Exhibit 10.30

 

FORMS OF EMPLOYEE STOCK OPTION, RESTRICTED STOCK,

RESTRICTED DEFERRAL, AND INCENTIVE SHARE AGREEMENTS

 

FORM OF STANDARD EMPLOYEE STOCK OPTION AGREEMENT

 

THE PNC FINANCIAL SERVICES GROUP, INC.

1997 LONG-TERM INCENTIVE AWARD PLAN

NONSTATUTORY STOCK OPTION AGREEMENT

 

OPTIONEE:

   <Name>

GRANT DATE:

                       , 200  

OPTION PRICE:

   $                      per share

COVERED SHARES:

   «Shares»

 

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 Agreement
(“Agreement”) as defined in the Plan unless otherwise defined in the Agreement
or an Annex thereto. In the 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 Agreement and in the Annexes hereto are for convenience
only and are not part of the Agreement and Annexes.

 

1. Grant of Option. Pursuant to the Plan and subject to the terms of the
Agreement, PNC hereby grants to Optionee an Option to purchase from PNC that
number of shares of PNC common stock specified above as the “Covered Shares,”
exercisable at the Option Price.

 

2. Terms of the Option.

 

2.1 Type of Option. The Option is intended to be a Nonstatutory Stock Option
without Rights.

 

2.2 Option Period. The Option is exercisable in whole or in part as to any
Covered Shares as to which it is outstanding and has become exercisable
(“vested”) at any time and from time to time through the Expiration Date.

 

To the extent that the Option or relevant portion thereof is outstanding, the
Option will vest as to Covered Shares as set forth in this Section 2.2.

 

(a) Unless the Option has become fully vested pursuant to Section 2.2(b),
2.2(c), 2.2(d) or 2.2(e), the Option will become exercisable (“vest”):

 

(i) as to one-third (1/3rd) of the Covered Shares (rounded down to the nearest
whole Share), commencing on the first (1st) anniversary date of the Grant Date
provided that Optionee is still an employee of the Corporation on such vesting
date or is a Retiree whose Retirement date occurred on or after the six (6)
month anniversary date of the Grant Date;

 

(ii) as to one-half (1/2) of the remaining Covered Shares (rounded down to the
nearest whole Share), commencing on the second (2nd) anniversary date of the
Grant Date provided that Optionee is still an employee of the Corporation on
such vesting date or is a Retiree whose Retirement date occurred on or after the
first (1st) anniversary date of the Grant Date; and

 

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(iii) as to the remaining Covered Shares, commencing on the third (3rd)
anniversary date of the Grant Date provided that Optionee is still an employee
of the Corporation on such vesting date or is a Retiree whose Retirement date
occurred on or after the first (1st) anniversary date of the Grant Date.

 

(b) If Optionee’s employment is terminated by the Corporation by reason of Total
and Permanent Disability and not for Cause, the Option will vest as to all
outstanding Covered Shares as to which it has not otherwise vested commencing on
Optionee’s Termination Date.

 

(c) If Optionee’s employment with the Corporation is terminated by reason of
Optionee’s death, the Option will immediately vest as to all outstanding Covered
Shares as to which it has not otherwise vested, and the Option may be exercised
by 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 Optionee’s employment with the Corporation is terminated during a
Coverage Period by the Corporation without Cause or by Optionee with Good
Reason, the Option will vest as to all outstanding Covered Shares as to which it
has not otherwise vested commencing on Optionee’s Termination Date.

 

(e) Notwithstanding any other provision of this Section 2.2, to the extent that
the Option is outstanding but not yet fully vested at the time a Change in
Control occurs, the Option will vest as to all then outstanding Covered Shares
as to which it has not otherwise vested, effective as of the day immediately
prior to the occurrence of the Change in Control, provided that, at the time the
Change in Control occurs, Optionee is either (i) an employee of the Corporation
or (ii) a former employee of the Corporation whose unvested Option, or portion
thereof, is then outstanding and continues to qualify for vesting pursuant to
the terms of Section 2.2(a)(i), (ii) and/or (iii).

 

If Optionee is employed by a Subsidiary that ceases to be a Subsidiary of PNC
and Optionee does not continue to be employed by PNC or a Subsidiary, then for
purposes of the Agreement, Optionee’s employment with the Corporation terminates
effective at the time this occurs.

 

2.3 Nontransferability; Designation of Beneficiary. The Option is not
transferable or assignable by Optionee other than by transfer to a properly
designated beneficiary in the event of death, or by will or the laws of descent
and distribution.

 

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.

 

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. In the absence
of a properly designated beneficiary, the Option will be held and may be
exercised by the person or persons entitled to do so under Optionee’s will or
under the applicable laws of descent and distribution.

 

3. Capital Adjustments. The number and class of Covered Shares as to which the
Option is outstanding and has not yet been exercised and the Option Price will
be subject to such adjustment, if any, as the Committee in its sole discretion
deems appropriate to reflect corporate transactions (including, without
limitation, stock dividends, stock splits, spin-offs, split-offs,
recapitalizations, mergers, consolidations or reorganizations of or by PNC
(each, a “Corporate Transaction”)), including without limitation cancellation of
the Option immediately prior to the effective time of the Corporate Transaction
and payment, in cash, in consideration therefor, of an amount equal to the
product of (a) the excess, if any, of the per share value of the consideration
payable to a PNC common shareholder in connection with such Corporate
Transaction over the Option Price and (b) the total number of Covered Shares
subject to the Option that were outstanding and unexercised immediately prior to
the effective time of the Corporate Transaction.

 

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All determinations hereunder will be made by the Committee in its sole
discretion and will be final, binding and conclusive for all purposes on all
parties, including without limitation the holder of the Option.

 

No fractional shares will be issued on exercise of the Option. PNC will
determine the manner in which any fractional shares will be treated.

 

4. Exercise of Option.

 

4.1 Notice and Effective Date. The Option may be exercised, in whole or in part,
by delivering to PNC written notice of such exercise, in such form as PNC may
from time to time prescribe, accompanied by full payment of the aggregate Option
Price with respect to that portion of the Option being exercised and
satisfaction of any amounts required to be withheld pursuant to applicable tax
laws in connection with such exercise.

 

In addition, notwithstanding Sections 4.2 and 4.3, Optionee may elect to
complete his or her Option exercise through a brokerage service/margin account
pursuant to the broker-assisted cashless option exercise procedure under
Regulation T of the Board of Governors of the Federal Reserve System and in such
manner as may be permitted by PNC from time to time consistent with said
Regulation T.

 

The effective date of such exercise will be the Exercise Date. Until PNC
notifies Optionee to the contrary, the form attached to the Agreement as Annex B
shall be used to exercise the Option and the form attached to the Agreement as
Annex C shall be used to make tax payment elections.

 

In the event that the Option is exercised, pursuant to Section 2.3, by any
person or persons other than Optionee, such notice of exercise must be
accompanied by appropriate proof of the derivative right of such person or
persons to exercise the Option.

 

4.2 Payment of Option Price. Upon exercise of the Option, in whole or in part,
Optionee may pay the aggregate Option Price (a) in cash, (b) using whole shares
of PNC common stock (either by physical delivery to PNC of certificates for the
shares or through PNC’s attestation procedure) having an aggregate Fair Market
Value on the Exercise Date not exceeding that portion of the aggregate Option
Price being paid using such shares, or (c) through a combination of cash and
shares of PNC common stock; provided, however, that shares of PNC common stock
used to pay all or any portion of the aggregate Option Price may not be subject
to any contractual restriction, pledge or other encumbrance and must be shares
that have been owned by Optionee for at least six (6) months prior to the
Exercise Date and, in the case of restricted stock, for which it has been at
least six (6) months since the restrictions lapsed, or, in either case, for such
other period as may be specified or permitted by PNC.

 

4.3 Payment of Taxes. Optionee may elect to satisfy any or all applicable
federal, state, or local tax liabilities incurred in connection with exercise of
the Option (a) by payment of cash, (b) subject to such terms and conditions as
PNC may from time to time establish, through the retention by PNC of sufficient
whole shares of PNC common stock otherwise issuable upon such exercise to
satisfy the minimum amount of taxes required to be withheld in connection with
such exercise, or (c) subject to such terms and conditions as PNC may from time
to time establish, using whole shares of PNC common stock (either by physical
delivery to PNC of certificates for the shares or through PNC’s 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.

 

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4.4 Effect. The exercise, in whole or in part, of the Option will cause a
reduction in the number of unexercised Covered Shares as to which the Option is
outstanding equal to the number of shares of PNC common stock with respect to
which the Option is exercised.

 

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 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, 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 twelve (12) months 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 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,

 

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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 (either as Coverage Period
is defined in Section A.10 of Annex A or, if Optionee was a party to a CIC
Severance Agreement that was in effect at the time of such termination of
employment, as Coverage Period is defined in such CIC Severance Agreement, if
longer), then commencing immediately after such Termination Date, the provisions
of subsections (a) and (b) of this Section 9.2 shall no longer apply and shall
be replaced with the following subsection (c):

 

(c) No-Hire. Optionee agrees that Optionee shall not, for a period of twelve
(12) months after the Termination Date, employ or offer to employ, solicit,
actively interfere with 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 Agreement.

 

10.1 Governing Law and Jurisdiction. The Agreement is governed by and construed
under the laws of the Commonwealth of Pennsylvania, without regard to conflict
of laws rules. Any dispute or claim arising out of or relating to the Agreement
or claim of breach hereof shall be brought exclusively in the federal court for
the Western District of Pennsylvania or in the Court of Common Pleas of
Allegheny County, Pennsylvania. By execution of the Agreement, Optionee and PNC
hereby consent to the exclusive jurisdiction of such courts, and waive any right
to challenge jurisdiction or venue in such courts with regard to any suit,
action, or proceeding under or in connection with the Agreement.

 

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 shall extend for
a period of twelve (12) months from the date of the legal order requiring such
compliance.

 

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10.4 No Waiver. Failure of PNC to demand strict compliance with any of the
terms, covenants or conditions of the Agreement shall not be deemed a waiver of
such term, covenant or condition, nor shall any waiver or relinquishment of any
such term, covenant or condition on any occasion or on multiple occasions be
deemed a waiver or relinquishment of such term, covenant or condition.

 

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 Applicable Law. Notwithstanding anything in the Agreement, PNC will not be
required to comply with any term, covenant or condition of the Agreement if and
to the extent prohibited by law, including but not limited to federal banking
and securities regulations, or as otherwise directed by one or more regulatory
agencies having jurisdiction over PNC or any of its subsidiaries. Further, to
the extent, if any, applicable to Optionee, Optionee agrees to reimburse PNC for
any amounts Optionee may be required to reimburse the Corporation pursuant to
Section 304 of the 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 Optionee reimburse PNC or its subsidiaries for such
amounts pursuant to Section 304 of the Sarbanes-Oxley Act of 2002.

 

11. Amendment of Pre-2004 Options and Reloads. For purposes of all PNC stock
options held by Optionee that were granted prior to January 1, 2004 and
outstanding on February 18, 2004 (or, in the case of reload stock options, that
were outstanding on February 18, 2004 or will be granted after February 18, 2004
in connection with the exercise of original stock options granted prior to
January 1, 2004), the terms of each such option are amended to include, or shall
include, as the case may be, the following provisions:

 

(a) Notwithstanding any other provision of such option relating to vesting, to
the extent that the such option is outstanding but not yet fully vested at the
time a Change in Control occurs, the option will vest as to all then outstanding
Covered Shares as to which it has not otherwise vested, effective as of the day
immediately prior to the occurrence of the Change in Control, provided that, at
the time the Change in Control occurs, the optionee either (i) is an employee of
the Corporation or (ii) is a former employee of the Corporation whose unvested
option, or portion thereof, is then outstanding and continues to qualify for
vesting under the terms of the relevant stock option agreement as amended;

 

(b) If there is a Change in Control, then notwithstanding any other provisions
of such option relating to the date of expiration or expiration date of the
option, to the extent that such option is outstanding and vested or vests at the
time the Change in Control occurs, such option will not expire at the earliest
before the close of business on the ninetieth (90th) day after the occurrence of
the Change in Control (or the tenth (10th) anniversary of the Grant Date if
earlier), provided that, either (i) the optionee is an employee of the
Corporation at the time the Change in Control occurs and the optionee’s
employment with the Corporation is not terminated for Cause or (ii) the optionee
is a former employee of the Corporation whose option, or portion thereof, is
outstanding at the time the Change in Control occurs because it qualified and
continues to qualify pursuant to the terms of the relevant stock option
agreement as amended for an exception to the general rule that stock options
expire at the time the optionee ceases to be an employee of the Corporation;

 

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(c) If, under the relevant stock option agreement as amended, more than one
exception to the general rule that stock options expire on termination of the
optionee’s employment with the Corporation is applicable to such option or a
portion thereof, then the option, or such portion of the option, will expire in
accordance with the provision or provisions of said agreement that specify the
latest expiration date;

 

(d) If the terms of the relevant stock option agreement as amended provide for
the early expiration of such stock option in certain circumstances where the
optionee has engaged in competitive conduct or activity or in other conduct or
activity that is inimical, contrary, harmful or detrimental to the Corporation’s
interests (a “detrimental conduct” provision), no determination that the
optionee has engaged in such detrimental conduct may be made on or after the
occurrence of a Change in Control; and

 

(e) If the termination of the optionee’s employment with the Corporation meets
the definition of Retirement, then with respect to any portion of the option
that is outstanding and vested on optionee’s retirement date or that qualifies
for post-employment vesting under the terms of the relevant stock option
agreement and vests thereafter, such option will qualify for an exception to the
general rule that options expire at the time the optionee ceases to be an
employee and will expire on the tenth (10th) anniversary date of the Grant Date,
subject to the operation of any detrimental conduct provision that may be
applicable.

 

The terms of PNC employee stock options granted after January 1, 2004 (including
reload options granted after February 18, 2004) shall also include the capital
adjustment provisions set forth in Section 3, unless and until the Committee
determines otherwise.

 

12. Effective Date. If Optionee does not accept the grant of the Option by
executing and delivering a copy of the Agreement to PNC, without altering or
changing the terms of the Agreement in any way, within sixty (60) days of
receipt by Optionee of a copy of the Agreement, PNC may, in its sole discretion,
withdraw its offer and cancel the Option and the Agreement at any time prior to
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
and, in the event that Optionee is subject to the reporting requirements of
Section 16(a) of the Exchange Act with respect to PNC securities, the filing
with and acceptance by the SEC of a Form 4 reporting the Grant, the Option and
the Agreement are effective as of the Grant Date.

 

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

 

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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

 

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ANNEX A

 

THE PNC FINANCIAL SERVICES GROUP, INC.

1997 LONG-TERM INCENTIVE AWARD PLAN

NONSTATUTORY STOCK OPTION AGREEMENT

CERTAIN DEFINITIONS

 

Except where the context otherwise indicates, the following definitions apply to
the Nonstatutory Stock Option Agreement (“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 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
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

 

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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 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 in Control” means a change of control of PNC of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or in response to any similar item on any similar schedule or
form) promulgated under the Exchange Act, whether or not PNC is then subject to
such reporting requirement; provided, however, that without limitation, a Change
in Control shall be deemed to have occurred if:

 

(a) any Person, excluding employee benefit plans of the Corporation, is or
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act or any successor provisions thereto), directly or indirectly, of
securities of PNC representing twenty percent (20%) or more of the combined
voting power of PNC’s then outstanding securities; provided, however, that such
an acquisition of beneficial ownership representing between twenty percent (20%)
and forty percent (40%), inclusive, of such voting power shall not be considered
a Change in Control if the Board approves such acquisition either prior to or
immediately after its occurrence;

 

(b) PNC consummates a merger, consolidation, share exchange, division or other
reorganization or transaction of PNC (a “Fundamental Transaction”) with any
other corporation, other than a Fundamental Transaction that results in the
voting securities of PNC outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least sixty percent (60%) of the combined
voting power immediately after such Fundamental Transaction of (i) PNC’s
outstanding securities, (ii) the surviving entity’s outstanding securities, or
(iii) in the case of a division, the outstanding securities of each entity
resulting from the division;

 

(c) the shareholders of PNC approve a plan of complete liquidation or winding-up
of PNC or an agreement for the sale or disposition (in one transaction or a
series of transactions) of all or substantially all of PNC’s assets;

 

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(d) as a result of a proxy contest, individuals who prior to the conclusion
thereof constituted the Board (including for this purpose any new director whose
election or nomination for election by PNC’s shareholders in connection with
such proxy contest was approved by a vote of at least two-thirds (2/3rds) of the
directors then still in office who were directors prior to such proxy contest)
cease to constitute at least a majority of the Board (excluding any Board seat
that is vacant or otherwise unoccupied);

 

(e) during any period of twenty-four (24) consecutive months, individuals who at
the beginning of such period constituted the Board (including for this purpose
any new director whose election or nomination for election by PNC’s shareholders
was approved by a vote of at least two-thirds (2/3rds) of the directors then
still in office who were directors at the beginning of such period) cease for
any reason to constitute at least a majority of the Board (excluding any Board
seat that is vacant or otherwise unoccupied); or

 

(f) the Board determines that a Change in Control has occurred.

 

Notwithstanding anything to the contrary herein, a divestiture or spin-off of a
subsidiary or division of PNC or any of its Subsidiaries shall not by itself
constitute a Change in Control.

 

A.5 “CIC Failure” means the following:

 

(a) with respect to a CIC 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 CIC Triggering Event described in Section A.7(b), the
proxy contest fails to replace or remove a majority of the members of the Board.

 

A.6 “CIC Severance Agreement” means the written agreement, if any, between
Optionee and PNC providing, among other things, for certain change in control
severance benefits.

 

A.7 “CIC Triggering Event” means the occurrence of either of the following:

 

(a) the Board or PNC’s shareholders approve a transaction described in
Subsection (b) of the definition of Change in 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 “Competitive Activity” means, for purposes of the Agreement and for purposes
of determining whether Optionee will be deemed to have violated the detrimental
conduct clause of Prior Options, any participation in, employment by, ownership
of any equity interest exceeding one percent (1%) in, or promotion or
organization of, any Person other than PNC or any Subsidiary (1) engaged in
business activities similar to some or all of the business activities of PNC or
any Subsidiary as of 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, 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.9 “Corporation” means PNC and its Subsidiaries.

 

A.10 “Coverage Period” means a period (a) commencing on the earlier to occur of
(i) the date of a CIC Triggering Event and (ii) the date of a Change in Control
and (b) ending on the date that is two (2) years after the date of the Change in
Control; provided, however, that in the event that a Coverage Period commences
on the date of a CIC Triggering Event, such Coverage Period

 

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will terminate upon the earlier to occur of (x) the date of a CIC Failure and
(y) the date that is two (2) years after the date of the Change in Control
triggered by the CIC Triggering Event. After the termination of any Coverage
Period, another Coverage Period will commence upon the earlier to occur of
clauses (a)(i) and (a)(ii) in the preceding sentence.

 

A.11 “Detrimental Conduct.” For purposes of the Agreement and for purposes of
determining whether Optionee will be deemed to have violated the detrimental
conduct clause of Prior Options, “Detrimental Conduct” means:

 

(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 through
the first (1st) anniversary of Optionee’s Termination Date;

 

(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 Agreement and for purposes of determining whether Optionee will be deemed to
have violated the detrimental conduct clause of Prior Options, only if and when
the CEO or his or her designee (or, if Optionee is the CEO, the Board)
determines that Optionee has engaged in conduct described in clause (i) above,
that Optionee is guilty of conduct described in clause (ii) or (iii) above, or
that an event described in clause (iv) or (v) above has occurred with respect to
Optionee and, if so, determines that Optionee will be deemed to have engaged in
Detrimental Conduct.

 

A.12 “Exchange Act” means the Securities Exchange Act of 1934 as amended and the
rules and regulations promulgated thereunder.

 

A.13 “Exercise Date” means the date on which PNC receives written notice, in
such form as PNC may from time to time prescribe, of the exercise, in whole or
in part, of the Option pursuant to the terms of the Agreement, subject to full
payment of the aggregate Option Price and satisfaction of all taxes required to
be withheld in connection with such exercise as provided in Sections 4.1, 4.2
and 4.3 of the Agreement.

 

A.14 “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.14(b)
through A.14(d);

 

provided, however, if there is a Change in Control, then notwithstanding
Sections A.14(c) and A.14(d), to the extent that the Option is outstanding and
vested or vests at the time the Change in Control occurs, the Option will not
expire at the earliest before the close of business on the

 

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ninetieth (90th) day after the occurrence of the Change in Control (or the tenth
(10th) anniversary of the Grant Date if earlier), provided that either (1)
Optionee is an employee of the Corporation at the time the Change in Control
occurs and 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 in Control occurs by
virtue of the application of one or more of the exceptions set forth in Section
A.14(c) and at least one of such exceptions is still applicable at the time the
Change in Control occurs.

 

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 vested 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 vested, except to the extent
that the provisions set forth in subsection (1), (2), (3), (4) or (5) of this
Section A.14(c) apply to 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 vested on the Retirement date or thereafter vests 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) Total and Permanent Disability. If Optionee’s employment is terminated by
the Corporation by reason of Total and Permanent Disability, then the Option
will expire on the third (3rd) anniversary of such Termination Date (but in no
event later than on the tenth (10th) anniversary of the Grant Date).

 

(5) DEAP or Agreement or Arrangement in lieu of or in addition to DEAP. 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 Displaced Employee Assistance Plan, or any successor plan by whatever
name known (“DEAP”), 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

 

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lieu of or in addition to the DEAP, and (b) Optionee has not revoked such waiver
and release agreement, and (c) the time for revocation of such waiver and
release agreement by Optionee has lapsed, then the Option will expire at the
close of business on the ninetieth (90th) day after 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
vested; provided, however, that if Optionee returns to employment with the
Corporation no later than said ninetieth (90th) day, then for purposes of the
Agreement, the entire Option, whether vested or unvested, will be treated as if
the termination of Optionee’s employment with the Corporation had not occurred.

 

If the vested portion of the Option (or the entire Option if fully vested) will
expire on Optionee’s Termination Date unless the conditions set forth in this
Section A.14(c)(5) are met, then such vested Option or portion thereof will not
terminate on the Termination Date, but Optionee will not be able to exercise the
Option after such Termination Date unless and until all of the conditions set
forth in this Section A.14(c)(5) have been met and the Option will terminate on
the ninetieth (90th) day after 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.14(c), then notwithstanding the provisions of such exception or exceptions,
the Option will expire on the date that PNC determines that Optionee has engaged
in Detrimental Conduct, if earlier than the date on which the Option would
otherwise expire; provided, however, that:

 

(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, whether or not
another exception is applicable, no determination that Optionee has engaged in
Detrimental Conduct may be made, for purposes of the Agreement and for purposes
of determining whether Optionee will be deemed to have violated the detrimental
conduct clause of Prior Options, on or after such Termination Date; and

 

(3) no determination that Optionee has engaged in Detrimental Conduct may be
made after the occurrence of a Change in Control.

 

For purposes of Prior Options that contain a clause in the definition of
expiration date or date of expiration providing for the early termination of the
stock option in certain circumstances where the optionee has engaged in
competitive conduct or activity or in other conduct or activity that is
inimical, contrary, or harmful to the Corporation’s interests (the “detrimental
conduct clause”), the detrimental conduct clause of the Prior Options will be
deemed to have the same meaning and application as this Section A.14(d), and the
standard of conduct, standard of proof, and procedures to be followed when
determining whether such detrimental conduct clause will apply and the impact on
expiration of the stock option of making such determination will be the same as
that provided for in this Section A.14(d).

 

A.15 “Good Reason” means:

 

(a) the assignment to Optionee of any duties inconsistent in any respect with
Optionee’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities immediately prior to either
the CIC Triggering Event or the Change in Control,

 

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or any other action by the Corporation that results in a diminution in any
respect in such position, authority, duties or responsibilities, excluding for
this purpose an isolated, insubstantial and inadvertent action not taken in bad
faith that is remedied by the Corporation promptly after receipt of notice
thereof given by Optionee;

 

(b) a reduction by the Corporation in Optionee’s annual base salary as in effect
on the Grant Date, as the same may be increased from time to time;

 

(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 CIC Triggering Event or the Change in Control;

 

(d) the failure by the Corporation (i) to continue in effect any bonus, stock
option or other cash or equity-based incentive plan in which Optionee
participates immediately prior to either the CIC Triggering Event or the Change
in Control that is material to Optionee’s total compensation, unless a
substantially equivalent arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or (ii) to continue
Optionee’s participation in such plan (or in such substitute or alternative
plan) on a basis at least as favorable, both in terms of the amount of benefits
provided and the level of Optionee’s participation relative to other
participants, as existed immediately prior to the CIC Triggering Event or the
Change in Control; or

 

(e) the failure by the Corporation to continue to provide Optionee with benefits
substantially similar to those received by Optionee under any of the
Corporation’s pension (including, but not limited to, tax-qualified plans), life
insurance, health, accident, disability or other welfare plans in which Optionee
was participating, at costs substantially similar to those paid by Optionee,
immediately prior to the CIC Triggering Event or the Change in Control.

 

A.16 “Grant Date” means the date set forth as the Grant Date on page 1 of the
Agreement.

 

A.17 “Option” means the Nonstatutory Stock Option granted to Optionee in Section
1 of the Agreement pursuant to which Optionee may purchase shares of PNC common
stock as provided in the Agreement.

 

A.18 “Option Price” means the dollar amount per share of PNC common stock set
forth as the Option Price on page 1 of the Agreement.

 

A.19 “Optionee” means the person identified as Optionee on page 1 of the
Agreement.

 

A.20 “Person” has the meaning given in Section 3(a)(9) of the Exchange Act and
also includes any syndicate or group deemed to be a person under Section
13(d)(3) of the Exchange Act.

 

A.21 “PNC” means The PNC Financial Services Group, Inc.

 

A.22 “Prior Options” means PNC stock options granted prior to January 1, 2001
or, in the case of reload stock options, that were or will be granted in
connection with the exercise of original stock options issued prior to that
date.

 

A.23 “Retiree” means an Optionee who has Retired.

 

A.24 “Retire” or “Retirement” means termination of Optionee’s employment with
the Corporation (a) at any time on or after the first day of the first month
coincident with or next following the date on which Optionee attains age
fifty-five (55) and completes five (5) years of service (as determined in the
same manner as the determination of five years of Vesting Service under the
provisions of The PNC Financial Services Group, Inc. Pension Plan) with the
Corporation and (b) for a reason other than termination by reason of Optionee’s
death or by the

 

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Corporation for Cause or, unless the Committee determines otherwise, termination
in connection with a divestiture of assets or of one or more Subsidiaries.

 

A.25 “Right(s)” means stock appreciation right(s) in accordance with the terms
of Article 7 of the Plan.

 

A.26 “SEC” means the Securities and Exchange Commission.

 

A.27 “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 Agreement, Optionee’s employment with the
Corporation terminates effective at the time this occurs.

 

A.28 “Total and Permanent Disability” means, unless the Committee determines
otherwise, Optionee’s disability as determined to be total and permanent by the
Corporation for purposes of the Agreement.

 

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FORM OF ADDENDUM TO STOCK OPTION AGREEMENT

FOR GRANTS WITH RELOAD FEATURE

 

THE PNC FINANCIAL SERVICES GROUP, INC.

1997 LONG-TERM INCENTIVE AWARD PLAN

 

ADDENDUM

TO

NONSTATUTORY STOCK OPTION AGREEMENT (“AGREEMENT”)

DATED                     , 200    

 

OPTIONEE:    <EMPLOYEE> ORIGINAL OPTION GRANT DATE:                        ,
200     ORIGINAL OPTION PRICE:    $                     per share ORIGINAL
OPTION COVERED SHARES:    <SHARES>

 

THIS ADDENDUM to the Agreement with respect to the original nonstatutory stock
option referenced above (“Original Option”) is made and entered into by and
between The PNC Financial Services Group, Inc. (“PNC”) and the optionee
identified above (“Optionee”) in order to provide for the grant of a certain
additional stock option or options (“Reload Option”) upon the terms and
conditions set forth in this Addendum and the Reload Nonstatutory Stock Option
Agreement for each such grant subsequently delivered to Optionee by PNC and
signed by the parties.

 

1. Definitions. Terms defined in The PNC Financial Services Group, Inc. 1997
Long-Term Incentive Award Plan as amended from time to time (“Plan”), or in the
Agreement or an Annex thereto, are used in this Addendum as defined in the Plan,
or in the Agreement or an Annex thereto, unless otherwise defined in this
Addendum.

 

2. Grant of Reload Option. Provided that Optionee exercises all or a portion of
the Original Option while employed by PNC or one of its Subsidiaries and in the
manner specified in Section 3 of this Addendum, Optionee will be granted a
Reload Option, as set forth in Section 4 of this Addendum, in connection with
each such exercise. Such Reload Option will be granted upon the terms and
conditions set forth in a Reload Nonstatutory Stock Option Agreement provided to
Optionee for such grant by PNC following the exercise of the Original Option,
subject to Optionee’s timely acceptance of such grant in the manner specified in
such Reload Nonstatutory Stock Option Agreement.

 

3. Required Manner of Original Option Exercise. To receive a Reload Option,
Optionee must exercise all or a portion of the Original Option while employed by
PNC or one of its Subsidiaries, and must pay all or a portion of the aggregate
Option Price for such exercise or satisfy all or a portion of the minimum,
exercise-related withholding tax requirements incurred in connection with such
exercise, or both, in the following manner:

 

  • Exercise Price: Pay all or a portion of the aggregate Option Price, in
accordance with and subject to the limitations of Section 4.2 of the Agreement,
for exercise of the Original Option or portion thereof using eligible
previously-acquired shares of PNC common stock, either by physically delivering
certificates for the shares to PNC or through PNC’s attestation procedure, where
Optionee delivers an executed affidavit of share ownership form to PNC in which
Optionee attests to ownership of a specified number of eligible
previously-acquired shares of PNC common stock (which may be in certificated or
non-certificated form).

 

  •

Exercise-Related Withholding Taxes: Satisfy all or a portion of the minimum,
exercise-related withholding tax requirements incurred in connection with
exercise of the Original Option or portion thereof, in accordance with and
subject to the limitations of Section 4.3 of the Agreement, either (i) using
eligible previously-acquired shares of PNC common stock (either by physical

 

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delivery of the share certificates to PNC or through PNC’s attestation
procedure) or (ii) by having PNC retain shares otherwise issuable to Optionee on
exercise of the Original Option or portion thereof and attesting to PNC that
Optionee owns a number of eligible previously-acquired shares of PNC common
stock at least equal to the number of shares retained.

 

Eligible Shares. In order for shares to be eligible previously-acquired shares
of PNC common stock for purposes of this Section 3 of the Addendum (“Eligible
Shares”), Optionee must have owned those shares for at least six (6) months
prior to the Original Option Exercise Date and, in the case of restricted stock,
at least six (6) months must have passed since the restrictions lapsed, or, in
either case, such other period as may be specified or permitted by PNC. In
addition, to be Eligible Shares, those shares cannot be subject to any
contractual restriction, pledge or other encumbrance.

 

4. Nature of Reload Option.

 

(a) A Reload Option will be an Option to purchase, at Fair Market Value as of
the Original Option Exercise Date, a number of shares of PNC common stock equal
to the aggregate number of whole Eligible Shares that Optionee, in the manner
set forth in Section 3 of this Addendum, either used or attested to the
ownership of in connection with the exercise of all or a portion of the Original
Option, in order to pay all or a portion of the aggregate Option Price for such
exercise, to satisfy all or a portion of the minimum, exercise-related
withholding tax requirements incurred in connection with such exercise, or both.

 

Any additional Eligible Shares that Optionee may decide to use for
exercise-related tax withholding in excess of the minimum required withholding
amount are not counted in determining the number of shares of PNC common stock
underlying a Reload Option.

 

(b) Subject generally to the lapse of a one-year vesting period beginning upon
the Reload Option’s Grant Date, a Reload Option will be exercisable only between
its Grant Date and the Original Option Expiration Date, and only in accordance
with the terms and conditions of the governing Reload Nonstatutory Stock Option
Agreement.

 

5. No Additional Reload Option. No Reload Option will entitle Optionee to
receive another Reload Option upon its exercise.

 

6. Applicable Law. Notwithstanding anything in this Addendum, PNC will not be
required to comply with any term, covenant or condition of this Addendum if and
to the extent prohibited by law, including but not limited to federal banking
and securities regulations, or as otherwise directed by one or more regulatory
agencies having jurisdiction over PNC or any of its subsidiaries. Further, to
the extent, if any, applicable to Optionee, Optionee agrees to reimburse PNC for
any amounts Optionee may be required to reimburse the Corporation pursuant to
Section 304 of the Sarbanes-Oxley Act of 2002, and agrees that PNC need not
comply with any term, covenant or condition of this Addendum to the extent that
doing so would require that Optionee reimburse PNC or its subsidiaries for such
amounts pursuant to Section 304 of the Sarbanes-Oxley Act of 2002.

 

7. Effective Date. This Addendum will not be effective unless and until the
Original Option Agreement is effective in accordance with its terms. Upon
effectiveness of the Original Option Agreement and upon execution and delivery
of this Addendum by both PNC and Optionee, this Addendum is effective as of the
Original Option Grant Date.

 

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IN WITNESS WHEREOF, PNC has caused this Addendum to be signed on its behalf,
effective as of the Original 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 Original Option Grant Date:

 

Optionee

 

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FORM OF STOCK OPTION AGREEMENT FOR

EXECUTIVE WITH 1-YEAR VESTING

 

THE PNC FINANCIAL SERVICES GROUP, INC.

1997 LONG-TERM INCENTIVE AWARD PLAN

NONSTATUTORY STOCK OPTION AGREEMENT

 

OPTIONEE:

  <Name>

GRANT DATE:

                      , 200  

OPTION PRICE:

  $                     per share

COVERED SHARES:

  «Shares»

 

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 Agreement
(“Agreement”) as defined in the Plan unless otherwise defined in the Agreement
or an Annex thereto. In the 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 Agreement and in the Annexes hereto are for convenience
only and are not part of the Agreement and Annexes.

 

1. Grant of Option. Pursuant to the Plan and subject to the terms of the
Agreement, PNC hereby grants to Optionee an Option to purchase from PNC that
number of shares of PNC common stock specified above as the “Covered Shares,”
exercisable at the Option Price.

 

2. Terms of the Option.

 

2.1 Type of Option. The Option is intended to be a Nonstatutory Stock Option
without Rights.

 

2.2 Option Period. The Option is exercisable in whole or in part as to any
Covered Shares as to which it is outstanding and has become exercisable
(“vested”) at any time and from time to time through the Expiration Date.

 

To the extent that the Option is otherwise outstanding, the Option will vest as
to Covered Shares as set forth in this Section 2.2.

 

(a) Unless the Option has become vested pursuant to Section 2.2(b), 2.2(c),
2.2(d) or 2.2(e), the Option will become exercisable (“vest”) as to all
outstanding Covered Shares commencing on the first (1st) anniversary date of the
Grant Date provided that Optionee is still an employee of the Corporation on
such vesting date.

 

(b) If Optionee’s employment is terminated by the Corporation by reason of Total
and Permanent Disability and not for Cause, the Option will vest as to all
outstanding Covered Shares as to which it has not otherwise vested commencing on
Optionee’s Termination Date.

 

(c) If Optionee’s employment with the Corporation is terminated by reason of
Optionee’s death, the Option will immediately vest as to all outstanding Covered
Shares as to which it has not otherwise vested, and the Option may be exercised
by 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 Optionee’s employment with the Corporation is terminated during a
Coverage Period by the Corporation without Cause or by Optionee with Good
Reason, the Option will vest as to all outstanding Covered Shares as to which it
has not otherwise vested commencing on Optionee’s Termination Date.

 

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(e) Notwithstanding any other provision of this Section 2.2, to the extent that
the Option is outstanding but not yet vested at the time a Change in Control
occurs, the Option will vest as to all then outstanding Covered Shares,
effective as of the day immediately prior to the occurrence of the Change in
Control, provided that, at the time the Change in Control occurs, Optionee is an
employee of the Corporation.

 

If Optionee is employed by a Subsidiary that ceases to be a Subsidiary of PNC
and Optionee does not continue to be employed by PNC or a Subsidiary, then for
purposes of the Agreement, Optionee’s employment with the Corporation terminates
effective at the time this occurs.

 

2.3 Nontransferability; Designation of Beneficiary. The Option is not
transferable or assignable by Optionee other than by transfer to a properly
designated beneficiary in the event of death, or by will or the laws of descent
and distribution.

 

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.

 

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. In the absence
of a properly designated beneficiary, the Option will be held and may be
exercised by the person or persons entitled to do so under Optionee’s will or
under the applicable laws of descent and distribution.

 

3. Capital Adjustments. The number and class of Covered Shares as to which the
Option is outstanding and has not yet been exercised and the Option Price will
be subject to such adjustment, if any, as the Committee in its sole discretion
deems appropriate to reflect corporate transactions (including, without
limitation, stock dividends, stock splits, spin-offs, split-offs,
recapitalizations, mergers, consolidations or reorganizations of or by PNC
(each, a “Corporate Transaction”)), 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 will be made by the Committee in its sole
discretion and will be final, binding and conclusive for all purposes on all
parties, including without limitation the holder of the Option.

 

No fractional shares will be issued on exercise of the Option. PNC will
determine the manner in which any fractional shares will be treated.

 

4. Exercise of Option.

 

4.1 Notice and Effective Date. The Option may be exercised, in whole or in part,
by delivering to PNC written notice of such exercise, in such form as PNC may
from time to time prescribe, accompanied by full payment of the aggregate Option
Price with respect to that portion of the Option being exercised and
satisfaction of any amounts required to be withheld pursuant to applicable tax
laws in connection with such exercise.

 

In addition, notwithstanding Sections 4.2 and 4.3, Optionee may elect to
complete his or her Option exercise through a brokerage service/margin account
pursuant to the broker-assisted cashless option exercise procedure under
Regulation T of the Board of Governors of the Federal Reserve System and in such
manner as may be permitted by PNC from time to time consistent with said
Regulation T.

 

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The effective date of such exercise will be the Exercise Date. Until PNC
notifies Optionee to the contrary, the form attached to the Agreement as Annex B
shall be used to exercise the Option and the form attached to the Agreement as
Annex C shall be used to make tax payment elections.

 

In the event that the Option is exercised, pursuant to Section 2.3, by any
person or persons other than Optionee, such notice of exercise must be
accompanied by appropriate proof of the derivative right of such person or
persons to exercise the Option.

 

4.2 Payment of Option Price. Upon exercise of the Option, in whole or in part,
Optionee may pay the aggregate Option Price (a) in cash, (b) using whole shares
of PNC common stock (either by physical delivery to PNC of certificates for the
shares or through PNC’s attestation procedure) having an aggregate Fair Market
Value on the Exercise Date not exceeding that portion of the aggregate Option
Price being paid using such shares, or (c) through a combination of cash and
shares of PNC common stock; provided, however, that shares of PNC common stock
used to pay all or any portion of the aggregate Option Price may not be subject
to any contractual restriction, pledge or other encumbrance and must be shares
that have been owned by Optionee for at least six (6) months prior to the
Exercise Date and, in the case of restricted stock, for which it has been at
least six (6) months since the restrictions lapsed, or, in either case, for such
other period as may be specified or permitted by PNC.

 

4.3 Payment of Taxes. Optionee may elect to satisfy any or all applicable
federal, state, or local tax liabilities incurred in connection with exercise of
the Option (a) by payment of cash, (b) subject to such terms and conditions as
PNC may from time to time establish, through the retention by PNC of sufficient
whole shares of PNC common stock otherwise issuable upon such exercise to
satisfy the minimum amount of taxes required to be withheld in connection with
such exercise, or (c) subject to such terms and conditions as PNC may from time
to time establish, using whole shares of PNC common stock (either by physical
delivery to PNC of certificates for the shares or through PNC’s 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.

 

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6. Rights as Shareholder. Optionee will have no rights as a shareholder with
respect to any Covered Shares until the Exercise Date and then only with respect
to those shares of PNC common stock issued upon such exercise of the Option and
not retained as provided in Section 4.3.

 

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, 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 twelve (12) months 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 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 (either as Coverage Period
is defined in Section A.10 of Annex A or, if Optionee was a party to a CIC
Severance Agreement that was in effect at the time of such termination of
employment, as Coverage Period is defined in such CIC Severance Agreement, if
longer), then commencing immediately after such Termination Date, the provisions
of subsections (a) and (b) of this Section 9.2 shall no longer apply and shall
be replaced with the following subsection (c):

 

(c) No-Hire. Optionee agrees that Optionee shall not, for a period of twelve
(12) months after the Termination Date, employ or offer to employ, solicit,
actively interfere with 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

 

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sources, (b) as required in the course of employment by the Corporation, (c) as
required by any court, supervisory authority, administrative agency or
applicable law, or (d) with the prior written consent of PNC.

 

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 Agreement.

 

10.1 Governing Law and Jurisdiction. The Agreement is governed by and construed
under the laws of the Commonwealth of Pennsylvania, without regard to conflict
of laws rules. Any dispute or claim arising out of or relating to the Agreement
or claim of breach hereof shall be brought exclusively in the federal court for
the Western District of Pennsylvania or in the Court of Common Pleas of
Allegheny County, Pennsylvania. By execution of the Agreement, Optionee and PNC
hereby consent to the exclusive jurisdiction of such courts, and waive any right
to challenge jurisdiction or venue in such courts with regard to any suit,
action, or proceeding under or in connection with the Agreement.

 

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 shall extend for
a period of twelve (12) months from the date of the legal order requiring such
compliance.

 

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.

 

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10.8 Applicable Law. Notwithstanding anything in the Agreement, PNC will not be
required to comply with any term, covenant or condition of the Agreement if and
to the extent prohibited by law, including but not limited to federal banking
and securities regulations, or as otherwise directed by one or more regulatory
agencies having jurisdiction over PNC or any of its subsidiaries. Further, to
the extent, if any, applicable to Optionee, Optionee agrees to reimburse PNC for
any amounts Optionee may be required to reimburse the Corporation pursuant to
Section 304 of the 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 Optionee reimburse PNC or its subsidiaries for such
amounts pursuant to Section 304 of the Sarbanes-Oxley Act of 2002.

 

11. Amendment of Pre-2004 Options. For purposes of all PNC stock options held by
Optionee that were granted prior to January 1, 2004 and outstanding on February
18, 2004, the terms of each such option are amended to include, or shall
include, as the case may be, the following provisions:

 

(a) Notwithstanding any other provision of such option relating to vesting, to
the extent that the such option is outstanding but not yet fully vested at the
time a Change in Control occurs, the option will vest as to all then outstanding
Covered Shares as to which it has not otherwise vested, effective as of the day
immediately prior to the occurrence of the Change in Control, provided that, at
the time the Change in Control occurs, the optionee is an employee of the
Corporation;

 

(b) If there is a Change in Control, then notwithstanding any other provisions
of such option relating to the date of expiration or expiration date of the
option, to the extent that such option is outstanding and vested or vests at the
time the Change in Control occurs, such option will not expire at the earliest
before the close of business on the ninetieth (90th) day after the occurrence of
the Change in Control (or the tenth (10th) anniversary of the Grant Date if
earlier), provided that, either (i) the optionee is an employee of the
Corporation at the time the Change in Control occurs and the optionee’s
employment with the Corporation is not terminated for Cause or (ii) the optionee
is a former employee of the Corporation whose option, or portion thereof, is
outstanding at the time the Change in Control occurs because it qualified and
continues to qualify pursuant to the terms of the relevant stock option
agreement as amended for an exception to the general rule that stock options
expire at the time the optionee ceases to be an employee of the Corporation;

 

(c) If, under the relevant stock option agreement as amended, more than one
exception to the general rule that stock options expire on termination of the
optionee’s employment with the Corporation is applicable to such option or a
portion thereof, then the option, or such portion of the option, will expire in
accordance with the provision or provisions of said agreement that specify the
latest expiration date;

 

(d) If the terms of the relevant stock option agreement as amended provide for
the early expiration of such stock option in certain circumstances where the
optionee has engaged in competitive conduct or activity or in other conduct or
activity that is inimical, contrary, harmful or detrimental to the Corporation’s
interests (a “detrimental conduct” provision), no determination that the
optionee has engaged in such detrimental conduct may be made on or after the
occurrence of a Change in Control; and

 

(e) If the termination of the optionee’s employment with the Corporation meets
the definition of Retirement, then with respect to any portion of the option
that is outstanding and vested on optionee’s retirement date or that qualifies
for post-employment vesting under the terms of the relevant stock option
agreement and vests thereafter, such option will qualify for an exception to the
general rule that options expire at the time the optionee ceases to be an
employee and will expire on the tenth (10th) anniversary date of the Grant Date,
subject to the operation of any detrimental conduct provision that may be
applicable.

 

The terms of PNC employee stock options granted after January 1, 2004 shall also
include the capital adjustment provisions set forth in Section 3, unless and
until the Committee determines otherwise.

 

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12. Effective Date. If Optionee does not accept the grant of the Option by
executing and delivering a copy of the Agreement to PNC, without altering or
changing the terms of the Agreement in any way, within sixty (60) days of
receipt by Optionee of a copy of the Agreement, PNC may, in its sole discretion,
withdraw its offer and cancel the Option and the Agreement at any time prior to
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
and the filing with and acceptance by the SEC of a Form 4 reporting the Grant,
the Option and the Agreement are effective as of the Grant Date.

 

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

 

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ANNEX A

 

THE PNC FINANCIAL SERVICES GROUP, INC.

1997 LONG-TERM INCENTIVE AWARD PLAN

NONSTATUTORY STOCK OPTION AGREEMENT

CERTAIN DEFINITIONS

 

Except where the context otherwise indicates, the following definitions apply to
the Nonstatutory Stock Option Agreement (“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 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
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

 

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illness), after a written demand for substantial performance is delivered to
Optionee by PNC that specifically identifies the manner in which it is believed
that Optionee has not substantially performed 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 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 in Control” means a change of control of PNC of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or in response to any similar item on any similar schedule or
form) promulgated under the Exchange Act, whether or not PNC is then subject to
such reporting requirement; provided, however, that without limitation, a Change
in Control shall be deemed to have occurred if:

 

(a) any Person, excluding employee benefit plans of the Corporation, is or
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act or any successor provisions thereto), directly or indirectly, of
securities of PNC representing twenty percent (20%) or more of the combined
voting power of PNC’s then outstanding securities; provided, however, that such
an acquisition of beneficial ownership representing between twenty percent (20%)
and forty percent (40%), inclusive, of such voting power shall not be considered
a Change in Control if the Board approves such acquisition either prior to or
immediately after its occurrence;

 

(b) PNC consummates a merger, consolidation, share exchange, division or other
reorganization or transaction of PNC (a “Fundamental Transaction”) with any
other corporation, other than a Fundamental Transaction that results in the
voting securities of PNC outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least sixty percent (60%) of the combined
voting power immediately after such Fundamental Transaction of (i) PNC’s
outstanding securities, (ii) the surviving entity’s outstanding securities, or
(iii) in the case of a division, the outstanding securities of each entity
resulting from the division;

 

(c) the shareholders of PNC approve a plan of complete liquidation or winding-up
of PNC or an agreement for the sale or disposition (in one transaction or a
series of transactions) of all or substantially all of PNC’s assets;

 

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(d) as a result of a proxy contest, individuals who prior to the conclusion
thereof constituted the Board (including for this purpose any new director whose
election or nomination for election by PNC’s shareholders in connection with
such proxy contest was approved by a vote of at least two-thirds (2/3rds) of the
directors then still in office who were directors prior to such proxy contest)
cease to constitute at least a majority of the Board (excluding any Board seat
that is vacant or otherwise unoccupied);

 

(e) during any period of twenty-four (24) consecutive months, individuals who at
the beginning of such period constituted the Board (including for this purpose
any new director whose election or nomination for election by PNC’s shareholders
was approved by a vote of at least two-thirds (2/3rds) of the directors then
still in office who were directors at the beginning of such period) cease for
any reason to constitute at least a majority of the Board (excluding any Board
seat that is vacant or otherwise unoccupied); or

 

(f) the Board determines that a Change in Control has occurred.

 

Notwithstanding anything to the contrary herein, a divestiture or spin-off of a
subsidiary or division of PNC or any of its Subsidiaries shall not by itself
constitute a Change in Control.

 

A.5 “CIC Failure” means the following:

 

(a) with respect to a CIC 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 CIC Triggering Event described in Section A.7(b), the
proxy contest fails to replace or remove a majority of the members of the Board.

 

A.6 “CIC Severance Agreement” means the written agreement, if any, between
Optionee and PNC providing, among other things, for certain change in control
severance benefits.

 

A.7 “CIC Triggering Event” means the occurrence of either of the following:

 

(a) the Board or PNC’s shareholders approve a transaction described in
Subsection (b) of the definition of Change in 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 “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 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, 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.9 “Corporation” means PNC and its Subsidiaries.

 

A.10 “Coverage Period” means a period (a) commencing on the earlier to occur of
(i) the date of a CIC Triggering Event and (ii) the date of a Change in Control
and (b) ending on the date that is two (2) years after the date of the Change in
Control; provided, however, that in the event that a Coverage Period commences
on the date of a CIC Triggering Event, such Coverage Period will terminate upon
the earlier to occur of (x) the date of a CIC Failure and (y) the date that is

 

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two (2) years after the date of the Change in Control triggered by the CIC
Triggering Event. After the termination of any Coverage Period, another Coverage
Period will commence upon the earlier to occur of clauses (a)(i) and (a)(ii) in
the preceding sentence.

