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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 20, 1998
-------------
SunTrust Banks, Inc.
--------------------
(Exact name of registrant as specified in its charter)
Georgia 001-08918 58-1575035
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
303 Peachtree St., N.E., Atlanta, Georgia 30308
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (404) 588-7711
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Item 5. Other Events
On July 20, 1998, the Registrant issued a Press Release announcing that
Registrant and Crestar Financial Corporation ("Crestar") had entered into a
definitive Agreement and Plan of Merger (the "Merger Agreement") providing for a
merger of a wholly owned subsidiary of Registrant with and into Crestar (the
"Merger"). Under the terms of the Merger Agreement, Crestar shareholders will
receive, in a tax-free exchange, 0.96 shares of Registrant's common stock for
each share of Crestar common stock. It is intended that the Merger will be
accounted for as a pooling-of-interests. In connection with the announcement,
the board of directors of Registrant has rescinded its stock repurchase
authorization.
Completion of the Merger is subject to certain conditions, including
(i) the approval of the shareholders of the Registrant and Crestar, (ii) the
approval of the appropriate state and federal bank regulators and other
governmental agencies, (iii) the receipt by Registrant and Crestar of letters
from KPMG Peat Marwick LLP and Arthur Andersen LLP that the transaction
contemplated by the Merger Agreement qualifies for pooling-of-interests
accounting treatment, (iv) the receipt by Registrant and Crestar of opinions
from King & Spalding and Skadden, Arps, Slate, Meagher & Flom LLP, respectively,
that the Merger will be treated for federal tax purposes as a tax free
reorganization and (v) other conditions to closing customary for a transaction
of this type.
Contemporaneously with the execution of the Merger Agreement,
Registrant and Crestar entered into option agreements (the "Stock Option
Agreements"). The Stock Option Agreements provide (i) Registrant with the right
to purchase a number of shares of Crestar common stock equal to 19.9% of
Crestar's outstanding common stock and (ii) Crestar with the right to purchase a
number of shares of Registrant common stock equal to 9.9% of Registrant's
outstanding common stock. The price per share of Crestar common stock payable
upon exercise of the option is $62-7/8 and the price per share of Registrant
common stock payable upon exercise of the option is $87.00. The options granted
under the Stock Option Agreements are exercisable only upon the occurrence of
certain triggering events which are defined in the Stock Option Agreements. No
triggering event has occurred at this time for either of the Stock Option
Agreements.
The foregoing description is qualified in its entirety by reference to
the complete text of the Merger Agreement and the Stock Option Agreements,
copies of which are filed as Exhibits 2.1, 2.2 and 2.3, respectively, to this
current report on Form 8-K and are incorporated by reference herein in their
entirety.
A copy of the news release, dated July 20, 1998 (the "News Release"),
relating to the Merger is filed as Exhibit 99.1 to this current report on Form
8-K and is incorporated herein by reference. A copy of the presentation
materials (the "Presentation Materials") given to analysts and certain other
parties on July 20, 1998 relating to the Merger is attached as Exhibit 99.2 to
this current report on Form 8-K and is incorporated herein by reference.
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The News Release and certain of the Presentation Materials contain,
among other things, certain forward-looking statements regarding each of the
Registrant, Crestar and the combined companies following the Merger, including
statements relating to cost savings, enhanced revenues and accretion to reported
earnings that may be realized from the Merger, and certain restructuring charges
expected to be incurred in connection with the Merger. Such forward-looking
statements involve certain risks and uncertainties, including a variety of
factors that may cause the Registrant's actual results to differ materially from
the anticipated results or other expectations expressed in such forward-looking
statements. Factors that might cause such a difference include, but are not
limited to: (1) expected cost savings from the Merger may not be fully realized
or realized within the expected time frame; (2) revenues following the Merger
may be lower than expected, or deposit attrition, operating costs or customer
loss and business disruption following the Merger may be greater than expected;
(3) competitive pressures among depository and other financial institutions may
increase significantly; (4) costs or difficulties related to the integration of
the business of the Registrant and Crestar may be greater than expected; (5)
changes in the interest rate environment may reduce margins; (6) general
economic or business conditions, either nationally or in the states or regions
in which the Registrant does business, may be less favorable than expected,
resulting in, among other things, a deterioration in credit quality or a reduced
demand for credit; (7) legislative or regulatory changes may adversely affect
the businesses in which the Registrant is engaged; and (8) changes may occur in
the securities markets.
ITEM 7. Financial Statements and Exhibits
<TABLE>
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(c) Exhibits
<S> <C> <C>
2.1 Agreement and Plan of Merger, dated July 20,
1998, by and among Registrant, Crestar
Financial Corporation and SMR Corporation.
2.2 Stock Option Agreement, dated July 20, 1998,
by and between Registrant (as Grantee) and
Crestar Financial Corporation (as Issuer).
2.3 Stock Option Agreement, dated July 20, 1998,
by and between Crestar Financial Corporation
(as Grantee) and Registrant (as Issuer).
99.1 Text of News Release Relating to the Merger
dated July 20, 1998.
99.2 Text of Presentation Material Relating to
the Merger dated July 20, 1998.
</TABLE>
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SUNTRUST BANKS, INC.
(Registrant)
Date: July 20, 1998 By: /s/ Raymond D. Fortin
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Raymond D. Fortin
Senior Vice President
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EXHIBIT INDEX
<TABLE>
<S> <C>
2.1 Agreement and Plan of Merger, dated July 20, 1998, by and among
Registrant, Crestar Financial Corporation and SMR Corporation.
2.2 Stock Option Agreement, dated July 20, 1998, by and between Registrant
(as Grantee) and Crestar Financial Corporation (as Issuer).
2.3 Stock Option Agreement, dated July 20, 1998, by and between Crestar
Financial Corporation (as Grantee) and Registrant (as Issuer).
99.1 Text of News Release Relating to the Merger dated July 20, 1998.
99.2 Text of Presentation Materials Relating to the Merger dated July 20,
1998.
</TABLE>
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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SUNTRUST BANKS, INC.
