SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Loyola Capital Corporation
(Name of Issuer)
Common Stock
(Title of Class of Securities)
549089100
(CUSIP Number)
John C. Clark, III
Crestar Financial Corporation
919 East Main Street
Richmond, Virginia 23219
(804) 782-7445
(Name, Address and Telephone Number of Persons
Authorized to Receive Notices and Communications)
April 27, 1995
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of
this Schedule 13D and is filing this schedule because of Rule
13d-1(b)(3) or (4), check the following box.
Check the following box if a fee is being paid with the
statement. (A fee is not required only if the reporting
person: (1) has a previous statement on file reporting
beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent
or less of such class.) (See Rule 13d-7.)
(Continued on following pages)
CUSIP No. 549089100 13D Page 2 of 12 Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Crestar Financial Corporation
I.R.S. No. 54-0722175
2 CHECK THE APPROPRIATE BOX IF (a)
A MEMBER OF A GROUP (b)
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) Not applicable
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Virginia
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON
WITH 7 SOLE VOTING POWER 0
8 SHARED VOTING POWER 0
9 SOLE DISPOSITIVE POWER 0
10 SHARED DISPOSITIVE POWER 0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
1,613,442 shares of Loyola Capital Corporation Common Stock*
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES Not applicable
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.9%
14 TYPE OF REPORTING PERSON
Co.
*Pursuant to a Stock Option Agreement dated as of April 27, 1995
Loyola Capital Corporation has granted an option to Crestar,
exercisable in certain events, to purchase up to 1,613,442 newly
issued shares of Loyola Capital Corporation Common Stock,
representing (on a post-purchase basis) approximately 19.9% of
Loyola Capital Corporation Common Stock.
ITEM 1. Security and Issuer.
The title of the class of equity securities to which this
Schedule relates is Loyola Capital Corporation Common Stock
("Loyola Common Stock"). Loyola Capital Corporation ("Loyola")
is a Maryland chartered thrift holding company for Loyola Savings
Bank FSB, a federally chartered savings association. The address
of Loyola's principal executive offices is 1300 North Charles
Street, Baltimore, Maryland 21201.
ITEM 2. Identity and Background.
The following information is given with respect to the
persons filing this Statement:
(a) Crestar Financial Corporation, a Virginia corporation
("Crestar").
(b) The principal executive offices of Crestar are located
at 919 East Main Street, Richmond, Virginia 23219.
(c) Crestar is a bank holding company doing business
through wholly-owned subsidiaries in Virginia, Washington, D.C.
and Maryland.
(d) Crestar has not, during the last five years, been
convicted in a criminal proceeding.
(e) Crestar has not, during the last five years, been a
party to a civil proceeding of a judicial or administrative body
of competent jurisdiction as a result of which it was or is
subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with
respect to such laws.
(f) Not applicable to Crestar.
The name, business address, present principal occupation or
employment and the name, principal business and address of any
corporation or other organization in which such employment is
conducted, of the directors and executive officers of Crestar are
as follows:
Directors and Director/Officers:
Richard M. Bagley
President of Bagley Investment Company
P. O. Box 9
Hampton, VA 23669
J. Carter Fox
President and Chief Executive Officer of Chesapeake Corporation
P. O. Box 2350
Richmond, VA 23218-2350
Bonnie Guiton Hill
Dean of the McIntire School
of Commerce
Monroe Hall
University of Virginia
Charlottesville, VA 22903
Gene A. James
President and Chief Executive Officer of Southern States
Cooperative, Inc.
P. O. Box 26234
Richmond, VA 23260
H. Gordon Leggett, Jr.
Executive Vice President of Leggett Stores
P. O. Box 10398
Lynchburg, VA 24506
Charles R. Longworth
Chairman, President and Chief Executive Officer of The Colonial
Williamsburg Foundation
P. O. Box 8
Williamsburg, VA 23187
Patrick J. Maher
President and Chief Executive Officer of Washington Gas
1100 H Street, N.W.
Washington, D.C. 20080
Frank E. McCarthy
Executive Vice President of National Automobile Dealers
Association
8400 Westpark Drive
McLean, VA 22102
G. Gilmer Minor, III
President and Chief Executive Officer of Owens & Minor, Inc.
P. O. Box 27626
Richmond, VA 23261
Gordon F. Rainey, Jr.
Partner of Hunton & Williams
951 East Byrd Street
Richmond, VA 23219
Frank S. Royal, M.D.
President and Member of Frank S. Royal, M.D., P.C.
1122 North 25th Street Suite A
Richmond, VA 23223
Richard G. Tilghman
Chairman and Chief Executive Officer of Crestar
919 East Main Street
Richmond, VA 23219
Eugene P. Trani
President of Virginia Commonwealth University
910 West Franklin Street
Richmond, VA 23284
L. Dudley Walker
Chairman of Bassett-Walker, Inc.
