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Exhibit 2.1 AGREEMENT AND PLAN OF MERGER dated as of July 16, 2004 between THE PNC FINANCIAL SERVICES GROUP, INC. and RIGGS NATIONAL CORPORATION




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TABLE OF CONTENTS PageRECITALSA.
    
    PNC
    
    
    1B.
    
    Company
    
    
    1C.
    
    Intention of the Parties
    
    
    1D.
    
    Approvals
    
    
    1ARTICLE IThe Merger1.1
    
    The Merger
    
    
    21.2
    
    Effective Time
    
    
    21.3
    
    Closing
    
    
    2ARTICLE IIConversion or Cancellation of Shares2.1
    
    Conversion or Cancellation of Shares
    
    
    32.2
    
    Fractional Shares
    
    
    82.3
    
    Exchange of Old Certificates for New Certificates
    
    
    82.4
    
    Adjustment of Exchange Ratio
    
    
    10ARTICLE IIIConduct of Business Pending Merger3.1
    
    Company Forbearances
    
    
    113.2
    
    PNC Forbearances
    
    
    13ARTICLE IVRepresentations4.1
    
    Disclosure Schedules
    
    
    144.2
    
    Standard
    
    
    144.3
    
    Representations
    
    
    12ARTICLE VCovenants5.1
    
    Reasonable Best Efforts
    
    
    265.2
    
    Stockholder Approvals
    
    
    265.3
    
    Registration Statement/Proxy Statement
    
    
    275.4
    
    Press Releases
    
    
    285.5
    
    Access; Information
    
    
    28
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Page5.6
    
    Acquisition Proposals
    
    
    295.7
    
    Affiliate Agreements
    
    
    305.8
    
    Takeover Laws and Provisions
    
    
    305.9
    
    Regulatory Applications
    
    
    305.10
    
    Options
    
    
    315.11
    
    Indemnification and Insurance
    
    
    315.12
    
    Benefit Plans
    
    
    325.13
    
    Notification of Certain Matters
    
    
    345.14
    
    Exemption from Liability Under Section 16(b)
    
    
    345.15
    
    Coordination of Dividends
    
    
    35ARTICLE VIConditions6.1
    
    Conditions to Each Partys Obligation to Effect the Merger
    
    
    366.2
    
    Conditions to Obligation of PNC
    
    
    376.3
    
    Conditions to Obligation of the Company
    
    
    37ARTICLE VIITermination7.1
    
    Termination by Mutual Consent
    
    
    387.2
    
    Termination by PNC
    
    
    387.3
    
    Termination by the Company
    
    
    397.4
    
    Effect of Termination and Abandonment
    
    
    39ARTICLE VIIIMiscellaneous8.1
    
    Survival
    
    
    408.2
    
    Modification or Amendment
    
    
    418.3
    
    Waiver of Conditions
    
    
    418.4
    
    Counterparts
    
    
    418.5
    
    Governing Law
    
    
    418.6
    
    Notices
    
    
    418.7
    
    Entire Agreement, Etc
    
    
    428.8
    
    Definition of
subsidiary and affiliate; Covenants with Respect to Subsidiaries and Affiliates
    
    
    428.9
    
    Interpretation; Effect
    
    
    428.10
    
    Severability
    
    
    428.11
    
    No Third Party Beneficiaries
    
    
    438.12
    
    Waiver of Jury Trial
    
    
    43
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INDEX OF DEFINED TERMS Location ofTerm
    
    DefinitionAcquisition Proposal
    
    
    5.6Affiliate
    
    
    8.8Benefit Plans
    
    
    4.3(m)(1)PNC
    
    
    PreamblePNC State Law
    
    
    1.1(b)PNC Benefit Plans
    
    
    5.12(a)PNC Common Stock
    
    
    Recital APNC Meeting
    
    
    5.2(a)PNC Preferred
    
    
    Recital APNC Preferred Stock
    
    
    Recital APNC Rights Agreement
    
    
    Recital APNC Stockholder Rights
    
    
    Recital ACash Election Shares
    
    
    2.1(d)Certificate of Merger
    
    
    1.4(a)Closing
    
    
    1.5Closing Date
    
    
    1.5Company
    
    
    PreambleCompany Bank
    
    
    5.11(a)Company Benefit Plans
    
    
    5.12(a)Company Common Stock
    
    
    Recital BCompany Insiders
    
    
    5.15Company Meeting
    
    
    5.2(a)Company Option
    
    
    5.10(a)Company Options
    
    
    5.10(a)Company Section 16 Information
    
    
    5.15Confidentiality Agreement
    
    
    5.5(c)Converted Cash Election Share
    
    
    2.1(e)(1)(c)Converted Stock Election Share
    
    
    2.1(e)(2)(B)DGCL
    
    
    1.1(b)Disclosure Schedule
    
    
    4.1Effective Time
    
    
    1.4(a)Election
    
    
    2.1(d)Election Deadline
    
    
    2.3(b)Election Form
    
    
    2.1(d)Employees
    
    
    4.3(m)(1)Environmental Laws
    
    
    4.3(o)ERISA
    
    
    4.3(m)(1)ERISA Affiliate
    
    
    4.3(m)(3)ERISA Plans
    
    
    4.3(m)(2)Exception Shares
    
    
    2.1(c)Exchange Act
    
    
    4.3(c)(1)Exchange Agent
    
    
    2.1(d)Exchange Ratio
    
    
    2.1(a)Governing Documents
    
    
    3.1(h)
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Location ofTerm
    
    DefinitionGovernmental Entity
    
    
    4.3(f)(1)Indemnified Liabilities
    
    
    5.11(a)Indemnified Party
    
    
    5.11(a)Insurance Amount
    
    
    5.11(b)Internal Revenue Code
    
    
    Recital CIRS
    
    
    4.3(m)(2)Proxy Statement/Prospectus
    
    
    5.3(a)Liens
    
    
    4.3(c)(1)Material Adverse Effect
    
    
    4.2(b)Measurement Price
    
    
    2.2Merger
    
    
    1.1(a)Multiemployer Plan
    
    
    4.3(m)(2)New Certificate
    
    
    2.3(a)New Option
    
    
    5.10(a)New Shares
    
    
    2.3(a)No-Election Shares
    
    
    2.1(d)NYSE
    
    
    2.2Old Certificate
    
    
    2.1(c)Old Share
    
    
    2.1(c)Pension Plan
    
    
    4.3(m)(2)Per Share Cash Consideration
    
    
    2.1(a)(2)Per Share Stock Consideration
    
    
    2.1(a)(1)Person
    
    
    2.3(b)Plan
    
    
    PreamblePreviously Disclosed
    
    
    3.1Registration Statement
    
    
    5.3(a)Regulatory Approvals
    
    
    4.3(f)(2)Regulatory Authorities
    
    
    4.3(i)(1)Regulatory Filings
    
    
    4.3(g)(1)Representatives
    
    
    5.6Rights
    
    
    4.3(b)(3)Securities Act
    
    
    4.3(g)(1)Significant Subsidiary
    
    
    4.3(c)(1)Stock Election Shares
    
    
    2.1(d)Stock Selected No-Election Share
    
    
    2.1(e)(1)(B)Subsidiary
    
    
    8.8Superior Proposal
    
    
    5.6Surviving Corporation
    
    
    1.1(a)Takeover Laws
    
    

    4.3(t)Takeover Provisions
    
    
    4.3(t)Tax
    
    
    4.3(p)(2)Tax Returns
    
    
    4.3(p)(1)Taxes
    
    
    4.3(p)(2)Termination Date
    
    
    7.2(b)
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AGREEMENT AND PLAN OF MERGER, dated as of July 16, 2004, (this Plan),
between The PNC Financial Services Group, Inc. (PNC) and Riggs National
Corporation (Company). RECITALS A. PNC. PNC is a Pennsylvania corporation with its principal executive
offices located in Pittsburgh, Pennsylvania. As of the date hereof, PNC has
(i) 800,000,000 authorized shares of common stock, par value $5.00 per share
(PNC Common Stock), of which not more than 284,500,000 shares are
outstanding, together with the rights (PNC Stockholder Rights) issued
pursuant to the Rights Agreement, dated as of May 15, 2000, as amended, between
PNC and Computershare Investor Services, LLC, as Rights Agent (PNC Rights
Agreement); and (ii) 20,000,000 authorized shares of preferred stock, par
value $1.00 per share (PNC Preferred Stock), of which 98,583 shares have been
designated as $1.80 Cumulative Convertible Preferred Stock  Series A (PNC
Series A Preferred Stock), of which 8,542 shares are outstanding, 38,542
shares have been designated as $1.80 Cumulative Convertible Preferred Stock -
Series B (PNC Series B Preferred Stock), of which 2,356 shares are
outstanding, 1,433,935 shares have been designated as $1.60 Cumulative
Convertible Preferred Stock-Series C (PNC Series C Preferred Stock), of which
173,877 shares are outstanding, 1,766,140 shares have been designated as $1.80
Cumulative Convertible Preferred Stock-Series D (PNC Series D Preferred
Stock), of which 255,863 shares are outstanding, 338,100 shares have been
designated as $2.60 Cumulative Nonvoting Preferred Stock, Series E (PNC Series
E Preferred Stock), of which no shares are outstanding, 6,000 shares have been
designated as Fixed/Adjustable Rate Noncumulative Preferred Stock, Series F
(PNC Series F Preferred Stock), of which no shares are outstanding, and

450,000 shares have been designated as Series G Junior Participating Preferred
Share Purchase Rights (PNC Series G Preferred Stock). B. Company. The Company is a Delaware corporation with its principal
executive offices located in Washington, DC. As of the date hereof, the
Company has (i) 50,000,000 authorized shares of common stock, par value $2.50
per share (Company Common Stock), of which not more than 29,202,595 shares
are outstanding, (ii) 20,000,000 authorized shares of Class B common stock, par
value $2.50 per share, of which no shares are outstanding and (iii) 25,000,000
authorized shares of preferred stock, par value $1.00 per share, of which no
shares are outstanding. C. Intention of the Parties. Each of the parties to this Plan intends
that the Merger (as hereinafter defined) shall qualify as a reorganization
under Section 368(a) of the Internal Revenue Code of 1986, as amended (the
Internal Revenue Code) and that this Plan shall constitute a plan of
reorganization for purposes of Sections 354 and 361 of the Internal Revenue
Code. D. Approvals. The board of directors of each of PNC and the Company has
(1) determined that this Plan and the transactions contemplated hereby are
advisable and in the best interests of PNC and the Company,




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respectively, and
in the best interests of their respective stockholders, (2) determined that
this Plan and the transactions contemplated hereby are
consistent with, and in furtherance of, its respective business strategies
and (3) authorized and approved this Plan. E. Voting Agreement. As a condition and inducement to PNCs willingness
to enter into this Agreement, a certain stockholder of the Company is
concurrently entering into a Voting Agreement with PNC in substantially the
form attached hereto as Exhibit A, pursuant to which, among other things, such
stockholder agrees to vote certain of his shares of Company Common Stock in
favor of this Agreement and the transactions contemplated hereby. NOW, THEREFORE, in consideration of their mutual promises and obligations,
the parties hereto approve, adopt and make this Plan and prescribe the terms
and conditions hereof and the manner and mode of carrying it into effect, which
are as follows: ARTICLE I
The Merger 1.1 The Merger. (a) Subject to the terms and conditions of this Plan, at
the Effective Time (as hereinafter defined), the Company shall merge with and
into PNC (the Merger), and the separate corporate existence of the Company
shall thereupon cease. PNC shall be the surviving corporation in the Merger
(hereinafter sometimes referred to as the Surviving Corporation) and shall
continue to be governed by the laws of the State of Pennsylvania. (b) The Merger shall have the effects specified in this Plan, the Delaware
General Corporation Law (the DGCL) and the Business Corporation Law of the
Commonwealth of Pennsylvania (the PBCL). (c) At the Effective Time, the Articles of Incorporation of PNC, as then
in effect, shall be the certificate of incorporation of the Surviving
Corporation and the By-laws of PNC, as then in effect, shall be the By-laws of
the Surviving Corporation. (d) The name of the Surviving Corporation shall be the name of PNC. 1.2 Effective Time. (a) Subject to the terms and conditions of this
Plan, on or before the Closing Date, the parties shall execute, and PNC will
cause to be filed with the Department of State of the Commonwealth of
Pennsylvania, articles of merger as provided in Sections 1926 and 1927 of the
PBCL (the Certificate of Merger), and PNC will cause a certificate of merger
to be filed with the Office of the Secretary of State of the State of Delaware
as provided in Section 252 of the DGCL. The Merger shall become effective at
such time as the Certificate of Merger has been filed, or at such other time as
may be specified therein. The date and time at which the Merger becomes
effective is herein referred to as the Effective Time. 2




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(b) PNC and the Company will each cause the Effective Time to occur not
later than the third business day following the satisfaction or waiver of the
last of the conditions specified in Sections 6.1(a), (b), (c), (e) and (f) of
this Plan.
Notwithstanding anything to the contrary in this Section 1.2(b), PNC and
the Company may cause the Effective Time to occur on such earlier or later day
following the satisfaction or waiver of such conditions as they may agree,
consistent with the provisions of the DGCL and the PBCL. 1.3 Closing. The closing of the Merger (the Closing) shall take place
at such time and place as PNC and the Company shall agree, on the date when the
Effective Time is to occur (the Closing Date). 1.4 Bank Merger. PNC and the Company shall take all action necessary and
appropriate to cause their respective subsidiaries PNC Bank, National
Association (PNC Bank) and Riggs Bank N.A. (Company Bank) to merge, and to
convert the operating systems of the Company Bank to those of the PNC Bank,
immediately after the Merger, with PNC Bank being the surviving bank
(Surviving Bank) thereof pursuant to the provisions of applicable law (the
Bank Merger). At the effective time of the Bank Merger, the Certificate of
Organization and Bylaws of the Surviving Bank shall be the Certificate of
Organization and Bylaws of PNC Bank in effect immediately prior to the
effective time of the Bank Merger. ARTICLE II
Conversion or Cancellation of Shares 2.1 Conversion or Cancellation of Shares. At the Effective Time, by
virtue of the Merger and without any action on the part of any stockholder: (a) Company Common Stock. Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time, other than Exception
Shares and Dissenting Shares (each as hereinafter defined), shall be converted
into the right to receive, at the election of each holder thereof, but subject
to the election and allocation procedures of Sections 2.1(d) and (e), the other
provisions of this Section 2.1 and possible adjustment as set forth in Section
2.4, either: (1) that number of shares of PNC Common Stock equal to the Exchange Ratio
(as defined in Section 2.1(b)) (the Per Share Stock Consideration), or (2) an amount in cash, without interest, equal to the Per Share Amount
(the Per Share Cash Consideration and, together with the Per Share Stock
Consideration, the Consideration). (b) Certain Definitions. For purposes of this Agreement, the following
terms shall have the following meanings: (1) Aggregate Cash Amount means, subject to Section 2.1(e), 45% of the
product of (x) the Aggregate Company Share Amount (as hereinafter defined) less
the number of Exception Shares cancelled pursuant to Section 2.1(d) 3




