inc. and
“Corporation” means PNC and its Consolidated Subsidiaries.
2. Restricted Shares Award. Pursuant to The PNC
Financial Services Group, Inc. 2006 Incentive Award Plan (the “Plan”), and subject to the terms and conditions of the Agreement, PNC grants to the Grantee named above (“Grantee”) a Restricted Shares Award of the number of
restricted shares of PNC common stock set forth above (the “Award” and the “Restricted Shares”), all subject to acceptance of the Award by Grantee in accordance with Section 16 and subject to the terms and conditions of the
Agreement and the Plan.
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 “Tranches” as follows:
(a) twenty-five percent (25%) of these shares (rounded down to the nearest whole share) are in the First Tranche of Restricted Shares;
(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
(c) the remaining fifty percent (50%) of these shares are in the Third Tranche of Restricted
Shares.
3. Terms of Award. The Award is subject to the following terms and conditions.
Restricted Shares are subject to the Restricted Period applicable to such shares as provided in Section A.23 of Annex A. During the
applicable Restricted Period and until all of the conditions of the Agreement with respect to such shares have been satisfied and the shares become Awarded Shares, Restricted Shares are subject to forfeiture and to transfer restrictions pursuant to
the terms and conditions of the Agreement.
Once issued in accordance with Section 16, Restricted Shares will be deposited with PNC
or its designee in a restricted account or credited to a restricted book-entry account. Restricted Shares will be held in a restricted account until either all of the conditions of the Agreement with respect to such shares have been satisfied or the
shares are forfeited pursuant to the terms of the Agreement. Restricted Shares that are forfeited by Grantee pursuant to and in accordance with the terms of Section 7 will be cancelled without payment of any consideration by PNC.
Any certificate or certificates representing Restricted Shares will contain the following legend:
“This 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. 2006 Incentive Award Plan 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.”
Where a book-entry system is used with respect to the issuance of 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.
Restricted Shares deposited with PNC or its designee that become Awarded Shares as provided in Section A.3 of Annex A upon satisfaction of all of the conditions of the Agreement with respect to such
shares will be released from the restricted account and reissued to, or at the proper direction of, Grantee or Grantee’s legal representative pursuant to Section 9.
4. Rights as Shareholder. Except as provided in Sections 6 through 9 and subject to Section 16, 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.
5. Capital Adjustments. Restricted Shares issued pursuant to the Award shall, 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 Restricted Shares that have not yet been released from the terms of the Agreement shall be subject to
the terms and conditions of the Agreement as if they were Restricted Shares, and shall 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.
6. Prohibitions Against Sale, Assignment, etc.; Payment to Legal Representative.
(a) Restricted Shares may not be sold, assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered, other than as may
be required pursuant to Section 10.2, unless and until the Restricted Period terminates and the Awarded Shares are released and reissued by PNC pursuant to Section 9.
(b) If Grantee is deceased at the time Restricted Shares become Awarded Shares, PNC will deliver such shares to the executor or
administrator of Grantee’s estate or to Grantee’s other legal representative as determined in good faith by the Committee.
(c) Any delivery of shares or other payment made in good faith by PNC to Grantee’s executor, administrator or other legal representative shall extinguish all right to payment hereunder.
7. Forfeiture Provisions.
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, or Section 8, if applicable, in the event that Grantee’s employment with the Corporation terminates prior to the fifth (5th) anniversary of the Award Date, all Restricted Shares that are
Unvested Shares on Grantee’s Termination Date will be forfeited by Grantee to PNC without payment of any consideration by PNC.
Upon any forfeiture of Unvested Shares pursuant to the provisions of this Section 7.1 or the provisions of Section 7.2 or Section 7.4(b), 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.
7.2 Detrimental Conduct; Judicial Criminal Proceedings.
(a) Detrimental Conduct. Unvested Shares that would otherwise remain outstanding after Grantee’s 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: (i) this Section 7.2(a) will not apply
to Restricted Shares that remain outstanding after Grantee’s Termination Date pursuant to Section 7.3 or Section 7.6, if any; (ii) no determination that Grantee has engaged in Detrimental Conduct may be made on or after the date
of Grantee’s death; (iii) 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 Grantee’s death; and (iv) Detrimental
Conduct will cease to apply to any Restricted Shares upon a Change of Control.
(b) Judicial Criminal Proceedings. If
any criminal charges are brought against Grantee, in an indictment or in other analogous formal charges commencing judicial criminal proceedings, alleging the commission of a felony that relates to or arises out of Grantee’s employment or other
service relationship with the Corporation, then to the extent that the Restricted Shares are still outstanding and have not yet become Awarded Shares, the Committee may determine to suspend the vesting of the Restricted Shares or to require the
escrow of the proceeds of the shares.
Any such suspension or escrow is subject to the following restrictions:
(1) It may last only until the earliest to occur of the following:
(A) resolution of the criminal proceedings in a manner that results in a conviction (including a plea of guilty or of nolo
contendere) of Grantee for, or any entry by Grantee into a pre-trial disposition with respect to, the commission of a felony that relates to or arises out of Grantee’s employment or other service relationship with the Corporation;
(B) resolution of the criminal proceedings in one of the following ways: (i) the charges as they relate to such alleged
felony have been dismissed (with or without prejudice); (ii) Grantee has been acquitted of such alleged felony; or (iii) a criminal proceeding relating to such alleged felony has been completed without resolution (for example, as a result
of a mistrial) and the relevant time period for recommencing criminal proceedings relating to such alleged felony has expired without any such recommencement;
(C) Grantee’s death;
(D) the occurrence of a Change of Control; or
(E) termination of the suspension or escrow in the discretion of the Committee; and
(2) It may be imposed only if the Committee makes reasonable provision for the retention or
realization of the value of the Restricted Shares to Grantee as if no suspension or escrow had been imposed upon any termination of the suspension or escrow under clauses (1)(B) or (E) above.
If the suspension is terminated by the occurrence of an event set forth in clause (1)(A) above, the Restricted Shares will, upon
such occurrence, be automatically forfeited by Grantee to PNC and cancelled without payment of any consideration by PNC.
7.3 Death. In the event of Grantee’s death while an employee of the Corporation and prior to the fifth (5th) anniversary of the Award Date, 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 on the date of Grantee’s death.
The Restricted Shares which thereby become Awarded Shares will be released and reissued by PNC to, or at the proper direction of,
Grantee’s legal representative pursuant to Section 9 as soon as administratively practicable following such date.
7.4 Qualifying Disability Termination.
(a) In the event Grantee’s employment with the Corporation is terminated prior to the fifth (5th) anniversary of the Award Date by the Corporation by reason of
Grantee’s Disability, Unvested Shares will not be automatically forfeited on Grantee’s Termination Date. Instead, Unvested Shares will, subject to the forfeiture provisions of Section 7.2 and Section 7.4(b), remain outstanding
pending and subject to affirmative 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.
If such Unvested Shares are still outstanding but the Designated Person has not made a specific 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 Award Date in the case of First Tranche shares, or the fourth (4th) or fifth (5th) anniversary of the Award 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 a specific determination regarding such vesting; and
(2) either (i) the ninetieth (90th) day
following the third (3rd) anniversary of the Award
Date in the case of First Tranche shares, or the fourth
(4th) or fifth (5th) anniversary of the Award 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 or its delegate, whichever is applicable; provided, however, if the Committee has acted to suspend the vesting of the Restricted Shares pursuant to Section 7.2(b), the Restricted Period will be
extended until the terms of such suspension have been satisfied.
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 for the respective Tranche of shares, including any extension of such Restricted Period, if applicable, then
the applicable Continued Employment Performance Goal with respect to such Tranche of shares will be deemed to have been achieved, and the Restricted Period with respect to all Unvested Shares in such Tranche then outstanding, if any, will
terminate as of the end of the day on the date of such approval. The Restricted Shares outstanding at the termination of such applicable Restricted Period will become Awarded Shares and will be released and reissued by PNC pursuant to
Section 9.
(b) If the Designated Person disapproves the vesting of Unvested Shares that had remained outstanding after
Grantee’s Termination Date pending and subject to affirmative 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.
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 specifically disapproved the vesting of Unvested Shares that had remained outstanding after Grantee’s Termination Date pending and subject to affirmative 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.
7.5 Other Committee Authority. Prior to the third (3rd) anniversary of the Award Date in the case of the First Tranche shares, or the fourth (4th) or fifth (5th) anniversary of the Award Date in the case of the Second or
Third Tranche shares, respectively, the Committee or its delegate may in their sole discretion, but need not, determine that, with respect to some or all of Grantee’s then outstanding Unvested Shares, the applicable Continued Employment
Performance Goal(s) with respect to such Tranche or Tranches of shares will be deemed to have been achieved and the Restricted Period with respect to some or all of the Unvested Shares in such Tranche or Tranches then outstanding, if any,
will terminate, all subject to such restrictions, terms or conditions as the Committee or its delegate may in their sole discretion determine.
7.6 Termination in Anticipation of a Change of Control. Notwithstanding anything in the Agreement to the contrary, if Grantee’s employment with the Corporation is terminated by the Corporation
prior to the fifth (5th) anniversary of the Award
Date and such termination is an Anticipatory Termination as defined in Section A.2 of Annex A, 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 Grantee’s Termination Date; and (ii) all Restricted Shares that thereby become Awarded
Shares will be released and reissued by PNC pursuant to Section 9 as soon as administratively practicable following such date.
8. Change of Control. Notwithstanding anything in the Agreement to the contrary, upon the occurrence of a Change of Control: (i) if Grantee is an employee of the Corporation as of the day
immediately preceding the Change of 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, if
any, will terminate as of the day immediately preceding the Change of Control; (ii) if Grantee’s employment with the Corporation terminated prior to the occurrence of the Change of Control but Unvested Shares remained outstanding after
such termination of employment pursuant to Section 7.4 and are still outstanding pending and subject to affirmative approval of the vesting of such shares by the Designated Person specified in Section A.13 of Annex A, then with respect to
all such Unvested Shares outstanding as of the day immediately preceding the Change of Control, such affirmative 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 of Control; and (iii) all Restricted Shares that thereby become Awarded Shares will be
released and reissued by PNC pursuant to Section 9 as soon as administratively practicable following such date.
9.
Termination of Restrictions; Payment to Legal Representative. Except as otherwise directed by the Committee pursuant to the suspension or escrow provisions of Section 7.2(b), if and to the extent applicable, PNC will release and issue or
reissue the outstanding whole Restricted Shares that have not been forfeited and have become Awarded Shares upon satisfaction of all of the conditions of the Agreement with respect to such shares following termination of the applicable Restricted
Period for such shares, without the legend referred to in Section 3.
Upon release of shares that have satisfied all of
the conditions of the Agreement with respect to such shares and have become Awarded Shares in accordance with this Section 9, PNC or its designee will deliver such whole shares to, or at the proper direction of, Grantee or Grantee’s legal
representative.
Any delivery of shares or other payment made in good faith by PNC to Grantee’s executor, administrator
or other legal representative shall extinguish all right to payment hereunder.
10. Payment of Taxes.
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 then applicable federal, state or local withholding tax obligations arising from that election (a) by payment of cash or (b) if and to the extent then permitted by
PNC and subject to such terms and conditions as PNC may from time to time establish, 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 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.
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 Restricted Shares that have become Awarded Shares to
satisfy the minimum amount of taxes then 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.
PNC will not retain more than
the number of shares sufficient to satisfy the minimum amount of taxes then required to be withheld in connection with the Restricted Shares. If Grantee desires to have an additional amount withheld above the required minimum, up to Grantee’s
W-4 obligation if higher, and if PNC so permits, Grantee may elect to satisfy this additional withholding either: (a) by payment of cash; or (b) if and to the extent then permitted by PNC and subject to such terms and conditions as PNC may
from time to time establish, using whole shares of PNC common stock (either by physical delivery to PNC of certificates for the shares or through PNC’s share attestation procedure) that are not subject to any contractual restriction, pledge or
other encumbrance and that have been owned by 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. If Grantee’s W-4 obligation does not exceed the required
minimum withholding in connection with the Restricted Shares, no additional withholding may be made.
11. Employment.
Neither the Award and the 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 Grantee’s status as an employee at will.
12. Subject to the Plan and the Committee. In all
respects the Award 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 Award and the Agreement are subject to any interpretation of, and any rules and regulations issued by, the Committee or its delegate or under the authority of the Committee, whether made
or issued before or after the Award Date.
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.
14. Grantee Covenants.
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 by virtue of receiving this Award (regardless of whether the Restricted Shares ultimately become Awarded Shares); that such provisions are reasonable and properly required for the adequate protection of the
business of PNC and its subsidiaries; and that enforcement of such provisions will not prevent Grantee from earning a living.
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 one year after Grantee’s Termination Date regardless of the reason for such termination of employment.
(a) Non-Solicitation. Grantee shall not, directly or indirectly, either for Grantee’s own benefit or purpose or for the
benefit or purpose of any Person other than PNC or any of its subsidiaries, solicit, call on, do business with, or actively interfere with PNC’s or any subsidiary’s 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.
(b) No-Hire. Grantee shall not, directly or indirectly, either for Grantee’s own benefit or purpose or for the benefit or
purpose of any Person other than PNC or any of its subsidiaries, employ or offer to employ, call on, or actively interfere with PNC’s or any subsidiary’s relationship with, or attempt to divert or entice away, any employee of PNC or any of
its subsidiaries, nor shall Grantee assist any other Person in such activities.
Notwithstanding the above, if Grantee’s
employment with the Corporation is terminated by the Corporation and such termination is an Anticipatory Termination, 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):
(c) No-Hire. Grantee
agrees that Grantee shall not, for a period of one year after the Termination Date, employ or offer to employ, solicit, actively interfere with PNC’s or any PNC affiliate’s relationship with, or attempt to divert or entice away, any
officer of PNC or any PNC affiliate.
14.3 Confidentiality. During Grantee’s 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 Corporation’s 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.
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 Grantee’s 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 of its subsidiaries or (b) developed with the use of any time, material, facilities or other resources of PNC or any subsidiary
(“Developments”). Grantee agrees to assign and hereby does assign to PNC or its designee all of Grantee’s 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 PNC’s or its
designee’s 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.
15. Enforcement Provisions. Grantee understands and agrees to the following provisions regarding enforcement of the
Agreement.
15.1 Governing Law and Jurisdiction. The Agreement is governed by and construed under the laws of the
Commonwealth of Pennsylvania, without reference to its conflict of laws provisions. 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.
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.
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 the Corporation institutes legal proceedings for injunctive or other relief.
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.
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.
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.
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.
15.8 Compliance with Internal Revenue Code Section 409A. It is the intention of the parties that the Award and the Agreement comply with the provisions of Section 409A of the Internal
Revenue Code to the extent, if any, that such provisions are applicable to the Agreement, and the Agreement will be administered by PNC in a manner consistent with this intent.
If any payments or benefits hereunder may be deemed to constitute nonconforming deferred compensation subject to taxation under the
provisions of Section 409A, Grantee agrees that PNC may, without the consent of Grantee, modify the Agreement and the Award to the extent and in the manner PNC deems necessary or advisable or take such other action or actions, including an
amendment or action with retroactive effect, that PNC deems appropriate in order either to preclude any such payments or benefits from being deemed “deferred compensation” within the meaning of Section 409A or to provide such
payments or benefits in a manner that complies with the provisions of Section 409A such that they will not be taxable thereunder.
15.9 Applicable Law; Clawback. 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, the Award, and any right to receive Shares or
other value pursuant to the Award and to retain such Shares or other value, shall be subject to rescission, cancellation or recoupment, in whole or in part, if and to the extent so provided under any “clawback” or similar policy of PNC in
effect on the Award Date or that may be established thereafter and to any clawback or recoupment that may be required by applicable law.
16. Acceptance of Award; PNC Right to Cancel. If Grantee does not accept the Award by executing and delivering a copy of the Agreement to PNC, without altering or changing the terms thereof in any
way, within thirty (30) days of receipt by Grantee of a copy of the Agreement, PNC may, in its sole discretion, withdraw its offer and cancel the Award at any time prior to Grantee’s 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 as of the Award Date and the Restricted Shares will be issued as soon thereafter as administratively practicable.
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 in connection with such shares, until the date the Agreement is effective and the Restricted Shares are issued in accordance with this Section 16.
In the event that one or more record dates for dividends on PNC common stock occur after the Award Date but before the Agreement is
effective in accordance with this Section 16 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 Restricted Shares been issued on the Award Date. Any such amount will be payable in accordance with applicable regular payroll practice as in effect from time to time for similarly situated employees.
IN WITNESS WHEREOF, PNC has caused the Agreement to be signed
on its behalf as of the Award Date.
THE PNC FINANCIAL SERVICES GROUP, INC.
By:
Chairman and Chief Executive Officer
ATTEST:
By:
Corporate Secretary
ACCEPTED
AND AGREED TO by GRANTEE
ANNEX A
CERTAIN DEFINITIONS
* * *
A.1 “Agreement,” “Award,” and “Award Date.” “Agreement” means the Restricted
Stock Award Agreement between PNC and Grantee evidencing the Award made to Grantee pursuant to the Plan. “Award” means the Award made to Grantee pursuant to the Plan and evidenced by the Agreement. “Award Date” means the Award
Date set forth on page 1 of the Agreement and is the date as of which the Restricted Shares are authorized to be granted by the Committee or its delegate in accordance with the Plan.
A.2 “Anticipatory Termination.” If Grantee’s employment with the Corporation is terminated by the Corporation other
than for Cause, death or Disability prior to the date on which a Change of Control occurs, and if it is reasonably demonstrated by Grantee that such termination of employment (i) was at the request of a third party that has taken steps
reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with or anticipation of a Change of Control, such a termination of employment is an “Anticipatory Termination.”
For purposes of this definition, “Cause” shall mean:
(a) the willful and continued failure of Grantee to substantially perform Grantee’s 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 Grantee’s
duties; or
(b) the willful engaging by Grantee in illegal conduct or gross misconduct that is materially and demonstrably
injurious to PNC or any of its subsidiaries.
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 Grantee’s 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 Grantee’s 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.
The cessation of employment of Grantee will be deemed to be a
termination of Grantee’s 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 Grantee’s 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.
A.3
“Awarded Shares.” Provided that the Restricted Shares are then outstanding and have not been forfeited, Restricted Shares become “Awarded Shares” when all of the following have occurred: (a) the Continued
Employment Performance Goal or Goals applicable to such Restricted Shares have been achieved or are deemed to have been achieved pursuant to the terms of the Agreement; (b) the Restricted
Period or Periods applicable to such Restricted Shares have terminated; and (c) if the Committee has acted to suspend the vesting of the Restricted Shares pursuant to Section 7.2(b) of
the Agreement, the terms of such suspension have been satisfied and the Restricted Shares have not been forfeited.
A.4
“Board” means the Board of Directors of PNC.
A.5 “Cause.” Except as otherwise provided in
Section A.2, “Cause” means:
(a) the willful and continued failure of Grantee to substantially perform Grantee’s
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 that specifically identifies the manner in which
it is believed that Grantee has not substantially performed Grantee’s duties;
(b) a material breach by Grantee of
(1) any code of conduct of PNC or one of its subsidiaries or (2) other written policy of PNC or a subsidiary, in either case required by law or established to maintain compliance with applicable law;
(c) any act of fraud, misappropriation, material dishonesty, or embezzlement by Grantee against PNC or one of its subsidiaries or any
client or customer of PNC or a subsidiary;
(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; or
(e) entry of
any order against Grantee, by any governmental body having regulatory authority with respect to the business of PNC or any of its subsidiaries, that relates to or arises out of Grantee’s employment or other service relationship with the
Corporation.
Except as otherwise provided in Section A.2, the cessation of employment of Grantee will be deemed to have been
a termination of Grantee’s employment with the Corporation for Cause for purposes of the Agreement only if and when the CEO or his or her designee (or, if Grantee is the CEO, the Board) determines that Grantee is guilty of conduct described in
clause (a), (b) or (c) above or that an event described in clause (d) or (e) above has occurred with respect to Grantee and, if so, determines that the termination of Grantee’s employment with the Corporation will be deemed
to have been for Cause.
A.6 “CEO” means the chief executive officer of PNC.
A.7 “Change of Control” means:
(a) Any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”)
becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then-outstanding shares of common stock of PNC (the “Outstanding PNC Common Stock”) or (B) the
combined voting power of the then-outstanding voting securities of PNC entitled to vote generally in the election of directors (the “Outstanding PNC Voting Securities”); provided, however, that, for purposes of this Section
A.7(a), the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from PNC, (2) any acquisition by PNC, (3) any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by PNC or any company controlled by, controlling or under common control with PNC (an “Affiliated Company”), (4) any acquisition pursuant to an Excluded Combination (as defined in Section A.7(c)) or (5) an acquisition
of beneficial ownership representing between 20% and 40%, inclusive, of the Outstanding PNC Voting Securities or Outstanding PNC Common Stock shall not be considered a Change of Control if the Incumbent Board as of immediately prior to any such
acquisition approves such acquisition either prior to or immediately after its occurrence;
(b) Individuals who, as of the
date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board (excluding any Board seat that is vacant or otherwise unoccupied); provided, however, that any individual
becoming a director subsequent to the
date hereof whose election, or nomination for election by PNC’s shareholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board shall be
considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;
(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar transaction involving PNC or any of its subsidiaries, a sale or other disposition of all or substantially
all of the assets of PNC, or the acquisition of assets or stock of another entity by PNC or any of its subsidiaries (each, a “Business Combination”), excluding, however, a Business Combination following which all or substantially all of
the individuals and entities that were the beneficial owners of the Outstanding PNC Common Stock and the Outstanding PNC Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the
then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors (or, for a non-corporate
entity, equivalent governing body), as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns PNC or all or substantially all of PNC’s assets
either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding PNC Common Stock and the Outstanding PNC Voting Securities, as the case
may be (such a Business Combination, an “Excluded Combination”); or
(d) Approval by the shareholders of PNC of a
complete liquidation or dissolution of PNC.
A.8 “Committee” means the Personnel and Compensation Committee
of the Board or such person or persons as may be designated or appointed by that committee as its delegate or designee.
A.9
“Competitive Activity” means 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 of its subsidiaries
(a) engaged in business activities similar to some or all of the business activities of PNC or any subsidiary as of Grantee’s 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 Grantee’s Termination Date or, if later and if applicable, after the date specified in clause (ii) of Section A.14(a), 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.
A.10 “Consolidated Subsidiary” means a corporation, bank, partnership, business trust, limited liability company or other form of business organization that (1) is a consolidated
subsidiary of PNC under generally accepted accounting principles and (2) satisfies the definition of “service recipient” under Section 409A of the Internal Revenue Code.
A.11 “Continued Employment Performance Goal” 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.
A.12 “Corporation”
means PNC and its Consolidated Subsidiaries.
A.13 “Designated Person” will be either: (a) the Committee
or its delegate, if Grantee was a member of the Corporate Executive Group (or equivalent successor classification) or was subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to PNC securities when he or she
ceased to be an employee of the Corporation; or (b) the Chief Human Resources Officer of PNC, if Grantee is not within one of the groups specified in Section A.13(a).
A.14 “Detrimental Conduct” means:
(a) Grantee has engaged, without the prior written consent of PNC (with consent to be given at PNC’s sole
discretion), in any Competitive Activity in the continental United States at any time during the period commencing on Grantee’s Termination Date and extending through (and including) the first (1st) anniversary of the later of (i) Grantee’s
Termination Date and, if different, (ii) the first date after Grantee’s Termination Date as of which Grantee ceases to have a service relationship with the Corporation;
(b) any act of fraud, misappropriation, or embezzlement by Grantee against PNC or one of its subsidiaries or any client or customer of
PNC or one of its subsidiaries; or
(c) any conviction (including a plea of guilty or of nolo contendere) of Grantee
for, or any entry by Grantee into a pre-trial disposition with respect to, the commission of a felony that relates to or arises out of Grantee’s employment or other service relationship with the Corporation.
Grantee will be deemed to have engaged in Detrimental Conduct for purposes of the Agreement only if and when the Committee (if Grantee
was an “executive officer” of PNC as defined in SEC Regulation S-K when he or she ceased to be an employee of the Corporation) or the CEO or his or her designee (if Grantee was not such an executive officer), whichever is applicable,
determines that Grantee has engaged in conduct described in clause (a) or clause (b) above or that an event described in clause (c) above has occurred with respect to Grantee, and, if so, determines that Grantee will be deemed to have
engaged in Detrimental Conduct.
A.15 “Disabled” or “Disability” means, except as may
otherwise be required by Section 409A of the Internal Revenue Code, that Grantee either (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected
to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, receiving (and has received for at least three months) income replacement benefits under any Corporation-sponsored disability benefit plan. If Grantee has been determined to be eligible for
Social Security disability benefits, Grantee shall be presumed to be Disabled as defined herein.
A.16 “Fair Market
Value” as it relates to a share of PNC common stock as of any given date means the average of the reported high and low trading prices on the New York Stock Exchange (or such successor reporting system as PNC may select) for a share of PNC
common stock on such date, or, if no PNC common stock trades have been reported on such exchange for that day, the average of such prices on the next preceding day and the next following day for which there were reported trades.
A.17 “Five-Year Continued Employment Performance Goal” means, subject to early achievement if so
determined by the Committee or its delegate or to deemed achievement pursuant to Section 7.3, Section 7.4, 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 Award Date through (and including) the day immediately preceding the first of the following to occur: (a) the fifth (5th) anniversary of the Award Date; (b) the date of Grantee’s death; and (c) the day a Change of
Control is deemed to have occurred.
A.18 “Four-Year Continued Employment Performance
Goal” means, subject to early achievement if so determined by the Committee or its delegate or to deemed achievement pursuant to Section 7.3, Section 7.4, 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 Award Date through (and including) the day immediately preceding the first of the following to occur: (a) the fourth (4th) anniversary of the Award Date; (b) the date of
Grantee’s death; and (c) the day a Change of Control is deemed to have occurred.
A.19 “GAAP” or
“generally accepted accounting principles” means accounting principles generally accepted in the United States of America.
A.20 “Grantee” means the person to whom the Restricted Stock Award is
granted, and is identified as Grantee on page 1 of the Agreement.
A.21 “Internal Revenue Code” means the
Internal Revenue Code of 1986 as amended, and the rules and regulations promulgated thereunder.
A.22 “PNC”
means The PNC Financial Services Group, Inc.
A.23 “Restricted Period.” The applicable Restricted Period for
Restricted Shares means, subject to early termination if so determined by the Committee or its delegate or pursuant to Section 7.6 of the Agreement, if applicable, the period set forth in the applicable subsection below:
(a) For First Tranche Shares: with respect to shares in the First Tranche of Restricted Shares, the period
from the Award Date through (and including) the earlier of: (i) the date of Grantee’s death; (ii) the day immediately preceding the day a Change of Control is deemed to have occurred; and (iii) the day immediately
preceding the third (3rd) anniversary of the Award
Date or, if later, the last day of any extension of the Restricted Period pursuant to Section 7.4(a) of the Agreement, if applicable;
(b) For Second Tranche Shares: with respect to shares in the Second Tranche of Restricted Shares, the period from the Award Date through (and including) the earlier of: (i) the date of
Grantee’s death; (ii) the day immediately preceding the day a Change of Control is deemed to have occurred; and (iii) the day immediately preceding the fourth (4th) anniversary of the Award Date or, if later, the last day of any extension of the Restricted Period pursuant to
Section 7.4(a) of the Agreement, if applicable; and
(c) For Third Tranche Shares: with
respect to shares in the Third Tranche of Restricted Shares, the period from the Award Date through (and including) the earlier of: (i) the date of Grantee’s death; (ii) the day immediately preceding the day a Change of Control is
deemed to have occurred; and (iii) the day immediately preceding the fifth (5th) anniversary of the Award Date or, if later, the last day of any extension of the Restricted Period pursuant to Section 7.4(a) of the Agreement, if applicable.
A.24 “SEC” means the United States Securities and Exchange Commission.
A.25 “Service relationship” or “having a service relationship with the Corporation” means being engaged
by the Corporation in any capacity for which Grantee receives compensation from the Corporation, including but not limited to acting for compensation as an employee, consultant, independent contractor, officer, director or advisory director.
A.26 “Termination Date” means Grantee’s last date of employment with the Corporation. If Grantee is
employed by a Consolidated Subsidiary that ceases to be a subsidiary of PNC or ceases to be a consolidated subsidiary of PNC under generally accepted accounting principles and Grantee does not continue to be employed by PNC or a Consolidated
Subsidiary, then for purposes of the Agreement, Grantee’s employment with the Corporation terminates effective at the time this occurs.
A.27 “Three-Year Continued Employment Performance Goal” means, subject to early achievement if so determined by the Committee or its delegate or to deemed achievement pursuant to
Section 7.3, Section 7.4, 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 Award Date through (and including) the day immediately
preceding the first of the following to occur: (a) the third (3rd) anniversary of the Award Date; (b) the date of Grantee’s death; and (c) the day a Change of Control is deemed to have occurred.
A.28 “Tranche(s)” or “First, Second or Third Tranche” have the meanings set forth in Section 2 of the
Agreement.
A.29 “Unvested Shares” means any Restricted Shares that are outstanding but have not yet become
Awarded Shares in accordance with the terms of the Agreement.
2011 Incentive Performance Units
Overall Standard Performance Period: January 1, 2011 - December 31, 2013 (3 Years)
Corporate
Performance Criteria: Based on PNC performance and rankings relative to Peers with respect to Earnings per Share Growth
and
Return on Average Common Equity (not including goodwill) performance
Risk Metrics Performance Downward Adjustment Criteria based on PNC’s
Return on Economic Capital as compared to its Cost of
Capital
100% Vests on Final Award
THE PNC FINANCIAL SERVICES GROUP, INC.
2006 INCENTIVE AWARD PLAN
* * *
2011-2013 INCENTIVE PERFORMANCE UNITS AWARD AGREEMENT
* * *
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| GRANTEE: |
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[ name ] |
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| GRANT DATE: |
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February 9, 2011 |
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| TARGET SHARE UNITS: |
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[ number ] Share Units |
1. Definitions.
Certain terms used in this 2011-2013 Incentive Performance Units Award Agreement (“Agreement”) are defined in
Section 15 or elsewhere in the Agreement, and such definitions will apply except where the context otherwise indicates.
In the Agreement, “PNC” means The PNC Financial Services Group, Inc., “Corporation” means PNC and its Consolidated
Subsidiaries, and “Plan” means The PNC Financial Services Group, Inc. 2006 Incentive Award Plan.
2. 2011
Incentive Performance Units.
Pursuant to the Plan and subject to the terms and conditions of the Agreement, PNC grants to
the grantee named above (“Grantee”) a Share-denominated incentive award opportunity of Performance Units (the “Performance Units” or the “2011 Incentive Performance Units”) with the number of target Share Units set
forth above (“Target Share Units”). Performance Units are subject to acceptance by Grantee in accordance with Section 18.
The 2011 Incentive Performance Units are subject to the corporate performance conditions, risk metrics performance downward adjustment conditions, employment conditions, and other terms and conditions of
this Agreement and to the Plan, and to final award determination in accordance with Section 5 or Section 6, as applicable.
In general, the 2011 Incentive Performance Units are an opportunity for Grantee to receive, at the end of the applicable overall performance period, an award of Shares and, if applicable, cash
Share-equivalents, provided that the conditions of the Agreement are met. The maximum potential payout amount that Grantee may receive as a final award determined by the Compensation Committee (defined
in Section 15.13) in accordance with Section 5 is based on the degree to which specified corporate performance criteria have been achieved by PNC, the applicable basic calculation
schedule established by the Compensation Committee for use in generating the maximum corporate performance potential payout percentage for the 2011 Incentive Performance Units from such corporate performance results, any formulaically determined
downward adjustment to the potential payout percentage calculated on the basis of corporate performance based on PNC’s performance with respect to specified risk metrics for the 2011 Incentive Performance Units, any further downward adjustment
to the calculated potential payout amount based on the Compensation Committee’s negative discretion, and Grantee’s level of satisfaction (or deemed satisfaction) of the service requirements set forth in Section 4, including any
limitations on the maximum potential payout amount that may apply in the circumstances (e.g., in the case of a qualifying retirement or death).
Further limitations or adjustments may apply if there is an early termination or limitation of the overall performance measurement period. Final awards are determined by the Compensation Committee in the
absence of a Change of Control (as defined herein) and are subject to the Compensation Committee’s negative discretion. The Agreement provides a formula for calculation of the Final Award in the event of a Change of Control of PNC and for the
form and timing of payment of any such award.
Any Final Award (as defined in Section 15.23) authorized pursuant to the
Agreement will be expressed as a number of awarded Share Units and paid in accordance with Section 7. Generally, an award will be paid in shares of PNC common stock (“Shares”) up to the same number of Shares as the number set forth
above as the number of Target Share Units (which is also the maximum number of Shares, subject to capital adjustments, if any, pursuant to Section 9, that may be paid with respect to the 2011 Incentive Performance Units hereunder). To the
extent, if any, that the total Final Award amount exceeds the Target Share Units number set forth above, any remainder will generally be paid in cash in an amount equal to the number of remaining awarded Share Units multiplied by the per share price
of PNC common stock on the award date (sometimes referred to in the Agreement as payment in “cash Share-equivalents”).
The 2011 Incentive Performance Units must still be outstanding at the time a Final Award determination is made for Grantee to be eligible to receive an award, and any Final Award and payment thereof is
subject to the terms and conditions set forth in this Agreement and to the Plan.
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3. |
Corporate Performance Conditions; Risk Metrics Performance Downward Adjustment Conditions; Dividend-Adjusted Target Share Units. |
3.1 Corporate Performance Conditions and Risk Metrics Performance Downward Adjustment Conditions. The 2011 Incentive Performance
Units are subject to corporate performance conditions and risk metrics performance downward adjustment conditions as set forth in this Section 3.
Final Award determination by the Compensation Committee pursuant to Section 5 requires the calculation of the “Final Potential Payout Percentage” and the “Calculated Maximum Potential
Payout Amount,” as defined in Section 15.24 and Section 15.7, respectively. Final Award calculation pursuant to Section 6 of the Agreement, if applicable, requires the calculation of the Change of Control Payout Percentage and
the calculated Final Award as set forth in that section of the Agreement.
Calculation of the Final Potential Payout
Percentage first takes into account PNC’s specified corporate performance to generate a corporate performance factor (the “Corporate Performance Factor” or “Corporate Factor”). The Corporate Performance Factor represents the
maximum corporate performance potential payout percentage for a final award determined by the Compensation Committee pursuant to Section 5. Then PNC’s measured performance with respect to specified risk metrics performance criteria is
taken into account to determine whether there will be a downward adjustment for risk metrics performance and, if so, the size of the formulaically determined downward adjustment to the Corporate Factor applicable to arrive at a Final Potential
Payout Percentage. Section 5 provides further detail on the calculation of the Final Potential Payout Percentage and the calculation of the Calculated Maximum Potential Payout Amount from the Final Potential Payout Percentage and the Adjusted
Target
Share Units in varying circumstances to determine the maximum final award that Grantee may be eligible to receive upon award determination by the Compensation Committee in the circumstances.
Section 6 provides details on the calculation of final awards upon the occurrence of a Change of Control.
Calculation of
the Corporate Performance Factor takes into account PNC’s performance and ranking relative to its Peers with respect to two corporate performance measures or metrics (the Corporate Performance Criteria), as measured annually and expressed as
the Annual Corporate Performance Potential Payout Percentages for the applicable covered annual performance measurement periods (which may be full or partial year periods as required by the Agreement) in the applicable overall Performance Period.
These annual percentages are averaged as provided in the applicable subsection of Section 5 to generate the Corporate Performance Factor, which is the final calculated corporate performance payout percentage.
Calculation of the Final Potential Payout Percentage also takes into account PNC’s performance with respect to the specified risk
metrics as measured annually for the applicable covered annual performance measurement periods, and whether such risk metrics performance meets the risk metrics performance criteria specified in the Agreement. The overall Corporate Performance
Factor is subject to a formulaically determined risk metrics performance downward adjustment for those covered annual periods, if any, in which PNC’s risk metrics performance does not meet the specified risk metrics performance criteria in
arriving at the overall Final Potential Payout Percentage.
This Section 3 sets forth the corporate performance metrics
(EPS growth and ROCE performance) and how they are measured, how risk metrics performance is measured and the risk metrics performance criteria (PNC’s return on economic capital for a covered period as compared to its cost of capital for that
period, and whether or not such return on economic capital at least equals cost of capital and thus satisfies the risk metrics performance criteria with respect to that period), the applicable covered annual performance measurement periods, the
basic schedule established for the 2011 Incentive Performance Units by the Compensation Committee for calculating annual corporate performance potential payout percentages based on corporate performance, as well as the establishment of the Peer
Group by the Compensation Committee, the manner in which PNC and its Peers will be ranked for the applicable covered performance periods based on each of the two corporate performance metrics (EPS growth and ROCE performance), and the establishment
by the Compensation Committee of the risk metrics, risk metrics performance measurement, and risk metrics performance criteria, each unless and until amended prospectively by the Compensation Committee.
3.2 Corporate Performance Criteria; Risk Metrics Performance Downward Adjustment Criteria; and Performance Period. The corporate
performance standards established by the Compensation Committee as the Corporate Performance Criteria for the 2011 Incentive Performance Units are PNC’s performance and ranking relative to its Peers with respect to two performance metrics
— EPS growth and ROCE performance — measured as set forth in Section 3.3 below. This performance is measured annually for each applicable covered annual performance period, which may consist of a full calendar year or a shorter
partial-year period as required by the Agreement, in the overall Performance Period.
The performance standards established by
the Compensation Committee as the Risk Metrics Performance downward adjustment criteria for the 2011 Incentive Performance Units are whether PNC’s return on economic capital at least equals its cost of capital for the applicable covered annual
performance period. This performance is measured as set forth in Section 3.5 below for each applicable covered annual performance measurement period in the overall Performance Period.
The overall Performance Period for the 2011 Incentive Performance Units is the period commencing January 1, 2011 through and
including the applicable performance measurement date specified in Section 5.1 or Section 6.1 of the Agreement as applicable. Generally the overall Performance Period will cover a three year period, but it may be terminated early or
limited in specified circumstances.
In the standard non-exceptional circumstances as specified in Section 5.1(a), the
applicable performance measurement date will be December 31, 2013 and the overall Performance Period will be the three year period commencing January 1, 2011 through and including December 31, 2013, consisting of the following three
covered annual performance measurement periods: (1) the full year period commencing January 1, 2011 through and including December 31, 2011; (2) the full year period commencing January 1, 2012 through and including
December 31, 2012; and (3) the full year period commencing January 1, 2013 through and including December 31, 2013.
If the overall Performance Period is terminated early or limited pursuant to the terms of the Agreement, the applicable overall Performance Period will be the period commencing January 1, 2011
through and including the performance measurement date as specified in the Agreement as applicable in such circumstances. The final covered annual performance measurement period in such overall Performance Period will be the one ending on the
performance measurement date specified in the Agreement as applicable in such circumstances, and may consist of a full calendar year or a shorter partial-year period as required by the Agreement. Thus the number of applicable covered annual
performance measurement periods will be one, two or three, as the case may be.
3.3 Peer Group; Rankings; and Corporate
Performance Metrics.
(a) Peer Group. The Peer Group, as defined in Section 15.29, is
determined by the Compensation Committee and may be reset by the Compensation Committee annually but no later than the
90th day of that year. Corporate performance measurements
for a given covered performance period will be made with respect to the Peers in the Peer Group as they exist on the last day of that covered period taking into account Peer name changes and the elimination from the Peer Group of any members that
have been eliminated since the beginning of the year due, for example, to consolidations, mergers or other material corporate reorganizations.
Unless and until reset prospectively by the Compensation Committee, the Peer Group will consist of the following members: PNC; BB&T Corporation; Bank of America Corporation; Capital One Financial,
Inc.; Comerica Inc.; Fifth Third Bancorp; JPMorgan Chase; KeyCorp; M&T Bank; Regions Financial Corporation; SunTrust Banks, Inc.; U.S. Bancorp; and Wells Fargo & Co.
(b) Rankings. The performance of PNC and each of the other Peers, as such Peer Group exists as of the last day of a given covered
period, is measured for the given covered performance period with respect to each of the two corporate performance metrics — EPS growth and ROCE performance — as set forth in Section 3.3(c) below. This performance is measured annually
for each applicable covered annual performance period (which may consist of a full calendar year or a shorter partial-year period as required by the Agreement) in the applicable overall Performance Period.
After measuring EPS growth and ROCE performance for PNC and its Peers for the covered performance period with respect to a given year,
PNC and its Peers will be ranked for that covered period based on their respective EPS growth performances and on their respective ROCE performances, in each case as adjusted as set forth in the following paragraph.
Rankings Adjustments. When ranking PNC’s and the other Peers’ EPS growth and ROCE performance for a given covered performance
period, a Peer that had positive adjusted earnings (as set forth in Section 3.3(c) below) for that covered year or partial year period will be ranked above any Peer that had a loss (i.e., negative adjusted earnings) for that covered year
or partial year period or, for purposes of the EPS growth metric, that had a loss either for that covered period or for the comparable period of the comparison year.
(c) Corporate Performance Metrics. The Compensation Committee has determined that the metrics for measuring corporate performance for each applicable covered annual performance measurement period
in the overall Performance Period, whether the given covered period consists of a full calendar year or a shorter partial-year period as required by the Agreement, will be EPS growth and
ROCE performance measured as set forth herein unless and until amended prospectively by the Compensation Committee.
“EPS growth” with respect to a given year means the growth or decline, as the case may be, in EPS achieved by PNC or other Peer for the given covered period of that year as compared to EPS for
the comparable period of the prior calendar year, expressed as a percentage (with a positive percentage for growth over the comparable prior year period EPS and a negative percentage for decline from the comparable prior year period EPS, as the case
may be) rounded to the nearest one-hundredth, with 0.005% being rounded upward to 0.01%. “EPS” for this purpose means the publicly-reported diluted earnings per share of PNC or other Peer for the given covered period or period of
comparison, as the case may be, in each case as adjusted, on an after-tax basis, as described below, rounded to the nearest cent with $0.005 being rounded upward to $0.01.
“ROCE performance” with respect to a given year means the ROCE achieved by PNC or other Peer for the given covered period of that year and may be a positive or negative return, as the case may
be. “ROCE” for this purpose means the publicly-reported return on average common shareholders’ equity of PNC or other Peer for the given covered period of the year, as adjusted, on an after-tax basis, as described below, expressed as
a percentage rounded to the nearest one-hundredth, with 0.005% being rounded upward to 0.01%.
EPS and ROCE Adjustments. For
purposes of measuring EPS growth and ROCE performance for PNC and the other Peers for the 2011 Incentive Performance Units calculations, publicly-reported performance results will be adjusted, on an after-tax basis, for the impact of any of the
following where such impact occurs during the covered period of a given year in the applicable overall Performance Period or, where applicable for purposes of the EPS growth metric, during the prior year comparison period for a given year:
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extraordinary items (as such term is used under GAAP); |
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items resulting from a change in tax law; |
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discontinued operations (such as, in PNC’s case, adjusting 2010 comparison period results for PNC Global Investment Servicing, including the 2010
gain on sale, for purposes of the 2011 covered period EPS growth comparison); |
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acquisition costs and merger integration costs; |
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any costs or expense arising from specified Visa litigation (including Visa-litigation-related expenses/charges recorded for obligations to Visa with
respect to the costs of specified litigation or the gains/reversal of expense recognized in connection with such obligations) and any other gains recognized on the redemption or sale of Visa shares as applicable; |
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acceleration of the accretion of any remaining issuance discount in connection with the redemption of TARP preferred stock;
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and, in PNC’s case, the net impact on PNC of significant gains or losses related to BlackRock transactions (similar to the adjustment provided for
in the 2010 Incentive Performance Units that included adjusting 2009 comparison period results to exclude the
4th quarter 2009 gain related to BlackRock’s
acquisition of Barclays Global Investors, for purposes of the 2010 covered performance period EPS growth comparison). |
In the case of the EPS growth metric, there will be an additional adjustment for the impact of any stock splits (whether in the form of a stock split or a stock dividend). In the case of the ROCE
performance metric, there will be an additional adjustment for the impact of any goodwill.
All of these adjustments will be
made, with respect to both PNC and the other Peers, on the basis of, and only where such amounts can be reasonably determined from, publicly-disclosed financial information. After-tax adjustments for PNC and the other Peers will be calculated using
the same methodology for making such adjustments on an after-tax basis.
