SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 20, 1998
CRESTAR FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 1-7083 54-0722175
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
919 East Main Street, Post Office Box 26665
Richmond, VA 23261-6665
(Address of principal executive offices) (Zip Code)
(804) 782-5000
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS.
On July 20, 1998, Crestar Financial Corporation, a Virginia
corporation ("Crestar"), entered into an Agreement and Plan of Merger (the
"Merger Agreement"), pursuant to which a wholly-owned subsidiary of
SunTrust Banks, Inc., a Georgia corporation ("SunTrust"), will be merged
with and into Crestar (the "Merger"). The Merger is intended to constitute
a tax-free reorganization for federal income tax purposes and to be
accounted for as a pooling-of-interests. The Merger Agreement is filed
herewith as Exhibit 2.1 and is incorporated by reference herein.
In accordance with the terms of the Merger Agreement, each share
of Crestar common stock, par value $5.00 per share ("Crestar Common
Stock"), outstanding immediately prior to the effective time of the Merger,
together with the rights attached thereto (the "Rights") issued pursuant to
the Rights Agreement, dated as of June 23, 1989 (the "Rights Agreement"),
between Crestar and Mellon Bank, N.A., as rights agent, will be converted
into the right to receive .96 shares (the "Exchange Ratio") of SunTrust
common stock, par value $1.00 per share ("SunTrust Common Stock") (with
cash being paid in lieu of fractional share interests).
Consummation of the Merger is subject to various conditions,
including (i) the approval of the shareholders of Crestar and SunTrust,
(ii) the approval of the appropriate state and federal bank regulators and
other governmental agencies, (iii) the receipt by Crestar and SunTrust of
letters from their independent auditors that the Merger will qualify for
pooling-of-interests accounting treatment, (iv) the receipt by Crestar and
SunTrust of an opinion of counsel that the Merger will be treated for
federal tax purposes as a reorganization under Section 368 of the Internal
Revenue Code of 1986, as amended, and (v) other customary conditions to
closing.
In connection with the Merger Agreement, Crestar and SunTrust
entered into option agreements (the "Stock Option Agreements"), each dated
as of July 20, 1998. The Stock Option Agreements provide (i) Crestar with
the right to purchase a number of shares of SunTrust Common Stock equal to
9.9% of SunTrust's Common Stock and (ii) SunTrust with the right to
purchase a number of shares of Crestar Common Stock equal to 19.9% of
Crestar's Common Stock. The price per share of Crestar Common Stock
payable upon exercise of the option is $62 7/8 and the price per share of
the SunTrust Common Stock payable upon exercise of the option is $87.00.
The options granted under the Stock Option Agreements will become
exercisable only upon the occurrence of certain events, none of which has
occurred as of the date hereof. The options were granted by each of
Crestar and SunTrust as a condition to the other party's entering into the
Merger Agreement. The Stock Option Agreements are filed herewith as
Exhibits 99.1 and 99.2 and are incorporated by reference herein.
The joint press release issued by Crestar and SunTrust with
respect to the Merger is filed herewith as Exhibit 99.3.
In connection with the execution of the Merger Agreement and the
Stock Option Agreements, Crestar amended its Rights Agreement to provide
that the Rights will not become distributable or exercisable as a result of
the execution of the Merger Agreement and the Stock Option Agreement
pursuant to which Crestar has granted an option or the consummation of the
transactions contemplated thereby.
Amendment No. 1 to the Rights Agreement is filed herewith as
Exhibit 99.4 and is incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENT AND EXHIBITS.
(c) Exhibits
2.1 Agreement and Plan of Merger by and among Crestar
Financial Corporation, SunTrust Banks, Inc., and SMR
Corporation, dated as of July 20, 1998
99.1 Stock Option Agreement, dated July 20, 1998, between
Crestar Financial Corporation, as issuer, and SunTrust
Banks, Inc., as grantee
99.2 Stock Option Agreement, dated July 20, 1998, between
SunTrust Banks, Inc., as issuer, and Crestar Financial
Corporation, as grantee
99.3 Press Release issued by Crestar Financial Corporation
and SunTrust Banks, Inc. on July 20, 1998
99.4 Amendment No. 1, dated as of July 20, 1998, to the
Rights Agreement, dated as of June 23, 1989, between
Crestar Financial Corporation and Mellon Bank, N.A., as
rights agent
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunder duly authorized.
Dated: July 22, 1998
CRESTAR FINANCIAL CORPORATION
By: /s/ James D. Barr
_______________________________
Name: James D. Barr
Title: Group Executive Vice President,
Controller and Treasurer
EXHIBIT INDEX
Exhibit
Number Description
2.1 Agreement and Plan of Merger by and among Crestar
Financial Corporation, SunTrust Banks, Inc., and SMR
Corporation, dated as of July 20, 1998
99.1 Stock Option Agreement, dated July 20, 1998, between
Crestar Financial Corporation, as issuer, and SunTrust
Banks, Inc., as grantee
99.2 Stock Option Agreement, dated July 20, 1998, between
SunTrust Banks, Inc., as issuer, and Crestar Financial
Corporation, as grantee
99.3 Press Release issued by Crestar Financial Corporation
and SunTrust Banks, Inc. on July 20, 1998
99.4 Amendment No. 1, dated as of July 20, 1998, to the
Rights Agreement, dated as of June 23, 1989, between
Crestar Financial Corporation and Mellon Bank, N.A., as
rights agent
- ------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SUNTRUST BANKS, INC.
CRESTAR FINANCIAL CORPORATION
AND
SMR CORPORATION
DATED AS OF JULY 20, 1998
- ------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER.....................................................2
1.1 Merger...................................................2
1.2 Effective Time...........................................2
1.3 Effect of Merger.........................................2
1.4 Articles of Incorporation and Bylaws.....................2
1.5 Directors and Officers...................................2
1.6 Additional Actions.......................................3
1.7 Tax Consequences; Accounting Treatment...................3
ARTICLE II CONVERSION OF SHARES...........................................3
2.1 Conversion of Shares.....................................3
2.2 Assumption of Employee and Director Stock Options .......4
2.3 Exchange of Certificates.................................5
2.4 Closing of Crestar's Transfer Books......................7
2.5 Changes in SunTrust Common Stock.........................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SUNTRUST.....................8
3.1 Corporate Organization...................................8
3.2 Authority................................................8
3.3 Capitalization...........................................8
3.4 Subsidiaries.............................................9
3.5 Information in Disclosure Documents,
Registration Statement, Etc..............................9
3.6 Consents and Approvals; No Violation....................10
3.7 Reports.................................................10
3.8 Financial Statements....................................11
3.9 Taxes...................................................11
3.10 Employee Plans..........................................11
3.11 Material Contracts......................................13
3.12 Absence of Certain Changes or Events....................13
3.13 Litigation..............................................13
3.14 Compliance with Laws and Orders.........................13
3.15 Agreements with Bank Regulators, Etc....................14
3.16 SunTrust Ownership of Stock.............................14
3.17 Accounting Treatment; Tax Treatment.....................14
3.18 Fees....................................................14
3.19 SunTrust Action.........................................15
3.20 Vote Required...........................................15
3.21 Material Interests of Certain Persons...................15
3.22 Intellectual Property...................................15
3.23 Interest Rate Risk Management Instruments...............16
3.24 Insurance...............................................16
3.25 Environmental Matters...................................16
3.26 Rescission of Repurchases...............................18
3.27 Disclosure Letter.......................................18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF CRESTAR.....................18
4.1 Corporate Organization..................................18
4.2 Authority...............................................18
4.3 Capitalization..........................................19
4.4 Subsidiaries............................................19
4.5 Information in Disclosure Documents,
Registration Statement, Etc.............................20
4.6 Consents and Approvals; No Violation....................20
4.7 Reports.................................................21
4.8 Financial Statements....................................21
4.9 Taxes...................................................21
4.10 Employee Plans..........................................22
4.11 Material Contracts......................................23
4.12 Absence of Certain Changes or Events....................24
4.13 Litigation..............................................24
4.14 Compliance with Laws and Orders.........................24
4.15 Agreements with Bank Regulators, Etc....................25
4.16 Crestar Ownership of Stock..............................25
4.17 Accounting Treatment; Tax Treatment.....................25
4.18 Fees....................................................25
4.19 Crestar Action..........................................26
4.20 Vote Required...........................................26
4.21 Material Interests of Certain Persons...................26
4.22 Intellectual Property...................................26
4.23 Interest Rate Risk Management Instruments...............27
4.24 Insurance...............................................27
4.25 Environmental Matters...................................28
4.26 Rescission of Repurchases...............................28
4.27 Disclosure Letter.......................................28
ARTICLE V COVENANTS.....................................................28
5.1 Acquisition Proposals...................................28
5.2 Interim Operations of Crestar...........................29
5.3 Interim Operations of SunTrust..........................31
5.4 Coordination of Dividends...............................31
5.5 Employee Matters........................................32
5.6 Access and Information..................................33
5.7 Certain Filings, Consents and Arrangements..............34
5.8 State Takeover Statutes.................................34
5.9 Indemnification and Insurance...........................34
5.10 Additional Agreements...................................35
5.11 Publicity...............................................36
5.12 Preparation of the Registration Statement and
the Proxy Statement Shareholders' Meetings..............36
5.13 Securities Act; Pooling-of-Interests....................37
5.14 Stock Exchange Listings.................................37
5.15 Shareholder Litigation..................................37
5.16 Pooling-of-Interests and Tax-free
Reorganization Treatment................................38
5.17 Letters of Accountants..................................38
5.18 Expenses................................................38
5.19 Adverse Action..........................................39
5.20 Standstill Agreements; Confidentiality
Agreements .............................................39
5.21 Issuance of Treasury Shares.............................39
5.22 Redemption of Securities. .............................39
ARTICLE VI CLOSING MATTERS...............................................39
6.1 The Closing.............................................39
6.2 Documents and Certificates..............................40
ARTICLE VII CONDITIONS....................................................40
7.1 Conditions to Each Party's Obligations to Effect
the Merger..............................................40
7.2 Conditions to Obligation of Crestar to Effect the
Merger..................................................41
7.3 Conditions to Obligation of SunTrust to Effect
the Merger..............................................42
ARTICLE VIII MISCELLANEOUS.................................................42
8.1 Termination.............................................42
8.2 Expense Reimbursement. ................................43
8.3 Non-Survival of Representations, Warranties
and Agreements..........................................45
8.4 Waiver and Amendment....................................45
8.5 Entire Agreement........................................45
8.6 Applicable Law..........................................45
8.7 Certain Definitions; Headlines..........................45
8.8 Notices.................................................46
8.9 Counterparts............................................48
8.10 Parties in Interest; Assignment.........................48
8.11 Severability............................................48
Exhibits
Exhibit A -- Crestar Option Agreement
Exhibit B -- SunTrust Option Agreement
Exhibit C -- SunTrust Affiliate Letter
Exhibit D -- Crestar Affiliate Letter
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of July 20, 1998
("Agreement"), is made by and among SUNTRUST BANKS, INC., a Georgia
corporation ("SunTrust"), CRESTAR FINANCIAL CORPORATION, a Virginia
corporation ("Crestar") and SMR CORPORATION, a Virginia corporation and a
wholly owned subsidiary of SunTrust ("Sub").
WHEREAS, SunTrust and Crestar have each determined that it is in the
best interests of their respective shareholders for Sub to merge with and
into Crestar upon the terms and subject to the conditions set forth in this
Agreement (the "Merger"), so that Crestar will continue as the surviving
corporation of the Merger and will become a wholly owned subsidiary of
SunTrust;
WHEREAS, the respective Boards of Directors of SunTrust, Crestar and
Sub have approved and declared advisable the Merger, the terms and
provisions of this Agreement, the Crestar Option Agreement (as defined
below) and the SunTrust Option Agreement (as defined below) and the
transactions contemplated hereby and thereby;
WHEREAS, the respective Boards of Directors of SunTrust and Crestar
have determined that the Merger is in furtherance of and consistent with
their respective long-term business strategies and is fair to and in the
best interests of their respective shareholders;
WHEREAS, for Federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization under the provisions of Section
368 of the Internal Revenue Code of 1986, as amended (the "Code"), and this
Agreement is intended to be and is adopted as a plan of reorganization for
purposes of Section 368 of the Code;
WHEREAS, for accounting purposes, it is intended that the Merger
shall be accounted for as a "pooling-of-interests";
WHEREAS, as a condition to, and contemporaneously with, the execution
of this Agreement, the parties have entered into a stock option agreement,
with Crestar as issuer and SunTrust as grantee (the "Crestar Option
Agreement") in the form attached hereto as Exhibit A; and
WHEREAS, as a condition to, and contemporaneously with, the execution
of this Agreement, the parties have entered into a stock option agreement,
with SunTrust as issuer and Crestar as grantee (the "SunTrust Option
Agreement") in the form attached hereto as Exhibit B.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
1.1 MERGER. Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined in Section 1.2), Sub will be merged with and
into Crestar (the "Merger") in accordance with the applicable provisions of
the Virginia Stock Corporation Act ("VSCA") and the separate corporate
existence of Sub will thereupon cease.
SunTrust may at any time in its discretion change the method of
effecting the combination of Sub with Crestar (including, without
limitation, the provisions of this Article I) if and to the extent it deems
such change to be desirable, including, without limitation, to provide for
a merger of Crestar with or into SunTrust; provided, however, that no such
change shall (A) alter or change the amount or kind of consideration to be
issued to holders of shares of common stock, par value $5.00 per share, of
Crestar ("Crestar Common Stock") as provided for in this Agreement, (B)
adversely affect the tax treatment of Crestar or Crestar's shareholders as
a result of the Merger or (C) materially impede or delay consummation of
the transactions contemplated by this Agreement.
1.2 EFFECTIVE TIME. As soon as practicable after satisfaction or
waiver of all conditions to the Merger, Sub and Crestar (the "Constituent
Corporations") shall cause articles of merger complying with the
requirements of the VSCA to be filed with the State Corporation Commission
of the Commonwealth of Virginia ("Virginia Articles of Merger"). The Merger
will become effective upon the filing of the Virginia Articles of Merger,
or such later time as shall be specified in such filing ("Effective Time").
1.3 EFFECT OF MERGER. The Merger will have the effects specified in
the VSCA. Without limiting the generality of the foregoing, Crestar will be
the surviving corporation in the Merger (sometimes hereinafter referred to
as the "Surviving Corporation") and will continue to be governed by the
laws of the State of Virginia, and the separate corporate existence of
Crestar and all of its rights, privileges, powers and franchises, public as
well as private, and all its debts, liabilities and duties as a corporation
organized under the VSCA, will continue unaffected by the Merger.
1.4 ARTICLES OF INCORPORATION AND BYLAWS. The Articles of
Incorporation and Bylaws of Crestar in effect immediately prior to the
Effective Time shall be the Articles of Incorporation and Bylaws of the
Surviving Corporation, until amended in accordance with applicable law.
1.5 DIRECTORS AND OFFICERS.
(a) Except as provided in Section 1.5(b), the directors and
officers of Crestar immediately prior to the Effective Time will be the
directors and officers, respectively, of the Surviving Corporation, from
and after the Effective Time, until their successors have been duly elected
or appointed and qualified or until their earlier death, resignation or
removal in accordance with the terms of the Surviving Corporation's
Articles of Incorporation and Bylaws and the VSCA.
(b) As of the Effective Time, in accordance with the Bylaws
of SunTrust, the Board of Directors of SunTrust shall increase its size to
such number as is necessary to create three vacancies and shall elect three
non-employee Crestar directors to fill such vacancies (the "Crestar
Directors"). The identity of the non-employee Crestar Directors shall be
mutually agreed upon by Crestar and SunTrust prior to the Effective Time.
Each non-employee Crestar Director so agreed upon shall be placed in a
separate class on SunTrust's Board of Directors. In addition to the Crestar
Directors, the Board of Directors of SunTrust shall increase its size to
such number as is necessary to create a vacancy in order to elect Richard
G. Tilghman to the Board of Directors of SunTrust.
1.6 ADDITIONAL ACTIONS. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any further deeds,
assignments or assurances in law or any other acts are necessary or
desirable to (i) vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation its right, title or interest in, to or under any of
the rights, properties or assets of Crestar, or (ii) otherwise carry out
the purposes of this Agreement, Crestar and its officers and directors
shall be deemed to have granted to the Surviving Corporation an irrevocable
power of attorney to execute and deliver all such deeds, assignments or
assurances in law or any other acts as are necessary or desirable to (i)
vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Crestar or (ii) otherwise carry out the purposes of
this Agreement, Crestar and its officers and directors shall be deemed to
have granted to the Surviving Corporation an irrevocable power of attorney
to execute and deliver all such deeds, assignments or assurances in law and
to all acts necessary or proper to vest, perfect or confirm title to and
possession of such rights, properties or assets in the Surviving
Corporation and otherwise to carry out the purposes of this Agreement, and
the officers and directors of the Surviving Corporation are authorized in
the name of Crestar or otherwise to take any and all such action.
1.7 TAX CONSEQUENCES; ACCOUNTING TREATMENT. It is intended that the
Merger shall (i) constitute a reorganization within the meaning of Section
368(a) of the Code and that this Agreement shall constitute a "plan of
reorganization" for the purposes of Section 368 of the Code, and (ii) be
accounted for as a "pooling of interests" under generally accepted
accounting principles.
ARTICLE II
CONVERSION OF SHARES
2.1 CONVERSION OF SHARES. Subject to Section 2.3, at the Effective
Time:
(a) each share of Crestar Common Stock issued and outstanding
immediately prior to the Effective Time, including each attached right
issued pursuant to the Rights Agreement between Crestar and Mellon Bank,
NA, as Rights Agent, dated as of June 23, 1989 (the "Crestar Rights
Agreement"), other than shares of Crestar Common Stock owned by SunTrust or
any direct or indirect wholly-owned subsidiary of SunTrust (except for any
such shares of Crestar Common Stock held in trust accounts, managed
accounts or in any similar manner as trustee or in a fiduciary capacity
("Trust Account Shares") or shares held in respect of a debt previously
contracted ("DPC Shares")), will be canceled, retired and converted into
0.96 (the "Conversion Ratio") shares of common stock, par value $1.00 per
share, of SunTrust ("SunTrust Common Stock"). The number of shares of
SunTrust Common Stock that each share of Crestar Common Stock will be
converted into is sometimes referred to herein as the "Merger
Consideration";
(b) each then-outstanding share of Crestar Common Stock owned
by SunTrust or any direct or indirect wholly-owned subsidiary of SunTrust
(except for any shares that are Trust Account Shares or DPC Shares) will be
canceled and retired; and
(c) each share of SunTrust Common Stock issued and
outstanding immediately prior to the Effective Time shall continue to be an
issued and outstanding share of common stock, par value $1.00 per share, of
the Surviving Corporation from and after the
Effective Time.
2.2 ASSUMPTION OF EMPLOYEE AND DIRECTOR STOCK OPTIONS.
(a) At the Effective Time, by virtue of the Merger and
without any action on the part of any holder of an option, each option
granted by Crestar to purchase shares of Crestar Common Stock (any such
option to purchase shares of Crestar Common Stock being referred to herein
as a "Crestar Option") that is outstanding and unexercised, whether vested
or unvested, immediately prior thereto (excluding any such option the
holder of which is then entitled to receive cash or stock in satisfaction
thereof under the terms of such option) shall be assumed by SunTrust and
converted into an option (each, a "New Option") to purchase such number of
shares of SunTrust Common Stock at an exercise price determined as provided
below (and otherwise having the same duration and other terms as the
original Crestar Option pursuant to the Crestar 1993 Stock Incentive Plan,
the Crestar 1981 Stock Option Plan, the Crestar/Loyola Stock Option Plan
(for former Loyola Bancorp directors and officers), the Crestar/Citizens
Stock Option Plan (including prior 1988 and 1986 Citizens Stock Option Plan
for former officer and directors), and the Crestar/American National Stock
Option Plan (including three prior American National stock option plans for
employees and outside directors) (the "Crestar Option Plans")):
(i) the number of shares of SunTrust Common Stock to be
subject to the New Option shall be equal to (x) the number of shares of
Crestar Common Stock purchasable upon exercise of the original Crestar
Option, multiplied by (y) the Conversion Ratio (rounded to the nearest
whole share); and
(ii) the exercise price per share of SunTrust Common Stock
under the New Option shall be equal to (x) the exercise price per share of
Crestar Common Stock under the original Crestar Option, divided by (y) the
Conversion Ratio (rounded to the nearest whole cent).
With respect to any Crestar Options that are "incentive stock options" (as
defined in Section 422 of the Code) or which are described in Section 423
of the Code, the foregoing assumption and conversion shall be effected in a
manner consistent with the requirements of Section 424(a) of the Code.
(b) At the Effective Time, by virtue of the Merger and without
any action on the part of any holder of a Performance Share awarded by
Crestar pursuant to that certain Performance Award Agreement dated October
27, 1995 between Crestar and Richard G. Tilghman (the "Performance Share
Award") that is outstanding immediately prior to the Effective Time, the
Performance Shares underlying such Performance Share Award shall be
converted into Performance Shares of SunTrust ("New Performance Shares") on
the same terms as are in effect on the date hereof, adjusted such that the
number of shares of SunTrust Common Stock to be subject to the New
Performance Share Award shall be equal to (x) the number of shares of
Crestar Common Stock subject to such Performance Share Award, multiplied by
(y) the Conversion Ratio (rounded to the nearest whole share).
(c) On or before the Effective Time, SunTrust shall file a
registration statement with the Securities and Exchange Commission (the
"Commission") registering a number of shares of SunTrust Common Stock
necessary to fulfill SunTrust's obligations under this Section 2.2. Such
registration statement shall be kept effective (and the current status of
the prospectus required thereby shall be maintained) for at least as long
as New Options, remain outstanding. Prior to the Effective Time, SunTrust
shall reserve for issuance the number of shares of SunTrust Common Stock
necessary to satisfy SunTrust's obligations under this Section 2.2.
2.3 EXCHANGE OF CERTIFICATES.
(a) Prior to the Effective Time, SunTrust shall designate
SunTrust Bank, Atlanta, to act as exchange agent (the "Exchange Agent") in
connection with the Merger pursuant to an exchange agent agreement
providing for, among other things, the matters set forth in this Section
2.3. At or prior to the Effective Time, SunTrust shall deposit, or shall
cause to be deposited, with the Exchange Agent, for the benefit of the
holders of Certificates, for exchange in accordance with this Article II,
certificates representing the shares of SunTrust Common Stock, and the cash
in lieu of fractional shares (such cash and certificates for shares of
SunTrust Common Stock, together with any dividends or distributions with
respect thereto, being hereinafter referred to as the "Exchange Fund") to
be issued in exchange for outstanding shares of Crestar Common Stock in
accordance with the terms of this Article II. Except as set forth herein,
from and after the Effective Time each holder of a certificate that
immediately prior to the Effective Time represented outstanding shares of
Crestar Common Stock ("Certificate") shall be entitled to receive in
exchange therefor, upon surrender thereof to the Exchange Agent, the Merger
Consideration for each share of Crestar Common Stock so represented by the
Certificate surrendered by such holder thereof. The certificates
representing shares of SunTrust Common Stock which constitute the Merger
Consideration shall be properly issued and countersigned and executed and
authenticated, as appropriate.
(b) Promptly after the Effective Time, SunTrust shall cause
the Exchange Agent to mail to each record holder of a Certificate a notice
and letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificate shall pass, only
upon proper delivery of the Certificate to the Exchange Agent) advising
such holder of the effectiveness of the Merger and the procedures to be
used in effecting the surrender of the Certificate in exchange for Merger
Consideration. Crestar shall have the right to review both the letter of
transmittal and the instructions prior to the Effective Time and provide
reasonable comments thereon. Upon surrender to the Exchange Agent of a
Certificate, together with such letter of transmittal duly executed and
completed in accordance with the instructions thereon, and such other
documents as may reasonably be requested, the Exchange Agent shall promptly
deliver to the person entitled thereto (x) a certificate representing that
number of whole shares of SunTrust Common Stock to which such holder of
Crestar Common Stock shall have become entitled pursuant to the provisions
of this Article II and (y) a check representing the amount of cash in lieu
of fractional shares, if any, which such holder has the right to receive in
respect of the Certificate surrendered by such holder thereof, and such
Certificate shall forthwith be canceled.
(c) If delivery of all or part of the Merger Consideration is
to be made to a person other than the person in whose name a surrendered
Certificate is registered, it shall be a condition to such delivery or
exchange that the Certificate surrendered shall be properly endorsed or
shall be otherwise in proper form for transfer and that the person
requesting such delivery or exchange shall have paid any transfer and other
taxes required by reason of such delivery or exchange in a name other than
that of the registered holder of the Certificate surrendered or shall have
established to the reasonable satisfaction of the Exchange Agent that such
tax either has been paid or is not payable.
(d) Subject to Section 2.3(e), until surrendered and
exchanged in accordance with this Section 2.3, each Certificate shall,
after the Effective Time, represent solely the right to receive the Merger
Consideration, multiplied by the number of shares of Crestar Common Stock
evidenced by such Certificate, together with any dividends or other
distributions as provided in Sections 2.3(e) and 2.3(f), and shall have no
other rights. From and after the Effective Time, SunTrust and Surviving
Corporation shall be entitled to treat such Certificates that have not yet
been surrendered for exchange as evidencing the ownership of the aggregate
Merger Consideration into which the shares of Crestar Common Stock
represented by such Certificates may be converted, notwithstanding any
failure to surrender such Certificates. One hundred eighty (180) days
following the Effective Time, the Exchange Agent shall deliver to the
Surviving Corporation any shares of SunTrust Common Stock and funds
(including any interest received with respect thereto) which SunTrust has
made available to the Exchange Agent and which have not been disbursed to
holders of Certificates, and thereafter such holders shall be entitled to
look to SunTrust (subject to abandoned property, escheat or other similar
laws) with respect to the shares of SunTrust Common Stock, cash in lieu of
fractional shares and unpaid dividends and distributions thereon
deliverable or payable upon due surrender of their Certificates. Neither
Exchange Agent nor any party hereto shall be liable to any holder of shares
of Crestar Common Stock for any Merger Consideration (or dividends,
distributions or interest with respect thereto) delivered to a public
official pursuant to any applicable abandoned property, escheat or similar
law.
