<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Under the Securities Exchange Act of 1934
(Amendment No. __________)*
CRESTAR FINANCIAL CORPORATION
(Name of Issuer)
Common Stock, Par Value $5.00
(Title of Class of Securities)
226091106
(CUSIP Number)
Raymond D. Fortin
Senior Vice President and General Counsel
SunTrust Banks, Inc.
303 Peachtree Street, N.E.
Atlanta, Georgia 30308
(404) 588-7165
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 20, 1998
(Date of Event Which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box: [ ]
NOTE: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D FORMS 7060
CUSIP No. 226091106 13D
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
SunTrust Banks, Inc.
- -------------------------------------------------------------------------------
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS: #58-1575035
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Georgia
- -------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER 22,338,161*
------------------------------------------------------
SHARES
8 SHARED VOTING POWER -0-
BENEFICIALLY
------------------------------------------------------
OWNED BY
9 SOLE DISPOSITIVE POWER 22,338,161*
EACH
------------------------------------------------------
REPORTING
10 SHARED DISPOSITIVE POWER -0-
PERSON WITH
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
22,338,161*
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.6% (1)
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- -------------------------------------------------------------------------------
- --------
(1) Assumes a total of 134,590,229 shares outstanding, adjusted to reflect the
issuance of the full amount of Common Stock pursuant to the Option
Agreement.
Page 1 of 11 Pages
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*BENEFICIAL OWNERSHIP OF 22,338,161 SHARES OF COMMON STOCK REPORTED
HEREUNDER IS SO BEING REPORTED SOLELY AS A RESULT OF THE OPTION AGREEMENT
DESCRIBED IN ITEM 4 HEREOF. THE OPTION GRANTED PURSUANT TO SUCH OPTION AGREEMENT
HAS NOT YET BECOME EXERCISABLE. SUNTRUST BANKS, INC. EXPRESSLY DISCLAIMS
BENEFICIAL OWNERSHIP OF SUCH SHARES.
STATEMENT PURSUANT TO RULE 13d-1
OF THE
GENERAL RULES AND REGULATIONS
UNDER THE
SECURITIES EXCHANGE ACT OF 1934
ITEM 1. SECURITY AND ISSUER.
This statement relates to the Common Stock, par value $5.00 per share
("Common Stock"), of Crestar Financial Corporation, a Virginia corporation (the
"Company"), the principal executive offices of which are located at 919 East
Main Street, Richmond, Virginia 23261-6665.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c) and (f). This statement is being filed by SunTrust Banks, Inc.,
a Georgia corporation registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended ("SunTrust"). The principal business
offices of SunTrust are located at 303 Peachtree Street, N.E., Atlanta, Georgia
30308. SunTrust offers traditional deposit and credit services through 697
full-service banking offices in Florida, Georgia, Tennessee and Alabama.
SunTrust also provides, through various subsidiaries, credit cards, mortgage
banking, credit-related insurance, data processing and information services,
discount brokerage and investment banking services. The names of the directors
and executive officers of SunTrust and their respective business addresses,
citizenship and present principal occupations or employment, as well as the
names, principal businesses and addresses of any corporations and other
organizations in which such employment is conducted, are set forth on Schedule I
hereto, which Schedule is incorporated herein by reference.
(d)-(e). Neither SunTrust, nor, to the best of its knowledge, any of the
persons listed in Schedule I hereto has during the last five years been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors). Neither SunTrust nor, to the best of its knowledge, any of the
persons listed in Schedule I hereto has during the last five years been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
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ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
As more fully described in Item 4, the Company has granted to SunTrust
an option pursuant to which SunTrust has the right, upon the occurrence of
certain events (none of which has occurred), to purchase up to 22,338,161 shares
of Common Stock (subject to adjustment in certain circumstances) at a price per
share equal to $62.875 (the "Option"). Certain terms of the Option are
summarized in Item 4.
If the Option were exercisable and SunTrust were to exercise the Option
on the date hereof, the funds required to purchase the shares of Common Stock
issuable upon such exercise would be $1,404,511,873. It is currently anticipated
that such funds would be derived from working capital.
Subject to market conditions and developments with respect to the Merger
(as defined below) SunTrust may purchase shares of Common Stock in the open
market or in privately negotiated transactions. It is currently anticipated that
any funds used to make such purchases would be derived from working capital.
ITEM 4. PURPOSE OF THE TRANSACTION.
(a)-(j) SunTrust is seeking to acquire the entire equity interest in the
Company pursuant to the Merger (as defined below). The transactions reported
hereunder are intended to assist in the achievement of that purpose.