 

A.11 “Detrimental Conduct” means, for purposes of the 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 through
the first (1st) anniversary of Optionee’s Termination Date;

 

(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 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.12 “Exchange Act” means the Securities Exchange Act of 1934 as amended and the
rules and regulations promulgated thereunder.

 

A.13 “Exercise Date” means the date on which PNC receives written notice, in
such form as PNC may from time to time prescribe, of the exercise, in whole or
in part, of the Option pursuant to the terms of the Agreement, subject to full
payment of the aggregate Option Price and satisfaction of all taxes required to
be withheld in connection with such exercise as provided in Sections 4.1, 4.2
and 4.3 of the Agreement.

 

A.14 “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.14(b)
through A.14(d);

 

provided, however, if there is a Change in Control, then notwithstanding
Sections A.14(c) and A.14(d), to the extent that the Option is outstanding and
vested or vests at the time the Change in Control occurs, the Option will not
expire at the earliest before the close of business on the ninetieth (90th) day
after the occurrence of the Change in Control (or the tenth (10th) anniversary
of the Grant Date if earlier), provided that either (1) Optionee is an employee
of the Corporation at the time the Change in Control occurs and 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 in Control occurs by virtue of the

 

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application of one or more of the exceptions set forth in Section A.14(c) and at
least one of such exceptions is still applicable at the time the Change in
Control occurs.

 

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 vested 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 vested, except to the extent
that the provisions set forth in subsection (1), (2), (3), (4) or (5) of this
Section A.14(c) apply to 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 vested 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) Total and Permanent Disability. If Optionee’s employment is terminated by
the Corporation by reason of Total and Permanent Disability, then the Option
will expire on the third (3rd) anniversary of such Termination Date (but in no
event later than on the tenth (10th) anniversary of the Grant Date).

 

(5) DEAP or Agreement or Arrangement in lieu of or in addition to DEAP. 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 Displaced Employee Assistance Plan, or any successor plan by whatever
name known (“DEAP”), or Optionee is offered and has entered into a similar
waiver and release agreement between PNC or a Subsidiary and Optionee pursuant
to the terms of an agreement or arrangement entered into by PNC or a Subsidiary
and Optionee in lieu of or in addition to the DEAP, and (b) Optionee has not
revoked such waiver and release agreement, and (c) the time for revocation of
such waiver and release agreement by Optionee has lapsed, then the Option will
expire at the close of business on the ninetieth (90th) day after 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 vested; provided, however, that if Optionee returns to employment
with the Corporation no later

 

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than said ninetieth (90th) day, then for purposes of the Agreement, the entire
Option, whether vested or unvested, will be treated as if the termination of
Optionee’s employment with the Corporation had not occurred.

 

If the Option is vested and will expire on Optionee’s Termination Date unless
the conditions set forth in this Section A.14(c)(5) are met, then such vested
Option will not terminate on the Termination Date, but Optionee will not be able
to exercise the Option after such Termination Date unless and until all of the
conditions set forth in this Section A.14(c)(5) have been met and the Option
will terminate on the ninetieth (90th) day after 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.14(c), then notwithstanding the provisions of such exception or exceptions,
the Option will expire on the date that PNC determines that Optionee has engaged
in Detrimental Conduct, if earlier than the date on which the Option would
otherwise expire; provided, however, that:

 

(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, whether or not
another exception is applicable, no determination that Optionee has engaged in
Detrimental Conduct may be made for purposes of the Agreement on or after such
Termination Date; and

 

(3) no determination that Optionee has engaged in Detrimental Conduct may be
made after the occurrence of a Change in Control.

 

A.15 “Good Reason” means:

 

(a) the assignment to Optionee of any duties inconsistent in any respect with
Optionee’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities immediately prior to either
the CIC Triggering Event or the Change in Control, or any other action by the
Corporation that results in a diminution in any respect in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith that is remedied by
the Corporation promptly after receipt of notice thereof given by Optionee;

 

(b) a reduction by the Corporation in Optionee’s annual base salary as in effect
on the Grant Date, as the same may be increased from time to time;

 

(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 CIC Triggering Event or the Change in Control;

 

(d) the failure by the Corporation (i) to continue in effect any bonus, stock
option or other cash or equity-based incentive plan in which Optionee
participates immediately prior to either the CIC Triggering Event or the Change
in Control that is material to Optionee’s total compensation, unless a
substantially equivalent arrangement (embodied in an ongoing substitute or
alternative plan) has been made with respect to such plan, or (ii) to continue
Optionee’s participation in such plan (or in such substitute or alternative
plan) on a basis at least as

 

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favorable, both in terms of the amount of benefits provided and the level of
Optionee’s participation relative to other participants, as existed immediately
prior to the CIC Triggering Event or the Change in Control; or

 

(e) the failure by the Corporation to continue to provide Optionee with benefits
substantially similar to those received by Optionee under any of the
Corporation’s pension (including, but not limited to, tax-qualified plans), life
insurance, health, accident, disability or other welfare plans in which Optionee
was participating, at costs substantially similar to those paid by Optionee,
immediately prior to the CIC Triggering Event or the Change in Control.

 

A.16 “Grant Date” means the date set forth as the Grant Date on page 1 of the
Agreement.

 

A.17 “Option” means the Nonstatutory Stock Option granted to Optionee in Section
1 of the Agreement pursuant to which Optionee may purchase shares of PNC common
stock as provided in the Agreement.

 

A.18 “Option Price” means the dollar amount per share of PNC common stock set
forth as the Option Price on page 1 of the Agreement.

 

A.19 “Optionee” means the person identified as Optionee on page 1 of the
Agreement.

 

A.20 “Person” has the meaning given in Section 3(a)(9) of the Exchange Act and
also includes any syndicate or group deemed to be a person under Section
13(d)(3) of the Exchange Act.

 

A.21 “PNC” means The PNC Financial Services Group, Inc.

 

A.22 “Retiree” means an Optionee who has Retired.

 

A.23 “Retire” or “Retirement” means termination of Optionee’s employment with
the Corporation (a) at any time on or after the first day of the first month
coincident with or next following the date on which Optionee attains age
fifty-five (55) and completes five (5) years of service (as determined in the
same manner as the determination of five years of Vesting Service under the
provisions of The PNC Financial Services Group, Inc. Pension Plan) with the
Corporation and (b) for a reason other than termination by reason of Optionee’s
death or by the Corporation for Cause or, unless the Committee determines
otherwise, termination in connection with a divestiture of assets or of one or
more Subsidiaries.

 

A.24 “Right(s)” means stock appreciation right(s) in accordance with the terms
of Article 7 of the Plan.

 

A.25 “SEC” means the Securities and Exchange Commission.

 

A.26 “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 Agreement, Optionee’s employment with the
Corporation terminates effective at the time this occurs.

 

A.27 “Total and Permanent Disability” means, unless the Committee determines
otherwise, Optionee’s disability as determined to be total and permanent by the
Corporation for purposes of the Agreement.

 

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FORM OF NON-CEG ANNUAL LTI PROGRAM

RESTRICTED STOCK GRANT AGREEMENT

 

200_ Long-Term Incentive Award Program Grant

Continued Employment Performance Goal

Restricted Period: Three Years (100%)

 

THE PNC FINANCIAL SERVICES GROUP, INC.

1997 LONG-TERM INCENTIVE AWARD PLAN

* * *

200   LONG-TERM INCENTIVE AWARD PROGRAM

* * *

RESTRICTED STOCK AGREEMENT

* * *

 

GRANTEE:

   < name >

GRANT DATE:

                       , 200  

SHARES:

   < number of whole shares>

 

1. Grant of Restricted Shares. Pursuant to Article 12 of The PNC Financial
Services Group, Inc. 1997 Long-Term Incentive Award Plan as amended from time to
time (“Plan”), and subject to the terms and conditions of this Restricted Stock
Agreement (“Agreement”), The PNC Financial Services Group, Inc. (“PNC”) hereby
grants to the Grantee named above (“Grantee”) an Incentive Share Award (as
defined in the Plan) of the number of shares of PNC common stock set forth
above, and, upon acceptance of the Grant by Grantee in accordance with Section
17, will cause the issuance of said shares to Grantee subject to the terms and
conditions of the Agreement and the Plan. The shares granted and issued to
Grantee hereby as an Incentive Share Award subject to the terms and conditions
of the Agreement and the Plan are hereafter referred to as the “Restricted
Shares.”

 

2. Definitions. Terms defined in the Plan are used in the Agreement as defined
in the Plan unless otherwise defined in Annex A (attached hereto and
incorporated herein by reference) or elsewhere in the Agreement.

 

3. Terms of Grant. The Grant will be subject to the following terms and
conditions:

 

Restricted Shares will be subject to a Restricted Period as provided in Section
A.24 of Annex A. Restricted Shares will be deposited with PNC or its designee,

 

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or credited to a book-entry account, during the term of the Restricted Period
unless and until forfeited pursuant to the terms of the Agreement.

 

Any certificate or certificates representing such 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. 1997 Long-Term Incentive
Award Plan as amended and an Agreement entered into between the registered owner
and The PNC Financial Services Group, Inc. Release from such terms and
conditions will be made only in accordance with the provisions of such Plan and
such Agreement, a copy of each of which is on file in the office of the
Corporate Secretary of The PNC Financial Services Group, Inc.”

 

Where a book-entry system is used with respect to Restricted Shares, appropriate
notation of such forfeiture possibility and transfer restrictions will be made
on the system with respect to the account or accounts to which the Restricted
Shares are credited.

 

Restricted Shares deposited with PNC or its designee during the term of the
Restricted Period that become Awarded Shares will be released and issued or
reissued to, or at the proper direction of, Grantee or Grantee’s legal
representative pursuant to Section 9 as soon as administratively practicable
following the end of the Restricted Period.

 

4. Rights as Shareholder. Except as provided in Section 6 and subject to Section
7.6(c), if applicable, and to Section 17, Grantee will have all the rights and
privileges of a shareholder with respect to the Restricted Shares including, but
not limited to, the right to vote the Restricted Shares and the right to receive
dividends thereon if and when declared by the Board; provided, however, that all
such rights and privileges will cease immediately upon any forfeiture of such
shares.

 

5. Capital Adjustments. Restricted Shares awarded hereunder will, as issued and
outstanding shares of PNC common stock, be subject to such adjustment as may be
necessary to reflect corporate transactions, including, without limitation,
stock dividends, stock splits, spin-offs, split-offs, recapitalizations,
mergers, consolidations or reorganizations of or by PNC; provided, however, that
any shares received as distributions on or in exchange for Unvested Shares will
be subject to the terms and conditions of the Agreement as if they were
Restricted Shares.

 

6. Prohibitions Against Sale, Assignment, etc. Unvested Shares may not be sold,
assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered,
other than by will or the laws of descent and distribution or as may be required
pursuant to Section 10.2, unless and until the Restricted Period terminates and
the Awarded Shares are released and issued or reissued by PNC pursuant to
Section 9.

 

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7. Forfeiture; Death; Qualifying Disability or Retirement Termination;
Termination in Anticipation of Change in Control.

 

7.1 Forfeiture on Termination of Employment. Except as otherwise provided in and
subject to the conditions of Section 7.3, Section 7.4(a), Section 7.5(a),
Section 7.5(c), Section 7.6(a), Section 7.6(b), or Section 8, if applicable, or
unless the Committee determines otherwise, in the event that Grantee’s
employment with the Corporation terminates prior to the third (3rd) anniversary
of the Grant 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 forfeiture of Unvested Shares pursuant to the provisions of this Section
7.1 or the provisions of Section 7.2, Section 7.4(b), Section 7.5(b), Section
7.5(c) or Section 7.6(d), neither Grantee nor any successors, heirs, assigns or
legal representatives of Grantee will thereafter have any further rights or
interest in such Unvested Shares or any certificate or certificates representing
such Unvested Shares.

 

7.2 Forfeiture for 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: (a)
this Section 7.2 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;
(b) no determination that Grantee has engaged in Detrimental Conduct may be made
on or after the date of Grantee’s death; (c) Detrimental Conduct will not apply
to conduct by or activities of successors to the Restricted Shares by will or
the laws of descent and distribution in the event of Grantee’s death; and (d)
Detrimental Conduct will cease to apply to any Restricted Shares upon a Change
in Control.

 

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 Grant Date, the Three-Year
Continued Employment Performance Goal will be deemed to have been achieved, and
the Restricted Period with respect to the then outstanding Unvested Shares will
terminate on the date of Grantee’s death.

 

The Restricted Shares which thereby become Awarded Shares will be released and
issued or 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 Disability Termination.

 

(a) In the event Grantee’s employment with the Corporation is terminated prior
to the third (3rd) anniversary of the Grant Date by the Corporation by reason of
Grantee’s Total and Permanent Disability, Unvested Shares will not be forfeited
on

 

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Grantee’s Termination Date. Instead, Unvested Shares will, subject to the
forfeiture provisions of Section 7.2, remain outstanding pending approval of the
vesting of the Restricted Shares pursuant to this Section 7.4(a) by the
Designated Person specified in Section A.13 of Annex A.

 

If such Unvested Shares are still outstanding but the Designated Person has not
made an affirmative determination to either approve or disapprove the vesting of
the Unvested Shares by the day immediately preceding the third (3rd) anniversary
of the Grant Date, then the Restricted Period will be automatically extended
through the first to occur of: (1) the day the Designated Person makes an
affirmative determination regarding such vesting; and (2) either (i) the
ninetieth (90th) day following the third (3rd) anniversary of the Grant Date, if
the Designated Person is the Chief Human Resources Officer of PNC, or (ii) the
180th day following such anniversary date if the Designated Person is the
Committee, whichever is applicable.

 

If the vesting of the then outstanding Unvested Shares is affirmatively approved
by the Designated Person on or prior to the last day of the Restricted Period,
including any extension of the Restricted Period, if applicable, then the
Three-Year Continued Employment Performance Goal will be deemed to have been
achieved, and the Restricted Period with respect to any then outstanding
Unvested Shares will terminate as of the end of the day on the date of such
approval or the day immediately preceding the third (3rd) anniversary of the
Grant Date, whichever is later. The Restricted Shares outstanding at the
termination of the Restricted Period will become Awarded Shares and will be
released and issued or reissued by PNC pursuant to Section 9.

 

(b) If the Designated Person disapproves the vesting of the Unvested Shares that
had remained outstanding after Grantee’s Termination Date pending approval of
vesting, then all such Unvested Shares that are still outstanding will be
forfeited by Grantee to PNC on such disapproval date without payment of any
consideration by PNC.

 

If by the end of the Restricted Period, including any extension of the
Restricted Period pursuant to the second paragraph of Section 7.4(a), if
applicable, the Designated Person has neither affirmatively approved nor
disapproved the vesting of the Unvested Shares that had remained outstanding
after Grantee’s Termination Date pending approval of vesting, then all such
Unvested Shares that are still outstanding will be forfeited by Grantee to PNC
at the close of business on the last day of the Restricted Period without
payment of any consideration by PNC.

 

7.5 Retirement.

 

(a) In the event that Grantee Retires on or after the first (1st) anniversary of
the Grant Date but prior to the third (3rd) anniversary of the Grant Date,
Unvested Shares will not be forfeited on Grantee’s Termination Date. Instead,
Unvested Shares will, subject to the forfeiture provisions of Section 7.2,
remain outstanding pending approval of the vesting of the Restricted Shares
pursuant to this Section 7.5(a) by the Designated Person specified in Section
A.13 of Annex A.

 

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If such Unvested Shares are still outstanding but the Designated Person has not
made an affirmative determination to either approve or disapprove the vesting of
the Unvested Shares by the day immediately preceding the third (3rd) anniversary
of the Grant Date, then the Restricted Period will be automatically extended
through the first to occur of: (1) the day the Designated Person makes an
affirmative determination regarding such vesting; and (2) either (i) the
ninetieth (90th) day following the third (3rd) anniversary of the Grant Date, if
the Designated Person is the Chief Human Resources Officer of PNC, or (ii) the
180th day following such anniversary date if the Designated Person is the
Committee, whichever is applicable.

 

If the vesting of the then outstanding Unvested Shares is affirmatively approved
by the Designated Person on or prior to the last day of the Restricted Period,
including any extension of the Restricted Period, if applicable, then the
Three-Year Continued Employment Performance Goal will be deemed to have been
achieved, and the Restricted Period with respect to any then outstanding
Unvested Shares will terminate as of the end of the day on the date of such
approval or the day immediately preceding the third (3rd) anniversary of the
Grant Date, whichever is later. The Restricted Shares outstanding at the
termination of the Restricted Period will become Awarded Shares and will be
released and issued or reissued by PNC pursuant to Section 9.

 

(b) If the Designated Person disapproves the vesting of the Unvested Shares that
had remained outstanding after Grantee’s Termination Date pending approval of
vesting, then all such Unvested Shares that are still outstanding will be
forfeited by Grantee to PNC on such disapproval date without payment of any
consideration by PNC.

 

If by the end of the Restricted Period, including any extension of the
Restricted Period pursuant to the second paragraph of Section 7.5(a), if
applicable, the Designated Person has neither affirmatively approved nor
disapproved the vesting of the Unvested Shares that had remained outstanding
after Grantee’s Termination Date pending approval of vesting, then all such
Unvested Shares that are still outstanding will be forfeited by Grantee to PNC
at the close of business on the last day of the Restricted Period without
payment of any consideration by PNC.

 

(c) In the event that Grantee Retires prior to the first (1st) anniversary of
the Grant Date, all Restricted Shares that are Unvested Shares on Grantee’s
Termination Date will be forfeited by Grantee to PNC on such date without
payment of any consideration by PNC; provided, however, that the Committee may,
in its sole discretion with respect to some or all of the Unvested Shares, treat
such shares as if Grantee had retired on or after the first (1st) anniversary of
the Grant Date.

 

7.6 Termination in Anticipation of a Change in Control.

 

(a) Notwithstanding anything in the Agreement to the contrary, if, after the
occurrence of a CIC Triggering Event but prior to a CIC Failure and prior to the
third (3rd) anniversary of the Grant Date, Grantee’s employment is terminated
(other than by reason of Grantee’s death) by the Corporation without Cause or by
Grantee for Good

 

-5-

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Reason, or if Grantee’s employment is deemed to have been so terminated pursuant
to Section 7.6(b), then: (i) the Three-Year Continued Employment Performance
Goal will be deemed to have been achieved and the Restricted Period with respect
to any then outstanding Unvested Shares will terminate as of the end of the day
on the day immediately preceding Grantee’s Termination Date (or, in the case of
a qualifying termination pursuant to Section 7.6(b), the date all of the
conditions set forth in clauses (i), (ii) and (iii) of the first or second
paragraph, as the case may be, of Section 7.6(b) are met); and (ii) all
Restricted Shares that thereby become Awarded Shares will be released and issued
or reissued by PNC pursuant to Section 9 as soon as administratively practicable
following such date.

 

(b) Grantee’s employment will also be deemed to have been terminated by the
Corporation without Cause after the occurrence of a CIC Triggering Event but
prior to a CIC Failure for purposes of Section 7.6(a) if: (i) Grantee’s
employment is terminated by the Corporation without Cause; (ii) such termination
of employment (a) was at the request of a third party that has taken steps
reasonably calculated to effect a Change in Control or (b) otherwise arose in
anticipation of a Change in Control; and (iii) a CIC Triggering Event or a
Change in Control occurs within three (3) months of such termination of
employment.

 

Grantee’s employment will also be deemed to have been terminated by Grantee for
Good Reason after the occurrence of a CIC Triggering Event but prior to a CIC
Failure for purposes of Section 7.6(a) if: (i) Grantee terminates Grantee’s
employment with Good Reason; (ii) the circumstance or event that constitutes
Good Reason (a) occurs at the request of a third party that has taken steps
reasonably calculated to effect a Change in Control or (b) otherwise arose in
anticipation of a Change in Control; and (iii) a CIC Triggering Event or a
Change in Control occurs within three (3) months of such termination of
employment.

 

For purposes of this Section 7.6(b) only, Grantee will have the burden of
proving that the requirements of clause (ii) of the first or second paragraph of
this Section 7.6(b), as the case may be, have been met and the standard of proof
to be met by Grantee will be clear and convincing evidence.

 

For purposes of this Section 7.6(b) only, the definition of Change in Control in
Section A.6 of Annex A will exclude the proviso in Section A.6(a).

 

(c) If the Unvested Shares will be forfeited by Grantee to PNC by reason of
Grantee’s termination of employment with the Corporation pursuant to Section 7.1
unless all of the conditions set forth in clauses (i), (ii) and (iii) of the
first or second paragraph, as the case may be, of Section 7.6(b) are met, then
in the event that the record date for any dividend payable with respect to the
Unvested Shares occurs on or after Grantee’s Termination Date but prior to the
time all of the conditions set forth in clauses (i), (ii) and (iii) of the first
or second paragraph, as the case may be, of Section 7.6(b) have been met, such
dividend will be held, without interest, pending satisfaction of all of such
conditions. In the event that one or more of the conditions of Section 7.6(b)
are not met, any dividend

 

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being held pending satisfaction of such conditions will be forfeited by Grantee
to PNC without payment of any consideration by PNC.

 

(d) If the Unvested Shares will be forfeited by Grantee to PNC by reason of
Grantee’s termination of employment with the Corporation pursuant to Section 7.1
unless all of the conditions set forth in clauses (i), (ii) and (iii) of the
first or second paragraph, as the case may be, of Section 7.6(b) are met, then
the Restricted Shares will remain outstanding pending satisfaction of all of
those conditions. Upon the failure of any required condition, all such Unvested
Shares will be forfeited by Grantee to PNC on the date such failure occurs
without payment of any consideration by PNC.

 

8. Change in Control. Notwithstanding anything in the Agreement to the contrary,
upon the occurrence of a Change in Control: (i) if Grantee is an employee of the
Corporation as of the day immediately preceding the Change in Control, the
Three-Year Continued Employment Performance Goal will be deemed to have been
achieved and the Restricted Period will terminate with respect to all then
outstanding Unvested Shares as of the day immediately preceding the Change in
Control; (ii) if Grantee’s employment with the Corporation terminated prior to
the occurrence of the Change in Control but the Unvested Shares remained
outstanding after such termination of employment pursuant to Section 7.4 or
Section 7.5 and are still outstanding pending approval of the vesting of such
shares by the Designated Person specified in Section A.13 of Annex A, then with
respect to all Unvested Shares outstanding as of the day immediately preceding
the Change in Control, such vesting approval will be deemed to have been given,
the Three-Year Continued Employment Performance Goal will be deemed to have been
achieved, and the Restricted Period will terminate, all as of the day
immediately preceding the Change in Control; and (iii) all Restricted Shares
that thereby become Awarded Shares will be released and issued or reissued by
PNC pursuant to Section 9 as soon as administratively practicable following such
date.

 

9. Termination of Prohibitions. Following termination of the Restricted Period,
PNC will release and issue or reissue the certificate or certificates
representing the then outstanding whole Restricted Shares that have become
Awarded Shares without the legend referred to in Section 3.

 

Upon release and issuance or reissuance of shares that have become Awarded
Shares, PNC or its designee will deliver the certificate or certificates for
such whole shares to, or at the proper direction of, Grantee or Grantee’s legal
representative.

 

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 applicable federal, state or local
withholding tax obligations arising from that election either: (a) by payment of
cash; (b) by physical delivery to PNC of certificates for whole shares of PNC
common stock that are not subject to any contractual restriction, pledge or
other encumbrance and that have been

 

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owned by Grantee for at least six (6) months and, in the case of restricted
stock, for which it has been at least six (6) months since the restrictions
lapsed; or (c) by a combination of cash and such stock. Any such tax election
shall be made pursuant to a form to be provided to Grantee by PNC on request.
For purposes of this Section 10.1, shares of PNC common stock that are used to
satisfy applicable withholding tax obligations will be valued at their Fair
Market Value on the date the tax withholding obligation arises. Grantee will
provide to PNC a copy of any Internal Revenue Code Section 83(b) election filed
by Grantee with respect to the Restricted Shares not later than ten (10) days
after the filing of such election.

 

10.2 Other Tax Liabilities. Where Grantee has not previously satisfied all
applicable withholding tax obligations, PNC will, at the time the tax
withholding obligation arises, retain sufficient whole shares of PNC common
stock from the shares granted pursuant to the Agreement to satisfy the minimum
amount of taxes required to be withheld by the Corporation in connection with
the Restricted Shares. For purposes of this Section 10.2, shares of PNC common
stock retained to satisfy applicable withholding tax requirements will be valued
at their Fair Market Value on the date the tax withholding obligation arises.

 

PNC will not retain more than the number of shares sufficient to satisfy the
minimum amount of taxes required to be withheld in connection with the
Restricted Shares. If Grantee desires to have an additional amount, up to
Grantee’s W-4 obligation, withheld above the required minimum and if PNC so
permits, Grantee may elect to satisfy this additional withholding either: (a) by
payment of cash; or (b) using whole shares of PNC common stock (either by
physical delivery to PNC of certificates for the shares or through PNC’s
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.

 

11. Employment. Neither the granting and issuance of the Restricted Shares nor
any term or provision of the Agreement shall constitute or be evidence of any
understanding, expressed or implied, on the part of PNC or any Subsidiary to
employ Grantee for any period or in any way alter Grantee’s status as an
employee at will.

 

12. Subject to the Plan and the Committee. In all respects the Grant and the
Agreement are subject to the terms and conditions of the Plan, which has been
made available to Grantee and is incorporated herein by reference; provided,
however, the terms of the Plan shall not be considered an enlargement of any
benefits under the Agreement. Further, the Grant and the Agreement are subject
to any interpretation of, and any rules and regulations issued by, the Committee
or under the authority of the Committee, whether made or issued before or after
the Grant Date.

 

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13. Headings; Entire Agreement. Headings used in the Agreement are provided for
reference and convenience only, shall not be considered part of the Agreement,
and shall not be employed in the construction of the Agreement. The Agreement
constitutes the entire agreement between Grantee and PNC and supersedes all
other discussions, negotiations, correspondence, representations, understandings
and agreements between the parties with respect to the subject matter hereof.

 

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, that such provisions are reasonable and properly required for the
adequate protection of the business of the Corporation, and that enforcement of
such provisions will not prevent Grantee from earning a living.

 

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 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 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 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 Grantee assist any other Person
in such activities.

 

Notwithstanding the above, if Grantee’s employment with the Corporation is
terminated by the Corporation without Cause or by Grantee with Good Reason and
such Termination Date occurs during a Coverage Period (either as Coverage Period
is defined in Section A.12 of Annex A or, if Grantee was a party to a written
agreement between Grantee and PNC providing, among other things, for certain
change in control severance benefits (a “CIC Severance Agreement”) that was in
effect at the time of such termination of employment, as Coverage Period is
defined in such CIC Severance Agreement, if longer), then commencing immediately
after such Termination Date, the provisions of

 

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subsections (a) and (b) of this Section 14.2 will no longer apply and will be
replaced with the following subsection (c):

 

(c) No-Hire. Grantee agrees that Grantee shall not, for a period of twelve (12)
months after the Termination Date, employ or offer to employ, solicit, actively
interfere with 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
Subsidiary 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 regard to conflict
of laws rules. Any dispute or claim arising out of or relating to the Agreement
or claim of breach hereof shall be brought exclusively in the federal court for
the Western District of Pennsylvania or in the Court of Common Pleas of
Allegheny County, Pennsylvania. By execution of the Agreement, Grantee and PNC
hereby consent to the exclusive jurisdiction of such courts, and waive any right
to challenge jurisdiction or venue in such courts with regard to any suit,
action, or proceeding under or in connection with the Agreement.

 

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15.2 Equitable Remedies. A breach of the provisions of any of Sections 14.2,
14.3 or 14.4 will cause the Corporation irreparable harm, and the Corporation
will therefore be entitled to issuance of immediate, as well as permanent,
injunctive relief restraining Grantee, and each and every person and entity
acting in concert or participating with Grantee, from initiation and/or
continuation of such breach.

 

15.3 Tolling Period. If it becomes necessary or desirable for the Corporation to
seek compliance with the provisions of Section 14.2 by legal proceedings, the
period during which Grantee shall comply with said provisions will extend for a
period of twelve (12) months from the date of the legal order requiring such
compliance.

 

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 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.

 

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16. Amendment of Pre-2004 Stock Options, Restricted Stock and Restricted Stock
Deferrals. All nonstatutory stock options granted to employees under the Plan
outstanding on February 18, 2004, all restricted stock grants to employees under
the Plan or PNC’s 1996 Executive Incentive Award Plan outstanding but not yet
vested on February 18, 2004, and all participant restricted stock deferral
accounts under the PNC and Affiliates Deferred Compensation Plan that were in
place but not yet vested on February 18, 2004, are subject to the amendments
approved by the Committee on that date. These amendments are generally described
in the Plan prospectus dated                     , 200   under the heading
“Recent Amendments” of the section titled “The Plan.” A copy of this Plan
prospectus accompanied or preceded delivery of the Agreement to Grantee.

 

To the extent that Grantee is the holder of any such stock options or is the
grantee of any such restricted stock or is a participant in the PNC and
Affiliates Deferred Compensation Plan with such stock deferral account or
accounts in place but not yet vested, Grantee hereby acknowledges and consents
to such amendments.

 

17. Acceptance of Grant; PNC Right to Cancel. If Grantee does not accept the
Grant by executing and delivering a copy of the Agreement to PNC, without
altering or changing the terms thereof in any way, within sixty (60) days of
receipt by Grantee of a copy of the Agreement, PNC may, in its sole discretion,
withdraw its offer and cancel the Grant at any time prior to 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 and, in the event that
Grantee is subject to the reporting requirements of Section 16(a) of the
Exchange Act with respect to PNC securities, the filing with and acceptance by
the SEC of a Form 4 reporting the Grant, the Agreement is effective.

 

Grantee will not have any of the rights of a shareholder with respect to the
Restricted Shares as set forth in Section 4, and will not have the right to vote
or to receive dividends on such shares, until the date the Agreement is
effective and the Restricted Shares are issued in accordance with this Section
17.

 

In the event that one or more record dates for dividends on PNC common stock
occur after the Grant Date but before the date the Agreement is effective in
accordance with this Section 17 and the Restricted Shares are issued, then upon
the effectiveness of the Agreement, the Corporation will make a cash payment to
Grantee equivalent to the amount of the dividends Grantee would have received
had the Agreement been effective and the Restricted Shares had been issued on
the Grant Date.

 

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IN WITNESS WHEREOF, PNC has caused the Agreement to be signed on its behalf as
of the Grant Date.

 

THE PNC FINANCIAL SERVICES GROUP, INC.

By:

        Chairman and Chief Executive Officer

ATTEST:

By:

        Corporate Secretary

ACCEPTED AND AGREED TO by GRANTEE.

       

Grantee

 

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200_ Long-Term Incentive Award Program Grant

Continued Employment Performance Goal

Restricted Period: Three Years (100%)

 

ANNEX A

TO

THE PNC FINANCIAL SERVICES GROUP, INC.

1997 LONG-TERM INCENTIVE AWARD PLAN

200_ LONG-TERM INCENTIVE AWARD PROGRAM

RESTRICTED STOCK AGREEMENT

 

* * *

 

CERTAIN DEFINITIONS

 

Except where the context otherwise indicates, the following definitions apply
for purposes of the Restricted Stock Agreement (“Agreement”) to which this Annex
A is attached:

 

A.1 “Awarded Shares.” Provided that the Restricted Shares are then outstanding,
Restricted Shares become “Awarded Shares” when both of the following have
occurred: (a) the Three-Year Continued Employment Performance Goal has been
achieved or is deemed to have been achieved pursuant to the terms of the
Agreement; and (b) the Restricted Period has terminated.

 

A.2 “Board” means the Board of Directors of PNC.

 

A.3 “Business Day” means any day when the New York Stock Exchange is open for
business.

 

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 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 Subsidiary.

 

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

 

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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.5 “CEO” means the chief executive officer of PNC.

 

A.6 “Change in Control” means a change of control of PNC of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or in response to any similar item on any similar schedule or
form) promulgated under the Exchange Act, whether or not PNC is then subject to
such reporting requirement; provided, however, that without limitation, a Change
in Control will be deemed to have occurred if:

 

(a) any Person, excluding employee benefits plans of the Corporation, is or
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act or any successor provisions thereto), directly or indirectly, of
securities of PNC representing twenty percent (20%) or more of the combined
voting power of PNC’s then outstanding securities; provided, however, that such
an acquisition of beneficial ownership representing between twenty percent (20%)
and forty percent (40%), inclusive, of such voting power will not be considered
a Change in Control if the Board approves such acquisition either prior to or
immediately after its occurrence;

 

(b) PNC consummates a merger, consolidation, share exchange, division or other
reorganization or transaction of PNC (a “Fundamental Transaction”) with any
other corporation, other than a Fundamental Transaction that results in the
voting securities of PNC outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least sixty percent (60%) of the combined
voting power immediately after such Fundamental Transaction of (i) PNC’s
outstanding securities, (ii) the surviving entity’s outstanding

 

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securities, or (iii) in the case of a division, the outstanding securities of
each entity resulting from the division;

 

(c) the shareholders of PNC approve a plan of complete liquidation or winding-up
of PNC or an agreement for the sale or disposition (in one transaction or a
series of transactions) of all or substantially all of PNC’s assets;

 

(d) as a result of a proxy contest, individuals who prior to the conclusion
thereof constituted the Board (including for this purpose any new director whose
election or nomination for election by PNC’s shareholders in connection with
such proxy contest was approved by a vote of at least two-thirds (2/3rds) of the
directors then still in office who were directors prior to such proxy contest)
cease to constitute at least a majority of the Board (excluding any Board seat
that is vacant or otherwise unoccupied);

 

(e) during any period of twenty-four (24) consecutive months, individuals who at
the beginning of such period constituted the Board (including for this purpose
any new director whose election or nomination for election by PNC’s shareholders
was approved by a vote of at least two-thirds (2/3rds) of the directors then
still in office who were directors at the beginning of such period) cease for
any reason to constitute at least a majority of the Board (excluding any Board
seat that is vacant or otherwise unoccupied); or

 

(f) the Board determines that a Change in Control has occurred.

 

Notwithstanding anything to the contrary herein, a divestiture or spin-off of a
subsidiary or division of PNC will not by itself constitute a Change in Control.

 

A.7 “CIC Failure” means the following:

 

(a) with respect to a CIC 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 CIC Triggering Event described in Section A.8(b), the
proxy contest fails to replace or remove a majority of the members of the Board.

 

A.8 “CIC Triggering Event” means the occurrence of either of the following:

 

(a) the Board or PNC’s shareholders approve a transaction described in
Subsection (b) of the definition of Change in Control contained in Section A.6;
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.

 

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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 Subsidiary (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, 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.11 “Corporation” means PNC and its Subsidiaries.

 

A.12 “Coverage Period” means a period (a) commencing on the earlier to occur of
(i) the date of a CIC Triggering Event and (ii) the date of a Change in Control
and (b) ending on the date that is three (3) years after the date of the Change
in Control; provided, however, that in the event that a Coverage Period
commences on the date of a CIC Triggering Event, such Coverage Period will
terminate upon the earlier to occur of (x) the date of a CIC Failure and (y) the
date that is three (3) years after the date of the Change in Control triggered
by the CIC Triggering Event. After the termination of any Coverage Period,
another Coverage Period will commence upon the earlier to occur of clause (a)(i)
and clause (a)(ii) in the preceding sentence.

 

A.13 “Designated Person” will be either: (a) the Committee, if Grantee is a
member of the Corporate Executive Group (or equivalent successor classification)
or is subject to the reporting requirements of Section 16(a) of the Exchange Act
with respect to PNC securities; or (a) the Chief Human Resources Officer of PNC,
if Grantee is not within one of the groups specified in Section A.13(a).

 

A.14 “Detrimental Conduct” means:

 

(a) Grantee 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 Grantee’s Termination Date through the
first (1st) anniversary of Grantee’s Termination Date;

 

(b) a material breach by Grantee of (i) any code of conduct of PNC or a
Subsidiary or (ii) other written policy of PNC or a Subsidiary, in either case
required by law or established to maintain compliance with applicable law;

 

(c) any act of fraud, misappropriation, material dishonesty, or embezzlement by
Grantee against PNC or a Subsidiary or any client or customer of PNC or a
Subsidiary;

 

(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

 

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commission of a felony which relates to or arises out of Grantee’s employment or
other service relationship with the Corporation; or

 

(e) entry of any order against Grantee by any governmental body having
regulatory authority with respect to the business of PNC or any Subsidiary,
which order relates to or arises out of 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 determines that Grantee has engaged
in conduct described in clause (a) above, that Grantee is guilty of conduct
described in clause (b) or clause (c) above, or that an event described in
clause (d) or clause (e) above has occurred with respect to Grantee and, if so,
determines that Grantee will be deemed to have engaged in Detrimental Conduct.

 

A.15 “Exchange Act” means the Securities Exchange Act of 1934 as amended, and
the rules and regulations promulgated thereunder.

 

A.16 “Fair Market Value” as it relates to PNC common stock means the average of
the high and low sale prices of the PNC common stock as reported on the New York
Stock Exchange (or such successor reporting system as PNC may select) on the
relevant date or, if no sale of the PNC common stock has been reported for that
day, the average of such prices on the next preceding day and the next following
day for which there were reported sales.

 

A.17 “Good Reason” means:

 

(a) the assignment to Grantee of any duties inconsistent in any respect with
Grantee’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities immediately prior to either
the CIC Triggering Event or the Change in Control, or any other action by the
Corporation which results in a diminution in any respect in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith that is remedied by
the Corporation promptly after receipt of notice thereof given by Grantee;

 

(b) a reduction by the Corporation in Grantee’s annual base salary as in effect
on the Grant Date, as the same may be increased from time to time;

 

(c) the Corporation’s requiring Grantee to be based at any office or location
that is more than fifty (50) miles from Grantee’s office or location immediately
prior to either the CIC Triggering Event or the Change in Control;

 

(d) the failure by the Corporation (i) to continue in effect any bonus, stock
option or other cash or equity-based incentive plan or program in which Grantee
participates immediately prior to either the CIC Triggering Event or the Change
in Control that is material to Grantee’s total compensation, unless a
substantially equivalent

 

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arrangement (embodied in an ongoing substitute or alternative plan or program)
has been made with respect to such plan or program, or (ii) to continue
Grantee’s participation in such plan or program (or in such substitute or
alternative plan or program) on a basis at least as favorable, both in terms of
the amount of benefits provided and the level of Grantee’s participation
relative to other participants, as existed immediately prior to the CIC
Triggering Event or the Change in Control; or

 

(e) the failure by the Corporation to continue to provide Grantee with benefits
substantially similar to those received by Grantee under any of the
Corporation’s pension (including, but not limited to, tax-qualified plans), life
insurance, health, accident, disability or other welfare plans or programs in
which Grantee was participating, at costs substantially similar to those paid by
Grantee, immediately prior to the CIC Triggering Event or the Change in Control.

 

A.18 “Grant” means the Restricted Shares granted and issued to Grantee pursuant
to Section 1 of the Agreement.

 

A.19 “Grant Date” means the Grant Date set forth on page 1 of the Agreement.

 

A.20 “Grantee” means the person 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 “Person” has the meaning given in Section 3(a)(9) of the Exchange Act and
also includes any syndicate or group deemed to be a person under Section
13(d)(3) of the Exchange Act.

 

A.23 “PNC” means The PNC Financial Services Group, Inc.

 

A.24 “Restricted Period” means, subject to early termination if so determined by
the Committee or pursuant to Section 7.6 of the Agreement, if applicable, the
period from the Grant Date through (and including) the earlier of: (a) the date
of Grantee’s death; (b) the day immediately preceding the day a Change in
Control is deemed to have occurred; and (c) the day immediately preceding the
third (3rd) anniversary of the Grant Date or, if later, the last day of any
extension of the Restricted Period pursuant to Section 7.4(a) or Section 7.5(a)
of the Agreement, if applicable.

 

A.25 “Retiree” means a Grantee who has Retired.

 

A.26 “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 or, unless the Committee
determines otherwise, termination in connection with a divestiture of assets or
of one or more Subsidiaries) if such termination of employment occurs on or
after the first (1st) day of

 

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the first (1st) month coincident with or next following the date on which
Grantee attains age fifty-five (55) and completes five (5) years of service (as
determined in the same manner as the determination of five years of Vesting
Service under the provisions of The PNC Financial Services Group, Inc. Pension
Plan) with the Corporation.

 

A.27 “SEC” means the United States Securities and Exchange Commission.

 

A.28 “Termination Date” means Grantee’s last date of employment with the
Corporation. If Grantee is employed by a Subsidiary that ceases to be a
Subsidiary of PNC and Grantee does not continue to be employed by PNC or a
Subsidiary, then for purposes of the Agreement, Grantee’s employment with the
Corporation terminates effective at the time this occurs.

 

A.29 “Three-Year Continued Employment Performance Goal” means, subject to early
achievement if so determined by the Committee or to deemed achievement pursuant
to Section 7.3, Section 7.4, Section 7.5, Section 7.6, or Section 8 of the
Agreement, if applicable, that Grantee has been continuously employed by the
Corporation for the period from the Grant Date through (and including) the day
immediately preceding the first of the following to occur: (a) the third (3rd)
anniversary of the Grant Date; (b) the date of Grantee’s death; and (c) the day
a Change in Control is deemed to have occurred.

 

A.30 “Total and Permanent Disability” means, unless the Committee determines
otherwise, Grantee’s disability as determined to be total and permanent by the
Corporation for purposes of the Agreement.

 

A.31 “Unvested Shares” means any Restricted Shares that are not Awarded Shares.

 

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FORM OF CEG LTI PROGRAM

RESTRICTED STOCK GRANT AGREEMENT

 

CEG LTI Program Restricted Stock Grant

Continued Employment Performance Goal

Restricted Period: Through November     , 200   (100%) [restricted period
usually ends in November and can be between two and four years]

 

THE PNC FINANCIAL SERVICES GROUP, INC.

1997 LONG-TERM INCENTIVE AWARD PLAN

* * *

RESTRICTED STOCK AGREEMENT

* * *

 

GRANTEE:

   < name >

GRANT DATE:

                   , 200_

SHARES:

   < number of whole shares>

 

1. Grant of Restricted Shares. Pursuant to Article 12 of The PNC Financial
Services Group, Inc. 1997 Long-Term Incentive Award Plan as amended from time to
time (“Plan”), and subject to the terms and conditions of this Restricted Stock
Agreement (“Agreement”), The PNC Financial Services Group, Inc. (“PNC”) hereby
grants to the Grantee named above (“Grantee”) an Incentive Share Award (as
defined in the Plan) of the number of shares of PNC common stock set forth
above, and, upon acceptance of the Grant by Grantee in accordance with Section
17, will cause the issuance of said shares to Grantee subject to the terms and
conditions of the Agreement and the Plan. The shares granted and issued to
Grantee hereby as an Incentive Share Award subject to the terms and conditions
of the Agreement and the Plan are hereafter referred to as the “Restricted
Shares.”

 

2. Definitions. Terms defined in the Plan are used in the Agreement as defined
in the Plan unless otherwise defined in Annex A (attached hereto and
incorporated herein by reference) or elsewhere in the Agreement.

 

3. Terms of Grant. The Grant will be subject to the following terms and
conditions:

 

Restricted Shares will be subject to a Restricted Period as provided in Section
A.25 of Annex A. Restricted Shares will be deposited with PNC or its designee,

 

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or credited to a book-entry account, during the term of the Restricted Period
unless and until forfeited pursuant to the terms of the Agreement.

 

Any certificate or certificates representing such 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. 1997 Long-Term Incentive
Award Plan as amended and an Agreement entered into between the registered owner
and The PNC Financial Services Group, Inc. Release from such terms and
conditions will be made only in accordance with the provisions of such Plan and
such Agreement, a copy of each of which is on file in the office of the
Corporate Secretary of The PNC Financial Services Group, Inc.”

 

Where a book-entry system is used with respect to Restricted Shares, appropriate
notation of such forfeiture possibility and transfer restrictions will be made
on the system with respect to the account or accounts to which the Restricted
Shares are credited.

 

Restricted Shares deposited with PNC or its designee during the term of the
Restricted Period that become Awarded Shares will be released and issued or
reissued to, or at the proper direction of, Grantee or Grantee’s legal
representative pursuant to Section 9 as soon as administratively practicable
following the end of the Restricted Period.

 

4. Rights as Shareholder. Except as provided in Section 6 and subject to Section
7.5(c), if applicable, and to Section 17, Grantee will have all the rights and
privileges of a shareholder with respect to the Restricted Shares including, but
not limited to, the right to vote the Restricted Shares and the right to receive
dividends thereon if and when declared by the Board; provided, however, that all
such rights and privileges will cease immediately upon any forfeiture of such
shares.

 

5. Capital Adjustments. Restricted Shares awarded hereunder will, as issued and
outstanding shares of PNC common stock, be subject to such adjustment as may be
necessary to reflect corporate transactions, including, without limitation,
stock dividends, stock splits, spin-offs, split-offs, recapitalizations,
mergers, consolidations or reorganizations of or by PNC; provided, however, that
any shares received as distributions on or in exchange for Unvested Shares will
be subject to the terms and conditions of the Agreement as if they were
Restricted Shares.

 

6. Prohibitions Against Sale, Assignment, etc. Unvested Shares may not be sold,
assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered,
other than by will or the laws of descent and distribution or as may be required
pursuant to Section 10.2, unless and until the Restricted Period terminates and
the Awarded Shares are released and issued or reissued by PNC pursuant to
Section 9.

 

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7. Forfeiture; Death; Qualifying Disability or Other Termination; Termination in
Anticipation of Change in Control.

 

7.1 Forfeiture on Termination of Employment. Except as otherwise provided in and
subject to the conditions of Section 7.3, Section 7.4(a), Section 7.4(c),
Section 7.5(a), Section 7.5(b), or Section 8, if applicable, or unless the
Committee determines otherwise, in the event that Grantee’s employment with the
Corporation terminates prior to November     , 200  , 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 forfeiture of Unvested Shares pursuant to the provisions of this Section
7.1 or the provisions of Section 7.2, Section 7.4(b), Section 7.4(c) or Section
7.5(d), neither Grantee nor any successors, heirs, assigns or legal
representatives of Grantee will thereafter have any further rights or interest
in such Unvested Shares or any certificate or certificates representing such
Unvested Shares.

 

7.2 Forfeiture for 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: (a)
this Section 7.2 will not apply to Restricted Shares that remain outstanding
after Grantee’s Termination Date pursuant to Section 7.3 or Section 7.5, if any;
(b) no determination that Grantee has engaged in Detrimental Conduct may be made
on or after the date of Grantee’s death; (c) Detrimental Conduct will not apply
to conduct by or activities of successors to the Restricted Shares by will or
the laws of descent and distribution in the event of Grantee’s death; and (d)
Detrimental Conduct will cease to apply to any Restricted Shares upon a Change
in Control.

 

7.3 Death. In the event of Grantee’s death while an employee of the Corporation
and prior to November     , 200  , the Continued Employment Performance Goal
will be deemed to have been achieved, and the Restricted Period with respect to
the then outstanding Unvested Shares will terminate on the date of Grantee’s
death.

 

The Restricted Shares which thereby become Awarded Shares will be released and
issued or 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 Disability or Other Termination.

 

(a) In the event Grantee’s employment with the Corporation is terminated prior
to November     , 200   by the Corporation by reason of Grantee’s Total and
Permanent Disability, Unvested Shares will not be forfeited on Grantee’s
Termination Date. Instead, Unvested Shares will, subject to the forfeiture
provisions of Section 7.2,

 

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remain outstanding pending approval of the vesting of the Restricted Shares
pursuant to this Section 7.4(a) by the Designated Person specified in Section
A.14 of Annex A.

 

If such Unvested Shares are still outstanding but the Designated Person has not
made an affirmative determination to either approve or disapprove the vesting of
the Unvested Shares by November     , 200  , then the Restricted Period will be
automatically extended through the first to occur of: (1) the day the Designated
Person makes an affirmative determination regarding such vesting; and (2) either
(i) the ninetieth (90th) day following November     , 200  , if the Designated
Person is the Chief Human Resources Officer of PNC, or (ii) the 180th day
following November     , 200   if the Designated Person is the Committee,
whichever is applicable.

 

If the vesting of the then outstanding Unvested Shares is affirmatively approved
by the Designated Person on or prior to the last day of the Restricted Period,
including any extension of the Restricted Period, if applicable, then the
Continued Employment Performance Goal will be deemed to have been achieved, and
the Restricted Period with respect to any then outstanding Unvested Shares will
terminate as of the end of the day on the date of such approval or November
    , 200  , whichever is later. The Restricted Shares outstanding at the
termination of the Restricted Period will become Awarded Shares and will be
released and issued or reissued by PNC pursuant to Section 9.

 

(b) If the Designated Person disapproves the vesting of the Unvested Shares that
had remained outstanding after Grantee’s Termination Date pending approval of
vesting, then all such Unvested Shares that are still outstanding will be
forfeited by Grantee to PNC on such disapproval date without payment of any
consideration by PNC.