(e) Whenever a dividend or other distribution is declared by
SunTrust on the SunTrust Common Stock, the record date for which is at or
after the Effective Time, the declaration shall include dividends or other
distributions on all shares issuable pursuant to this Agreement, provided
that no dividends or other distributions declared or made with respect to
SunTrust Common Stock shall be paid to the holder of any unsurrendered
Certificate with respect to the share of SunTrust Common Stock represented
thereby until the holder of such Certificate shall surrender such
Certificate in accordance with this Article II. The Surviving Corporation
shall pay any dividends or make any other distributions with a record date
prior to the Effective Time which may have been declared or made by Crestar
on Crestar Common Stock in accordance with the terms of this Agreement on
or prior to the Effective Time and which remain unpaid at the Effective
Time.
(f) If any Certificate shall have been lost, stolen or
destroyed, the Exchange Agent shall deliver in exchange for such lost,
stolen or destroyed certificate, upon the making of an affidavit of that
fact by the holder thereof in form satisfactory to the Exchange Agent, the
Merger Consideration, as may be required pursuant to this Agreement;
provided, however, that the Exchange Agent may, in its sole discretion and
as a condition precedent to the delivery of the Merger Consideration to
which the holder of such certificate is entitled as a result of the Merger,
require the owner of such lost, stolen or destroyed certificate to deliver
a bond in such sum as it may direct as indemnity against any claim that may
be made against Crestar, SunTrust or the Exchange Agent or any other party
with respect to the certificate alleged to have been lost, stolen or
destroyed.
(g) Holders of unsurrendered Certificates will not be
entitled to vote at any meeting of SunTrust shareholders.
(h) Notwithstanding anything to the contrary contained
herein, no certificates or scrip representing fractional shares of SunTrust
Common Stock shall be issued upon the surrender for exchange of a
Certificate or Certificates. No dividends or distributions of SunTrust
shall be payable on or with respect to any fractional share and any such
fractional share interest will not entitle the owner thereof to vote or to
any rights of shareholders of SunTrust. In lieu of any such fractional
shares, holders of Certificates otherwise entitled to fractional shares
shall be entitled to receive promptly from the Exchange Agent a cash
payment in an amount equal to the fraction of such share of SunTrust Common
Stock to which such holder would otherwise be entitled multiplied by the
Market Price (as defined in Section 8.7).
2.4 CLOSING OF CRESTAR'S TRANSFER BOOKS. Immediately after the
Effective Time, the stock transfer books of Crestar shall be closed. In the
event of a transfer of ownership of Crestar Common Stock which is not
registered in the transfer records of Crestar, the Merger Consideration to
be distributed pursuant to this Agreement may be delivered to a transferee,
if a Certificate is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by payment of
any applicable stock transfer taxes. SunTrust and the Exchange Agent shall
be entitled to rely upon the stock transfer books of Crestar to establish
the identity of those persons entitled to receive the Merger Consideration
specified in this Agreement for their shares of Crestar Common Stock, which
books shall be conclusive with respect to the ownership of such shares. In
the event of a dispute with respect to the ownership of any such shares,
the Surviving Corporation and the Exchange Agent shall be entitled to
deposit any Merger Consideration represented thereby in escrow with an
independent party and thereafter be relieved with respect to any claims to
such Merger Consideration.
2.5 CHANGES IN SUNTRUST COMMON STOCK. If between the date of this
Agreement and the Effective Time, the shares of SunTrust Common Stock shall
be changed into a different number of shares by reason of any
reclassification, recapitalization, split-up, combination or exchange of
shares, or if a stock dividend thereon shall be declared with a record date
within said period, the Merger Consideration shall be adjusted accordingly.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SUNTRUST
SunTrust hereby represents and warrants to Crestar that:
3.1 CORPORATE ORGANIZATION. Each of SunTrust and Sub is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and is duly qualified to do business as a
foreign corporation in each jurisdiction in which its ownership or lease of
property or the nature of the business conducted by it makes such
qualification necessary, except for such jurisdictions in which the failure
to be so qualified would not have a Material Adverse Effect. SunTrust is
registered as a bank holding Crestar under the Bank Holding Crestar Act of
1956, as amended (the "BHCA"). SunTrust has the requisite corporate power
and authority to own, lease and operate its properties and assets and to
carry on its business as it is now being conducted. SunTrust has heretofore
made available to Crestar true and complete copies of its articles of
incorporation and bylaws.
3.2 AUTHORITY. Each of SunTrust and Sub has the requisite corporate
power and authority to execute and deliver this Agreement and, except for
any required approval of SunTrust's shareholders, to consummate the
transactions contemplated by this Agreement. The execution and delivery of
this Agreement and the consummation of the transactions contemplated herein
have been duly approved by the Board of Directors of SunTrust and Sub and
no other corporate proceedings on the part of SunTrust or Sub are necessary
to authorize this Agreement or to consummate the transactions so
contemplated, subject only to approval by the shareholders of SunTrust as
described in Section 5.12(b) of this Agreement. This Agreement has been
duly executed and delivered by, and constitutes the valid and binding
obligation of, each of SunTrust and Sub enforceable against each of them in
accordance with its terms, except as enforceability thereof may be limited
by applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other similar laws affecting the enforcement of creditors'
rights generally and except that the availability of the equitable remedy
of specific performance or injunctive relief is subject to the discretion
of the court before which any proceedings may be brought.
3.3 CAPITALIZATION. As of the date hereof, the authorized capital
stock of SunTrust consists of 500,000,000 shares of SunTrust Common Stock
and 50,000,000 shares of SunTrust preferred stock. As of the close of
business on July 17, 1998, (i) 213,108,057 shares of SunTrust Common Stock
were duly authorized, validly issued and outstanding, fully paid and
nonassessable, (ii) no shares of preferred stock were issued and
outstanding and (iii) 4,247,953 shares of SunTrust Common Stock were held
in SunTrust's treasury. As of the date hereof, except as set forth in this
Section 3.3, pursuant to the exercise of employee stock options under
SunTrust's various stock option plans in effect, pursuant to the SunTrust
Option Agreement, pursuant to SunTrust's dividend reinvestment plan and
pursuant to stock grants made pursuant to SunTrust's various stock plans,
there are no other shares of capital stock of SunTrust authorized, issued
or outstanding and there are no outstanding subscriptions, options,
warrants, rights, convertible securities or any other agreements or
commitments of any character relating to the issued or unissued capital
stock or other securities of SunTrust obligating SunTrust to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of
capital stock of SunTrust or obligating SunTrust to grant, extend or enter
into any subscription, option, warrant, right, convertible security or
other similar agreement or commitment. As of the date hereof, except as
provided in this Agreement, there are no voting trusts or other agreements
or understandings to which SunTrust or any SunTrust subsidiary is a party
with respect to the voting of the capital stock of SunTrust. All of the
shares of SunTrust Common Stock issuable in exchange for Crestar Common
Stock at the Effective Time in accordance with this Agreement and all of
the shares of SunTrust Common Stock issuable upon exercise of New Options
will be, when so issued, duly authorized, validly issued, fully paid and
nonassessable and will not be subject to preemptive rights.
3.4 SUBSIDIARIES. The name and state of incorporation of each
significant subsidiary (as defined in Section 8.7) of SunTrust
(collectively, the "Significant Subsidiaries") is set forth in the SunTrust
SEC Reports (as defined in Section 3.7). Each of the Significant
Subsidiaries is a bank or a corporation duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
incorporation or organization and is duly qualified to do business as a
foreign corporation in each jurisdiction in which its ownership or lease of
property or the nature of the business conducted by it makes such
qualification necessary, except for such jurisdictions in which the failure
to be so qualified would not have a Material Adverse Effect. Each of the
Significant Subsidiaries has the requisite corporate power and authority to
own, lease and operate its properties and assets and to carry on its
businesses as they are now being conducted. All outstanding shares of
capital stock of each of the Significant Subsidiaries are owned by SunTrust
or another of SunTrust's subsidiaries and are validly issued, fully paid
and (except pursuant to 12 USC Section 55 in the case of each national bank
subsidiary and applicable state law in the case of each state bank
subsidiary) nonassessable, are not subject to preemptive rights and are
owned free and clear of all liens, claims and encumbrances. There are no
outstanding subscriptions, options, warrants, rights, convertible
securities or any other agreements or commitments of any character relating
to the issued or unissued capital stock or other securities of any
Significant Subsidiary obligating any of the Significant Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold additional
shares of its capital stock or obligating any of the Significant
Subsidiaries to grant, extend or enter into any subscription, option,
warrant, right, convertible security or other similar agreement or
commitment.
3.5 INFORMATION IN DISCLOSURE DOCUMENTS, REGISTRATION STATEMENT, ETC.
None of the information with respect to SunTrust or any of SunTrust's
subsidiaries provided by SunTrust for inclusion in (i) the Registration
Statement to be filed with the Commission by SunTrust on Form S-4 under the
Securities Act of 1933, as amended (the "Securities Act"), for the purpose
of registering the shares of SunTrust Common Stock to be issued in the
Merger (the "Registration Statement") and (ii) any joint proxy statement of
Crestar and SunTrust ("Proxy Statement") required to be mailed to Crestar's
shareholders and SunTrust's shareholders in connection with the Merger
will, in the case of the Proxy Statement or any amendments or supplements
thereto, at the time of the mailing of the Proxy Statement and any
amendments or supplements thereto, and at the time of the Crestar Meeting
and the SunTrust Meeting (each as hereinafter defined), or, in the case of
the Registration Statement, at the time it becomes effective, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Registration Statement will comply as to form in all
material respects with the provisions of the Securities Act and the rules
and regulations promulgated thereunder. The Proxy Statement will comply as
to form in all material respects with the provisions of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated thereunder.
3.6 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and
delivery of this Agreement by SunTrust and Sub nor the consummation by
SunTrust and Sub of the transactions contemplated hereby will (a) conflict
with or result in any breach of any provision of its articles of
incorporation or bylaws, (b) violate, conflict with, constitute a default
(or an event which, with notice or lapse of time or both, would constitute
a default) under, or result in the termination of, or accelerate the
performance required by, or result in the creation of any lien or other
encumbrance upon any of the properties or assets of SunTrust or any of
SunTrust's subsidiaries under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which SunTrust or any of
SunTrust's subsidiaries is a party or to which they or any of their
respective properties or assets are subject, except for such violations,
conflicts, breaches, defaults, terminations, accelerations or creations of
liens or other encumbrances, which, either individually or in the
aggregate, will not have a Material Adverse Effect, (c) constitute or
result in a violation of any law, rule, ordinance or regulation or
judgment, decree, order, award or governmental or non-governmental permit
or license to which it or any of its subsidiaries is subject, except for
the consents, approvals and notices set forth below and except for such
violations which, either individually or in the aggregate, will not have a
Material Adverse Effect, or (d) require any consent, approval,
authorization or permit of or from, or filing with or notification to, any
court, governmental authority or other regulatory or administrative agency
or commission, including, but not limited to, authorities, agencies and the
staff's thereof regulating financial institutions, domestic (whether
federal, state, municipal or local) or foreign ("Governmental Entity"),
except (i) pursuant to the Exchange Act and the Securities Act, (ii) filing
the Virginia Articles of Merger, (iii) filings required under the
securities or blue sky laws of the various states, (iv) the applications,
notices, reports and other filings required to be made in connection with
the approval of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") under the Bank Holding Crestar Act of 1956, as
amended (the "BHC Act"), (v) the approvals of any other Governmental
Entities pursuant to state banking laws and regulations (the "Regulatory
Approvals"), (vi) filings and approvals pursuant to any applicable state
takeover law, (vii) pursuant to the rules of the New York Stock Exchange or
(viii) consents, approvals, authorizations, permits, filings or
notifications which, if not obtained or made will not, individually or in
the aggregate, have a Material Adverse Effect.
3.7 REPORTS. Since January 1, 1996, SunTrust and each of SunTrust's
subsidiaries have timely filed all reports, registrations and statements,
together with any required amendments thereto, that they were required to
file with (i) the Commission under Section 12(b), 12(g), 13(a) or 14(a) of
the Exchange Act, including, but not limited to Forms 10-K, Forms 10-Q and
proxy statements ("SunTrust SEC Reports"), (ii) the Federal Reserve Board,
(iii) any other Governmental Entities, and (iv) any self-regulatory
organizations ("SROs") and all other reports and statements required to be
filed by SunTrust or SunTrust's subsidiaries, including, without
limitation, any report or statement required to be filed pursuant to laws,
rules or regulations of the United States, any state, or any Governmental
Entity, and have paid all fees and assessments due and payable in
connection therewith, except where the failure to file such report,
registration or statement, or to pay such fees and assessments, either
individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect. SunTrust has made available to Crestar true and
complete copies of each of SunTrust's annual reports on Form 10-K for the
years 1996 and 1997 and its quarterly report on Form 10-Q for March 31,
1998. As of their respective dates, the SunTrust SEC Reports complied with
the requirements of the Commission and 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 light of the
circumstances under which they were made, not misleading.
3.8 FINANCIAL STATEMENTS. The audited consolidated financial
statements of SunTrust included in SunTrust's annual report on Form 10-K as
filed with the Commission for the year ended December 31, 1997, and the
unaudited interim financial statements of SunTrust as of and for the three
months ended March 31, 1998 included in a quarterly report on Form 10-Q as
filed with the Commission, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as may
be indicated therein or in the notes thereto) and fairly present the
consolidated financial position of SunTrust and SunTrust's subsidiaries as
of the dates thereof and the results of their operations and cash flows for
the periods then ended, subject, in the case of the unaudited interim
financial statements, to normal year-end and audit adjustments and any
other adjustments described therein, and are derived from the books and
records of SunTrust and SunTrust's subsidiaries, which are complete and
accurate in all material respects and have been maintained in all material
respects in accordance with applicable laws and regulations. There exist no
liabilities of SunTrust and its consolidated subsidiaries, contingent or
otherwise of a type required to be disclosed in accordance with generally
accepted accounting practices, except as disclosed in the SunTrust SEC
Reports and except for liabilities which, either individually or in the
aggregate, would not have a Material Adverse Effect. SunTrust's reserve for
possible loan losses as shown in its Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1998 was adequate, within the meaning of
generally accepted accounting principles and safe and sound banking
practices.
3.9 TAXES. SunTrust will promptly make available to Crestar, upon
request by Crestar, true and correct copies of the federal, state and local
income tax returns, and state and local property and sales tax returns and
any other tax returns filed by SunTrust and any of SunTrust's subsidiaries
for each of the fiscal years that remains open, as of the date hereof, for
examination or assessment of tax. SunTrust and each SunTrust subsidiary
have prepared in good faith and duly and timely filed, or caused to be duly
and timely filed, all federal, state, local and foreign income, estimated
tax, withholding tax, franchise, sales and other tax returns or reports
required to be filed by them on or before the date hereof, except to the
extent that all such failures to file, taken together, would not have a
Material Adverse Effect. Except as otherwise would not have, either
individually or in the aggregate, a Material Adverse Effect, SunTrust and
each of its subsidiaries have paid, or have made adequate provision or set
up an adequate accrual or reserve for the payment of, all taxes, shown or
required to be shown to be owing on all such returns or reports, together
with any interest, additions or penalties related to any such taxes or to
any open taxable year or period.
3.10 EMPLOYEE PLANS. All employee benefit, welfare, bonus, deferred
compensation, pension, profit sharing, stock option, employee stock
ownership, consulting, severance, or fringe benefit plans, formal or
informal, written or oral, and all trust agreements related thereto,
relating to any present or former directors, officers or employees of
SunTrust or its subsidiaries ("SunTrust Employee Plans") have been
maintained, operated, and administered in all material respects in
compliance with their terms and currently comply, and have at all relevant
times complied, in all material respects with the applicable requirements
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), the Code, and any other applicable laws. With respect to each
SunTrust Employee Plan which is a pension plan (as defined in Section 3(2)
of ERISA): (a) each pension plan as amended (and any trust relating
thereto) intended to be a qualified plan under Section 401(a) of the Code
either: (i) has been determined by the Internal Revenue Service ("IRS") to
be so qualified, (ii) is the subject of a pending application for such
determination that was timely filed, or (iii) will be submitted for such a
determination prior to end of the "remedial amendment period" within the
meaning of Section 401(b) of the Code, (b) there is no accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412 of the
Code), whether or not waived, and no waiver of the minimum funding
standards of such sections has been requested from the IRS, (c) neither
SunTrust nor any of its subsidiaries has provided, or is required to
provide, security to any pension plan pursuant to Section 401(a)(29) of the
Code, (d) the fair market value of the assets of each defined benefit plan
(as defined in Section 3(35) of ERISA) exceeds the value of the "benefit
liabilities" within the meaning of Section 4001(a)(16) of ERISA under such
defined benefit plan as of the end of the most recent plan year thereof
ending prior to the date hereof, calculated on the basis of the actuarial
assumptions used in the most recent actuarial valuation for such defined
benefit plan as of the date hereof, (e) no reportable event described in
Section 4043 of ERISA has occurred for which the 30 day reporting
requirement has not been waived has occurred, (f) no defined benefit plan
has been terminated, nor has the Pension Benefit Guaranty Corporation
("PBGC") instituted proceedings to terminate a defined benefit plan or to
appoint a trustee or administrator of a defined benefit plan, and no
circumstances exist that constitute grounds under Section 4042(a)(2) of
ERISA entitling the PBGC to institute any such proceedings and (g) no
pension plan is a "multiemployer plan" within the meaning of Section 3(37)
of ERISA or a "multiple employer plan" within the meaning of Section 413(c)
of the Code. Neither SunTrust nor any of its subsidiaries has incurred any
liability to the PBGC with respect to any "single-employer plan" within the
meaning of Section 4001(a)(15) of ERISA currently or formerly maintained by
any entity considered one employer with it under Section 4001 of ERISA or
Section 414 of the Code, except for premiums all of which have been paid
when due. Neither SunTrust nor any of its subsidiaries has incurred any
withdrawal liability with respect to a multiemployer plan under Subtitle E
of Title IV of ERISA. Neither SunTrust nor any of its subsidiaries has an
obligation to institute any Employee Plan or any such other arrangement,
agreement or plan. With respect to any insurance policy that heretofore has
or currently does provide funding for benefits under any SunTrust Employee
Plan, (A) there is no liability on the part of SunTrust or any of its
subsidiaries in the nature of a retroactive or retrospective rate
adjustment, loss sharing arrangement, or other actual or contingent
liability, nor would there be any such liability if such insurance policy
was terminated, and (B) no insurance Crestar issuing such policy is in
receivership, conservatorship, liquidation or similar proceeding and, to
the knowledge of SunTrust, no such proceeding with respect to any such
insurer is imminent. Neither the execution of this Agreement, nor the
consummation of the transactions contemplated thereby will (A) constitute a
stated triggering event under any SunTrust Employee Plan that will result
in any payment (whether of severance pay or otherwise) becoming due from
SunTrust or any of its subsidiaries to any present or former officer,
employee, director, shareholder, consultant or dependent of any of the
foregoing or (B) accelerate the time of payment or vesting, or increase the
amount of compensation due to any present or former officer, employee,
director, shareholder, consultant, or dependent of any of the foregoing.
Neither SunTrust nor any of its subsidiaries has any obligations for
retiree health and life benefits under any SunTrust Employee Plan. There
are no restrictions on the rights of SunTrust or its subsidiaries to amend
or terminate any such SunTrust Employee Plan without incurring any
liability thereunder.
3.11 MATERIAL CONTRACTS. Neither SunTrust nor any of SunTrust's
subsidiaries is in default under any contract or agreement required to be
filed as an exhibit to a Form 10-K filed by SunTrust with the Commission as
of the date of this Agreement, which default is reasonably likely to have,
either individually or in the aggregate, a Material Adverse Effect, 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. Neither SunTrust nor any
of SunTrust's 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 SunTrust or any of SunTrust's
subsidiaries the subject of a proceeding asserting that it or any such
subsidiary has committed an unfair labor practice or seeking to compel it
or such subsidiary to bargain with any labor organization as to wages and
conditions of employment, nor is there any strike, work stoppage or other
labor dispute involving it or any of its subsidiaries pending or
threatened.
3.12 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for liabilities
incurred in connection with this Agreement or the transactions contemplated
hereby, since December 31, 1997, SunTrust and its subsidiaries have
conducted their business only in the ordinary course or as disclosed in any
SunTrust SEC Reports, and there has not been (1) any change or event having
a Material Adverse Effect on SunTrust, (2) any declaration, setting aside
or payment of any dividend or other distribution (whether in cash, stock,
or property) with respect to any of SunTrust's capital stock, other than
regular quarterly cash dividends on the SunTrust Common Stock, (3) any
split, combination or reclassification of any of SunTrust's capital stock
or any substitution for shares of SunTrust's capital stock, except for
issuances of SunTrust's Common Stock upon the exercise of options awarded
prior to the date hereof in accordance with the SunTrust Stock Option
Plans, or (4) except insofar as may have been disclosed in the SunTrust SEC
Reports or required by a change in generally accepted accounting
principles, any change in accounting methods, principles or practices by
SunTrust materially affecting its assets, liabilities or business.
3.13 LITIGATION. Except as disclosed in the SunTrust SEC Reports
filed by SunTrust with the Commission prior to the date of this Agreement,
there is no suit, action or proceeding pending, or, to the knowledge of
SunTrust, threatened, against or affecting SunTrust or any of SunTrust's
subsidiaries which, either individually or in the aggregate, would be
reasonably expected to result in a Material Adverse Effect, nor is there
any judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator, outstanding against SunTrust or any of SunTrust's
subsidiaries having, or which, insofar as reasonably can be foreseen, in
the future would have, either individually or in the aggregate, a Material
Adverse Effect.
3.14 COMPLIANCE WITH LAWS AND ORDERS. Except as disclosed in the
SunTrust SEC Reports filed by SunTrust with the Commission prior to the
date of this Agreement, the businesses of SunTrust and of SunTrust's
subsidiaries are not being conducted in violation of any law, ordinance,
regulation, judgment, order, decree, license or permit of any Governmental
Entity (including, without limitation, in the case of SunTrust's
subsidiaries that are banks, all statutes, rules and regulations pertaining
to the conduct of the banking business and the exercise of trust powers),
except for violations which individually or in the aggregate do not, and,
insofar as reasonably can be foreseen, in the future will not, have a
Material Adverse Effect. No investigation or review by any Governmental
Entity with respect to SunTrust or any of SunTrust's subsidiaries is
pending or, to the knowledge of SunTrust, threatened, nor has any
Governmental Entity indicated an intention to conduct the same in each case
other than those the outcome of which will not, either individually or in
the aggregate, have a Material Adverse Effect.
3.15 AGREEMENTS WITH BANK REGULATORS, ETC. Neither SunTrust nor any
SunTrust subsidiary is a party to any written agreement or memorandum of
understanding with, or a party to any commitment letter, board resolution
or similar undertaking to, or is subject to any order or directive by, or
is a recipient of any extraordinary supervisory letter from, any
Governmental Entity which restricts materially the conduct of its business,
or in any manner relates to its capital adequacy, its credit or reserve
policies or its management, nor has SunTrust been advised by any
Governmental Entity that it is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such order,
decree, agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or similar submission. Neither SunTrust nor any
of SunTrust's subsidiaries is required by Section 32 of the Federal Deposit
Insurance Act ("FDIA") to give prior notice to a Federal banking agency of
the proposed addition of an individual to its board of directors or the
employment of an individual as a senior executive officer. SunTrust knows
of no reason why the regulatory approvals referred to in Section 3.6(d)
should not be obtained.
3.16 SUNTRUST OWNERSHIP OF STOCK. As of the date of this Agreement,
other than with respect to the Crestar Option Agreement, neither SunTrust
nor any of its affiliates or associates (i) beneficially owns, directly or
indirectly, or (ii) are parties to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing
of, Crestar Common Stock (other than Trust Account Shares), which in the
aggregate, represent 5% or more of the outstanding shares of Crestar Common
Stock.
3.17 ACCOUNTING TREATMENT; TAX TREATMENT. SunTrust knows of no
reason, assuming the reissuance of SunTrust Common Stock contemplated by
Section 5.21 occurs, with respect to SunTrust and its affiliates that would
prevent SunTrust from accounting for the business combination to be
effected by the Merger as a "pooling-of-interests." As of the date hereof,
SunTrust is aware of no reason why the Merger will fail to qualify as a
reorganization under Section 368(a) of the Code.
3.18 FEES. Except for the fees paid and payable to Lehman Brothers
Inc., neither SunTrust nor any of SunTrust's subsidiaries has paid or will
become obligated to pay any fee or commission to any broker, finder or
intermediary in connection with the transactions contemplated by this
Agreement.
3.19 SUNTRUST ACTION. The Board of Directors of SunTrust (at a
meeting duly called, constituted and held) has by the requisite vote of all
directors present (a) determined that the Merger is advisable and in the
best interests of SunTrust and its shareholders, (b) approved this
Agreement and the transactions contemplated by this Agreement and (c)
directed that the Merger be submitted for consideration by SunTrust's
shareholders at the SunTrust Meeting. SunTrust has taken all steps
necessary to exempt (i) the execution of this Agreement, the SunTrust
Option Agreement and the Crestar Option Agreement, (ii) the Merger and
(iii) the transactions contemplated hereby and thereby from (x) any statute
of the State of Georgia that purports to limit or restrict business
combinations or the ability to acquire or to vote shares, including,
without limitation, Sections 14-2-1110 et seq. and Sections 14-2-1131 et
seq. of the Georgia Business Corporation Code, and (y) any applicable
provision of SunTrust's articles of incorporation or bylaws containing
change of control or anti-takeover provisions.
