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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
MIDLANTIC CORPORATION
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(Name of Issuer)
COMMON STOCK
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(Title of Class of Securities)
59780E101
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(CUSIP Number)
Walter E. Gregg, Jr., Esquire
PNC Bank Corp.
One PNC Plaza
Fifth Avenue and Wood Street
Pittsburgh, Pennsylvania 15265
(412) 762-2281
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
JULY 10, 1995
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(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement /X/.
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CUSIP NO. 59780E101 SCHEDULE 13D
1. Name of Reporting Person: PNC Bank Corp.
I.R.S. Identification No. 25-1435979
2. Check the Appropriate Box if a Member of a Group* (a)
(b)
3. SEC Use Only
4. Source of Funds: BK, WC
5. Check Box if Disclosure of Legal Proceedings is
Required Pursuant To Items 2(d) or 2(e)
6. Citizenship or Place of Organization: Pennsylvania
Number of 7. Sole Voting Power: 45,236 1
Shares
Beneficially 8. Shared Voting Power: 4,418 1,2
Owned by
Each 9. Sole Dispositive Power: 33,191 1,2
Reporting
Person 10. Shared Dispositive Power: 11,155 1,2
With
11. Aggregate Amount Beneficially Owned by Each Reporting
Person: 55,654 1,2
12. Check Box if the Aggregate Amount in Row (11) /X/
Excludes Certain Shares
13. Percent of Class Represented by Amount in Row 11: .11% 1,2
14. Type of Reporting Person: HC
1 As of June 30, 1995, PNC Bank, N.A. ("PNC Bank") (a wholly-owned
indirect subsidiary of PNC Bank Corp. ("PNC") as co-trustee, held in a
charitable foundation $200,000 aggregate principal amount of 8 % Convertible
Subordinated Debentures due 2010 ("Convertible Debentures") of Midlantic
Corporation ("MC") which at the option of the holder are convertible into
approximately 4,167 shares of MC Common Stock (as defined herein).
Additionally, as of the same date, the various trust departments of PNC's
subsidiary banks held an aggregate of 149,826 shares of MC Common Stock in
fiduciary accounts for the benefit of other persons. The various trust
departments had voting power (sole or shared) with respect to 45,487 and
dispositive (sole or shared) with respect to 40,179 shares. PNC is not deemed
to be the beneficial owner of such shares under the rules of the SEC pursuant
to Section 16(a) of the Securities Exchange Act of 1934, as amended.
2 The Reporting Person also has entered into a Stock Option Agreement
covering 10,425,000 shares of MC Common Stock (as defined herein) or
approximately 16.67% of the shares that would be outstanding following
exercise thereof. Unless and until the option granted thereunder is exercised,
the Reporting Person disclaims beneficial ownership of the shares covered
thereby.
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ITEM 1. SECURITY AND ISSUER.
The title of the class of equity securities to which this
Schedule 13D relates is the common stock, $3.00 par value, of Midlantic
Corporation ("MC Common Stock"). The address of the principal executive office
of Midlantic Corporation ("MC") is Metro Park Plaza, P.O. Box 600, Edison, New
Jersey 08818.
ITEM 2. IDENTITY AND BACKGROUND.
This statement is filed on behalf of PNC Bank Corp. ("PNC"). PNC
is a Pennsylvania corporation with its principal executive office at One PNC
Plaza, Fifth Avenue and Wood Street, Pittsburgh, Pennsylvania 15265. PNC is a
bank holding company registered under the Bank Holding Company Act of 1956 as
amended, ("BHC Act") and is principally engaged in the business of managing and
controlling banks and activities closely related to banking.
Filed as Schedule I to this Schedule 13D is a list of the
executive officers and directors of PNC containing the following information
with respect to each such person: (a) name, (b) business address and (c)
present principal occupation or employment, and the name and, if different than
such person's business address, the address of any corporation or other
organization in which such employment is conducted. Each person listed in
Schedule I is a United States citizen, except for Helge H. Wehmeier, who is a
citizen of the Federal Republic of Germany.
During the past five years, neither PNC nor, to the best of PNC's
knowledge, any person named in Schedule I (i) has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) has
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result was or is subject to a judgment, decree
or final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws, or finding any
violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS
OR OTHER CONSIDERATION.
The securities to which this Schedule 13D relates are the subject
of a MC Stock Option Agreement dated as of July 10, 1995 ("Option Agreement"),
pursuant to which MC has granted to PNC an option to purchase, under certain
circumstances, none of which has occured as of the date hereto, up to
10,425,000 shares of MC Common Stock ("Option"), subject to adjustment as
provided therein. The exercise price under the Option Agreement is
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$48.00 per share, subject to adjustment as provided therein, and the aggregate
amount of funds required to exercise the Option in full would be $500,400,000.
If and when the Option is exercised, PNC's source of funds will be either
working capital or funds borrowed from one or more banks in the ordinary course
of business; the identity of such bank or banks has not yet been determined.
ITEM 4. PURPOSE OF TRANSACTIONS.
On July 10, 1995, PNC, PNC Bancorp, Inc. (a wholly-owned
subsidiary of PNC and also a registered bank holding company under the BHC Act
("Bancorp")) and MC entered into an Agreement and Plan of Reorganization
("Reorganization Agreement"), and MC and Bancorp, joined in by PNC, entered
into a related Agreement and Plan of Merger ("Agreement of Merger") providing
for the merger ("Merger") of MC with and into Bancorp. The Reorganization
Agreement and Agreement of Merger are herein sometimes referred to collectively
as the "Merger Agreements." Under the Agreement of Merger, each share of
issued and outstanding MC Common Stock on the effective date of the Merger
(other than as provided in the Agreement of Merger) (including each attached
right issued pursuant to the Rights Agreement dated as of February 23, 1990, as
amended, between Midlantic Bank, N.A. and MC) ("MC Rights Agreement") will be
converted into 2.05 shares of Common Stock, par value of $5 per share of PNC
("PNC Common Stock"). The Agreement of Merger also provides for the treatment
of stock options outstanding under MC's Incentive Stock and Stock Option Plan.
The Reorganization Agreement provides that immediately following
consummation of the Merger, Garry J. Scheuring, who currently is Chairman,
President and Chief Executive Officer of MC, and three other persons currently
serving as directors of MC, who will be selected by MC, (as acceptable to PNC)
to become directors of PNC. Mr. Scheuring will also become Vice Chairman of
PNC.
PNC has entered into the Option Agreement in order to facilitate
consummation of the transactions contemplated by the Merger Agreements. See
also the description in Item 6 hereof of certain other provisions of the Option
Agreement and the Merger Agreements. Further, PNC similarly granted MC an
option to purchase, under certain circumstances, up to 45,500,000 shares of
PNC's Common Stock, $5 par value at the exercise price of $35.00 per share.
Consummation of the Merger is subject to, among other things,
receipt of all necessary shareholder and government approvals. Subject
thereto, upon consummation of the Merger, the separate corporate existence of
MC shall cease, and all outstanding shares of MC Common Stock (other than
shares held in the treasury of MC or owned beneficially by
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any subsidiary of MC other than in a fiduciary capacity or in connection with a
debt previously contracted or held by PNC or owned beneficially by any
subsidiary of PNC other than in a fiduciary capacity) will be converted into
PNC Common Stock and cash in lieu of fractional interests. As a result, MC
Common Stock will cease to be authorized to be quoted in an inter-dealer
quotation system of a registered national securities association and will
become eligible for termination of registration pursuant to Section 12(g)(4) of
the Securities Exchange Act of 1934, as amended ("Securities Exchange Act").
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
The 10,425,000 shares of MC Common Stock subject to the Option
represent approximately 16.67% of the shares of MC Common Stock that would be
issued and outstanding upon exercise of the Option in full. Unless and until
the Option is exercised, PNC disclaims beneficial ownership of the MC Common
Stock subject to the Option.
As of June 30, 1995, PNC Bank as co-trustee of a charitable
foundation held $200,000 aggregate principal amount of MC's Convertible
Debentures, convertible into approximately 4,167 shares of MC Common Stock for
the benefit of other persons. Upon conversion of the Convertible Debentures,
PNC Bank would have shared voting and dispositive power with respect to such
shares. Additionally, as of the same date, the various trust departments of
PNC Bank Corp.'s subsidiary banks held an aggregate of 149,826 shares of MC
Common Stock in fiduciary accounts for the benefit of other persons. The
various trust departments had voting power (sole or shared) with respect to
45,487 shares and dispositive (sole or shared) with respect to 40,179 shares.
PNC is not deemed to be the beneficial owner of such shares under the rules of
the SEC pursuant to Section 16(a) of the Securities Exchange Act.
Except as otherwise described herein, neither PNC, nor, to the
best of PNC's knowledge, any of the persons listed on Schedule I hereto,
beneficially owns any shares of MC Common Stock. Other than as stated above,
no transactions in MC Common Stock were effected during the past 60 days by
PNC, or, to the best of PNC's knowledge, by any of the persons listed on
Schedule I hereto.
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ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS
OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
OPTION AGREEMENT
Set forth below is a description of selected provisions of the
Option Agreement. Such description is qualified in its entirety by reference
to the copy of the Option Agreement filed as an Exhibit hereto, which is
incorporated by reference herein and made a part hereof to the same extent as
though set forth herein in full.
The Option Agreement provides for the purchase by PNC of up to
10,425,000 shares of MC Common Stock at an exercise price of $48.00 per share,
provided, however, that in the event MC issues or agrees to issue any shares of
MC Common Stock in breach of its obligations under the Merger Agreements at a
price less than $48.00 per share (as adjusted, as described below), the
exercise price shall be equal to such lesser price and provided further, that
the number of shares subject to the Option shall be reduced to such lesser
number, if any, as may from time to time be necessary, but only for so long as
may be necessary, to cause PNC not to (a) become an interested shareholder for
purposes of the New Jersey Shareholders Protection Act, (b) become an Acquiring
Person as such term is defined in the MC Rights Agreement, or (c) become an
"Interested Shareholder" or an "Affiliate" or "Associate" thereof for purposes
of Article Eighth of the Restated Certificate of Incorporation of MC. In the
event of any change in MC Common Stock by reason of stock dividends, split-ups,
recapitalizations, combinations, exchanges of shares or the like, the type and
number of shares subject to the Option, and/or the purchase price therefor,
shall be adjusted appropriately. Also, in the event that any additional shares
of MC Common Stock are issued or otherwise become outstanding after the date of
the Option Agreement (other than pursuant to the Option Agreement), the number
of shares of MC Common Stock subject to the Option shall be adjusted so that,
after such issuance, it equals 19.99% of the number of shares of MC Common
Stock then issued and outstanding without giving effect to any shares subject
or issued pursuant to the Option.
PNC may exercise the Option in whole or part, upon the occurrence
of certain events ("Purchase Events"). The Option Agreement provides that a
Purchase Event shall mean the occurrence of any of the following events after
the date of execution of the Option Agreement:
(i) MC or any MC Subsidiary, without having received PNC's
prior written consent, shall have entered into an agreement
with any person (other than PNC or any PNC Subsidiary) to
(x) merge or consolidate, or enter into any similar
transaction, with MC or any MC Subsidiary, (y) purchase,
lease or
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otherwise acquire all or substantially all of the assets of
MC or any MC Subsidiary or (z) purchase or otherwise
acquire (including by way of merger, consolidation, share
exchange or any similar transaction) securities
representing 20% or more of the voting power of MC or
any MC Subsidiary; provided, however, that in no event
shall any merger, consolidation, purchase or similar
transaction involving only MC and one or more of its
Subsidiaries or involving only any two or more of such
Subsidiaries, be deemed to be a Purchase Event, provided
any such transaction is not entered into in violation of
the terms of the Merger Agreements;
(ii) any person (other than MC, any MC Subsidiary, the MC
Subsidiaries in a fiduciary capacity, PNC, affiliates of
PNC or subsidiaries of PNC in a fiduciary capacity) shall
have acquired beneficial ownership or the right to acquire
beneficial ownership of 20% or more of the outstanding
shares of MC Common Stock (the term "beneficial ownership"
for purposes of this Option Agreement having the meaning
assigned thereto in Section 13(d) of the Securities
Exchange Act and the regulations promulgated thereunder);
or
(iii) any person (other than MC, any MC Subsidiary, PNC or any
PNC affiliate) (x) shall have made a bona fide proposal to
MC by public announcement or written communication that is
or becomes the subject of public disclosure to acquire MC
or any MC Subsidiary by merger, consolidation, purchase of
all or substantially all of its assets or any other similar
transaction, (y) shall have commenced a bona fide tender or
exchange offer to purchase shares of MC Common Stock such
that upon consummation of such offer such person would own
or control 20% or more of the outstanding shares of MC
Common Stock, or (z) shall have filed an application or
notice with the Federal Reserve Board or any other federal
or state regulatory agency for clearance or approval to
engage in any transaction described in clause (i) or (ii)
above, and thereafter the holders of MC Common Stock shall
have not approved the Merger Agreements and the
transactions contemplated thereby at the meeting of such
stockholders held for such purpose or such meeting shall
not have been held or shall have been canceled prior to
termination of the Merger Agreements.
The Option may be exercised in whole or in part, at any time or
from time to time if a Purchase Event shall have occurred and be continuing and
before the Option Agreement is terminated. The Option Agreement provides that
to the extent that it shall have
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not been exercised, the Option shall terminate on the earliest of (i) the
effective date of the Merger; (ii) termination of the Merger Agreements in
accordance with the provisions thereof prior to the occurrence of a Purchase
Event (other than a termination resulting from a willful breach by MC of any
covenant contained therein); (iii) six months after termination of the Merger
Agreements if such termination follows the occurrence of a Purchase Event or is
due to a willful breach by MC of any covenant contained therein; and provided
further that any exercise shall be subject to compliance with applicable
provisions of law.
The Option Agreement provides that neither PNC nor MC may assign
any of its rights or obligations under the Option Agreement or the Option
created thereunder to any other person without the express written consent of
the other party except that (i) if a Purchase Event shall have occurred and be
continuing, PNC may assign in whole or in part its rights and obligations under
the Option Agreement; provided, however, that until the date 30 days following
the date on which the Board of Governors of the Federal Reserve System approves
an application under the BHC to acquire the shares of MC Common Stock subject
to the option, PNC may not assign its rights under the Option except in (i) a
widely dispersed public distribution, (ii) a private placement in which no one
party acquires the right to purchase in excess of 2% of the voting shares of
MC, (iii) an assignment to a single party (e.g., a broker or investment banker)
for the purpose of conducting a widely dispersed public distribution on PNC's
behalf, or (iv) any other manner approved by the Federal Reserve Board. PNC's
acquisition of more than certain percentages of the outstanding MC Common Stock
may be subject to prior approval of, or the filing of notices with, applicable
regulatory authorities.
MERGER AGREEMENTS
Set forth below is a description of selected provisions of the
Merger Agreements. Such description is qualified in its entirety by reference
to the copies thereof filed as Exhibits hereto, which are incorporated by
reference herein and made a part hereof.
The Agreement of Merger provides that, on the effective date of
the Merger ("Effective Date"), each share of MC Common Stock outstanding (with
certain exceptions), including each attached right issued pursuant to the MC
Rights Agreement shall by virtue of the Merger be converted into 2.05 shares of
PNC Common Stock.
Pursuant to the Reorganization Agreement, PNC and MC agree that
each shall submit the Reorganization Agreement and the Plan of Merger and, in
the case of PNC, the issuance of PNC Common Stock thereunder, to their
respective shareholders for approval at a special shareholders meeting to be
held as soon as practicable.
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The Reorganization Agreement provides that PNC, Bancorp and MC
shall each use its best efforts in good faith to take or cause to be taken all
action necessary or desirable on its part so as to permit consummation of the
Merger at the earliest possible date. Additionally, except as otherwise
provided in the Reorganization Agreement, neither party shall take or fail to
take or cause, nor to the best of its ability, permit to be taken or fail to be
taken, any action that would substantially impair the prospects of completing
the Merger pursuant to the Merger Agreements. The Reorganization Agreement
further provides that neither PNC nor MC shall, and neither PNC nor MC shall
permit any of their respective subsidiaries to, except with the prior written
consent of the other and except as Previously Disclosed (as defined in the
Reorganization Agreement) or expressly contemplated by the Merger Agreements or
the Option Agreement (1) carry on its business other than in the usual, regular
and ordinary course in substantially the same manner as heretofore conducted;
(2) in the case of MC only, declare, set aside, make or pay any dividend or
other distribution in respect of its capital stock other than its regular
quarterly cash dividends on MC Common Stock in amounts not in excess of $.32
per share, or, in the case of PNC only, declare, set aside, make or pay any
dividend or other distribution in respect of its capital stock other than (x)
its regular quarterly cash dividend on PNC Common Stock in amounts not in
excess of $.35 per share, except as may be increased by PNC's Board of
Directors at a regularly scheduled meeting, such increase not to exceed 20%, or
(y) any dividends payable on any PNC Preferred Stock in accordance with the
provisions of the applicable certificate of incorporation or certificate of
designation relating to such preferred stock; (3) issue any shares of its
capital stock or permit any treasury shares to become outstanding other than
pursuant to the Option Agreements, the MC Rights Agreement or Rights
outstanding at the date of the Merger Agreement; provided, however, that MC may
issue shares of MC Common Stock or permit treasury shares to become outstanding
in accordance with the terms of its Dividend Reinvestment and Stock Purchase
Plan and its Savings and Investment Plan; (4) incur any additional debt
obligation or other obligation for borrowed money other than in the ordinary
course of business consistent with past practice; (5) issue, grant or authorize
any Rights or effect any recapitalization, reclassification, stock dividend,
stock split or like change in capitalization, or redeem repurchase or otherwise
acquire any shares of its capital stock; (6) amend its articles or certificates
of incorporation or association or by-laws; impose, or suffer the imposition,
on any share of stock held by such party in any Subsidiary of such party of any
lien, charge or encumbrance, or permit any such lien, charge or encumbrance to
exist; (7) merge with any other corporation, savings association or bank or
permit any other corporation, savings association or bank to merge into it or
consolidate with any other corporation, savings association or bank; acquire
control over any other firm, bank, corporation, savings association or
organization or create any subsidiary; (8) except in the ordinary course of
business, waive or release any material right or cancel or compromise any
material debt or claim; (9) liquidate or sell or dispose of any material assets
or acquire any material assets; except as Previously Disclosed, make any
capital expenditure in excess
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of $250,000 in any instance or $500,000 in the aggregate; or except as
Previously Disclosed, establish new branches or other similar facilities or
enter into or modify any leases or other contracts relating thereto that
involve annual payments by such party or any Subsidiary of such party that
exceed $100,000 in any instance or $500,000 in the aggregate, except with
respect to renewals of leases in the ordinary course of business; (10) increase
the rate of compensation of, pay or agree to pay any bonus to, or provide any
other employee benefit or incentive to, any of its directors, officers or
employees except (i) in a manner consistent with past practice, (ii) for
bonuses in respect of 1995 pursuant to the MC Annual Incentive and Bonus Plan
(including without limitation the provisions thereof providing MC with
discretion in determining the amounts payable thereunder), PROVIDED, HOWEVER,
that in no event shall the aggregate amount paid pursuant to such plan in
respect of 1995 exceed 140% of the aggregate amount paid pursuant to such plan
in respect of 1994, consistent with the terms of such plan, and (iii) MC and
its Subsidiaries may in their discretion increase the salaries of any or all of
their respective employees who were employees on or prior to December 31, 1994,
in the ordinary course of business but only to the extent that the aggregate
amount paid by MC and its Subsidiaries as salaries during the 1995 calendar
year to such employees is equal to or less than 104% of the aggregate amount
paid by MC and its Subsidiaries to such employees during the 1994 calendar
year; enter into or modify any employment or severance contracts with any of
its present or former directors, officers or employees; or enter into or
substantially modify (except as may be required by applicable law) any pension,
retirement, stock option, stock purchase, stock appreciation right, savings,
profit sharing, deferred compensation, consulting, bonus, group insurance or
other employee benefit, incentive or welfare contract, plan or arrangement, or
any trust agreement related thereto, in respect of any of its directors,
officers or other employees; (11) change its lending, investment,
asset/liability management or other material banking policies in any material
respect except as may be required by changes in applicable law; (12) change its
methods of accounting in effect at December 31, 1994, except as required by
changes in generally accepted accounting principles concurred in by its
independent certified public accountants, or change any of its methods of
reporting income and deductions for federal income tax purposes from those
employed in the preparation of its federal income tax returns for the year
ended December 31, 1994, except as required by law; (13) authorize or permit
any of its officers, directors, employees or agents to directly or indirectly
solicit, initiate or encourage any inquiries relating to, or the making of any
proposal which constitutes, a "takeover proposal" (as defined in the
Reorganization Agreement), or, except to the extent legally required for the
discharge of the fiduciary duties of its Board of Directors, recommend or
endorse any takeover proposal, or participate in any discussions or
negotiations, or provide third parties with any nonpublic information, relating
to any such inquiry or proposal or otherwise facilitate any effort or attempt
to make or implement a takeover proposal; provided, however, that each party
may communicate information about any such takeover proposal to its
stockholders if, in the judgment of such party's Board of Directors, based upon
the
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advice of outside counsel, such communication is required under applicable law;
or (14) agree to do any of the foregoing.