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hereof (but
excluding from such reduction the 3,341,921 treasury shares as of the date
hereof) and (y) $24.25, rounded to the nearest whole cent; provided, however,
that if, at the Effective Time, the aggregate number of shares of Company
Common Stock issuable upon exercise of then outstanding Company Options (as
defined under Section 5.10(a)) exceeds the difference between (A) 7,530,482
less (B) the aggregate number of shares of Company Common Stock issued upon
exercise of Company Options after the date hereof and prior to the Effective
Time (such excess being referred to herein as the Excess Option Shares), then
the Aggregate Cash Amount shall be reduced by the product of (A) the Excess
Option Shares and (B) an amount equal to the excess of $24.25 over the weighted
average exercise price of the options related to the Excess Option Shares at
the Effective Time, in each case rounded to the nearest whole cent. (2) Aggregate Company Share Amount shall equal 29,202,595 shares of
Company Common Stock; provided, however, that the Aggregate Company Share
Amount shall be increased by virtue of the issuance of any shares of Company
Common Stock upon (i) the exercise from and after the date hereof and prior to
the Effective Time of Company Options outstanding on the date hereof, (ii) the
funding of the trust under the Company Amended and Restated Deferred
Compensation Plan, in each case, after July 15, 2004 and prior to the Effective
Time, (iii) the distribution of interests under the Riggs National Corporation
and Riggs Bank N.A. Deferred Compensation Plan for Directors in accordance with
the terms of such plan and (iv) the vesting of deferred share awards or
performance share awards under the Riggs National Corporation 2002 Long-Term
Incentive Plan (including by reason of Section 5.12(c)) to the extent not
outstanding on the date hereof. (3) Aggregate PNC Share Amount shall, subject to Section 2.1(e), be
equal to 7,533,648 shares of PNC Common Stock; provided, however, that the
Aggregate PNC Share Amount shall be (x) increased by virtue of the issuance
of any shares of Company Common Stock upon (i) the exercise from and after the
date hereof and prior to the Effective Time of Company Stock Options
outstanding on the date hereof , (ii) the funding of the trust under the
Company Amended and Restated Deferred Compensation Plan, in each case, after
July 15, 2004 and prior to the Effective Time, (iii) the distribution of
interests under the Riggs National Corporation and Riggs Bank N.A. Deferred
Compensation Plan for Directors in accordance with the terms of such plan or
(iv) the vesting of deferred share awards or performance share awards under the
Riggs National Corporation 2002 Long-Term Incentive Plan (including by reason
of Section 5.12(c)) to the extent not outstanding on the date hereof and (y)
shall be decreased in the event any shares of Company Common Stock are
cancelled pursuant to Section 2.1(d) hereof, other than the 3,341,921 treasury
shares as of the date hereof, in each case on a basis of 0.2580 additional
shares of PNC Common Stock for each share of Company Common Stock so issued or
cancelled. (4) Measurement Price means the average of the daily high and low per
share sales prices of PNC Common Stock on the New York Stock Exchange (the
"NYSE), as reported in the New York City edition of The Wall Street Journal
or, if not reported therein, in another authoritative source mutually agreed by
PNC and 4




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the Company, for the five (5) full consecutive NYSE trading days ending
on the trading day immediately prior to the Closing Date. (5) Closing Transaction Value means the sum of (A) the Aggregate Cash
Amount and (B) the product obtained by multiplying the Aggregate PNC Share
Amount by the Measurement Price, rounded to the nearest whole cent. (6) Per Share Amount means the amount obtained by dividing the Closing
Transaction Value by the number of Exchangeable Shares, rounded to the nearest
whole cent. (7) Exchange Ratio means that fraction of a share of PNC Common Stock as
shall be obtained by dividing the Per Share Amount by the Measurement Price,
rounded to the nearest one-ten-thousandth. (8) Exchangeable Shares means the aggregate number of shares of Company
Common Stock issued and outstanding immediately prior to the Effective Time,
rounded to the nearest whole share. (e) Adjustments to Preserve Tax Treatment. (i) In the event that the quotient obtained by dividing (x) the product of
(i) the Aggregate PNC Share Amount and (ii) the Final PNC Share Value by (y)
the sum of (A) the Aggregate Cash Amount, (B) the Other Cash Consideration (as
defined below), and (C) the product of (i) the Aggregate PNC Share Amount and
(ii) the Final PNC Share Value is less than 0.425, the Aggregate PNC Share
Amount shall be increased by the Share Adjustment Amount (as defined in this
Section 2.1(e)) and the Aggregate Cash Amount shall be decreased by the product
of (x) the Final PNC Share Value and (y) the Share Adjustment Amount. The
"Share Adjustment Amount shall be equal to the quotient obtained by dividing
(x) the difference obtained by subtracting (i) the product of (a) the Aggregate
PNC Share Amount and (b) the Final PNC Share Value from (ii) the product of (a)
0.425 and (b) the sum of (1) the Aggregate Cash Amount, (2) Other Cash
Consideration and (3) the product of the Aggregate PNC Share Amount and the
Final PNC Share Value by (y) the Final PNC Share Value. (ii) In the event that the Aggregate PNC Share Amount and the Aggregate
Cash Amount are adjusted as provided for in this Section 2.1(e), all references
in this Agreement to the Aggregate PNC Share Amount and the Aggregate Cash
Amount shall refer to the Aggregate PNC Share Amount and the Aggregate Cash
Amount as adjusted in this Section 2.1(e). (iii) For purposes of this Agreement, Final PNC Share Value means the
arithmetic average of the daily high and low per share sales prices of PNC
Common Stock on the NYSE on the Closing Date or if the Closing Date is not a
trading day, the trading day prior to the Closing Date; and Other Cash
Consideration means the sum of (i) the product of the number of Dissenting
Shares (except to the extent that the holder of such Dissenting Shares, as of
the Closing Date, has effectively withdrawn or lost his right to dissent from
the Merger under the DGCL) and the Per Share Cash Consideration and (ii) any
other amounts 5




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received by a holder of
Company stock prior to the Merger, either in a redemption of Company stock or
in a distribution with respect to Company stock (but only to the extent such
amount is treated as other property or money received in the exchange for
purposes of Section 356 of the Code, or would be so treated if the Company
shareholder also had received stock of PNC in exchange for stock owned by the
shareholder in the Company). (c) PNC Common Stock. Each share of PNC Common Stock outstanding
immediately prior to the Effective Time shall remain outstanding and shall be
unaffected by the Merger. (d) Cancellation of Old Shares. Each Exception Share shall cease to be
outstanding, shall be canceled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor. Each share of Company
Common Stock issued and outstanding immediately prior to the Effective Time,
other than Exception Shares, is hereinafter defined as an Old Share. Old
Shares shall cease to be outstanding, shall be canceled and retired and shall
cease to exist, and each holder of a certificate (an Old Certificate)
formerly representing Old Shares shall thereafter cease to have any rights with
respect to such shares, except the right to receive, without interest, upon
exchange of such Old Certificate in accordance with Section 2.3, the
Consideration. Exception Shares means shares of Company Common Stock owned
or held by PNC or by the Company, other than shares owned or held in a bona
fide fiduciary or agency capacity or in satisfaction of a debt previously
contracted in good faith. (e) Subject to the allocation procedures set forth in Section 2.1(e), each
record holder of Company Common Stock will be entitled (i) to elect to receive
shares of PNC Common Stock for all or some of the shares of Company Common
Stock (Stock Election Shares) held by such record holder, (ii) to elect to
receive cash for all or some of the shares of Company Common Stock (Cash
Election Shares) held by such record holder or (iii) to indicate that such
holder makes no such election for all or some of the shares of Company Common
Stock (No-Election Shares) held by such record holder. All such elections
(each, an Election) shall be made on a form designed for that purpose and
agreed to by PNC and the Company (an Election Form). Any shares of Company
Common Stock for which the record holder has not, as of the Election Deadline
(as defined below), properly submitted to the Exchange Agent a properly
completed Election Form will be deemed No-Election Shares. A record holder
acting in different capacities or acting on behalf of other persons in any way
will be entitled to submit an Election Form for each capacity in which such
record holder so acts with respect to each person for which it so acts.
The exchange agent (the Exchange Agent) will be a bank or trust company
in the United States selected by PNC and reasonably acceptable to the Company.
In order to make a valid election, the properly completed Election Form must be
accompanied by certificates of the shares of Company Common Stock to which such
Form of Election relates or by an appropriate customary guarantee of delivery
of such certificates, as set forth in such Form of Election, from a member of
any registered national securities exchange or a commercial bank or trust
company in the United States (provided that such certificates are in fact
delivered to the Exchange Agent by the time required in such guarantee of
delivery; failure to 6




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deliver shares of Company Common Stock covered by such a
guarantee of delivery within the time set forth on such guarantee shall be
deemed to invalidate any otherwise properly made Election, unless otherwise
determined by PNC, in its sole discretion). Notwithstanding anything contained
herein to the contrary, each share of Company Common Stock owned by a
subsidiary of PNC or by a subsidiary of the Company (in each case, other than
those shares held by any such subsidiary in a bona fide fiduciary or agency
capacity) shall be converted in the Merger solely into PNC Common Stock. (f) The allocation among the holders of shares of Company Common Stock of
rights to receive the Per Share Stock Consideration or the Per Share Cash
Consideration will be made as follows: (1) Number of Stock Elections Less Than the Stock Conversion Number. If
the aggregate number of Stock Election Shares (on the basis of valid Election
Forms received as of the Election Deadline) is less than the number obtained by
dividing the Aggregate PNC Share Amount by the Exchange Ratio (the Stock
Conversion Number), then (A) each Stock Election Share will be, as of the Effective Time,
converted into the right to receive the Per Share Stock Consideration, (B) the Exchange Agent will allocate from among the No-Election
Shares, pro rata to the holders of No-Election Shares in accordance with
their respective numbers of No-Election Shares, a sufficient number of
No-Election Shares so that the sum of such number and the number of Stock
Election Shares equals as closely as practicable the Stock Conversion
Number, and each such allocated No-Election Share (each, a
Stock-Selected No-Election Share) will be, as of the Effective Time,
converted into the right to receive the Per Share Stock Consideration,
providedthat if the sum of all No-Election Shares and Stock Election
Shares is equal to or less than the Stock Conversion Number, all
No-Election Shares will be Stock-Selected No-Election Shares, (C) if the sum of Stock Election Shares and No-Election Shares is
less than the Stock Conversion Number, the Exchange Agent will allocate
from among the Cash Election Shares, pro rata to the holders of Cash
Election Shares in accordance with their respective numbers of Cash
Election Shares, a sufficient number of Cash Election Shares so that the
sum of such number, the number of all Stock Election Shares and the
number of all No-Election Shares equals as closely as practicable the
Stock
Conversion Number, and each such allocated Cash Election Share
(each, a Converted Cash Election Share) will be, as of the Effective
Time, converted into the right to receive the Per Share Stock
Consideration, and (D) each No-Election Share and Cash Election Share that is not a
Stock-Selected No-Election Share or a Converted Cash Election Share (as
the case may be) will be, as of the Effective Time, converted into the
right to receive the Per Share Cash Consideration; or 7




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(2) Number of Stock Elections Greater Than the Stock Conversion Number.
If the aggregate number of Stock Election Shares (on the basis of valid
Election Forms received by the Election Deadline) is greater than the Stock
Conversion Number, then (A) each Cash Election Share and No-Election Share will be, as of
the Effective Time, converted into the right to receive the Per Share
Cash Consideration, (B) the Exchange Agent will allocate from among the Stock Election
Shares, pro rata to the holders of Stock Election Shares in accordance
with their respective numbers of Stock Election Shares, a sufficient
number of Stock Election Shares (Converted Stock Election Shares) so
that the difference of (x) the number of Stock Election Shares less (y)
the number of the Converted Stock Election Shares equals as closely as
practicable the Stock Conversion Number, and each Converted Stock
Election Share will be, as of the Effective Time, converted into the
right to receive the Per Share Cash Consideration; provided that if an
Election Form designates by stock certificate number the priority in
which the Stock Election Shares governed by such Election Form are to be
reallocated pursuant to this clause (B), such Stock Election Shares shall
be deemed reallocated in accordance with such priority, and (C) each Stock Election Share that is not a Converted Stock Election
Share will be, as of the Effective Time, converted into the right to
receive the Per Share Stock Consideration. (3) Number of Stock Elections is Equal to the Stock Conversion Number. If
the aggregate number of Stock Election Shares (on the basis of Election Forms
received by the Election Deadline) is equal to the Stock Conversion Number,
then (A) each Stock Election Share will be, as of the Effective Time,
converted into the right to receive the Per Share Stock Consideration,
and (B) each Cash Election Share and No-Election Share will be, as of
the Effective Time, converted into the right to receive the Per Share
Cash Consideration. 2.2 Fractional Shares. Notwithstanding any other provision of this
Article II, no fractional shares of PNC Common Stock will be issued pursuant to
the
Merger. Instead, PNC will pay or cause to be paid to the holder of any
Old Shares that would, pursuant to paragraph 2.1, otherwise be entitled to
receive fractional shares of PNC Common Stock an amount in cash, rounded to the
nearest cent and without interest, equal to the product of (i) the fraction of
a share to which such holder would otherwise have been entitled and (ii) the
Measurement Price. 2.3 Exchange of Old Certificates for New Certificates. 8