3.20 VOTE REQUIRED. The affirmative vote of the holders of a majority
of the total votes cast (provided that the total votes cast represent over
50% of all securities entitled to vote) by the holders of SunTrust Common
Stock is the only vote of the holders of any class or series of SunTrust
capital stock necessary to approve this Agreement and the transactions
contemplated herein.
3.21 MATERIAL INTERESTS OF CERTAIN PERSONS. Except as disclosed in
SunTrust's Proxy Statement for its 1998 Annual Meeting of Shareholders, no
officer or director of SunTrust, or any "associate" (as such term is
defined in Rule 14a-1 under the 1934 Act) of any such officer or director,
has any material interest in any material contract or property (real or
personal), tangible or intangible, used in or pertaining to the business of
SunTrust or any of its subsidiaries.
3.22 INTELLECTUAL PROPERTY.
(a) SunTrust and its subsidiaries own or have a valid license
to use all trademarks, service marks and trade names (including any
registrations or applications for registration of any of the foregoing)
(collectively, the "SunTrust Intellectual Property") necessary to carry on
its business substantially as currently conducted, except for such SunTrust
Intellectual Property the failure of which to own or validly license
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect. Neither SunTrust nor any such subsidiary has
received any notice of infringement of or conflict with, and, to SunTrust's
knowledge, there are no infringements of or conflicts with, the rights of
others with respect to the use of any SunTrust Intellectual Property that
individually or in the aggregate, in either such case, would reasonably be
expected to have a Material Adverse Effect.
(b) The consummation of the Merger and the other transactions
contemplated by this Agreement will not result in the loss by SunTrust of
any rights to use computer and telecommunications software including source
and object code and documentation and any other media (including, without
limitation, manuals, journals and reference books) necessary to carry on
its business substantially as currently conducted and the loss of which
would have a Material Adverse Effect.
(c) The computer software operated by SunTrust which is
material to the conduct of its business is capable of providing or is being
adapted to provide uninterrupted millennium functionality to record, store,
process and present calendar dates falling on or after January 1, 2000 in
substantially the same manner and with the same functionality as such
software records, stores, processes and presents such calendar dates
falling on or before December 31, 1999, except as would not have a Material
Adverse Effect. None of SunTrust or any of its subsidiaries has received,
or reasonably expects to receive, a "Year 2000 Deficiency Notification
Letter" (as such term is employed in the Federal Reserve's Supervision and
Regulation Letter No. SR 98-3(SUP), dated March 4, 1998). SunTrust has
disclosed to Crestar a complete and accurate copy of SunTrust's plan for
addressing the issues set forth in the statements of the Federal Financial
Institutions Examination Council, dated May 5, 1997, entitled "Year 2000
Project Management Awareness," and December 1997, entitled "Safety and
Soundness Guidelines Concerning the Year 2000 Business Risk," as such
issues affect SunTrust and its subsidiaries. The costs of the adaptions and
compliance referred to in this Section 3.22(c) will not have a Material
Adverse Effect.
3.23 INTEREST RATE RISK MANAGEMENT INSTRUMENTS. Except as would not
reasonably be expected to have a Material Adverse Effect, all interest rate
swaps, caps, floors and option agreements and other interest rate risk
management arrangements, whether entered into for the account of SunTrust
or for the account of a customer of SunTrust or of one of SunTrust's
subsidiaries, were entered into in the ordinary course of business and, to
SunTrust's knowledge, in accordance with prudent banking practices and
applicable rules, regulations and policies of any Governmental Entity and
with counterparties believed to be financially responsible at the time and
are legal, valid and binding obligations of SunTrust or one of its
subsidiaries enforceable in accordance with their terms (except as may be
limited by bankruptcy, insolvency, moratorium, reorganization or similar
laws affecting the rights of creditors generally and the availability of
equitable remedies), and are in full force and effect. Except as would not
reasonably be expected to have a Material Adverse Effect, SunTrust and each
of SunTrust's subsidiaries have duly performed all of their obligations
thereunder to the extent that such obligations to perform have accrued,
and, to SunTrust's knowledge, there are no breaches, violations or defaults
or allegations or assertions of such by any party thereunder.
3.24 INSURANCE. Except as would not reasonably be expected to have a
Material Adverse Effect, SunTrust and SunTrust's subsidiaries have in
effect insurance coverage with reputable insurers which, in respect of
amounts, premiums, types and risks insured, constitutes reasonably adequate
coverage against all risks customarily insured against by bank holding
companies and their subsidiaries comparable in size and operations to
SunTrust and SunTrust's subsidiaries.
3.25 ENVIRONMENTAL MATTERS. For purposes of this Agreement, the
following terms shall have the indicated meanings:
"Environmental Law" means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, determination, judgment, decree, injunction or
agreement with any Governmental Entity relating to (1) the health,
protection, preservation, containment or restoration of the environment
including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil,
wetlands, plant and animal life or any other natural resource,
conservation, and/or (2) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production,
release or disposal of Hazardous Substances. The term "Environmental Law"
includes without limitation (1) the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, 42 U.S.C. Section 9601, et
seq.; the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.
9601(2)(D); the Resource Conservation and Recovery Act, as amended, 42
U.S.C. Section 6901, et seq.; the Clean Air Act, as amended, 42 U.S.C.
Section 7401, et seq.; the Federal Water Pollution Control Act, as amended
by the Clean Water Act, 33 U.S.C. Section 1251, ET SEQ.; the Toxic
Substances Control Act, as amended, 15 U.S.C. Section 9601, et seq.; the
Emergency Planning and Community Right to Know Act, 42 U.S.C. Section
11001, et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f, et
seq.; and all comparable state and local laws, ordinances, rules,
regulations respecting the interpretation or enforcement of same and (2)
any common law (including without limitation common law that may impose
strict liability) that may impose liability for injuries or damages due to
the release of any Hazardous Substance.
"Hazardous Substance" means (i) any hazardous wastes, toxic
chemicals, materials, substances or wastes as defined by or for the
purposes of any Environmental Law; (ii) any "oil", as defined by the Clean
Water Act, as amended from time to time, and regulations promulgated
thereunder (including crude oil or any fraction thereof and any petroleum
products or derivatives thereof); (iii) any substance, the presence of
which is prohibited, regulated or controlled by any applicable federal,
state or local laws, regulations, statutes or ordinances now in force or
hereafter enacted relating to waste disposal or environmental protection
with respect to the exposure to, or manufacture, possession, presence, use,
generation, storage, transportation, treatment, release, emission,
discharge, disposal, abatement, cleanup, removal, remediation or handling
of any such substance; (iv) any asbestos or asbestos-containing materials,
polychlorinated biphenyls ("PCBs") in the form of electrical equipment,
fluorescent light fixtures with ballasts, cooling oils or any other form,
urea formaldehyde or atmospheric radon; (v) any solid, liquid, gaseous or
thermal irritant or contaminant, such as smoke, vapor, soot, fumes,
alkalis, acids, chemicals, pesticides, herbicides, sewage, industrial
sludge or other similar wastes; (vi) industrial, nuclear or medical
by-products; (vii) any lead based paint or coating and (viii) any
underground storage tank(s).
"Loan Portfolio Properties, Trust Properties and Other Properties"
means any real property, interest in real property, improvements,
appurtenances, rights and personal property attendant thereto, which is
owned, leased as a landlord or a tenant, licensed as a licensor or
licensee, managed or operated or upon which is held a mortgage, deed of
trust, deed to secure debt or other security interest by SunTrust or
Crestar, as the case may be, or any of their subsidiaries whether directly,
as an agent, as trustee or other fiduciary or otherwise.
(i) Neither SunTrust nor any of its subsidiaries is in violation of
or has any liability, absolute or contingent, in connection with or under
any Environmental Law, except any such violations or liabilities which
would not reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect; (ii) none of the Loan Portfolio Properties,
Trust Properties and Other Properties of SunTrust or its subsidiaries is in
violation of or has any liability, absolute or contingent, under any
Environmental Law, except any such violations or liabilities which,
individually or in the aggregate would not have a Material Adverse Effect;
and (iii) there are no actions, suits, demands, notices, claims,
investigations or proceedings pending or threatened relating to any Loan
Portfolio Properties, Trust Properties and Other Properties including,
without limitation any notices, demand letters or requests for information
from any federal or state environmental agency relating to any such
liability under or violation of Environmental Law, which would impose a
liability upon SunTrust or its subsidiaries pursuant to any Environmental
Law, except such as would not, individually or in the aggregate, have a
Material Adverse Effect.
3.26 RESCISSION OF REPURCHASES. All share repurchase programs
previously authorized by the Board of Directors of SunTrust, except to the
extent that SunTrust is advised by the Commission that such purchases would
not adversely affect the ability of SunTrust and Crestar to account for the
Merger as a "pooling of interests" for accounting purposes, have been
revoked by resolution duly adopted on or prior to the date hereof.
3.27 DISCLOSURE LETTER. Prior to the execution and delivery of this
Agreement, SunTrust has delivered to Crestar a schedule (the "SunTrust
Disclosure Letter ") 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 SunTrust's representations or warranties contained in Article
III or to SunTrust's covenants contained in Article V; provided, however,
that notwithstanding anything in this Agreement to the contrary the mere
inclusion of an item in the SunTrust Disclosure Letter as an exception to a
representation or warranty shall not be deemed an admission by a party that
such item represents a material exception or material fact, event or
circumstance or that such item has had or would have a Material Adverse
Effect with respect to SunTrust.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CRESTAR
Crestar hereby represents and warrants to SunTrust that:
4.1 CORPORATE ORGANIZATION. Crestar is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Virginia and is duly qualified to do business as a foreign corporation in
each jurisdiction in which its ownership or lease of property or the nature
of the business conducted by it makes such qualification necessary, except
for such jurisdictions in which the failure to be so qualified would not
have a Material Adverse Effect. Crestar is registered as a bank holding
Crestar under the BHCA. Crestar has the requisite corporate power and
authority to own, lease and operate its properties and assets and to carry
on its business as it is now being conducted. Crestar has heretofore made
available to SunTrust true and complete copies of its articles of
incorporation and bylaws.
4.2 AUTHORITY. Crestar has the requisite corporate power and
authority to execute and deliver this Agreement and, except for any
required approval of Crestar's shareholders, to consummate the transactions
contemplated by this Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated herein have
been duly approved by the Board of Directors of Crestar and no other
corporate proceedings on the part of Crestar are necessary to authorize
this Agreement or to consummate the transactions so contemplated, subject
only to approval by the shareholders of Crestar as described in Section
5.12(c) of this Agreement. This Agreement has been duly executed and
delivered by, and constitutes the valid and binding obligation of Crestar,
enforceable against Crestar in accordance with its terms, except as the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium and other similar laws
affecting the enforcement of creditors' rights generally and except that
the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which
any proceedings may be brought.
4.3 CAPITALIZATION. As of the date hereof, the authorized capital
stock of Crestar consists of 200,000,000 shares of Crestar Common Stock and
2,000,000 shares of Crestar preferred stock. As of the close of business on
July 17, 1998, (i) 112,252,068 shares of Crestar Common Stock were duly
authorized, validly issued and outstanding, fully paid and nonassessable
and (ii) no shares of preferred stock were issued or outstanding. As of the
date of this Agreement except as set forth in this Section 4.3, pursuant to
the Crestar Option Plans, pursuant to the Crestar Option Agreement,
pursuant to the Crestar Rights Agreement, pursuant to the Crestar Dividend
Reinvestment Plan, pursuant to the Crestar Thrift and Profit Sharing Plan
or as set forth in the Crestar Disclosure Letter, there are no shares of
capital stock of Crestar authorized, issued or outstanding and there are no
outstanding subscriptions, options, warrants, rights, convertible
securities or any other agreements or commitments of any character relating
to the issued or unissued capital stock or other securities of Crestar
obligating Crestar to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of Crestar or
obligating Crestar to grant, extend or enter into any subscription, option,
warrant, right, convertible security or other similar agreement or
commitment. Except as set forth in the Crestar Disclosure Letter, there are
no voting trusts or other agreements or understandings to which Crestar or
any of Crestar's subsidiaries is a party with respect to the voting of the
capital stock of Crestar. As of the date of this Agreement, there were
outstanding under the Crestar Option Plans options to purchase 3,264,247
shares of Crestar Common Stock, which Crestar stock options had a weighted
average exercise price of $27.60 and for which adequate shares of Crestar
Common Stock have been reserved for issuance under the Crestar Option
Plans.
4.4 SUBSIDIARIES. The Crestar Disclosure Letter sets forth the name
and state of incorporation of each subsidiary of Crestar (collectively, the
"Crestar Subsidiaries"). Each of the Crestar Subsidiaries is a bank, a
corporation or other business entity duly organized, validly existing and
in good standing under the laws of its respective jurisdiction of
incorporation or organization and is duly qualified to do business as a
foreign corporation or foreign business entity in each jurisdiction in
which its ownership or lease of property or the nature of the business
conducted by it makes such qualification necessary, except for such
jurisdictions in which the failure to be so qualified would not have a
Material Adverse Effect. Each of the Crestar Subsidiaries has the requisite
corporate power and authority to own, lease and operate its properties and
assets and to carry on its businesses as they are now being conducted.
Except as set forth in the Crestar Disclosure Letter, all outstanding
shares of capital stock of each Crestar Subsidiary is owned by Crestar or
another Crestar Subsidiary and are validly issued, fully paid and (except
pursuant to 12 USC Section 55 in the case of each national bank subsidiary
and applicable state law in the case of each state bank subsidiary)
nonassessable, are not subject to preemptive rights and are owned free and
clear of all liens, claims and encumbrances. There are no outstanding
subscriptions, options, warrants, rights, convertible securities or any
other agreements or commitments of any character relating to the issued or
unissued capital stock or other securities of any Crestar Subsidiary
obligating any Crestar Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold additional shares of its capital stock or
obligating any Crestar Subsidiary to grant, extend or enter into any
subscription, option, warrant, right, convertible security or other similar
agreement or commitment.
4.5 INFORMATION IN DISCLOSURE DOCUMENTS, REGISTRATION STATEMENT, ETC.
None of the information with respect to Crestar or any Crestar Subsidiary
provided by Crestar for inclusion in the Proxy Statement or the
Registration Statement will, in the case of the Proxy Statement or any
amendments or supplements thereto, at the time of the mailing of the Proxy
Statement and any amendments or supplements thereto, and at the time of the
Crestar Meeting and the SunTrust Meeting, or, in the case of the
Registration Statement, at the time it becomes effective, contain any
untrue statement of material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and
regulations promulgated thereunder.
4.6 CONSENTS AND APPROVALS; NO VIOLATION. Except as set forth in the
Crestar Disclosure Letter, neither the execution and delivery of this
Agreement by Crestar nor the consummation by Crestar of the transactions
contemplated hereby will (a) conflict with or result in any breach of any
provision of its certificate of incorporation or bylaws, (b) violate,
conflict with, constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in the
creation of any lien or other encumbrance upon any of the properties or
assets of Crestar or any Crestar Subsidiary under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which
Crestar or any Crestar Subsidiary is a party or to which they or any of
their respective properties or assets are subject, except for such
violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens or other encumbrances, which, either individually or in
the aggregate, will not have a Material Adverse Effect, (c) constitute or
result in a violation of any law, rule, ordinance or regulation or
judgment, decree, order, award or governmental or non-governmental permit
or license to which it or any of its subsidiaries is subject, except for
the consents, approvals and notices set forth below and except for such
violations which, either individually or in the aggregate, will not have a
Material Adverse Effect, or (d) require any consent, approval,
authorization or permit of or from, or filing with or notification to, any
Governmental Entity, except (i) pursuant to the Exchange Act and the
Securities Act, (ii) filing the Virginia Articles of Merger, (iii) filings
required under the securities or blue sky laws of the various states, (iv)
the applications, notices, reports and other filings required to be made in
connection with the approval of the Federal Reserve Board under the BHC
Act, (v) the Regulatory Approvals, (vi) filings and approvals pursuant to
any applicable state takeover law, (vii) pursuant to the rules of the New
York Stock Exchange or (viii) consents, approvals, authorizations, permits,
filings or notifications which, if not obtained or made will not,
individually or in the aggregate, have a Material Adverse Effect.
4.7 REPORTS. Since January 1, 1996, Crestar and each Crestar
Subsidiary have timely filed all reports, registrations and statements,
together with any required amendments thereto, that they were required to
file with (i) the Commission under Section 12(b), 12(g), 13(a) or 14(a) of
the Exchange Act, including, but not limited to Forms 10-K, Forms 10-Q and
proxy statements ("Crestar SEC Reports"), (ii) the Federal Reserve Board,
(iii) any other Governmental Entity, and (iv) any SRO, and all other
reports and statements required to be filed by Crestar and the Crestar
Subsidiaries, including, without limitation, any report or statement
required to be filed pursuant to laws, rules or regulations of the United
States, any state, or any Governmental Entity, and have paid all fees and
assessments due and payable in connection therewith, except where the
failure to file such report, registration or statement, or to pay such fees
and assessments, either individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. Crestar has made
available to SunTrust true and complete copies of each of Crestar's annual
reports on Form 10- K for the years 1996 and 1997 and its quarterly report
on Form 10-Q for March 31, 1998. As of their respective dates, the Crestar
SEC Reports complied with the requirements of the Commission and 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 light of the circumstance under which they were made, not
misleading.
4.8 FINANCIAL STATEMENTS. The audited consolidated financial
statements of Crestar included in Crestar's annual report on Form 10-K as
filed with the Commission for the year ended December 31, 1997, and the
unaudited interim financial statements of Crestar as of and for the three
months ended March 31, 1998 included in a quarterly report on Form 10-Q as
filed with the Commission, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis (except as may
be indicated therein or in the notes thereto) and fairly present the
consolidated financial position of Crestar and the Crestar Subsidiaries as
of the dates thereof and the results of their operations and cash flows for
the periods then ended, subject, in the case of the unaudited interim
financial statements, to normal year-end and audit adjustments and any
other adjustments described therein, and are derived from the books and
records of Crestar and the Crestar Subsidiaries, which are complete and
accurate in all material respects and have been maintained in all material
respects in accordance with applicable laws and regulations. There exist no
liabilities of Crestar and its consolidated subsidiaries, contingent or
otherwise of a type required to be disclosed in accordance with generally
accepted accounting practices, except as disclosed in the Crestar SEC
Reports and except for liabilities which, either individually or in the
aggregate, would not have a Material Adverse Effect. Crestar's reserve for
possible loan losses as shown in its Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1998 was adequate, within the meaning of
generally accepted accounting principles and safe and sound banking
practices.
4.9 TAXES. Crestar will promptly make available to SunTrust, upon
request by SunTrust, true and correct copies of the federal, state and
local income tax returns, and state and local property and sales tax
returns filed by Crestar and the Crestar Subsidiaries for each of the
fiscal years that remains open, as of the date hereof, for examination or
assessment of tax. Crestar and each Crestar Subsidiary have prepared in
good faith and duly and timely filed, or caused to be duly and timely
filed, all federal, state, local and foreign income, franchise, sales and
other tax returns or reports required to be filed by them on or before the
date hereof, except to the extent that all failures to file, taken
together, would not have a Material Adverse Effect. Except as otherwise
would not have, either individually or in the aggregate, a Material Adverse
Effect, Crestar and each Crestar Subsidiary have paid, or have made
adequate provision or set up an adequate accrual or reserve for the payment
of, all taxes shown or required to be shown to be owing on all such returns
or reports, together with any interest, additions or penalties related to
any such taxes or to any open taxable year or period. Except as set forth
in the Crestar Disclosure Letter, neither Crestar nor any Crestar
Subsidiary has consented to extend the statute of limitations with respect
to the assessment of any tax. Except as set forth in the Crestar Disclosure
Letter, neither Crestar nor any Crestar Subsidiary is a party to any action
or proceeding, nor to the best of Crestar's knowledge is any such action or
proceeding threatened, by any Governmental Entity in connection with the
determination, assessment or collection of any material amount of taxes,
and no deficiency notices or reports have been received by Crestar or any
Crestar Subsidiary in respect of any material deficiencies for any tax,
assessment, or government charge.
4.10 EMPLOYEE PLANS. All employee benefit, welfare, bonus, deferred
compensation, pension, profit sharing, stock option, employee stock
ownership, consulting, severance, or fringe benefit plans, formal or
informal, written or oral and all trust agreements related thereto,
relating to any present or former directors, officers or employees of
Crestar or the Crestar Subsidiaries ("Crestar Employee Plans") are listed
in the Crestar Disclosure Letter. Except as set forth in the Crestar
Disclosure Letter, all of the Crestar Employee Plans have been maintained,
operated, and administered in all material respects in compliance with
their terms and currently comply, and have at all relevant times complied,
in all material respects with the applicable requirements of ERISA, the
Code, and any other applicable laws. Except as set forth in the Crestar
Disclosure Letter, with respect to each Crestar Employee Plan which is a
pension plan (as defined in Section 3(2) of ERISA): (a) each pension plan
as amended (and any trust relating thereto) intended to be a qualified plan
under Section 401(a) of the Code either has been determined by the IRS to
be so qualified or is the subject of a pending application for such
determination that was timely filed, (b) there is no accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412 of the
Code), whether or not waived, and no waiver of the minimum funding
standards of such sections has been requested from the IRS, (c) neither
Crestar nor any of the Crestar Subsidiaries has provided, or is required to
provide, security to any pension plan pursuant to Section 401(a)(29) of the
Code, (d) the fair market value of the assets of each defined benefit plan
(as defined in Section 3(35) of ERISA) exceeds the value of the "benefit
liabilities" within the meaning of Section 4001(a)(16) of ERISA under such
defined benefit plan as of the end of the most recent plan year thereof
ending prior to the date hereof, calculated on the basis of the actuarial
assumptions used in the most recent actuarial valuation for such defined
benefit plan as of the date hereof, (e) no reportable event described in
Section 4043 of ERISA has occurred for which the 30 day reporting
requirement has not been waived has occurred, (f) no defined benefit plan
has been terminated, nor has the PBGC instituted proceedings to terminate a
defined benefit plan or to appoint a trustee or administrator of a defined
benefit plan, and no circumstances exist that constitute grounds under
Section 4042(a)(2) of ERISA entitling the PBGC to institute any such
proceedings and (g) no pension plan is a "multiemployer plan" within the
meaning of Section 3(37) of ERISA or a "multiple employer plan" within the
meaning of Section 413(c) of the Code. Neither Crestar nor any Crestar
Subsidiary has incurred any liability to the PBGC with respect to any
"single-employer plan" within the meaning of Section 4001(a)(15) of ERISA
currently or formerly maintained by any entity considered one employer with
it under Section 4001 of ERISA or Section 414 of the Code, except for
premiums all of which have been paid when due. Neither Crestar nor any of
its subsidiaries has incurred any withdrawal liability with respect to a
multiemployer plan under Subtitle E of Title IV of ERISA. Neither Crestar
nor any of its subsidiaries has an obligation to institute any Employee
Plan or any such other arrangement, agreement or plan. Except as set forth
in the Crestar Disclosure Letter, there are no outstanding grants of
restricted stock with respect to Crestar Common Stock and no outstanding
stock appreciation rights with respect to Crestar Common Stock. With
respect to any insurance policy that heretofore has or currently does
provide funding for benefits under any Crestar Employee Plan, (A) there is
no liability on the part of Crestar or any of its subsidiaries in the
nature of a retroactive or retrospective rate adjustment, loss sharing
arrangement, or other actual or contingent liability, nor would there be
any such liability if such insurance policy was terminated, and (B) no
insurance Crestar issuing such policy is in receivership, conservatorship,
liquidation or similar proceeding and, to the knowledge of Crestar, no such
proceeding with respect to any such insurer is imminent. Except as set
forth in the Crestar Disclosure Letter, neither the execution of this
Agreement, nor the consummation of the transactions contemplated thereby
will (A) constitute a stated triggering event under any Crestar Employee
Plan that will result in any payment (whether of severance pay or
otherwise) becoming due from Crestar or any of its subsidiaries to any
present or former officer, employee, director, shareholder, consultant or
dependent of any of the foregoing or (B) accelerate the time of payment or
vesting, or increase the amount of compensation due to any present or
former officer, employee, director, shareholder, consultant, or dependent
of any of the foregoing. The material terms of the Executive Agreements (as
defined below) are reflected in the Crestar SEC Reports, as amended in the
manner reflected in the Crestar Disclosure Letter. Neither Crestar nor any
Crestar Subsidiary has any obligations for retiree health and life benefits
under any Crestar Employee Plan, except as set forth in the Crestar
Disclosure Letter. Except as set forth in the Crestar Disclosure Letter,
there are no restrictions on the rights of Crestar or the Crestar
Subsidiaries to amend or terminate any such Crestar Employee Plan without
incurring any liability thereunder.
4.11 MATERIAL CONTRACTS. Except as set forth in the Crestar
Disclosure Letter or disclosed in the Crestar SEC Reports, neither Crestar
nor any Crestar Subsidiary is a party to, or is bound or affected by, or
receives benefits under (a) any agreements providing for aggregate payments
to any director, officer, employee or consultant of Crestar or any Crestar
Subsidiary in any calendar year in excess of $50,000, (b) any material
agreement, indenture or other instrument relating to the borrowing of money
by Crestar or any Crestar Subsidiary or the guarantee by Crestar or any
Crestar Subsidiary of any such obligation (other than trade payables and
instruments relating to transactions entered into in the ordinary course of
business) or (c) any other contract or agreement or amendment thereto that
would be required to be filed as an exhibit to a Form 10-K filed by Crestar
with the Commission as of the date of this Agreement (collectively, the
"Crestar Contracts"). Neither Crestar nor any Crestar Subsidiary is in
default under any Crestar Contract, which default is reasonably likely to
have, either individually or in the aggregate, a Material Adverse Effect,
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. Except as set
forth in the Crestar Disclosure Letter, neither Crestar nor any Crestar
Subsidiary 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 Crestar or any Crestar Subsidiary the subject
of a proceeding asserting that it or any Crestar Subsidiary has committed
an unfair labor practice or seeking to compel it or such subsidiary to
bargain with any labor organization as to wages and conditions of
employment, nor is there any strike, work stoppage or other labor dispute
involving it or any Crestar Subsidiary pending or threatened.