 

If by the end of the Restricted Period, including any extension of the
Restricted Period pursuant to the second paragraph of Section 7.4(a), if
applicable, the Designated Person has neither affirmatively approved nor
disapproved the vesting of the Unvested Shares that had remained outstanding
after Grantee’s Termination Date pending approval of vesting, then all such
Unvested Shares that are still outstanding will be forfeited by Grantee to PNC
at the close of business on the last day of the Restricted Period without
payment of any consideration by PNC.

 

(c) In the event that Grantee’s employment with the Corporation is terminated
prior to November     , 200   other than by reason of death, by the Corporation
by reason of Grantee’s Total and Permanent Disability, or in circumstances that
qualify for vesting pursuant to Section 7.5(a) or Section 7.5(b), all Restricted
Shares that are Unvested Shares on Grantee’s Termination Date will be forfeited
by Grantee to PNC on such date without payment of any consideration by PNC
unless the Committee determines otherwise. The Committee may, in its sole
discretion with respect to some or all of the Unvested Shares, treat such shares
in the same manner that such shares would be treated pursuant to Section 7.4 if
Grantee’s employment had been terminated by the Corporation by reason of Total
and Permanent Disability.

 

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7.5 Termination in Anticipation of a Change in Control.

 

(a) Notwithstanding anything in the Agreement to the contrary, if, after the
occurrence of a CIC Triggering Event but prior to a CIC Failure and prior to
November     , 200  , Grantee’s employment is terminated (other than by reason
of Grantee’s death) by the Corporation without Cause or by Grantee for Good
Reason, or if Grantee’s employment is deemed to have been so terminated pursuant
to Section 7.5(b), then: (i) the Continued Employment Performance Goal will be
deemed to have been achieved and the Restricted Period with respect to any then
outstanding Unvested Shares will terminate as of the end of the day on the day
immediately preceding Grantee’s Termination Date (or, in the case of a
qualifying termination pursuant to Section 7.5(b), the date all of the
conditions set forth in clauses (i), (ii) and (iii) of the first or second
paragraph, as the case may be, of Section 7.5(b) are met); and (ii) all
Restricted Shares that thereby become Awarded Shares will be released and issued
or reissued by PNC pursuant to Section 9 as soon as administratively practicable
following such date.

 

(b) Grantee’s employment will also be deemed to have been terminated by the
Corporation without Cause after the occurrence of a CIC Triggering Event but
prior to a CIC Failure for purposes of Section 7.5(a) if: (i) Grantee’s
employment is terminated by the Corporation without Cause; (ii) such termination
of employment (a) was at the request of a third party that has taken steps
reasonably calculated to effect a Change in Control or (b) otherwise arose in
anticipation of a Change in Control; and (iii) a CIC Triggering Event or a
Change in Control occurs within three (3) months of such termination of
employment.

 

Grantee’s employment will also be deemed to have been terminated by Grantee for
Good Reason after the occurrence of a CIC Triggering Event but prior to a CIC
Failure for purposes of Section 7.5(a) if: (i) Grantee terminates Grantee’s
employment with Good Reason; (ii) the circumstance or event that constitutes
Good Reason (a) occurs at the request of a third party that has taken steps
reasonably calculated to effect a Change in Control or (b) otherwise arose in
anticipation of a Change in Control; and (iii) a CIC Triggering Event or a
Change in Control occurs within three (3) months of such termination of
employment.

 

For purposes of this Section 7.5(b) only, Grantee will have the burden of
proving that the requirements of clause (ii) of the first or second paragraph of
this Section 7.5(b), as the case may be, have been met and the standard of proof
to be met by Grantee will be clear and convincing evidence.

 

For purposes of this Section 7.5(b) only, the definition of Change in Control in
Section A.6 of Annex A will exclude the proviso in Section A.6(a).

 

(c) If the Unvested Shares will be forfeited by Grantee to PNC by reason of
Grantee’s termination of employment with the Corporation pursuant to Section 7.1
unless all of the conditions set forth in clauses (i), (ii) and (iii) of the
first or second paragraph, as the case may be, of Section 7.5(b) are met, then
in the event that the record date for any dividend payable with respect to the
Unvested Shares occurs on or after Grantee’s

 

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Termination Date but prior to the time all of the conditions set forth in
clauses (i), (ii) and (iii) of the first or second paragraph, as the case may
be, of Section 7.5(b) have been met, such dividend will be held, without
interest, pending satisfaction of all of such conditions. In the event that one
or more of the conditions of Section 7.5(b) are not met, any dividend being held
pending satisfaction of such conditions will be forfeited by Grantee to PNC
without payment of any consideration by PNC.

 

(d) If the Unvested Shares will be forfeited by Grantee to PNC by reason of
Grantee’s termination of employment with the Corporation pursuant to Section 7.1
unless all of the conditions set forth in clauses (i), (ii) and (iii) of the
first or second paragraph, as the case may be, of Section 7.5(b) are met, then
the Restricted Shares will remain outstanding pending satisfaction of all of
those conditions. Upon the failure of any required condition, all such Unvested
Shares will be forfeited by Grantee to PNC on the date such failure occurs
without payment of any consideration by PNC.

 

8. Change in Control. Notwithstanding anything in the Agreement to the contrary,
upon the occurrence of a Change in Control: (i) if Grantee is an employee of the
Corporation as of the day immediately preceding the Change in Control, the
Continued Employment Performance Goal will be deemed to have been achieved and
the Restricted Period will terminate with respect to all then outstanding
Unvested Shares as of the day immediately preceding the Change in Control; (ii)
if Grantee’s employment with the Corporation terminated prior to the occurrence
of the Change in Control but the Unvested Shares remained outstanding after such
termination of employment pursuant to Section 7.4 and are still outstanding
pending approval of the vesting of such shares by the Designated Person
specified in Section A.14 of Annex A, then with respect to all Unvested Shares
outstanding as of the day immediately preceding the Change in Control, such
vesting approval will be deemed to have been given, the Continued Employment
Performance Goal will be deemed to have been achieved, and the Restricted Period
will terminate, all as of the day immediately preceding the Change in Control;
and (iii) all Restricted Shares that thereby become Awarded Shares will be
released and issued or reissued by PNC pursuant to Section 9 as soon as
administratively practicable following such date.

 

9. Termination of Prohibitions. Following termination of the Restricted Period,
PNC will release and issue or reissue the certificate or certificates
representing the then outstanding whole Restricted Shares that have become
Awarded Shares without the legend referred to in Section 3.

 

Upon release and issuance or reissuance of shares that have become Awarded
Shares, PNC or its designee will deliver the certificate or certificates for
such whole shares to, or at the proper direction of, Grantee or Grantee’s legal
representative.

 

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

 

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Shares, Grantee shall satisfy all applicable federal, state or local withholding
tax obligations arising from that election either: (a) by payment of cash; (b)
by physical delivery to PNC of certificates for whole shares of PNC common stock
that are not subject to any contractual restriction, pledge or other encumbrance
and that have been owned by Grantee for at least six (6) months and, in the case
of restricted stock, for which it has been at least six (6) months since the
restrictions lapsed; or (c) by a combination of cash and such stock. Any such
tax election shall be made pursuant to a form to be provided to Grantee by PNC
on request. For purposes of this Section 10.1, shares of PNC common stock that
are used to satisfy applicable withholding tax obligations will be valued at
their Fair Market Value on the date the tax withholding obligation arises.
Grantee will provide to PNC a copy of any Internal Revenue Code Section 83(b)
election filed by Grantee with respect to the Restricted Shares not later than
ten (10) days after the filing of such election.

 

10.2 Other Tax Liabilities. Where Grantee has not previously satisfied all
applicable withholding tax obligations, PNC will, at the time the tax
withholding obligation arises, retain sufficient whole shares of PNC common
stock from the shares granted pursuant to the Agreement to satisfy the minimum
amount of taxes required to be withheld by the Corporation in connection with
the Restricted Shares. For purposes of this Section 10.2, shares of PNC common
stock retained to satisfy applicable withholding tax requirements will be valued
at their Fair Market Value on the date the tax withholding obligation arises.

 

PNC will not retain more than the number of shares sufficient to satisfy the
minimum amount of taxes required to be withheld in connection with the
Restricted Shares. If Grantee desires to have an additional amount, up to
Grantee’s W-4 obligation, withheld above the required minimum and if PNC so
permits, Grantee may elect to satisfy this additional withholding either: (a) by
payment of cash; or (b) using whole shares of PNC common stock (either by
physical delivery to PNC of certificates for the shares or through PNC’s
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.

 

11. Employment. Neither the granting and issuance of the Restricted Shares nor
any term or provision of the Agreement shall constitute or be evidence of any
understanding, expressed or implied, on the part of PNC or any Subsidiary to
employ Grantee for any period or in any way alter Grantee’s status as an
employee at will.

 

12. Subject to the Plan and the Committee. In all respects the Grant and the
Agreement are subject to the terms and conditions of the Plan, which has been
made available to Grantee and is incorporated herein by reference; provided,
however, the terms of the Plan shall not be considered an enlargement of any
benefits under the Agreement. Further, the Grant and the Agreement are subject
to any interpretation of,

 

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and any rules and regulations issued by, the Committee or under the authority of
the Committee, whether made or issued before or after the Grant Date.

 

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, that such provisions are reasonable and properly required for the
adequate protection of the business of the Corporation, and that enforcement of
such provisions will not prevent Grantee from earning a living.

 

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 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 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 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 Grantee assist any other Person
in such activities.

 

Notwithstanding the above, if Grantee’s employment with the Corporation is
terminated by the Corporation without Cause or by Grantee with Good Reason and
such Termination Date occurs during a Coverage Period (either as Coverage Period
is defined in Section A.13 of Annex A or, if Grantee was a party to a written
agreement between Grantee and PNC providing, among other things, for certain
change in control severance benefits (a “CIC Severance Agreement”) that was in
effect at the time of such termination

 

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of employment, as Coverage Period is defined in such CIC Severance Agreement, if
longer), then commencing immediately after such Termination Date, the provisions
of subsections (a) and (b) of this Section 14.2 will no longer apply and will be
replaced with the following subsection (c):

 

(c) No-Hire. Grantee agrees that Grantee shall not, for a period of twelve (12)
months after the Termination Date, employ or offer to employ, solicit, actively
interfere with 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
Subsidiary 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 regard to conflict
of laws rules. Any dispute or claim arising out of or relating to the Agreement
or claim of breach hereof shall be brought exclusively in the federal court for
the Western District of Pennsylvania or in the Court of Common Pleas of
Allegheny County, Pennsylvania. By execution of the Agreement, Grantee and PNC
hereby consent to the exclusive jurisdiction of such courts, and waive any right
to challenge jurisdiction or venue in such courts with regard to any suit,
action, or proceeding under or in connection with the Agreement.

 

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15.2 Equitable Remedies. A breach of the provisions of any of Sections 14.2,
14.3 or 14.4 will cause the Corporation irreparable harm, and the Corporation
will therefore be entitled to issuance of immediate, as well as permanent,
injunctive relief restraining Grantee, and each and every person and entity
acting in concert or participating with Grantee, from initiation and/or
continuation of such breach.

 

15.3 Tolling Period. If it becomes necessary or desirable for the Corporation to
seek compliance with the provisions of Section 14.2 by legal proceedings, the
period during which Grantee shall comply with said provisions will extend for a
period of twelve (12) months from the date of the legal order requiring such
compliance.

 

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 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.

 

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16. Amendment of Pre-2004 Stock Options, Restricted Stock and Restricted Stock
Deferrals. All nonstatutory stock options granted to employees under the Plan
outstanding on February 18, 2004, all restricted stock grants to employees under
the Plan or PNC’s 1996 Executive Incentive Award Plan outstanding but not yet
vested on February 18, 2004, and all participant restricted stock deferral
accounts under the PNC and Affiliates Deferred Compensation Plan that were in
place but not yet vested on February 18, 2004, are subject to the amendments
approved by the Committee on that date. These amendments are generally described
in the Plan prospectus dated                 , 200   under the heading “Recent
Amendments” of the section titled “The Plan.” A copy of this Plan prospectus
accompanied or preceded delivery of the Agreement to Grantee.

 

To the extent that Grantee is the holder of any such stock options or is the
grantee of any such restricted stock or is a participant in the PNC and
Affiliates Deferred Compensation Plan with such stock deferral account or
accounts in place but not yet vested, Grantee hereby acknowledges and consents
to such amendments.

 

17. Acceptance of Grant; PNC Right to Cancel. If Grantee does not accept the
Grant by executing and delivering a copy of the Agreement to PNC, without
altering or changing the terms thereof in any way, within sixty (60) days of
receipt by Grantee of a copy of the Agreement, PNC may, in its sole discretion,
withdraw its offer and cancel the Grant at any time prior to 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 and, in the event that
Grantee is subject to the reporting requirements of Section 16(a) of the
Exchange Act with respect to PNC securities, the filing with and acceptance by
the SEC of a Form 4 reporting the Grant, the Agreement is effective.

 

Grantee will not have any of the rights of a shareholder with respect to the
Restricted Shares as set forth in Section 4, and will not have the right to vote
or to receive dividends on such shares, until the date the Agreement is
effective and the Restricted Shares are issued in accordance with this Section
17.

 

In the event that one or more record dates for dividends on PNC common stock
occur after the Grant Date but before the date the Agreement is effective in
accordance with this Section 17 and the Restricted Shares are issued, then upon
the effectiveness of the Agreement, the Corporation will make a cash payment to
Grantee equivalent to the amount of the dividends Grantee would have received
had the Agreement been effective and the Restricted Shares had been issued on
the Grant Date.

 

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IN WITNESS WHEREOF, PNC has caused the Agreement to be signed on its behalf as
of the Grant Date.

 

THE PNC FINANCIAL SERVICES GROUP, INC.

By:

        Chairman and Chief Executive Officer

 

ATTEST:

By:

        Corporate Secretary

 

ACCEPTED AND AGREED TO by GRANTEE.

 

Grantee

 

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CEG LTI Program Restricted Stock Grant

Continued Employment Performance Goal

Restricted Period: Through November     , 200   (100%) [restricted period
usually ends in November and can be between two and four years]

 

ANNEX A

TO

THE PNC FINANCIAL SERVICES GROUP, INC.

1997 LONG-TERM INCENTIVE AWARD PLAN

RESTRICTED STOCK AGREEMENT

 

* * *

 

CERTAIN DEFINITIONS

 

Except where the context otherwise indicates, the following definitions apply
for purposes of the Restricted Stock Agreement (“Agreement”) to which this Annex
A is attached:

 

A.1 “Awarded Shares.” Provided that the Restricted Shares are then outstanding,
Restricted Shares become “Awarded Shares” when both of the following have
occurred: (a) the Continued Employment Performance Goal has been achieved or is
deemed to have been achieved pursuant to the terms of the Agreement; and (b) the
Restricted Period has terminated.

 

A.2 “Board” means the Board of Directors of PNC.

 

A.3 “Business Day” means any day when the New York Stock Exchange is open for
business.

 

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 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 Subsidiary.

 

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For purposes of the preceding clauses (a) and (b), no act or failure to act, on
the part of Grantee, shall be considered willful unless it is done, or omitted
to be done, by Grantee in bad faith and without reasonable belief that 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.5 “CEO” means the chief executive officer of PNC.

 

A.6 “Change in Control” means a change of control of PNC of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or in response to any similar item on any similar schedule or
form) promulgated under the Exchange Act, whether or not PNC is then subject to
such reporting requirement; provided, however, that without limitation, a Change
in Control will be deemed to have occurred if:

 

(a) any Person, excluding employee benefits plans of the Corporation, is or
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act or any successor provisions thereto), directly or indirectly, of
securities of PNC representing twenty percent (20%) or more of the combined
voting power of PNC’s then outstanding securities; provided, however, that such
an acquisition of beneficial ownership representing between twenty percent (20%)
and forty percent (40%), inclusive, of such voting power will not be considered
a Change in Control if the Board approves such acquisition either prior to or
immediately after its occurrence;

 

(b) PNC consummates a merger, consolidation, share exchange, division or other
reorganization or transaction of PNC (a “Fundamental Transaction”) with any
other corporation, other than a Fundamental Transaction that results in the
voting securities of PNC outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least sixty percent (60%) of the combined
voting power immediately after such Fundamental

 

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Transaction of (i) PNC’s outstanding securities, (ii) the surviving entity’s
outstanding securities, or (iii) in the case of a division, the outstanding
securities of each entity resulting from the division;

 

(c) the shareholders of PNC approve a plan of complete liquidation or winding-up
of PNC or an agreement for the sale or disposition (in one transaction or a
series of transactions) of all or substantially all of PNC’s assets;

 

(d) as a result of a proxy contest, individuals who prior to the conclusion
thereof constituted the Board (including for this purpose any new director whose
election or nomination for election by PNC’s shareholders in connection with
such proxy contest was approved by a vote of at least two-thirds (2/3rds) of the
directors then still in office who were directors prior to such proxy contest)
cease to constitute at least a majority of the Board (excluding any Board seat
that is vacant or otherwise unoccupied);

 

(e) during any period of twenty-four (24) consecutive months, individuals who at
the beginning of such period constituted the Board (including for this purpose
any new director whose election or nomination for election by PNC’s shareholders
was approved by a vote of at least two-thirds (2/3rds) of the directors then
still in office who were directors at the beginning of such period) cease for
any reason to constitute at least a majority of the Board (excluding any Board
seat that is vacant or otherwise unoccupied); or

 

(f) the Board determines that a Change in Control has occurred.

 

Notwithstanding anything to the contrary herein, a divestiture or spin-off of a
subsidiary or division of PNC will not by itself constitute a Change in Control.

 

A.7 “CIC Failure” means the following:

 

(a) with respect to a CIC 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 CIC Triggering Event described in Section A.8(b), the
proxy contest fails to replace or remove a majority of the members of the Board.

 

A.8 “CIC Triggering Event” means the occurrence of either of the following:

 

(a) the Board or PNC’s shareholders approve a transaction described in
Subsection (b) of the definition of Change in Control contained in Section A.6;
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.

 

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A.9 “Committee” means the Personnel and Compensation Committee of the Board.

 

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 Subsidiary (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, 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.11 “Continued Employment Performance Goal” means, subject to early achievement
if so determined by the Committee or to deemed achievement pursuant to Section
7.3, Section 7.4, Section 7.5, or Section 8 of the Agreement, if applicable,
that Grantee has been continuously employed by the Corporation for the period
from the Grant Date through (and including) the first of the following to occur:
(a) November     , 200  ; (b) the day immediately preceding the date of
Grantee’s death; and (c) the day immediately preceding the day a Change in
Control is deemed to have occurred.

 

A.12 “Corporation” means PNC and its Subsidiaries.

 

A.13 “Coverage Period” means a period (a) commencing on the earlier to occur of
(i) the date of a CIC Triggering Event and (ii) the date of a Change in Control
and (b) ending on the date that is three (3) years after the date of the Change
in Control; provided, however, that in the event that a Coverage Period
commences on the date of a CIC Triggering Event, such Coverage Period will
terminate upon the earlier to occur of (x) the date of a CIC Failure and (y) the
date that is three (3) years after the date of the Change in Control triggered
by the CIC Triggering Event. After the termination of any Coverage Period,
another Coverage Period will commence upon the earlier to occur of clause (a)(i)
and clause (a)(ii) in the preceding sentence.

 

A.14 “Designated Person” will be either: (a) the Committee, if Grantee is a
member of the Corporate Executive Group (or equivalent successor classification)
or is subject to the reporting requirements of Section 16(a) of the Exchange Act
with respect to PNC securities; or (a) the Chief Human Resources Officer of PNC,
if Grantee is not within one of the groups specified in Section A.14(a).

 

A.15 “Detrimental Conduct” means:

 

(a) Grantee 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 Grantee’s Termination Date through the
first (1st) anniversary of Grantee’s Termination Date;

 

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(b) a material breach by Grantee of (i) any code of conduct of PNC or a
Subsidiary or (ii) other written policy of PNC or a Subsidiary, in either case
required by law or established to maintain compliance with applicable law;

 

(c) any act of fraud, misappropriation, material dishonesty, or embezzlement by
Grantee against PNC or a Subsidiary or any client or customer of PNC or a
Subsidiary;

 

(d) any conviction (including a plea of guilty or of nolo contendere) of Grantee
for, or entry by Grantee into a pre-trial disposition with respect to, the
commission of a felony which relates to or arises out of Grantee’s employment or
other service relationship with the Corporation; or

 

(e) entry of any order against Grantee by any governmental body having
regulatory authority with respect to the business of PNC or any Subsidiary,
which order relates to or arises out of 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 determines that Grantee has engaged
in conduct described in clause (a) above, that Grantee is guilty of conduct
described in clause (b) or clause (c) above, or that an event described in
clause (d) or clause (e) above has occurred with respect to Grantee and, if so,
determines that Grantee will be deemed to have engaged in Detrimental Conduct.

 

A.16 “Exchange Act” means the Securities Exchange Act of 1934 as amended, and
the rules and regulations promulgated thereunder.

 

A.17 “Fair Market Value” as it relates to PNC common stock means the average of
the high and low sale prices of the PNC common stock as reported on the New York
Stock Exchange (or such successor reporting system as PNC may select) on the
relevant date or, if no sale of the PNC common stock has been reported for that
day, the average of such prices on the next preceding day and the next following
day for which there were reported sales.

 

A.18 “Good Reason” means:

 

(a) the assignment to Grantee of any duties inconsistent in any respect with
Grantee’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities immediately prior to either
the CIC Triggering Event or the Change in Control, or any other action by the
Corporation which results in a diminution in any respect in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith that is remedied by
the Corporation promptly after receipt of notice thereof given by Grantee;

 

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(b) a reduction by the Corporation in Grantee’s annual base salary as in effect
on the Grant Date, as the same may be increased from time to time;

 

(c) the Corporation’s requiring Grantee to be based at any office or location
that is more than fifty (50) miles from Grantee’s office or location immediately
prior to either the CIC Triggering Event or the Change in Control;

 

(d) the failure by the Corporation (i) to continue in effect any bonus, stock
option or other cash or equity-based incentive plan or program in which Grantee
participates immediately prior to either the CIC Triggering Event or the Change
in Control that is material to Grantee’s total compensation, unless a
substantially equivalent arrangement (embodied in an ongoing substitute or
alternative plan or program) has been made with respect to such plan or program,
or (ii) to continue Grantee’s participation in such plan or program (or in such
substitute or alternative plan or program) on a basis at least as favorable,
both in terms of the amount of benefits provided and the level of Grantee’s
participation relative to other participants, as existed immediately prior to
the CIC Triggering Event or the Change in Control; or

 

(e) the failure by the Corporation to continue to provide Grantee with benefits
substantially similar to those received by Grantee under any of the
Corporation’s pension (including, but not limited to, tax-qualified plans), life
insurance, health, accident, disability or other welfare plans or programs in
which Grantee was participating, at costs substantially similar to those paid by
Grantee, immediately prior to the CIC Triggering Event or the Change in Control.

 

A.19 “Grant” means the Restricted Shares granted and issued to Grantee pursuant
to Section 1 of the Agreement.

 

A.20 “Grant Date” means the Grant Date set forth on page 1 of the Agreement.

 

A.21 “Grantee” means the person identified as Grantee on page 1 of the
Agreement.

 

A.22 “Internal Revenue Code” means the Internal Revenue Code of 1986 as amended,
and the rules and regulations promulgated thereunder.

 

A.23 “Person” has the meaning given in Section 3(a)(9) of the Exchange Act and
also includes any syndicate or group deemed to be a person under Section
13(d)(3) of the Exchange Act.

 

A.24 “PNC” means The PNC Financial Services Group, Inc.

 

A.25 “Restricted Period” means, subject to early termination if so determined by
the Committee or pursuant to Section 7.5 of the Agreement, if applicable, the
period from the Grant Date through (and including) the earlier of: (a) the date
of Grantee’s death; (b) the day immediately preceding the day a Change in
Control is deemed to have

 

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occurred; and (c) November     , 200   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.26 “SEC” means the United States Securities and Exchange Commission.

 

A.27 “Termination Date” means Grantee’s last date of employment with the
Corporation. If Grantee is employed by a Subsidiary that ceases to be a
Subsidiary of PNC and Grantee does not continue to be employed by PNC or a
Subsidiary, then for purposes of the Agreement, Grantee’s employment with the
Corporation terminates effective at the time this occurs.

 

A.28 “Total and Permanent Disability” means, unless the Committee determines
otherwise, Grantee’s disability as determined to be total and permanent by the
Corporation for purposes of the Agreement.

 

A.29 “Unvested Shares” means any Restricted Shares that are not Awarded Shares.

 

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FORM OF 5-YEAR RESTRICTED STOCK GRANT AGREEMENT

 

Restricted Stock Grant

Continued Employment Performance Goals

Restricted Periods: Three Years (25%); Four Years (25%); Five Years (50%)

 

THE PNC FINANCIAL SERVICES GROUP, INC.

1997 LONG-TERM INCENTIVE AWARD PLAN

* * *

RESTRICTED STOCK AGREEMENT

* * *

 

GRANTEE:

   < name >

GRANT DATE:

                       , 200  

SHARES:

   < number of whole shares>

 

1. Grant of Restricted Shares. Pursuant to Article 12 of The PNC Financial
Services Group, Inc. 1997 Long-Term Incentive Award Plan as amended from time to
time (“Plan”), and subject to the terms and conditions of this Restricted Stock
Agreement (“Agreement”), The PNC Financial Services Group, Inc. (“PNC”) hereby
grants to the Grantee named above (“Grantee”) an Incentive Share Award (as
defined in the Plan) of the number of shares of PNC common stock set forth
above, and, upon acceptance of the Grant by Grantee in accordance with Section
17, will cause the issuance of said shares to Grantee subject to the terms and
conditions of the Agreement and the Plan.

 

The shares granted and issued to Grantee hereby as an Incentive Share Award
subject to the terms and conditions of the Agreement and the Plan are hereafter
referred to as the “Restricted Shares.”

 

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

 

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(c) the remaining fifty percent (50%) of these shares are in the Third Tranche
of Restricted Shares.

 

2. Definitions. Terms defined in the Plan are used in the Agreement as defined
in the Plan unless otherwise defined in Annex A (attached hereto and
incorporated herein by reference) or elsewhere in the Agreement.

 

3. Terms of Grant. The Grant 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.27 of Annex A. Restricted Shares will be deposited with
PNC or its designee, or credited to a book-entry account, during the term of the
applicable Restricted Period unless and until forfeited pursuant to the terms of
the Agreement.

 

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. 1997 Long-Term Incentive
Award Plan as amended and an Agreement entered into between the registered owner
and The PNC Financial Services Group, Inc. Release from such terms and
conditions will be made only in accordance with the provisions of such Plan and
such Agreement, a copy of each of which is on file in the office of the
Corporate Secretary of The PNC Financial Services Group, Inc.”

 

Where a book-entry system is used with respect to Restricted Shares, appropriate
notation of such forfeiture possibility and transfer restrictions will be made
on the system with respect to the account or accounts to which the Restricted
Shares are credited.

 

Restricted Shares deposited with PNC or its designee during the term of the
applicable Restricted Period that become Awarded Shares as provided in Section
A.1 of Annex A will be released and issued or reissued to, or at the proper
direction of, Grantee or Grantee’s legal representative pursuant to Section 9 as
soon as administratively practicable following the end of the Restricted Period
applicable to such shares.

 

4. Rights as Shareholder. Except as provided in Section 6 and subject to Section
7.6(c), if applicable, and to Section 17, Grantee will have all the rights and
privileges of a shareholder with respect to the Restricted Shares including, but
not limited to, the right to vote the Restricted Shares and the right to receive
dividends thereon if and when declared by the Board; provided, however, that all
such rights and privileges will cease immediately upon any forfeiture of such
shares.

 

5. Capital Adjustments. Restricted Shares awarded hereunder will, as issued and
outstanding shares of PNC common stock, be subject to such adjustment as may be

 

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necessary to reflect corporate transactions, including, without limitation,
stock dividends, stock splits, spin-offs, split-offs, recapitalizations,
mergers, consolidations or reorganizations of or by PNC; provided, however, that
any shares received as distributions on or in exchange for Unvested Shares will
be subject to the terms and conditions of the Agreement as if they were
Restricted Shares, and will have the same Restricted Period and Performance Goal
that are applicable to the Restricted Shares that such shares were a
distribution on or for which such shares were exchanged.

 

6. Prohibitions Against Sale, Assignment, etc. Unvested Shares may not be sold,
assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered,
other than by will or the laws of descent and distribution or as may be required
pursuant to Section 10.2, unless and until the applicable Restricted Period
terminates and the Awarded Shares are released and issued or reissued by PNC
pursuant to Section 9.

 

7. Forfeiture; Death; Disability Termination; Retirement; Termination in
Anticipation of Change in Control.

 

7.1 Forfeiture on Termination of Employment. Except as otherwise provided in and
subject to the conditions of Section 7.3, Section 7.4(a), Section 7.5, Section
7.6(a), Section 7.6(b), or Section 8, if applicable, in the event that Grantee’s
employment with the Corporation terminates prior to the fifth (5th) anniversary
of the Grant 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 forfeiture of Unvested Shares pursuant to the provisions of this Section
7.1 or the provisions of Section 7.2, Section 7.4(b), Section 7.5, or Section
7.6(d), neither Grantee nor any successors, heirs, assigns or legal
representatives of Grantee will thereafter have any further rights or interest
in such Unvested Shares or any certificate or certificates representing such
Unvested Shares.

 

7.2 Forfeiture for 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: (a)
this Section 7.2 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;
(b) no determination that Grantee has engaged in Detrimental Conduct may be made
on or after the date of Grantee’s death; (c) Detrimental Conduct will not apply
to conduct by or activities of successors to the Restricted Shares by will or
the laws of descent and distribution in the event of Grantee’s death; and (d)
Detrimental Conduct will cease to apply to any Restricted Shares upon a Change
in Control.

 

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 Grant Date, all remaining
applicable Continued Employment Performance Goals will be deemed to have been

 

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achieved, and the Restricted Period or Periods with respect to all then
outstanding Unvested Shares, if any, will terminate on the date of Grantee’s
death.

 

The Restricted Shares which thereby become Awarded Shares will be released and
issued or 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 Disability Termination.

 

(a) In the event Grantee’s employment with the Corporation is terminated prior
to the fifth (5th) anniversary of the Grant Date by the Corporation by reason of
Grantee’s Total and Permanent Disability, Unvested Shares will not be forfeited
on Grantee’s Termination Date. Instead, Unvested Shares will, subject to the
forfeiture provisions of Section 7.2, remain outstanding pending approval of the
vesting of the Restricted Shares pursuant to this Section 7.4(a) by the
Designated Person specified in Section A.14 of Annex A.

 

If such Unvested Shares are still outstanding but the Designated Person has not
made an affirmative determination to either approve or disapprove the vesting of
the Unvested Shares or relevant portion thereof by the day immediately preceding
the third (3rd) anniversary of the Grant Date in the case of First Tranche
shares, or the fourth (4th) or fifth (5th) anniversary of the Grant Date in the
case of Second or Third Tranche shares, respectively, then the Restricted Period
applicable to such shares will be automatically extended through the first to
occur of: (1) the day the Designated Person makes an affirmative determination
regarding such vesting; and (2) either (i) the ninetieth (90th) day following
the third (3rd) anniversary of the Grant Date in the case of First Tranche
shares, or the fourth (4th) or fifth (5th) anniversary of the Grant Date in the
case of Second or Third Tranche shares, respectively, if the Designated Person
is the Chief Human Resources Officer of PNC, or (ii) the 180th day following
such anniversary date if the Designated Person is the Committee, whichever is
applicable.

 

If the vesting of the then outstanding Unvested Shares or relevant portion
thereof is affirmatively approved by the Designated Person on or prior to the
last day of the applicable Restricted Period, including any extension of such
Restricted Period, if applicable, then the applicable Continued Employment
Performance Goal will be deemed to have been achieved, and the Restricted Period
with respect to any such Unvested Shares then outstanding will terminate as of
the end of the day on the later of (i) the date of such approval and (ii) the
day immediately preceding the third (3rd) anniversary of the Grant Date in the
case of First Tranche shares, or the fourth (4th) or fifth (5th) anniversary of
the Grant Date in the case of Second or Third Tranche shares, respectively. The
Restricted Shares outstanding at the termination of such applicable Restricted
Period will become Awarded Shares and will be released and issued or reissued by
PNC pursuant to Section 9.

 

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(b) If the Designated Person disapproves the vesting of Unvested Shares that had
remained outstanding after Grantee’s Termination Date pending approval of
vesting, then all such Unvested Shares that are still outstanding will be
forfeited by Grantee to PNC on such disapproval date without payment of any
consideration by PNC.

 

If by the end of the applicable Restricted Period, including any extension of
such Restricted Period pursuant to the second paragraph of Section 7.4(a), if
applicable, the Designated Person has neither affirmatively approved nor
disapproved the vesting of Unvested Shares that had remained outstanding after
Grantee’s Termination Date pending approval of vesting, then all such Unvested
Shares that are still outstanding will be forfeited by Grantee to PNC at the
close of business on the last day of the applicable Restricted Period without
payment of any consideration by PNC.

 

7.5 Retirement. In the event that Grantee Retires prior to the fifth (5th)
anniversary of the Grant Date, all Restricted Shares that are Unvested Shares on
Grantee’s Termination Date will be forfeited by Grantee to PNC on such date
without payment of any consideration by PNC unless the Committee determines
otherwise. The Committee may, in its sole discretion with respect to some or all
of the Unvested Shares, treat such shares in the same manner that such shares
would be treated pursuant to Section 7.4 if Grantee’s employment had been
terminated by the Corporation by reason of Total and Permanent Disability.

 

7.6 Termination in Anticipation of a Change in Control.

 

(a) Notwithstanding anything in the Agreement to the contrary, if, after the
occurrence of a CIC Triggering Event but prior to a CIC Failure and prior to the
fifth (5th) anniversary of the Grant Date, Grantee’s employment is terminated
(other than by reason of Grantee’s death) by the Corporation without Cause or by
Grantee for Good Reason, or if Grantee’s employment is deemed to have been so
terminated pursuant to Section 7.6(b), then: (i) all remaining applicable
Continued Employment Performance Goals will be deemed to have been achieved and
the Restricted Period or Periods with respect to all then outstanding Unvested
Shares, if any, will terminate as of the end of the day on the day immediately
preceding Grantee’s Termination Date (or, in the case of a qualifying
termination pursuant to Section 7.6(b), the date all of the conditions set forth
in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may
be, of Section 7.6(b) are met); and (ii) all Restricted Shares that thereby
become Awarded Shares will be released and issued or reissued by PNC pursuant to
Section 9 as soon as administratively practicable following such date.

 

(b) Grantee’s employment will also be deemed to have been terminated by the
Corporation without Cause after the occurrence of a CIC Triggering Event but
prior to a CIC Failure for purposes of Section 7.6(a) if: (i) Grantee’s
employment is terminated by the Corporation without Cause; (ii) such termination
of employment (a) was at the request of a third party that has taken steps
reasonably calculated to effect a Change in Control or (b) otherwise arose in
anticipation of a Change in Control; and (iii) a CIC Triggering Event or a
Change in Control occurs within three (3) months of such termination of
employment.

 

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Grantee’s employment will also be deemed to have been terminated by Grantee for
Good Reason after the occurrence of a CIC Triggering Event but prior to a CIC
Failure for purposes of Section 7.6(a) if: (i) Grantee terminates Grantee’s
employment with Good Reason; (ii) the circumstance or event that constitutes
Good Reason (a) occurs at the request of a third party that has taken steps
reasonably calculated to effect a Change in Control or (b) otherwise arose in
anticipation of a Change in Control; and (iii) a CIC Triggering Event or a
Change in Control occurs within three (3) months of such termination of
employment.

 

For purposes of this Section 7.6(b) only, Grantee will have the burden of
proving that the requirements of clause (ii) of the first or second paragraph of
this Section 7.6(b), as the case may be, have been met and the standard of proof
to be met by Grantee will be clear and convincing evidence.

 

For purposes of this Section 7.6(b) only, the definition of Change in Control in
Section A.6 of Annex A will exclude the proviso in Section A.6(a).

 

(c) If Unvested Shares will be forfeited by Grantee to PNC by reason of
Grantee’s termination of employment with the Corporation pursuant to Section 7.1
unless all of the conditions set forth in clauses (i), (ii) and (iii) of the
first or second paragraph, as the case may be, of Section 7.6(b) are met, then
in the event that the record date for any dividend payable with respect to such
Unvested Shares occurs on or after Grantee’s Termination Date but prior to the
time all of the conditions set forth in clauses (i), (ii) and (iii) of the first
or second paragraph, as the case may be, of Section 7.6(b) have been met, such
dividend will be held, without interest, pending satisfaction of all of such
conditions. In the event that one or more of the conditions of Section 7.6(b)
are not met, any dividend being held pending satisfaction of such conditions
will be forfeited by Grantee to PNC without payment of any consideration by PNC.

 

(d) If Unvested Shares will be forfeited by Grantee to PNC by reason of
Grantee’s termination of employment with the Corporation pursuant to Section 7.1
unless all of the conditions set forth in clauses (i), (ii) and (iii) of the
first or second paragraph, as the case may be, of Section 7.6(b) are met, then
such Restricted Shares will remain outstanding pending satisfaction of all of
those conditions. Upon the failure of any required condition, all such Unvested
Shares will be forfeited by Grantee to PNC on the date such failure occurs
without payment of any consideration by PNC.

 

8. Change in Control. Notwithstanding anything in the Agreement to the contrary,
upon the occurrence of a Change in Control: (i) if Grantee is an employee of the
Corporation as of the day immediately preceding the Change in Control, all
remaining applicable Continued Employment Performance Goals will be deemed to
have been achieved and the Restricted Period or Periods with respect to all then
outstanding Unvested Shares will terminate as of the day immediately preceding
the Change in Control; (ii) if Grantee’s employment with the Corporation
terminated prior to the occurrence of the Change in Control but Unvested Shares
remained outstanding after

 

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such termination of employment pursuant to Section 7.4 or Section 7.5 and are
still outstanding pending approval of the vesting of such shares by the
Designated Person specified in Section A.14 of Annex A, then with respect to all
such Unvested Shares outstanding as of the day immediately preceding the Change
in Control, such vesting approval will be deemed to have been given, the
applicable Continued Employment Performance Goal or Goals will be deemed to have
been achieved, and the applicable Restricted Period or Periods will terminate,
all as of the day immediately preceding the Change in Control; and (iii) all
Restricted Shares that thereby become Awarded Shares will be released and issued
or reissued by PNC pursuant to Section 9 as soon as administratively practicable
following such date.

 

9. Termination of Prohibitions. Following termination of the Restricted Period
applicable to such shares, PNC will release and issue or reissue the certificate
or certificates representing the then outstanding whole Restricted Shares that
have become Awarded Shares without the legend referred to in Section 3.

 

Upon release and issuance or reissuance of shares that have become Awarded
Shares, PNC or its designee will deliver the certificate or certificates for
such whole shares to, or at the proper direction of, Grantee or Grantee’s legal
representative.

 

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 applicable federal, state or local
withholding tax obligations arising from that election either: (a) by payment of
cash; (b) by physical delivery to PNC of certificates for whole shares of PNC
common stock that are not subject to any contractual restriction, pledge or
other encumbrance and that have been owned by Grantee for at least six (6)
months and, in the case of restricted stock, for which it has been at least six
(6) months since the restrictions lapsed; or (c) by a combination of cash and
such stock. Any such tax election shall be made pursuant to a form to be
provided to Grantee by PNC on request. For purposes of this Section 10.1, shares
of PNC common stock that are used to satisfy applicable withholding tax
obligations will be valued at their Fair Market Value on the date the tax
withholding obligation arises. Grantee will provide to PNC a copy of any
Internal Revenue Code Section 83(b) election filed by Grantee with respect to
the Restricted Shares not later than ten (10) days after the filing of such
election.

 

10.2 Other Tax Liabilities. Where Grantee has not previously satisfied all
applicable withholding tax obligations, PNC will, at the time the tax
withholding obligation arises with respect to any Restricted Shares, retain
sufficient whole shares of PNC common stock from the shares granted pursuant to
the Agreement to satisfy the minimum amount of taxes required to be withheld by
the Corporation in connection with such shares. For purposes of this Section
10.2, shares of PNC common stock retained to satisfy applicable withholding tax
requirements will be valued at their Fair Market Value on the date the tax
withholding obligation arises.

 

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PNC will not retain more than the number of shares sufficient to satisfy the
minimum amount of taxes required to be withheld in connection with the
Restricted Shares. If Grantee desires to have an additional amount, up to
Grantee’s W-4 obligation, withheld above the required minimum and if PNC so
permits, Grantee may elect to satisfy this additional withholding either: (a) by
payment of cash; or (b) using whole shares of PNC common stock (either by
physical delivery to PNC of certificates for the shares or through PNC’s
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.

 

11. Employment. Neither the granting and issuance of the Restricted Shares nor
any term or provision of the Agreement shall constitute or be evidence of any
understanding, expressed or implied, on the part of PNC or any Subsidiary to
employ Grantee for any period or in any way alter Grantee’s status as an
employee at will.

 

12. Subject to the Plan and the Committee. In all respects the Grant and the
Agreement are subject to the terms and conditions of the Plan, which has been
made available to Grantee and is incorporated herein by reference; provided,
however, the terms of the Plan shall not be considered an enlargement of any
benefits under the Agreement. Further, the Grant and the Agreement are subject
to any interpretation of, and any rules and regulations issued by, the Committee
or under the authority of the Committee, whether made or issued before or after
the Grant Date.

 

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, that such provisions are reasonable and properly required for the
adequate protection of the business of the Corporation, and that enforcement of
such provisions will not prevent Grantee from earning a living.

 

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.

 

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(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 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 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 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 Grantee assist any other Person
in such activities.

 

Notwithstanding the above, if Grantee’s employment with the Corporation is
terminated by the Corporation without Cause or by Grantee with Good Reason and
such Termination Date occurs during a Coverage Period (either as Coverage Period
is defined in Section A.13 of Annex A or, if Grantee was a party to a written
agreement between Grantee and PNC providing, among other things, for certain
change in control severance benefits (a “CIC Severance Agreement”) that was in
effect at the time of such termination of employment, as Coverage Period is
defined in such CIC Severance Agreement, if longer), then commencing immediately
after such Termination Date, the provisions of subsections (a) and (b) of this
Section 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 twelve (12)
months 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

 

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inventorship or authorship, whether or not patentable, that have been or will be
conceived and/or reduced to practice by Grantee during the term of 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
Subsidiary 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 regard to conflict
of laws rules. Any dispute or claim arising out of or relating to the Agreement
or claim of breach hereof shall be brought exclusively in the federal court for
the Western District of Pennsylvania or in the Court of Common Pleas of
Allegheny County, Pennsylvania. By execution of the Agreement, Grantee and PNC
hereby consent to the exclusive jurisdiction of such courts, and waive any right
to challenge jurisdiction or venue in such courts with regard to any suit,
action, or proceeding under or in connection with the Agreement.

 

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 of the legal order requiring such
compliance.

 

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

 

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competent jurisdiction to be void for any reason whatsoever, the remaining
provisions, restrictions and obligations will remain valid and binding upon
Grantee.

 

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 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.

 

16. Amendment of Pre-2004 Stock Options, Restricted Stock and Restricted Stock
Deferrals. All nonstatutory stock options granted to employees under the Plan
outstanding on February 18, 2004, all restricted stock grants to employees under
the Plan or PNC’s 1996 Executive Incentive Award Plan outstanding but not yet
vested on February 18, 2004, and all participant restricted stock deferral
accounts under the PNC and Affiliates Deferred Compensation Plan that were in
place but not yet vested on February 18, 2004, are subject to the amendments
approved by the Committee on that date. These amendments are generally described
in the Plan prospectus dated                     , 200   under the heading
“Recent Amendments” of the section titled “The Plan.” A copy of this Plan
prospectus accompanied or preceded delivery of the Agreement to Grantee.

 

To the extent that Grantee is the holder of any such stock options or is the
grantee of any such restricted stock or is a participant in the PNC and
Affiliates Deferred Compensation Plan with such stock deferral account or
accounts in place but not yet vested, Grantee hereby acknowledges and consents
to such amendments.

 

17. Acceptance of Grant; PNC Right to Cancel. If Grantee does not accept the
Grant by executing and delivering a copy of the Agreement to PNC, without
altering or changing the terms thereof in any way, within sixty (60) days of
receipt by Grantee of a copy of the Agreement, PNC may, in its sole discretion,
withdraw its offer and cancel the Grant at any time prior to Grantee’s delivery
to PNC of a copy of the Agreement

 

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executed by Grantee. Otherwise, upon execution and delivery of the Agreement by
both PNC and Grantee and, in the event that Grantee is subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect to PNC
securities, the filing with and acceptance by the SEC of a Form 4 reporting the
Grant, the Agreement is effective.

 

Grantee will not have any of the rights of a shareholder with respect to the
Restricted Shares as set forth in Section 4, and will not have the right to vote
or to receive dividends on such shares, until the date the Agreement is
effective and the Restricted Shares are issued in accordance with this Section
17.

 

In the event that one or more record dates for dividends on PNC common stock
occur after the Grant Date but before the date the Agreement is effective in
accordance with this Section 17 and the Restricted Shares are issued, then upon
the effectiveness of the Agreement, the Corporation will make a cash payment to
Grantee equivalent to the amount of the dividends Grantee would have received
had the Agreement been effective and the Restricted Shares had been issued on
the Grant Date.

 

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.

           

Grantee

 

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Restricted Stock Grant

Continued Employment Performance Goals

Restricted Periods: Three Years (25%); Four Years (25%); Five Years (50%);

 

ANNEX A

TO

THE PNC FINANCIAL SERVICES GROUP, INC.

1997 LONG-TERM INCENTIVE AWARD PLAN

RESTRICTED STOCK AGREEMENT

 

* * *

 

CERTAIN DEFINITIONS

 

Except where the context otherwise indicates, the following definitions apply
for purposes of the Restricted Stock Agreement (“Agreement”) to which this Annex
A is attached:

 

A.1 “Awarded Shares.” Provided that the Restricted Shares are then outstanding,
Restricted Shares become “Awarded Shares” when both of the following have
occurred: (a) the Continued Employment Performance Goal applicable to such
Restricted Shares has been achieved or is deemed to have been achieved pursuant
to the terms of the Agreement; and (b) the Restricted Period applicable to such
Restricted Shares has terminated.

 

A.2 “Board” means the Board of Directors of PNC.

 

A.3 “Business Day” means any day when the New York Stock Exchange is open for
business.

 

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 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 Subsidiary.

 

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For purposes of the preceding clauses (a) and (b), no act or failure to act, on
the part of Grantee, shall be considered willful unless it is done, or omitted
to be done, by Grantee in bad faith and without reasonable belief that 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.5 “CEO” means the chief executive officer of PNC.

 

A.6 “Change in Control” means a change of control of PNC of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or in response to any similar item on any similar schedule or
form) promulgated under the Exchange Act, whether or not PNC is then subject to
such reporting requirement; provided, however, that without limitation, a Change
in Control will be deemed to have occurred if:

 

(a) any Person, excluding employee benefits plans of the Corporation, is or
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act or any successor provisions thereto), directly or indirectly, of
securities of PNC representing twenty percent (20%) or more of the combined
voting power of PNC’s then outstanding securities; provided, however, that such
an acquisition of beneficial ownership representing between twenty percent (20%)
and forty percent (40%), inclusive, of such voting power will not be considered
a Change in Control if the Board approves such acquisition either prior to or
immediately after its occurrence;

 

(b) PNC consummates a merger, consolidation, share exchange, division or other
reorganization or transaction of PNC (a “Fundamental Transaction”) with any
other corporation, other than a Fundamental Transaction that results in the
voting securities of PNC outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least sixty percent (60%) of the combined
voting power immediately after such Fundamental

 

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Transaction of (i) PNC’s outstanding securities, (ii) the surviving entity’s
outstanding securities, or (iii) in the case of a division, the outstanding
securities of each entity resulting from the division;

 

(c) the shareholders of PNC approve a plan of complete liquidation or winding-up
of PNC or an agreement for the sale or disposition (in one transaction or a
series of transactions) of all or substantially all of PNC’s assets;

 

(d) as a result of a proxy contest, individuals who prior to the conclusion
thereof constituted the Board (including for this purpose any new director whose
election or nomination for election by PNC’s shareholders in connection with
such proxy contest was approved by a vote of at least two-thirds (2/3rds) of the
directors then still in office who were directors prior to such proxy contest)
cease to constitute at least a majority of the Board (excluding any Board seat
that is vacant or otherwise unoccupied);

 

(e) during any period of twenty-four (24) consecutive months, individuals who at
the beginning of such period constituted the Board (including for this purpose
any new director whose election or nomination for election by PNC’s shareholders
was approved by a vote of at least two-thirds (2/3rds) of the directors then
still in office who were directors at the beginning of such period) cease for
any reason to constitute at least a majority of the Board (excluding any Board
seat that is vacant or otherwise unoccupied); or

 

(f) the Board determines that a Change in Control has occurred.

 

Notwithstanding anything to the contrary herein, a divestiture or spin-off of a
subsidiary or division of PNC will not by itself constitute a Change in Control.