P. O. Box 5423
Martinsville, VA 24115
James M. Wells III
President of Crestar
919 East Main Street
Richmond, VA 23219
Karen Hastie Williams
Partner of Crowell & Moring
1001 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2505
Non-Director Officers:
William K. Butler, II
President - Eastern Region
Crestar Financial Corporation
919 East Main Street
Richmond, VA 23219
William M. Ginther
Group Executive Vice
President - Technology &
Operations
Crestar Financial Corporation
919 Eat Main Street
Richmond, VA 23219
C. Garland Hagen
Corporate Executive
Vice President - Investment Bank
Crestar Financial Corporation
919 East Main Street
Richmond, VA 23219
F. Edward Harris
President - Western Region
Crestar Financial Corporation
919 East Main Street
Richmond, VA 23219
William C. Harris
Corporate Executive
Vice President & President
Greater Washington Banking
Crestar Financial Corporation
919 East Main Street
Richmond, VA 2321
C.T. Hill
President - Capital Region
Crestar Financial Corporation
919 East Main Street
Richmond, VA 232199
James J. Kelly
Group Executive Vice President
Management Resources Group
Crestar Financial Corporation
919 East Main Street
Richmond, VA 23219
Robert F. Norfleet, Jr.
Corporate Executive
Vice President & Senior
Credit Officer
Crestar Financial Corporation
919 East Main Street
Richmond, VA 23219
O.H. Parrish, Jr.
Corporate Executive
Vice President & President
Virginia Banking
Crestar Financial Corporation
919 East Main Street
Richmond, VA 23219
To the knowledge of Crestar, none of such persons has,
during the last five years, been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors)
or has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result was
or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any
violation with respect to such laws.
To the knowledge of Crestar, all such persons are citizens
of the United States of America.
ITEM 3. Source and Amount of Funds or Other Consideration.
Any purchase by Crestar of Loyola Common Stock covered by
this Schedule would be made from working capital. The total
amount of such funds to be utilized for such purpose is not
anticipated to exceed $40,336,050.
ITEM 4. Purpose of Transaction.
On April 27, 1995, the Board of Directors of Crestar
approved a Letter Agreement (the "Letter Agreement") dated April
27, 1995, between Loyola and Crestar; Loyola's Board had
authorized its chief executive officer to enter into the Letter
Agreement. The Letter Agreement is to be merged into a
definitive acquisition agreement prior to May 31, 1995. Loyola
will be merged into Crestar, with Crestar as the surviving
corporation (the "Merger"). In connection with the Merger, each
share of Loyola Common Stock outstanding immediately prior to
consummation of the Merger (other than shares held by Crestar)
will be converted into and represent the right to receive shares
of common stock of Crestar ("Crestar Common Stock").
In the Merger, each share of Loyola Common Stock will be
converted into a fraction of a share of Crestar Common Stock,
determined in accordance with the Exchange Ratio. The "Exchange
Ratio" will be calculated as follows:
(a) if the Average Closing Price (as defined below) is
between $43.478 and $46.375, the Exchange Ratio shall be
0.690 (the quotient of (A) $32.00 divided by (B) $46.375).
(b) if the Average Closing Price is greater than
$46.375, the Exchange Ratio shall be the quotient of (A)
$32.00 divided by (B) the Average Closing Price, rounded to
the nearest one-one thousandth of a share, provided that the
Exchange Ratio shall not be less than 0.640.
(c) if the Average Closing Price is less than $43.478,
the Exchange Ratio shall be the quotient of (A) $30.00
divided by (B) the Average Closing Price, rounded to the
nearest one-one thousandth of a share, provided that the
Exchange Ratio shall not be greater than 0.750. The
Agreement may be terminated by Loyola, by action of its
Board of Directors, at any time during the five-day period
prior to the fifth day prior to the closing date, if the
Average Closing Price is less than $40.00, provided,
however, that Crestar shall have the option of increasing
the consideration to be received by holders of Loyola Common
Stock hereunder by adjusting the Exchange Ratio to a number
equal to a quotient, the numerator of which is the product
of $40.00 times the Exchange Ratio then in effect and the
denominator of which is the Average Closing Price. In such
case, Crestar shall give prompt written notice to Loyola of
such election and of the revised Exchange Ratio, and in such
event no termination shall be deemed to have occurred and
the Agreement shall remain in full force and effect in
accordance with its terms.
As used herein, "Average Closing Price" shall mean the
average closing price of Crestar Common Stock as reported on the
New York Stock Exchange for each of the 10 trading days ending on
the tenth day prior to the closing date.
At the effective time of the Merger, Outstanding Options (as
defined in the Letter Agreement) granted by Loyola to purchase
shares of Loyola Common Stock which are unexercised immediately
prior thereto shall be converted as to each whole share subject
to such Outstanding Option into an option (each, an "Exchange
Option") to purchase such number of shares of Crestar common
stock at such exercise price as is determined as provided below
(and otherwise having the same duration, tax consequences, and
other terms as the Outstanding Option):
(a) the number of shares of Crestar Common Stock to be
subject to the Exchange Option shall be equal to the product
of (A) the number of shares of the Loyola Common Stock
subject to the Outstanding Option multiplied by (B) the
Exchange Ratio, the product being rounded, if necessary, up
or down, to the nearest whole share;
(b) the per share exercise price under the Exchange
Option shall be equal to (A) the per share exercise price
under the Outstanding Option divided by (B) the Exchange
Ratio, with any fractional cent rounded up to the next whole
cent.