MC agreed that, at the request of PNC (unless such action would
prevent the Merger from being accounted for as a pooling of interests) on or
before the Effective Date, MC shall call for redemption and cause to be
redeemed (or converted by the holders thereof into MC Common Stock) and
cancelled by MC the total outstanding principal amount of MC's Convertible
Debentures all in accordance with the terms and conditions of the Indenture
pertaining thereto. In the event such redemption and cancellation shall not
occur prior to the Effective Date, PNC and Bancorp shall, by Supplemental
Indenture, jointly and severally assume all of the obligations of MC under the
outstanding Convertible Debentures.
PNC and MC agreed that each shall coordinate with the other the
declaration of any dividends in respect of PNC Common Stock and MC Common Stock
and the record dates and payment dates relating thereto, it being the intention
of the parties that holders of PNC Common Stock or MC Common Stock shall not
receive two dividends, or fail to receive one dividend, for any single calendar
quarter with respect to their shares of PNC Common Stock and/or MC Common Stock
and any shares of PNC Common Stock any such holder receives in exchange
therefor in the Merger.
MC also agreed that, at the request of PNC, it will take all
action to facilitate the merger of MC subsidiaries with subsidiaries of PNC
effective on or after the Effective Date; provided however, that in no event
shall the closing be delayed in order to facilitate any such merger and provide
further, however, MC is not required to take any action that could adversely
affect the qualification of the merger as a reorganization with the meaning of
Section 368(a) of the Code.
Reference is made to Item 4 hereof for a description of certain
other provisions of the Merger Agreements.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. MC Stock Option Agreement, dated as of July 10, 1995,
between PNC and MC.
2. Agreement and Plan of Reorganization, dated as of July 10,
1995, among PNC, Bancorp and MC.
3. Agreement and Plan of Merger between Bancorp and MC and
joined in by PNC (included as Annex A to Exhibit 2).
4. PNC Stock Option Agreement, dated as of July 10, 1995,
between PNC and MC.
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Dated: July 20, 1995 PNC BANK CORP.
By /s/ Michelle O'Donnell Manning
------------------------------
Michelle O'Donnell Manning
Vice President
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<TABLE>
SCHEDULE I
----------
Following is a list of the executive officers and directors of
PNC Bank Corp. ("PNC") as of July 20, 1995:
EXECUTIVE OFFICERS:
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<S> <C>
NAME OFFICE
- ---- ------
Thomas H. O'Brien Chairman and Chief Executive Officer
James E. Rohr President
Susan B. Bohn Executive Vice President, Corporate
Development and Communications
Richard C. Caldwell Executive Vice President, Investment Management and Trust
Walter E. Gregg, Jr. Executive Vice President, Finance and Administration
Robert L. Haunschild Senior Vice President and Chief Financial
Officer
Joe R. Irwin Executive Vice President and
Chief Investment Officer
William J. Johns Senior Vice President and Chief Accounting Officer
Edward P. Junker III Vice Chairman
Thomas E. Paisley III Senior Vice President and Chairman of Corporate Credit Policy Committee
Helen P. Pudlin Senior Vice President and General Counsel
Bruce E. Robbins Executive Vice President Corporate Banking
A. William Schenck III Executive Vice President, PNC Retail Banking
Herbert G. Summerfield, Jr. Executive Vice President, PNC Real Estate
</TABLE>
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<TABLE>
The business address for each executive officer is PNC Bank
Corp., One PNC Plaza, Fifth Avenue and Wood Streets, Pittsburgh, Pennsylvania
15265.
DIRECTORS:
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<CAPTION>
NAME AND OCCUPATION BUSINESS ADDRESS
- ------------------- ----------------
<S> <C>
Robert N. Clay P.O. Box 114
President Midway, KY 40347
Clay Holding Company
William G. Copeland P.O. Box 15760
Chairman of the Board Wilmington, DE 19850-5760
Providentmutual Holding Company
George A. Davidson, Jr. CNG Tower, 625 Liberty Avenue
Chairman and Chief Executive Officer Pittsburgh, PA 15222-3199
Consolidated Natural Gas Company
Dianna L. Green One Oxford Centre - 30th Floor
Senior Vice President, Customer Operations 301 Grant Street
Duquesne Light Company Pittsburgh, PA 15279
C. G. Grefenstette 2000 Grant Building
Chairman and Chief Executive Officer Pittsburgh, PA 15219
The Hillman Company
Thomas Marshall 600 Grant Street-Room 1100
Retired Chairman and Chief Executive Officer Pittsburgh, PA 15219-2704
Aristech Chemical Corporation
W. Craig McClelland 1600 Valley Road
Chairman and Chief Executive Officer Wayne, NJ 07470
Union Camp Corporation
Donald I. Moritz 420 Boulevard of the Allies
Chairman of the Executive Committee Pittsburgh, PA 15219
Equitable Resources, Inc.
Thomas H. O'Brien 30th Floor
Chairman and Chief Executive Officer One PNC Plaza
PNC Bank Corp. Fifth Avenue and Wood Street
Pittsburgh, PA 15265
</TABLE>
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<TABLE>
<S> <C>
Jackson H. Randolph 139 East Fourth Street
Chairman and Chief Executive Officer Cincinnati, OH 45202
Cinergy Corp.
James E. Rohr 30th Floor
President One PNC Plaza
PNC Bank Corp. Fifth Avenue and Wood Street
Pittsburgh, PA 15265
Roderic H. Ross 1401 Walnut Street, 10th Floor
Chairman, President and Chief Executive Officer Philadelphia, PA 19102-3122
Keystone State Life Insurance Company
Vincent A. Sarni c/o PPG Industries, Inc.
Chairman of the Executive Committee One PPG Place
Pittsburgh Baseball Associates Pittsburgh, PA 15272
Richard P. Simmons 1000 Six PPG Place
Chairman Pittsburgh, PA 15222
Allegheny Ludlum Corporation
Thomas J. Usher 600 Grant Street-Room 6170
Chairman and Chief Executive Officer Pittsburgh, PA 15219-4776
USX Corporation
Milton A. Washington 5604 Baum Boulevard
President and Chief Executive Officer Pittsburgh, PA 15206
Allegheny Housing Rehabilitation Corporation
Helge H. Wehmeier 500 Grant Street
President and Chief Executive Officer Pittsburgh, PA 15219-2507
Bayer Corporation
</TABLE>
- 16 -
<PAGE> 17
<TABLE>
EXHIBIT INDEX
-------------
<S> <C>
EXHIBIT 1 MC Stock Option Agreement, dated as of
July 10, 1995, between PNC and MC.
EXHIBIT 2 Agreement and Plan of Reorganization, dated as of
July 10, 1995, among PNC Bancorp and MC.
EXHIBIT 3 Agreement and Plan of Merger dated as of
July 10, 1995 between Bancorp and MC
(included as Annex A to Exhibit 2).
EXHIBIT 4 PNC Stock Option Agreement, dated as of
July 10, 1995, between PNC and MC.
</TABLE>
- 17 -
<PAGE> 18
MC STOCK OPTION AGREEMENT
EXHIBIT 1
This MC STOCK OPTION AGREEMENT ("Option Agreement") dated
as of July 10, 1995, between MIDLANTIC CORPORATION ("MC"), a New Jersey
corporation registered as a bank holding company under the Bank Holding Company
Act of 1956, as amended ("Bank Holding Company Act"), and PNC BANK CORP.
("PNC"), a Pennsylvania corporation registered as a bank holding company under
the Bank Holding Company Act.
WITNESSETH
----------
WHEREAS, the Boards of Directors of MC and PNC, together
with the Board of Directors of PNC Bancorp, Inc., have approved an Agreement
and Plan of Reorganization ("Reorganization Agreement") and have adopted a
related Agreement and Plan of Merger dated as of the date hereof (together
referred to herein as the "Merger Agreements"), providing for certain
transactions pursuant to which MC would be merged with and into PNC Bancorp,
Inc., a subsidiary of PNC;
WHEREAS, as a condition to PNC's entry into the Merger
Agreements and to induce such entry, MC has agreed to grant to PNC the option
set forth herein to purchase authorized but unissued shares of MC Common Stock;
NOW, THEREFORE, in consideration of the premises herein
contained, the parties agree as follows:
1. DEFINITIONS.
Capitalized terms defined in the Merger Agreements and used
herein shall have the same meanings as in the Merger Agreements.
2. GRANT OF OPTION.
Subject to the terms and conditions set forth herein, MC
hereby grants to PNC an option ("Option") to purchase up to 10,425,000 shares
of MC Common Stock, at a price of $48 per share payable in cash as provided in
Section 4 hereof; provided, however, that in the event MC issues or agrees to
issue any shares of MC Common Stock in breach of its obligations under the
Merger Agreements at a price less than $48 per share (as adjusted pursuant to
Section 6 hereof), the exercise price shall be equal to such lesser price.
Notwithstanding anything else in this Agreement to the contrary, the number of
shares of MC Common Stock subject to the Option shall be reduced to such lesser
number, if any, as may from time-to-time be necessary, but only for so long as
may be necessary, to cause PNC not to (a) become an interested stockholder for
purposes of the New Jersey Shareholders Protection Act, (b) become an Acquiring
Person as such term is defined in the MC Rights Agreement or (c) become an
"Interested Shareholder" or an "Affiliate" or "Associate" thereof for purposes
of Article EIGHTH of the Restated Certificate of Incorporation of MC.
<PAGE> 19
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3. EXERCISE OF OPTION.
(a) PNC may exercise the Option, in whole or part, at any
time or from time to time if a Purchase Event (as defined below) shall have
occurred and be continuing; provided that to the extent the Option shall not
have been exercised, it shall terminate and be of no further force and effect
upon the earliest to occur of (i) the Effective Date of the Merger or (ii)
termination of the Merger Agreements in accordance with the provisions thereof
prior to the occurrence of a Purchase Event (other than a termination resulting
from a willful breach by MC of any covenant contained therein) or (iii) six
months after termination of the Merger Agreements if such termination follows
the occurrence of a Purchase Event or is due to a willful breach by MC of any
covenant contained therein; and provided further that any such exercise shall
be subject to compliance with applicable provisions of law.
(b) As used herein, a "Purchase Event" shall mean any of
the following events or transactions occurring after the date hereof:
(i) MC or any MC Subsidiary, without having
received PNC's prior written consent, shall
have entered into an agreement with any person
(other than PNC or any PNC Subsidiary) to (x)
merge or consolidate, or enter into any similar
transaction, with MC or any MC Subsidiary, (y)
purchase, lease or otherwise acquire all or
substantially all of the assets of MC or any MC
Subsidiary or (z) purchase or otherwise acquire
(including by way of merger, consolidation,
share exchange or any similar transaction)
securities representing 20% or more of the
voting power of MC or any MC Subsidiary;
provided, however, that in no event shall any
merger, consolidation, purchase or similar
transaction involving only MC and one or more
of its Subsidiaries or involving only any two
or more of such Subsidiaries, be deemed to be a
Purchase Event, provided any such transaction
is not entered into in violation of the terms
of the Merger Agreements;
(ii) any person (other than MC, any MC Subsidiary,
the MC Subsidiaries in a fiduciary capacity,
PNC, affiliates of PNC or subsidiaries of PNC
in a fiduciary capacity) shall have acquired
beneficial ownership or the right to acquire
beneficial ownership of 20% or more of the
outstanding shares of MC Common Stock (the term
"beneficial ownership" for purposes of this
Option Agreement having the meaning assigned
thereto in Section 13(d) of the
<PAGE> 20
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Exchange Act and the regulations promulgated
thereunder); or
(iii) any person (other than MC, any MC Subsidiary,
PNC or any PNC affiliate) (x) shall have made a
bona fide proposal to MC by public announcement
or written communication that is or becomes the
subject of public disclosure to acquire MC or
any MC Subsidiary by merger, consolidation,
purchase of all or substantially all of its
assets or any other similar transaction, (y)
shall have commenced a bona fide tender or
exchange offer to purchase shares of MC Common
Stock such that upon consummation of such offer
such person would own or control 20% or more of
the outstanding shares of MC Common Stock, or
(z) shall have filed an application or notice
with the Federal Reserve Board or any other
federal or state regulatory agency for
clearance or approval to engage in any
transaction described in clause (i) or (ii)
above, and thereafter the holders of MC Common
Stock shall have not approved the Merger
Agreements and the transactions contemplated
thereby at the meeting of such stockholders
held for such purpose or such meeting shall not
have been held or shall have been cancelled
prior to termination of the Merger Agreements.
If more than one of the transactions giving rise to a Purchase Event under this
Section 3(b) is undertaken or effected, then all such transactions shall give
rise only to one Purchase Event, which Purchase Event shall be deemed
continuing for all purposes hereunder until all such transactions are
abandoned. As used in this Option Agreement, "person" shall have the meanings
specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(c) In the event PNC wishes to exercise the Option, it
shall send to MC a written notice (the date of which being herein referred to
as "Notice Date") specifying (i) the total number of shares it will purchase
pursuant to such exercise, and (ii) a place and date not earlier than three
business days nor later than 60 business days from the Notice Date for the
closing of such purchase ("Closing Date"); provided that if prior notification
to or approval of any federal or state regulatory agency is required in
connection with such purchase, PNC shall promptly file the required notice or
application for approval and shall expeditiously process the same and the
period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which any required notification period has expired or
been terminated or
<PAGE> 21
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such approval has been obtained and any requisite waiting period shall have
passed.
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) At the closing referred to in Section 3 hereof, PNC
shall pay to MC the aggregate purchase price for the shares of MC Common Stock
purchased pursuant to the exercise of the Option in immediately available funds
by a wire transfer to a bank account designated by MC.
(b) At such closing, simultaneously with the delivery of
cash as provided in subsection (a), MC shall deliver to PNC a certificate or
certificates representing the number of shares of MC Common Stock purchased by
PNC, and PNC shall deliver to MC a letter agreeing that PNC will not offer to
sell or otherwise dispose of such shares in violation of applicable law or the
provisions of this Option Agreement.
(c) Certificates for MC Common Stock delivered at a
closing hereunder may be endorsed with a restrictive legend which shall read
substantially as follows:
"The transfer of the shares represented by this
certificate is subject to certain provisions of an
agreement between the registered holder hereof and
Midlantic Corporation and to resale restrictions arising
under the Securities Act of 1933, as amended, a copy of
which agreement is on file at the principal office of
Midlantic Corporation. A copy of such agreement will be
provided to the holder hereof without charge upon receipt
by Midlantic Corporation of a written request."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if PNC shall have delivered to
MC a copy of a letter from the staff of the Commission, or an opinion of
counsel, in form and substance satisfactory to MC, to the effect that such
legend is not required for purposes of the Securities Act.
<PAGE> 22
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5. REPRESENTATIONS.
MC hereby represents, warrants and covenants to PNC as
follows:
(a) MC shall at all times maintain sufficient authorized
but unissued shares of MC Common Stock so that the Option may be exercised
without authorization of additional shares of MC Common Stock.
(b) The shares to be issued upon due exercise, in whole or
in part, of the Option, when paid for as provided herein, will be duly
authorized, validly issued, fully paid and nonassessable.
6. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
In the event of any change in MC Common Stock by reason of
stock dividends, split-ups, recapitalizations, combinations, exchanges of
shares or the like, the type and number of shares subject to the Option, and
the purchase price per share, as the case may be, shall be adjusted
appropriately. In the event that any additional shares of MC Common Stock are
issued or otherwise become outstanding after the date of this Option Agreement
(other than pursuant to this Option Agreement), the number of shares of MC
Common Stock subject to the Option shall be adjusted so that, after such
issuance, it equals 19.99% of the number of shares of MC Common Stock then
issued and outstanding without giving effect to any shares subject or issued
pursuant to the Option. Nothing contained in this Section 6 shall be deemed to
authorize MC to breach any provision of the Merger Agreements.
7. REGISTRATION RIGHTS.
MC shall, if requested by PNC, as expeditiously as possible
following the occurrence of a Purchase Event and prior to the second
anniversary thereof, file a registration statement on a form of general use
under the Securities Act if necessary in order to permit the sale or other
disposition of the shares of MC Common Stock that have been acquired upon
exercise of the Option in accordance with the intended method of sale or other
disposition requested by PNC. PNC shall provide all information reasonably
requested by MC for inclusion in any registration statement to be filed
hereunder. MC will use its best efforts to cause such registration statement
first to become effective and then to remain effective for such period not in
excess of 180 days from the day such registration statement first becomes
effective as may be reasonably necessary to effect such sales or other
dispositions. The obligations of MC hereunder to file a registration statement
and to maintain its effectiveness may be suspended for one or more periods of
<PAGE> 23
- 23 -
time not exceeding 60 days in the aggregate if the Board of Directors of MC
shall have determined that the filing of such registration statement or the
maintenance of its effectiveness would require disclosure of nonpublic
information that would materially and adversely affect MC. The first
registration effected under this Section 7 shall be at MC's expense except for
underwriting commissions and the fees and disbursements of PNC's counsel
attributable to the registration of such MC Common Stock. A second
registration may be requested hereunder at PNC's expense. In no event shall MC
be required to effect more than two registrations hereunder. The filing of any
registration statement hereunder may be delayed for such period of time as may
reasonably be required to facilitate any public distribution by MC of MC Common
Stock. If requested by PNC, in connection with any such registration, MC will
become a party to any underwriting agreement relating to the sale of such
shares, but only to the extent of obligating itself in respect of
representations, warranties, indemnities and other agreements customarily
included in such underwriting agreements. Upon receiving any request from PNC
or assignee thereof under this Section 7, MC agrees to send a copy thereof to
PNC and to any assignee thereof known to MC, in each case by promptly mailing
the same, postage prepaid, to the address of record of the persons entitled to
receive such copies.
8. SEVERABILITY.
If any term, provision, covenant or restriction contained
in this Option Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Option Agreement shall remain in full force and effect, and shall in no
way be affected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Option will not permit the holder to
acquire the full number of shares of MC Common Stock provided in Section 2
hereof (as adjusted pursuant to Section 6 hereof), it is the express intention
of MC to allow the holder to acquire or to require MC to repurchase such lesser
number of shares as may be permissible, without any amendment or modification
hereof.
9. MISCELLANEOUS.
(a) EXPENSES. Except as otherwise provided herein, each
of the parties hereto shall bear and pay all costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
<PAGE> 24
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(b) ENTIRE AGREEMENT. Except as otherwise expressly
provided herein, this Option Agreement contains the entire agreement between
the parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereto,
written or oral. Notwithstanding anything to the contrary contained in this
Agreement or the Merger Agreements, this Agreement shall be deemed to amend the
Confidentiality Agreement so as to permit PNC to enter into this Agreement and
exercise all of its rights hereunder, including its right to acquire MC Common
Stock upon exercise of the Option. The terms and conditions of this Option
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns. Nothing in this Option Agreement,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Option
Agreement, except as expressly provided herein.
(c) ASSIGNMENT. Neither of the parties hereto may assign
any of its rights or obligations under this Option Agreement or the Option
created hereunder to any other person, without the express written consent of
the other party, except that in the event a Purchase Event shall have occurred
and be continuing PNC may assign in whole or in part its rights and obligations
hereunder; provided, however, that until the date 30 days following the date on
which the Federal Reserve Board approves an application by PNC under the Bank
Holding Company Act to acquire the shares of MC Common Stock subject to the
Option, PNC may not assign its rights under the Option except in (i) a widely
dispersed public distribution, (ii) a private placement in which no one party
acquires the right to purchase in excess of 2% of the voting shares of MC,
(iii) an assignment to a single party (E.g., a broker or investment banker) for
the purpose of conducting a widely dispersed public distribution on PNC's
behalf, or (iv) any other manner approved by the Federal Reserve Board.
(d) NOTICES. All notices or other communications which
are required or permitted hereunder shall be in writing and sufficient if
delivered personally or sent by overnight express or by registered or certified
mail, postage prepaid, addressed as provided in the Reorganization Agreement.
A party may change its address for notice purposes by written notice to the
other party hereto.
(e) COUNTERPARTS. This Option Agreement may be executed
in any number of counterparts, and each such counterpart shall be deemed to be
an original instrument, but all such counterparts together shall constitute but
one agreement.