 

A.7 “CIC Failure” means the following:

 

(a) with respect to a CIC 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 CIC Triggering Event described in Section A.8(b), the
proxy contest fails to replace or remove a majority of the members of the Board.

 

A.8 “CIC Triggering Event” means the occurrence of either of the following:

 

(a) the Board or PNC’s shareholders approve a transaction described in
Subsection (b) of the definition of Change in Control contained in Section A.6;
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.

 

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A.9 “Committee” means the Personnel and Compensation Committee of the Board.

 

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 Subsidiary (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, 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.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 Subsidiaries.

 

A.13 “Coverage Period” means a period (a) commencing on the earlier to occur of
(i) the date of a CIC Triggering Event and (ii) the date of a Change in Control
and (b) ending on the date that is three (3) years after the date of the Change
in Control; provided, however, that in the event that a Coverage Period
commences on the date of a CIC Triggering Event, such Coverage Period will
terminate upon the earlier to occur of (x) the date of a CIC Failure and (y) the
date that is three (3) years after the date of the Change in Control triggered
by the CIC Triggering Event. After the termination of any Coverage Period,
another Coverage Period will commence upon the earlier to occur of clause (a)(i)
and clause (a)(ii) in the preceding sentence.

 

A.14 “Designated Person” will be either: (a) the Committee, if Grantee is a
member of the Corporate Executive Group (or equivalent successor classification)
or is subject to the reporting requirements of Section 16(a) of the Exchange Act
with respect to PNC securities; or (a) the Chief Human Resources Officer of PNC,
if Grantee is not within one of the groups specified in Section A.14(a).

 

A.15 “Detrimental Conduct” means:

 

(a) Grantee 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 Grantee’s Termination Date through the
first (1st) anniversary of Grantee’s Termination Date;

 

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(b) a material breach by Grantee of (i) any code of conduct of PNC or a
Subsidiary or (ii) other written policy of PNC or a Subsidiary, in either case
required by law or established to maintain compliance with applicable law;

 

(c) any act of fraud, misappropriation, material dishonesty, or embezzlement by
Grantee against PNC or a Subsidiary or any client or customer of PNC or a
Subsidiary;

 

(d) any conviction (including a plea of guilty or of nolo contendere) of Grantee
for, or entry by Grantee into a pre-trial disposition with respect to, the
commission of a felony which relates to or arises out of Grantee’s employment or
other service relationship with the Corporation; or

 

(e) entry of any order against Grantee by any governmental body having
regulatory authority with respect to the business of PNC or any Subsidiary,
which order relates to or arises out of 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 determines that Grantee has engaged
in conduct described in clause (a) above, that Grantee is guilty of conduct
described in clause (b) or clause (c) above, or that an event described in
clause (d) or clause (e) above has occurred with respect to Grantee and, if so,
determines that Grantee will be deemed to have engaged in Detrimental Conduct.

 

A.16 “Exchange Act” means the Securities Exchange Act of 1934 as amended, and
the rules and regulations promulgated thereunder.

 

A.17 “Fair Market Value” as it relates to PNC common stock means the average of
the high and low sale prices of the PNC common stock as reported on the New York
Stock Exchange (or such successor reporting system as PNC may select) on the
relevant date or, if no sale of the PNC common stock has been reported for that
day, the average of such prices on the next preceding day and the next following
day for which there were reported sales.

 

A.18 “Five-Year Continued Employment Performance Goal” means, subject to early
achievement if so determined by the Committee or to deemed achievement pursuant
to Section 7.3, Section 7.4, Section 7.5, Section 7.6, or Section 8 of the
Agreement, if applicable, that Grantee has been continuously employed by the
Corporation for the period from the Grant Date through (and including) the day
immediately preceding the first of the following to occur: (a) the fifth (5th)
anniversary of the Grant Date; (b) the date of Grantee’s death; and (c) the day
a Change in Control is deemed to have occurred.

 

A.19 “Four-Year Continued Employment Performance Goal” means, subject to early
achievement if so determined by the Committee or to deemed achievement pursuant
to Section 7.3, Section 7.4, Section 7.5, Section 7.6, or Section 8 of the
Agreement, if

 

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--------------------------------------------------------------------------------

applicable, that Grantee has been continuously employed by the Corporation for
the period from the Grant Date through (and including) the day immediately
preceding the first of the following to occur: (a) the fourth (4th) anniversary
of the Grant Date; (b) the date of Grantee’s death; and (c) the day a Change in
Control is deemed to have occurred.

 

A.20 “Good Reason” means:

 

(a) the assignment to Grantee of any duties inconsistent in any respect with
Grantee’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities immediately prior to either
the CIC Triggering Event or the Change in Control, or any other action by the
Corporation which results in a diminution in any respect in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith that is remedied by
the Corporation promptly after receipt of notice thereof given by Grantee;

 

(b) a reduction by the Corporation in Grantee’s annual base salary as in effect
on the Grant Date, as the same may be increased from time to time;

 

(c) the Corporation’s requiring Grantee to be based at any office or location
that is more than fifty (50) miles from Grantee’s office or location immediately
prior to either the CIC Triggering Event or the Change in Control;

 

(d) the failure by the Corporation (i) to continue in effect any bonus, stock
option or other cash or equity-based incentive plan or program in which Grantee
participates immediately prior to either the CIC Triggering Event or the Change
in Control that is material to Grantee’s total compensation, unless a
substantially equivalent arrangement (embodied in an ongoing substitute or
alternative plan or program) has been made with respect to such plan or program,
or (ii) to continue Grantee’s participation in such plan or program (or in such
substitute or alternative plan or program) on a basis at least as favorable,
both in terms of the amount of benefits provided and the level of Grantee’s
participation relative to other participants, as existed immediately prior to
the CIC Triggering Event or the Change in Control; or

 

(e) the failure by the Corporation to continue to provide Grantee with benefits
substantially similar to those received by Grantee under any of the
Corporation’s pension (including, but not limited to, tax-qualified plans), life
insurance, health, accident, disability or other welfare plans or programs in
which Grantee was participating, at costs substantially similar to those paid by
Grantee, immediately prior to the CIC Triggering Event or the Change in Control.

 

A.21 “Grant” means the Restricted Shares granted and issued to Grantee pursuant
to Section 1 of the Agreement.

 

A.22 “Grant Date” means the Grant Date set forth on page 1 of the Agreement.

 

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A.23 “Grantee” means the person identified as Grantee on page 1 of the
Agreement.

 

A.24 “Internal Revenue Code” means the Internal Revenue Code of 1986 as amended,
and the rules and regulations promulgated thereunder.

 

A.25 “Person” has the meaning given in Section 3(a)(9) of the Exchange Act and
also includes any syndicate or group deemed to be a person under Section
13(d)(3) of the Exchange Act.

 

A.26 “PNC” means The PNC Financial Services Group, Inc.

 

A.27 “Restricted Period.” The applicable Restricted Period for Restricted Shares
means, subject to early termination if so determined by the Committee or
pursuant to Section 7.6 of the Agreement, if applicable, the period set forth in
the applicable subsection below:

 

(a) For First Tranche Shares: with respect to shares in the First Tranche of
Restricted Shares, the period from the Grant Date through (and including) the
earlier of: (i) the date of Grantee’s death; (ii) the day immediately preceding
the day a Change in Control is deemed to have occurred; and (iii) the day
immediately preceding the third (3rd) anniversary of the Grant Date or, if
later, the last day of any extension of the Restricted Period pursuant to
Section 7.4(a) or Section 7.5 of the Agreement, if applicable;

 

(b) For Second Tranche Shares: with respect to shares in the Second Tranche of
Restricted Shares, the period from the Grant Date through (and including) the
earlier of: (i) the date of Grantee’s death; (ii) the day immediately preceding
the day a Change in Control is deemed to have occurred; and (iii) the day
immediately preceding the fourth (4th) anniversary of the Grant Date or, if
later, the last day of any extension of the Restricted Period pursuant to
Section 7.4(a) or Section 7.5 of the Agreement, if applicable; and

 

(c) For Third Tranche Shares: with respect to shares in the Third Tranche of
Restricted Shares, the period from the Grant Date through (and including) the
earlier of: (i) the date of Grantee’s death; (ii) the day immediately preceding
the day a Change in Control is deemed to have occurred; and (iii) the day
immediately preceding the fifth (5th) anniversary of the Grant Date or, if
later, the last day of any extension of the Restricted Period pursuant to
Section 7.4(a) or Section 7.5 of the Agreement, if applicable.

 

A.28 “Retiree” means a Grantee who has Retired.

 

A.29 “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 or, unless the Committee
determines

 

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otherwise, termination in connection with a divestiture of assets or of one or
more Subsidiaries) if such termination of employment occurs on or after the
first (1st) day of the first (1st) month coincident with or next following the
date on which Grantee attains age fifty-five (55) and completes five (5) years
of service (as determined in the same manner as the determination of five years
of Vesting Service under the provisions of The PNC Financial Services Group,
Inc. Pension Plan) with the Corporation.

 

A.30 “SEC” means the United States Securities and Exchange Commission.

 

A.31 “Termination Date” means Grantee’s last date of employment with the
Corporation. If Grantee is employed by a Subsidiary that ceases to be a
Subsidiary of PNC and Grantee does not continue to be employed by PNC or a
Subsidiary, then for purposes of the Agreement, Grantee’s employment with the
Corporation terminates effective at the time this occurs.

 

A.32 “Three-Year Continued Employment Performance Goal” means, subject to early
achievement if so determined by the Committee or to deemed achievement pursuant
to Section 7.3, Section 7.4, Section 7.5, Section 7.6, or Section 8 of the
Agreement, if applicable, that Grantee has been continuously employed by the
Corporation for the period from the Grant Date through (and including) the day
immediately preceding the first of the following to occur: (a) the third (3rd)
anniversary of the Grant Date; (b) the date of Grantee’s death; and (c) the day
a Change in Control is deemed to have occurred.

 

A.33 “Total and Permanent Disability” means, unless the Committee determines
otherwise, Grantee’s disability as determined to be total and permanent by the
Corporation for purposes of the Agreement.

 

A.34 “Tranche(s)” or “First, Second or Third Tranche” has the meaning set forth
in Section 1 of the Agreement.

 

A.35 “Unvested Shares” means any Restricted Shares that are not Awarded Shares.

 

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FORM OF NON-NEO ANNUAL 25/25 PROGRAM

RESTRICTED STOCK GRANT AGREEMENT

 

Annual 25/25 Program - 200_ Restricted Stock Grant

Continued Employment Performance Goal

Restricted Period: Three Years (100%)

 

THE PNC FINANCIAL SERVICES GROUP, INC.

1997 LONG-TERM INCENTIVE AWARD PLAN

* * *

ANNUAL 25/25 PROGRAM

200_ RESTRICTED STOCK GRANT

* * *

RESTRICTED STOCK AGREEMENT

* * *

 

GRANTEE:

  < name >          

GRANT DATE:

  February     , 200            

SHARES:

  < number of whole shares>          

 

1. Grant of Restricted Shares. Pursuant to Article 12 of The PNC Financial
Services Group, Inc. 1997 Long-Term Incentive Award Plan as amended from time to
time (“Plan”), and subject to the terms and conditions of this Restricted Stock
Agreement (“Agreement”), The PNC Financial Services Group, Inc. (“PNC”) hereby
grants to the Grantee named above (“Grantee”) an Incentive Share Award (as
defined in the Plan) of the number of shares of PNC common stock set forth
above, and, upon acceptance of the Grant by Grantee in accordance with Section
17, will cause the issuance of said shares to Grantee subject to the terms and
conditions of the Agreement and the Plan. The shares granted and issued to
Grantee hereby as an Incentive Share Award subject to the terms and conditions
of the Agreement and the Plan are hereafter referred to as the “Restricted
Shares.”

 

2. Definitions. Terms defined in the Plan are used in the Agreement as defined
in the Plan unless otherwise defined in Annex A (attached hereto and
incorporated herein by reference) or elsewhere in the Agreement.

 

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3. Terms of Grant. The Grant will be subject to the following terms and
conditions:

 

Restricted Shares will be subject to a Restricted Period as provided in Section
A.24 of Annex A. Restricted Shares will be deposited with PNC or its designee,
or credited to a book-entry account, during the term of the Restricted Period
unless and until forfeited pursuant to the terms of the Agreement.

 

Any certificate or certificates representing such 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. 1997 Long-Term Incentive
Award Plan as amended and an Agreement entered into between the registered owner
and The PNC Financial Services Group, Inc. Release from such terms and
conditions will be made only in accordance with the provisions of such Plan and
such Agreement, a copy of each of which is on file in the office of the
Corporate Secretary of The PNC Financial Services Group, Inc.”

 

Where a book-entry system is used with respect to Restricted Shares, appropriate
notation of such forfeiture possibility and transfer restrictions will be made
on the system with respect to the account or accounts to which the Restricted
Shares are credited.

 

Restricted Shares deposited with PNC or its designee during the term of the
Restricted Period that become Awarded Shares will be released and issued or
reissued to, or at the proper direction of, Grantee or Grantee’s legal
representative pursuant to Section 9 as soon as administratively practicable
following the end of the Restricted Period.

 

4. Rights as Shareholder. Except as provided in Section 6 and subject to Section
7.6(b) or Section 7.7(c), if applicable, and to Section 17, Grantee will have
all the rights and privileges of a shareholder with respect to the Restricted
Shares including, but not limited to, the right to vote the Restricted Shares
and the right to receive dividends thereon if and when declared by the Board;
provided, however, that all such rights and privileges will cease immediately
upon any forfeiture of such shares.

 

5. Capital Adjustments. Restricted Shares awarded hereunder will, as issued and
outstanding shares of PNC common stock, be subject to such adjustment as may be
necessary to reflect corporate transactions, including, without limitation,
stock dividends, stock splits, spin-offs, split-offs, recapitalizations,
mergers, consolidations or reorganizations of or by PNC; provided, however, that
any shares received as distributions on or in exchange for Unvested Shares will
be subject to the terms and conditions of the Agreement as if they were
Restricted Shares.

 

6. Prohibitions Against Sale, Assignment, etc. Unvested Shares may not be sold,
assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered,
other than by will or the laws of descent and distribution or as may be required
pursuant

 

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to Section 10.2, unless and until the Restricted Period terminates and the
Awarded Shares are released and issued or reissued by PNC pursuant to Section 9.

 

7. Forfeiture; Death; Qualifying Disability, Retirement or DEAP Termination;
Termination in Anticipation of CIC.

 

7.1 Forfeiture on Termination of Employment. Except as otherwise provided in and
subject to the conditions of Section 7.3, Section 7.4(a), Section 7.5(a),
Section 7.6(a), Section 7.7(a), Section 7.7(b), or Section 8, if applicable, or
unless the Committee determines otherwise, in the event that Grantee’s
employment with the Corporation terminates prior to the third (3rd) anniversary
of the Grant 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 forfeiture of Unvested Shares pursuant to the provisions of this Section
7.1 or the provisions of Section 7.2, Section 7.4(b), Section 7.5(b), Section
7.6(c) or Section 7.7(d), neither Grantee nor any successors, heirs, assigns or
legal representatives of Grantee will thereafter have any further rights or
interest in such Unvested Shares or any certificate or certificates representing
such Unvested Shares.

 

7.2 Forfeiture for 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: (a)
this Section 7.2 will not apply to Restricted Shares that remain outstanding
after Grantee’s Termination Date pursuant to Section 7.3 or Section 7.7, if any;
(b) no determination that Grantee has engaged in Detrimental Conduct may be made
on or after the date of Grantee’s death; (c) Detrimental Conduct will not apply
to conduct by or activities of successors to the Restricted Shares by will or
the laws of descent and distribution in the event of Grantee’s death; and (d)
Detrimental Conduct will cease to apply to any Restricted Shares upon a Change
in Control.

 

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 Grant Date, the Three-Year
Continued Employment Performance Goal will be deemed to have been achieved, and
the Restricted Period with respect to the then outstanding Unvested Shares will
terminate on the date of Grantee’s death.

 

The Restricted Shares which thereby become Awarded Shares will be released and
issued or 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.

 

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7.4 Disability Termination.

 

(a) In the event Grantee’s employment with the Corporation is terminated prior
to the third (3rd) anniversary of the Grant Date by the Corporation by reason of
Grantee’s Total and Permanent Disability, Unvested Shares will not be forfeited
on Grantee’s Termination Date. Instead, Unvested Shares will, subject to the
forfeiture provisions of Section 7.2, remain outstanding pending approval of the
vesting of the Restricted Shares pursuant to this Section 7.4(a) by the
Designated Person specified in Section A.13 of Annex A.

 

If such Unvested Shares are still outstanding but the Designated Person has not
made an affirmative determination to either approve or disapprove the vesting of
the Unvested Shares by the day immediately preceding the third (3rd) anniversary
of the Grant Date, then the Restricted Period will be automatically extended
through the first to occur of: (1) the day the Designated Person makes an
affirmative determination regarding such vesting; and (2) either (i) the
ninetieth (90th) day following the third (3rd) anniversary of the Grant Date, if
the Designated Person is the Chief Human Resources Officer of PNC, or (ii) the
180th day following such anniversary date if the Designated Person is the
Committee, whichever is applicable.

 

If the vesting of the then outstanding Unvested Shares is affirmatively approved
by the Designated Person on or prior to the last day of the Restricted Period,
including any extension of the Restricted Period, if applicable, then the
Three-Year Continued Employment Performance Goal will be deemed to have been
achieved, and the Restricted Period with respect to any then outstanding
Unvested Shares will terminate as of the end of the day on the date of such
approval or the day immediately preceding the third (3rd) anniversary of the
Grant Date, whichever is later. The Restricted Shares outstanding at the
termination of the Restricted Period will become Awarded Shares and will be
released and issued or reissued by PNC pursuant to Section 9.

 

(b) If the Designated Person disapproves the vesting of the Unvested Shares that
had remained outstanding after Grantee’s Termination Date pending approval of
vesting, then all such Unvested Shares that are still outstanding will be
forfeited by Grantee to PNC on such disapproval date without payment of any
consideration by PNC.

 

If by the end of the Restricted Period, including any extension of the
Restricted Period pursuant to the second paragraph of Section 7.4(a), if
applicable, the Designated Person has neither affirmatively approved nor
disapproved the vesting of the Unvested Shares that had remained outstanding
after Grantee’s Termination Date pending approval of vesting, then all such
Unvested Shares that are still outstanding will be forfeited by Grantee to PNC
at the close of business on the last day of the Restricted Period without
payment of any consideration by PNC.

 

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7.5 Retirement.

 

(a) In the event that Grantee Retires prior to the third (3rd) anniversary of
the Grant Date, Unvested Shares will not be forfeited on Grantee’s Termination
Date. Instead, Unvested Shares will, subject to the forfeiture provisions of
Section 7.2, remain outstanding pending approval of the vesting of the
Restricted Shares pursuant to this Section 7.5(a) by the Designated Person
specified in Section A.13 of Annex A.

 

If such Unvested Shares are still outstanding but the Designated Person has not
made an affirmative determination to either approve or disapprove the vesting of
the Unvested Shares by the day immediately preceding the third (3rd) anniversary
of the Grant Date, then the Restricted Period will be automatically extended
through the first to occur of: (1) the day the Designated Person makes an
affirmative determination regarding such vesting; and (2) either (i) the
ninetieth (90th) day following the third (3rd) anniversary of the Grant Date, if
the Designated Person is the Chief Human Resources Officer of PNC, or (ii) the
180th day following such anniversary date if the Designated Person is the
Committee, whichever is applicable.

 

If the vesting of the then outstanding Unvested Shares is affirmatively approved
by the Designated Person on or prior to the last day of the Restricted Period,
including any extension of the Restricted Period, if applicable, then the
Three-Year Continued Employment Performance Goal will be deemed to have been
achieved, and the Restricted Period with respect to any then outstanding
Unvested Shares will terminate as of the end of the day on the date of such
approval or the day immediately preceding the third (3rd) anniversary of the
Grant Date, whichever is later. The Restricted Shares outstanding at the
termination of the Restricted Period will become Awarded Shares and will be
released and issued or reissued by PNC pursuant to Section 9.

 

(b) If the Designated Person disapproves the vesting of the Unvested Shares that
had remained outstanding after Grantee’s Termination Date pending approval of
vesting, then all such Unvested Shares that are still outstanding will be
forfeited by Grantee to PNC on such disapproval date without payment of any
consideration by PNC.

 

If by the end of the Restricted Period, including any extension of the
Restricted Period pursuant to the second paragraph of Section 7.5(a), if
applicable, the Designated Person has neither affirmatively approved nor
disapproved the vesting of the Unvested Shares that had remained outstanding
after Grantee’s Termination Date pending approval of vesting, then all such
Unvested Shares that are still outstanding will be forfeited by Grantee to PNC
at the close of business on the last day of the Restricted Period without
payment of any consideration by PNC.

 

7.6 DEAP Termination.

 

(a) In the event that Grantee’s employment with the Corporation is terminated
prior to the third (3rd) anniversary of the Grant Date by the Corporation and
Grantee is

 

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offered and has entered into the standard Waiver and Release Agreement with PNC
or a Subsidiary under an applicable PNC or Subsidiary Displaced Employee
Assistance Plan, or any successor plan by whatever name known (“DEAP”), or
Grantee is offered and has entered into a similar waiver and release agreement
between PNC or a Subsidiary and Grantee pursuant to the terms of an agreement or
arrangement entered into by PNC or a Subsidiary and Grantee in lieu of or in
addition to the DEAP, then Unvested Shares will not be forfeited on Grantee’s
Termination Date. Instead, Unvested Shares will, subject to the forfeiture
provisions of Section 7.2, remain outstanding pending approval of the vesting of
the Restricted Shares pursuant to this Section 7.6(a) by the Designated Person
specified in Section A.13 of Annex A, provided that Grantee does not revoke such
waiver and release agreement within the time for revocation of such waiver and
release agreement by Grantee.

 

If such Unvested Shares are still outstanding but the Designated Person has not
made an affirmative determination to either approve or disapprove the vesting of
the Unvested Shares by the day immediately preceding the third (3rd) anniversary
of the Grant Date, then the Restricted Period will be automatically extended
through the first to occur of: (1) the day the Designated Person makes an
affirmative determination regarding such vesting; and (2) either (i) the
ninetieth (90th) day following the third (3rd) anniversary of the Grant Date, if
the Designated Person is the Chief Human Resources Officer of PNC, or (ii) the
180th day following such anniversary date if the Designated Person is the
Committee, whichever is applicable.

 

If the vesting of the then outstanding Unvested Shares is affirmatively approved
by the Designated Person on or prior to the last day of the Restricted Period,
including any extension of the Restricted Period, if applicable, then the
Three-Year Continued Employment Performance Goal will be deemed to have been
achieved, and the Restricted Period with respect to any then outstanding
Unvested Shares will terminate as of the end of the day on the date of such
approval or the day immediately preceding the third (3rd) anniversary of the
Grant Date, whichever is later. The Restricted Shares outstanding at the
termination of the Restricted Period will become Awarded Shares and will be
released and issued or reissued by PNC pursuant to Section 9.

 

(b) In the event that the record date for any dividend payable with respect to
the Unvested Shares occurs on or after Grantee’s Termination Date but prior to
the lapse of the time for revocation by Grantee of the waiver and release
agreement specified in the first paragraph of Section 7.6(a), then such dividend
will be held, without interest, pending satisfaction of the condition of Section
7.6(a) that Grantee enter into the offered waiver and release agreement and not
revoke such waiver and release agreement within the time for revocation of such
agreement by Grantee. In the event that this condition is not met, any dividend
being held pending satisfaction of such condition will be forfeited by Grantee
to PNC without payment of any consideration by PNC.

 

(c) If (i) Grantee does not enter into, or enters into but revokes, the waiver
and release agreement specified in the first paragraph of Section 7.6(a) or (ii)
the Designated Person disapproves the vesting of the Unvested Shares that had
remained outstanding

 

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after Grantee’s Termination Date pending the non-revocation of, and the lapse of
the time within which Grantee may revoke, such waiver and release agreement and
pending approval of the vesting of such shares, then all such Unvested Shares
that are still outstanding will be forfeited by Grantee to PNC on the date such
failure to satisfy the conditions of Section 7.6(a) occurs without payment of
any consideration by PNC.

 

If, by the end of the Restricted Period, including any extension of the
Restricted Period pursuant to the second paragraph of Section 7.6(a), if
applicable, such Unvested Shares are still outstanding but the Designated Person
has neither affirmatively approved nor disapproved the vesting of such shares,
then all such Unvested Shares will be forfeited by Grantee to PNC at the close
of business on the last day of the Restricted Period without payment of any
consideration by PNC.

 

7.7 Termination in Anticipation of a Change in Control.

 

(a) Notwithstanding anything in the Agreement to the contrary, if, after the
occurrence of a CIC Triggering Event but prior to a CIC Failure and prior to the
third (3rd) anniversary of the Grant Date, Grantee’s employment is terminated
(other than by reason of Grantee’s death) by the Corporation without Cause or by
Grantee for Good Reason, or if Grantee’s employment is deemed to have been so
terminated pursuant to Section 7.7(b), then: (i) the Three-Year Continued
Employment Performance Goal will be deemed to have been achieved and the
Restricted Period with respect to any then outstanding Unvested Shares will
terminate as of the end of the day on the day immediately preceding Grantee’s
Termination Date (or, in the case of a qualifying termination pursuant to
Section 7.7(b), the date all of the conditions set forth in clauses (i), (ii)
and (iii) of the first or second paragraph, as the case may be, of Section
7.7(b) are met); and (ii) all Restricted Shares that thereby become Awarded
Shares will be released and issued or reissued by PNC pursuant to Section 9 as
soon as administratively practicable following such date.

 

(b) Grantee’s employment will also be deemed to have been terminated by the
Corporation without Cause after the occurrence of a CIC Triggering Event but
prior to a CIC Failure for purposes of Section 7.7(a) if: (i) Grantee’s
employment is terminated by the Corporation without Cause; (ii) such termination
of employment (a) was at the request of a third party that has taken steps
reasonably calculated to effect a Change in Control or (b) otherwise arose in
anticipation of a Change in Control; and (iii) a CIC Triggering Event or a
Change in Control occurs within three (3) months of such termination of
employment.

 

Grantee’s employment will also be deemed to have been terminated by Grantee for
Good Reason after the occurrence of a CIC Triggering Event but prior to a CIC
Failure for purposes of Section 7.7(a) if: (i) Grantee terminates Grantee’s
employment with Good Reason; (ii) the circumstance or event that constitutes
Good Reason (a) occurs at the request of a third party that has taken steps
reasonably calculated to effect a Change in Control or (b) otherwise arose in
anticipation of a Change in Control; and (iii) a CIC Triggering Event or a
Change in Control occurs within three (3) months of such termination of
employment.

 

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For purposes of this Section 7.7(b) only, Grantee will have the burden of
proving that the requirements of clause (ii) of the first or second paragraph of
this Section 7.7(b), as the case may be, have been met and the standard of proof
to be met by Grantee will be clear and convincing evidence.

 

For purposes of this Section 7.7(b) only, the definition of Change in Control in
Section A.6 of Annex A will exclude the proviso in Section A.6(a).

 

(c) If the Unvested Shares will be forfeited by Grantee to PNC by reason of
Grantee’s termination of employment with the Corporation pursuant to Section 7.1
unless all of the conditions set forth in clauses (i), (ii) and (iii) of the
first or second paragraph, as the case may be, of Section 7.7(b) are met, then
in the event that the record date for any dividend payable with respect to the
Unvested Shares occurs on or after Grantee’s Termination Date but prior to the
time all of the conditions set forth in clauses (i), (ii) and (iii) of the first
or second paragraph, as the case may be, of Section 7.7(b) have been met, such
dividend will be held, without interest, pending satisfaction of all of such
conditions. In the event that one or more of the conditions of Section 7.7(b)
are not met, any dividend being held pending satisfaction of such conditions
will be forfeited by Grantee to PNC without payment of any consideration by PNC.

 

(d) If the Unvested Shares will be forfeited by Grantee to PNC by reason of
Grantee’s termination of employment with the Corporation pursuant to Section 7.1
unless all of the conditions set forth in clauses (i), (ii) and (iii) of the
first or second paragraph, as the case may be, of Section 7.7(b) are met, then
the Restricted Shares will remain outstanding pending satisfaction of all of
those conditions. Upon the failure of any required condition, all such Unvested
Shares will be forfeited by Grantee to PNC on the date such failure occurs
without payment of any consideration by PNC.

 

8. Change in Control. Notwithstanding anything in the Agreement to the contrary,
upon the occurrence of a Change in Control: (i) if Grantee is an employee of the
Corporation as of the day immediately preceding the Change in Control, the
Three-Year Continued Employment Performance Goal will be deemed to have been
achieved and the Restricted Period will terminate with respect to all then
outstanding Unvested Shares as of the day immediately preceding the Change in
Control; (ii) if Grantee’s employment with the Corporation terminated prior to
the occurrence of the Change in Control but the Unvested Shares remained
outstanding after such termination of employment pursuant to Section 7.4,
Section 7.5 or Section 7.6 and are still outstanding pending approval of the
vesting of such shares by the Designated Person specified in Section A.13 of
Annex A, then with respect to all Unvested Shares outstanding as of the day
immediately preceding the Change in Control, such vesting approval will be
deemed to have been given, the Three-Year Continued Employment Performance Goal
will be deemed to have been achieved, and the Restricted Period will terminate,
all as of the day immediately preceding the Change in Control, provided,
however, in the case of Unvested Shares that remained outstanding
post-employment solely pursuant to Section 7.6(a), that Grantee entered into and
does not revoke the

 

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waiver and release agreement specified in Section 7.6(a); and (iii) all
Restricted Shares that thereby become Awarded Shares will be released and issued
or reissued by PNC pursuant to Section 9 as soon as administratively practicable
following such date.

 

9. Termination of Prohibitions. Following termination of the Restricted Period,
PNC will release and issue or reissue the certificate or certificates
representing the then outstanding whole Restricted Shares that have become
Awarded Shares without the legend referred to in Section 3.

 

Upon release and issuance or reissuance of shares that have become Awarded
Shares, PNC or its designee will deliver the certificate or certificates for
such whole shares to, or at the proper direction of, Grantee or Grantee’s legal
representative.

 

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 applicable federal, state or local
withholding tax obligations arising from that election either: (a) by payment of
cash; (b) by physical delivery to PNC of certificates for whole shares of PNC
common stock that are not subject to any contractual restriction, pledge or
other encumbrance and that have been owned by Grantee for at least six (6)
months and, in the case of restricted stock, for which it has been at least six
(6) months since the restrictions lapsed; or (c) by a combination of cash and
such stock. Any such tax election shall be made pursuant to a form to be
provided to Grantee by PNC on request. For purposes of this Section 10.1, shares
of PNC common stock that are used to satisfy applicable withholding tax
obligations will be valued at their Fair Market Value on the date the tax
withholding obligation arises. Grantee will provide to PNC a copy of any
Internal Revenue Code Section 83(b) election filed by Grantee with respect to
the Restricted Shares not later than ten (10) days after the filing of such
election.

 

10.2 Other Tax Liabilities. Where Grantee has not previously satisfied all
applicable withholding tax obligations, PNC will, at the time the tax
withholding obligation arises, retain sufficient whole shares of PNC common
stock from the shares granted pursuant to the Agreement to satisfy the minimum
amount of taxes required to be withheld by the Corporation in connection with
the Restricted Shares. For purposes of this Section 10.2, shares of PNC common
stock retained to satisfy applicable withholding tax requirements will be valued
at their Fair Market Value on the date the tax withholding obligation arises.

 

PNC will not retain more than the number of shares sufficient to satisfy the
minimum amount of taxes required to be withheld in connection with the
Restricted Shares. If Grantee desires to have an additional amount, up to
Grantee’s W-4 obligation, withheld above the required minimum and if PNC so
permits, Grantee may elect to satisfy this additional withholding either: (a) by
payment of cash; or (b) using whole shares of PNC common stock (either by
physical delivery to PNC of certificates for the

 

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shares or through PNC’s 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.

 

11. Employment. Neither the granting and issuance of the Restricted Shares nor
any term or provision of the Agreement shall constitute or be evidence of any
understanding, expressed or implied, on the part of PNC or any Subsidiary to
employ Grantee for any period or in any way alter Grantee’s status as an
employee at will.

 

12. Subject to the Plan and the Committee. In all respects the Grant and the
Agreement are subject to the terms and conditions of the Plan, which has been
made available to Grantee and is incorporated herein by reference; provided,
however, the terms of the Plan shall not be considered an enlargement of any
benefits under the Agreement. Further, the Grant and the Agreement are subject
to any interpretation of, and any rules and regulations issued by, the Committee
or under the authority of the Committee, whether made or issued before or after
the Grant Date.

 

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, that such provisions are reasonable and properly required for the
adequate protection of the business of the Corporation, and that enforcement of
such provisions will not prevent Grantee from earning a living.

 

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 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 Grantee should reasonably know (i) is
a customer of PNC or any Subsidiary for which PNC or any Subsidiary provides any
services as of the Termination Date, or (ii) was a

 

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customer of PNC or any Subsidiary for which PNC or any Subsidiary provided any
services at any time during the twelve (12) months preceding the Termination
Date, or (iii) was, as of the Termination Date, considering retention of PNC or
any Subsidiary to provide any services.

 

(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 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 Grantee assist any other Person
in such activities.

 

Notwithstanding the above, if Grantee’s employment with the Corporation is
terminated by the Corporation without Cause or by Grantee with Good Reason and
such Termination Date occurs during a Coverage Period (either as Coverage Period
is defined in Section A.12 of Annex A or, if Grantee was a party to a written
agreement between Grantee and PNC providing, among other things, for certain
change in control severance benefits (a “CIC Severance Agreement”) that was in
effect at the time of such termination of employment, as Coverage Period is
defined in such CIC Severance Agreement, if longer), then commencing immediately
after such Termination Date, the provisions of subsections (a) and (b) of this
Section 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 twelve (12)
months 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
Subsidiary 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

 

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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 regard to conflict
of laws rules. Any dispute or claim arising out of or relating to the Agreement
or claim of breach hereof shall be brought exclusively in the federal court for
the Western District of Pennsylvania or in the Court of Common Pleas of
Allegheny County, Pennsylvania. By execution of the Agreement, Grantee and PNC
hereby consent to the exclusive jurisdiction of such courts, and waive any right
to challenge jurisdiction or venue in such courts with regard to any suit,
action, or proceeding under or in connection with the Agreement.

 

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 of the legal order requiring such
compliance.

 

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.

 

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15.7 Waiver of Jury Trial. Each of Grantee and PNC hereby waives any right to
trial by jury with regard to any suit, action or proceeding under or in
connection with any of Sections 14.2, 14.3 and 14.4.

 

15.8 Applicable Law. Notwithstanding anything in the Agreement, PNC will not be
required to comply with any term, covenant or condition of the Agreement if and
to the extent prohibited by law, including but not limited to federal banking
and securities regulations, or as otherwise directed by one or more regulatory
agencies having jurisdiction over PNC or any of its subsidiaries. Further, to
the extent, if any, applicable to Grantee, Grantee agrees to reimburse PNC for
any amounts Grantee may be required to reimburse PNC or its subsidiaries
pursuant to Section 304 of the 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.

 

16. Amendment of Pre-2004 Stock Options, Restricted Stock and Restricted Stock
Deferrals. All nonstatutory stock options granted to employees under the Plan
outstanding on February 18, 2004, all restricted stock grants to employees under
the Plan or PNC’s 1996 Executive Incentive Award Plan outstanding but not yet
vested on February 18, 2004, and all participant restricted stock deferral
accounts under the PNC and Affiliates Deferred Compensation Plan that were in
place but not yet vested on February 18, 2004, are subject to the amendments
approved by the Committee on that date. These amendments are generally described
in the Plan prospectus dated             , 200   under the heading “Recent
Amendments” of the section titled “The Plan.” A copy of this Plan prospectus
accompanied or preceded delivery of the Agreement to Grantee.

 

To the extent that Grantee is the holder of any such stock options or is the
grantee of any such restricted stock or is a participant in the PNC and
Affiliates Deferred Compensation Plan with such stock deferral account or
accounts in place but not yet vested, Grantee hereby acknowledges and consents
to such amendments.

 

17. Acceptance of Grant; PNC Right to Cancel. If Grantee does not accept the
Grant by executing and delivering a copy of the Agreement to PNC, without
altering or changing the terms thereof in any way, within sixty (60) days of
receipt by Grantee of a copy of the Agreement, PNC may, in its sole discretion,
withdraw its offer and cancel the Grant at any time prior to 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 and, in the event that
Grantee is subject to the reporting requirements of Section 16(a) of the
Exchange Act with respect to PNC securities, the filing with and acceptance by
the SEC of a Form 4 reporting the Grant, the Agreement is effective.

 

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

 

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dividends on such shares, until the date the Agreement is effective and the
Restricted Shares are issued in accordance with this Section 17.

 

In the event that one or more record dates for dividends on PNC common stock
occur after the Grant Date but before the date the Agreement is effective in
accordance with this Section 17 and the Restricted Shares are issued, then upon
the effectiveness of the Agreement, the Corporation will make a cash payment to
Grantee equivalent to the amount of the dividends Grantee would have received
had the Agreement been effective and the Restricted Shares had been issued on
the Grant Date.

 

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.

 

Grantee

 

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Annual 25/25 Program - 200   Restricted Stock Grant

Continued Employment Performance Goal

Restricted Period: Three Years (100%)

 

ANNEX A

TO

THE PNC FINANCIAL SERVICES GROUP, INC.

1997 LONG-TERM INCENTIVE AWARD PLAN

ANNUAL 25/25 PROGRAM — 200   RESTRICTED STOCK GRANT

RESTRICTED STOCK AGREEMENT

 

* * *

 

CERTAIN DEFINITIONS

 

Except where the context otherwise indicates, the following definitions apply
for purposes of the Restricted Stock Agreement (“Agreement”) to which this Annex
A is attached:

 

A.1 “Awarded Shares.” Provided that the Restricted Shares are then outstanding,
Restricted Shares become “Awarded Shares” when both of the following have
occurred: (a) the Three-Year Continued Employment Performance Goal has been
achieved or is deemed to have been achieved pursuant to the terms of the
Agreement; and (b) the Restricted Period has terminated.

 

A.2 “Board” means the Board of Directors of PNC.

 

A.3 “Business Day” means any day when the New York Stock Exchange is open for
business.

 

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 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 Subsidiary.

 

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For purposes of the preceding clauses (a) and (b), no act or failure to act, on
the part of Grantee, shall be considered willful unless it is done, or omitted
to be done, by Grantee in bad faith and without reasonable belief that 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.5 “CEO” means the chief executive officer of PNC.

 

A.6 “Change in Control” means a change of control of PNC of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or in response to any similar item on any similar schedule or
form) promulgated under the Exchange Act, whether or not PNC is then subject to
such reporting requirement; provided, however, that without limitation, a Change
in Control will be deemed to have occurred if:

 

(a) any Person, excluding employee benefits plans of the Corporation, is or
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act or any successor provisions thereto), directly or indirectly, of
securities of PNC representing twenty percent (20%) or more of the combined
voting power of PNC’s then outstanding securities; provided, however, that such
an acquisition of beneficial ownership representing between twenty percent (20%)
and forty percent (40%), inclusive, of such voting power will not be considered
a Change in Control if the Board approves such acquisition either prior to or
immediately after its occurrence;

 

(b) PNC consummates a merger, consolidation, share exchange, division or other
reorganization or transaction of PNC (a “Fundamental Transaction”) with any
other corporation, other than a Fundamental Transaction that results in the
voting securities of PNC outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least sixty percent (60%) of the combined
voting power immediately after such Fundamental

 

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Transaction of (i) PNC’s outstanding securities, (ii) the surviving entity’s
outstanding securities, or (iii) in the case of a division, the outstanding
securities of each entity resulting from the division;

 

(c) the shareholders of PNC approve a plan of complete liquidation or winding-up
of PNC or an agreement for the sale or disposition (in one transaction or a
series of transactions) of all or substantially all of PNC’s assets;

 

(d) as a result of a proxy contest, individuals who prior to the conclusion
thereof constituted the Board (including for this purpose any new director whose
election or nomination for election by PNC’s shareholders in connection with
such proxy contest was approved by a vote of at least two-thirds (2/3rds) of the
directors then still in office who were directors prior to such proxy contest)
cease to constitute at least a majority of the Board (excluding any Board seat
that is vacant or otherwise unoccupied);

 

(e) during any period of twenty-four (24) consecutive months, individuals who at
the beginning of such period constituted the Board (including for this purpose
any new director whose election or nomination for election by PNC’s shareholders
was approved by a vote of at least two-thirds (2/3rds) of the directors then
still in office who were directors at the beginning of such period) cease for
any reason to constitute at least a majority of the Board (excluding any Board
seat that is vacant or otherwise unoccupied); or

 

(f) the Board determines that a Change in Control has occurred.

 

Notwithstanding anything to the contrary herein, a divestiture or spin-off of a
subsidiary or division of PNC will not by itself constitute a Change in Control.

 

A.7 “CIC Failure” means the following:

 

(a) with respect to a CIC 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 CIC Triggering Event described in Section A.8(b), the
proxy contest fails to replace or remove a majority of the members of the Board.

 

A.8 “CIC Triggering Event” means the occurrence of either of the following:

 

(a) the Board or PNC’s shareholders approve a transaction described in
Subsection (b) of the definition of Change in Control contained in Section A.6;
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.

 

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A.9 “Committee” means the Personnel and Compensation Committee of the Board.

 

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 Subsidiary (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, 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.11 “Corporation” means PNC and its Subsidiaries.

 

A.12 “Coverage Period” means a period (a) commencing on the earlier to occur of
(i) the date of a CIC Triggering Event and (ii) the date of a Change in Control
and (b) ending on the date that is three (3) years after the date of the Change
in Control; provided, however, that in the event that a Coverage Period
commences on the date of a CIC Triggering Event, such Coverage Period will
terminate upon the earlier to occur of (x) the date of a CIC Failure and (y) the
date that is three (3) years after the date of the Change in Control triggered
by the CIC Triggering Event. After the termination of any Coverage Period,
another Coverage Period will commence upon the earlier to occur of clause (a)(i)
and clause (a)(ii) in the preceding sentence.

 

A.13 “Designated Person” will be either: (a) the Committee, if Grantee is a
member of the Corporate Executive Group (or equivalent successor classification)
or is subject to the reporting requirements of Section 16(a) of the Exchange Act
with respect to PNC securities; or (a) the Chief Human Resources Officer of PNC,
if Grantee is not within one of the groups specified in Section A.13(a).

 

A.14 “Detrimental Conduct” means:

 

(a) Grantee 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 Grantee’s Termination Date through the
first (1st) anniversary of Grantee’s Termination Date;

 

(b) a material breach by Grantee of (i) any code of conduct of PNC or a
Subsidiary or (ii) other written policy of PNC or a Subsidiary, in either case
required by law or established to maintain compliance with applicable law;

 

(c) any act of fraud, misappropriation, material dishonesty, or embezzlement by
Grantee against PNC or a Subsidiary or any client or customer of PNC or a
Subsidiary;

 

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(d) any conviction (including a plea of guilty or of nolo contendere) of Grantee
for, or entry by Grantee into a pre-trial disposition with respect to, the
commission of a felony which relates to or arises out of Grantee’s employment or
other service relationship with the Corporation; or

 

(e) entry of any order against Grantee by any governmental body having
regulatory authority with respect to the business of PNC or any Subsidiary,
which order relates to or arises out of 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 determines that Grantee has engaged
in conduct described in clause (a) above, that Grantee is guilty of conduct
described in clause (b) or clause (c) above, or that an event described in
clause (d) or clause (e) above has occurred with respect to Grantee and, if so,
determines that Grantee will be deemed to have engaged in Detrimental Conduct.

 

A.15 “Exchange Act” means the Securities Exchange Act of 1934 as amended, and
the rules and regulations promulgated thereunder.

 

A.16 “Fair Market Value” as it relates to PNC common stock means the average of
the high and low sale prices of the PNC common stock as reported on the New York
Stock Exchange (or such successor reporting system as PNC may select) on the
relevant date or, if no sale of the PNC common stock has been reported for that
day, the average of such prices on the next preceding day and the next following
day for which there were reported sales.

 

A.17 “Good Reason” means:

 

(a) the assignment to Grantee of any duties inconsistent in any respect with
Grantee’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities immediately prior to either
the CIC Triggering Event or the Change in Control, or any other action by the
Corporation which results in a diminution in any respect in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith that is remedied by
the Corporation promptly after receipt of notice thereof given by Grantee;

 

(b) a reduction by the Corporation in Grantee’s annual base salary as in effect
on the Grant Date, as the same may be increased from time to time;

 

(c) the Corporation’s requiring Grantee to be based at any office or location
that is more than fifty (50) miles from Grantee’s office or location immediately
prior to either the CIC Triggering Event or the Change in Control;

 

(d) the failure by the Corporation (i) to continue in effect any bonus, stock
option or other cash or equity-based incentive plan or program in which Grantee

 

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participates immediately prior to either the CIC Triggering Event or the Change
in Control that is material to Grantee’s total compensation, unless a
substantially equivalent arrangement (embodied in an ongoing substitute or
alternative plan or program) has been made with respect to such plan or program,
or (ii) to continue Grantee’s participation in such plan or program (or in such
substitute or alternative plan or program) on a basis at least as favorable,
both in terms of the amount of benefits provided and the level of Grantee’s
participation relative to other participants, as existed immediately prior to
the CIC Triggering Event or the Change in Control; or

 

(e) the failure by the Corporation to continue to provide Grantee with benefits
substantially similar to those received by Grantee under any of the
Corporation’s pension (including, but not limited to, tax-qualified plans), life
insurance, health, accident, disability or other welfare plans or programs in
which Grantee was participating, at costs substantially similar to those paid by
Grantee, immediately prior to the CIC Triggering Event or the Change in Control.

 

A.18 “Grant” means the Restricted Shares granted and issued to Grantee pursuant
to Section 1 of the Agreement.

 

A.19 “Grant Date” means the Grant Date set forth on page 1 of the Agreement.

 

A.20 “Grantee” means the person 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 “Person” has the meaning given in Section 3(a)(9) of the Exchange Act and
also includes any syndicate or group deemed to be a person under Section
13(d)(3) of the Exchange Act.

 

A.23 “PNC” means The PNC Financial Services Group, Inc.

 

A.24 “Restricted Period” means, subject to early termination if so determined by
the Committee or pursuant to Section 7.7 of the Agreement, if applicable, the
period from the Grant Date through (and including) the earlier of: (a) the date
of Grantee’s death; (b) the day immediately preceding the day a Change in
Control is deemed to have occurred; and (c) the day immediately preceding the
third (3rd) anniversary of the Grant Date or, if later, the last day of any
extension of the Restricted Period pursuant to Section 7.4(a), Section 7.5(a) or
Section 7.6(a) of the Agreement, if applicable.

 

A.25 “Retiree” means a Grantee who has Retired.

 

A.26 “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 or, unless the Committee
determines

 

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otherwise, termination in connection with a divestiture of assets or of one or
more Subsidiaries) if such termination of employment occurs on or after the
first (1st) day of the first (1st) month coincident with or next following the
date on which Grantee attains age fifty-five (55) and completes five (5) years
of service (as determined in the same manner as the determination of five years
of Vesting Service under the provisions of The PNC Financial Services Group,
Inc. Pension Plan) with the Corporation.

 

A.27 “SEC” means the United States Securities and Exchange Commission.

 

A.28 “Termination Date” means Grantee’s last date of employment with the
Corporation. If Grantee is employed by a Subsidiary that ceases to be a
Subsidiary of PNC and Grantee does not continue to be employed by PNC or a
Subsidiary, then for purposes of the Agreement, Grantee’s employment with the
Corporation terminates effective at the time this occurs.

 

A.29 “Three-Year Continued Employment Performance Goal” means, subject to early
achievement if so determined by the Committee or to deemed achievement pursuant
to Section 7.3, Section 7.4, Section 7.5, Section 7.6, Section 7.7, or Section 8
of the Agreement, if applicable, that Grantee has been continuously employed by
the Corporation for the period from the Grant Date through (and including) the
day immediately preceding the first of the following to occur: (a) the third
(3rd) anniversary of the Grant Date; (b) the date of Grantee’s death; and (c)
the day a Change in Control is deemed to have occurred.

 

A.30 “Total and Permanent Disability” means, unless the Committee determines
otherwise, Grantee’s disability as determined to be total and permanent by the
Corporation for purposes of the Agreement.

 

A.31 “Unvested Shares” means any Restricted Shares that are not Awarded Shares.

 

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FORM OF NEO ANNUAL 25/25 PROGRAM

RESTRICTED STOCK GRANT AGREEMENT

 

Annual 25/25 Program (NEOs) - 200   Restricted Stock Grant

Continued Employment Performance Goal

Restricted Period: Three Years (100%)

 

THE PNC FINANCIAL SERVICES GROUP, INC.