Consummation of the Merger will be subject to certain usual
conditions, including (i) negotiation of a definitive agreement
(ii) approval by Loyola shareholders; (iii) receipt of all
requisite regulatory approvals; and (iv) other customary
conditions. It is expected that the definitive agreement can be
terminated by, among other things, (i) either party if the other
party has materially breached its covenants, agreements,
representations or warranties, (ii) either party if the
conditions precedent to such party's obligations have not been
satisfied or fulfilled or would be impossible to satisfy and,
(iii) either party if the Merger is not consummated by March 31,
1996.
Crestar and Loyola have entered into a Stock Option
Agreement, dated as of April 27, 1995 ("Option Agreement"),
pursuant to which Loyola issued to Crestar an option (the
"Option") to purchase up to 1,613,442 shares of Loyola Common
Stock at a purchase price of $25.00 per share.
Crestar may exercise the Option upon the occurrence of
certain events ("Purchase Events"). The Option Agreement
provides that a Purchase Event shall mean the occurrence of any
of the following events after the date of execution of the Option
Agreement: (i) Loyola, without having received Crestar's prior
written consent, shall have entered into an agreement with any
person to (x) merge, consolidate or enter into any similar
transaction with Loyola except as contemplated in the Letter
Agreement and the definitive agreement; (y) purchase, lease or
otherwise acquire all or substantially all of the assets of
Loyola; or (z) purchase or otherwise acquire (including by way of
merger, consolidation, share exchange or any similar transaction)
securities representing 15% or more of the voting power of
Loyola; (ii) any person (other than Crestar and its subsidiary
banks in a fiduciary capacity, or Loyola and Loyola Savings Bank
FSB in a fiduciary capacity) shall have acquired beneficial
ownership or the right to acquire beneficial ownership of 15% or
more of the outstanding shares of Loyola Common Stock; (iii) any
person shall have made a bona fide proposal to Loyola by public
announcement or written communication that is or becomes the
subject of public disclosure to acquire Loyola or Loyola Savings
Bank FSB by merger, consolidation, purchase of all or
substantially all of its assets or any other similar transaction,
and following such bona fide proposal the shareholders of Loyola
vote not to adopt the Merger; or (iv) Loyola shall have willfully
breached certain specified covenants contained in the Letter
Agreement or the definitive agreement following a bona fide
proposal to acquire by merger, consolidation, purchase of all or
substantially all of its assets or any other similar transaction,
which breach would entitle Crestar to terminate the Letter
Agreement or the definitive agreement (without regard to the cure
periods provided for therein) and such breach shall not have been
cured prior to the date on which Crestar shall notify Loyola of
its intent to exercise the Option.
The Option may be exercised in whole or in part, at one or
more closings, and may be exercised at any time if a Purchase
Event shall have occurred and be continuing and before the Option
Agreement is terminated, unless Crestar shall have breached in
any material respect any material covenant or representation
contained in the Letter Agreement or the definitive agreement and
such breach has not been cured. The Option Agreement provides
that to the extent that it shall have not been exercised, the
Option shall terminate (i) on the effective date of the Merger;
(ii) upon the termination of the Letter Agreement or the
definitive agreement in accordance with the provisions thereof
(other than a termination resulting from a willful breach by
Loyola of certain specified covenants contained therein or,
following the occurrence of a Purchase Event, failure of Loyola's
shareholders to approve the Merger by the vote required under
applicable law); or (iii) 12 months after termination of the
definitive agreement due to a willful breach by Loyola of certain
specified covenants contained therein or, following the
occurrence of a Purchase Event, failure of Loyola's shareholders
to approve the Merger by the vote required under applicable law.
The Letter Agreement and the Option Agreement are attached
as exhibits and are incorporated by reference and made a part
hereof to the same extent as if set forth herein in full. The
above summary does not purport to be complete and is subject to
and qualified in its entirety by reference to the Letter
Agreement and the Option Agreement.
Except as set forth above and below (including Item 6),
neither Crestar, nor to the knowledge of Crestar, any executive
officer or director of Crestar, has any plans or proposals which
relate to or would result in:
(a) the acquisition by any person of additional securities
of Loyola, or the disposition of securities of Loyola;
(b) an extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving Loyola
or any of its subsidiaries;
(c) a sale or transfer of a material amount of assets of
Loyola or any of its subsidiaries;
(d) any change in the present board of directors or
management of Loyola, including any plans or proposals
to change the number or term of directors to fill any
existing vacancies on the board;
(e) any material change in the present capitalization or
dividend policy of Loyola;
(f) any other material change in Loyola's business or
corporate structure;
(g) changes in Loyola's charter, bylaws or instruments
corresponding thereto or other actions which may impede
the acquisition of control of Loyola by any person;
(h) causing a class of securities of Loyola to be delisted
from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation
system of a registered national securities association;
(i) a class of equity securities of Loyola to become
eligible for termination of registration pursuant to
Section 12(g)(4) of the Securities Exchange Act of
1934; or
(j) any action similar to those enumerated above.