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(a) Exchange Agent.Until the first anniversary of the Effective Time,
PNC shall make available or cause to be made available to the Exchange Agent
certificates (each, a New Certificate) representing the shares of PNC Common
Stock (each, a New Share) and cash in amounts sufficient to allow the
Exchange Agent to make all deliveries of New Certificates and payments that may
be required in exchange for Old Certificates pursuant to this Article II. Upon
such anniversary, any such New Certificates and cash remaining in the
possession of the Exchange Agent (together with any dividends or earnings in
respect thereof) shall be delivered to PNC. Any holder of Old Certificates who
has not theretofore exchanged his or her Old Certificates for New Certificates
and/or cash pursuant to this Article II shall thereafter be entitled to look
exclusively to PNC, and only as a general creditor thereof in the case of cash,
for the shares of PNC Common Stock and/or cash to which he or she may be
entitled upon exchange of such Old Certificates pursuant to this Article II.
Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto,
shall be liable to any holder of Old Certificates for any amount properly
delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws. (b) Exchange Procedures. At least twenty business days prior to the
expected Election Deadline, and thereafter from time to time as the Company may
reasonably request until the Election Deadline, PNC shall cause the Exchange
Agent to mail or deliver to each individual, bank, corporation, partnership,
trust, association or other entity or organization (any of the foregoing, a
Person) who is a holder of record of Company Common Stock an Election Form
and a form of letter of transmittal in form reasonably satisfactory to PNC and
the Company containing instructions for use in effecting the surrender of Old
Certificates in exchange for New Certificates and any payments pursuant to this
Article II. To be effective, the Election Form must be properly completed,
signed and actually received by the Exchange Agent not later than 5:00 p.m.,
New York City time, on the business day that is ten (10) trading days prior to
the Closing Date (which date shall be publicly announced by PNC as soon as
practicable prior to such date) (the Election Deadline) and accompanied by
the Old Certificates as to which such Election Form is being made, duly
endorsed in blank or otherwise in a form acceptable for transfer on the books
of Company (or accompanied by an appropriate guarantee of delivery by an
eligible organization) in the case of shares that are not held in book entry
form. For shares that are held in book entry form, PNC shall establish
procedures for the delivery of such shares, which procedures shall be
reasonably acceptable to Company. The Exchange Agent shall make all
computations contemplated by Section 2.1 hereof, and after consultation with
PNC and the Company, all such computations will be conclusive and binding on
the former holders of Company Common Stock absent manifest error. Any shares
of
Company Common Stock for which the record holder has not, as of the
Election Deadline, properly submitted to the Exchange Agent a properly
completed Election Form will be deemed No-Election Shares. Any Election Form
may be revoked, by the stockholder who submitted such Election Form to the
Exchange Agent, only by written notice received by the Exchange Agent prior to
the Election Deadline. In addition, all Election Forms shall automatically be
revoked if the Exchange Agent is notified in writing by PNC and the Company
that the Merger has been abandoned. Promptly after the Effective Time, each
holder who has surrendered to the Exchange Agent an Old Certificate for
cancellation together with such letter of transmittal, duly executed and 9




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completed in accordance with the instructions thereto, shall be entitled to
receive in exchange therefor a New Certificate representing the New Shares
and/or a check in the amount to which such holder is entitled pursuant to this
Article II, and the Old Certificate so surrendered shall forthwith be canceled.
No interest will accrue or be paid with respect to any property to be
delivered upon surrender of Old Certificates. If any New Certificate is to be
issued, or cash payment made, in a name other than that in which the Old
Certificate surrendered in exchange therefor is registered, it shall be a
condition of such exchange that the Person requesting such exchange shall pay
any transfer or other taxes required by reason of the issuance of such New
Certificate or the making of such cash payment in a name other than that of the
registered holder of the Old Certificate surrendered, or shall establish to the
satisfaction of the PNC and the Exchange Agent that any such taxes have been
paid or are not applicable. (c) Distributions with Respect to Unexchanged Shares. Notwithstanding any
other provision of this Plan, no dividends or other distributions in respect of
New Shares with a record date after the Effective Time shall be paid to any
Person holding an Old Certificate until such Old Certificate has been
surrendered for exchange as provided herein. Subject to the effect of
applicable laws and the immediately preceding sentence, following surrender of
any such Old Certificates, there shall be paid to the holder of the New
Certificates issued in exchange therefor, without interest, at the time of such
surrender, the amount of dividends or other distributions with a record date on
or after the Effective Time theretofore payable with respect to the New Shares
represented thereby, as well as any dividends with respect to Company Common
Stock declared prior to the Effective time but unpaid. (d) Transfers. At or after the Effective Time, there shall be no
transfers on the stock transfer books of PNC or the Company of Old Shares. (e) Lost, Stolen or Destroyed Certificates. If any Old Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Old Certificate to be lost, stolen or
destroyed and, if required by PNC or the Exchange Agent, the posting by such
Person of a bond in such reasonable amount as PNC or the Exchange Agent may
direct as indemnity against any claim that may be made against it with respect
to such Old Certificate, PNC or the Exchange Agent shall, in exchange for such
lost, stolen or destroyed Old Certificate, issue or cause to be issued a New
Certificate and/or pay or cause to be paid the amounts, if any, deliverable in
respect to the Old Shares formerly represented by such Old Certificate pursuant
to this Article II. 2.4 Adjustment of Consideration. In the event that, subsequent to the
date of this Plan but prior to the Effective Time, the shares of PNC Common
Stock issued and outstanding shall, through a reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
similar change in the capitalization of PNC, increase or decrease in number or
be changed into or exchanged for a different kind or number of securities, then
an appropriate and proportionate adjustment shall be made to the Per Share Cash
Consideration and the Per Share Stock Consideration. 10




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2.5 Shares of Dissenting Stockholders. Notwithstanding anything in
this Agreement to the contrary, any shares of Company Common Stock that are
issued and outstanding as of the Effective Time and that are held by a
stockholder who has properly exercised his appraisal rights under the DGCL (the
Dissenting Shares) shall not be converted into the right to receive the
Consideration unless and until the holder shall have failed to perfect, or
shall have effectively withdrawn or lost, his right to dissent from the Merger
under the DGCL and to receive such consideration as may be determined to be due
with respect to such Dissenting Shares pursuant to and subject to the
requirements of the DGCL. If any such holder shall have so failed to perfect
or have effectively withdrawn or lost such right after the Election Deadline,
each share of such holders Company Common Stock shall thereupon be deemed to
have been converted into and to have become, as of the Effective Time, the
right to receive, without any interest thereon, the Per Share Stock
Consideration or the Per Share Cash Consideration, or a combination thereof, as
determined by PNC in its sole discretion. The Company shall give PNC (i)
prompt notice of any notice or demands for appraisal or payment for shares of
Company Common Stock received by the Company and (ii) the opportunity to
participate in and direct all negotiations and proceedings with respect to any
such demands or notices. The Company shall not, without the prior written
consent of PNC, make any payment with respect to, or settle, offer to settle or
otherwise negotiate, any such demands. 2.7 Withholding Rights. PNC shall be entitled to deduct and withhold from
the Consideration such amounts as it is required to deduct and withhold under
the Code and the rules and regulations promulgated thereunder, or any provision
of state, local or foreign Tax law. To the extent that amounts are so withheld
by PNC, such withheld amounts shall be treated for all purposes of this Plan as
having been paid to the Company stockholder in respect to which such deduction
and withholding was made by PNC. ARTICLE II
Conduct of Business Pending Merger 3.1 Company Forbearances. The Company agrees that from the date hereof
until the Effective Time, except as contemplated by this Plan, or as set forth
in the applicable paragraph of its Disclosure Schedule (Previously
Disclosed), without the prior written consent of the other party hereto (which
consent shall not be unreasonably withheld), it will not, and will cause each
of its subsidiaries not to: (a) Ordinary Course. Conduct its business and the business of its
subsidiaries other than in the ordinary and usual course or fail to use
reasonable efforts to preserve intact their business organizations and assets
and maintain their rights, franchises and existing relations with customers,
suppliers, employees and business associates, or take any action reasonably
likely to materially impair its ability to perform its obligations under this
Plan or to consummate the transactions contemplated hereby and thereby. (b) Capital Stock. (1) Issue, sell or otherwise permit to become
outstanding, or dispose of or encumber or pledge or authorize or propose the
creation of, any additional shares of its stock other than pursuant to Rights 11




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outstanding on the date hereof, (2) enter into any agreement with respect to
the foregoing or (3) permit any additional shares of its stock to become
subject to new grants, other Rights or similar stock-based employee rights. (c) Dividends, Etc.(1) Make, declare, pay or set aside for payment any
dividend (other than (A) dividends from its direct or indirect wholly owned
subsidiaries to it or another of its wholly owned subsidiaries, (B) dividends
on preferred stock of subsidiaries, the common stock of which is wholly owned
directly or indirectly by the Company, in accordance with the terms thereof,
and (C) regular quarterly dividends on its common stock at a rate equal to the
rate paid by it during the fiscal quarter immediately preceding the date hereof
or (2) directly or indirectly adjust, split, combine, redeem, reclassify,
purchase or otherwise acquire, any shares of its capital stock. (d) Compensation; Employment Agreements; Etc.Enter into or amend or
renew any employment, consulting, severance or similar agreements or
arrangements with any of its directors, officers or employees or those of its
subsidiaries or grant any salary or wage increase or increase any employee
benefit (including incentive or bonus payments), except (1) for normal
individual increases in compensation to employees (other than executive
officers or directors) in the ordinary course of business consistent with past
practice, (2) for other changes that are required by applicable law and (3) to
satisfy Previously Disclosed contractual obligations. (e) Benefit Plans.Enter into, establish, adopt or materially amend any
Benefit Plan, except (1) as may be required by applicable law, (2) to satisfy
Previously Disclosed contractual obligations or (3) as provided in this Plan. (f) Dispositions. Sell, transfer, mortgage, encumber or otherwise dispose
of or discontinue any of its assets, deposits, business or properties except
for sales, transfers, mortgages, encumbrances or other dispositions or
discontinuances in the ordinary course of business consistent with past
practice and in a transaction that, together with other such transactions, is
not material to it and its subsidiaries, taken as a whole. (g) Acquisitions. Acquire (other than by way of foreclosures or
acquisitions of control in a fiduciary or similar capacity or in satisfaction
of debts previously contracted in good faith, in each case in the ordinary and
usual course of business consistent with past practice) all or any portion of
the assets, business,
deposits or properties of any other entity except in the ordinary course
of business consistent with past practice and in a transaction that, together
with other such transactions, is not material to it and its subsidiaries, taken
as a whole. (h) Governing Documents. Amend its articles of incorporation, bylaws or
similar governing documents (Governing Documents) or the Governing Documents
of any of its subsidiaries, except as contemplated by this Plan. (i) Accounting Methods. Implement or adopt any change in its accounting
principles, practices or methods, other than as may be required by 12




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generally
accepted accounting principles, applicable regulatory accounting requirements
or applicable law. (j) Contracts. (1) Enter into, renew or terminate, or make any payment
not then required under, any contract or agreement (other than loans, funding
arrangements and other transactions made in the ordinary course of the banking
business and that do not contain (A) any non-competition or exclusive dealing
agreements or other agreement or obligation which purports to limit or restrict
in any respect the ability of the Company or its subsidiaries to solicit
customers or the manner in which, or the localities in which, all or any
portion of the business of the Company and its or could be conducted or (B)
any agreement that grants any right of first refusal or right of first offer or
similar right or that limits or purports to limit the ability of the Company or
any of its subsidiaries (or, following consummation of the transactions
contemplated hereby, the ability of PNC or any of its subsidiaries) to own,
operate, sell, transfer, pledge or otherwise dispose of any assets or business)
that calls for aggregate annual payments of $300,000 or more and which is not
terminable on 60 days or less notice without payment of any termination fee or
penalty and (2) enter into any contract or agreement pertaining to the use of
the name Riggs or any derivative thereof. (k) Claims. Settle any claim, action or proceeding against it, except for
any claim, action or proceeding settled in the ordinary course of business in
an amount or for such consideration not in excess of $100,000, individually, or
$300,000 in the aggregate for all such settlements, and would not impose any
material restriction on the business of the Company or its subsidiaries or,
after the Effective Time, PNC or its subsidiaries or create precedent for
claims that are reasonably likely to be material to the Company or its
subsidiaries or, after the Effective Time, PNC or its subsidiaries. (l) Adverse Actions. Notwithstanding anything herein to the contrary, (1)
take any action that would, or is reasonably likely to, prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the Code
or (2) take any action that is reasonably likely to result in (A) any of the
conditions to the Merger set forth in Article VI not being satisfied in a
timely manner or (B) a material violation of any provision of this Plan except,
in each case, as may be required by applicable law or regulation. (m) Capital Expenditures. Other than in the ordinary course of business,
make any capital expenditures in excess of (1) $100,000 per project or related
series of projects or (2) $300,000 in the aggregate. (n) Certain Tax Matters.Make, change or revoke any material Tax
election, file any material amended Tax Return, enter into any material closing
agreement, settle any material Tax claim or assessment, or surrender any right
to claim a material refund of Taxes. (o) Commitments. Agree or commit to do any of the foregoing. 3.2 PNC Forbearances. PNC agrees that from the date hereof until the
Effective Time, except as expressly contemplated by this Plan or as Previously 13




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Disclosed, without the prior written consent of the Company (which consent
shall not be unreasonably withheld), it will not, and, in the case of (b) only,
will cause each of its subsidiaries not to: (a) Governing Documents. Amend its Governing Documents in a manner that
would adversely affect the Companys stockholders. (b) Adverse Actions. Notwithstanding anything herein to the contrary, (1)
take any action that would, or is reasonably likely to, prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code, (2) take any action that is reasonably likely to result in (A) any of the
conditions to the Merger set forth in Article VI not being satisfied in a
timely manner or (B) a material violation of any provision of this Plan except,
in each case, as may be required by applicable law or regulation or (3) declare
or pay any extraordinary or special dividends on or make any other
extraordinary or special distributions in respect of any of its capital stock. ARTICLE III
Representations 4.1 Disclosure Schedules. On or prior to the date hereof, PNC has
delivered to the Company a schedule and the Company has delivered to PNC a
schedule (respectively, each schedule a Disclosure Schedule) setting forth,
among other things, items the disclosure of which is necessary or appropriate
either in response to an express disclosure requirement contained in a
provision hereof or as an exception to one or more representations contained in
Section 4.3 or to one or more of its covenants contained herein; provided, that
the mere inclusion of an item in a Disclosure Schedule as an exception to a
representation shall not be deemed an admission by a party that such item was
required to be disclosed therein. 4.2 Standard. (a) For all purposes of this Plan, no representation of
PNC or the Company contained in Section 4.3 (other than the representations
contained in Section 4.3(b), which shall be true and correct in all material
respects, and in Section 4.3(g)(3), which shall be true and correct in all
respects) shall be deemed untrue and no party hereto shall be deemed to have
breached a representation, as a consequence of the existence of any fact, event
or circumstance unless such fact, circumstance or event, individually or taken
together with all other facts, events or circumstances inconsistent with any
representation contained in Section 4.3 (read for this purpose without regard
to any individual reference to materiality or Material Adverse Effect set
forth therein) has had or is reasonably
likely to have a Material Adverse Effect with respect to PNC or the
Company, as the case may be. (b) The term Material Adverse Effect means an effect which (1) is
materially adverse to the business, financial condition or results of
operations of PNC or the Company, as the context may dictate, and its
subsidiaries, taken as a whole, or (2) materially impairs the ability of PNC or
the Company to consummate the Merger; provided, however, that in determining
whether a Material Adverse Effect has occurred there shall be excluded any
effect to the extent attributable to or resulting from (A) any changes in laws,
regulations or interpretations of laws or 14