1996 EXECUTIVE INCENTIVE AWARD PLAN

 

* * *

RESTRICTED STOCK AGREEMENT

 

GRANTEE:

  

<name>

GRANT DATE:

  

February     , 200  

SHARES:

  

<number of whole shares>

 

1. Grant of Restricted Shares. Pursuant to Sections 5 and 6 of The PNC Financial
Services Group, Inc. 1996 Executive Incentive Award Plan, as amended from time
to time (“Plan”), and subject to the terms and conditions of this Restricted
Stock Agreement (“Agreement”), The PNC Financial Services Group, Inc. (“PNC”)
hereby grants to the Grantee named above (“Grantee”) a restricted stock award of
the number of shares of PNC common stock set forth above, and, upon acceptance
of the Grant by Grantee in accordance with Section 18, will cause the issuance
of said shares to Grantee subject to the terms and conditions of the Agreement
and the Plan. The shares granted and issued to Grantee hereby as a restricted
stock award subject to the terms and conditions of the Agreement and the Plan
are hereafter referred to as the “Restricted Shares.” The Restricted Shares are
being granted and issued to Grantee as part of an Incentive Award and include
Additional Stock as defined in the Plan.

 

2. Definitions. Terms defined in the Plan are used in the Agreement as defined
in the Plan unless otherwise defined in Annex A (attached hereto and
incorporated herein by reference) or elsewhere in the Agreement.

 

3. Terms of Grant. The Grant will be subject to the following terms and
conditions:

 

Restricted Shares will be subject to a Restricted Period as provided in Section
A.24 of Annex A. Restricted Shares will be deposited with PNC or its designee,

 

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or credited to a book-entry account, during the term of the Restricted Period
unless and until forfeited pursuant to the terms of the Agreement.

 

Any certificate or certificates representing such 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. 1996 Executive Incentive
Award Plan as amended and an Agreement entered into between the registered owner
and The PNC Financial Services Group, Inc. Release from such terms and
conditions will be made only in accordance with the provisions of such Plan and
such Agreement, a copy of each of which is on file in the office of the
Corporate Secretary of The PNC Financial Services Group, Inc.”

 

Where a book-entry system is used with respect to Restricted Shares, appropriate
notation of such forfeiture possibility and transfer restrictions will be made
on the system with respect to the account or accounts to which the Restricted
Shares are credited.

 

Restricted Shares deposited with PNC or its designee during the term of the
Restricted Period that become Awarded Shares will be released and issued or
reissued to, or at the proper direction of, Grantee or Grantee’s legal
representative pursuant to Section 9 as soon as administratively practicable
following the end of the Restricted Period.

 

4. Rights as Shareholder. Except as provided in Section 6 and subject to Section
7.6(b) or Section 7.7(c), if applicable, and to Section 18, Grantee will have
all the rights and privileges of a shareholder with respect to the Restricted
Shares including, but not limited to, the right to vote the Restricted Shares
and the right to receive dividends thereon if and when declared by the Board;
provided, however, that all such rights and privileges will cease immediately
upon any forfeiture of such shares.

 

5. Capital Adjustments. Restricted Shares awarded hereunder will, as issued and
outstanding shares of PNC common stock, be subject to such adjustment as may be
necessary to reflect corporate transactions, including, without limitation,
stock dividends, stock splits, spin-offs, split-offs, recapitalizations,
mergers, consolidations or reorganizations of or by PNC; provided, however, that
any shares received as distributions on or in exchange for Unvested Shares will
be subject to the terms and conditions of the Agreement as if they were
Restricted Shares.

 

6. Prohibitions Against Sale, Assignment, etc. Unvested Shares may not be sold,
assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered,
other than by will or the laws of descent and distribution or as may be required
pursuant to Section 10.2, unless and until the Restricted Period terminates and
the Awarded Shares are released and issued or reissued by PNC pursuant to
Section 9.

 

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7. Forfeiture; Death; Qualifying Disability, Retirement, or DEAP Termination;
Termination in Anticipation of Change in Control.

 

7.1 Forfeiture on Termination of Employment. Except as otherwise provided in and
subject to the conditions of Section 7.3, Section 7.4(a), Section 7.5(a),
Section 7.6(a), Section 7.7(a), Section 7.7(b), or Section 8, if applicable, or
unless the Committee determines otherwise, in the event that Grantee’s
employment with the Corporation terminates prior to the third (3rd) anniversary
of the Grant 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 forfeiture of Unvested Shares pursuant to the provisions of this Section
7.1 or the provisions of Section 7.2, Section 7.4(b), Section 7.5(b), Section
7.6(c) or Section 7.7(d), neither Grantee nor any successors, heirs, assigns or
legal representatives of Grantee will thereafter have any further rights or
interest in such Unvested Shares or any certificate or certificates representing
such Unvested Shares.

 

7.2 Forfeiture for 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: (a)
this Section 7.2 will not apply to Restricted Shares that remain outstanding
after Grantee’s Termination Date pursuant to Section 7.3 or Section 7.7, if any;
(b) no determination that Grantee has engaged in Detrimental Conduct may be made
on or after the date of Grantee’s death; (c) Detrimental Conduct will not apply
to conduct by or activities of successors to the Restricted Shares by will or
the laws of descent and distribution in the event of Grantee’s death; and (d)
Detrimental Conduct will cease to apply to any Restricted Shares upon a Change
in Control.

 

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 Grant Date, the Three-Year
Continued Employment Performance Goal will be deemed to have been achieved, and
the Restricted Period with respect to the then outstanding Unvested Shares will
terminate on the date of Grantee’s death.

 

The Restricted Shares which thereby become Awarded Shares will be released and
issued or 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 Disability Termination.

 

(a) In the event Grantee’s employment with the Corporation is terminated prior
to the third (3rd) anniversary of the Grant Date by the Corporation by reason of
Grantee’s Total and Permanent Disability, Unvested Shares will not be forfeited
on

 

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Grantee’s Termination Date. Instead, Unvested Shares will, subject to the
forfeiture provisions of Section 7.2, remain outstanding pending approval of the
vesting of the Restricted Shares pursuant to this Section 7.4(a) by the
Designated Person specified in Section A.13 of Annex A.

 

If such Unvested Shares are still outstanding but the Designated Person has not
made an affirmative determination to either approve or disapprove the vesting of
the Unvested Shares by the day immediately preceding the third (3rd) anniversary
of the Grant Date, then the Restricted Period will be automatically extended
through the first to occur of: (1) the day the Designated Person makes an
affirmative determination regarding such vesting; and (2) either (i) the 180th
day following the third (3rd) anniversary of the Grant Date, if the Designated
Person is the Committee, or (ii) the ninetieth (90th) day following such
anniversary date, if the Designated Person is the Chief Human Resources Officer
of PNC, whichever is applicable.

 

If the vesting of the then outstanding Unvested Shares is affirmatively approved
by the Designated Person on or prior to the last day of the Restricted Period,
including any extension of the Restricted Period, if applicable, then the
Three-Year Continued Employment Performance Goal will be deemed to have been
achieved, and the Restricted Period with respect to any then outstanding
Unvested Shares will terminate as of the end of the day on the date of such
approval or the day immediately preceding the third (3rd) anniversary of the
Grant Date, whichever is later. The Restricted Shares outstanding at the
termination of the Restricted Period will become Awarded Shares and will be
released and issued or reissued by PNC pursuant to Section 9.

 

(b) If the Designated Person disapproves the vesting of the Unvested Shares that
had remained outstanding after Grantee’s Termination Date pending approval of
vesting, then all such Unvested Shares that are still outstanding will be
forfeited by Grantee to PNC on such disapproval date without payment of any
consideration by PNC.

 

If by the end of the Restricted Period, including any extension of the
Restricted Period pursuant to the second paragraph of Section 7.4(a), if
applicable, the Designated Person has neither affirmatively approved nor
disapproved the vesting of the Unvested Shares that had remained outstanding
after Grantee’s Termination Date pending approval of vesting, then all such
Unvested Shares that are still outstanding will be forfeited by Grantee to PNC
at the close of business on the last day of the Restricted Period without
payment of any consideration by PNC.

 

7.5 Retirement.

 

(a) In the event that Grantee Retires prior to the third (3rd) anniversary of
the Grant Date, Unvested Shares will not be forfeited on Grantee’s Termination
Date. Instead, Unvested Shares will, subject to the forfeiture provisions of
Section 7.2, remain outstanding pending approval of the vesting of the
Restricted Shares pursuant to this Section 7.5(a) by the Designated Person
specified in Section A.13 of Annex A.

 

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If such Unvested Shares are still outstanding but the Designated Person has not
made an affirmative determination to either approve or disapprove the vesting of
the Unvested Shares by the day immediately preceding the third (3rd) anniversary
of the Grant Date, then the Restricted Period will be automatically extended
through the first to occur of: (1) the day the Designated Person makes an
affirmative determination regarding such vesting; and (2) either (i) the 180th
day following the third (3rd) anniversary of the Grant Date, if the Designated
Person is the Committee, or (ii) the ninetieth (90th) day following such
anniversary date, if the Designated Person is the Chief Human Resources Officer
of PNC, whichever is applicable.

 

If the vesting of the then outstanding Unvested Shares is affirmatively approved
by the Designated Person on or prior to the last day of the Restricted Period,
including any extension of the Restricted Period, if applicable, then the
Three-Year Continued Employment Performance Goal will be deemed to have been
achieved, and the Restricted Period with respect to any then outstanding
Unvested Shares will terminate as of the end of the day on the date of such
approval or the day immediately preceding the third (3rd) anniversary of the
Grant Date, whichever is later. The Restricted Shares outstanding at the
termination of the Restricted Period will become Awarded Shares and will be
released and issued or reissued by PNC pursuant to Section 9.

 

(b) If the Designated Person disapproves the vesting of the Unvested Shares that
had remained outstanding after Grantee’s Termination Date pending approval of
vesting, then all such Unvested Shares that are still outstanding will be
forfeited by Grantee to PNC on such disapproval date without payment of any
consideration by PNC.

 

If by the end of the Restricted Period, including any extension of the
Restricted Period pursuant to the second paragraph of Section 7.5(a), if
applicable, the Designated Person has neither affirmatively approved nor
disapproved the vesting of the Unvested Shares that had remained outstanding
after Grantee’s Termination Date pending approval of vesting, then all such
Unvested Shares that are still outstanding will be forfeited by Grantee to PNC
at the close of business on the last day of the Restricted Period without
payment of any consideration by PNC.

 

7.6 DEAP Termination.

 

(a) In the event that Grantee’s employment with the Corporation is terminated
prior to the third (3rd) anniversary of the Grant Date by the Corporation and
Grantee is offered and has entered into the standard Waiver and Release
Agreement with PNC or a Subsidiary under an applicable PNC or Subsidiary
Displaced Employee Assistance Plan, or any successor plan by whatever name known
(“DEAP”), or Grantee is offered and has entered into a similar waiver and
release agreement between PNC or a Subsidiary and Grantee pursuant to the terms
of an agreement or arrangement entered into by PNC or a Subsidiary and Grantee
in lieu of or in addition to the DEAP, then Unvested Shares will not be
forfeited on Grantee’s Termination Date. Instead, Unvested Shares will, subject
to the forfeiture provisions of Section 7.2, remain outstanding pending approval
of the vesting of the Restricted Shares pursuant to this Section 7.6(a) by the
Designated Person

 

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specified in Section A.13 of Annex A, provided that Grantee does not revoke such
waiver and release agreement within the time for revocation of such waiver and
release agreement by Grantee.

 

If such Unvested Shares are still outstanding but the Designated Person has not
made an affirmative determination to either approve or disapprove the vesting of
the Unvested Shares by the day immediately preceding the third (3rd) anniversary
of the Grant Date, then the Restricted Period will be automatically extended
through the first to occur of: (1) the day the Designated Person makes an
affirmative determination regarding such vesting; and (2) either (i) the 180th
day following the third (3rd) anniversary of the Grant Date, if the Designated
Person is the Committee, or (ii) the ninetieth (90th) day following such
anniversary date, if the Designated Person is the Chief Human Resources Officer
of PNC, whichever is applicable.

 

If the vesting of the then outstanding Unvested Shares is affirmatively approved
by the Designated Person on or prior to the last day of the Restricted Period,
including any extension of the Restricted Period, if applicable, then the
Three-Year Continued Employment Performance Goal will be deemed to have been
achieved, and the Restricted Period with respect to any then outstanding
Unvested Shares will terminate as of the end of the day on the date of such
approval or the day immediately preceding the third (3rd) anniversary of the
Grant Date, whichever is later. The Restricted Shares outstanding at the
termination of the Restricted Period will become Awarded Shares and will be
released and issued or reissued by PNC pursuant to Section 9.

 

(b) In the event that the record date for any dividend payable with respect to
the Unvested Shares occurs on or after Grantee’s Termination Date but prior to
the lapse of the time for revocation by Grantee of the waiver and release
agreement specified in the first paragraph of Section 7.6(a), then such dividend
will be held, without interest, pending satisfaction of the condition of Section
7.6(a) that Grantee enter into the offered waiver and release agreement and not
revoke such waiver and release agreement within the time for revocation of such
agreement by Grantee. In the event that this condition is not met, any dividend
being held pending satisfaction of such condition will be forfeited by Grantee
to PNC without payment of any consideration by PNC.

 

(c) If (i) Grantee does not enter into, or enters into but revokes, the waiver
and release agreement specified in the first paragraph of Section 7.6(a) or (ii)
the Designated Person disapproves the vesting of the Unvested Shares that had
remained outstanding after Grantee’s Termination Date pending the non-revocation
of, and the lapse of the time within which Grantee may revoke, such waiver and
release agreement and pending approval of the vesting of such shares, then all
such Unvested Shares that are still outstanding will be forfeited by Grantee to
PNC on the date such failure to satisfy the conditions of Section 7.6(a) occurs
without payment of any consideration by PNC.

 

If, by the end of the Restricted Period, including any extension of the
Restricted Period pursuant to the second paragraph of Section 7.6(a), if
applicable, such Unvested Shares are still outstanding but the Designated Person
has neither affirmatively approved

 

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nor disapproved the vesting of such shares, then all such Unvested Shares will
be forfeited by Grantee to PNC at the close of business on the last day of the
Restricted Period without payment of any consideration by PNC.

 

7.7 Termination in Anticipation of a Change in Control.

 

(a) Notwithstanding anything in the Agreement to the contrary, if, after the
occurrence of a CIC Triggering Event but prior to a CIC Failure and prior to the
third (3rd) anniversary of the Grant Date, Grantee’s employment is terminated
(other than by reason of Grantee’s death) by the Corporation without Cause or by
Grantee for Good Reason, or if Grantee’s employment is deemed to have been so
terminated pursuant to Section 7.7(b), then: (i) the Three-Year Continued
Employment Performance Goal will be deemed to have been achieved and the
Restricted Period with respect to any then outstanding Unvested Shares will
terminate as of the end of the day on the day immediately preceding Grantee’s
Termination Date (or, in the case of a qualifying termination pursuant to
Section 7.7(b), the date all of the conditions set forth in clauses (i), (ii)
and (iii) of the first or second paragraph, as the case may be, of Section
7.7(b) are met); and (ii) all Restricted Shares that thereby become Awarded
Shares will be released and issued or reissued by PNC pursuant to Section 9 as
soon as administratively practicable following such date.

 

(b) Grantee’s employment will also be deemed to have been terminated by the
Corporation without Cause after the occurrence of a CIC Triggering Event but
prior to a CIC Failure for purposes of Section 7.7(a) if: (i) Grantee’s
employment is terminated by the Corporation without Cause; (ii) such termination
of employment (a) was at the request of a third party that has taken steps
reasonably calculated to effect a Change in Control, or (b) otherwise arose in
anticipation of a Change in Control; and (iii) a CIC Triggering Event or a
Change in Control occurs within three (3) months of such termination of
employment.

 

Grantee’s employment will also be deemed to have been terminated by Grantee for
Good Reason after the occurrence of a CIC Triggering Event but prior to a CIC
Failure for purposes of Section 7.7(a) if: (i) Grantee terminates Grantee’s
employment with Good Reason; (ii) the circumstance or event that constitutes
Good Reason (a) occurs at the request of a third party that has taken steps
reasonably calculated to effect a Change in Control or (b) otherwise arose in
anticipation of a Change in Control; and (iii) a CIC Triggering Event or a
Change in Control occurs within three (3) months of such termination of
employment.

 

For purposes of this Section 7.7(b) only, Grantee will have the burden of
proving that the requirements of clause (ii) of the first or second paragraph of
this Section 7.7(b), as the case may be, have been met and the standard of proof
to be met by Grantee will be clear and convincing evidence.

 

For purposes of this Section 7.7(b) only, the definition of Change in Control in
Section A.6 of Annex A will exclude the proviso in Section A.6(a).

 

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(c) If the Unvested Shares will be forfeited by Grantee to PNC by reason of
Grantee’s termination of employment with the Corporation pursuant to Section 7.1
unless all of the conditions set forth in clauses (i), (ii) and (iii) of the
first or second paragraph, as the case may be, of Section 7.7(b) are met, then
in the event that the record date for any dividend payable with respect to the
Unvested Shares occurs on or after Grantee’s Termination Date but prior to the
time all of the conditions set forth in clauses (i), (ii) and (iii) of the first
or second paragraph, as the case may be, of Section 7.7(b) have been met, such
dividend will be held, without interest, pending satisfaction of all of such
conditions. In the event that one or more of the conditions of Section 7.7(b)
are not met, any dividend being held pending satisfaction of such conditions
will be forfeited by Grantee to PNC without payment of any consideration by PNC.

 

(d) If the Unvested Shares will be forfeited by Grantee to PNC by reason of
Grantee’s termination of employment with the Corporation pursuant to Section 7.1
unless all of the conditions set forth in clauses (i), (ii) and (iii) of the
first or second paragraph, as the case may be, of Section 7.7(b) are met, then
the Restricted Shares will remain outstanding pending satisfaction of all of
those conditions. Upon the failure of any required condition, all such Unvested
Shares will be forfeited by Grantee to PNC on the date such failure occurs
without payment of any consideration by PNC.

 

8. Change in Control. Notwithstanding anything in the Agreement to the contrary,
upon the occurrence of a Change in Control: (i) if Grantee is an employee of the
Corporation as of the day immediately preceding the Change in Control, the
Three-Year Continued Employment Performance Goal will be deemed to have been
achieved and the Restricted Period will terminate with respect to all then
outstanding Unvested Shares as of the day immediately preceding the Change in
Control; (ii) if Grantee’s employment with the Corporation terminated prior to
the occurrence of the Change in Control but the Unvested Shares remained
outstanding after such termination of employment pursuant to Section 7.4,
Section 7.5 or Section 7.6 and are still outstanding pending approval of the
vesting of such shares by the Designated Person specified in Section A.13 of
Annex A, then with respect to all Unvested Shares outstanding as of the day
immediately preceding the Change in Control, such vesting approval will be
deemed to have been given, the Three-Year Continued Employment Performance Goal
will be deemed to have been achieved, and the Restricted Period will terminate,
all as of the day immediately preceding the Change in Control, provided,
however, in the case of Unvested Shares that remained outstanding
post-employment solely pursuant to Section 7.6(a), that Grantee entered into and
does not revoke the waiver and release agreement specified in Section 7.6(a);
and (iii) all Restricted Shares that thereby become Awarded Shares will be
released and issued or reissued by PNC pursuant to Section 9 as soon as
administratively practicable following such date.

 

9. Termination of Prohibitions. Following termination of the Restricted Period,
PNC will release and issue or reissue the certificate or certificates
representing the then outstanding whole Restricted Shares that have become
Awarded Shares without the legend referred to in Section 3.

 

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Upon release and issuance or reissuance of shares that have become Awarded
Shares, PNC or its designee will deliver the certificate or certificates for
such whole shares to, or at the proper direction of, Grantee or Grantee’s legal
representative.

 

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 applicable federal, state or local
withholding tax obligations arising from that election either: (a) by payment of
cash; (b) by physical delivery to PNC of certificates for whole shares of PNC
common stock that are not subject to any contractual restriction, pledge or
other encumbrance and that have been owned by Grantee for at least six (6)
months and, in the case of restricted stock, for which it has been at least six
(6) months since the restrictions lapsed; or (c) by a combination of cash and
such stock. Any such tax election shall be made pursuant to a form to be
provided to Grantee by PNC on request. For purposes of this Section 10.1, shares
of PNC common stock that are used to satisfy applicable withholding tax
obligations will be valued at their Fair Market Value on the date the tax
withholding obligation arises. Grantee will provide to PNC a copy of any
Internal Revenue Code Section 83(b) election filed by Grantee with respect to
the Restricted Shares not later than ten (10) days after the filing of such
election.

 

10.2 Other Tax Liabilities. Where Grantee has not previously satisfied all
applicable withholding tax obligations, PNC will, at the time the tax
withholding obligation arises, retain sufficient whole shares of PNC common
stock from the shares granted pursuant to the Agreement to satisfy the minimum
amount of taxes required to be withheld by the Corporation in connection with
the Restricted Shares. For purposes of this Section 10.2, shares of PNC common
stock retained to satisfy applicable withholding tax requirements will be valued
at their Fair Market Value on the date the tax withholding obligation arises.

 

PNC will not retain more than the number of shares sufficient to satisfy the
minimum amount of taxes required to be withheld in connection with the
Restricted Shares. If Grantee desires to have an additional amount, up to
Grantee’s W-4 obligation, withheld above the required minimum and if PNC so
permits, Grantee may elect to satisfy this additional withholding either: (a) by
payment of cash; or (b) using whole shares of PNC common stock (either by
physical delivery to PNC of certificates for the shares or through PNC’s
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.

 

11. Employment. Neither the granting and issuance of the Restricted Shares nor
any term or provision of the Agreement shall constitute or be evidence of any

 

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understanding, expressed or implied, on the part of PNC or any Subsidiary to
employ Grantee for any period or in any way alter Grantee’s status as an
employee at will.

 

12. Subject to the Plan and the Committee. In all respects the Grant and the
Agreement are subject to the terms and conditions of the Plan, which has been
made available to Grantee and is incorporated herein by reference; provided,
however, the terms of the Plan shall not be considered an enlargement of any
benefits under the Agreement. Further, the Grant and the Agreement are subject
to any interpretation of, and any rules and regulations issued by, the Committee
or under the authority of the Committee, whether made or issued before or after
the Grant Date.

 

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, that such provisions are reasonable and properly required for the
adequate protection of the business of the Corporation, and that enforcement of
such provisions will not prevent Grantee from earning a living.

 

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 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 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 Subsidiary, employ or offer to employ, call on, or actively interfere with
PNC’s or any

 

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Subsidiary’s relationship with, or attempt to divert or entice away, any
employee of the Corporation, 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 without Cause or by Grantee with Good Reason and
such Termination Date occurs during a Coverage Period (either as Coverage Period
is defined in Section A.12 of Annex A or, if Grantee was a party to a written
agreement between Grantee and PNC providing, among other things, for certain
change in control severance benefits (a “CIC Severance Agreement”) that was in
effect at the time of such termination of employment, as Coverage Period is
defined in such CIC Severance Agreement, if longer), then commencing immediately
after such Termination Date, the provisions of subsections (a) and (b) of this
Section 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 twelve (12)
months 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
Subsidiary 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.

 

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15.1 Governing Law and Jurisdiction. The Agreement is governed by and construed
under the laws of the Commonwealth of Pennsylvania, without regard to conflict
of laws rules. Any dispute or claim arising out of or relating to the Agreement
or claim of breach hereof shall be brought exclusively in the federal court for
the Western District of Pennsylvania or in the Court of Common Pleas of
Allegheny County, Pennsylvania. By execution of the Agreement, Grantee and PNC
hereby consent to the exclusive jurisdiction of such courts, and waive any right
to challenge jurisdiction or venue in such courts with regard to any suit,
action, or proceeding under or in connection with the Agreement.

 

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 of the legal order requiring such
compliance.

 

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 Applicable Law. Notwithstanding anything in the Agreement, PNC will not be
required to comply with any term, covenant or condition of the Agreement if and
to the extent prohibited by law, including but not limited to federal banking
and securities

 

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regulations, or as otherwise directed by one or more regulatory agencies having
jurisdiction over PNC or any of its subsidiaries. Further, to the extent, if
any, applicable to Grantee, Grantee agrees to reimburse PNC for any amounts
Grantee may be required to reimburse PNC or its subsidiaries pursuant to Section
304 of the 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.

 

16. Modification; Interpretation; Rules and Regulations. The Committee may
modify or amend the terms of the Agreement or the Grant; provided, however, no
modification or amendment of the Agreement or the Grant shall, without the
consent of Grantee, adversely affect the rights or obligations of Grantee.

 

The Committee will have the power to construe and interpret the Agreement. The
Grant and the Agreement are also subject to any administrative guidelines and
other rules and regulations relating to the Grant or the Agreement promulgated
by or under the authority of the Committee. The Committee’s determinations on
matters within its authority will be conclusive and binding on Grantee.

 

17. Amendment of Pre-2004 Stock Options, Restricted Stock and Restricted Stock
Deferrals. All nonstatutory stock options granted to employees under PNC’s 1997
Long-Term Incentive Award Plan outstanding on February 18, 2004, all restricted
stock grants to employees under the Plan or PNC’s 1997 Long-Term Incentive Award
Plan outstanding but not yet vested on February 18, 2004, and all participant
restricted stock deferral accounts under the PNC and Affiliates Deferred
Compensation Plan that were in place but not yet vested on February 18, 2004,
are subject to the amendments approved by the Committee on that date. These
amendments are generally described in the Plan prospectus dated             ,
200   under the heading “Recent Amendments” of the section titled “2004
Restricted Stock Grants.” A copy of this Plan prospectus accompanied or preceded
delivery of the Agreement to Grantee.

 

To the extent that Grantee is the holder of any such stock options or is the
grantee of any such restricted stock or is a participant in the PNC and
Affiliates Deferred Compensation Plan with such stock deferral account or
accounts in place but not yet vested, Grantee hereby acknowledges and consents
to such amendments.

 

18. Acceptance of Grant; PNC Right to Cancel. If Grantee does not accept the
Grant by executing and delivering a copy of the Agreement to PNC, without
altering or changing the terms thereof in any way, within sixty (60) days of
receipt by Grantee of a copy of the Agreement, PNC may, in its sole discretion,
withdraw its offer and cancel the Grant at any time prior to 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 and, in the event that
Grantee is subject to the reporting requirements of Section 16(a) of the
Exchange Act with respect to PNC securities, the filing with and acceptance by
the SEC of a Form 4 reporting the Grant, the Agreement is effective.

 

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Grantee will not have any of the rights of a shareholder with respect to the
Restricted Shares as set forth in Section 4, and will not have the right to vote
or to receive dividends on such shares, until the date the Agreement is
effective and the Restricted Shares are issued in accordance with this Section
18.

 

In the event that one or more record dates for dividends on PNC common stock
occur after the Grant Date but before the date the Agreement is effective in
accordance with this Section 18 and the Restricted Shares are issued, then upon
the effectiveness of the Agreement, the Corporation will make a cash payment to
Grantee equivalent to the amount of the dividends Grantee would have received
had the Agreement been effective and the Restricted Shares had been issued on
the Grant Date.

 

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.

 

Grantee

 

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Annual 25/25 Program (NEOs) - 200   Restricted Stock Grant

Continued Employment Performance Goal

Restricted Period: Three Years (100%)

 

ANNEX A

TO

THE PNC FINANCIAL SERVICES GROUP, INC.

1996 EXECUTIVE INCENTIVE AWARD PLAN

RESTRICTED STOCK AGREEMENT

 

* * *

 

CERTAIN DEFINITIONS

 

Except where the context otherwise indicates, the following definitions apply
for purposes of the Restricted Stock Agreement (“Agreement”) to which this Annex
A is attached:

 

A.1 “Awarded Shares.” Provided that the Restricted Shares are then outstanding,
Restricted Shares become “Awarded Shares” when both of the following have
occurred: (a) the Three-Year Continued Employment Performance Goal has been
achieved or is deemed to have been achieved pursuant to the terms of the
Agreement; and (b) the Restricted Period has terminated.

 

A.2 “Board” means the Board of Directors of PNC.

 

A.3 “Business Day” means any day when the New York Stock Exchange is open for
business.

 

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 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 Subsidiary.

 

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

 

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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.5 “CEO” means the chief executive officer of PNC.

 

A.6 “Change in Control” means a change of control of PNC of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or in response to any similar item on any similar schedule or
form) promulgated under the Exchange Act, whether or not PNC is then subject to
such reporting requirement; provided, however, that without limitation, a Change
in Control will be deemed to have occurred if:

 

(a) any Person, excluding employee benefits plans of the Corporation, is or
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act or any successor provisions thereto), directly or indirectly, of
securities of PNC representing twenty percent (20%) or more of the combined
voting power of PNC’s then outstanding securities; provided, however, that such
an acquisition of beneficial ownership representing between twenty percent (20%)
and forty percent (40%), inclusive, of such voting power will not be considered
a Change in Control if the Board approves such acquisition either prior to or
immediately after its occurrence;

 

(b) PNC consummates a merger, consolidation, share exchange, division or other
reorganization or transaction of PNC (a “Fundamental Transaction”) with any
other corporation, other than a Fundamental Transaction that results in the
voting securities of PNC outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least sixty percent (60%) of the combined
voting power immediately after such Fundamental Transaction of (i) PNC’s
outstanding securities, (ii) the surviving entity’s outstanding

 

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securities, or (iii) in the case of a division, the outstanding securities of
each entity resulting from the division;

 

(c) the shareholders of PNC approve a plan of complete liquidation or winding-up
of PNC or an agreement for the sale or disposition (in one transaction or a
series of transactions) of all or substantially all of PNC’s assets;

 

(d) as a result of a proxy contest, individuals who prior to the conclusion
thereof constituted the Board (including for this purpose any new director whose
election or nomination for election by PNC’s shareholders in connection with
such proxy contest was approved by a vote of at least two-thirds (2/3rds) of the
directors then still in office who were directors prior to such proxy contest)
cease to constitute at least a majority of the Board (excluding any Board seat
that is vacant or otherwise unoccupied);

 

(e) during any period of twenty-four (24) consecutive months, individuals who at
the beginning of such period constituted the Board (including for this purpose
any new director whose election or nomination for election by PNC’s shareholders
was approved by a vote of at least two-thirds (2/3rds) of the directors then
still in office who were directors at the beginning of such period) cease for
any reason to constitute at least a majority of the Board (excluding any Board
seat that is vacant or otherwise unoccupied); or

 

(f) the Board determines that a Change in Control has occurred.

 

Notwithstanding anything to the contrary herein, a divestiture or spin-off of a
subsidiary or division of PNC will not by itself constitute a Change in Control.

 

A.7 “CIC Failure” means the following:

 

(a) with respect to a CIC 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 CIC Triggering Event described in Section A.8(b), the
proxy contest fails to replace or remove a majority of the members of the Board.

 

A.8 “CIC Triggering Event” means the occurrence of either of the following:

 

(a) the Board or PNC’s shareholders approve a transaction described in
Subsection (b) of the definition of Change in Control contained in Section A.6;
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.

 

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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 Subsidiary (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, 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.11 “Corporation” means PNC and its Subsidiaries.

 

A.12 “Coverage Period” means a period (a) commencing on the earlier to occur of
(i) the date of a CIC Triggering Event and (ii) the date of a Change in Control
and (b) ending on the date that is three (3) years after the date of the Change
in Control; provided, however, that in the event that a Coverage Period
commences on the date of a CIC Triggering Event, such Coverage Period will
terminate upon the earlier to occur of (x) the date of a CIC Failure and (y) the
date that is three (3) years after the date of the Change in Control triggered
by the CIC Triggering Event. After the termination of any Coverage Period,
another Coverage Period will commence upon the earlier to occur of clause (a)(i)
and clause (a)(ii) in the preceding sentence.

 

A.13 “Designated Person” will be either: (a) the Committee, if Grantee is a
member of the Corporate Executive Group (or equivalent successor classification)
or is subject to the reporting requirements of Section 16(a) of the Exchange Act
with respect to PNC securities; or (a) the Chief Human Resources Officer of PNC,
if Grantee is not within one of the groups specified in Section A.13(a).

 

A.14 “Detrimental Conduct” means:

 

(a) Grantee 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 Grantee’s Termination Date through the
first (1st) anniversary of Grantee’s Termination Date;

 

(b) a material breach by Grantee of (i) any code of conduct of PNC or a
Subsidiary or (ii) other written policy of PNC or a Subsidiary, in either case
required by law or established to maintain compliance with applicable law;

 

(c) any act of fraud, misappropriation, material dishonesty, or embezzlement by
Grantee against PNC or a Subsidiary or any client or customer of PNC or a
Subsidiary;

 

(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

 

-18-

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commission of a felony which relates to or arises out of Grantee’s employment or
other service relationship with the Corporation; or

 

(e) entry of any order against Grantee by any governmental body having
regulatory authority with respect to the business of PNC or any Subsidiary,
which order relates to or arises out of 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 determines that Grantee has engaged
in conduct described in clause (a) above, that Grantee is guilty of conduct
described in clause (b) or clause (c) above, or that an event described in
clause (d) or clause (e) above has occurred with respect to Grantee and, if so,
determines that Grantee will be deemed to have engaged in Detrimental Conduct.

 

A.15 “Exchange Act” means the Securities Exchange Act of 1934 as amended, and
the rules and regulations promulgated thereunder.

 

A.16 “Fair Market Value” as it relates to PNC common stock means the average of
the high and low sale prices of the PNC common stock as reported on the New York
Stock Exchange (or such successor reporting system as PNC may select) on the
relevant date or, if no sale of the PNC common stock has been reported for that
day, the average of such prices on the next preceding day and the next following
day for which there were reported sales.

 

A.17 “Good Reason” means:

 

(a) the assignment to Grantee of any duties inconsistent in any respect with
Grantee’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities immediately prior to either
the CIC Triggering Event or the Change in Control, or any other action by the
Corporation which results in a diminution in any respect in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith that is remedied by
the Corporation promptly after receipt of notice thereof given by Grantee;

 

(b) a reduction by the Corporation in Grantee’s annual base salary as in effect
on the Grant Date, as the same may be increased from time to time;

 

(c) the Corporation’s requiring Grantee to be based at any office or location
that is more than fifty (50) miles from Grantee’s office or location immediately
prior to either the CIC Triggering Event or the Change in Control;

 

(d) the failure by the Corporation (i) to continue in effect any bonus, stock
option or other cash or equity-based incentive plan or program in which Grantee
participates immediately prior to either the CIC Triggering Event or the Change
in Control that is material to Grantee’s total compensation, unless a
substantially equivalent

 

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arrangement (embodied in an ongoing substitute or alternative plan or program)
has been made with respect to such plan or program, or (ii) to continue
Grantee’s participation in such plan or program (or in such substitute or
alternative plan or program) on a basis at least as favorable, both in terms of
the amount of benefits provided and the level of Grantee’s participation
relative to other participants, as existed immediately prior to the CIC
Triggering Event or the Change in Control; or

 

(e) the failure by the Corporation to continue to provide Grantee with benefits
substantially similar to those received by Grantee under any of the
Corporation’s pension (including, but not limited to, tax-qualified plans), life
insurance, health, accident, disability or other welfare plans or programs in
which Grantee was participating, at costs substantially similar to those paid by
Grantee, immediately prior to the CIC Triggering Event or the Change in Control.

 

A.18 “Grant” means the Restricted Shares granted and issued to Grantee pursuant
to Section 1 of the Agreement.

 

A.19 “Grant Date” means the Grant Date set forth on page 1 of the Agreement.

 

A.20 “Grantee” means the person 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 “Person” has the meaning given in Section 3(a)(9) of the Exchange Act and
also includes any syndicate or group deemed to be a person under Section
13(d)(3) of the Exchange Act.

 

A.23 “PNC” means The PNC Financial Services Group, Inc.

 

A.24 “Restricted Period” means, subject to early termination if so determined by
the Committee or pursuant to Section 7.7 of the Agreement, if applicable, the
period from the Grant Date through (and including) the earlier of: (a) the date
of Grantee’s death; (b) the day immediately preceding the day a Change in
Control is deemed to have occurred; and (c) the day immediately preceding the
third (3rd) anniversary of the Grant Date or, if later, the last day of any
extension of the Restricted Period pursuant to Section 7.4(a), Section 7.5(a) or
Section 7.6(a) of the Agreement, if applicable.

 

A.25 “Retiree” means a Grantee who has Retired.

 

A.26 “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 or, unless the Committee
determines otherwise, termination in connection with a divestiture of assets or
of one or more Subsidiaries) if such termination of employment occurs on or
after the first (1st) day of

 

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the first (1st) month coincident with or next following the date on which
Grantee attains age fifty-five (55) and completes five (5) years of service (as
determined in the same manner as the determination of five years of Vesting
Service under the provisions of The PNC Financial Services Group, Inc. Pension
Plan) with the Corporation.

 

A.27 “SEC” means the United States Securities and Exchange Commission.

 

A.28 “Termination Date” means Grantee’s last date of employment with the
Corporation. If Grantee is employed by a Subsidiary that ceases to be a
Subsidiary of PNC and Grantee does not continue to be employed by PNC or a
Subsidiary, then for purposes of the Agreement, Grantee’s employment with the
Corporation terminates effective at the time this occurs.

 

A.29 “Three-Year Continued Employment Performance Goal” means, subject to early
achievement if so determined by the Committee or to deemed achievement pursuant
to Section 7.3, Section 7.4, Section 7.5, Section 7.6, Section 7.7, or Section 8
of the Agreement, if applicable, that Grantee has been continuously employed by
the Corporation for the period from the Grant Date through (and including) the
day immediately preceding the first of the following to occur: (a) the third
(3rd) anniversary of the Grant Date; (b) the date of Grantee’s death; and (c)
the day a Change in Control is deemed to have occurred.

 

A.30 “Total and Permanent Disability” means, unless the Committee determines
otherwise, Grantee’s disability as determined to be total and permanent by the
Corporation for purposes of the Agreement.

 

A.31 “Unvested Shares” means any Restricted Shares that are not Awarded Shares.

 

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FORM OF ANNUAL 25/25 PROGRAM

RESTRICTED AWARD DEFERRAL ACCOUNT AGREEMENT

 

Annual 25/25 Program - 200   Restricted Deferred Award

Continued Employment Performance Goal

Restricted Period: Three Years (100%)

 

THE PNC FINANCIAL SERVICES GROUP, INC. AND AFFILIATES

DEFERRED COMPENSATION PLAN

* * *

ANNUAL 25/25 PROGRAM

200   RESTRICTED DEFERRED AWARD

* * *

RESTRICTED AWARD DEFERRAL ACCOUNT AGREEMENT

* * *

 

PARTICIPANT:    < name > GRANT DATE:    February     , 200   DEFERRED SHARES:   
< number of shares, including fractions>

 

1. Definitions. Terms defined in The PNC Financial Services Group, Inc. and
Affiliates Deferred Compensation Plan, as amended from time to time (“Plan”),
are used in this Restricted Award Deferral Account Agreement (“Agreement”) as
defined in the Plan unless otherwise defined in Annex A (attached hereto and
incorporated herein by reference) or elsewhere in the Agreement.

 

2. 200   Restricted Award Deferral Account. Subject to the terms and conditions
of the Agreement, The PNC Financial Services Group, Inc. (“PNC”) has, in
connection with the Corporation’s Annual 25/25 Program for 200  , granted to the
Participant named above (“Participant”) a restricted stock award in the amount
of the number of shares of PNC common stock set forth above under “Deferred
Shares.” In accordance with Participant’s prior Deferral Election, such award
has been deferred under the Plan, subject to the terms and conditions of the
Agreement.

 

Upon acceptance of the award of the Deferred Shares (“Award”) and the terms and
conditions of the deferral of such shares under the Plan and the Agreement in
accordance with Section 17, a separate subaccount of Participant’s Plan Account
will be established for Participant under the Plan to reflect the deferral of
such shares (“200   Restricted Award Deferral Account”). The Deferral Amounts
credited to such

 

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subaccount will be deemed to be invested in the phantom PNC Common Stock Fund,
such that the initial balance of the 200_ Restricted Award Deferral Account will
be a number of units of phantom PNC common stock equal to the number of Deferred
Shares set forth above (“Deferred Share Units”). Except as otherwise provided in
the Agreement, the 200   Restricted Award Deferral Account will be treated in
the same manner and will be subject to the same terms and conditions as a
subaccount established under the Plan for Participant for cash deferrals.

 

3. Restricted Period. The 200   Restricted Award Deferral Account will be
subject to the following terms and conditions:

 

The 200   Restricted Award Deferral Account and the Deferred Share Units will be
subject to forfeiture and transfer restrictions pursuant to the terms and
conditions of the Agreement during the term of a Restricted Period as provided
in Section A.23 of Annex A.

 

An appropriate notation that the 200   Restricted Award Deferral Account and the
Deferred Share Units are subject to the terms and conditions of the Agreement,
including such forfeiture possibility and restrictions against transfer, will be
made on the Plan system with respect to the 200   Restricted Award Deferral
Account and the Deferred Share Units. It will also be noted that release from
such terms and conditions will be made only in accordance with the provisions of
the Agreement, a copy of which is on file in the office of the Corporate
Secretary of The PNC Financial Services Group, Inc.

 

To the extent that the Deferred Share Units become Awarded Share Units and are
not forfeited pursuant to Section 7, the 200   Restricted Award Deferral Account
and Deferred Share Units will be released from the terms and conditions of the
Agreement and the 200   Restricted Award Deferral Account will become a regular
subaccount under the Plan pursuant to Section 9 as soon as administratively
practicable following termination of the Restricted Period.

 

4. Phantom Dividends. Subject to Section 7.6(b) or Section 7.7(c), if
applicable, and to Section 17, any earnings credited to Participant under the
Plan with respect to the Deferred Share Units in the 200   Restricted Award
Deferral Account will not be restricted by the Agreement and will be credited to
the subaccount of Participant’s Plan Account that reflects deferrals of cash
annual incentive awards for 200  .

 

5. Capital Adjustments. Deferred Share Units, as units of phantom PNC common
stock, will be subject to such adjustment as may be necessary to reflect the
effect on such units of corporate transactions, including, without limitation,
stock dividends, stock splits, spin-offs, split-offs, recapitalizations,
mergers, consolidations or reorganizations of or by PNC, on shares of PNC common
stock; provided, however, that any share units credited to Participant as deemed
distributions on or in exchange for Unvested Share Units will be credited to the
200   Restricted Award Deferral Account as Deferred Share Units and will be
subject to the terms and conditions of the Agreement as such.

 

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6. Prohibitions Against Transfer and Other Limitations. Deferred Share Units may
not be transferred to a subaccount other than the 200_ Restricted Award Deferral
Account unless and until they become Awarded Share Units and are released from
the terms and conditions of the Agreement pursuant to Section 9 following
termination of the Restricted Period.

 

Participant may not elect to begin distributions or make hardship withdrawals
from the 200_ Restricted Award Deferral Account until that subaccount has been
released from the terms and conditions of the Agreement pursuant to Section 9.
Any accelerated or other distribution of the 200_ Restricted Award Deferral
Account that would otherwise occur pursuant to the Plan, or otherwise, will be
delayed until that subaccount has been released from the terms and conditions of
the Agreement pursuant to Section 9.

 

7. Forfeiture; Death; Qualifying Disability, Retirement or DEAP Termination;
Termination in Anticipation of CIC.

 

7.1 Forfeiture on Termination of Employment. Except as otherwise provided in and
subject to the conditions of Section 7.3, Section 7.4(a), Section 7.5(a),
Section 7.6(a), Section 7.7 (a), Section 7.7(b), or Section 8, if applicable, or
unless the Committee determines otherwise, in the event that Participant’s
employment with the Corporation terminates prior to the third (3rd) anniversary
of the Grant Date, all Deferred Share Units that are Unvested Share Units on
Participant’s Termination Date will be forfeited by Participant to PNC without
payment of any consideration by PNC.

 

Upon forfeiture of Unvested Share Units pursuant to the provisions of this
Section 7.1 or the provisions of Section 7.2, Section 7.4(b), Section 7.5(b),
Section 7.6(c) or Section 7.7(d), neither Participant nor any successors, heirs,
assigns or legal representatives of Participant will thereafter have any further
rights or interest in such Unvested Share Units.

 

7.2 Forfeiture for Detrimental Conduct. Unvested Share Units that would
otherwise remain in effect after Participant’s Termination Date, if any, will be
forfeited by Participant to PNC without payment of any consideration by PNC in
the event that, at any time prior to the date such units become Awarded Share
Units, PNC determines that Participant has engaged in Detrimental Conduct;
provided, however, that: (a) this Section 7.2 will not apply to Deferred Share
Units that remain outstanding after Participant’s Termination Date pursuant to
Section 7.3 or Section 7.7, if any; (b) no determination that Participant has
engaged in Detrimental Conduct may be made on or after the date of Participant’s
death; (c) Detrimental Conduct will not apply to conduct by or activities of
successors to Participant’s interests under the Plan in the event of
Participant’s death; and (d) Detrimental Conduct will cease to apply to any
Deferred Share Units upon a Change in Control.

 

7.3 Death. In the event of Participant’s death while an employee of the
Corporation and prior to the third (3rd) anniversary of the Grant Date, the
Three-Year

 

-3-

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Continued Employment Performance Goal will be deemed to have been achieved, and
the Restricted Period with respect to those Unvested Share Units then in effect
will terminate on the date of Participant’s death.

 

The Deferred Share Units which thereby become Awarded Share Units will be
released from the terms and conditions of the Agreement pursuant to Section 9 as
soon as administratively practicable following such date.

 

7.4 Disability Termination.

 

(a) In the event Participant’s employment with the Corporation is terminated
prior to the third (3rd) anniversary of the Grant Date by the Corporation by
reason of Participant’s Total and Permanent Disability, Unvested Share Units
will not be forfeited on Participant’s Termination Date. Instead, Unvested Share
Units will, subject to the forfeiture provisions of Section 7.2, remain in
effect pending approval of the vesting of the Deferred Share Units pursuant to
this Section 7.4(a) by the Designated Person specified in Section A.14 of Annex
A.

 

If such Unvested Share Units are still in effect but the Designated Person has
not made an affirmative determination to either approve or disapprove the
vesting of the Unvested Share Units by the day immediately preceding the third
(3rd) anniversary of the Grant Date, then the Restricted Period will be
automatically extended through the first to occur of: (1) the day the Designated
Person makes an affirmative determination regarding such vesting; and (2) either
(i) the ninetieth (90th) day following the third (3rd) anniversary of the Grant
Date, if the Designated Person is the Chief Human Resources Officer of PNC, or
(ii) the 180th day following such anniversary date if the Designated Person is
the Committee, whichever is applicable.

 

If the vesting of the Unvested Share Units that are then in effect is
affirmatively approved by the Designated Person on or prior to the last day of
the Restricted Period, including any extension of the Restricted Period, if
applicable, then the Three-Year Continued Employment Performance Goal will be
deemed to have been achieved, and the Restricted Period with respect to any
Unvested Share Units then in effect will terminate as of the end of the day on
the date of such approval or the day immediately preceding the third (3rd)
anniversary of the Grant Date, whichever is later. The Deferred Share Units in
effect at the termination of the Restricted Period will become Awarded Share
Units and will be released from the terms and conditions of the Agreement
pursuant to Section 9.

 

(b) If the Designated Person disapproves the vesting of the Unvested Share Units
that had remained in effect after Participant’s Termination Date pending
approval of vesting, then all such Unvested Share Units that are still in effect
will be forfeited by Participant to PNC on such disapproval date without payment
of any consideration by PNC.

 

-4-

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If by the end of the Restricted Period, including any extension of the
Restricted Period pursuant to the second paragraph of Section 7.4(a), if
applicable, the Designated Person has neither affirmatively approved nor
disapproved the vesting of the Unvested Share Units that had remained in effect
after Participant’s Termination Date pending approval of vesting, then all such
Unvested Share Units that are still in effect will be forfeited by Participant
to PNC at the close of business on the last day of the Restricted Period without
payment of any consideration by PNC.

 

7.5 Retirement.

 

(a) In the event that Participant Retires prior to the third (3rd) anniversary
of the Grant Date, Unvested Share Units will not be forfeited on Participant’s
Termination Date. Instead, Unvested Share Units will, subject to the forfeiture
provisions of Section 7.2, remain in effect pending approval of the vesting of
the Deferred Share Units pursuant to this Section 7.5(a) by the Designated
Person specified in Section A.14 of Annex A.

 

If such Unvested Share Units are still in effect but the Designated Person has
not made an affirmative determination to either approve or disapprove the
vesting of the Unvested Share Units by the day immediately preceding the third
(3rd) anniversary of the Grant Date, then the Restricted Period will be
automatically extended through the first to occur of: (1) the day the Designated
Person makes an affirmative determination regarding such vesting; and (2) either
(i) the ninetieth (90th) day following the third (3rd) anniversary of the Grant
Date, if the Designated Person is the Chief Human Resources Officer of PNC, or
(ii) the 180th day following such anniversary date if the Designated Person is
the Committee, whichever is applicable.

 

If the vesting of the Unvested Share Units that are then in effect is
affirmatively approved by the Designated Person on or prior to the last day of
the Restricted Period, including any extension of the Restricted Period, if
applicable, then the Three-Year Continued Employment Performance Goal will be
deemed to have been achieved, and the Restricted Period with respect to any
Unvested Share Units then in effect will terminate as of the end of the day on
the date of such approval or the day immediately preceding the third (3rd)
anniversary of the Grant Date, whichever is later. The Deferred Share Units in
effect at the termination of the Restricted Period will become Awarded Shares
and will be released and issued or reissued by PNC pursuant to Section 9.