The Compensation Committee may also take into account
other adjustments applied on a consistent basis to the EPS or ROCE of each member of the Peer Group but only if the effect of such
adjustment or adjustments would be to reduce the calculated potential award payout amounts in making its final award payout determinations.
3.4 Annual Corporate Performance Potential Payout Calculation Schedule; Calculation of Applicable Annual Corporate Performance
Potential Payout Percentages. The Compensation Committee also establishes the applicable Annual Corporate Performance Potential Payout Calculation Schedule (as defined in Section 15.2) for the 2011 Incentive Performance Units. Unless and
until amended prospectively by the Compensation Committee, the Schedule established by the Compensation Committee at the time it authorized the 2011 Incentive Performance Units that accompanies the Agreement shall be applied in order to generate the
Annual Corporate Performance Potential Payout Percentage (as defined in Section 15.3) for each of the applicable covered annual performance measurement periods in the applicable overall Performance Period from the corporate performance results
for each such covered period.
For each applicable covered annual performance period (which may consist of a full calendar
year or a shorter partial-year period as required by the Agreement), PNC will measure EPS growth and ROCE performance for the covered period with respect to that year for PNC and for each other member of the applicable Peer Group as of the end of
the covered period and will calculate the relative rankings of PNC and the other Peers with respect to each corporate performance metric for the covered period with respect to that given year, all as set forth in Section 3.3.
Once PNC and other Peer EPS growth and ROCE performance and rankings have been measured and calculated for a given covered annual
performance measurement period in accordance with Section 3.3, the applicable Schedule (as defined in Section 15.2) will be applied (1) to generate a payout percentage for each corporate metric for that given year based on such
relative covered period performance, and then (2) to generate the final Annual Corporate Performance Potential Payout Percentage for that given year giving equal weight to each corporate performance metric. Such results will be presented to the
Compensation Committee.
The Annual Corporate Performance Potential Payout Percentages for the applicable covered annual
performance periods in the applicable overall Performance Period are taken into account in the calculation of the final Corporate Performance Factor as part of the Final Award determination process by the Compensation Committee as set forth in
Section 5 or may be a part of the Final Award calculation pursuant to Section 6 of the Agreement, as applicable.
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3.5 |
Risk Metrics Performance Criteria; Conditions for Risk Metrics Performance Downward Adjustment to Corporate Performance Factor. |
(a) Risk Metrics Performance Criteria. The Compensation Committee has determined that there will be a formulaically determined
downward adjustment to the overall Corporate Performance Factor if specified risk metrics performance criteria are not met as set forth in the Agreement.
For each applicable covered annual performance measurement period in the applicable overall Performance Period, whether the given covered period consists of a full calendar year or a shorter partial-year
period as required by the Agreement, PNC will measure, as its “Risk Metrics Performance” with respect to that given covered annual period, PNC’s return on economic capital for the covered period as compared to PNC’s cost of
capital with respect to that same covered period, all as set forth herein unless and until amended prospectively by the Compensation Committee.
“Risk Metrics Performance Criteria.” If PNC’s ROEC (as defined below) for a covered annual performance measurement period in the applicable overall Performance Period equals or
exceeds its Cost of Capital (as defined below) with respect to that same covered period, this Risk Metrics Performance meets the Risk Metrics Performance Criteria for that covered period.
If PNC’s ROEC for a covered annual performance measurement period in the applicable overall Performance Period is less than
its Cost of Capital with respect to that same covered period, the Risk Metrics Performance Criteria for that covered period has not been met, and the overall Risk Metrics
Performance Downward Adjustment to the Corporate Performance Factor, where applicable, will include an adjustment amount with respect to that covered period.
Return on economic capital (“ROEC”). For purposes of the measurement of Risk Metrics Performance, PNC’s ROEC is calculated
as earnings for the applicable covered performance measurement period, divided by average economic capital for the same period, then annualized.
Earnings will mean PNC’s publicly-reported earnings for the applicable covered period adjusted, on an after-tax basis, for the impact of the same items as for purposes of measuring PNC’s EPS
growth performance as described under Corporate Performance Metrics in Section 3.3(c) above.
Economic capital will mean
total economic capital for PNC on a consolidated basis as that term is used by PNC for its internal measurement purposes. Average economic capital for the applicable covered period will mean the average of the economic capital values at the
following points: beginning of period, end of period, and at each intermediate quarter-end in the period. For example, for a full calendar year 2011 covered period, this would be the average of the economic capital values at the following dates:
December 31, 2010 (for the beginning of period value), December 31, 2011 (for the end of period value), and March 31, 2011, June 30, 2011 and September 30, 2011 (for the intermediate points).
Cost of capital (“Cost of Capital”). Cost of capital, for purposes of the measurement of Risk Metrics
Performance, will be established as of the beginning of each year for that covered annual performance measurement period of the overall Performance Period and approved by the Compensation Committee no later than March 30th of that year. The Cost of Capital number approved by the
Compensation Committee for 2011 is 10.0%.
Generally, PNC’s cost of capital for the given performance year will be
calculated by (1) generating an initial cost of capital using PNC’s internal Capital Asset Pricing Model with a three-year average of three-year Treasury rates for the risk free rate, a PNC three-year Beta (PNC’s measure of
volatility), and an equity risk premium of 6%, and then (2) adding to that initial percentage an expected return on goodwill. The Compensation Committee may modify the definition of cost of capital and how it is calculated prospectively.
ROEC and Cost of Capital will be calculated to one place to the right of the decimal, rounded to the nearest tenth with 0.05
being rounded upward to 0.1, for assessing PNC’s Risk Metrics Performance.
(b) Determination of Risk Metrics
Performance Downward Adjustment to Corporate Performance Factor. PNC will measure its Risk Metrics Performance as set forth in Section 3.5(a) above for each applicable covered annual performance measurement period in the applicable overall
Performance Period and will determine whether or not such Risk Metrics Performance meets the Risk Metrics Performance Criteria for each such covered period. Such results will be presented to the Compensation Committee.
If PNC’s Risk Metrics Performance meets the Risk Metrics Performance Criteria set forth in Section 3.5(a) in all of the
applicable covered annual periods in the applicable overall Performance Period (generally, in all 3 years of the overall Performance Period unless the overall Performance Period is terminated early or limited pursuant to the terms of the Agreement),
no Risk Metrics Performance Downward Adjustment (as defined in Section 15.24) will be made to the overall Corporate Performance Factor.
If PNC’s Risk Metrics Performance does not meet the Risk Metrics Performance Criteria set forth in Section 3.5(a) for one or more given covered annual periods in the applicable overall
Performance Period, the Risk Metrics Performance Downward Adjustment will include an adjustment amount or amounts, as the case may be, with respect to such covered period or periods, calculated as set forth in Section 15.24.
As set forth in Section 15.24, where a Final Award determination is made by the
Compensation Committee pursuant to Section 5, the Final Potential Payout Percentage that is taken into account in the calculation of the maximum potential payout amount that Grantee may be eligible to receive upon award determination by the
Compensation Committee will take into account a Risk Metrics Performance Downward Adjustment to the Corporate Performance Factor where applicable. When a Final Award is calculated pursuant to Section 6, a downward adjustment for Risk Metrics
Performance would be part of the Final Award calculation if and when provided for under that Section 6.
3.6 Adjusted
Target Share Units. Generally, the maximum size of any Final Award that Grantee may receive pursuant to the Agreement will be expressed as a specified number of Share Units and will be a percentage of the dividend-adjusted Target Share Units.
The applicable percentage is calculated in accordance with Section 5 or Section 6, as the case may be, and takes into account the degree to which corporate performance criteria have been achieved and any applicable downward adjustment for
risk metrics performance, or the formula for calculating a Change of Control payout percentage, as the case may be, and the degree to which service requirements have been met. In most cases, there are further limitations set forth in those Sections
on the maximum size of an award that may be made to a former employee, if any. Dividend-adjusted Target Share Units reflect adjustments for phantom dividends on target share units converted to additional target share units. The calculation of
dividend-adjusted target share units is described below.
As used in the Agreement, “Adjusted Target Share Units”
means the number of Share Units equal to the Target Share Units (i.e., the number of Share Units specified on page 1 of the Agreement as the Target Share Units, subject to capital adjustments pursuant to Section 9 if any) as adjusted for
the addition of all Dividend Adjustment Share Units accrued through the date specified by the applicable Section of the Agreement. Generally, dividend adjustments are calculated through December 31, 2013 unless an earlier date is specified in
Section 5.1 or Section 6.1 of the Agreement as applicable (e.g., in the case of a qualifying Retirement or a Change of Control prior to December 31, 2013).
“Dividend Adjustment Share Units” are calculated as follows. For each PNC common stock cash dividend payment date that occurs
during the period beginning on January 1, 2011 through and including December 31, 2013 (or, if earlier and if so required by the Agreement, through the date so specified by the Agreement), there will be added as of that dividend payment
date to the number of Adjusted Target Share Units a number of Share Units (including fractional Share Units computed to six decimal places) equal to (i) the amount of the cash dividends that would have been paid on that dividend payment date on
the target number of share units, as adjusted for all previous additions to such target number pursuant to this paragraph up to that date, had each such Share Unit been an issued and outstanding share 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. The addition of Dividend Adjustment Share Units is subject to any applicable Plan limits. Cumulatively, these additional Share Units
are referred to as the “Dividend Adjustment Share Units,” and the Target Share Units as adjusted for the addition of all accrued Dividend Adjustment Share Units are referred to as the “Adjusted Target Share Units.”
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4. |
Grantee Service Requirements and Limitation of Potential Award; Early Termination of 2011 Incentive Performance Units. |
4.1 Eligibility for an Award; Employment Conditions and Early Termination of 2011 Incentive Performance Units. The 2011 Incentive
Performance Units are subject to the employment conditions set forth in this Section 4.
Grantee will not be eligible to
receive a Final Award unless the 2011 Incentive Performance Units remain outstanding on the Compensation Committee-determined Award Date (as defined in Section 15.5) or as of the end of the day immediately preceding the day on which a Change of
Control occurs, if earlier.
The 2011 Incentive Performance Units will automatically terminate on Grantee’s
Termination Date (as defined in Section 15.46) unless an exception is available as set forth in Section 4.2, Section 4.3, Section 4.4 or Section 4.5. Where one or more of the conditions to an exception are post-employment
conditions, the Performance Units will terminate upon the failure of any of those conditions.
In the event that
Grantee’s employment is terminated by the Corporation for Cause (as defined in Section 15.8), the 2011 Incentive Performance Units will automatically terminate on Grantee’s Termination Date whether or not the termination might
otherwise have qualified for an exception as a Retirement or a Disability termination pursuant to Section 4.3 or Section 4.4.
In the limited circumstances where the 2011 Incentive Performance Units remain outstanding notwithstanding Grantee’s termination of employment with the Corporation, Grantee will be eligible for
consideration for an award, subject to limitation as set forth in the applicable section of the Agreement. Said award, if any, will be determined and payable at the same time as the awards of those 2011 Incentive Performance Units grantees who
remain Corporation employees, except that in the case of death, the determination and payment of said award, if any, shall be accelerated if so indicated in accordance with the applicable provisions of Section 5 or Section 6, as
applicable, and Section 7.
Any award that the Compensation Committee may determine to make after Grantee’s death
will be paid to Grantee’s legal representative, as determined in good faith by the Compensation Committee, in accordance with Section 10.
Notwithstanding anything in Section 4 or Section 5 to the contrary, if a Change of Control (as defined in Section 15.10) occurs prior to the time the Compensation Committee makes a Final
Award determination pursuant to Section 5.2 (that is, prior to the Committee-determined Award Date), an award will be determined in accordance with Section 6.
4.2 Death While an Employee. If Grantee dies while an employee of the Corporation and prior to the Committee-determined Award Date, the 2011 Incentive Performance Units will remain outstanding and
Grantee will be eligible for consideration for a prorated award calculated in accordance with Section 5.1(b), with an applicable performance measurement date (as defined in Section 5.1) of the earlier of the last day of the calendar year
in which the death occurred and December 31, 2013, and with dividend adjustments to Adjusted Target Share Units calculated through that December 31st, and payable in accordance with Section 7.
Any such award will be subject to Compensation Committee determination pursuant to Section 5.2, and may be further reduced or
eliminated by the Compensation Committee in the exercise of its negative discretion unless such determination occurs during a Change of Control Coverage Period (as defined in Section 15.11) or a Change of Control has occurred.
In the event that a Change of Control occurs after the time Grantee died but prior to the time the Compensation Committee makes an award
determination with respect to Grantee (either to award a specified amount or not to authorize any award), an award will be deemed to be made pursuant to Section 6, calculated as specified in Section 6.1(b) and payable in accordance with
Section 7.
4.3 Qualifying Retirement. If Grantee Retires (as defined in Section 15.38) prior to the
Committee-determined Award Date and the termination of employment is not also a termination by the Corporation for Cause, the 2011 Incentive Performance Units will remain outstanding post-employment; provided, however, that PNC may
terminate the Performance Units at any time prior to the Award Date, other than during a Change of Control Coverage Period or after the occurrence of a Change of Control, upon determination that Grantee has engaged in Detrimental Conduct (as defined
in Section 15.18). If Grantee is Disabled (as defined in Section 15.19) at the time of Retirement and Section 4.4 is also applicable to Grantee, that subsection will govern rather than this Section 4.3.
Provided that the 2011 Incentive Performance Units have not been terminated prior to the award date for Detrimental Conduct and are still
outstanding at that time, Grantee will be eligible for
Compensation Committee consideration of a prorated award at the time that awards are considered for those 2011 Incentive Performance Units grantees who remain Corporation employees, calculated in
accordance with Section 5.1(c) with a performance measurement date of the last day of the last full quarter completed on or prior to Grantee’s Retirement date, but in no event later than December 31, 2013, and with dividend
adjustments to Adjusted Target Share Units calculated through that same performance measurement date, and payable in accordance with Section 7.
Any such award will be subject to Compensation Committee determination pursuant to Section 5.2, and may be further reduced or eliminated by the Compensation Committee in the exercise of its negative
discretion unless such determination occurs during a Change of Control Coverage Period or a Change of Control has occurred.
If Grantee dies after a qualifying Retirement but before the time set forth above for consideration of an award and provided that the
2011 Incentive Performance Units have not been terminated for Detrimental Conduct and are still outstanding at the time of Grantee’s death, the Compensation Committee may consider an award for Grantee and make an award determination with
respect to Grantee (either to award a specified amount or not to authorize any award). Any such award determination will be made and such award, if any, will be calculated in accordance with Section 5.1(c) as described above but will be paid in
accordance with Section 7 during the calendar year immediately following the year in which Grantee’s death occurs, if the death occurs on or prior to December 31, 2013, or in 2014 if the death occurs in 2014 but prior to the Award
Date.
In the event that a Change of Control occurs prior to the time the Compensation Committee makes an award determination
with respect to Grantee (either to award a specified amount or not to authorize an award), an award will be deemed to be made pursuant to Section 6, calculated as specified in Section 6.1(c) and payable in accordance with Section 7.
4.4 Qualifying Disability Termination. If Grantee’s employment with the Corporation is terminated by reason of
Disability (as defined in Section 15.19) prior to the Committee-determined Award Date and the termination of employment is not also a termination by the Corporation for Cause, the 2011 Incentive Performance Units will remain outstanding
post-employment; provided, however, that PNC may terminate the Performance Units at any time prior to the Award Date, other than during a Change of Control Coverage Period or after the occurrence of a Change of Control, upon
determination that Grantee has engaged in Detrimental Conduct (as defined in Section 15.18).
Provided that the 2011
Incentive Performance Units are still outstanding at that time, Grantee will be eligible for Compensation Committee consideration of a full award at the time that awards are considered for those 2011 Incentive Performance Units grantees who remain
Corporation employees, calculated in accordance with Section 5.1(d) and payable in accordance with Section 7.
Any
such award will be subject to Compensation Committee determination pursuant to Section 5.2, and may be further reduced or eliminated by the Compensation Committee in the exercise of its negative discretion unless such determination occurs
during a Change of Control Coverage Period or a Change of Control has occurred. Although Grantee will be eligible for consideration for a full award (Standard Payout Calculation) at the scheduled time, it is anticipated that the Compensation
Committee will take into account the timing and circumstances of the Disability when deciding whether and the extent to which to exercise its negative discretion.
If Grantee dies after a qualifying Disability termination but before the time set forth above for consideration of an award and provided that the 2011 Performance Units have not been terminated for
Detrimental Conduct and are still outstanding at the time of Grantee’s death, the Compensation Committee may consider an award for Grantee and make an award determination with respect to Grantee (either to award a specified amount or not to
authorize any award). Any such award determination will be made and such award, if any, will be paid in accordance with Section 7 during the calendar year immediately following the year in which Grantee’s death occurs, if the death occurs
on or prior to December 31, 2013, or in 2014 if the death occurs in 2014 but prior to the Award Date; provided,
however, that the maximum award that may be approved in these circumstances is the award that could have been authorized had Grantee died while an employee of the Corporation.
In the event that a Change of Control occurs prior to the time the Compensation Committee makes an award determination with respect to
Grantee (either to award a specified amount or not to authorize an award), an award will be deemed to be made pursuant to Section 6, calculated as specified in Section 6.1(d) and payable in accordance with Section 7.
4.5 Qualifying Termination in Anticipation of a Change of Control. If Grantee’s employment with the Corporation is terminated
by the Corporation prior to the Award Date and such termination is an Anticipatory Termination as defined in Section 15.4, then (i) the 2011 Incentive Performance Units will remain outstanding notwithstanding Grantee’s termination of
employment with the Corporation, (ii) the Performance Units will not be subject to termination for Detrimental Conduct, and (iii) Grantee will be eligible for consideration for an award pursuant to Section 5.2, calculated in
accordance with Section 5.1(e), or will receive an award pursuant to Section 6, calculated as specified in Section 6.1(e), as applicable. Any such award will be payable in accordance with Section 7.
If Grantee dies while eligible to receive an award pursuant to this Section 4.5 but prior to the time the Compensation Committee
makes an award determination pursuant to Section 5.2 or a Change of Control occurs, Grantee will be eligible for Compensation Committee consideration of an award of up to the greater of the award Grantee could have received had he or she died
while an employee of the Corporation or an award determined as set forth in Section 5.1(e). If Grantee dies while eligible to receive an award pursuant to this Section 4.5 but a Change of Control occurs prior to the time the Compensation
Committee makes an award determination pursuant to Section 5.2, Grantee will be deemed to receive an award in accordance with Section 6.1(e).
| |
5. |
Certification of Performance Results; Calculation of Maximum Potential Payout Amount; and Final Award Determination. |
5.1 Certification of Level of Achievement of Corporate Performance and Risk Metrics Performance with respect to the Specified
Criteria; Calculation of Final Potential Payout Percentage and Calculated Maximum Potential Payout Amount. As soon as practicable after December 31, 2013, or after the earlier relevant date if the applicable performance measurement date and
potential award date are earlier under the circumstances, PNC will present information to the Compensation Committee concerning the following:
(1) the levels of EPS growth and ROCE performance achieved by PNC and the other members of the applicable Peer Group and the relative rankings of PNC and the other Peers with respect to such corporate
performance metrics for each of the applicable covered annual performance periods for which performance is being measured under the circumstances;
(2) the Annual Corporate Performance Potential Payout Percentages for such covered performance periods generated in accordance with the Schedule on the basis of such corporate performance, giving equal
weight to each of the two corporate performance metrics;
(3) the Corporate Performance Factor calculated as set forth in
Section 15.24 on the basis of such Annual Corporate Performance Potential Payout Percentages;
(4) PNC’s Risk Metrics
Performance for each of the applicable covered annual performance periods for which performance is being measured under the circumstances;
(5) the Risk Metrics Performance Downward Adjustment, if any, generated on the basis of such risk metrics performance as calculated as set forth in Section 3.5(b) and Section 15.24;
(6) the Final Potential Payout Percentage applicable under the circumstances, calculated as set forth in Section 15.24;
(7) such additional criteria for the certifications and calculations to be made pursuant to
this Section 5.1 as may be required by subsection (a), (b), (c), (d) or (e) below, as applicable under the circumstances (including the last day of the applicable performance measurement period and such limitations and prorations as
may be applicable) in order to calculate the applicable Maximum Calculated Potential Payout Amount; and
(8) such additional
criteria and information as the Compensation Committee may request.
The last day of the applicable performance measurement
period is sometimes referred to as the “performance measurement date.” The time when the certification, calculation and Final Award determination process will take place is sometimes referred to as the “scheduled award-determination
period,” and the date when a Final Award, if any, is determined and made by the Compensation Committee is sometimes referred to as the “Committee-determined Award Date” (as set forth in Section 15.5).
Notwithstanding anything in this Section 5 to the contrary, if a Change of Control has occurred, Section 6 will apply.
(a) Non-Exceptional Circumstances – Standard Payout Calculation. Provided that Grantee remains an employee of the
Corporation and the 2011 Incentive Performance Units remain outstanding such that Grantee remains eligible for consideration for an award, and that a Change of Control has not occurred, the overall Performance Period will run from January 1,
2011 through December 31, 2013 and the process of certification of the levels of achievement of corporate performance with respect to the Corporate Performance Criteria and Risk Metrics Performance with respect to the Risk Metrics Performance
Criteria, the calculation of the final Corporate Performance Factor, Risk Metrics Performance Downward Adjustment, and Final Potential Payout Percentage, the calculation of the Calculated Maximum Potential Payout Amount, and the determination of the
Final Award, if any, by the Compensation Committee will occur in early 2014.
Under the circumstances set forth in this
subsection (a) above (“non-exceptional circumstances”), PNC will present information to the Compensation Committee for purposes of this Section 5.1 on the following basis:
(i) the applicable performance measurement date will be December 31, 2013;
(ii) the applicable overall Performance Period will be the period beginning on January 1, 2011 and ending on December 31, 2013,
and will consist of the full calendar year covered annual performance periods from January 1, 2011 through December 31, 2011, from January 1, 2012 through December 31, 2012, and from January 1, 2013 through December 31,
2013;
(iii) the applicable Final Potential Payout Percentage will be the percentage that is the Corporate Performance Factor
less (i.e., adjusted downward for) the Risk Metrics Performance Downward Adjustment, if any, all calculated as set forth in Section 15.24 using corporate performance and risk metrics performance for the three full calendar year covered
annual performance measurement periods (2011, 2012 and 2013) in the overall Performance Period specified above, but in no event resulting in a Corporate Performance Factor greater than 200.00% or a Risk Metrics Performance Downward Adjustment of
greater than 30 percentage points;
(iv) the applicable Calculated Maximum Potential Payout Amount will be the number of Share
Units equal to the applicable Final Potential Payout Percentage of the Adjusted Target Share Units, with dividend adjustments to the Target Share Units calculated through December 31, 2013; and
(v) the scheduled award-determination period will occur in early 2014.
(b) Death While an Employee. In the event that Grantee dies while an employee of the
Corporation and prior to the regularly scheduled award date for non-exceptional circumstances in early 2014 and the 2011 Incentive Performance Units remain outstanding pursuant to Section 4.2, PNC will present information to the Compensation
Committee for purposes of this Section 5.1 on the following basis:
(i) the applicable performance measurement date will
be the earlier of the last day of the calendar year in which the death occurred and December 31, 2013;
(ii) the applicable overall Performance Period will be the period beginning on January 1, 2011 and ending on the
December 31st that is the applicable performance
measurement date, and will consist of the one, two or three full calendar year covered annual performance periods (for 2011, or for 2011 and 2012, or for 2011, 2012 and 2013, as the case may be) in that period;
(iii) the applicable Final Potential Payout Percentage will be the percentage that is the Corporate Performance Factor less (i.e.,
adjusted downward for) the Risk Metrics Performance Downward Adjustment, if any, all calculated as set forth in Section 15.24 using corporate performance and risk metrics performance for the one, two or three full calendar year covered annual
performance measurement periods, as the case may be, in the applicable overall Performance Period specified above, but in no event resulting in a Corporate Performance Factor greater than 200.00% or a Risk Metrics Performance Downward Adjustment of
greater than 30 percentage points;
(iv) the applicable Calculated Maximum Potential Payout Amount will be
the number of Share Units equal to (x) the applicable Final Potential Payout Percentage of the Adjusted Target Share Units, with dividend adjustments to the Target Share Units calculated through the December 31st that is the applicable performance measurement date, then
(y) prorated (as defined in Section 15.36) based on the number of full quarters in the applicable overall Performance Period specified above, including through December 31st of the year of death if prior to 2014; and
(v) the scheduled award-determination period will occur during the year immediately following the year in which Grantee died (i.e., early in 2012, 2013, or 2014, as the case may be) unless Grantee
dies after December 31, 2013 but prior to the award date, in which case the scheduled award-determination period will occur in 2014.
(c) Qualifying Retirement. In the event that Grantee Retires prior to the regularly scheduled award date for non-exceptional circumstances in early 2014 but Grantee has met the conditions for a
qualifying Retirement termination set forth in Section 4.3 and the 2011 Incentive Performance Units have not been terminated by PNC prior to the award date pursuant to Section 4.3 for Detrimental Conduct and remain outstanding, PNC will
present information to the Compensation Committee for purposes of this Section 5.1 on the following basis:
(i) the
applicable performance measurement date will be the last day of the last full quarter completed prior to Grantee’s Retirement date or, if the Retirement date is a quarter-end date, that quarter-end date, but in no event later than
December 31, 2013;
(ii) the applicable overall Performance Period will be the period beginning on January 1, 2011
and ending on the quarter-end date that is the applicable performance measurement date, and will consist of one, two or three covered periods, as the case may be, consisting of the full covered year or years, if any, and any partial covered year, as
applicable, in that period;
(iii) the applicable Final Potential Payout Percentage will be the percentage that is the
Corporate Performance Factor less (i.e., adjusted downward for) the Risk Metrics Performance Downward Adjustment, if any, all calculated as set forth in Section 15.24 using corporate performance and risk metrics performance for the one,
two or three covered periods, as the case may be, in the applicable overall Performance Period specified above;
(iv) the applicable Calculated Maximum Potential Payout Amount will be the number of Share
Units equal to (x) the applicable Final Potential Payout Percentage of the Adjusted Target Share Units, with dividend adjustments to the Target Share Units calculated through the quarter-end date that is the applicable performance measurement
date, then (y) prorated (as defined in Section 15.36) based on the number of full quarters in the applicable overall Performance Period (i.e., in the period from January 1, 2011 through the quarter-end date that is the
applicable performance measurement date specified above); and
(v) the scheduled award-determination period will occur in
early 2014 as provided in Section 7.1, unless Grantee dies after Retirement but before the beginning of 2013, in which case the scheduled award-determination period will occur in early 2013 (if the death occurred in 2012) or early 2012 (if the
death occurred in 2011), as the case may be.
In the event that Grantee is Disabled at the time of Retirement and
Section 4.4 is also applicable to Grantee, then Section 5.1(d) will govern rather than this Section 5.1(c).
(d) Qualifying Disability. Except as set forth in the following paragraph, in the event that Grantee becomes Disabled prior to the
regularly scheduled award date for non-exceptional circumstances in early 2014 but Grantee has met the conditions for a qualifying Disability termination set forth in Section 4.4 and the 2011 Incentive Performance Units have not been terminated
by PNC prior to the award date pursuant to Section 4.4 for Detrimental Conduct and remain outstanding, PNC will present information to the Compensation Committee for purposes of this Section 5.1 for consideration of an award on the same
basis as that set forth in Section 5.1(a) for a continuing employee of the Corporation, together with such information as the Compensation Committee may request concerning the timing and circumstances of the Disability. The scheduled
award-determination period will occur in early 2014 as provided in Section 7.1.
If Grantee dies after a qualifying
Disability termination but prior to the regularly scheduled award date and the 2011 Incentive Performance Units are still outstanding at the time of Grantee’s death, Grantee will be eligible for Compensation Committee consideration of an award
at the time and up to the maximum amount of the award Grantee could have received had he or she died while an employee of the Corporation.
(e) Qualifying Termination in Anticipation of a Change of Control. In the event that Grantee’s employment with the Corporation is terminated by the Corporation prior to the regularly scheduled
award date for non-exceptional circumstances in early 2014 but Grantee has met the conditions for a qualifying termination in anticipation of a Change of Control set forth in Section 4.5 and the 2011 Incentive Performance Units remain
outstanding, but a Change of Control has not yet occurred, then:
(1) If a Change of Control transaction is pending at the
regularly scheduled award date, the 2011 Incentive Performance Units will remain outstanding and Grantee will be eligible to receive an award pursuant to Section 5.2 on the same basis as that set forth in Section 5.1(c) for a qualifying
Retiree and the Compensation Committee will have no discretion to further reduce the size of such award; and
(2) If there is
no Change of Control transaction pending at the regularly scheduled award date, the 2011 Incentive Performance Units will remain outstanding and the Compensation Committee will have discretion to authorize an award, pursuant to Section 5.2, to
Grantee up to a maximum permitted award calculated on the same basis as that set forth in Section 5.1(c) for a qualifying Retiree, but the Compensation Committee will also have discretion to further reduce the award as set forth in
Section 5.2(b).
If Grantee dies after an Anticipatory Termination but prior to the time the Compensation Committee makes
an award determination pursuant to Section 5.2 or a Change of Control occurs, Grantee will be eligible for Compensation Committee consideration of an award of up to the greater of
the award Grantee could have received had he or she died while an employee of the Corporation and an award determined as set forth above in this Section 5.1(e).
If Grantee dies after an Anticipatory Termination but a Change of Control occurs prior to the time the Compensation Committee makes an
award determination pursuant to Section 5.2, Grantee will be deemed to receive an award in accordance with Section 6.1(e).
5.2 Final Award Determination by Compensation Committee.
(a) The
Compensation Committee will have the authority to award to Grantee (“award”) as a Final Award such amount, denominated as a specified number of Share Units, as may be determined by the Compensation Committee, subject to the limitations set
forth in the following paragraph, provided, that, the 2011 Incentive Performance Units are still outstanding, that Grantee is either still an employee of the Corporation or qualifies for an exception to the employment condition
pursuant to Section 4.2, 4.3, 4.4 or 4.5, and that the Final Potential Payout Percentage is greater than zero.
The Final
Award will not exceed the applicable Calculated Maximum Potential Payout Amount, as determined in accordance with the applicable subsection of Section 5.1, and is subject to the exercise of negative discretion by the Compensation Committee to
further reduce this calculated payout amount pursuant to Section 5.2(b), if applicable.
The Compensation Committee will
not have authority to exercise negative discretion to further reduce the payout amount below the full applicable Calculated Maximum Potential Payout Amount if a Change of Control Coverage Period has commenced and has not yet ended or if a Change of
Control has occurred. If there has been a Change of Control, the Compensation Committee’s authority is subject to Section 6.
The date on which the Compensation Committee makes its determination as to whether or not it will authorize an award and, if so, the size of a Final Award, if any, it authorizes within the Calculated
Maximum Potential Payout Amount determined pursuant to the Agreement is sometimes referred to in the Agreement as the “Committee-determined Award Date” (as set forth in Section 15.5).
Payment of the Final Award, if any, will be made in accordance with Section 7. If Grantee dies after a Final Award is determined but
before payment is made, payment of the Final Award will be made to Grantee’s legal representative, as determined in good faith by the Compensation Committee, in accordance with Section 10.
(b) Except during a Change of Control Coverage Period or after the occurrence of a Change of Control, the Compensation Committee may
exercise negative discretion with respect to the 2011 Incentive Performance Units and may determine, in light of such Corporation or individual performance or other factors as the Compensation Committee may deem appropriate, that notwithstanding the
levels of EPS growth and/or ROCE performance and rankings achieved by PNC relative to the performance of the other members of the Peer Group and notwithstanding the extent to which PNC’s Risk Metrics Performance has satisfied the Risk Metrics
Performance Criteria, the Compensation Committee will not award Grantee the full applicable Calculated Maximum Potential Payout Amount that the Compensation Committee is authorized to award pursuant to Section 5.2(a), or any of such amount.
If the Compensation Committee so determines to exercise its negative discretion pursuant to this Section 5.2(b), the
Final Award, if any, will be further reduced accordingly; provided, however, that the Compensation Committee will not have authority to exercise negative discretion if a Change of Control Coverage Period has commenced and has not yet
ended or if a Change of Control has occurred.
(c) If a Change of Control occurs prior to the time the Compensation Committee
makes an award determination pursuant to Section 5.2, the Final Award will be determined in accordance with Section 6 rather than being determined by the Compensation Committee pursuant to Section 5.2, and the
Compensation Committee will not have negative discretion to reduce the payout amount calculated pursuant to Section 6.
6. Change of Control Prior to a Committee-Determined Award Date.
6.1 Final Award Calculation.
Notwithstanding anything in the Agreement to the contrary, upon the occurrence of a Change of Control at any time prior to a Committee-determined Award Date pursuant to Section 5.2, (i) the
overall Performance Period, if not already ended, will be limited and will end on the last day of the last full quarter completed prior to the day the Change of Control occurs, or, if the Change of Control occurs on a quarter-end date, on the day
the Change of Control occurs, but in no event later than December 31, 2013, (ii) if Dividend Adjustment Share Units were otherwise still accruing at the time, no further Dividend Adjustment Share Units will accrue and be added to the
number of Adjusted Target Share Units after the last day of the overall Performance Period as so limited, and (iii) Grantee will be deemed to have been awarded a Final Award in an amount determined as set forth in this Section 6, payable
to Grantee or Grantee’s legal representative at the time and in the manner set forth in Section 7, provided that the 2011 Incentive Performance Units are still outstanding as of the end of the day immediately preceding the
day on which the Change of Control occurs and have not already terminated or been terminated in accordance with the service or conduct provisions of Section 4.
If this Section 6 is applicable and a Final Award is deemed to be awarded pursuant to Section 6, the day the Change of Control occurs will be considered the Award Date for purposes of the
Agreement. This date is sometimes referred to in the Agreement as the “Change-of-Control-determined Award Date” (as set forth in Section 15.5).
(a) Standard Change of Control Payout Calculation. Provided that Grantee is an employee of the Corporation and the 2011 Incentive Performance Units are still outstanding as of the end of the day
immediately preceding the day on which the Change of Control occurs such that Grantee remains eligible for an award, Grantee’s Final Award will be determined as follows:
(i) the applicable performance measurement date will be the last day of the last full quarter completed prior to the day the Change of Control occurs, or, if the Change of Control occurs on a quarter-end
date, the day the Change of Control occurs, but in no event later than December 31, 2013;
(ii) the applicable overall
Performance Period will be the period beginning on January 1, 2011 and ending on the quarter-end date that is the applicable performance measurement date, and will consist of one, two or three covered periods, as the case may be, consisting of
the full covered year or years, if any, and any partial covered year, as applicable, in that period;
(iii) the scheduled
award-determination period will occur as soon as practicable after the occurrence of the Change of Control; and
(iv) a Final
Award will be calculated in two parts (Part A and Part B), and the Final Award amount will be the sum of the amounts calculated for the Part A Award and the Part B Award as set forth below; provided, however, that the Part B Award is
not applicable in the limited circumstance where the Change of Control occurs on or after December 31, 2013 and the Part A Award is not prorated.
Part A Award: The Part A Award amount will be the number of Share Units equal to:
(1) the “Change of Control Payout Percentage” (calculated as set forth below) of the Adjusted Target Share Units, with dividend adjustments to the Target Share Units calculated through the
quarter-end date that is the applicable performance measurement date specified above, then,
(2) prorated (as defined in Section 15.36) based on the number of full quarters in the applicable overall Performance Period (i.e., in the period from January 1, 2011 through the
quarter-end date that is the applicable performance measurement date specified above) unless the Change of Control occurs on or after December 31, 2013. If the Change of Control occurs on or after December 31, 2013 (and therefore the
applicable overall Performance Period covers a full three year period), proration will not apply.
The “Change of Control
Payout Percentage” will be (a) or (b) below, as applicable, (but in no event greater than 200.00%):
(a) If the
Change of Control occurs prior to December 31, 2013, such that the applicable overall Performance Period is less than three years, the Change of Control Payout Percentage will be the higher of (1) 100% and (2) the percentage
that is the Corporate Performance Factor less (i.e., adjusted downward for) the Risk Metrics Performance Downward Adjustment, if any, all calculated in the same manner as set forth in Section 15.24 for an award determination made
pursuant to Section 5 using corporate performance and risk metrics performance for the one, two or three covered periods, as the case may be, in the applicable overall Performance Period specified above in subsection (ii) of this
Section 6.1(a); and
(b) If the Change of Control occurs on or after December 31, 2013, the Change of Control Payout
Percentage will be the percentage that is the Corporate Performance Factor less (i.e., adjusted downward for) the Risk Metrics Performance Downward Adjustment, if any, calculated in the same manner as set forth in Section 15.24 for an
award determination made pursuant to Section 5 using corporate performance and risk metrics performance for all three covered annual performance measurement periods in the applicable overall Performance Period (i.e., for the three full
calendar year covered annual performance periods for 2011, 2012 and 2013).
Part B Award: The Part B Award amount will
be the number of Share Units equal to:
(1) 100% of the Adjusted Target Share Units, with dividend adjustments to the Target
Share Units calculated through the quarter-end date that is the applicable performance measurement date specified above, multiplied by
(2) the fraction equal to 1.00 minus the fraction used for the proration by quarters in the calculation of the Part A Award above.
If the calculation of the Part A Award above does not include a proration factor, the Part B Award will not be applicable.
Grantee’s Final Award determined pursuant to this Section 6.1(a) will be paid to Grantee’s legal representative, as determined in good faith by the Compensation Committee, in accordance
with Section 10 if Grantee dies after the Change of Control occurs but before this Final Award is paid.
(b) Death
While an Employee. If Grantee died while an employee of the Corporation and a Final Award determination (either to award a specified amount or not to authorize any award) was made by the Compensation Committee pursuant to Section 5.2 prior
to the Change of Control, no further or different award determination will be made pursuant to this Section 6.1.
In the
event that Grantee died while an employee of the Corporation and qualified for consideration for an award pursuant to Section 4.2 but the Compensation Committee had not yet made an award determination (either to award a specified amount or not
to authorize any award) with respect to Grantee at the time the Change of Control occurs such that Grantee remains eligible for an award, then the scheduled award-determination period will occur as soon as practicable after the occurrence of the
Change of Control, and the amount of Grantee’s Final Award (payable to Grantee’s legal representative,
as determined in good faith by the Compensation Committee, in accordance with Section 10) will be determined on the following basis, as applicable.
(1) If Grantee died in the calendar year prior to the year in which the Change of Control occurs but the Compensation Committee had not
yet made an award determination (either to award a specified amount or not to authorize any award) with respect to Grantee at the time the Change of Control occurs, Grantee’s Final Award will be in the amount of the Calculated Maximum Potential
Payout Amount determined in the same manner as set forth in Section 5.1(b) but with no Compensation Committee discretion to further reduce the amount of the award.
(2) If Grantee died prior to but in the same calendar year as the Change of Control, Grantee’s Final Award will be in the amount of the award that would have been payable to Grantee pursuant to the
calculations set forth in Section 6.1(a), but substituting a Part B Award of zero Share Units for any Part B Award amount calculated pursuant to that section, had Grantee not died but had been an employee of the Corporation as of the end of day
immediately preceding the day the Change of Control occurred.
(c) Qualifying Retirement. In the event that Grantee
Retired prior to the day the Change of Control occurs but Grantee has met the conditions for a qualifying Retirement termination set forth in Section 4.3 and the 2011 Incentive Performance Units have not been terminated by PNC prior to the
Change of Control pursuant to Section 4.3 for Detrimental Conduct and are still outstanding as of the end of the day immediately preceding the day on which the Change of Control occurs such that Grantee remains eligible for an award,
Grantee’s Final Award will be in the amount of the lesser of:
(1) the Calculated Maximum Potential Payout Amount
determined in the same manner as set forth in Section 5.1(c) but with no Compensation Committee discretion to further reduce the amount of the award; and
(2) the amount of the award that would have been payable to Grantee pursuant to the calculations set forth in Section 6.1(a), but substituting a Part B Award of zero Share Units for any Part B Award
amount calculated pursuant to that section, had Grantee not Retired but had been an employee of the Corporation as of the end of the day immediately preceding the day the Change of Control occurred.
The scheduled award-determination period will occur as soon as practicable after the occurrence of the Change of Control.
If Grantee died while a qualified Retiree and a Final Award determination (either to award a specified amount or not to authorize any
award) was made by the Compensation Committee pursuant to Section 5.2 prior to the Change of Control, no further or different award determination will be made pursuant to this Section 6.1.
If no such Final Award determination was made prior to the Change of Control, Grantee’s Final Award determined pursuant to this
Section 6.1(c) will be paid to Grantee’s legal representative, as determined in good faith by the Compensation Committee, in accordance with Section 10.
(d) Qualifying Disability. In the event that Grantee became Disabled and Grantee’s employment with the Corporation terminated prior to the day the Change of Control occurs but Grantee has met
the conditions for a qualifying Disability termination set forth in Section 4.4 and the 2011 Incentive Performance Units have not been terminated by PNC prior to the Change of Control pursuant to Section 4.4 for Detrimental Conduct and are
still outstanding as of the end of the day immediately preceding the day on which the Change of Control occurs such that Grantee remains eligible for an award, Grantee’s Final Award will be in the amount of the award that would have been
payable to Grantee pursuant to the calculations set forth in Section 6.1(a), but substituting a Part B Award of zero Share Units for any Part B Award amount calculated pursuant to that section, had Grantee still been an
employee of the Corporation as of the end of the day immediately preceding the day the Change of Control occurred.
The scheduled award-determination period will occur as soon as practicable after the occurrence of the Change of Control.
If Grantee died while qualified to receive an award and a Final Award determination (either to award a specified amount or not to authorize any award) was made by the Compensation Committee pursuant to
Section 5.2 prior to the Change of Control, no further or different award determination will be made pursuant to this Section 6.1. If no such Final Award determination was made prior to the Change of Control, Grantee’s Final Award
(payable to Grantee’s legal representative, as determined in good faith by the Compensation Committee, in accordance with Section 10) will be an award determined in accordance with Section 6.1(b) as if Grantee had died while an
employee of the Corporation and prior to the Change of Control.
(e) Qualifying Termination in Anticipation of a Change of
Control. In the event that Grantee’s employment with the Corporation was terminated by the Corporation prior to the Award Date and such termination was an Anticipatory Termination as defined in Section 15.4 and the 2011 Incentive
Performance Units are still outstanding at the time the Change of Control occurs and Grantee remains eligible for an award pursuant to Section 4.5, Grantee will receive a Final Award on the following basis, as applicable.
(1) If the Change of Control occurs within three (3) months of Grantee’s Termination Date, Grantee will receive a Final Award on
the same basis as a continuing employee of the Corporation as set forth in Section 6.1(a).
(2) If the Change of Control
occurs more than three (3) months after Grantee’s Termination Date, Grantee will receive a Final Award on the same basis as a qualifying Retiree as set forth in Section 6.1(c).
If Grantee died while qualified to receive an award pursuant to Section 4.5 and a Final Award determination (either to award a
specified amount or not to authorize any award) was made by the Compensation Committee pursuant to Section 5.2 prior to the Change of Control, no further or different award determination will be made pursuant to this Section 6.1. If no
such Final Award determination was made prior to the Change of Control, Grantee’s Final Award (payable to Grantee’s legal representative, as determined in good faith by the Compensation Committee, in accordance with Section 10) will
be in the same amount as the Final Award that would have been paid to Grantee pursuant to this Section 6.1(e) had Grantee still been alive on the Change-of-Control-determined Award Date.
6.2 No Committee Discretion to Reduce Calculated Award Amount. The Compensation Committee may not exercise any further negative
discretion pursuant to Section 5.2(b) or otherwise exercise discretion pursuant to the Agreement in any way that would serve to reduce an award calculated pursuant to and deemed to be made to Grantee in accordance with this Section 6.
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7. |
Payment of Final Award; Termination of Any Unawarded 2011 Incentive Performance Units. |
7.1 Payment of Final Award Determined by the Compensation Committee. Any Final Award determined by the Compensation Committee
pursuant to Section 5.2 will be settled by delivery of whole Shares and, if applicable, cash Share-equivalents that together equal the number of Share Units specified in the Final Award (sometimes referred to in the Agreement as “awarded
Share Units”) or as otherwise provided pursuant to Section 9 if applicable. Payment will be subject to applicable withholding taxes as set forth in Section 11.
(a) Form of Payment. Except as set forth below or as otherwise provided pursuant to Section 9 if applicable, any Final Award determined by the Compensation Committee pursuant to
Section 5.2 will be settled first by delivery of a number of whole Shares equal to the number of awarded Share Units. This number of shares may not, however, exceed the number specified in
the Agreement as the Target Share Units number. The Target Share Units number, which does not include any additions for Dividend Adjustment Share Units, is the maximum number of Shares, subject to capital adjustments, if any, pursuant to
Section 9, that may be paid with respect to the 2011 Incentive Performance Units under the Agreement.