Crestar reserves the right to change its intentions with
respect to any or all of the foregoing and its right to act
either alone or together with any other person or group.
ITEM 5. Interest in Securities of the Issuer.
(a) An aggregate of 1,613,442 shares of Loyola Common Stock
would be owned by Crestar upon exercise of the Option,
representing approximately 19.9% of Loyola Common Stock (on a
post-purchase basis). Neither Crestar nor any director or
officer of Crestar identified in Item 2 owns any other shares of
Loyola Common Stock and has the right to purchase any other
shares of Loyola Common Stock.
(b) Crestar does not possess sole or shared voting and
dispositive power over any of the shares of Loyola Common Stock
covered by this Schedule.
(c) No transactions in Loyola Common Stock other than those
reported in this Schedule have been effected by Crestar, or, to
the knowledge of Crestar, any director or officer of Crestar
identified in Item 2, within the past 60 days.
(d) Not applicable.
(e) Not applicable.
ITEM 6. Contracts, Arrangements or Understandings with Respect
to Securities of the Issuer.
See Item 4 hereof for a description of the Option Agreement
and the Letter Agreement.
ITEM 7. Material to be Filed as Exhibits.
Filed herewith are these exhibits:
(a) Letter Agreement dated April 27, 1995, among Crestar,
Crestar Bank and Loyola.
(b) Stock Option Agreement, dated as of April 27, 1995,
between Crestar and Loyola.
SIGNATURES
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this Schedule
13D is true, complete and correct.
Dated: May 8, 1995 CRESTAR FINANCIAL CORPORATION
By /s/ John C. Clark, III
John C. Clark, III, Senior
Vice President and General
Counsel
April 27, 1995
HIGHLY CONFIDENTIAL
Board of Directors
Loyola Capital Corporation
1300 North Charles Street
Baltimore, Maryland 21201
Attention:Joseph W. Mosmiller
Chairman of the Board and
Chief Executive Officer
Ladies and Gentlemen:
On behalf of Crestar Financial Corporation ("Crestar"), I am
pleased to make the following binding offer to acquire Loyola
Capital Corporation ("Loyola") on the terms set forth in this
letter.
1. Structure; Valuation and Consideration; Loyola
Capitalization. The transaction would be structured as a
statutory merger of Loyola into Crestar (the "Merger").
Crestar and Loyola would use their best efforts to make the
Merger effective on or before January 31, 1996, or, if applicable
law or regulatory authorities do not permit the Merger to
be effective by this date, as soon as practicable thereafter, but
not later than March 31, 1996.
In the Merger, each share of Loyola common stock shall be
converted into a fraction of a share of Crestar common stock,
determined in accordance with the Exchange Ratio. The "Exchange
Ratio" shall be calculated as follows:
(a) if the Average Closing Price (as defined below) is
between $43.478 and $46.375, the Exchange Ratio shall be 0.690
(the quotient of (A) $32.00 divided by (B) $46.375).
(b) if the Average Closing Price is greater than
$46.375, the Exchange Ratio shall be the quotient of (A) $32.00
divided by (B) the Average Closing Price, rounded to the nearest
one-one thousandth of a share, provided that the Exchange Ratio
shall not be less than 0.640.
(c) if the Average Closing Price is less than $43.478,
the Exchange Ratio shall be the quotient of (A) $30.00 divided by
(B) the Average Closing Price, rounded to the nearest one-one
thousandth of a share, provided that the Exchange Ratio shall not
be greater than 0.750. The Agreement may be terminated by
Loyola, by action of its Board of Directors, at any time during
the five-day period prior to the fifth day prior to the closing
date, if the Average Closing Price is less than $40.00, provided,
however, that Crestar shall have the option of increasing the
consideration to be received by holders of Loyola common stock
hereunder by adjusting the Exchange Ratio to a number equal to a
quotient, the numerator of which is the product of $40.00 times
the Exchange Ratio then in effect and the denominator of which is
the Average Closing Price. In such case, Crestar shall give
prompt written notice to Loyola of such election and of the
revised Exchange Ratio, and in such event no termination shall be
deemed to have occurred and the Agreement shall remain in full
force and effect in accordance with its terms.
As used herein, "Average Closing Price" shall mean the
average closing price of Crestar common stock as reported on the
New York Stock Exchange for each of the 10 trading days ending on
the tenth day prior to the closing date.
At March 31, 1995, Loyola had 8,107,750 shares of common
stock issued and outstanding and outstanding options
("Outstanding Options") covering 1,080,567 shares of Loyola
common stock. Except for shares that may become issuable
pursuant to the Stock Option Agreement (referred to below) and
shares issued upon exercise of Outstanding Options, no additional
shares of Loyola common stock or Loyola preferred stock have been
issued through the date hereof or will be issued, and no options
for Loyola common stock or Loyola preferred stock have been
granted since March 31, 1995, and none will be granted, between
the date of this letter and the effective date of the Merger.