4.12 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for liabilities
incurred in connection with this Agreement or the transactions contemplated
hereby, since December 31, 1997, Crestar and its subsidiaries have
conducted their business only in the ordinary course or as disclosed in any
Crestar SEC Reports, and there has not been (1) any change or event having
a Material Adverse Effect on Crestar, (2) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock, or
property) with respect to any of Crestar's capital stock, other than
regular quarterly cash dividends on Crestar Common Stock, (3) any split,
combination or reclassification of any of Crestar's capital stock or any
substitution for shares of Crestar's capital stock, except for issuances of
Crestar's Common Stock upon the exercise of options awarded prior to the
date hereof in accordance with the Crestar Option Plans, (4) except as set
forth in the Crestar Disclosure Letter (A) any granting by Crestar or any
of its subsidiaries to any current or former director, executive officer or
other key employee of Crestar or its subsidiaries of any increase in
compensation, bonus or other benefits, except for normal increases in the
ordinary course of business or as was required under any employment
agreements in effect as of the date of the most recent audited financial
statements included in the Crestar SEC Reports filed and publicly available
prior to the date of this Agreement, (B) any granting by Crestar or any of
its subsidiaries to any such current or former director, executive officer
or key employee of any increase in severance or termination pay, except in
the ordinary course of business or pursuant to the Crestar Stock Option
Plans, or (C) any entry by Crestar or any of its subsidiaries into, or any
amendment of, any employment, deferred compensation, consulting, severance,
termination or indemnification agreement with any such current or former
director, executive officer or key employee, other than in the ordinary
course of business, (5) except insofar as may have been disclosed in the
Crestar SEC Reports or required by a change in generally accepted
accounting principles, any change in accounting methods, principles or
practices by Crestar materially affecting its assets, liabilities or
business or (6) except insofar as may have been disclosed in the Crestar
SEC Reports, any tax election that individually or in the aggregate would
reasonably be expected to have a Material Adverse Effect.
4.13 LITIGATION. Except as disclosed in the Crestar SEC Reports filed
by Crestar with the Commission prior to the date of this Agreement or as
set forth in the Crestar Disclosure Letter, there is no suit, action or
proceeding pending, or, to the knowledge of Crestar, threatened, against or
affecting Crestar or any Crestar Subsidiary which, either individually or
in the aggregate, would be reasonably expected to have a Material Adverse
Effect, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator, outstanding against Crestar or any
Crestar Subsidiary having, or which, insofar as reasonably can be foreseen,
in the future would have, either individually or in the aggregate, a
Material Adverse Effect.
4.14 COMPLIANCE WITH LAWS AND ORDERS. Except as set forth in the
Crestar Disclosure Letter or as disclosed in the Crestar SEC Reports filed
by Crestar with the Commission prior to the date of this Agreement, the
businesses of Crestar and the Crestar Subsidiaries are not being conducted
in violation of any law, ordinance, regulation, judgment, order, decree,
license or permit of any Governmental Entity (including, without
limitation, in the case of Crestar Subsidiaries that are banks, all
statutes, rules and regulations pertaining to the conduct of the banking
business and the exercise of trust powers), except for violations which
individually or in the aggregate do not, and, insofar as reasonably can be
foreseen, in the future will not, have a Material Adverse Effect. Except as
set forth in the Crestar Disclosure Letter, no investigation or review by
any Governmental Entity with respect to Crestar or any Crestar Subsidiary
is pending or, to the knowledge of Crestar threatened, nor has any
Governmental Entity indicated an intention to conduct the same in each case
other than those the outcome of which will not, either individually or in
the aggregate, have a Material Adverse Effect.
4.15 AGREEMENTS WITH BANK REGULATORS, ETC. Neither Crestar nor any
Crestar Subsidiary is a party to any written agreement or memorandum of
understanding with, or a party to any commitment letter, board resolution
or similar undertaking to, or is subject to any order or directive by, or
is a recipient of any extraordinary supervisory letter from, any
Governmental Entity which restricts materially the conduct of its business,
or in any manner relates to its capital adequacy, its credit or reserve
policies or its management, nor has Crestar been advised by any
Governmental Entity that it is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such order,
decree, agreement, memorandum of understanding, extraordinary supervisory
letter, commitment letter or similar submission. Neither Crestar nor any
Crestar Subsidiary is required by Section 32 of the FDIA to give prior
notice to a Federal banking agency of the proposed addition of an
individual to its board of directors or the employment of an individual as
a senior or executive officer. Crestar knows of no reason why the
regulatory approvals referred to in Section 4.6(d) should not be obtained.
4.16 CRESTAR OWNERSHIP OF STOCK. As of the date of this Agreement,
other than with respect to the SunTrust Option Agreement, neither Crestar
nor any of its affiliates or associates (i) beneficially owns, directly or
indirectly, or (ii) are parties to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing
of, SunTrust Common Stock (other than held in trust accounts, managed
accounts or in any similar manner as trustee or in a fiduciary capacity),
which in the aggregate, represent 5% or more of the outstanding shares of
SunTrust Common Stock.
4.17 ACCOUNTING TREATMENT; TAX TREATMENT. Crestar knows of no reason,
with respect to Crestar and its affiliates, that would prevent SunTrust
from accounting for the business combination to be effected by the Merger
as a "pooling-of-interests." As of the date hereof, Crestar is aware of no
reason why the Merger will fail to qualify as a reorganization under
Section 368(a) of the Code.
4.18 FEES. Except for fees paid and payable to Morgan Stanley, Dean
Witter, Discover & Co., neither Crestar nor any Crestar Subsidiary has paid
or will become obligated to pay any fee or commission to any broker, finder
or intermediary in connection with the transactions contemplated by this
Agreement.
4.19 CRESTAR ACTION. The Board of Directors of Crestar (at a meeting
duly called, constituted and held) has by the requisite vote of all
directors present (a) determined that the Merger is advisable and in the
best interests of Crestar and its shareholders, (b) approved this Agreement
and the transactions contemplated hereby, including the Merger, and (c)
directed that the Merger be submitted for consideration by Crestar's
shareholders at the Crestar Meeting. Crestar has taken all steps necessary
to exempt (i) the execution of this Agreement, the SunTrust Option
Agreement and the Crestar Option Agreement, (ii) the Merger and (iii) the
transactions contemplated hereby and thereby from, (x) any statute of the
Commonwealth of Virginia that purports to limit or restrict business
combinations or the ability to acquire or to vote shares, including,
without limitation, Sections 13.1-725 et seq. and Sections 13.1-728.1 et
seq. of the VSCA, (y) the Crestar Rights Agreement and (z) any applicable
provision of Crestar's articles of incorporation or bylaws containing
change of control or anti-takeover provisions. Crestar has (A) duly entered
into an appropriate amendment to the Crestar Rights Agreement and (B) taken
all other action necessary or appropriate so that the execution of this
Agreement, and the consummation of the transactions contemplated hereby
(including, without limitation, the Merger) do not and will not result in
the ability of any person to exercise any rights under the Crestar Rights
Agreement or enable or require the rights to separate from the shares of
Crestar Common Stock to which they are attached or to be triggered or
become exercisable.
4.20 VOTE REQUIRED. The affirmative vote of holders of more than
two-thirds of the outstanding shares of Crestar Common Stock entitled to
vote thereon is the only vote of the holders of any class or series of
Crestar capital stock necessary to approve this Agreement and the
transactions contemplated by the Agreement.
4.21 MATERIAL INTERESTS OF CERTAIN PERSONS. Except as disclosed in
Crestar's Proxy Statement for its 1998 Annual Meeting of Shareholders or as
set forth in the Crestar Disclosure Letter, no officer or director of
Crestar, or any "associate" (as such term is defined in Rule 14a-1 under
the Exchange Act) of any such officer or director, has any material
interest in any material contract or property (real or personal), tangible
or intangible, used in or pertaining to the business of Crestar or any
Crestar Subsidiary.
4.22 INTELLECTUAL PROPERTY.
(a) Crestar and its subsidiaries own or have a valid license
to use all trademarks, service marks and trade names (including any
registrations or applications for registration of any of the foregoing)
(collectively, the "Crestar Intellectual Property") necessary to carry on
its business substantially as currently conducted, except for such Crestar
Intellectual Property the failure of which to own or validly license
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect. Neither Crestar nor any such subsidiary has
received any notice of infringement of or conflict with, and, to Crestar's
knowledge, there are no infringements of or conflicts with, the rights of
others with respect to the use of any Crestar Intellectual Property that
individually or in the aggregate, in either such case, would reasonably be
expected to have a Material Adverse Effect.
(b) The consummation of the Merger and the other transactions
contemplated by this Agreement will not result in the loss by Crestar of
any rights to use computer and telecommunications software including source
and object code and documentation and any other media (including, without
limitation, manuals, journals and reference books) necessary to carry on
its business substantially as currently conducted and the loss of which
would have a Material Adverse Effect.
(c) The computer software operated by Crestar which is
material to the conduct of its business is capable of providing or is being
adapted to provide uninterrupted millennium functionality to record, store,
process and present calendar dates falling on or after January 1, 2000 in
substantially the same manner and with the same functionality as such
software records, stores, processes and presents such calendar dates
falling on or before December 31, 1999, except as would not have a Material
Adverse Effect. None of Crestar or any of its subsidiaries has received, or
reasonably expects to receive, a "Year 2000 Deficiency Notification Letter"
(as such term is employed in the Federal Reserve's Supervision and
Regulation Letter No. SR 98-3(SUP), dated March 4, 1998). Crestar has
disclosed to SunTrust a complete and accurate copy of Crestar's plan for
addressing the issues set forth in the statements of the Federal Financial
Institutions Examination Council, dated May 5, 1997, entitled "Year 2000
Project Management Awareness," and December 1997, entitled "Safety and
Soundness Guidelines Concerning the Year 2000 Business Risk," as such
issues affect Crestar and its subsidiaries. The costs of the adaptions and
compliance referred to in this Section 4.22(c) will not have a Material
Adverse Effect.
4.23 INTEREST RATE RISK MANAGEMENT INSTRUMENTS. Except as would not
reasonably be expected to have a Material Adverse Effect, all interest rate
swaps, caps, floors and option agreements and other interest rate risk
management arrangements, whether entered into for the account of Crestar or
for the account of a customer of Crestar or of one of Crestar's
subsidiaries, were entered into in the ordinary course of business and, to
Crestar's knowledge, in accordance with prudent banking practices and
applicable rules, regulations and policies of any Governmental Entity and
with counterparties believed to be financially responsible at the time and
are legal, valid and binding obligations of Crestar or one of its
subsidiaries enforceable in accordance with their terms (except as may be
limited by bankruptcy, insolvency, moratorium, reorganization or similar
laws affecting the rights of creditors generally and the availability of
equitable remedies), and are in full force and effect. Except as would not
reasonably be expected to have a Material Adverse Effect, Crestar and each
of Crestar's subsidiaries have duly performed all of their obligations
thereunder to the extent that such obligations to perform have accrued,
and, to Crestar's knowledge, there are no breaches, violations or defaults
or allegations or assertions of such by any party thereunder.
4.24 INSURANCE. Except as would not reasonably be expected to have a
Material Adverse Effect, Crestar and Crestar's subsidiaries have in effect
insurance coverage with reputable insurers which, in respect of amounts,
premiums, types and risks insured, constitutes reasonably adequate coverage
against all risks customarily insured against by bank holding companies and
their subsidiaries comparable in size and operations to Crestar and
Crestar's subsidiaries.
4.25 ENVIRONMENTAL MATTERS. (a) Neither Crestar nor any of its
subsidiaries is in violation of or has any liability, absolute or
contingent, in connection with or under any Environmental Law, except any
such violations or liabilities which would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect; (b)
none of the Loan Portfolio Properties, Trust Properties and Other
Properties of Crestar or its subsidiaries is in violation of or has any
liability, absolute or contingent, under any Environmental Law, except any
such violations or liabilities which, individually or in the aggregate
would not have a Material Adverse Effect; and (c) to the best of Crestar's
knowledge, there are no actions, suits, demands, notices, claims,
investigations or proceedings pending or threatened relating to any Loan
Portfolio Properties, Trust Properties and Other Properties including,
without limitation any notices, demand letters or requests for information
from any federal or state environmental agency relating to any such
liability under or violation of Environmental Law, which would impose a
liability upon Crestar or its subsidiaries pursuant to any Environmental
Law, except such as would not, individually or in the aggregate, have a
Material Adverse Effect.
4.26 RESCISSION OF REPURCHASES. All share repurchase programs
previously authorized by the Board of Directors of Crestar, except to the
extent that Crestar is advised by the Commission that such purchases would
not adversely affect the ability of SunTrust and Crestar to account for the
Merger as a "pooling of interests" for accounting purposes, have been
revoked by resolution duly adopted on or prior to the date hereof.
4.27 DISCLOSURE LETTER. Prior to the execution and delivery of this
Agreement, Crestar has delivered to SunTrust a schedule (the "Crestar
Disclosure Letter") 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 Crestar's representations or warranties contained in Article IV or to
Crestar's covenants contained in Article V; provided, however, that
notwithstanding anything in this Agreement to the contrary the mere
inclusion of an item in the Crestar Disclosure Letter as an exception to a
representation or warranty shall not be deemed an admission by a party that
such item represents a material exception or material fact, event or
circumstance or that such item has had or would have a Material Adverse
Effect (as defined herein) with respect to Crestar.
ARTICLE V
COVENANTS
5.1 ACQUISITION PROPOSALS. Crestar shall not, nor shall it permit any
Crestar Subsidiary to, nor shall it authorize or permit any officer,
director or employee of, or any investment banker, attorney or other
advisor or representative or agent of, Crestar or any Crestar Subsidiary
to, directly or indirectly, (i) solicit, initiate, encourage or facilitate
the submission of any proposal relating to or involving an Acquisition
Transaction (as hereinafter defined) or (ii) enter into, encourage or
facilitate any discussions or negotiations regarding, or furnish to any
person any information with respect to, or take any other action to
encourage or facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, or constitute an
effort to facilitate, any proposal relating to or involving an Acquisition
Transaction; provided, however, that nothing contained in this Section 5.1
shall prohibit the Board of Directors of Crestar from furnishing
information to, or entering into discussions or negotiations with, any
person or entity that makes an unsolicited, written bona fide proposal
regarding an Acquisition Transaction if, and only to the extent that (A)
the Board of Directors of Crestar concludes in good faith, after
consultation with and based upon the advice of outside counsel, that it is
required to furnish such information or enter into such discussions or
negotiations in order to comply with its fiduciary duties to shareholders
under applicable law, (B) prior to taking such action, Crestar receives
from such person or entity an executed confidentiality agreement and an
executed standstill agreement, each in reasonably customary form (provided
that such agreement is at least as limiting as any such agreement between
SunTrust and Crestar), and (C) the Board of Directors of Crestar concludes
in good faith that the proposal regarding the Acquisition Transaction
contains an offer of consideration that is superior to the consideration
set forth herein. Notwithstanding anything in this Agreement to the
contrary, Crestar shall (i) immediately advise SunTrust orally and in
writing of (A) the receipt by it (or any of the other entities or persons
referred to above) of any proposal regarding an Acquisition Transaction, or
any inquiry which could reasonably be expected to lead to any such
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, (ii) keep SunTrust fully informed of the status
and details of any such proposal or inquiry, and (iii) negotiate in good
faith with SunTrust to make such adjustments in the terms and conditions of
this Agreement as would enable Crestar to proceed with the transactions
contemplated herein on such adjusted terms. Without limiting the foregoing,
it is understood that any violation of the restrictions set forth in the
first sentence of this Section 5.1 by any officer or director of Crestar or
any Crestar Subsidiary or any investment banker, attorney or other advisor,
representative or agent of Crestar or any Crestar Subsidiary, acting on
behalf of or at the request of the Board of Directors of Crestar, shall be
deemed to be a breach of this Section 5.1 by Crestar. Crestar shall
immediately terminate and cease any and all discussions, negotiations
and/or contacts with any other person or entity which may exist relating to
or involving an Acquisition Transaction. For purposes of this Agreement,
"Acquisition Transaction" means any merger, consolidation, share exchange,
joint venture, business combination or similar transaction involving
Crestar or any Crestar Subsidiary, or any purchase of all or any material
portion of the assets of Crestar or any Crestar Subsidiary.
5.2 INTERIM OPERATIONS OF CRESTAR. During the period from the date of
this Agreement to the Effective Time, except as specifically contemplated
by this Agreement or the Crestar Option Agreement, set forth in the Crestar
Disclosure Letter or as otherwise approved expressly in writing by
SunTrust:
(a) Crestar shall, and shall cause each of the Crestar
Subsidiaries to, conduct their respective businesses only in, and not take
any action except in, the ordinary course of business consistent with past
practice. Crestar shall use all commercially reasonable efforts to preserve
intact the business organization of Crestar and each of the Crestar
Subsidiaries, to keep available the services of its and their present key
officers and employees and to preserve the goodwill of those having
business relationships with Crestar or the Crestar Subsidiaries. Other than
in the ordinary course of business consistent with past practice, Crestar
shall not (i) incur any indebtedness for borrowed money (it being
understood and agreed that incurrence of indebtedness in the ordinary
course of business shall include, without limitation, the creation of
deposit liabilities, purchases of federal funds, borrowings pursuant to
existing lines of credit, sales of certificates of deposit and entering
into repurchase agreements), (ii) assume, guarantee, endorse or otherwise
as an accommodation become responsible for the obligations of any other
individual, corporation or other entity, or (iii) make any loan or advance.
(b) Crestar shall not and shall not permit any Crestar
Subsidiary to make any change or amendment to their respective articles of
incorporation or bylaws (or comparable governing instruments) in a manner
that would materially and adversely affect either party's ability to
consummate the Merger or the economic benefits of the Merger to either
party.
(c) Crestar shall not, and shall not permit any Crestar
Subsidiary to, issue or sell any shares of capital stock or any other
securities of any of them (other than (i) pursuant to outstanding
exercisable stock options granted pursuant to one of the Crestar Option
Plans or pursuant to outstanding exercisable stock awards reflected in the
Crestar Disclosure Letter, (ii) pursuant to the Crestar Rights Agreement,
(iii) pursuant to the terms of 401(k) plans of Crestar and any Crestar
Subsidiary in effect as of the date hereof, or (iv) pursuant to the Crestar
Dividend Reinvestment Plan) or issue any securities convertible into or
exchangeable for, or options, warrants to purchase, scrip, rights to
subscribe for, calls or commitments of any character whatsoever relating
to, or enter into any contract, understanding or arrangement with respect
to the issuance of, any shares of capital stock or any other securities of
any of them (other than pursuant to the Crestar Option Plans) or enter into
any arrangement or contract with respect to the purchase or voting of
shares of their capital stock, or adjust, split, combine or reclassify any
of their capital stock or other securities or make any other changes in
their capital structures. Neither Crestar nor any Crestar Subsidiaries
shall grant any additional stock options, except for stock option grants
made in accordance with existing elections by participants in the Crestar
Option Plans.
(d) Crestar shall not, and shall not permit any Crestar
Subsidiary to, declare, set aside, pay or make any dividend or other
distribution or payment (whether in cash, stock or property) with respect
to, or purchase or redeem, any shares of the capital stock of any of them
other than (a) regular quarterly cash dividends in an amount not to exceed
$0.33 per share of Crestar Common Stock payable on the regular historical
payment dates and (b) dividends paid by any Crestar Subsidiary to Crestar
or another Crestar Subsidiary with respect to its capital stock between the
date hereof and the Effective Time.
(e) Crestar shall not, and shall not permit any Crestar
Subsidiary to, acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any
other manner, any business or any person.
(f) Crestar shall not, and shall not permit any Crestar
Subsidiary to, sell, lease, license, mortgage or otherwise encumber or
subject to any lien or otherwise dispose of a material amount of its
properties or assets (including securitizations), other than in the
ordinary course of business consistent with past practice.
(g) Except as set forth in the Crestar Disclosure Letter or
as otherwise provided in this Agreement, Crestar shall not, and shall not
permit any Crestar Subsidiary to, adopt or amend (except as required by law
or other contractual obligations existing on the date hereof) any bonus,
profit sharing, compensation, severance, termination, stock option,
pension, retirement, deferred compensation, employment or other employee
benefit agreements, trusts, plans, funds or other arrangements for the
benefit or welfare of any director, officer or employee, or (except for
normal merit increases in the ordinary course of business consistent with
past practice) increase the compensation or fringe benefits of any
director, officer or employee or pay any benefit not required by any
existing plan, agreement or arrangement (including, without limitation, the
granting of stock options or stock appreciation rights) or take any action
or grant any benefit not required under the terms of any existing
agreements, trusts, plans, funds or other such arrangements or enter into
any contract, agreement, commitment or arrangement to do any of the
foregoing; provided, however, that nothing contained herein shall prohibit
Crestar from conclusively determining the earned amount of any bonuses
under Crestar's bonus plans in respect of calendar year 1998, based on
Crestar's annualized performance through the Effective Time (determined
without regard to the costs incurred in connection with the transactions
contemplated by this Agreement), such bonuses to be paid in accordance with
Crestar's past practice. SunTrust hereby agrees that any Crestar Employee
(as hereinafter defined) who is involuntarily terminated from employment
following the Effective Time shall be paid any bonus payable in respect of
1998 in accordance with the preceding sentence. Crestar shall appoint one
individual at its discretion and one individual at SunTrust's direction to
serve jointly, as the Administrator of Crestar's Executive Severance Plan.
(h) At the request of SunTrust, Crestar will modify and
change its loan, litigation, real estate valuation, asset, liquidity and
investment portfolio policies and practices (including loan classifications
and level of reserves) prior to the Effective Time so as to be consistent
on a mutually satisfactory basis with those of SunTrust and generally
accepted accounting principles, at the earlier of (i) such time within
seven days prior to the Effective Time as SunTrust acknowledges in writing
that all conditions to its obligations to consummate the Merger set forth
in Sections 7.1 and 7.3 have been waived or satisfied if the Merger were to
be consummated on such date or (ii) immediately prior to the Effective
Time.
(i) Crestar shall not, and shall not permit any Crestar
Subsidiary to, authorize, or commit or agree to take, any of the actions
set forth in clauses (a) through (g) of this Section 5.2.
5.3 INTERIM OPERATIONS OF SUNTRUST. During the period from the date
of this Agreement to the Effective Time, without the prior written consent
of Crestar, SunTrust will not declare or pay any extraordinary or special
dividend on the SunTrust Common Stock or take any action that would (a)
materially delay or adversely affect the ability of SunTrust to obtain any
approvals of Governmental Entities required to permit consummation of the
Merger or (b) materially adversely affect its ability to perform its
obligations under this Agreement or to consummate the transactions
contemplated hereby.
5.4 COORDINATION OF DIVIDENDS. Subject to Section 5.16, each of
SunTrust and Crestar shall coordinate with the other regarding the
declaration and payment of dividends in respect of the SunTrust Common
Stock and the Crestar Common Stock and the record dates and payment dates
relating thereto, it being the intention of SunTrust and Crestar that any
holder of SunTrust Common Stock or Crestar Common Stock shall not receive
two dividends, or fail to receive one dividend, for any single calendar
quarter with respect to its shares of SunTrust Common Stock and/or shares
of Crestar Common Stock, including shares of SunTrust Common Stock that a
holder receives in exchange for shares of Crestar Common Stock pursuant to
the Merger.
5.5 EMPLOYEE MATTERS.
(a) The Surviving Corporation and SunTrust shall assume,
honor, maintain and perform on and after the Effective Time, without
deduction, counterclaims, interruptions or deferment (other than
withholding under applicable law), all vested benefits of any person under
all Crestar Employee Plans in accordance with the terms of such plans.
Without limiting the generality of the foregoing, as of the Effective Time,
SunTrust shall assume and honor and shall cause the Surviving Corporation
to assume and to honor in accordance with their terms all employment,
severance and other compensation agreements and arrangements existing prior
to the execution of this Agreement which are between Crestar or any Crestar
Subsidiary and any director, officer or employee thereof (each an
"Executive Agreement") except as otherwise expressly agreed between
SunTrust and such person. SunTrust and Crestar hereby agree that the
execution of this Agreement or the consummation of the Merger shall
constitute a "Change in Control" for purposes of any Executive Agreement
and all other Crestar Employee Plans, as is provided for under the terms of
such plan.
(b) For purposes of all employee benefit plans, programs or
arrangements maintained or contributed to by SunTrust or the Surviving
Corporation, SunTrust shall credit and cause the Surviving Corporation to
credit employees of Crestar and the Crestar Subsidiaries as of the
Effective Time ("Crestar Employees ") with all service with Crestar or any
Crestar Subsidiary for purposes of eligibility and vesting as if such
service, and compensation therefrom, had been performed for SunTrust. From
and after the Effective Time, SunTrust shall, and shall cause the Surviving
Corporation to, cause any and all pre-existing condition limitations under
any health plans to be waived with respect to Crestar Employees and their
eligible dependents to the extent that such conditions were covered by
Crestar's health plans. To the extent that any Crestar Employee and their
eligible dependents have, before the Effective Time, satisfied in whole or
in part any annual deductible or paid any out of pocket or co-payment
expenses under the applicable plan of Crestar, SunTrust shall credit such
individual therefor under the corresponding plan of SunTrust or Surviving
Corporation in which such individual participates after the Effective Time.
A Crestar Employee who is eligible for a specific period of paid vacation
at the Effective Time under Crestar's standard vacation policy shall remain
eligible for that period of paid vacation after the Effective Time.
(c) Except as otherwise provided herein or in the Crestar
Disclosure Letter, SunTrust shall, and shall cause the Surviving
Corporation to maintain, the Crestar Employee Plans at least through
December 31, 1998. SunTrust for 1999 will provide the Crestar Employees
with benefits under SunTrust's employee benefit plans or Crestar's employee
benefit plans, or a combination of such plans, which will (in SunTrust's
judgment) be no less favorable in the aggregate to Crestar Employees than
the benefits provided at the Effective Time to Covered Employees generally.