<PAGE> 25
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(f) SPECIFIC PERFORMANCE. The parties agree that damages
would be an inadequate remedy for a breach of the provisions of this Option
Agreement by either party hereto and that this Option Agreement may be enforced
by either party hereto through injunctive or other equitable relief.
(g) GOVERNING LAW. This Option Agreement shall be
governed by and construed in accordance with the laws of New Jersey applicable
to agreements made and entirely to be performed within such state and such
federal laws as may be applicable.
<PAGE> 26
- 26 -
IN WITNESS WHEREOF, each of the parties hereto has executed this Option
Agreement as of the day and year first written above.
PNC BANK CORP.
By /s/ Thomas H. O'Brien
-----------------------
Thomas H. O'Brien
Chairman and Chief
Executive Officer
MIDLANTIC CORPORATION
By /s/ Garry J. Scheuring
-----------------------
Garry J. Scheuring
Chairman, President and
Chief Executive Officer
<PAGE> 27
AGREEMENT AND PLAN OF REORGANIZATION
EXHIBIT 2
AGREEMENT AND PLAN OF REORGANIZATION ("Reorganization
Agreement" or "Agreement") dated as of July 10, 1995, among MIDLANTIC
CORPORATION ("MC"), a New Jersey corporation having its principal executive
office at Metro Park Plaza, P.O. Box 600, Edison, New Jersey 08818, PNC BANK
CORP. ("PNC"), a Pennsylvania corporation having its principal executive office
at One PNC Plaza, Pittsburgh, Pennsylvania 15265, and PNC BANCORP, INC.
("Bancorp"), a Delaware corporation and a wholly-owned subsidiary of PNC having
its registered office at 222 Delaware Avenue, Wilmington, Delaware 19899.
WITNESSETH
WHEREAS, the parties hereto desire that MC shall be merged
with and into Bancorp ("Merger") pursuant to an Agreement and Plan of Merger
substantially in the form attached hereto as Annex A ("Plan of Merger"); and
WHEREAS, the parties hereto desire to provide for certain
undertakings, conditions, representations, warranties and covenants in
connection with the transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and of the
mutual representations, warranties and covenants herein contained and intending
to be legally bound hereby, the parties hereto do hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1. "Bank Holding Company Act" shall mean the Bank
Holding Company Act of 1956, as amended.
1.2. "Closing Date" shall mean the date specified pursuant
to Section 4.8 hereof as the date on which the parties hereto shall close the
transactions contemplated herein.
1.3. "Code" shall mean the Internal Revenue Code of 1986,
as amended.
1.4. "Commission" or "SEC" shall mean the Securities and
Exchange Commission.
1.5. "Department of Banking" shall mean the Pennsylvania
Department of Banking.
1.6. "Effective Date" shall mean the date specified
pursuant to Section 4.8 hereof as the effective date of the Merger.
<PAGE> 28
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1.7. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
1.8. "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
1.9. "FDIA" shall mean the Federal Deposit Insurance Act.
1.10. "FDIC" shall mean the Federal Deposit Insurance
Corporation.
1.11. "Federal Reserve Board" shall mean the Board of
Governors of the Federal Reserve System.
1.12. "Intellectual Property" means domestic and foreign
letters patent, patents, patent applications, patent licenses, software
licensed or owned, know-how licenses, trade names, common law and other
trademarks, service marks, licenses of trademarks, trade names and/or service
marks, trademark registrations and applications, service mark registrations and
applications and copyright registrations and applications.
1.13. "Investment Companies" means the Compass Capital
Group of open-end mutual funds.
1.14. "Investment Company Act" means the Investment
Company Act of 1940, as amended.
1.15. "Material Adverse Effect" shall mean, with respect
to MC or PNC, as the case may be, a material adverse effect on the business,
results of operations or financial condition of such party and its Subsidiaries
taken as a whole.
1.16. "MB" means Midlantic Bank, N.A., a wholly owned
subsidiary of MC.
1.17. "MC Financial Statements" shall mean (i) the
consolidated balance sheets of MC as of March 31, 1995 and as of December 31,
1994 and 1993 and the related consolidated statements of income, cash flows and
changes in shareholders' equity (including related notes, if any) for the three
months ended March 31, 1995 and each of the three years ended December 31,
1994, 1993 and 1992 as filed by MC in SEC Documents and (ii) the consolidated
balance sheets of MC and related consolidated statements of income, cash flows
and changes in shareholders' equity (including related notes, if any) as filed
by MC in SEC Documents with respect to periods ended subsequent to March 31,
1995.
1.18. "MC Option Agreement" shall mean the Stock Option
Agreement dated of even date herewith between MC and PNC pursuant to which MC
will grant
<PAGE> 29
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PNC the right to purchase certain shares of MC Common Stock (as defined below),
approval of the Merger by MC's Board of Directors having been received on a
prior date.
1.19. "Option Agreements" shall mean the MC Option
Agreement and the PNC Option Agreement.
1.20. "PNC Financial Statements" shall mean (i) the
consolidated balance sheets of PNC as of March 31, 1995 and as of December 31,
1994 and 1993 and the related consolidated statements of income, cash flows and
changes in shareholders' equity (including related notes, if any) for the three
months ended March 31, 1995 and each of the three years ended December 31,
1994, 1993 and 1992 as filed by PNC in SEC Documents and (ii) the consolidated
balance sheets of PNC and related consolidated statements of income, cash flows
and changes in shareholders' equity (including related notes, if any) as filed
by PNC in SEC Documents with respect to periods ended subsequent to March 31,
1995.
1.21. "PNC Option Agreement" shall mean the Stock Option
Agreement dated of even date herewith between PNC and MC pursuant to which PNC
will grant MC the right to purchase certain shares of PNC Common Stock (as
defined below).
1.22. "Pennsylvania Banking Code" shall mean the
Pennsylvania Banking Code of 1965, as amended.
1.23. "Previously Disclosed" shall mean disclosed prior to
the execution hereof in (i) an SEC Document filed with the SEC subsequent to
January 1, 1994 and prior to the date hereof or (ii) a letter dated of even
date herewith from the party making such disclosure and delivered to the other
party prior to the execution hereof. Any information disclosed by one party to
the other for any purpose hereunder shall be deemed to be disclosed for all
purposes hereunder. The inclusion of any matter in information Previously
Disclosed shall not be deemed an admission or otherwise to imply that any such
matter is material for purposes of this Agreement.
1.24. "Proxy Statement" shall mean the joint proxy
statement/prospectus (or similar documents) together with any supplements
thereto sent to the shareholders of PNC and MC to solicit their votes in
connection with this Agreement and the Plan of Merger.
1.25. "Registration Statement" shall mean the registration
statement with respect to the PNC Common Stock to be issued in connection with
the Merger as declared effective by the Commission under the Securities Act.
<PAGE> 30
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1.26. "Rights" shall mean warrants, options, rights,
convertible securities and other arrangements or commitments which obligate an
entity to issue or dispose of any of its capital stock, and stock appreciation
rights, performance units and other similar stock- based rights whether they
obligate the issuer thereof to issue stock or other securities or to pay cash.
1.27. "SEC Documents" shall mean all reports and
registration statements filed, or required to be filed, by a party hereto
pursuant to the Securities Laws.
1.28. "Securities Act" shall mean the Securities Act of
1933, as amended.
1.29. "Securities Laws" shall mean the Securities Act; the
Exchange Act; the Investment Company Act; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939, as amended; and the rules and
regulations of the Commission promulgated thereunder.
Other terms used herein are defined in the preamble and the
recitals to this Reorganization Agreement and in Articles II, III and IV
hereof.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF MC
MC hereby represents and warrants to PNC and Bancorp as
follows:
2.1. CAPITAL STRUCTURE OF MC
The authorized capital stock of MC consists of (i)
40,000,000 shares of preferred stock, no par value ("MC Preferred Stock"), none
of which is issued and outstanding, and (ii) 150,000,000 shares of common
stock, par value $3 per share ("MC Common Stock"), of which, as of June 30,
1995, 52,128,214 shares are issued and outstanding and 633,883 shares are held
in treasury. As of June 30, 1995, no shares of MC Preferred Stock or MC Common
Stock were reserved for issuance, except that (i) 1,389,333 shares of MC Common
Stock were reserved for issuance pursuant to MC's dividend reinvestment and
stock purchase plans, (ii) 5,830,616 shares of MC Common Stock were reserved
for issuance upon the exercise of stock options heretofore granted pursuant to
MC's stock option plans, (iii) 500,000 shares of MC's Series B Junior
Participating Preferred Stock were reserved for issuance upon exercise of
rights pursuant to the Rights Agreement dated as of February 23, 1990 between
MC and MB, as amended (the "MC Rights Agreement"), (iv) 10,425,000 shares of MC
Common Stock were reserved for issuance pursuant to the MC Option Agreement and
(v) 1,517,500 shares of MC Common Stock were reserved for issuance pursuant to
MC's 8 1/4% Convertible Subordinated Debentures due 2010. All outstanding
shares of MC Common Stock have been duly issued and are validly outstanding,
fully paid and nonassessable. MC does not have and is not bound by any Rights
which are authorized, issued or
<PAGE> 31
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outstanding with respect to the capital stock of MC except for the MC Option
Agreement and as Previously Disclosed and except for Rights issued pursuant to
the MC Rights Agreement. None of the shares of MC's capital stock has been
issued in violation of the preemptive rights of any person. MC has taken all
action necessary so that the execution of this Reorganization Agreement, the
Plan of Merger and the MC Option Agreement and the consummation of the
transactions contemplated hereby and thereby do not and will not result in the
grant of any rights to any person under the MC Rights Agreement or enable or
require the Rights thereunder to be exercised, distributed or triggered.
2.2. ORGANIZATION, STANDING AND AUTHORITY OF MC
MC is a duly organized corporation, validly existing and in
good standing under the laws of New Jersey with full corporate power and
authority to carry on its business as now conducted and is duly licensed or
qualified to do business in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or the conduct of its
business requires such qualification, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on MC. MC is
registered as a bank holding company under the Bank Holding Company Act.
2.3. OWNERSHIP OF MC SUBSIDIARIES; CAPITAL
STRUCTURE OF MC SUBSIDIARIES
MC does not own, directly or indirectly, 5% or more of the
outstanding capital stock or other voting securities of any corporation, bank
or other organization except as Previously Disclosed (collectively the "MC
Subsidiaries" and individually a "MC Subsidiary"). The outstanding shares of
capital stock of each MC Subsidiary are validly issued and outstanding, fully
paid and (except as provided in 12 U.S.C. Section 55) nonassessable and,
except as Previously Disclosed, all such shares are directly or indirectly
owned by MC free and clear of all liens, claims and encumbrances. No MC
Subsidiary has or is bound by any Rights which are authorized, issued or
outstanding with respect to the capital stock of any MC Subsidiary and, except
as Previously Disclosed, there are no agreements, understandings or commitments
relating to the right of MC to vote or to dispose of said shares. None of the
shares of capital stock of any MC Subsidiary has been issued in violation of
the preemptive rights of any person.
2.4. ORGANIZATION, STANDING AND AUTHORITY OF
MC SUBSIDIARIES
Each MC Subsidiary is a duly organized corporation or
banking association, validly existing and in good standing under applicable
laws. Each MC
<PAGE> 32
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Subsidiary (i) has full power and authority to carry on its business as now
conducted, and (ii) is duly licensed or qualified to do business in the states
of the United States and foreign jurisdictions where its ownership or leasing
of property or the conduct of its business requires such licensing or
qualification and where failure to be so licensed or qualified would have a
Material Adverse Effect on MC. Each MC Subsidiary has all federal, state,
local and foreign governmental authorizations necessary for it to own or lease
its properties and assets and to carry on its business as it is now being
conducted, except where the failure to be so authorized would not have a
Material Adverse Effect on MC.
2.5. AUTHORIZED AND EFFECTIVE AGREEMENT
(a) MC has all requisite corporate power and authority to
enter into and perform all of its obligations under this Reorganization
Agreement, the Plan of Merger and the MC Option Agreement. The execution and
delivery of this Reorganization Agreement, the Plan of Merger and the MC Option
Agreement and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate action
in respect thereof on the part of MC, except that the affirmative vote of the
holders of a majority of the shares of MC Common Stock cast by the holders of
such shares entitled to vote thereon is the only shareholder vote required to
approve the Plan of Merger pursuant to the New Jersey Business Corporation Act
and MC's Restated Certificate of Incorporation and Bylaws. The Board of
Directors of MC has directed that this Agreement and the Plan of Merger be
submitted to MC's stockholders for approval at a special meeting to be held as
soon as practicable.
(b) Assuming the accuracy of the representation contained
in Section 3.5(b) hereof, this Reorganization Agreement and the Plan of Merger
constitute legal, valid and binding obligations of MC, enforceable against it
in accordance with their respective terms, subject as to enforceability, to
bankruptcy, insolvency and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(c) Except as Previously Disclosed, neither the execution
and delivery of this Reorganization Agreement, the Plan of Merger or the MC
Option Agreement, nor consummation of the transactions contemplated hereby or
thereby, nor compliance by MC with any of the provisions hereof or thereof
shall (i) conflict with or result in a breach of any provision of the articles
or certificate of incorporation or association, charter or by-laws of MC or any
MC Subsidiary, (ii) assuming the consents and approvals contemplated by Section
4.3(b) hereof and which are Previously Disclosed are duly obtained, constitute
or result in a breach of any term, condition or provision of, or constitute a
default under, or give rise to any right of termination, cancellation or
acceleration with respect to, or result in the creation of any lien, charge or
encumbrance upon any property or asset of MC or any MC Subsidiary pursuant to,
any note, bond, mortgage, indenture, license,
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agreement or other instrument or obligation, or (iii) assuming the consents and
approvals contemplated by Section 4.3(b) hereof and which are Previously
Disclosed are duly obtained, violate any order, writ, injunction, decree,
statute, rule or regulation applicable to MC or any MC Subsidiary, except (in
the case of clauses (ii) and (iii) above) for such violations, rights,
conflicts, breaches, creations or defaults which, either individually or in the
aggregate, will not have a Material Adverse Effect on MC.
(d) Other than as contemplated by Section 4.3(b) hereof
and except as Previously Disclosed, no consent, approval or authorization of,
or declaration, notice, filing or registration with, any governmental or
regulatory authority, or any other person, is required to be made or obtained
by MC or any MC Subsidiary on or prior to the Closing Date in connection with
the execution, delivery and performance of this Agreement and the Plan of
Merger or the consummation of the transactions contemplated hereby or thereby.
2.6. SEC DOCUMENTS; REGULATORY FILINGS
MC has filed all SEC Documents required by the Securities
Laws and such SEC Documents complied, as of their respective dates, in all
material respects with the Securities Laws. MC and each of the MC Subsidiaries
has filed all reports required by statute or regulation to be filed with any
federal or state bank regulatory agency, except where the failure to so file
would not have a Material Adverse Effect on MC, and such reports were prepared
in accordance with the applicable statutes, regulations and instructions in
existence as of the date of filing of such reports in all material respects.
2.7. FINANCIAL STATEMENTS; BOOKS AND RECORDS;
MINUTE BOOKS
The MC Financial Statements fairly present the consolidated
financial position of MC and its consolidated Subsidiaries as of the dates
indicated and the consolidated results of operations, changes in shareholders'
equity and cash flows of MC and its consolidated Subsidiaries for the periods
then ended in conformity with generally accepted accounting principles
applicable to financial institutions applied on a consistent basis except as
disclosed therein. The books and records of MC and each MC Subsidiary fairly
reflect in all material respects the transactions to which it is a party or by
which its properties are subject or bound. Such books and records have been
properly kept and maintained and are in compliance in all material respects
with all applicable legal and accounting requirements. The minute books of MC
and the MC Subsidiaries contain records which are accurate in all material
respects of all corporate actions of its shareholders and Board of Directors
(including committees of its Board of Directors).
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2.8. MATERIAL ADVERSE CHANGE
MC has not, on a consolidated basis, suffered any material
adverse change in its financial condition, results of operations or business
since December 31, 1994.
2.9. ABSENCE OF UNDISCLOSED LIABILITIES
Neither MC nor any MC Subsidiary has any liability
(contingent or otherwise), excluding contractually assumed contingencies, that
is material to MC on a consolidated basis, or that, when combined with all
similar liabilities, would be material to MC on a consolidated basis, except as
Previously Disclosed, as disclosed in the MC Financial Statements filed with
the SEC prior to the date hereof and except for liabilities incurred in the
ordinary course of business subsequent to March 31, 1995.
2.10. PROPERTIES
MC and the MC Subsidiaries have good and marketable title
free and clear of all liens, encumbrances, charges, defaults or equitable
interests to all of the properties and assets, real and personal, which,
individually or in the aggregate, are material to the business of MC and its
Subsidiaries taken as a whole, and which are reflected on the MC Financial
Statements as of December 31, 1994 or acquired after such date, except (i)
liens for taxes not yet due and payable, (ii) pledges to secure deposits and
other liens incurred in the ordinary course of banking business, (iii) such
imperfections of title, easements and encumbrances, if any, as are not material
in character, amount or extent and (iv) dispositions and encumbrances for
adequate consideration in the ordinary course of business. All leases pursuant
to which MC or any MC Subsidiary, as lessee, leases real and personal property
which, individually or in the aggregate, are material to the business of MC and
its Subsidiaries taken as a whole are valid and enforceable in accordance with
their respective terms.
2.11. LOANS
Each loan reflected as an asset in the MC Financial
Statements (i) is evidenced by notes, agreements or other evidences of
indebtedness which are true, genuine and what they purport to be, (ii) to the
extent secured, has been secured by valid liens and security interests which
have been perfected, and (iii) is the legal, valid and binding obligation of
the obligor named therein, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles, in each case other than loans as to which the failure to satisfy
the foregoing standards would not have a Material Adverse Effect on MC.
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2.12. TAX MATTERS
(a) MC and each MC Subsidiary have timely filed federal
income tax returns for each year through December 31, 1993 and have timely
filed, or caused to be filed, all other federal, state, local and foreign tax
returns (including, without limitation, estimated tax returns, returns required
under Sections 1441-1446 and 6031-6060 of the Code and the regulations
thereunder and any comparable state, foreign and local laws, any other
information returns, withholding tax returns, FICA and FUTA returns and back up
withholding returns required under Section 3406 of the Code and any comparable
state, foreign and local laws) required to be filed with respect to MC or any
MC Subsidiary, except where the failure to file timely such federal income and
other tax returns would not, in the aggregate, have a Material Adverse Effect
on MC. All taxes due in respect of the periods covered by such tax returns
have been paid or adequate reserves have been established for the payment of
such taxes, except where any such failure to pay or establish adequate reserves
would not, in the aggregate, have a Material Adverse Effect on MC and, as of
the Closing Date, all taxes due in respect of any subsequent periods ending on
or prior to the Closing Date will have been paid or adequate reserves will have
been established for the payment thereof, except where any such failure to pay
or establish adequate reserves would not, in the aggregate, have a Material
Adverse Effect on MC. Except as Previously Disclosed, no material (i) audit
examination, (ii) deficiency, or (iii) refund litigations with respect to such
returns is pending. Not later than 60 days after the date hereof, MC shall
deliver to PNC a list of all (i) audit examinations, (ii) deficiencies, and
(iii) refund litigation with respect to such returns. Neither MC nor any MC
Subsidiary will have any material liability for any such taxes in excess of the
amounts so paid or reserves or accruals so established.
(b) All federal, state and local (and, if applicable,
foreign) tax returns filed by MC and each MC Subsidiary are complete and
accurate in all material respects. Neither MC nor any MC Subsidiary is
delinquent in the payment of any material tax, assessment or governmental
charge, and, except as Previously Disclosed, none of them has requested any
extension of time within which to file any tax returns in respect of any fiscal
year or portion thereof which have not since been filed. Except as Previously
Disclosed, no material deficiencies for any tax, assessment or governmental
charge have been proposed, asserted or assessed (tentatively or otherwise)
against MC or any MC Subsidiary which have not been settled and paid. Except
as Previously Disclosed, there are currently no agreements in effect with
respect to MC or any MC Subsidiary to extend the period of limitations for the
assessment or collection of any tax.
(c) Except as Previously Disclosed, neither the
transactions contemplated hereby nor the termination of the employment of any
employees of MC or any MC Subsidiary prior to or following consummation of the
transactions contemplated hereby could result in MC or any MC Subsidiary making
or being required to make
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any "excess parachute payment" as that term is defined in Section 280G of the
Code.
(d) For purposes of this Section 2.12, references to MC
and any MC Subsidiary shall include predecessors thereof.