 

(b) If the Designated Person disapproves the vesting of the Unvested Share Units
that had remained in effect after Participant’s Termination Date pending
approval of vesting, then all such Unvested Share Units that are still in effect
will be forfeited by Participant to PNC on such disapproval date without payment
of any consideration by PNC.

 

If by the end of the Restricted Period, including any extension of the
Restricted Period pursuant to the second paragraph of Section 7.5(a), if
applicable, the Designated Person has neither affirmatively approved nor
disapproved the vesting of the Unvested Share Units that had remained
outstanding after Participant’s Termination Date pending

 

-5-

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approval of vesting, then all such Unvested Share Units that are still in effect
will be forfeited by Participant to PNC at the close of business on the last day
of the Restricted Period without payment of any consideration by PNC.

 

7.6 DEAP Termination.

 

(a) In the event that Participant’s employment with the Corporation is
terminated prior to the third (3rd) anniversary of the Grant Date by the
Corporation and Participant is offered and has entered into the standard Waiver
and Release Agreement with PNC or a Subsidiary under an applicable PNC or
Subsidiary Displaced Employee Assistance Plan, or any successor plan by whatever
name known (“DEAP”), or Participant is offered and has entered into a similar
waiver and release agreement between PNC or a Subsidiary and Participant
pursuant to the terms of an agreement or arrangement entered into by PNC or a
Subsidiary and Participant in lieu of or in addition to the DEAP, then Unvested
Share Units will not be forfeited on Participant Termination Date. Instead,
Unvested Share Units will, subject to the forfeiture provisions of Section 7.2,
remain in effect pending approval of the vesting of the Deferred Share Units
pursuant to this Section 7.6(a) by the Designated Person specified in Section
A.14 of Annex A, provided that Participant does not revoke such waiver and
release agreement within the time for revocation of such waiver and release
agreement by Participant.

 

If such Unvested Share Units are still in effect but the Designated Person has
not made an affirmative determination to either approve or disapprove the
vesting of the Unvested Share Units by the day immediately preceding the third
(3rd) anniversary of the Grant Date, then the Restricted Period will be
automatically extended through the first to occur of: (1) the day the Designated
Person makes an affirmative determination regarding such vesting; and (2) either
(i) the ninetieth (90th) day following the third (3rd) anniversary of the Grant
Date, if the Designated Person is the Chief Human Resources Officer of PNC, or
(ii) the 180th day following such anniversary date if the Designated Person is
the Committee, whichever is applicable.

 

If the vesting of the Unvested Share Units that are then in effect is
affirmatively approved by the Designated Person on or prior to the last day of
the Restricted Period, including any extension of the Restricted Period, if
applicable, then the Three-Year Continued Employment Performance Goal will be
deemed to have been achieved, and the Restricted Period with respect to any
Unvested Share Units then in effect will terminate as of the end of the day on
the date of such approval or the day immediately preceding the third (3rd)
anniversary of the Grant Date, whichever is later. The Deferred Share Units in
effect at the termination of the Restricted Period will become Awarded Share
Units and will be released from the terms and conditions of the Agreement
pursuant to Section 9.

 

(b) In the event that the record date for any phantom dividend to be credited to
Participant’s Plan Account with respect to the Unvested Share Units occurs on or
after Participant’s Termination Date but prior to the lapse of the time for
revocation by Participant of the waiver and release agreement specified in the
first paragraph of

 

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Section 7.6(a), then such phantom dividend will be held, without interest,
pending satisfaction of the condition of Section 7.6(a) that Participant enter
into the offered waiver and release agreement and not revoke such waiver and
release agreement within the time for revocation of such agreement by
Participant. In the event that this condition is not met, any phantom dividend
being held pending satisfaction of such condition will be forfeited by
Participant to PNC without payment of any consideration by PNC.

 

(c) If (i) Participant does not enter into, or enters into but revokes, the
waiver and release agreement specified in the first paragraph of Section 7.6(a)
or (ii) the Designated Person disapproves the vesting of the Unvested Share
Units that had remained in effect after Participant’s Termination Date pending
the non-revocation of, and the lapse of the time within which Participant may
revoke, such waiver and release agreement and pending approval of the vesting of
such share units, then all such Unvested Share Units that are still in effect
will be forfeited by Participant to PNC on the date such failure to satisfy the
conditions of Section 7.6(a) occurs without payment of any consideration by PNC.

 

If, by the end of the Restricted Period, including any extension of the
Restricted Period pursuant to the second paragraph of Section 7.6(a), if
applicable, such Unvested Share Units are still outstanding but the Designated
Person has neither affirmatively approved nor disapproved the vesting of such
shares units, then all such Unvested Share Units will be forfeited by
Participant to PNC at the close of business on the last day of the Restricted
Period without payment of any consideration by PNC.

 

7.7 Termination in Anticipation of a Change in Control.

 

(a) Notwithstanding anything in the Agreement to the contrary, if, after the
occurrence of a CIC Triggering Event but prior to a CIC Failure and prior to the
third (3rd) anniversary of the Grant Date, Participant’s employment is
terminated (other than by reason of Participant’s death) by the Corporation
without Cause or by Participant for Good Reason, or if Participant’s employment
is deemed to have been so terminated pursuant to Section 7.7(b), then: (i) the
Three-Year Continued Employment Performance Goal will be deemed to have been
achieved and the Restricted Period with respect to any Unvested Share Units then
in effect will terminate as of the end of the day on the day immediately
preceding Participant’s Termination Date (or, in the case of a qualifying
termination pursuant to Section 7.7(b), the date all of the conditions set forth
in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may
be, of Section 7.7(b) are met); and (ii) all Deferred Share Units that thereby
become Awarded Share Units will be released from the terms and conditions of the
Agreement pursuant to Section 9 as soon as administratively practicable
following such date.

 

(b) Participant’s employment will also be deemed to have been terminated by the
Corporation without Cause after the occurrence of a CIC Triggering Event but
prior to a CIC Failure for purposes of Section 7.7(a) if: (i) Participant’s
employment is terminated by the Corporation without Cause; (ii) such termination
of employment (a) was at the request of a third party that has taken steps
reasonably calculated to effect a Change in Control or (b) otherwise arose in
anticipation of a Change in Control; and

 

-7-

--------------------------------------------------------------------------------

(iii) a CIC Triggering Event or a Change in Control occurs within three (3)
months of such termination of employment.

 

Participant’s employment will also be deemed to have been terminated by
Participant for Good Reason after the occurrence of a CIC Triggering Event but
prior to a CIC Failure for purposes of Section 7.7(a) if: (i) Participant
terminates Participant’s employment with Good Reason; (ii) the circumstance or
event that constitutes Good Reason (a) occurs at the request of a third party
that has taken steps reasonably calculated to effect a Change in Control or (b)
otherwise arose in anticipation of a Change in Control; and (iii) a CIC
Triggering Event or a Change in Control occurs within three (3) months of such
termination of employment.

 

For purposes of this Section 7.7(b) only, Participant will have the burden of
proving that the requirements of clause (ii) of the first or second paragraph of
this Section 7.7(b), as the case may be, have been met and the standard of proof
to be met by Participant will be clear and convincing evidence.

 

For purposes of this Section 7.7(b) only, the definition of Change in Control in
Section A.6 of Annex A will exclude the proviso in Section A.6(a).

 

(c) If the Unvested Share Units will be forfeited by Participant to PNC by
reason of Participant’s termination of employment with the Corporation pursuant
to Section 7.1 unless all of the conditions set forth in clauses (i), (ii) and
(iii) of the first or second paragraph, as the case may be, of Section 7.7(b)
are met, then in the event that the record date for any phantom dividend to be
credited to Participant’s Plan Account with respect to the Unvested Share Units
occurs on or after Participant’s Termination Date but prior to the time all of
the conditions set forth in clauses (i), (ii) and (iii) of the first or second
paragraph, as the case may be, of Section 7.7(b) are met, such phantom dividend
will be held, without interest, pending satisfaction of all of such conditions.
In the event that one or more of the conditions of Section 7.7(b) are not met,
any phantom dividend being held pending satisfaction of such conditions will be
forfeited by Participant to PNC without payment of any consideration by PNC.

 

(d) If the Unvested Share Units will be forfeited by Participant to PNC by
reason of Participant’s termination of employment with the Corporation pursuant
to Section 7.1 unless all of the conditions set forth in clauses (i), (ii) and
(iii) of the first or second paragraph, as the case may be, of Section 7.7(b)
are met, then the Deferred Share Units will remain in effect pending
satisfaction of all of those conditions. Upon the failure of any required
condition, all such Unvested Share Units will be forfeited by Participant to PNC
on the date such failure occurs without payment of any consideration by PNC.

 

8. Change in Control. Notwithstanding anything in the Agreement to the contrary,
upon the occurrence of a Change in Control: (i) if Participant is an employee of
the Corporation as of the day immediately preceding the Change in Control, the
Three-Year Continued Employment Performance Goal will be deemed to have been

 

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achieved and the Restricted Period will terminate with respect to all Unvested
Share Units then in effect as of the day immediately preceding the Change in
Control; (ii) if Participant’s employment with the Corporation terminated prior
to the occurrence of the Change in Control but the Unvested Share Units remained
in effect after such termination of employment pursuant to Section 7.4, Section
7.5 or Section 7.6 and are still in effect pending approval of the vesting of
such share units by the Designated Person specified in Section A.14 of Annex A,
then with respect to all Unvested Share Units in effect as of the day
immediately preceding the Change in Control, such vesting approval will be
deemed to have been given, the Three-Year Continued Employment Performance Goal
will be deemed to have been achieved, and the Restricted Period will terminate,
all as of the day immediately preceding the Change in Control, provided,
however, in the case of Unvested Share Units that remained outstanding
post-employment solely pursuant to Section 7.6(a), that Participant entered into
and does not revoke the waiver and release agreement specified in Section
7.6(a); and (iii) all Deferred Share Units that thereby become Awarded Share
Units will be released from the terms and conditions of the Agreement pursuant
to Section 9 as soon as administratively practicable following such date.

 

9. Release of Agreement Restrictions. To the extent that the Deferred Share
Units become Awarded Share Units and are not forfeited pursuant to Section 7,
PNC will release the 200_ Restricted Award Deferral Account and Deferred Share
Units from the terms and conditions of the Agreement and the 200_ Restricted
Award Deferral Account will become a regular subaccount under the Plan as soon
as administratively practicable following termination of the Restricted Period.

 

10. FICA Withholding Taxes. During the term of the Restricted Period, any
earnings credited to Participant’s Plan Account with respect to the Deferred
Share Units in the 200_ Restricted Award Deferral Account (phantom dividends)
will be treated as wages for purposes of the Federal Insurance Contributions Act
(“FICA”) in the year they are credited to Participant and will be subject to
Social Security and Medicare withholding at that time. Otherwise, the Deferred
Shares amount will be treated as wages for FICA purposes and will be subject to
Social Security and Medicare withholding at the time the 200_ Restricted Award
Deferral Account and Deferred Share Units are released from the terms and
conditions of the Agreement pursuant to Section 9.

 

11. Employment. Neither the granting of the Award, the release of the 200_
Restricted Award Deferral Account and Deferred Share Units from the terms and
conditions of the Agreement pursuant to Section 9, nor any term or provision of
the Agreement shall constitute or be evidence of any understanding, expressed or
implied, on the part of PNC or any Subsidiary to employ Participant for any
period or in any way alter Participant’s status as an employee at will.

 

12. Subject to the Plan. Except as otherwise provided in the Agreement, the 200_
Restricted Award Deferral Account and Deferred Share Units are in all respects
subject to the terms and conditions of the Plan, which has been made available
to Participant and is incorporated herein by reference.

 

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13. Headings; Entire Agreement. Headings used in the Agreement are provided for
reference and convenience only, shall not be considered part of the Agreement,
and shall not be employed in the construction of the Agreement. The Agreement
constitutes the entire agreement between Participant and PNC and supersedes all
other discussions, negotiations, correspondence, representations, understandings
and agreements between the parties with respect to the subject matter hereof.

 

  14. Participant Covenants.

 

14.1 General. Participant and PNC acknowledge and agree that Participant has
received adequate consideration with respect to enforcement of the provisions of
Sections 14 and 15, that such provisions are reasonable and properly required
for the adequate protection of the business of the Corporation, and that
enforcement of such provisions will not prevent Participant from earning a
living.

 

14.2 Non-Solicitation; No-Hire. Participant agrees to comply with the provisions
of subsections (a) and (b) of this Section 14.2 while employed by the
Corporation and for a period of twelve (12) months after Participant’s
Termination Date regardless of the reason for such termination of employment.

 

(a) Non-Solicitation. Participant shall not, directly or indirectly, either for
Participant’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 Participant should reasonably know (i)
is a customer of PNC or any Subsidiary for which PNC or any Subsidiary provides
any services as of the Termination Date, or (ii) was a customer of PNC or any
Subsidiary for which PNC or any Subsidiary provided any services at any time
during the twelve (12) months preceding the Termination Date, or (iii) was, as
of the Termination Date, considering retention of PNC or any Subsidiary to
provide any services.

 

(b) No-Hire. Participant shall not, directly or indirectly, either for
Participant’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 Participant
assist any other Person in such activities.

 

Notwithstanding the above, if Participant’s employment with the Corporation is
terminated by the Corporation without Cause or by Participant with Good Reason
and such Termination Date occurs during a Coverage Period (either as Coverage
Period is defined in Section A.12 of Annex A or, if Participant was a party to a
written agreement between Participant and PNC providing, among other things, for
certain change in control severance benefits (a “CIC Severance Agreement”) that
was in effect at the time of such termination of employment, as Coverage Period
is defined in such CIC Severance

 

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Agreement, if longer), then commencing immediately after such Termination Date,
the provisions of subsections (a) and (b) of this Section 14.2 will no longer
apply and will be replaced with the following subsection (c):

 

(c) No-Hire. Participant agrees that Participant shall not, for a period of
twelve (12) months after the Termination Date, employ or offer to employ,
solicit, actively interfere with 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 Participant’s employment with the Corporation, and
thereafter regardless of the reason for termination of such employment,
Participant will not disclose or use in any way any confidential business or
technical information or trade secret acquired in the course of such employment,
all of which is the exclusive and valuable property of the Corporation whether
or not conceived of or prepared by Participant, other than (a) information
generally known in the 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. Participant shall promptly and fully disclose to
PNC any and all inventions, discoveries, improvements, ideas or other works of
inventorship or authorship, whether or not patentable, that have been or will be
conceived and/or reduced to practice by Participant during the term of
Participant’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”).
Participant agrees to assign and hereby does assign to PNC or its designee all
of Participant’s right, title and interest, including copyrights and patent
rights, in and to all Developments. Participant shall perform all actions and
execute all instruments that PNC or any Subsidiary shall deem necessary to
protect or record PNC’s or its designee’s interests in the Developments. The
obligations of this Section 14.4 shall be performed by Participant without
further compensation and will continue beyond the Termination Date.

 

15. Enforcement Provisions. Participant 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 regard to conflict
of laws rules. Any dispute or claim arising out of or relating to the Agreement
or claim of breach hereof shall be brought exclusively in the federal court for
the Western District of Pennsylvania or in the Court of Common Pleas of
Allegheny County, Pennsylvania. By execution of the Agreement, Participant and
PNC hereby consent to the exclusive jurisdiction of such courts, and waive any
right to challenge jurisdiction or venue in such courts with regard to any suit,
action, or proceeding under or in connection with the Agreement.

 

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15.2 Equitable Remedies. A breach of the provisions of any of Sections 14.2,
14.3 or 14.4 will cause the Corporation irreparable harm, and the Corporation
will therefore be entitled to issuance of immediate, as well as permanent,
injunctive relief restraining Participant, and each and every person and entity
acting in concert or participating with Participant, from initiation and/or
continuation of such breach.

 

15.3 Tolling Period. If it becomes necessary or desirable for the Corporation to
seek compliance with the provisions of Section 14.2 by legal proceedings, the
period during which Participant shall comply with said provisions will extend
for a period of twelve (12) months from the date of the legal order requiring
such compliance.

 

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 Participant
and PNC that if any restriction or obligation imposed by any of these provisions
is deemed by a court of competent jurisdiction to be void for any reason
whatsoever, the remaining provisions, restrictions and obligations will remain
valid and binding upon Participant.

 

15.6 Reform. In the event any of Sections 14.2, 14.3 and 14.4 are determined by
a court of competent jurisdiction to be unenforceable because unreasonable
either as to length of time or area to which said restriction applies, it is the
intent of Participant and PNC that said court reduce and reform the provisions
thereof so as to apply the greatest limitations considered enforceable by the
court.

 

15.7 Waiver of Jury Trial. Each of Participant and PNC hereby waives any right
to trial by jury with regard to any suit, action or proceeding under or in
connection with any of Sections 14.2, 14.3 and 14.4.

 

15.8 Applicable Law. Notwithstanding anything in the Agreement, PNC will not be
required to comply with any term, covenant or condition of the Agreement if and
to the extent prohibited by law, including but not limited to federal banking
and securities regulations, or as otherwise directed by one or more regulatory
agencies having jurisdiction over PNC or any of its subsidiaries. Further, to
the extent, if any, applicable to Participant, Participant agrees to reimburse
PNC for any amounts Participant may be required to reimburse PNC or its
subsidiaries pursuant to Section 304 of the 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 Participant reimburse
PNC or its subsidiaries for such amounts pursuant to Section 304 of the
Sarbanes-Oxley Act of 2002.

 

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16. Amendment of Pre-2004 Stock Options, Restricted Stock and Restricted Stock
Deferrals. All nonstatutory stock options granted to employees under the Plan
outstanding on February 18, 2004, all restricted stock grants to employees under
PNC’s 1997 Long-Term Incentive Award Plan or 1996 Executive Incentive Award Plan
outstanding but not yet vested on February 18, 2004, and all participant
restricted stock deferral accounts under the PNC and Affiliates Deferred
Compensation Plan that were in place but not yet vested on February 18, 2004,
are subject to the amendments approved by the Committee on that date. These
amendments are generally described in the prospectus supplement dated
            , 200   under the heading “Recent Amendments.” A copy of this
prospectus supplement accompanied or preceded delivery of the Agreement to
Participant.

 

To the extent that Participant is the holder of any such stock options or is the
grantee of any such restricted stock or is a participant in the PNC and
Affiliates Deferred Compensation Plan with such stock deferral account or
accounts in place but not yet vested, Participant hereby acknowledges and
consents to such amendments.

 

17. Acceptance of Award; PNC Right to Cancel. If Participant does not accept the
Award and the terms and conditions of the deferral of the Deferred Shares by
executing and delivering a copy of the Agreement to PNC, without altering or
changing the terms thereof in any way, within sixty (60) days of receipt by
Participant of a copy of the Agreement, PNC may, in its sole discretion,
withdraw its offer and cancel the Award at any time prior to Participant’s
delivery to PNC of a copy of the Agreement executed by Participant. Otherwise,
upon execution and delivery of the Agreement by both PNC and Participant and, in
the event that Participant is subject to the reporting requirements of Section
16(a) of the Exchange Act with respect to PNC securities, the filing with and
acceptance by the SEC of a Form 4 reporting the Award, the Award and the
Agreement are effective.

 

The 200   Restricted Award Deferral Account will not be established and
Participant’s Plan Account will not be credited with any phantom dividends with
respect to the Deferred Share Units as set forth in Section 4 unless and until
the date the Award and the terms and conditions of the deferral of the Deferred
Shares are accepted and are effective in accordance with this Section 17.

 

In the event that one or more record dates for dividends on PNC common stock
occur after the Grant Date but before the date the Award and the terms and
conditions of the deferral of the Deferred Shares are accepted and are effective
in accordance with this Section 17, then upon the effectiveness of the Award and
the Agreement, Participant’s Plan Account will be credited with an amount
equivalent to the amount that would have been credited to such Plan Account with
respect to phantom dividends had the Agreement been effective and the Deferred
Share Units had been credited to Participant’s 200   Restricted Award Deferral
Account on the Grant Date.

 

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IN WITNESS WHEREOF, PNC has caused the Agreement to be signed on its behalf as
of the Grant Date.

 

THE PNC FINANCIAL SERVICES GROUP, INC.

By:         Chairman and Chief Executive Officer

ATTEST:

By:         Corporate Secretary

ACCEPTED AND AGREED TO by PARTICIPANT.

     

Participant

 

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Annual 25/25 Program - 200   Restricted Deferred Award

Continued Employment Performance Goal

Restricted Period: Three Years (100%)

 

ANNEX A

TO

THE PNC FINANCIAL SERVICES GROUP, INC. AND AFFILIATES

DEFERRED COMPENSATION PLAN

ANNUAL 25/25 PROGRAM — 200   RESTRICTED DEFERRED AWARD

RESTRICTED AWARD DEFERRAL ACCOUNT AGREEMENT

 

* * *

 

CERTAIN DEFINITIONS

 

Except where the context otherwise indicates, the following definitions apply
for purposes of the Restricted Award Deferral Account Agreement (“Agreement”) to
which this Annex A is attached:

 

A.1 “Awarded Share Units.” Provided that the Deferred Share Units have not been
forfeited pursuant to Section 7 of the Agreement, Deferred Share Units become
“Awarded Share Units” when both of the following have occurred: (a) the
Three-Year Continued Employment Performance Goal has been achieved or is deemed
to have been achieved pursuant to the terms of the Agreement; and (b) the
Restricted Period has terminated.

 

A.2 “Board” means the Board of Directors of PNC.

 

A.3 “Business Day” means any day when the New York Stock Exchange is open for
business.

 

A.4 “Cause” means:

 

(a) the willful and continued failure of Participant to substantially perform
Participant’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 Participant by the Board or the CEO
which specifically identifies the manner in which the Board or the CEO believes
that Participant has not substantially performed Participant’s duties; or

 

(b) the willful engaging by Participant in illegal conduct or gross misconduct
that is materially and demonstrably injurious to PNC or any Subsidiary.

 

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For purposes of the preceding clauses (a) and (b), no act or failure to act, on
the part of Participant, shall be considered willful unless it is done, or
omitted to be done, by Participant in bad faith and without reasonable belief
that Participant’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 Participant’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 Participant in good faith and in the best
interests of the Corporation.

 

The cessation of employment of Participant will be deemed to be a termination of
Participant’s employment with the Corporation for Cause for purposes of the
Agreement only if and when there shall have been delivered to Participant, as
part of the notice of Participant’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, Participant is guilty of
conduct described in clause (a) or clause (b) above and, in either case,
specifying the particulars thereof in detail. Such resolution shall be adopted
only after (i) reasonable notice of such Board meeting is provided to
Participant, together with written notice that PNC believes that Participant is
guilty of conduct described in clause (a) or clause (b) above and, in either
case, specifying the particulars thereof in detail, and (ii) Participant is
given an opportunity, together with counsel, to be heard before the Board.

 

A.5 “CEO” means the chief executive officer of PNC.

 

A.6 “Change in Control” means a change of control of PNC of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or in response to any similar item on any similar schedule or
form) promulgated under the Exchange Act, whether or not PNC is then subject to
such reporting requirement; provided, however, that without limitation, a Change
in Control will be deemed to have occurred if:

 

(a) any Person, excluding employee benefits plans of the Corporation, is or
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act or any successor provisions thereto), directly or indirectly, of
securities of PNC representing twenty percent (20%) or more of the combined
voting power of PNC’s then outstanding securities; provided, however, that such
an acquisition of beneficial ownership representing between twenty percent (20%)
and forty percent (40%), inclusive, of such voting power will not be considered
a Change in Control if the Board approves such acquisition either prior to or
immediately after its occurrence;

 

(b) PNC consummates a merger, consolidation, share exchange, division or other
reorganization or transaction of PNC (a “Fundamental Transaction”) with any
other corporation, other than a Fundamental Transaction that results in the
voting securities of PNC outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least

 

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sixty percent (60%) of the combined voting power immediately after such
Fundamental Transaction of (i) PNC’s outstanding securities, (ii) the surviving
entity’s outstanding securities, or (iii) in the case of a division, the
outstanding securities of each entity resulting from the division;

 

(c) the shareholders of PNC approve a plan of complete liquidation or winding-up
of PNC or an agreement for the sale or disposition (in one transaction or a
series of transactions) of all or substantially all of PNC’s assets;

 

(d) as a result of a proxy contest, individuals who prior to the conclusion
thereof constituted the Board (including for this purpose any new director whose
election or nomination for election by PNC’s shareholders in connection with
such proxy contest was approved by a vote of at least two-thirds (2/3rds) of the
directors then still in office who were directors prior to such proxy contest)
cease to constitute at least a majority of the Board (excluding any Board seat
that is vacant or otherwise unoccupied);

 

(e) during any period of twenty-four (24) consecutive months, individuals who at
the beginning of such period constituted the Board (including for this purpose
any new director whose election or nomination for election by PNC’s shareholders
was approved by a vote of at least two-thirds (2/3rds) of the directors then
still in office who were directors at the beginning of such period) cease for
any reason to constitute at least a majority of the Board (excluding any Board
seat that is vacant or otherwise unoccupied); or

 

(f) the Board determines that a Change in Control has occurred.

 

Notwithstanding anything to the contrary herein, a divestiture or spin-off of a
subsidiary or division of PNC will not by itself constitute a Change in Control.

 

A.7 “CIC Failure” means the following:

 

(a) with respect to a CIC 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 CIC Triggering Event described in Section A.8(b), the
proxy contest fails to replace or remove a majority of the members of the Board.

 

A.8 “CIC Triggering Event” means the occurrence of either of the following:

 

(a) the Board or PNC’s shareholders approve a transaction described in
Subsection (b) of the definition of Change in Control contained in Section A.6;
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.

 

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A.9 “Committee” means the Personnel and Compensation Committee of the Board.

 

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 Subsidiary (a) engaged in business activities similar to some or all of the
business activities of PNC or any Subsidiary as of Participant’s Termination
Date or (b) engaged in business activities which Participant knows PNC or any
Subsidiary intends to enter within the first twelve (12) months after
Participant’s Termination Date, in either case whether Participant is acting as
agent, consultant, independent contractor, employee, officer, director,
investor, partner, shareholder, proprietor or in any other individual or
representative capacity therein.

 

A.11 “Corporation” means PNC and its Subsidiaries.

 

A.12 “Coverage Period” means a period (a) commencing on the earlier to occur of
(i) the date of a CIC Triggering Event and (ii) the date of a Change in Control
and (b) ending on the date that is three (3) years after the date of the Change
in Control; provided, however, that in the event that a Coverage Period
commences on the date of a CIC Triggering Event, such Coverage Period will
terminate upon the earlier to occur of (x) the date of a CIC Failure and (y) the
date that is three (3) years after the date of the Change in Control triggered
by the CIC Triggering Event. After the termination of any Coverage Period,
another Coverage Period will commence upon the earlier to occur of clause (a)(i)
and clause (a)(ii) in the preceding sentence.

 

A.13 “Deferred Share Units” means the units of phantom PNC common stock credited
to Participant’s 200_ Restricted Award Deferral Account.

 

A.14 “Designated Person” will be either: (a) the Committee, if Participant is a
member of the Corporate Executive Group (or equivalent successor classification)
or is subject to the reporting requirements of Section 16(a) of the Exchange Act
with respect to PNC securities; or (a) the Chief Human Resources Officer of PNC,
if Participant is not within one of the groups specified in Section A.14(a).

 

A.15 “Detrimental Conduct” means:

 

(a) Participant 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 Participant’s Termination Date
through the first (1st) anniversary of Participant’s Termination Date;

 

(b) a material breach by Participant of (i) any code of conduct of PNC or a
Subsidiary or (ii) other written policy of PNC or a Subsidiary, in either case
required by law or established to maintain compliance with applicable law;

 

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(c) any act of fraud, misappropriation, material dishonesty, or embezzlement by
Participant against PNC or a Subsidiary or any client or customer of PNC or a
Subsidiary;

 

(d) any conviction (including a plea of guilty or of nolo contendere) of
Participant for, or entry by Participant into a pre-trial disposition with
respect to, the commission of a felony which relates to or arises out of
Participant’s employment or other service relationship with the Corporation; or

 

(e) entry of any order against Participant by any governmental body having
regulatory authority with respect to the business of PNC or any Subsidiary,
which order relates to or arises out of Participant’s employment or other
service relationship with the Corporation.

 

Participant will be deemed to have engaged in Detrimental Conduct for purposes
of the Agreement only if and when the Committee determines that Participant has
engaged in conduct described in clause (a) above, that Participant is guilty of
conduct described in clause (b) or clause (c) above, or that an event described
in clause (d) or clause (e) above has occurred with respect to Participant and,
if so, determines that Participant will be deemed to have engaged in Detrimental
Conduct.

 

A.16 “Exchange Act” means the Securities Exchange Act of 1934 as amended, and
the rules and regulations promulgated thereunder.

 

A.17 “Good Reason” means:

 

(a) the assignment to Participant of any duties inconsistent in any respect with
Participant’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities immediately prior to either
the CIC Triggering Event or the Change in Control, or any other action by the
Corporation which results in a diminution in any respect in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith that is remedied by
the Corporation promptly after receipt of notice thereof given by Participant;

 

(b) a reduction by the Corporation in Participant’s annual base salary as in
effect on the Grant Date, as the same may be increased from time to time;

 

(c) the Corporation’s requiring Participant to be based at any office or
location that is more than fifty (50) miles from Participant’s office or
location immediately prior to either the CIC Triggering Event or the Change in
Control;

 

(d) the failure by the Corporation (i) to continue in effect any bonus, stock
option or other cash or equity-based incentive plan or program in which
Participant participates immediately prior to either the CIC Triggering Event or
the Change in Control that is material to Participant’s total compensation,
unless a substantially

 

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equivalent arrangement (embodied in an ongoing substitute or alternative plan or
program) has been made with respect to such plan or program, or (ii) to continue
Participant’s participation in such plan or program (or in such substitute or
alternative plan or program) on a basis at least as favorable, both in terms of
the amount of benefits provided and the level of Participant’s participation
relative to other participants, as existed immediately prior to the CIC
Triggering Event or the Change in Control; or

 

(e) the failure by the Corporation to continue to provide Participant with
benefits substantially similar to those received by Participant under any of the
Corporation’s pension (including, but not limited to, tax-qualified plans), life
insurance, health, accident, disability or other welfare plans or programs in
which Participant was participating, at costs substantially similar to those
paid by Participant, immediately prior to the CIC Triggering Event or the Change
in Control.

 

A.18 “Grant Date” means the Grant Date set forth on page 1 of the Agreement.

 

A.19 “Internal Revenue Code” means the Internal Revenue Code of 1986 as amended,
and the rules and regulations promulgated thereunder.

 

A.20 “Participant” means the Participant named on page 1 of the Agreement.

 

A.21 “Person” has the meaning given in Section 3(a)(9) of the Exchange Act and
also includes any syndicate or group deemed to be a person under Section
13(d)(3) of the Exchange Act.

 

A.22 “PNC” means The PNC Financial Services Group, Inc.

 

A.23 “Restricted Period” means, subject to early termination if so determined by
the Committee or pursuant to Section 7.7 of the Agreement, if applicable, the
period from the Grant Date through (and including) the earlier of: (a) the date
of Participant’s death; (b) the day immediately preceding the day a Change in
Control is deemed to have occurred; and (c) the day immediately preceding the
third (3rd) anniversary of the Grant Date or, if later, the last day of any
extension of the Restricted Period pursuant to Section 7.4(a), Section 7.5(a) or
Section 7.6(a) of the Agreement, if applicable.

 

A.24 “Retiree” means a Participant who has Retired.

 

A.25 “Retire” or “Retirement” means termination of Participant’s employment with
the Corporation at any time and for any reason (other than termination by reason
of Participant’s death or by the Corporation for Cause or, unless the Committee
determines otherwise, termination in connection with a divestiture of assets or
of one or more Subsidiaries) if such termination of employment occurs on or
after the first (1st) day of the first (1st) month coincident with or next
following the date on which Participant attains age fifty-five (55) and
completes five (5) years of service (as determined in the same manner as the
determination of five years of Vesting Service under the provisions of The PNC
Financial Services Group, Inc. Pension Plan) with the Corporation.

 

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A.26 “SEC” means the United States Securities and Exchange Commission.

 

A.27 “Termination Date” means Participant’s last date of employment with the
Corporation. If Participant is employed by a Subsidiary that ceases to be a
Subsidiary of PNC and Participant does not continue to be employed by PNC or a
Subsidiary, then for purposes of the Agreement, Participant’s employment with
the Corporation terminates effective at the time this occurs.

 

A.28 “Three-Year Continued Employment Performance Goal” means, subject to early
achievement if so determined by the Committee or to deemed achievement pursuant
to Section 7.3, Section 7.4, Section 7.5, Section 7.6, Section 7.7, or Section 8
of the Agreement, if applicable, that Participant has been continuously employed
by the Corporation for the period from the Grant Date through (and including)
the day immediately preceding the first of the following to occur: (a) the third
(3rd) anniversary of the Grant Date; (b) the date of Participant’s death; and
(c) the day a Change in Control is deemed to have occurred.

 

A.29 “Total and Permanent Disability” means, unless the Committee determines
otherwise, Participant’s disability as determined to be total and permanent by
the Corporation for purposes of the Agreement.

 

A.30 “200_ Restricted Award Deferral Account” means the subaccount of
Participant’s Plan Account established for Participant under the Plan in
accordance with Section 2 of the Agreement.

 

A.31 “Unvested Share Units” means any Deferred Share Units that are not Awarded
Share Units.

 

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FORM OF 2003 INCENTIVE SHARE AGREEMENT

 

2003 LTI Program Incentive Share Grant

Three Year Performance Period (January 1, 2003 - December 31, 2005)

Performance Goals: Relative PNC Return on Common Equity and Relative PNC Total
Shareholder Return

50%: Vest on Award; 50%: Restricted Period Through December 31, 2006

 

THE PNC FINANCIAL SERVICES GROUP, INC.

1997 LONG-TERM INCENTIVE AWARD PLAN

 

* * *

 

2003 INCENTIVE SHARE AGREEMENT

 

GRANTEE:

   < name >

GRANT DATE:

   January 3, 2003

TARGET INCENTIVE SHARES:

   < number of whole shares>

PREMIUM INCENTIVE SHARES:

   < number of whole shares> [50% of the number of Target Incentive Shares]

 

1. Grant of Incentive Shares. Pursuant to Article 12 of The PNC Financial
Services Group, Inc. 1997 Long-Term Incentive Award Plan, as amended from time
to time (“Plan”), The PNC Financial Services Group, Inc. (“PNC”) hereby grants
to the Grantee named above (“Grantee”) an Incentive Share Award (as defined in
the Plan) of the number of shares of PNC Common Stock set forth above as “Target
Incentive Shares” and “Premium Incentive Shares,” subject to the terms and
conditions of this 2003 Incentive Share Agreement (“Agreement”) and the Plan and
to acceptance of the Grant by Grantee in accordance with Section 15. The Target
Incentive Shares and Premium Incentive Shares are hereafter collectively
referred to as “Incentive Shares.”

 

2. Definitions. Terms defined in the Plan are used in the Agreement as defined
in the Plan unless otherwise defined in Annex A (attached hereto and
incorporated herein by reference) or elsewhere in the Agreement.

 

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3. Terms and Conditions of Grant. The Grant will be subject to the following
terms and conditions:

 

  3.1 Certification of Attainment of PNC Performance Goals; Award of Incentive
Shares.

 

(a) As soon as practicable after December 31, 2005, PNC will calculate the ROCE
and TSR for the Performance Period for PNC and for the other members of the Peer
Group and present to the Committee information concerning the extent, if any, to
which PNC has attained each of the PNC Performance Goals. Upon certification of
the level of achievement of the PNC Performance Goals by the Committee and
provided that the Grant is still outstanding, the Committee will have the
authority, subject to Section 3.2, to award to Grantee (“award”) and direct PNC
to issue Incentive Shares as follows:

 

  (i) up to and including 50% of the Target Incentive Shares if PNC’s level of
ROCE performance for the Performance Period is within the top half of the ROCE
performance of the members of the Peer Group at the time the award is determined
(“Target ROCE Performance Goal”);

 

  (ii) up to and including 50% of the Target Incentive Shares if PNC’s level of
TSR performance for the Performance Period is within the top half of the TSR
performance of the members of the Peer Group at the time the award is determined
(“Target TSR Performance Goal”);

 

  (iii) up to and including 50% of the Premium Incentive Shares if PNC’s level
of ROCE performance for the Performance Period is within the top quartile of the
ROCE performance of the members of the Peer Group at the time the award is
determined (“Premium ROCE Performance Goal”); and

 

  (iv) up to and including 50% of the Premium Incentive Shares if PNC’s level of
TSR performance for the Performance Period is within the top quartile of the TSR
performance of the members of the Peer Group at the time the award is determined
(“Premium TSR Performance Goal”).

 

Attainment of each PNC Performance Goal shall be determined separately, and
Grantee may be awarded Incentive Shares under one or more of subsections (i),
(ii), (iii) and (iv) of this Section 3.1(a) as indicated above. For purposes of
determining PNC’s level of performance, PNC will be within the top half or the
top quartile, respectively, if its Peer Group ranking with respect to the
performance being measured is at least equal to the number of members of the
Peer Group at the time the award is determined divided by 2 or 4, as the case
may be, rounded up to the nearest whole number (e.g., if there are eleven Peer
Group members, ranking 6th or higher would be in the top half and ranking 3rd or
higher would be in the top quartile).

 

The date on which the Committee makes its determination as to whether the
respective PNC Performance Goals have been achieved and whether to award
Incentive Shares hereunder is hereafter referred to as the “Award Date.”

 

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(b) Except as otherwise set forth in Section 3.1(d), if applicable, or unless
the Committee determines otherwise, in the event that Grantee’s employment with
the Corporation terminates on or prior to the Award Date, the Grant will
terminate as of Grantee’s Termination Date (and therefore no Incentive Shares
may be awarded by the Committee pursuant to the Grant).

 

(c) In the event of Grantee’s death while an employee of the Corporation and on
or prior to the Award Date, or in the event that Grantee’s employment with the
Corporation is terminated on or prior to the Award Date by reason of Grantee’s
Total and Permanent Disability or as otherwise determined by the Committee, the
Committee may in its sole discretion, but need not, permit the Grant to remain
outstanding in light of the facts and circumstances applicable to Grantee
notwithstanding such termination of employment and may consider Grantee for an
award of Incentive Shares on the Award Date if and to the extent that the PNC
Performance Goals have been achieved.

 

(d) Notwithstanding anything in the Agreement to the contrary, if Grantee’s
employment is terminated prior to January 1, 2006 (other than by reason of
Grantee’s death) during a Coverage Period by the Corporation without Cause or by
Grantee for Good Reason, Grantee will be deemed to have been awarded all of the
Target Incentive Shares as of the end of the day on the day immediately
preceding Grantee’s Termination Date, such shares shall all be Vested Shares
from the time of issuance, and PNC shall issue a certificate or certificates for
all of such shares to Grantee or Grantee’s legal representative without further
restriction under the Agreement as soon as administratively practicable
following such award date.

 

Further, notwithstanding anything in the Agreement to the contrary, if Grantee’s
employment is terminated (other than by reason of Grantee’s death) during a
Coverage Period by the Corporation without Cause or by Grantee for Good Reason
on or after January 1, 2006 but on or before the Award Date, Grantee shall be
awarded the maximum number of Incentive Shares authorized by Section 3.1(a) for
the level of performance attained by PNC with respect to the PNC Performance
Goals, such shares shall all be Vested Shares from the time of issuance, and PNC
shall issue a certificate or certificates for all of such shares to Grantee or
Grantee’s legal representative without further restriction under the Agreement
as soon as administratively practicable following the Award Date.

 

Grantee’s employment shall also be deemed to have been terminated by the
Corporation without Cause during a Coverage Period for purposes of this Section
3.1(d) if: (i) Grantee’s employment is terminated by the Corporation other than
during a Coverage Period without Cause (as defined in Section A.4(a) of Annex
A); (ii) such termination of employment (a) was at the request of a third party
that has taken steps reasonably calculated to effect a Change in Control, or (b)
otherwise arose in anticipation of a Change in Control; and (iii) a Coverage
Period commences within three (3) months of such termination of employment.

 

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Grantee’s employment shall also be deemed to have been terminated by Grantee for
Good Reason during a Coverage Period for purposes of this Section 3.1(d) if: (i)
Grantee terminates Grantee’s employment other than during a Coverage Period with
Good Reason (as defined in Section A.18 of Annex A); (ii) the circumstance or
event that constitutes Good Reason (a) occurs at the request of a third party
that has taken steps reasonably calculated to effect a Change in Control or (b)
otherwise arose in anticipation of a Change in Control; and (iii) a Coverage
Period commences within three (3) months of such termination of employment.

 

For purposes of this Section 3.1(d) only, Grantee shall have the burden of
proving that the requirements of clauses (ii)(a) and (ii)(b) of the third or
fourth paragraph of this Section 3.1(d), as the case may be, have been met and
the standard of proof to be met by Grantee shall be clear and convincing
evidence.

 

For purposes of this Section 3.1(d) only, the definition of Change in Control in
Section A.6 of Annex A shall exclude the proviso in Section A.6(a).

 

3.2 Negative Committee Discretion.

 

(a) The Committee may, other than during a Coverage Period, exercise negative
discretion with respect to the Grant and determine, in light of such Corporation
or individual performance factors as the Committee may deem appropriate, that,
notwithstanding the achievement of one or more of the applicable PNC Performance
Goals, the Committee will not award, and PNC will not issue, some or all of the
Incentive Shares that the Committee is authorized to award pursuant to Section
3.1(a).

 

(b) If the time for the Committee to make its determination as to whether the
PNC Performance Goals have been achieved and whether to award Incentive Shares
occurs during a Coverage Period, the Committee may not exercise negative
discretion with respect to the Grant, and in the event that PNC has achieved one
or more of the applicable PNC Performance Goals and the Grant is still
outstanding, Grantee shall be awarded and PNC shall issue the maximum number of
Incentive Shares authorized by Section 3.1(a) for the level of performance
attained by PNC with respect to the PNC Performance Goals.

 

3.3 Termination of Grant. The Grant is subject to termination prior to the Award
Date without the issuance of Incentive Shares pursuant to Section 3.1(b). If and
to the extent that the Committee determines at the Award Date (a) that the PNC
Performance Goals applicable to the issuance of some or all of the Incentive
Shares have not been achieved or (b) to exercise negative discretion with
respect to the Grant pursuant to Section 3.2 (a) and not award some or all of
the Incentive Shares, the Grant shall terminate as to such Incentive Shares and
such shares shall not be issued to Grantee.

 

3.4 Issuance of Awarded Shares; Dividend Equivalents. PNC will cause the
issuance to Grantee of such Incentive Shares as have been awarded to Grantee by
the Committee as soon as practicable after the Award Date; provided, however,
that other

 

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than during a Coverage Period, the Committee may, in its sole discretion, defer
the issuance of Incentive Shares to Grantee when, in the judgment of the
Committee, such deferral may be required in order to obtain or preserve more
favorable tax treatment for the Corporation, including deductions for
compensation.

 

One half of the Awarded Shares will be Vested Shares at the time of issuance,
and PNC will issue a certificate or certificates to Grantee or Grantee’s legal
representative for such shares without further restriction under the Agreement.
Except as otherwise provided in Section 3.1(d), if applicable, the remaining
Awarded Shares will be issued as “Restricted Shares” and will continue to be
subject to the terms and conditions of the Agreement, including forfeiture
provisions and restrictions against transfer, unless and until they become
Vested Shares and are released and reissued by PNC to Grantee or Grantee’s legal
representative pursuant to Section 8.

 

In the event that one or more record dates for dividends on PNC Common Stock
occur after the end of the Performance Period but before the date the Awarded
Shares are issued, PNC will make a cash payment to Grantee equivalent to the
amount of the dividends Grantee would have received had the Awarded Shares been
issued and outstanding on January 1, 2005.

 

3.5 Restricted Shares. Restricted Shares will be subject to a Restricted Period
as provided in Section A.25 of Annex A. Restricted Shares will be deposited with
PNC or its designee, or credited to a book-entry account, during the term of the
Restricted Period unless and until forfeited pursuant to the terms of the
Agreement.

 

Any certificate or certificates representing such 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. 1997 Long-Term Incentive
Award Plan, as amended, and an Agreement entered into between the registered
owner and The PNC Financial Services Group, Inc. Release from such terms and
conditions will be made only in accordance with the provisions of such Plan and
such Agreement, a copy of each of which is on file in the office of the
Corporate Secretary of The PNC Financial Services Group, Inc.”

 

Where a book-entry system is used with respect to Restricted Shares, appropriate
notation of such forfeiture possibility and transfer restrictions will be made
on the system with respect to the account or accounts to which the Restricted
Shares are credited.

 

Restricted Shares deposited with PNC or its designee during the term of the
Restricted Period that become Vested Shares will be released and reissued to
Grantee or Grantee’s legal representative pursuant to Section 8 as soon as
administratively practicable following the end of the Restricted Period.

 

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4. Rights as Shareholder. Except as provided in Section 6 and subject to Section
7.5(c), if applicable, and to Section 15, Grantee will have all the rights and
privileges of a shareholder with respect to Awarded Shares once they have been
issued including, but not limited to, the right to vote the shares and the right
to receive dividends thereon if and when declared by the Board; provided,
however, all such rights and privileges will cease immediately upon any
forfeiture of such shares.

 

5. Capital Adjustments. The number and class of Incentive Shares subject to
award under the Agreement will be subject to such adjustment, if any, as the
Committee in its sole discretion deems appropriate to reflect such events as
stock dividends, stock splits, recapitalizations, mergers, consolidations or
reorganizations of or by PNC. Restricted Shares awarded under the Agreement
will, as issued and outstanding shares of PNC Common Stock, be subject to such
adjustment as may be necessary to reflect such events as stock dividends, stock
splits, recapitalizations, mergers, consolidations or reorganizations of or by
PNC; provided, however, that any shares received as distributions on or in
exchange for Unvested Shares will be subject to the terms and conditions of the
Agreement as if they were unvested Restricted Shares.

 

6. Prohibitions Against Sale, Assignment, etc. The Grant may not be sold,
assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered,
other than by will or the laws of descent and distribution if permitted by the
Committee pursuant to Section 7.1. Unvested Shares may not be sold, assigned,
transferred, exchanged, pledged, hypothecated or otherwise encumbered, other
than by will or the laws of descent and distribution, unless and until the
Restricted Period terminates and the Vested Shares are released and reissued by
PNC to Grantee or Grantee’s legal representative pursuant to Section 8.

 

7. Forfeiture of Unvested Shares; Death; Qualifying Disability or Other
Termination; Qualifying CIC Termination.

 

7.1 Forfeiture on Termination of Employment. Except as otherwise set forth in
Section 7.3, Section 7.4 or Section 7.5, if applicable, or unless the Committee
determines otherwise, in the event that Grantee’s employment with the
Corporation terminates prior to January 1, 2007, 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. Neither Grantee nor any
successors, heirs, assigns or legal representatives of Grantee will thereafter
have any further rights or interest in such Unvested Shares or the certificate
or certificates representing such Unvested Shares.

 

7.2 Forfeiture for 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 Vested Shares, PNC determines
that Grantee has engaged in Detrimental Conduct; provided, however, that no
determination that Grantee has engaged in Detrimental Conduct may be made on or
after the date of Grantee’s death, and Detrimental Conduct will not apply to
conduct by or activities of

 

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successors to the Restricted Shares by will or the laws of descent and
distribution in the event of Grantee’s death.

 

This Section 7.2 will not apply to Restricted Shares that remain outstanding
after Grantee’s Termination Date pursuant to Section 7.3 or Section 7.5, if any.

 

7.3 Death. In the event of Grantee’s death while an employee of the Corporation
and prior to January 1, 2007, the Continued Employment Performance Goal shall be
deemed to have been achieved, and the Restricted Period with respect to the then
outstanding Restricted Shares will terminate on the date of Grantee’s death.

 

The Restricted Shares which thereby become Vested Shares will be released and
reissued by PNC to Grantee’s legal representative pursuant to Section 8 as soon
as administratively practicable following such date.

 

7.4 Qualifying Disability or Other Termination. In the event Grantee’s
employment with the Corporation is terminated prior to January 1, 2007 by the
Corporation by reason of Grantee’s Total and Permanent Disability or as
otherwise determined by the Committee, then the Continued Employment Performance
Goal shall be deemed to have been achieved, in the case of Grantee’s Total and
Permanent Disability, with respect to all Unvested Shares, and otherwise, to the
extent determined by the Committee.

 

The Committee may, but need not, accelerate termination of the Restricted
Period. The Restricted Shares outstanding at the termination of the Restricted
Period will become Vested Shares and will be released and reissued to Grantee
pursuant to Section 8.

 

7.5 Qualifying CIC Termination.

 

(a) Notwithstanding anything in the Agreement to the contrary, the Continued
Employment Performance Goal shall be deemed to have been achieved and the
Restricted Period with respect to the then outstanding Restricted Shares will
terminate at the end of the day on the day immediately preceding Grantee’s
Termination Date if Grantee’s employment is terminated (other than by reason of
Grantee’s death) during a Coverage Period by the Corporation without Cause or by
Grantee for Good Reason.

 

The Restricted Shares which thereby become Vested Shares will be released and
reissued to Grantee pursuant to Section 8 as soon as administratively
practicable following such date.