2. Loyola Options. At the effective time of the Merger,
Outstanding Options granted by Loyola to purchase shares of
Loyola common stock which are unexercised immediately prior
thereto shall be converted as to each whole share subject to such
Outstanding Option into an option (each, an "Exchange Option") to
purchase such number of shares of Crestar common stock at such
exercise price as is determined as provided below (and otherwise
having the same duration, tax consequences, and other terms as
the Outstanding Option):
(a) the number of shares of Crestar common stock to be
subject to the Exchange Option shall be equal to the product of
(A) the number of shares of the Loyola common stock subject to
the Outstanding Option multiplied by (B) the Exchange Ratio, the
product being rounded, if necessary, up or down, to the nearest
whole share;
(b) the per share exercise price under the Exchange
Option shall be equal to (A) the per share exercise price under
the Outstanding Option divided by (B) the Exchange Ratio, with
any fractional cent rounded up to the next whole cent.
3. Certain Conditions. The Merger would be subject to
satisfaction of certain conditions precedent usual for
transactions of this type, including the following:
(a) Negotiation of a definitive agreement and plan of
reorganization (the "Agreement") incorporating the agreements
expressed in this letter and other terms and conditions usual for
contracts of that type. Crestar and Loyola would negotiate
the Agreement in good faith, and we believe we should be able to
execute the Agreement by May 15, 1995. If we are unable to
execute the Agreement by May 31, 1995, however, either Crestar or
Loyola may terminate this letter of agreement, with no liability
one to the other.
(b) Receipt of all necessary contractual, creditor,
and regulatory approvals for the Merger, including approvals of
the Board of Governors of the Federal Reserve System; the Bureau
of Financial Institutions of the Virginia State Corporation
Commission; the Office of Thrift Supervision; and any other
federal or state regulatory authority having jurisdiction over
the Merger, and the expiration of all waiting periods required by
law.
(c) Compliance with requirements of the Securities Act
of 1933 and applicable state securities laws, including filing a
registration statement covering Crestar common stock issuable in
the Merger with the Securities and Exchange Commission.
(d) Compliance with all applicable federal and state
laws and regulations concerning the Merger, the absence in all
orders, decrees or advisory letters of regulatory authorities
concerning the Merger of any conditions or requirements
reasonably deemed objectionable to Crestar, and the absence
of any actual or threatened litigation under federal antitrust
laws. Crestar and Loyola agree to cooperate in taking all
reasonable necessary steps to obtain regulatory and corporate
approvals, including, as respects any meeting of Loyola
shareholders, the favorable vote of holders of the requisite
majority of outstanding Loyola Common Stock. At the signing of
the definitive Agreement, the members of Loyola's board of
directors would agree to vote their shares in favor of the
Merger.
(e) The receipt by Crestar and Loyola of opinions of
their respective counsel to the effect that the Merger
constitutes a tax-free reorganization for federal income tax
purposes.
(f) The taking by Crestar and Loyola of all corporate
action necessary for the Merger by (i) the board of directors and
shareholders of Loyola and (ii) the board of directors of
Crestar, as and to the extent required by law and their
respective charters and bylaws.
(g) Receipt by Crestar prior to execution of the
Agreement of an acceptable letter from KPMG Peat Marwick to the
effect that the Merger can be accounted for as a "pooling of
interests."
4. Indemnification. Crestar acknowledges its obligation
to provide, and agrees to provide, indemnification to the
directors and officers of Loyola following the effective date of
the Merger to the same extent as if Loyola were maintaining its
separate existence after such time.
5. General Condition; PreMerger Review; Operating
Synergies. The obligation of Crestar to consummate the Merger
would be subject to the condition that, on the effective date of
the Merger, since March 31, 1995, there shall have been no change
not previously agreed to by Crestar in Loyola's capital
structure, dividend policy, stock option plans, material
contracts, branches, credit policies, loan charge-off policies,
reserve requirements and securities portfolio management
policies, all to be described in detail in the Agreement.
Without the approval of Crestar, Loyola shall not make any change
in the salaries or bonuses of any of its employees, other than
those permitted by their current employment policies in the
ordinary course of business, any of which changes shall be
reported promptly to Crestar.
Crestar's obligation to enter into the Agreement is subject
to a review (at Crestar's expense and with the full cooperation
of Loyola) to confirm the accuracy of Loyola's representations
and warranties to be contained in the Agreement.
With appropriate exceptions and without effect on Loyola's
incentive bonus program, Loyola's management will work with
Crestar to achieve appropriate operating efficiencies and to make
appropriate accruals for loan loss reserves and expenses and,
when indicated, charge-offs prior to consummation of the Merger.
Crestar representatives will be given full access to Loyola's
books and records in this undertaking. Loyola shall be under no
obligation to make any adjustments until such time as all terms
and conditions of the Agreement have been satisfied in full and
all contingencies to closing have been eliminated.
6. Other Proposals. Between the date of this letter and
the earlier of the termination of this letter or the execution of
the Agreement, Loyola shall not, and Loyola shall use its best
efforts to ensure that its directors, officers and advisors do
not, institute, pursue, or, subject to the fiduciary obligations
of Loyola's Board of Directors to its shareholders, enter into
any discussions, negotiations, or agreements (whether preliminary
or definitive) with any person or entity other than Crestar
contemplating or providing for any merger, share exchange,
acquisition, purchase or sale of a significant amount of assets,
or other business combination or change in control of Loyola.