CRESTAR FINANCIAL CORPORATION
AND
SMR CORPORATION
DATED AS OF JULY 20, 1998
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TABLE OF CONTENTS
<TABLE>
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Page
<S> <C>
ARTICLE I THE MERGER...................................................2
1.1 Merger..............................................2
1.2 Effective Time......................................2
1.3 Effect of Merger....................................2
1.4 Articles of Incorporation and Bylaws................2
1.5 Directors and Officers..............................2
1.6 Additional Actions..................................3
1.7 Tax Consequences; Accounting Treatment..............3
ARTICLE II CONVERSION OF SHARES.........................................3
2.1 Conversion of Shares................................3
2.2 Assumption of Employee and Director Stock Options ..4
2.3 Exchange of Certificates............................5
2.4 Closing of Crestar's Transfer Books.................7
2.5 Changes in SunTrust Common Stock....................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SUNTRUST...................8
3.1 Corporate Organization..............................8
3.2 Authority...........................................8
3.3 Capitalization......................................8
3.4 Subsidiaries........................................9
3.5 Information in Disclosure Documents,
Registration Statement, Etc.........................9
3.6 Consents and Approvals; No Violation................10
3.7 Reports.............................................10
3.8 Financial Statements................................11
3.9 Taxes...............................................11
3.10 Employee Plans......................................11
3.11 Material Contracts..................................13
3.12 Absence of Certain Changes or Events................13
3.13 Litigation..........................................13
3.14 Compliance with Laws and Orders.....................13
3.15 Agreements with Bank Regulators, Etc................14
3.16 SunTrust Ownership of Stock.........................14
3.17 Accounting Treatment; Tax Treatment.................14
3.18 Fees................................................14
3.19 SunTrust Action.....................................15
3.20 Vote Required.......................................15
3.21 Material Interests of Certain Persons...............15
</TABLE>
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<TABLE>
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3.22 Intellectual Property.................................15
3.23 Interest Rate Risk Management Instruments.............16
3.24 Insurance.............................................16
3.25 Environmental Matters.................................16
3.26 Rescission of Repurchases.............................18
3.27 Disclosure Letter.....................................18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF CRESTAR......................18
4.1 Corporate Organization................................18
4.2 Authority.............................................18
4.3 Capitalization........................................19
4.4 Subsidiaries..........................................19
4.5 Information in Disclosure Documents,
Registration Statement, Etc...........................20
4.6 Consents and Approvals; No Violation..................20
4.7 Reports...............................................21
4.8 Financial Statements..................................21
4.9 Taxes.................................................21
4.10 Employee Plans........................................22
4.11 Material Contracts....................................23
4.12 Absence of Certain Changes or Events..................24
4.13 Litigation............................................24
4.14 Compliance with Laws and Orders.......................24
4.15 Agreements with Bank Regulators, Etc..................25
4.16 Crestar Ownership of Stock............................25
4.17 Accounting Treatment; Tax Treatment...................25
4.18 Fees..................................................25
4.19 Crestar Action........................................26
4.20 Vote Required.........................................26
4.21 Material Interests of Certain Persons.................26
4.22 Intellectual Property.................................26
4.23 Interest Rate Risk Management Instruments.............27
4.24 Insurance.............................................27
4.25 Environmental Matters.................................28
4.26 Rescission of Repurchases.............................28
4.27 Disclosure Letter.....................................28
ARTICLE V COVENANTS......................................................28
5.1 Acquisition Proposals.................................28
5.2 Interim Operations of Crestar.........................29
5.3 Interim Operations of SunTrust........................31
5.4 Coordination of Dividends.............................31
5.5 Employee Matters......................................32
5.6 Access and Information................................33
</TABLE>
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<TABLE>
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5.7 Certain Filings, Consents and Arrangements............34
5.8 State Takeover Statutes...............................34
5.9 Indemnification and Insurance.........................34
5.10 Additional Agreements.................................35
5.11 Publicity.............................................36
5.12 Preparation of the Registration Statement and
the Proxy Statement Shareholders' Meetings............36
5.13 Securities Act; Pooling-of-Interests..................37
5.14 Stock Exchange Listings...............................37
5.15 Shareholder Litigation................................37
5.16 Pooling-of-Interests and Tax-free
Reorganization Treatment..............................38
5.17 Letters of Accountants................................38
5.18 Expenses..............................................38
5.19 Adverse Action........................................39
5.20 Standstill Agreements; Confidentiality
Agreements ...........................................39
5.21 Issuance of Treasury Shares...........................39
5.22 Redemption of Securities. ...........................39
ARTICLE VI CLOSING MATTERS................................................39
6.1 The Closing...........................................39
6.2 Documents and Certificates............................40
ARTICLE VII CONDITIONS.....................................................40
7.1 Conditions to Each Party's Obligations to Effect
the Merger............................................40
7.2 Conditions to Obligation of Crestar to Effect the
Merger................................................41
7.3 Conditions to Obligation of SunTrust to Effect
the Merger............................................42
ARTICLE VIII MISCELLANEOUS..................................................42
8.1 Termination...........................................42
8.2 Expense Reimbursement. ..............................43
8.3 Non-Survival of Representations, Warranties
and Agreements........................................45
8.4 Waiver and Amendment..................................45
8.5 Entire Agreement......................................45
8.6 Applicable Law........................................45
8.7 Certain Definitions; Headlines........................45
8.8 Notices...............................................46
8.9 Counterparts..........................................48
8.10 Parties in Interest; Assignment.......................48
8.11 Severability..........................................48
</TABLE>
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Exhibits
Exhibit A -- Crestar Option Agreement
Exhibit B -- SunTrust Option Agreement
Exhibit C -- SunTrust Affiliate Letter
Exhibit D -- Crestar Affiliate Letter
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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, 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:
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ARTICLE I
THE MERGER
1.1 MERGER. Subject to the terms and conditions of this Agreement,
at the Effective Time (as defined in Section 1.2), Sub will be merged with and
into Crestar (the "Merger") in accordance with the applicable provisions of the
Virginia Stock Corporation Act ("VSCA") and the separate corporate existence of
Sub will thereupon cease.
SunTrust may at any time in its discretion change the method of
effecting the combination of Sub with Crestar (including, without limitation,
the provisions of this Article I) if and to the extent it deems such change to
be desirable, including, without limitation, to provide for a merger of Crestar
with or into SunTrust; provided, however, that no such change shall (A) alter or
change the amount or kind of consideration to be issued to holders of shares of
common stock, par value $5.00 per share, of Crestar ("Crestar Common Stock") as
provided for in this Agreement, (B) adversely affect the tax treatment of
Crestar or Crestar's shareholders as a result of the Merger or (C) materially
impede or delay consummation of the transactions contemplated by this Agreement.
1.2 EFFECTIVE TIME. As soon as practicable after satisfaction or
waiver of all conditions to the Merger, Sub and Crestar (the "Constituent
Corporations") shall cause articles of merger complying with the requirements of
the VSCA to be filed with the State Corporation Commission of the Commonwealth
of Virginia ("Virginia Articles of Merger"). The Merger will become effective
upon the filing of the Virginia Articles of Merger, or such later time as shall
be specified in such filing ("Effective Time").
1.3 EFFECT OF MERGER. The Merger will have the effects specified
in the VSCA. Without limiting the generality of the foregoing, Crestar will be
the surviving corporation in the Merger (sometimes hereinafter referred to as
the "Surviving Corporation") and will continue to be governed by the laws of the
State of Virginia, and the separate corporate existence of Crestar and all of
its rights, privileges, powers and franchises, public as well as private, and
all its debts, liabilities and duties as a corporation organized under the VSCA,
will continue unaffected by the Merger.
1.4 ARTICLES OF INCORPORATION AND BYLAWS. The Articles of
Incorporation and Bylaws of Crestar in effect immediately prior to the Effective
Time shall be the Articles of Incorporation and Bylaws of the Surviving
Corporation, until amended in accordance with applicable law.
1.5 DIRECTORS AND OFFICERS.
(a) Except as provided in Section 1.5(b), the directors and
officers of Crestar immediately prior to the Effective Time will be the
directors and officers, respectively, of the Surviving Corporation, from and
after the Effective Time, until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the terms of the Surviving Corporation's Articles of
Incorporation and Bylaws and the VSCA.
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(b) As of the Effective Time, in accordance with the Bylaws
of SunTrust, the Board of Directors of SunTrust shall increase its size to such
number as is necessary to create three vacancies and shall elect three
non-employee Crestar directors to fill such vacancies (the "Crestar Directors").
The identity of the non-employee Crestar Directors shall be mutually agreed upon
by Crestar and SunTrust prior to the Effective Time. Each non-employee Crestar
Director so agreed upon shall be placed in a separate class on SunTrust's Board
of Directors. In addition to the Crestar Directors, the Board of Directors of
SunTrust shall increase its size to such number as is necessary to create a
vacancy in order to elect Richard G. Tilghman to the Board of Directors of
SunTrust.
1.6 ADDITIONAL ACTIONS. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any further deeds,
assignments or assurances in law or any other acts are necessary or desirable to
(i) vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Crestar, or (ii) otherwise carry out the purposes of
this Agreement, Crestar and its officers and directors shall be deemed to have
granted to the Surviving Corporation an irrevocable power of attorney to execute
and deliver all such deeds, assignments or assurances in law or any other acts
as are necessary or desirable to (i) vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of Crestar or (ii) otherwise carry
out the purposes of this Agreement, Crestar and its officers and directors shall
be deemed to have granted to the Surviving Corporation an irrevocable power of
attorney to execute and deliver all such deeds, assignments or assurances in law
and to all acts necessary or proper to vest, perfect or confirm title to and
possession of such rights, properties or assets in the Surviving Corporation and
otherwise to carry out the purposes of this Agreement, and the officers and
directors of the Surviving Corporation are authorized in the name of Crestar or
otherwise to take any and all such action.
1.7 TAX CONSEQUENCES; ACCOUNTING TREATMENT. It is intended that
the Merger shall (i) constitute a reorganization within the meaning of Section
368(a) of the Code and that this Agreement shall constitute a "plan of
reorganization" for the purposes of Section 368 of the Code, and (ii) be
accounted for as a "pooling of interests" under generally accepted accounting
principles.