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regulations generally affecting the
banking or bank holding company businesses, but not uniquely relating to PNC or
the Company, (B) any change in generally accepted accounting principles or
regulatory accounting requirements, generally affecting the banking or bank
holding company businesses, but not uniquely relating to PNC or the Company,
(C) events, conditions or trends in economic, business or financial conditions
generally or affecting the banking or bank holding company businesses
specifically (including changes in interest rates and changes in the markets
for securities), except to the extent any such events, conditions or trends in
economic, business or financial conditions have a materially disproportionate
adverse effect upon PNC or the Company, as the context may dictate, (D) changes
in national or international political or social conditions including the
engagement by the United States in hostilities, whether or not pursuant to the
declaration of a national emergency or war, or the occurrence of any military
or terrorist attack upon or within the United States, or any of its
territories, possessions or diplomatic or consular offices or upon any military
installation, equipment or personnel of the United States, (E) actions or
omissions of PNC or the Company taken with the prior written consent of the
other party in contemplation of the transactions contemplated hereby and (F)
any change, effect, event or occurrence arising out of the announcement or
performance of this Plan and the transactions contemplated hereby, including
any expenses incurred in connection herewith. 4.3 Representations. Except as Previously Disclosed, the Company hereby
represents and warrants to PNC, and PNC hereby represent and warrant to the
Company, to the extent applicable, in each case with respect to itself and its
subsidiaries, as follows: (a) Organization, Standing and Authority. It is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. It is duly qualified to do business and is
in good standing in the states of the United States and any foreign
jurisdictions where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified. (b) Capital Stock. (1) The information in Recital A, in the case of PNC, and in Recital B, in
the case of the Company, is true and correct. (2) Its outstanding shares of common stock have been duly authorized and
are validly issued and outstanding, fully paid and nonassessable, not subject
to any preemptive rights and were not issued in violation of any preemptive
rights. (3) Except as set forth in this Plan or as Previously Disclosed, as of the
date hereof, there are no shares of its common stock authorized and reserved
for issuance, it does not have any Rights outstanding with respect to its
common stock, and it does not have any commitment to authorize, issue or sell
any of its common stock or Rights, except pursuant to this Plan, outstanding
options to purchase its common stock and the Benefit Plans. All Company
Options 15




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(as defined in Section 5.10(a)) under the Riggs National Corporation 1993 Stock Option
Plan, Riggs National Corporation 1994 Stock Option Plan, Riggs National
Corporation 1996 Stock Option Plan and Riggs National Corporation 1997
Non-Employee Directors Stock Option Plan are fully vested and exercisable, or will become
such in accordance with their regular vesting schedule prior to October 11, 2004.
As used herein, Rights means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any Person any right
to subscribe for or acquire, or any options, calls or commitments relating to, or any
stock appreciation right or other instrument the value of which is determined in whole or
in part by reference to the market price or value of, shares of capital stock or earnings of
such Person. (4) In the case of PNC, any shares of PNC Common Stock issued in
connection with the Merger have been duly authorized and are validly issued and
outstanding, fully paid and nonassessable, not subject to any preemptive rights
and were not issued in violation of any preemptive rights. (c) Subsidiaries. (1) The Company has Previously Disclosed a list of all of its
subsidiaries. (2) (A) It owns, directly or indirectly, all the issued and outstanding
equity securities of each of its Significant Subsidiaries, (B) no equity
securities of any of its Significant Subsidiaries are or may become required to
be issued (other than to it or its wholly owned subsidiaries) by reason of any
Right or otherwise, (C) there are no contracts, commitments, understandings or
arrangements by which any of its Significant Subsidiaries is or may be bound to
sell or otherwise transfer any equity securities of any its subsidiaries (other
than to it or its wholly owned subsidiaries), (D) there are no contracts,
commitments, understandings, or arrangements relating to its rights to vote or
to dispose of such securities and (E) all the equity securities of each
Significant Subsidiary held by it or its subsidiaries have been duly authorized
and are validly issued and outstanding, fully paid and nonassessable (except as
provided in 12 U.S.C. § 55 or
comparable state laws) and are owned by it or its subsidiaries free and
clear of all liens, pledges, security interests, claims, provisions, preemptive
or subscriptive rights or other encumbrances or restrictions of any kind or
Rights (Liens). For purposes of this Plan, Significant Subsidiaryhas the
meaning ascribed to that term in Rule 1-02 of Regulation S-X under the
Securities Exchange Act of 1934, as amended (the Exchange
Act). (3) Each of its Significant Subsidiaries has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of its
organization, and is duly qualified to do business and in good standing in the
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified. (d) Corporate Power. It and each of its Significant Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and it has the corporate
power 16




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and authority to execute, deliver and perform its obligations under this
Plan and to consummate the transactions contemplated hereby and thereby. (e) Corporate Authority. (1) Subject to receipt of the stockholder approval described in Section
4.3(e)(3), in the case of the Company, this Plan and the transactions
contemplated hereby and thereby have been authorized by all necessary corporate
action. This Plan is its valid and legally binding obligation, enforceable in
accordance with its terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or affecting
creditors rights or by general equity principles). (2) In the case of PNC, no vote of the holders of any class or series of
PNCs capital stock is necessary to approve and adopt this Plan and the
transactions contemplated hereby. (3) In the case of the Company, the affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock to adopt this Plan
is the only vote of the holders of any class or series of the Companys capital
stock necessary to approve and adopt this Plan and the transactions
contemplated hereby. (f) Regulatory Approvals; No Defaults. (1) No consents or approvals of, or filings or registrations with, any
governmental or regulatory authority, agency, court, commission or other
entity, domestic or foreign (Governmental Entity) or with any third party are
required to be made or obtained by it or any of its subsidiaries in connection
with the execution, delivery or performance by it of this Plan or to consummate
the Merger or the Bank Merger except for (A) filings and approvals of
applications with and by federal, state and other authorities as Previously
Disclosed, (B) filings with the SEC, the National Association of Securities
Dealers, and state securities
authorities, (C) filings and approvals under the Hart-Scott-Rodino
Antitrust Improvements Act, if required by applicable law and regulation (D)
the applicable stockholder approval described in Section 5.2(a), (E) any
consents, notices or approvals required pursuant to any investment advisory
contract or the Investment Advisers Act of 1940, and (F) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware
pursuant to the DGCL and the filing of the Articles of Merger with the
Department of State of the Commonwealth of Pennsylvania. (2) Subject to receipt of the regulatory approvals referred to in the
preceding paragraph (the Regulatory Approvals), and the expiration of related
waiting periods, and required filings under federal and state securities laws,
the execution, delivery and performance of this Plan and the consummation of
the transactions contemplated hereby do not and will not (A) constitute a
breach or violation of, or a default under, or give rise to any Lien, any
acceleration of remedies or any right of termination under, any law, rule or
regulation or any judgment, 17




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decree, order, governmental permit or license, or
agreement, indenture or instrument of it or of any of its subsidiaries or to
which it or any of its subsidiaries or properties is subject or bound, (B)
constitute a breach or violation of, or a default under, its Governing
Documents or (C) require any consent or approval under any such law, rule,
regulation, judgment, decree, order, governmental permit or license, agreement,
indenture or instrument. (3) As of the date hereof, it (a) knows of no reason why (1) all
Regulatory Approvals from any Governmental Entity required for the consummation
of the transactions contemplated by this Plan should not be obtained on a
timely basis or (2) the opinion of tax counsel referred to, in the case of PNC,
in Section 6.2(c) and, in the case of the Company, in Section 6.3(c) should not
be obtained on a timely basis and (b) has no reason to believe that the Merger
will fail to qualify as a reorganization under Section 368(a) of the Internal
Revenue Code. (g) Financial Reports and Regulatory Documents; Material Adverse Effect. (1) Its Annual Report on Form 10-K for the fiscal year ended December 31,
2003, and all other reports, registration statements, definitive proxy
statements or information statements filed by it or any of its subsidiaries
subsequent to December 31, 2003 under the Securities Act of 1933, as amended
(Securities Act), or under Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act or under the securities regulations of the SEC, in the form filed
(collectively, its Regulatory Filings) with the SEC as of the date filed, (A)
complied in all material respects as to form with the applicable requirements
under the Securities Act or the Exchange Act, as the case may be, and (B) did
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 therein,
in the light of the circumstances under which they were made, not misleading;
and each of the balance sheets or statements of condition contained in or
incorporated by reference into any such Regulatory Filing (including the
related notes and schedules thereto) fairly presented in all material respects
its financial position and that of its subsidiaries
as of its date, and each of the statements of income and changes in
shareholders equity and cash flows or equivalent statements in such Regulatory
Filings (including any related notes and schedules thereto) fairly presented in
all material respects, the results of operations, changes in shareholders
equity and changes in cash flows, as the case may be, of it and its
subsidiaries for the periods to which they relate, in each case in accordance
with GAAP consistently applied during the periods involved, except in each case
as may be noted therein, subject to normal year-end audit adjustments in the
case of unaudited statements. (2) Since December 31, 2003, it and its subsidiaries have not incurred any
liability other than in the ordinary course of business consistent with past
practice. (3) In the case of the Company only, since December 31, 2003, (A) it and
its subsidiaries have conducted their businesses in the ordinary and usual
course consistent with past practice (excluding the incurrence of 18




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expenses
related to this Plan and the transactions contemplated hereby) and (B) no event
has occurred or circumstance arisen that, individually or taken together with
all other facts, circumstances and events (described in any paragraph of
Section 4.3 or otherwise), is reasonably likely to have a Material Adverse
Effect with respect to it. (4) In the case of the PNC only, since December 31, 2003, no event has
occurred or circumstance arisen that, individually or taken together with all
other facts, circumstances and events (described in any paragraph of Section
4.3 or otherwise), is reasonably likely to have a Material Adverse Effect with
respect to it. (h) Litigation. Except as set forth in its Regulatory Filings prior to
the date hereof, there is no suit, action or proceeding pending or, to the
knowledge of it, threatened against or affecting it or any of its subsidiaries
(and it is not aware of any basis for any such suit, action or proceeding) (1)
that, individually or in the aggregate, is material to it and its subsidiaries,
taken as a whole, or (2) that is reasonably likely to prevent or delay it in
any material respect from performing its obligations under, or consummating the
transactions contemplated by, this Plan. (i) Regulatory Matters. (1) Except as Previously Disclosed, neither it nor any of its subsidiaries
is a party to or is subject to any written order, decree, agreement, memorandum
of understanding or similar arrangement with, or a commitment letter or similar
submission to, or extraordinary supervisory letter from, any Governmental
Entity charged with the supervision or regulation of financial institutions or
issuers of securities or engaged in the insurance of deposits or the
supervision or regulation of it or any of its subsidiaries (collectively, the
Regulatory Authorities). (2) Except as Previously Disclosed, neither it nor any of its subsidiaries
has been advised by any Regulatory Authority that such Regulatory Authority is
contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such written order, decree,
agreement, memorandum of understanding, commitment letter, supervisory letter
or similar submission. Except as Previously Disclosed, there are no material
formal or informal investigations relating to any material regulatory matters
pending before any Governmental Entity with respect to it or its subsidiaries. (j) Compliance with Laws. Except as Previously Disclosed, it and each of
its subsidiaries: (1) conducts its business in compliance with all applicable federal,
state, local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable thereto or to the employees conducting
such businesses, including, without limitation, the Sarbanes-Oxley Act of 2002,
the Equal Credit Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act, the Home Mortgage Disclosure Act, the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA 19




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PATRIOT) Act of 2001, the Bank Secrecy Act and all
other applicable fair lending laws and other laws relating to discriminatory
business practices; and (2) has all permits, licenses, authorizations, orders and approvals of,
and has made all filings, applications and registrations with, all Governmental
Entities that are required in order to permit them to own or lease their
properties and to conduct their businesses as presently conducted; all such
permits, licenses, certificates of authority, orders and approvals are in full
force and effect and, to its knowledge, no suspension or cancellation of any of
them is threatened. (k) Material Contracts; Defaults. Except for those agreements and other
documents filed as exhibits to its Regulatory Filings, neither it nor any of
its subsidiaries is a party to, bound by or subject to any agreement, contract,
arrangement, commitment or understanding (1) that is a material contract
within the meaning of Item 601(b)(10) of the SECs Regulation S-K, (2) in the
case of the Company only, any agreement, contract, arrangement, commitment or
understanding that contains (A) any non-competition or exclusive dealing
agreements or other agreement or obligation which purports to limit or restrict
in any respect the ability of the Company or its subsidiaries to solicit
customers or the manner in which, or the localities in which, all or any
portion of the business of the Company and its Subsidiaries is or would be
conducted or (B) any agreement that grants any right of first refusal or right
of first offer or similar right or that limits or purports to limit the ability
of the Company or any of its subsidiaries; (3) in the case of the Company only,
any agreement, contract, arrangement, commitment or understanding that involves
performance of services or delivery of goods or materials to or by, or
expenditures or receipts of, it or any of its subsidiaries of an amount or
value in excess of $300,000, other than any loan commitment entered in the
ordinary course or any such agreement, contract, arrangement, commitment or
understanding that is terminable on 60 days or less notice without payment of
any termination fee or penalty; (4) in the case of the Company only, any joint
venture, partnership or similar arrangement providing for the sharing of
profits, losses, costs or liabilities by it or any of its subsidiaries with any
other Person; and (5) in the case of the Company only, any agreement providing
for the indemnification by the
Company or its subsidiaries of any Person (other than customary agreements
with vendors providing goods or services to the Company or its Subsidiaries
where the potential indemnity obligations thereunder are not reasonably
expected to be material to the Company). Neither PNC nor any of its
subsidiaries, nor Seller nor any of its subsidiaries, is in default under any
material contract, agreement, commitment, arrangement, lease, insurance policy
or other instrument to which it is a party, by which its respective assets,
business, or operations may be bound or affected, or under which it or its
respective assets, business, or operations receives benefits, and there has not
occurred any event that, with the lapse of time or the giving of notice or
both, would constitute such a default. (l) No Brokers; Fairness Opinions. (i) No action has been taken by it
that would give rise to any valid claim against any party hereto for a
brokerage commission, finders fee or other like payment with respect to the
transactions contemplated by this Plan, excluding a Previously Disclosed fee to
be paid to 20