To the extent, if
any, that the total number of awarded Share Units exceeds that maximum number of Shares, then any such excess number of awarded Share Units will be settled in cash (sometimes referred to in the Agreement as payment in “cash
Share-equivalents”). This cash payment amount will be equal to the number of such remaining awarded Share Units multiplied by the Fair Market Value (as defined in Section 15.22) of a share of PNC common stock on the Committee-determined
Award Date or as otherwise provided pursuant to Section 9 if applicable.
In the event that a Final Award determined by
the Compensation Committee is a prorated award and is made to Grantee as a qualifying Retiree or in the event of Grantee’s death, then the form of payment of any such Final Award will be determined as follows unless otherwise provided pursuant
to Section 9 if applicable. The Final Award will be settled by delivery of whole Shares up to a number of Shares equal to the product of the proration factor used in calculating the award and the number specified in the Agreement as the Target
Share Units number, rounded down to the nearest whole number, and any remainder will be settled in cash as cash Share-equivalents.
(b) Timing. Determination of eligibility for an award, calculation of the Calculated Maximum Potential Payout Amount, and a decision by the Compensation Committee on whether or not to authorize an
award and, if so, the size of such Final Award within such maximum potential award amount (the “scheduled award-determination process”) and then payment of any such Final Award will all generally occur in the first quarter of 2014 or as
soon thereafter as practicable after the final Peer data necessary for the Compensation Committee to make its award determination is available.
In general, it is expected that the Award Date will occur in 2014 and no later than the end of the second quarter of that year, and that payment of a Final Award, if any, will be made as soon as
practicable after the Award Date. Except as otherwise provided below, in no event will payment be made earlier than January 1, 2014 or later than December 31, 2014, other than in unusual circumstances where a further delay thereafter would
be permitted under Section 409A of the Internal Revenue Code, and if such a delay is permissible, as soon as practicable within such limits.
In the event of Grantee’s death prior to the Award Date where Grantee has satisfied all of the conditions of Section 4.2, 4.3, 4.4 or 4.5 of the Agreement and otherwise meets all applicable
criteria as set forth in the Agreement for consideration for an award, (a) the scheduled award-determination process will occur at the same time and in the same manner as set forth above for grantees of 2011 Incentive Performance Units who
remain employees of the Corporation, provided that if the death occurs prior to 2013, the scheduled award-determination process will occur in the calendar year immediately following Grantee’s death, and (b) payment of a Final Award, if
any, will be made during the calendar year immediately following the year in which Grantee died if the death occurs on or prior to December 31, 2013, or in 2014 if Grantee dies in 2014, provided, that, in no event will payment
occur later than December 31st of the calendar year
so specified as the year for payment, other than in unusual circumstances where a further delay thereafter would be permitted under Section 409A of the Internal Revenue Code, and if such a delay is permissible, as soon as practicable within
such limits.
Otherwise, in the event that Grantee is no longer employed by the Corporation but has satisfied all of the
conditions of Section 4.3, 4.4 or 4.5 of the Agreement and otherwise meets all applicable criteria as set forth in the Agreement for consideration for an award, (a) the scheduled award-determination process will occur at the same time and
in the same manner as set forth above for grantees of 2011 Incentive Performance Units who remain employees of the Corporation, generally in 2014 during the first quarter of that year, and (b) once the Compensation Committee has made its award
determination, payment of a Final Award, if any, will be made as soon as practicable after the Committee-determined Award Date, provided, that, in no event will payment be made
earlier than January 1, 2014 or later than December 31, 2014, other than in unusual circumstances where a further delay thereafter would be permitted under Section 409A of the Internal Revenue Code, and if such a delay is permissible,
as soon as practicable within such limits.
(c) Dividend Record Dates. In the event that one or
more record dates for dividends on PNC common stock occur after December 31, 2013 (or, in the event of Grantee’s death prior to 2013, after the end of the applicable overall Performance Period) but before the date the Final Award, if any,
is paid pursuant to this Section 7.1, PNC will make a cash payment to Grantee in an amount equivalent to the amount of the dividends Grantee would have received had the full number of Share Units specified in the Final Award, if any, been that
number of shares of PNC common stock and had such shares been issued and outstanding on January 1, 2014 (or, in the event of Grantee’s death prior to 2013, on the January 1st immediately following the last day of the applicable overall Performance Period) and had remained outstanding on the
record date or dates for such dividends. Any such payment will be made at the same time as payment of the Final Award, if any.
(d) Disputes. If there is a dispute regarding payment of the Final Award, PNC will settle the undisputed portion of the award, if
any, within the time frame set forth above in this Section 7.1, and will settle any remaining portion as soon as practicable after such dispute is finally resolved but in any event within the time period permitted under Section 409A of the
Internal Revenue Code.
7.2 Delivery of Final Award Determined by Section 6. If a Final Award is deemed to be made
pursuant to Section 6 rather than determined by the Compensation Committee pursuant to Section 5.2, the Final Award is fully vested as of the date of the Change of Control. The number of Share Units in the Final Award will be calculated as
of the date of the Change of Control once the final data necessary for the award determination is available, and the Final Award will be paid at the time and in the form set forth below.
(a) Timing. If Grantee died in the calendar year prior to the year in which the Change of Control occurs but
no final payment decision had been made and no resulting payment, if any, had been made prior to the date the Change of Control occurred, payment will be made as soon as practicable after the date the Change of Control occurs and the amount of the
Final Award is determinable and determined in accordance with Section 6, but in no event later than
December 31st of the calendar year following the year
in which Grantee died unless payment at such time would be a noncompliant payment under Section 409A of the Internal Revenue Code, in which case payment will be made at the time set forth in subsection (a)(1) or subsection (a)(2) of this
Section 7.2, as the case may be, that does comply with such Section 409A.
Except as otherwise set forth in the
preceding paragraph, payment of the Final Award will be made by PNC at the time set forth in subsection (a)(1) of this Section 7.2 unless payment at such time would be a noncompliant payment under Section 409A of the Internal Revenue Code,
and otherwise, at the time set forth in subsection (a)(2) of this Section 7.2, in either case as further described below.
(1) If, under the circumstances, the Change of Control is a permissible payment event under Section 409A of the Internal Revenue Code, payment of the Final Award will be made as soon as practicable
after the date the Change of Control occurs and the amount of the Final Award is determinable and determined in accordance with Section 6, but in no event later than December 31st of the calendar year in which the Change of Control occurs or, if later, by the 15th day of the third calendar month following the date on which the
Change of Control occurs, other than in unusual circumstances where a further delay thereafter would be permitted under Section 409A of the Internal Revenue Code, and if such a delay is permissible, as soon as practicable within such limits.
(2) If, under the circumstances, payment at the time of the Change of Control would not comply with Section 409A of the
Internal Revenue Code, then payment will be made as soon as practicable after January 1, 2014, but in no event later than December 31, 2014.
(b) Form of Payment.
(1) If, under the circumstances, (i) payment of the Final Award is made in the calendar year immediately following the year in which
Grantee died pursuant to the first paragraph of Section 7.2(a) or (ii) payment of the Final Award is made at the time specified in Section 7.2(a)(1), then the Final Award will be in an amount equal to the base amount described below
in subsection (2)(A) of Section 7.2(b).
Payment of this amount will be made entirely in cash if so provided in the
circumstances pursuant to Section 9.2. Otherwise, payment of this amount will be made in the form of shares of PNC common stock (valued as provided in Section 15.22 or Section 9, as applicable, as of the date of the Change of Control)
up to the Target Share Units number of shares and any remaining value will be paid in the form of cash; provided, that, if the award is made as a prorated award to a qualifying Retiree or in the event of Grantee’s death, the
maximum number of such shares that may be delivered in payment of such award will be the number that is the product of the proration factor used in calculating the award and the Target Share Units number, and any remaining value will be paid in the
form of cash.
If applicable, in the event that one or more record dates for dividends on PNC common stock occur on or after
the date of the Change of Control but before the date the Final Award is paid pursuant to Section 7.2(a)(1), PNC will also make a cash payment to Grantee in an amount equivalent to the amount of the dividends Grantee would have received had the
full number of Share Units specified in the Final Award been that number of shares of PNC common stock and had such shares been issued and outstanding on the date of the Change of Control and had remained outstanding on the record date or dates for
such dividends. Any such payment will be made at the same time as payment of the Final Award, and will be applicable only in the event that the Change of Control is a permissible payment event under Section 409A of the Internal Revenue Code and
payment of the Final Award is made at the time specified in Section 7.2(a)(1).
(2) If, under the circumstances, payment
of the Final Award is made at the time specified in Section 7.2(a)(2), then the Final Award will be paid entirely in cash and will be in an amount equal to the base amount described below in subsection (A) of this Section 7.2(b)(2)
plus the phantom investment amount described below in subsection (B) of this Section 7.2(b)(2).
(A) The base
amount will be an amount equal to the number of Share Units specified in the Final Award multiplied by the Fair Market Value (as defined in Section 15.22) of a share of PNC common stock on the date of the Change of Control or by the per share
value otherwise provided pursuant to Section 9 as applicable.
(B) The phantom investment amount will be either
(i) or (ii), whichever is larger: (i) interest on the base amount described in Section 7.2(b)(2)(A) from the date of the Change of Control through the payment date at the short-term, mid-term or long-term Federal rate under Internal
Revenue Code Section 1274(b)(2)(B), as applicable depending on the term until payment, compounded semi-annually; or (ii) a phantom investment amount with respect to said base amount that reflects, if positive, the performance of the PNC
stock or other consideration received by a PNC common shareholder in the Change of Control transaction, with dividends reinvested in such stock, from the date of the Change of Control through the payment date. PNC may, at its option, provide other
phantom investment alternatives in addition to those referenced in the preceding sentence and may permit Grantee to make a phantom investment election from among such alternatives under and in accordance with procedures established by PNC, but any
such alternatives must provide for at least the two phantom investments set forth in Section 7.2(b)(2)(B)(i) and (ii) at a minimum. The phantom investment amount will be applicable only in the event that payment at the time of the Change
of Control would not comply with Section 409A of the Internal Revenue Code and thus payment is made at the time specified in Section 7.2(a)(2) rather than at the time specified in Section 7.2(a)(1).
(c) Disputes. If there is a dispute regarding payment of the Final Award, PNC will
settle the undisputed portion of the award, if any, within the time frame set forth in the applicable provisions of Section 7.2(a), and will settle any remaining portion as soon as practicable after such dispute is finally resolved but in any
event within the time period permitted under Section 409A of the Internal Revenue Code.
7.3 Final Award Fully
Vested. The Final Award, if any, will be fully vested at the Committee-determined Award Date or as of the date of the Change of Control, as applicable. Any Shares issued pursuant to this Section 7 will be fully vested at the time of
issuance, and PNC will issue any such Shares and deliver any cash payable pursuant to this Section 7 to, or at the proper direction of, Grantee or Grantee’s legal representative, as determined in good faith by the Compensation Committee,
at the time specified in the applicable subsection of Section 7.1 or Section 7.2, whichever is applicable.
No
fractional shares will be issued. If a Final Award is payable in Shares and includes a fractional interest, such fractional interest will be liquidated on the basis of the then current Fair Market Value of PNC common stock and paid to Grantee or
Grantee’s legal representative in cash at the time the Shares are issued pursuant to this Section 7.
In the event
that Grantee is deceased, payment will be delivered to the executor or administrator of Grantee’s estate or to Grantee’s other legal representative, as determined in good faith by the Compensation Committee.
7.4 Termination of Any Unawarded 2011 Incentive Performance Units. Once an award determination has been made by the Compensation
Committee pursuant to Section 5.2 or a Final Award is deemed to have been made by virtue of the application of Section 6, the Share-denominated incentive award opportunity represented by the 2011 Incentive Performance Units will terminate
as to any portion of the Performance Units not so awarded.
Termination of all or a portion of the 2011 Incentive Performance
Units pursuant to this Section 7.4, or pursuant to Section 4, if applicable, will in no way affect Grantee’s covenants or the other provisions of Sections 16 and 17.
8. No Rights as Shareholder until Final Award and Issuance of Shares.
Grantee will have no rights as a shareholder by virtue of the 2011 Incentive Performance Units unless and until a Final Award, if any, is
made and Shares are issued and delivered in settlement of all or a portion of such Final Award, if any.
9. Capital
Adjustments.
9.1 Except as otherwise provided in Section 9.2, if applicable, if corporate transactions such as stock
dividends, stock splits, spin-offs, split-offs, recapitalizations, mergers, consolidations or reorganizations of or by PNC (“Corporate Transactions”) occur prior to the time a Final Award, if any, is paid, the Compensation Committee shall
make those adjustments, if any, in the number, class or kind of the Target Share Units that it deems appropriate in its discretion to reflect Corporate Transactions such that the rights of Grantee are neither enlarged nor diminished as a result of
such Corporate Transactions, including without limitation (a) measuring the value per Share Unit of any share-denominated award authorized for payment to Grantee by reference to the per share value of the consideration payable to a PNC common
shareholder in connection with such Corporate Transactions, and (b) authorizing payment of the entire Final Award, if any, in cash at the time otherwise specified in Section 7.
All determinations hereunder shall be made by the Compensation Committee in its sole discretion and shall be final, binding and
conclusive for all purposes on all parties, including without limitation Grantee.
9.2 Upon the occurrence of a Change of Control, (a) the number, class and kind of the
Target Share Units will automatically be adjusted to reflect the same changes as are made to outstanding shares of PNC common stock generally, (b) the value per Share Unit to be used in calculating the base amount described in
Section 7.2(b) of any award that is deemed to be awarded to Grantee in accordance with Section 6 will be measured by reference to the per share value of the consideration payable to a PNC common shareholder in connection with such
Corporate Transaction or Transactions if applicable, and (c) if the effect of the Corporate Transaction or Transactions on a PNC common shareholder is to convert that shareholder’s holdings into consideration that does not consist solely
(other than as to a minimal amount) of shares of PNC common stock, then the entire value of any amounts payable to Grantee pursuant to Section 6 will be paid solely in cash at the time otherwise specified in Section 7.
10. Prohibitions Against Sale, Assignment, etc.; Payment to Legal Representative.
(a) Performance Units may not be sold, assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered.
(b) If Grantee is deceased at the time any Final Award authorized by this Agreement is to be paid, such payment shall be made to the
executor or administrator of Grantee’s estate or to Grantee’s other legal representative as determined in good faith by the Compensation Committee.
(c) Any delivery of Shares or other payment made in good faith by PNC to Grantee’s executor, administrator or other legal representative shall extinguish all right to payment hereunder.
11. Withholding Taxes; Payment Upon Inclusion Under Section 409A.
Where Grantee has not previously satisfied all applicable withholding tax obligations, PNC will, at the time the tax withholding
obligation arises in connection herewith, retain an amount sufficient to satisfy the minimum amount of taxes then required to be withheld by the Corporation in connection therewith from any amounts then payable hereunder to Grantee. If any
withholding is required prior to the time amounts are payable hereunder to Grantee, the withholding will be taken from other compensation then payable to Grantee or as otherwise determined by PNC.
To the extent, if any, that payment of any amounts then payable to Grantee hereunder is made in cash, the Corporation will withhold first
from such cash portion of the award payment unless the Compensation Committee determines otherwise. If the amount so withheld is not sufficient or if there is no such cash portion, the Corporation will retain whole shares of PNC common stock from
any amounts payable to Grantee hereunder in the form of Shares, until such withholdings in the aggregate are sufficient to satisfy such minimum required withholding obligations.
For purposes of this Section 11, shares of PNC common stock retained to satisfy applicable withholding tax requirements will be
valued at their Fair Market Value (as defined in Section 15.22) on the date the tax withholding obligation arises.
If
Grantee desires to have an additional amount withheld above the required minimum, up to Grantee’s W-4 obligation if higher, and if PNC so permits, Grantee may elect to satisfy this additional withholding by payment of cash. PNC will not retain
Shares for this purpose. If Grantee’s W-4 obligation does not exceed the required minimum withholding in connection herewith, no additional withholding may be made.
It is the intention of the parties that the 2011 Incentive Performance Units and the Agreement comply with the provisions of Section 409A to the extent, if any, that such provisions are applicable to
the Agreement. In the event that, notwithstanding such intention, the arrangement fails to meet the requirements of Section 409A and the regulations promulgated thereunder, then PNC may at that time permit the acceleration of the time for
payment to Grantee under the Agreement notwithstanding any of the other provisions of the Agreement, but any such accelerated payment may not exceed the amount required to be included in Grantee’s income as a result of the failure to comply
with the requirements of
Section 409A and the regulations promulgated thereunder. For purposes of this provision, an amount will be deemed to have been included in Grantee’s income if the amount is timely
reported on Form W-2 or Form 1099-MISC as appropriate.
12. Employment.
Neither the granting of the 2011 Incentive Performance Units nor the calculation, determination and payment of any Final Award hereunder
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 Grantee’s status as an employee at
will.
13. Subject to the Plan and the Compensation Committee.
In all respects the 2011 Incentive Performance Units 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 2011 Incentive Performance Units and
the Agreement are subject to any interpretation of, and any rules and regulations issued by, the Compensation Committee or its delegate or under the authority of the Compensation Committee, whether made or issued before or after the Grant Date.
14. 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 with respect to the subject matters addressed herein, and
supersedes all other discussions, negotiations, correspondence, representations, understandings and agreements between the parties concerning the subject matters hereof.
15. Certain Definitions.
Except where the context otherwise indicates, the
following definitions apply for purposes of the Agreement.
15.1 “Adjusted Target Share Units” has the
meaning set forth in Section 3.6.
15.2 “Annual Corporate Performance Potential Payout Calculation
Schedule” or “Schedule” means the Schedule established by the Compensation Committee with respect to the 2011 Incentive Performance Units as set forth in Section 3.4 setting forth the method by which the Annual
Corporate Performance Potential Payout Percentage will be calculated for a given covered annual performance measurement period, as specified by the Agreement, from the corporate performance results for such period.
15.3 “Annual Corporate Performance Potential Payout Percentage.”
The Annual Corporate Performance Potential Payout Percentage for a given year is the percentage determined with respect to that year in
accordance with the Annual Corporate Performance Potential Payout Calculation Schedule on the basis of PNC’s relative covered period EPS growth and ROCE performance rankings and PNC’s covered period EPS growth and ROCE performance relative
to Peer performance for the covered annual performance period applicable to that given year, giving equal weight to each corporate performance metric. The Annual Corporate Performance Potential Payout Percentage is rounded to the nearest
one-hundredth, with 0.005% being rounded upward to 0.01%.
The covered annual performance period for any given year of the overall Performance Period
will consist of the full or partial year period beginning on January 1 of the given year and ending on December 31 of that year, or on such earlier quarter-end performance measurement date as may be specified by the Agreement if
applicable.
15.4 “Anticipatory Termination.”
If Grantee’s employment with the Corporation is terminated by the Corporation other than for Cause (as Cause is defined in
Section 15.8(a)), death or Disability (as Disability is defined in Section 15.19) prior to the date on which a Change of Control occurs, and if it is reasonably demonstrated by Grantee that such termination of employment (i) was at
the request of a third party that has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with or anticipation of a Change of Control, such a termination of employment is an “Anticipatory
Termination.”
15.5 “Award Date” means: (1) the date on which the Compensation Committee makes its
determination as to whether or not it will authorize an award, and if so, as to the size of the Final Award, if any, it authorizes pursuant to Section 5.2 within the Calculated Maximum Potential Payout Amount determined in accordance with the
Agreement (sometimes referred to as the “Committee-determined Award Date”); or (2) if a Change of Control has occurred and Grantee is deemed to have been awarded a Final Award pursuant to Section 6, the Award Date will be
the date the Change of Control occurs (sometimes referred to as the “Change-of-Control-determined Award Date”).
15.6 “Board” means the Board of Directors of PNC.
15.7
“Calculated Maximum Potential Payout Amount” means the maximum size of the award, denominated as a specified number of Share Units, that the Compensation Committee may award to Grantee as calculated in accordance with the applicable
provisions of Section 5.1.
15.8 “Cause.”
(a) “Cause” on or after the occurrence of a Change of Control or for purposes of the definition of an Anticipatory
Termination.
If a termination of Grantee’s employment with the Corporation occurs on or within three (3) years
after the occurrence of a Change of Control, then “Cause” means:
(i) the willful and continued failure of Grantee
to substantially perform Grantee’s 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 Grantee’s duties; or
(ii) the willful engaging by Grantee in illegal conduct or gross misconduct that is materially and demonstrably injurious to PNC or any of its subsidiaries.
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 Grantee’s 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 Grantee’s 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.
The cessation of employment of Grantee will be deemed to be a termination of Grantee’s 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 Grantee’s 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.
“Cause” shall also have the meaning set forth in
this Section 15.8(a) for purposes of the definition of Anticipatory Termination in Section 15.4.
(b)
“Cause” other than as provided in subsection (a).
Except as otherwise provided in Section 15.8(a),
“Cause” means:
(i) the willful and continued failure of Grantee to substantially perform Grantee’s 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 that specifically identifies the manner in which it is
believed that Grantee has not substantially performed Grantee’s duties;
(ii) a material breach by Grantee of
(1) any code of conduct of PNC or any code of conduct of a subsidiary of PNC that is applicable to Grantee or (2) other written policy of PNC or other written policy of a subsidiary of PNC that is applicable to Grantee, in either case
required by law or established to maintain compliance with applicable law;
(iii) any act of fraud, misappropriation, material
dishonesty, or embezzlement by Grantee against PNC or any of its subsidiaries or any client or customer of PNC or any of its subsidiaries;
(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
(v) entry of any order against Grantee, by any governmental body having regulatory authority with respect to the business of PNC or any
of its subsidiaries, that relates to or arises out of Grantee’s employment or other service relationship with the Corporation.
The cessation of employment of Grantee will be deemed to have been a termination of Grantee’s employment with the Corporation for Cause for purposes of the Agreement only if and when the CEO or his
or her designee (or, if Grantee is the CEO, the Board) 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 Grantee’s employment with the Corporation will be deemed to have been for Cause.
15.9 “CEO” means the chief executive officer of PNC.
15.10
“Change of Control” means:
(a) Any individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either
(A) the then-outstanding shares of common stock of PNC (the “Outstanding PNC Common Stock”) or (B) the combined voting power of the then-outstanding voting securities of PNC entitled to vote generally in the election of directors
(the “Outstanding PNC Voting Securities”); provided, however, that, for purposes of this Section 15.10(a), the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from PNC,
(2) any acquisition by PNC, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by PNC or any
company controlled by, controlling or under common control with PNC (an “Affiliated Company”), (4) any acquisition pursuant to an Excluded Combination (as defined in
Section 15.10(c)) or (5) an acquisition of beneficial ownership representing between 20% and 40%, inclusive, of the Outstanding PNC Voting Securities or Outstanding PNC Common Stock shall not be considered a Change of Control if the
Incumbent Board as of immediately prior to any such acquisition approves such acquisition either prior to or immediately after its occurrence;
(b) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board (excluding any Board seat that is
vacant or otherwise unoccupied); provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by PNC’s shareholders, was approved by a vote of at least two-thirds of
the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;
(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar transaction involving PNC or any of
its subsidiaries, a sale or other disposition of all or substantially all of the assets of PNC, or the acquisition of assets or stock of another entity by PNC or any of its subsidiaries (each, a “Business Combination”), excluding, however,
a Business Combination following which all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding PNC Common Stock and the Outstanding PNC Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60% of the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of the then-outstanding voting securities
entitled to vote generally in the election of directors (or, for a non-corporate entity, equivalent governing body), as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a
result of such transaction, owns PNC or all or substantially all of PNC’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the
Outstanding PNC Common Stock and the Outstanding PNC Voting Securities, as the case may be (such a Business Combination, an “Excluded Combination”); or
(d) Approval by the shareholders of PNC of a complete liquidation or dissolution of PNC.
15.11 “Change of Control Coverage Period” means a period commencing on the occurrence of a Change of Control Triggering Event and ending upon the earlier to occur of (a) the date of
a Change of Control Failure and (b) the date of a Change of Control.
After the termination of any Change of Control
Coverage Period, another Change of Control Coverage Period will commence upon the occurrence of another Change of Control Triggering Event.
For purposes of this Agreement, “Change of Control Triggering Event” shall mean the occurrence of either of the following: (i) the Board or PNC’s shareholders approve a transaction
described in subsection (c) of the definition of Change of Control contained in Section 15.10; or (ii) the commencement of a proxy contest in which any Person seeks to replace or remove a majority of the members of the Board.
For purposes of this Agreement, “Change of Control Failure” shall mean: (x) with respect to a Change of
Control Triggering Event described in clause (i) of the definition above, PNC’s shareholders vote against the transaction approved by the Board or the agreement to consummate the transaction is terminated; or (y) with respect to a
Change of Control Triggering Event described in clause (ii) of the definition above, the proxy contest fails to replace or remove a majority of the members of the Board.
15.12 “Change of Control Payout Percentage” has the meaning set forth in Section 6.1(a)(iv).
15.13 “Compensation Committee” or “Committee” means the
Personnel and Compensation Committee of the Board, or such person or persons as may be designated or appointed by that committee as its delegate or designee.
15.14 “Competitive Activity” means 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 of its subsidiaries (a) engaged in business activities similar to some or all of the business activities of PNC or any subsidiary as of Grantee’s 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 Grantee’s Termination Date or, if later and if applicable, after the date specified in clause (ii) of Section 15.18(a), 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.
15.15 “Consolidated Subsidiary” means a corporation, bank, partnership, business trust, limited liability company or
other form of business organization that (1) is a consolidated subsidiary of PNC under generally accepted accounting principles and (2) satisfies the definition of “service recipient” under Section 409A.
15.15.1 “Corporate Performance Criteria” means the corporate performance standards established by the Compensation
Committee as the corporate performance criteria for the 2011 Incentive Performance Units as set forth in Section 3.
15.15.2 “Corporate Performance Factor” or “Corporate Factor” has the meaning set forth in
Section 15.24.
15.16 “Corporation” means PNC and its Consolidated Subsidiaries.
15.16.1 “Cost of Capital” has the meaning set forth in Section 3.5.
15.17 “Covered annual performance period” or “covered annual performance measurement period” or
“covered performance period” or “covered annual period” or “covered period” with respect to a given year means the full year or portion of the year specified in the Agreement as the period for which
corporate performance is to be measured for purposes of determining an Annual Corporate Performance Potential Payout Percentage for that given year and for which risk metrics performance is to be measured for purposes of determining whether the Risk
Metrics Performance Criteria have been met with respect to that given year. The covered annual performance period with respect to a given year may be the full calendar year or the portion of the calendar year from January 1 through the
quarter-end date specified by the Agreement.
15.18 “Detrimental Conduct” means:
(a) Grantee has engaged, without the prior written consent of PNC (with consent to be given at PNC’s sole
discretion), in any Competitive Activity in the continental United States at any time during the period commencing on Grantee’s Termination Date and extending through (and including) the first (1st) anniversary of the later of (i) Grantee’s
Termination Date and, if different, (ii) the first date after Grantee’s Termination Date as of which Grantee ceases to have a service relationship with the Corporation;
(b) any act of fraud, misappropriation, or embezzlement by Grantee against PNC or one of its subsidiaries or any client or customer of
PNC or one of its subsidiaries; or
(c) any conviction (including a plea of guilty or of nolo contendere) of Grantee
for, or any entry by Grantee into a pre-trial disposition with respect to, the commission of a felony that relates to or arises out of Grantee’s employment or other service relationship with the Corporation.
Grantee will be deemed to have engaged in Detrimental Conduct for purposes of the Agreement
only if and when the Compensation Committee or its delegate (if Grantee was an “executive officer” of PNC as defined in SEC Regulation S-K when he or she ceased to be an employee of the Corporation) or the CEO (if Grantee was not such an
executive officer) determines that Grantee has engaged in conduct described in clause (a) or clause (b) above or that an event described in clause (c) above has occurred with respect to Grantee, and, if so, determines that Grantee
will be deemed to have engaged in Detrimental Conduct.
15.19 “Disabled” or “Disability”
means, except as may otherwise be required by Section 409A, that Grantee either (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, receiving (and has received for at least three months) income replacement benefits under any Corporation-sponsored disability benefit plan. If Grantee has been determined to be eligible for Social
Security disability benefits, Grantee shall be presumed to be Disabled as defined herein.
15.20 “Dividend Adjustment
Share Units” has the meaning set forth in Section 3.6.
15.21 “EPS” and “EPS
growth” have the meanings set forth in Section 3.3(c).
15.22 “Fair Market Value” as it relates
to a share of PNC common stock as of any given date means the average of the reported high and low trading prices on the New York Stock Exchange (or such successor reporting system as PNC may select) for a share of PNC common stock on such date, or,
if no PNC common stock trades have been reported on such exchange for that day, the average of such prices on the next preceding day and the next following day for which there were reported trades.
15.23 “Final Award” means the amount, if any, (a) awarded to Grantee by the Compensation Committee in accordance
with Section 5.2, or (b) deemed to be awarded to Grantee pursuant to Section 6. The Final Award will be denominated as a specified number of awarded Share Units and will be payable in accordance with Section 7.
15.24 “Final Potential Payout Percentage.”
Section 5 Final Award Determination: Where a Final Award determination is made by the Compensation Committee pursuant to the applicable provisions of Section 5, the term “Final
Potential Payout Percentage” will be the percentage that is equal to:
| |
(A) |
the “Corporate Performance Factor” (also sometimes referred to as the “Corporate Factor”) calculated as the weighted average, as set
forth below, of the Annual Corporate Performance Potential Payout Percentages for all of the covered annual performance measurement periods in the applicable overall Performance Period, including those covered periods consisting of a full year, if
any, and those, if any, consisting of a partial year, but in no event more than three covered periods in all and in no event resulting in a Corporate Performance Factor greater than 200.00%; |
less (i.e., adjusted downward for, but not below 0%),
| |
(B) |
the amount of the “Risk Metrics Performance Downward Adjustment,” if any, calculated as set forth below, but in no event resulting in a downward
adjustment to the Corporate Performance Factor of more than 30 percentage points. |
The Risk Metrics Performance
Downward Adjustment will either be a downward adjustment of an amount calculated as set forth below, or zero (that is, no adjustment). The Risk Metrics Performance Downward Adjustment cannot result in a positive adjustment (that is, an increase) to
the Corporate Performance Factor.
If the Corporate Performance Factor less the downward adjustment for the Risk Metrics
Performance Downward Adjustment would mathematically result in a negative number, the Final Potential Payout Percentage will be 0%.
The weighted average for the Corporate Performance Factor will be calculated as follows:
| |
(1) |
the sum of one, two or three amounts, as the case may be, for the one, two or three covered periods, as applicable, in the overall Performance Period specified in the
Agreement, where the amount for a given covered period is calculated by the applicable subsection below: |
(i) for
any applicable full year covered annual performance period in the overall Performance Period, if any, the amount will be the product of (a) the Annual Corporate Performance Potential Payout Percentage for such full year covered period and
(b) four (for the four full completed quarters in any such covered period);
(ii) for any applicable partial year covered
annual performance period in the overall Performance Period, if any, the amount will be the product of (a) the Annual Corporate Performance Potential Payout Percentage for that partial year covered period and (b) the number of full
completed quarters, if any, in such covered period;
divided by
| |
(2) |
the total number of quarters in the applicable overall Performance Period. |
If all of the Annual Corporate Performance Potential Payout Percentages are 0%, then the Corporate Performance Factor will be 0%.
The Risk Metrics Performance Downward Adjustment is a negative adjustment to the Corporate Performance Factor of an amount calculated as follows:
| |
(X) |
The sum of one, two or three amounts, as the case may be, for the one, two or three covered periods, as applicable, in the overall Performance Period specified in the
Agreement, where the amount for a given covered period is calculated by the applicable subsection below: |
(i) for
any applicable full year or partial year covered annual performance period in the overall Performance Period, if any, where the Risk Metrics Performance for that covered period meets the Risk Metrics Performance Criteria (measured as set forth in
Section 3.5 of the Agreement), the amount with respect to that given covered period will be zero;
(ii) for any applicable
full year covered annual performance period in the overall Performance Period, if any, where the Risk Metrics Performance for that covered period does not meet the Risk Metrics Performance Criteria (measured as set forth in Section 3.5
of the Agreement), the amount with respect to that given covered period will be 10 percentage points;
(iii) for any applicable
partial year covered annual performance period in the overall Performance Period, if any, where the Risk Metrics Performance for that covered period does not meet the Risk Metrics Performance Criteria (measured as set forth in
Section 3.5 of the Agreement), the amount with respect to that given covered period will be the product of (a) 2.5 percentage points and (b) the number of full completed quarters, if any, in such covered period, or zero if the covered
period is less than one full quarter;
| |
(Y) |
If all of the amounts calculated as set forth in (X) above are zero, then the Risk Metrics Performance Adjustment will be zero (i.e., in that case, there
will be no downward adjustment for Risk Metrics Performance). |
Section 6 Final Award Calculation:
Where a Final Award is deemed to be awarded pursuant to Section 6 by reason of the occurrence of a Change of Control, the Final Award payout calculation will be as set forth in the applicable subsection of Section 6.
15.25 “GAAP” or “generally accepted accounting principles” means accounting principles generally
accepted in the United States of America.
15.26 “Grant Date” means the Grant Date set forth on page 1 of the
Agreement, and is the date as of which the 2011 Incentive Performance Units are authorized to be granted by the Compensation Committee in accordance with the Plan.
15.27 “Grantee” means the person to whom the 2011 Incentive Performance Units are granted and is identified as Grantee on page 1 of the Agreement.
15.28 “Internal Revenue Code” means the Internal Revenue Code of 1986 as amended, and the rules and regulations
promulgated thereunder.
15.29 “Peer Group” means the group of financial institutions, including PNC,
designated by the Compensation Committee as PNC’s Peer Group as applicable in accordance with Section 3.3. A member of the Peer Group, including PNC, is sometimes referred to as a “Peer”.
15.30 [intentionally omitted]
15.31 “Performance measurement date” has the meaning set forth in Section 5.1 or Section 6.1, as applicable, and refers to the last day of the applicable overall performance
measurement period.
15.32 “Performance Period” has the meaning set forth in Section 3.2 and refers to
the period during which corporate performance and risk metrics performance will be measured against the applicable corporate and risk metrics performance standards established by the Compensation Committee in accordance with the Agreement.
15.33 “Performance Units” or “2010 Incentive Performance Units” means the Share-denominated
incentive award opportunity performance units granted to Grantee in accordance with Article 10.3 of the Plan and evidenced by the Agreement.
15.33.1 “Person” has the meaning set forth in Section 15.10(a).
15.34 “Plan” means The PNC Financial Services Group, Inc. 2006 Incentive Award Plan as amended from time to time.
15.35 “PNC” means The PNC Financial Services Group, Inc.
15.36
“Prorate” or “Prorated” means multiplying by a fraction, sometimes referred to as the “proration factor,” not to exceed 1 and determined as follows.
Where the Agreement specifies “prorating” or “prorating by quarters,” the proration factor is the
fraction equal to (a) the number of full quarters in the applicable overall Performance Period, (b) divided by twelve, which is the number of quarters in the full three year period from January 1, 2011 through December 31, 2013.
15.37 “Retiree.” Grantee is sometimes referred to as a “Retiree” if Grantee Retires, as
defined in Section 15.38.
15.38 “Retires” or “Retirement.” Grantee
“Retires” if his employment with the Corporation terminates at any time and for any reason (other than termination by reason of Grantee’s death or by the Corporation for Cause and, if the Compensation Committee or the CEO so
determines prior to such divestiture, other than by reason of termination in connection with a divestiture of assets or a divestiture of one or more subsidiaries of the Corporation) on or after the first date on which Grantee has both attained at
least age fifty-five (55) and completed five (5) years of service, where a year of service is determined in the same manner as the determination of a year of vesting service calculated under the provisions of The PNC Financial Services
Group, Inc. Pension Plan. If Grantee “Retires” as defined herein, the termination of Grantee’s employment with the Corporation is sometimes referred to as “Retirement.”
15.38.1 “Risk Metrics Performance” has the meaning set forth in Section 3.5.
15.38.2 “Risk Metrics Performance Criteria” means the risk metrics performance criteria established by the Compensation
Committee as set forth in Section 3.5.
15.38.3 “Risk Metrics Performance Downward Adjustment” has the
meaning set forth in Section 15.24.
15.39 “ROCE” and “ROCE performance” have the
meanings set forth in Section 3.3(c).
15.39.1 “ROEC” or “Return on Economic Capital”
has the meaning set forth in Section 3.5.
15.40 “Schedule” is defined in Section 15.2.
15.41 “SEC” means the United States Securities and Exchange Commission.
15.42 “Section 409A” means Section 409A of the Internal Revenue Code.
15.43 “Service relationship” or “having a service relationship with the Corporation” means being
engaged by the Corporation in any capacity for which Grantee receives compensation from the Corporation, including but not limited to acting for compensation as an employee, consultant, independent contractor, officer, director or advisory director.
15.44 “Share” means a share of PNC common stock.
15.45 “Target Share Units” means the number of Share Units specified on page 1 of the Agreement as Target Share Units,
subject to capital adjustments pursuant to Section 9 if any.
15.46 “Termination Date” means
Grantee’s last date of employment with the Corporation. If Grantee is employed by a Consolidated Subsidiary that ceases to be a subsidiary of PNC or ceases to be a consolidated subsidiary of PNC under generally accepted accounting principles
and Grantee does not continue to be employed by PNC or a Consolidated Subsidiary, then for purposes of the Agreement, Grantee’s employment with the Corporation terminates effective at the time this occurs.
16. Grantee Covenants.
16.1 General. Grantee and PNC acknowledge and agree that Grantee has received adequate consideration with respect to enforcement of the provisions of Sections 16 and 17 by virtue of receiving
the 2011 Incentive Performance Units (regardless of whether a Final Award is ultimately determined and paid or of the size of such Final Award, if any); that such provisions are reasonable and properly required for the adequate protection of the
business of PNC and its subsidiaries; and that enforcement of such provisions will not prevent Grantee from earning a living.
16.2 Non-Solicitation; No-Hire. Grantee agrees to comply with the provisions of
subsections (a) and (b) of this Section 16.2 while employed by the Corporation and for a period of one year after Grantee’s Termination Date regardless of the reason for such termination of employment.
(a) Non-Solicitation. Grantee shall not, directly or indirectly, either for Grantee’s own benefit or purpose or for the
benefit or purpose of any Person other than PNC or any of its subsidiaries, solicit, call on, do business with, or actively interfere with PNC’s or any subsidiary’s 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.
(b) No-Hire. Grantee shall not, directly or indirectly, either for Grantee’s own benefit or purpose or for the benefit or
purpose of any Person other than PNC or any of its subsidiaries, employ or offer to employ, call on, or actively interfere with PNC’s or any subsidiary’s relationship with, or attempt to divert or entice away, any employee of PNC or any of
its subsidiaries, nor shall Grantee assist any other Person in such activities.
Notwithstanding the above, if Grantee’s
employment with the Corporation is terminated by the Corporation and such termination is an Anticipatory Termination, then commencing immediately after such Termination Date, the provisions of subsections (a) and (b) of this
Section 16.2 shall no longer apply and will be replaced with the following subsection (c):
(c) No-Hire. Grantee
agrees that Grantee shall not, for a period of one year after the Termination Date, employ or offer to employ, solicit, actively interfere with PNC’s or any PNC affiliate’s relationship with, or attempt to divert or entice away, any
officer of PNC or any PNC affiliate.
16.3 Confidentiality. During Grantee’s 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 Corporation’s 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.
16.4 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 Grantee’s 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 of its subsidiaries or (b) developed with the use of any time, material, facilities or other resources of PNC or any subsidiary
(“Developments”). Grantee agrees to assign and hereby does assign to PNC or its designee all of Grantee’s 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 PNC’s or its designee’s interests in the Developments. The obligations of this Section 16.4 shall be performed by Grantee without further
compensation and will continue beyond Grantee’s Termination Date.
17. Enforcement Provisions.
Grantee understands and agrees to the following provisions regarding enforcement of the Agreement.
17.1 Governing Law and Jurisdiction. The Agreement is governed by and construed under
the laws of the Commonwealth of Pennsylvania, without reference to its conflict of laws provisions. 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.
17.2 Equitable Remedies. A breach of the provisions of any of Sections 16.2, 16.3 or 16.4 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.
17.3 Tolling Period. If it becomes necessary or desirable for the Corporation to seek
compliance with the provisions of Section 16.2 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 the Corporation institutes legal
proceedings for injunctive or other relief.
17.4 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.
17.5 Severability. The restrictions and obligations
imposed by Sections 16.2, 16.3, 16.4, 17.1 and 17.7 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.
17.6 Reform. In the event any of Sections 16.2, 16.3 and 16.4 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.
17.7 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 16.2, 16.3 and 16.4.
17.8. Compliance with Internal Revenue Code
Section 409A. It is the intention of the parties that the Performance Units and the Agreement comply with the provisions of Section 409A to the extent, if any, that such provisions are applicable to the Agreement, and the Agreement
will be administered by PNC in a manner consistent with this intent.
If any payments or benefits hereunder may be deemed to
constitute nonconforming deferred compensation subject to taxation under the provisions of Section 409A, Grantee agrees that PNC may, without the consent of Grantee, modify the Agreement to the extent and in the manner PNC deems necessary or
advisable or take such other action or actions, including an amendment or action with retroactive effect, that PNC deems appropriate in order either to preclude any such payments or benefits from being deemed “deferred compensation” within
the meaning of Section 409A or to provide such payments or benefits in a manner that complies with the provisions of Section 409A such that they will not be taxable thereunder.
17.9 Applicable Law; Clawback. 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 applicable to Grantee, the 2011 Incentive Performance Units, and any
right to receive and retain any Shares or other value pursuant to such Performance Units, shall be subject to rescission, cancellation or recoupment, in whole or in part, if and to the extent so provided under any “clawback” or similar
policy of PNC in effect on the Grant Date or that may be established thereafter and to any clawback or recoupment that may be required by applicable law.
18. Acceptance of 2011 Incentive Performance Units; PNC Right to Cancel; Effectiveness of Agreement.
If Grantee does not accept the 2011 Incentive Performance Units by executing and delivering a copy of the Agreement to PNC, without altering or changing the terms thereof in any way, within thirty
(30) days of receipt by Grantee of a copy of the Agreement, PNC may, in its sole discretion, withdraw its offer and cancel the 2011 Incentive Performance Units at any time prior to Grantee’s 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 as of the Grant Date.
IN WITNESS WHEREOF, PNC has caused the Agreement to be signed on its behalf as of the Grant Date.
THE PNC FINANCIAL SERVICES GROUP, INC.
By:
Chairman and Chief Executive Officer
ATTEST:
By:
Corporate Secretary
ACCEPTED AND AGREED TO by GRANTEE
SCHEDULE
* * *
ANNUAL CORPORATE PERFORMANCE POTENTIAL PAYOUT CALCULATION SCHEDULE
FOR
2011 INCENTIVE PERFORMANCE UNITS
* * *
Final Award determination by the Compensation Committee pursuant to
Section 5 of the 2011-2013 Incentive Performance Units Award Agreement (the “Agreement”) requires the calculation of the Final Potential Payout Percentage and the Calculated Maximum Potential Payout Amount, each as defined in the
Agreement. Final Award calculation pursuant to Section 6 of the Agreement, if applicable, requires the calculation of the Change of Control Payout Percentage and the calculated final award as set forth in that section of the Agreement.
Those calculations, in turn, take into account PNC’s performance and rankings relative to its Peers with respect to two
corporate performance measures or metrics (the Corporate Performance Criteria), as measured annually and expressed as the Annual Corporate Performance Potential Payout Percentages for the applicable covered annual performance measurement periods
(which may be full or partial year periods as required by the Agreement) in the applicable overall Performance Period.
Unless
and until amended prospectively by the Compensation Committee, this Schedule will be applied in order to generate an Annual Corporate Performance Potential Payout Percentage for each of the applicable covered annual performance measurement periods
in the applicable overall Performance Period.
Section 3 of the Agreement sets forth the corporate performance metrics
(EPS growth and ROCE performance) and how they are measured, the applicable covered performance periods, the establishment of the applicable Peer Group, and the manner in which PNC and its Peers will be ranked for the applicable covered performance
periods based on each of the two corporate performance metrics (EPS growth and ROCE performance).