2.13. EMPLOYEE BENEFIT PLANS
(a) MC has made available true and complete copies of all
qualified pension or profit-sharing plans, any deferred compensation,
consulting, bonus or group insurance contract or any other incentive, welfare
or employee benefit plan or agreement maintained for the benefit of employees
or former employees of MC or any MC Subsidiary, and will make available to PNC
(i) the most recent actuarial and financial reports prepared with respect to
any qualified plans, (ii) the most recent annual reports filed with any
government agency and (iii) all rulings and determination letters and any open
requests for rulings or letters that pertain to any qualified plan.
(b) Neither MC nor any MC Subsidiary (nor any pension plan
maintained by any of them) has incurred or reasonably expects to incur any
material liability to the Pension Benefit Guaranty Corporation or to the
Internal Revenue Service with respect to any pension plan qualified under
Section 401 of the Code except liabilities to the Pension Benefit Guaranty
Corporation pursuant to Section 4007 of ERISA, all of which have been fully
paid. No reportable event under Section 4043(b) of ERISA has occurred with
respect to any such pension plan, other than a reportable event that occurs by
reason of the transactions contemplated by this Agreement or an event for which
the 30 day notice requirement has been waived by the Pension Benefit Guaranty
Corporation.
(c) Neither MC nor any MC Subsidiary participates in, or
has incurred any liability under Section 4201 of ERISA for a complete or
partial withdrawal from, a multiemployer plan as such term is defined in ERISA.
(d) Except as Previously Disclosed, a favorable
determination letter has been issued by the Internal Revenue Service with
respect to each "employee pension plan" (as defined in Section 3(2) of ERISA)
of MC or any MC Subsidiary which is intended to be a qualified plan to the
effect that such plan is qualified under Section 401 of the Code and tax exempt
under Section 501 of the Code. No such letter has been revoked or threatened
to be revoked and neither MC nor any MC Subsidiary knows of any reasonable
ground on which such revocation may be based. Such plans have been operated in
all material respects in accordance with their terms and applicable law.
(e) No prohibited transaction (which shall mean any
transaction prohibited by Section 406 of ERISA and not exempt under Section 408
of ERISA) has occurred
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with respect to any "employee benefit plan" (as defined in Section 3(3) of
ERISA) maintained by MC or any MC Subsidiary which would result in the
imposition, directly or indirectly, of an excise tax under Section 4975 of the
Code that would have, individually or in the aggregate, a Material Adverse on
MC.
(f) The actuarial present value of accrued benefit
obligations, whether or not vested, under each "employee pension plan"
maintained by MC or any MC Subsidiary did not exceed as of the most recent
actuarial valuation date the then current fair market value of the assets of
such plan and no material adverse change has occurred with respect to the
funded status of any such plan since such date.
2.14. CERTAIN CONTRACTS
(a) Except as Previously Disclosed, neither MC nor any MC
Subsidiary is a party to, or is bound by, (i) any material contract as defined
in Item 601(b)(10) of Regulation S-K of the SEC or, to the knowledge of the
executive officers of MC involved in the negotiation of, or conduct of PNC's
due diligence with respect to, this Agreement, any other material contract or
similar arrangement whether or not made in the ordinary course of business
(other than loans or loan commitments and funding transactions in the ordinary
course of business of the MC Subsidiaries) or any agreement restricting the
nature or geographic scope of its business activities in any material respect,
(ii) any agreement, indenture or other instrument relating to the borrowing of
money by MC or any MC Subsidiary or the guarantee by MC or any MC Subsidiary of
any such obligation, other than instruments relating to transactions entered
into in the customary course, (iii) any agreement, arrangement or commitment
relating to the employment of a consultant who was formerly a director or
executive officer or the employment, election, retention in office or severance
of any present or former director or officer, or (iv) any contract, agreement
or understanding with a labor union, in each case whether written or oral.
(b) Except as Previously Disclosed, neither MC nor any MC
Subsidiary is in default under any material agreement, commitment, arrangement,
lease, insurance policy or other instrument whether entered into in the
ordinary course of business or otherwise and whether written or oral, and there
has not occurred any event that, with the lapse of time or giving of notice or
both, would constitute such a default, except for such defaults which would
not, individually or in the aggregate, have a Material Adverse Effect on MC.
2.15. LEGAL PROCEEDINGS
Except as Previously Disclosed, there are no actions, suits
or proceedings instituted, pending or, to the knowledge of MC, threatened (or
unasserted but considered probable of assertion and which if asserted would
have at least a
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reasonable probability of an unfavorable outcome) against MC or any MC
Subsidiary or against any asset, interest or right of MC or any MC Subsidiary
as to which there is a reasonable probability of an unfavorable outcome and
which, if such an unfavorable outcome was rendered, would, individually or in
the aggregate, have a Material Adverse Effect on MC. To the knowledge of MC,
there are no actual or threatened actions, suits or proceedings which present a
claim to restrain or prohibit the transactions contemplated herein or to impose
any material liability in connection therewith as to which there is a
reasonable probability of an unfavorable outcome and which, if such an
unfavorable outcome was rendered, would, individually or in the aggregate, have
a Material Adverse Effect on MC. Except as Previously Disclosed, there are no
actions, suits or proceedings instituted, pending or, to the knowledge of MC,
threatened (or unasserted but considered probable of assertion and which if
asserted would be reasonably expected to have an unfavorable outcome) against
any present or former director or officer of MC, that might give rise to a
claim for indemnification and that (i) has a reasonable probability of an
unfavorable outcome and (ii) in the event of an unfavorable outcome, would,
individually or in the aggregate, have a Material Adverse Effect on MC.
2.16. COMPLIANCE WITH LAWS
Except as Previously Disclosed, MC and each MC Subsidiary
is in compliance in all material respects with all statutes and regulations
applicable to the conduct of its business, and neither MC nor any MC Subsidiary
has received notification from any agency or department of federal, state or
local government (i) asserting a material violation of any such statute or
regulation, (ii) threatening to revoke any license, franchise, permit or
government authorization or (iii) restricting or in any way limiting its
operations, except for such noncompliance, violations, revocations and
restrictions which would not, individually or in the aggregate, have a Material
Adverse Effect on MC. Neither MC nor any MC Subsidiary is subject to any
regulatory or supervisory cease and desist order, agreement, directive,
memorandum of understanding or commitment which could be reasonably anticipated
to have a Material Adverse Effect on MC, and none of them has received any
communication requesting that they enter into any of the foregoing.
2.17. LABOR MATTERS
With respect to their employees, neither MC nor any MC
Subsidiary is a party to any labor agreement with any labor organization, group
or association and has not engaged in any unfair labor practice. Since January
1, 1994 and prior to the date hereof, MC and the MC Subsidiaries have not
experienced any attempt by organized labor or its representatives to make MC or
any MC Subsidiary conform to demands of organized labor relating to their
employees or to enter into a binding agreement with organized labor that would
cover the employees of MC or any MC Subsidiary. There is no unfair labor
practice charge or other complaint by any employee or former employee of MC or
any MC Subsidiary against any of them
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pending before any governmental agency arising out of MC's or such MC
Subsidiary's activities, which charge or complaint (i) has a reasonable
probability of an unfavorable outcome and (ii) in the event of an unfavorable
outcome would, individually or in the aggregate, have a Material Adverse Effect
on MC; there is no labor strike or labor disturbance pending or threatened
against any of them; and neither MC nor any MC Subsidiary has experienced a
work stoppage or other labor difficulty since January 1, 1994.
2.18. BROKERS AND FINDERS
Neither MC nor any MC Subsidiary, nor any of their
respective officers, directors or employees, has employed any broker, finder or
financial advisor or incurred any liability for any fees or commissions in
connection with the transactions contemplated herein or the Plan of Merger,
except for MC's retention of Merrill Lynch & Co. to perform certain financial
advisory services.
2.19. INSURANCE
MC and the MC Subsidiaries each currently maintains
insurance in amounts reasonably necessary for their operations. Neither MC nor
any MC Subsidiary has received any notice of a premium increase or cancellation
with respect to any of its insurance policies or bonds, and within the last
three years, neither MC nor any MC Subsidiary has been refused any insurance
coverage sought or applied for, and MC has no reason to believe that existing
insurance coverage cannot be renewed as and when the same shall expire, upon
terms and conditions as favorable as those presently in effect, other than
possible increases in premiums or unavailability in coverage that have not
resulted from any extraordinary loss experience of MC or any MC Subsidiary.
The deposits of MB are insured by the FDIC in accordance with the FDIA, and MB
has paid all assessments and filed all reports required by the FDIA.
2.20. ENVIRONMENTAL LIABILITY
Neither MC nor any MC Subsidiary has received any written
notice of any legal, administrative, arbitral or other proceeding, claim or
action and, to the knowledge of MC and the MC Subsidiaries, there is no
governmental investigation of any nature ongoing, in each case that could
reasonably be expected to result in the imposition, on MC or any MC Subsidiary
of any liability arising under any local, state or federal environmental
statute, regulation or ordinance including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended, which liability would have a Material Adverse Effect on MC; except
as Previously Disclosed, there are no facts or circumstances which could
reasonably be expected to form the basis for any such proceeding,
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claim, action or governmental investigation that would impose any such
liability; and neither MC nor any MC Subsidiary is subject to any agreement,
order, judgment, decree or memorandum by or with any court, governmental
authority, regulatory agency or third party imposing any such liability.
2.21. ADMINISTRATION OF TRUST ACCOUNTS
Each MC Subsidiary has properly administered all accounts
for which it acts as a fiduciary or agent, including but not limited to
accounts for which it serves as a trustee, agent, custodian, personal
representative, guardian, conservator or investment advisor, in accordance with
the terms of the governing documents and applicable state and federal law and
regulation and common law, except where the failure to do so would not,
individually or in the aggregate, have a Material Adverse Effect on MC.
Neither MC, any MC Subsidiary, nor any director, officer or employee of MC or
any MC Subsidiary acting on behalf of MC or an MC Subsidiary, has committed any
breach of trust with respect to any such fiduciary or agency account, and the
accountings for each such fiduciary or agency account are true and correct in
all material respects and accurately reflect the assets of such fiduciary or
agency account, except for such breaches and failures to be true, correct and
accurate which would not, individually or in the aggregate, have a Material
Adverse Effect on MC.
2.22. INTELLECTUAL PROPERTY
Except as Previously Disclosed, MC or an MC Subsidiary owns
the entire right, title and interest in and to, or has valid licenses with
respect to, all of the Intellectual Property necessary in all material respects
to conduct the business and operations of MC and the MC Subsidiaries as
presently conducted, except where the failure to do so would not, individually
or in the aggregate, have a Material Adverse Effect on MC. None of such
Intellectual Property is subject to any outstanding order, decree, judgment,
stipulation, settlement, lien, charge, encumbrance or attachment, which order,
decree, judgment, stipulation, settlement, lien, charge, encumbrance or
attachment would have a Material Adverse Effect on MC.
2.23. CERTAIN INFORMATION
When the Registration Statement or any post-effective
amendment thereto shall become effective, and at all times subsequent to such
effectiveness up to and including the time of the MC shareholders' meeting to
vote upon the Merger, such Registration Statement and all amendments or
supplements thereto, with respect to all information set forth therein
furnished by MC relating to MC and the MC Subsidiaries, (i) shall comply in all
material respects with the applicable provisions of the Securities Laws, and
(ii) shall not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements contained therein not misleading.
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2.24. POOLING OF INTERESTS
As of the date of this Agreement, MC knows of no reason
relating to it or any of its Subsidiaries which would reasonably cause it to
believe that the Merger will not qualify as a pooling of interests for
financial accounting purposes.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
PNC AND BANCORP
PNC and Bancorp hereby jointly and severally represent and
warrant to MC as follows:
3.1. CAPITAL STRUCTURE OF PNC
The authorized capital stock of PNC consists at June 30,
1995 of (i) 17,562,360 shares of preferred stock, par value $1 per share (the
"PNC Preferred Stock"), of which at such date the following series and
respective number of shares were issued and outstanding: 18,362 shares of $1.80
Cumulative Convertible Preferred Stock, Series A; 6,336 shares of $1.80
Cumulative Convertible Preferred Stock, Series B; 365,114 shares of $1.60
Cumulative Convertible Preferred Stock, Series C; and 491,990 shares of $1.80
Cumulative Convertible Preferred Stock, Series D and (ii) 450,000,000 shares of
common stock, par value $5 per share ("PNC Common Stock"), of which 227,915,764
shares were issued and outstanding and 8,570,832 shares were held in treasury.
All outstanding shares of PNC capital stock have been duly issued and are
validly outstanding, fully paid and nonassessable. None of the shares of PNC's
capital stock has been issued in violation of the preemptive rights of any
person. The shares of PNC Common Stock to be issued in connection with the
Merger have been duly authorized and, when issued in accordance with the terms
of this Reorganization Agreement and the Plan of Merger, will be validly
issued, fully paid, nonassessable and free and clear of any preemptive rights.
As of the date hereof, no shares of PNC Preferred Stock or PNC Common Stock
were reserved for issuance, except that (i) 178,965 shares of PNC Common Stock
were reserved for issuance pursuant to PNC's dividend reinvestment and stock
purchase plans, (ii) 21,602,949 shares of PNC Common Stock were reserved for
issuance pursuant to PNC employee benefit and stock incentive plans, (iii)
1,704,031 shares of PNC Common Stock were reserved for issuance upon conversion
of the shares of PNC Preferred Stock and convertible debentures, and (iv)
45,500,000 shares of PNC Common Stock were reserved for issuance pursuant to
the PNC Option Agreement.
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3.2. ORGANIZATION, STANDING AND AUTHORITY OF PNC
PNC is a duly organized corporation, validly existing and
in good standing under the laws of Pennsylvania, with full corporate power and
authority to carry on its business as now conducted and is duly licensed or
qualified to do business in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or the conduct of its
business requires such qualification, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on PNC. Each of
PNC and Bancorp is registered as a bank holding company under the Bank Holding
Company Act.
3.3. OWNERSHIP OF PNC SUBSIDIARIES; CAPITAL
STRUCTURE OF PNC SUBSIDIARIES
PNC does not own, directly or indirectly, 25% or more of
the outstanding capital stock or other voting securities of any corporation,
bank or other organization except as Previously Disclosed (collectively the
"PNC Subsidiaries" and individually a "PNC Subsidiary"). The outstanding
shares of capital stock of the PNC Subsidiaries are validly issued and
outstanding, fully paid and (except as provided in 12 U.S.C. Section 55)
nonassessable and all such shares are directly or indirectly owned by PNC free
and clear of all liens, claims and encumbrances. No PNC Subsidiary has or is
bound by any Rights which are authorized, issued or outstanding with respect to
the capital stock of any PNC Subsidiary and, except as Previously Disclosed,
there are no agreements, understandings or commitments relating to the right of
PNC to vote or to dispose of said shares. None of the shares of capital stock
of any PNC Subsidiary has been issued in violation of the preemptive rights of
any person.
3.4. ORGANIZATION, STANDING AND AUTHORITY OF
PNC SUBSIDIARIES
Each PNC Subsidiary is a duly organized corporation or
banking association, validly existing and in good standing under applicable
laws. Each PNC Subsidiary (i) has full power and authority to carry on its
business as now conducted, and (ii) is duly licensed or qualified to do
business in the states of the United States and foreign jurisdictions where its
ownership or leasing of property or the conduct of its business requires such
licensing or qualification and where failure to be licensed or qualified would
have a Material Adverse Effect on PNC. Each PNC Subsidiary has all federal,
state, local and foreign governmental authorizations necessary for it to own or
lease its properties and assets and to carry on its business as it is now being
conducted, except where the failure to be so authorized would not have a
Material Adverse Effect on PNC.
3.5. AUTHORIZED AND EFFECTIVE AGREEMENT
(a) Each of PNC and Bancorp has all requisite corporate
power and authority to enter into and perform all of its obligations under this
Reorganization
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Agreement, the Plan of Merger and the PNC Option Agreement. The execution and
delivery of this Reorganization Agreement, the Plan of Merger and the PNC
Option Agreement and the consummation of the transactions contemplated hereby
and thereby have been duly and validly authorized by all necessary corporate
action in respect thereof on the part of PNC and Bancorp, except that the
affirmative vote of the holders of a majority of the votes cast by the holders
of PNC capital stock eligible to vote thereon is required to authorize the
issuance of PNC Common Stock pursuant to this Reorganization Agreement and the
Plan of Merger in accordance with New York Stock Exchange ("NYSE") policy. The
Board of Directors of PNC has directed that this Agreement and the Plan of
Merger be submitted to PNC's stockholders for approval at a special meeting to
be held as soon as practicable.
(b) Assuming the accuracy of the representation contained
in Section 2.5(b) hereof, this Reorganization Agreement and the Plan of Merger
constitute legal, valid and binding obligations of PNC and Bancorp, in each
case enforceable against it in accordance with their respective terms subject,
as to enforceability, to bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
(c) Except as Previously Disclosed, neither the execution
and delivery of this Reorganization Agreement, the Plan of Merger or the PNC
Option Agreement, nor consummation of the transactions contemplated hereby or
thereby, nor compliance by PNC or Bancorp with any of the provisions hereof or
thereof shall (i) conflict with or result in a breach of any provision of the
articles or certificate of incorporation or association, charter or by-laws of
PNC or any PNC Subsidiary, (ii) assuming the consents and approvals
contemplated by Section 4.3(a) hereof and which are Previously Disclosed are
duly obtained, constitute or result in a breach of any term, condition or
provision of, or constitute a default under, or give rise to any right of
termination, cancellation or acceleration with respect to, or result in the
creation of any lien, charge or encumbrance upon any property or asset of PNC
or any PNC Subsidiary pursuant to, any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation, or (iii) assuming the
consents and approvals contemplated by Section 4.3(a) hereof and which are
Previously Disclosed are duly obtained, violate any order, writ, injunction,
decree, statute, rule or regulation applicable to PNC or any PNC Subsidiary,
except (in the case of clauses (ii) and (iii) above) for such violations,
rights, conflicts, breaches, creations or defaults which, either individually
or in the aggregate, will not have a Material Adverse Effect on PNC.
(d) Except for approvals specified in Section 4.3(a)
hereof, except as Previously Disclosed and except as expressly referred to in
this Reorganization Agreement, no consent, approval or authorization of, or
declaration, notice, filing or registration with, any governmental or
regulatory authority, or any other person, is
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required to be made or obtained by PNC or Bancorp on or prior to the Closing
Date in connection with the execution, delivery and performance of this
Agreement and the Plan of Merger or the consummation of the transactions
contemplated hereby or thereby.
3.6. SEC DOCUMENTS; REGULATORY FILINGS
PNC has filed all SEC Documents required by the Securities
Laws and such SEC Documents complied, as of their respective dates, in all
material respects with the Securities Laws. PNC and each of the PNC
Subsidiaries has filed all reports required by statute or regulation to be
filed with any federal or state bank regulatory agency, except where the
failure to so file would not have a Material Adverse Effect on PNC, and such
reports were prepared in accordance with the applicable statutes, regulations
and instructions in existence as of the date of filing of such reports in all
material respects.
3.7. FINANCIAL STATEMENTS; BOOKS AND RECORDS;
MINUTE BOOKS
The PNC Financial Statements fairly present the
consolidated financial position of PNC and its consolidated Subsidiaries as of
the dates indicated and the consolidated results of operations, changes in
shareholders' equity and cash flows of PNC and its consolidated Subsidiaries
for the periods then ended in conformity with generally accepted accounting
principles applicable to financial institutions applied on a consistent basis
except as disclosed therein. The books and records of PNC and each PNC
Subsidiary fairly reflect in all material respects the transactions to which it
is a party or by which its properties are subject or bound. Such books and
records have been properly kept and maintained and are in compliance in all
material respects with all applicable legal and accounting requirements. The
minute books of PNC and the PNC Subsidiaries contain records which are accurate
in all material respects of all corporate actions of its shareholders and Board
of Directors (including committees of its Board of Directors).
3.8. MATERIAL ADVERSE CHANGE
PNC has not, on a consolidated basis, suffered any material
adverse change in its financial condition, results of operations or business
since December 31, 1994.
3.9. ABSENCE OF UNDISCLOSED LIABILITIES
Neither PNC nor any PNC Subsidiary has any liability
(contingent or otherwise), excluding contractually assumed contingencies, that
is material to PNC on a consolidated basis, or that, when combined with all
similar liabilities, would be material to PNC on a consolidated basis, except
as Previously Disclosed, as
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disclosed in the PNC Financial Statements filed with the SEC prior to the date
hereof and except for liabilities incurred in the ordinary course of business
subsequent to March 31, 1995.
