Mercantile - PNC (M&A)

Mercantile Bankshares Corporation (MRBK) -
The PNC Financial Services Group, Inc. (PNC)
$6.0B Stock-Cash Merger

Summary

PNC acquires Baltimore-based regional banking company

MRBK has $17B in assets and 240 branches
Will make PNC a top 10 banking company
Deal terms

0.4184 PNC share plus $16.45, per MRBK share
Valued at $47.24 per MRBK share at announcement
$6.0B total, 52.5mm PNS shares plus $2.13B in cash
64.5% stock; 35.5% cash
Direct merger of MRBK into PNC
Two MRBK directors will join PNC board
$225mm break-up fee (3.75%)
MRBK stock chart PNC stock chart

Announced 10.09.06

Closed 2.27.07

Advisors

Financial

PNC: Citigroup / Goldman Sachs
MRBK: Sandler O'Neill

Legal

PNC: Wachtell
MRBK: Davis Polk / Venable

Merger Agreement Hyperlinked

General

EDGAR filing
Hyperlinked version
Detailed hyperlinked index follows

Article I The Merger

1.1 The Merger
1.2 Effective Time
1.3 Effects of the Merger
1.4 Conversion of Mercantile Bankshares Common Stock
1.5 Stock Options and other Stock-based Awards
1.6 Articles of Incorporation of PNC
1.7 Bylaws of PNC
1.8 Tax Consequences

Article II Delivery of Merger Consideration

2.1 Exchange Agent
2.2 Deposit of Merger Consideration
2.3 Delivery of Merger Consideration
2.4 Withholding Rights

Article III Mercantile Bankshares Reps

3.1 Corporate Organization
3.2 Capitalization
3.3 Authority; No Violation
3.4 Consents and Approvals
3.5 Reports; Regulatory Matters
3.6 Financial Statements
3.7 Brokers Fees
3.8 Absence of Certain Changes or Events
3.9 Legal Proceedings
3.10 Taxes and Tax Returns
3.11 Employee Matters
3.12 Compliance with Applicable Law
3.13 Certain Contracts
3.14 Risk Management Instruments
3.15 Investment Securities
3.16 Loan Portfolio
3.17 Property
3.18 Intellectual Property
3.19 Environmental Liability
3.20 Investment Adviser Subsidiaries; Funds; Clients
3.21 Broker-dealer Subsidiaries
3.22 State Takeover Laws; Rights Agreement
3.23 Reorganization; Approvals
3.24 Opinion
3.25 Mercantile Bankshares Information

Article IV PNC Reps

4.1 Corporate Organization
4.2 Capitalization
4.3 Authority; No Violation
4.4 Consents and Approvals
4.5 Reports; Regulatory Matters
4.6 Financial Statements
4.7 Brokers Fees
4.8 Absence of Certain Changes or Events
4.9 Legal Proceedings
4.10 Taxes and Tax Returns
4.11 Compliance with Applicable Law
4.12 Risk Management Instruments
4.13 Property
4.14 Environmental Liability
4.15 Reorganization; Approvals
4.16 Aggregate Cash Consideration
4.17 PNC Information
4.18 Investment Securities
4.19 Loan Portfolio

Article V Covenants Relating to Conduct of Business

5.1 Conduct of Businesses Prior to the Effective Time
5.2 Mercantile Bankshares Forbearances
5.3 PNC Forbearances

Article VI Additional Agreements

6.1 Regulatory Matters
6.2 Access to Information
6.3 Stockholder Approval
6.4 Affiliates
6.5 NYSE Listing
6.6 Employee Matters
6.7 Indemnification; Directors and officers Insurance
6.8 Additional Agreements
6.9 Advice of Changes
6.10 Exemption from Liability under Section 16(b)
6.11 No Solicitation
6.12 Directorship
6.13 Dividends
6.14 Donation to Charitable Foundation

Article VII Conditions Precedent

7.1 Each Party
7.2 PNC
7.3 Mercantile Bankshares

Article VIII Termination and Amendment

8.1 Termination
8.2 Effect of Termination
8.3 Fees and Expenses
8.4 Termination Fee
8.5 Amendment
8.6 Extension; Waiver

Article IX General Provisions

9.1 Closing
9.2 Standard
9.3 Nonsurvival of Representations, Warranties and
Agreements
9.4 Notices
9.5 Interpretation
9.6 Counterparts
9.7 Entire Agreement
9.8 Governing Law; Jurisdiction
9.9 Publicity
9.10 Assignment; Third Party Beneficiaries
9.11 Specific Performance

Proxy Solicitation

Definitive proxy statement 1.18.07

Table of contents

Preliminary proxy statement

Not yet filed

Form S-4 12.01.06

Table of contents

Amendment #1 1.10.07

Table of contents

Amendment #2 1.18.07

Table of contents

Deal Protection

No shop covenant

Merger agreement §6.11

Break-up fee

$225mm (3.75%)
Agreement §8.4

Regulatory Approvals

Required approvals

Federal Reserve Board
Virginia State Bureau of Financial Institutions
Maryland Commissioner of Financial Regulation

See Merger agreement §7.2(d) and §7.3(d)

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