ARTICLE II
CONVERSION OF SHARES
2.1 CONVERSION OF SHARES. Subject to Section 2.3, at the Effective
Time:
(a) each share of Crestar Common Stock issued and
outstanding immediately prior to the Effective Time, including each attached
right issued pursuant to the Rights Agreement between Crestar and Mellon Bank,
NA, as Rights Agent, dated as of June 23, 1989 (the "Crestar Rights Agreement"),
other than shares of Crestar Common Stock owned by SunTrust or any direct or
indirect wholly-owned subsidiary of SunTrust (except for any such shares of
Crestar Common Stock held in trust accounts, managed accounts or in any similar
manner as trustee or in a fiduciary capacity ("Trust Account Shares") or shares
held in respect of a debt previously contracted ("DPC Shares")), will be
canceled, retired and converted into 0.96 (the "Conversion Ratio") shares of
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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
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Award Agreement dated October 27, 1995 between Crestar and Richard G. Tilghman
(the "Performance Share Award") that is outstanding immediately prior to the
Effective Time, the Performance Shares underlying such Performance Share Award
shall be converted into Performance Shares of SunTrust ("New Performance
Shares") on the same terms as are in effect on the date hereof, adjusted such
that the number of shares of SunTrust Common Stock to be subject to the New
Performance Share Award shall be equal to (x) the number of shares of Crestar
Common Stock subject to such Performance Share Award, multiplied by (y) the
Conversion Ratio (rounded to the nearest whole share).
(c) On or before the Effective Time, SunTrust shall file a
registration statement with the Securities and Exchange Commission (the
"Commission") registering a number of shares of SunTrust Common Stock necessary
to fulfill SunTrust's obligations under this Section 2.2. Such registration
statement shall be kept effective (and the current status of the prospectus
required thereby shall be maintained) for at least as long as New Options,
remain outstanding. Prior to the Effective Time, SunTrust shall reserve for
issuance the number of shares of SunTrust Common Stock necessary to satisfy
SunTrust's obligations under this Section 2.2.
2.3 EXCHANGE OF CERTIFICATES.
(a) Prior to the Effective Time, SunTrust shall designate
SunTrust Bank, Atlanta, to act as exchange agent (the "Exchange Agent") in
connection with the Merger pursuant to an exchange agent agreement providing
for, among other things, the matters set forth in this Section 2.3. At or prior
to the Effective Time, SunTrust shall deposit, or shall cause to be deposited,
with the Exchange Agent, for the benefit of the holders of Certificates, for
exchange in accordance with this Article II, certificates representing the
shares of SunTrust Common Stock, and the cash in lieu of fractional shares (such
cash and certificates for shares of SunTrust Common Stock, together with any
dividends or distributions with respect thereto, being hereinafter referred to
as the "Exchange Fund") to be issued in exchange for outstanding shares of
Crestar Common Stock in accordance with the terms of this Article II. Except as
set forth herein, from and after the Effective Time each holder of a certificate
that immediately prior to the Effective Time represented outstanding shares of
Crestar Common Stock ("Certificate") shall be entitled to receive in exchange
therefor, upon surrender thereof to the Exchange Agent, the Merger Consideration
for each share of Crestar Common Stock so represented by the Certificate
surrendered by such holder thereof. The certificates representing shares of
SunTrust Common Stock which constitute the Merger Consideration shall be
properly issued and countersigned and executed and authenticated, as
appropriate.
(b) Promptly after the Effective Time, SunTrust shall cause
the Exchange Agent to mail to each record holder of a Certificate a notice and
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificate shall pass, only upon proper delivery
of the Certificate to the Exchange Agent) advising such holder of the
effectiveness of the Merger and the procedures to be used in effecting the
surrender of the Certificate in exchange for Merger Consideration. Crestar shall
have the right to review both the letter of transmittal and the instructions
prior to the Effective Time and provide reasonable comments thereon. Upon
surrender to the Exchange Agent of a Certificate, together with such letter of
transmittal duly executed and completed in accordance with the instructions
thereon, and such other documents as may reasonably
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be requested, the Exchange Agent shall promptly deliver to the person entitled
thereto (x) a certificate representing that number of whole shares of SunTrust
Common Stock to which such holder of Crestar Common Stock shall have become
entitled pursuant to the provisions of this Article II and (y) a check
representing the amount of cash in lieu of fractional shares, if any, which such
holder has the right to receive in respect of the Certificate surrendered by
such holder thereof, and such Certificate shall forthwith be canceled.
(c) If delivery of all or part of the Merger Consideration
is to be made to a person other than the person in whose name a surrendered
Certificate is registered, it shall be a condition to such delivery or exchange
that the Certificate surrendered shall be properly endorsed or shall be
otherwise in proper form for transfer and that the person requesting such
delivery or exchange shall have paid any transfer and other taxes required by
reason of such delivery or exchange in a name other than that of the registered
holder of the Certificate surrendered or shall have established to the
reasonable satisfaction of the Exchange Agent that such tax either has been paid
or is not payable.
(d) Subject to Section 2.3(e), until surrendered and
exchanged in accordance with this Section 2.3, each Certificate shall, after the
Effective Time, represent solely the right to receive the Merger Consideration,
multiplied by the number of shares of Crestar Common Stock evidenced by such
Certificate, together with any dividends or other distributions as provided in
Sections 2.3(e) and 2.3(f), and shall have no other rights. From and after the
Effective Time, SunTrust and Surviving Corporation shall be entitled to treat
such Certificates that have not yet been surrendered for exchange as evidencing
the ownership of the aggregate Merger Consideration into which the shares of
Crestar Common Stock represented by such Certificates may be converted,
notwithstanding any failure to surrender such Certificates. One hundred eighty
(180) days following the Effective Time, the Exchange Agent shall deliver to the
Surviving Corporation any shares of SunTrust Common Stock and funds (including
any interest received with respect thereto) which SunTrust has made available to
the Exchange Agent and which have not been disbursed to holders of Certificates,
and thereafter such holders shall be entitled to look to SunTrust (subject to
abandoned property, escheat or other similar laws) with respect to the shares of
SunTrust Common Stock, cash in lieu of fractional shares and unpaid dividends
and distributions thereon deliverable or payable upon due surrender of their
Certificates. Neither Exchange Agent nor any party hereto shall be liable to any
holder of shares of Crestar Common Stock for any Merger Consideration (or
dividends, distributions or interest with respect thereto) delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
(e) Whenever a dividend or other distribution is declared by
SunTrust on the SunTrust Common Stock, the record date for which is at or after
the Effective Time, the declaration shall include dividends or other
distributions on all shares issuable pursuant to this Agreement, provided that
no dividends or other distributions declared or made with respect to SunTrust
Common Stock shall be paid to the holder of any unsurrendered Certificate with
respect to the share of SunTrust Common Stock represented thereby until the
holder of such Certificate shall surrender such Certificate in accordance with
this Article II. The Surviving Corporation shall pay any dividends or make any
other distributions with a record date prior to the Effective Time which may
have been declared or made by Crestar on Crestar Common Stock in accordance with
the terms of this Agreement on or prior to the Effective Time and which remain
unpaid at the Effective Time.
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<PAGE> 12
(f) If any Certificate shall have been lost, stolen or
destroyed, the Exchange Agent shall deliver in exchange for such lost, stolen or
destroyed certificate, upon the making of an affidavit of that fact by the
holder thereof in form satisfactory to the Exchange Agent, the Merger
Consideration, as may be required pursuant to this Agreement; provided, however,
that the Exchange Agent may, in its sole discretion and as a condition precedent
to the delivery of the Merger Consideration to which the holder of such
certificate is entitled as a result of the Merger, require the owner of such
lost, stolen or destroyed certificate to deliver a bond in such sum as it may
direct as indemnity against any claim that may be made against Crestar, SunTrust
or the Exchange Agent or any other party with respect to the certificate alleged
to have been lost, stolen or destroyed.