Once PNC and other Peer EPS
growth and ROCE performance and rankings have been measured and calculated for a given covered annual performance measurement period in accordance with Section 3.3 of the Agreement, this Schedule uses the table that follows and interpolation to
generate a payout percentage for each corporate performance metric for that given year based on such relative covered period performance.
Once payout percentages for each of relative covered period EPS growth and relative covered period ROCE performance are calculated using the table and interpolation, they are averaged, giving equal weight
to each corporate performance metric, to generate the final Annual Corporate Performance Potential Payout Percentage for that given year, rounded to the nearest one-hundredth, with 0.005% being rounded upward to 0.01%.
If the payout percentage with respect to either covered period EPS growth or covered period ROCE performance for a given year is 0% but
is a positive number with respect to the other corporate performance metric, the Annual Corporate Performance Potential Payout Percentage for that given year will be the percentage that is one-half (1/2) of that positive number. If the payout
percentages with respect to covered period EPS growth and covered period ROCE performance for that given year are both 0%, the Annual Corporate Performance Potential Payout Percentage for that given year will be 0%. In no event will an Annual
Corporate Performance Potential Payout Percentage be greater than 200.00% or less than 0%.
The table used for this Schedule, as established by the Compensation Committee at the time
it authorized the 2011 Incentive Performance Units, follows.
|
|
|
|
|
| Corporate Performance Measures |
| Peer Group Position
with respect to
Covered Period EPS Growth and ROCE Performance |
|
Unadjusted
Payout Percentage * |
| Maximum |
|
#1 |
|
200% |
|
|
#2 |
|
183% |
|
|
#3 |
|
167% |
|
|
#4 |
|
150% |
|
|
#5 |
|
133% |
|
|
#6 |
|
117% |
| Median |
|
#7 |
|
100% |
|
|
#8 |
|
80% |
|
|
#9 |
|
60% |
|
|
#10 |
|
40% |
| Minimum |
|
#11 |
|
0% |
|
|
#12 |
|
0% |
|
|
#13 |
|
0% |
| * |
Consistent with the design of this compensation program and approach taken in prior years, this Schedule interpolates results to arrive at final potential payout
percentages for EPS growth and ROCE performance, respectively. In other words, the final payout percentage with respect to a given year for each corporate performance metric will depend both on PNC’s relative covered period ranking and on
PNC’s covered period performance relative to the performance of the Peers ranked immediately above and below PNC for the covered period of that year, as illustrated below. |
The calculated payout percentage for a corporate performance metric with respect to a given year depends both on PNC’s relative
covered period ranking achieved with respect to that corporate performance metric and on PNC’s performance for that corporate metric for the covered period of that year relative to the comparable performance of the Peers ranking immediately
above and below PNC (other than where PNC ranks #1 or ranks near the bottom at #11, #12 or #13). This calculated percentage is rounded to the nearest one-hundredth, with 0.005% being rounded upward to 0.01%.
For example, if PNC achieves a #2 covered period ranking, the payout percentage for this rank would be between 175% (which is the
mid-point between 167% and 183% in the table) and 191.50% (which is the mid-point between 183% and 200% in the table). The final calculated percentage depends on how PNC’s EPS growth or ROCE performance, as the case may be, for the covered
period compares to the covered period EPS growth or ROCE performance, as applicable, of the Peers ranking immediately above and below PNC, in this case the performance of the Peers ranking #1 and #3.
At the other end of the scale, if for example PNC achieves a #10 covered period ranking (the lowest ranking that would generate a payout
potential above zero) for a corporate performance metric, the payout percentage for this rank would be between 20% and 50% and the final calculated percentage would be determined based on the comparison of PNC’s covered period performance for
that corporate performance metric to that of the Peers ranking #9 and #11.
Compensation Committee Negative Discretion. Once the annual corporate performance
potential payout percentage for PNC’s relative performance with respect to the Corporate Performance Criteria for the given full year or partial-year covered annual performance period has been determined using the table above and interpolation,
the Compensation Committee may decide, in its discretion, to reduce that percentage (as long as such decision is not made during a Change of Control Coverage Period, as defined in the Agreement, or after the occurrence of a Change of Control) but
may not increase it.
2011 Performance Units
Overall Standard Performance Period: January 1, 2011 - December 31, 2013 (3 Years)
Corporate
Performance Criteria: Levels of Financial Return from Investing Activities
Achieved by PNC’s A&L Unit Relative to
Benchmark Index
100% Vests on Final Award
THE PNC FINANCIAL SERVICES GROUP, INC.
2006 INCENTIVE AWARD PLAN
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2011
PERFORMANCE UNITS AWARD AGREEMENT
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| GRANTEE: |
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| GRANT DATE: |
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February 9, 2011 |
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| TARGET SHARE UNITS: |
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[ ] Share Units |
1. Definitions.
Certain terms used in this 2011 Performance Units Award
Agreement (“Agreement”) are defined in Section 14 or elsewhere in the Agreement, and such definitions will apply except where the context otherwise indicates.
In the Agreement, “PNC” means The PNC Financial Services Group, Inc., “Corporation” means PNC and its Consolidated Subsidiaries, and “Plan” means The PNC Financial Services
Group, Inc. 2006 Incentive Award Plan.
2. 2011 Performance Units.
Pursuant to the Plan and subject to the terms and conditions of the Agreement, PNC grants to the grantee named above (“Grantee”)
a Share-denominated incentive award opportunity of Performance Units (the “Performance Units” or the “2011 Performance Units”) with the number of target Share Units set forth above (“Target Share Units”). Performance
Units are subject to acceptance by Grantee in accordance with Section 17.
The 2011 Performance Units are subject to the
corporate performance conditions, employment conditions, and other terms and conditions of this Agreement and to the Plan, and to final award determination in accordance with Section 5 or Section 6, as applicable. Payment of any Final
Award (as defined in Section 14.22) authorized pursuant to the Agreement will be made in cash, generally in an amount equal to the number of Share Units specified in the Final Award multiplied by the per share price of PNC common stock on the
award date (sometimes referred to in the Agreement as payment in “cash Share-equivalents”).
In general, the 2011
Performance Units are an opportunity for Grantee to receive, at the end of the applicable overall performance period, an award of cash Share-equivalents provided that the conditions of the Agreement are met. The maximum potential payout amount that
Grantee may receive as an award is based on the degree to which specified corporate performance criteria for PNC’s Asset & Liability Unit (“A&L Unit”) have been achieved, the applicable basic calculation schedule
established by the
Compensation Committee (defined in Section 14.14) for use in generating the maximum potential payout percentage for the 2011 Performance Units from such performance results, any downward
adjustment to the calculated potential payout amount based on the Compensation Committee’s negative discretion, and Grantee’s level of satisfaction (or deemed satisfaction) of the service requirements set forth in Section 4, including
any limitations on the maximum potential payout amount that may apply in the circumstances (e.g., in the case of a qualifying retirement or death).
Further limitations or adjustments may apply if there is an early termination or limitation of the overall performance measurement period. Final awards are determined by the Compensation Committee in the
absence of a Change of Control (as defined herein) and are subject to the Compensation Committee’s negative discretion. The Agreement provides a formula for calculation of the Final Award in the event of a Change of Control of PNC and for the
form and timing of payment of any such award.
Any Final Award (as defined in Section 14.22) for the 2011 Performance
Units authorized pursuant to this Agreement will be expressed as a number of awarded Share Units and will be paid in cash in accordance with Section 7, generally in cash Share-equivalents. The 2011 Performance Units must still be outstanding at
the time a Final Award determination is made for Grantee to be eligible to receive an award, and any Final Award and payment thereof is subject to the terms and conditions set forth in the Agreement and to the Plan.
3. Corporate Performance Conditions; Calculation of Applicable Annual Potential Payout Percentages.
3.1 Corporate Performance Conditions. The 2011 Performance Units are subject to the corporate performance conditions set forth in
this Section 3.
Final Award determination by the Committee pursuant to Section 5 requires the calculation of the
Final Potential Payout Percentage (also referred to as the Corporate Performance Factor) and the Calculated Maximum Potential Payout Amount, as defined in Section 14.23 and Section 14.8, respectively. Final Award calculation pursuant to
Section 6 of the Agreement, if applicable, requires the calculation of the Change of Control Payout Percentage and the calculated final award as set forth in that section of the Agreement.
Those calculations, in turn, take into account the levels of investment performance achieved by the A&L Unit with respect to the
corporate Performance Criteria, as measured annually and expressed as the Annual Potential Payout Percentages for the applicable covered annual performance measurement periods (which may be full or partial year periods as required by the Agreement)
in the applicable overall Performance Period.
This Section 3 sets forth the corporate Performance Criteria, applicable
covered performance measurement periods and Benchmark Performance Index for such periods, measurement of the specified A&L Unit investment performance with respect to the Performance Criteria, and the basic annual potential payout calculation
schedule established by the Compensation Committee for use in generating the maximum potential payout percentage for the 2011 Performance Units from such corporate performance results, each unless and until amended prospectively by the Compensation
Committee.
3.2 Performance Criteria and Performance Period. The corporate performance standards established by the
Compensation Committee as the Performance Criteria for the 2011 Performance Units are the levels of financial return from investing activities achieved by the A&L Unit relative to the applicable Benchmark Performance Index measured as set forth
in this Section 3, all unless and until amended prospectively by the Compensation Committee. This A&L Unit investment performance is measured annually for each applicable covered annual performance period, which may consist of a full
calendar year or a shorter partial-year period as required by the Agreement, in the overall Performance Period.
The overall Performance Period for the 2011 Performance Units is the period commencing
January 1, 2011 through and including the applicable performance measurement date specified in Section 5.1 or Section 6.1 of the Agreement as applicable. Generally the overall Performance Period will cover a three year period, but it
may be terminated early or limited in specified circumstances.
In the standard non-exceptional circumstances as specified in
Section 5.1(a), the applicable performance measurement date will be December 31, 2013 and the overall Performance Period will be the three year period commencing January 1, 2011 through and including December 31, 2013, consisting
of the following three covered annual performance measurement periods: (1) the full year period commencing January 1, 2011 through and including December 31, 2011; (2) the full year period commencing January 1, 2012 through
and including December 31, 2012; and (3) the full year period commencing January 1, 2013 through and including December 31, 2013.
If the overall Performance Period is terminated early or limited pursuant to the terms of the Agreement, the applicable overall Performance Period will be the period commencing January 1, 2011
through and including the performance measurement date as specified in the Agreement as applicable in such circumstances. The final covered annual performance measurement period in such overall Performance Period will be the one ending on the
performance measurement date specified in the Agreement as applicable in such circumstances and may consist of a full calendar year or a shorter partial-year period as required by the Agreement. Thus the number of applicable covered annual
performance measurement periods will be one, two or three, as the case may be.
3.3 Benchmark Performance Index; Measured
A&L Unit Investment Performance. The Compensation Committee has determined that the applicable Benchmark Performance Index for each applicable covered annual performance measurement period in the overall Performance Period, whether the given
covered period consists of a full calendar year or a shorter partial-year period as required by the Agreement, will be the benchmark performance index that PNC uses internally to evaluate the investment performance of the A&L Unit as in effect
as of March 30 of that given year (or as of the last business day that occurs prior to March 30 if March 30 does not fall on a business day), so that, to the extent applicable:
(1) performance for the covered annual performance period consisting of the full year period from January 1, 2011 through
December 31, 2011 (or through an earlier quarter-end date of that calendar year if so specified by the Agreement) will be compared to PNC’s internal performance benchmark index for the A&L Unit in effect on March 30, 2011;
(2) performance for the covered annual performance period consisting of the full calendar year period from January 1,
2012 through December 31, 2012 (or the portion of that calendar year from January 1, 2012 through an earlier quarter-end date of that calendar year if so specified by the Agreement) will be compared to PNC’s internal performance
benchmark index for the A&L Unit in effect on March 30, 2012; and
(3) performance for the covered annual performance
period consisting of the full calendar year period from January 1, 2013 through December 31, 2013 (or the portion of that calendar year from January 1, 2013 through an earlier quarter-end date of that calendar year if so specified by
the Agreement) will be compared to PNC’s internal performance benchmark index for the A&L Unit in effect on March 29, 2013.
The A&L Unit investment performance as measured for a given year with respect to the Performance Criteria will be expressed as the number of basis points by which the level of financial return from
investing activities achieved by the A&L Unit for the applicable covered measurement period with respect to that year exceeds or falls short of the Benchmark Performance Index applicable to that covered period, with zero basis points indicating
performance at the benchmark index level.
3.4 Annual Potential Payout Calculation Schedule (Schedule); Calculation of
Applicable Annual Potential Payout Percentages. The Compensation Committee also establishes the applicable Annual Potential Payout Calculation Schedule (“Schedule”) (as defined in Section 14.2) for the 2011
Performance Units. Unless and until amended prospectively by the Compensation Committee, the Schedule established by the Compensation Committee at the time it authorized the 2011 Performance
Units that accompanies the Agreement shall be applied in order to generate the Annual Potential Payout Percentage (as defined in Section 14.3) for each of the applicable covered annual performance measurement periods in the applicable overall
Performance Period from the performance results for each such covered period.
For each applicable covered annual performance
period (which may consist of a full calendar year or a shorter partial-year period as required by the Agreement), PNC will determine the measured A&L Unit investment performance for the covered period with respect to that year based on the level
of financial return from investing activities achieved by the A&L Unit for that covered period and the comparison in basis points of such performance to the applicable Benchmark Performance Index, all as set forth in this Section 3. Once
this measured performance has been calculated and expressed in basis points, the applicable Schedule (as defined in Section 14.2) will be applied to generate the Annual Potential Payout Percentage (as defined in Section 14.3) achieved by
the A&L Unit for that given year. Such results will be presented to the Compensation Committee.
As described in
Section 3.1 above, the Annual Potential Payout Percentages for the applicable covered annual performance periods in the applicable overall Performance Period are taken into account in the calculation of the Final Potential Payout Percentage as
part of the Final Award determination process by the Compensation Committee as set forth in Section 5 or may be a part of the Final Award calculation pursuant to Section 6 of the Agreement, as applicable.
4. Grantee Service Requirements and Limitation of Potential Award; Early Termination of 2011 Performance Units.
4.1 Eligibility for an Award; Employment Conditions and Early Termination of Performance Units. The 2011 Performance Units are
subject to the employment conditions set forth in this Section 4.
Grantee will not be eligible to receive a Final Award
unless the 2011 Performance Units remain outstanding on the Compensation Committee-determined Award Date (as defined in Section 14.5) or as of the end of the day immediately preceding the day on which a Change of Control occurs, if earlier.
The 2011 Performance Units will automatically terminate on Grantee’s Termination Date (as defined in Section 14.43)
unless an exception is available as set forth in Section 4.2, Section 4.3, Section 4.4 or Section 4.5. Where one or more of the conditions to an exception are post-employment conditions, the Performance Units will terminate upon
the failure of any of those conditions.
In the event that Grantee’s employment is terminated by the Corporation for
Cause (as defined in Section 14.9), the 2011 Performance Units will automatically terminate on Grantee’s Termination Date whether or not the termination might otherwise have qualified for an exception as a Retirement or a Disability
termination pursuant to Section 4.3 or Section 4.4.
In the limited circumstances where the 2011 Performance Units
remain outstanding notwithstanding Grantee’s termination of employment with the Corporation, Grantee will be eligible for consideration for an award, subject to limitation as set forth in the applicable section of the Agreement. Said award, if
any, will be determined and payable at the same time that such an award would have been determined and payable had Grantee remained a Corporation employee, except that in the case of death, the determination and payment of said award, if any, shall
be accelerated if so indicated in accordance with the applicable provisions of Section 5 or Section 6, as applicable, and Section 7.
Any award that the Compensation Committee may determine to make after Grantee’s death will be paid to Grantee’s legal representative, as determined in good faith by the Compensation Committee,
in accordance with Section 9.
Notwithstanding anything in Section 4 or Section 5 to the contrary, if a Change of
Control (as defined in Section 14.11) occurs prior to the time the Compensation Committee makes a Final Award determination pursuant to Section 5.2 (that is, prior to the Compensation Committee-determined Award Date), an award will be
determined in accordance with Section 6.
4.2 Death While an Employee. If Grantee dies while an employee of the
Corporation and prior to the Compensation Committee-determined Award Date, the 2011 Performance Units will remain outstanding and Grantee will be eligible for consideration for a prorated award calculated in accordance with Section 5.1(b), with
an applicable performance measurement date (as defined in Section 5.1) of the earlier of the last day of the calendar year in which the death occurred and December 31, 2013, and payable in accordance with Section 7.
Any such award will be subject to Compensation Committee determination pursuant to Section 5.2, and may be further reduced or
eliminated by the Compensation Committee in the exercise of its negative discretion unless such determination occurs during a Change of Control Coverage Period (as defined in Section 14.12) or a Change of Control has occurred.
In the event that a Change of Control occurs after the time Grantee died but prior to the time the Compensation Committee makes an award
determination with respect to Grantee (either to award a specified amount or not to authorize any award), an award will be deemed to be made pursuant to Section 6, calculated as specified in Section 6.1(b) and payable in accordance with
Section 7.
4.3 Qualifying Retirement. If Grantee Retires (as defined in Section 14.36) prior to the
Compensation Committee-determined Award Date and the termination of employment is not also a termination by the Corporation for Cause, the 2011 Performance Units will remain outstanding post-employment; provided, however, that PNC may
terminate the Performance Units at any time prior to the Award Date, other than during a Change of Control Coverage Period or after the occurrence of a Change of Control, upon determination that Grantee has engaged in Detrimental Conduct (as defined
in Section 14.19). If Grantee is Disabled (as defined in Section 14.20) at the time of Retirement and Section 4.4 is also applicable to Grantee, that subsection will govern rather than this Section 4.3.
Provided that the 2011 Performance Units have not been terminated prior to the award date for Detrimental Conduct and are still
outstanding at that time, Grantee will be eligible for Compensation Committee consideration of a prorated award at the time that such an award, if any, would have been considered had Grantee remained a Corporation employee, calculated in accordance
with Section 5.1(c) with a performance measurement date of the last day of the last full quarter completed on or prior to Grantee’s Retirement date, but in no event later than December 31, 2013, and payable in accordance with
Section 7.
Any such award will be subject to Compensation Committee determination pursuant to Section 5.2, and may
be further reduced or eliminated by the Compensation Committee in the exercise of its negative discretion unless such determination occurs during a Change of Control Coverage Period or a Change of Control has occurred.
If Grantee dies after a qualifying Retirement but before the time set forth above for consideration of an award and provided that the
2011 Performance Units have not been terminated for Detrimental Conduct and are still outstanding at the time of Grantee’s death, the Compensation Committee may consider an award for Grantee and make an award determination with respect to
Grantee (either to award a specified amount or not to authorize any award). Any such award determination will be made and such award, if any, will be calculated in accordance with Section 5.1(c) as described above but will be paid in accordance
with Section 7 during the calendar year immediately following the year in which Grantee’s death occurs, if the death occurs on or prior to December 31, 2013, or in 2014 if the death occurs in 2014 but prior to the Award Date.
In the event that a Change of Control occurs prior to the time the Compensation Committee makes an award determination with
respect to Grantee (either to award a specified amount or not to authorize an
award), an award will be deemed to be made pursuant to Section 6, calculated as specified in Section 6.1(c) and payable in accordance with Section 7.
4.4 Qualifying Disability Termination. If Grantee’s employment with the Corporation is terminated by reason of Disability (as
defined in Section 14.20) prior to the Compensation Committee-determined Award Date and the termination of employment is not also a termination by the Corporation for Cause, the Performance Units will remain outstanding post-employment;
provided, however, that PNC may terminate the 2011 Performance Units at any time prior to the Award Date, other than during a Change of Control Coverage Period or after the occurrence of a Change of Control, upon determination that
Grantee has engaged in Detrimental Conduct (as defined in Section 14.19).
Provided that the 2011 Performance Units are
still outstanding at that time, Grantee will be eligible for Compensation Committee consideration of a full award at the time that such an award, if any, would have been considered had Grantee remained a Corporation employee, calculated in
accordance with Section 5.1(d) and payable in accordance with Section 7.
Any such award will be subject to
Compensation Committee determination pursuant to Section 5.2, and may be further reduced or eliminated by the Compensation Committee in the exercise of its negative discretion unless such determination occurs during a Change of Control Coverage
Period or a Change of Control has occurred. Although Grantee will be eligible for consideration for a full award (Standard Payout Calculation) at the scheduled time, it is anticipated that the Compensation Committee will take into account the timing
and circumstances of the Disability when deciding whether and the extent to which to exercise its negative discretion.
If
Grantee dies after a qualifying Disability termination but before the time set forth above for consideration of an award and provided that the 2011 Performance Units have not been terminated for Detrimental Conduct and are still outstanding at the
time of Grantee’s death, the Compensation Committee may consider an award for Grantee and make an award determination with respect to Grantee (either to award a specified amount or not to authorize any award). Any such award determination will
be made and such award, if any, will be paid in accordance with Section 7 during the calendar year immediately following the year in which Grantee’s death occurs, if the death occurs on or prior to December 31, 2013, or in 2014 if the
death occurs in 2014 but prior to the Award Date; provided, however, that the maximum award that may be approved in these circumstances is the award that could have been authorized had Grantee died while an employee of the Corporation.
In the event that a Change of Control occurs prior to the time the Compensation Committee makes an award determination with
respect to Grantee (either to award a specified amount or not to authorize an award), an award will be deemed to be made pursuant to Section 6, calculated as specified in Section 6.1(d) and payable in accordance with Section 7.
4.5 Qualifying Termination in Anticipation of a Change of Control. If Grantee’s employment with the Corporation
is terminated by the Corporation prior to the Award Date and such termination is an Anticipatory Termination as defined in Section 14.4, then (i) the 2011 Performance Units will remain outstanding notwithstanding Grantee’s termination
of employment with the Corporation, (ii) the 2011 Performance Units will not be subject to termination for Detrimental Conduct, and (iii) Grantee will be eligible for consideration for an award pursuant to Section 5.2,
calculated in accordance with Section 5.1(e), or will receive an award pursuant to Section 6, calculated as specified in Section 6.1(e), as applicable. Any such award will be payable in accordance with Section 7.
If Grantee dies while eligible to receive an award pursuant to this Section 4.5 but prior to the time the Compensation Committee
makes an award determination pursuant to Section 5.2 or a Change of Control occurs, Grantee will be eligible for Compensation Committee consideration of an award of up to the greater of the award Grantee could have received had he died while an
employee of the Corporation or an award determined as set forth in Section 5.1(e). If Grantee dies while eligible to receive an award pursuant to this Section 4.5 but a Change of Control occurs prior to the time the Compensation Committee
makes an award determination pursuant to Section 5.2, Grantee will be deemed to receive an award in accordance with Section 6.1(e).
5. Certification of Performance Results; Calculation of Maximum Potential Payout Amount; and Final Award Determination.
5.1 Certification of Level of Achievement of A&L Unit Performance with respect to Corporate Performance Criteria;
Calculation of Final Potential Payout Percentage and Calculated Maximum Potential Payout Amount. As soon as practicable after December 31, 2013, or after the earlier relevant date if the applicable performance measurement date and potential
award date are earlier under the circumstances, PNC will present information to the Compensation Committee concerning the following:
(1) the levels of financial return from investing activities achieved by the A&L Unit for each of the applicable covered annual performance periods for which A&L Unit performance is being measured
under the circumstances, and the comparison, in basis points, of such performance to applicable Benchmark Performance Index;
(2) the Annual Potential Payout Percentages for such covered performance periods generated in accordance with the Schedule on the basis of
the investment performance achieved by the A&L Unit with respect to the Performance Criteria for such covered periods;
(3)
the Final Potential Payout Percentage (also sometimes referred to as the Corporate Performance Factor or the Corporate Factor) applicable under the circumstances, calculated as set forth in Section 14.23;
(4) such additional criteria for the certifications and calculations to be made pursuant to this Section 5.1 as may be required by
subsection (a), (b), (c), (d) or (e) below, as applicable under the circumstances (including the last day of the applicable performance measurement period and such limitations and prorations as may be applicable), in order to calculate the
applicable Maximum Calculated Potential Payout Amount; and
(5) such additional criteria and information as the Compensation
Committee may request.
The last day of the applicable performance measurement period is sometimes referred to as the
“performance measurement date.” The time when the certification, calculation and Final Award determination process will take place is sometimes referred to as the “scheduled award-determination period,” and the date when a Final
Award, if any, is determined and made by the Compensation Committee is sometimes referred to as the “Committee-determined Award Date” (as set forth in Section 14.5).
Notwithstanding anything in this Section 5 to the contrary, if a Change of Control has occurred, Section 6 will apply.
(a) Non-Exceptional Circumstances – Standard Payout Calculation. Provided that Grantee remains an employee of the
Corporation and the 2011 Performance Units remain outstanding such that Grantee remains eligible for consideration for an award, and that a Change of Control has not occurred, the overall Performance Period will run from January 1, 2011 through
December 31, 2013 and the process of certification of the levels of achievement of A&L Unit performance with respect to the corporate Performance Criteria, the calculation of the Final Potential Payout Percentage (the Corporate Performance
Factor), the calculation of the Calculated Maximum Potential Payout Amount, and the determination of the Final Award, if any, by the Compensation Committee will occur in early 2014.
Under the circumstances set forth in this subsection (a) above (“non-exceptional circumstances”), PNC will present
information to the Compensation Committee for purposes of this Section 5.1 on the following basis:
(i) the applicable performance measurement date will be December 31, 2013;
(ii) the applicable overall Performance Period will be the period beginning on January 1, 2011 and ending on December 31, 2013,
and will consist of the full calendar year covered annual performance periods from January 1, 2011 through December 31, 2011, from January 1, 2012 through December 31, 2012, and from January 1, 2013 through December 31,
2013;
(iii) the applicable Final Potential Payout Percentage (Corporate Performance Factor) will be the percentage that is the
weighted average of the Annual Potential Payout Percentages for the full calendar year covered annual performance periods for 2011, 2012 and 2013, calculated as set forth in Section 14.23, but in no event resulting in a Corporate Performance
Factor greater than 200.00%;
(iv) the applicable Calculated Maximum Potential Payout Amount will be the number of Share Units
equal to the applicable Final Potential Payout Percentage (Corporate Performance Factor) of the Target Share Units; and
(v)
the scheduled award determination period will occur in early 2014.
(b) Death While an Employee. In the event that
Grantee dies while an employee of the Corporation and prior to the regularly scheduled award date for non-exceptional circumstances in early 2014 and the 2011 Performance Units remain outstanding pursuant to Section 4.2, PNC will present
information to the Compensation Committee for purposes of this Section 5.1 on the following basis:
(i) the applicable
performance measurement date will be the earlier of the last day of the calendar year in which the death occurred and December 31, 2013;
(ii) the applicable overall Performance Period will be the period beginning on January 1, 2011 and ending on the December 31st that is the applicable performance measurement date, and will consist of the one, two or three full calendar year
covered annual performance periods (for 2011, or for 2011 and 2012, or for 2011, 2012 and 2013, as the case may be) in that period;
(iii) the applicable Final Potential Payout Percentage (Corporate Performance Factor) will be the percentage that is the weighted average of the Annual Potential Payout Percentages for the one, two or
three covered annual performance periods, as the case may be, in the applicable overall Performance Period specified above, calculated as set forth in Section 14.23, but in no event resulting in a Corporate Performance Factor greater than
200.00%;
(iv) the applicable Calculated Maximum Potential Payout Amount will be the number of Share Units
equal to (x) the applicable Final Potential Payout Percentage of the Target Share Units, then (y) prorated (as defined in Section 14.34) based on the number of full quarters in the applicable overall Performance Period specified
above, including through December 31st of the year of
death if prior to 2014; and
(v) the scheduled award-determination period will occur during the year immediately following the
year in which Grantee died (i.e., early in 2012, 2013, or 2014, as the case may be) unless Grantee dies after December 31, 2013 but prior to the award date, in which case the scheduled award-determination period will occur in 2014.
(c) Qualifying Retirement. In the event that Grantee Retires prior to the regularly scheduled award date for
non-exceptional circumstances in early 2014 but Grantee has met the conditions for a qualifying Retirement termination set forth in Section 4.3 and the 2011 Performance Units have not been terminated by PNC prior to the award date pursuant to
Section 4.3 for Detrimental Conduct and remain outstanding, PNC will present information to the Compensation Committee for purposes of this Section 5.1 on the following basis:
(i) the applicable performance measurement date will be the last day of the last full
quarter completed prior to Grantee’s Retirement date or, if the Retirement date is a quarter-end date, that quarter-end date, but in no event later than December 31, 2013;
(ii) the applicable overall Performance Period will be the period beginning on January 1, 2011 and ending on the quarter-end date
that is the applicable performance measurement date, and will consist of one, two or three covered periods, as the case may be, consisting of the full covered year or years, if any, and any partial covered year, as applicable, in that period;
(iii) the applicable Final Potential Payout Percentage (Corporate Performance Factor) will be the percentage that is the
weighted average of the Annual Potential Payout Percentages for the one, two or three covered periods, as the case may be, in the applicable overall Performance Period specified above, calculated as set forth in Section 14.23;
(iv) the applicable Calculated Maximum Potential Payout Amount will be the number of Share Units equal to (x) the applicable Final
Potential Payout Percentage of the Target Share Units, then (y) prorated (as defined in Section 14.34) based on the number of full quarters in the applicable overall Performance Period (i.e., in the period from January 1, 2011
through the quarter-end date that is the applicable performance measurement date specified above); and
(v) the scheduled award
determination period will occur in early 2014 as provided in Section 7.1, unless Grantee dies after Retirement but before the beginning of 2013, in which case the scheduled award-determination period will occur in early 2013 (if the death
occurred in 2012) or early 2012 (if the death occurred in 2011), as the case may be.
In the event that Grantee is Disabled at
the time of Retirement and Section 4.4 is also applicable to Grantee, then Section 5.1(d) will govern rather than this Section 5.1(c).
(d) Qualifying Disability. Except as set forth in the following paragraph, in the event that Grantee becomes Disabled prior to the regularly scheduled award date for non-exceptional circumstances
in early 2014 but Grantee has met the conditions for a qualifying Disability termination set forth in Section 4.4 and the 2011 Performance Units have not been terminated by PNC prior to the award date pursuant to Section 4.4 for
Detrimental Conduct and remain outstanding, PNC will present information to the Compensation Committee for purposes of this Section 5.1 for consideration of an award on the same basis as that set forth in Section 5.1(a) for a continuing
employee of the Corporation, together with such information as the Compensation Committee may request concerning the timing and circumstances of the Disability. The scheduled award-determination period will occur in early 2014 as provided in
Section 7.1.
If Grantee dies after a qualifying Disability termination but prior to the regularly scheduled award date
and the 2011 Performance Units are still outstanding at the time of Grantee’s death, Grantee will be eligible for Compensation Committee consideration of an award at the time and up to the maximum amount of the award Grantee could have received
had he died while an employee of the Corporation.
(e) Qualifying Termination in Anticipation of a Change of Control.
In the event that Grantee’s employment with the Corporation is terminated by the Corporation prior to the regularly scheduled award date for non-exceptional circumstances in early 2014 but Grantee has met the conditions for a qualifying
termination in anticipation of a Change of Control set forth in Section 4.5 and the 2011 Performance Units remain outstanding, but a Change of Control has not yet occurred, then:
(1) If a Change of Control transaction is pending at the regularly scheduled award date, the 2011 Performance Units will remain
outstanding and Grantee will be eligible to receive an award pursuant to Section 5.2 on the same basis as that set forth in Section 5.1(c) for a qualifying Retiree and the Compensation Committee will have no discretion to further reduce
the size of such award; and
(2) If there is no Change of Control transaction pending at the regularly scheduled award
date, the 2011 Performance Units will remain outstanding and the Compensation Committee will have discretion to authorize an award, pursuant to Section 5.2, to Grantee up to a maximum permitted award calculated on the same basis as that set
forth in Section 5.1(c) for a qualifying Retiree, but the Compensation Committee will also have discretion to further reduce the award as set forth in Section 5.2(b).
If Grantee dies after an Anticipatory Termination but prior to the time the Compensation Committee makes an award determination pursuant
to Section 5.2 or a Change of Control occurs, Grantee will be eligible for Compensation Committee consideration of an award of up to the greater of the award Grantee could have received had he died while an employee of the Corporation and an
award determined as set forth above in this Section 5.1(e).
If Grantee dies after an Anticipatory Termination but a
Change of Control occurs prior to the time the Compensation Committee makes an award determination pursuant to Section 5.2, Grantee will be deemed to receive an award in accordance with Section 6.1(e).
5.2 Final Award Determination by Compensation Committee.
(a) The Compensation Committee will have the authority to award to Grantee (“award”) as a Final Award such amount, denominated as a specified number of Share Units, as may be determined by the
Compensation Committee, subject to the limitations set forth in the following paragraph, provided, that, the 2011 Performance Units are still outstanding, that Grantee is either still an employee of the Corporation or qualifies for an
exception to the employment condition pursuant to Section 4.2, 4.3, 4.4 or 4.5, and that the Final Potential Payout Percentage (Corporate Performance Factor) is greater than zero.
The Final Award will not exceed the applicable Calculated Maximum Potential Payout Amount, as determined in accordance with the
applicable subsection of Section 5.1, and is subject to the exercise of negative discretion by the Compensation Committee to reduce or further reduce this calculated payout amount pursuant to Section 5.2(b), if applicable.
The Compensation Committee will not have authority to exercise negative discretion to reduce the payout amount below the full applicable
Calculated Maximum Potential Payout Amount if a Change of Control Coverage Period has commenced and has not yet ended or if a Change of Control has occurred. If there has been a Change of Control, the Compensation Committee’s authority is
subject to Section 6.
The date on which the Compensation Committee makes its determination as to whether or not it will
authorize an award and, if so, the size of a Final Award, if any, it authorizes within the Calculated Maximum Potential Payout Amount determined pursuant to the Agreement is sometimes referred to in the Agreement as the “Committee-determined
Award Date” (as set forth in Section 14.5).
Payment of the Final Award, if any, will be made in cash in accordance
with Section 7. If Grantee dies after a Final Award is determined but before payment is made, payment of the Final Award will be made to Grantee’s legal representative, as determined in good faith by the Compensation Committee, in
accordance with Section 9.
(b) Except during a Change of Control Coverage Period or after the occurrence of a Change of
Control, the Compensation Committee may exercise negative discretion with respect to the 2011 Performance Units and may determine, in light of such Corporation or individual performance or other factors as the Compensation Committee may deem
appropriate, that notwithstanding the levels of financial return from investing activities achieved by the A&L Unit relative to benchmark, the Compensation Committee will not award Grantee the full applicable Calculated Maximum Potential Payout
Amount that the Compensation Committee is authorized to award pursuant to Section 5.2(a), or any of such amount.
It is
anticipated that the Compensation Committee will take into account such factors as absolute A&L Unit financial performance, absolute trading results, cumulative performance relative to the
benchmark, adherence to risk parameters, and Grantee’s contributions to the success of other PNC businesses when deciding whether and the extent to which to exercise its negative discretion.
If the Compensation Committee so determines to exercise its negative discretion pursuant to this Section 5.2(b), the
Final Award, if any, will be reduced accordingly; provided, however, that the Compensation Committee will not have authority to exercise negative discretion if a Change of Control Coverage Period has commenced and has not yet ended or
if a Change of Control has occurred.
(c) If a Change of Control occurs prior to the time the Compensation Committee makes an
award determination pursuant to Section 5.2, the Final Award will be determined in accordance with Section 6 rather than being determined by the Compensation Committee pursuant to Section 5.2, and the Compensation Committee will not
have negative discretion to reduce the payout amount calculated pursuant to Section 6.
6. Change of Control Prior to
a Committee-Determined Award Date.
6.1 Final Award Calculation.
Notwithstanding anything in the Agreement to the contrary, upon the occurrence of a Change of Control at any time prior to a
Committee-determined Award Date pursuant to Section 5.2, (i) the overall Performance Period, if not already ended, will be limited and will end on the last day of the last full quarter completed prior to the day the Change of Control
occurs or, if the Change of Control occurs on a quarter-end date, on the day the Change of Control occurs, but in no event later than December 31, 2013, and (ii) Grantee will be deemed to have been awarded a Final Award in an amount
determined as set forth in this Section 6, payable to Grantee or Grantee’s legal representative at the time and in the manner set forth in Section 7, provided that the 2011 Performance Units are still outstanding as of the end of the
day immediately preceding the day on which the Change of Control occurs and have not already terminated or been terminated in accordance with the service or conduct provisions of Section 4.
If this Section 6 is applicable and a Final Award is deemed to be awarded pursuant to Section 6, the day the Change of Control
occurs will be considered the Award Date for purposes of the Agreement. This date is sometimes referred to in the Agreement as the “Change-of-Control-determined Award Date” (as set forth in Section 14.5).
(a) Standard Change of Control Payout Calculation. Provided that Grantee is an employee of the Corporation and the 2011
Performance Units are still outstanding as of the end of the day immediately preceding the day on which the Change of Control occurs such that Grantee remains eligible for an award, Grantee’s Final Award will be determined as follows:
(i) the applicable performance measurement date will be the last day of the last full quarter completed prior to the day the
Change of Control occurs, or, if the Change of Control occurs on a quarter-end date, the day the Change of Control occurs, but in no event later than December 31, 2013;
(ii) the applicable overall Performance Period will be the period beginning on January 1, 2011 and ending on the quarter-end date that is the applicable performance measurement date, and will consist
of one, two or three covered periods, as the case may be, consisting of the full covered year or years, if any, and any partial covered year, as applicable, in that period;
(iii) the scheduled award-determination period will occur as soon as practicable after the occurrence of the Change of Control; and
(iv) a Final Award will be calculated in two parts (Part A and Part B), and the Final Award amount will be the sum of the amounts calculated for the Part A Award and the Part B Award as set forth below;
provided, however, that the Part B Award is not applicable in the limited circumstance
where the Change of Control occurs on or after December 31, 2013 and the Part A Award is not prorated.
Part A Award: The Part A Award amount will be the number of Share Units equal to:
(1) the “Change of Control Payout Percentage” (calculated as set forth below) of the Target Share Units, then,
(2) prorated (as defined in Section 14.34) based on the number of full quarters in the applicable overall Performance Period (i.e., in the period from January 1, 2011 through the
quarter-end date that is the applicable performance measurement date specified above) unless the Change of Control occurs on or after December 31, 2013. If the Change of Control occurs on or after December 31, 2013 (and therefore the
applicable overall Performance Period covers a full three year period), proration will not apply.
The “Change of Control
Payout Percentage” will be (a) or (b) below, as applicable, (but in no event greater than 200.00%):
(a) If the
Change of Control occurs prior to December 31, 2013, such that the applicable overall Performance Period is less than three years, the Change of Control Payout Percentage will be the higher of (1) 100% and (2) the percentage
that is the Corporate Performance Factor calculated in the same manner as set forth in Section 14.23 for an award determination made pursuant to Section 5 using corporate performance for the one, two or three covered periods, as the case
may be, consisting of the full covered year or years, if any, and any partial covered year, as applicable, in the applicable overall Performance Period specified above in subsection (ii) of this Section 6.1(a); and
(b) If the Change of Control occurs on or after December 31, 2013, the Change of Control Payout Percentage will be the percentage
that is the Corporate Performance Factor calculated in the same manner as set forth in Section 14.23 for an award determination made pursuant to Section 5 using corporate performance for all three covered annual performance measurement
periods in the applicable overall Performance Period (i.e., for the three full calendar year covered annual performance periods for 2011, 2012 and 2013).
Part B Award: The Part B Award amount will be the number of Share Units equal to:
| |
(1) |
100% of the Target Share Units, multiplied by |
| |
(2) |
the fraction equal to 1.00 minus the fraction used for the proration by quarters in the calculation of the Part A Award above. |
If the calculation of the Part A Award above does not include a proration factor, the Part B Award will not be applicable.
Grantee’s Final Award determined pursuant to this Section 6.1(a) will be paid to Grantee’s legal representative, as
determined in good faith by the Compensation Committee, in accordance with Section 9 if Grantee dies after the Change of Control occurs but before this Final Award is paid.
(b) Death While an Employee. If Grantee died while an employee of the Corporation and a Final Award determination (either to award
a specified amount or not to authorize any award) was made by the Compensation Committee pursuant to Section 5.2 prior to the Change of Control, no further or different award determination will be made pursuant to this Section 6.1.
In the event that Grantee died while an employee of the Corporation and qualified for consideration for an award pursuant to
Section 4.2 but the Compensation Committee had not yet made an
award determination (either to award a specified amount or not to authorize any award) with respect to Grantee at the time the Change of Control occurs such that Grantee remains eligible for an
award, then the scheduled award-determination period will occur as soon as practicable after the occurrence of the Change of Control, and the amount of Grantee’s Final Award (payable to Grantee’s legal representative, as determined in good
faith by the Compensation Committee, in accordance with Section 9) will be determined on the following basis, as applicable.
(1) If Grantee died in the calendar year prior to the year in which the Change of Control occurs but the Compensation Committee had not yet made an award determination (either to award a specified amount
or not to authorize any award) with respect to Grantee at the time the Change of Control occurs, Grantee’s Final Award will be in the amount of the Calculated Maximum Potential Payout Amount determined in the same manner as set forth in
Section 5.1(b) but with no Compensation Committee discretion to further reduce the amount of the award.
(2) If Grantee
died prior to but in the same calendar year as the Change of Control, Grantee’s Final Award will be in the amount of the award that would have been payable to Grantee pursuant to the calculations set forth in Section 6.1(a), but
substituting a Part B Award of zero Share Units for any Part B Award amount calculated pursuant to that section, had Grantee not died but had been an employee of the Corporation as of the end of day immediately preceding the day the Change of
Control occurred.
(c) Qualifying Retirement. In the event that Grantee Retired prior to the day the Change of Control
occurs but Grantee has met the conditions for a qualifying Retirement termination set forth in Section 4.3 and the 2011 Performance Units have not been terminated by PNC prior to the Change of Control pursuant to Section 4.3 for
Detrimental Conduct and are still outstanding as of the end of the day immediately preceding the day on which the Change of Control occurs such that Grantee remains eligible for an award, Grantee’s Final Award will be in the amount of the
lesser of:
(1) the Calculated Maximum Potential Payout Amount determined in the same manner as set forth in
Section 5.1(c) but with no Compensation Committee discretion to further reduce the amount of the award; and
(2) the
amount of the award that would have been payable to Grantee pursuant to the calculations set forth in Section 6.1(a), but substituting a Part B Award of zero Share Units for any Part B Award amount calculated pursuant to that section, had
Grantee not Retired but had been an employee of the Corporation as of the end of the day immediately preceding the day the Change of Control occurred.
The scheduled award-determination period will occur as soon as practicable after the occurrence of the Change of Control.
If Grantee died while a qualified Retiree and a Final Award determination (either to award a specified amount or not to authorize any award) was made by the Compensation Committee pursuant to
Section 5.2 prior to the Change of Control, no further or different award determination will be made pursuant to this Section 6.1.
If no such Final Award determination was made prior to the Change of Control, Grantee’s Final Award determined pursuant to this Section 6.1(c) will be paid to Grantee’s legal
representative, as determined in good faith by the Compensation Committee, in accordance with Section 9.
(d)
Qualifying Disability. In the event that Grantee became Disabled and Grantee’s employment with the Corporation terminated prior to the day the Change of Control occurs but Grantee has met the conditions for a qualifying Disability
termination set forth in Section 4.4 and the 2011 Performance Units have not been terminated by PNC prior to the Change of Control pursuant to Section 4.4 for Detrimental Conduct and are still outstanding as of the end of the day
immediately preceding the day on which the Change of Control occurs such that Grantee remains eligible for an award, Grantee’s Final
Award will be in the amount of the award that would have been payable to Grantee pursuant to the calculations set forth in Section 6.1(a), but substituting a Part B Award of zero Share Units
for any Part B Award amount calculated pursuant to that section, had Grantee still been an employee of the Corporation as of the end of the day immediately preceding the day the Change of Control occurred. The scheduled award-determination period
will occur as soon as practicable after the occurrence of the Change of Control.
If Grantee died while qualified to receive
an award and a Final Award determination (either to award a specified amount or not to authorize any award) was made by the Compensation Committee pursuant to Section 5.2 prior to the Change of Control, no further or different award
determination will be made pursuant to this Section 6.1. If no such Final Award determination was made prior to the Change of Control, Grantee’s Final Award (payable to Grantee’s legal representative, as determined in good faith by
the Compensation Committee, in accordance with Section 9) will be an award determined in accordance with Section 6.1(b) as if Grantee had died while an employee of the Corporation and prior to the Change of Control.