Thereafter, Crestar Employees shall participate in such employee benefit
plans, or combination of plans, of SunTrust as determined by a committee
which will be formed as soon as practicable after the date hereof by
SunTrust and Crestar, which committee shall make recommendations to the
current Chief Executive Officers of SunTrust and Crestar.
(d) SunTrust shall, and shall cause the Surviving Corporation
to, maintain without adverse amendment Crestar's deferred compensation
plans with respect to (A) any amounts deferred as of the date hereof and
(B) amounts with respect to which deferral elections are in place as of the
date hereof and relate to bonuses paid to or to be paid in respect of 1997
and 1998. SunTrust further agrees to permit the deferral of any bonus
amounts paid in respect of calendar years 1997 and 1998 and to take no
action with respect to amounts deferred during such years which would
prevent such amounts from becoming entitled to the most favorable interest
rates provided in such deferred compensation plans, notwithstanding the
occurrence of a Change of Control for purposes of Crestar's various bonus
and production incentive plans. SunTrust hereby agrees that any deferral
elections made prior to the date hereof by any Crestar Employee pursuant to
the deferred compensation plans shall be honored notwithstanding (i) the
involuntary termination of any such Crestar Employee's employment as of or
following the Effective Time (other than for cause) or (ii) in the case of
those Crestar Employees who are parties to an Executive Agreement, the
termination of any such Crestar Employee's employment for Good Reason (as
defined in such Executive Agreement) as of or following the Effective Time.
(e) SunTrust acknowledges and agrees that, immediately prior
to the Effective Time, Crestar may make payment in shares of Crestar Common
Stock (net of applicable withholding taxes) in settlement of all awards
under Crestar's Value Share II and Value Share III plans in accordance with
the terms of Crestar's 1993 Stock Incentive Plan and any related
agreements, including any Incentive Award Agreement relating to such
awards.
(f) SunTrust's obligations under the first and second
sentences in Section 5.5(a) (and any related provisions of the Crestar
Disclosure Letter) are intended to be for the benefit of, and shall be
enforceable by, any Crestar Employee to which such obligations relate.
5.6 ACCESS AND INFORMATION. Upon reasonable notice, each of the
parties shall (and shall cause each of the parties' subsidiaries to) afford
to the other parties and their representatives (including, without
limitation, directors, officers and employees of the parties and their
affiliates, and counsel, accountants and other professionals retained) 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 of
such party and its subsidiaries and to such other information as any party
may reasonably request; provided, however, that no party shall be required
to provide access to any such information if the providing of such access
(i) would be reasonably likely, in the written opinion of counsel, to
result in the loss or impairment of any privilege generally recognized
under law with respect to such information or (ii) would be precluded by
any law, ordinance, regulation, judgment, order, decree, license or permit
of any Governmental Entity. The parties hereto will use reasonable efforts
to make appropriate substitute disclosure arrangements under circumstances
in which the restrictions of the preceding sentences apply. All information
furnished by one party to any of the others in connection with this
Agreement or the transactions contemplated hereby shall be kept
confidential by such other party in accordance with the terms of the
Confidentiality Agreement dated July 17, 1998, between SunTrust and Crestar
(the "Confidentiality Agreement").
5.7 CERTAIN FILINGS, CONSENTS AND ARRANGEMENTS. The parties hereto
shall cooperate with each other and use their commercially reasonable
efforts to promptly prepare and file all necessary documentation, to effect
all applications, notices, petitions and filings, and to obtain as promptly
as practicable all permits, consents, approvals and authorizations of all
third parties and Governmental Entities which are necessary or advisable to
consummate the transactions contemplated by this Agreement (including
without limitation the Merger). Crestar and SunTrust shall have the right
to review in advance, and to the extent practicable each will consult the
other on, in each case subject to applicable laws relating to the exchange
of information, all the information relating to Crestar or SunTrust, as the
case may be, and any of their respective Subsidiaries, which appears in any
filing made with, or written materials submitted to, any third party or any
Governmental Entity in connection with the transactions contemplated by
this Agreement. In exercising the foregoing right, each of the parties
hereto shall act reasonably and as promptly as practicable. The parties
hereto agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all
third parties and Governmental Entities necessary or advisable to
consummate the transactions contemplated by this Agreement and each party
will keep the other apprised of the status of matters relating to
completion of the transactions contemplated herein. SunTrust and Crestar
shall promptly furnish each other with copies of written communications
received by SunTrust or Crestar, as the case may be, or any of their
respective Subsidiaries, affiliates or associates from, or delivered by any
of the foregoing to, any Governmental Entity in respect of the transactions
contemplated hereby.
5.8 STATE TAKEOVER STATUTES. Crestar shall take all reasonable steps
to (i) exempt Crestar and the Merger from the requirements of any state
takeover law by action of Crestar's Board of Directors or otherwise and
(ii) upon the request of SunTrust, assist in any challenge by SunTrust to
the applicability to the Merger of any state takeover law.
5.9 INDEMNIFICATION AND INSURANCE.
(a) From and after the Effective Time, SunTrust shall
indemnify, defend and hold harmless the present and former directors and
officers of Crestar and the Crestar Subsidiaries (each, an "Indemnified
Party") against all costs or expenses (including reasonable attorneys'
fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") 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, which is based upon or relates to such Indemnified
Party's capacity as a director or officer, to the fullest extent that such
persons are permitted to be indemnified under the VSCA or Crestar's
Articles of Incorporation and Bylaws as in effect on the date hereof. In
the event of any such threatened or actual claim, action, suit, proceeding
or investigation (whether asserted or arising before or after the Effective
Time), the Indemnified Parties may retain counsel reasonably satisfactory
to them and to SunTrust; provided, however, that (1) SunTrust shall have
the right to assume the defense thereof and upon such assumption SunTrust
shall not be liable to any Indemnified Party for any legal expenses of
other counsel or any other expenses subsequently incurred by any
Indemnified Party in connection with the defense thereof, except that if
SunTrust elects not to assume such defense, or counsel for the Indemnified
Parties reasonably advises the Indemnified Parties that there are issues
which raise conflicts of interest between SunTrust and the Indemnified
Parties, the Indemnified Parties may retain counsel reasonably satisfactory
to them and to SunTrust, and SunTrust shall pay the reasonable fees and
expenses of such counsel for the Indemnified Parties, (2) SunTrust shall in
all cases be obligated pursuant to this Section 5.9(a) to pay for only one
firm of counsel for all Indemnified Parties, and (3) SunTrust shall not be
liable for any settlement effected without its prior written consent (which
consent shall not be unreasonably withheld). Any Indemnified Party wishing
to claim indemnification under this Section 5.9, upon learning of any such
claim, action, suit, proceeding or investigation, shall promptly notify
SunTrust thereof, provided that the failure to so notify shall not affect
the obligation of SunTrust under this Section 5.9 except to the extent such
failure to notify materially prejudices SunTrust. SunTrust's obligations
under this Section 5.9(a) shall continue in full force and effect for a
period of six years after the Effective Time; provided that all rights to
indemnification in respect of any claim, action, suit, proceeding or
investigation made, asserted or commenced within such six year period shall
continue until the final disposition of such claim, action, suit,
proceeding or investigation.
(b) SunTrust shall cause the persons serving as officers and
directors of Crestar immediately prior to the Effective Time to be covered
for a period of six years from the Effective Time by the directors' and
officers' liability insurance policy maintained by Crestar (provided that
SunTrust may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are not less advantageous
than such policy) with respect to acts or omissions occurring prior to the
Effective Time which were committed by such officers and directors in their
capacity as such; provided, however, that in no event shall SunTrust be
required to expend on any annual basis more than 200% of the current amount
expended by Crestar (the "Insurance Amount") to maintain or procure
insurance coverage, and further provided that if SunTrust is unable to
maintain or obtain the insurance called for by this Section 5.9(b),
SunTrust shall use all reasonable efforts to obtain as much comparable
insurance as is available for the Insurance Amount.
(c) In the event SunTrust or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, to the
extent necessary, proper provision shall be made so that the successors and
assigns of SunTrust assume the obligations set forth in this section.
(d) The provisions of this Section 5.9 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party and his
or her heirs and representatives.
5.10 ADDITIONAL AGREEMENTS. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its commercially
reasonable efforts to take promptly, or cause to be taken promptly, all
actions and to do promptly, or cause to be done promptly, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement, including using its commercially reasonable
efforts to obtain all necessary actions or non-actions, extensions,
waivers, consents and approvals from all applicable Governmental Entities,
effecting all necessary registrations, applications and filings (including,
without limitation, filings under any applicable state securities laws) and
obtaining any required contractual consents and regulatory approvals.
5.11 PUBLICITY. The initial press release announcing this Agreement
shall be a joint press release and thereafter Crestar and SunTrust shall
consult with each other in issuing any press releases or otherwise making
public statements with respect to the transactions contemplated hereby and
in making any filings with any Governmental Entity or with any national
securities exchange with respect thereto.
5.12 PREPARATION OF THE REGISTRATION STATEMENT AND THE PROXY
STATEMENT; SHAREHOLDERS' MEETINGS.
(a) As soon as practicable following the date of this
Agreement, SunTrust and Crestar shall prepare and file with the Commission
the Proxy Statement and SunTrust shall prepare and file with the Commission
the Registration Statement, in which the Proxy Statement will be included
as a prospectus. Each of Crestar and SunTrust shall use all commercially
reasonable efforts to have the Registration Statement declared effective
under the Securities Act as promptly as practicable after such filing.
Crestar shall use all commercially reasonable efforts to cause the Proxy
Statement to be mailed to Crestar's shareholders, and SunTrust shall use
all commercially reasonable efforts to cause the Proxy Statement to be
mailed to SunTrust's shareholders, in each case as promptly as practicable
after the Registration Statement is declared effective under the Securities
Act. SunTrust shall also take any action (other than qualifying to do
business in any jurisdiction in which it is not now so qualified or to file
a general consent to service of process) required to be taken under any
applicable state securities laws in connection with the issuance of
SunTrust Common Stock in the Merger and Crestar shall furnish SunTrust all
information concerning Crestar and the holders of its capital stock and
shall take any action as SunTrust may reasonably request in connection with
any such action. If at any time prior to the Effective Time any information
relating to Crestar, or any of its affiliates, officers or directors,
should be discovered by Crestar which should be set forth in an amendment
or supplement to any of the Registration Statement or the Proxy Statement,
so that any of such documents would not include any misstatement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, Crestar shall promptly notify SunTrust and Crestar
shall cooperate in the filing of any appropriate amendment or supplement
describing such information with the Commission and, to the extent
required, any dissemination thereof to the shareholders of Crestar and
SunTrust.
(b) SunTrust shall, as soon as practicable following the date
of this Agreement, duly call, give notice of, convene and hold a meeting of
its shareholders (the "SunTrust Meeting") for the purpose of approving this
Agreement and shall, through its Board of Directors, recommend to its
shareholders the approval and adoption of this Agreement, the Merger and
the other transactions contemplated hereby.
(c) Crestar shall, as soon as practicable following the date
of this Agreement, duly call, give notice of, convene and hold a meeting of
its shareholders (the "Crestar Meeting") for the purpose of approving this
Agreement and the Board of Directors of Crestar shall recommend to its
shareholders the approval and adoption of this Agreement, the Merger and
the other transactions contemplated hereby, shall use all reasonable
efforts to solicit such approval and adoption and shall not recommend or
present for shareholder consideration in any manner any other Acquisition
Transaction, tender offer or exchange offer for 20% or more of the
outstanding securities of Crestar, or a transaction contemplating the sale
of any material Crestar Subsidiary or Subsidiaries, or any material assets
of Crestar or a Crestar Subsidiary or Subsidiaries; provided, however, that
nothing in this Section 5.12(c) shall prohibit the Board of Directors of
Crestar from withdrawing or modifying in a manner adverse to SunTrust its
recommendation to the shareholders or recommending any other Acquisition
Transaction or any other such transaction described in the foregoing clause
if Crestar is not in breach of, and has not breached, any of the provisions
of Section 5.1, Crestar receives an unsolicited, written bona fide proposal
regarding an Acquisition Transaction, and as a result of such proposal (A)
the Board of Directors of Crestar concludes in good faith that it is
required to take such action, but only after consultation with outside
counsel and only if such outside counsel concludes and advises the Board
that the failure to take such action would result in a substantial risk
that the Board of Directors would violate any fiduciary duties of the
Crestar Board to Crestar shareholders under applicable law, and (B) the
proposal regarding the Acquisition Transaction contains an offer of
consideration that is superior to the consideration set forth herein.
(d) Crestar and SunTrust shall use all commercially
reasonable efforts to hold the Crestar Meeting and the SunTrust Meeting on
the same date and as soon as practicable after the date hereof.
5.13 SECURITIES ACT; POOLING-OF-INTERESTS.
(a) Prior to the Effective Time, each of SunTrust and Crestar
shall identify to the other all persons who were, at the time of the
SunTrust Meeting or the Crestar Meeting, as the case may be, "affiliates"
of such party as that term is used in paragraphs (c) and (d) of Rule 145
under the Securities Act (including at a minimum, all those persons subject
to the reporting requirements of Rule 16(a) under the Exchange Act) and for
purposes of qualifying for "pooling-of-interests" accounting treatment (the
"Affiliates").
(b) Each of SunTrust and Crestar shall obtain a written
agreement in the form of Exhibit C and Exhibit D, respectively, from each
person who is identified as an Affiliate of such party pursuant to clause
(a) above. Each of SunTrust and Crestar shall deliver such written
agreements to the other party no later than 30 days prior to the Effective
Time.
5.14 STOCK EXCHANGE LISTINGS. SunTrust shall use all commercially
reasonable efforts to list on the New York Stock Exchange, upon official
notice of issuance, the SunTrust Common Stock to be issued pursuant to the
Merger.
5.15 SHAREHOLDER LITIGATION. Each of Crestar and SunTrust shall give
the other the reasonable opportunity to participate in the defense of any
shareholder litigation against Crestar or SunTrust, as applicable, and its
directors relating to the transactions contemplated by this Agreement.
5.16 POOLING-OF-INTERESTS AND TAX-FREE REORGANIZATION TREATMENT.
Neither SunTrust nor Crestar shall knowingly take or cause to be taken any
action, whether before or after the Effective Time, which would disqualify
the Merger as a "pooling of interests" for accounting purposes or as a
"reorganization" within the meaning of Section 368 of the Code.
5.17 LETTERS OF ACCOUNTANTS.
(a) SunTrust shall use all commercially reasonable efforts to
cause to be delivered to Crestar two letters from SunTrust's independent
accountants, one dated a date within two business days before the date on
which the Registration Statement shall become effective and one dated a
date within two business days before the Closing Date, each addressed to
Crestar, in form and substance reasonably satisfactory to Crestar and
customary in scope and substance for comfort letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement.
(b) SunTrust shall use all commercially reasonable efforts to
cause to be delivered to Crestar and Crestar's independent accountants two
letters from SunTrust's independent accountants addressed to Crestar and
SunTrust, one dated as of the date the Registration Statement is effective
and one dated as of the Closing Date, in each case stating that accounting
for the Merger as a pooling of interests under Opinion 16 of the Accounting
Principles Board and applicable Commission rules and regulations is
appropriate if the Merger is closed and consummated in accordance with this
Agreement.
(c) Crestar shall use all commercially reasonable efforts to
cause to be delivered to SunTrust two letters from Crestar's independent
accountants, one dated a date within two business days before the date on
which the Registration Statement shall become effective and one dated a
date within two business days before the Closing Date, each addressed to
SunTrust, in form and substance reasonably satisfactory to SunTrust and
customary in scope and substance for comfort letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement.
(d) Crestar shall use all commercially reasonable efforts to
cause to be delivered to SunTrust and SunTrust's independent accountants
two letters from Crestar's independent accountants addressed to SunTrust
and Crestar, one dated as of the date the Registration Statement is
effective and one dated as of the Closing Date, in each case stating that
accounting for the Merger as a pooling of interests under Opinion 16 of the
Accounting Principles Board and applicable Commission rules and regulations
is appropriate if the Merger is closed and consummated in accordance with
this Agreement.
5.18 EXPENSES. Except as otherwise provided in Section 8.2, each
party shall bear all expenses incurred by it in connection with this
Agreement and the transactions contemplated hereby, except that printing
expenses and commission filing and registration fees shall be shared
equally between Crestar and SunTrust.
5.19 ADVERSE ACTION. From the date hereof until the Effective Time,
except as expressly contemplated by this Agreement, neither party will,
without the written consent of the other party (which consent will not be
unreasonably withheld or delayed) knowingly take any action that would, or
would be reasonably likely to result in (a) any of its representations and
warranties set forth in the Agreement being or becoming untrue in any
material respect, (b) any of the conditions to the Merger set forth in
Article VII not being satisfied or (c) a material violation of any
provision of the Agreement except, in each case, as may be required by
applicable law.
5.20 STANDSTILL AGREEMENTS; CONFIDENTIALITY AGREEMENTS. During the
period from the date of this Agreement through the Effective Time, neither
Crestar nor SunTrust shall terminate, amend, modify or waive any provision
of any confidentiality or standstill agreement to which it or any of its
respective subsidiaries is a party (other than the Confidentiality
Agreement). During such period, Crestar or SunTrust, as the case may be,
shall enforce, to the fullest extent permitted under applicable law, the
provisions of any such agreement, including by obtaining injunctions to
prevent any breaches of such agreements and to enforce specifically the
terms and provisions thereof in any court having jurisdiction.
5.21 ISSUANCE OF TREASURY SHARES. SunTrust shall use all commercially
reasonable efforts to reissue the requisite number of shares of SunTrust
Common Stock held as treasury stock as of the date of this Agreement so
that the Merger will not fail to qualify for pooling of interests
accounting treatment by virtue of the number of shares of SunTrust Common
Stock held in SunTrust treasury.
5.22 REDEMPTION OF SECURITIES. Prior to the Effective Time, to the
extent not prohibited by the terms of such securities, Crestar shall redeem
or tender for, or cause to be redeemed or tendered for, such outstanding
securities of Crestar (other than Crestar Common Stock) or any Crestar
Subsidiary as SunTrust may reasonably request.
ARTICLE VI
CLOSING MATTERS
6.1 THE CLOSING. Subject to satisfaction or waiver of all conditions
precedent set forth in Article VII of this Agreement, the closing of the
Merger ("Closing") shall take place at the offices of King & Spalding, 1185
Avenue of the Americas, New York, New York, or at such other location
mutually agreeable to the parties and on a date ("Closing Date") which is
on the third business day after the later of:
(a) the first date on which the Merger may be consummated in
accordance with the approvals of any Governmental Entities,
(b) the date the required approvals of Crestar's shareholders
and SunTrust's shareholders have been obtained, or
(c) such other date to which the parties agree in writing.
If all conditions are determined to be satisfied in all material
respects (or are duly waived) at the Closing, the Closing shall be
consummated by the making of all necessary filing required by all
Governmental Entities.
6.2 DOCUMENTS AND CERTIFICATES. SunTrust and Crestar shall, on or
prior to Closing, execute and deliver all such instruments, documents or
certificates as may be necessary or advisable, on the advice of counsel,
for the consummation at the Closing of the transactions contemplated by
this Agreement to occur as soon as practicable.
ARTICLE VII
CONDITIONS
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) The Merger shall have been approved and adopted by the
requisite vote of the holders of Crestar Common Stock and the issuance of
SunTrust Common Stock shall have been approved by the requisite vote of the
holders of SunTrust Common Stock.
(b) The SunTrust Common Stock issuable in the Merger shall
have been authorized for listing on the New York Stock Exchange, upon
official notice
of issuance.
(c) All authorizations, consents, orders or approvals of, and
all expirations of waiting periods imposed by, any Governmental Entity
(collectively, "Consents") which are necessary for the consummation of the
Merger (other than immaterial Consents, the failure to obtain which would
not be materially adverse to the combined businesses of SunTrust, Crestar,
SunTrust's subsidiaries and the Crestar Subsidiaries taken as a whole)
shall have been obtained or shall have occurred and shall be in full force
and effect at the Effective Time; provided, however, that none of the
preceding Consents shall be deemed obtained if it shall have imposed any
condition or requirement which would so materially and adversely impact the
economic or business benefits to SunTrust or Crestar of the transactions
contemplated by this Agreement that, had such condition or requirement been
known, such party would not, in its reasonable judgment, have entered into
this Agreement.
(d) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act. No stop order
suspending the effectiveness of the Registration Statement shall have been
issued by the Commission and remain in effect.
(e) SunTrust and Crestar shall have received a letter, dated
the date of the Closing, from Arthur Andersen LLP or its successor,
SunTrust's independent accountants, and KPMG Peat Marwick LLP or its
successor, Crestar's independent accountants, each to the effect that, for
financial reporting purposes, the Merger qualifies for pooling-of-interests
accounting treatment under generally accepted accounting principles if
consummated in accordance with this Agreement.
(f) No temporary restraining order, preliminary or permanent
injunction or other order by any federal or state court in the United
States which prevents the consummation of the Merger shall have been issued
and remain in effect.
(g) King & Spalding, counsel to SunTrust, shall have
delivered to SunTrust their opinion, dated on or about the date that is two
business days prior to the date the Proxy Statement is first mailed to the
shareholders of Crestar and the shareholders of SunTrust, and reaffirmed as
of the Closing Date, substantially to the effect that, on the basis of
facts, representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at such time, the Merger will
be treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code. In rendering such opinion, counsel
may require and rely upon representations contained in certificates of
officers of Crestar, SunTrust, and others, reasonably satisfactory in form
and substance to such counsel.
7.2 CONDITIONS TO OBLIGATION OF CRESTAR TO EFFECT THE MERGER. The
obligation of Crestar to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the additional
following conditions:
(a) SunTrust and Sub shall have performed in all material
respects all covenants contained in this Agreement required to be performed
by each of them at or prior to the Effective Time.
(b) The representations and warranties of SunTrust contained
in Article III shall be true and correct when made and shall be true and
correct as of the Effective Time as if made at and as of such time, except
as expressly contemplated or permitted by this Agreement, except for
representations and warranties relating to a time or times other than the
Effective Time which were or will be true and correct at such time or times
and except where the failure or failures of such representations and
warranties to be so true and correct, individually or in the aggregate,
does not result or would not result in a Material Adverse Effect.
(c) SunTrust shall have furnished Crestar a certificate dated
the date of the Closing, signed by the Chief Executive Officer and Chief
Financial Officer of SunTrust that the conditions set forth in Sections
7.2(a) and 7.2(b) have been satisfied.
(d) Skadden, Arps, Slate, Meagher & Flom LLP, counsel to
Crestar, shall have delivered to Crestar their opinion, dated on or about
the date that is two business days prior to the date the Proxy Statement is
first mailed to the shareholders of Crestar and the shareholders of
SunTrust, and reaffirmed as of the Closing Date, substantially to the
effect that, on the basis of facts, representations and assumptions set
forth in such opinion which are consistent with the state of facts existing
at such time, the Merger will be treated for federal income tax purposes as
a reorganization within the meaning of Section 368(a) of the Code. In
rendering such opinion, counsel may require and rely upon representations
contained in certificates of officers of Crestar, SunTrust, and others,
reasonably satisfactory in form and substance to such counsel.
7.3 CONDITIONS TO OBLIGATION OF SUNTRUST TO EFFECT THE MERGER. The
obligation of SunTrust to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the additional
following conditions:
(a) Crestar shall have performed in all material respects its
covenants contained in this Agreement required to be performed at or prior
to the Effective Time.
(b) The representations and warranties of Crestar contained
in Article IV shall be true and correct when made and shall be true and
correct as of the Effective Time as if made on and as of such time, except
as expressly contemplated or permitted by this Agreement, except for
representations and warranties relating to a time or times other than the
Effective Time which were or will be true and correct at such time or times
and except where the failure or failures of such representations and
warranties to be so true and correct, individually or in the aggregate,
does not result or would not result in a Material Adverse Effect.
(c) Crestar shall have furnished SunTrust a certificate dated
the date of the Closing signed by the Chief Executive Officer and Chief
Financial Officer of Crestar that the conditions set forth in Sections
7.3(a) and 7.3(b) have been satisfied.
ARTICLE VIII
MISCELLANEOUS
8.1 TERMINATION. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval by the shareholders
of both Crestar and SunTrust:
(a) by mutual consent of the Board of Directors of SunTrust
and the Board of Directors of Crestar set forth in a written instrument;
(b) by either SunTrust or Crestar if (i) the Merger shall not
have been consummated on or before March 31, 1999; provided, however, that
the right to terminate this Agreement pursuant to this Section 8.1(b)(i)
shall not be available to any party that is in material breach of its
obligations under this Agreement or whose failure to fulfill any of its
obligations contained in this Agreement has been the cause of, or resulted
in, the failure of the Merger to have occurred on or prior to the aforesaid
date or (ii) any court or other Governmental Entity having jurisdiction
over a party hereto shall have issued an order enjoining, restraining or
otherwise prohibiting the transactions contemplated by this Agreement and
such order, decree, ruling or other action shall have become final and
nonappealable;
(c) by either SunTrust or Crestar if this Agreement is not
approved at the Crestar Meeting or the issuance of SunTrust Common Stock is
not approved at the SunTrust Meeting (provided the terminating party is not
otherwise in material breach of its obligations under this Agreement);
(d) by SunTrust if the Board of Directors of Crestar (A)
withdraws, or modifies in a manner adverse to SunTrust, the approval or
recommendation by such Board of Directors of this Agreement or the Merger
or (B) approves, recommends or causes Crestar to enter into any agreement
with respect to any Acquisition Transaction;
(e) by Crestar if any of the conditions specified in Sections
7.1 and 7.2 have not been met or waived by Crestar at such time as such
condition can no longer be satisfied;
(f) by SunTrust if any of the conditions specified in
Sections 7.1 and 7.3 have not been met or waived by SunTrust at such time
as such condition can no longer be satisfied;
(g) by Crestar in the event of a breach by SunTrust of any
representation or warranty, or any covenant or other agreement (in any
material respect) contained in this Agreement which breach is not cured
within 30 days after written notice thereof to SunTrust by Crestar;
provided, however, that Crestar shall not have the right to terminate this
Agreement pursuant to this Section 8.1(g) with respect to a breach of a
representation or warranty unless the breach of representation or warranty,
together with all other such breaches, would entitle Crestar not to
consummate the transactions contemplated hereby under Section 7.2; or
(h) by SunTrust in the event of a breach by Crestar of any
representation or warranty, or any covenant or other agreement (in any
material respect) contained in this Agreement which breach is not cured
within 30 days after written notice thereof to Crestar by SunTrust;
provided, however, that SunTrust shall not have the right to terminate this
Agreement pursuant to this Section 8.1(h) with respect to a breach of a
representation or warranty unless the breach of representation or warranty,
together with all other such breaches, would entitle SunTrust not to
consummate the transactions contemplated hereby under Section 7.3.