(g) Holders of unsurrendered Certificates will not be
entitled to vote at any meeting of SunTrust shareholders.
(h) Notwithstanding anything to the contrary contained
herein, no certificates or scrip representing fractional shares of SunTrust
Common Stock shall be issued upon the surrender for exchange of a Certificate or
Certificates. No dividends or distributions of SunTrust shall be payable on or
with respect to any fractional share and any such fractional share interest will
not entitle the owner thereof to vote or to any rights of shareholders of
SunTrust. In lieu of any such fractional shares, holders of Certificates
otherwise entitled to fractional shares shall be entitled to receive promptly
from the Exchange Agent a cash payment in an amount equal to the fraction of
such share of SunTrust Common Stock to which such holder would otherwise be
entitled multiplied by the Market Price (as defined in Section 8.7).
2.4 CLOSING OF CRESTAR'S TRANSFER BOOKS. Immediately after the
Effective Time, the stock transfer books of Crestar shall be closed. In the
event of a transfer of ownership of Crestar Common Stock which is not registered
in the transfer records of Crestar, the Merger Consideration to be distributed
pursuant to this Agreement may be delivered to a transferee, if a Certificate is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by payment of any applicable stock
transfer taxes. SunTrust and the Exchange Agent shall be entitled to rely upon
the stock transfer books of Crestar to establish the identity of those persons
entitled to receive the Merger Consideration specified in this Agreement for
their shares of Crestar Common Stock, which books shall be conclusive with
respect to the ownership of such shares. In the event of a dispute with respect
to the ownership of any such shares, the Surviving Corporation and the Exchange
Agent shall be entitled to deposit any Merger Consideration represented thereby
in escrow with an independent party and thereafter be relieved with respect to
any claims to such Merger Consideration.
2.5 CHANGES IN SUNTRUST COMMON STOCK. If between the date of this
Agreement and the Effective Time, the shares of SunTrust Common Stock shall be
changed into a different number of shares by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or if a stock
dividend thereon shall be declared with a record date within said period, the
Merger Consideration shall be adjusted accordingly.
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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
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<PAGE> 14
any subscription, option, warrant, right, convertible security or other similar
agreement or commitment. As of the date hereof, except as provided in this
Agreement, there are no voting trusts or other agreements or understandings to
which SunTrust or any SunTrust subsidiary is a party with respect to the voting
of the capital stock of SunTrust. All of the shares of SunTrust Common Stock
issuable in exchange for Crestar Common Stock at the Effective Time in
accordance with this Agreement and all of the shares of SunTrust Common Stock
issuable upon exercise of New Options will be, when so issued, duly authorized,
validly issued, fully paid and nonassessable and will not be subject to
preemptive rights.
3.4 SUBSIDIARIES. The name and state of incorporation of each
significant subsidiary (as defined in Section 8.7) of SunTrust (collectively,
the "Significant Subsidiaries") is set forth in the SunTrust SEC Reports (as
defined in Section 3.7). Each of the Significant Subsidiaries is a bank or a
corporation duly organized, validly existing and in good standing under the laws
of its respective jurisdiction of incorporation or organization and is duly
qualified to do business as a foreign corporation in each jurisdiction in which
its ownership or lease of property or the nature of the business conducted by it
makes such qualification necessary, except for such jurisdictions in which the
failure to be so qualified would not have a Material Adverse Effect. Each of the
Significant Subsidiaries has the requisite corporate power and authority to own,
lease and operate its properties and assets and to carry on its businesses as
they are now being conducted. All outstanding shares of capital stock of each of
the Significant Subsidiaries are owned by SunTrust or another of SunTrust's
subsidiaries and are validly issued, fully paid and (except pursuant to 12 USC
Section 55 in the case of each national bank subsidiary and applicable state law
in the case of each state bank subsidiary) nonassessable, are not subject to
preemptive rights and are owned free and clear of all liens, claims and
encumbrances. There are no outstanding subscriptions, options, warrants, rights,
convertible securities or any other agreements or commitments of any character
relating to the issued or unissued capital stock or other securities of any
Significant Subsidiary obligating any of the Significant Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold additional shares of
its capital stock or obligating any of the Significant Subsidiaries to grant,
extend or enter into any subscription, option, warrant, right, convertible
security or other similar agreement or commitment.
3.5 INFORMATION IN DISCLOSURE DOCUMENTS, REGISTRATION STATEMENT,
ETC. None of the information with respect to SunTrust or any of SunTrust's
subsidiaries provided by SunTrust for inclusion in (i) the Registration
Statement to be filed with the Commission by SunTrust on Form S-4 under the
Securities Act of 1933, as amended (the "Securities Act"), for the purpose of
registering the shares of SunTrust Common Stock to be issued in the Merger (the
"Registration Statement") and (ii) any joint proxy statement of Crestar and
SunTrust ("Proxy Statement") required to be mailed to Crestar's shareholders and
SunTrust's shareholders in connection with the Merger will, in the case of the
Proxy Statement or any amendments or supplements thereto, at the time of the
mailing of the Proxy Statement and any amendments or supplements thereto, and at
the time of the Crestar Meeting and the SunTrust Meeting (each as hereinafter
defined), or, in the case of the Registration Statement, at the time it becomes
effective, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Registration Statement will comply as to form in all material
respects with the provisions of the Securities Act and the rules
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<PAGE> 15
and regulations promulgated thereunder. The Proxy Statement will comply as to
form in all material respects with the provisions of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and the rules and regulations
promulgated thereunder.
3.6 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution
and delivery of this Agreement by SunTrust and Sub nor the consummation by
SunTrust and Sub of the transactions contemplated hereby will (a) conflict with
or result in any breach of any provision of its articles of incorporation or
bylaws, (b) violate, conflict with, constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or
result in the creation of any lien or other encumbrance upon any of the
properties or assets of SunTrust or any of SunTrust's subsidiaries under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture, deed
of trust, license, lease, agreement or other instrument or obligation to which
SunTrust or any of SunTrust's subsidiaries is a party or to which they or any of
their respective properties or assets are subject, except for such violations,
conflicts, breaches, defaults, terminations, accelerations or creations of liens
or other encumbrances, which, either individually or in the aggregate, will not
have a Material Adverse Effect, (c) constitute or result in a violation of any
law, rule, ordinance or regulation or judgment, decree, order, award or
governmental or non-governmental permit or license to which it or any of its
subsidiaries is subject, except for the consents, approvals and notices set
forth below and except for such violations which, either individually or in the
aggregate, will not have a Material Adverse Effect, or (d) require any consent,
approval, authorization or permit of or from, or filing with or notification to,
any court, governmental authority or other regulatory or administrative agency
or commission, including, but not limited to, authorities, agencies and the
staff's thereof regulating financial institutions, domestic (whether federal,
state, municipal or local) or foreign ("Governmental Entity"), except (i)
pursuant to the Exchange Act and the Securities Act, (ii) filing the Virginia
Articles of Merger, (iii) filings required under the securities or blue sky laws
of the various states, (iv) the applications, notices, reports and other filings
required to be made in connection with the approval of the Board of Governors of
the Federal Reserve System (the "Federal Reserve Board") under the Bank Holding
Crestar Act of 1956, as amended (the "BHC Act"), (v) the approvals of any other
Governmental Entities pursuant to state banking laws and regulations (the
"Regulatory Approvals"), (vi) filings and approvals pursuant to any applicable
state takeover law, (vii) pursuant to the rules of the New York Stock Exchange
or (viii) consents, approvals, authorizations, permits, filings or notifications
which, if not obtained or made will not, individually or in the aggregate, have
a Material Adverse Effect.