(e) Qualifying Termination in Anticipation of a Change of Control. In the event that Grantee’s employment with the
Corporation was terminated by the Corporation prior to the Award Date and such termination was an Anticipatory Termination as defined in Section 14.4 and the 2011 Performance Units are still outstanding at the time the Change of Control occurs
and Grantee remains eligible for an award pursuant to Section 4.5, Grantee will receive a Final Award on the following basis, as applicable.
(1) If the Change of Control occurs within three (3) months of Grantee’s Termination Date, Grantee will receive a Final Award on the same basis as a continuing employee of the Corporation as set
forth in Section 6.1(a).
(2) If the Change of Control occurs more than three (3) months after Grantee’s
Termination Date, Grantee will receive a Final Award on the same basis as a qualifying Retiree as set forth in Section 6.1(c).
If Grantee died while qualified to receive an award pursuant to Section 4.5 and a Final Award determination (either to award a specified amount or not to authorize any award) was made by the
Compensation Committee pursuant to Section 5.2 prior to the Change of Control, no further or different award determination will be made pursuant to this Section 6.1. If no such Final Award determination was made prior to the Change of
Control, Grantee’s Final Award (payable to Grantee’s legal representative, as determined in good faith by the Compensation Committee, in accordance with Section 9) will be in the same amount as the Final Award that would have been
paid to Grantee pursuant to this Section 6.1(e) had Grantee still been alive on the Change-of-Control-determined Award Date.
6.2 No Committee Discretion to Reduce Calculated Award Amount. The Compensation Committee may not exercise any further negative discretion pursuant to Section 5.2(b) or otherwise exercise
discretion pursuant to the Agreement in any way that would serve to reduce an award calculated pursuant to and deemed to be made to Grantee in accordance with this Section 6.
7. Payment of Final Award; Termination of Any Unawarded 2011 Performance Units.
7.1 Payment of Final Award Determined by the Committee.
(a) Form of Payment. Payment of any Final Award determined by the Compensation Committee pursuant to Section 5.2 will be made in cash in an amount equal to the number of Share Units specified
in the Final Award multiplied by the Fair Market Value (as defined in Section 14.21) of a share of PNC common stock on the Committee-determined Award Date or as otherwise provided pursuant to Section 8 if applicable.
(b) Timing. Determination of eligibility for an award, calculation of the Calculated Maximum Potential Payout Amount, and a
decision by the Compensation Committee on whether or not to
authorize an award and, if so, the size of such Final Award within such maximum potential award amount (the “scheduled award-determination process”) and then payment of any such Final
Award will all generally occur in the first quarter of 2014 or as soon thereafter as practicable after the final data necessary for the Compensation Committee to make its award determination is available.
In general, it is expected that the Award Date will occur in 2014 and no later than the end of the second quarter of that year, and that
payment of a Final Award, if any, will be made as soon as practicable after the Award Date. Except as otherwise provided below, in no event will payment be made earlier than January 1, 2014 or later than December 31, 2014, other than in
unusual circumstances where a further delay thereafter would be permitted under Section 409A of the Internal Revenue Code, and if such a delay is permissible, as soon as practicable within such limits.
In the event of Grantee’s death prior to the Award Date where Grantee has satisfied all of the conditions of
Section 4.2, 4.3, 4.4 or 4.5 of the Agreement and otherwise meets all applicable criteria as set forth in the Agreement for consideration for an award, (a) the scheduled award-determination process will occur at the same time and in the
same manner that such process would have occurred had Grantee remained an employee of the Corporation, provided that if the death occurs prior to 2013, the scheduled award-determination process will occur in the calendar year immediately following
Grantee’s death, and (b) payment of a Final Award, if any, will be made during the calendar year immediately following the year in which Grantee died if the death occurs on or prior to December 31, 2013, or in 2014 if Grantee dies in
2014, provided, that, in no event will payment occur later than December 31st of the calendar year so specified as the year for payment, other than in unusual circumstances where a further delay thereafter would be permitted under Section 409A of the Internal Revenue Code,
and if such a delay is permissible, as soon as practicable within such limits.
Otherwise, in the event that Grantee is no
longer employed by the Corporation but has satisfied all of the conditions of Section 4.3, 4.4 or 4.5 of the Agreement and otherwise meets all applicable criteria as set forth in the Agreement for consideration for an award, (a) the
scheduled award-determination process will occur at the same time and in the same manner that such process would have occurred had Grantee remained an employee of the Corporation, generally in 2014 during the first quarter of that year, and
(b) once the Compensation Committee has made its award determination, payment of a Final Award, if any, will be made as soon as practicable after the Committee-determined Award Date, provided, that, in no event will payment be
made earlier than January 1, 2014 or later than December 31, 2014, other than in unusual circumstances where a further delay thereafter would be permitted under Section 409A of the Internal Revenue Code, and if such a delay is
permissible, as soon as practicable within such limits.
(c) Disputes. If there is a dispute regarding payment of the
Final Award, PNC will settle the undisputed portion of the award, if any, within the time frame set forth above in this Section 7.1, and will settle any remaining portion as soon as practicable after such dispute is finally resolved but in any
event within the time period permitted under Section 409A of the Internal Revenue Code.
7.2 Payment of Final Award
Determined by Section 6. If a Final Award is deemed to be made pursuant to Section 6 rather than determined by the Compensation Committee pursuant to Section 5.2, the Final Award is fully vested as of the date of the Change of
Control. The number of Share Units in the Final Award will be calculated as of the date of the Change of Control once the final data necessary for the award determination is available, and the Final Award will be paid at the time and in the form set
forth below.
(a) Timing. If Grantee died in the calendar year prior to the year in which the
Change of Control occurs but no final payment decision had been made and no resulting payment, if any, had been made prior to the date the Change of Control occurred, payment will be made as soon as practicable after the date the Change of Control
occurs and the amount of the Final Award is determinable and determined in accordance with Section 6, but in no event later than December 31st of the calendar year following the year in which Grantee died unless payment at such time would be a noncompliant
payment under Section 409A of the Internal Revenue Code, in which case payment will be made at the time set forth in subsection
(a)(1) or subsection (a)(2) of this Section 7.2, as the case may be, that does comply with such Section 409A.
Except as otherwise set forth in the preceding paragraph, payment of the Final Award will be made by PNC at the time set forth in subsection (a)(1) of this Section 7.2 unless payment at such time
would be a noncompliant payment under Section 409A of the Internal Revenue Code, and otherwise, at the time set forth in subsection (a)(2) of this Section 7.2, in either case as further described below.
(1) If, under the circumstances, the Change of Control is a permissible payment event under Section 409A of the
Internal Revenue Code, payment of the Final Award will be made in cash as soon as practicable after the date the Change of Control occurs and the amount of the Final Award is determinable and determined in accordance with Section 6, but in no
event later than December 31st of the calendar year
in which the Change of Control occurs or, if later, by the 15th day of the third calendar month following the date on which the Change of Control occurs, other than in unusual circumstances where a further delay thereafter would be permitted under Section 409A
of the Internal Revenue Code, and if such a delay is permissible, as soon as practicable within such limits.
(2) If, under the
circumstances, payment at the time of the Change of Control would not comply with Section 409A of the Internal Revenue Code, then payment will be made in cash as soon as practicable after January 1, 2014, but in no event later than
December 31, 2014.
(b) Form of Payment. The Final Award will be paid in cash.
If, under the circumstances, (1) payment of the Final Award is made in the calendar year immediately following the year in which
Grantee died pursuant to the first paragraph of Section 7.2(a) or (2) payment of the Final Award is made at the time specified in Section 7.2(a)(1), then the Final Award will be in an amount equal to the base amount described below in
subsection (A) of this Section 7.2(b).
If, under the circumstances, payment of the Final Award is made at the time
specified in Section 7.2(a)(2), then the Final Award will be in an amount equal to the base amount described below in subsection (A) of this Section 7.2(b) plus the phantom investment amount described below in subsection
(B) of this Section 7.2(b).
(A) The base amount will be an amount equal to the number of Share Units specified in
the Final Award multiplied by the Fair Market Value (as defined in Section 14.21) of a share of PNC common stock on the date of the Change of Control or by the per share value otherwise provided pursuant to Section 8 as applicable.
(B) The phantom investment amount will be either (i) or (ii), whichever is larger: (i) interest on the base amount
described in Section 7.2(b)(A) from the date of the Change of Control through the payment date at the short-term, mid-term or long-term Federal rate under Internal Revenue Code Section 1274(b)(2)(B), as applicable depending on the term
until payment, compounded semi-annually; or (ii) a phantom investment amount with respect to said base amount that reflects, if positive, the performance of the PNC stock or other consideration received by a PNC common shareholder in the Change
of Control transaction, with dividends reinvested in such stock, from the date of the Change of Control through the payment date. PNC may, at its option, provide other phantom investment alternatives in addition to those referenced in the preceding
sentence and may permit Grantee to make a phantom investment election from among such alternatives under and in accordance with procedures established by PNC, but any such alternatives must provide for at least the two phantom investments set forth
in Section 7.2(b)(B)(i) and (ii) at a minimum. The phantom investment amount will be applicable only in the event that payment at the time of the Change of Control would not comply with Section 409A of the Internal Revenue Code and
thus payment is made at the time specified in Section 7.2(a)(2) rather than at the time specified in Section 7.2(a)(1).
(c) Disputes. If there is a dispute regarding payment of the Final Award, PNC will settle the undisputed portion of the award, if any, within the time frame set forth in the applicable provisions
of
Section 7.2(a), and will settle any remaining portion as soon as practicable after such dispute is finally resolved but in any event within the time period permitted under Section 409A
of the Internal Revenue Code.
7.3 Final Award Fully Vested. The Final Award, if any, will be fully vested at the
Committee-determined Award Date or as of the date of the Change of Control, as applicable. PNC will deliver any cash payable pursuant to this Section 7 to, or at the proper direction of, Grantee or Grantee’s legal representative, as
determined in good faith by the Compensation Committee, at the time specified in the applicable subsection of Section 7.1 or Section 7.2, whichever is applicable.
In the event that Grantee is deceased, payment will be delivered to the executor or administrator of Grantee’s estate or to Grantee’s other legal representative, as determined in good faith by
the Compensation Committee.
7.4 Termination of Any Unawarded 2011 Performance Units. Once an award determination has
been made by the Compensation Committee pursuant to Section 5.2 or a Final Award is deemed to have been made by virtue of the application of Section 6, the Share-denominated incentive award opportunity represented by the 2011 Performance
Units will terminate as to any portion of the Performance Units not so awarded.
Termination of all or a portion of the 2011
Performance Units pursuant to this Section 7.4, or pursuant to Section 4, if applicable, will in no way affect Grantee’s covenants or the other provisions of Sections 15 and 16.
8. Capital Adjustments.
8.1 Except as otherwise provided in Section 8.2, if applicable, if corporate transactions such as stock dividends, stock splits, spin-offs, split-offs, recapitalizations, mergers, consolidations or
reorganizations of or by PNC (“Corporate Transactions”) occur prior to the time a Final Award, if any, is paid, the Compensation Committee shall make those adjustments, if any, in the number, class or kind of the Target Share Units that it
deems appropriate in its discretion to reflect Corporate Transactions such that the rights of Grantee are neither enlarged nor diminished as a result of such Corporate Transactions, including without limitation measuring the value per Share Unit of
any share-denominated award authorized for payment to Grantee by reference to the per share value of the consideration payable to a PNC common shareholder in connection with such Corporate Transactions.
All determinations hereunder shall be made by the Compensation Committee in its sole discretion and shall be final, binding and
conclusive for all purposes on all parties, including without limitation Grantee.
8.2 Upon the occurrence of a Change of
Control, (a) the number, class and kind of the Target Share Units will automatically be adjusted to reflect the same changes as are made to outstanding shares of PNC common stock generally, and (b) the value per Share Unit to be used in
calculating the base amount described in Section 7.2(b) of any award that is deemed to be awarded to Grantee in accordance with Section 6 will be measured by reference to the per share value of the consideration payable to a PNC common
shareholder in connection with such Corporate Transaction or Transactions if applicable.
9. Prohibitions Against Sale,
Assignment, etc.; Payment to Legal Representative.
(a) Performance Units may not be sold, assigned, transferred,
exchanged, pledged, hypothecated or otherwise encumbered.
(b) If Grantee is deceased at the time any Final Award authorized
by this Agreement is to be paid, such payment shall be made to the executor or administrator of Grantee’s estate or to Grantee’s other legal representative as determined in good faith by the Compensation Committee.
(c) Any payment made in good faith by PNC to Grantee’s executor, administrator or other
legal representative shall extinguish all right to payment hereunder.
10. Withholding Taxes; Payment Upon Inclusion Under
Section 409A.
Where Grantee has not previously satisfied all applicable withholding tax obligations, PNC will, at the
time the tax withholding obligation arises in connection herewith, retain an amount sufficient to satisfy the minimum amount of taxes then required to be withheld by the Corporation in connection therewith from any amounts then payable to Grantee
hereunder. If any withholding is required prior to the time amounts are payable to Grantee hereunder, the withholding will be taken from other compensation then payable to Grantee or as otherwise determined by PNC.
If Grantee desires to have an additional amount withheld above the required minimum, up to Grantee’s W-4 obligation if higher, and
if PNC so permits, Grantee may elect to satisfy this additional withholding by payment of cash. If Grantee’s W-4 obligation does not exceed the required minimum withholding in connection herewith, no additional withholding may be made.
It is the intention of the parties that the Performance Units and the Agreement comply with the provisions of
Section 409A to the extent, if any, that such provisions are applicable to the Agreement. In the event that, notwithstanding such intention, the arrangement fails to meet the requirements of Section 409A and the regulations promulgated
thereunder, then PNC may at that time permit the acceleration of the time for payment to Grantee under the Agreement notwithstanding any of the other provisions of the Agreement, but any such accelerated payment may not exceed the amount required to
be included in Grantee’s income as a result of the failure to comply with the requirements of Section 409A and the regulations promulgated thereunder. For purposes of this provision, an amount will be deemed to have been included in
Grantee’s income if the amount is timely reported on Form W-2 or Form 1099-MISC as appropriate.
11. Employment.
Neither the granting of the 2011 Performance Units nor the calculation, determination and payment of any Final Award hereunder
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 Grantee’s status as an employee at
will.
12. Subject to the Plan and the Compensation Committee.
In all respects the 2011 Performance Units 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 2011 Performance Units and the Agreement
are subject to any interpretation of, and any rules and regulations issued by, the Compensation Committee or its delegate or under the authority of the Compensation Committee, whether made or issued before or after the Grant Date.
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 with respect to the subject matters addressed herein, and
supersedes all other discussions, negotiations, correspondence, representations, understandings and agreements between the parties concerning the subject matters hereof.
14. Certain Definitions.
Except where the context otherwise indicates, the following definitions apply for purposes of the Agreement.
14.1 “A&L Unit” means the Asset & Liability unit of PNC.
14.2 “Annual Potential Payout Calculation Schedule” or “Schedule” means the Schedule established by the
Compensation Committee with respect to the 2011 Performance Units as set forth in Section 3.4 setting forth the method by which the Annual Potential Payout Percentage will be calculated for a given covered annual performance period as specified
by the Agreement.
14.3 “Annual Potential Payout Percentage.”
The Annual Potential Payout Percentage for a given year is the percentage determined with respect to that year in accordance with the
Annual Potential Payout Calculation Schedule on the basis of the level of financial return from investing activities achieved by the A&L Unit for the covered annual performance period applicable to that given year compared to the applicable
Benchmark Performance Index. The Annual Potential Payout Percentage is rounded to the nearest one-hundredth, with 0.005% being rounded upward to 0.01%.
The covered annual performance period for any given year of the overall Performance Period will consist of the full or partial year period beginning on January 1 of the given year and ending on
December 31 of that year, or on such earlier quarter-end performance measurement date as may be specified by the Agreement if applicable.
14.4 “Anticipatory Termination.”
If Grantee’s employment
with the Corporation is terminated by the Corporation other than for Cause (as Cause is defined in Section 14.9(a)), death or Disability (as Disability is defined in Section 14.20) prior to the date on which a Change of Control occurs, and
if it is reasonably demonstrated by Grantee that such termination of employment (i) was at the request of a third party that has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with or
anticipation of a Change of Control, such a termination of employment is an “Anticipatory Termination.”
14.5
“Award Date” means: (1) the date on which the Compensation Committee makes its determination as to whether or not it will authorize an award, and if so, as to the size of the Final Award, if any, it authorizes pursuant to
Section 5.2 within the Calculated Maximum Potential Payout Amount determined in accordance with the Agreement (sometimes referred to as the “Committee-determined Award Date”); or (2) if a Change of Control has occurred and
Grantee is deemed to have been awarded a Final Award pursuant to Section 6, the Award Date will be the date the Change of Control occurs (sometimes referred to as the “Change-of-Control-determined Award Date”).
14.6 “Benchmark Performance Index” has the meaning set forth in Section 3.3.
14.7 “Board” means the Board of Directors of PNC.
14.8 “Calculated Maximum Potential Payout Amount” means the maximum size of the award, denominated as a specified number
of Share Units, that the Compensation Committee may award to Grantee based on the degree to which the specified corporate Performance Criteria have been achieved by the A&L Unit, the application of the applicable Annual Potential Payout
Calculation Schedule established by the Compensation Committee to such performance results, and on Grantee’s level of satisfaction, or deemed satisfaction, of the service requirements and conduct provisions set forth in Section 4,
including any limitations on the maximum potential payout amount that may apply in the circumstances (e.g., in the case of a qualifying Retirement).
14.9 “Cause.”
(a) “Cause” on or after the occurrence of a Change of Control or for purposes of the definition of an Anticipatory
Termination.
If a termination of Grantee’s employment with the Corporation occurs on or within three (3) years
after the occurrence of a Change of Control, then “Cause” means:
(i) the willful and continued failure of Grantee
to substantially perform Grantee’s 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 Grantee’s duties; or
(ii) the willful engaging by Grantee in illegal conduct or gross misconduct that is materially and demonstrably injurious to PNC or any of its subsidiaries.
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 Grantee’s 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 Grantee’s 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.
The cessation of employment of Grantee will be deemed to be a termination of Grantee’s 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 Grantee’s 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.
“Cause” shall also have the meaning set forth in this
Section 14.9(a) for purposes of the definition of Anticipatory Termination in Section 14.4.
(b)
“Cause” other than as provided in subsection (a).
Except as otherwise provided in Section 14.9(a),
“Cause” means:
(i) the willful and continued failure of Grantee to substantially perform Grantee’s 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 that specifically identifies the manner in which it is
believed that Grantee has not substantially performed Grantee’s duties;
(ii) a material breach by Grantee of
(1) any code of conduct of PNC or any code of conduct of a subsidiary of PNC that is applicable to Grantee or (2) other written policy of PNC or other written policy of a subsidiary of PNC that is applicable to Grantee, in either case
required by law or established to maintain compliance with applicable law;
(iii) any act of fraud, misappropriation, material
dishonesty, or embezzlement by Grantee against PNC or any of its subsidiaries or any client or customer of PNC or any of its subsidiaries;
(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
(v) entry of any order
against Grantee, by any governmental body having regulatory authority with respect to the business of PNC or any of its subsidiaries, that relates to or arises out of Grantee’s employment or other service relationship with the Corporation.
The cessation of employment of Grantee will be deemed to have been a termination of Grantee’s employment with the
Corporation for Cause for purposes of the Agreement only if and when the CEO or his or her designee (or, if Grantee is the CEO, the Board) 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 Grantee’s employment with the Corporation will be deemed to have been for Cause.
14.10 “CEO” means the chief executive officer of PNC.
14.11 “Change of Control” means:
(a) Any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”)
becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then-outstanding shares of common stock of PNC (the “Outstanding PNC Common Stock”) or (B) the
combined voting power of the then-outstanding voting securities of PNC entitled to vote generally in the election of directors (the “Outstanding PNC Voting Securities”); provided, however, that, for purposes of this
Section 14.11(a), the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from PNC, (2) any acquisition by PNC, (3) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by PNC or any company controlled by, controlling or under common control with PNC (an “Affiliated Company”), (4) any acquisition pursuant to an Excluded Combination (as defined in Section 14.11(c)) or
(5) an acquisition of beneficial ownership representing between 20% and 40%, inclusive, of the Outstanding PNC Voting Securities or Outstanding PNC Common Stock shall not be considered a Change of Control if the Incumbent Board as of
immediately prior to any such acquisition approves such acquisition either prior to or immediately after its occurrence;
(b)
Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board (excluding any Board seat that is vacant or otherwise unoccupied); provided,
however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by PNC’s shareholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent
Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;
(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar transaction involving PNC or any of its subsidiaries, a sale or other disposition of all or substantially
all of the assets of PNC, or the acquisition of assets or stock of another entity by PNC or any of its subsidiaries (each, a “Business Combination”), excluding, however, a Business Combination following which all or substantially all of
the individuals and entities that were the beneficial owners of the Outstanding PNC Common Stock and the Outstanding PNC Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the
then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors (or, for a non-corporate
entity, equivalent governing body), as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns PNC or all or substantially all of PNC’s assets
either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding PNC Common Stock and the Outstanding PNC Voting Securities, as the case may
be (such a Business Combination, an “Excluded Combination”); or
(d) Approval by the shareholders of PNC of a
complete liquidation or dissolution of PNC.
14.12 “Change of Control Coverage Period” means a period
commencing on the occurrence of a Change of Control Triggering Event and ending upon the earlier to occur of (a) the date of a Change of Control Failure and (b) the date of a Change of Control.
After the termination of any Change of Control Coverage Period, another Change of Control Coverage Period will commence upon the
occurrence of another Change of Control Triggering Event.
For purposes of this Agreement, “Change of Control Triggering
Event” shall mean the occurrence of either of the following: (i) the Board or PNC’s shareholders approve a transaction described in subsection (c) of the definition of Change of Control contained in Section 14.11; or
(ii) the commencement of a proxy contest in which any Person seeks to replace or remove a majority of the members of the Board.
For purposes of this Agreement, “Change of Control Failure” shall mean: (x) with respect to a Change of Control Triggering Event described in clause (i) of the definition above,
PNC’s shareholders vote against the transaction approved by the Board or the agreement to consummate the transaction is terminated; or (y) with respect to a Change of Control Triggering Event described in clause (ii) of the definition
above, the proxy contest fails to replace or remove a majority of the members of the Board.
14.13 “Change of Control
Payout Percentage” has the meaning set forth in Section 6.1(a)(iv).
14.14 “Compensation
Committee” or “Committee” means the Personnel and Compensation Committee of the Board, or such person or persons as may be designated or appointed by that committee as its delegate or designee.
14.15 “Competitive Activity” means 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 of its subsidiaries (a) engaged in business activities similar to some or all of the business activities of PNC or any subsidiary as of Grantee’s
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 Grantee’s Termination Date or, if later and if applicable, after the date
specified in clause (ii) of Section 14.19(a), 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.
14.16 “Consolidated Subsidiary” means a corporation, bank, partnership,
business trust, limited liability company or other form of business organization that (1) is a consolidated subsidiary of PNC under generally accepted accounting principles and (2) satisfies the definition of “service recipient”
under Section 409A.
14.16.1 “Corporate Performance Factor” has the meaning set forth in
Section 14.23.
14.17 “Corporation” means PNC and its Consolidated Subsidiaries.
14.18 “Covered annual performance period” or “covered annual performance measurement period” or
“covered performance period” or “covered annual period” or “covered period” with respect to a given year means the full year or portion of the year specified in the Agreement as the period for which
A&L Unit performance is to be measured for purposes of determining an Annual Potential Payout Percentage for that given year. The covered annual performance period with respect to a given year may be
the full calendar year or the portion of the calendar year from January 1 through the quarter-end date specified by the Agreement.
14.19 “Detrimental Conduct” means:
(a) Grantee has engaged, without the prior written consent of PNC (with consent to be given at PNC’s sole
discretion), in any Competitive Activity in the continental United States at any time during the period commencing on Grantee’s Termination Date and extending through (and including) the first (1st) anniversary of the later of (i) Grantee’s
Termination Date and, if different, (ii) the first date after Grantee’s Termination Date as of which Grantee ceases to have a service relationship with the Corporation;
(b) any act of fraud, misappropriation, or embezzlement by Grantee against PNC or one of its subsidiaries or any client or customer of
PNC or one of its subsidiaries; or
(c) any conviction (including a plea of guilty or of nolo contendere) of Grantee
for, or any entry by Grantee into a pre-trial disposition with respect to, the commission of a felony that relates to or arises out of Grantee’s employment or other service relationship with the Corporation.
Grantee will be deemed to have engaged in Detrimental Conduct for purposes of the Agreement only if and when the Compensation Committee
or its delegate (if Grantee was an “executive officer” of PNC as defined in SEC Regulation S-K when he ceased to be an employee of the Corporation) or the CEO (if Grantee was not such an executive officer) determines that Grantee has
engaged in conduct described in clause (a) or clause (b) above or that an event described in clause (c) above has occurred with respect to Grantee and, if so, determines that Grantee will be deemed to have engaged in Detrimental
Conduct.
14.20 “Disabled” or “Disability” means, except as may otherwise be required by
Section 409A, that Grantee either (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12
months, receiving (and has received for at least three months) income replacement benefits under any Corporation-sponsored disability benefit plan. If Grantee has been determined to be eligible for Social Security disability benefits, Grantee shall
be presumed to be Disabled as defined herein.
14.21 “Fair Market Value” as it relates to a share of PNC
common stock as of any given date means the average of the reported high and low trading prices on the New York Stock Exchange (or such successor reporting system as PNC may select) for a share of PNC common stock on such date, or, if no PNC common
stock trades have been reported on such exchange for that day, the average of such prices on the next preceding day and the next following day for which there were reported trades.
14.22 “Final Award” means the amount, if any, (a) awarded to Grantee by the Compensation Committee in accordance
with Section 5.2, or (b) deemed to be awarded to Grantee pursuant to Section 6. The Final Award will be denominated as a specified number of awarded Share Units and will be payable in cash in accordance with Section 7.
14.23 “Final Potential Payout Percentage” or “Corporate Performance Factor.”
Section 5 Final Award Determination: Where a Final Award determination is made pursuant to the applicable subsections of
Section 5, the “Final Potential Payout Percentage” or “Corporate Performance Factor” will be the percentage that is the weighted average (but in no event greater than 200.00%) of the Annual Potential Payout
Percentages for all of the covered annual performance measurement periods in the applicable overall Performance Period, including those covered periods consisting of a full year, if any, and those, if any, consisting of a partial year (but in no
event more than three covered periods in all).
Such weighted average will be calculated as follows:
(1) the sum of one, two or three amounts, as the case may be, for the one, two or three
covered periods, as applicable, in the overall Performance Period specified in the Agreement, where the amount for a given covered period is calculated by the applicable subsection below:
(i) for any applicable full year covered annual performance period in the overall Performance Period, the amount will be the product of
(a) the Annual Potential Payout Percentage for such full year covered period and (b) four (for the four full completed quarters in any such covered period);
(ii) for any applicable partial year covered annual performance period in the overall Performance Period, the amount will be the product of (a) the Annual Potential Payout Percentage for that partial
year covered period and (b) the number of full completed quarters, if any, in such covered period;
divided by
(2) the total number of quarters in the applicable overall Performance Period.
If all of the Annual Potential Payout Percentages are 0%, then the Final Potential Payout Percentage or Corporate Performance Factor will
be 0%.
Section 6 Final Award Calculation: Where a Final Award is deemed to be awarded pursuant to Section 6
by reason of the occurrence of a Change of Control, the Final Award payout calculation will be as set forth in the applicable subsection of Section 6.
14.24 “GAAP” or “generally accepted accounting principles” means accounting principles generally accepted in the United States of America.
14.25 “Grant Date” means the Grant Date set forth on page 1 of the Agreement and is the date as of which the 2011
Performance Units are authorized to be granted by the Compensation Committee in accordance with the Plan.
14.26
“Grantee” means the person to whom the 2011 Performance Units are granted and is identified as Grantee on page 1 of the Agreement.
14.27 “Internal Revenue Code” means the Internal Revenue Code of 1986 as amended, and the rules and regulations promulgated thereunder.
14.28 “Performance Criteria” means the corporate performance standards established by the Compensation Committee as the
performance criteria for the 2011 Performance Units as set forth in Section 3.
14.29 “Performance measurement
date” has the meaning set forth in Section 5.1 or Section 6.1, as applicable, and refers to the last day of the applicable overall performance measurement period.
14.30 “Performance Period” has the meaning set forth in Section 3.2 and refers to the period during which corporate
performance will be measured against the performance standards established by the Compensation Committee in accordance with the Agreement.
14.31 “Performance Units” or “2011 Performance Units” means the Share-denominated incentive award opportunity performance units granted to Grantee in accordance with
Article 10.3 of the Plan and evidenced by the Agreement.
14.31.1 “Person” has the meaning set forth in
Section 14.11(a).
14.32 “Plan” means The PNC Financial Services Group, Inc. 2006 Incentive
Award Plan as amended from time to time.
14.33 “PNC” means The PNC Financial Services Group, Inc.
14.34 “Prorate” or “Prorated” means multiplying by a fraction, sometimes referred to as the
“proration factor,” not to exceed 1 and determined as follows.
Where the Agreement specifies
“prorating” or “prorating by quarters,” the proration factor is the fraction equal to (a) the number of full quarters in the applicable overall Performance Period, (b) divided by twelve, which is the
number of quarters in the full three year period from January 1, 2011 through December 31, 2013.
14.35
“Retiree.” Grantee is sometimes referred to as a “Retiree” if Grantee Retires, as defined in Section 14.36.
14.36 “Retires” or “Retirement.” Grantee “Retires” if his employment with the Corporation terminates at any time and for any reason (other than
termination by reason of Grantee’s death or by the Corporation for Cause and, if the Compensation Committee or the CEO so determines prior to such divestiture, other than by reason of termination in connection with a divestiture of assets or a
divestiture of one or more subsidiaries of the Corporation) on or after the first date on which Grantee has both attained at least age fifty-five (55) and completed five (5) years of service, where a year of service is determined in the
same manner as the determination of a year of vesting service calculated under the provisions of The PNC Financial Services Group, Inc. Pension Plan. If Grantee “Retires” as defined herein, the termination of Grantee’s
employment with the Corporation is sometimes referred to as “Retirement.”
14.37 “Schedule”
is defined in Section 14.2.
14.38 “SEC” means the United States Securities and Exchange Commission.
14.39 “Section 409A” means Section 409A of the Internal Revenue Code.
14.40 “Service relationship” or “having a service relationship with the Corporation” means being
engaged by the Corporation in any capacity for which Grantee receives compensation from the Corporation, including but not limited to acting for compensation as an employee, consultant, independent contractor, officer, director or advisory director.
14.41 “Share” means a share of PNC common stock.
14.42 “Target Share Units” means the number of Share Units specified on page 1 of the Agreement as Target Share
Units, subject to capital adjustments pursuant to Section 8 if any.
14.43 “Termination Date” means
Grantee’s last date of employment with the Corporation. If Grantee is employed by a Consolidated Subsidiary that ceases to be a subsidiary of PNC or ceases to be a consolidated subsidiary of PNC under generally accepted accounting principles
and Grantee does not continue to be employed by PNC or a Consolidated Subsidiary, then for purposes of the Agreement, Grantee’s employment with the Corporation terminates effective at the time this occurs.
15. Grantee Covenants.
15.1 General. Grantee and PNC acknowledge and agree that Grantee has received adequate consideration with respect to enforcement of the provisions of Sections 15 and 16 by virtue of receiving
the 2011 Performance Units (regardless of whether a Final Award is ultimately determined and paid or of the size of such Final Award, if any); that such provisions are reasonable and properly required for the adequate protection of the business of
PNC and its subsidiaries; and that enforcement of such provisions will not prevent Grantee from earning a living.
15.2 Non-Solicitation; No-Hire. Grantee agrees to comply with the provisions of
subsections (a) and (b) of this Section 15.2 while employed by the Corporation and for a period of one year after Grantee’s Termination Date regardless of the reason for such termination of employment.
(a) Non-Solicitation. Grantee shall not, directly or indirectly, either for Grantee’s own benefit or purpose or for the
benefit or purpose of any Person other than PNC or any of its subsidiaries, solicit, call on, do business with, or actively interfere with PNC’s or any subsidiary’s 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.
(b) No-Hire. Grantee shall not, directly or indirectly, either for Grantee’s own benefit or purpose or for the benefit or
purpose of any Person other than PNC or any of its subsidiaries, employ or offer to employ, call on, or actively interfere with PNC’s or any subsidiary’s relationship with, or attempt to divert or entice away, any employee of PNC or any of
its subsidiaries, nor shall Grantee assist any other Person in such activities.
Notwithstanding the above, if Grantee’s
employment with the Corporation is terminated by the Corporation and such termination is an Anticipatory Termination, then commencing immediately after such Termination Date, the provisions of subsections (a) and (b) of this
Section 15.2 shall no longer apply and will be replaced with the following subsection (c):
(c) No-Hire. Grantee
agrees that Grantee shall not, for a period of one year after the Termination Date, employ or offer to employ, solicit, actively interfere with PNC’s or any PNC affiliate’s relationship with, or attempt to divert or entice away, any
officer of PNC or any PNC affiliate.
15.3 Confidentiality. During Grantee’s 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 Corporation’s 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.
15.4 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 Grantee’s 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 of its subsidiaries or (b) developed with the use of any time, material, facilities or other resources of PNC or any subsidiary
(“Developments”). Grantee agrees to assign and hereby does assign to PNC or its designee all of Grantee’s 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 PNC’s or its designee’s interests in the Developments. The obligations of this Section 15.4 shall be performed by Grantee without further
compensation and will continue beyond Grantee’s Termination Date.
16. Enforcement Provisions.
Grantee understands and agrees to the following provisions regarding enforcement of the Agreement.
16.1 Governing Law and Jurisdiction. The Agreement is governed by and construed under
the laws of the Commonwealth of Pennsylvania, without reference to its conflict of laws provisions. 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.
16.2 Equitable Remedies. A breach of the provisions of any of Sections 15.2, 15.3 or 15.4 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.
16.3 Tolling Period. If it becomes necessary or desirable for the Corporation to seek
compliance with the provisions of Section 15.2 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 the Corporation institutes legal
proceedings for injunctive or other relief.
16.4 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.
16.5 Severability. The restrictions and obligations
imposed by Sections 15.2, 15.3, 15.4, 16.1 and 16.7 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.
16.6 Reform. In the event any of Sections 15.2, 15.3 and 15.4 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.
16.7 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 15.2, 15.3 and 15.4.
16.8. Compliance with Internal Revenue Code
Section 409A. It is the intention of the parties that the 2011 Performance Units and the Agreement comply with the provisions of Section 409A to the extent, if any, that such provisions are applicable to the Agreement, and the
Agreement will be administered by PNC in a manner consistent with this intent.
If any payments or benefits hereunder may be
deemed to constitute nonconforming deferred compensation subject to taxation under the provisions of Section 409A, Grantee agrees that PNC may, without the consent of Grantee, modify the Agreement to the extent and in the manner PNC deems
necessary or advisable or take such other action or actions, including an amendment or action with retroactive effect, that PNC deems appropriate in order either to preclude any such payments or benefits from being deemed “deferred
compensation” within the meaning of Section 409A or to provide such payments or benefits in a manner that complies with the provisions of Section 409A such that they will not be taxable thereunder.
16.9 Applicable Law; Clawback. 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 applicable to Grantee, the 2011 Performance Units, and any right to
receive and retain any value pursuant to such Performance Units, shall be subject to rescission, cancellation or recoupment, in whole or in part, if and to the extent so provided under any “clawback” or similar policy of PNC in effect on
the Grant Date or that may be established thereafter and to any clawback or recoupment that may be required by applicable law.
17. Acceptance of 2011 Performance Units; PNC Right to Cancel; Effectiveness of Agreement.
If Grantee does not accept the 2011 Performance Units by executing and delivering a copy of the Agreement to PNC, without altering or
changing the terms thereof in any way, within thirty (30) days of receipt by Grantee of a copy of the Agreement, PNC may, in its sole discretion, withdraw its offer and cancel the 2011 Performance Units at any time prior to Grantee’s
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 as of the Grant Date.
IN WITNESS WHEREOF, PNC has caused the Agreement to be signed
on its behalf as of the Grant Date.
THE PNC FINANCIAL SERVICES GROUP, INC.
By:
Chairman and Chief Executive Officer
ATTEST:
By:
Corporate Secretary
ACCEPTED
AND AGREED TO by GRANTEE
SCHEDULE
* * *
ANNUAL POTENTIAL PAYOUT CALCULATION SCHEDULE
FOR
2011
PERFORMANCE UNITS
Final Award determination by the Compensation Committee pursuant to Section 5 of the 2011 Performance
Units Award Agreement (the “Agreement”) requires the calculation of the Final Potential Payout Percentage (the Corporate Performance Factor) and the Calculated Maximum Potential Payout Amount, each as defined in the Agreement. Final Award
calculation pursuant to Section 6 of the Agreement, if applicable, requires the calculation of the Change of Control Payout Percentage and the calculated final award as set forth in that section of the Agreement.
Those calculations, in turn, take into account the levels of investment performance achieved by the A&L Unit with respect to the
corporate Performance Criteria, as measured annually and expressed as the Annual Potential Payout Percentages for the applicable covered annual performance measurement periods (which may be full or partial year periods as required by the Agreement)
in the applicable overall Performance Period.
Unless and until amended prospectively by the Compensation Committee, this
Schedule will be applied in order to generate an Annual Potential Payout Percentage for each of the applicable covered annual performance measurement periods in the applicable overall Performance Period.
Section 3 of the Agreement sets forth the corporate Performance Criteria, the applicable covered performance periods and Benchmark
Performance Index for such periods, and measurement of the specified A&L Unit investment performance with respect to the corporate Performance Criteria for such periods.
Once this A&L Unit investment performance has been measured for the covered period of a given year and performance with respect to the corporate Performance Criteria for that period has been
calculated and expressed in basis points, this Schedule uses the table that follows and interpolation to generate an Annual Potential Payout Percentage (ranging from 0% up through a maximum of 200.00%) for that given year based on such covered
period performance.
Percentages are interpolated for performance between the points indicated on the table and are rounded to
the nearest one-hundredth, with 0.005% being rounded upward to 0.01%. In no event will an Annual Potential Payout Percentage be greater than 200.00% or less than 0.00%.
The table used for this Schedule, as established by the Compensation Committee at the time it authorized the 2011 Performance Units, follows.
|
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| Measured A&L Unit Investment
Performance Relative to Benchmark Performance Index (in basis
points) |
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Annual Potential Payout
Percentage |
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| +40 basis points or higher |
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200% |
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| +20 basis points |
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150% |
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| 0 basis points
(at benchmark)
to
-25 basis points |
|
100% |
|
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| -35 basis points |
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40% |
|
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| -40 basis points or below |
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0% |
Compensation Committee Negative Discretion. Once the annual potential payout percentage for A&L Unit investment performance
achieved for the given full year or partial-year covered annual performance period with respect to the corporate Performance Criteria has been determined using the table above, including interpolation where required, the Compensation Committee may
decide, in its discretion, to reduce that percentage (as long as such decision is not made during a Change of Control Coverage Period, as defined in the Agreement, or after the occurrence of a Change of Control) but may not increase it.
THE PNC FINANCIAL SERVICES GROUP, INC.
2006 INCENTIVE AWARD PLAN
* * *
2010 SPECIAL ACHIEVEMENT PERFORMANCE-BASED
RESTRICTED SHARE UNITS AWARD AGREEMENT
* * *
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| GRANTEE: |
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[ Name ] |
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| AWARD GRANT DATE: |
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February 9, 2011 |
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| TARGET SHARE UNITS: |
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[ number of share units.] |
1. Definitions.
Certain terms used in this 2010 Special Achievement Performance-Based Restricted Share Units Award Agreement (the “Agreement”)
are defined in Annex A (which is incorporated herein as part of the Agreement) or elsewhere in the Agreement, and such definitions will apply except where the context otherwise indicates.
In the Agreement, “PNC” means The PNC Financial Services Group, Inc., “Corporation” means PNC and its Consolidated
Subsidiaries, and “Plan” means The PNC Financial Services Group, Inc. 2006 Incentive Award Plan.
2. Performance
RSUs with Dividend Equivalents.
Pursuant to the Plan and subject to the terms and conditions of the Agreement, PNC grants
to the Grantee named above (“Grantee”) a Share-denominated award opportunity of performance-based restricted share units (“Performance RSUs”), with the number of target share units set forth above, together with the opportunity
to receive Dividend Equivalents (“Dividend Equivalents”) with respect to those share units (together, the “Performance-Based Award”). The Performance-Based Award is subject to acceptance by Grantee in accordance with
Section 18.
The Performance RSUs and related Dividend Equivalents are divided into four installments or tranches and are
subject to the terms and conditions of this Agreement and to the Plan. These include (1) specified vesting conditions for each tranche that relate to a service requirement and to performance criteria based on compliance with tier 1 capital
ratios required for well-capitalized institutions as established by PNC’s regulators and (2) final award payout size adjustment, upward or downward within specified limits, for each tranche based on specified performance criteria that
relate to one-year total shareholder return.
The four Performance RSUs and related Dividend Equivalents “Tranches”
are set forth below:
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• |
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25% of the target number of Share Units (rounded down to the nearest whole share) are in the first tranche and will relate to 2011 performance
(“2011 Tranche” or “1st Tranche”);
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• |
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another 25% of the target number of Share Units (rounded down to the nearest whole share) are in the second tranche and will relate to 2012 performance
(“2012 Tranche” or “2nd Tranche”);
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• |
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another 25% of the target number of Share Units (rounded down to the nearest whole share) are in the third tranche and will relate to 2013 performance
(“2013 Tranche” or “3rd Tranche”); and
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• |
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the remaining 25% of the target number of Share Units are in the fourth tranche and will relate to 2014 performance (“2014 Tranche” or
“4th Tranche”); |
Provided that a Performance RSUs’ tranche vests in accordance with the terms of Section 5 and is not forfeited pursuant to
Section 4, the size of the payout award amount for the Performance RSUs in that tranche will be based on the target number of share units in the tranche as adjusted upward or downward, if applicable, in accordance with the performance
adjustment provisions of Section 6, and will be settled and paid, generally in shares of PNC common stock, pursuant to and in accordance with the terms of Sections 7 and 8. Provided that a Dividend Equivalents’ tranche is not forfeited
pursuant to Section 4, the Dividend Equivalents that relate to such tranche will also vest when the related Performance RSUs in the tranche vest, the payout size for the Dividend Equivalents in the tranche will be adjusted to relate to the same
number of adjusted share units as the adjusted share units of Performance RSUs in that same tranche that are being settled, and those Dividend Equivalents will be paid out in cash at the same time as their related Performance RSUs in accordance with
the terms of Sections 7 and 8.
Performance RSUs that are forfeited by Grantee pursuant to the service or conduct provisions
of Section 4 or that expire upon failure to vest in accordance with the performance vesting conditions of Section 5 will be cancelled, together with the Dividend Equivalents that relate to those Performance RSUs, without payment of any
consideration by PNC.
Performance RSUS and Dividend Equivalents are not transferable. The Performance RSUs and Dividend
Equivalents are subject to forfeiture pursuant to the terms and conditions of the Agreement prior to vesting and settlement, and are subject to upward or downward adjustment from the target number of share units, or share units to which they relate
in the case of dividend equivalents, in accordance with Section 6.
3. Dividend Equivalents.
The Dividend Equivalents portion of a Tranche of share units represents the opportunity to receive a payout in cash of an amount equal to
the cash dividends that would have been paid, without interest or reinvestment, between the Award Grant Date and the settlement date for that Tranche on a number of shares of PNC common stock equal to the performance-adjusted number of Share Units
settled and paid out with respect to the related Performance RSUs in that same Tranche, if any, had such shares been issued and outstanding shares on the Award Grant Date and thereafter through the settlement date.
Dividend Equivalents are subject to the same service requirements, forfeiture events, performance vesting conditions, and
performance-based payout size adjustments as the Performance RSUs to which they relate as set forth in Sections 4, 5 and 6, and will not be settled and paid unless and until such related Performance RSUs vest, are settled and are paid. Vested
outstanding Dividend Equivalents will be settled and paid in accordance with Sections 7 and 8.
4. Forfeiture Upon Failure
to Meet Service Requirements; Other Forfeiture Provisions.