3.10. PROPERTIES
PNC and the PNC Subsidiaries have good and marketable title
free and clear of all liens, encumbrances, charges, defaults or equitable
interests to all of the properties and assets, real and personal, which,
individually or in the aggregate, are material to the business of PNC and its
Subsidiaries taken as a whole, and which are reflected on the PNC Financial
Statements as of December 31, 1994 or acquired after such date, except (i)
liens for taxes not yet due and payable, (ii) pledges to secure deposits and
other liens incurred in the ordinary course of banking business, (iii) such
imperfections of title, easements and encumbrances, if any, as are not material
in character, amount or extent and (iv) dispositions and encumbrances for
adequate consideration in the ordinary course of business. All leases pursuant
to which PNC or any PNC Subsidiary, as lessee, leases real and personal
property which, individually or in the aggregate, are material to the business
of PNC and its Subsidiaries taken as a whole are valid and enforceable in
accordance with their respective terms.
3.11. LOANS
Each loan reflected as an asset in the PNC Financial
Statements (i) is evidenced by notes, agreements or other evidences of
indebtedness which are true, genuine and what they purport to be, (ii) to the
extent secured, has been secured by valid liens and security interests which
have been perfected, and (iii) is the legal, valid and binding obligation of
the obligor named therein, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles, in each case other than loans as to which the failure to satisfy
the foregoing standards would not have a Material Adverse Effect on PNC.
3.12. TAX MATTERS
(a) PNC and each PNC Subsidiary have timely filed federal
income tax returns for each year through December 31, 1993 and have timely
filed, or caused to be filed, all other federal, state, local and foreign tax
returns (including, without limitation, estimated tax returns, returns required
under Sections 1441-1446 and 6031-6060 of the Code and the regulations
thereunder and any comparable state, foreign and local laws, any other
information returns, withholding tax returns, FICA and FUTA returns and back up
withholding returns required under Section 3406 of
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the Code and any comparable state, foreign and local laws) required to be filed
with respect to PNC or any PNC Subsidiary, except where the failure to file
timely such federal income and other tax returns would not, in the aggregate,
have a Material Adverse Effect on PNC. All taxes due in respect of the periods
covered by such tax returns have been paid or adequate reserves have been
established for the payment of such taxes, except where any such failure to pay
or establish adequate reserves would not, in the aggregate, have a Material
Adverse Effect on PNC and, as of the Closing Date, all taxes due in respect of
any subsequent periods ending on or prior to the Closing Date will have been
paid or adequate reserves will have been established for the payment thereof,
except where any such failure to pay or establish adequate reserves would not,
in the aggregate, have a Material Adverse Effect on PNC. Except as Previously
Disclosed, no material (i) audit examination, (ii) deficiency, or (iii) refund
litigation with respect to such returns is pending. Not later than 60 days
after the date hereof, PNC shall deliver to MC a list of all (i) audit
examinations, (ii) deficiencies, and (iii) refund litigations with respect to
such returns. Neither PNC nor any PNC Subsidiary will have any material
liability for any such taxes in excess of the amounts so paid or reserves or
accruals so established.
(b) All federal, state and local (and, if applicable,
foreign) tax returns filed by PNC and each PNC Subsidiary are complete and
accurate in all material respects. Neither PNC nor any PNC Subsidiary is
delinquent in the payment of any material tax, assessment or governmental
charge, and, except as Previously Disclosed, none of them has requested any
extension of time within which to file any tax returns in respect of any fiscal
year or portion thereof which have not since been filed. Except as Previously
Disclosed, no material deficiencies for any tax, assessment or governmental
charge have been proposed, asserted or assessed (tentatively or otherwise)
against PNC or any PNC Subsidiary which have not been settled and paid. Except
as Previously Disclosed, there are currently no agreements in effect with
respect to PNC or any PNC Subsidiary to extend the period of limitations for
the assessment or collection of any tax.
(c) For purposes of this Section 3.12, references to PNC
and any PNC Subsidiary shall include predecessors thereof.
3.13. EMPLOYEE BENEFIT PLANS
(a) PNC has made available to MC true and complete copies
of all qualified pension or profit-sharing plans, any deferred compensation,
bonus or group insurance contract or any other incentive, welfare or employee
benefit plan or agreement maintained for the benefit of employees or former
employees of PNC or any PNC Subsidiary, and will make available to MC (i) the
most recent actuarial and financial reports prepared with respect to any
qualified plans, (ii) the most recent annual reports filed with any government
agency and (iii) all rulings and
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determination letters and any open requests for rulings or letters that pertain
to any qualified plan.
(b) Neither PNC nor any PNC Subsidiary (nor any pension
plan maintained by any of them) has incurred or reasonably expects to incur any
material liability to the Pension Benefit Guaranty Corporation or to the
Internal Revenue Service with respect to any pension plan qualified under
Section 401 of the Code except liabilities to the Pension Benefit Guaranty
Corporation pursuant to Section 4007 of ERISA, all of which have been fully
paid. No reportable event under Section 4043(b) of ERISA has occurred with
respect to any such pension plan, other than a reportable event that occurs by
reason of the transactions contemplated by this Agreement or an event for which
the 30 day notice requirement has been waived by the Pension Benefit Guaranty
Corporation.
(c) Neither PNC nor any PNC Subsidiary participates in, or
has incurred any liability under Section 4201 of ERISA for a complete or
partial withdrawal from, a multiemployer plan as such term is defined in ERISA.
(d) Except as Previously Disclosed, a favorable
determination letter has been issued by the Internal Revenue Service with
respect to each "employee pension plan" (as defined in Section 3(2) of ERISA)
of PNC or any PNC Subsidiary which is intended to be a qualified plan to the
effect that such plan is qualified under Section 401 of the Code and tax exempt
under Section 501 of the Code. No such letter has been revoked or threatened
to be revoked and neither PNC nor any PNC Subsidiary knows of any reasonable
ground on which such revocation may be based. Such plans have been operated in
all material respects in accordance with their terms and applicable law.
(e) No prohibited transaction (which shall mean any
transaction prohibited by Section 406 of ERISA and not exempt under Section 408
of ERISA) has occurred with respect to any "employee benefit plan" (as defined
in Section 3(3) of ERISA) maintained by PNC or any PNC Subsidiary which would
result in the imposition, directly or indirectly, of an excise tax under
Section 4975 of the Code that would have, individually or in the aggregate, a
Material Adverse Effect on PNC.
(f) The actuarial present value of accrued benefit
obligations, whether or not vested, under each "employee pension plan"
maintained by PNC or any PNC Subsidiary did not exceed as of the most recent
actuarial valuation date the then current fair market value of the assets of
such plan and no material adverse change has occurred with respect to the
funded status of any such plan since such date.
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3.14. CERTAIN CONTRACTS
(a) Except as Previously Disclosed, neither PNC nor any
PNC Subsidiary is a party to, or is bound by, (i) any material contract
required to be filed by PNC under Item 601(b)(10) of Regulation S-K of the SEC,
any agreement restricting in any material respect the nature of its current
business activities or the geographic scope of its business activities in New
Jersey or in Philadelphia, Montgomery, Delaware, Chester or Bucks Counties in
Pennsylvania, (ii) any agreement, indenture or other instrument relating to the
borrowing of money by PNC or any PNC Subsidiary of an amount exceeding $100
million or the guarantee by PNC or any PNC Subsidiary of any such obligation,
other than instruments relating to transactions entered into in the customary
course, (iii) any agreement, arrangement or commitment relating to the
employment of a consultant who was formerly a director or executive officer or
the employment, election, retention in office or severance of any present or
former director or executive officer of PNC, or (iv) any contract, agreement or
understanding with a labor union, in each case whether written or oral.
(b) Neither PNC nor any PNC Subsidiary is in default under
any material agreement, commitment, arrangement, lease, insurance policy or
other instrument whether entered into in the ordinary course of business or
otherwise and whether written or oral, and there has not occurred any event
that, with the lapse of time or giving of notice or both, would constitute such
a default, except for such defaults which would not, individually or in the
aggregate, have a Material Adverse Effect on PNC.
3.15. LEGAL PROCEEDINGS
Except as Previously Disclosed, there are no actions, suits
or proceedings instituted, pending or, to the knowledge of PNC and Bancorp,
threatened (or unasserted but considered probable of assertion and which if
asserted would have at least a reasonable probability of an unfavorable
outcome) against PNC, Bancorp or any PNC Subsidiary or against any asset,
interest or right of PNC or any PNC Subsidiary as to which there is a
reasonable probability of an unfavorable outcome and which, if such an
unfavorable outcome was rendered, would, individually or in the aggregate, have
a Material Adverse Effect on PNC. To the knowledge of PNC and Bancorp, there
are no actual or threatened actions, suits or proceedings which present a claim
to restrain or prohibit the transactions contemplated herein or to impose any
material liability in connection therewith as to which there is a reasonable
probability of an unfavorable outcome and which, if such an unfavorable outcome
was rendered, would, individually or in the aggregate, have a Material Adverse
Effect on PNC.
3.16. COMPLIANCE WITH LAWS
Except as Previously Disclosed, each of PNC and the PNC
Subsidiaries is in compliance in all material respects with all statutes and
regulations applicable to
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the conduct of its business, and none of them has received notification from
any agency or department of federal, state or local government (i) asserting a
material violation of any such statute or regulation, (ii) threatening to
revoke any license, franchise, permit or government authorization or (iii)
restricting or in any way limiting its operations, except for such
noncompliance, violations, revocations and restrictions which would not,
individually or in the aggregate, have a Material Adverse Effect on PNC. None
of PNC or any PNC Subsidiary is subject to any regulatory or supervisory cease
and desist order, agreement, directive, memorandum of understanding or
commitment which could be reasonably anticipated to have a Material Adverse
Effect on PNC, and none of them has received any communication requesting that
they enter into any of the foregoing.
3.17. LABOR MATTERS
With respect to their employees, neither PNC nor any PNC
Subsidiary is a party to any labor agreement with any labor organization, group
or association and has not engaged in any unfair labor practice. Since January
1, 1994, and prior to the date hereof, PNC and the PNC Subsidiaries have not
experienced any attempt by organized labor or its representatives to make PNC
or any PNC Subsidiary conform to demands of organized labor relating to their
employees or to enter into a binding agreement with organized labor that would
cover the employees of PNC or any PNC Subsidiary. There is no unfair labor
practice charge or other complaint by any employee or former employee of PNC or
any PNC Subsidiary against any of them pending before any governmental agency
arising out of PNC's or such PNC Subsidiary's activities, which charge or
complaint (i) has a reasonable probability of an unfavorable outcome and (ii)
in the event of an unfavorable outcome, would, individually or in the
aggregate, have a Material Adverse Effect on PNC; there is no labor strike or
labor disturbance pending or threatened against any of them; and neither PNC
nor any PNC Subsidiary has experienced a work stoppage or other labor
difficulty since January 1, 1994.
3.18. BROKERS AND FINDERS
Neither PNC nor any PNC Subsidiary, nor any of their
respective officers, directors or employees, has employed any broker, finder or
financial advisor or incurred any liability for any fees or commissions in
connection with the transactions contemplated herein or the Plan of Merger,
except for PNC's retention of Smith Barney Inc. to perform certain financial
advisory services.
3.19. INSURANCE
PNC and the PNC Subsidiaries each currently maintains
insurance in amounts reasonably necessary for their operations and, to the best
knowledge of
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PNC, similar in scope and coverage to that maintained by other entities
similarly situated. Neither PNC nor any PNC Subsidiary has received any notice
of a premium increase or cancellation with respect to any of its insurance
policies or bonds, and within the last three years, neither PNC nor any PNC
Subsidiary has been refused any insurance coverage sought or applied for, and
PNC has no reason to believe that existing insurance coverage cannot be renewed
as and when the same shall expire, upon terms and conditions as favorable as
those presently in effect, other than possible increases in premiums or
unavailability in coverage that have not resulted from any extraordinary loss
experience of PNC or any PNC Subsidiary. The deposits of those PNC
Subsidiaries that are insured depository institutions within the meaning of the
FDIA are insured by the FDIC in accordance with the FDIA, and such institutions
have paid all assessments and filed all reports required by the FDIA.
3.20. ENVIRONMENTAL LIABILITY
Neither PNC nor any PNC Subsidiary has received any written
notice of any legal, administrative, arbitral or other proceeding, claim or
action and, to the knowledge of PNC and the PNC Subsidiaries, there is no
governmental investigation of any nature ongoing, in each case that could
reasonably be expected to result in the imposition, on PNC or any PNC
Subsidiary of any liability arising under any local, state or federal
environmental statute, regulation or ordinance including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, which liability would have a Material Adverse Effect on PNC;
except as Previously Disclosed, there are no facts or circumstances which could
reasonably be expected to form the basis for any such proceeding, claim, action
or governmental investigation that would impose any such liability; and neither
PNC nor any PNC Subsidiary is subject to any agreement, order, judgment, decree
or memorandum by or with any court, governmental authority, regulatory agency
or third party imposing any such liability.
3.21. ADMINISTRATION OF TRUST ACCOUNTS
Each PNC Subsidiary has properly administered all accounts
for which it acts as a fiduciary or agent, including but not limited to
accounts for which it serves as a trustee, agent, custodian, personal
representative, guardian, conservator or investment advisor, in accordance with
the terms of the governing documents and applicable state and federal law and
regulation and common law, except where the failure to do so would not,
individually or in the aggregate, have a Material Adverse Effect on PNC.
Neither PNC, any PNC Subsidiary, nor any director, officer or employee of PNC
or any PNC Subsidiary acting on behalf of PNC or an PNC Subsidiary, has
committed any breach of trust with respect to any such fiduciary or agency
account, and the accountings for each such fiduciary or agency account are true
and correct in all material respects and accurately reflect the assets of such
fiduciary or agency account, except for such breaches and failures to be true,
correct
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and accurate which would not, individually or in the aggregate, have a Material
Adverse Effect on PNC.
3.22. CERTAIN INFORMATION
When the Registration Statement or any post-effective
amendment thereto shall become effective, and at all times subsequent to such
effectiveness up to and including the time of the PNC shareholders' meeting to
vote upon the Merger, such Registration Statement and all amendments or
supplements thereto, with respect to all information set forth therein
furnished by PNC relating to PNC and the PNC Subsidiaries, (i) shall comply in
all material respects with the applicable provisions of the Securities Laws,
and (ii) shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements contained therein not misleading.
3.23. POOLING OF INTERESTS
As of the date of this Agreement, PNC knows of no reason
relating to it or any of its Subsidiaries which would reasonably cause it to
believe that the Merger will not qualify as a pooling of interests for
financial accounting purposes.
ARTICLE 4
COVENANTS
4.1. SHAREHOLDERS' MEETING
PNC and MC shall submit this Reorganization Agreement and
the Plan of Merger and, in the case of PNC, the issuance of PNC Common Stock
thereunder, to their respective shareholders for approval at special meetings
to be held as soon as practicable. Subject to the fiduciary duties of the
respective boards of directors of MC and PNC as determined by each after
consultation with such board's counsel, the boards of directors of PNC and MC
shall recommend at the respective shareholders' meetings that the shareholders
vote in favor of such approval.
4.2. PROXY STATEMENT; REGISTRATION STATEMENT
As promptly as practicable after the date hereof, PNC and
MC shall cooperate in the preparation of the Proxy Statement to be mailed to
the shareholders of MC and PNC in connection with the Merger and the
transactions contemplated thereby and to be filed by PNC as part of the
Registration Statement. PNC will advise MC, promptly after it receives notice
thereof, of the time when the Registration Statement or any post-effective
amendment thereto has become effective or any supplement or amendment has been
filed, of the issuance of any stop order,
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of the suspension of qualification of the PNC Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction, or the
initiation or threat of any proceeding for any such purpose, or of any request
by the SEC for the amendment or supplement of the Registration Statement or for
additional information. PNC shall take all actions necessary to register or
qualify the shares of PNC Common Stock to be issued in the Merger pursuant to
all applicable state "blue sky" or securities laws and shall maintain such
registrations or qualifications in effect for all purposes hereof. PNC shall
apply for approval to list the shares of PNC Common Stock to be issued in the
Merger on the NYSE, subject to official notice of issuance, prior to the
Effective Date.
4.3. APPLICATIONS
(a) As promptly as practicable after the date hereof,
Bancorp and, if required, PNC, shall submit any requisite applications for
prior approval of the transactions contemplated herein and in the Plan of
Merger (i) to the Federal Reserve Board pursuant to Sections 3 and 4 of the
Bank Holding Company Act, (ii) to the Department of Banking pursuant to Section
116 of the Pennsylvania Banking Code, and (iii) to the Commissioner of Banking
of New Jersey pursuant to N.J. Stat. Ann. Section 17:9A-370, et seq., and the
regulations promulgated thereunder, and each of the parties hereto shall, and
they shall cause their respective subsidiaries to, submit any applications,
notices or other filings to any other state or federal government agency,
department or body the approval of which is required for consummation of the
Merger. MC and PNC each represents and warrants to the other that all
information concerning it and its directors, officers, shareholders and
subsidiaries included (or submitted for inclusion) in any such application and
furnished by it shall be true, correct and complete in all material respects.
(b) To the extent that the rights of MB under any
investment advisory contract with the Investment Companies may not be assigned
without the consent or approval of another party thereto, MC shall cause MB to
use its reasonable best efforts to obtain any such consent, which obligation
may be satisfied by seeking to obtain the approval of directors and
shareholders of the Investment Companies to new contracts, effective as of the
Effective Date with MB or with an affiliate of PNC, as PNC may elect, on
substantially the same terms as existing contracts at meetings of shareholders
to be held as soon as practicable, except as PNC may otherwise request that MB
seek the requisite approvals to merge one or more of the Investment Companies
into a similar fund in the PNC Family of Funds. MC and PNC each represents and
warrants that none of the information or data in the proxy materials required
for the shareholder approvals referred to in this Section 4.3(b) and provided
by it or any of its Subsidiaries will contain at the time of the related
meeting of shareholders any untrue statement of a material fact or any omission
of any material fact, the omission of which would be misleading in the
circumstances in which made.
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4.4. BEST EFFORTS
(a) PNC, Bancorp, and MC shall each use its best efforts
in good faith, and each of them shall cause its subsidiaries to use their best
efforts in good faith, to (i) furnish such information as may be required in
connection with the preparation of the documents referred to in Sections 4.2
and 4.3 above, and (ii) take or cause to be taken all action necessary or
desirable on its part so as to permit consummation of the Merger at the
earliest possible date, including, without limitation, (1) obtaining the
consent or approval of each individual, partnership, corporation, association
or other business or professional entity whose consent or approval is required
for consummation of the transactions contemplated hereby, provided that neither
MC nor any MC Subsidiary shall agree to make any payments or modifications to
agreements in connection therewith without the prior written consent of PNC,
which consent shall not be unreasonably withheld and (2) requesting the
delivery of appropriate opinions, consents and letters from its counsel and
independent auditors. No party hereto shall take or fail to take, or cause or
permit its Subsidiaries to take or fail to take, or to the best of its ability
permit to be taken or omitted to be taken by any third persons, any action that
would substantially impair the prospects of completing the Merger pursuant to
this Reorganization Agreement and the Plan of Merger, that would materially
delay such completion, or that would adversely affect the qualification of the
Merger for pooling of interests accounting treatment or as a reorganization
within the meaning of Section 368(a) of the Code; provided that nothing herein
contained shall preclude PNC or MC, as the case may be, from exercising its
rights under the PNC Option Agreement or the MC Option Agreement, respectively.
In the event that either party has taken any action, whether before, on or
after the date hereof, that would adversely affect such qualification, each
party shall take such action as the other party may reasonably request to cure
such effect to the extent curable without a Material Adverse Effect on either
of the parties.
(b) MC shall give prompt notice to PNC, and PNC shall give
prompt notice to MC, of (i) the occurrence, or failure to occur, of any event
which occurrence or failure would be likely to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the Closing Date and (ii) any
material failure of MC or PNC, as the case may be, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder, and each party shall use all reasonable efforts to remedy such
failure.
(c) Each party shall provide and shall request its
auditors to provide the other party with such historical financial information
regarding it (and related audit reports and consents) as the other party may
reasonably request for securities disclosure purposes.
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4.5. INVESTIGATION AND CONFIDENTIALITY
MC and PNC each will keep the other advised of all material
developments relevant to its business and to consummation of the transactions
contemplated herein and in the Plan of Merger. PNC and MC each may make or
cause to be made such investigation of the financial and legal condition of the
other as such party reasonably deems necessary or advisable in connection with
the transactions contemplated herein and in the Plan of Merger, provided,
however, that such investigation shall be reasonably related to such
transactions and shall not interfere unnecessarily with normal operations. PNC
and MC agree to furnish the other and the other's advisors with such financial
data and other information with respect to its business and properties as such
other party shall from time to time reasonably request. No investigation
pursuant to this Section 4.5 shall affect or be deemed to modify any
representation or warranty made by, or the conditions to the obligations to
consummate the Merger of, any party hereto. Each party hereto shall hold all
information furnished by the other party or any of such party's Subsidiaries or
representatives pursuant to Section 4.5 in confidence to the extent required
by, and in accordance with, the provisions of the confidentiality agreement,
dated June 27, 1995 between MC and PNC (the "Confidentiality Agreement").