3.7 REPORTS. Since January 1, 1996, SunTrust and each of
SunTrust's subsidiaries have timely filed all reports, registrations and
statements, together with any required amendments thereto, that they were
required to file with (i) the Commission under Section 12(b), 12(g), 13(a) or
14(a) of the Exchange Act, including, but not limited to Forms 10-K, Forms 10-Q
and proxy statements ("SunTrust SEC Reports"), (ii) the Federal Reserve Board,
(iii) any other Governmental Entities, and (iv) any self-regulatory
organizations ("SROs") and all other reports and statements required to be filed
by SunTrust or SunTrust's subsidiaries, including, without limitation, any
report or statement required to be filed pursuant to laws, rules or regulations
of the United States, any state, or any Governmental Entity, and have paid all
fees and assessments due and payable in connection therewith, except where the
failure to file such report, registration or statement, or to pay such fees
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<PAGE> 16
and assessments, either individually or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect. SunTrust has made available to
Crestar true and complete copies of each of SunTrust's annual reports on Form
10-K for the years 1996 and 1997 and its quarterly report on Form 10-Q for March
31, 1998. As of their respective dates, the SunTrust SEC Reports complied with
the requirements of the Commission and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
3.8 FINANCIAL STATEMENTS. The audited consolidated financial
statements of SunTrust included in SunTrust's annual report on Form 10-K as
filed with the Commission for the year ended December 31, 1997, and the
unaudited interim financial statements of SunTrust as of and for the three
months ended March 31, 1998 included in a quarterly report on Form 10-Q as filed
with the Commission, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be indicated
therein or in the notes thereto) and fairly present the consolidated financial
position of SunTrust and SunTrust's subsidiaries as of the dates thereof and the
results of their operations and cash flows for the periods then ended, subject,
in the case of the unaudited interim financial statements, to normal year-end
and audit adjustments and any other adjustments described therein, and are
derived from the books and records of SunTrust and SunTrust's subsidiaries,
which are complete and accurate in all material respects and have been
maintained in all material respects in accordance with applicable laws and
regulations. There exist no liabilities of SunTrust and its consolidated
subsidiaries, contingent or otherwise of a type required to be disclosed in
accordance with generally accepted accounting practices, except as disclosed in
the SunTrust SEC Reports and except for liabilities which, either individually
or in the aggregate, would not have a Material Adverse Effect. SunTrust's
reserve for possible loan losses as shown in its Quarterly Report on Form 10-Q
for the fiscal quarter ended March 31, 1998 was adequate, within the meaning of
generally accepted accounting principles and safe and sound banking practices.
3.9 TAXES. SunTrust will promptly make available to Crestar, upon
request by Crestar, true and correct copies of the federal, state and local
income tax returns, and state and local property and sales tax returns and any
other tax returns filed by SunTrust and any of SunTrust's subsidiaries for each
of the fiscal years that remains open, as of the date hereof, for examination or
assessment of tax. SunTrust and each SunTrust subsidiary have prepared in good
faith and duly and timely filed, or caused to be duly and timely filed, all
federal, state, local and foreign income, estimated tax, withholding tax,
franchise, sales and other tax returns or reports required to be filed by them
on or before the date hereof, except to the extent that all such failures to
file, taken together, would not have a Material Adverse Effect. Except as
otherwise would not have, either individually or in the aggregate, a Material
Adverse Effect, SunTrust and each of its subsidiaries have paid, or have made
adequate provision or set up an adequate accrual or reserve for the payment of,
all taxes, shown or required to be shown to be owing on all such returns or
reports, together with any interest, additions or penalties related to any such
taxes or to any open taxable year or period.
3.10 EMPLOYEE PLANS. All employee benefit, welfare, bonus, deferred
compensation, pension, profit sharing, stock option, employee stock ownership,
consulting, severance, or fringe benefit plans, formal or informal, written or
oral, and all trust agreements related thereto, relating to any present or
former directors, officers or employees of SunTrust or its subsidiaries
("SunTrust
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<PAGE> 17
Employee Plans") have been maintained, operated, and administered in all
material respects in compliance with their terms and currently comply, and have
at all relevant times complied, in all material respects with the applicable
requirements of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), the Code, and any other applicable laws. With respect to each
SunTrust Employee Plan which is a pension plan (as defined in Section 3(2) of
ERISA): (a) each pension plan as amended (and any trust relating thereto)
intended to be a qualified plan under Section 401(a) of the Code either: (i) has
been determined by the Internal Revenue Service ("IRS") to be so qualified, (ii)
is the subject of a pending application for such determination that was timely
filed, or (iii) will be submitted for such a determination prior to end of the
"remedial amendment period" within the meaning of Section 401(b) of the Code,
(b) there is no accumulated funding deficiency (as defined in Section 302 of
ERISA and Section 412 of the Code), whether or not waived, and no waiver of the
minimum funding standards of such sections has been requested from the IRS, (c)
neither SunTrust nor any of its subsidiaries has provided, or is required to
provide, security to any pension plan pursuant to Section 401(a)(29) of the
Code, (d) the fair market value of the assets of each defined benefit plan (as
defined in Section 3(35) of ERISA) exceeds the value of the "benefit
liabilities" within the meaning of Section 4001(a)(16) of ERISA under such
defined benefit plan as of the end of the most recent plan year thereof ending
prior to the date hereof, calculated on the basis of the actuarial assumptions
used in the most recent actuarial valuation for such defined benefit plan as of
the date hereof, (e) no reportable event described in Section 4043 of ERISA has
occurred for which the 30 day reporting requirement has not been waived has
occurred, (f) no defined benefit plan has been terminated, nor has the Pension
Benefit Guaranty Corporation ("PBGC") instituted proceedings to terminate a
defined benefit plan or to appoint a trustee or administrator of a defined
benefit plan, and no circumstances exist that constitute grounds under Section
4042(a)(2) of ERISA entitling the PBGC to institute any such proceedings and (g)
no pension plan is a "multiemployer plan" within the meaning of Section 3(37) of
ERISA or a "multiple employer plan" within the meaning of Section 413(c) of the
Code. Neither SunTrust nor any of its subsidiaries has incurred any liability to
the PBGC with respect to any "single-employer plan" within the meaning of
Section 4001(a)(15) of ERISA currently or formerly maintained by any entity
considered one employer with it under Section 4001 of ERISA or Section 414 of
the Code, except for premiums all of which have been paid when due. Neither
SunTrust nor any of its subsidiaries has incurred any withdrawal liability with
respect to a multiemployer plan under Subtitle E of Title IV of ERISA. Neither
SunTrust nor any of its subsidiaries has an obligation to institute any Employee
Plan or any such other arrangement, agreement or plan. With respect to any
insurance policy that heretofore has or currently does provide funding for
benefits under any SunTrust Employee Plan, (A) there is no liability on the part
of SunTrust or any of its subsidiaries in the nature of a retroactive or
retrospective rate adjustment, loss sharing arrangement, or other actual or
contingent liability, nor would there be any such liability if such insurance
policy was terminated, and (B) no insurance Crestar issuing such policy is in
receivership, conservatorship, liquidation or similar proceeding and, to the
knowledge of SunTrust, no such proceeding with respect to any such insurer is
imminent. Neither the execution of this Agreement, nor the consummation of the
transactions contemplated thereby will (A) constitute a stated triggering event
under any SunTrust Employee Plan that will result in any payment (whether of
severance pay or otherwise) becoming due from SunTrust or any of its
subsidiaries to any present or former officer, employee, director, shareholder,
consultant or dependent of any of the foregoing or (B) accelerate the time of
payment or vesting, or increase the amount of compensation due to any present or
former officer, employee, director, shareholder,
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<PAGE> 18
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
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<PAGE> 19
(including, without limitation, in the case of SunTrust's subsidiaries that are
banks, all statutes, rules and regulations pertaining to the conduct of the
banking business and the exercise of trust powers), except for violations which
individually or in the aggregate do not, and, insofar as reasonably can be
foreseen, in the future will not, have a Material Adverse Effect. No
investigation or review by any Governmental Entity with respect to SunTrust or
any of SunTrust's subsidiaries is pending or, to the knowledge of SunTrust,
threatened, nor has any Governmental Entity indicated an intention to conduct
the same in each case other than those the outcome of which will not, either
individually or in the aggregate, have a Material Adverse Effect.
3.15 AGREEMENTS WITH BANK REGULATORS, ETC. Neither SunTrust nor any
SunTrust subsidiary is a party to any written agreement or memorandum of
understanding with, or a party to any commitment letter, board resolution or
similar undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, any Governmental Entity
which restricts materially the conduct of its business, or in any manner relates
to its capital adequacy, its credit or reserve policies or its management, nor
has SunTrust been advised by any Governmental Entity that it is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of understanding,
extraordinary supervisory letter, commitment letter or similar submission.