7. Expenses. Each party shall bear its own expenses in
connection with the implementation of this letter of intent,
regardless of whether or not the definitive Agreement is
executed.
8. Stock Option Agreement. Simultaneously with the
execution of this binding letter of agreement, Crestar and Loyola
are entering into a Stock Option Agreement pursuant to which
Loyola will grant Crestar an option to purchase 1,613,442 of its
authorized but unissued shares of common stock at $25.00 cash per
share, exercisable in certain events.
9. Termination. The Agreement will provide for
termination in the event the Merger is not consummated by March
31, 1996.
10. Binding Letter of Agreement. This is a binding letter
of agreement that legally commits the parties to the Merger. The
parties agree to negotiate in good faith the Agreement, which
will contain terms and conditions usual to transactions of this
type, and into which this binding letter of agreement will be
merged.
Very truly yours,
CRESTAR FINANCIAL CORPORATION
By /s/ Richard G. Tilghman
Richard G. Tilghman
Chairman of the Board and
Chief Executive Officer
Accepted and agreed to pursuant
to authorization of the Board
of Directors
LOYOLA CAPITAL CORPORATION
By /s/ Joseph W. Mosmiller
Joseph W. Mosmiller
Chairman of the Board and
Chief Executive Officer
Dated: April 27, 1995
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT ("Option Agreement") dated as of
April 27, 1995, between LOYOLA CAPITAL CORPORATION ("Loyola"), a
Maryland corporation, and CRESTAR FINANCIAL CORPORATION
("Crestar"), a Virginia corporation, recites and provides:
A. The Boards of Directors of Loyola and Crestar have
approved a binding letter of agreement dated April 27, 1995 (the
"Letter Agreement") (to be merged into a definitive agreement
(the "Merger Agreement")) providing for the merger (the "Merger")
of Loyola with and into Crestar.
B. As a condition to and as consideration for Crestar's
entry into the Letter Agreement and the Merger Agreement and to
induce such entry, Loyola has agreed to grant to Crestar the
option set forth herein to purchase authorized but unissued
shares of Loyola Common Stock.
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
Capitalized terms defined in the Letter Agreement or
the Merger Agreement and used herein shall have the same meanings
as in the Letter Agreement or the Merger Agreement, as the case
may be.
2. Grant of Option.
Subject to the terms and conditions set forth herein,
Loyola hereby grants to Crestar an option (the "Option") to
purchase up to 1,613,442 shares of Loyola Common Stock at an
exercise price of $25.00 per share payable in cash as provided in
Section 4; provided, however, that in the event Loyola issues or
agrees to issue any shares of Loyola Common Stock (other than as
permitted under the Letter Agreement and the Merger Agreement) at
a price less than $25.00 per share (as adjusted pursuant to
Section 6), the exercise price shall be such lesser price.
3. Exercise of Option.
(a) Unless Crestar shall have breached in any material
respect any material covenant or representation contained in the
Letter Agreement or the Merger Agreement and such breach has not
been cured, Crestar may exercise the Option, in whole or part, at
any time or from time to time if a Purchase Event (as defined
below) shall have occurred and be continuing; provided that to
the extent the Option shall not have been exercised, it shall
terminate and be of no further force and effect (i) on the
Effective Date of the Merger, or (ii) upon termination of the
Letter Agreement or the Merger Agreement in accordance with
the provisions thereof (other than a termination resulting from a
willful breach by Loyola of any Specified Covenant or, following
the occurrence of a Purchase Event, failure of Loyola's
stockholders to approve the Merger Agreement by the vote required
under applicable law or under Loyola's Charter), or (iii) 12
months after termination of the Letter Agreement or the Merger
Agreement due to a willful breach by Loyola of any Specified
Covenant or, following the occurrence of a Purchase Event,
failure of Loyola's stockholders to approve the Merger Agreement
by the vote required under applicable law or under Loyola's
Charter. Any exercise of the Option shall be subject to
compliance with applicable provisions of law.