The Merger Agreement. The Company, SMR Corporation (Va.) ("Sub") and
SunTrust have entered into an Agreement and Plan of Merger, dated as of July 20,
1998 (the "Merger Agreement"), pursuant to which Sub will merge with and into
the Company (the "Merger"), with the Company surviving the Merger as a wholly
owned subsidiary of SunTrust (the "Surviving Company"). At the effective time of
the Merger (the "Effective Time"), each outstanding share of Common Stock will
be converted into the right to receive 0.96 of a share of common stock of
SunTrust ("SunTrust Common Stock") (the "Exchange Ratio").
If SunTrust changes (or establishes a record date for changing) the
number of shares of SunTrust Common Stock issued and outstanding prior to the
Effective Date as a result of a stock split, stock dividend, recapitalization or
similar transaction with respect to the outstanding SunTrust Common Stock and
the record date therefor shall be prior to the Effective Date, the Exchange
Ratio shall be proportionately adjusted. As of the Effective Time, each share of
Common Stock held directly or indirectly by the Company, other than shares held
in a fiduciary capacity or in satisfaction of a debt previously contracted, will
be canceled, and no exchange or payment will be made with respect thereto.
The Merger is subject to various regulatory approvals, the approval of
the shareholders of the Company and the satisfaction of other terms and
conditions set forth in the Merger Agreement,
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including the approval of the shareholders of SunTrust of the issuance of
SunTrust Common Stock pursuant to the Merger Agreement.
As a result of the Merger, the Common Stock will be eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). In addition, the Common
Stock will be eligible for delisting from the New York Stock Exchange, where it
has been traded under the symbol "CF". SunTrust has agreed to cause three
members of the Company's Board of Directors on the date of the Merger Agreement
(to be mutually agreed upon by the Company and SunTrust) to be elected or
appointed as directors of SunTrust as of the Effective Time. SunTrust has also
agreed to elect Richard G. Tilghma, the current Chief Executive Officer and
Chairman of the Board of Crestar, to the Board of Directors of SunTrust at the
Effective Time.
The Option Agreement. In connection with the Merger Agreement, SunTrust
and the Company entered into a Stock Option Agreement, dated as of July 20, 1998
(the "Option Agreement"). The Option Agreement is designed to enhance the
likelihood that the Merger will be successfully consummated in accordance with
the terms contemplated by the Merger Agreement. Pursuant to the Option
Agreement, the Company granted SunTrust an option to purchase, subject to
adjustments in certain circumstances, up to 22,338,161 fully paid and
non-assessable shares of Common Stock (the "Option Shares") at a price per share
equal to $62.875. Also in connection with the Merger Agreement, SunTrust and
Crestar entered into a Stock Option Agreement substantially identical to the
Option Agreement, which provides for the grant of an option to purchase up to
21,097,697 shares of common stock of SunTrust to Crestar on substantially the
same terms as the Option Agreement.
Subject to applicable law and regulatory restrictions, SunTrust may
exercise the Option, in whole or in part, if, but only if, both an Initial
Triggering Event (as defined below) and a Subsequent Triggering Event (as
defined below) have occurred prior to the occurrence of an Exercise Termination
Event (as defined below), provided that written notice of such exercise as
required by the Option Agreement is provided within 90 days following such
Subsequent Triggering Event (or such later period as provided in the Option
Agreement).
As defined in the Option Agreement, "Initial Triggering Event" means any
of the following events or transactions occurring after the date of signing the
Option Agreement:
(i) The Company or any of its subsidiaries (each a "Company
Subsidiary"), without having received SunTrust'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 the 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 SunTrust or any of
its subsidiaries (each a "SunTrust Subsidiary") or the board of
directors of the Company shall have recommended that the
shareholders of the Company approve or accept any Acquisition
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Transaction other than as contemplated by the Merger Agreement.