4.6. PRESS RELEASES
MC and PNC shall agree with each other as to the form and
substance of any press release related to this Reorganization Agreement and the
Plan of Merger or the transactions contemplated hereby or thereby, and shall
consult each other as to the form and substance of other public disclosures
related thereto, provided, however, that nothing contained herein shall
prohibit any party, following notification to the other parties, from making
any disclosure which is required by applicable law or the rules of the NYSE.
4.7. COVENANTS OF MC AND PNC
(a) Prior to the Closing Date, and except as otherwise
provided for by this Reorganization Agreement, the Merger Agreement, the Option
Agreements, or consented to or approved by the other parties hereto, each of
PNC and MC shall, and shall cause each of its respective subsidiaries to, use
its best efforts to preserve its properties, business and relationships with
customers, employees and other persons.
(b) Neither PNC nor MC shall, and neither PNC nor MC
shall permit any of their respective subsidiaries to, except with the prior
written consent of the other and except as Previously Disclosed or expressly
contemplated or permitted by this Agreement, the Merger Agreement, or the
Option Agreements:
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(1) carry on its business other than in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted;
(2) in the case of MC only, declare, set aside,
make or pay any dividend or other distribution in respect of its capital stock
other than its regular quarterly cash dividends on MC Common Stock in amounts
not in excess of $.32 per share, or, in the case of PNC only, declare, set
aside, make or pay any dividend or other distribution in respect of its capital
stock other than (x) its regular quarterly cash dividend on PNC Common Stock in
amounts not in excess of $.35 per share, except as may be increased by PNC's
Board of Directors at a regularly scheduled meeting, such increase not to
exceed 20%, or (y) any dividends payable on any PNC Preferred Stock in
accordance with the provisions of the applicable certificate of incorporation
or certificate of designation relating to such preferred stock;
(3) issue any shares of its capital stock or
permit any treasury shares to become outstanding other than pursuant to the
Option Agreements, the MC Rights Agreement or Rights outstanding at the date
hereof; provided, however, that MC may issue shares of MC Common Stock or
permit treasury shares to become outstanding in accordance with the terms of
its Dividend Reinvestment and Stock Purchase Plan and its Savings and
Investment Plan;
(4) incur any additional debt obligation or other
obligation for borrowed money other than in the ordinary course of business
consistent with past practice;
(5) issue, grant or authorize any Rights or
effect any recapitalization, reclassification, stock dividend, stock split or
like change in capitalization, or redeem, repurchase or otherwise acquire any
shares of its capital stock;
(6) amend its articles or certificate of
incorporation or association or by-laws; impose, or suffer the imposition, on
any share of stock held by such party in any Subsidiary of such party of any
lien, charge or encumbrance, or permit any such lien, charge or encumbrance to
exist;
(7) merge with any other corporation, savings
association or bank or permit any other corporation, savings association or
bank to merge into it or consolidate with any other corporation, savings
association or bank; acquire control over any other firm, bank, corporation,
savings association or organization or create any subsidiary;
(8) except in the ordinary course of business,
waive or release any material right or cancel or compromise any material debt
or claim;
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(9) liquidate or sell or dispose of any material
assets or acquire any material assets; except as Previously Disclosed, make any
capital expenditure in excess of $250,000 in any instance or $500,000 in the
aggregate; or, except as Previously Disclosed, establish new branches or other
similar facilities or enter into or modify any leases or other contracts
relating thereto that involve annual payments by such party or any Subsidiary
of such party that exceed $100,000 in any instance or $500,000 in the
aggregate, except with respect to renewals of leases in the ordinary course of
business;
(10) increase the rate of compensation of, pay or
agree to pay any bonus to, or provide any other employee benefit or incentive
to, any of its directors, officers or employees except (i) in a manner
consistent with past practice, (ii) for bonuses in respect of 1995 pursuant to
the MC Annual Incentive and Bonus Plan (including without limitation the
provisions thereof providing MC with discretion in determining the amounts
payable thereunder), PROVIDED, HOWEVER, that in no event shall the aggregate
amount paid pursuant to such plan in respect of 1995 exceed 140% of the
aggregate amount paid pursuant to such plan in respect of 1994, consistent with
the terms of such plan, and (iii) MC and its Subsidiaries may in their
discretion increase the salaries of any or all of their respective employees
who were employees on or prior to December 31, 1994, in the ordinary course of
business but only to the extent that the aggregate amount paid by MC and its
Subsidiaries as salaries during the 1995 calendar year to such employees is
equal to or less than 104% of the aggregate amount paid by MC and its
Subsidiaries to such employees during the 1994 calendar year; enter into or
modify any employment or severance contracts with any of its present or former
directors, officers or employees; or enter into or substantially modify (except
as may be required by applicable law) any pension, retirement, stock option,
stock purchase, stock appreciation right, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
related thereto, in respect of any of its directors, officers or other
employees;
(11) change its lending, investment,
asset/liability management or other material banking policies in any material
respect except as may be required by changes in applicable law;
(12) change its methods of accounting in effect at
December 31, 1994, except as required by changes in generally accepted
accounting principles concurred in by its independent certified public
accountants, or change any of its methods of reporting income and deductions
for federal income tax purposes from those employed in the preparation of its
federal income tax returns for the year ended December 31, 1994, except as
required by law;
(13) authorize or permit any of its officers,
directors, employees or agents to directly or indirectly solicit, initiate or
encourage any inquiries relating
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to, or the making of any proposal which constitutes, a "takeover proposal" (as
defined below), or, except to the extent legally required for the discharge of
the fiduciary duties of its Board of Directors, recommend or endorse any
takeover proposal, or participate in any discussions or negotiations, or
provide third parties with any nonpublic information, relating to any such
inquiry or proposal or otherwise facilitate any effort or attempt to make or
implement a takeover proposal; provided, however, that each party may
communicate information about any such takeover proposal to its stockholders
if, in the judgment of such party's Board of Directors, based upon the advice
of outside counsel, such communication is required under applicable law. Each
party will take all actions necessary or advisable to inform the appropriate
individuals or entities referred to in the first sentence hereof of the
obligations undertaken herein. Each party will notify the other immediately if
any such inquiries or takeover proposals are received by, any such information
is requested from, or any such negotiations or discussions are sought to be
initiated or continued with, such party, and such party will promptly inform
the other party in writing of all of the relevant details with respect to the
foregoing. As used in this Agreement, "takeover proposal" shall mean any
tender or exchange offer, proposal for a merger, consolidation or other
business combination involving PNC or MC or any of their respective
Subsidiaries or any proposal or offer to acquire in any manner a substantial
equity interest in, or a substantial portion of the assets of, PNC or MC or any
of their respective Subsidiaries other than the transactions contemplated or
permitted by this Agreement, the Plan of Merger and the Option Agreements; or
(14) agree to do any of the foregoing.
(c) Unless such action would prevent the Merger from being
accounted for as a pooling of interests, and if PNC shall request such action,
then, on or before the Closing Date, MC shall call for redemption and cause to
be redeemed (or converted by the holders thereof into MC Common Stock) and
cancelled by MC the total outstanding principal amount of MC's 8 1/4%
Convertible Subordinated Debentures Due 2010 (the "Debentures"), all in
accordance with the terms and conditions of the Indenture (the "Indenture")
dated June 15, 1985 and supplemented January 30, 1987 between MC and Morgan
Guaranty Trust Company of New York as Trustee. In the event such redemption
and cancellation shall not occur prior to the Closing Date, PNC and Bancorp
shall, by Supplemental Indenture, jointly and severally assume all of the
obligations of MC under the outstanding Debentures.
4.8. CLOSING; ARTICLES OF MERGER
The transactions contemplated by this Reorganization
Agreement and the Plan of Merger shall be consummated at a closing to be held
at the executive offices of PNC, One PNC Plaza, Pittsburgh, Pennsylvania, on
the first business day
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following satisfaction of the conditions to consummation of the Merger set
forth in Article 5 hereof (other than such conditions relating to the receipt
of officers' certificates and legal opinions) or such later date during such
month in which such business day shall occur (or, if such business day shall
occur within 10 days prior to the end of such month, during the next following
month) thereafter as may be specified by PNC. In connection with such Closing,
Bancorp and MC shall execute a certificate of merger and shall cause such
certificate to be delivered to the New Jersey Secretary of State in accordance
with Section 14A:10-4.1 of the New Jersey Business Corporation Act and Bancorp
shall execute a certificate of merger and shall cause such certificate to be
delivered to the Delaware Secretary of State in accordance with Section 252(c)
of the Delaware General Corporation Law. The Merger shall be effective at the
time and on the date specified in such certificates of merger.
4.9. AFFILIATES
(a) MC and PNC shall cooperate and use their best
efforts to identify those persons who may be deemed to be "affiliates" of MC or
PNC within the meaning of Rule 145 promulgated by the Commission under the
Securities Act and for purposes of qualifying the "Merger" for "pooling
interests" accounting treatment. MC and PNC shall use its respective best
efforts to cause each person so identified to deliver to PNC or MC, as the case
may be, no later than 30 days prior to the Effective Date, a written agreement
(which agreement shall be substantially in the form of Exhibit 4.9(a) (in the
case of MC affiliates) and 4.9(b) (in the case of PNC affiliates) hereof).
Shares of PNC Common Stock issued to such MC and PNC affiliates in exchange for
MC Common Stock or previously owned by them shall not be transferable until
such time as financial results covering at least 30 days of combined operations
of PNC and MC have been published within the meaning of Section 201.01 of the
Commission's Codification of Financial Reporting Policies, regardless of
whether each such affiliate has provided the written agreement referred to in
this section.
(b) PNC shall use its best efforts to publish no later
than ninety (90) days after the end of the first month after the Effective Date
in which there are at least thirty (30) days of post-Merger combined operations
(which month may be the month in which the Effective Date occurs), combined
sales and net income figures as contemplated by and in accordance with the
terms of SEC Accounting Series Release No. 135.
4.10. MC EMPLOYEES; DIRECTORS AND MANAGEMENT; INDEMNIFICATION
(a) On and after the Effective Date (or as soon thereafter
as may be practicable), all persons who are employed by MC and/or MC
Subsidiaries on such date shall be employed upon terms and conditions
(including benefits) which in the aggregate are no less favorable with respect
to their employment by PNC and its
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subsidiaries after the Effective Date than those generally afforded to other
employees of PNC subsidiaries holding similar positions, subject to the terms
and conditions under which those employee benefits are made available to such
employees and provided that for purposes of determining eligibility for and
vesting of such employee benefits only (and not for pension benefit accrual
purposes) and, if applicable, for purposes of satisfying any waiting periods
concerning "preexisting conditions" and the satisfaction of any "copayment" or
deductible requirements), service with MC or a MC Subsidiary or any predecessor
thereto prior to the Effective Date shall be treated as service with an
"employer" to the same extent as if such persons had been employees of PNC, and
provided further that this Section 4.10(a) shall not be construed (i) to limit
the ability of PNC and its affiliates to terminate the employment of any
employee or to review employee benefits programs from time to time and to make
such changes as they deem appropriate or (ii) to require PNC or its affiliates
to provide employees or former employees of MC or any of its Subsidiaries with
post-retirement medical benefits more favorable than those provided to new
hires at PNC (except that such persons who are employed by MC and/or MC
Subsidiaries on the Effective Date ("MC Employees") shall receive credit for
service with MC and/or MC Subsidiaries and their predecessors for purposes of
eligibility for such post-retirement medical benefits to the extent that MC
provided such credit with respect to comparable plans). PNC agrees to honor in
accordance with their terms all employment, severance and employee benefit
plans, contracts, agreements, arrangements, and understandings Previously
Disclosed, provided, however, that the foregoing shall not prevent PNC from
amending or terminating any such plan, contract, agreement, arrangement or
understanding in accordance with its terms. The continued coverage of the MC
Employees under the employee benefit plans maintained by MC and/or the MC
Subsidiaries immediately prior to the Effective Date (the "MC Plans") during a
transition period shall be deemed to provide the MC Employees with benefits
that are no less favorable than those offered to other employees of PNC and its
Subsidiaries, provided that after the Effective Date there is no material
reduction (determined on an overall basis) in the benefits provided under the
MC Plans. Notwithstanding anything in this Section 4.10 to the contrary,
following the Effective Time, PNC shall or shall cause Bancorp to provide a
severance plan to MC Employees. Such severance plan shall (i) for a period of
one year following the Effective Time, be either the MC severance plan as
Previously Disclosed or the PNC severance plan as in effect on the date hereof,
as MC may elect on or prior to July 19, 1995 and (ii) thereafter, under the PNC
severance plan (as in effect from time to time).
(b) On or prior to the Effective Date, PNC shall offer to
enter into an employment agreement with Mr. Garry J. Scheuring on the terms
Previously Disclosed.
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(c) PNC's Board of Directors shall take all requisite
action to elect as directors of PNC effective as of the Effective Date Garry J.
Scheuring and three other persons serving as directors of MC immediately prior
to the Effective Date, which three persons shall be selected by MC subject to
approval by PNC.
(d) In the event of any threatened or actual claim,
action, suit, proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, any such claim, action, suit,
proceeding or investigation in which any person who is now, or has been at any
time prior to the date of this Agreement, or who becomes prior to the Effective
Date, a director or officer of MC (the "Indemnified Parties") is, or is
threatened to be, made a party based in whole or in part on, or arising in
whole or in part out of, or pertaining to (i) the fact that he is or was a
director, officer or employee of MC, any of the MC Subsidiaries or any of their
respective predecessors or (ii) this Agreement, the Merger Agreement, the
Option Agreements or any of the transactions contemplated hereby or thereby,
whether in any case asserted or arising before or after the Effective Date, the
parties hereto agree to cooperate and use their best efforts to defend against
and respond thereto. It is understood and agreed that after the Effective
Date, PNC shall (or shall cause Bancorp to) indemnify and hold harmless, as and
to the fullest extent permitted by law, each such Indemnified Party against any
losses, claims, damages, liabilities, costs, expenses (including reasonable
attorney's fees and expenses in advance of the final disposition of any claim,
suit, proceeding or investigation to each Indemnified Party to the fullest
extent permitted by law upon receipt of any undertaking required by applicable
law), judgments, fines and amounts paid in settlement in connection with any
such threatened or actual claim, action, suit, proceeding or investigation, and
in the event of any such threatened or actual claim, action, suit, proceeding
or investigation (whether asserted or arising before or after the Effective
Date), the Indemnified Parties may retain counsel reasonably satisfactory to
them after consultation with PNC; provided, however, that (1) PNC shall have
the right to assume the defense thereof and upon such assumption PNC shall not
be liable to any Indemnified Party for any legal expenses of other counsel or
any other expenses subsequently incurred by any Indemnified Party in connection
with the defense thereof, except that if PNC elects not to assume such defense
or counsel for the Indemnified Parties reasonably advises the Indemnified
Parties that there are issues which raise conflicts of interest between PNC and
the Indemnified Parties, the Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with PNC, and PNC shall pay the
reasonable fees and expenses of such counsel for the Indemnified Parties, (2)
PNC shall be obligated pursuant to this paragraph to pay for only one firm of
counsel for all Indemnified Parties, (3) PNC shall not be liable for any
settlement effected without its prior written consent (which consent shall not
be unreasonably withheld) and (4) PNC shall have no obligation hereunder to any
Indemnified Party when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
nonappealable, that indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law. Any Indemnified Party
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wishing to claim Indemnification under this Section 4.10(d), upon learning of
any such claim, action, suit, proceeding or investigation, shall promptly
notify PNC thereof, provided that the failure of any Indemnified Party to so
notify PNC shall not relieve it of its obligations hereunder except (and only)
to the extent that such failure materially prejudices PNC. PNC's obligations
under this Section 4.10(d) continue in full force and effect for a period of
six (6) years from the Effective Time; provided, however, that all rights to
indemnification in respect of any claim (a "Claim") asserted or made within
such period shall continue until the final disposition of such Claim.
(e) PNC agrees that all rights to indemnification and
all limitations on liability existing in favor of the directors, officers and
employees of MC and its Subsidiaries (the "Covered Parties") as provided in
their respective Certificates of Incorporation, By-Laws or similar governing
documents as in effect as of the date of this Agreement with respect to matters
occurring prior to the Effective Time shall survive the Merger and shall
continue in full force and effect, and shall be honored by such entities or
their respective successors as if they were the indemnifying party thereunder,
without any amendment thereto, for a period of six years from the Effective
Time; PROVIDED, HOWEVER, that all rights to indemnification in respect of any
Claim asserted or made within such period shall continue until the final
disposition of such Claim; PROVIDED, further, however, that nothing contained
in this Section 4.10(e) shall be deemed to preclude the liquidation,
consolidation or merger of MC or any MC Subsidiary, in which case all of such
rights to indemnification and limitations on liability shall be deemed to so
survive and continue notwithstanding any such liquidation, consolidation or
merger.
(f) PNC, from and after the Effective Date will use its
best efforts directly or indirectly to cause the persons who served as
directors or officers of MC on or before the Effective Date to be covered by
MC's existing directors' and officers' liability insurance policy (provided
that PNC may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are not less advantageous than
such policy) but in no event shall any insured person be entitled under this
Section 4.10(e) to insurance coverage more favorable than that provided to him
or her in such capacities at the date hereof with respect to acts or omissions
resulting from their service as such on or prior to the Effective Date. Such
insurance coverage, if reasonably available at a reasonable cost relative to
the coverage obtained, shall commence on the Effective Date and will be
provided for a period of no less than six (6) years after the Effective Date;
provided, however, that in no event shall PNC be required to expend more than
125% of the current amount expended by MC (the "Insurance Amount") to maintain
or procure insurance coverage pursuant hereto and further provided that the
Insurance Amount shall be deemed reasonable for purposes of this Section
4.10(f). MC agrees to
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renew any such existing insurance or to purchase any "discovery period"
insurance provided for thereunder at PNC's request.
(g) In the event PNC or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of PNC assume
the obligations set forth in this section.
(h) The provisions of Section 4.10(d), (e) and (f) are
intended to be for the benefit of, and shall be enforceable by, each
Indemnified Party and their respective heirs and representatives. The
provisions of Section 4.10(b) are intended to be for the benefit of, and shall
be enforceable by Mr. Scheuring and his heirs and representatives.
4.11. MC SUBSIDIARIES
MC undertakes and agrees that, if so requested by PNC, it
shall take all necessary action to facilitate the merger of MC Subsidiaries
with subsidiaries of PNC effective on or after the Effective Date; provided
however, that in no event shall the Closing be delayed in order to facilitate
any such merger and PROVIDED FURTHER, HOWEVER, that MC shall not be required to
take any action that could adversely affect the qualification of the Merger as
a reorganization within the meaning of Section 368(a) of the Code.
4.12. DIVIDENDS
After the date of this Agreement, each of PNC and MC shall
coordinate with the other the declaration of any dividends in respect of PNC
Common Stock and MC Common Stock and the record dates and payment dates
relating thereto, it being the intention of the parties hereto that holders of
PNC Common Stock or MC Common Stock shall not receive two dividends, or fail to
receive one dividend, for any single calendar quarter with respect to their
shares of PNC Common Stock and/or MC Common Stock and any shares of PNC Common
Stock any such holder receives in exchange therefor in the Merger.