 

(b) Grantee’s employment shall also be deemed to have been terminated by the
Corporation without Cause during a Coverage Period for purposes of Section 7.5
if: (i) Grantee’s employment is terminated by the Corporation other than during
a Coverage Period without Cause (as defined in Section A.4(a) of Annex A); (ii)
such termination of employment (a) was at the request of a third party that has
taken steps reasonably calculated to effect a Change in Control, or (b)
otherwise arose in anticipation of a

 

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Change in Control; and (iii) a Coverage Period commences within three (3) months
of such termination of employment.

 

Grantee’s employment shall also be deemed to have been terminated by Grantee for
Good Reason during a Coverage Period for purposes of Section 7.5 if: (i) Grantee
terminates Grantee’s employment other than during a Coverage Period with Good
Reason (as defined in Section A.18 of Annex A); (ii) the circumstance or event
that constitutes Good Reason (a) occurs at the request of a third party that has
taken steps reasonably calculated to effect a Change in Control or (b) otherwise
arose in anticipation of a Change in Control; and (iii) a Coverage Period
commences within three (3) months of such termination of employment.

 

For purposes of Section 7.5(b) only, Grantee shall have the burden of proving
that the requirements of clauses (ii)(a) and (ii)(b) of the first or second
paragraph of Section 7.5(b), as the case may be, have been met and the standard
of proof to be met by Grantee shall be clear and convincing evidence.

 

For purposes of Section 7.5(b) only, the definition of Change in Control in
Section A.6 of Annex A shall exclude the proviso in Section A.6(a).

 

(c) If the Restricted Shares will be forfeited by Grantee to PNC on Grantee’s
Termination Date pursuant to Section 7.1 unless all of the conditions set forth
in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may
be, of Section 7.5(b) are met, then in the event that the record date for any
dividends payable with respect to the Restricted Shares occurs on or after
Grantee’s Termination Date but prior to the time all of the conditions set forth
in clauses (i), (ii) and (iii) of the first or second paragraph, as the case may
be, of Section 7.5(b) are met, such dividends will be held, without interest,
pending satisfaction of such conditions. In the event that the conditions of
Section 7.5(b) are not met, any dividends being held pending satisfaction of
such conditions will be forfeited by Grantee to PNC without payment of any
consideration by PNC.

 

8. Termination of Prohibitions on Restricted Stock. Following termination of the
Restricted Period, PNC will release and issue or reissue the certificate or
certificates representing the then outstanding whole Restricted Shares that have
become Vested Shares without the legend referred to in Section 3.5. PNC or its
designee will deliver such certificate or certificates for whole shares to, or
at the proper direction of, Grantee or Grantee’s legal representative.

 

9. Payment of Taxes.

 

9.1 Code Section 83(b) Election. Grantee may satisfy any or all applicable
federal, state or local withholding tax obligations arising from a Code Section
83(b) election with respect to the Restricted Shares (a) by payment of cash or
(b) through the surrender (including by means of an attestation procedure) of
whole shares of PNC Common Stock that are not subject to any contractual
restriction, pledge or other encumbrance and that have been owned by Grantee for
at least six (6) months and, in the

 

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case of restricted stock, for which it has been at least six (6) months since
the restrictions lapsed. Any such tax election shall be made pursuant to a form
to be provided to Grantee by PNC on request. For purposes of this Section 9.1,
shares of PNC Common Stock that are surrendered to satisfy applicable
withholding tax obligations will be valued at their Fair Market Value on the
date the tax withholding obligation arises. Grantee will provide to PNC a copy
of any Code Section 83(b) election filed by Grantee with respect to the
Restricted Shares not later than ten (10) days after the filing of such
election.

 

9.2 Other Tax Liabilities. Where Grantee has not previously satisfied all
applicable withholding tax obligations, PNC will retain sufficient whole Awarded
Shares to satisfy the minimum amount of taxes required to be withheld in
connection with the issuance of Awarded Shares hereunder, or the release and
issuance or reissuance of Restricted Shares hereunder, as the case may be. For
purposes of this Section 9.2, shares of PNC Common Stock retained to satisfy
applicable withholding taxes will be valued at their Fair Market Value on the
date the tax withholding obligation arises.

 

10. Employment. Neither the Grant nor the award and issuance of Awarded Shares
nor any term or provision of the Agreement shall constitute or be evidence of
any understanding, expressed or implied, on the part of PNC or any Subsidiary to
employ Grantee for any period or in any way alter Grantee’s status as an
employee at will.

 

11. Subject to the Plan and the Committee. In all respects the Grant and the
Agreement are subject to the terms and conditions of the Plan, which has been
made available to Grantee and is incorporated herein by reference; provided,
however, the terms of the Plan shall not be considered an enlargement of any
benefits under the Agreement. Further, the Grant and the Agreement are subject
to any interpretation of, and any rules and regulations issued by, the Committee
or under the authority of the Committee, whether made or issued before or after
the Grant Date.

 

12. Headings; Entire Agreement. Headings used in the Agreement are provided for
reference and convenience only, shall not be considered part of the Agreement,
and shall not be employed in the construction of the Agreement. The Agreement
constitutes the entire agreement between Grantee and PNC and supersedes all
other discussions, negotiations, correspondence, representations, understandings
and agreements between the parties with respect to the subject matter hereof.

 

13. Grantee Covenants.

 

13.1 General. Grantee and PNC acknowledge and agree that Grantee has received
adequate consideration with respect to enforcement of the provisions of Sections
13 and 14, that such provisions are reasonable and properly required for the
adequate protection of the business of the Corporation, and that enforcement of
such provisions will not prevent Grantee from earning a living.

 

13.2 Non-Solicitation; No-Hire. Grantee agrees to comply with the provisions of
subsections (a) and (b) of this Section 13.2 while employed by the Corporation
and for

 

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a period of twelve (12) months after 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 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 which Grantee should reasonably know (i) is
a customer of PNC or any Subsidiary for which PNC or any Subsidiary provides any
services as of the Termination Date, or (ii) was a customer of PNC or any
Subsidiary for which PNC or any Subsidiary provided any services at any time
during the twelve (12) months preceding the Termination Date, or (iii) was, as
of the Termination Date, considering retention of PNC or any Subsidiary to
provide any services.

 

(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 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 Grantee assist any other Person
in such activities.

 

Notwithstanding the above, if Grantee’s employment with the Corporation is
terminated by the Corporation without Cause or by Grantee with Good Reason and
such Termination Date occurs during a Coverage Period (either as Coverage Period
is defined in Section A.14 of Annex A or, if Grantee was a party to a written
agreement between Grantee and PNC providing, among other things, for certain
change in control severance benefits (a “CIC Severance Agreement”) that was in
effect at the time of such termination of employment, as Coverage Period is
defined in such CIC Severance Agreement, if longer), then commencing immediately
after such Termination Date, the provisions of subsections (a) and (b) of this
Section 13.2 shall no longer apply and shall be replaced with the following
subsection (c):

 

(c) No-Hire. Grantee agrees that Grantee shall not, for a period of twelve (12)
months after the Termination Date, employ or offer to employ, solicit, actively
interfere with PNC’s or any PNC affiliate’s relationship with, or attempt to
divert or entice away, any officer of PNC or any PNC affiliate.

 

13.3 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.

 

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13.4 Ownership of Inventions. Grantee shall promptly and fully disclose to PNC
any and all inventions, discoveries, improvements, ideas or other works of
inventorship or authorship, whether or not patentable, that are conceived and/or
reduced to practice by Grantee during the term of 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 Subsidiary 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 13.4 shall be performed by
Grantee without further compensation and shall continue beyond the Termination
Date.

 

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 regard to conflict
of laws rules. Any dispute or claim arising out of or relating to the Agreement
or claim of breach hereof shall be brought exclusively in the federal court for
the Western District of Pennsylvania or in the Court of Common Pleas of
Allegheny County, Pennsylvania. By execution of the Agreement, Grantee and PNC
hereby consent to the exclusive jurisdiction of such courts, and waive any right
to challenge jurisdiction or venue in such courts with regard to any suit,
action, or proceeding under or in connection with the Agreement.

 

14.2 Equitable Remedies. A breach of the provisions of any of Sections 13.2,
13.3 or 13.4 will cause the Corporation irreparable harm, and the Corporation
will therefore be entitled to issuance of immediate, as well as permanent,
injunctive relief restraining Grantee, and each and every person and entity
acting in concert or participating with Grantee, from initiation and/or
continuation of such breach.

 

14.3 Tolling Period. If it becomes necessary or desirable for the Corporation to
seek compliance with the provisions of Section 13.2 by legal proceedings, the
period during which Grantee shall comply with said provisions shall extend for a
period of twelve (12) months from the date of the legal order requiring such
compliance.

 

14.4 No Waiver. Failure of PNC to demand strict compliance with any of the
terms, covenants or conditions of the Agreement shall not be deemed a waiver of
such term, covenant or condition, nor shall any waiver or relinquishment of any
such term, covenant or condition on any occasion or on multiple occasions be
deemed a waiver or relinquishment of such term, covenant or condition.

 

14.5 Severability. The restrictions and obligations imposed by Sections 13.2,
13.3 and 13.4 are separate and severable, and it is the intent of Grantee and
PNC that if

 

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any restriction or obligation imposed by any of these provisions is deemed by a
court of competent jurisdiction to be void for any reason whatsoever, the
remaining provisions, restrictions and obligations shall remain valid and
binding upon Grantee.

 

14.6 Reform. In the event any of Sections 13.2, 13.3 and 13.4 are determined by
a court of competent jurisdiction to be unenforceable because unreasonable
either as to length of time or area to which said restriction applies, it is the
intent of Grantee and PNC that said court reduce and reform the provisions
thereof so as to apply the greatest limitations considered enforceable by the
court.

 

14.7 Waiver of Jury Trial. Each of Grantee and PNC hereby waives any right to
trial by jury with regard to any suit, action or proceeding under or in
connection with any of Sections 13.2, 13.3 and 13.4.

 

14.8 Applicable Law. Notwithstanding anything in the Agreement, PNC will not be
required to comply with any term, covenant or condition of the Agreement if and
to the extent prohibited by law, including but not limited to federal banking
and securities regulations, or as otherwise directed by one or more regulatory
agencies having jurisdiction over PNC or any of its subsidiaries. Further, to
the extent, if any, applicable to Grantee, Grantee agrees to reimburse PNC for
any amounts Grantee may be required to reimburse PNC or its subsidiaries
pursuant to Section 304 of the 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.

 

15. Acceptance of Grant; PNC Right to Cancel. If Grantee does not accept the
Grant by executing and delivering a copy of the Agreement to PNC within sixty
(60) days of receipt by Grantee of a copy of the Agreement, PNC may, in its sole
discretion, withdraw its offer and cancel the Grant at any time prior to
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.

 

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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.

 

<name>

 

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2003 LTI Program Incentive Share Grant

Three Year Performance Period (January 1, 2003 - December 31, 2005)

Performance Goals: Relative PNC Return on Common Equity and Relative PNC Total
Shareholder Return

50%: Vest on Award; 50%: Restricted Period Through December 31, 2006

 

ANNEX A

TO

THE PNC FINANCIAL SERVICES GROUP, INC.

1997 LONG-TERM INCENTIVE AWARD PLAN

2003 INCENTIVE SHARE AGREEMENT

 

* * *

 

CERTAIN DEFINITIONS

 

Except where the context otherwise indicates, the following definitions apply
for purposes of the 2003 Incentive Share Agreement (“Agreement”) to which this
Annex A is attached:

 

A.1 “Awarded Shares” means any Incentive Shares that have been awarded by the
Committee, or are deemed to have been awarded, pursuant to Section 3 of the
Agreement and have been issued in accordance with Section 3.1(d) or Section 3.4
of the Agreement.

 

A.2 “Board” means the Board of Directors of The PNC Financial Services Group,
Inc.

 

A.3 “Business Day” means any day when the New York Stock Exchange is open for
business.

 

A.4 “Cause.”

 

(a) “Cause” during a Coverage Period. If the termination of Grantee’s employment
occurs during a Coverage Period, then, for purposes of the Agreement, “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

 

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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 Subsidiary.

 

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.

 

(b) “Cause” other than during a Coverage Period. If the termination of Grantee’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 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 which 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 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 Grantee against PNC or a Subsidiary or any client or customer of PNC or a
Subsidiary;

 

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(iv) any conviction (including a plea of guilty or of nolo contendere) of
Grantee for, or entry by Grantee into a pre-trial disposition with respect to,
the commission of a felony; or

 

(v) entry of any order against Grantee by any governmental body having
regulatory authority with respect to the business of PNC or any Subsidiary,
which order relates to or arises out of 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 Committee determines that Grantee is guilty of
conduct described in clause (i), (ii) or (iii) above or that an event described
in clause (iv) or (v) above has occurred with respect to Grantee and, if so,
determines that the termination of Grantee’s employment with the Corporation
will be deemed to have been for Cause.

 

A.5 “CEO” means the chief executive officer of The PNC Financial Services Group,
Inc.

 

A.6 “Change in Control” means a change of control of PNC of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or in response to any similar item on any similar schedule or
form) promulgated under the Exchange Act, whether or not PNC is then subject to
such reporting requirement; provided, however, that without limitation, a Change
in Control shall be deemed to have occurred if:

 

(a) any Person, excluding employee benefits plans of the Corporation, is or
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act or any successor provisions thereto), directly or indirectly, of
securities of PNC representing twenty percent (20%) or more of the combined
voting power of PNC’s then outstanding securities; provided, however, that such
an acquisition of beneficial ownership representing between twenty percent (20%)
and forty percent (40%), inclusive, of such voting power shall not be considered
a Change in Control if the Board approves such acquisition either prior to or
immediately after its occurrence;

 

(b) PNC consummates a merger, consolidation, share exchange, division or other
reorganization or transaction of PNC (a “Fundamental Transaction”) with any
other corporation, other than a Fundamental Transaction that results in the
voting securities of PNC outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least sixty percent (60%) of the combined
voting power immediately after such Fundamental Transaction of (i) PNC’s
outstanding securities, (ii) the surviving entity’s outstanding securities, or
(iii) in the case of a division, the outstanding securities of each entity
resulting from the division;

 

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(c) the shareholders of PNC approve a plan of complete liquidation or winding-up
of PNC or an agreement for the sale or disposition (in one transaction or a
series of transactions) of all or substantially all of PNC’s assets;

 

(d) as a result of a proxy contest, individuals who prior to the conclusion
thereof constituted the Board (including for this purpose any new director whose
election or nomination for election by PNC’s shareholders in connection with
such proxy contest was approved by a vote of at least two-thirds (2/3rds) of the
directors then still in office who were directors prior to such proxy contest)
cease to constitute at least a majority of the Board (excluding any Board seat
that is vacant or otherwise unoccupied);

 

(e) during any period of twenty-four (24) consecutive months, individuals who at
the beginning of such period constituted the Board (including for this purpose
any new director whose election or nomination for election by PNC’s shareholders
was approved by a vote of at least two-thirds (2/3rds) of the directors then
still in office who were directors at the beginning of such period) cease for
any reason to constitute at least a majority of the Board (excluding any Board
seat that is vacant or otherwise unoccupied); or

 

(f) the Board determines that a Change in Control has occurred.

 

Notwithstanding anything to the contrary herein, a divestiture or spin-off of a
subsidiary or division of PNC shall not by itself constitute a Change in
Control.

 

A.7 “CIC Failure” means the following:

 

(a) with respect to a CIC 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 CIC Triggering Event described in Section A.8(b), the
proxy contest fails to replace or remove a majority of the members of the Board.

 

A.8 “CIC Triggering Event” means the occurrence of either of the following:

 

(a) the Board or PNC’s shareholders approve a transaction described in
Subsection (b) of the definition of Change in Control contained in Section A.6;
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 “Code” means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.

 

A.10 “Committee” means the Personnel and Compensation Committee of the Board of
Directors of The PNC Financial Services Group, Inc.

 

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A.11 “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 Subsidiary (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, 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.12 “Continued Employment Performance Goal” means, subject to early achievement
if so determined by the Committee or pursuant to Section 7.5 of the Agreement,
if applicable, that Grantee has been continuously employed by the Corporation
for the period commencing on the Award Date through (and including) December 31,
2006 or, if earlier, through (and including) the day immediately preceding the
first of the following to occur: (a) the date Grantee’s employment is terminated
by the Corporation by reason of Total and Permanent Disability or as otherwise
determined by the Committee; and (b) the date of Grantee’s death.

 

A.13 “Corporation” means PNC and its Subsidiaries.

 

A.14 “Coverage Period” means a period (a) commencing on the earlier to occur of
(i) the date of a CIC Triggering Event and (ii) the date of a Change in Control
and (b) ending on the date that is three (3) years after the date of the Change
in Control; provided, however, that in the event that a Coverage Period
commences on the date of a CIC Triggering Event, such Coverage Period shall
terminate upon the earlier to occur of (x) the date of a CIC Failure and (y) the
date that is three (3) years after the date of the Change in Control triggered
by the CIC Triggering Event. After the termination of any Coverage Period,
another Coverage Period shall commence upon the earlier to occur of clause
(a)(i) and clause (a)(ii) in the preceding sentence.

 

A.15 “Detrimental Conduct.”

 

(a) “Detrimental Conduct” during a Coverage Period. If the determination of
whether Grantee has engaged in Detrimental Conduct occurs during a Coverage
Period, then for purposes of the Agreement, “Detrimental Conduct” means:

 

(i) Grantee 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 Grantee’s Termination Date through (and
including) the first (1st) anniversary of Grantee’s Termination Date; or

 

(ii) Grantee has willfully engaged in illegal conduct or gross misconduct that
is materially and demonstrably injurious to PNC or any Subsidiary.

 

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For purposes of the preceding clause (ii), no act or failure to act, on the part
of Grantee, shall be considered willful unless it is done, or omitted to be
done, by Grantee in bad faith and without reasonable belief that 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 while employed by the Corporation or based upon the
advice of counsel for the Corporation, shall be conclusively presumed to be
done, or omitted to be done, by Grantee in good faith and in the best interests
of the Corporation.

 

Grantee will be deemed to have engaged in Detrimental Conduct for purposes of
the Agreement only if and when there shall have been delivered to Grantee a copy
of a resolution duly adopted by the affirmative vote of not less than a majority
of the entire membership of the Board, at a Board meeting called and held for
the purpose of considering such determination, finding on the basis of clear and
convincing evidence that, in the good faith opinion of the Board, Grantee has
engaged in conduct described in clause (i) above or is guilty of conduct
described in clause (ii) above and, in either case, specifying the particulars
thereof in detail. Such resolution shall be adopted only after (1) reasonable
notice of such Board meeting is provided to Grantee, together with written
notice that PNC believes that Grantee has engaged in conduct described in clause
(i) above or is guilty of conduct described in clause (ii) above and, in either
case, specifying the particulars thereof in detail, and (2) Grantee is given an
opportunity, together with counsel, to be heard before the Board.

 

(b) “Detrimental Conduct” other than during a Coverage Period. If the
determination of whether Grantee has engaged in Detrimental Conduct occurs other
than during a Coverage Period, then for purposes of the Agreement, “Detrimental
Conduct” means:

 

(i) Grantee 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 Grantee’s Termination Date through (and
including) the first (1st) anniversary of Grantee’s Termination Date;

 

(ii) a material breach by Grantee of (1) any code of conduct of PNC or a
Subsidiary or (2) other written policy of PNC or a Subsidiary, in either case
required by law or established to maintain compliance with applicable law;

 

(iii) any act of fraud, misappropriation, material dishonesty, or embezzlement
by Grantee against PNC or a Subsidiary or any client or customer of PNC or a
Subsidiary;

 

(iv) any conviction (including a plea of guilty or of nolo contendere) of
Grantee for, or entry by Grantee into a pre-trial disposition with respect to,
the commission of a felony which relates to or arises out of Grantee’s
employment or other service relationship with the Corporation; or

 

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(v) entry of any order against Grantee by any governmental body having
regulatory authority with respect to the business of PNC or any Subsidiary,
which order relates to or arises out of 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 determines that Grantee has engaged
in conduct described in clause (i) above, that Grantee is guilty of conduct
described in clause (ii) or clause (iii) above, or that an event described in
clause (iv) or clause (v) above has occurred with respect to Grantee and, if so,
determines that Grantee will be deemed to have engaged in Detrimental Conduct.

 

A.16 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

 

A.17 “Fair Market Value” as it relates to PNC Common Stock means the average of
the high and low sale prices of the PNC Common Stock as reported on the New York
Stock Exchange (or such successor reporting system as PNC may select) on the
relevant date or, if no sale of the PNC Common Stock has been reported for that
day, the average of such prices on the next preceding day and the next following
day for which there were reported sales.

 

A.18 “Good Reason” means:

 

(a) the assignment to Grantee of any duties inconsistent in any respect with
Grantee’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities immediately prior to either
the CIC Triggering Event or the Change in Control, or any other action by the
Corporation which results in a diminution in any respect in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith that is remedied by
the Corporation promptly after receipt of notice thereof given by Grantee;

 

(b) a reduction by the Corporation in Grantee’s annual base salary as in effect
on the Grant Date, as the same may be increased from time to time;

 

(c) the Corporation’s requiring Grantee to be based at any office or location
that is more than fifty (50) miles from Grantee’s office or location immediately
prior to either the CIC Triggering Event or the Change in Control;

 

(d) the failure by the Corporation (i) to continue in effect any bonus, stock
option or other cash or equity-based incentive plan or program in which Grantee
participates immediately prior to either the CIC Triggering Event or the Change
in Control that is material to Grantee’s total compensation, unless a
substantially equivalent arrangement (embodied in an ongoing substitute or
alternative plan or program) has been made with respect to such plan or program,
or (ii) to continue Grantee’s participation in such plan or program (or in such
substitute or alternative plan or program) on a basis at

 

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least as favorable, both in terms of the amount of benefits provided and the
level of Grantee’s participation relative to other participants, as existed
immediately prior to the CIC Triggering Event or the Change in Control; or

 

(e) the failure by the Corporation to continue to provide Grantee with benefits
substantially similar to those received by Grantee under any of the
Corporation’s pension (including, but not limited to, tax-qualified plans), life
insurance, health, accident, disability or other welfare plans or programs in
which Grantee was participating, at costs substantially similar to those paid by
Grantee, immediately prior to the CIC Triggering Event or the Change in Control.

 

A.19 “Grant” means the grant of Incentive Shares to Grantee pursuant to Section
1 of the Agreement.

 

A.20 “Grant Date” means the Grant Date set forth on page 1 of the Agreement.

 

A.21 “Peer Group” means U.S. Bancorp, National City Corporation, PNC, Fifth
Third Bancorp, Wells Fargo & Company, The Bank of New York Company, Inc.,
SunTrust Banks, Inc., Bank One Corporation, KeyCorp, Wachovia Corporation and
FleetBoston Financial Corporation, as such group may be adjusted from time to
time by the Committee to reflect mergers, consolidations, or other material
corporate reorganizations or changes affecting one or more members of the Peer
Group or other changes in PNC’s Peer Group.

 

A.22 “Performance Period” means the period commencing January 1, 2003 through
(and including) December 31, 2005.

 

A.23 “Person” has the meaning given in Section 3(a)(9) of the Exchange Act and
also includes any syndicate or group deemed to be a person under Section
13(d)(3) of the Exchange Act.

 

A.24 “PNC Performance Goal” means: (a) with respect to one half (1/2) of the
Target Incentive Shares, the Target ROCE Performance Goal; (b) with respect to
the remaining half (1/2) of the Target Incentive Shares, the Target TSR
Performance Goal; (c) with respect to one half (1/2) of the Premium Incentive
Shares, the Premium ROCE Performance Goal; and (d) with respect to the remaining
half (1/2) of the Premium Incentive Shares, the Premium TSR Performance Goal, as
applicable.

 

A.25 “Restricted Period” means, subject to early termination pursuant to Section
7.4 or Section 7.5 of the Agreement, if applicable, the period commencing on the
Award Date through (and including) the earlier of (a) the date of Grantee’s
death and (b) December 31, 2006.

 

A.26 “ROCE” or “Return on Common Equity” means, with respect to each of PNC and
the other members of the Peer Group, the annualized cumulative return on common
equity for the period commencing January 1, 2003 through (and including)

 

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December 31, 2005. The Return on Common Equity of PNC or any other Peer Group
member may be adjusted to reflect significant nonrecurring items, including,
without limitation, merger-related charges or gains or losses on a sale of a
business unit, as approved by the Committee. ROCE will be expressed as a percent
rounded to the nearest one-hundredth (e.g., 0.00%, with 0.005% being rounded
upward to 0.01%).

 

A.27 “Termination Date” means Grantee’s last date of employment with the
Corporation. If Grantee is employed by a Subsidiary that ceases to be a
Subsidiary of PNC and Grantee does not continue to be employed by PNC or a
Subsidiary, then for purposes of the Agreement, Grantee’s employment with the
Corporation terminates effective at the time this occurs.

 

A.28 “Total and Permanent Disability” means, unless the Committee determines
otherwise, Grantee’s disability as determined to be total and permanent by the
Corporation for purposes of the Agreement.

 

A.29 “TSR” or “Total Shareholder Return” means, with respect to PNC, the
cumulative total shareholder return on its common stock and, with respect to
each other member of the Peer Group, the cumulative total shareholder return on
a class of common stock of such other Peer Group member registered under Section
12 of the Exchange Act. For each of PNC and the other members of the Peer Group,
cumulative total shareholder return will be calculated by dividing: (a) the sum
of: (i) the cumulative amount of dividends for the measurement period, assuming
dividend reinvestment, with dividends reinvested on a monthly basis at the
dividend yield rate using share price at month end and ex-date dividends per
share, and (ii) the difference between the share price at the end and the
beginning of the measurement period; by (b) the closing share price on December
31, 2002. The term “measurement period” will be the period beginning at the
“measurement point” established by the market close on December 31, 2002 and
continuing through (and including) the market close on December 31, 2005. With
respect to dividends, it will be assumed that dividends are reinvested into
additional shares of the same class of equity securities at the frequency with
which dividends are paid on such securities during the applicable period. TSR
will be expressed as a percent rounded to the nearest one-hundredth (e.g.,
0.00%, with 0.005% being rounded upward to 0.01%).

 

A.30 “Unvested Shares” means any Restricted Shares that are not Vested Shares.

 

A.31 “Vested Shares.” Awarded Shares that are not issued as Restricted Shares
pursuant to the Agreement are “Vested Shares” upon issuance and are not subject
to further restriction under the Agreement. Awarded Shares that are issued as
Restricted Shares pursuant to Section 3.4 of the Agreement become “Vested
Shares” if and when both of the following have occurred, provided that the
Restricted Shares are then outstanding: (a) the Continued Employment Performance
Goal has been achieved or is deemed to have been achieved pursuant to the
Agreement; and (b) the Restricted Period has terminated.

 

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FORM OF 2004 INCENTIVE SHARE AGREEMENT

 

2004 Incentive Share Grant

Two Year Performance Period (January 1, 2004 - December 31, 2005)

PNC Performance Goals: Relative PNC Return on Common Equity and Total
Shareholder Return

50%: Vests on Award; 50%: Restricted Period From Award Through December 31, 2006

 

THE PNC FINANCIAL SERVICES GROUP, INC.

1997 LONG-TERM INCENTIVE AWARD PLAN

 

* * *

2004 INCENTIVE SHARE AGREEMENT

* * *

 

GRANTEE:

   < name >

GRANT DATE:

   January 6, 2004

TARGET ROCE INCENTIVE SHARES:

   < number of whole shares>

TARGET TSR INCENTIVE SHARES:

   < number of whole shares>

MAXIMUM ROCE INCENTIVE SHARES:

   200% of Adjusted Target ROCE Incentive Shares

MAXIMUM TSR INCENTIVE SHARES:

   200% of Adjusted Target TSR Incentive Shares

 

1. Grant of 2004 Incentive Shares. Pursuant to Article 12 of The PNC Financial
Services Group, Inc. 1997 Long-Term Incentive Award Plan as amended from time to
time (“Plan”), The PNC Financial Services Group, Inc. (“PNC”) hereby grants to
the Grantee named above (“Grantee”) an Incentive Share Award (as defined in the
Plan) opportunity of the number of shares of PNC common stock described above
and defined in Sections A.31 and A.32 of Annex A as the “Maximum ROCE Incentive
Shares” and “Maximum TSR Incentive Shares,” subject to the terms and conditions
of this 2004 Incentive Share Agreement (“Agreement”) and the Plan and to
acceptance of the Grant by Grantee in accordance with Section 17. The Maximum
ROCE Incentive Shares and Maximum TSR Incentive Shares are hereafter
collectively referred to as the “2004 Incentive Shares,” as provided in Section
A.3 of Annex A.

 

In general, the Grant of incentive shares pursuant to the Agreement and the Plan
is an opportunity for Grantee to receive an award of unrestricted and restricted
shares of PNC common stock, not to exceed collectively the number of 2004
Incentive Shares, as

 

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determined by the Committee or otherwise in accordance with the terms of the
Agreement, provided that Grantee satisfies or is deemed to have satisfied the
continued employment conditions specified in the Agreement and the other
conditions of the Agreement are met. The number of the 2004 Incentive Shares
that may be awarded to Grantee by the Committee is limited to a percentage of
the target incentive share numbers specified above, as adjusted for phantom
dividends on target shares converted to additional target incentive shares, less
the number of the 2003 Incentive Shares, if any, awarded to Grantee pursuant to
the 2003 Incentive Share Agreement, and is subject to the Committee’s negative
discretion. The potential payout percentages applicable to the adjusted target
incentive shares are determined by the levels of performance of the PNC
Performance Goals achieved by PNC relative to its peers over the Performance
Period. The potential payout percentage could be as high as 200% of the adjusted
target incentive shares for each performance measure, if PNC outperforms its
peers in both performance measure categories, or could be zero for one or both
categories of target incentive shares if PNC fails to achieve at least the
threshold level of performance specified in the Agreement. The Grant is subject
to the terms and conditions set forth in the Agreement and to the Plan.

 

2. Definitions. Terms defined in the Plan are used in the Agreement as defined
in the Plan unless otherwise defined in Annex A (attached hereto and
incorporated herein by reference) or elsewhere in the Agreement.

 

3. Terms and Conditions of Grant. The Grant will be subject to the following
terms and conditions:

 

3.1 Certification of Attainment of Threshold Performance Goals and Final
Potential Payout Percentages; Award of 2004 Incentive Shares.

 

(a) After the end of each year of the Performance Period, PNC will determine the
Return on Common Equity (ROCE) and Total Shareholder Return (TSR) for that year
for each member of the Peer Group, including PNC, and will calculate the
Adjusted Annual Potential Payout Percentage with respect to each PNC Performance
Measure for that year.

 

(b) As soon as practicable after December 31, 2005, PNC will present to the
Committee information concerning the levels of ROCE and TSR performance achieved
by PNC and the other members of the Peer Group for the Performance Period,
whether or not PNC has achieved at least the Threshold ROCE Performance Goal
and/or the Threshold TSR Performance Goal, and, if so, the Final Potential
Payout Percentages for ROCE and/or TSR performance calculated on the basis of
the levels of such performance achieved by PNC relative to the other Peers.

 

Upon certification of PNC’s levels of achievement of the PNC Performance Goals
and the resulting Final Potential Payout Percentages by the Committee, and
provided that the Grant is still outstanding, that the continued employment
requirement set forth in Section 3.1(c) has been met or is deemed to have been
met pursuant to the terms of the Agreement, and that at least the threshold
level of performance of at least one of the

 

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Goals has been met, the Committee will have the authority, subject to the
exercise of negative discretion by the Committee pursuant to Section 3.2 and
subject to Section 3.4, if applicable, to award to Grantee (“award”), and direct
PNC to issue pursuant to Section 3.5, a number of the 2004 Incentive Shares as
follows:

 

  (i) up to and including the number that is the Final ROCE Potential Payout
Percentage of the Adjusted Target ROCE Incentive Shares, provided that PNC has
achieved at least the Threshold ROCE Performance Goal; plus

 

  (ii) up to and including the number that is the Final TSR Potential Payout
Percentage of the Adjusted Target TSR Incentive Shares, provided that PNC has
achieved at least the Threshold TSR Performance Goal; minus

 

  (iii) the aggregate number of unrestricted and restricted shares of PNC common
stock awarded to Grantee pursuant to the 2003 Incentive Share Agreement.

 

The date on which the Committee makes its determination as to whether, and if
so, the extent to which, an award of the 2004 Incentive Shares may be made
pursuant to the Agreement, and within those limits, whether to award any of the
2004 Incentive Shares hereunder, and if so, how many to award, is hereafter
referred to as the “Award Date.” The Award Date cannot occur any earlier that
the date on which the Committee makes its award determination pursuant to the
2003 Incentive Share Agreement.

 

(c) Except as otherwise provided in and subject to the conditions of Section
3.1(d), Section 3.1(e), or Section 3.4, if applicable, or unless the Committee
determines otherwise: (i) Grantee must remain an employee of the Corporation
through the Award Date to be eligible to receive an award of any 2004 Incentive
Shares; and (ii) in the event that Grantee’s employment with the Corporation
terminates on or prior to the Award Date, the Grant will terminate as of
Grantee’s Termination Date (and therefore no 2004 Incentive Shares may be
awarded to Grantee pursuant to the Grant).

 

(d) In the event of Grantee’s death while an employee of the Corporation and on
or prior to the Award Date, or in the event that Grantee’s employment with the
Corporation is terminated on or prior to the Award Date by reason of Grantee’s
Total and Permanent Disability or as otherwise determined by the Committee, the
Committee may in its sole discretion, but need not, deem the continued
employment requirement of Section 3.1(c) to have been met and permit the Grant
or a portion thereof to remain outstanding in light of the facts and
circumstances applicable to Grantee notwithstanding such termination of
employment.

 

To the extent that the Grant is outstanding on the Award Date and if at least
one of the threshold levels of PNC performance has been achieved, the Committee
may consider Grantee for an award of 2004 Incentive Shares pursuant to Section
3.1(b) within the limits determined by the Final Potential Payout Percentages
and subject to reduction for any award of 2003 Incentive Shares to Grantee. Any
award that the Committee may

 

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determine to make after Grantee’s death will be delivered to Grantee’s legal
representative.

 

(e) (i) Notwithstanding anything in the Agreement to the contrary, if, prior to
the Award Date, (1) Grantee’s employment is terminated (other than by reason of
Grantee’s death) by the Corporation without Cause or by Grantee for Good Reason
after the occurrence of a CIC Triggering Event but prior to a CIC Failure, or if
Grantee’s employment is deemed to have been so terminated pursuant to Section
3.1(e)(ii), and (2) a Change in Control occurs within three (3) months of
Grantee’s Termination Date, then the continued employment requirement of Section
3.1(c) will be deemed to have been met and Grantee will receive an award
pursuant to Section 3.4.

 

(ii) Grantee’s employment will be deemed to have been terminated by the
Corporation without Cause after the occurrence of a CIC Triggering Event but
prior to a CIC Failure for purposes of Section 3.1(e)(i) if: (1) Grantee’s
employment is terminated by the Corporation without Cause; (2) such termination
of employment (a) was at the request of a third party that has taken steps
reasonably calculated to effect a Change in Control or (b) otherwise arose in
anticipation of a Change in Control; and (3) a Change in Control occurs within
three (3) months of such termination of employment.

 

Grantee’s employment will be deemed to have been terminated by Grantee for Good
Reason after the occurrence of a CIC Triggering Event but prior to a CIC Failure
for purposes of Section 3.1(e)(i) if: (1) Grantee terminates Grantee’s
employment with Good Reason; (2) the circumstance or event that constitutes Good
Reason (a) occurs at the request of a third party that has taken steps
reasonably calculated to effect a Change in Control or (b) otherwise arose in
anticipation of a Change in Control; and (3) a Change in Control occurs within
three (3) months of such termination of employment.

 

For purposes of this Section 3.1(e)(ii) only, Grantee will have the burden of
proving that the requirements of clause (2) of the first or second paragraph of
this Section 3.1(e)(ii), as the case may be, have been met and the standard of
proof to be met by Grantee will be clear and convincing evidence.

 

For purposes of this Section 3.1(e)(ii) only, the definition of Change in
Control in Section A.12 of Annex A will exclude the proviso in Section A.12(a).

 

(iii) If the Grant will terminate by reason of Grantee’s termination of
employment with the Corporation pursuant to Section 3.1(c) unless all of the
conditions set forth in Section 3.1(e)(i), including Section 3.1(e)(ii), if
applicable, are met, then the Grant will remain outstanding pending satisfaction
of all of those conditions. Upon the failure of any required condition,
including the condition that a Change in Control occur within three (3) months
of Grantee’s Termination Date, the Grant will terminate on the date such failure
occurs.

 

3.2 Negative Committee Discretion. The Committee may exercise negative
discretion with respect to the Grant and determine, in light of such Corporation
or

 

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individual performance factors as the Committee may deem appropriate, that,
notwithstanding the level of ROCE and/or TSR performance achieved by PNC
relative to the other members of the Peer Group, the Committee will not award,
and PNC will not issue, some or all of the number of the 2004 Incentive Shares
that the Committee is authorized to award pursuant to Section 3.1(b); provided,
however, that the Committee may not exercise such negative discretion upon or
after the occurrence of a Change in Control.

 

3.3 Termination of Grant. Except as otherwise provided in Section 3.1(d),
Section 3.1(e), or Section 3.4, if applicable, the Grant is subject to
termination on or prior to the Award Date pursuant to Section 3.1(c) without the
issuance of any of the 2004 Incentive Shares.

 

Once the Committee has made its determinations at the Award Date, the Grant will
terminate as to any portion of the 2004 Incentive Shares that the Committee is
not authorized to award pursuant to Section 3.1(b) and as to any portion that
the Committee could but elects not to award by exercise of its negative
discretion pursuant to Section 3.2, and such shares shall not be issued to
Grantee. In the event that an award of a number of the 2004 Incentive Shares is
made pursuant to Section 3.4, the Grant will terminate as to any portion of the
2004 Incentive Shares not so awarded.

 

Termination of all or a portion of the Grant will in no way affect Grantee’s
covenants or the other provisions of Section 14 and Section 15.

 

3.4 Change in Control Prior to Award Date. Notwithstanding anything in the
Agreement to the contrary, upon the occurrence of a Change in Control at any
time prior to the Award Date, the Performance Period, if not already ended, will
end as of the end of the day on the day the Change in Control is deemed to
occur, and, provided that either (i) Grantee is an employee of the Corporation
as of the day immediately preceding the day the Change in Control is deemed to
occur, or (ii) if Grantee’s employment with the Corporation terminated prior to
the occurrence of the Change in Control, the Grant is still outstanding and the
continued employment requirement is deemed to have been met pursuant to Section
3.1(e)(i) or because the Committee so determined pursuant to Section 3.1(c) or
Section 3.1(d), then Grantee will be deemed to have been awarded, and PNC will
cause the issuance pursuant to this Section 3.4 to Grantee as Awarded Shares as
soon as administratively practicable following such Change in Control date, an
award of the number of the 2004 Incentive Shares determined as follows:

 

  (a) the sum of:

 

  (i)

the percentage of the number of Adjusted Target ROCE Incentive Shares that is
the greater of (1) 100% of such shares, and (2) the percentage of such shares
determined as described below on the basis of PNC’s level of ROCE performance
relative to its peers through the date of the Change in Control if the Change in
Control occurs before December 31, 2005 (or the Final ROCE Potential

 

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Payout Percentage of such shares if the Change in Control occurs on or after
December 31, 2005 but before the Award Date); plus

 

  (ii) the percentage of the number of Adjusted Target TSR Incentive Shares that
is the greater of (1) 100% of such shares, and (2) the percentage of such shares
determined as described below on the basis of PNC’s level of TSR performance
relative to its peers through the date of the Change in Control if the Change in
Control occurs before December 31, 2005 (or the Final TSR Potential Payout
Percentage of such shares if the Change in Control occurs on or after December
31, 2005 but before the Award Date);

 

  (b) prorated by multiplying the sum determined in Section 3.4(a) above by a
fraction (not to exceed 1) equal to the number of days from and including
January 1, 2004 through and including the day the Change in Control is deemed to
have occurred, divided by 731 (the number of days in the 2-year performance
period);

 

  (c) then reduced by the aggregate number of shares of PNC common stock, if
any, that Grantee receives as an award upon the occurrence of the Change in
Control pursuant to the 2003 Incentive Share Agreement.

 

For purposes of Section 3.4(a)(i)(2) and (a)(ii)(2) above, the percentages to be
determined on the basis of PNC’s levels of ROCE and TSR performance relative to
its peers through the date of the Change in Control (if the Change in Control
occurs before December 31, 2005) will be calculated using the same methodology
as that set forth in Section A.4 of Annex A for calculating the Adjusted Annual
ROCE and TSR Potential Payout Percentages with respect to a given year, but (1)
in calculating the ROCE performance of PNC and the other then existing members
of the Peer Group to be used in the calculation of the percentage for purposes
of Section 3.4(a)(i)(2), using the period commencing January 1, 2004 through and
including the end of the last completed calendar quarter prior to the occurrence
of the Change in Control rather than the period specified in the definition of
Return on Common Equity set forth in Section A.41 of Annex A for 2004 or 2005,
and (2) in calculating the TSR performance of PNC and the other then existing
members of the Peer Group to be used in the calculation of the percentage for
purposes of Section 3.4(a)(ii)(2), using the period beginning at the measuring
point established by the market close on December 31, 2003 and continuing
through (and including) the market close on the day the Change in Control is
deemed to have occurred as the measurement period and using the closing share
price on December 31, 2003 for the closing share price in clause (b),
respectively, of the definition of Total Shareholder Return set forth in Section
A.49 of Annex A rather than the measurement period and the closing share price,
respectively, specified in that definition for the 2004 or 2005 measurement
period.

 

All of the Awarded Shares that are awarded pursuant to this Section 3.4 will be
Vested Shares at the time of issuance, and PNC will issue a certificate or
certificates to,

 

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or at the proper direction of, Grantee or Grantee’s legal representative for
such shares without further restriction under the Agreement; provided, however,
that no fractional shares will be issued, and if the award includes a fractional
interest, such fractional interest will be liquidated on the basis of the then
current market value of PNC common stock and paid to Grantee or Grantee’s legal
representative in cash at the time the Awarded Shares are issued.

 

In the event that a record date for dividends on PNC common stock occurs after
the date the Change in Control is deemed to have occurred (or after January 1,
2006, if earlier) but before the date the Awarded Shares are issued, the
Corporation will make a cash payment to Grantee equivalent to the amount of the
dividends Grantee would have received had the Awarded Shares been issued and
outstanding on the date the Change in Control is deemed to have occurred (or on
January 1, 2006, if earlier).

 

In the event of a corporate transaction or transactions (including, without
limitation, stock dividends, stock splits, spin-offs, split-offs,
recapitalizations, mergers, consolidations or reorganizations of or by PNC
(each, a “Corporate Transaction”)), the Committee may, subject to the last
paragraph of this Section 3.4, make such adjustments in the number and class of
the 2004 Incentive Shares subject to award pursuant to this Section 3.4 as it
deems appropriate in its sole discretion to reflect the Corporate
Transaction(s), including without limitation payment of the award in cash in an
amount equal to the product of (a) the per share value of the consideration
payable to a PNC common shareholder in connection with such Corporate
Transaction and (b) the total number of the 2004 Incentive Shares awarded to
Grantee pursuant to this Section 3.4.

 

The Committee may not exercise any negative discretion pursuant to Section 3.2
or otherwise exercise discretion pursuant to the Agreement in any way that would
serve to reduce an award to Grantee pursuant to this Section 3.4.

 

3.5 Issuance of Awarded Shares; Dividend Equivalents. Unless a Change in Control
occurs prior to the Award Date and Section 3.4 is applicable, PNC will cause the
issuance pursuant to this Section 3.5 to Grantee as Awarded Shares of such
number of the 2004 Incentive Shares as have been awarded to Grantee by the
Committee as soon as practicable after the Award Date; provided, however, that
the Committee may in its sole discretion, other than during a Coverage Period,
defer the issuance of an award of 2004 Incentive Shares to Grantee when, in the
judgment of the Committee, such deferral may be required in order to obtain or
preserve more favorable tax treatment for the Corporation, including deductions
for compensation.

 

One half (1/2) of the Awarded Shares issued pursuant to this Section 3.5 will be
Vested Shares at the time of issuance, and PNC will issue a certificate or
certificates to, or at the proper direction of, Grantee or Grantee’s legal
representative for such shares without further restriction under the Agreement.

 

The remaining Awarded Shares issued pursuant to this Section 3.5 will be issued
as Restricted Shares and will continue to be subject to the terms and conditions
of the

 

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Agreement, including forfeiture provisions and restrictions against transfer,
unless and until they become Vested Shares and are released and reissued by PNC
to, or at the proper direction of, Grantee or Grantee’s legal representative
pursuant to Section 9.

 

No fractional shares will be issued. If an award includes a fractional interest
or if the division of the award into unrestricted shares and Restricted Shares
results in fractional interests, any such fractional interest or interests will
be liquidated on the basis of the then current market value of PNC common stock
and paid to Grantee in cash at the time the Awarded Shares are issued.

 

In the event that one or more record dates for dividends on PNC common stock
occur after the end of the Performance Period but before the date the Awarded
Shares are issued pursuant to this Section 3.5, the Corporation will make a cash
payment to Grantee equivalent to the amount of the dividends Grantee would have
received had the Awarded Shares been issued and outstanding on January 1, 2006.

 

3.6 Restricted Shares. Restricted Shares will be subject to a Restricted Period
as provided in Section A.39 of Annex A. Restricted Shares will be deposited with
PNC or its designee, or credited to a book-entry account, during the term of the
Restricted Period and until released pursuant to Section 9 unless and until
forfeited pursuant to the terms of the Agreement.

 

Any certificate or certificates representing such 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. 1997 Long-Term Incentive
Award Plan as amended and an Agreement entered into between the registered owner
and The PNC Financial Services Group, Inc. Release from such terms and
conditions will be made only in accordance with the provisions of such Plan and
such Agreement, a copy of each of which is on file in the office of the
Corporate Secretary of The PNC Financial Services Group, Inc.”

 

Where a book-entry system is used with respect to Restricted Shares, appropriate
notation of such forfeiture possibility and transfer restrictions will be made
on the system with respect to the account or accounts to which the Restricted
Shares are credited.

 

Restricted Shares deposited with PNC or its designee during the term of the
Restricted Period that become Vested Shares will be released and reissued to, or
at the proper direction of, Grantee or Grantee’s legal representative pursuant
to Section 9 as soon as administratively practicable following the end of the
Restricted Period.

 

4. Rights as Shareholder. Except as provided in Section 6, if applicable, and
subject to Section 7.5(c), if applicable, Grantee will have all the rights and
privileges of a shareholder with respect to Awarded Shares once they have been
issued including, but

 

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not limited to, the right to vote the shares and the right to receive dividends
thereon if and when declared by the Board; provided, however, that all such
rights and privileges will cease immediately upon any forfeiture of Awarded
Shares that have not become Vested Shares.

 

5. Capital Adjustments. Except as otherwise provided in Section 3.4, the number
and class of 2004 Incentive Shares subject to award under the Agreement will be
subject to such adjustment, if any, as the Committee in its sole discretion
deems appropriate to reflect corporation transactions including, without
limitation, stock dividends, stock splits, spin-offs, split-offs,
recapitalizations, mergers, consolidations or reorganizations of or by PNC
(each, a “Corporate Transaction”). Awarded Shares issued as Restricted Shares
pursuant to Section 3.5 will, as issued and outstanding shares of PNC common
stock, be subject to such adjustment as may be necessary to reflect Corporate
Transactions; provided, however, that any shares received as distributions on or
in exchange for Unvested Shares will be subject to the terms and conditions of
the Agreement as if they were unvested Restricted Shares.

 

6. Prohibitions Against Sale, Assignment, etc. The Grant may not be sold,
assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered,
other than by will or the laws of descent and distribution if permitted by the
Committee pursuant to Section 3.5(d). Unvested Shares may not be sold, assigned,
transferred, exchanged, pledged, hypothecated or otherwise encumbered, other
than by will or the laws of descent and distribution or as may be required
pursuant to Section 10.2, unless and until the Restricted Period terminates and
the Vested Shares are released and reissued by PNC pursuant to Section 9.

 

7. Forfeiture of Unvested Shares; Death; Certain Disability or Other
Terminations; Termination in Anticipation of a Change in Control.

 

7.1 Forfeiture on Termination of Employment. Except as otherwise provided in and
subject to the conditions of Section 7.3, Section 7.4(a), Section 7.4(c),
Section 7.5, or Section 8, if applicable, or unless the Committee determines
otherwise, in the event that Grantee’s employment with the Corporation
terminates prior to January 1, 2007, 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 forfeiture of Unvested Shares pursuant to the provisions of this Section
7.1 or the provisions of Section 7.2, Section 7.4(b), Section 7.4(c) or Section
7.5(d), neither Grantee nor any successors, heirs, assigns or legal
representatives of Grantee will thereafter have any further rights or interest
in such Unvested Shares or in any certificate or certificates representing such
Unvested Shares.