For purposes of the Option Agreement, "Acquisition Transaction"
means (a) a merger, consolidation or share exchange, or any
similar transaction, involving the Company or a Company
Subsidiary, provided, however, that in no event shall (i) any
merger, consolidation or similar transaction involving only the
Company and one or more of the Company Subsidiaries, or
involving only any two or more of such Company Subsidiaries, or
(ii) any merger, consolidation or similar transaction as to
which the shareholders of the Company 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 the 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 Merger
Agreement, (b) a purchase, lease or other acquisition of assets
of the Company or any Company Subsidiary (other than any
purchase, lease or other acquisition not involving all or a
substantial portion of the assets of the Company and the Company
Subsidiaries taken as a whole), provided that any such
transaction is not entered into in violation of the terms of the
Merger 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 the
Company or any Company Subsidiary or (d) any substantially
similar transaction;
(ii) The board of directors of the Company does not recommend that
the shareholders of the Company approve the Merger Agreement or
publicly withdraws or modifies, or publicly announces its
intention to withdraw or modify, in any manner adverse to
SunTrust, its recommendation that its shareholders approve the
Merger Agreement;
(iii) Any person other than SunTrust or any SunTrust Subsidiary or any
Company 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 the
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 SunTrust or any SunTrust Subsidiary shall
have made a bona fide proposal to the Company 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 the Company or its
shareholders to engage in an Acquisition Transaction, the
Company shall have breached any covenant or obligation contained
in the Merger Agreement and such breach (x) would entitle
SunTrust to terminate the Merger Agreement and (y) shall not
have been cured prior to the Notice Date (as defined below);
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(vi) Any person other than SunTrust or any SunTrust Subsidiary, other
than in connection with a transaction to which SunTrust 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, which application or notice has been accepted for
processing, for approval to engage in an Acquisition
Transaction;
(vii) The shareholders of the Company shall have voted and failed to
approve the Merger 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 SunTrust or
any SunTrust Subsidiary) shall have made, or disclosed an
intention to make, a proposal to engage in an Acquisition
Transaction; or
(viii) Any person other than SunTrust or any SunTrust 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.
As defined in the Option Agreement, "Subsequent Triggering Event" means
either of the following events or transactions occurring after the date of
signing the Option Agreement:
(i) The acquisition by any person, other than any SunTrust
Subsidiary or any Company 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) above, except that the percentage referred to in
clause (c) shall be 20%.
As defined in the Option Agreement, "Exercise Termination Event" means
each of the following: (i) the Effective Time of the Merger; (ii) termination of
the Merger Agreement in accordance with the provisions thereof (other than a
termination resulting from a willful breach by the Company of a provision of the
Merger 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 Merger Agreement if such termination follows the occurrence
of an Initial Triggering Event or is a termination by SunTrust pursuant to
Section 8.1(h) thereof resulting from a willful breach by the Company of a
provision of the Merger Agreement.
As provided in the Option Agreement, if SunTrust is entitled to and
wishes to exercise the Option, it is obligated to send to the Company 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
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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, regulatory or
administrative agency or commission, domestic or foreign (a "Governmental
Entity"), is required in connection with such purchase, SunTrust is obligated to
promptly file the required notice or application for approval and expeditiously
process the same and the period of time that otherwise would run pursuant to
this sentence will run instead 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 will be deemed to occur on
the Notice Date relating thereto.
Certain regulatory approvals may be required before an acquisition of
Common Stock pursuant to an exercise of the Option could be completed.
Neither of the parties to the Option Agreement may assign any of its
rights or obligations under the Option Agreement or the Option created
thereunder to any other person, without the express written consent of the other
party, except that if a Subsequent Triggering Event shall have occurred prior to
an Exercise Termination Event, SunTrust, subject to the express provisions of
the Option Agreement, may assign in whole or in part its rights and obligations
thereunder within 90 days following such Subsequent Triggering Event (or such
later period as may be provided pursuant to the Option Agreement).
In addition, any shares of Common Stock purchased upon the exercise of
the Option may be resold by SunTrust pursuant to registration rights under the
Option Agreement.
In the event of any change in the 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 of the Option will be appropriately
adjusted. Whenever the number of shares of Common Stock purchasable upon
exercise of the Option is adjusted as provided in the Option Agreement, 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.
At any time after the occurrence of a Repurchase Event (as defined
below) (i) at the request of the Holder (which term shall mean the holder or
holders of the Option), delivered prior to an Exercise Termination Event (or
such later period as provided in the Option Agreement), the Company (or any
successor thereto) must 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 the 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 provided in the
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Option Agreement), the Company (or any successor thereto) must repurchase such
number of the Option Shares from the Owner as the Owner designates 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" means 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 the Company, (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 the 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 the Company's assets, the sum of the price paid in such
sale for such assets and the current market value of the remaining assets of the
Company 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 the Company outstanding at the time of such sale.
In determining the market/offer price, the value of consideration other than
cash will 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 Company, whose determination will be conclusive and binding on all
parties.