8.2 EXPENSE REIMBURSEMENT.
(a) In order to induce SunTrust to enter into this Agreement
and to reimburse and compensate SunTrust for its time, expenses and lost
opportunity costs of pursuing the Merger and seeking to consummate the
transactions contemplated by this Agreement, Crestar will make a cash
payment to SunTrust of an amount equal to all out-of-pocket expenses and
fees incurred by SunTrust, including without limitation fees and expenses
payable to all legal, accounting, financial and other professional
advisors, relating to the Merger or the transactions contemplated by this
Agreement if:
(i) SunTrust terminates this Agreement pursuant to Section
8.1(d) or Section 8.1(h);
(ii) Crestar terminates this Agreement pursuant to Section
8.1(c) because this Agreement was not approved at the Crestar Meeting; or
(iii) SunTrust terminates this Agreement pursuant to Section
8.1(c) because this Agreement was not approved at the Crestar Meeting.
(b) In order to induce Crestar to enter into this Agreement
and to reimburse and compensate Crestar for its time, expenses and lost
opportunity costs of pursuing the Merger and seeking to consummate the
transactions contemplated by this Agreement, SunTrust will make a cash
payment to Crestar of an amount equal to all out-of-pocket expenses and
fees incurred by Crestar, including without limitation fees and expenses
payable to all legal, accounting, financial and other professional
advisors, relating to the Merger or the transactions contemplated by this
Agreement if:
(i) Crestar terminates this Agreement pursuant to
Section 8.1(g);
(ii) SunTrust terminates this Agreement pursuant to Section
8.1(c) because the issuance of SunTrust Common Stock was not approved at
the SunTrust Meeting; or
(iii) Crestar terminates this Agreement pursuant to Section
8.1(c) because the issuance of SunTrust Common Stock was not approved at
the SunTrust Meeting.
(c) Any payment required by this Section 8.2 must be paid by
Crestar or SunTrust, as applicable, to the other party (by wire transfer of
immediately available funds to an account designated by such party) within
one (1) business day after demand by such party; provided, however, that if
such payment is required pursuant to Section 8.2(a)(ii) or Section
8.2(b)(ii), such payment must be made by Crestar or SunTrust, as
applicable, concurrently with, and as a condition to, such termination of
this Agreement.
(d) The parties agree that the agreements contained in this
Section 8.2 are an integral part of the transactions contemplated by this
Agreement. The parties acknowledge and agree that damages upon termination
of the Agreement in the circumstances referred to in Section 8.2(a) and
Section 8.2(b) are not reasonably ascertainable and the payment pursuant to
this Section 8.2 constitutes liquidated damages and not a penalty. The
payment pursuant to Section 8.2 is intended to provide reimbursement for
out-of-pocket expenses and not damages, for termination of this Agreement
under the circumstances referred to therein, and such payments shall not
relieve any party from liability for the willful breach of any of its
representations, warranties, covenants or agreements contained in this
Agreement and the nonbreaching party may pursue any remedies available to
it at law or in equity, including recovery of such damages to which it may
be entitled. Notwithstanding anything to the contrary contained in this
Section 8.2, in addition to any amounts paid or payable pursuant to Section
8.2(a) or Section 8.2(b), Crestar or SunTrust, as applicable, shall pay the
costs and expenses (including legal fees and expenses) in connection with
any action, including the filing of any lawsuit or other legal action,
taken by the other party to collect payment hereunder, together with
interest on the unpaid amount at the publicly announced prime rate of
SunTrust from the date such amount was required to be paid.
8.3 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. The
representations, warranties, covenants and agreements in this Agreement
will terminate at the Effective Time or the earlier termination of this
Agreement pursuant to Section 7.1, as the case may be; provided, however,
that if the Merger is consummated, Sections 1.6, 2.1 through 2.4, 5.6, 5.9
and this Section 8.3 will survive the Effective Time to the extent
contemplated by such Sections; provided, further, that Section 5.18, the
last sentence of Section 5.6 and all of Section 8.2 will in all events
survive any termination of this Agreement.
8.4 WAIVER AND AMENDMENT. Any provision of this Agreement may be
waived at any time by the party which is, or whose shareholders are,
entitled to the benefits thereof, and this Agreement may be amended or
supplemented at any time, provided that no amendment will be made after any
shareholder approval of the Merger which reduces or changes the form of the
Merger Consideration without further shareholder approval. No such waiver,
amendment or supplement will be effective unless in a writing which makes
express reference to this Section 8.4 and is signed by the party or parties
sought to be bound thereby.
8.5 ENTIRE AGREEMENT. This Agreement together with the Crestar Option
Agreement, the SunTrust Option Agreement and the Confidentiality Agreement,
contain the entire agreement among SunTrust and Crestar with respect to the
Merger and the other transactions contemplated hereby and thereby, and
supersedes all prior agreements among the parties with respect to such
matters.
8.6 APPLICABLE LAW. This Agreement will be governed by and
construed in accordance with the laws of the State of Georgia.
8.7 CERTAIN DEFINITIONS; HEADLINES. (a) For purposes of this
Agreement, the term:
(i) "affiliate", "associate" and "significant subsidiary"
shall have the respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the
Exchange Act, as in effect on the date hereof.
(ii) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management or policies of a person, whether through the ownership of stock,
as trustee or executor, by contract or credit arrangement or otherwise;
(iii) "group" shall have the meaning ascribed to such term in
Section 13(d) of the Exchange Act, as in effect on the date hereof.
(iv) "Market Price" means the average of the per share closing
prices on the New York Stock Exchange of SunTrust Common Stock for the 20
consecutive trading days ending at the end of the third trading day
immediately preceding the Effective Time.
(v) "Material Adverse Effect" means an event, change or
occurrence which has a material negative impact on the financial condition,
businesses or results of operations of Crestar and its subsidiaries, taken
as a whole, or SunTrust and its subsidiaries, taken as a whole, as the case
may be, or the ability of Crestar or SunTrust, as the case may be, to
consummate the transactions contemplated hereby.
(vi)"person" means an individual, corporation, partnership,
association, trust or unincorporated organization; and
(vii) "subsidiary" of Crestar, SunTrust or any other person
means, except where the context otherwise requires, any corporation,
partnership, trust or similar association of which Crestar, SunTrust or any
other person, as the case may be (either alone or through or together with
any other subsidiary), owns, directly or indirectly, more than 50% of the
stock or other equity interests, the holders of which are generally
entitled to vote for the election of the board of directors or other
governing body of such corporation.
(b) The descriptive headings contained in this Agreement are
for convenience and reference only and will not affect in any way the
meaning or interpretation of this Agreement.
(c) Unless the context of this Agreement expressly indicates
otherwise, (i) any singular term in this Agreement will include the plural
and any plural term will include the singular and (ii) the term section or
schedule will mean a section or schedule of or to this Agreement.
8.8 NOTICES. All notices, consents, requests, demands and other
communications hereunder will be in writing and will be deemed to have been
duly given or delivered if delivered personally, telexed with receipt
acknowledged, mailed by registered or certified mail return receipt
requested, sent by facsimile with confirmation of receipt, or delivered by
a recognized commercial courier addressed as follows:
If to SunTrust to:
SunTrust Banks, Inc.
303 Peachtree Street, N.E
Atlanta, Georgia 30308
Attention: John W. Spiegel
Executive Vice President and
Chief Financial Officer
Telephone: (404) 588-7495
Telecopy: (404) 581-1664
With a copy to:
SunTrust Banks, Inc.
303 Peachtree Street, N.E
Atlanta, Georgia 30308
Attention: Raymond D. Fortin
General Counsel
Telephone: (404) 588-7165
Telecopy: (404) 581-1664
And an additional copy:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303
Attention: C. William Baxley
Telephone: (404) 572-4600
Telecopy: (404) 572-5100
If to Crestar to:
Crestar Financial Corporation
919 East Main Street
Richmond, Virginia 23261-6665
Attention: Linda G. Rigsby
Senior Vice President and
Corporate Secretary
Telephone: (804) 782-7738
Telecopy: (804) 782-7244
With a copy to:
Hunton &Williams
Riverfront Plaza, East Towers
951 East Byrd Street
Richmond, Virginia 23219-4074
Attention: Lathan M. Ewers, Jr.
Telephone: (804) 788-8200
Facsimile: (804) 788-8218
and an additional copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: William S. Rubenstein
Telephone: (212) 735-3000
Facsimile: (212) 735-2000
or to such other address as any party may have furnished to the other
parties in writing in accordance with this Section 8.8.
8.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original but all of
which together will constitute but one agreement.
8.10 PARTIES IN INTEREST; ASSIGNMENT. Except for Section 2.2 (which
is intended to be for the benefit of the holders of Outstanding Options
under the Crestar Option Plans to the extent contemplated thereby and their
beneficiaries, and may be enforced by such persons) and Section 5.9 hereof
(which are intended to be for the benefit of directors and officers to the
extent contemplated thereby and their beneficiaries, and may be enforced by
such persons), this Agreement is not intended to nor will it confer upon
any other person (other than the parties hereto) any rights or remedies.
Without the prior written consent of the other parties to this Agreement,
neither SunTrust, Crestar nor Sub shall assign any rights or delegate any
obligations under this Agreement. Any such purported assignment or
delegation made without prior consent of the other parties hereto shall be
null and void.
8.11 SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or
public policy, all other terms and provisions of this Agreement will
nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner adverse to any party hereto. Upon any such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto will negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the transactions
contemplated by this Agreement are consummated to the extent possible.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized representatives to execute this Agreement as of the date first
above written.
SUNTRUST BANKS, INC.
By: /s/ L. Phillip Humann
-------------------------------
L. Phillip Humann
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
SMR CORPORATION
By: /s/ L. Phillip Humann
-------------------------
L. Phillip Humann
President
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 20, 1998, between SUNTRUST
BANKS, INC., a Georgia corporation ("Grantee"), and CRESTAR FINANCIAL
CORPORATION, a Virginia corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, as a condition to, and contemporaneous with the execution of
an Agreement and Plan of Merger dated July 20, 1998 ("Agreement") and in
consideration therefor, the parties are entering into this Stock Option
Agreement pursuant to which Issuer has agreed to grant Grantee the Option
(as hereinafter defined):
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Agreement, the parties
hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to
22,338,161 fully paid and nonassessable shares of common stock, par value
$5.00 ("Common Stock"), of Issuer at a price of $62.875 per share (such
price, as adjusted if applicable, the "Option Price"); provided however
that in no event shall the number of shares of Common Stock for which this
Option is exercisable exceed 19.9% of the Issuer's issued and outstanding
common shares without giving effect to any shares subject to or issued
pursuant to the Option. The number of shares of Common Stock that may be
received upon the exercise of the Option and the Option Price are subject
to adjustment as herein set forth.
(b) If any additional shares of Common Stock are issued or otherwise
become outstanding after the date of this Stock Option Agreement (other
than pursuant to this Stock Option Agreement), the number of shares of
Common Stock subject to the Option shall be increased so that, after such
issuance, such number equals 19.9% of the number of shares of Common Stock
then issued and outstanding without giving effect to any shares subject to
or issued pursuant to the Option. Nothing contained in this Section 1(b) or
elsewhere in this Stock Option Agreement shall be deemed to authorize
Issuer or Grantee to breach any provision of the Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option,
in whole or part, if, but only if, both an Initial Triggering Event (as
hereinafter defined) and a Subsequent Triggering Event (as hereinafter
defined) shall have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined), provided that the Holder shall
have sent the written notice of such exercise (as provided in subsection
(e) of this Section 2) within 90 days following such Subsequent Triggering
Event (or such later date as provided in Section 10). Each of the following
shall be an "Exercise Termination Event": (i) the Effective Time of the
Merger; (ii) termination of the Agreement in accordance with the provisions
thereof (other than a termination resulting from a willful breach by Issuer
of a provision of the Agreement) if such termination occurs prior to the
occurrence of an Initial Triggering Event; or (iii) the passage of eighteen
months after termination of the Agreement if such termination follows the
occurrence of an Initial Triggering Event or is a termination by Grantee
pursuant to Section 8.1(h) thereof resulting from a willful breach by
Issuer of a provision of the Agreement. The term "Holder" shall mean the
holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any of its subsidiaries (each an "Issuer
Subsidiary"), without having received Grantee's prior written consent,
shall have entered into an agreement to engage in, an Acquisition
Transaction (as hereinafter defined) with any person (the term "person" for
purposes of this Stock Option Agreement having the meaning assigned thereto
in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934
(the "1934 Act"), and the rules and regulations thereunder) other than
Grantee or any of its subsidiaries (each a "Grantee Subsidiary") or the
board of directors of Issuer shall have recommended that the shareholders
of Issuer approve or accept any Acquisition Transaction other than as
contemplated by the Agreement. For purposes of this Stock Option Agreement,
"Acquisition Transaction" shall mean (a) a merger, consolidation or share
exchange, or any similar transaction, involving Issuer or any Issuer
Subsidiary, provided, however, that in no event shall (i) any merger,
consolidation or similar transaction involving only the Issuer and one or
more of the Issuer Subsidiaries, or involving only any two or more of such
Issuer Subsidiaries, or (ii) any merger, consolidation or similar
transaction as to which the shareholders of Issuer immediately prior
thereto own in the aggregate at least 75% of the common stock of the
surviving corporation or its publicly-held parent corporation immediately
following consummation thereof be deemed to be an Acquisition Transaction,
provided that any such transaction is not entered into in violation of the
terms of the Agreement, (b) a purchase, lease or other acquisition of
assets of the Issuer or any Issuer Subsidiary (other than any purchase,
lease or other acquisition not involving all or a substantial portion of
the assets of the Issuer and the Issuer Subsidiaries taken as a whole),
provided that any such transaction is not entered into in violation of the
terms of the Agreement, (c) a purchase or other acquisition (including by
way of merger, consolidation, share exchange or otherwise) of securities
representing 10% or more of the voting power of Issuer or any Issuer
Subsidiary or (d) any substantially similar transaction;.
(ii) The board of directors of Issuer does not recommend that the
shareholders of Issuer approve the Agreement or publicly withdraws or
modifies, or publicly announces its intention to withdraw or modify, in any
manner adverse to the Grantee, its recommendation that its shareholders
approve the Agreement;
(iii) Any person other than Grantee or any Grantee Subsidiary or
any Issuer Subsidiary acting in a fiduciary capacity shall have acquired
beneficial ownership or the right to acquire beneficial ownership of 10% or
more of the outstanding shares of Common Stock (the term "beneficial
ownership" for purposes of this Stock Option Agreement having the meaning
assigned thereto in Section 13(d) of the 1934 Act, and the rules and
regulations thereunder);
(iv) Any person other than Grantee or any Grantee Subsidiary
shall have made a bona fide proposal to Issuer or its shareholders by
public announcement or written communication that is or becomes the subject
of public disclosure to engage in an Acquisition Transaction;
(v) After a proposal is made by a third party to Issuer or its
shareholders to engage in an Acquisition Transaction, Issuer shall have
breached any covenant or obligation contained in the Agreement and such
breach (x) would entitle Grantee to terminate the Agreement and (y) shall
not have been cured prior to the Notice Date (as defined below);
(vi) Any person other than Grantee or any Grantee Subsidiary,
other than in connection with a transaction to which Grantee has given its
prior written consent, shall have filed an application or notice with The
Board of Governors of the Federal Reserve System (the "FRB") or any other
federal or state bank regulatory authority, which application or notice has
been accepted for processing, for approval to engage in an Acquisition
Transaction;
(vii) The shareholders of Issuer shall have voted and failed to
approve the Agreement and the Merger at a meeting which has been held for
that purpose or any adjournment or postponement thereof, or such meeting
shall not have been held in violation of the Merger Agreement or shall have
been canceled prior to termination of the Merger Agreement if, prior to
such meeting (or if such meeting shall not have been held or shall have
been canceled, prior to such termination), it shall have been publicly
announced that any person (other than Grantee or any Grantee Subsidiary)
shall have made, or disclosed an intention to make, a proposal to engage in
an Acquisition Transaction; or
(viii) Any person other than Grantee or any Grantee Subsidiary
shall have filed with the SEC a registration statement or tender offer
materials with respect to a potential exchange or tender offer that would
constitute an Acquisition Transaction;
(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person, other than any Grantee
Subsidiary or any Issuer Subsidiary acting in a fiduciary capacity, of
beneficial ownership of 20% or more of the then outstanding Common Stock;
or
(ii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection 2(b), except that the percentage referred to in
clause (c) shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) If the Holder is entitled to and wishes to exercise the Option,
it shall send to Issuer 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 from the
Notice Date for the closing of such purchase (the "Closing Date"); provided
that if prior notification to or approval of the FRB or any other
governmental authority or regulatory or administrative agency or
commission, domestic or foreign (a "Governmental Entity"), is required in
connection with such purchase, the Holder 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 from the later of (x) the date on which any required notification
periods have expired or been terminated and (y) the date on which such
approvals have been obtained and any requisite waiting period or periods
shall have passed. Any exercise of the Option shall be deemed to occur on
the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2,
the Holder shall pay to Issuer the aggregate purchase price for the shares
of Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by wire transfer to a bank account designated
by Issuer, provided that failure or refusal of Issuer to designate such a
bank account shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer
shall deliver to the Holder a certificate or certificates representing the
number of shares of Common Stock purchased by the Holder and, if the Option
should be exercised in part only, a new Option evidencing the rights of the
Holder thereof to purchase the balance of the shares purchasable hereunder,
and the Holder shall deliver to Issuer a copy of this Stock Option
Agreement and a letter agreeing that the Holder will not offer to sell or
otherwise dispose of such shares in violation of applicable law or the
provisions of this Stock Option Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder
may be endorsed with a restrictive legend that shall read substantially as
follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement between the registered holder
hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on
file at the principal office of Issuer and will be provided to the
holder hereof without charge upon receipt by Issuer of a written
request therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933, as amended (the "1933 Act"), in
the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the Holder shall have delivered to Issuer a copy
of a letter from the staff of the Securities and Exchange Commission (the
"SEC"), or an opinion of counsel, in form and substance satisfactory to
Issuer, to the effect that such legend is not required for purposes of the
1933 Act; (ii) the reference to the provisions of this Stock Option
Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Stock Option
Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required
by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2
and the tender of the applicable purchase price in immediately available
funds, the Holder shall be deemed to be the holder of record of the shares
of Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of Issuer shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually
delivered to the Holder. Issuer shall pay all expenses, and any and all
United States Federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of the Holder or its
assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock;
(ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other
voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer; (iii) promptly to take all action as may from time to
time be required (including (A) complying with all premerger notification,
reporting and waiting period requirements specified in 15 U.S.C. Section
l8a and regulations promulgated thereunder and (B) in the event, under the
Bank Holding Company Act of 1956, as amended, or the Change in Bank Control
Act of 1978, as amended, or any state banking law, prior approval of or
notice to the FRB or to any other Governmental Entity is necessary before
the Option may be exercised, cooperating fully with the Holder in preparing
such applications or notices and providing such information to each such
Governmental Entity as they may require) in order to permit the Holder to
exercise the Option and Issuer duly and effectively to issue shares of
Common Stock pursuant hereto; and (iv) promptly to take all action provided
herein to protect the rights of the Holder against dilution.
4. This Stock Option Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Stock Option Agreement at the principal
office of Issuer, for other agreements providing for Options of different
denominations entitling the holder thereof to purchase, on the same terms
and subject to the same conditions as are set forth herein, in the
aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Stock Option Agreement" and "Option" as used herein include any
Stock Option Agreements and related options for which this Stock Option
Agreement (and the Option granted hereby) may be exchanged. Upon receipt
by Issuer of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Stock Option Agreement, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification,
and upon surrender and cancellation of this Stock Option Agreement, if
mutilated, Issuer will execute and deliver a new Stock Option Agreement of
like tenor and date. Any such new Stock Option Agreement executed and
delivered shall constitute an additional contractual obligation on the part
of Issuer, whether or not the Stock Option Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section
1 of this Stock Option Agreement, the number of shares of Common Stock
purchasable upon the exercise of the Option shall be subject to adjustment
from time to time as provided in this Section 5.
(a) In the event of any change in Common Stock by reason of
stock dividends, split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares or the like, the type and
number of shares of Common Stock purchasable upon exercise hereof shall be
appropriately adjusted.
(b) Whenever the number of shares of Common Stock purchasable
upon exercise hereof is adjusted as provided in this Section 5, the Option
Price shall be adjusted by multiplying the Option Price by a fraction, the
numerator of which shall be equal to the number of shares of Common Stock
purchasable prior to the adjustment and the denominator of which shall be
equal to the number of shares of Common Stock purchasable after the
adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of
Grantee delivered within 90 days (or such later date as may be provided
pursuant to Section 10) of such Subsequent Triggering Event (whether on its
own behalf or on behalf of any subsequent holder of this Option (or part
thereof) or any of the shares of Common Stock issued pursuant hereto),
promptly prepare, file and keep current a shelf registration statement
under the 1933 Act covering any shares issued and issuable pursuant to this
Option and shall use its reasonable best efforts to cause such registration
statement to become effective and remain current in order to permit the
sale or other disposition of any shares of Common Stock issued upon total
or partial exercise of this Option ("Option Shares") in accordance with any
plan of disposition requested by Grantee. Issuer will use its reasonable
best efforts to cause such registration statement first to become effective
and then to remain effective for such period not in excess of 180 days from
the day such registration statement first becomes effective or such shorter
time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such
registrations. If requested by any such Holder in connection with such
registration, Issuer shall 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. The
foregoing notwithstanding, if, at the time of any request by Grantee for
registration of Option Shares as provided above, Issuer is in the process
of registration with respect to an underwritten public offering of shares
of Common Stock, and if in the good faith judgment of the managing
underwriter or managing underwriters, or, if none, the sole underwriter or
underwriters, of such offering the inclusion of the Holder's Option or
Option Shares would interfere with the successful marketing of the shares
of Common Stock offered by Issuer, the number of Option Shares otherwise to
be covered in the registration statement contemplated hereby may be
reduced; provided, however, that after any such required reduction the
number of Option Shares to be included in such offering for the account of
the Holder shall constitute at least 25% of the total number of shares to
be sold by the Holder and Issuer in the aggregate; provided further,
however, that if such reduction occurs, then the Issuer shall file a
registration statement for the balance as promptly as practical and no
reduction shall thereafter occur. Each such Holder shall provide all
information reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder. Upon receiving any request
under this Section 6 from any Holder, Issuer agrees to send a copy thereof
to any other person known to Issuer to be entitled to registration rights
under this Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies.
7. (a) At any time after the occurrence of a Repurchase Event (as
defined below) (i) at the request of the Holder, delivered prior to an
Exercise Termination Event (or such later period as may be provided
pursuant to Section 10), Issuer (or any successor thereto) shall repurchase
the Option from the Holder at a price (the "Option Repurchase Price") equal
to the amount by which (A) the market/offer price (as defined below)
exceeds (B) the Option Price, multiplied by the number of shares for which
this Option may then be exercised and (ii) at the request of the owner of
Option Shares from time to time (the "Owner"), delivered prior to an
Exercise Termination Event (or such later period as may be provided
pursuant to Section 10), Issuer (or any successor thereto) shall repurchase
such number of the Option Shares from the Owner as the Owner shall
designate at a price (the "Option Share Repurchase Price") equal to the
market/ offer price multiplied by the number of Option Shares so
designated. The term "market/offer price" shall mean the highest of (i)
the price per share of Common Stock at which a tender offer or exchange
offer therefor has been made after the date hereof, (ii) the price per
share of Common Stock to be paid by any third party pursuant to an
agreement with Issuer, (iii) the highest closing price for shares of Common
Stock within the six-month period immediately preceding the date the Holder
gives notice of the required repurchase of this Option or the Owner gives
notice of the required repurchase of Option Shares, as the case may be, or
(iv) in the event of a sale of all or substantially all of Issuer's assets,
the sum of the price paid in such sale for such assets and the current
market value of the remaining assets of Issuer as determined by a
nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, divided by the number of shares of Common Stock
of Issuer outstanding at the time of such sale. In determining the
market/offer price, the value of consideration other than cash shall be
determined by a nationally recognized investment banking firm selected by
the Holder or Owner, as the case may be, and reasonably acceptable to the
Issuer, whose determination shall be conclusive and binding on all parties.
