This excerpt taken from the NFG 10-Q filed May 10, 2005.
4. Cashless Exercise
The broker-assisted method of exercising options described in this Section IV (C)(4) (cashless exercise) requires no cash outlay by the Participant. A Participant wishing to do a cashless exercise must first establish a trading account with a registered securities broker-dealer. Establishing that trading account will likely include the Participants commitment to pay the broker as described in their agreement. Upon request by a Participant, the Secretary or Assistant Secretary will provide information that may help the Participant find a broker who has previously done cashless exercises with the Company and/or may be willing to do so at a discounted commission rate. The Participant must provide the Secretary or Assistant Secretary with the Participants brokers name, firm, address, telephone and fax numbers.
To do a cashless exercise, the Participant must deliver a Notice of Exercise as described in Section IV (B)(1), and notify the Participants broker to proceed with the exercise. The Participants broker will sell Company stock for the Participants account and pay to the Company the exercise price, plus any necessary tax withholding. The Company will have share certificates delivered to the Participants broker within three business days after the Exercise Date, unless the Company elects to retain the certificates pending receipt of the exercise price. The Participant will be required to pay the Participants broker according to the agreement between them, typically a few days interest on the exercise price plus a commission on the shares sold.