A "Repurchase Event" will be deemed to have occurred upon the occurrence
of any of the following events or transactions after the date of the Option
Agreement:
(i) the acquisition by any person (other than SunTrust or any
SunTrust Subsidiary) of beneficial ownership of 50% or more of
the then outstanding Common Stock; or
(ii) the consummation of any Acquisition Transaction, except that the
percentage referred to in clause (c) shall be 50%.
If, prior to an Exercise Termination Event, the Company enters into an
agreement (i) to consolidate with or merge into any person, other than SunTrust
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 SunTrust or one of its subsidiaries, to merge into the Company and the
Company is the continuing or surviving corporation, but, in connection with such
merger, the then outstanding shares of Common Stock are 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 SunTrust or one of its subsidiaries,
then, and in each such case, the agreement governing such transaction must make
proper provision so that the Option will, upon the consummation of any such
transaction and upon the terms and conditions set forth in the Option Agreement,
be converted into, or exchanged for, an option (the "Substitute Option"), at the
election of the Holder, of either (x) the
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Acquiring Corporation (as defined in the Option Agreement) or (y) any person
that controls the Acquiring Corporation.
Copies of the Option Agreement and the Merger Agreement are filed as
exhibits to this Schedule 13D and are incorporated herein by reference. The
foregoing summary is not intended to be complete and is qualified in its
entirety by reference to such exhibits.
Purchase of Common Stock. Subject to market conditions and developments
with respect to the Merger, SunTrust may purchase shares of Common Stock in the
open market or in privately negotiated transactions.
ITEM 5. INTEREST IN SECURITIES OF THE COMPANY.
(a) SunTrust may be deemed to be the beneficial owner of the Option
Shares. As provided in the Option Agreement, SunTrust may exercise the Option
only upon the happening of one or more events, none of which has occurred. See
Item 4 hereof. If the Option were exercised in full, the Option Shares would
represent approximately 16.6% of the currently outstanding Common Stock (after
giving effect to the issuance of such Option Shares). SunTrust has no right to
vote or dispose of the shares of Common Stock subject to the Option unless and
until such time as the Option is exercised. To the best knowledge of SunTrust,
none of the persons listed in Schedule I hereto beneficially owns any shares of
Common Stock.
(b) If SunTrust were to exercise the Option, it would have sole power to
vote and, subject to the terms of the Option Agreement, sole power to direct the
disposition of the shares of Common Stock covered thereby.
(c) SunTrust acquired the Option in connection with the Merger
Agreement. See Item 4 hereof.
To the best knowledge of SunTrust, none of the persons listed in
Schedule I hereto has effected any transactions in Common Stock during the past
60 days.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO SECURITIES OF THE COMPANY.
Except as described in Item 4 and Item 5 hereof, neither SunTrust nor,
to the best of its knowledge, any of the persons listed on Schedule I hereto,
has any contract, arrangement, understanding or relationship with any other
person with respect to any securities of the Company,
Page 9 of 11 Pages
<PAGE> 11
including the transfer or voting of any of the securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of profits,
division of profits or losses, or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Agreement and Plan of Merger, dated as of July 20, 1998, by and among
SunTrust Banks, Inc., SMR Corporation (Va.) and Crestar Financial Corporation.
Stock Option Agreement, dated as of July 20, 1998, between SunTrust
Banks, Inc. and Crestar Financial Corporation.
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<PAGE> 12
After reasonable inquiry and to the best of my knowledge and belief, I
hereby certify that the information set forth in this statement is true,
complete and correct.
Dated: July 30, 1998
SUNTRUST BANKS, INC.
By: /s/ Raymond D. Fortin
-----------------------------
Name: Raymond D. Fortin
Title: Senior Vice President
and General Counsel
Page 11 of 11 Pages
<PAGE> 13
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
SUNTRUST BANKS, INC.
The names, business addresses and present principal occupations of the
directors and executive officers of SunTrust Banks, Inc. are set forth below. If
no business address is given, the director's or officer's business address is
303 Peachtree Street, N.E., Atlanta, Georgia 30308. The business address of each
of the directors of SunTrust Banks, Inc. is also the business address of such
director's employer, if any. Directors of SunTrust Banks, Inc. are identified by
an asterisk. Unless otherwise indicated, all directors and officers listed below
are citizens of the United States.
<TABLE>
<CAPTION>
Name Present Principal Occupation or Employment and Address
- ---- ------------------------------------------------------
<S> <C>
*James B. Williams Chairman of the Board of SunTrust Banks, Inc.