4.1 Service Requirements. Grantee will fail to meet the
service requirements for a given Tranche of Performance RSUs and related Dividend Equivalents in the event that Grantee does not continue to be employed by the Corporation through the earliest to occur of the following:
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(i) |
the 1st , 2nd ,
3rd , or 4th anniversary of the Award Grant Date, as the case may be, with
respect to the 1st , 2nd , 3rd , or 4th Tranche of the Performance RSUs and related Dividend Equivalents, as applicable; |
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(ii) |
the date of Grantee’s death; |
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(iii) |
Grantee’s Termination Date (as defined in Annex A) where Grantee’s employment was not terminated by the Corporation for Cause and
where either (a) Grantee’s termination |
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of employment qualifies as a Retirement (as defined in Annex A) or (b) Grantee’s employment was terminated as of such date by the Corporation by reason of Grantee’s Disability
(as defined in Annex A); and |
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(iv) |
the day immediately prior to the date a Change of Control (as defined in Annex A) occurs. |
4.2 Forfeiture of Performance-Based Award Upon Failure to Meet Service Requirements. If, at the time Grantee ceases to be employed
by the Corporation, Grantee has failed to meet the service requirements set forth in Section 4.1 with respect to one or more Tranches of Performance RSUs and related Dividend Equivalents, then all outstanding Performance RSUs that have so
failed to meet such service requirements, together with the Dividend Equivalents related to such Tranche or Tranches of Performance RSUs, will be forfeited by Grantee to PNC and cancelled without payment of any consideration by PNC as of
Grantee’s Termination Date.
4.3 Forfeiture Upon Detrimental Conduct Determination by Designated Person.
Performance RSUs and related Dividend Equivalents that would otherwise remain outstanding after Grantee’s Termination Date by reason of Section 4.1(iii) due to Grantee’s qualifying Retirement or Disability termination, if any, will be
forfeited by Grantee to PNC and cancelled without payment of any consideration by PNC in the event that, at any time prior to the date such units, if any, are settled in accordance with Section 7.5 or expire unvested pursuant to other
provisions of the Agreement, PNC by PNC’s Designated Person determines in its sole discretion that Grantee has engaged in Detrimental Conduct (each as defined in Annex A); provided, however, that no determination that Grantee has engaged
in Detrimental Conduct may be made on or after the date of Grantee’s death or on or after the date of a Change of Control.
4.4 Judicial Criminal Proceedings.
Any vesting and settlement, or settlement if vesting has already occurred, of Performance RSUs and related Dividend Equivalents that may otherwise remain outstanding after Grantee’s Termination Date
and have not yet been settled shall be automatically suspended if:
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• |
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At any time prior to the date such units are settled in accordance with Section 7.5 or expire unvested pursuant to other provisions of the
Agreement, |
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• |
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Any criminal charges are brought against Grantee, in an indictment or in other analogous formal charges commencing judicial criminal proceedings,
alleging the commission of a felony that relates to or arises out of Grantee’s employment or other service relationship with the Corporation. |
Such suspension of vesting and settlement, or settlement if vesting has already occurred, shall continue until the earliest to occur of the following:
(1) resolution of the criminal proceedings in a manner that results in a conviction (including a plea of guilty or of nolo
contendere) of Grantee for, or any entry by Grantee into a pre-trial disposition with respect to, the commission of a felony that relates to or arises out of Grantee’s employment or other service relationship with the Corporation;
(2) resolution of the criminal proceedings in one of the following ways: (i) the charges as they relate to such alleged
felony have been dismissed (with or without prejudice); (ii) Grantee has been acquitted of such alleged felony; or (iii) a criminal proceeding relating to such alleged felony has been completed without resolution (for example, as a result
of a mistrial) and the relevant time period for recommencing criminal proceedings relating to such alleged felony has expired without any such recommencement;
(3) Grantee’s death; or
(4) the occurrence of a Change of Control.
If the suspension is terminated by the occurrence of an event set forth in clause (1) above, the Performance RSUs, together with all
related Dividend Equivalents, will, upon such occurrence, be automatically forfeited by Grantee to PNC and cancelled without payment of any consideration by PNC.
If the suspension is terminated by the occurrence of an event set forth in clause (2), (3) or (4) above, vesting determinations and settlement shall proceed in accordance with
Section 5.5 and Section 7.5 as applicable.
4.5 Termination of Performance-Based Award Upon Forfeiture of
Units.
The Performance-Based Award will terminate with respect to any Tranche or Tranches, as the case may be, of
Performance RSUs and related Dividend Equivalents upon forfeiture and cancellation of such Tranche or Tranches of Performance RSUs and related Dividend Equivalents pursuant to any of the provisions of Section 4.
Upon forfeiture and cancellation of such Tranche or Tranches of Performance RSUs and related Dividend Equivalents pursuant to any of the
provisions of Section 4, neither Grantee nor any successors, heirs, assigns or legal representatives of Grantee will thereafter have any further rights or interest in the Performance RSUs or the related Dividend Equivalents evidenced by the
Agreement with respect to that Tranche or those Tranches, as applicable.
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5. |
Vesting Determinations; Expiration of Performance RSUs and Related Dividend Equivalents Upon Failure to Vest. |
5.1 Vesting Performance Conditions. Vesting of Performance RSUs and related Dividend Equivalents is subject to satisfaction or
deemed satisfaction of the vesting performance condition for the applicable Tranche or Tranches of the Performance-Based Award as set forth in the applicable subsection of this Section 5.
Provided that the applicable Tranche or Tranches of Performance RSUs and related Dividend Equivalents are still outstanding and have not
been forfeited pursuant to the service requirements or other forfeiture provisions of Section 4, vesting determinations will be made in accordance with Section 5.2, Section 5.3, Section 5.4 or Section 5.5, as applicable.
Any Tranche of the Performance-Based Award that fails to vest upon such final vesting determination and is no longer eligible
for vesting in accordance with the applicable subsection of this Section 5 will expire and terminate unvested without payment of any consideration by PNC. Performance RSUs and related Dividend Equivalents that have met the service and vesting
performance conditions of Section 4 and this Section 5 and are not forfeited pursuant to the other provisions of those Sections prior to the settlement date will be performance-adjusted, settled and paid in accordance with Sections 6, 7
and 8.
All determinations made by the Compensation Committee or by PNC’s Designated Person hereunder shall be made in
its sole discretion and shall be final, binding and conclusive for all purposes on all parties, including without limitation Grantee.
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5.2 |
Vesting Determinations in Standard Circumstances — While Grantee is Still an Employee and there has not been a Change of Control. |
Provided that Grantee is still an employee of the Corporation on the 1st , 2nd , 3rd, or 4th anniversary of the Award Grant Date, as the case may be, such that the service requirements of Section 4.1(i)
with respect to the applicable Tranche have been satisfied, and provided that a Change of Control has not occurred, then outstanding Performance RSUs and related Dividend Equivalents will vest as of the 1st , 2nd , 3rd, or 4th anniversary of the Award Grant Date, as the case may be, with respect to the 1st , 2nd , 3rd, or 4th
Tranche of the Performance RSUs and related Dividend Equivalents, as applicable, upon determination by the Compensation Committee that the vesting performance condition applicable for the Tranche
has been met.
If a Change of Control occurs prior to the scheduled vesting date for an outstanding Tranche or Tranches of
Performance RSUs and related Dividend Equivalents, vesting determinations will be made pursuant to Section 5.3.
The
Vesting Performance Condition for a Tranche will be satisfied if PNC has, as of the applicable performance measurement date for that Tranche, met or exceeded the required tier 1 capital ratio established by PNC’s primary Federal bank holding
company regulator for well-capitalized institutions as then in effect and applicable to PNC.
For purposes
of this Section 5.2, the applicable performance measurement date for a Tranche will be the year-end date immediately preceding the applicable scheduled vesting date for that Tranche (as specified in the paragraph above). For example, in order
for the 1st Tranche to vest as of the 1st anniversary of the Award Grant Date, the specified tier 1 capital
ratio must satisfy the Vesting Performance Condition as of December 31, 2011, for the 2nd Tranche, the specified tier 1 capital ratio must satisfy the Vesting Performance Condition as of December 31, 2012, etc.
The process of certification of the level of corporate achievement with respect to the vesting performance criteria will occur as soon as
practicable after the applicable performance measurement date (in the case of determinations made pursuant to this Section 5.2, after the applicable year-end date). PNC will present information to the Compensation Committee with respect to
(1) the minimum specified tier 1 capital ratio required to satisfy the applicable Vesting Performance Condition for the Tranche and (2) the applicable tier 1 capital ratio achieved by PNC with respect to the Tranche, which will be based on
PNC’s publicly reported financial results for the period ending on the applicable performance measurement date. Generally, this will be the public release of earnings results for PNC’s fourth quarter that occurs after the year-end
measurement date and prior to the vesting date for the Tranche, so that the Compensation Committee will be able to make its determination in late January or early February following the applicable performance year-end.
If the Compensation Committee determines that the applicable Vesting Performance Condition has been satisfied, the Tranche of Performance
RSUs and related Dividend Equivalents will vest as of the scheduled vesting date for that Tranche; if not, such Tranche of Performance RSUs and related Dividend Equivalents will fail to vest and will expire unvested.
5.3 Vesting Determinations in the Event of a Change of Control While an Employee.
In the event that (a) a Change of Control (as defined in Annex A) occurs prior to the time a Tranche of Performance RSUs and related
Dividend Equivalents either vests or expires unvested in accordance with one of the other subsections of this Section 5 and (b) provided that Grantee was still an employee of the Corporation on the day immediately prior to the date
the Change of Control occurs such that Grantee satisfies the service requirements of Section 4.1(iv), then:
(i) If the
Vesting Performance Condition (as described in Section 5.2) is satisfied using the quarter-end date immediately preceding the Change of Control (or, if the Change of Control occurs on a quarter-end date, using the date of the Change of Control)
as the applicable performance measurement date for the Vesting Performance Condition for all then outstanding and unvested Tranches, then any and all outstanding Tranche or Tranches, if applicable, of Performance RSUs and related Dividend
Equivalents will vest as of the date that the Change of Control occurs (i.e., the outstanding and unvested units and related dividend equivalents will vest as of the Change of Control date if PNC met or exceeded the then required tier 1
capital ratio for well-capitalized institutions as of the end of the last full quarter completed prior to or as of the date of the Change of Control); and
(ii) If the Vesting Performance Condition is not satisfied pursuant to Section 5.3(i)
above or if the applicable service requirement set forth in clause (b) of this Section 5.3 is not met, then all outstanding and unvested Tranches of Performance RSUs and related Dividend Equivalents will fail to vest and will expire
unvested as of the date the Change of Control occurs.
The process of vesting determination will occur as soon as practicable
after the Change of Control date and will be based on the comparison of (1) the applicable tier 1 capital ratio performance achieved by PNC on the quarter-end performance measurement date described above as reflected in the publicly reported
financial results for PNC for the period ending on that quarter-end date to (2) the minimum specified tier 1 capital ratio required to satisfy the Vesting Performance Condition.
In the event that Grantee was no longer an employee of the Corporation on the day immediately prior to the date of the Change of Control
but satisfied the service requirements of Section 4.1(iii) by reason of a qualifying Disability or Retirement termination of employment and one or more Tranches of Performance RSUs and related Dividend Equivalents remain outstanding and
eligible for vesting pursuant to Section 5.5 at the time the Change of Control occurs and have not been forfeited pursuant to any of the other provisions of Section 4, vesting determinations with respect to such Tranches will be made
pursuant to Section 5.5(c).
5.4 Vesting Determinations in the Event of Death While an Employee.
In the event of (a) Grantee’s death prior to the time a Tranche of the Performance RSUs and related Dividend Equivalents either
vests or expires unvested pursuant to one of the other subsections of this Section 5, and (b) provided that such Performance RSUs and related Dividend Equivalents have not been forfeited pursuant to Section 4 for any reason prior to
Grantee’s death, then:
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• |
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Provided that Grantee’s death occurred while Grantee was still an employee of the Corporation such that the service requirements of
Section 4.1(ii) were met, the Vesting Performance Conditions of this Section 5 will be deemed to have been satisfied and all then outstanding and unvested Tranches of Performance RSUs and related Dividend Equivalents will vest as of the
date of Grantee’s death. |
If, prior to Grantee’s death, Grantee ceased to be an employee of the
Corporation but satisfied the service requirement of Section 4.1(iii) by reason of a qualifying Disability or Retirement termination of employment and provided that the unvested Tranche or Tranches of Performance RSUs and related Dividend
Equivalents have not been forfeited since such termination of employment pursuant to any of the other provisions of Section 4 and were still outstanding and eligible for vesting at the time of Grantee’s death, vesting determinations for
such outstanding and unvested Tranche or Tranches will be made as set forth in Section 5.5(c).
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5.5 |
Vesting Determinations Post-Employment in the Event of Termination of Employment by Reason of Qualifying Retirement or Disability. |
(a) In the event that (1) Grantee’s employment with the Corporation was not terminated by the Corporation for Cause and either
Grantee’s termination of employment qualifies as a Retirement (as defined in Annex A) or Grantee’s employment was terminated by the Corporation by reason of Grantee’s Disability (as defined in Annex A) such that Grantee met the
service requirements of Section 4.1(iii) and (2) such termination of employment occurs prior to the time a Tranche of Performance RSUs and related Dividend Equivalents either vests or expires unvested pursuant to Section 5.2 or
Section 5.3, then:
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The service conditions for the remaining Tranche or Tranches of the Performance-Based Award are deemed to be met by reason of Section 4.1(iii),
but any Tranche of Performance RSUs and related Dividend Equivalents outstanding as of Grantee’s Retirement or other Termination Date will still be subject to forfeiture pursuant to the other provisions of Section 4 (including Sections 4.3
and 4.4) if, at any time prior to the applicable settlement date set forth in Section 7.5(a) for such Tranche, (i) the |
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Performance RSUs and related Dividend Equivalents are automatically forfeited upon resolution of judicial criminal proceedings as set forth in Section 4.4(1) or (ii) PNC by PNC’s
Designated Person determines in its sole discretion that Grantee has engaged in Detrimental Conduct and the Performance RSUs and related Dividend Equivalents are forfeited pursuant to Section 4.3; provided that no determination that
Grantee has engaged in Detrimental Conduct may be made on or after the date of Grantee’s death or on or after the date of a Change of Control. |
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• |
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Provided that the Performance RSUs and related Dividend Equivalents have not been forfeited pursuant to Section 4 and are still outstanding and
eligible for vesting at the time, the Compensation Committee will make a vesting determination with respect to each such eligible Tranche of Performance RSUs and related Dividend Equivalents at the time and in the manner that such determination
would have been made pursuant to Section 5.2 had Grantee remained an employee of the Corporation, subject to the provisions of subsections (b) and (c) of this Section 5.5 in the event of a Change of Control or death,
respectively. |
If the Compensation Committee determines that the applicable Vesting Performance Condition has
been satisfied, the Tranche of Performance RSUs and related Dividend Equivalents will vest as of the scheduled vesting date for that Tranche, subject to the forfeiture provisions of Sections 4.3 and 4.4 if applicable; if not, such Tranche of
Performance RSUs and related Dividend Equivalents will fail to vest and will expire unvested.
In the event that prior to the
applicable settlement date PNC’s Designated Person determines that Grantee has engaged in Detrimental Conduct, all of the then outstanding Performance RSUs and Dividend Equivalents will be forfeited to PNC and cancelled upon such determination
pursuant to Section 4.3. Performance RSUs and related Dividend Equivalents will also be cancelled if they are automatically forfeited pursuant to Section 4.4 prior to settlement.
If vesting has been suspended for pending judicial criminal proceedings pursuant to Section 4.4 and such
suspension had not yet been lifted by the applicable scheduled vesting date for a Tranche but is lifted thereafter pursuant to an event that does not result in the automatic forfeiture of the Performance RSUs and related Dividend Equivalents,
vesting determinations pursuant to subsection (a) of this Section 5.5 will proceed as promptly after the suspension is so lifted as practicable, but will in no event extend beyond December 31st of the calendar year in which such lifting of the suspension occurs.
If, after such lifting of the suspension, the Tranche has not been forfeited pursuant to Section 4 and the Compensation
Committee determines that the applicable Vesting Performance Condition has been satisfied, the Tranche will vest as of the later of such determination date and the regularly scheduled vesting date for the Tranche; if the Compensation Committee
determines that the applicable Vesting Performance Condition has not been satisfied, such Tranche will fail to vest and will expire unvested.
If a Change of Control occurs or Grantee dies prior to the time a vesting determination has been made with respect to one or more Tranches of Performance
RSUs and related Dividend Equivalents pursuant to this subsection (a) of Section 5.5 and the Performance RSUs and related Dividend Equivalents have not been forfeited pursuant to Section 4.3 or Section 4.4 and are still
outstanding, vesting determinations will be made pursuant to Section 5.5(b) or Section 5.5(c) as applicable.
(b)
Change of Control After a Qualifying Retirement or Termination by Reason of Disability. If a Change of Control occurs after Grantee’s qualifying Retirement or termination of employment by the Corporation by reason of Grantee’s
Disability, but before a vesting determination has been made with respect to one or more Tranches of Performance RSUs and related Dividend Equivalents as
set forth above in subsection (a) of this Section 5.5, and provided that those Tranches of Performance RSUs and related Dividend Equivalents have not been forfeited pursuant to
Section 4.3 or Section 4.4 and are still outstanding at the time the Change of Control occurs, vesting determinations will be made with respect to those Tranches pursuant to Section 5.3 as if Grantee had still been an employee of the
Corporation as of the day immediately prior to the date the Change of Control occurs.
(c) Death After a Qualifying
Retirement or Termination by Reason of Disability. If Grantee dies after Grantee’s qualifying Retirement or termination of employment by the Corporation by reason of Grantee’s Disability, but before a vesting determination has been
made with respect to one or more Tranches of Performance RSUs and related Dividend Equivalents as set forth above in subsection (a), or subsection (b) if applicable, of this Section 5.5, and provided that those Tranches of Performance RSUs
and related Dividend Equivalents have not been forfeited pursuant to Section 4.3 or Section 4.4 and are still outstanding at the time of Grantee’s death, then:
(i) If the Vesting Performance Condition (as described in Section 5.2) is satisfied using the quarter-end date immediately preceding the date of Grantee’s death (or, if such death occurred on a
quarter-end date, using the date of death) as the performance measurement date for the Vesting Performance Condition for all then outstanding and unvested Tranches, then any such outstanding Tranche (or Tranches, if applicable) of Performance RSUs
and related Dividend Equivalents will vest as of the date of Grantee’s death (i.e., the outstanding and unvested units will vest as of the date of death if PNC met or exceeded the required tier 1 capital ratio for well-capitalized
institutions as of the end of the last full quarter completed prior to or as of such date); and
(ii) If the Vesting
Performance Condition is not satisfied pursuant to Section 5.5(c)(i) above, then all such outstanding and unvested Tranches of Performance RSUs and related Dividend Equivalents will fail to vest and will expire unvested as of the date of
Grantee’s death.
The Compensation Committee will review the applicable tier 1 capital ratio
performance and make a vesting determination no later than December 31st of the calendar year in which Grantee’s death occurs or, if later, the
15th day of the 3rd calendar month following the date of Grantee’s death.
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5.6 |
Termination of Any Tranche of the Performance-Based Award that Fails to Vest or is Forfeited. |
The Performance-Based Award will terminate with respect to any Tranche or Tranches, as the case may be, of Performance RSUs and related
Dividend Equivalents, without payment of any consideration by PNC, upon forfeiture and cancellation of such Tranche or Tranches of Performance RSUs and related Dividend Equivalents (a) pursuant to the provisions of Section 4.2 upon failure
to meet the service requirements set forth in Section 4.1, (b) pursuant to the provisions of Section 4.3 upon a Detrimental Conduct determination under that Section, (c) pursuant to the automatic forfeiture provisions of
Section 4.4 on the occurrence of an event set forth in clause (1) of that Section, or (d) upon expiration for failure to vest pursuant to Section 5.2, Section 5.3 or Section 5.5.
Upon forfeiture and cancellation of such Tranche or Tranches of Performance RSUs and related Dividend Equivalents pursuant to any of the
forfeiture provisions of Section 4 or upon expiration of such Tranche or Tranches of Performance RSUs and related Dividend Equivalents pursuant to any of the provisions of Sections 5.2, 5.3 or 5.5 for failure to vest, neither Grantee nor any
successors, heirs, assigns or legal representatives of Grantee will thereafter have any further rights or interest in the Performance RSUs or the related Dividend Equivalents evidenced by the Agreement with respect to that Tranche or those Tranches,
as applicable.
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6. |
Performance Adjustment of Outstanding Vested Performance RSUs and Related Dividend Equivalents. |
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6.1 |
Performance Adjustment of Outstanding Units. |
Once a Tranche of Performance RSUs and related Dividend Equivalents has met the service and performance conditions for vesting pursuant to Sections 4 and 5, the number of Share Units in that Tranche will
be subject to performance adjustment as applicable in accordance with this Section 6 prior to settlement and payout of that portion of the Performance-Based Award in accordance with Sections 7 and 8.
The award payout on settlement for any such Tranche that has met the service and performance conditions for vesting pursuant to Sections
4 and 5 will be based on a number of Share Units (the “Payout Share Units”) determined as percentage (the “Payout Percentage”) of the target Share Units in the Tranche, rounded to the nearest one-hundredth with 0.005 Share Units
being rounded upward to 0.01 Share Units. If a Tranche does not vest pursuant to one of the subsections of Section 5 or is forfeited prior to settlement pursuant to Section 4.3 or Section 4.4, if applicable, it will not remain
outstanding and does not pay out at all.
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6.2 |
Payout Percentage in Standard Circumstances While Grantee is an Employee or after a Qualifying Disability or Retirement Termination of Employment.
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For any Tranche of Performance RSUs and related Dividend Equivalents that vested pursuant to Section 5.2 or
Section 5.5(a), the target number of Share Units in the Tranche will be performance adjusted by using a Payout Percentage that is adjusted upward or downward from 100% by up to 25 percentage points based on the “Payout Performance
Criteria” described below.
For purposes of the Payout Performance Criteria, each Tranche relates to
a given calendar year: the 1st Tranche (the one with a
scheduled vesting date of the 1st anniversary of the Award
Grant Date in February 2012) relates to 2011 and is sometimes referred to as the “2011 Tranche”; the
2nd Tranche relates in the same way to 2012 and is
sometimes referred to as the “2012 Tranche”; etc. A Tranche that vests pursuant to Section 5.2 or Section 5.5(a) will vest on its scheduled vesting date.
The payout performance metric for the Payout Performance Criteria is total shareholder return for the year that relates to the given
Tranche. For purposes of this measurement, total shareholder return performance (“TSR Performance”) will mean the total shareholder return (i.e., price change plus reinvestment of dividends) on PNC common stock for the applicable
calendar year assuming an investment on the first day of the year is held through the last day of the applicable year and using, as the beginning and ending prices for purposes of that calculation, the closing price on the last trading day of the
preceding year and on the last trading day of the applicable year, respectively. TSR Performance will be calculated to two places to the right of the decimal, rounded to the nearest one-hundredth with 0.005 being rounded upward to 0.01.
The Payout Percentage for a Tranche that vests pursuant to Section 5.2 or Section 5.5(a) will be 100% plus or minus (as
applicable) the positive or negative TSR Performance of PNC for the year that relates to that Tranche up to a maximum of 25 percentage points either direction, such that the Payout Percentage will be no less than 75.00% and no more than
125.00%.
Thus, the number of Payout Share Units for a Tranche of Performance RSUs and related Dividend Equivalents that
vested pursuant to Section 5.2 or Section 5.5(a) and is not forfeited prior to settlement pursuant to Section 4 will be the Payout Percentage of the number of target Share Units in the Tranche, rounded to the nearest one-hundredth
with 0.005 Share Units being rounded upward to 0.01 Share Units). The portion of the Share Units in a Tranche that do not become Payout Share Units will be cancelled; that is, only the number of target share units that become Payout Share Units as a
result of the Payout
Performance Criteria adjustment will be eligible to be the basis of the settlement and payout of the Performance RSUs and related Dividend Equivalents in the Tranche in accordance with Sections 7
and 8.
For example, if PNC’s TSR Performance for 2012 is 10.16% and the 2012 Tranche vests pursuant
to Section 5.2 (i.e., Grantee is still an employee of the Corporation and meets the service requirement as of the 2nd anniversary of the Award Grant Date in February 2013 and PNC’s tier 1 capital ratio as of December 31, 2012
meets or exceeds the tier 1 capital ratio then required by PNC’s primary Federal bank holding company regulator for a well-capitalized institution), then the Payout Percentage would be 110.16%. Using this Payout Percentage of 110.16%, the award
payout for the 2012 Tranche of Performance RSUs and related Dividend Equivalents in this example would be based on a number of Payout Share Units calculated as 110.16% of the target number of Share Units in that Tranche, rounded to the nearest
one-hundredth, and would be settled and paid out in accordance with Sections 7 and 8, generally in February 2013.
If, in the
same example, PNC’s TSR Performance for 2012 were negative 10.16%, the Payout Percentage would be 89.84% and the award payout for the 2012 Tranche of Performance RSUs and related Dividend Equivalents would be based on a number of Payout Share
Units calculated as 89.84% of the target number of Share Units in that Tranche, rounded to the nearest one-hundredth. The remaining portion of the target Share Units in the Tranche in this example would not be eligible to be the basis for settlement
and payout.
6.3 Payout Percentage After a Change of Control or Death.
The Payout Percentage will be 100% for any Tranche of Performance RSUs and related Dividend Equivalents that vested pursuant to
Section 5.3, Section 5.4, Section 5.5(b), or Section 5.5(c). Thus the number of Payout Share Units for a Tranche of outstanding Performance RSUs and related Dividend Equivalents that vested pursuant to one of those sections would
be calculated as 100% of the target number of Share Units in that Tranche, rounded to the nearest one-hundredth Share Unit if the tranche is not in whole units (e.g., if a capital adjustment pursuant to Section 10 resulted in a
fractional share unit in the tranche).
7. Settlement Date.
7.1 Settlement of Outstanding Units. Performance RSUs and related Dividend Equivalents that (i) have been forfeited by Grantee
pursuant to the service requirements or conduct provisions of Section 4 or (ii) have expired unvested and terminated pursuant to the applicable provisions of Section 5 as having failed to vest and no longer being eligible for vesting,
will not settle and will be cancelled without payment of any consideration by PNC.
Performance RSUs and related Dividend
Equivalents that have vested pursuant to one of the subsections of Section 5 (Section 5.2, 5.3, 5.4, 5.5(a), 5.5(b) or 5.5(c), as applicable) and that have not been forfeited prior to their settlement date pursuant to Section 4.3 or
Section 4.4, if applicable, will be performance-adjusted, as applicable, as to the number of Share Units that will be the basis for payout on settlement (that is, the Payout Share Units for such Tranche of Performance RSUs and related Dividend
Equivalents determined in accordance with the provisions of Section 6), and such Tranche of Performance RSUs and related Dividend Equivalents will be settled and paid out with respect to those Payout Share Units in accordance with the
applicable provisions of Sections 7 and 8.
The applicable settlement date for a Tranche of Performance RSUs and related
Dividend Equivalents (“Settlement Date”) is determined by Section 7.2, 7.3, 7.4, 7.5(a), 7.5(b) or 7.5(c), based on the subsection of Section 5 that was applied in vesting the Performance RSUs and related Dividend Equivalents in
such Tranche. Section 8 provides for the payout of such outstanding vested, performance-adjusted Performance RSUs and related Dividend Equivalents.
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7.2 |
Settlement Date Where Vesting Determination is Made in Standard Circumstances Pursuant to Section 5.2 (While Grantee is Still an Employee and there has not been
a Change of Control). |
Where Grantee was still an employee of the Corporation on the applicable anniversary
of the Award Grant Date and the outstanding Tranche of Performance RSUs and related Dividend Equivalents has satisfied the applicable vesting performance condition and vested pursuant to Section 5.2, the Settlement Date with respect to any such
Tranche of Performance RSUs and related Dividend Equivalents will be the date as of which the Tranche vests, which will be:
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the scheduled vesting date for that Tranche (that is, as of the 1st , 2nd , 3rd, or 4th anniversary of the Award Grant Date, as the case may be, with respect to the 1st , 2nd , 3rd, or 4th Tranche, as applicable). |
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7.3 |
Settlement Date Where Vesting Determination is Made Upon the Occurrence of a Change of Control While Grantee is an Employee Pursuant to Section 5.3.
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Where a Change of Control has occurred, Grantee was still an employee of the Corporation on the day immediately
prior to the date the Change of Control occurred, and the remaining outstanding Tranches of Performance RSUs and related Dividend Equivalents have satisfied the applicable vesting performance condition and vested pursuant to Section 5.3:
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The Settlement Date with respect to any such Tranche or Tranches of Performance RSUs and related Dividend Equivalents will be the date of the Change of
Control, but only if the Change of Control is a permissible payment event under Section 409A of the Internal Revenue Code and any regulations, revenues procedures of revenue rulings issued by the Secretary of the United States Treasury
applicable to such Section 409A; and |
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If the Change of Control is not a permissible payment event under such Section 409A, the Settlement Date with respect to any such Tranche
will be the anniversary of the Award Grant Date that would have been the scheduled vesting date for such Tranche had the Tranche vested pursuant to Section 5.2 rather than pursuant to Section 5.3. |
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7.4 |
Settlement Date Where Vesting Occurred Pursuant to Section 5.4 upon Grantee’s Death While an Employee. |
In the event that the remaining outstanding Tranches of Performance RSUs and related Dividend Equivalents have vested pursuant to
Section 5.4 upon Grantee’s death while Grantee was still an employee of the Corporation:
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The Settlement Date with respect to any such Tranche or Tranches of Performance RSUs and related Dividend Equivalents will be the date of
Grantee’s death. |
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7.5 |
Settlement Date Where Vesting Occurred Post-Employment Pursuant to Section 5.5 Following Qualifying Disability or Retirement Termination.
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(a) Where the Tranche of Performance RSUs and related Dividend Equivalents has satisfied the applicable vesting
performance condition and vested pursuant to Section 5.5(a) and provided that the Tranche is not forfeited prior to settlement pursuant to the conduct provisions of Section 4.3 or Section 4.4, if applicable, the Settlement Date with
respect to any such Tranche of Performance RSUs and related Dividend Equivalents will be:
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• |
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the scheduled vesting date for that Tranche (that is, as of the 1st , 2nd , 3rd, or 4th anniversary of the Award Grant Date, as the case may be, with respect to the 1st , 2nd , 3rd, or 4th Tranche, as |
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applicable) provided that there either (i) has been no suspension of vesting and/or settlement of such Tranche pursuant to Section 4.4 or (ii) if there had been a suspension
of vesting and/or settlement pursuant to that section, such suspension was lifted pursuant to the occurrence of an event that did not result in the forfeiture of the Tranche and such lifting occurred prior to the scheduled vesting date for that
Tranche; or |
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if there had been a suspension of vesting and/or settlement of such Tranche imposed pursuant to Section 4.4 and such suspension was lifted
pursuant to the occurrence of an event that did not result in the forfeiture of the Tranche but the lifting of the suspension occurred after the scheduled vesting date for such Tranche, then the Settlement Date would be such later date as of which
the Tranche has both vested pursuant to Section 5.5(a) and any suspension of settlement imposed pursuant to Section 4.4 has been lifted. |
(b) Change of Control After a Qualifying Retirement or Termination by Reason of Disability. Where the remaining Tranche or Tranches of Performance RSUs and related Dividend Equivalents were
outstanding and had not been forfeited pursuant to Section 4 prior to the occurrence of the Change of Control, and such Tranche or Tranches have satisfied the applicable vesting performance condition and vested as of the Change in Control date
pursuant to Section 5.5(b):
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The Settlement Date with respect to any such Tranche or Tranches of Performance RSUs and related Dividend Equivalents will be the date of the Change of
Control, but only if the Change of Control is a permissible payment event under Section 409A of the Internal Revenue Code and any regulations, revenues procedures of revenue rulings issued by the Secretary of the United States Treasury
applicable to such Section 409A; and |
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If the Change of Control is not a permissible payment event under such Section 409A, the Settlement Date with respect to any such Tranche
will be the anniversary of the Award Grant Date that would have been the scheduled vesting date for such Tranche had the Tranche vested pursuant to Section 5.5(a) rather than pursuant to Section 5.5(b). |
(c) Death After a Qualifying Retirement or Termination by Reason of Disability. Where the remaining Tranche or Tranches of
Performance RSUs and related Dividend Equivalents were outstanding and had not been forfeited pursuant to Section 4 prior to Grantee’s death, and such Tranche or Tranches have satisfied the applicable vesting performance condition and
vested as of the date of Grantee’s death pursuant to Section 5.5(c):
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The Settlement Date with respect to any such Tranche or Tranches of Performance RSUs and related Dividend Equivalents will be the date of
Grantee’s death. |
8. Settlement Payout.
8.1 Settlement of Outstanding Units. Performance RSUs and related Dividend Equivalents that (i) have been forfeited by Grantee
pursuant to the service requirements or conduct provisions of Section 4 or (ii) have expired unvested and terminated pursuant to the applicable provisions of Section 5 as having failed to vest and no longer being eligible for vesting,
will not settle and will be cancelled without payment of any consideration by PNC.
Performance RSUs and related Dividend
Equivalents that have vested pursuant to one of the subsections of Section 5 (Section 5.2, 5.3, 5.4, 5.5(a), 5.5(b) or 5.5(c), as applicable) and that have not been forfeited pursuant to Section 4.3 or Section 4.4, if applicable,
prior to their Settlement Date as determined in accordance with the applicable subsection of Section 7 will be paid out with respect to the Payout Share Units determined in accordance with the provisions of Section 6 at the time and in the
form set forth in the applicable subsection of this Section 8.
8.2 Settlement of Outstanding Units where there has not been a Change of Control.
(a) Timing. With respect to a Tranche or Tranches of Performance RSUs and related Dividend Equivalents that have a
Settlement Date determined in accordance with Section 7.2, 7.4, 7.5(a) or 7.5(c), as the case may be, and have not been forfeited pursuant to Section 4.3 or Section 4.4 prior to settlement, payment will be made as follows:
Payment will be made to Grantee by PNC with respect to any such Tranche as soon as practicable following the
applicable Settlement Date set forth in the applicable subsection of Section 7, generally within 30 days, but no later than December 31st of the calendar year in which the settlement date occurs; provided, however, that:
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If the Tranche of Performance RSUs and related Dividend Equivalents vested pursuant to Section 5.4 upon Grantee’s death while an employee of
the Corporation or was vested post-employment and after Grantee’s death pursuant to a Compensation Committee determination that the applicable vesting performance condition had been met in accordance with Section 5.5(c), payment will be
made no later than December 31st of the calendar year
in which Grantee’s death occurred or, if later, the
15th day of the 3rd calendar month following the date of Grantee’s death; and
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Where the Settlement Date occurs pursuant to Section 7.5(a) following the lifting of a suspension imposed pursuant to Section 4.4, payment
will be made no later than December 31st of the
calendar year in which the Settlement Date occurs. |
(b) Form of Payment. Except as otherwise set
forth in Section 10, if applicable, such payment with respect to a given Tranche of Performance RSUs and related Dividend Equivalents will be made at the applicable time set forth above by delivery to Grantee or his or her representative as
follows:
With respect to the Performance RSUs portion of the Tranche, settlement of the number of Payout Share Units
determined in accordance with Section 6 for the Tranche being settled will be made by delivery of that number of whole Shares of PNC common stock equal to the number of whole Payout Share Units and by cash for any fractional Payout Share Unit
as set forth in Section 8.4, or as otherwise determined pursuant to Section 10 if applicable.
With respect to the
related Dividend Equivalents portion of the Tranche, settlement will be made by payment of cash in an amount equivalent to the amount of the cash dividends Grantee would have received, without interest on or reinvestment of such amounts, had
Grantee been the record holder of a number of issued and outstanding Shares of PNC common stock equal to the number of Payout Share Units for that Tranche for the period beginning on the Award Grant Date and through the Settlement Date for such
Tranche, subject to adjustment if any pursuant to Section 10.
(c) Disputes. If there is a dispute regarding
payment of a final award, PNC will settle the undisputed portion of the award, if any, within the time frame set forth above in this Section 8.2, and will settle any remaining portion as soon as practicable after such dispute is finally
resolved but in any event within the time period permitted under Section 409A of the Internal Revenue Code.
8.3
Settlement of Outstanding Units after a Change of Control.
(a) Timing. With respect to a Tranche or Tranches of
Performance RSUs and related Dividend Equivalents that have satisfied the applicable performance condition and vested pursuant to Section 5.3 or Section 5.5(b) and have a Settlement Date determined in accordance with Section 7.3 or
7.5(b), as the case may be, and have not been forfeited pursuant to Section 4.3 or Section 4.4 prior to the occurrence of the Change of Control, payment will be made as follows:
Payment will be made to Grantee by PNC with respect to any such Tranche at the time set
forth in subsection (a)(1) of this Section 8.3 unless payment at such time would be a noncompliant payment under Section 409A of the Internal Revenue Code, and otherwise, at the time set forth in subsection (a)(2) of this Section 8.3,
in either case as further described below.
(1) If, under the circumstances, the Change of Control is a
permissible payment event under Section 409A of the Internal Revenue Code, payment of any such outstanding Tranche that satisfied the performance vesting criteria pursuant to Section 5.3 or 5.5(b) and has a Settlement Date in accordance
with Section 7.3 or 7.5(b), as the case may be, will be made as soon as practicable after the date that the data was available and the determination made that such Tranche has vested in accordance with Section 5.3 or 5.5(b), as applicable,
but in no event later than December 31st of the
calendar year in which the Change of Control occurs or, if later, by the 15th day of the third calendar month following the date on which the Change of Control occurs, other than in unusual circumstances where a further delay thereafter would be permitted under Section 409A
of the Internal Revenue Code, and if such a delay is permissible, as soon as practicable within such limits.
(2) If, under the circumstances, payment at the time of the Change of Control would not comply with Section 409A of the Internal Revenue Code, then payment will be made with respect to each Tranche
of Performance RSUs and related Dividend Equivalents being settled as soon as practicable after the anniversary of the Award Grant Date that would have been the scheduled vesting date for such Tranche had the Tranche vested pursuant to
Section 5.2 rather than Section 5.3 or pursuant to Section 5.5(a) rather than Section 5.5(b), as the case may be, but in no event later than December 31st of the year in which such scheduled vesting date occurs.
(b) Form of Payment.
(1) If, under the circumstances, the Change of Control is a permissible payment event under Section 409A of the Internal Revenue Code and payment with respect to a Tranche or Tranches of Performance
RSUs and related Dividend Equivalents is made at the time specified in Section 8.3(a)(1), then payment with respect to any such Tranche will be in an amount equal to the base amounts for the Performance RSUs and the Dividend Equivalents as
described below in subsection (2)(A) of Section 8.3(b).
Payment of this amount will be made entirely in cash if so
provided in the circumstances pursuant to Section 10.2(c), valued as provided in Section 10.2. Otherwise, payment of the Performance RSUs base amount will be made in the form of whole shares of PNC common stock (valued at Fair Market Value
or as otherwise provided in Section 10, as applicable, as of the date of the Change of Control) and cash for any fractional interest, and payment of the Dividend Equivalents base amount (valued as provided in Section 10, as applicable)
will be paid in the form of cash.
(2) If, under the circumstances, payment at the time of the Change of Control would not
comply with Section 409A of the Internal Revenue Code and payment with respect to the Tranche or Tranches of Performance RSUs and related Dividend Equivalents being settled will be made at the time or times specified in Section 8.3(a)(2),
then such payments will be made entirely in cash and the payment amount with respect to any such Tranche will be in an amount equal to (X) plus (Y), where (X) is the Performance RSUs base amount described below in subsection (A) of
this Section 8.2(b)(2) plus the phantom investment amount for the Performance RSUs base amount described below in subsection (B) of this Section 8.3(b)(2) and (Y) is the Dividend Equivalents base amount described below in
subsection (A) of this Section 8.2(b)(2) plus the phantom investment amount for the Dividend Equivalents base amount described below in subsection (B) of this Section 8.2(b)(2).
(A) Base Amounts. The Performance RSUs base amount will be an amount equal to the number of Payout Share Units determined in
accordance with Section 6 for the settled Tranche being paid multiplied by the Fair Market Value (as defined in Annex A) of a share of PNC common stock on the date of the Change of Control or by the per share value provided pursuant to
Section 10 as applicable.
The Dividend Equivalents base amount for a settled Tranche being paid will be an
amount equivalent to the amount of the cash dividends Grantee would have received, without interest on or reinvestment of such amounts, had Grantee been the record holder of a number of issued and outstanding shares of PNC common stock equal to the
number of Payout Share Units for that Tranche for the period beginning on the Award Grant Date and through the date of the Change of Control, subject to adjustment if any pursuant to Section 10.
(B) Phantom Investment Amounts. The phantom investment amount for the Performance RSUs base amount with respect to the settled
Tranche being paid will be either (i) or (ii), whichever is larger: (i) interest on the Performance RSUs base amount described in Section 8.3(b)(2)(A) from the date of the Change of Control through the payment date for that Tranche at
the short-term, mid-term or long-term Federal rate under Internal Revenue Code Section 1274(b)(2)(B), as applicable depending on the term until payment, compounded semi-annually; or (ii) a phantom investment amount with respect to said
base amount that reflects, if positive, the performance of the PNC stock or other consideration received by a PNC common shareholder in the Change of Control transaction, with dividends reinvested in such stock, from the date of the Change of
Control through the payment date for that Tranche.
The phantom investment amount for the Dividend Equivalents base
amount with respect to the settled Tranche being paid will be interest on the Dividend Equivalents base amount described in Section 8.3(b)(2)(A) from the date of the Change of Control through the payment date for that Tranche at the
short-term, mid-term or long-term Federal rate under Internal Revenue Code Section 1274(b)(2)(B), as applicable depending on the term until payment, compounded semi-annually.
PNC may, at its option, provide other phantom investment alternatives in addition to those referenced in the preceding two paragraphs of
this Section 8.3(b)(2)(B) and may permit Grantee to make a phantom investment election from among such alternatives under and in accordance with procedures established by PNC, but any such alternatives must provide for at least the two phantom
investments set forth in Section 8.3(b)(2)(B)(i) and (ii) with respect to the Performance RSUs base amount at a minimum and for at least the one phantom investment set forth in this Section 8.3(b)(2)(B) for the Dividend Equivalents
base amount at a minimum.
The phantom investment amounts will be applicable only in the event that payment at the time of the
Change of Control would not comply with Section 409A of the Internal Revenue Code and thus payment is made at the time specified in Section 7.2(a)(2) rather than at the time specified in Section 7.2(a)(1).
(c) Disputes. If there is a dispute regarding payment of a final award, PNC will settle the undisputed portion of the award, if
any, within the time frame set forth in the applicable subsection of Section 8.3(a), and will settle any remaining portion as soon as practicable after such dispute is finally resolved but in any event within the time period permitted under
Section 409A of the Internal Revenue Code.
8.4 Final Award Fully Vested. A final award, if any, will be fully
vested as of the applicable Settlement Date. Any Shares issued pursuant to this Section 8 will be fully vested at the time of issuance, and PNC will issue any such Shares and deliver any cash payable pursuant to this Section 8 to, or at
the proper direction of, Grantee or Grantee’s legal representative, as determined in good faith by the Committee, at the time specified in the applicable subsection of Section 8.2 or Section 8.3, whichever is applicable.
No fractional shares will be issued. If a final award payment is payable in Shares and includes a fractional interest, such fractional
interest will be liquidated on the basis of the then current Fair Market Value of PNC common stock, or as otherwise provided in Section 10, if applicable, and paid to Grantee or Grantee’s legal representative in cash at the time the Shares
are issued pursuant to this Section 8.
In the event that Grantee is deceased, payment will be delivered to the executor or
administrator of Grantee’s estate or to Grantee’s other legal representative, as determined in good faith by the Committee.
9. No Rights as Shareholder Until Issuance of Shares. Grantee will have no rights as a shareholder of PNC by virtue of this Performance-Based Award unless and until shares of PNC stock are issued
and delivered in settlement of vested outstanding Performance RSUs pursuant to Section 8.
10. Capital
Adjustments.