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Sandler ONeill & Partners, L.P., in the case of PNC, and Previously
Disclosed fee to be paid to Lehman Brothers Inc., in the case of the Company. (ii) As of the date of this Plan, it has received the written opinion,
dated the date of this Plan, of its financial advisor, Lehman Brothers Inc., in
the case of the Company, and of its financial advisor, Sandler ONeill &
Partners, L.P., in the case of PNC, to the effect that the Consideration is
fair, from a financial point of view, to, in the case of PNC, PNC and in the
case of the Company, the holders of Company Common Stock. (m) Employee Benefit Plans. In the case of the Company only, (1) All benefit and compensation plans, contracts, policies or
arrangements covering its current or former employees of it and its
subsidiaries (the Employees) and its current or former directors, including,
but not limited to, employee benefit plans within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended (ERISA),
and deferred compensation, stock option, stock purchase, stock appreciation
rights, stock based, incentive and bonus plans (the Benefit Plans)have been
Previously Disclosed. Copies of all Benefit Plans and all amendments thereto,
all summary plan descriptions, the most recently filed Form 5500 and the most
recent IRS determination letter have been made available to the other party. (2) All Benefit Plans, other than multiemployer plans within the meaning
of Section 3(37) of ERISA (each a Multiemployer Plan) are in substantial
compliance with ERISA, the Internal Revenue Code and other applicable laws.
Each Benefit Plan which is subject to ERISA (the ERISA Plans) that is an
employee pension benefit plan within the meaning of Section 3(2) of ERISA
(Pension Plan), and that is intended to be qualified under Section 401(a) of
the Internal Revenue Code has received a favorable determination letter from
the Internal Revenue Service (the IRS), and it is not aware of any
circumstances likely to result in the loss of the qualification of such plan
under Section 401(a) of the Internal Revenue Code. Neither it nor any of its
subsidiaries has engaged in a transaction with respect to any ERISA Plan that,
assuming the taxable period of such transaction expired as of the date hereof,
could subject it or any subsidiary to
a tax or penalty imposed by either Section 4975 of the Internal Revenue
Code or Section 502(i) of ERISA in an amount which would be material. Neither
it nor any of its subsidiaries has incurred or reasonably expects to incur a
material tax or penalty imposed by Section 4980F of the Internal Revenue Code
or Section 502 of ERISA. (3) No liability under Subtitle C or D of Title IV of ERISA has been or is
reasonably expected to be incurred by it or any of its subsidiaries with
respect to any ongoing, frozen or terminated single-employer plan, within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by
any of them, or the single-employer plan of any entity which is considered one
employer with it under Section 4001 of ERISA or Section 414 of the Internal
Revenue Code (an ERISA Affiliate). None of it, any of its subsidiaries or
any of its ERISA Affiliates has contributed to a Multiemployer Plan or a plan
that has two or more contributing sponsors at least two of whom are not under
common control, within 21




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the meaning of Section 4063 of ERISA, within the past
six years. No notice of a reportable event, within the meaning of Section
4043 of ERISA for which the 30-day reporting requirement has not been waived or
extended other than pursuant to Pension Benefit Guaranty Corporation Reg.
Section 4043.66, has been required to be filed for any Pension Plan or by any
ERISA Affiliate within the 12-month period ending on the date hereof or will be
required to be filed in connection with the transactions contemplated by this
Plan. (4) All contributions required to be made under each Benefit Plan have
been timely made and all obligations in respect of each Benefit Plan have been
properly accrued and reflected in the Regulatory Filings as of the date of such
filings. Neither any Pension Plan nor any single-employer plan of an ERISA
Affiliate has an accumulated funding deficiency (whether or not waived)
within the meaning of Section 412 of the Internal Revenue Code or Section 302
of ERISA and no ERISA Affiliate has an outstanding funding waiver. It is not
reasonably anticipated that required minimum contributions to any Pension Plan
under Section 412 of the Internal Revenue Code will be materially increased by
application of Section 412(l) of the Internal Revenue Code. Neither it nor any
of its subsidiaries has provided, or is required to provide, security to any
Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Internal Revenue Code. (5) Under each Pension Plan which is a single-employer plan, as of the
last day of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all benefit liabilities, within the
meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in such Pension Plans most recent actuarial
valuation), did not exceed the then current value of the assets of such Pension
Plan, and there has been no material change in the financial condition of such
Pension Plan since the last day of the most recent plan year. (6) As of the date hereof, there is no material pending or, to its
knowledge threatened, litigation relating to the Benefit Plans. Neither it nor
any of its subsidiaries has any obligations for retiree health and life
benefits under any ERISA Plan or collective bargaining agreement. It or its
subsidiaries may
amend or terminate any such plan or agreement at any time without
incurring any liability thereunder other in respect of claims owed prior to
such amendment or termination. (7) Neither the execution of this Plan, shareholder approval of this Plan
nor the consummation of the transactions contemplated hereby (either alone or
in conjunction with any other event) will (w) entitle any of its employees or
any of its subsidiaries to severance pay or any increase in severance pay upon
any termination of employment after the date hereof, (x) accelerate the time of
payment or vesting or result in any payment or funding (through a grantor trust
or otherwise) of compensation or benefits under, increase the amount payable or
result in any other material obligation pursuant to, any of the Benefit Plans,
(y) limit or restrict the right of the Company or, after the consummation of
the transactions contemplated hereby, PNC to merge, amend or terminate any of
the Benefit Plans or (z) result in payments under any of the Benefit Plans
which would 22




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not be deductible under Section 162(m) or Section 280G of the
Internal Revenue Code. (n) Labor Matters. Neither it nor any of its subsidiaries is a party to
or is bound by any collective bargaining agreement, contract or other agreement
or understanding with a labor union or labor organization, nor is it or any of
its subsidiaries the subject of a proceeding asserting that it or any such
subsidiary has committed an unfair labor practice (within the meaning of the
National Labor Relations Act) or seeking to compel it or any of its
subsidiaries to bargain with any labor organization as to wages or conditions
of employment, nor is there any strike or other material labor dispute
involving it or any of its subsidiaries pending or, to its knowledge,
threatened, nor to its knowledge is there any activity involving its or any of
its subsidiaries employees seeking to certify a collective bargaining unit or
engaging in other organizational activity. (o) Environmental Matters. To its knowledge, neither its conduct nor its
operation or the conduct or operation of its subsidiaries nor any condition of
any property presently or previously owned, leased or operated by any of them
(including, without limitation, in a fiduciary or agency capacity), violates or
violated Environmental Laws and no condition has existed or event has occurred
with respect to any of them or any such property that, with notice or the
passage of time, or both, is reasonably likely to result in liability under
Environmental Laws. To its knowledge, no property on which it or any of its
subsidiaries holds a Lien, violates or violated Environmental Laws and no
condition has existed or event has occurred with respect to any such property
that, with notice or the passage of time, or both, is reasonably likely to
result in liability under Environmental Laws. Neither it nor any of its
subsidiaries has received any written notice from any person or entity that it
or its subsidiaries or the operation or condition of any property ever owned,
leased, operated, or held as collateral or in a fiduciary capacity by any of
them are or were in violation of or otherwise are alleged to have liability
under any Environmental Law, including, but not limited to, responsibility (or
potential responsibility) for the cleanup or other remediation of any
pollutants, contaminants, or hazardous or toxic wastes, substances or materials
at, on, beneath, or originating from, any such property. Environmental Laws
means all applicable local, state and federal environmental, health and safety
laws and regulations, including the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation, and Liability Act, the
Clean Water Act, the Federal Clean Air Act, and the Occupational Safety and
Health Act, each as amended, regulations promulgated thereunder, and state
counterparts. (p) Tax Matters. (1) (A) All returns, amended returns or other reports (including
elections, declarations, disclosures, schedules, estimates and information
returns) with respect to Taxes (as hereinafter defined) (Tax Returns) that
are required to be filed (taking into account any validly obtained extensions
of time within which to file) by or with respect to it and its subsidiaries
have been duly and timely filed, and all such Tax Returns are complete and
accurate in all material respects, (B) all Taxes shown to be due on the Tax
Returns referred to in clause (A) 23




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have been paid in full in a timely manner,
(C) all Taxes that it or any of its Subsidiaries is obligated to withhold from
amounts owing to any employee, creditor or third party have been withheld and,
to the extent due and payable, paid over to the proper Governmental Authority
in a timely manner, (D) the Tax Returns referred to in clause (A) have been
examined by the Internal Revenue Service or the appropriate Tax authority or
the period for assessment of the Taxes in respect of which such Tax Returns
were required to be filed has expired, (E) all deficiencies asserted or
assessments made as a result of such examinations have been paid in full, (F)
no issues that have been raised by the relevant taxing authority in connection
with the examination of any of the Tax Returns referred to in clause (A) are
currently pending, and (G) no extensions or waivers of statutes of limitation
have been given by, or requested with respect to any Taxes of, it or any of its
subsidiaries. (2) (A) It has made available to the other party hereto true and correct
copies of the U.S. federal income Tax Returns filed by it and its subsidiaries
for each of the three most recent fiscal years ended on or before December 31,
2003; (B) it has made provision in accordance with GAAP, in the financial
statements included in the Regulatory Filings filed prior to the date hereof,
for all Taxes that accrued on or before the end of the most recent period
covered by its Regulatory Filings filed prior to the date hereof; (C) neither
it nor any of its subsidiaries is a party to any Tax allocation or sharing
agreement, is or has been a member of an affiliated group filing consolidated
or combined Tax returns (other than a group over which it is or was the common
parent) or otherwise has any liability for the Taxes of any person (other than
its own Taxes and those of its subsidiaries); (D) as of the date hereof,
neither it nor any of its subsidiaries has any reason to believe that any
conditions exist that could reasonably be expected to prevent or impede the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code; (E) no Liens for Taxes exist with respect to any
of its assets or properties or those of its subsidiaries, except for statutory
Liens for Taxes not yet due and payable or that are being contested in good
faith and reserved for in accordance with GAAP; (F) neither it nor any of its
subsidiaries has been a party to any distribution occurring during the last
three years in which the parties to such distribution treated the distribution
as one to which Section 355 of the Internal Revenue Code applied; (G) neither
it nor any of its
subsidiaries has been a party to any listed transaction as defined in
Treasury Regulation Section 1.6011-4; and (H) no Tax is required to be withheld
pursuant to Section 1445 of the Internal Revenue Code as a result of the
transfer contemplated by this Plan. (3) As used herein, Tax and Taxes means all federal, state, local or
foreign taxes, charges, levies or other assessments, however denominated,
including, without limitation, all net income, gross income, gains, gross
receipts, sales, use, ad valorem, goods and services, capital, production,
transfer, franchise, windfall profits, license, withholding, payroll,
employment, disability, employer health, excise, estimated, severance, stamp,
occupation, property, environmental, unemployment or other taxes, custom
duties, assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any taxing authority whether arising before, on or after the Closing Date. 24




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(q) Derivative Instruments. All interest rate swaps, caps, floors, option
agreements, futures and forward contracts and other similar risk management
arrangements, whether entered into for its own account, or for the account of
one or more of its subsidiaries or their customers, if any, were entered into
(1) in accordance with prudent business practices and all applicable laws,
rules, regulations and regulatory policies and (2) with counterparties believed
to be financially responsible at the time; and each of them constitutes the
valid and legally binding obligation of such party or one of its subsidiaries,
enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditors rights or by general equity principles), and are in full
force and effect. Neither it nor its subsidiaries, nor to its knowledge, any
other party thereto, is in breach of any of its obligations under any such
agreement or arrangement. (r) Insurance. It and its subsidiaries are insured with reputable
insurers against such risks and in such amounts as its management reasonably
has determined to be prudent in accordance with industry practices. All of the
insurance policies, binders, or bonds maintained by it or its subsidiaries are
in full force and effect; it and its subsidiaries are not in material default
thereunder. (s) Takeover Laws and Provisions. It has taken all action required to be
taken by it in order to exempt this Plan and the transactions contemplated
hereby from, and this Plan and the transactions contemplated hereby are exempt
from, the requirements of any moratorium, control share, fair price,
affiliate transaction, business combination or other antitakeover laws and
regulations of any state (collectively, Takeover Laws). It has taken all
action required to be taken by it in order to make this Plan and the
transactions contemplated hereby comply with, and this Plan, and the
transactions contemplated hereby comply with, the requirements of any Articles,
Sections or provisions of its Governing Documents concerning business
combinations, fair price, voting requirements, constituency requirements
or other related provisions (collectively, Takeover Provisions). (t) Transactions with Affiliates. There are no outstanding amounts
payable to or receivable from, or advances by the Company or any of its
subsidiaries to, and neither the Company nor any of its subsidiaries is
otherwise a creditor or debtor to, any present or former director or executive
officer of the Company or any of its subsidiaries, other than as part of the
normal and customary terms of such Persons respective employment or service as
a director with the Company or any of its subsidiaries. Neither the Company
nor any subsidiary of the Company is a party to any transaction or agreement
with any present or former director or executive officer of the Company, other
than the terms of such Persons respective employment or service as a director
with the Company or any of its subsidiaries. (u) Available Funds. In the case of PNC, PNC has or will have available
to it all funds necessary to satisfy all of its obligations hereunder and in
connection with the Merger and the other transactions contemplated by this
Plan. 25