Neither SunTrust nor any of SunTrust's subsidiaries is required by Section 32 of
the Federal Deposit Insurance Act ("FDIA") to give prior notice to a Federal
banking agency of the proposed addition of an individual to its board of
directors or the employment of an individual as a senior executive officer.
SunTrust knows of no reason why the regulatory approvals referred to in Section
3.6(d) should not be obtained.
3.16 SUNTRUST OWNERSHIP OF STOCK. As of the date of this Agreement,
other than with respect to the Crestar Option Agreement, neither SunTrust nor
any of its affiliates or associates (i) beneficially owns, directly or
indirectly, or (ii) are parties to any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of, Crestar Common
Stock (other than Trust Account Shares), which in the aggregate, represent 5% or
more of the outstanding shares of Crestar Common Stock.
3.17 ACCOUNTING TREATMENT; TAX TREATMENT. SunTrust knows of no
reason, assuming the reissuance of SunTrust Common Stock contemplated by Section
5.21 occurs, with respect to SunTrust and its affiliates that would prevent
SunTrust from accounting for the business combination to be effected by the
Merger as a "pooling-of-interests." As of the date hereof, SunTrust is aware of
no reason why the Merger will fail to qualify as a reorganization under Section
368(a) of the Code.
3.18 FEES. Except for the fees paid and payable to Lehman Brothers
Inc., neither SunTrust nor any of SunTrust's subsidiaries has paid or will
become obligated to pay any fee or commission to any broker, finder or
intermediary in connection with the transactions contemplated by this Agreement.
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3.19 SUNTRUST ACTION. The Board of Directors of SunTrust (at a
meeting duly called, constituted and held) has by the requisite vote of all
directors present (a) determined that the Merger is advisable and in the best
interests of SunTrust and its shareholders, (b) approved this Agreement and the
transactions contemplated by this Agreement and (c) directed that the Merger be
submitted for consideration by SunTrust's shareholders at the SunTrust Meeting.
SunTrust has taken all steps necessary to exempt (i) the execution of this
Agreement, the SunTrust Option Agreement and the Crestar Option Agreement, (ii)
the Merger and (iii) the transactions contemplated hereby and thereby from (x)
any statute of the State of Georgia that purports to limit or restrict business
combinations or the ability to acquire or to vote shares, including, without
limitation, Sections 14-2-1110 et seq. and Sections 14-2-1131 et seq. of the
Georgia Business Corporation Code, and (y) any applicable provision of
SunTrust's articles of incorporation or bylaws containing change of control or
anti-takeover provisions.
3.20 VOTE REQUIRED. The affirmative vote of the holders of a
majority of the total votes cast (provided that the total votes cast represent
over 50% of all securities entitled to vote) by the holders of SunTrust Common
Stock is the only vote of the holders of any class or series of SunTrust capital
stock necessary to approve this Agreement and the transactions contemplated
herein.
3.21 MATERIAL INTERESTS OF CERTAIN PERSONS. Except as disclosed in
SunTrust's Proxy Statement for its 1998 Annual Meeting of Shareholders, no
officer or director of SunTrust, or any "associate" (as such term is defined in
Rule 14a-1 under the 1934 Act) of any such officer or director, has any material
interest in any material contract or property (real or personal), tangible or
intangible, used in or pertaining to the business of SunTrust or any of its
subsidiaries.
3.22 INTELLECTUAL PROPERTY.
(a) SunTrust and its subsidiaries own or have a valid
license to use all trademarks, service marks and trade names (including any
registrations or applications for registration of any of the foregoing)
(collectively, the "SunTrust Intellectual Property") necessary to carry on its
business substantially as currently conducted, except for such SunTrust
Intellectual Property the failure of which to own or validly license
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect. Neither SunTrust nor any such subsidiary has received
any notice of infringement of or conflict with, and, to SunTrust's knowledge,
there are no infringements of or conflicts with, the rights of others with
respect to the use of any SunTrust Intellectual Property that individually or in
the aggregate, in either such case, would reasonably be expected to have a
Material Adverse Effect.
(b) The consummation of the Merger and the other
transactions contemplated by this Agreement will not result in the loss by
SunTrust of any rights to use computer and telecommunications software including
source and object code and documentation and any other media (including, without
limitation, manuals, journals and reference books) necessary to carry on its
business substantially as currently conducted and the loss of which would have a
Material Adverse Effect.
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(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,
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plant and animal life or any other natural resource, conservation, and/or (2)
the use, storage, recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of Hazardous Substances. The
term "Environmental Law" includes without limitation (1) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
Section 9601, et seq.; the Superfund Amendments and Reauthorization Act of 1986,
42 U.S.C. 9601(2)(D); the Resource Conservation and Recovery Act, as amended, 42
U.S.C. Section 6901, et seq.; the Clean Air Act, as amended, 42 U.S.C. Section
7401, et seq.; the Federal Water Pollution Control Act, as amended by the Clean
Water Act, 33 U.S.C. Section 1251, ET SEQ.; the Toxic Substances Control Act, as
amended, 15 U.S.C. Section 9601, et seq.; the Emergency Planning and Community
Right to Know Act, 42 U.S.C. Section 11001, et seq.; the Safe Drinking Water
Act, 42 U.S.C. Section 300f, et seq.; and all comparable state and local laws,
ordinances, rules, regulations respecting the interpretation or enforcement of
same and (2) any common law (including without limitation common law that may
impose strict liability) that may impose liability for injuries or damages due
to the release of any Hazardous Substance.
"Hazardous Substance" means (i) any hazardous wastes, toxic chemicals,
materials, substances or wastes as defined by or for the purposes of any
Environmental Law; (ii) any "oil", as defined by the Clean Water Act, as amended
from time to time, and regulations promulgated thereunder (including crude oil
or any fraction thereof and any petroleum products or derivatives thereof);
(iii) any substance, the presence of which is prohibited, regulated or
controlled by any applicable federal, state or local laws, regulations, statutes
or ordinances now in force or hereafter enacted relating to waste disposal or
environmental protection with respect to the exposure to, or manufacture,
possession, presence, use, generation, storage, transportation, treatment,
release, emission, discharge, disposal, abatement, cleanup, removal, remediation
or handling of any such substance; (iv) any asbestos or asbestos-containing
materials, polychlorinated biphenyls ("PCBs") in the form of electrical
equipment, fluorescent light fixtures with ballasts, cooling oils or any other
form, urea formaldehyde or atmospheric radon; (v) any solid, liquid, gaseous or
thermal irritant or contaminant, such as smoke, vapor, soot, fumes, alkalis,
acids, chemicals, pesticides, herbicides, sewage, industrial sludge or other
similar wastes; (vi) industrial, nuclear or medical by-products; (vii) any lead
based paint or coating and (viii) any underground storage tank(s).
"Loan Portfolio Properties, Trust Properties and Other Properties"
means any real property, interest in real property, improvements, appurtenances,
rights and personal property attendant thereto, which is owned, leased as a
landlord or a tenant, licensed as a licensor or licensee, managed or operated or
upon which is held a mortgage, deed of trust, deed to secure debt or other
security interest by SunTrust or Crestar, as the case may be, or any of their
subsidiaries whether directly, as an agent, as trustee or other fiduciary or
otherwise.
(i) Neither SunTrust nor any of its subsidiaries is in violation of or
has any liability, absolute or contingent, in connection with or under any
Environmental Law, except any such violations or liabilities which would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect; (ii) none of the Loan Portfolio Properties, Trust Properties and
Other Properties of SunTrust or its subsidiaries is in violation of or has any
liability, absolute or contingent, under any Environmental Law, except any such
violations or liabilities which, individually or in the aggregate would not have
a Material Adverse Effect; and (iii) there are no actions, suits, demands,
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notices, claims, investigations or proceedings pending or threatened relating to
any Loan Portfolio Properties, Trust Properties and Other Properties including,
without limitation any notices, demand letters or requests for information from
any federal or state environmental agency relating to any such liability under
or violation of Environmental Law, which would impose a liability upon SunTrust
or its subsidiaries pursuant to any Environmental Law, except such as would not,
individually or in the aggregate, have a Material Adverse Effect.