10.1 Except as otherwise provided in Section 10.2, if applicable, if corporate transactions such as
stock dividends, stock splits, spin-offs, split-offs, recapitalizations, mergers, consolidations or reorganizations of or by PNC (“Corporate Transactions”) occur prior to the time, if any, an outstanding, vested Tranche of Performance RSUs
and related Dividend Equivalents is settled and paid, the Compensation Committee shall make those adjustments, if any, in the number, class or kind of the Target Share Units that relate to any such Tranche of Performance RSUs and related Dividend
Equivalents that it deems appropriate in its discretion to reflect Corporate Transactions such that the rights of Grantee are neither enlarged nor diminished as a result of such Corporate Transactions, including without limitation (a) measuring
the value per Share Unit of any share-denominated award authorized for payment to Grantee by reference to the per share value of the consideration payable to a PNC common shareholder in connection with such Corporate Transactions, and
(b) authorizing payment of the entire value of any award amount authorized for payment to Grantee pursuant to Section 8 to be paid in cash at the time otherwise specified in Section 8.
All determinations hereunder shall be made by the Compensation Committee in its sole discretion and shall be final, binding and
conclusive for all purposes on all parties, including without limitation Grantee.
10.2 Upon the occurrence of a Change of
Control, (a) the number, class and kind of the Target Share Units that relate to any then outstanding Tranche of Performance RSUs and related Dividend Equivalents will automatically be adjusted to reflect the same changes as are made to
outstanding shares of PNC common stock generally, (b) the value per Share Unit to be used in calculating the base amount described in Section 8.3(b) of any award payment to be made to Grantee in accordance with Section 8.3 will be
measured by reference to the per share value of the consideration payable to a PNC common shareholder in connection with such Corporate Transaction or Transactions if applicable, and (c) if the effect of the Corporate Transaction or
Transactions on a PNC common shareholder is to convert that shareholder’s holdings into consideration that does not consist solely (other than as to a minimal amount) of shares of PNC common stock, then the entire value of any amounts payable
to Grantee pursuant to Section 8 will be paid solely in cash at the time otherwise specified in Section 8.
11.
Prohibitions Against Sale, Assignment, etc.; Payment to Legal Representative.
(a) Performance RSUs and related
Dividend Equivalents may not be sold, assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered.
(b) If
Grantee is deceased at the time any portion of the Performance-Based Award is settled and paid in accordance with the terms of Sections 7 and 8, such delivery of shares and/or other payment will be made to the executor or administrator of
Grantee’s estate or to Grantee’s other legal representative as determined in good faith by the Compensation Committee.
(c) Any delivery of shares or other payment made in good faith by PNC to Grantee’s executor, administrator or other legal representative shall extinguish all right to payment hereunder.
12. Withholding Taxes.
Where Grantee has not previously satisfied all applicable withholding tax obligations, PNC will, at the time any tax withholding obligation arises in connection herewith, retain an amount sufficient to
satisfy
the minimum amount of taxes then required to be withheld by the Corporation in connection therewith from any amounts then payable hereunder to Grantee. If any withholding is required prior to the
time amounts are payable to Grantee hereunder, the withholding will be taken from other compensation then payable to Grantee or as otherwise determined by PNC.
To the extent, if any, that payment of any amounts then payable to Grantee hereunder is settled in cash, the Corporation will withhold first from such cash portion of the payment of such amounts unless
the Compensation Committee determines otherwise. If the amount so withheld is not sufficient or if there is no such cash portion, the Corporation will retain whole shares of PNC common stock from any amounts payable to Grantee hereunder in the form
of Shares, until such withholdings in the aggregate are sufficient to satisfy such minimum required withholding obligations.
For purposes of this Section 12, shares of PNC common stock retained to satisfy applicable withholding tax requirements will be
valued at their Fair Market Value (as defined in Annex A) on the date the tax withholding obligation arises.
If Grantee
desires to have an additional amount withheld above the required minimum, up to Grantee’s W-4 obligation if higher, and if PNC so permits, Grantee may elect to satisfy this additional withholding by payment of cash. PNC will not retain Shares
for this purpose. If Grantee’s W-4 obligation does not exceed the required minimum withholding in connection herewith, no additional withholding may be made.
13. Employment. Neither the granting of the Performance-Based Award nor the calculation, determination and payment with respect to any vested and outstanding portion of such Performance-Based Award
authorized hereunder 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 Grantee’s
status as an employee at will.
14. Subject to the Plan and the Compensation Committee. In all respects the
Performance-Based Award 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 Performance-Based Award and the Agreement are subject to any interpretation of, and any rules and regulations issued by, the Compensation Committee or its delegate or under
the authority of the Compensation Committee, whether made or issued before or after the Award Grant Date.
15. 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 with respect to the subject matters addressed herein, and
supersedes all other discussions, negotiations, correspondence, representations, understandings and agreements between the parties concerning the subject matters hereof.
16. Grantee Covenants.
16.1 General. Grantee and PNC acknowledge
and agree that Grantee has received adequate consideration with respect to enforcement of the provisions of Sections 16 and 17 by virtue of receiving this Performance-Based Award (regardless of whether such share units or any portion thereof
ultimately vest and settle); that such provisions are reasonable and properly required for the adequate protection of the business of PNC and its subsidiaries; and that enforcement of such provisions will not prevent Grantee from earning a living.
16.2 Non-Solicitation; No-Hire. Grantee agrees to comply with the provisions of subsections (a) and (b) of
this Section 16.2 while employed by the Corporation and for a period of one year after Grantee’s Termination Date regardless of the reason for such termination of employment.
(a) Non-Solicitation. Grantee shall not, directly or indirectly, either for
Grantee’s own benefit or purpose or for the benefit or purpose of any Person other than PNC or any of its subsidiaries, solicit, call on, do business with, or actively interfere with PNC’s or any subsidiary’s 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 Grantee’s 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.
(b) No-Hire. Grantee shall not, directly or indirectly, either for Grantee’s
own benefit or purpose or for the benefit or purpose of any Person other than PNC or any of its subsidiaries, employ or offer to employ, call on, or actively interfere with PNC’s or any subsidiary’s relationship with, or attempt to divert
or entice away, any employee of PNC or any of its subsidiaries, nor shall Grantee assist any other Person in such activities.
16.3 Confidentiality. During Grantee’s 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 Corporation’s 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.
16.4 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 Grantee’s 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 of its subsidiaries or (b) developed with the use of any time, material, facilities or other resources of PNC or any subsidiary (“Developments”). Grantee agrees to assign and hereby does assign to
PNC or its designee all of Grantee’s 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 PNC’s or its designee’s interests in the Developments. The obligations of this Section 16.4 shall be performed by Grantee without further compensation and will continue beyond Grantee’s Termination Date.
17. Enforcement Provisions. Grantee understands and agrees to the following provisions regarding enforcement of the
Agreement.
17.1 Governing Law and Jurisdiction. The Agreement is governed by and construed under the laws of the
Commonwealth of Pennsylvania, without reference to its conflict of laws provisions. 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.
17.2 Equitable
Remedies. A breach of the provisions of any of Sections 16.2, 16.3 or 16.4 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.
17.3 Tolling Period. If it becomes necessary or desirable for the Corporation to seek compliance with the provisions of Section 16.2 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 the Corporation institutes legal proceedings for injunctive or other relief.
17.4 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.
17.5 Severability. The restrictions and obligations imposed by Sections 16.2, 16.3, 16.4, 17.1 and 17.7 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.
17.6 Reform. In the event any of Sections
16.2, 16.3 and 16.4 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.
17.7 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 16.2, 16.3 and 16.4.
17.8. Compliance with Internal Revenue Code Section 409A. It is the intention of the parties that the Performance-Based Award
and the Agreement comply with the provisions of Section 409A of the Internal Revenue Code to the extent, if any, that such provisions are applicable to the Agreement, and the Agreement will be administered by PNC in a manner consistent with
this intent.
If any payments or benefits hereunder may be deemed to constitute nonconforming deferred compensation subject to
taxation under the provisions of Section 409A, Grantee agrees that PNC may, without the consent of Grantee, modify the Agreement and the Performance-Based Award to the extent and in the manner PNC deems necessary or advisable or take such other
action or actions, including an amendment or action with retroactive effect, that PNC deems appropriate in order either to preclude any such payments or benefits from being deemed “deferred compensation” within the meaning of
Section 409A or to provide such payments or benefits in a manner that complies with the provisions of Section 409A such that they will not be taxable thereunder.
17.9 Applicable Law; Clawback. 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 applicable to Grantee, the Performance-Based Award, and any right to receive and retain any Shares or other value
pursuant to such Award, shall be subject to rescission, cancellation or recoupment, in whole or in part, if and to the extent so provided under any “clawback” or similar policy of PNC in effect on the Award Grant Date or that may be
established thereafter and to any clawback or recoupment that may be required by applicable law.
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18. |
Acceptance of Performance-Based Award; PNC Right to Cancel; Effectiveness of Agreement. |
If Grantee does not accept the Performance-Based Award by executing and delivering a copy of the Agreement to PNC, without altering or
changing the terms thereof in any way, within 30 days of receipt by Grantee of a copy of the Agreement, PNC may, in its sole discretion, withdraw its offer and cancel the Performance-Based Award at any time prior to Grantee’s 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 as of the Award Grant Date.
IN WITNESS WHEREOF, PNC has caused the Agreement to be signed on its behalf as of the Award Grant Date.
THE PNC FINANCIAL SERVICES GROUP, INC.
By:
Chairman and Chief Executive Officer
ATTEST:
By:
Corporate Secretary
ACCEPTED
AND AGREED TO by GRANTEE
ANNEX A
CERTAIN DEFINITIONS
* * *
A.1 “Agreement” means the 2010 Special Achievement Performance-Based Restricted Share Units Award Agreement between PNC
and Grantee evidencing the Performance RSUs and related Dividend Equivalents award opportunity granted to Grantee pursuant to the Plan.
A.2 “Award Grant Date” means the Award Grant Date set forth on page 1 of the Agreement, and is the date as of which the award opportunity of Performance RSUs and related Dividend
Equivalents (together, the “Performance-Based Award”) is authorized to be granted by the Compensation Committee in accordance with the Plan.
A.3 “Board” means the Board of Directors of PNC.
A.4
“Cause” means:
(i) the willful and continued failure of Grantee to substantially perform Grantee’s
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 that specifically identifies the manner in which
it is believed that Grantee has not substantially performed Grantee’s duties;
(ii) a material breach by Grantee of
(1) any code of conduct of PNC or any code of conduct of a subsidiary of PNC that is applicable to Grantee or (2) other written policy of PNC or other written policy of a subsidiary of PNC that is applicable to Grantee, in either case
required by law or established to maintain compliance with applicable law;
(iii) any act of fraud, misappropriation, material
dishonesty, or embezzlement by Grantee against PNC or any of its subsidiaries or any client or customer of PNC or any of its subsidiaries;
(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
(v) entry of any order against Grantee, by any governmental body having regulatory authority with respect to the business of PNC or any
of its subsidiaries, that relates to or arises out of Grantee’s employment or other service relationship with the Corporation.
The cessation of employment of Grantee will be deemed to have been a termination of Grantee’s employment with the Corporation for Cause for purposes of the Agreement only if and when the CEO or his
or her designee (or, if Grantee is the CEO, the Board) 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 Grantee’s employment with the Corporation will be deemed to have been for Cause.
A.5 “CEO” means the chief executive officer of PNC.
A.6
“Change of Control” means:
(a) Any individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either
(A) the then-outstanding shares of common stock of PNC (the “Outstanding PNC Common Stock”) or (B) the combined voting power of the then-outstanding voting securities of PNC entitled to vote generally in the election of directors
(the “Outstanding PNC Voting Securities”); provided, however, that, for purposes
of this Section A.6(a), the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from PNC, (2) any acquisition by PNC, (3) any acquisition
by any employee benefit plan (or related trust) sponsored or maintained by PNC or any company controlled by, controlling or under common control with PNC (an “Affiliated Company”), (4) any acquisition pursuant to an Excluded
Combination (as defined in Section A.6(c)) or (5) an acquisition of beneficial ownership representing between 20% and 40%, inclusive, of the Outstanding PNC Voting Securities or Outstanding PNC Common Stock shall not be considered a Change of
Control if the Incumbent Board as of immediately prior to any such acquisition approves such acquisition either prior to or immediately after its occurrence;
(b) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board (excluding any Board seat that is
vacant or otherwise unoccupied); provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by PNC’s shareholders, was approved by a vote of at least two-thirds of
the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;
(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar transaction involving PNC or any of
its subsidiaries, a sale or other disposition of all or substantially all of the assets of PNC, or the acquisition of assets or stock of another entity by PNC or any of its subsidiaries (each, a “Business Combination”), excluding, however,
a Business Combination following which all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding PNC Common Stock and the Outstanding PNC Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60% of the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of the then-outstanding voting securities
entitled to vote generally in the election of directors (or, for a non-corporate entity, equivalent governing body), as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a
result of such transaction, owns PNC or all or substantially all of PNC’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the
Outstanding PNC Common Stock and the Outstanding PNC Voting Securities, as the case may be (such a Business Combination, an “Excluded Combination”); or
(d) Approval by the shareholders of PNC of a complete liquidation or dissolution of PNC.
A.7 “Compensation Committee” means the Personnel and Compensation Committee of the Board or such person or persons as may be designated or appointed by that committee as its delegate or
designee.
A.8 “Competitive Activity” means 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 of its subsidiaries (a) engaged in business activities similar to some or all of the business activities of PNC or any subsidiary as
of Grantee’s 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 Grantee’s Termination Date or, if later and if applicable,
after the date specified in clause (ii) of Section A.12(a), 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.
A.9 “Consolidated Subsidiary” means a corporation, bank,
partnership, business trust, limited liability company or other form of business organization that (1) is a consolidated subsidiary of PNC under generally accepted accounting principles and (2) satisfies the definition of “service
recipient” under Section 409A of the Internal Revenue Code.
A.10 “Corporation” means PNC and its Consolidated Subsidiaries.
A.11 “Designated Person” will be either: (a) the Compensation Committee or its delegate, if Grantee was a member of
the Corporate Executive Group (or equivalent successor classification) or was subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to PNC securities when he or she ceased to be an employee of the Corporation;
or (b) the Chief Human Resources Officer of PNC, if Grantee is not within one of the groups specified in Section A.11(a).
A.12 “Detrimental Conduct” means:
(a) Grantee has engaged, without the prior written consent of PNC (with consent to be given at PNC’s sole
discretion), in any Competitive Activity in the continental United States at any time during the period commencing on Grantee’s Termination Date and extending through (and including) the first (1st) anniversary of the later of (i) Grantee’s
Termination Date and, if different, (ii) the first date after Grantee’s Termination Date as of which Grantee ceases to have a service relationship with the Corporation;
(b) any act of fraud, misappropriation, or embezzlement by Grantee against PNC or one of its subsidiaries or any client or customer of
PNC or one of its subsidiaries; or
(c) any conviction (including a plea of guilty or of nolo contendere) of Grantee
for, or any entry by Grantee into a pre-trial disposition with respect to, the commission of a felony that relates to or arises out of Grantee’s employment or other service relationship with the Corporation.
Grantee will be deemed to have engaged in Detrimental Conduct for purposes of the Agreement only if and when PNC, by PNC’s
Designated Person, determines that Grantee has engaged in conduct described in clause (a) or clause (b) above or that an event described in clause (c) above has occurred with respect to Grantee and, if so, determines that Grantee will
be deemed to have engaged in Detrimental Conduct.
A.13 “Disabled” or “Disability” means,
except as may otherwise be required by Section 409A of the Internal Revenue Code, that Grantee either (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that
can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can
be expected to last for a continuous period of not less than 12 months, receiving (and has received for at least three months) income replacement benefits under any Corporation-sponsored disability benefit plan. If Grantee has been determined to be
eligible for Social Security disability benefits, Grantee shall be presumed to be Disabled as defined herein.
A.14
“Dividend Equivalents” means the opportunity to receive dividend-equivalents granted to Grantee in connection with the Performance RSUs to which they relate and evidenced by the Agreement.
A.15 “Fair Market Value” as it relates to a share of PNC common stock as of any given date means the average of the
reported high and low trading prices on the New York Stock Exchange (or such successor reporting system as PNC may select) for a share of PNC common stock on such date, or, if no PNC common stock trades have been reported on such exchange for that
day, the average of such prices on the next preceding day and the next following day for which there were reported trades.
A.16 “Grantee” means the person to whom the Performance RSUs with related Dividend Equivalents award opportunity is
granted and is identified as Grantee on page 1 of the Agreement.
A.17 “Internal Revenue Code” means the
Internal Revenue Code of 1986 as amended, and the rules and regulations promulgated thereunder.
A.18 “Payout Share
Units” means the performance-adjusted number of Share Units calculated in accordance with Section 6 and eligible to be used in determining the payout amount for a Tranche of
Performance RSUs and related Dividend Equivalents that are settled and paid out in accordance with Sections 7 and 8 of the Agreement.
A.19 “Performance-Based Award” means the Performance RSUs and related Dividend Equivalents award opportunity granted to
Grantee pursuant to the Plan and evidenced by the Agreement.
A.20 “Performance measurement date” means, with
respect to the Vesting Performance Condition, the year-end or other quarter-end date specified by the applicable provisions of Section 5 of the Agreement as the date as of which the Vesting Performance Condition for a Tranche or Tranches of
Performance RSUs and related Dividend Equivalents will be measured to determine whether or not the Vesting Performance Condition for such Tranche or Tranches has been satisfied.
A.21 “Performance RSUs” means the Share-denominated award opportunity performance-based restricted share units granted
to Grantee in accordance with Article 10 of the Plan and evidenced by the Agreement.
A.22 “Plan” means
The PNC Financial Services Group, Inc. 2006 Incentive Award Plan as amended from time to time.
A.23 “PNC”
means The PNC Financial Services Group, Inc.
A.24 “Retiree.” Grantee is sometimes referred to as a
“Retiree” if Grantee Retires, as defined in Section A.25.
A.25 “Retires” or
“Retirement.” Grantee “Retires” if his or her employment with the Corporation terminates at any time and for any reason (other than termination by reason of Grantee’s death or by the Corporation for Cause and,
if the Compensation Committee or the CEO so determines prior to such divestiture, other than by reason of termination in connection with a divestiture of assets or a divestiture of one or more subsidiaries of the Corporation) on or after the first
date on which Grantee has both attained at least age fifty-five (55) and completed five (5) years of service, where a year of service is determined in the same manner as the determination of a year of vesting service calculated under the
provisions of The PNC Financial Services Group, Inc. Pension Plan.
If Grantee “Retires” as defined herein,
the termination of Grantee’s employment with the Corporation is sometimes referred to as “Retirement” and such Grantee’s Termination Date is sometimes also referred to as Grantee’s “Retirement Date.”
A.26 “Section 409A” means Section 409A of the Internal Revenue Code.
A.27 “Service relationship” or “having a service relationship with the Corporation” means being engaged
by the Corporation in any capacity for which Grantee receives compensation from the Corporation, including but not limited to acting for compensation as an employee, consultant, independent contractor, officer, director or advisory director.
A.28 “Settlement Date” has the meaning set forth in Section 7 of the Agreement.
A.29 “Share” means a share of PNC common stock.
A.30 “Target Share Units” means the number of share units specified on page 1 of the Agreement as the Target Share
Units, subject to capital adjustments pursuant to Section 10 of the Agreement if any.
A.31 “Termination
Date” means Grantee’s last date of employment with the Corporation. If Grantee is employed by a Consolidated Subsidiary that ceases to be a subsidiary of PNC or ceases to be a consolidated subsidiary of PNC under generally accepted
accounting principles and Grantee does not
continue to be employed by PNC or a Consolidated Subsidiary, then for purposes of the Agreement, Grantee’s employment with the Corporation terminates effective at the time this occurs.
A.32 “Tranche” means one of the four installments into which the Performance RSUs and related Dividend
Equivalents of the Performance-Based Award have been divided as specified in Section 2 of the Agreement.
A.33
“TSR Performance” has the meaning set forth in Section 6 of the Agreement.
A.34 “Vesting
Performance Condition.” The vesting performance condition for a Tranche or Tranches of the Performance-Based Award is set forth in the applicable subsection of Section 5 of the Agreement.
THE PNC FINANCIAL SERVICES GROUP, INC.
2006 INCENTIVE AWARD PLAN
* * *
2011 PERFORMANCE-BASED RESTRICTED SHARE UNITS
AWARD AGREEMENT
*
* *
|
|
|
|
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| GRANTEE: |
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[ Name ] |
|
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| AWARD GRANT DATE: |
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February 9, 2011 |
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| TARGET SHARE UNITS: |
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[ number of share units ] |
1. Definitions.
Certain terms used in this 2011 Performance-Based Restricted Share Units Award Agreement (the “Agreement”) are defined in Annex
A (which is incorporated herein as part of the Agreement) or elsewhere in the Agreement, and such definitions will apply except where the context otherwise indicates.
In the Agreement, “PNC” means The PNC Financial Services Group, Inc., “Corporation” means PNC and its Consolidated Subsidiaries, and “Plan” means The PNC Financial Services
Group, Inc. 2006 Incentive Award Plan.
2. Performance RSUs with Dividend Equivalents.
Pursuant to the Plan and subject to the terms and conditions of the Agreement, PNC grants to the Grantee named above (“Grantee”)
a Share-denominated award opportunity of performance-based restricted share units (“Performance RSUs”), with the number of target share units set forth above, together with the opportunity to receive Dividend Equivalents (“Dividend
Equivalents”) with respect to those share units (together, the “Performance-Based Award”). The Performance-Based Award is subject to acceptance by Grantee in accordance with Section 18.
The Performance RSUs and related Dividend Equivalents are divided into four installments or tranches and are subject to the terms and
conditions of this Agreement and to the Plan. These include (1) specified vesting conditions for each tranche that relate to a service requirement and to performance criteria based on compliance with tier 1 capital ratios required for
well-capitalized institutions as established by PNC’s regulators and (2) final award payout size adjustment, upward or downward within specified limits, for each tranche based on specified performance criteria that relate to one-year total
shareholder return.
The four Performance RSUs and related Dividend Equivalents “Tranches” are set forth below:
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• |
|
25% of the target number of Share Units (rounded down to the nearest whole share) are in the first tranche and will relate to 2011 performance
(“2011 Tranche” or “1st Tranche”);
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• |
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another 25% of the target number of Share Units (rounded down to the nearest whole share) are in the second tranche and will relate to 2012 performance
(“2012 Tranche” or “2nd Tranche”);
|
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• |
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another 25% of the target number of Share Units (rounded down to the nearest whole share) are in the third tranche and will relate to 2013 performance
(“2013 Tranche” or “3rd Tranche”); and
|
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• |
|
the remaining 25% of the target number of Share Units are in the fourth tranche and will relate to 2014 performance (“2014 Tranche” or
“4th Tranche”); |
Provided that a Performance RSUs’ tranche vests in accordance with the terms of Section 5 and is not forfeited pursuant to
Section 4, the size of the payout award amount for the Performance RSUs in that tranche will be based on the target number of share units in the tranche as adjusted upward or downward, if applicable, in accordance with the performance
adjustment provisions of Section 6, and will be settled and paid, generally in shares of PNC common stock, pursuant to and in accordance with the terms of Sections 7 and 8. Provided that a Dividend Equivalents’ tranche is not forfeited
pursuant to Section 4, the Dividend Equivalents that relate to such tranche will also vest when the related Performance RSUs in the tranche vest, the payout size for the Dividend Equivalents in the tranche will be adjusted to relate to the same
number of adjusted share units as the adjusted share units of Performance RSUs in that same tranche that are being settled, and those Dividend Equivalents will be paid out in cash at the same time as their related Performance RSUs in accordance with
the terms of Sections 7 and 8.
Performance RSUs that are forfeited by Grantee pursuant to the service or conduct provisions
of Section 4 or that expire upon failure to vest in accordance with the performance vesting conditions of Section 5 will be cancelled, together with the Dividend Equivalents that relate to those Performance RSUs, without payment of any
consideration by PNC.
Performance RSUS and Dividend Equivalents are not transferable. The Performance RSUs and Dividend
Equivalents are subject to forfeiture pursuant to the terms and conditions of the Agreement prior to vesting and settlement, and are subject to upward or downward adjustment from the target number of share units, or share units to which they relate
in the case of dividend equivalents, in accordance with Section 6.
3. Dividend Equivalents.
The Dividend Equivalents portion of a Tranche of share units represents the opportunity to receive a payout in cash of an amount equal to
the cash dividends that would have been paid, without interest or reinvestment, between the Award Grant Date and the settlement date for that Tranche on a number of shares of PNC common stock equal to the performance-adjusted number of Share Units
settled and paid out with respect to the related Performance RSUs in that same Tranche, if any, had such shares been issued and outstanding shares on the Award Grant Date and thereafter through the settlement date.
Dividend Equivalents are subject to the same service requirements, forfeiture events, performance vesting conditions, and
performance-based payout size adjustments as the Performance RSUs to which they relate as set forth in Sections 4, 5 and 6, and will not be settled and paid unless and until such related Performance RSUs vest, are settled and are paid. Vested
outstanding Dividend Equivalents will be settled and paid in accordance with Sections 7 and 8.
4. Forfeiture Upon Failure
to Meet Service Requirements; Other Forfeiture Provisions.
4.1 Service Requirements. Grantee will fail to meet the
service requirements for a given Tranche of Performance RSUs and related Dividend Equivalents in the event that Grantee does not continue to be employed by the Corporation through the earliest to occur of the following:
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(i) |
the 1st , 2nd ,
3rd , or 4th anniversary of the Award Grant Date, as the case may be, with
respect to the 1st , 2nd , 3rd , or 4th Tranche of the Performance RSUs and related Dividend Equivalents, as applicable; |
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(ii) |
the date of Grantee’s death; |
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(iii) |
Grantee’s Termination Date (as defined in Annex A) where Grantee’s employment was not terminated by the Corporation for Cause and
where either (a) Grantee’s termination of employment qualifies as a Retirement (as defined in Annex A) or (b) Grantee’s |
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employment was terminated as of such date by the Corporation by reason of Grantee’s Disability (as defined in Annex A); and |
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(iv) |
the day immediately prior to the date a Change of Control (as defined in Annex A) occurs. |
4.2 Forfeiture of Performance-Based Award Upon Failure to Meet Service Requirements. If, at the time Grantee ceases to be employed
by the Corporation, Grantee has failed to meet the service requirements set forth in Section 4.1 with respect to one or more Tranches of Performance RSUs and related Dividend Equivalents, then all outstanding Performance RSUs that have so
failed to meet such service requirements, together with the Dividend Equivalents related to such Tranche or Tranches of Performance RSUs, will be forfeited by Grantee to PNC and cancelled without payment of any consideration by PNC as of
Grantee’s Termination Date.
4.3 Forfeiture Upon Detrimental Conduct Determination by Designated Person.
Performance RSUs and related Dividend Equivalents that would otherwise remain outstanding after Grantee’s Termination Date by reason of Section 4.1(iii) due to Grantee’s qualifying Retirement or Disability termination, if any, will be
forfeited by Grantee to PNC and cancelled without payment of any consideration by PNC in the event that, at any time prior to the date such units, if any, are settled in accordance with Section 7.5 or expire unvested pursuant to other
provisions of the Agreement, PNC by PNC’s Designated Person determines in its sole discretion that Grantee has engaged in Detrimental Conduct (each as defined in Annex A); provided, however, that no determination that Grantee has engaged
in Detrimental Conduct may be made on or after the date of Grantee’s death or on or after the date of a Change of Control.
4.4 Judicial Criminal Proceedings.
Any vesting and settlement, or settlement if vesting has already occurred, of Performance RSUs and related Dividend Equivalents that may otherwise remain outstanding after Grantee’s Termination Date
and have not yet been settled shall be automatically suspended if:
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At any time prior to the date such units are settled in accordance with Section 7.5 or expire unvested pursuant to other provisions of the
Agreement, |
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Any criminal charges are brought against Grantee, in an indictment or in other analogous formal charges commencing judicial criminal proceedings,
alleging the commission of a felony that relates to or arises out of Grantee’s employment or other service relationship with the Corporation. |
Such suspension of vesting and settlement, or settlement if vesting has already occurred, shall continue until the earliest to occur of the following:
(1) resolution of the criminal proceedings in a manner that results in a conviction (including a plea of guilty or of nolo
contendere) of Grantee for, or any entry by Grantee into a pre-trial disposition with respect to, the commission of a felony that relates to or arises out of Grantee’s employment or other service relationship with the Corporation;
(2) resolution of the criminal proceedings in one of the following ways: (i) the charges as they relate to such alleged
felony have been dismissed (with or without prejudice); (ii) Grantee has been acquitted of such alleged felony; or (iii) a criminal proceeding relating to such alleged felony has been completed without resolution (for example, as a result
of a mistrial) and the relevant time period for recommencing criminal proceedings relating to such alleged felony has expired without any such recommencement;
(3) Grantee’s death; or
(4) the occurrence of a Change of Control.
If the suspension is terminated by the occurrence of an event set forth in clause (1)
above, the Performance RSUs, together with all related Dividend Equivalents, will, upon such occurrence, be automatically forfeited by Grantee to PNC and cancelled without payment of any consideration by PNC.
If the suspension is terminated by the occurrence of an event set forth in clause (2), (3) or (4) above, vesting
determinations and settlement shall proceed in accordance with Section 5.5 and Section 7.5 as applicable.
4.5
Termination of Performance-Based Award Upon Forfeiture of Units.
The Performance-Based Award will terminate with
respect to any Tranche or Tranches, as the case may be, of Performance RSUs and related Dividend Equivalents upon forfeiture and cancellation of such Tranche or Tranches of Performance RSUs and related Dividend Equivalents pursuant to any of the
provisions of Section 4.
Upon forfeiture and cancellation of such Tranche or Tranches of Performance RSUs and related
Dividend Equivalents pursuant to any of the provisions of Section 4, neither Grantee nor any successors, heirs, assigns or legal representatives of Grantee will thereafter have any further rights or interest in the Performance RSUs or the
related Dividend Equivalents evidenced by the Agreement with respect to that Tranche or those Tranches, as applicable.
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5. |
Vesting Determinations; Expiration of Performance RSUs and Related Dividend Equivalents Upon Failure to Vest. |
5.1 Vesting Performance Conditions. Vesting of Performance RSUs and related Dividend Equivalents is subject to satisfaction or
deemed satisfaction of the vesting performance condition for the applicable Tranche or Tranches of the Performance-Based Award as set forth in the applicable subsection of this Section 5.
Provided that the applicable Tranche or Tranches of Performance RSUs and related Dividend Equivalents are still outstanding and have not
been forfeited pursuant to the service requirements or other forfeiture provisions of Section 4, vesting determinations will be made in accordance with Section 5.2, Section 5.3, Section 5.4 or Section 5.5, as applicable.
Any Tranche of the Performance-Based Award that fails to vest upon such final vesting determination and is no longer eligible
for vesting in accordance with the applicable subsection of this Section 5 will expire and terminate unvested without payment of any consideration by PNC. Performance RSUs and related Dividend Equivalents that have met the service and vesting
performance conditions of Section 4 and this Section 5 and are not forfeited pursuant to the other provisions of those Sections prior to the settlement date will be performance-adjusted, settled and paid in accordance with Sections 6, 7
and 8.
All determinations made by the Compensation Committee or by PNC’s Designated Person hereunder shall be made in
its sole discretion and shall be final, binding and conclusive for all purposes on all parties, including without limitation Grantee.
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5.2 |
Vesting Determinations in Standard Circumstances — While Grantee is Still an Employee and there has not been a Change of Control. |
Provided that Grantee is still an employee of the Corporation on the 1st , 2nd , 3rd, or 4th anniversary of the Award Grant Date, as the case may be, such that the service requirements of Section 4.1(i)
with respect to the applicable Tranche have been satisfied, and provided that a Change of Control has not occurred, then outstanding Performance RSUs and related Dividend Equivalents will vest as of the 1st , 2nd , 3rd, or 4th anniversary of the Award Grant Date, as the case may be, with respect to the 1st , 2nd , 3rd, or 4th Tranche of the Performance RSUs and related Dividend Equivalents, as applicable, upon determination by
the Compensation Committee that the vesting performance condition applicable for the Tranche has been met.
If a Change of Control occurs prior to the scheduled vesting date for an outstanding Tranche or Tranches of Performance RSUs and related Dividend Equivalents, vesting determinations will be made pursuant
to Section 5.3.
The Vesting Performance Condition for a Tranche will be satisfied if PNC has, as of the applicable
performance measurement date for that Tranche, met or exceeded the required tier 1 capital ratio established by PNC’s primary Federal bank holding company regulator for well-capitalized institutions as then in effect and applicable to PNC.
For purposes of this Section 5.2, the applicable performance measurement date for a Tranche will be
the year-end date immediately preceding the applicable scheduled vesting date for that Tranche (as specified in the paragraph above). For example, in order for the 1st Tranche to vest as of the 1st anniversary of the Award Grant Date, the specified tier 1 capital ratio must satisfy the Vesting Performance Condition
as of December 31, 2011, for the 2nd Tranche, the
specified tier 1 capital ratio must satisfy the Vesting Performance Condition as of December 31, 2012, etc.
The
process of certification of the level of corporate achievement with respect to the vesting performance criteria will occur as soon as practicable after the applicable performance measurement date (in the case of determinations made pursuant to this
Section 5.2, after the applicable year-end date). PNC will present information to the Compensation Committee with respect to (1) the minimum specified tier 1 capital ratio required to satisfy the applicable Vesting Performance Condition
for the Tranche and (2) the applicable tier 1 capital ratio achieved by PNC with respect to the Tranche, which will be based on PNC’s publicly reported financial results for the period ending on the applicable performance measurement date.
Generally, this will be the public release of earnings results for PNC’s fourth quarter that occurs after the year-end measurement date and prior to the vesting date for the Tranche, so that the Compensation Committee will be able to make its
determination in late January or early February following the applicable performance year-end.
If the Compensation Committee
determines that the applicable Vesting Performance Condition has been satisfied, the Tranche of Performance RSUs and related Dividend Equivalents will vest as of the scheduled vesting date for that Tranche; if not, such Tranche of Performance RSUs
and related Dividend Equivalents will fail to vest and will expire unvested.
5.3 Vesting Determinations in the Event of a
Change of Control While an Employee.
In the event that (a) a Change of Control (as defined in Annex A) occurs prior
to the time a Tranche of Performance RSUs and related Dividend Equivalents either vests or expires unvested in accordance with one of the other subsections of this Section 5 and (b) provided that Grantee was still an employee of the
Corporation on the day immediately prior to the date the Change of Control occurs such that Grantee satisfies the service requirements of Section 4.1(iv), then:
(i) If the Vesting Performance Condition (as described in Section 5.2) is satisfied using the quarter-end date immediately preceding the Change of Control (or, if the Change of Control occurs on a
quarter-end date, using the date of the Change of Control) as the applicable performance measurement date for the Vesting Performance Condition for all then outstanding and unvested Tranches, then any and all outstanding Tranche or Tranches, if
applicable, of Performance RSUs and related Dividend Equivalents will vest as of the date that the Change of Control occurs (i.e., the outstanding and unvested units and related dividend equivalents will vest as of the Change of Control date
if PNC met or exceeded the then required tier 1 capital ratio for well-capitalized institutions as of the end of the last full quarter completed prior to or as of the date of the Change of Control); and
(ii) If the Vesting Performance Condition is not satisfied pursuant to Section 5.3(i)
above or if the applicable service requirement set forth in clause (b) of this Section 5.3 is not met, then all outstanding and unvested Tranches of Performance RSUs and related Dividend Equivalents will fail to vest and will expire
unvested as of the date the Change of Control occurs.
The process of vesting determination will occur as soon as practicable
after the Change of Control date and will be based on the comparison of (1) the applicable tier 1 capital ratio performance achieved by PNC on the quarter-end performance measurement date described above as reflected in the publicly reported
financial results for PNC for the period ending on that quarter-end date to (2) the minimum specified tier 1 capital ratio required to satisfy the Vesting Performance Condition.
In the event that Grantee was no longer an employee of the Corporation on the day immediately prior to the date of the Change of Control
but satisfied the service requirements of Section 4.1(iii) by reason of a qualifying Disability or Retirement termination of employment and one or more Tranches of Performance RSUs and related Dividend Equivalents remain outstanding and
eligible for vesting pursuant to Section 5.5 at the time the Change of Control occurs and have not been forfeited pursuant to any of the other provisions of Section 4, vesting determinations with respect to such Tranches will be made
pursuant to Section 5.5(c).
5.4 Vesting Determinations in the Event of Death While an Employee.
In the event of (a) Grantee’s death prior to the time a Tranche of the Performance RSUs and related Dividend Equivalents either
vests or expires unvested pursuant to one of the other subsections of this Section 5, and (b) provided that such Performance RSUs and related Dividend Equivalents have not been forfeited pursuant to Section 4 for any reason prior to
Grantee’s death, then:
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Provided that Grantee’s death occurred while Grantee was still an employee of the Corporation such that the service requirements of
Section 4.1(ii) were met, the Vesting Performance Conditions of this Section 5 will be deemed to have been satisfied and all then outstanding and unvested Tranches of Performance RSUs and related Dividend Equivalents will vest as of the
date of Grantee’s death. |
If, prior to Grantee’s death, Grantee ceased to be an employee of the
Corporation but satisfied the service requirement of Section 4.1(iii) by reason of a qualifying Disability or Retirement termination of employment and provided that the unvested Tranche or Tranches of Performance RSUs and related Dividend
Equivalents have not been forfeited since such termination of employment pursuant to any of the other provisions of Section 4 and were still outstanding and eligible for vesting at the time of Grantee’s death, vesting determinations for
such outstanding and unvested Tranche or Tranches will be made as set forth in Section 5.5(c).
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5.5 |
Vesting Determinations Post-Employment in the Event of Termination of Employment by Reason of Qualifying Retirement or Disability. |
(a) In the event that (1) Grantee’s employment with the Corporation was not terminated by the Corporation for Cause and either
Grantee’s termination of employment qualifies as a Retirement (as defined in Annex A) or Grantee’s employment was terminated by the Corporation by reason of Grantee’s Disability (as defined in Annex A) such that Grantee met the
service requirements of Section 4.1(iii) and (2) such termination of employment occurs prior to the time a Tranche of Performance RSUs and related Dividend Equivalents either vests or expires unvested pursuant to Section 5.2 or
Section 5.3, then:
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The service conditions for the remaining Tranche or Tranches of the Performance-Based Award are deemed to be met by reason of Section 4.1(iii),
but any Tranche of Performance RSUs and related Dividend Equivalents outstanding as of Grantee’s Retirement or other Termination Date will still be subject to forfeiture pursuant to the other provisions of Section 4 (including Sections 4.3
and 4.4) if, at any time prior to the applicable settlement date set forth in Section 7.5(a) for such Tranche, (i) the |
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Performance RSUs and related Dividend Equivalents are automatically forfeited upon resolution of judicial criminal proceedings as set forth in Section 4.4(1) or (ii) PNC by PNC’s
Designated Person determines in its sole discretion that Grantee has engaged in Detrimental Conduct and the Performance RSUs and related Dividend Equivalents are forfeited pursuant to Section 4.3; provided that no determination that
Grantee has engaged in Detrimental Conduct may be made on or after the date of Grantee’s death or on or after the date of a Change of Control. |
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Provided that the Performance RSUs and related Dividend Equivalents have not been forfeited pursuant to Section 4 and are still outstanding and
eligible for vesting at the time, the Compensation Committee will make a vesting determination with respect to each such eligible Tranche of Performance RSUs and related Dividend Equivalents at the time and in the manner that such determination
would have been made pursuant to Section 5.2 had Grantee remained an employee of the Corporation, subject to the provisions of subsections (b) and (c) of this Section 5.5 in the event of a Change of Control or death,
respectively. |
If the Compensation Committee determines that the applicable Vesting Performance Condition has
been satisfied, the Tranche of Performance RSUs and related Dividend Equivalents will vest as of the scheduled vesting date for that Tranche, subject to the forfeiture provisions of Sections 4.3 and 4.4 if applicable; if not, such Tranche of
Performance RSUs and related Dividend Equivalents will fail to vest and will expire unvested.
In the event that prior to the
applicable settlement date PNC’s Designated Person determines that Grantee has engaged in Detrimental Conduct, all of the then outstanding Performance RSUs and Dividend Equivalents will be forfeited to PNC and cancelled upon such determination
pursuant to Section 4.3. Performance RSUs and related Dividend Equivalents will also be cancelled if they are automatically forfeited pursuant to Section 4.4 prior to settlement.
If vesting has been suspended for pending judicial criminal proceedings pursuant to Section 4.4 and such
suspension had not yet been lifted by the applicable scheduled vesting date for a Tranche but is lifted thereafter pursuant to an event that does not result in the automatic forfeiture of the Performance RSUs and related Dividend Equivalents,
vesting determinations pursuant to subsection (a) of this Section 5.5 will proceed as promptly after the suspension is so lifted as practicable, but will in no event extend beyond December 31st of the calendar year in which such lifting of the suspension occurs.
If, after such lifting of the suspension, the Tranche has not been forfeited pursuant to Section 4 and the Compensation
Committee determines that the applicable Vesting Performance Condition has been satisfied, the Tranche will vest as of the later of such determination date and the regularly scheduled vesting date for the Tranche; if the Compensation Committee
determines that the applicable Vesting Performance Condition has not been satisfied, such Tranche will fail to vest and will expire unvested.
If a Change of Control occurs or Grantee dies prior to the time a vesting determination has been made with respect to one or more Tranches of Performance
RSUs and related Dividend Equivalents pursuant to this subsection (a) of Section 5.5 and the Performance RSUs and related Dividend Equivalents have not been forfeited pursuant to Section 4.3 or Section 4.4 and are still
outstanding, vesting determinations will be made pursuant to Section 5.5(b) or Section 5.5(c) as applicable.
(b)
Change of Control After a Qualifying Retirement or Termination by Reason of Disability. If a Change of Control occurs after Grantee’s qualifying Retirement or termination of employment by the Corporation by reason of Grantee’s
Disability, but before a vesting determination has been made with respect to one or more Tranches of Performance RSUs and related Dividend Equivalents as
set forth above in subsection (a) of this Section 5.5, and provided that those Tranches of Performance RSUs and related Dividend Equivalents have not been forfeited pursuant to
Section 4.3 or Section 4.4 and are still outstanding at the time the Change of Control occurs, vesting determinations will be made with respect to those Tranches pursuant to Section 5.3 as if Grantee had still been an employee of the
Corporation as of the day immediately prior to the date the Change of Control occurs.
(c) Death After a Qualifying
Retirement or Termination by Reason of Disability. If Grantee dies after Grantee’s qualifying Retirement or termination of employment by the Corporation by reason of Grantee’s Disability, but before a vesting determination has been
made with respect to one or more Tranches of Performance RSUs and related Dividend Equivalents as set forth above in subsection (a), or subsection (b) if applicable, of this Section 5.5, and provided that those Tranches of Performance RSUs
and related Dividend Equivalents have not been forfeited pursuant to Section 4.3 or Section 4.4 and are still outstanding at the time of Grantee’s death, then:
(i) If the Vesting Performance Condition (as described in Section 5.2) is satisfied using the quarter-end date immediately preceding the date of Grantee’s death (or, if such death occurred on a
quarter-end date, using the date of death) as the performance measurement date for the Vesting Performance Condition for all then outstanding and unvested Tranches, then any such outstanding Tranche (or Tranches, if applicable) of Performance RSUs
and related Dividend Equivalents will vest as of the date of Grantee’s death (i.e., the outstanding and unvested units will vest as of the date of death if PNC met or exceeded the required tier 1 capital ratio for well-capitalized
institutions as of the end of the last full quarter completed prior to or as of such date); and
(ii) If the Vesting
Performance Condition is not satisfied pursuant to Section 5.5(c)(i) above, then all such outstanding and unvested Tranches of Performance RSUs and related Dividend Equivalents will fail to vest and will expire unvested as of the date of
Grantee’s death.
The Compensation Committee will review the applicable tier 1 capital ratio performance and make a
vesting determination no later than December 31st of
the calendar year in which Grantee’s death occurs or, if later, the 15th day of the
3rd calendar month following the date of Grantee’s
death.
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5.6 |
Termination of Any Tranche of the Performance-Based Award that Fails to Vest or is Forfeited. |
The Performance-Based Award will terminate with respect to any Tranche or Tranches, as the case may be, of Performance RSUs and related
Dividend Equivalents, without payment of any consideration by PNC, upon forfeiture and cancellation of such Tranche or Tranches of Performance RSUs and related Dividend Equivalents (a) pursuant to the provisions of Section 4.2 upon failure
to meet the service requirements set forth in Section 4.1, (b) pursuant to the provisions of Section 4.3 upon a Detrimental Conduct determination under that Section, (c) pursuant to the automatic forfeiture provisions of
Section 4.4 on the occurrence of an event set forth in clause (1) of that Section, or (d) upon expiration for failure to vest pursuant to Section 5.2, Section 5.3 or Section 5.5.