 

7.2 Forfeiture for 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 Vested Shares, PNC determines
that

 

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Grantee has engaged in Detrimental Conduct; provided, however, that: (a) this
Section 7.2 will not apply to Restricted Shares that remain outstanding after
Grantee’s Termination Date pursuant to Section 7.3 or Section 7.5, if any; (b)
no determination that Grantee has engaged in Detrimental Conduct may be made on
or after the date of Grantee’s death; (c) Detrimental Conduct will not apply to
conduct by or activities of successors to the Restricted Shares by will or the
laws of descent and distribution in the event of Grantee’s death; and (d)
Detrimental Conduct will cease to apply to any Restricted Shares upon a Change
in Control.

 

7.3 Death. In the event of Grantee’s death while an employee of the Corporation
and prior to January 1, 2007, the Continued Employment Performance Goal will be
deemed to have been achieved, and the Restricted Period with respect to the then
outstanding Unvested Shares will terminate on the date of Grantee’s death.

 

The Restricted Shares which thereby become Vested 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 Disability or Other Termination.

 

(a) In the event Grantee’s employment with the Corporation is terminated prior
to January 1, 2007 by the Corporation by reason of Grantee’s Total and Permanent
Disability, Unvested Shares will not be forfeited on Grantee’s Termination Date.
Instead, Unvested Shares will, subject to the forfeiture provisions of Section
7.2, remain outstanding pending approval of the vesting of the Restricted Shares
pursuant to this Section 7.4(a) by the Designated Person specified in Section
A.20 of Annex A.

 

If such Unvested Shares are still outstanding but the Designated Person has not
made an affirmative determination to either approve or disapprove the vesting of
the Unvested Shares by December 31, 2006, then the Restricted Period will be
automatically extended through the first to occur of: (1) the day the Designated
Person makes an affirmative determination regarding such vesting; and (2) either
(i) the ninetieth (90th) day following January 1, 2007, if the Designated Person
is the Chief Human Resources Officer of PNC, or (ii) the 180th day following
January 1, 2007 if the Designated Person is the Committee, whichever is
applicable.

 

If the vesting of the then outstanding Unvested Shares is affirmatively approved
by the Designated Person on or prior to the last day of the Restricted Period,
including any extension of the Restricted Period if applicable, then the
Continued Employment Performance Goal will be deemed to have been achieved, and
the Restricted Period with respect to any then outstanding Unvested Shares will
terminate as of the end of the day on the date of such approval or December 31,
2006, whichever is later. The Restricted Shares outstanding at the termination
of the Restricted Period will become Vested Shares and will be released and
reissued by PNC pursuant to Section 9.

 

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(b) If the Designated Person disapproves the vesting of the Unvested Shares that
had remained outstanding after Grantee’s Termination Date pending approval of
vesting, then all such Unvested Shares that are still outstanding will be
forfeited by Grantee to PNC on such disapproval date without payment of any
consideration by PNC.

 

If by the end of the Restricted Period, including any extension of the
Restricted Period pursuant to the second paragraph of Section 7.4(a) if
applicable, the Designated Person has neither affirmatively approved nor
disapproved the vesting of the Unvested Shares that had remained outstanding
after Grantee’s Termination Date pending approval of vesting, then all such
Unvested Shares that are still outstanding will be forfeited by Grantee to PNC
at the close of business on the last day of the Restricted Period without
payment of any consideration by PNC.

 

(c) In the event that Grantee’s employment with the Corporation is terminated
prior to January 1, 2007 other than by reason of death, by the Corporation by
reason of Grantee’s Total and Permanent Disability, or in circumstances that
qualify for vesting pursuant to Section 7.5(a) or Section 7.5(b), all Restricted
Shares that are Unvested Shares on Grantee’s Termination Date will be forfeited
by Grantee to PNC on such date without payment of any consideration by PNC
unless the Committee determines otherwise. The Committee may in its sole
discretion, with respect to some or all of the Unvested Shares, treat such
shares in the same manner that such shares would be treated pursuant to Section
7.4 if Grantee’s employment had been terminated by the Corporation by reason of
Total and Permanent Disability.

 

7.5 Termination in Anticipation of a Change in Control.

 

(a) Notwithstanding anything in the Agreement to the contrary, if, after the
occurrence of a CIC Triggering Event but prior to a CIC Failure and prior to
January 1, 2007, Grantee’s employment is terminated (other than by reason of
Grantee’s death) by the Corporation without Cause or by Grantee for Good Reason,
or if Grantee’s employment is deemed to have been so terminated pursuant to
Section 7.5(b), then: (i) the Continued Employment Performance Goal will be
deemed to have been achieved and the Restricted Period with respect to any then
outstanding Unvested Shares will terminate as of the end of the day on the day
immediately preceding Grantee’s Termination Date (or, in the case of a
qualifying termination pursuant to Section 7.5(b), the date all of the
conditions set forth in clauses (i), (ii) and (iii) of the first or second
paragraph, as the case may be, of Section 7.5(b) are met); and (ii) all
Restricted Shares that thereby become Vested Shares will be released and
reissued by PNC pursuant to Section 9 as soon as administratively practicable
following such date.

 

(b) Grantee’s employment will also be deemed to have been terminated by the
Corporation without Cause after the occurrence of a CIC Triggering Event but
prior to a CIC Failure for purposes of Section 7.5(a) if: (i) Grantee’s
employment is terminated by the Corporation without Cause; (ii) such termination
of employment (a) was at the request of a third party that has taken steps
reasonably calculated to effect a Change in Control or (b) otherwise arose in
anticipation of a Change in Control; and (iii) a CIC

 

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Triggering Event or a Change in Control occurs within three (3) months of such
termination of employment.

 

Grantee’s employment will also be deemed to have been terminated by Grantee for
Good Reason after the occurrence of a CIC Triggering Event but prior to a CIC
Failure for purposes of Section 7.5(a) if: (i) Grantee terminates Grantee’s
employment with Good Reason; (ii) the circumstance or event that constitutes
Good Reason (a) occurs at the request of a third party that has taken steps
reasonably calculated to effect a Change in Control or (b) otherwise arose in
anticipation of a Change in Control; and (iii) a CIC Triggering Event or a
Change in Control occurs within three (3) months of such termination of
employment.

 

For purposes of this Section 7.5(b) only, Grantee will have the burden of
proving that the requirements of clause (ii) of the first or second paragraph of
this Section 7.5(b), as the case may be, have been met and the standard of proof
to be met by Grantee will be clear and convincing evidence.

 

For purposes of this Section 7.5(b) only, the definition of Change in Control in
Section A.12 of Annex A will exclude the proviso in Section A.12(a).

 

(c) If the Unvested Shares will be forfeited by Grantee to PNC by reason of
Grantee’s termination of employment with the Corporation pursuant to Section 7.1
unless all of the conditions set forth in clauses (i), (ii) and (iii) of the
first or second paragraph, as the case may be, of Section 7.5(b) are met, then
in the event that the record date for any dividend payable with respect to the
Unvested Shares occurs on or after Grantee’s Termination Date but prior to the
time all of the conditions set forth in clauses (i), (ii) and (iii) of the first
or second paragraph, as the case may be, of Section 7.5(b) have been met, such
dividend will be held, without interest, pending satisfaction of all of such
conditions. In the event that one or more of the conditions of Section 7.5(b)
are not met, any dividend being held pending satisfaction of such conditions
will be forfeited by Grantee to PNC without payment of any consideration by PNC.

 

(d) If the Unvested Shares will be forfeited by Grantee to PNC by reason of
Grantee’s termination of employment with the Corporation pursuant to Section 7.1
unless all of the conditions set forth in clauses (i), (ii) and (iii) of the
first or second paragraph, as the case may be, of Section 7.5(b) are met, then
the Restricted Shares will remain outstanding pending satisfaction of all of
those conditions. Upon the failure of any required condition, all such Unvested
Shares will be forfeited by Grantee to PNC on the date such failure occurs
without payment of any consideration by PNC.

 

8. Change in Control on or After Award Date. Notwithstanding anything in the
Agreement to the contrary, upon the occurrence of a Change in Control: (i) if
Grantee is an employee of the Corporation as of the day immediately preceding
the Change in Control, the Continued Employment Performance Goal will be deemed
to have been achieved and the Restricted Period will terminate with respect to
all then outstanding Unvested Shares as of the day immediately preceding the
Change in Control;

 

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(ii) if Grantee’s employment with the Corporation terminated prior to the
occurrence of the Change in Control but the Unvested Shares remained outstanding
after such termination of employment pursuant to Section 7.4 and are still
outstanding pending approval of the vesting of such shares by the Designated
Person specified in Section A.20 of Annex A, then with respect to all Unvested
Shares outstanding as of the day immediately preceding the Change in Control,
such vesting approval will be deemed to have been given, the Continued
Employment Performance Goal will be deemed to have been achieved, and the
Restricted Period will terminate, all as of the day immediately preceding the
Change in Control; and (iii) all Restricted Shares that thereby become Vested
Shares will be released and reissued by PNC pursuant to Section 9 as soon as
administratively practicable following such date.

 

9. Termination of Prohibitions on Restricted Shares. Following termination of
the Restricted Period, PNC will release and issue or reissue the certificate or
certificates representing the then outstanding whole Restricted Shares that have
become Vested Shares without the legend referred to in Section 3.5; any
fractional interest will be liquidated on the basis of the then current market
value of the PNC common stock.

 

Upon release and reissuance of shares that have become Vested Shares, PNC or its
designee will deliver the certificate or certificates for such whole shares,
together with the proceeds of any such fractional interest to, or at the proper
direction of, Grantee or Grantee’s legal representative.

 

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 will satisfy all applicable federal, state or local
withholding and payroll tax obligations (“withholding tax obligations”) arising
from that election either: (a) by payment of cash; (b) by physical delivery to
PNC of certificates for whole shares of PNC common stock that are not subject to
any contractual restriction, pledge or other encumbrance and that have been
owned by Grantee for at least six (6) months and, in the case of restricted
stock, for which it has been at least six (6) months since the restrictions
lapsed; or (c) by a combination of cash and such stock. Any such tax election
will be made pursuant to a form to be provided to Grantee by PNC on request. For
purposes of this Section 10.1, shares of PNC common stock that are used to
satisfy applicable withholding tax obligations will be valued at their Fair
Market Value on the date the tax withholding obligation arises. Grantee will
provide to PNC a copy of any Internal Revenue Code Section 83(b) election filed
by Grantee with respect to the Restricted Shares not later than ten (10) days
after the filing of such election.

 

10.2 Other Tax Liabilities. Where Grantee has not previously satisfied all
applicable withholding tax obligations, PNC will, at the time the tax
withholding obligation arises, retain sufficient whole shares of PNC common
stock from the shares awarded to Grantee pursuant to the Agreement to satisfy
the minimum amount of taxes required to be withheld by the Corporation in
connection with the Awarded Shares. For

 

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purposes of this Section 10.2, shares of PNC common stock retained to satisfy
applicable withholding tax requirements will be valued at their Fair Market
Value on the date the tax withholding obligation arises.

 

PNC will not retain more than the number of shares sufficient to satisfy the
minimum amount of taxes required to be withheld in connection with the Awarded
Shares. If Grantee desires to have an additional amount, up to Grantee’s W-4
obligation, withheld above the required minimum and if PNC so permits, Grantee
may elect to satisfy this additional withholding either: (a) by payment of cash;
or (b) using whole shares of PNC common stock (either by physical delivery to
PNC of certificates for the shares or through 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. PNC will not be responsible for determining whether shares
of PNC common stock so used by Grantee for this purpose satisfy the requirements
set forth in this paragraph, and will be entitled to rely on Grantee’s share
attestation or certification for all purposes, including but not limited to
taxes and tax withholding. Any such tax election will be made pursuant to a form
provided by PNC. Shares of PNC common stock that are used for this purpose will
be valued at their Fair Market Value on the date the tax withholding obligation
arises.

 

11. Employment. Neither the Grant nor the award and issuance of Awarded Shares
nor any term or provision of the Agreement shall constitute or be evidence of
any understanding, expressed or implied, on the part of PNC or any Subsidiary to
employ Grantee for any period or in any way alter Grantee’s status as an
employee at will.

 

12. Subject to the Plan and the Committee. In all respects the Grant, any
Awarded Shares and the Agreement are subject to the terms and conditions of the
Plan, which has been made available to Grantee and is incorporated herein by
reference; provided, however, the terms of the Plan shall not be considered an
enlargement of any benefits under the Agreement. Further, the Grant, any Awarded
Shares and the Agreement are subject to any interpretation of, and any rules and
regulations issued by, the Committee or under the authority of the Committee,
whether made or issued before or after the Grant Date.

 

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

 

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Sections 14 and 15, that such provisions are reasonable and properly required
for the adequate protection of the business of the Corporation, and that
enforcement of such provisions will not prevent Grantee from earning a living.

 

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 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 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 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 Grantee assist any other Person
in such activities.

 

Notwithstanding the above, if Grantee’s employment with the Corporation is
terminated by the Corporation without Cause or by Grantee with Good Reason and
such Termination Date occurs during a Coverage Period (either as Coverage Period
is defined in Section A.19 of Annex A or, if Grantee was a party to a written
agreement between Grantee and PNC providing, among other things, for certain
change in control severance benefits (a “CIC Severance Agreement”) that was in
effect at the time of such termination of employment, as Coverage Period is
defined in such CIC Severance Agreement, if longer), then commencing immediately
after such Termination Date, the provisions of subsections (a) and (b) of this
Section 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 twelve (12)
months 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

 

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valuable property of the Corporation whether or not conceived of or prepared by
Grantee, other than (a) information generally known in the 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
Subsidiary 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 regard to conflict
of laws rules. Any dispute or claim arising out of or relating to the Agreement
or claim of breach hereof shall be brought exclusively in the federal court for
the Western District of Pennsylvania or in the Court of Common Pleas of
Allegheny County, Pennsylvania. By execution of the Agreement, Grantee and PNC
hereby consent to the exclusive jurisdiction of such courts, and waive any right
to challenge jurisdiction or venue in such courts with regard to any suit,
action, or proceeding under or in connection with the Agreement.

 

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 of the legal order requiring such
compliance.

 

15.4 No Waiver. Failure of PNC to demand strict compliance with any of the
terms, covenants or conditions of the Agreement will not be deemed a waiver of
such

 

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term, covenant or condition, nor will any waiver or relinquishment of any such
term, covenant or condition on any occasion or on multiple occasions be deemed a
waiver or relinquishment of such term, covenant or condition.

 

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 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.

 

16. Amendment of Change in Control Provisions of 2003 Incentive Share Agreement.
The terms and conditions of the 2003 Incentive Share Agreement are hereby
amended as follows:

 

(1) Section 3.1(d) is amended and restated in its entirety to read as follows:

 

“(d)(1)

 

(i) Notwithstanding anything in the Agreement to the contrary, if, prior to the
Award Date, (1) Grantee’s employment is terminated (other than by reason of
Grantee’s death) by the Corporation without Cause or by Grantee for Good Reason
after the occurrence of a CIC Triggering Event but prior to a CIC Failure, or if
Grantee’s employment is deemed to have been so terminated pursuant to Section
3.1(d)(1)(ii), and (2) a Change in Control occurs within three

 

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(3) months of Grantee’s Termination Date, then the continued employment
requirement of Section 3.1(b) will be deemed to have been met and Grantee will
receive an award pursuant to Section 3.1(d)(2).

 

(ii) Grantee’s employment will be deemed to have been terminated by the
Corporation without Cause after the occurrence of a CIC Triggering Event but
prior to a CIC Failure for purposes of Section 3.1(d)(1)(i) if: (1) Grantee’s
employment is terminated by the Corporation without Cause (as defined in Section
A.4(a) of Annex A; (2) such termination of employment (a) was at the request of
a third party that has taken steps reasonably calculated to effect a Change in
Control or (b) otherwise arose in anticipation of a Change in Control; and (3) a
Change in Control occurs within three (3) months of such termination of
employment.

 

Grantee’s employment will be deemed to have been terminated by Grantee for Good
Reason after the occurrence of a CIC Triggering Event but prior to a CIC Failure
for purposes of Section 3.1(d)(1)(i) if: (1) Grantee terminates Grantee’s
employment with Good Reason (as defined in Section A.18 of Annex A); (2) the
circumstance or event that constitutes Good Reason (a) occurs at the request of
a third party that has taken steps reasonably calculated to effect a Change in
Control or (b) otherwise arose in anticipation of a Change in Control; and (3) a
Change in Control occurs within three (3) months of such termination of
employment.

 

For purposes of this Section 3.1(d)(1)(ii) only, Grantee will have the burden of
proving that the requirements of clause (2) of the first or second paragraph of
this Section 3.1(d)(1)(ii), as the case may be, have been met and the standard
of proof to be met by Grantee will be clear and convincing evidence.

 

For purposes of this Section 3.1(d)(1)(ii) only, the definition of Change in
Control in Section A.6 of Annex A will exclude the proviso in Section A.6(a).

 

(iii) If the Grant will terminate by reason of Grantee’s termination of
employment with the Corporation pursuant to Section 3.1(b) unless all of the
conditions set forth in Section 3.1(d)(1)(i) (including those set forth in
Section 3.1(d)(1)(ii), if applicable) are met, then the Grant will remain
outstanding pending satisfaction of all of those conditions. Upon the failure of
any required condition, including the condition that a Change in Control occur
within three (3) months of Grantee’s Termination Date, the Grant will terminate
on the date such failure occurs.

 

(d)(2)

 

Notwithstanding anything in the Agreement to the contrary, upon the occurrence
of a Change in Control at any time prior to the Award Date, the Performance
Period, if not already ended, will end as of the end of the day on the

 

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day the Change in Control is deemed to occur, and, provided that either (i)
Grantee is an employee of the Corporation as of the day immediately preceding
the day the Change in Control is deemed to occur, or (ii) if Grantee’s
employment with the Corporation terminated prior to the occurrence of the Change
in Control, the Grant is still outstanding and the continued employment
requirement is deemed to have been met pursuant to Section 3.1(d)(1) or because
the Committee so determined pursuant to Section 3.1(b) or Section 3.1(c), then
Grantee will be deemed to have been awarded, and PNC will cause the issuance
pursuant to this Section 3.1(d)(2) to Grantee as Awarded Shares as soon as
administratively practicable following such Change in Control date, an award of
the number of the Incentive Shares determined as follows:

 

  (a) the sum of:

 

  (i) 100% of the Target Incentive Shares; plus

 

  (ii) 50% of the Premium Incentive Shares if PNC’s level of ROCE performance
relative to its peers, determined as described below, through the date of the
Change in Control is within the top quartile of the ROCE performance of the
members of the Peer Group at that time; plus

 

  (iii) 50% of the Premium Incentive Shares if PNC’s level of TSR performance
relative to its peers, determined as described below, through the date of the
Change in Control is within the top quartile of the TSR performance of the
members of the Peer Group at that time;

 

  (b) prorated by multiplying the sum determined in Section 3.1(d)(2)(a) above
by a fraction (not to exceed 1) equal to the number of days from and including
January 1, 2003 through and including the day the Change in Control is deemed to
have occurred, divided by 1,096 (the number of days in the 3-year performance
period).

 

In determining the levels of ROCE performance of PNC and the other then existing
members of the Peer Group for purposes of Section 3.1(d)(2)(a)(ii) above, the
period commencing January 1, 2003 through and including the end of the last
completed calendar quarter prior to the occurrence of the Change in Control will
be used in the definition of Return on Common Equity set forth in Section A.26
of Annex A rather than the period specified in that definition.

 

In determining the levels of TSR performance of PNC and the other then existing
members of the Peer Group for purposes of Section 3.1(d)(2)(a)(iii) above, the
period beginning at the measuring point established by the market close on
December 31, 2002 and continuing through (and including) the market close on the
day the Change in Control is deemed to have occurred will be used as

 

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the measurement period in the definition of Total Shareholder Return set forth
in Section A.29 of Annex A rather than the period specified in that definition.

 

All of the Awarded Shares that are awarded pursuant to this Section 3.1(d)(2)
will be Vested Shares at the time of issuance, and PNC will issue a certificate
or certificates to, or at the proper direction of, Grantee or Grantee’s legal
representative for such shares without further restriction under the Agreement;
provided, however, that no fractional shares will be issued, and if the award
includes a fractional interest, such fractional interest will be liquidated on
the basis of the then current market value of PNC Common Stock and paid to
Grantee or Grantee’s legal representative in cash at the time the Awarded Shares
are issued.

 

In the event that a record date for dividends on PNC Common Stock occurs after
the date the Change in Control is deemed to have occurred (or after January 1,
2006, if earlier) but before the date the Awarded Shares are issued, the
Corporation will make a cash payment to Grantee equivalent to the amount of the
dividends Grantee would have received had the Awarded Shares been issued and
outstanding on the date the Change in Control is deemed to have occurred (or on
January 1, 2006, if earlier).

 

In the event of a corporate transaction or transactions (including, without
limitation, stock dividends, stock splits, spin-offs, split-offs,
recapitalizations, mergers, consolidations or reorganizations of or by PNC
(each, a “Corporate Transaction”)), the Committee may, subject to the last
paragraph of this Section 3.1(d)(2), make such adjustments in the number and
class of Incentive Shares subject to award pursuant to this Section 3.1(d)(2) as
it deems appropriate in its sole discretion to reflect the Corporate
Transaction(s), including without limitation payment of the award in cash in an
amount equal to the product of (a) the per share value of the consideration
payable to a PNC Common Stock shareholder in connection with such Corporate
Transaction and (b) the total number of the Incentive Shares awarded to Grantee
pursuant to this Section 3.1(d)(2).

 

The Committee may not exercise any negative discretion pursuant to Section 3.2
or otherwise exercise discretion pursuant to the Agreement in any way that would
serve to reduce an award to Grantee pursuant to this Section 3.1(d)(2).”

 

(2) Section 3.2 is amended by: (i) deleting the phrase “other than during a
Coverage Period” from the first line of Section 3.2(a) and adding the following
proviso to the end of Section 3.2(a): “provided, however, that the Committee may
not exercise such negative discretion upon or after the occurrence of a Change
in Control”; and (ii) deleting Section 3.2(b) in its entirety.

 

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(3) Section 3.3 is amended by adding the following to the end of the section:
“In the event that an award of a number of Incentive Shares is made pursuant to
Section 3.1(d)(2), the Grant will terminate as to any portion of the Incentive
Shares not so awarded. Termination of all or a portion of the Grant will in no
way affect Grantee’s covenants or the other provisions of Section 13 and Section
14.”

 

(4) Section 3.4 is amended to correct the typographical error in the last line
of the section by changing “2005” to “2006.”

 

(5) A new Section 8A that reads as follows is added immediately prior to Section
8:

 

“8A. Change in Control on or After Award Date. Notwithstanding anything in the
Agreement to the contrary, upon the occurrence of a Change in Control: (i) if
Grantee is an employee of the Corporation as of the day immediately preceding
the Change in Control, the Continued Employment Performance Goal will be deemed
to have been achieved and the Restricted Period will terminate with respect to
all then outstanding Unvested Shares as of the day immediately preceding the
Change in Control; (ii) if Grantee’s employment with the Corporation terminated
prior to the occurrence of the Change in Control but Unvested Shares remained
outstanding after such termination of employment pursuant to Section 7.4, then
with respect to all such Unvested Shares outstanding as of the day immediately
preceding the Change in Control, the Restricted Period will terminate as of the
day immediately preceding the Change in Control; and (iii) all Restricted Shares
that thereby become Vested Shares will be released and reissued by PNC pursuant
to Section 8 as soon as administratively practicable following such date.”

 

(6) The following amendments are made to the definitions in Annex A:

 

The definition of Continued Employment Performance Goal in Section A.12 is
amended by: (i) replacing the phrase “or pursuant to Section 7.5 of the
Agreement” with the phrase “or to deemed achievement pursuant to Section 7.5 or
Section 8A of the Agreement”; and (ii) deleting the word “and” immediately
preceding subsection (b) and adding the following subsection (c) at the end of
the definition: “and (c) the day a Change in Control is deemed to have
occurred.”

 

The definition of Performance Period in Section A.22 is amended by adding the
phrase “subject to early termination pursuant to Section 3.1(d)(2) of the
Agreement,” after the word “means.”

 

The definition of Restricted Period in Section A.25 is amended by deleting the
word “and” immediately preceding subsection (b), and by adding the following
subsection (c) at the end of the definition: “and (c) the day immediately
preceding the day a Change in Control is deemed to have occurred.”

 

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17. Acceptance of Grant; PNC Right to Cancel; Effectiveness of Agreement. If
Grantee does not accept the Grant by executing and delivering a copy of the
Agreement to PNC, without altering or changing the terms thereof in any way,
within sixty (60) days of receipt by Grantee of a copy of the Agreement, PNC
may, in its sole discretion, withdraw its offer and cancel the Grant at any time
prior to 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 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.

  

Grantee

 

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2004 Incentive Share Grant

Two Year Performance Period (January 1, 2004 - December 31, 2005)

PNC Performance Goals: Relative PNC Return on Common Equity and Total
Shareholder Return

50%: Vests on Award; 50%: Restricted Period From Award Through December 31, 2006

 

ANNEX A

TO

THE PNC FINANCIAL SERVICES GROUP, INC.

1997 LONG-TERM INCENTIVE AWARD PLAN

2004 INCENTIVE SHARE AGREEMENT

 

* * *

 

CERTAIN DEFINITIONS

 

Except where the context otherwise indicates, the following definitions apply
for purposes of the 2004 Incentive Share Agreement (“Agreement”) to which this
Annex A is attached:

 

A.1 “2003 Incentive Share Agreement” means the 2003 Incentive Share Agreement
between Grantee and PNC relating to the January 3, 2003 grant of a certain
incentive share award opportunity (the 2003 Incentive Shares) to Grantee, as
amended.

 

A.2 “2003 Incentive Shares” means the incentive share award opportunity granted
to Grantee January 3, 2003 pursuant to the 2003 Incentive Share Agreement and
subject to the terms and conditions of that agreement, as amended, and the Plan.

 

A.3 “2004 Incentive Shares” means, collectively, the Maximum ROCE Incentive
Shares and the Maximum TSR Incentive Shares, representing the maximum number of
shares of PNC common stock that could be awarded to Grantee as Awarded Shares,
subject to the terms and conditions of the Agreement and the Plan.

 

A.4 “Adjusted Annual Potential Payout Percentage(s).” The Adjusted Annual
Potential Payout Percentage for a given year within the Performance Period (2004
or 2005) with respect to a given Performance Measure (ROCE or TSR) (the
“Adjusted Annual ROCE Potential Payout Percentage” or the “Adjusted Annual TSR
Potential Payout Percentage,” as the case may be) is the percentage determined
as follows.

 

If PNC achieves the best ROCE or TSR performance, as the case may be, of any of
the then existing members of the Peer Group for a given year (Top Performer
ranking), the Adjusted Annual Potential Payout Percentage for that Performance
Measure for that year will be 200%. If PNC’s ROCE or TSR performance for a given
year compared to the ROCE or TSR performance, as the case may be, of the other
then existing Peers for that year ranks PNC as #10 or lower, however many Peers
are then in the Peer Group, the

 

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Adjusted Annual Potential Payout Percentage for that Performance Measure for
that year will be 0%.

 

Otherwise, the Adjusted Annual Potential Payout Percentage for a given year with
respect to a given Performance Measure will be equal to: the sum of the
unadjusted potential payout percentage set forth in the schedule below
(“Schedule”) for the Peer ranking immediately below PNC (“Peer B”) plus X%,
where X is (1) the difference between the unadjusted potential payout percentage
set forth in the Schedule for the Peer ranking immediately above PNC (“Peer A”)
and the unadjusted potential payout percentage set forth in the Schedule for
Peer B, times (2) a fraction equal to (i) the difference between PNC’s ROCE or
TSR performance, as the case may be, for the given year and Peer B’s ROCE or TSR
performance for the given year, divided by (ii) the difference between Peer A’s
ROCE or TSR performance, as the case may be, for the given year and Peer B’s
ROCE or TSR performance for the given year. If there is no Peer B at that time,
the Adjusted Annual Potential Payout Percentage for the given year will be the
same as the unadjusted potential payout percentage set forth in the Schedule for
PNC’s ranking.

 

SCHEDULE

 

Peer Group Position

--------------------------------------------------------------------------------

 

Unadjusted Potential Payout Percentage

--------------------------------------------------------------------------------

Top Performer

  200%

#2

  180%

#3

  160%

#4

  140%

#5

  120%

#6

  100%

#7

    80%

#8

    60%

#9

    40%

#10

or lower

      0%

 

Peer Group positions in the Schedule will be determined by calculating the ROCE
or TSR performance, as the case may be, achieved by each then existing member of
the Peer Group for the given year and then ranking each such member of the Peer
Group by that performance, with the Peer with the best performance being ranked
the Top Performer, the Peer with the second best performance being ranked #2,
and so on.

 

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The unadjusted potential payout percentages by Peer Group position in the
Schedule will not change even if the number of Peers in the Peer Group increases
or is reduced, for example, due to industry consolidation.

 

A.5 “Adjusted Target ROCE Incentive Shares” means the number of incentive shares
equal to the Target ROCE Incentive Shares plus the Dividend Adjustment Shares
related to target ROCE incentive shares for all PNC common stock cash dividend
payment dates that occur from and after the Grant Date through and including
December 31, 2005 or, if earlier, the day a Change in Control is deemed to have
occurred.

 

A.6 “Adjusted Target TSR Incentive Shares” means the number of incentive shares
equal to the Target TSR Incentive Shares plus the Dividend Adjustment Shares
related to target TSR incentive shares for all PNC common stock cash dividend
payment dates that occur from and after the Grant Date through and including
December 31, 2005 or, if earlier, the day a Change in Control is deemed to have
occurred.

 

A.7 “Award Date” means the date on which the Committee makes its determination
as to whether, and if so, the extent to which, an award of the 2004 Incentive
Shares may be made pursuant to the Agreement, and within those limits, whether
to award any of the 2004 Incentive Shares pursuant to Section 3.1(b) of the
Agreement, and if so, how many to award.

 

A.8 “Awarded Shares” means any 2004 Incentive Shares that have been (a) awarded
by the Committee and issued in accordance with Section 3.5 of the Agreement as
Vested Shares or Restricted Shares or (b) deemed awarded and issued pursuant to
Section 3.4 of the Agreement as Vested Shares.

 

A.9 “Board” means the Board of Directors of PNC.

 

A.10 “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 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 Subsidiary.

 

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

 

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the advice of counsel for the Corporation, shall be conclusively presumed to be
done, or omitted to be done, by Grantee in good faith and in the best interests
of the Corporation.

 

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.11 “CEO” means the chief executive officer of PNC.

 

A.12 “Change in Control” means a change of control of PNC of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or in response to any similar item on any similar schedule or
form) promulgated under the Exchange Act, whether or not PNC is then subject to
such reporting requirement; provided, however, that without limitation, a Change
in Control will be deemed to have occurred if:

 

(a) any Person, excluding employee benefits plans of the Corporation, is or
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act or any successor provisions thereto), directly or indirectly, of
securities of PNC representing twenty percent (20%) or more of the combined
voting power of PNC’s then outstanding securities; provided, however, that such
an acquisition of beneficial ownership representing between twenty percent (20%)
and forty percent (40%), inclusive, of such voting power will not be considered
a Change in Control if the Board approves such acquisition either prior to or
immediately after its occurrence;

 

(b) PNC consummates a merger, consolidation, share exchange, division or other
reorganization or transaction of PNC (a “Fundamental Transaction”) with any
other corporation, other than a Fundamental Transaction that results in the
voting securities of PNC outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least sixty percent (60%) of the combined
voting power immediately after such Fundamental Transaction of (i) PNC’s
outstanding securities, (ii) the surviving entity’s outstanding securities, or
(iii) in the case of a division, the outstanding securities of each entity
resulting from the division;

 

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(c) the shareholders of PNC approve a plan of complete liquidation or winding-up
of PNC or an agreement for the sale or disposition (in one transaction or a
series of transactions) of all or substantially all of PNC’s assets;

 

(d) as a result of a proxy contest, individuals who prior to the conclusion
thereof constituted the Board (including for this purpose any new director whose
election or nomination for election by PNC’s shareholders in connection with
such proxy contest was approved by a vote of at least two-thirds (2/3rds) of the
directors then still in office who were directors prior to such proxy contest)
cease to constitute at least a majority of the Board (excluding any Board seat
that is vacant or otherwise unoccupied);

 

(e) during any period of twenty-four (24) consecutive months, individuals who at
the beginning of such period constituted the Board (including for this purpose
any new director whose election or nomination for election by PNC’s shareholders
was approved by a vote of at least two-thirds (2/3rds) of the directors then
still in office who were directors at the beginning of such period) cease for
any reason to constitute at least a majority of the Board (excluding any Board
seat that is vacant or otherwise unoccupied); or

 

(f) the Board determines that a Change in Control has occurred.

 

Notwithstanding anything to the contrary herein, a divestiture or spin-off of a
subsidiary or division of PNC will not by itself constitute a Change in Control.

 

A.13 “CIC Failure” means the following:

 

(a) with respect to a CIC Triggering Event described in Section A.14(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 CIC Triggering Event described in Section A.14(b), the
proxy contest fails to replace or remove a majority of the members of the Board.

 

A.14 “CIC Triggering Event” means the occurrence of either of the following:

 

(a) the Board or PNC’s shareholders approve a transaction described in
Subsection (b) of the definition of Change in Control contained in Section A.12;
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.15 “Committee” means the Personnel and Compensation Committee of the Board.

 

A.16 “Competitive Activity” means, for purposes of the Agreement, any
participation in, employment by, ownership of any equity interest exceeding one
percent

 

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(1%) in, or promotion or organization of, any Person other than PNC or any
Subsidiary (a) engaged in business activities similar to some or all of the
business activities of PNC or any Subsidiary as of 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, 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.17 “Continued Employment Performance Goal” means, subject to early achievement
if so determined by the Committee or to deemed achievement pursuant to Section
7.3, Section 7.4, Section 7.5, or Section 8 of the Agreement, if applicable,
that Grantee has been continuously employed by the Corporation for the period
commencing on the Award Date through (and including) the first of the following
to occur: (a) December 31, 2006; (b) the day immediately preceding the date of
Grantee’s death; and (c) the day immediately preceding the day a Change in
Control is deemed to have occurred.

 

A.18 “Corporation” means PNC and its Subsidiaries.

 

A.19 “Coverage Period” means a period (a) commencing on the earlier to occur of
(i) the date of a CIC Triggering Event and (ii) the date of a Change in Control
and (b) ending on the date that is three (3) years after the date of the Change
in Control; provided, however, that in the event that a Coverage Period
commences on the date of a CIC Triggering Event, such Coverage Period will
terminate upon the earlier to occur of (x) the date of a CIC Failure and (y) the
date that is three (3) years after the date of the Change in Control triggered
by the CIC Triggering Event. After the termination of any Coverage Period,
another Coverage Period will commence upon the earlier to occur of clause (a)(i)
and clause (a)(ii) in the preceding sentence.

 

A.20 “Designated Person” will be either: (a) the Committee, if Grantee is a
member of the Corporate Executive Group (or equivalent successor classification)
or is subject to the reporting requirements of Section 16(a) of the Exchange Act
with respect to PNC securities; or (a) the Chief Human Resources Officer of PNC,
if Grantee is not within one of the groups specified in Section A.20(a).

 

A.21 “Detrimental Conduct” means:

 

(a) Grantee 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 Grantee’s Termination Date through (and
including) the first (1st) anniversary of Grantee’s Termination Date;

 

(b) a material breach by Grantee of (i) any code of conduct of PNC or a
Subsidiary or (ii) other written policy of PNC or a Subsidiary, in either case
required by law or established to maintain compliance with applicable law;

 

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(c) any act of fraud, misappropriation, material dishonesty, or embezzlement by
Grantee against PNC or a Subsidiary or any client or customer of PNC or a
Subsidiary;

 

(d) any conviction (including a plea of guilty or of nolo contendere) of Grantee
for, or entry by Grantee into a pre-trial disposition with respect to, the
commission of a felony which relates to or arises out of Grantee’s employment or
other service relationship with the Corporation; or

 

(e) entry of any order against Grantee by any governmental body having
regulatory authority with respect to the business of PNC or any Subsidiary,
which order relates to or arises out of 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 determines that Grantee has engaged
in conduct described in clause (a) above, that Grantee is guilty of conduct
described in clause (b) or clause (c) above, or that an event described in
clause (d) or clause (e) above has occurred with respect to Grantee and, if so,
determines that Grantee will be deemed to have engaged in Detrimental Conduct.

 

A.22 “Dividend Adjustment Shares.” Once the Agreement has become effective in
accordance with Section 17 of the Agreement, for each PNC common stock cash
dividend payment date that occurs during the period from and after the Grant
Date through and including December 31, 2005 or, if earlier, the day a Change in
Control is deemed to have occurred, there will be added, subject to any
applicable Plan limits, as of that dividend payment date to the number of Target
ROCE Incentive Shares and to the number of Target TSR Incentive Shares,
respectively, a number of incentive shares (including fractional shares) equal
to (i) the amount of the cash dividends that would have been paid on that
dividend payment date on the target number of ROCE or TSR incentive shares, as
the case may be, as adjusted for all previous additions to such target number
pursuant to this Section A.22, had such target incentive shares been issued and
outstanding shares of PNC common stock on the record date for such dividend,
divided by (ii) the Fair Market Value of a share of PNC common stock on that
dividend payment date.

 

Cumulatively, these additional ROCE or TSR incentive shares are referred to as
the “Dividend Adjustment Shares” related to the target ROCE incentive shares or
the target TSR incentive shares, as the case may be, and the Target ROCE
Incentive Shares and Target TSR Incentive Shares as adjusted for the addition of
all Dividend Adjustment Shares related to such respective target incentive
shares are referred to as the “Adjusted Target ROCE Incentive Shares” and the
“Adjusted Target TSR Incentive Shares.”

 

A.23 “Exchange Act” means the Securities Exchange Act of 1934 as amended, and
the rules and regulations promulgated thereunder.

 

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A.24 “Fair Market Value” as it relates to PNC common stock means the average of
the high and low sale prices of PNC common stock as reported on the New York
Stock Exchange (or such successor reporting system as PNC may select) on the
relevant date or, if no sale of PNC common stock has been reported for that day,
the average of such prices on the next preceding day and the next following day
for which there were reported sales.

 

A.25 “Final Potential Payout Percentage(s).” The Final Potential Payout
Percentage with respect to each Performance Measure (ROCE or TSR) (the “Final
ROCE Potential Payout Percentage” or the “Final TSR Potential Payout
Percentage,” as the case may be) will be the percentage that is the average of
the Adjusted Annual Potential Payout Percentages for that Performance Measure
(ROCE or TSR) for the years in the Performance Period (2004 and 2005).

 

If the Adjusted Annual Potential Payout Percentage for a Performance Measure is
0% for one of the years in the Performance Period but is a positive number for
the other year, then the Final Potential Payout Percentage for that Performance
Measure will be the percentage that is one-half (1/2) of that positive number.

 

If the Adjusted Annual Potential Payout Percentage for a Performance Measure is
0% for both of the years in the Performance Period, then the Final Potential
Payout Percentage for that Performance Measure will be 0%.

 

A.26 “Good Reason” means:

 

(a) the assignment to Grantee of any duties inconsistent in any respect with
Grantee’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities immediately prior to either
the CIC Triggering Event or the Change in Control, or any other action by the
Corporation which results in a diminution in any respect in such position,
authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith that is remedied by
the Corporation promptly after receipt of notice thereof given by Grantee;

 

(b) a reduction by the Corporation in Grantee’s annual base salary as in effect
on the Grant Date, as the same may be increased from time to time;

 

(c) the Corporation’s requiring Grantee to be based at any office or location
that is more than fifty (50) miles from Grantee’s office or location immediately
prior to either the CIC Triggering Event or the Change in Control;

 

(d) the failure by the Corporation (i) to continue in effect any bonus, stock
option or other cash or equity-based incentive plan or program in which Grantee
participates immediately prior to either the CIC Triggering Event or the Change
in Control that is material to Grantee’s total compensation, unless a
substantially equivalent arrangement (embodied in an ongoing substitute or
alternative plan or program) has been made with respect to such plan or program,
or (ii) to continue Grantee’s participation in

 

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such plan or program (or in such substitute or alternative plan or program) on a
basis at least as favorable, both in terms of the amount of benefits provided
and the level of Grantee’s participation relative to other participants, as
existed immediately prior to the CIC Triggering Event or the Change in Control;
or

 

(e) the failure by the Corporation to continue to provide Grantee with benefits
substantially similar to those received by Grantee under any of the
Corporation’s pension (including, but not limited to, tax-qualified plans), life
insurance, health, accident, disability or other welfare plans or programs in
which Grantee was participating, at costs substantially similar to those paid by
Grantee, immediately prior to the CIC Triggering Event or the Change in Control.

 

A.27 “Grant” means the grant, subject to the terms and conditions of the
Agreement and the Plan, of the 2004 Incentive Shares award opportunity to
Grantee pursuant to Section 1 of the Agreement.

 

A.28 “Grant Date” means the Grant Date set forth on page 1 of the Agreement.

 

A.29 “Grantee” means the person identified as Grantee on page 1 of the
Agreement.

 

A.30 “Internal Revenue Code” means the Internal Revenue Code of 1986 as amended,
and the rules and regulations promulgated thereunder.

 

A.31 “Maximum ROCE Incentive Shares” is the number of incentive shares that is
200% of the Adjusted Target ROCE Incentive Shares, and represents Grantee’s
maximum incentive share award opportunity pursuant to the Agreement with respect
to the PNC ROCE Performance Goal.

 

A.32 “Maximum TSR Incentive Shares” is the number of incentive shares that is
200% of the Adjusted Target TSR Incentive Shares, and represents Grantee’s
maximum incentive share award opportunity pursuant to the Agreement with respect
to the PNC TSR Performance Goal.

 

A.33 “Peer Group” means The Bank of New York Company, Inc., Bank One
Corporation, Fifth Third Bancorp, FleetBoston Financial Corporation, KeyCorp,
National City Corporation, PNC, SunTrust Banks, Inc., U.S. Bancorp, Wachovia
Corporation, and Wells Fargo & Company as such group may be adjusted from time
to time by the Committee to reflect mergers, consolidations, or other material
corporate reorganizations or changes affecting one or more members of the Peer
Group or other changes in PNC’s peer group. A member of the Peer Group is
sometimes referred to as a “Peer.”

 

A.34 “Performance Measure(s).” The Performance Measures are Return on Common
Equity and Total Shareholder Return.

 

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A.35 “Performance Period” means, subject to early termination pursuant to
Section 3.4 of the Agreement, the period commencing January 1, 2004 through (and
including) December 31, 2005. The two years in the Performance Period are 2004
and 2005.

 

A.36 “Person” has the meaning given in Section 3(a)(9) of the Exchange Act and
also includes any syndicate or group deemed to be a person under Section
13(d)(3) of the Exchange Act.

 

A.37 “PNC” means The PNC Financial Services Group, Inc.

 

A.38 “PNC Performance Goal(s).” The PNC Performance Goals are the level of PNC
Return on Common Equity (“PNC ROCE Performance Goal”) and the level of PNC Total
Shareholder Return (“PNC TSR Performance Goal”) relative to the levels of ROCE
and TSR performance, respectively, of the other members of the Peer Group.

 

A.39 “Restricted Period” means, subject to early termination if so determined by
the Committee or pursuant to Section 7.5 of the Agreement, if applicable, the
period commencing on the Award Date through (and including) the earlier of: (a)
the date of Grantee’s death; (b) the day immediately preceding the day a Change
in Control is deemed to have occurred; and (c) December 31, 2006 or, if later,
the last day of any extension of the Restricted Period pursuant to Section
7.4(a) of the Agreement, if applicable.

 

A.40 “Restricted Shares” are shares of PNC common stock that have been awarded
to Grantee by the Committee as Awarded Shares and issued as Restricted Shares
pursuant to Section 3.5 of the Agreement. Restricted Shares are subject to the
terms and conditions of the Agreement, including forfeiture provisions and
restrictions against transfer, unless and until they become Vested Shares as set
forth in Section A.51 and are released and reissued by PNC pursuant to Section 9
of the Agreement. Restricted Shares that have not yet become Vested Shares are
sometimes referred to as “Unvested Shares.”

 

A.41 “Return on Common Equity” or “ROCE” means, with respect to each of PNC and
the other members of the Peer Group: (a) for 2004, the annualized cumulative
return on common equity for the period commencing January 1, 2004 through (and
including) December 31, 2004; and (b) for 2005, the annualized cumulative return
on common equity for the period commencing January 1, 2005 through (and
including) December 31, 2005. The Return on Common Equity of PNC or any other
Peer may be adjusted to reflect significant nonrecurring items, including,
without limitation, merger-related charges or gains or losses on a sale of a
business unit, as approved by the Committee. ROCE will be expressed as a percent
rounded to the nearest one-hundredth (e.g., 0.00%, with 0.005% being rounded
upward to 0.01%).

 

A.42 “SEC” means the United States Securities and Exchange Commission.

 

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A.43 “Target ROCE Incentive Shares” means the number of incentive shares
specified on page 1 of the Agreement as Target ROCE Incentive Shares.

 

A.44 “Target TSR Incentive Shares” means the number of incentive shares
specified on page 1 of the Agreement as Target TSR Incentive Shares.

 

A.45 “Termination Date” means Grantee’s last date of employment with the
Corporation. If Grantee is employed by a Subsidiary that ceases to be a
Subsidiary of PNC and Grantee does not continue to be employed by PNC or a
Subsidiary, then for purposes of the Agreement, Grantee’s employment with the
Corporation terminates effective at the time this occurs.

 

A.46 “Threshold ROCE Performance Goal.” PNC will have achieved the Threshold
ROCE Performance Goal if PNC’s ranking relative to the other then existing
members of the Peer Group with respect to ROCE performance was ninth (9th) or
better for at least one year of the Performance Period (2004 or 2005), where
Peer Group positions for a given year were determined by calculating the ROCE
performance achieved by each then existing member of the Peer Group for the
given year and then ranking each such member of the Peer Group by that
performance, with the Peer with the best performance being ranked the Top
Performer, the Peer with the second best performance being ranked second (2nd),
and so on. The ranking required to achieve this threshold will not change
whether or not the number of then existing members of the Peer Group changes.

 

A.47 “Threshold TSR Performance Goal.” PNC will have achieved the Threshold TSR
Performance Goal if PNC’s ranking relative to the other then existing members of
the Peer Group with respect to TSR performance was ninth (9th) or better for at
least one year of the Performance Period (2004 or 2005), where Peer Group
positions for a given year were determined by calculating the TSR performance
achieved by each then existing member of the Peer Group for the given year and
then ranking each such member of the Peer Group by that performance, with the
Peer with the best performance being ranked the Top Performer, the Peer with the
second best performance being ranked second (2nd), and so on. The ranking
required to achieve this threshold will not change whether or not the number of
then existing members of the Peer Group changes.

 

A.48 “Total and Permanent Disability” means, unless the Committee determines
otherwise, Grantee’s disability as determined to be total and permanent by the
Corporation for purposes of the Agreement.

 

A.49 “Total Shareholder Return” or “TSR” means, with respect to PNC, the
cumulative total shareholder return on PNC’s common stock and, with respect to
each other member of the Peer Group, the cumulative total shareholder return on
a class of such other Peer’s common stock that is registered under Section 12 of
the Exchange Act. For each of PNC and the other members of the Peer Group,
cumulative total shareholder return will be calculated by dividing: (a) the sum
of: (i) the cumulative amount of dividends for the measurement period, assuming
dividend reinvestment, with dividends

 

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reinvested on a monthly basis at the dividend yield rate using share price at
month end and ex-date dividends per share, and (ii) the difference between the
share price at the end and the beginning of the measurement period; by (b) the
closing share price on December 31, 2003, for the 2004 measurement period, or
the closing share price on December 31, 2004, for the 2005 measurement period.
The term “measurement period” will be: (1) for the 2004 measurement period, the
period beginning at the measurement point established by the market close on
December 31, 2003 and continuing through (and including) the market close on
December 31, 2004; and (2) for the 2005 measurement period, the period beginning
at the measurement point established by the market close on December 31, 2004
and continuing through (and including) the market close on December 31, 2005.
With respect to dividends, it will be assumed that dividends are reinvested into
additional shares of the same class of equity securities at the frequency with
which dividends are paid on such securities during the applicable period. TSR
will be expressed as a percent rounded to the nearest one-hundredth (e.g.,
0.00%, with 0.005% being rounded upward to 0.01%).

 

A.50 “Unvested Shares” means any Restricted Shares that have not yet become
Vested Shares.

 

A.51 “Vested Shares.” Vested Shares are Awarded Shares that are not subject to
further restriction under the Agreement.

 

Awarded Shares that are issued pursuant to Section 3.5 of the Agreement as
Restricted Shares become Vested Shares and are released and reissued by PNC
pursuant to Section 9 of the Agreement if and when both of the following have
occurred, provided that the Restricted Shares are then outstanding: (a) the
Continued Employment Performance Goal has been achieved or is deemed to have
been achieved pursuant to the terms of the Agreement; and (b) the Restricted
Period has terminated.

 

Awarded Shares issued pursuant to Section 3.5 of the Agreement that are not
issued as Restricted Shares are Vested Shares upon issuance and are not subject
to further restriction under the Agreement.

 

All Awarded Shares issued pursuant to Section 3.4 of the Agreement will be
Vested Shares upon issuance.

 

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