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ARTICLE V
Covenants 5.1 Reasonable Best Efforts. Subject to the terms and conditions of this
Plan, each of PNC and the Company agrees to use its respective reasonable best
efforts in good faith to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or desirable, or advisable under
applicable laws, so as to permit consummation of the Merger as soon as possible
and otherwise to enable consummation of the transactions contemplated hereby
and shall cooperate fully with the other party hereto to that end. 5.2 Stockholder Approvals. (a) The Company agrees to take in accordance with applicable law and its
Governing Documents all action necessary to convene a meeting of its
stockholders (including any adjournment or postponement, the Company
Meeting), as promptly as practicable, to consider and vote upon the adoption
and approval of this Plan, as well as any other matters required to be approved
by the Companys stockholders for consummation of the Merger. (b) The board of directors of the Company has adopted resolutions
recommending to the stockholders of the Company the adoption of this Plan and
the other matters required to be approved or adopted in order to carry out the
intentions of this Plan, and the board of directors of the Company shall
recommend to the Companys stockholders the approval and adoption of this Plan
and the other matters required to be approved or adopted in order to carry out
the intentions of this Plan. Notwithstanding the foregoing, the board of
directors of the Company may withdraw, modify, condition or refuse to recommend
the adoption of this Plan and the other matters required to be approved or adopted in
order to carry out the intentions of this Plan if the board of directors of the
Company determines, in good faith after consultation with its outside financial
and legal advisors, that the failure to take such action would breach its
fiduciary obligations under applicable law. Notwithstanding the foregoing,
this Plan and such other matters shall be submitted to the stockholders of the
Company at the Company Meeting for the purpose of approving the Plan and such
other matters and nothing contained herein shall be deemed to relieve the
Company of such obligation, provided, however, that if the Board of Directors
of the Company shall have withdrawn, modified, conditioned or refused to
recommend the adoption of this Plan and such other matters in accordance with
the terms of this Agreement, then in submitting this Agreement to the Companys
stockholders, the board of directors of the Company may submit this Agreement
to the Companys stockholders without recommendation (although the resolutions
adopting this Plan as of the date hereof may not be rescinded or amended), in
which event the board of directors of the Company may communicate the basis for
its lack of a recommendation to the Companys stockholders in the Proxy
Statement (as defined in Section 5.3(a)) or an appropriate amendment or
supplement thereto to the extent required by law. 26




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5.3 Registration Statement/Proxy Statement. (a) The parties agree jointly to prepare a registration statement on Form
S-4 or other applicable form (the Registration Statement) to be filed by PNC
with the SEC in connection with the issuance of PNC Common Stock in the Merger
(including the proxy statement and prospectus and other proxy solicitation
materials of the Company constituting a part thereof (the Proxy Statement)
and all related documents). The parties agree to cooperate in the preparation
of the Registration Statement and the Proxy Statement; and, provided that the
Company has cooperated as required above, PNC agrees to file the Registration
Statement with the SEC within twenty-one (21) days of the date hereof. Each of
PNC and the Company agrees to use all reasonable efforts to cause the
Registration Statement to be declared effective under the Securities Act as
promptly as reasonably practicable after filing thereof. PNC also agrees to
use all reasonable efforts to obtain all necessary state securities law or
Blue Sky permits and approvals required to carry out the transactions
contemplated by this Plan. Each of PNC and the Company agrees to furnish all
information concerning it, its subsidiaries, officers, directors and
stockholders as may be reasonably requested in connection with the foregoing. (b) Each of PNC and the Company agrees (1) as to itself and its
subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in (a) the Registration Statement will,
at the time the Registration Statement and each amendment or supplement
thereto, if any, becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading and
(b) the Proxy Statement and any amendment or supplement thereto will, at the
date of mailing to stockholders and at the time of the Company Meeting contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which such statement was made, not
misleading and (2) that the Registration Statement and Proxy Statement shall comply with all
applicable laws as they relate to PNC and the Company. Each of PNC and the
Company further agrees that if it shall become aware prior to the Effective
Date of any information furnished by it that would cause any of the statements
in the Proxy Statement or the Registration Statement to be false or misleading
with respect to any material fact, or to omit to state any material fact
necessary to make the statements therein not false or misleading, to promptly
inform the other party thereof and to take the necessary steps to correct the
Proxy Statement or the Registration Statement. (c) PNC agrees to advise the Company, promptly after PNC receives notice
thereof, of the time when the Registration Statement has become effective or
any supplement or amendment has been filed, of the issuance of any stop order
or the suspension of the qualification of PNC Common Stock for offering or sale
in any jurisdiction, of 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. 27




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5.4 Press Releases. PNC and the Company shall consult with each other
before issuing any press release with respect to the Merger or this Plan and
shall not issue any such press release or make any such public statement
without the prior consent of the other party, which shall not be unreasonably
withheld; provided, however, that a party may, without the prior consent of the
other party (but after prior consultation, to the extent practicable in the
circumstances) issue such press release or make such public statement as may
upon the advice of counsel be required by law or the rules and regulations of
the NASDAQ National Market or the NYSE, as the case may be. PNC and the
Company shall cooperate to develop all public announcement materials and make
appropriate management available at presentations related to the transactions
contemplated by this Plan as reasonably requested by the other party. 5.5 Access; Information. (a) Each of PNC and the Company agrees that upon reasonable notice and
subject to applicable laws relating to the exchange of information, it shall
afford the other party, and the other partys officers, employees, counsel,
accountants and other authorized representatives, such access during normal
business hours throughout the period prior to the Effective Time to the books,
records (including, without limitation, tax returns and work papers of
independent auditors), properties, personnel and to such other information as
any party may reasonably request and, during such period, it shall furnish
promptly to such other party (1) a copy of each material report, schedule and
other document filed by it pursuant to the requirements of federal or state
securities or banking laws (including pursuant to any agreements with,
commitments to or orders of any Governmental Entity, including any related
action plan), and (2) all other information concerning the business, properties
and personnel of it as the other may reasonably request; provided that the
foregoing shall not require PNC or the Company (i) to permit any inspection, or
to disclose any information, that in the reasonable judgment of PNC or the
Company, as the case may be, would result in disclosure of any trade secrets of
third parties or violate any of its obligations with
respect to confidentiality if PNC or the Company, as the case may be,
shall have used reasonable efforts to obtain the consent of such third party to
such inspection or disclosure or (ii) to disclose any privileged information of
PNC or the Company, as the case may be, or any of its subsidiaries. All
requests for information made pursuant to this Section 5.5 shall be directed to
an executive officer of PNC or the Company, as the case may be, or such Person
as may be designated by either of their executive officers, as the case may be. (b) Each party agrees that it will not, and will cause its representatives
not to, use any information obtained pursuant to this Section 5.5 (as well as
any other information obtained prior to the date hereof in connection with the
entering into of this Plan) for any purpose unrelated to the consummation of
the transactions contemplated by this Plan. Subject to the requirements of
law, each party will keep confidential, and will cause its representatives to
keep confidential, all information and documents obtained pursuant to this
Section 5.5 (as well as any other information obtained prior to the date hereof
in connection with the entering into of this Plan) unless such information (1)
was already known to such party, (2) becomes available to such party from other
sources not known by 28




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such party to be bound by a confidentiality obligation,
(3) is disclosed with the prior written approval of the providing party or (4)
is or becomes readily ascertainable from publicly available sources. If this
Plan is terminated or the transactions contemplated by this Plan shall
otherwise fail to be consummated, each party shall promptly cause all copies of
documents or extracts thereof containing information and data as to the other
party to be returned to the other party. (c) In addition to the confidentiality arrangements contained in this
Plan, all information provided or obtained in connection with the transactions
contemplated by this Plan (including pursuant to clause (a) above) will be held
by PNC in accordance with and subject to the terms of the Confidentiality
Agreement, dated May 21, 2004, between PNC and the Company (the
Confidentiality Agreement). In the event of a conflict or inconsistency
between the terms of this Plan and the Confidentiality Agreement, the terms of
this Plan will govern. 5.6 Acquisition Proposals. The Company agrees that neither it nor any of
its subsidiaries nor any of its respective officers and directors or the
officers and directors of any of its subsidiaries shall, and it shall direct
and use all reasonable best efforts to cause its employees and agents,
including any investment banker, attorney or accountant retained by it or by
any of its subsidiaries (collectively, its Representatives) not to, initiate,
solicit or encourage, directly or indirectly, any inquiries or the making or
implementation of any Acquisition Proposal, or, except to the extent that the
board of directors of the Company determines, in good faith, after consultation
with its outside financial and legal advisors, that such action is required in
order for the board of directors of the Company to comply with its fiduciary
duties, engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any Person relating to an
Acquisition Proposal or otherwise facilitate any effort or attempt to implement
or make an Acquisition Proposal (and in any event, the Company shall not
provide any confidential information or data to any Person in connection with
an Acquisition Proposal unless such person shall have executed a
confidentiality agreement on terms at least as favorable as those contained in
the Confidentiality Agreement). Acquisition Proposal means any proposal or
offer with respect to the following involving the Company or any of its
Significant Subsidiaries: (1) any merger, consolidation, share exchange,
business combination or other similar transaction; (2) any sale, lease,
exchange, pledge, transfer or other disposition of 30% or more of its
consolidated assets or liabilities in a single transaction or series of
transactions; (3) any tender offer or exchange offer for 30% or more of the
outstanding shares of its capital stock; or (4) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing, other than the Merger provided for in this
Plan. Notwithstanding anything in this Plan to the contrary, the Company shall
(i) promptly advise PNC, orally and in writing, of (A) the receipt by it (or
any of the other persons referred to above) of any Acquisition Proposal, or any
inquiry which could reasonably be expected to lead to an Acquisition Proposal,
(B) the material terms and conditions of such proposal or inquiry (whether
written or oral), and (C) the identity of the person making any such proposal
or inquiry and (ii) keep the other party hereto fully informed of the status
and details of any such proposal or inquiry and any developments with respect
thereto. The Company shall use its 29




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reasonable best efforts to enforce any
existing confidentiality or standstill agreements in accordance with the terms
thereof. 5.7 Affiliate Agreements. The Company shall use its reasonable best
efforts to cause each director, executive officer and other person who is an
affiliate (for purposes of Rule 145 under the Securities Act) of the Company
to deliver to PNC, as soon as practicable after the date of this Plan, a
written agreement in the form Previously Disclosed. 5.8 Takeover Laws and Provisions. No party hereto shall take any action
that would cause the transactions contemplated by this Plan to be subject to
requirements imposed by any Takeover Law and each of them shall take all
necessary steps within its control to exempt (or ensure the continued exemption
of) the transactions contemplated by this Plan from, or if necessary challenge
the validity or applicability of, any applicable Takeover Law, as now or
hereafter in effect. No party hereto shall take any action that would cause
the transactions contemplated by this Plan not to comply with any Takeover
Provisions and each of them shall take all necessary steps within its control
to make the transactions contemplated by this Plan comply with (or continue to
comply with) the Takeover Provisions. 5.9 Regulatory Applications. (a) PNC and the Company shall cooperate and use their respective
reasonable best efforts to prepare as promptly as possible all documentation,
to effect all filings and to obtain all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary to
consummate the transactions contemplated by this Plan, and PNC shall file its
applications for approval of the Merger and the Bank Merger by the Board of
Governors of the Federal Reserve (the Board of Governors) and the Office of
the Comptroller of the Currency (the OCC), respectively, within 21 days of
the date hereof, and shall promptly make all other necessary regulatory
filings. Each of PNC and the Company shall have the right to review in
advance, and to the extent practicable
each will consult with the other, in each case subject to applicable laws
relating to the exchange of information, with respect to all material written
information submitted to any third party or any Governmental Entity in
connection with the transactions contemplated by this Plan. In exercising the
foregoing right, each of the parties hereto agrees to act reasonably and as
promptly as practicable. Each party hereto agrees that it will consult with
the other party hereto with respect to the obtaining of all material permits,
consents, approvals and authorizations of all third parties and Governmental
Entities necessary or advisable to consummate the transactions contemplated by
this Plan and each party will keep the other party appraised of the status of
material matters relating to completion of the transactions contemplated
hereby. Notwithstanding the foregoing, nothing contained herein shall be
deemed to require the Company or PNC to take any action, or commit to take any
action, or agree to any condition or restriction, in connection with obtaining
the foregoing permits, consents, approvals and authorizations of Governmental
Entities, that would reasonably be expected to have a material adverse effect
(measured on a scale relative to the Company) on either PNC or the Company (a
Materially Burdensome Regulatory Condition). 30




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(b) Each party agrees, upon request, to furnish the other party with all
information concerning itself, its subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with any filing, notice or application made by or on behalf of
such other party or any of its subsidiaries with or to any third party or
Governmental Entity. 5.10 Options. (a) Cashout of Options.Immediately after the Effective
Time, each option granted by the Company to purchase shares of Company Common
Stock that is outstanding and unexercised under any employee stock option or
equity compensation plan or arrangement of the Company (any such option to
purchase Company Common Stock being referred to as a Company Option or the
Company Options), whether or not vested or exercisable, shall be terminated
and the holder shall be paid by PNC as soon as reasonably possible following
the Effective Time, an amount in cash determined by multiplying (i) the excess,
if any, of the Per Share Cash Consideration over the applicable per share
exercise price of that option by (ii) the number of shares of Company Common
Stock that the holder could have purchased (assuming full vesting of all
options) had that holder exercised that option immediately before the Effective
Time, less applicable tax withholding. (b) Actions.Prior to the Effective Time, (1) the Company shall take
such actions as PNC may reasonably request (but without expenditure of any
funds) to give effect to the transactions contemplated by Section 5.10(a),
including, without limitation, the provision of any notices to option holders
as may be provided for in the Companys stock option and equity compensation
arrangements, and (2) the Board of Directors of the Company or the Compensation
Committee thereof, as applicable, will use its reasonable best efforts to adopt
any resolutions and/or plan amendments necessary to effectuate the provisions
of Section 5.10(a). 5.11 Indemnification and Insurance. (a) Following the Effective Time, PNC shall indemnify, defend and hold
harmless and advance expenses to the present and former directors, officers,
employees and agents of the Company or any of its subsidiaries (including the
Company Bank), and any person presently or formerly serving at the request of
the Company or any of its subsidiaries as a director, officer, employee, agent,
trustee or fiduciary of another corporation, partnership, joint venture, trust
or other enterprise or under or with respect to any employee benefit plan
(each, an Indemnified Party and collectively, the Indemnified Parties)
against all costs or expenses (including reasonable attorneys fees),
judgments, fines, losses, claims, damages, penalties, amounts paid in
settlement or other liabilities (collectively, Indemnified Liabilities)
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
arising out of actions or omissions occurring at or prior to the Effective Time
(including the transactions contemplated by this Plan), whether asserted or
claimed prior to, at or after the Effective Time (x) to the same extent as such
persons are indemnified or have the right to advancement of expenses pursuant
to the Governing Documents and indemnification agreements, if any, in effect on
the date of this Plan with the Company or any of its subsidiaries and (y)
without limitation 31