Upon forfeiture and cancellation of such Tranche or Tranches of Performance RSUs and related Dividend Equivalents pursuant to any of the
forfeiture provisions of Section 4 or upon expiration of such Tranche or Tranches of Performance RSUs and related Dividend Equivalents pursuant to any of the provisions of Sections 5.2, 5.3 or 5.5 for failure to vest, neither Grantee nor any
successors, heirs, assigns or legal representatives of Grantee will thereafter have any further rights or interest in the Performance RSUs or the related Dividend Equivalents evidenced by the Agreement with respect to that Tranche or those Tranches,
as applicable.
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6. |
Performance Adjustment of Outstanding Vested Performance RSUs and Related Dividend Equivalents. |
6.1 Performance Adjustment of Outstanding Units.
Once a Tranche of Performance RSUs and related Dividend Equivalents has met the service and performance conditions for vesting pursuant to Sections 4 and 5, the number of Share Units in that Tranche will
be subject to performance adjustment as applicable in accordance with this Section 6 prior to settlement and payout of that portion of the Performance-Based Award in accordance with Sections 7 and 8.
The award payout on settlement for any such Tranche that has met the service and performance conditions for vesting pursuant to Sections
4 and 5 will be based on a number of Share Units (the “Payout Share Units”) determined as percentage (the “Payout Percentage”) of the target Share Units in the Tranche, rounded to the nearest one-hundredth with 0.005 Share Units
being rounded upward to 0.01 Share Units. If a Tranche does not vest pursuant to one of the subsections of Section 5 or is forfeited prior to settlement pursuant to Section 4.3 or Section 4.4, if applicable, it will not remain
outstanding and does not pay out at all.
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6.2 |
Payout Percentage in Standard Circumstances While Grantee is an Employee or after a Qualifying Disability or Retirement Termination of Employment.
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For any Tranche of Performance RSUs and related Dividend Equivalents that vested pursuant to Section 5.2 or
Section 5.5(a), the target number of Share Units in the Tranche will be performance adjusted by using a Payout Percentage that is adjusted upward or downward from 100% by up to 25 percentage points based on the “Payout Performance
Criteria” described below.
For purposes of the Payout Performance Criteria, each Tranche relates to
a given calendar year: the 1st Tranche (the one with a
scheduled vesting date of the 1st anniversary of the Award
Grant Date in February 2012) relates to 2011 and is sometimes referred to as the “2011 Tranche”; the
2nd Tranche relates in the same way to 2012 and is
sometimes referred to as the “2012 Tranche”; etc. A Tranche that vests pursuant to Section 5.2 or Section 5.5(a) will vest on its scheduled vesting date.
The payout performance metric for the Payout Performance Criteria is total shareholder return for the year that relates to the given
Tranche. For purposes of this measurement, total shareholder return performance (“TSR Performance”) will mean the total shareholder return (i.e., price change plus reinvestment of dividends) on PNC common stock for the applicable
calendar year assuming an investment on the first day of the year is held through the last day of the applicable year and using, as the beginning and ending prices for purposes of that calculation, the closing price on the last trading day of the
preceding year and on the last trading day of the applicable year, respectively. TSR Performance will be calculated to two places to the right of the decimal, rounded to the nearest one-hundredth with 0.005 being rounded upward to 0.01.
The Payout Percentage for a Tranche that vests pursuant to Section 5.2 or Section 5.5(a) will be 100% plus or minus (as
applicable) the positive or negative TSR Performance of PNC for the year that relates to that Tranche up to a maximum of 25 percentage points either direction, such that the Payout Percentage will be no less than 75.00% and no more than
125.00%.
Thus, the number of Payout Share Units for a Tranche of Performance RSUs and related Dividend Equivalents that
vested pursuant to Section 5.2 or Section 5.5(a) and is not forfeited prior to settlement pursuant to Section 4 will be the Payout Percentage of the number of target Share Units in the Tranche, rounded to the nearest one-hundredth
with 0.005 Share Units being rounded upward to 0.01 Share Units). The portion of the Share Units in a Tranche that do not become Payout Share Units will be cancelled; that is, only the number of target share units that become Payout Share Units as a
result of the Payout
Performance Criteria adjustment will be eligible to be the basis of the settlement and payout of the Performance RSUs and related Dividend Equivalents in the Tranche in accordance with Sections 7
and 8.
For example, if PNC’s TSR Performance for 2012 is 10.16% and the 2012 Tranche vests pursuant
to Section 5.2 (i.e., Grantee is still an employee of the Corporation and meets the service requirement as of the 2nd anniversary of the Award Grant Date in February 2013 and PNC’s tier 1 capital ratio as of December 31, 2012
meets or exceeds the tier 1 capital ratio then required by PNC’s primary Federal bank holding company regulator for a well-capitalized institution), then the Payout Percentage would be 110.16%. Using this Payout Percentage of 110.16%, the award
payout for the 2012 Tranche of Performance RSUs and related Dividend Equivalents in this example would be based on a number of Payout Share Units calculated as 110.16% of the target number of Share Units in that Tranche, rounded to the nearest
one-hundredth, and would be settled and paid out in accordance with Sections 7 and 8, generally in February 2013.
If, in the
same example, PNC’s TSR Performance for 2012 were negative 10.16%, the Payout Percentage would be 89.84% and the award payout for the 2012 Tranche of Performance RSUs and related Dividend Equivalents would be based on a number of Payout Share
Units calculated as 89.84% of the target number of Share Units in that Tranche, rounded to the nearest one-hundredth. The remaining portion of the target Share Units in the Tranche in this example would not be eligible to be the basis for settlement
and payout.
6.3 Payout Percentage After a Change of Control or Death.
The Payout Percentage will be 100% for any Tranche of Performance RSUs and related Dividend Equivalents that vested pursuant to
Section 5.3, Section 5.4, Section 5.5(b), or Section 5.5(c). Thus the number of Payout Share Units for a Tranche of outstanding Performance RSUs and related Dividend Equivalents that vested pursuant to one of those sections would
be calculated as 100% of the target number of Share Units in that Tranche, rounded to the nearest one-hundredth Share Unit if the tranche is not in whole units (e.g., if a capital adjustment pursuant to Section 10 resulted in a
fractional share unit in the tranche).
7. Settlement Date.
7.1 Settlement of Outstanding Units. Performance RSUs and related Dividend Equivalents that (i) have been forfeited by Grantee
pursuant to the service requirements or conduct provisions of Section 4 or (ii) have expired unvested and terminated pursuant to the applicable provisions of Section 5 as having failed to vest and no longer being eligible for vesting,
will not settle and will be cancelled without payment of any consideration by PNC.
Performance RSUs and related Dividend
Equivalents that have vested pursuant to one of the subsections of Section 5 (Section 5.2, 5.3, 5.4, 5.5(a), 5.5(b) or 5.5(c), as applicable) and that have not been forfeited prior to their settlement date pursuant to Section 4.3 or
Section 4.4, if applicable, will be performance-adjusted, as applicable, as to the number of Share Units that will be the basis for payout on settlement (that is, the Payout Share Units for such Tranche of Performance RSUs and related Dividend
Equivalents determined in accordance with the provisions of Section 6), and such Tranche of Performance RSUs and related Dividend Equivalents will be settled and paid out with respect to those Payout Share Units in accordance with the
applicable provisions of Sections 7 and 8.
The applicable settlement date for a Tranche of Performance RSUs and related
Dividend Equivalents (“Settlement Date”) is determined by Section 7.2, 7.3, 7.4, 7.5(a), 7.5(b) or 7.5(c), based on the subsection of Section 5 that was applied in vesting the Performance RSUs and related Dividend Equivalents in
such Tranche. Section 8 provides for the payout of such outstanding vested, performance-adjusted Performance RSUs and related Dividend Equivalents.
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7.2 |
Settlement Date Where Vesting Determination is Made in Standard Circumstances Pursuant to Section 5.2 (While Grantee is Still an Employee and there has not been
a Change of Control). |
Where Grantee was still an employee of the Corporation on the applicable anniversary
of the Award Grant Date and the outstanding Tranche of Performance RSUs and related Dividend Equivalents has satisfied the applicable vesting performance condition and vested pursuant to Section 5.2, the Settlement Date with respect to any such
Tranche of Performance RSUs and related Dividend Equivalents will be the date as of which the Tranche vests, which will be:
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the scheduled vesting date for that Tranche (that is, as of the 1st , 2nd , 3rd, or 4th anniversary of the Award Grant Date, as the case may be, with respect to the 1st , 2nd , 3rd, or 4th Tranche, as applicable). |
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7.3 |
Settlement Date Where Vesting Determination is Made Upon the Occurrence of a Change of Control While Grantee is an Employee Pursuant to Section 5.3.
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Where a Change of Control has occurred, Grantee was still an employee of the Corporation on the day immediately
prior to the date the Change of Control occurred, and the remaining outstanding Tranches of Performance RSUs and related Dividend Equivalents have satisfied the applicable vesting performance condition and vested pursuant to Section 5.3:
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The Settlement Date with respect to any such Tranche or Tranches of Performance RSUs and related Dividend Equivalents will be the date of the Change of
Control, but only if the Change of Control is a permissible payment event under Section 409A of the Internal Revenue Code and any regulations, revenues procedures of revenue rulings issued by the Secretary of the United States Treasury
applicable to such Section 409A; and |
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If the Change of Control is not a permissible payment event under such Section 409A, the Settlement Date with respect to any such Tranche
will be the anniversary of the Award Grant Date that would have been the scheduled vesting date for such Tranche had the Tranche vested pursuant to Section 5.2 rather than pursuant to Section 5.3. |
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7.4 |
Settlement Date Where Vesting Occurred Pursuant to Section 5.4 upon Grantee’s Death While an Employee. |
In the event that the remaining outstanding Tranches of Performance RSUs and related Dividend Equivalents have vested pursuant to
Section 5.4 upon Grantee’s death while Grantee was still an employee of the Corporation:
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The Settlement Date with respect to any such Tranche or Tranches of Performance RSUs and related Dividend Equivalents will be the date of
Grantee’s death. |
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7.5 |
Settlement Date Where Vesting Occurred Post-Employment Pursuant to Section 5.5 Following Qualifying Disability or Retirement Termination.
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(a) Where the Tranche of Performance RSUs and related Dividend Equivalents has satisfied the applicable vesting
performance condition and vested pursuant to Section 5.5(a) and provided that the Tranche is not forfeited prior to settlement pursuant to the conduct provisions of Section 4.3 or Section 4.4, if applicable, the Settlement Date with
respect to any such Tranche of Performance RSUs and related Dividend Equivalents will be:
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the scheduled vesting date for that Tranche (that is, as of the 1st , 2nd , 3rd, or 4th anniversary of the Award Grant Date, as the case may be, with respect to the 1st , 2nd , 3rd, or 4th Tranche, as |
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applicable) provided that there either (i) has been no suspension of vesting and/or settlement of such Tranche pursuant to Section 4.4 or (ii) if there had been a suspension
of vesting and/or settlement pursuant to that section, such suspension was lifted pursuant to the occurrence of an event that did not result in the forfeiture of the Tranche and such lifting occurred prior to the scheduled vesting date for that
Tranche; or |
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if there had been a suspension of vesting and/or settlement of such Tranche imposed pursuant to Section 4.4 and such suspension was lifted
pursuant to the occurrence of an event that did not result in the forfeiture of the Tranche but the lifting of the suspension occurred after the scheduled vesting date for such Tranche, then the Settlement Date would be such later date as of which
the Tranche has both vested pursuant to Section 5.5(a) and any suspension of settlement imposed pursuant to Section 4.4 has been lifted. |
(b) Change of Control After a Qualifying Retirement or Termination by Reason of Disability. Where the remaining Tranche or Tranches of Performance RSUs and related Dividend Equivalents were
outstanding and had not been forfeited pursuant to Section 4 prior to the occurrence of the Change of Control, and such Tranche or Tranches have satisfied the applicable vesting performance condition and vested as of the Change in Control date
pursuant to Section 5.5(b):
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The Settlement Date with respect to any such Tranche or Tranches of Performance RSUs and related Dividend Equivalents will be the date of the Change of
Control, but only if the Change of Control is a permissible payment event under Section 409A of the Internal Revenue Code and any regulations, revenues procedures of revenue rulings issued by the Secretary of the United States Treasury
applicable to such Section 409A; and |
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If the Change of Control is not a permissible payment event under such Section 409A, the Settlement Date with respect to any such Tranche
will be the anniversary of the Award Grant Date that would have been the scheduled vesting date for such Tranche had the Tranche vested pursuant to Section 5.5(a) rather than pursuant to Section 5.5(b). |
(c) Death After a Qualifying Retirement or Termination by Reason of Disability. Where the remaining Tranche or Tranches of
Performance RSUs and related Dividend Equivalents were outstanding and had not been forfeited pursuant to Section 4 prior to Grantee’s death, and such Tranche or Tranches have satisfied the applicable vesting performance condition and
vested as of the date of Grantee’s death pursuant to Section 5.5(c):
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The Settlement Date with respect to any such Tranche or Tranches of Performance RSUs and related Dividend Equivalents will be the date of
Grantee’s death. |
8. Settlement Payout.
8.1 Settlement of Outstanding Units. Performance RSUs and related Dividend Equivalents that (i) have been forfeited by Grantee
pursuant to the service requirements or conduct provisions of Section 4 or (ii) have expired unvested and terminated pursuant to the applicable provisions of Section 5 as having failed to vest and no longer being eligible for vesting,
will not settle and will be cancelled without payment of any consideration by PNC.
Performance RSUs and related Dividend
Equivalents that have vested pursuant to one of the subsections of Section 5 (Section 5.2, 5.3, 5.4, 5.5(a), 5.5(b) or 5.5(c), as applicable) and that have not been forfeited pursuant to Section 4.3 or Section 4.4, if applicable,
prior to their Settlement Date as determined in accordance with the applicable subsection of Section 7 will be paid out with respect to the Payout Share Units determined in accordance with the provisions of Section 6 at the time and in the
form set forth in the applicable subsection of this Section 8.
8.2 Settlement of Outstanding Units where there has not been a Change of Control.
(a) Timing. With respect to a Tranche or Tranches of Performance RSUs and related Dividend Equivalents that have a
Settlement Date determined in accordance with Section 7.2, 7.4, 7.5(a) or 7.5(c), as the case may be, and have not been forfeited pursuant to Section 4.3 or Section 4.4 prior to settlement, payment will be made as follows:
Payment will be made to Grantee by PNC with respect to any such Tranche as soon as practicable following the
applicable Settlement Date set forth in the applicable subsection of Section 7, generally within 30 days, but no later than December 31st of the calendar year in which the settlement date occurs; provided, however, that:
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If the Tranche of Performance RSUs and related Dividend Equivalents vested pursuant to Section 5.4 upon Grantee’s death while an employee of
the Corporation or was vested post-employment and after Grantee’s death pursuant to a Compensation Committee determination that the applicable vesting performance condition had been met in accordance with Section 5.5(c), payment will be
made no later than December 31st of the calendar year
in which Grantee’s death occurred or, if later, the
15th day of the 3rd calendar month following the date of Grantee’s death; and
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Where the Settlement Date occurs pursuant to Section 7.5(a) following the lifting of a suspension imposed pursuant to Section 4.4, payment
will be made no later than December 31st of the
calendar year in which the Settlement Date occurs. |
(b) Form of Payment. Except as otherwise set
forth in Section 10, if applicable, such payment with respect to a given Tranche of Performance RSUs and related Dividend Equivalents will be made at the applicable time set forth above by delivery to Grantee or his or her representative as
follows:
With respect to the Performance RSUs portion of the Tranche, settlement of the number of Payout Share Units
determined in accordance with Section 6 for the Tranche being settled will be made by delivery of that number of whole Shares of PNC common stock equal to the number of whole Payout Share Units and by cash for any fractional Payout Share Unit
as set forth in Section 8.4, or as otherwise determined pursuant to Section 10 if applicable.
With respect to the
related Dividend Equivalents portion of the Tranche, settlement will be made by payment of cash in an amount equivalent to the amount of the cash dividends Grantee would have received, without interest on or reinvestment of such amounts, had
Grantee been the record holder of a number of issued and outstanding Shares of PNC common stock equal to the number of Payout Share Units for that Tranche for the period beginning on the Award Grant Date and through the Settlement Date for such
Tranche, subject to adjustment if any pursuant to Section 10.
(c) Disputes. If there is a dispute regarding
payment of a final award, PNC will settle the undisputed portion of the award, if any, within the time frame set forth above in this Section 8.2, and will settle any remaining portion as soon as practicable after such dispute is finally
resolved but in any event within the time period permitted under Section 409A of the Internal Revenue Code.
8.3
Settlement of Outstanding Units after a Change of Control.
(a) Timing. With respect to a Tranche or Tranches of
Performance RSUs and related Dividend Equivalents that have satisfied the applicable performance condition and vested pursuant to Section 5.3 or Section 5.5(b) and have a Settlement Date determined in accordance with Section 7.3 or
7.5(b), as the case may be, and have not been forfeited pursuant to Section 4.3 or Section 4.4 prior to the occurrence of the Change of Control, payment will be made as follows:
Payment will be made to Grantee by PNC with respect to any such Tranche at the time set
forth in subsection (a)(1) of this Section 8.3 unless payment at such time would be a noncompliant payment under Section 409A of the Internal Revenue Code, and otherwise, at the time set forth in subsection (a)(2) of this Section 8.3,
in either case as further described below.
(1) If, under the circumstances, the Change of Control is a
permissible payment event under Section 409A of the Internal Revenue Code, payment of any such outstanding Tranche that satisfied the performance vesting criteria pursuant to Section 5.3 or 5.5(b) and has a Settlement Date in accordance
with Section 7.3 or 7.5(b), as the case may be, will be made as soon as practicable after the date that the data was available and the determination made that such Tranche has vested in accordance with Section 5.3 or 5.5(b), as applicable,
but in no event later than December 31st of the
calendar year in which the Change of Control occurs or, if later, by the 15th day of the third calendar month following the date on which the Change of Control occurs, other than in unusual circumstances where a further delay thereafter would be permitted under Section 409A
of the Internal Revenue Code, and if such a delay is permissible, as soon as practicable within such limits.
(2) If, under the circumstances, payment at the time of the Change of Control would not comply with Section 409A of the Internal Revenue Code, then payment will be made with respect to each Tranche
of Performance RSUs and related Dividend Equivalents being settled as soon as practicable after the anniversary of the Award Grant Date that would have been the scheduled vesting date for such Tranche had the Tranche vested pursuant to
Section 5.2 rather than Section 5.3 or pursuant to Section 5.5(a) rather than Section 5.5(b), as the case may be, but in no event later than December 31st of the year in which such scheduled vesting date occurs.
(1) If,
under the circumstances, the Change of Control is a permissible payment event under Section 409A of the Internal Revenue Code and payment with respect to a Tranche or Tranches of Performance RSUs and related Dividend Equivalents is made at the
time specified in Section 8.3(a)(1), then payment with respect to any such Tranche will be in an amount equal to the base amounts for the Performance RSUs and the Dividend Equivalents as described below in subsection (2)(A) of
Section 8.3(b).
Payment of this amount will be made entirely in cash if so provided in the circumstances pursuant to
Section 10.2(c), valued as provided in Section 10.2. Otherwise, payment of the Performance RSUs base amount will be made in the form of whole shares of PNC common stock (valued at Fair Market Value or as otherwise provided in
Section 10, as applicable, as of the date of the Change of Control) and cash for any fractional interest, and payment of the Dividend Equivalents base amount (valued as provided in Section 10, as applicable) will be paid in the form of
cash.
(2) If, under the circumstances, payment at the time of the Change of Control would not comply with Section 409A
of the Internal Revenue Code and payment with respect to the Tranche or Tranches of Performance RSUs and related Dividend Equivalents being settled will be made at the time or times specified in Section 8.3(a)(2), then such payments will be
made entirely in cash and the payment amount with respect to any such Tranche will be in an amount equal to (X) plus (Y), where (X) is the Performance RSUs base amount described below in subsection (A) of this Section 8.2(b)(2)
plus the phantom investment amount for the Performance RSUs base amount described below in subsection (B) of this Section 8.3(b)(2) and (Y) is the Dividend Equivalents base amount described below in subsection (A) of this
Section 8.2(b)(2) plus the phantom investment amount for the Dividend Equivalents base amount described below in subsection (B) of this Section 8.2(b)(2).
(A) Base Amounts. The Performance RSUs base amount will be an amount equal to the number of Payout Share Units determined in
accordance with Section 6 for the settled Tranche being paid multiplied by the Fair Market Value (as defined in Annex A) of a share of PNC common stock on the date of the Change of Control or by the per share value provided pursuant to
Section 10 as applicable.
The Dividend Equivalents base amount for a settled Tranche being paid will be an
amount equivalent to the amount of the cash dividends Grantee would have received, without interest on or reinvestment of such amounts, had Grantee been the record holder of a number of issued and outstanding shares of PNC common stock equal to the
number of Payout Share Units for that Tranche for the period beginning on the Award Grant Date and through the date of the Change of Control, subject to adjustment if any pursuant to Section 10.
(B) Phantom Investment Amounts. The phantom investment amount for the Performance RSUs base amount with respect to the settled
Tranche being paid will be either (i) or (ii), whichever is larger: (i) interest on the Performance RSUs base amount described in Section 8.3(b)(2)(A) from the date of the Change of Control through the payment date for that Tranche at
the short-term, mid-term or long-term Federal rate under Internal Revenue Code Section 1274(b)(2)(B), as applicable depending on the term until payment, compounded semi-annually; or (ii) a phantom investment amount with respect to said
base amount that reflects, if positive, the performance of the PNC stock or other consideration received by a PNC common shareholder in the Change of Control transaction, with dividends reinvested in such stock, from the date of the Change of
Control through the payment date for that Tranche.
The phantom investment amount for the Dividend Equivalents base
amount with respect to the settled Tranche being paid will be interest on the Dividend Equivalents base amount described in Section 8.3(b)(2)(A) from the date of the Change of Control through the payment date for that Tranche at the
short-term, mid-term or long-term Federal rate under Internal Revenue Code Section 1274(b)(2)(B), as applicable depending on the term until payment, compounded semi-annually.
PNC may, at its option, provide other phantom investment alternatives in addition to those referenced in the preceding two paragraphs of
this Section 8.3(b)(2)(B) and may permit Grantee to make a phantom investment election from among such alternatives under and in accordance with procedures established by PNC, but any such alternatives must provide for at least the two phantom
investments set forth in Section 8.3(b)(2)(B)(i) and (ii) with respect to the Performance RSUs base amount at a minimum and for at least the one phantom investment set forth in this Section 8.3(b)(2)(B) for the Dividend Equivalents
base amount at a minimum.
The phantom investment amounts will be applicable only in the event that payment at the time of the
Change of Control would not comply with Section 409A of the Internal Revenue Code and thus payment is made at the time specified in Section 7.2(a)(2) rather than at the time specified in Section 7.2(a)(1).
(c) Disputes. If there is a dispute regarding payment of a final award, PNC will settle the undisputed portion of the award, if
any, within the time frame set forth in the applicable subsection of Section 8.3(a), and will settle any remaining portion as soon as practicable after such dispute is finally resolved but in any event within the time period permitted under
Section 409A of the Internal Revenue Code.
8.4 Final Award Fully Vested. A final award, if any, will be fully
vested as of the applicable Settlement Date. Any Shares issued pursuant to this Section 8 will be fully vested at the time of issuance, and PNC will issue any such Shares and deliver any cash payable pursuant to this Section 8 to, or at
the proper direction of, Grantee or Grantee’s legal representative, as determined in good faith by the Committee, at the time specified in the applicable subsection of Section 8.2 or Section 8.3, whichever is applicable.
No fractional shares will be issued. If a final award payment is payable in Shares and includes a fractional interest, such fractional
interest will be liquidated on the basis of the then current Fair Market Value of PNC common stock, or as otherwise provided in Section 10, if applicable, and paid to Grantee or Grantee’s legal representative in cash at the time the Shares
are issued pursuant to this Section 8.
In the event that Grantee is deceased, payment will be delivered to the executor
or administrator of Grantee’s estate or to Grantee’s other legal representative, as determined in good faith by the Committee.
9. No Rights as Shareholder Until Issuance of Shares. Grantee will have no rights as
a shareholder of PNC by virtue of this Performance-Based Award unless and until shares of PNC stock are issued and delivered in settlement of vested outstanding Performance RSUs pursuant to Section 8.
10. Capital Adjustments.
10.1 Except as otherwise provided in Section 10.2, if applicable, if corporate transactions such as stock dividends, stock splits, spin-offs, split-offs, recapitalizations, mergers, consolidations or
reorganizations of or by PNC (“Corporate Transactions”) occur prior to the time, if any, an outstanding, vested Tranche of Performance RSUs and related Dividend Equivalents is settled and paid, the Compensation Committee shall make those
adjustments, if any, in the number, class or kind of the Target Share Units that relate to any such Tranche of Performance RSUs and related Dividend Equivalents that it deems appropriate in its discretion to reflect Corporate Transactions such that
the rights of Grantee are neither enlarged nor diminished as a result of such Corporate Transactions, including without limitation (a) measuring the value per Share Unit of any share-denominated award authorized for payment to Grantee by
reference to the per share value of the consideration payable to a PNC common shareholder in connection with such Corporate Transactions, and (b) authorizing payment of the entire value of any award amount authorized for payment to Grantee
pursuant to Section 8 to be paid in cash at the time otherwise specified in Section 8.
All determinations hereunder
shall be made by the Compensation Committee in its sole discretion and shall be final, binding and conclusive for all purposes on all parties, including without limitation Grantee.
10.2 Upon the occurrence of a Change of Control, (a) the number, class and kind of the Target Share Units that relate to any then
outstanding Tranche of Performance RSUs and related Dividend Equivalents will automatically be adjusted to reflect the same changes as are made to outstanding shares of PNC common stock generally, (b) the value per Share Unit to be used in
calculating the base amount described in Section 8.3(b) of any award payment to be made to Grantee in accordance with Section 8.3 will be measured by reference to the per share value of the consideration payable to a PNC common shareholder
in connection with such Corporate Transaction or Transactions if applicable, and (c) if the effect of the Corporate Transaction or Transactions on a PNC common shareholder is to convert that shareholder’s holdings into consideration that
does not consist solely (other than as to a minimal amount) of shares of PNC common stock, then the entire value of any amounts payable to Grantee pursuant to Section 8 will be paid solely in cash at the time otherwise specified in
Section 8.
11. Prohibitions Against Sale, Assignment, etc.; Payment to Legal Representative.
(a) Performance RSUs and related Dividend Equivalents may not be sold, assigned, transferred, exchanged, pledged, hypothecated or
otherwise encumbered.
(b) If Grantee is deceased at the time any portion of the Performance-Based Award is settled and paid
in accordance with the terms of Sections 7 and 8, such delivery of shares and/or other payment will be made to the executor or administrator of Grantee’s estate or to Grantee’s other legal representative as determined in good faith by the
Compensation Committee.
(c) Any delivery of shares or other payment made in good faith by PNC to Grantee’s executor,
administrator or other legal representative shall extinguish all right to payment hereunder.
12. Withholding Taxes.
Where Grantee has not previously satisfied all applicable withholding tax obligations, PNC will, at the time any tax
withholding obligation arises in connection herewith, retain an amount sufficient to satisfy the minimum amount of taxes then required to be withheld by the Corporation in connection therewith from any amounts then payable hereunder to Grantee. If
any withholding is required prior to the time amounts are payable to Grantee hereunder, the withholding will be taken from other compensation then payable to Grantee or as otherwise determined by PNC.
To the extent, if any, that payment of any amounts then payable to Grantee hereunder is
settled in cash, the Corporation will withhold first from such cash portion of the payment of such amounts unless the Compensation Committee determines otherwise. If the amount so withheld is not sufficient or if there is no such cash portion, the
Corporation will retain whole shares of PNC common stock from any amounts payable to Grantee hereunder in the form of Shares, until such withholdings in the aggregate are sufficient to satisfy such minimum required withholding obligations.
For purposes of this Section 12, shares of PNC common stock retained to satisfy applicable withholding tax requirements
will be valued at their Fair Market Value (as defined in Annex A) on the date the tax withholding obligation arises.
If
Grantee desires to have an additional amount withheld above the required minimum, up to Grantee’s W-4 obligation if higher, and if PNC so permits, Grantee may elect to satisfy this additional withholding by payment of cash. PNC will not retain
Shares for this purpose. If Grantee’s W-4 obligation does not exceed the required minimum withholding in connection herewith, no additional withholding may be made.
13. Employment. Neither the granting of the Performance-Based Award nor the calculation, determination and payment with respect to any vested and outstanding portion of such Performance-Based Award
authorized hereunder 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 Grantee’s
status as an employee at will.
14. Subject to the Plan and the Compensation Committee. In all respects the
Performance-Based Award 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 Performance-Based Award and the Agreement are subject to any interpretation of, and any rules and regulations issued by, the Compensation Committee or its delegate or under
the authority of the Compensation Committee, whether made or issued before or after the Award Grant Date.
15. 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 with respect to the subject matters addressed herein, and
supersedes all other discussions, negotiations, correspondence, representations, understandings and agreements between the parties concerning the subject matters hereof.
16. Grantee Covenants.
16.1 General. Grantee and PNC acknowledge
and agree that Grantee has received adequate consideration with respect to enforcement of the provisions of Sections 16 and 17 by virtue of receiving this Performance-Based Award (regardless of whether such share units or any portion thereof
ultimately vest and settle); that such provisions are reasonable and properly required for the adequate protection of the business of PNC and its subsidiaries; and that enforcement of such provisions will not prevent Grantee from earning a living.
16.2 Non-Solicitation; No-Hire. Grantee agrees to comply with the provisions of subsections (a) and (b) of
this Section 16.2 while employed by the Corporation and for a period of one year after Grantee’s Termination Date regardless of the reason for such termination of employment.
(a) Non-Solicitation. Grantee shall not, directly or indirectly, either for Grantee’s own benefit or purpose or for the
benefit or purpose of any Person other than PNC or any of its subsidiaries, solicit, call on, do business with, or actively interfere with PNC’s or any subsidiary’s 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
Grantee’s 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.
(b) No-Hire. Grantee shall
not, directly or indirectly, either for Grantee’s own benefit or purpose or for the benefit or purpose of any Person other than PNC or any of its subsidiaries, employ or offer to employ, call on, or actively interfere with PNC’s or any
subsidiary’s relationship with, or attempt to divert or entice away, any employee of PNC or any of its subsidiaries, nor shall Grantee assist any other Person in such activities.
16.3 Confidentiality. During Grantee’s 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 Corporation’s 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.
16.4 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 Grantee’s 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 of its subsidiaries or (b) developed with the use of any time, material, facilities or other resources of PNC or any subsidiary (“Developments”). Grantee agrees to assign and hereby does assign to
PNC or its designee all of Grantee’s 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 PNC’s or its designee’s interests in the Developments. The obligations of this Section 16.4 shall be performed by Grantee without further compensation and will continue beyond Grantee’s Termination Date.
17. Enforcement Provisions. Grantee understands and agrees to the following provisions regarding enforcement of the
Agreement.
17.1 Governing Law and Jurisdiction. The Agreement is governed by and construed under the laws of the
Commonwealth of Pennsylvania, without reference to its conflict of laws provisions. 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.
17.2 Equitable
Remedies. A breach of the provisions of any of Sections 16.2, 16.3 or 16.4 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.
17.3 Tolling Period. If it becomes necessary or desirable for the Corporation to seek compliance with the provisions of Section 16.2 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 the Corporation institutes legal proceedings for injunctive or other relief.
17.4 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.
17.5 Severability. The restrictions and obligations imposed by Sections 16.2, 16.3, 16.4, 17.1 and 17.7 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.
17.6 Reform. In the event any of Sections
16.2, 16.3 and 16.4 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.
17.7 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 16.2, 16.3 and 16.4.
17.8. Compliance with Internal Revenue Code Section 409A. It is the intention of the parties that the Performance-Based Award
and the Agreement comply with the provisions of Section 409A of the Internal Revenue Code to the extent, if any, that such provisions are applicable to the Agreement, and the Agreement will be administered by PNC in a manner consistent with
this intent.
If any payments or benefits hereunder may be deemed to constitute nonconforming deferred compensation subject to
taxation under the provisions of Section 409A, Grantee agrees that PNC may, without the consent of Grantee, modify the Agreement and the Performance-Based Award to the extent and in the manner PNC deems necessary or advisable or take such other
action or actions, including an amendment or action with retroactive effect, that PNC deems appropriate in order either to preclude any such payments or benefits from being deemed “deferred compensation” within the meaning of
Section 409A or to provide such payments or benefits in a manner that complies with the provisions of Section 409A such that they will not be taxable thereunder.
17.9 Applicable Law; Clawback. 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 applicable to Grantee, the Performance-Based Award, and any right to receive and retain any Shares or other value
pursuant to such Award, shall be subject to rescission, cancellation or recoupment, in whole or in part, if and to the extent so provided under any “clawback” or similar policy of PNC in effect on the Award Grant Date or that may be
established thereafter and to any clawback or recoupment that may be required by applicable law.
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18. |
Acceptance of Performance-Based Award; PNC Right to Cancel; Effectiveness of Agreement. |
If Grantee does not accept the Performance-Based Award by executing and delivering a copy of the Agreement to PNC, without altering or
changing the terms thereof in any way, within 30 days of receipt by Grantee of a copy of the Agreement, PNC may, in its sole discretion, withdraw its offer and cancel the Performance-Based Award at any time prior to Grantee’s 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 as of the Award Grant Date.
IN WITNESS WHEREOF, PNC has caused the Agreement to be signed
on its behalf as of the Award Grant Date.
THE PNC FINANCIAL SERVICES GROUP, INC.
By:
Chairman and Chief Executive Officer
ATTEST:
By:
Corporate Secretary
ACCEPTED
AND AGREED TO by GRANTEE
ANNEX A
CERTAIN DEFINITIONS
* * *
A.1 “Agreement” means the 2011 Performance-Based Restricted Share Units Award Agreement between PNC and Grantee
evidencing the Performance RSUs and related Dividend Equivalents award opportunity granted to Grantee pursuant to the Plan.
A.2 “Award Grant Date” means the Award Grant Date set forth on page 1 of the Agreement, and is the date as of which the
award opportunity of Performance RSUs and related Dividend Equivalents (together, the “Performance-Based Award”) is authorized to be granted by the Compensation Committee in accordance with the Plan.
A.3 “Board” means the Board of Directors of PNC.
A.4 “Cause” means:
(i) the willful and continued failure of Grantee to substantially perform Grantee’s 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 that specifically identifies the manner in which it is believed that Grantee has not substantially performed Grantee’s duties;
(ii) a material breach by Grantee of (1) any code of conduct of PNC or any code of conduct of a subsidiary of PNC that is applicable
to Grantee or (2) other written policy of PNC or other written policy of a subsidiary of PNC that is applicable to Grantee, in either case required by law or established to maintain compliance with applicable law;
(iii) any act of fraud, misappropriation, material dishonesty, or embezzlement by Grantee against PNC or any of its subsidiaries or any
client or customer of PNC or any of its subsidiaries;
(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
(v) entry of any order against Grantee, by any governmental body having regulatory authority with respect to the business of PNC or any of its subsidiaries, that relates to or arises out of Grantee’s
employment or other service relationship with the Corporation.
The cessation of employment of Grantee will be deemed to have
been a termination of Grantee’s employment with the Corporation for Cause for purposes of the Agreement only if and when the CEO or his or her designee (or, if Grantee is the CEO, the Board) 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 Grantee’s employment with the
Corporation will be deemed to have been for Cause.
A.5 “CEO” means the chief executive officer of PNC.
A.6 “Change of Control” means:
(a) Any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”)
becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then-outstanding shares of common stock of PNC (the “Outstanding PNC Common Stock”) or (B) the
combined voting power of the then-outstanding voting securities of PNC entitled to vote generally in the election of directors (the “Outstanding PNC Voting Securities”); provided, however, that, for purposes
of this Section A.6(a), the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from PNC, (2) any acquisition by PNC, (3) any acquisition
by any employee benefit plan (or related trust) sponsored or maintained by PNC or any company controlled by, controlling or under common control with PNC (an “Affiliated Company”), (4) any acquisition pursuant to an Excluded
Combination (as defined in Section A.6(c)) or (5) an acquisition of beneficial ownership representing between 20% and 40%, inclusive, of the Outstanding PNC Voting Securities or Outstanding PNC Common Stock shall not be considered a Change of
Control if the Incumbent Board as of immediately prior to any such acquisition approves such acquisition either prior to or immediately after its occurrence;
(b) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board (excluding any Board seat that is
vacant or otherwise unoccupied); provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by PNC’s shareholders, was approved by a vote of at least two-thirds of
the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;
(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar transaction involving PNC or any of
its subsidiaries, a sale or other disposition of all or substantially all of the assets of PNC, or the acquisition of assets or stock of another entity by PNC or any of its subsidiaries (each, a “Business Combination”), excluding, however,
a Business Combination following which all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding PNC Common Stock and the Outstanding PNC Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60% of the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of the then-outstanding voting securities
entitled to vote generally in the election of directors (or, for a non-corporate entity, equivalent governing body), as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a
result of such transaction, owns PNC or all or substantially all of PNC’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the
Outstanding PNC Common Stock and the Outstanding PNC Voting Securities, as the case may be (such a Business Combination, an “Excluded Combination”); or
(d) Approval by the shareholders of PNC of a complete liquidation or dissolution of PNC.
A.7 “Compensation Committee” means the Personnel and Compensation Committee of the Board or such person or persons as may be designated or appointed by that committee as its delegate or
designee.
A.8 “Competitive Activity” means 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 of its subsidiaries (a) engaged in business activities similar to some or all of the business activities of PNC or any subsidiary as
of Grantee’s 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 Grantee’s Termination Date or, if later and if applicable,
after the date specified in clause (ii) of Section A.12(a), 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.
A.9 “Consolidated Subsidiary” means a corporation, bank,
partnership, business trust, limited liability company or other form of business organization that (1) is a consolidated subsidiary of PNC under generally accepted accounting principles and (2) satisfies the definition of “service
recipient” under Section 409A of the Internal Revenue Code.
A.10 “Corporation” means PNC and its Consolidated Subsidiaries.
A.11 “Designated Person” will be either: (a) the Compensation Committee or its delegate, if Grantee was a member of
the Corporate Executive Group (or equivalent successor classification) or was subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to PNC securities when he or she ceased to be an employee of the Corporation;
or (b) the Chief Human Resources Officer of PNC, if Grantee is not within one of the groups specified in Section A.11(a).
A.12 “Detrimental Conduct” means:
(a) Grantee has engaged, without the prior written consent of PNC (with consent to be given at PNC’s sole
discretion), in any Competitive Activity in the continental United States at any time during the period commencing on Grantee’s Termination Date and extending through (and including) the first (1st) anniversary of the later of (i) Grantee’s
Termination Date and, if different, (ii) the first date after Grantee’s Termination Date as of which Grantee ceases to have a service relationship with the Corporation;
(b) any act of fraud, misappropriation, or embezzlement by Grantee against PNC or one of its subsidiaries or any client or customer of
PNC or one of its subsidiaries; or
(c) any conviction (including a plea of guilty or of nolo contendere) of Grantee
for, or any entry by Grantee into a pre-trial disposition with respect to, the commission of a felony that relates to or arises out of Grantee’s employment or other service relationship with the Corporation.
Grantee will be deemed to have engaged in Detrimental Conduct for purposes of the Agreement only if and when PNC, by PNC’s
Designated Person, determines that Grantee has engaged in conduct described in clause (a) or clause (b) above or that an event described in clause (c) above has occurred with respect to Grantee and, if so, determines that Grantee will
be deemed to have engaged in Detrimental Conduct.
A.13 “Disabled” or “Disability” means,
except as may otherwise be required by Section 409A of the Internal Revenue Code, that Grantee either (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that
can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can
be expected to last for a continuous period of not less than 12 months, receiving (and has received for at least three months) income replacement benefits under any Corporation-sponsored disability benefit plan. If Grantee has been determined to be
eligible for Social Security disability benefits, Grantee shall be presumed to be Disabled as defined herein.
A.14
“Dividend Equivalents” means the opportunity to receive dividend-equivalents granted to Grantee in connection with the Performance RSUs to which they relate and evidenced by the Agreement.
A.15 “Fair Market Value” as it relates to a share of PNC common stock as of any given date means the average of the
reported high and low trading prices on the New York Stock Exchange (or such successor reporting system as PNC may select) for a share of PNC common stock on such date, or, if no PNC common stock trades have been reported on such exchange for that
day, the average of such prices on the next preceding day and the next following day for which there were reported trades.
A.16 “Grantee” means the person to whom the Performance RSUs with related Dividend Equivalents award opportunity is
granted and is identified as Grantee on page 1 of the Agreement.
A.17 “Internal Revenue Code” means the
Internal Revenue Code of 1986 as amended, and the rules and regulations promulgated thereunder.
A.18 “Payout Share
Units” means the performance-adjusted number of Share Units calculated in accordance with Section 6 and eligible to be used in determining the payout amount for a Tranche of
Performance RSUs and related Dividend Equivalents that are settled and paid out in accordance with Sections 7 and 8 of the Agreement.
A.19 “Performance-Based Award” means the Performance RSUs and related Dividend Equivalents award opportunity granted to
Grantee pursuant to the Plan and evidenced by the Agreement.
A.20 “Performance measurement date” means, with
respect to the Vesting Performance Condition, the year-end or other quarter-end date specified by the applicable provisions of Section 5 of the Agreement as the date as of which the Vesting Performance Condition for a Tranche or Tranches of
Performance RSUs and related Dividend Equivalents will be measured to determine whether or not the Vesting Performance Condition for such Tranche or Tranches has been satisfied.
A.21 “Performance RSUs” means the Share-denominated award opportunity performance-based restricted share units granted
to Grantee in accordance with Article 10 of the Plan and evidenced by the Agreement.
A.22 “Plan” means
The PNC Financial Services Group, Inc. 2006 Incentive Award Plan as amended from time to time.
A.23 “PNC”
means The PNC Financial Services Group, Inc.
A.24 “Retiree.” Grantee is sometimes referred to as a
“Retiree” if Grantee Retires, as defined in Section A.25.
A.25 “Retires” or
“Retirement.” Grantee “Retires” if his or her employment with the Corporation terminates at any time and for any reason (other than termination by reason of Grantee’s death or by the Corporation for Cause and,
if the Compensation Committee or the CEO so determines prior to such divestiture, other than by reason of termination in connection with a divestiture of assets or a divestiture of one or more subsidiaries of the Corporation) on or after the first
date on which Grantee has both attained at least age fifty-five (55) and completed five (5) years of service, where a year of service is determined in the same manner as the determination of a year of vesting service calculated under the
provisions of The PNC Financial Services Group, Inc. Pension Plan.
If Grantee “Retires” as defined herein,
the termination of Grantee’s employment with the Corporation is sometimes referred to as “Retirement” and such Grantee’s Termination Date is sometimes also referred to as Grantee’s “Retirement Date.”
A.26 “Section 409A” means Section 409A of the Internal Revenue Code.
A.27 “Service relationship” or “having a service relationship with the Corporation” means being engaged
by the Corporation in any capacity for which Grantee receives compensation from the Corporation, including but not limited to acting for compensation as an employee, consultant, independent contractor, officer, director or advisory director.
A.28 “Settlement Date” has the meaning set forth in Section 7 of the Agreement.
A.29 “Share” means a share of PNC common stock.
A.30 “Target Share Units” means the number of share units specified on page 1 of the Agreement as the Target Share
Units, subject to capital adjustments pursuant to Section 10 of the Agreement if any.
A.31 “Termination
Date” means Grantee’s last date of employment with the Corporation. If Grantee is employed by a Consolidated Subsidiary that ceases to be a subsidiary of PNC or ceases to be a consolidated subsidiary of PNC under generally accepted
accounting principles and Grantee does not
continue to be employed by PNC or a Consolidated Subsidiary, then for purposes of the Agreement, Grantee’s employment with the Corporation terminates effective at the time this occurs.
A.32 “Tranche” means one of the four installments into which the Performance RSUs and related Dividend
Equivalents of the Performance-Based Award have been divided as specified in Section 2 of the Agreement.
A.33
“TSR Performance” has the meaning set forth in Section 6 of the Agreement.
A.34 “Vesting
Performance Condition.” The vesting performance condition for a Tranche or Tranches of the Performance-Based Award is set forth in the applicable subsection of Section 5 of the Agreement.