(b) As used herein, a "Purchase Event" shall mean any
of the following events or transactions occurring after the date
hereof:
(i) Loyola or Loyola Federal Savings Bank (the
"Savings Bank"), without having received Crestar's prior written
consent, shall have entered into an agreement with any person (x)
to merge or consolidate, or enter into any similar transaction,
except as contemplated in the Letter Agreement or the Merger
Agreement, (y) to purchase, lease or otherwise acquire all or
substantially all of the assets of Loyola or the Savings Bank, or
(z) to purchase or otherwise acquire (including by way of merger,
consolidation, share exchange or any similar transaction)
securities representing 10% or more of the voting power of
Loyola or the Savings Bank;
(ii) any person (other than Loyola or the Savings
Bank in a fiduciary capacity, or Crestar, Crestar Bank, Crestar
Bank N.A. or Crestar Bank MD in a fiduciary capacity) shall have
acquired beneficial ownership or the right to acquire beneficial
ownership of 15% or more of the outstanding shares of Loyola
Common Stock after the date hereof (the term "beneficial
ownership" for purposes of this Option Agreement having the
meaning assigned thereto in Section 13(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") and the regulations
promulgated thereunder);
(iii) any person shall have made a bona fide
proposal to Loyola by public announcement or written
communication that is or becomes the subject of public
disclosure to acquire Loyola or Savings Bank by merger,
consolidation, purchase of all or substantially all of its assets
or any other similar transaction, and following such bona fide
proposal the stockholders of Loyola vote not to adopt the Merger
Agreement; or
(iv) Loyola shall have willfully breached any
Specified Covenant following a bona fide proposal to Loyola or
the Savings Bank to acquire Loyola or the Savings Bank by merger,
consolidation, purchase of all or substantially all of its assets
or any other similar transaction, which breach would entitle
Crestar to terminate the Letter Agreement or the Merger Agreement
(without regard to the cure periods provided for therein) and
such breach shall not have been cured prior to the Notice Date
(as defined below).
If more than one of the transactions giving rise
to a Purchase Event under this Section 3(b) is undertaken or
effected, then all such transactions shall give rise only to one
Purchase Event, which Purchase Event shall be deemed continuing
for all purposes hereunder until all such transactions are
abandoned. As used in this Option Agreement, "person" shall have
the meanings specified in Sections 3(a)(9) and 13(d)(3) of the
Exchange Act.
(c) In the event Crestar wishes to exercise the
Option, it shall send to Loyola a written notice (the date of
which being herein referred to as the "Notice Date") specifying
(i) the total number of shares it will purchase pursuant to such
exercise, and (ii) a place and date not earlier than three
business days nor later than 60 business days after the Notice
Date for the closing of such purchase ("Closing Date");
provided that if prior notification to or approval of any federal
or state regulatory agency is required in connection with such
purchase, Crestar shall promptly file the required notice or
application for approval and shall expeditiously process the same
and the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which any required
notification period has expired or been terminated or such
approval has been obtained and any requisite waiting period shall
have passed.
(d) As used herein, "Specified Covenant" means any
covenant contained in Section 6 of the Letter Agreement and
Sections 1.8, 4.1, 4.2, 4.4, 4.5, 4.6, 4.8, 4.9, 4.11, or 4.13 of
the draft Merger Agreement, the table of contents of which is
attached hereto, and, after its execution, comparable provisions
in the Merger Agreement.
4. Payment and Delivery of Certificates.
(a) At the closing referred to in Section 3, Crestar
shall pay to Loyola the aggregate purchase price for the shares
of Loyola Common Stock purchased pursuant to the exercise of the
Option in immediately available funds by a wire transfer to a
bank account designated by Loyola.
(b) At such closing, simultaneously with the delivery
of funds as provided in subsection (a), Loyola shall deliver to
Crestar a certificate or certificates representing the number of
shares of Loyola Common Stock purchased by Crestar, and Crestar
shall deliver to Loyola a letter agreeing that Crestar will not
offer to sell or otherwise dispose of such shares in violation of
applicable law or the provisions of this Option Agreement.
(c) Certificates for Loyola Common Stock delivered at
a closing hereunder may be endorsed with a restrictive legend
which shall read substantially as follows:
"The transfer of the shares represented by this
certificate is subject to certain provisions of a Stock Option
Agreement between the registered holder hereof and Loyola
Capital Corporation and to resale restrictions arising under the
Securities Act of 1933, as amended, a copy of which agreement is
on file at the principal office of Loyola Capital Corporation. A
copy of such agreement will be provided to the holder hereof
without charge upon receipt by Loyola Capital Corporation of a
written request."
It is understood and agreed that the above legend shall
be removed by delivery of substitute certificate(s) without such
legend if Crestar shall have delivered to Loyola a copy of a
letter from the staff of the Commission, or an opinion of
counsel, in form and substance satisfactory to Loyola, to the
effect that such legend is not required for purposes of
the Securities Act.
5. Representations.
Loyola represents, warrants and covenants to Crestar as
follows:
(a) Loyola shall at all times maintain sufficient
authorized but unissued shares of Loyola Common Stock so that the
Option may be exercised without authorization of additional
shares of Loyola Common Stock.
(b) The shares to be issued upon due exercise, in
whole or in part, of the Option, when paid for as provided
herein, will be duly authorized, validly issued, fully paid
and nonassessable.
6. Adjustment Upon Changes in Capitalization.
In the event of any change in Loyola Common Stock by
reason of stock dividends, split-ups, mergers, recapitalizations,
combinations, exchanges of shares or the like, the type and
number of shares subject to the Option, and the purchase price
per share, as the case may be, shall be adjusted appropriately.
In the event that any additional shares of Loyola Common Stock
are issued or otherwise become outstanding after the date of this
Option Agreement (other than pursuant to this Option Agreement),
the number of shares of Loyola Common Stock subject to the Option
shall be adjusted so that, after such issuance, it equals 19.9%
of the number of shares of Loyola Common Stock then issued and
outstanding without giving effect to any shares subject or issued
pursuant to the Option. Nothing contained in this Section 6 shall
be deemed to authorize Loyola to breach any provision of the
Letter Agreement or the Merger Agreement.