(b) The Holder or the Owner, as the case may be, may exercise its
right to require Issuer to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at
its principal office, a copy of this Stock Option Agreement or certificates
for Option Shares, as applicable, accompanied by a written notice or
notices stating that the Holder or the Owner, as the case may be, elects to
require Issuer to repurchase this Option and/or the Option Shares in
accordance with the provisions of this Section 7. As promptly as
practicable, and in any event within five business days after the surrender
of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto, Issuer shall deliver or
cause to be delivered to the Holder the Option Repurchase Price and/or to
the Owner the Option Share Repurchase Price therefor or the portion thereof
that Issuer is not then prohibited under applicable law and regulation from
so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing
the Option and/or the Option Shares in full, Issuer shall immediately so
notify the Holder and/or the Owner and thereafter deliver or cause to be
delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the Option
Share Repurchase Price, respectively, that it is no longer prohibited from
delivering, within five business days after the date on which Issuer is no
longer so prohibited; provided, however, that if Issuer at any time after
delivery of a notice of repurchase pursuant to subsection (b) of this
Section 7 is prohibited under applicable law or regulation, or as a
consequence of administrative policy, from delivering to the Holder and/or
the Owner, as appropriate, the Option Repurchase Price and the Option Share
Repurchase Price, respectively, in full (and Issuer hereby undertakes to
use its best efforts to obtain all required regulatory and legal approvals
and to file any required notices as promptly as practicable in order to
accomplish such repurchase), the Holder or Owner may revoke its notice of
repurchase of the Option or the Option Shares either in whole or to the
extent of the prohibition, whereupon, in the latter case, Issuer shall
promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Purchase Price or the Option Share Repurchase Price
that Issuer is not prohibited from delivering; and (ii) deliver, as
appropriate, either (A) to the Holder, a new Stock Option Agreement
evidencing the right of the Holder to purchase that number of shares of
Common Stock obtained by multiplying the number of shares of Common Stock
for which the surrendered Stock Option Agreement was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator
of which is the Option Repurchase Price less the portion thereof
theretofore delivered to the Holder and the denominator of which is the
Option Repurchase Price, or (B) to the Owner, a certificate for the Option
Shares it is then so prohibited from repurchasing.
(d) For purposes of this Section 7, a "Repurchase Event" shall be
deemed to have occurred upon the occurrence of any of the following events
or transactions after the date hereof:
(i) the acquisition by any person (other than Grantee or any
Grantee Subsidiary) of beneficial ownership of 50% or more of the then
outstanding Common Stock; or
(ii) the consummation of any Acquisition Transaction described
in Section 2(b) (i) hereof, except that the percentage referred to in
clause (z) shall be 50%.
8. (a) If prior to an Exercise Termination Event, Issuer shall enter
into an agreement (i) to consolidate or merge with any person, other than
Grantee or one of its subsidiaries, and shall not be the continuing or
surviving corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or one of its subsidiaries, to merge into Issuer
and Issuer shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of Common Stock
shall be changed into or exchanged for stock or other securities of any
other person or cash or any other property or the then outstanding shares
of Common Stock shall after such merger represent less than 50% of the
outstanding shares and share equivalents of the merged company, or (iii) to
sell or otherwise transfer all or substantially all of its assets to any
person, other than Grantee or one of its subsidiaries, then, and in each
such case, the agreement governing such transaction shall make proper
provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be
converted into, or exchanged for, an option (the "Substitute Option"), at
the election of the Holder, of either (x) the Acquiring Corporation (as
hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other
than Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
surviving person, and (iii) the transferee of all or substantially all of
Issuer's assets.
(2) "Substitute Common Stock" shall mean the common stock to be
issued by the issuer of the Substitute Option upon exercise of the
Substitute Option.
(3) "Assigned Value" shall mean the market/offer price, as
defined in Section 7.
(4) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year immediately preceding
the consolidation, merger or sale in question, but in no event higher than
the closing price of the shares of Substitute Common Stock on the day
preceding such consolidation, merger or sale; provided, that if Issuer is
the issuer of the Substitute Option, the Average Price shall be computed
with respect to a share of common stock issued by the person merging into
Issuer or by any company which controls or is controlled by such person, as
the Holder may elect.
(c) The Substitute Option shall have the same terms as the
Option, provided, that if the terms of the Substitute Option cannot, for
legal reasons, be the same as the Option, such terms shall be as similar as
possible and in no event less advantageous to the Holder. The issuer of the
Substitute Option shall also enter into an agreement with the then Holder
or Holders of the Substitute Option in substantially the same form as this
Stock Option Agreement, which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option is
then exercisable, divided by the Average Price. The exercise price of the
Substitute Option per share of Substitute Common Stock shall then be equal
to the Option Price multiplied by a fraction, the numerator of which shall
be the number of shares of Common Stock for which the Option is then
exercisable and the denominator of which shall be the number of shares of
Substitute Common Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for a number of shares that is
more than 19.9% of the shares of Substitute Common Stock outstanding prior
to exercise of the Substitute Option. If the Substitute Option would be
exercisable for more than 19.9% of the shares of Substitute Common Stock
outstanding prior to exercise but for this clause (e), the issuer of the
Substitute Option (the "Substitute Option Issuer") shall make a cash
payment to the Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause
(e) over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined
by a nationally recognized investment banking firm selected by the Holder
or the Owner, as the case may be, and reasonably acceptable to the Issuer.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any
person that controls the Acquiring Corporation assume in writing all the
obligations of Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase
the Substitute Option from the Substitute Option Holder at a price (the
"Substitute Option Repurchase Price") equal to the amount by which (i) the
Highest Closing Price (as hereinafter defined) exceeds (ii) the exercise
price of the Substitute Option, multiplied by the number of shares of
Substitute Common Stock for which the Substitute Option may then be
exercised, and at the request of the owner (the "Substitute Share Owner")
of shares of Substitute Common Stock (the "Substitute Shares"), the
Substitute Option issuer shall repurchase the Substitute Shares at a price
(the "Substitute Share Repurchase Price") equal to the Highest Closing
Price multiplied by the number of Substitute Shares so designated. The term
"Highest Closing Price" shall mean the highest closing price for shares of
Substitute Common Stock within the six-month period immediately preceding
the date the Substitute Option Holder gives notice of the required
repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder or the Substitute Share Owner,
as the case may be, may exercise its respective right to require the
Substitute Option Issuer to repurchase the Substitute Option and the
Substitute Shares pursuant to this Section 9 by surrendering for such
purpose to the Substitute Option Issuer, at its principal office, the
agreement for such Substitute Option (or, in the absence of such an
agreement, a copy of this Stock Option Agreement) and certificates for
Substitute Shares accompanied by a written notice or notices stating that
the Substitute Option Holder or the Substitute Share Owner, as the case may
be, elects to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares in accordance with the
provisions of this Section 9. As promptly as practicable, and in any event
within five business days after the surrender of the Substitute Option
and/or certificates representing Substitute Shares and the receipt of such
notice or notices relating thereto, the Substitute Option Issuer shall
deliver or cause to be delivered to the Substitute Option Holder the
Substitute Option Repurchase Price and/or to the Substitute Share Owner the
Substitute Share Repurchase Price therefor or the portion thereof which the
Substitute Option Issuer is not then prohibited under applicable law and
regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from repurchasing the Substitute Option and/or the
Substitute Shares in part or in full, the Substitute Option Issuer shall
immediately so notify the Substitute Option Holder and/or the Substitute
Share Owner and thereafter deliver or cause to be delivered, from time to
time, to the Substitute Option Holder and/or the Substitute Share Owner, as
appropriate, the portion of the Substitute Share Repurchase Price,
respectively, which it is no longer prohibited from delivering, within five
business days after the date on which the Substitute Option Issuer is no
longer so prohibited; provided, however, that if the Substitute Option
Issuer is at any time after delivery of a notice of repurchase pursuant to
subsection (b) of this Section 9 prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering
to the Substitute Option Holder and/or the Substitute Share Owner, as
appropriate, the Substitute Option Repurchase Price and the Substitute
Share Repurchase Price, respectively, in full (and the Substitute Option
Issuer shall use its best efforts to receive all required regulatory and
legal approvals as promptly as practicable in order to accomplish such
repurchase), the Substitute Option Holder or Substitute Share Owner may
revoke its notice of repurchase of the Substitute Option or the Substitute
Shares either in whole or to the extent of the prohibition, whereupon, in
the latter case, the Substitute Option Issuer shall promptly (i) deliver to
the Substitute Option Holder or Substitute Share Owner, as appropriate,
that portion of the Substitute Option Repurchase Price or the Substitute
Share Repurchase Price that the Substitute Option Issuer is not prohibited
from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of
the Substitute Option Holder to purchase that number of shares of the
Substitute Common Stock obtained by multiplying the number of shares of the
Substitute Common Stock for which the surrendered Substitute Option was
exercisable at the time of delivery of the notice of repurchase by a
fraction, the numerator of which is the Substitute Option Repurchase Price
less the portion thereof theretofore delivered to the Substitute Option
Holder, and the denominator of which is the Substitute Option Repurchase
Price, or (B) to the Substitute Share Owner, a certificate for the
Substitute Option Shares it is then so prohibited from repurchasing.
10. The time periods for exercise of certain rights under Sections 2,
6, 7 and 12 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights, and for the
expiration of all statutory waiting periods; (ii) during the pendency of
any temporary restraining order, injunction or other legal ban to the
exercise of such rights; and (iii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and
deliver this Stock Option Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Stock Option
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of Issuer and no
other corporate proceedings on the part of Issuer are necessary to
authorize this Stock Option Agreement or to consummate the transactions
contemplated hereby. This Stock Option Agreement has been duly and validly
executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize
and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Stock Option Agreement in accordance
with its terms will have reserved for issuance upon the exercise of the
Option, that number of shares of Common Stock equal to the maximum number
of shares of Common Stock at any time and from time to time issuable
hereunder, and all such shares, upon issuance pursuant hereto, will be duly
authorized, validly issued, fully paid, nonassessable, and will be
delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights.
(c) Issuer has taken all action (including, if required,
redeeming all of the Rights or amending or terminating the Company Rights
Agreement (as defined in the Merger Agreement)) so that the entering into
of this Stock Option Agreement, the acquisition of shares of Common Stock
hereunder and the other transactions contemplated thereby do not and will
not result in the grant of any rights of any person under the Company
Rights Agreement or enable or require the Rights (as defined in the Company
Rights Agreement) to be exercised, distributed or triggered.
12. Neither of the parties hereto may assign any of its rights and
obligations under this Stock 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 Subsequent Triggering Event shall
have occurred prior to an Exercise Termination Event, Grantee, subject to
the express provisions hereof, may assign in whole or in part its rights
and obligations hereunder within 90 days following such Subsequent
Triggering Event (or such later period as may be provided pursuant to
Section 10).
13. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and Governmental
Entities necessary to the consummation of the transactions contemplated by
this Stock Option Agreement, including without limitation making
application to list the shares of Common Stock issuable hereunder on the
New York Stock Exchange or such other exchange or market on which the
shares of Issuer may be listed upon official notice of issuance and making
any necessary applications to the FRB under the Bank Holding Company Act
and any other Governmental Entities for approval to acquire the shares
issuable hereunder.
14. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Stock Option Agreement by either
party hereto and that the obligations of the parties shall hereto be
enforceable by either party hereto through injunctive or other equitable
relief.
15. If any term, provision, covenant or restriction contained in this
Stock 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 Stock 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 Holder is not permitted
to acquire, or Issuer is not permitted to repurchase pursuant to Section 7,
the full number of shares of Common Stock provided in Section 1(a) hereof
(as adjusted pursuant to Sections 1(b) or 5 hereof), it is the express
intention of Issuer to allow the Holder to acquire or to require Issuer to
repurchase such lesser number of shares as may be permissible, without any
amendment or modification hereof.
16. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person,
by cable, telegram, telecopy or telex, or by registered or certified mail
(postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Agreement.
17. This Stock Option Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia, regardless of the laws
that might otherwise govern under applicable principles of conflicts of
laws thereof.
18. This Stock Option Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
19. Except as otherwise expressly 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.
20. Except as otherwise expressly provided herein or in the
Agreement, this Stock 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
thereof, written or oral. The terms and conditions of this Stock Option
Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. Nothing in
this Stock Option Agreement, expressed or implied, is intended to confer
upon any party, other than the parties hereto, and their respective
successors except as assigns, any rights, remedies, obligations or
liabilities under or by reason of this Stock Option Agreement, except as
expressly provided herein.
21. Terms used in this Stock Option Agreement and not defined herein
but defined in the Agreement shall have the meanings assigned thereto in
the Agreement.
[signatures follow on separate pages]
IN WITNESS WHEREOF, each of the parties has caused this Stock Option
Agreement to be executed on its behalf by their officers thereunto duly
authorized, all as of the date first above written.
SUNTRUST BANKS, INC., as Grantee
By: /s/ L. Phillip Humann
____________________________
Name: L. Phillip Humann
Title: Chairman of the Board and
Chief Executive Officer
CRESTAR FINANCIAL CORPORATION, as Issuer
By: /s/ Richard G. Tilghman
_______________________________
Name: Richard G. Tilghman
Title: Chairman of the Board and
Chief Executive Officer
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 20, 1998, between SUNTRUST
BANKS, INC., a Georgia corporation ("Issuer"), and CRESTAR FINANCIAL
CORPORATION, a Virginia corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, as a condition to, and contemporaneous with the execution of
an Agreement and Plan of Merger dated July 20, 1998 ("Agreement") and in
consideration therefor, the parties are entering into this Stock Option
Agreement pursuant to which Issuer has agreed to grant Grantee the Option
(as hereinafter defined):
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Agreement, the parties
hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to
21,097,697 fully paid and nonassessable shares of common stock, par value
$1.00 ("Common Stock"), of Issuer at a price of $87.00 per share (such
price, as adjusted if applicable, the "Option Price"); provided however
that in no event shall the number of shares of Common Stock for which this
Option is exercisable exceed 9.9% of the Issuer's issued and outstanding
common shares without giving effect to any shares subject to or issued
pursuant to the Option. The number of shares of Common Stock that may be
received upon the exercise of the Option and the Option Price are subject
to adjustment as herein set forth.
(b) If any additional shares of Common Stock are issued or otherwise
become outstanding after the date of this Stock Option Agreement (other
than pursuant to this Stock Option Agreement), the number of shares of
Common Stock subject to the Option shall be increased so that, after such
issuance such number equals 9.9% of the number of shares of Common Stock
then issued and outstanding without giving effect to any shares subject to
or issued pursuant to the Option. Nothing contained in this Section 1(b) or
elsewhere in this Stock Option Agreement shall be deemed to authorize
Issuer or Grantee to breach any provision of the Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option,
in whole or part, if, but only if, both an Initial Triggering Event (as
hereinafter defined) and a Subsequent Triggering Event (as hereinafter
defined) shall have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined), provided that the Holder shall
have sent the written notice of such exercise (as provided in subsection
(e) of this Section 2) within 90 days following such Subsequent Triggering
Event (or such later date as provided in Section 10). Each of the following
shall be an "Exercise Termination Event": (i) the Effective Time of the
Merger; (ii) termination of the Agreement in accordance with the provisions
thereof (other than a termination resulting from a willful breach by Issuer
of a provision of the Agreement) if such termination occurs prior to the
occurrence of an Initial Triggering Event; or (iii) the passage of eighteen
months after termination of the Agreement if such termination follows the
occurrence of an Initial Triggering Event or is a termination by Grantee
pursuant to Section 8.1(g) thereof resulting from a willful breach by
Issuer of a provision of the Agreement. The term "Holder" shall mean the
holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any significant subsidiary of Issuer without
having received Grantee's prior written consent, shall have entered into an
agreement to engage in, an Acquisition Transaction (as hereinafter defined)
with any person (the term "person" for purposes of this Stock Option
Agreement having the meaning assigned thereto in Sections 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934 (the "1934 Act"), and the
rules and regulations thereunder) other than Grantee or any of its
subsidiaries (each a "Grantee Subsidiary") or the board of directors of
Issuer shall have recommended that the shareholders of Issuer approve or
accept any Acquisition Transaction other than as contemplated by the
Agreement. For purposes of this Stock Option Agreement, "Acquisition
Transaction" shall mean (a) a merger, consolidation or share exchange
involving Issuer or any significant subsidiary of Issuer, provided,
however, that in no event shall (i) any merger, consolidation or share
exchange involving only the Issuer and one or more of the subsidiaries of
Issuer, or involving only any two or more of such subsidiaries of Issuer be
deemed to be an Acquisition Transaction, or (ii) any merger, consolidation
or share exchange (A) in which Issuer is the surviving entity, or (B) as to
which the shareholders of Issuer immediately prior thereto own in the
aggregate at least 40% of the common stock of the surviving corporation or
its publicly-held parent corporation immediately following consummation
thereof be deemed to be an Acquisition Transaction, (b) a purchase, lease
or other acquisition of all or substantially all of the assets of Issuer
and its subsidiaries taken as a whole, or (c) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of securities representing 20% or more of the voting power of
Issuer;
(ii) The board of directors of Issuer does not recommend that
the shareholders of Issuer approve the Agreement or publicly withdraws or
modifies, or publicly announces its intention to withdraw or modify, in any
manner adverse to the Grantee, its recommendation that its shareholders
approve the Agreement;
(iii) Any person other than Grantee or any Grantee Subsidiary or
any Issuer Subsidiary acting in a fiduciary capacity shall have acquired
beneficial ownership or the right to acquire beneficial ownership of 20% or
more of the outstanding shares of Common Stock (the term "beneficial
ownership" for purposes of this Stock Option Agreement having the meaning
assigned thereto in Section 13(d) of the 1934 Act, and the rules and
regulations thereunder);
(iv) Any person other than Grantee or any Grantee Subsidiary
shall have made a bona fide proposal to Issuer or its shareholders by
public announcement or written communication that is or becomes the subject
of public disclosure to engage in an Acquisition Transaction;
(v) After a proposal is made by a third party to Issuer or its
shareholders to engage in an Acquisition Transaction, Issuer shall have
breached any covenant or obligation contained in the Agreement and such
breach (x) would entitle Grantee to terminate the Agreement and (y) shall
not have been cured prior to the Notice Date (as defined below);
(vi) Any person other than Grantee or any Grantee Subsidiary,
other than in connection with a transaction to which Grantee has given its
prior written consent, shall have filed an application or notice with The
Board of Governors of the Federal Reserve System (the "FRB") or any other
federal or state bank regulatory authority, which application or notice has
been accepted for processing, for approval to engage in an Acquisition
Transaction;
(vii) The shareholders of Issuer shall have voted and failed to
approve the Agreement and the Merger at a meeting which has been held for
that purpose or any adjournment or postponement thereof, or such meeting
shall not have been held in violation of the Merger Agreement or shall have
been canceled prior to termination of the Merger Agreement if, prior to
such meeting (or if such meeting shall not have been held or shall have
been canceled, prior to such termination), it shall have been publicly
announced that any person (other than Grantee or any Grantee Subsidiary)
shall have made, or disclosed an intention to make, a proposal to engage in
an Acquisition Transaction; or
(viii) Any person other than Grantee or any Grantee Subsidiary
shall have filed with the SEC a registration statement or tender offer
materials with respect to a potential exchange or tender offer that would
constitute an Acquisition Transaction;
(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person, other than Grantee or any
Grantee Subsidiary or any Issuer Subsidiary acting in a fiduciary capacity,
of beneficial ownership of 25% or more of the then outstanding Common
Stock; or
(ii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection 2(b), except that the percentage referred to in
clause (c) shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) If the Holder is entitled to and wishes to exercise the Option,
it shall send to Issuer 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 from the
Notice Date for the closing of such purchase (the "Closing Date"); provided
that if prior notification to or approval of the FRB or any other
governmental authority or regulatory or administrative agency or
commission, domestic or foreign (a "Governmental Entity"), is required in
connection with such purchase, the Holder 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 from the later of (x) the date on which any required notification
periods have expired or been terminated and (y) the date on which such
approvals have been obtained and any requisite waiting period or periods
shall have passed. Any exercise of the Option shall be deemed to occur on
the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2,
the Holder shall pay to Issuer the aggregate purchase price for the shares
of Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by wire transfer to a bank account designated
by Issuer, provided that failure or refusal of Issuer to designate such a
bank account shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer
shall deliver to the Holder a certificate or certificates representing the
number of shares of Common Stock purchased by the Holder and, if the Option
should be exercised in part only, a new Option evidencing the rights of the
Holder thereof to purchase the balance of the shares purchasable hereunder,
and the Holder shall deliver to Issuer a copy of this Stock Option
Agreement and a letter agreeing that the Holder will not offer to sell or
otherwise dispose of such shares in violation of applicable law or the
provisions of this Stock Option Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder
may be endorsed with a restrictive legend that shall read substantially as
follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement between the registered holder
hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on
file at the principal office of Issuer and will be provided to the
holder hereof without charge upon receipt by Issuer of a written
request therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933, as amended (the "1933 Act"), in
the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the Holder shall have delivered to Issuer a copy
of a letter from the staff of the Securities and Exchange Commission (the
"SEC"), or an opinion of counsel, in form and substance satisfactory to
Issuer, to the effect that such legend is not required for purposes of the
1933 Act; (ii) the reference to the provisions of this Stock Option
Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Stock Option
Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required
by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2
and the tender of the applicable purchase price in immediately available
funds, the Holder shall be deemed to be the holder of record of the shares
of Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of Issuer shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually
delivered to the Holder. Issuer shall pay all expenses, and any and all
United States Federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of the Holder or its
assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock;
(ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other
voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer; (iii) promptly to take all action as may from time to
time be required (including (A) complying with all premerger notification,
reporting and waiting period requirements specified in 15 U.S.C. Section
l8a and regulations promulgated thereunder and (B) in the event, under the
Bank Holding Company Act of 1956, as amended, or the Change in Bank Control
Act of 1978, as amended, or any state banking law, prior approval of or
notice to the FRB or to any other Governmental Entity is necessary before
the Option may be exercised, cooperating fully with the Holder in preparing
such applications or notices and providing such information to each such
Governmental Entity as they may require) in order to permit the Holder to
exercise the Option and Issuer duly and effectively to issue shares of
Common Stock pursuant hereto; and (iv) promptly to take all action provided
herein to protect the rights of the Holder against dilution.
4. This Stock Option Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Stock Option Agreement at the principal
office of Issuer, for other agreements providing for Options of different
denominations entitling the holder thereof to purchase, on the same terms
and subject to the same conditions as are set forth herein, in the
aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Stock Option Agreement" and "Option" as used herein include any
Stock Option Agreements and related options for which this Stock Option
Agreement (and the Option granted hereby) may be exchanged. Upon receipt
by Issuer of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Stock Option Agreement, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification,
and upon surrender and cancellation of this Stock Option Agreement, if
mutilated, Issuer will execute and deliver a new Stock Option Agreement of
like tenor and date. Any such new Stock Option Agreement executed and
delivered shall constitute an additional contractual obligation on the part
of Issuer, whether or not the Stock Option Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section
1 of this Stock Option Agreement, the number of shares of Common Stock
purchasable upon the exercise of the Option shall be subject to adjustment
from time to time as provided in this Section 5.
(a) In the event of any change in Common Stock by reason of
stock dividends, split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares or the like, the type and
number of shares of Common Stock purchasable upon exercise hereof shall be
appropriately adjusted.
(b) Whenever the number of shares of Common Stock purchasable
upon exercise hereof is adjusted as provided in this Section 5, the Option
Price shall be adjusted by multiplying the Option Price by a fraction, the
numerator of which shall be equal to the number of shares of Common Stock
purchasable prior to the adjustment and the denominator of which shall be
equal to the number of shares of Common Stock purchasable after the
adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of
Grantee delivered within 90 days (or such later date as may be provided
pursuant to Section 10) of such Subsequent Triggering Event (whether on its
own behalf or on behalf of any subsequent holder of this Option (or part
thereof) or any of the shares of Common Stock issued pursuant hereto),
promptly prepare, file and keep current a shelf registration statement
under the 1933 Act covering any shares issued and issuable pursuant to this
Option and shall use its reasonable best efforts to cause such registration
statement to become effective and remain current in order to permit the
sale or other disposition of any shares of Common Stock issued upon total
or partial exercise of this Option ("Option Shares") in accordance with any
plan of disposition requested by Grantee. Issuer will use its reasonable
best efforts to cause such registration statement first to become effective
and then to remain effective for such period not in excess of 180 days from
the day such registration statement first becomes effective or such shorter
time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such
registrations. If requested by any such Holder in connection with such
registration, Issuer shall 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. The
foregoing notwithstanding, if, at the time of any request by Grantee for
registration of Option Shares as provided above, Issuer is in the process
of registration with respect to an underwritten public offering of shares
of Common Stock, and if in the good faith judgment of the managing
underwriter or managing underwriters, or, if none, the sole underwriter or
underwriters, of such offering the inclusion of the Holder's Option or
Option Shares would interfere with the successful marketing of the shares
of Common Stock offered by Issuer, the number of Option Shares otherwise to
be covered in the registration statement contemplated hereby may be
reduced; provided, however, that after any such required reduction the
number of Option Shares to be included in such offering for the account of
the Holder shall constitute at least 25% of the total number of shares to
be sold by the Holder and Issuer in the aggregate; provided further,
however, that if such reduction occurs, then the Issuer shall file a
registration statement for the balance as promptly as practical and no
reduction shall thereafter occur. Each such Holder shall provide all
information reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder. Upon receiving any request
under this Section 6 from any Holder, Issuer agrees to send a copy thereof
to any other person known to Issuer to be entitled to registration rights
under this Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies.
7. (a) At any time after the occurrence of a Repurchase Event (as
defined below) (i) at the request of the Holder, delivered prior to an
Exercise Termination Event (or such later period as may be provided
pursuant to Section 10), Issuer (or any successor thereto) shall repurchase
the Option from the Holder at a price (the "Option Repurchase Price") equal
to the amount by which (A) the market/offer price (as defined below)
exceeds (B) the Option Price, multiplied by the number of shares for which
this Option may then be exercised and (ii) at the request of the owner of
Option Shares from time to time (the "Owner"), delivered prior to an
Exercise Termination Event (or such later period as may be provided
pursuant to Section 10), Issuer (or any successor thereto) shall repurchase
such number of the Option Shares from the Owner as the Owner shall
designate at a price (the "Option Share Repurchase Price") equal to the
market/ offer price multiplied by the number of Option Shares so
designated. The term "market/offer price" shall mean the highest of (i)
the price per share of Common Stock at which a tender offer or exchange
offer therefor has been made after the date hereof, (ii) the price per
share of Common Stock to be paid by any third party pursuant to an
agreement with Issuer, (iii) the highest closing price for shares of Common
Stock within the six-month period immediately preceding the date the Holder
gives notice of the required repurchase of this Option or the Owner gives
notice of the required repurchase of Option Shares, as the case may be, or
(iv) in the event of a sale of all or substantially all of Issuer's assets,
the sum of the price paid in such sale for such assets and the current
market value of the remaining assets of Issuer as determined by a
nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, divided by the number of shares of Common Stock
of Issuer outstanding at the time of such sale. In determining the
market/offer price, the value of consideration other than cash shall be
determined by a nationally recognized investment banking firm selected by
the Holder or Owner, as the case may be, and reasonably acceptable to the
Issuer, whose determination shall be conclusive and binding on all parties.