3.26 RESCISSION OF REPURCHASES. All share repurchase programs
previously authorized by the Board of Directors of SunTrust, except to the
extent that SunTrust is advised by the Commission that such purchases would not
adversely affect the ability of SunTrust and Crestar to account for the Merger
as a "pooling of interests" for accounting purposes, have been revoked by
resolution duly adopted on or prior to the date hereof.
3.27 DISCLOSURE LETTER. Prior to the execution and delivery of this
Agreement, SunTrust has delivered to Crestar a schedule (the "SunTrust
Disclosure Letter ") setting forth, among other things, items the disclosure of
which is necessary or appropriate either in response to an express disclosure
requirement contained in a provision hereof or as an exception to SunTrust's
representations or warranties contained in Article III or to SunTrust's
covenants contained in Article V; provided, however, that notwithstanding
anything in this Agreement to the contrary the mere inclusion of an item in the
SunTrust Disclosure Letter as an exception to a representation or warranty shall
not be deemed an admission by a party that such item represents a material
exception or material fact, event or circumstance or that such item has had or
would have a Material Adverse Effect with respect to SunTrust.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CRESTAR
Crestar hereby represents and warrants to SunTrust that:
4.1 CORPORATE ORGANIZATION. Crestar is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Virginia and is duly qualified to do business as a foreign
corporation in each jurisdiction in which its ownership or lease of property or
the nature of the business conducted by it makes such qualification necessary,
except for such jurisdictions in which the failure to be so qualified would not
have a Material Adverse Effect. Crestar is registered as a bank holding Crestar
under the BHCA. Crestar has the requisite corporate power and authority to own,
lease and operate its properties and assets and to carry on its business as it
is now being conducted. Crestar has heretofore made available to SunTrust true
and complete copies of its articles of incorporation and bylaws.
4.2 AUTHORITY. Crestar has the requisite corporate power and
authority to execute and deliver this Agreement and, except for any required
approval of Crestar's shareholders, to consummate the transactions contemplated
by this Agreement. The execution and delivery of this Agreement and the
consummation of the transactions contemplated herein have been duly approved
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by the Board of Directors of Crestar and no other corporate proceedings on the
part of Crestar are necessary to authorize this Agreement or to consummate the
transactions so contemplated, subject only to approval by the shareholders of
Crestar as described in Section 5.12(c) of this Agreement. This Agreement has
been duly executed and delivered by, and constitutes the valid and binding
obligation of Crestar, enforceable against Crestar in accordance with its terms,
except as the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium and other similar
laws affecting the enforcement of creditors' rights generally and except that
the availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceedings
may be brought.
4.3 CAPITALIZATION. As of the date hereof, the authorized capital
stock of Crestar consists of 200,000,000 shares of Crestar Common Stock and
2,000,000 shares of Crestar preferred stock. As of the close of business on July
17, 1998, (i) 112,252,068 shares of Crestar Common Stock were duly authorized,
validly issued and outstanding, fully paid and nonassessable and (ii) no shares
of preferred stock were issued or outstanding. As of the date of this Agreement
except as set forth in this Section 4.3, pursuant to the Crestar Option Plans,
pursuant to the Crestar Option Agreement, pursuant to the Crestar Rights
Agreement, pursuant to the Crestar Dividend Reinvestment Plan, pursuant to the
Crestar Thrift and Profit Sharing Plan or as set forth in the Crestar Disclosure
Letter, there are no shares of capital stock of Crestar authorized, issued or
outstanding and there are no outstanding subscriptions, options, warrants,
rights, convertible securities or any other agreements or commitments of any
character relating to the issued or unissued capital stock or other securities
of Crestar obligating Crestar to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of Crestar or obligating
Crestar to grant, extend or enter into any subscription, option, warrant, right,
convertible security or other similar agreement or commitment. Except as set
forth in the Crestar Disclosure Letter, there are no voting trusts or other
agreements or understandings to which Crestar or any of Crestar's subsidiaries
is a party with respect to the voting of the capital stock of Crestar. As of the
date of this Agreement, there were outstanding under the Crestar Option Plans
options to purchase 3,264,247 shares of Crestar Common Stock, which Crestar
stock options had a weighted average exercise price of $27.60 and for which
adequate shares of Crestar Common Stock have been reserved for issuance under
the Crestar Option Plans.
4.4 SUBSIDIARIES. The Crestar Disclosure Letter sets forth the
name and state of incorporation of each subsidiary of Crestar (collectively, the
"Crestar Subsidiaries"). Each of the Crestar Subsidiaries is a bank, a
corporation or other business entity duly organized, validly existing and in
good standing under the laws of its respective jurisdiction of incorporation or
organization and is duly qualified to do business as a foreign corporation or
foreign business entity in each jurisdiction in which its ownership or lease of
property or the nature of the business conducted by it makes such qualification
necessary, except for such jurisdictions in which the failure to be so qualified
would not have a Material Adverse Effect. Each of the Crestar Subsidiaries has
the requisite corporate power and authority to own, lease and operate its
properties and assets and to carry on its businesses as they are now being
conducted. Except as set forth in the Crestar Disclosure Letter, all outstanding
shares of capital stock of each Crestar Subsidiary is owned by Crestar or
another Crestar Subsidiary and are validly issued, fully paid and (except
pursuant to 12 USC Section 55 in the case of each national bank subsidiary and
applicable state law in the case of each state bank
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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.
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4.7 REPORTS. Since January 1, 1996, Crestar and each Crestar
Subsidiary have timely filed all reports, registrations and statements, together
with any required amendments thereto, that they were required to file with (i)
the Commission under Section 12(b), 12(g), 13(a) or 14(a) of the Exchange Act,
including, but not limited to Forms 10-K, Forms 10-Q and proxy statements
("Crestar SEC Reports"), (ii) the Federal Reserve Board, (iii) any other
Governmental Entity, and (iv) any SRO, and all other reports and statements
required to be filed by Crestar and the Crestar Subsidiaries, including, without
limitation, any report or statement required to be filed pursuant to laws, rules
or regulations of the United States, any state, or any Governmental Entity, and
have paid all fees and assessments due and payable in connection therewith,
except where the failure to file such report, registration or statement, or to
pay such fees and assessments, either individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect. Crestar has made
available to SunTrust true and complete copies of each of Crestar's annual
reports on Form 10- K for the years 1996 and 1997 and its quarterly report on
Form 10-Q for March 31, 1998. As of their respective dates, the Crestar SEC
Reports complied with the requirements of the Commission and did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstance under which they were made, not misleading.
4.8 FINANCIAL STATEMENTS. The audited consolidated financial
statements of Crestar included in Crestar's annual report on Form 10-K as filed
with the Commission for the year ended December 31, 1997, and the unaudited
interim financial statements of Crestar as of and for the three months ended
March 31, 1998 included in a quarterly report on Form 10-Q as filed with the
Commission, have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as may be indicated therein or
in the notes thereto) and fairly present the consolidated financial position of
Crestar and the Crestar Subsidiaries as of the dates thereof and the results of
their operations and cash flows for the periods then ended, subject, in the case
of the unaudited interim financial statements, to normal year-end and audit
adjustments and any other adjustments described therein, and are derived from
the books and records of Crestar and the Crestar Subsidiaries, which are
complete and accurate in all material respects and have been maintained in all
material respects in accordance with applicable laws and regulations. There
exist no liabilities of Crestar and its consolidated subsidiaries, contingent or
otherwise of a type required to be disclosed in accordance with generally
accepted accounting practices, except as disclosed in the Crestar SEC Reports
and except for liabilities which, either individually or in the aggregate, would
not have a Material Adverse Effect. Crestar's reserve for possible loan losses
as shown in its Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 1998 was adequate, within the meaning of generally accepted accounting
principles and safe and sound banking practices.