*Summerfield K. Johnston Chairman of the Board and Chief Executive
Officer of Coca-Cola Enterprises, Inc., a
producer and distributor of products of the
Coca- Cola Company and other liquid
non-alcoholic refreshment products. 2500 Windy
Ridge Parkway, 14th Floor, Atlanta, GA 30339
*Larry L. Prince Chairman of the Board and Chief Executive
Officer of Genuine Parts Company, a service
organization engaged in the distribution of
automotive replacement parts, industrial
replacement parts and office products. 2999
Circle 75 Parkway, Atlanta, GA 30339
*R. Randall Rollins Chairman of the Board and Chief Executive
Officer of Rollins, Inc., a consumer services
company. 2170 Piedmont Road, N.E., Atlanta, GA
30324
*M. Douglas Ivester Chairman of the Board and Chief Executive
Officer of The Coca-Cola Company. One Coca-Cola
Plaza, Suite 2512, North Tower, Atlanta, GA
30313
*J. Hyatt Brown Chairman, President and Chief Executive Officer
of Poe & Brown, Inc., an insurance agency. 2200
S. Ridgewood Avenue, Daytona Beach, FL 32114
</TABLE>
<PAGE> 14
<TABLE>
<S> <C>
*Alston D. Correll Chairman of the Board and Chief Executive
Officer of Georgia- Pacific Corporation, a
manufacturer and distributor of pulp, paper and
building products. 133 Peachtree Street, N.E.,
51st Floor, Atlanta, GA 30303
*David H. Hughes Chairman of the Board and Chief Executive
Officer of Hughes Supply, Inc., a distributor of
construction materials.
*Scott L. Probasco Chairman of the Executive Committee of SunTrust
Bank, Chattanooga, a banking subsidiary of
SunTrust Banks, Inc. 736 Market Street,
Chattanooga, TN 37402
*A. W. Dahlberg Chairman of the Board, President and Chief
Executive Officer of The Southern Company, an
investor-owned electric utility group. 270
Peachtree Street, N.W., Suite 2200, Atlanta, GA
30303
*L. Phillip Humann Chief Executive Officer and President of
SunTrust Banks, Inc.
*Joseph L. Lanier, Jr. Chairman of the Board and Chief Executive
Officer of Dan River, Inc., a textile
manufacturing company. 2291 Memorial Drive,
Danville, VA 24541
John W. Spiegel Executive Vice President and Chief Financial
Officer of SunTrust Banks, Inc.
E. Jenner Wood III Executive Vice President of SunTrust Banks, Inc.
John W. Clay, Jr. Executive Vice President of SunTrust Banks, Inc.
and Chairman of the Board and Chief Executive
Officer of SunTrust Banks of Tennessee, Inc.,
SunTrust Banks, Inc.'s Tennessee banking
affiliate.
Theodore J. Hoepner Executive Vice President of SunTrust Banks, Inc.
and Chairman of the Board, President and Chief
Executive Officer of SunTrust Banks of Florida,
Inc.
Robert R. Long Executive Vice President of SunTrust Banks, Inc.
and Chairman of the Board, President and Chief
Executive Officer of SunTrust Banks of Georgia,
Inc. and SunTrust Bank, Atlanta.
</TABLE>
<PAGE> 15
Exhibit Index
<TABLE>
<S> <C>
2.1 Agreement and Plan of Merger, dated as of July 20, 1998, by and among,
by and between SunTrust Banks, Inc., SMR Corporation (Va.) and Crestar
Financial Corporation.
99.1 Stock Option Agreement, dated as of July 20, 1998, between SunTrust
Banks, Inc. and Crestar Financial Corporation.
</TABLE>
<PAGE> 1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SUNTRUST BANKS, INC.
CRESTAR FINANCIAL CORPORATION
AND
SMR CORPORATION (VA.)
DATED AS OF JULY 20, 1998
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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 (VA.), 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.
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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.
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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
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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
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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
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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
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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,
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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
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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,
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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
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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
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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
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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
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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
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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
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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
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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
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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,
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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.
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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.
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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
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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
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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.
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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
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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.
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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,
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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.
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(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.
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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.
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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
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<PAGE> 32
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;
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(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
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(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;
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(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
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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
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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 (VA.)
By: /s/ L. PHILLIP HUMANN
------------------------------------
L. Phillip Humann
President
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<PAGE> 1
EXHIBIT 99.1
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").
WITNESSETH:
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
<PAGE> 2
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);
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<PAGE> 3
(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.
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(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
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<PAGE> 5
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
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<PAGE> 6
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
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<PAGE> 7
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
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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%.
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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
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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
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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:
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(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.
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<PAGE> 13
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]
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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