7. Registration Rights.
If requested by Crestar, Loyola shall as expeditiously
as possible file a registration statement on a form of general
use under the Securities Act if necessary in order to permit the
sale or other disposition of the shares of Loyola Common Stock
that have been acquired upon exercise of the Option in accordance
with the intended method of sale or other disposition requested
by Crestar. Crestar shall provide all information reasonably
requested by Loyola for inclusion in any registration statement
to be filed hereunder. Loyola will use its best efforts to cause
such registration statement first to become effective and then to
remain effective for such period not in excess of 270 days from
the day such registration statement first becomes effective as
may be reasonably necessary to effect such sales or other
dispositions. The first registration effected under this Section
7 shall be at Loyola's expense except for underwriting
commissions and the fees and disbursements of Crestar's counsel
attributable to the registration of such Loyola Common Stock. A
second registration may be requested hereunder at Crestar's
expense. In no event shall Loyola be required to effect more
than two registrations hereunder. The filing of any registration
statement hereunder may be delayed for such period of time as may
reasonably be required to facilitate any public distribution by
Loyola of Loyola Common Stock. If requested by Crestar, in
connection with any such registration, Loyola will become a party
to any underwriting agreement relating to the sale of such
shares, but only to the extent of obligating itself in respect of
representations, warranties, indemnities and other agreements
customarily included in such underwriting agreements. Upon
receiving any request from Crestar or assignee thereof under
this Section 7, Loyola agrees to send a copy thereof to Crestar
and to any assignee thereof known to Loyola, in each case by
promptly mailing the same, postage prepaid, to the address
of record of the persons entitled to receive such copies.
8. Severability.
If any term, provision, covenant or restriction
contained in this Option Agreement is held by a court or a
federal or state regulatory agency of competent jurisdiction
to be invalid, void or unenforceable, the remainder of the terms,
provisions and covenants and restrictions contained in this
Option Agreement shall remain in full force and effect, and
shall in no way be affected, impaired or invalidated. If for any
reason such court or regulatory agency determines that the Option
will not permit the holder to acquire the full number of shares
of Loyola Common Stock provided in Section 2 (as adjusted
pursuant to Section 6), it is the express intention of Loyola to
allow the holder to acquire such lesser number of shares as may
be permissible, without any amendment or modification hereof.
9. Miscellaneous.
(a) Expenses. Except as otherwise provided herein,
each of the parties hereto shall bear and pay all costs and
expenses incurred by it or on its behalf in connection with the
transactions contemplated hereunder, including fees and expenses
of its own financial consultants, investment bankers, accountants
and counsel.
(b) Entire Agreement. Except as otherwise expressly
provided herein, this Option Agreement contains the entire
agreement between the parties with respect to the transactions
contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral. The terms
and conditions of this Option Agreement shall inure to the
benefit of and be binding upon the parties hereto and their
respective successors and assigns. Nothing in this Option
Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective
successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Option Agreement, except
as expressly provided herein.
(c) Assignment. Neither of the parties hereto may
assign any of its rights or obligations under this Option
Agreement or the Option created hereunder to any other person,
without the express written consent of the other party, except
that in the event a Purchase Event shall have occurred and be
continuing Crestar may assign in whole or in part its rights and
obligations hereunder; provided, however, that to the extent
required by applicable regulatory authorities, Crestar may not
assign its rights under the Option except in (i) a widely
dispersed public distribution, (ii) a private placement in which
no one party acquires the right to purchase in excess of 2% of
the voting shares of Loyola, (iii) an assignment to a single
party (e.g., a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on Crestar's
behalf, or (iv) any other manner approved by applicable
regulatory authorities.
(d) Notices. All notices or other communications which
are required or permitted hereunder shall be in writing and
sufficient if delivered in the manner and to the addresses
provided for in or pursuant to Section 8.4 of the draft Merger
Agreement and, after its execution, the Merger Agreement.
(e) Counterparts. This Option Agreement may be
executed in any number of counterparts, and each such counterpart
shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
(f) Specific Performance. The parties agree that
damages would be an inadequate remedy for a breach of the
provisions of this Option Agreement by either party hereto and
that this Option Agreement may be enforced by either party hereto
through injunctive or other equitable relief.
(g) Governing Law. This Option Agreement shall be
governed by and construed in accordance with the laws of Virginia
applicable to agreements made and entirely to be performed within
such state and such federal laws as may be applicable.
IN WITNESS WHEREOF, each of the parties hereto has executed
this Option Agreement as of the day and year first written above.
LOYOLA CAPITAL CORPORATION
By: /s/ Joseph W. Mosmiller
Joseph W. Mosmiller
Chairman of the Board and
Chief Executive Officer
CRESTAR FINANCIAL CORPORATION
By: /s/ Richard G. Tilghman
Richard G. Tilghman
Chairman of the Board and
Chief Executive Officer