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ARTICLE 5
CONDITIONS PRECEDENT
5.1. CONDITIONS PRECEDENT - PNC,
BANCORP AND MC
The respective obligations of the parties to effect the
Merger shall be subject to satisfaction or waiver of the following conditions
at or prior to the Closing Date:
(a) All corporate action necessary to authorize the
execution, delivery and performance of this Reorganization Agreement and the
Plan of Merger and consummation of the transactions contemplated hereby and
thereby shall have been duly and validly taken;
(b) The parties hereto shall have received all regulatory
approvals required or mutually deemed necessary in connection with the
transactions contemplated by this Reorganization Agreement and the Plan of
Merger, all notice periods and waiting periods required after the granting of
any such approvals shall have passed and all conditions contained in any such
approval required to have been satisfied prior to consummation of such
transactions shall have been satisfied, provided, however, that no such
approval shall have imposed any condition or requirement which, in the
reasonable opinion of the Board of Directors of PNC or MC so materially and
adversely affects the anticipated economic and business benefits to PNC or MC,
respectively, of the transactions contemplated by this Agreement as to render
consummation of such transactions inadvisable;
(c) The Registration Statement (including any
post-effective amendment thereto) shall be effective under the Securities Act,
and no proceeding shall be pending or to the knowledge of PNC threatened by the
Commission to suspend the effectiveness of such Registration Statement, and PNC
shall have received all state securities or "Blue Sky" permits or other
authorizations, or confirmations as to the availability of an exemption from
registration requirements as may be necessary;
(d) To the extent that any lease, license, loan, financing
agreement or other contract or agreement to which MC or any MC Subsidiary is a
party requires the consent of or waiver from the other party thereto as a
result of the transactions contemplated by this Agreement, such consent or
waiver shall have been obtained, unless the failure to obtain such consents or
waivers, individually or in the aggregate, would not have a Material Adverse
Effect on MC;
(e) None of the parties hereto shall be subject to any
order, decree or injunction of a court or agency of competent jurisdiction
which enjoins or prohibits the consummation of the transactions contemplated by
this Reorganization Agreement and the Plan of Merger; and
(f) The shares of PNC Common Stock that may be issued in
the Merger shall have been approved for listing on the NYSE, subject to
official notice of issuance.
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5.2. CONDITIONS PRECEDENT - MC
The obligations of MC to effect the Merger shall be subject
to satisfaction of the following additional conditions at or prior to the
Closing Date unless waived by MC pursuant to Section 6.4 hereof:
(a) The representations and warranties of PNC and Bancorp
set forth in Article 3 hereof shall be true and correct in all material
respects as of the date of this Reorganization Agreement and as of the Closing
Date as though made on and as of the Closing Date (or on the date when made in
the case of any representation and warranty which specifically relates to an
earlier date), except as otherwise contemplated by this Reorganization
Agreement or consented to in writing by MC; PROVIDED, HOWEVER, that (i) in
determining whether or not the condition contained in this paragraph (a) shall
be satisfied, no effect shall be given to any exceptions in such
representations and warranties relating to materiality or Material Adverse
Effect and (ii) the condition contained in this paragraph (a) shall be deemed
to be satisfied unless the failure of such representations and warranties to be
so true and correct constitute, individually or in the aggregate, a Material
Adverse Effect on PNC;
(b) PNC and Bancorp shall have in all material respects
performed all obligations and complied with all covenants required by this
Reorganization Agreement and the Plan of Merger;
(c) Each of PNC and Bancorp shall have delivered to MC a
certificate, dated the Closing Date and signed by its respective Chairman,
President, Executive Vice President or Senior Vice President to the effect that
the conditions set forth in paragraphs (a) and (b) of this section have been
satisfied;
(d) No event shall have occurred that shall preclude the
Merger from being accounted for as a pooling of interests;
(e) MC shall have received from Ernst & Young letters
dated not more than five days prior to (i) the effective date of the
Registration Statement and (ii) the Closing Date, with respect to certain
financial information regarding PNC, each in form and substance which is
customary in transactions of the nature contemplated by this Agreement;
(f) MC shall have received opinions of Arnold & Porter and
William F. Strome, Esquire, dated the Closing Date, as to the matters specified
in Exhibit 5.2(f) hereto; and
(g) MC shall have received an opinion of Skadden, Arps,
Slate, Meagher & Flom, in form and substance reasonably satisfactory to MC
dated as of the Effective Date, substantially to the effect that, on the basis
of facts, representations
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and assumptions set forth in such opinion which are consistent with the state
of facts existing on the Effective Date, the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section 368(a) of
the Code and that accordingly:
(i) No gain or loss will be recognized by MC as
a result of the Merger;
(ii) No gain or loss will be recognized by the
stockholders of MC who exchange all of their MC Common
Stock solely for PNC Common Stock in the Merger (except
with respect to cash received in lieu of a fractional share
interest in PNC Common Stock); and
(iii) The tax basis of the PNC Common Stock
received by stockholders who exchange all of their MC
Common Stock solely for PNC Common Stock in the Merger will
be the same as the tax basis of the MC Common Stock
surrendered in exchange therefor (reduced by any amount
allocable to a fractional share interest for which cash is
received).
5.3. CONDITIONS PRECEDENT - PNC AND BANCORP
The respective obligations of PNC and Bancorp to effect the
Merger shall be subject to satisfaction of the following additional conditions
at or prior to the Closing Date unless waived by PNC pursuant to Section 6.4
hereof:
(a) The representations and warranties of MC set forth in
Article 2 hereof shall be true and correct in all material respects as of the
date of this Reorganization Agreement and as of the Closing Date as though made
on and as of the Closing Date (or on the date when made in the case of any
representation and warranty which specifically relates to an earlier date),
except as otherwise contemplated by this Reorganization Agreement or consented
to in writing by PNC; PROVIDED, HOWEVER, that (i) in determining whether or not
the condition contained in this paragraph (a) shall be satisfied, no effect
shall be given to any exceptions in such representations and warranties
relating to materiality or Material Adverse Effect and (ii) the condition
contained in this paragraph (a) shall be deemed to be satisfied unless the
failure of such representations and warranties to be so true and correct
constitute, individually or in the aggregate, a Material Adverse Effect on MC;
(b) MC shall have in all material respects performed all
obligations and complied with all covenants required by this Reorganization
Agreement and the Plan of Merger;
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(c) MC shall have delivered to PNC and Bancorp a
certificate, dated the Closing Date and signed by its Chairman, President and
Chief Executive Officer or any Executive Vice President to the effect that the
conditions set forth in this section have been satisfied;
(d) The Rights issued pursuant to the MC Rights Agreement
shall not have become nonredeemable, exercisable, distributed or triggered
pursuant to the terms of such agreement;
(e) No event shall have occurred that shall preclude the
Merger from being accounted for as a pooling of interests;
(f) PNC shall have received from Coopers & Lybrand letters
dated not more than five days prior to (i) the effective date of the
Registration Statement and (ii) the Closing Date, with respect to certain
financial information regarding MC, each in form and substance which is
customary in transactions of the nature contemplated by this Agreement;
(g) PNC and Bancorp shall have received opinions of
Skadden, Arps, Slate, Meagher & Flom, Joseph Kott, Esquire and local counsel
reasonably satisfactory to PNC, dated the Closing Date, as to the matters
specified in Exhibit 5.3(g) hereto; and
(h) PNC shall have received an opinion of Arnold & Porter,
reasonably satisfactory in form and substance to PNC substantially to the
effect that the Merger when consummated in accordance with the terms hereof and
the Plan of Merger will constitute a reorganization within the meaning of
Section 368(a) of the Code, and that the exchange of MC Common Stock to the
extent exchanged for PNC Common Stock will not give rise to recognition of gain
or loss for federal income tax purposes to the shareholders of MC.
ARTICLE 6
TERMINATION, WAIVER AND AMENDMENT
6.1. TERMINATION
This Reorganization Agreement and the Plan of Merger may be
terminated, either before or after approval by the shareholders of PNC and MC:
(a) At any time on or prior to the Effective Date, by the
mutual consent in writing of the parties hereto;
(b) At any time on or prior to the Closing Date, by PNC in
writing, if MC has, or by MC in writing, if PNC or Bancorp has, in any material
respect, breached (i) any covenant or agreement contained herein or in the Plan
of Merger or
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(ii) any representation or warranty contained herein, and in either case if (x)
such breach has not been cured by the earlier of 30 days after the date on
which written notice of such breach is given to the party committing such
breach or the Closing Date and (y) such breach would entitle the non-breaching
party not to consummate the transactions contemplated hereby under Article V
hereof.
(c) At any time, by any party hereto in writing, if the
applications for prior approval referred to in Section 4.3 hereof have been
denied, and the time period for appeals and requests for reconsideration has
run, or if any governmental entity of competent jurisdiction shall have issued
a final non-appealable order enjoining or otherwise prohibiting the Merger;
(d) At any time, by any party hereto in writing, if the
shareholders of PNC or MC do not approve the transactions contemplated herein
at the special meetings duly called for that purpose; or
(e) By any party hereto in writing, if the Closing Date
has not occurred by the close of business on March 31, 1996, unless the failure
of the Closing to occur by such date shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe the covenants and
agreements set forth herein.
6.2. EFFECT OF TERMINATION
In the event this Reorganization Agreement or the Plan of
Merger is terminated pursuant to Section 6.1 hereof, this Agreement and the
Plan of Merger shall become void and have no effect, except that (i) the
provisions relating to confidentiality and expenses set forth in Sections 4.5
and 7.1 hereof, respectively, shall survive any such termination and (ii) a
termination pursuant to Section 6.1(b)(i) shall not relieve the breaching party
from liability for an uncured willful breach of such covenant or agreement
giving rise to such termination.
6.3. SURVIVAL OF REPRESENTATIONS, WARRANTIES
AND COVENANTS
All representations, warranties and covenants in this
Reorganization Agreement and the Plan of Merger or in any instrument delivered
pursuant hereto or thereto shall expire on, and be terminated and extinguished
at, the Effective Date other than covenants that by their terms are to survive
or be performed after the Effective Date, provided that no such
representations, warranties or covenants shall be deemed to be terminated or
extinguished so as to deprive PNC, Bancorp or MC (or any director, officer or
controlling person thereof) of any defense in law or equity which otherwise
would be available against the claims of any person, including, without
limitation, any shareholder or former shareholder of either PNC
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or MC, the aforesaid representations, warranties and covenants being material
inducements to the consummation by PNC, Bancorp and MC of the transactions
contemplated herein.
6.4. WAIVER
Except with respect to any required shareholder or
regulatory approval, PNC and MC, respectively, by written instrument signed by
an executive officer of such party, may at any time (whether before or after
approval of this Reorganization Agreement and the Plan of Merger by the
shareholders of PNC and MC) extend the time for the performance of any of the
obligations or other acts of MC, on the one hand, or PNC or Bancorp, on the
other hand, and may waive (i) any inaccuracies of such parties in the
representations or warranties contained in this Agreement, the Plan of Merger
or any document delivered pursuant hereto or thereto, (ii) compliance with any
of the covenants, undertakings or agreements of such parties, or satisfaction
of any of the conditions precedent to its obligations, contained herein or in
the Plan of Merger or (iii) the performance by such parties of any of its
obligations set out herein or therein; provided, however, that no such waiver
executed after approval of this Reorganization Agreement and the Plan of Merger
by the shareholders of PNC or MC shall change the number of shares of PNC
Common Stock into which each share of MC Common Stock shall be converted
pursuant to the Merger.
6.5. AMENDMENT OR SUPPLEMENT
This Reorganization Agreement and the Plan of Merger may be
amended or supplemented at any time by mutual agreement of the parties hereto
or thereto. Any such amendment or supplement must be in writing and approved
by their respective boards of directors and/or officers authorized thereby and
shall be subject to the proviso in Section 6.4 hereof.
ARTICLE 7
MISCELLANEOUS
7.1. EXPENSES
Each party hereto shall bear and pay all costs and expenses
incurred by it in connection with the transactions contemplated in this
Reorganization Agreement, including fees and expenses of its own financial
consultants, accountants and counsel, except that PNC and MC each shall bear
and pay 50% of all printing and mailing costs and filing fees associated with
the Registration Statement and the Proxy Statement.
<PAGE> 69
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7.2. ENTIRE AGREEMENT
This Reorganization Agreement, the Plan of Merger and the
Option Agreements contain the entire agreement between the parties with respect
to the transactions contemplated hereunder and thereunder and supersede all
prior arrangements or understandings with respect thereto, written or oral,
other than documents referred to herein or therein and the Confidentiality
Agreement. The terms and conditions of this Reorganization Agreement and the
Plan of Merger shall inure to the benefit of and be binding upon the parties
hereto and thereto and their respective successors. Except as specifically set
forth herein, or in the Plan of Merger, nothing in this Reorganization
Agreement or the Plan of Merger, expressed or implied, is intended to confer
upon any party, other than the parties hereto and thereto, and their respective
successors, any rights, remedies, obligations or liabilities.
7.3. NO ASSIGNMENT
No party hereto may assign any of its rights or obligations
under this Reorganization Agreement to any other person.
7.4. NOTICES
All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by facsimile transmission or overnight express or by registered or
certified mail, postage prepaid, addressed as follows:
If to MC:
Midlantic Corporation
Metro Park Plaza
P.O. Box 600
Edison, New Jersey 08818
Attention: Garry J. Scheuring
Chairman, President and
Chief Executive Officer
Facsimile No.: 908-321-8518
<PAGE> 70
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With a required copy to:
Midlantic Corporation
Metro Park Plaza
P.O. Box 600
Edison, New Jersey 08818
Attention: Joseph H. Kott
Executive Vice President and
General Counsel
Facsimile No.: 908-321-8518
and to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: William S. Rubenstein, Esquire
Facsimile No.: 212-735-2000
If to PNC or Bancorp:
PNC Bank Corp.
One PNC Plaza
Pittsburgh, Pennsylvania 15265
Attention: Thomas H. O'Brien
Chairman and Chief Executive Officer
Facsimile No.: 412-762-4507
With a required copy to:
PNC Bank Corp.
One PNC Plaza
Pittsburgh, Pennsylvania 15265
Attention: Walter E. Gregg, Jr., Esquire
Executive Vice President,
Finance and Administration
Facsimile No.: 412-762-4507
and to:
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Arnold & Porter
555 Twelfth Street, N.W.
Washington, D.C. 20004
Attention: Steven Kaplan, Esquire
Facsimile No.: 202-942-5999
7.5. CAPTIONS
The captions contained in this Reorganization Agreement are
for reference purposes only and are not part of this Reorganization Agreement.
7.6. COUNTERPARTS
This Reorganization Agreement may be executed in any number
of counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
7.7. GOVERNING LAW
This Reorganization Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
applicable to agreements made and entirely to be performed within such
jurisdiction, except to the extent federal law may be applicable.
<PAGE> 72
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IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound hereby, have caused this Reorganization Agreement to be executed
in counterparts by their duly authorized officers and their corporate seal to
be hereunto affixed and attested by their officers thereunto duly authorized,
all as of the day and year first above written.
Attest PNC BANK CORP.
/s/ William F. Strome By /s/ Walter E. Gregg, Jr.
- ------------------------- ------------------------
William F. Strome Walter E. Gregg, Jr.
Secretary Executive Vice President
(SEAL)
Attest PNC BANCORP, INC.
/s/ William F. Strome By /s/ Walter E. Gregg, Jr.
- ------------------------- ------------------------
William F. Strome Walter E. Gregg, Jr.
Assistant Secretary Executive Vice President
(SEAL)
Attest MIDLANTIC CORPORATION
/s/ John M. Sperger By /s/ Garry J. Scheuring
- ------------------------- -----------------------
John M. Sperger Garry J. Scheuring
Secretary Chairman, President and
Chief Executive Officer
(SEAL)
<PAGE> 73
EXHIBIT 3
AGREEMENT AND PLAN OF MERGER OF
MIDLANTIC CORPORATION
WITH AND INTO PNC BANCORP, INC.
AGREEMENT AND PLAN OF MERGER ("Plan of Merger") dated as of
July 10, 1995, by and between MIDLANTIC CORPORATION ("MC"), a New Jersey
corporation having its principal executive office at Metro Park Plaza, P.O. Box
600, Edison, New Jersey 08818 and PNC BANCORP, INC. ("Bancorp"), a Delaware
corporation having its registered office at 222 Delaware Avenue, Wilmington,
Delaware 19899, and joined in by PNC BANK CORP. ("PNC"), a Pennsylvania
corporation having its principal executive office at One PNC Plaza, Pittsburgh,
Pennsylvania 15265.
WITNESSETH
----------
WHEREAS, the respective Boards of Directors of MC, Bancorp
and PNC deem the merger of MC with and into Bancorp, under and pursuant to the
terms and conditions herein set forth or referred to, desirable and in the best
interests of the respective corporations and their respective shareholders, and
the respective Boards of Directors of MC, Bancorp and PNC have adopted
resolutions approving this Plan of Merger and an Agreement and Plan of
Reorganization dated of even date herewith ("Reorganization Agreement"); and
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein contained, the parties hereto do hereby agree as
follows:
ARTICLE I
MERGER
Subject to the terms and conditions of this Plan of Merger,
on the Effective Date (as hereinafter defined), MC shall be merged with and
into Bancorp, pursuant to the provisions of, and with the effect provided in,
Chapter 10 of the New Jersey Business Corporation Act, N.J. Rev. Stat. Section
14A:10-1 et seq. and 8 Del. Code Ch. 1, subchapter IX (said transaction being
hereinafter referred to as the "Merger"). On the Effective Date, the separate
existence of MC shall cease and Bancorp, as the surviving entity, shall
continue unaffected and unimpaired by the Merger. (Bancorp as existing on and
after the Effective Date being hereinafter sometimes referred to as the
"Surviving Corporation.")
<PAGE> 74
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ARTICLE II
CERTIFICATE OF INCORPORATION AND BY-LAWS
The Certificate of Incorporation and the By-Laws of Bancorp
in effect immediately prior to the Effective Date shall be the Certificate of
Incorporation and the By-Laws of the Surviving Corporation, in each case until
amended in accordance with applicable law.
ARTICLE III
BOARD OF DIRECTORS
On the Effective Date, the Board of Directors of the
Surviving Corporation shall consist of those persons serving as directors of
Bancorp immediately prior to the Effective Date.
ARTICLE IV
CAPITAL
The shares of capital stock of the Surviving Corporation
issued and outstanding immediately prior to the Effective Date shall, on the
Effective Date, continue to be issued and outstanding.
ARTICLE V
CONVERSION AND EXCHANGE OF MC
SHARES; FRACTIONAL SHARE INTERESTS
1. On the Effective Date, each share of the common stock
of MC, par value $3 per share ("MC Common Stock"), outstanding immediately
prior to the Effective Date (except as provided in Paragraphs 2, 5 and 7 of
this Article), including each attached right issued pursuant to the Rights
Agreement dated as of February 23, 1990 between MC and Midlantic Bank, N.A. (as
amended), shall by virtue of the Merger be converted into 2.05 shares of common
stock, par value $5 per share, of PNC ("PNC Common Stock").
2. On the Effective Date, all shares of MC Common Stock
held in the treasury of MC or owned beneficially by any subsidiary of MC other
than in a fiduciary capacity or in connection with a debt previously contracted
and all shares of MC Common Stock owned by PNC or owned beneficially by any
subsidiary of PNC other than in a fiduciary capacity or in connection with a
debt previously contracted shall be canceled and no cash, stock or other
property shall be delivered in exchange therefor.
3. On and after the Effective Date, each holder of a
certificate or certificates theretofore representing outstanding shares of MC
Common Stock
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(any such certificate being hereinafter referred to as a "Certificate") may
surrender the same to PNC or its agent for cancellation and each such holder
shall be entitled upon such surrender to receive in exchange therefor
certificate(s) representing the number of shares of PNC Common Stock to which
such holder is entitled as provided herein and a check in an amount equal to
the amount of cash to be paid pursuant to Paragraph 7 of this Article V,
without interest, to which such holder is entitled. Until so surrendered, each
Certificate shall be deemed for all purposes to evidence ownership of the
number of shares of PNC Common Stock into which the shares represented by such
Certificates have been changed or converted as aforesaid. No dividends or
other distributions declared after the Effective Date with respect to PNC
Common Stock shall be paid to the holder of any unsurrendered Certificate until
the holder thereof shall surrender such Certificate in accordance with this
Article V. After the surrender of a Certificate in accordance with this
Article V, the record holder thereof shall be entitled to receive any such
dividends or other distributions, without any interest thereon, which
theretofore had become payable with respect to shares of PNC Common Stock
represented by such Certificate. Certificates surrendered for exchange by any
person who is an "affiliate" of MC for purposes of Rule 145(c) under the
Securities Act of 1933, as amended, shall not be exchanged for certificates
representing shares of PNC Common Stock until PNC has received the written
agreement of such person contemplated by Section 4.9 of the Reorganization
Agreement. If any certificate for shares of MC Common Stock is to be issued in
a name other than that in which a certificate surrendered for exchange is
issued, the certificate so surrendered shall be properly endorsed and otherwise
in proper form for transfer and the person requesting such exchange shall affix
any requisite stock transfer tax stamps to the certificate surrendered or
provide funds for their purchase or establish to the reasonable satisfaction of
PNC or its agent that such taxes are not payable.
4. Upon the Effective Date, the stock transfer books of MC
shall be closed and no transfer of MC Common Stock shall thereafter be made or
recognized. Any other provision of this Plan of Merger notwithstanding,
neither PNC or its agent nor any party to the Merger shall be liable to a
holder of MC Common Stock for any amount paid or property delivered in good
faith to a public official pursuant to any applicable abandoned property,
escheat or similar law.