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of, and in addition to, clause (x), to the fullest extent
permitted by law. In the event of any such Indemnified Liabilities, (i) PNC
shall pay the reasonable fees and expenses of counsel selected by an
Indemnified Party promptly after statements therefor are received and shall
otherwise advance to such Indemnified Party upon request reimbursement of
documented expenses reasonably incurred and (ii) PNC shall cooperate in the
defense of such matter. If any Indemnified Party is required to bring any
action to enforce rights or to collect moneys due under this Plan and is
successful in obtaining a decision that it is entitled to enforcement of any
right or collection of any money in such action, PNC shall reimburse such
Indemnified Party for all of its expenses reasonably incurred in connection
with bringing and pursuing such action including, without limitation,
reasonable attorneys fees and costs. (b) For a period of six years from the Effective Time, PNC shall use its
reasonable best efforts to provide directors and officers liability insurance
(including excess coverage) and fiduciary liability insurance in respect of any
Company Benefit Plans that serves to reimburse the present and former officers
and directors of the Company or any of its subsidiaries (including the Company
Bank) with respect to claims against such directors and officers arising from
facts or events occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Plan) which insurance shall
contain at least the same coverage and amounts, and contain terms and
conditions no less advantageous, as that coverage currently provided by the
Company, provided, that if PNC is unable to maintain or obtain the insurance
called for by this Section 5.11(b), PNC will use its reasonable best efforts to
obtain as much comparable insurance as is reasonably available. (c) Any Indemnified Party wishing to claim indemnification under Section
5.11(a), upon learning of any claim, action, suit, proceeding or investigation
described above, shall notify PNC thereof; providedthat the failure to so
notify shall not affect the obligations of PNC under Section 5.11(a) unless and to the
extent that PNC is actually and materially prejudiced as a result of such
failure. PNC hereby acknowledges notice of all matters Previously Disclosed. (d) If PNC or any of its successors or assigns shall consolidate with or
merge into any other entity and shall not be the continuing or surviving entity
of such consolidation or merger or shall transfer all or substantially all of
its assets or deposits to any other entity, or engage in any similar
transaction, then and in each case, PNC shall cause proper provision to be made
so that the successors and assigns of PNC shall assume the obligations set
forth in this Section 5.11. (e) The provisions of this Section 5.11 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs
and representatives. The indemnification rights granted in this Section 5.11
are in addition to, and not in substitution for, any other rights to
indemnification or contribution that any Indemnified Party may have by contract
or otherwise. 5.12 Benefit Plans. 32




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(a) PNC shall, or shall cause the Company to, from and after the Effective
Time, (1) comply with the Benefit Plans of the Company (the Company Benefit
Plans) in accordance with their terms, (2) provide the employees of the
Company with (A) until December 31, 2005, benefits under employee benefit plans
that are no less favorable in the aggregate than those provided by the Company
on the date hereof and (B) until the first anniversary of the Effective Time,
severance benefits on an individual-by-individual basis that are equal to the
severance benefits provided by the Company under the Riggs National Corporation
Employee Severance Policy on the date hereof other than any such employees who
as of the Effective Time are parties to Senior Executive Change of Control and
Retention Agreements or other individual agreements providing for payments in
connection with the termination of any such employee party, (3) provide
employees of the Company credit for years of service with the Company or any of
its subsidiaries or their predecessors prior to the Effective Time for the
purpose of eligibility, vesting and benefit accruals (other than benefit
accruals under a defined benefit pension plan), (4) cause any and all
pre-existing condition limitations (to the extent such limitations did not
apply to a pre-existing condition under comparable Company Benefit Plans) and
eligibility waiting periods under group health plans of PNC to be waived with
respect to employees of the Company who remain as employees of PNC or its
subsidiaries (and their eligible dependents) and (5) cause to be credited any
deductibles or out-of-pocket expenses incurred by employees of the Company and
their beneficiaries and dependents during the portion of the calendar year
prior to their participation in PNCs health plans with the objective that
there be no double counting during the year in which the Closing Date occurs of
such deductibles or out-of-pocket expenses. PNC and the Company agree to
honor, or to cause to be honored, in accordance with their terms, all vested or
accrued benefit obligations to, and contractual rights of, current and former
employees of the Company and its subsidiaries, including, without limitation,
any benefits or rights arising as a result of the transactions contemplated by
this Plan (either alone or in combination with any other event); it being
understood and agreed to by the parties hereto that the
transactions contemplated by this Plan shall constitute a change of
control for purposes of the Company Benefit Plans. (b) PNC hereby expressly assumes at the Effective Time (i) the Previously
Disclosed special retention letter agreements, (ii) the Riggs National
Corporation Senior Executive Change of Control and Retention Agreements (and
the related trust agreement), (iii) the Riggs National Corporation Amended and
Restated Deferred Compensation Plan (and the related trust agreement), (iv) the
Riggs National Corporation and Riggs Bank N.A. Deferred Compensation Plan for
Directors and (v) the Split Dollar Life Insurance Agreements, each as more
specifically identified on Section 5.12(b) of the Disclosure Schedule, and PNC
agrees to honor and perform the Companys obligations under such plans and
agreements in accordance with their terms. (c) Prior to the Effective Time, the Company shall take any actions it
determines are warranted to cause the interests in the Company Deferred
Compensation Plan and the Riggs National Corporation and Riggs Bank N.A.
Deferred Compensation Plan for Directors that are in the Company stock fund to
be converted into a dollar amount equal to the Per Share Cash Consideration
that could be invested in the same way interests that are not in the Company
stock fund 33




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can be invested at the Effective Time. Prior to the Effective Time,
the Company shall take any actions that are necessary to cause all unvested
deferred share awards and all unvested performance share awards which are
outstanding under the Riggs National Corporation 2002 Long-Term Incentive Plan
to be terminated immediately prior to the Effective Time and simultaneously
therewith will issue one share of Company Common Stock for each underlying
share that is so terminated to the grantee of such award. 5.13 Notification of Certain Matters. Each of PNC and the Company shall
give prompt notice to the other of any fact, event or circumstance known to it
that (1) is reasonably likely, individually or taken together with all other
facts, events and circumstances known to it, to result in any Material Adverse
Effect with respect to it or (2) would cause or constitute a material breach of
any of its representations, covenants or agreements contained herein. 5.14 Exemption from Liability Under Section 16(b). PNC and the Company
agree that, in order to most effectively compensate and retain the Company
Insiders (as defined below) in connection with the Merger, both prior to and
after the Effective Time, it is desirable that the Company Insiders not be
subject to a risk of liability under Section 16(b) of the Exchange Act to the
fullest extent permitted by applicable law in connection with the conversion of
shares of Company Common Stock and Company Options into shares or options of
PNC in the Merger, and for that compensatory and retentive purpose agree to the
provisions of this Section 5.14. Assuming that the Company delivers to PNC the
Company Section 16 Information (as defined below) in a timely fashion prior to
the Effective Time, the board of directors of PNC, or a committee of
non-employee directors thereof (as such term is defined for purposes of Rule
16b-3(d) under the Exchange Act), shall reasonably promptly thereafter and in
any event prior to the Effective Time adopt a resolution providing in substance
that the receipt by the Company Insiders (as defined below) of PNC Common Stock
in exchange for shares of Company Common
Stock pursuant to the transactions contemplated hereby and to the extent
such securities are listed in the Company Section 16 Information, are intended
to be exempt from liability pursuant to Section 16(b) under the Exchange Act to
the fullest extent permitted by applicable law. Company Section 16
Information shall mean information accurate in all material respects regarding
the Company Insiders, the number of shares of Company Common Stock held by each
such Company Insider and expected to be exchanged for PNC Common Stock in the
Merger, and the number and description of the options to purchase shares of
Company Common Stock held by each such Company Insider and expected to be
converted into options to purchase shares of PNC Common Stock in connection
with the Merger; providedthat the requirement for a description of any Company
Options shall be deemed to be satisfied if copies of all plans, and forms of
agreements, under which such Options have been granted have been made available
to PNC. Company Insiders shall mean those present or former officers and
directors of the Company who are subject to the reporting requirements of
Section 16(a) of the Exchange Act and who are listed in the Company Section 16
Information. Prior to the Effective Time, the board of directors of the
Company, or a committee of non-employee directors thereof (as such term is
defined for purposes of Rule 16b-3(d) under the Exchange Act), shall adopt a
resolution providing in substance that the disposition by the Company Insiders
of Company Common Stock in exchange for the Consideration pursuant to 34




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the transactions contemplated hereby us intended to be exempt from liability
pursuant to Section 16(b) under the Exchange Act to the fullest extent
permitted by applicable law. 5.15 Coordination of Dividends. The board of directors of the Company
shall cause its regular quarterly dividend record dates and payment dates for
Company Common Stock to be the same as PNCs regular quarterly dividend record
dates and payment dates for PNC Common Stock (i.e., the Company shall move its
next dividend record and payment dates to on or about October 8 and October 24,
respectively), and the Company shall not thereafter change its regular dividend
payment dates and record dates. 5.16 Certain Transition Matters. (a) Commencing following the date
hereof, PNC and the Company shall cooperate and take all actions reasonably
necessary to facilitate the integration of their respective businesses and
operating systems, effective as of the Closing Date, including by causing their
respective employees and officers, and their respective outside vendors and
contractors, to provide support and to assist in performing all tasks,
including equipment installation, reasonably required to result in a successful
integration and conversion at the Closing. (b) PNC and the Company shall consult with respect to the character,
amount and timing of restructuring charges to be taken by each of them in
connection with the transactions contemplated hereby, and shall take such
charges as PNC shall reasonably request; provided, however, that the Company
shall not be obligated to take any such charges pursuant to this Section
5.16(b) unless and until (i) PNC irrevocably acknowledges to the Company in
writing that all conditions to its obligation to consummate the Merger have
been satisfied; and (ii) PNC irrevocably waives in writing any and all rights
that it may have to terminate this Plan and the Company has obtained the
approval of this Plan from its
stockholders. The Company shall consult and cooperate with PNC in
connection with the development, enhancement and performance of the Companys
system of internal control over financial reporting. (c) Prior to the Effective Time, the Company shall (i) continue to use
all reasonable efforts to comply with the terms of all agreements with,
commitments to or orders of any Governmental Entity, including any related
action plan, in accordance with their terms, and (ii) continue to work with the
independent consultant retained by the Company in connection with Section 1 of
the May 14, 2004 Cease and Desist Order with the Board of Governors (the
Independent Consultant), and shall provide the Independent Consultant with
such authority, and with such access to and cooperation of the Company and its
personnel, necessary to allow the Independent Consultant to oversee the efforts
of the Company addressed in clause (i) of this sentence. In addition, the
Company agrees that it shall use all reasonable efforts to cause the Company
Bank to complete, prior to the earlier of December 31, 2004 and the anticipated
Closing Date, the review contemplated by Section 1(d) of Article II of the May
13, 2004 consent order with the OCC to the satisfaction of the OCC. The
Company also agrees that it shall use all reasonable efforts to complete the
anticipated sale of, or winding down of the operations identified in Section
5.16(c) of the Company Disclosure Schedule prior to 35




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the Closing Date, and that
it shall timely inform PNC of all material developments relating thereto, and
shall consult and cooperate with PNC with respect thereto. The Company shall
keep PNC fully informed of all efforts in these regards. ARTICLE VI
Conditions 6.1 Conditions to Each Partys Obligation to Effect the Merger. The
respective obligation of each of PNC and the Company to consummate the Merger
is subject to the fulfillment or written waiver by PNC and the Company prior to
the Effective Time of each of the following conditions: (a) Stockholder Approval. This Plan and the Merger shall have been duly
adopted and approved by the requisite votes of the stockholders of the Company. (b) Governmental and Regulatory Consents. All statutory waiting periods
applicable to the consummation of the Merger and the Bank Merger shall have
expired or been terminated, and, other than the filing provided for in Section
1.4(a), all notices, reports and other filings required to be made prior to the
Effective Time by PNC or the Company or any of their respective subsidiaries
with, and all regulatory consents, registrations, approvals, permits and
authorizations required to be obtained prior to the Effective Time by PNC or
the Company or any of their respective subsidiaries from, any Governmental
Entity in connection with the consummation of the Merger and the Bank Merger,
and the other transactions contemplated hereby by PNC and the Company, shall
have been made or obtained (as the case may be) and become final, unless the
failure to obtain any such consent or approval would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on PNC or
the Company, and no such
consent, registration, approval, permit or authorization shall have
resulted in the imposition of any Materially Burdensome Regulatory Condition. (c) Third Party Consents. All consents or approvals of all Persons (other
than Governmental Entities) required for consummation of the Merger shall have
been obtained and shall be in full force and effect, unless the failure to
obtain any such consent or approval would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on PNC or the
Company. (d) No Prohibitions. No United States or state court or other
Governmental Entity of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any law, statute, rule, regulation, judgment,
decree, injunction or other order (whether temporary, preliminary or permanent)
which is in effect and prohibits consummation of the Merger. (e) Registration Statement. The Registration Statement shall have become
effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the SEC
or any other Governmental Entity. 36