(b) The Holder or the Owner, as the case may be, may exercise its
right to require Issuer to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at
its principal office, a copy of this Stock Option Agreement or certificates
for Option Shares, as applicable, accompanied by a written notice or
notices stating that the Holder or the Owner, as the case may be, elects to
require Issuer to repurchase this Option and/or the Option Shares in
accordance with the provisions of this Section 7. As promptly as
practicable, and in any event within five business days after the surrender
of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto, Issuer shall deliver or
cause to be delivered to the Holder the Option Repurchase Price and/or to
the Owner the Option Share Repurchase Price therefor or the portion thereof
that Issuer is not then prohibited under applicable law and regulation from
so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing
the Option and/or the Option Shares in full, Issuer shall immediately so
notify the Holder and/or the Owner and thereafter deliver or cause to be
delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the Option
Share Repurchase Price, respectively, that it is no longer prohibited from
delivering, within five business days after the date on which Issuer is no
longer so prohibited; provided, however, that if Issuer at any time after
delivery of a notice of repurchase pursuant to subsection (b) of this
Section 7 is prohibited under applicable law or regulation, or as a
consequence of administrative policy, from delivering to the Holder and/or
the Owner, as appropriate, the Option Repurchase Price and the Option Share
Repurchase Price, respectively, in full (and Issuer hereby undertakes to
use its best efforts to obtain all required regulatory and legal approvals
and to file any required notices as promptly as practicable in order to
accomplish such repurchase), the Holder or Owner may revoke its notice of
repurchase of the Option or the Option Shares either in whole or to the
extent of the prohibition, whereupon, in the latter case, Issuer shall
promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Purchase Price or the Option Share Repurchase Price
that Issuer is not prohibited from delivering; and (ii) deliver, as
appropriate, either (A) to the Holder, a new Stock Option Agreement
evidencing the right of the Holder to purchase that number of shares of
Common Stock obtained by multiplying the number of shares of Common Stock
for which the surrendered Stock Option Agreement was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator
of which is the Option Repurchase Price less the portion thereof
theretofore delivered to the Holder and the denominator of which is the
Option Repurchase Price, or (B) to the Owner, a certificate for the Option
Shares it is then so prohibited from repurchasing.
(d) For purposes of this Section 7, a "Repurchase Event" shall be
deemed to have occurred upon the occurrence of any of the following events
or transactions after the date hereof:
(i) the acquisition by any person (other than Grantee or any
Grantee Subsidiary) of beneficial ownership of 50% or more of the then
outstanding Common Stock; or
(ii) the consummation of any Acquisition Transaction described
in Section 2(b) (i) hereof, except that the percentage referred to in
clause (z) shall be 50%.
8. (a) If prior to an Exercise Termination Event, Issuer shall enter
into an agreement (i) to consolidate or merge with any person, other than
Grantee or one of its subsidiaries, and shall not be the continuing or
surviving corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or one of its subsidiaries, to merge into Issuer
and Issuer shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of Common Stock
shall be changed into or exchanged for stock or other securities of any
other person or cash or any other property or the then outstanding shares
of Common Stock shall after such merger represent less than 50% of the
outstanding shares and share equivalents of the merged company, or (iii) to
sell or otherwise transfer all or substantially all of its assets to any
person, other than Grantee or one of its subsidiaries, then, and in each
such case, the agreement governing such transaction shall make proper
provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be
converted into, or exchanged for, an option (the "Substitute Option"), at
the election of the Holder, of either (x) the Acquiring Corporation (as
hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other
than Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
surviving person, and (iii) the transferee of all or substantially all of
Issuer's assets.
(2) "Substitute Common Stock" shall mean the common stock to be
issued by the issuer of the Substitute Option upon exercise of the
Substitute Option.
(3) "Assigned Value" shall mean the market/offer price, as
defined in Section 7.
(4) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year immediately preceding
the consolidation, merger or sale in question, but in no event higher than
the closing price of the shares of Substitute Common Stock on the day
preceding such consolidation, merger or sale; provided, that if Issuer is
the issuer of the Substitute Option, the Average Price shall be computed
with respect to a share of common stock issued by the person merging into
Issuer or by any company which controls or is controlled by such person, as
the Holder may elect.
(c) The Substitute Option shall have the same terms as the
Option, provided, that if the terms of the Substitute Option cannot, for
legal reasons, be the same as the Option, such terms shall be as similar as
possible and in no event less advantageous to the Holder. The issuer of the
Substitute Option shall also enter into an agreement with the then Holder
or Holders of the Substitute Option in substantially the same form as this
Stock Option Agreement, which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option is
then exercisable, divided by the Average Price. The exercise price of the
Substitute Option per share of Substitute Common Stock shall then be equal
to the Option Price multiplied by a fraction, the numerator of which shall
be the number of shares of Common Stock for which the Option is then
exercisable and the denominator of which shall be the number of shares of
Substitute Common Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for a number of shares that is
more than 9.9% of the shares of Substitute Common Stock outstanding prior
to exercise of the Substitute Option. If the Substitute Option would be
exercisable for more than 9.9% of the shares of Substitute Common Stock
outstanding prior to exercise but for this clause (e), the issuer of the
Substitute Option (the "Substitute Option Issuer") shall make a cash
payment to the Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause
(e) over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined
by a nationally recognized investment banking firm selected by the Holder
or the Owner, as the case may be, and reasonably acceptable to the Issuer.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any
person that controls the Acquiring Corporation assume in writing all the
obligations of Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase
the Substitute Option from the Substitute Option Holder at a price (the
"Substitute Option Repurchase Price") equal to the amount by which (i) the
Highest Closing Price (as hereinafter defined) exceeds (ii) the exercise
price of the Substitute Option, multiplied by the number of shares of
Substitute Common Stock for which the Substitute Option may then be
exercised, and at the request of the owner (the "Substitute Share Owner")
of shares of Substitute Common Stock (the "Substitute Shares"), the
Substitute Option issuer shall repurchase the Substitute Shares at a price
(the "Substitute Share Repurchase Price") equal to the Highest Closing
Price multiplied by the number of Substitute Shares so designated. The term
"Highest Closing Price" shall mean the highest closing price for shares of
Substitute Common Stock within the six-month period immediately preceding
the date the Substitute Option Holder gives notice of the required
repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder or the Substitute Share Owner,
as the case may be, may exercise its respective right to require the
Substitute Option Issuer to repurchase the Substitute Option and the
Substitute Shares pursuant to this Section 9 by surrendering for such
purpose to the Substitute Option Issuer, at its principal office, the
agreement for such Substitute Option (or, in the absence of such an
agreement, a copy of this Stock Option Agreement) and certificates for
Substitute Shares accompanied by a written notice or notices stating that
the Substitute Option Holder or the Substitute Share Owner, as the case may
be, elects to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares in accordance with the
provisions of this Section 9. As promptly as practicable, and in any event
within five business days after the surrender of the Substitute Option
and/or certificates representing Substitute Shares and the receipt of such
notice or notices relating thereto, the Substitute Option Issuer shall
deliver or cause to be delivered to the Substitute Option Holder the
Substitute Option Repurchase Price and/or to the Substitute Share Owner the
Substitute Share Repurchase Price therefor or the portion thereof which the
Substitute Option Issuer is not then prohibited under applicable law and
regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from repurchasing the Substitute Option and/or the
Substitute Shares in part or in full, the Substitute Option Issuer shall
immediately so notify the Substitute Option Holder and/or the Substitute
Share Owner and thereafter deliver or cause to be delivered, from time to
time, to the Substitute Option Holder and/or the Substitute Share Owner, as
appropriate, the portion of the Substitute Share Repurchase Price,
respectively, which it is no longer prohibited from delivering, within five
business days after the date on which the Substitute Option Issuer is no
longer so prohibited; provided, however, that if the Substitute Option
Issuer is at any time after delivery of a notice of repurchase pursuant to
subsection (b) of this Section 9 prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering
to the Substitute Option Holder and/or the Substitute Share Owner, as
appropriate, the Substitute Option Repurchase Price and the Substitute
Share Repurchase Price, respectively, in full (and the Substitute Option
Issuer shall use its best efforts to receive all required regulatory and
legal approvals as promptly as practicable in order to accomplish such
repurchase), the Substitute Option Holder or Substitute Share Owner may
revoke its notice of repurchase of the Substitute Option or the Substitute
Shares either in whole or to the extent of the prohibition, whereupon, in
the latter case, the Substitute Option Issuer shall promptly (i) deliver to
the Substitute Option Holder or Substitute Share Owner, as appropriate,
that portion of the Substitute Option Repurchase Price or the Substitute
Share Repurchase Price that the Substitute Option Issuer is not prohibited
from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of
the Substitute Option Holder to purchase that number of shares of the
Substitute Common Stock obtained by multiplying the number of shares of the
Substitute Common Stock for which the surrendered Substitute Option was
exercisable at the time of delivery of the notice of repurchase by a
fraction, the numerator of which is the Substitute Option Repurchase Price
less the portion thereof theretofore delivered to the Substitute Option
Holder, and the denominator of which is the Substitute Option Repurchase
Price, or (B) to the Substitute Share Owner, a certificate for the
Substitute Option Shares it is then so prohibited from repurchasing.
10. The time periods for exercise of certain rights under Sections 2,
6, 7 and 12 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights, and for the
expiration of all statutory waiting periods; (ii) during the pendency of
any temporary restraining order, injunction or other legal ban to the
exercise of such rights; and (iii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and
deliver this Stock Option Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Stock Option
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of Issuer and no
other corporate proceedings on the part of Issuer are necessary to
authorize this Stock Option Agreement or to consummate the transactions
contemplated hereby. This Stock Option Agreement has been duly and validly
executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize
and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Stock Option Agreement in accordance
with its terms will have reserved for issuance upon the exercise of the
Option, that number of shares of Common Stock equal to the maximum number
of shares of Common Stock at any time and from time to time issuable
hereunder, and all such shares, upon issuance pursuant hereto, will be duly
authorized, validly issued, fully paid, nonassessable, and will be
delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights.
12. Neither of the parties hereto may assign any of its rights and
obligations under this Stock 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 Subsequent Triggering Event shall
have occurred prior to an Exercise Termination Event, Grantee, subject to
the express provisions hereof, may assign in whole or in part its rights
and obligations hereunder within 90 days following such Subsequent
Triggering Event (or such later period as may be provided pursuant to
Section 10).
13. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and Governmental
Entities necessary to the consummation of the transactions contemplated by
this Stock Option Agreement, including without limitation making
application to list the shares of Common Stock issuable hereunder on the
New York Stock Exchange or such other exchange or market on which the
shares of Issuer may be listed upon official notice of issuance and making
any necessary applications to the FRB under the Bank Holding Company Act
and any other Governmental Entities for approval to acquire the shares
issuable hereunder.
14. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Stock Option Agreement by either
party hereto and that the obligations of the parties shall hereto be
enforceable by either party hereto through injunctive or other equitable
relief.
15. If any term, provision, covenant or restriction contained in this
Stock 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 Stock 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 Holder is not permitted
to acquire, or Issuer is not permitted to repurchase pursuant to Section 7,
the full number of shares of Common Stock provided in Section 1(a) hereof
(as adjusted pursuant to Sections 1(b) or 5 hereof), it is the express
intention of Issuer to allow the Holder to acquire or to require Issuer to
repurchase such lesser number of shares as may be permissible, without any
amendment or modification hereof.
16. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person,
by cable, telegram, telecopy or telex, or by registered or certified mail
(postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Agreement.
17. This Stock Option Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia, regardless of the laws
that might otherwise govern under applicable principles of conflicts of
laws thereof.
18. This Stock Option Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
19. Except as otherwise expressly 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.
20. Except as otherwise expressly provided herein or in the
Agreement, this Stock 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
thereof, written or oral. The terms and conditions of this Stock Option
Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. Nothing in
this Stock Option Agreement, expressed or implied, is intended to confer
upon any party, other than the parties hereto, and their respective
successors except as assigns, any rights, remedies, obligations or
liabilities under or by reason of this Stock Option Agreement, except as
expressly provided herein.
21. Terms used in this Stock Option Agreement and not defined herein
but defined in the Agreement shall have the meanings assigned thereto in
the Agreement.
[signatures follow on separate pages]
IN WITNESS WHEREOF, each of the parties has caused this Stock Option
Agreement to be executed on its behalf by their officers thereunto duly
authorized, all as of the date first above written.
SUNTRUST BANKS, INC., as Issuer
By: /s/ L. Phillip Humann
_______________________________________
Name: L. Phillip Humann
Title: Chairman of the Board and
Chief Executive Officer
CRESTAR FINANCIAL CORPORATION, as Grantee
By: /s/ Richard G. Tilghman
______________________________________
Name: Richard G. Tilghman
Title: Chairman of the Board and
Chief Executive Officer
SUN TRUST BANK CRESTAR
CONTACTS:
SUNTRUST BANKS, INC. CRESTAR FINANCIAL CORPORATION:
James C. Armstrong Media: Barry Koling
(404) 588-7425 (804) 782-7845
Investors: Eugene S. Putnam, Jr.
(804) 782-5619
FOR IMMEDIATE RELEASE
SUNTRUST BANKS, CRESTAR FINANCIAL CORPORATION AGREE TO MERGE
ATLANTA, GA and RICHMOND, VA, July 20, 1998 - SunTrust Banks, Inc. ("Sun
Trust") (NYSE; STI) and Crestar Financial Corporation ("Crestar") (NYSE:
CF) today announced that they have signed a definitive agreement to merge.
The boards of directors of both companies have unanimously approved the
agreement. The transaction is subject to regulatory approvals and the
approval of shareholders of both companies. SunTrust expects to close the
transaction in the fourth quarter of 1998. The terms of the merger, which
will be accounted for as a pooling-of-interests, call for a tax-free
exchange of 0.96 shares of SunTrust common stock for each common share of
Crestar. Based on SunTrust's closing stock price on July 17, 198 of $87.44
and Crestar's 113.5 million fully diluted common shares outstanding, the
transaction would have a value of $83.94 per Crestar common share and an
aggregate value of $9.5 billion. The merger is expected to be accretive to
SunTrust's earnings per share beginning in 1999.
Upon completion of the merger, Crestar will become a wholly-owned
subsidiary of SunTrust, and will operate under its current name and
management as one of SunTrust's four locally-focused bank holding
companies. L. Phillip Humann will remain chairman, president and chief
executive officer of SunTrust. Richard G. Tilghman, chairman and chief
executive officer of Crestar, will continue in those posts, and become vice
chairman of the board of directors of SunTrust. Three additional
representatives from the Crestar board will join the current 12 members on
the SunTrust board of directors.
"Our approach to banking is built on a local focus on our customers and our
communities," said Mr. Tilghman. "We are delighted to have found in
SunTrust a merger partner that gives us the best of both worlds - the
relationship approach to banking that sets us apart in our marketplace,
combined with additional resources to broaden our products and services,
and to continue to compete effectively. Our customers will see the same
faces in the same places, with no disruption, just the knowledge that what
we do for them will be enhanced."
"Crestar is first class - a disciplined, well-managed bank with a
reputation for quality service throughout its region. We're pleased to
welcome Crestar and its people to the SunTrust family," said Mr. Humann.
"Together, our financial, product and cultural strengths should be
enormously appealing to the people and businesses of our rapidly-growing
markets. Crestar fits perfectly with our business philosophy; it has the
management orientation and the efficiency of operation to thrive within
SunTrust's decentralized banking structure."
The merger will create the tenth-largest banking company in the United
States, based on assets of $88 billion, and will provide a full line of
consumer and commercial banking services to more than 3.3 million customers
through its 1,093 branches in Florida, Georgia, Tennessee, Alabama,
Virginia, Maryland, and the District of Columbia. The estimated market
capitalization of the merged company will be $25.4 billion.
SunTrust estimates that the combined company can reduce its expenses by
more than $130 million annually. On an annual basis, 75 percent of these
cost reductions are expected to be achieved by the end of 1999, with the
balance to be achieved in 2000. These cost reductions will be spread across
a broad range of operational activities and staff functions of both
companies.
SunTrust and Crestar do not overlap geographically, but are contiguous.
There will be no merger-related branch closings in either company's area.
SunTrust expects to incur pre-tax merger-related restructuring charges of
$200 million in 1998. In addition, a $50 million charge will be taken to
align the companies' accounting and reserving policies. The companies
believe there will be minimal job losses as a result of the merger and that
any reductions would be accomplished primarily through attrition.
Transition teams comprising representatives of both companies will analyze
best practices and identify both cost savings and revenue enhancement
possibilities. The 1999 earnings estimate for the combined company includes
modest revenue-enhancements. The companies believe additional revenue
enhancement opportunities will grow out of the merger, both from a greater
ability to address the growth potential of the combined company's key
market regions and from the ability to cross-sell each company's products
and services to the other's customers. The initial benefits will come from
increased capital leverage. SunTrust brings to the merger particular
strengths in trust and investment management, investment banking, corporate
banking and treasury management, while Crestar adds strength in mortgage
banking, leasing and student lending.
SunTrust has ceased its share repurchase program.
SunTrust was advised by and received a fairness opinion from Lehman
Brothers and was advised by the law firm of King & Spalding. Crestar was
advised by Morgan Stanley Dean Witter, and the law firms of Skadden, Arps,
Slate, Meagher & Flom and Hunton & Williams.
Crestar Financial Corporation is the holding company for Crestar Bank with
396 banking offices and 684 ATMs in Virginia, Maryland and the District of
Columbia. Other subsidiaries provide insurance, equipment and automobile
leasing, mortgage banking and full-service securities and investment
advisory services. At June 30, 1998, Crestar had total assets of $26.2
billion and total deposits of $17.9 billion. Equity capital of $2.2 billion
represented 8.4% of total assets. Book value per share was $19.65.
SunTrust Banks, Inc. is a bank holding company based in Atlanta, Georgia.
It offers traditional deposit and credit services as well as trust and
investment services through 697 full-service banking offices in Florida,
Georgia, Tennessee and Alabama. Various SunTrust subsidiaries provide
credit cards, mortgage banking, credit-related insurance, data processing
and information services, discount brokerage and investment banking
services. As of June 30, 1998, SunTrust had total assets of $61.4 billion,
total deposits of $37.0 billion, total shareholders' equity of $5.9 billion
and a book value of $28.32 per share.
# # #
This news release contains, among other things, certain forward-looking
statements regarding the combined company following the merger, including
statements relating to cost savings, enhanced revenue and accretion to
reported earnings that may be realized from the merger and certain
restructuring charges expected to be incurred in connection with the
merger. Such forward-looking statements involve certain risks and
uncertainties, including a variety of factors that may cause the combined
company's actual results to differ materially from the anticipated results
or other expectations expressed in such forward-looking statements. Factors
that might cause such a difference include, but are not limited to: (1)
expected cost savings from the merger may not be fully realized within the
expected time frame; (2) revenues following the merger may be lower than
expected, or deposit attrition, operating costs or customer loss and
business disruption following the merger may be greater than expected; (3)
competitive pressures among depository and other financial institutions may
increase significantly; (4) costs or difficulties related to the
integration of the business of the companies may be greater than expected,
(5) changes in the interest rate environment may reduce margins; (6)
general economic or business conditions, either nationally or in the states
or regions in which the companies do business, may be less favorable than
expected, resulting in, among other things, a deterioration in credit
quality or a reduced demand for credit; (7) legislative or regulatory
changes may adversely affect the businesses in which the companies are
engaged; and (8) changes may occur in the securities markets.
AMENDMENT NO. 1 TO RIGHTS AGREEMENT
AMENDMENT NO. 1, dated as of July 20, 1998 (this "Amendment"), to
the Rights Agreement, dated as of June 23, 1989 (the "Rights Agreement"),
between Crestar Financial Corporation, a Virginia corporation (the
"Company"), and Mellon Bank, N.A., as rights agent (the "Rights Agent").
WITNESSETH
WHEREAS, the Company and the Rights Agent have previously entered
into the Rights Agreement; and
WHEREAS, no Distribution Date (as defined in Section 1(h) of the
Rights Agreement) has occurred as of the date of this Amendment; and
WHEREAS, Section 27 of the Rights Agreement provides that the
Company may from time to time supplement or amend the Rights Agreement in
accordance with the terms of Section 27; and
WHEREAS, the Company, SunTrust Banks, Inc., a Georgia corporation
("Parent"), and SMR Corporation, a Virginia corporation ("Merger Sub") have
entered into an Agreement and Plan of Merger, dated as of July 20, 1998
(the "Merger Agreement"), pursuant to which Merger Sub will merge (the
"Merger") with and into the Company with the Company as the surviving
corporation in the Merger; and
WHEREAS, in connection with the Merger Agreement, the Company and
Parent have entered into a Stock Option Agreement, dated as of July 20,
1998 (the "Option Agreement"), pursuant to which the Company has granted to
Parent an option to purchase certain shares of the Company's Common Stock
under certain circumstances and upon certain terms and conditions; and
WHEREAS, the Board of Directors has determined that the
transactions contemplated by the Merger Agreement are in the best interests
of the Company and its stockholders; and
WHEREAS, the Board of Directors has determined that it is
advisable and in the best interest of the Company and its stockholders to
amend the Rights Agreement to exempt the Merger Agreement, the Option
Agreement and the transactions contemplated thereby (including, without
limitation, the option granted pursuant to the Option Agreement) from the
application of the Rights Agreement; and
WHEREAS, the Board of Directors of the Company has approved and
adopted this Amendment and directed that the proper officers take all
appropriate steps to execute and put into effect this Amendment.
NOW, THEREFORE, the Company hereby amends the Rights Agreement as
follows:
1. Section 1(a) of the Rights Agreement is hereby amended by
inserting the following proviso at the end thereof;
"; provided, however, that, until the termination of
both the Merger Agreement and the Stock Option
Agreement (each as defined below) in accordance with
their respective terms, neither SunTrust Banks, Inc., a
Georgia corporation ("Acquiror"), nor any Affiliate or
Associate of Acquiror (collectively with Acquiror, the
"Acquiror Parties") shall be deemed to be an Acquiring
Person by virtue of the fact that Acquiror is the
Beneficial Owner solely of shares of Common Stock (i)
of which any Acquiror Party is or becomes the
Beneficial Owner by reason of the approval, execution
or delivery of the Agreement and Plan of Merger, dated
as of July 20, 1998, by and among the Company, Acquiror
and SMR Corporation, a Virginia corporation, as may be
amended from time to time (the "Merger Agreement"), or
the Stock Option Agreement, dated as of July 20, 1998,
between the Company, as issuer, and Acquiror, as
grantee, as may be amended from time to time (the
"Stock Option Agreement"), or by reason of the
consummation of any transaction contemplated in the
Merger Agreement, the Stock Option Agreement or both,
(ii) of which any Acquiror Party is the Beneficial
Owner on the date hereof, (iii) acquired in
satisfaction of debts contracted prior to the date
hereof by any Acquiror Party in good faith in the
ordinary course of such Acquiror Party's banking
business, (iv) held by any Acquiror Party in a bona
fide fiduciary or depository capacity, or (v) owned in
the ordinary course of business by either (A) an
investment company registered under the Investment
Company Act of 1940, as amended, or (B) an investment
account, in either case for which any Acquiror Party
acts as investment advisor."
2. Section 13 of the Rights Agreement is hereby amended to add
the following subsection (d) at the end thereof:
"Notwithstanding any other provision of this Agreement, at the
Effective Time (as defined in the Merger Agreement), the Common
Stock will be converted into the consideration provided for in
the Merger Agreement, and all Rights attached thereto shall
simultaneously be extinguished with no additional consideration
being paid on account thereof."
3. Section 15 of the Rights Agreement is hereby modified and
amended to add the following sentence at the end thereof:
"Nothing in this Agreement shall be construed to give any holder
of Rights or any other Person any legal or equitable rights,
remedies or claims under this Agreement in connection with any
transactions contemplated by the Merger Agreement or the Stock
Option Agreement."
4. This Amendment shall be deemed to be in force and effective
immediately prior to the execution and delivery of the Merger Agreement.
Except as amended hereby, the Rights Agreement shall remain in full force
and effect and shall be otherwise unaffected hereby.
5. Capitalized terms used in this Amendment and not defined
herein shall have the meanings assigned thereto in the Rights Agreement.
6. This Amendment may be executed in any number of counterparts
and each of such counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute but one and
the same instrument.
7. In all respects not inconsistent with the terms and
provisions of this Amendment, the Rights Agreement is hereby ratified,
adopted, approved and confirmed. In executing and delivering this
Amendment, the Rights Agent shall be entitled to all the privileges and
immunities afforded to the Rights Agent under the terms and conditions of
the Rights Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 1 to be duly executed and attested as of the day and year first above
written.
ATTEST: CRESTAR FINANCIAL CORPORATION
By: /s/ John C. Clark, III By: /s/ James D. Barr
--------------------------- -----------------------------
Name: John C. Clark, III Name: James D. Barr
Title: Corporate Senior Vice Title: Group Executive Vice
President, General President, Controller
Counsel & Assistant & Treasurer
Corporate Secretary
ATTEST: MELLON BANK, N.A.
By: /s/ Jack Livingston By: /s/ Marilyn Spisak
-------------------------- -----------------------------
Name: Jack Livingston Name: Marilyn Spisak
Title: As Agent Title: As Agent