5. In the event that prior to the Effective Date the
outstanding shares of PNC Common Stock shall have been increased, decreased or
changed into or exchanged for a different number or kind of shares or
<PAGE> 76
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securities by reorganization, recapitalization, reclassification, stock
dividend, stock split or other like changes in PNC's capitalization, all
without PNC receiving adequate consideration therefor, then an appropriate and
proportionate adjustment shall be made in the number and kind of shares of PNC
Common Stock to be thereafter delivered pursuant to this Plan of Merger.
6. On the Effective Date, MC's obligations under its
Incentive Stock and Stock Option Plan (1986) (the "1986 Plan") with respect to
stock options granted thereunder to any person who is, on the date MC's
shareholders approved the Merger, subject to the reporting requirements of
Section 16(a) of the Securities Exchange Act of 1934, as amended, with respect
to equity securities of MC (an "Insider") shall, as to the portion of the MC
Option that is then exercisable (determined by giving effect to the
acceleration provisions of Section 4(d)(ii) of the 1986 Plan but without regard
to the acceleration provisions of Section 4(d)(i) of the 1986 Plan) (a "Vested
MC Option") be assumed by PNC and each such option shall become an option (a
"PNC Option") that entitles such Insider to receive, upon payment of the
exercise price, 2.05 shares of PNC Common Stock for each share of MC Common
Stock covered by the Vested MC Option. Each such PNC Option shall be subject
to the same terms and conditions as were applicable to the Vested MC Option,
except that immediately following the Effective Time, the PNC Option shall be
cancelled in exchange for the number of shares of PNC Common Stock having an
aggregate "fair market value" equal to the product of (1) the number of shares
of PNC Common Stock subject to such PNC Option and (2) the excess, if any, of
the fair market value of a share of PNC Common Stock on the Effective Date over
the exercise price of the PNC Option. The portion of each MC Option held by an
Insider that is not a Vested MC Option shall automatically become exercisable
in accordance with Section 4(d) of the 1986 Plan and shall be cancelled on the
Effective Date if not theretofore exercised. Each MC Option held by any person
who is not an Insider shall be cancelled at the Effective Date and PNC shall
deliver to the holder of each such option, in respect thereof, the number of
shares of PNC Common Stock having an aggregate fair market value equal to the
product of (1) the number of shares of MC Common Stock subject to such option
and (2) the excess, if any, of the fair market value of a share of MC Common
Stock on the Effective Date over the exercise price of such option. For
purposes of this Paragraph 6, (1) "fair market value" with respect to a share
of MC Common Stock shall have the meaning assigned to such term in the 1986
Plan and (2) "fair market value" with respect to a share of PNC Common Stock
shall have the meaning ascribed to the term "market value" in Paragraph 7 of
this Article.
<PAGE> 77
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7. Notwithstanding any other provision hereof, each holder
of shares or of Stock Options who would otherwise have been entitled to receive
a fraction of a share of PNC Common Stock (after taking into account all
Certificates delivered by such holder or all shares to be delivered to such
holder upon termination of Stock Options) shall receive, in lieu thereof, cash
in an amount equal to such fractional part of a share of PNC Common Stock
multiplied by the market value of such Common Stock. The market value of one
share of PNC Common Stock on the Effective Date shall be the closing price of
such Common Stock in the New York Stock Exchange -- Composite Transactions List
(as reported by THE WALL STREET JOURNAL or other authoritative source) on the
last business day preceding such date. No such holder shall be entitled to
dividends, voting rights or any other shareholder right in respect of any
fractional share.
8. The provisions pertaining to Stock Options contained in
Paragraphs 6 and 7 of this Article V are intended to be for the benefit of, and
shall be enforceable by, the respective holders of Stock Options and his or her
heirs and representatives.
ARTICLE VI
EFFECTIVE DATE OF THE MERGER
Certificates of merger evidencing the transactions
contemplated herein shall be delivered to the Delaware and New Jersey
Secretaries of State for filing as provided in the Reorganization Agreement.
The Merger shall be effective at the time and on the date specified in such
certificates of merger (such date and time being herein referred to as the
"Effective Date").
ARTICLE VII
FURTHER ASSURANCES
If at any time the Surviving Corporation shall consider or
be advised that any further assignments, conveyances or assurances are
necessary or desirable to vest, perfect or confirm in the Surviving Corporation
title to any property or rights of MC, or otherwise carry out the provisions
hereof, the proper officers and directors of MC, as of the Effective Date, and
thereafter the officers of the Surviving Corporation acting on behalf of MC,
shall execute and deliver any and all proper assignments, conveyances and
assurances, and do all things necessary or desirable to vest, perfect or
confirm title to such property or rights in the Surviving Corporation and
otherwise carry out the provisions hereof.
<PAGE> 78
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ARTICLE VIII
CONDITIONS PRECEDENT
The obligations of PNC, Bancorp and MC to effect the Merger
as herein provided shall be subject to satisfaction, unless duly waived, of the
conditions set forth in the Reorganization Agreement.
ARTICLE IX
TERMINATION
Anything contained in the Plan of Merger to the contrary
notwithstanding, and notwithstanding adoption hereof by the shareholders of MC,
this Plan of Merger may be terminated and the Merger abandoned as provided in
the Reorganization Agreement.
ARTICLE X
MISCELLANEOUS
1. This Plan of Merger may be amended or supplemented at
any time prior to its Effective Date by mutual agreement of Bancorp, PNC and
MC. Any such amendment or supplement must be in writing and approved by their
respective Boards of Directors and/or by officers authorized thereby and shall
be subject to the proviso in Section 6.4 of the Reorganization Agreement.
2. Any notice or other communication required or permitted
under this Plan of Merger shall be given, and shall be effective, in accordance
with the provisions of the Reorganization Agreement.
3. The headings of the several Articles herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Plan of Merger.
4. This Plan of Merger shall be governed by and construed
in accordance with the laws of New Jersey and Delaware applicable to the
internal affairs of MC and Bancorp, respectively.
<PAGE> 79
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IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound hereby, have caused this Agreement and Plan of Merger to be
executed in counterparts by their duly authorized officers and their corporate
seals to be hereunto affixed and attested by their officers thereunto duly
authorized, all as of the day and year first above written.
Attest PNC BANK CORP.
/s/ William F. Strome By /s/ Walter E. Gregg, Jr.
- ---------------------------- ----------------------------
William F. Strome Walter E. Gregg, Jr.
Assistant Secretary Executive Vice President
(SEAL)
Attest PNC BANCORP, INC.
/s/ William F. Strome By /s/ Walter E. Gregg, Jr.
- ---------------------------- ----------------------------
William F. Strome Walter E. Gregg, Jr.
Secretary Executive Vice President
(SEAL)
Attest MIDLANTIC CORPORATION
/s/ John M. Sperger By /s/ Garry J. Scheuring
- ---------------------------- ----------------------------
John M. Sperger Garry J. Scheuring
Secretary Chairman, President and
Chief Executive Officer
(SEAL)
<PAGE> 80
EXHIBIT 4
PNC STOCK OPTION AGREEMENT
This PNC STOCK OPTION AGREEMENT ("Option Agreement") dated
as of July 10, 1995, between MIDLANTIC CORPORATION ("MC"), a New Jersey
corporation registered as a bank holding company under the Bank Holding Company
Act of 1956, as amended ("Bank Holding Company Act"), and PNC BANK CORP.
("PNC"), a Pennsylvania corporation registered as a bank holding company under
the Bank Holding Company Act.
WITNESSETH
----------
WHEREAS, the Boards of Directors of MC and PNC, together
with the Board of Directors of PNC Bancorp, Inc., have approved an Agreement
and Plan of Reorganization ("Reorganization Agreement") and have adopted a
related Agreement and Plan of Merger dated as of the date hereof (together
referred to herein as the "Merger Agreements"), providing for certain
transactions pursuant to which MC would be merged with and into PNC Bancorp,
Inc., a subsidiary of PNC;
WHEREAS, as a condition to MC's entry into the Merger
Agreements and to induce such entry, PNC has agreed to grant to MC the option
set forth herein to purchase authorized but unissued shares of PNC Common
Stock;
NOW, THEREFORE, in consideration of the premises herein
contained, the parties agree as follows:
1. DEFINITIONS.
Capitalized terms defined in the Merger Agreements and used
herein shall have the same meanings as in the Merger Agreements.
2. GRANT OF OPTION.
Subject to the terms and conditions set forth herein, PNC
hereby grants to MC an option ("Option") to purchase up to 45,500,000 shares of
PNC Common Stock, at a price of $35 per share payable in cash as provided in
Section 4 hereof; provided, however, that in the event PNC issues or agrees to
issue any shares of PNC Common Stock in breach of its obligations under the
Merger Agreements at a price less than $35 per share (as adjusted pursuant to
Section 6 hereof), the exercise price shall be equal to such lesser price.
3. EXERCISE OF OPTION.
(a) MC may exercise the Option, in whole or part,
at any time or from time to time if a Purchase Event (as defined below) shall
have
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occurred and be continuing; provided that to the extent the Option shall not
have been exercised, it shall terminate and be of no further force and effect
upon the earliest to occur of (i) the Effective Date of the Merger or (ii)
termination of the Merger Agreements in accordance with the provisions thereof
prior to the occurrence of a Purchase Event (other than a termination resulting
from a willful breach by PNC of any covenant contained therein) or (iii) six
months after termination of the Merger Agreements if such termination follows
the occurrence of a Purchase Event or is due to a willful breach by PNC of any
covenant contained therein; and provided further that any such exercise shall
be subject to compliance with applicable provisions of law.
(b) As used herein, a "Purchase Event" shall mean
any of the following events or transactions occurring after the date hereof:
(i) PNC or any PNC Subsidiary, without having
received MC's prior written consent and except
as permitted by the Merger Agreements, shall
have entered into an agreement with any person
(other than MC or any MC Subsidiary) to (x)
merge or consolidate, or enter into any similar
transaction, with PNC or any PNC Subsidiary,
(y) purchase, lease or otherwise acquire all or
substantially all of the assets of PNC or any
PNC Subsidiary or (z) purchase or otherwise
acquire (including by way of merger,
consolidation, share exchange or any similar
transaction) securities representing 20% or
more of the voting power of PNC or any PNC
Subsidiary; provided, however, that in no event
shall any merger, consolidation, purchase or
similar transaction involving only PNC and one
or more of its Subsidiaries or involving only
any two or more of such Subsidiaries, be deemed
to be a Purchase Event, provided any such
transaction is not entered into in violation of
the terms of the Merger Agreements;
(ii) any person (other than PNC, any PNC Subsidiary,
the PNC Subsidiaries in a fiduciary capacity,
MC, affiliates of MC or subsidiaries of MC in a
fiduciary capacity) shall have acquired
beneficial ownership or the right to acquire
beneficial ownership of 20% or more of the
outstanding shares of PNC Common Stock (the
term "beneficial ownership" for purposes of
this Option Agreement having the meaning
assigned thereto in Section 13(d) of the
Exchange Act and the regulations promulgated
thereunder); or
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(iii) any person (other than PNC, any PNC Subsidiary,
MC or any MC affiliate) (x) shall have made a
bona fide proposal to PNC by public
announcement or written communication that is
or becomes the subject of public disclosure to
acquire PNC or any PNC Subsidiary by merger,
consolidation, purchase of all or substantially
all of its assets or any other similar
transaction, (y) shall have commenced a bona
fide tender or exchange offer to purchase
shares of PNC Common Stock such that upon
consummation of such offer such person would
own or control 20% or more of the outstanding
shares of PNC Common Stock, or (z) shall have
filed an application or notice with the Federal
Reserve Board or any other federal or state
regulatory agency for clearance or approval to
engage in any transaction described in clause
(i) or (ii) above, and thereafter the holders
of PNC Common Stock shall have not approved the
Merger Agreements and the transactions
contemplated thereby at the meeting of such
stockholders held for such purpose or such
meeting shall not have been held or shall have
been cancelled prior to termination of the
Merger Agreements.
If more than one of the transactions giving rise to a Purchase Event under this
Section 3(b) is undertaken or effected, then all such transactions shall give
rise only to one Purchase Event, which Purchase Event shall be deemed
continuing for all purposes hereunder until all such transactions are
abandoned. As used in this Option Agreement, "person" shall have the meanings
specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(c) In the event MC wishes to exercise the
Option, it shall send to PNC a written notice (the date of which being herein
referred to as "Notice Date") specifying (i) the total number of shares it will
purchase pursuant to such exercise, and (ii) a place and date not earlier than
three business days nor later than 60 business days from the Notice Date for
the closing of such purchase ("Closing Date"); provided that if prior
notification to or approval of any federal or state regulatory agency is
required in connection with such purchase, MC shall promptly file the required
notice or application for approval and shall expeditiously process the same and
the period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which any required notification period has expired or
been terminated or such approval has been obtained and any requisite waiting
period shall have passed.
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4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) At the closing referred to in Section 3
hereof, MC shall pay to PNC the aggregate purchase price for the shares of PNC
Common Stock purchased pursuant to the exercise of the Option in immediately
available funds by a wire transfer to a bank account designated by PNC.
(b) At such closing, simultaneously with the
delivery of cash as provided in subsection (a), PNC shall deliver to MC a
certificate or certificates representing the number of shares of PNC Common
Stock purchased by MC, and MC shall deliver to PNC a letter agreeing that MC
will not offer to sell or otherwise dispose of such shares in violation of
applicable law or the provisions of this Option Agreement.
(c) Certificates for PNC Common Stock
delivered at a closing hereunder may be endorsed with a restrictive legend
which shall read substantially as follows:
"The transfer of the shares represented by this
certificate is subject to certain provisions of an agreement between the
registered holder hereof and PNC Bank Corp. and to resale restrictions arising
under the Securities Act of 1933, as amended, a copy of which agreement is on
file at the principal office of PNC Bank Corp. A copy of such agreement will
be provided to the holder hereof without charge upon receipt by PNC Bank Corp.
of a written request."
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if MC shall have delivered to
PNC a copy of a letter from the staff of the Commission, or an opinion of
counsel, in form and substance satisfactory to PNC, to the effect that such
legend is not required for purposes of the Securities Act.
5. REPRESENTATIONS.
PNC hereby represents, warrants and covenants to MC as
follows:
(a) PNC shall at all times maintain sufficient
authorized but unissued shares of PNC Common Stock so that the Option may be
exercised without authorization of additional shares of PNC Common Stock.
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(b) The shares to be issued upon due exercise, in
whole or in part, of the Option, when paid for as provided herein, will be duly
authorized, validly issued, fully paid and nonassessable.
<PAGE> 85
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6. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
In the event of any change in PNC Common Stock by reason of
stock dividends, split-ups, recapitalizations, combinations, exchanges of
shares or the like, the type and number of shares subject to the Option, and
the purchase price per share, as the case may be, shall be adjusted
appropriately. In the event that any additional shares of PNC Common Stock are
issued or otherwise become outstanding after the date of this Option Agreement
(other than pursuant to this Option Agreement), the number of shares of PNC
Common Stock subject to the Option shall be adjusted so that, after such
issuance, it equals 19.99% of the number of shares of PNC Common Stock then
issued and outstanding without giving effect to any shares subject or issued
pursuant to the Option. Nothing contained in this Section 6 shall be deemed to
authorize PNC to breach any provision of the Merger Agreements.
7. REGISTRATION RIGHTS.
PNC shall, if requested by MC, as expeditiously as possible
following the occurrence of a Purchase Event and prior to the second
anniversary thereof, file a registration statement on a form of general use
under the Securities Act if necessary in order to permit the sale or other
disposition of the shares of PNC Common Stock that have been acquired upon
exercise of the Option in accordance with the intended method of sale or other
disposition requested by MC. MC shall provide all information reasonably
requested by PNC for inclusion in any registration statement to be filed
hereunder. PNC will use its best efforts to cause such registration statement
first to become effective and then to remain effective for such period not in
excess of 180 days from the day such registration statement first becomes
effective as may be reasonably necessary to effect such sales or other
dispositions. The obligations of PNC hereunder to file a registration
statement and to maintain its effectiveness may be suspended for one or more
periods of time not exceeding 60 days in the aggregate if the Board of
Directors of PNC shall have determined that the filing of such registration
statement or the maintenance of its effectiveness would require disclosure of
nonpublic information that would materially and adversely affect PNC. The
first registration effected under this Section 7 shall be at PNC's expense
except for underwriting commissions and the fees and disbursements of MC's
counsel attributable to the registration of such PNC Common Stock. A second
registration may be requested hereunder at MC's expense. In no event shall PNC
be required to effect more than two registrations hereunder. The filing of any
registration statement hereunder may be delayed for such period of time as may
reasonably be required to facilitate any public distribution by PNC of PNC
Common Stock. If requested by MC, in connection with any such
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registration, PNC will become a party to any underwriting agreement relating to
the sale of such shares, but only to the extent of obligating itself in respect
of representations, warranties, indemnities and other agreements customarily
included in such underwriting agreements. Upon receiving any request from MC
or assignee thereof under this Section 7, PNC agrees to send a copy thereof to
MC and to any assignee thereof known to PNC, in each case by promptly mailing
the same, postage prepaid, to the address of record of the persons entitled to
receive such copies.
8. SEVERABILITY.
If any term, provision, covenant or restriction contained
in this Option Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Option Agreement shall remain in full force and effect, and shall in no
way be affected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Option will not permit the holder to
acquire the full number of shares of PNC Common Stock provided in Section 2
hereof (as adjusted pursuant to Section 6 hereof), it is the express intention
of PNC to allow the holder to acquire or to require PNC to repurchase such
lesser number of shares as may be permissible, without any amendment or
modification hereof.
9. MISCELLANEOUS.
(a) EXPENSES. Except as otherwise provided
herein, each of the parties hereto shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with the transactions
contemplated hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
(b) ENTIRE AGREEMENT. Except as otherwise
expressly provided herein, this Option Agreement contains the entire agreement
between the parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereto,
written or oral. Notwithstanding anything to the contrary contained in this
Agreement or the Merger Agreements, this Agreement shall be deemed to amend the
Confidentiality Agreement so as to permit MC to enter into this Agreement and
exercise all of its rights hereunder, including its right to acquire PNC Common
Stock upon exercise of the Option. The terms and conditions of this Option
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns.
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Nothing in this Option Agreement, expressed or implied, is intended to confer
upon any party, other than the parties hereto, and their respective successors
and assigns, any rights, remedies, obligations or liabilities under or by
reason of this Option Agreement, except as expressly provided herein.
(c) ASSIGNMENT. Neither of the parties hereto
may assign any of its rights or obligations under this Option Agreement or the
Option created hereunder to any other person, without the express written
consent of the other party, except that in the event a Purchase Event shall
have occurred and be continuing MC may assign in whole or in part its rights
and obligations hereunder; provided, however, that until the date 30 days
following the date on which the Federal Reserve Board approves an application
by MC under the Bank Holding Company Act to acquire the shares of PNC Common
Stock subject to the Option, MC may not assign its rights under the Option
except in (i) a widely dispersed public distribution, (ii) a private placement
in which no one party acquires the right to purchase in excess of 2% of the
voting shares of PNC, (iii) an assignment to a single party (E.g., a broker or
investment banker) for the purpose of conducting a widely dispersed public
distribution on MC's behalf, or (iv) any other manner approved by the Federal
Reserve Board.
(d) NOTICES. All notices or other communications
which are required or permitted hereunder shall be in writing and sufficient if
delivered personally or sent by overnight express or by registered or certified
mail, postage prepaid, addressed as provided in the Reorganization Agreement.
A party may change its address for notice purposes by written notice to the
other party hereto.
(e) COUNTERPARTS. This Option Agreement may be
executed in any number of counterparts, and each such counterpart shall be
deemed to be an original instrument, but all such counterparts together shall
constitute but one agreement.
(f) SPECIFIC PERFORMANCE. The parties agree that
damages would be an inadequate remedy for a breach of the provisions of this
Option Agreement by either party hereto and that this Option Agreement may be
enforced by either party hereto through injunctive or other equitable relief.
(g) GOVERNING LAW. This Option Agreement shall
be governed by and construed in accordance with the laws of Pennsylvania
applicable to agreements made and entirely to be performed within such state
and such federal laws as may be applicable.
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IN WITNESS WHEREOF, each of the parties hereto has executed
this Option Agreement as of the day and year first written above.
PNC BANK CORP.
By /s/ Thomas H. O'Brien
------------------------
Thomas H. O'Brien
Chairman and Chief
Executive Officer
MIDLANTIC CORPORATION
By /s/ Garry J. Scheuring
------------------------
Garry J. Scheuring
Chairman, President and
Chief Executive Officer