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(f) Blue Sky Approvals. All permits and other authorizations under the
Securities Laws (other than that referred to in Section 6.1(e)) and other
authorizations necessary to consummate the Merger and to issue the shares of
PNC Common Stock to be issued in the Merger shall have been received and be in
full force and effect. 6.2 Conditions to Obligation of PNC. The obligation of PNC to consummate
the Merger is also subject to the fulfillment, or the written waiver by PNC
prior to the Effective Time, of each of the following conditions: (a) Representations. The representations of the Company set forth in this
Plan shall be, giving effect to Sections 4.1 and 4.2, true and correct as of
the date of this Plan and as of the Effective Time as though made at and as of
the Effective Time (except that representations that by their terms speak
specifically as of the date of this Plan or some other date shall be true and
correct as of such date) and PNC shall have received a certificate, dated the
Closing Date, signed on behalf of the Company by the Chief Executive Officer
and the Chief Financial Officer of the Company to such effect. (b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Plan at or prior to the Effective Time, and PNC shall have
received a certificate, dated the Closing Date, signed on behalf of the Company
by the Chief Executive Officer and the Chief Financial Officer of the Company
to such effect. (c) Opinion of Tax Counsel. PNC shall have received an opinion from
Wachtell, Lipton, Rosen & Katz, special counsel to PNC, dated the Closing Date,
to the effect that, on the basis of the facts, representations and assumptions
set forth in such opinion, (1) the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code and (2) each of PNC and the Company will be a party
to that reorganization within the meaning of Section 368(b) of the Internal
Revenue Code. In rendering its opinion, Wachtell, Lipton, Rosen & Katz may
require and rely upon representations contained in letters from each of PNC and
the Company. 6.3 Conditions to Obligation of the Company. The obligation of the
Company to consummate the Merger is also subject to the fulfillment, or the
written waiver by the Company, prior to the Effective Time of each of the
following conditions: (a) Representations. The representations of PNC set forth in this Plan
shall be, giving effect to Sections 4.1 and 4.2, true and correct as of the
date of this Plan and as of the Effective Time as though made at and as of the
Effective Time (except that representations that by their terms speak
specifically as of the date of this Plan or some other date shall be true and
correct as of such date); and the Company shall have received a certificate,
dated the Closing Date, signed on behalf of PNC by the Chief Executive Officer
and the Chief Financial Officer of PNC to such effect. 37




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(b) Performance of Obligations of PNC. PNC shall have performed in all
material respects all obligations required to be performed by it under this
Plan at or prior to the Effective Time, and the Company shall have received a
certificate, dated the Closing Date, signed on behalf of PNC by the Chief
Executive Officer and the Chief Financial Officer of PNC to such effect. (c) Opinion of Tax Counsel. The Company shall have received an opinion of
Sullivan & Cromwell LLP, special counsel to the Company, dated the Closing
Date, to the effect that on the basis of the facts, representations and
assumptions set forth in such opinion, (1) the Merger will be treated for
federal income tax purposes as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code, and (2) each of PNC and the Company will
be a party to that reorganization within the meaning of Section 368(b) of the
Internal Revenue Code. In rendering its opinion, Sullivan & Cromwell LLP may
require and rely upon representations contained in letters from each of PNC and
the Company. ARTICLE VII
Termination 7.1 Termination by Mutual Consent. This Plan may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (whether or not
the stockholders of Company Common Stock have adopted and approved this Plan),
upon the mutual consent of PNC and the Company, by action of their respective
boards of directors. 7.2 Termination by PNC. This Plan may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after the
approval by stockholders of the Company referred to in Section 6.1(a), by
action of the board of directors of PNC: (a) if there has been a breach of any representation, covenant or
agreement made by the Company in this Plan, or any such representation shall
have become untrue after the date of this Plan, such that Section 6.2(a) or
6.2(b) would not be satisfied and such breach or condition is not curable or,
if curable, is not cured within 30 days after written notice thereof is given
by PNC to the Company; (b) if the Merger shall not have been consummated by April 30, 2005 (the
Termination Date), providedthat the right to terminate this Plan shall not
be available if PNC has breached in any material respect its obligations under
this Plan in any manner that shall have proximately contributed to the
occurrence of the failure of the Merger to be consummated; (c) if the approval of the Companys stockholders required by Section
6.1(a) shall not have been obtained at its stockholders meeting or at any
adjournment or postponement thereof; (d) if any order permanently restraining, enjoining or otherwise
prohibiting consummation of the Merger shall become final and non-appealable
(whether before or after the approval by the stockholders of the Company); or 38




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(e) if (i) the Board of Directors of the Company has failed to recommend
that the Company Stockholders vote in favor of this Agreement and the
transactions contemplated hereby or has withdrawn, modified or qualified such
recommendation in a manner adverse to PNC, (ii) the Company has failed to
substantially comply with its obligations under Section 5.2 or 5.6, or (iii)
the Board of Directors of the Company has publicly recommended or endorsed an
Acquisition Proposal other than the Merger. 7.3 Termination by the Company. This Plan may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after the approval by stockholders of the Company referred to in Section
6.1(a), by action of the board of directors of the Company: (a) if the Merger shall not have been consummated by the Termination Date;
providedthat the right to terminate this Plan pursuant to this clause (a)
shall not be available if the Company has breached in any material respect its
obligations under this Plan in any manner that shall have proximately
contributed to the occurrence of the failure of the Merger to be consummated; (b) if the approval of the Companys stockholders required by Section
6.1(a) shall not have been obtained at its stockholders meeting or at any
adjournment or postponement thereof; (c) if any order permanently restraining, enjoining or otherwise
prohibiting consummation of the Merger shall become final and non-appealable
(whether before or after the approval by the stockholders of the Company); (d) if there has been a breach of any representation, covenant or
agreement made by PNC in this Plan, or any such representation shall have
become untrue after the date of this Plan, such that Section 6.3(a) or 6.3(b)
would not be satisfied and such breach or condition is not curable or, if
curable, is not cured within 30 days after written notice thereof is given by
the Company to PNC. 7.4 Effect of Termination and Abandonment. In the event of termination of
this Plan and the abandonment of the Merger pursuant to this Article VII, this
Plan (other than as set forth in Sections 7.5 and 8.1) shall become void and of
no effect with no liability on the part of any party hereto (or of any of its
directors, officers, employees, agents, legal and financial advisors or other
representatives); provided, however, no such termination shall relieve any
party hereto of any liability or damages resulting from any willful breach of
this Plan. 7.5 Termination Fee. (a) In the event that (i) a Company Pre-Termination
Takeover Proposal Event (as hereinafter defined) shall occur after the date of
this Agreement and thereafter this Agreement is terminated by either PNC or the
Company pursuant to Section 7.2(c) or 7.3(b), respectively, by PNC pursuant to
Section 7.2(e)(i) or (ii), or by PNC pursuant to Section 7.2(a) as a result of
a willful breach by the Company, and (ii) prior to the date that is twelve (12)
months after the date of such termination the Company consummates an
Acquisition Proposal or enters into any acquisition or other similar agreement,
including any letter of intent, related to any Acquisition Proposal (each, a
Company Acquisition Agreement), then 39




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the Company shall, (i) on the date such
Company Acquisition Agreement is entered into, pay PNC a fee equal to $10
million by wire transfer of same day funds and (ii) on the date an Acquisition
Proposal is consummated (if consummated within one year of the date of
termination, or if consummated at any time (without regard to such one-year
period) if the Acquisition Proposal is the Acquisition Proposal relating to the
Company Acquisition Agreement addressed in the preceding clause (i)), pay PNC a
fee equal to $30 million by wire transfer of same day funds, less any fee paid
pursuant to the preceding clause (i). (b) In the event that this Agreement is terminated by PNC pursuant to
Section 7.2(e)(iii), then the Company shall, (i) on the date of such
termination, pay PNC a fee equal to $10 million by wire transfer of same day
funds and (ii) on the date the Company consummates an Acquisition Proposal (if
consummated within one year of the date of termination, or at any time if the
Acquisition Proposal is the Acquisition Proposal that resulted in such
termination), pay PNC a fee equal to $20 million by wire transfer of same day
funds. (c) For purposes of this Section 7.5, a Pre-Termination Takeover Proposal
Event shall be deemed to occur if, prior to the event giving rise to the right
to terminate this Agreement, a bona fide Acquisition Proposal shall have been
made known to the Company or any of its Subsidiaries or has been made directly
to its shareholders generally or any person shall have publicly announced an
intention (whether or not conditional) to
make a Acquisition Proposal, and such Acquisition Proposal or public
announcement shall not have been irrevocably withdrawn not less than five
business days prior to the Company Meeting. (d) Notwithstanding anything to the contrary herein, the maximum aggregate
amount of fees payable under this Section 7.5 shall be $30 million. (e) The Company acknowledges that the agreements contained in this Section
7.5 are an integral part of the transactions contemplated by this Plan, and
that, without these agreements, PNC would not enter into this Agreement;
accordingly, if the Company fails promptly to pay the amount due pursuant to
this Section 7.5, and, in order to obtain such payment, PNC commences a suit
which results in a judgment against the Company for the fee set forth in this
Section 7.5, the Company shall pay to PNC its costs and expenses (including
attorneys fees and expenses) in connection with such suit, together with
interest on the amount of the fee at the rate on six-month U.S. Treasury
obligations plus 300 basis points in effect on the date such payment was
required to be made. ARTICLE VIII
Miscellaneous 8.1 Survival. Except for the agreements and covenants contained in
Articles I and II, Sections 5.10, 5.11, 5.12, 5.14 and 7.5 and this Article
VIII, the representations, agreements and covenants contained in this Plan
shall be deemed only to be conditions of the Merger and shall not survive the
Effective Time. 40




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8.2 Modification or Amendment. Subject to applicable law, at any time
prior to the Effective Time, the parties hereto may modify or amend this Plan,
by written agreement executed and delivered by duly authorized officers of the
respective parties. 8.3 Waiver of Conditions. The conditions to each partys obligation to
consummate the Merger are for the sole benefit of such party and may be waived
by such party as a whole or in part to the extent permitted by applicable law.
No waiver shall be effective unless it is in a writing signed by a duly
authorized officer of the waiving party that makes express reference to the
provision or provisions subject to such waiver. 8.4 Counterparts. For the convenience of the parties hereto, this Plan
may be executed in any number of separate counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement. The execution and delivery of this Plan
may be effected by telecopier. 8.5 Governing Law. This Plan shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed entirely within the State of Delaware. 8.6 Notices. Any notice, request, instruction or other document to be
given hereunder by any party to the other shall be in writing and shall be
deemed to have been duly given (a) on the date of delivery if delivered
personally, or by facsimile, upon confirmation of receipt, (b) on the first
business day following the date of dispatch if delivered by a recognized
next-day courier service, or (c) on the third business day following the date
of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid. All notices hereunder shall be delivered as set
forth below, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice. To PNC:
    
    To the Company:The PNC Financial Services Group, Inc.
    
    Riggs National CorporationOne PNC Plaza
    
    800 17th Street, NW249 Fifth Avenue
    
    Washington, DC 20006Pittsburgh, Pennsylvania 15222
    
    Attention: Chairman and ChiefAttention:
Mergers & Acquisition
Department
    

Executive
Officer
Telecopy No.: (202) 835-5226Telecopy No.: (412) 762-6238-and-Attention: General CounselTelecopy: (412) 705-2679
 41




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with copies to:
    
    with copies to:Wachtell, Lipton, Rosen & Katz
    
    Sullivan & Cromwell LLP51 West 52nd Street
    
    125 Broad StreetNew York, NY 10019
    
    New York, NY 10004-2498Attention: Craig M. Wasserman
    
    Attention: Mark J. MentingFacsimile: 212-403-2000
    
    Facsimile: 212-558-3588
 8.7 Entire Agreement, Etc. This Plan (including the Disclosure Schedules)
and the Confidentiality Agreement constitute the entire agreement, and
supersedes all other prior agreements, understandings, representations, both
written and oral, between the parties, with respect to the subject matter
hereof, and this Plan shall not be assignable by operation of law or otherwise
(any attempted assignment in contravention of this Section 8.7 being null and
void). 8.8 Definition of subsidiary and affiliate; Covenants with Respect to
Subsidiaries and Affiliates. (a) When a reference is made in this Plan to a
subsidiary of a Person, the term subsidiary has the meaning ascribed to that
term in Rule 1-02 of Registration S-X under the Exchange Act. When a reference
is made in this Plan to an affiliate of a Person, the term affiliate (or
Affiliate) means those other Persons that, directly or indirectly, control,
are controlled by, or are under common control with, such Person. (a) Insofar as any provision of this Plan shall require a subsidiary or an
affiliate of a party to take or omit to take any action, such provision shall
be deemed a covenant by PNC or the Company, as the case may be, to cause such
action or omission to occur. 8.9 Interpretation; Effect. When a reference is made in this Plan to
Sections, such reference shall be to a Section of this Plan unless otherwise
indicated. The table of contents and headings contained in this Plan are for
reference purposes only and are not part of this Plan. Whenever the words
include, includes or including are used in this Plan, they shall be
deemed to be followed by the words without limitation. No provision of this
Agreement shall be construed to require the Company, PNC or any of their
respective subsidiaries or affiliates to take any action that would violate any
applicable law, rule or regulation. 8.10 Severability. The provisions of this Plan shall be deemed severable
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof. If any provision of
this Plan, or the application thereof to any Person or entity or any
circumstance, is found by a court or other Governmental Entity of competent
jurisdiction to be invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Plan and the application of such
provision to other Persons, entities or circumstances shall not be affected by
such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or
the application thereof, in any other jurisdiction. 42




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8.11 No Third Party Beneficiaries. Nothing contained in this Plan,
expressed or implied, is intended to confer upon any Person, other than the
parties hereto, any benefit, right or remedies except that the provisions of
Sections 5.11, 5.12(b) (to the extent of agreements expressly set forth in
Section 5.12(b) of the Disclosure Schedule) and 5.14 shall inure to the benefit
of the Persons referred to therein. 8.12 Waiver of Jury Trial. Each party hereto acknowledges and agrees that
any controversy which may arise under this Plan is likely to involve
complicated and difficult issues, and therefore each party hereby irrevocably
and unconditionally waives any right such party may have to a trial by jury in
respect of any litigation, directly or indirectly, arising out of, or relating
to, this Plan, or the transactions contemplated by this Plan. Each party
certifies and acknowledges that (a) no representative, agent or attorney of any
other party has represented, expressly or otherwise, that such other party
would not, in the event of litigation, seek to enforce the foregoing waiver,
(b) each party understands and has considered the implications of this waiver,
(c) each party makes this waiver voluntarily, and (d) each party has been
induced to enter into this Plan by, among other things, the mutual waivers and
certifications in this Section 8.12. [next page is a signature page] 43




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IN WITNESS WHEREOF, this Plan has been duly executed and delivered by the
duly authorized officers of the parties hereto as of the date first above
written. THE PNC FINANCIAL SERVICES GROUP, INC.By:
    /s/ James E. RohrName:
    James E. RohrTitle:
    Chairman and Chief Executive Officer RIGGS NATIONAL CORPORATIONBy:
    /s/Robert AllbrittonName:
    Robert AllbrittonTitle:
    Chairman and Chief Executive Officer