4.9 TAXES. Crestar will promptly make available to SunTrust, upon
request by SunTrust, true and correct copies of the federal, state and local
income tax returns, and state and local property and sales tax returns filed by
Crestar and the Crestar Subsidiaries for each of the fiscal years that remains
open, as of the date hereof, for examination or assessment of tax. Crestar and
each Crestar Subsidiary have prepared in good faith and duly and timely filed,
or caused to be duly and timely filed, all federal, state, local and foreign
income, franchise, sales and other tax returns or reports required to be filed
by them on or before the date hereof, except to the extent that all failures to
file, taken together, would not have a Material Adverse Effect. Except as
otherwise would not
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have, either individually or in the aggregate, a Material Adverse Effect,
Crestar and each Crestar Subsidiary have paid, or have made adequate provision
or set up an adequate accrual or reserve for the payment of, all taxes shown or
required to be shown to be owing on all such returns or reports, together with
any interest, additions or penalties related to any such taxes or to any open
taxable year or period. Except as set forth in the Crestar Disclosure Letter,
neither Crestar nor any Crestar Subsidiary has consented to extend the statute
of limitations with respect to the assessment of any tax. Except as set forth in
the Crestar Disclosure Letter, neither Crestar nor any Crestar Subsidiary is a
party to any action or proceeding, nor to the best of Crestar's knowledge is any
such action or proceeding threatened, by any Governmental Entity in connection
with the determination, assessment or collection of any material amount of
taxes, and no deficiency notices or reports have been received by Crestar or any
Crestar Subsidiary in respect of any material deficiencies for any tax,
assessment, or government charge.
4.10 EMPLOYEE PLANS. All employee benefit, welfare, bonus, deferred
compensation, pension, profit sharing, stock option, employee stock ownership,
consulting, severance, or fringe benefit plans, formal or informal, written or
oral and all trust agreements related thereto, relating to any present or former
directors, officers or employees of Crestar or the Crestar Subsidiaries
("Crestar Employee Plans") are listed in the Crestar Disclosure Letter. Except
as set forth in the Crestar Disclosure Letter, all of the Crestar Employee Plans
have been maintained, operated, and administered in all material respects in
compliance with their terms and currently comply, and have at all relevant times
complied, in all material respects with the applicable requirements of ERISA,
the Code, and any other applicable laws. Except as set forth in the Crestar
Disclosure Letter, with respect to each Crestar Employee Plan which is a pension
plan (as defined in Section 3(2) of ERISA): (a) each pension plan as amended
(and any trust relating thereto) intended to be a qualified plan under Section
401(a) of the Code either has been determined by the IRS to be so qualified or
is the subject of a pending application for such determination that was timely
filed, (b) there is no accumulated funding deficiency (as defined in Section 302
of ERISA and Section 412 of the Code), whether or not waived, and no waiver of
the minimum funding standards of such sections has been requested from the IRS,
(c) neither Crestar nor any of the Crestar Subsidiaries has provided, or is
required to provide, security to any pension plan pursuant to Section 401(a)(29)
of the Code, (d) the fair market value of the assets of each defined benefit
plan (as defined in Section 3(35) of ERISA) exceeds the value of the "benefit
liabilities" within the meaning of Section 4001(a)(16) of ERISA under such
defined benefit plan as of the end of the most recent plan year thereof ending
prior to the date hereof, calculated on the basis of the actuarial assumptions
used in the most recent actuarial valuation for such defined benefit plan as of
the date hereof, (e) no reportable event described in Section 4043 of ERISA has
occurred for which the 30 day reporting requirement has not been waived has
occurred, (f) no defined benefit plan has been terminated, nor has the PBGC
instituted proceedings to terminate a defined benefit plan or to appoint a
trustee or administrator of a defined benefit plan, and no circumstances exist
that constitute grounds under Section 4042(a)(2) of ERISA entitling the PBGC to
institute any such proceedings and (g) no pension plan is a "multiemployer plan"
within the meaning of Section 3(37) of ERISA or a "multiple employer plan"
within the meaning of Section 413(c) of the Code. Neither Crestar nor any
Crestar Subsidiary has incurred any liability to the PBGC with respect to any
"single-employer plan" within the meaning of Section 4001(a)(15) of ERISA
currently or formerly maintained by any entity considered one employer with it
under Section 4001 of ERISA or Section 414 of the Code, except for premiums all
of which have
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been paid when due. Neither Crestar nor any of its subsidiaries has incurred any
withdrawal liability with respect to a multiemployer plan under Subtitle E of
Title IV of ERISA. Neither Crestar nor any of its subsidiaries has an obligation
to institute any Employee Plan or any such other arrangement, agreement or plan.
Except as set forth in the Crestar Disclosure Letter, there are no outstanding
grants of restricted stock with respect to Crestar Common Stock and no
outstanding stock appreciation rights with respect to Crestar Common Stock. With
respect to any insurance policy that heretofore has or currently does provide
funding for benefits under any Crestar Employee Plan, (A) there is no liability
on the part of Crestar or any of its subsidiaries in the nature of a retroactive
or retrospective rate adjustment, loss sharing arrangement, or other actual or
contingent liability, nor would there be any such liability if such insurance
policy was terminated, and (B) no insurance Crestar issuing such policy is in
receivership, conservatorship, liquidation or similar proceeding and, to the
knowledge of Crestar, no such proceeding with respect to any such insurer is
imminent. Except as set forth in the Crestar Disclosure Letter, neither the
execution of this Agreement, nor the consummation of the transactions
contemplated thereby will (A) constitute a stated triggering event under any
Crestar Employee Plan that will result in any payment (whether of severance pay
or otherwise) becoming due from Crestar or any of its subsidiaries to any
present or former officer, employee, director, shareholder, consultant or
dependent of any of the foregoing or (B) accelerate the time of payment or
vesting, or increase the amount of compensation due to any present or former
officer, employee, director, shareholder, consultant, or dependent of any of the
foregoing. The material terms of the Executive Agreements (as defined below) are
reflected in the Crestar SEC Reports, as amended in the manner reflected in the
Crestar Disclosure Letter. Neither Crestar nor any Crestar Subsidiary has any
obligations for retiree health and life benefits under any Crestar Employee
Plan, except as set forth in the Crestar Disclosure Letter. Except as set forth
in the Crestar Disclosure Letter, there are no restrictions on the rights of
Crestar or the Crestar Subsidiaries to amend or terminate any such Crestar
Employee Plan without incurring any liability thereunder.
4.11 MATERIAL CONTRACTS. Except as set forth in the Crestar
Disclosure Letter or disclosed in the Crestar SEC Reports, neither Crestar nor
any Crestar Subsidiary is a party to, or is bound or affected by, or receives
benefits under (a) any agreements providing for aggregate payments to any
director, officer, employee or consultant of Crestar or any Crestar Subsidiary
in any calendar year in excess of $50,000, (b) any material agreement, indenture
or other instrument relating to the borrowing of money by Crestar or any Crestar
Subsidiary or the guarantee by Crestar or any Crestar Subsidiary of any such
obligation (other than trade payables and instruments relating to transactions
entered into in the ordinary course of business) or (c) any other contract or
agreement or amendment thereto that would be required to be filed as an exhibit
to a Form 10-K filed by Crestar with the Commission as of the date of this
Agreement (collectively, the "Crestar Contracts"). Neither Crestar nor any
Crestar Subsidiary is in default under any Crestar Contract, which default is
reasonably likely to have, either individually or in the aggregate, a Material
Adverse Effect, and there has not occurred any event that with the lapse of time
or the giving of notice or both would constitute such a default. Except as set
forth in the Crestar Disclosure Letter, neither Crestar nor any Crestar
Subsidiary is a party to, or is bound by, any collective bargaining agreement,
contract, or other agreement or understanding with a labor union or labor
organization, nor is Crestar or any Crestar Subsidiary the subject of a
proceeding asserting that it or any Crestar Subsidiary has committed an unfair
labor practice or seeking to compel it or such subsidiary to bargain with any
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labor organization as to wages and conditions of employment, nor is there any
strike, work stoppage or other labor dispute involving it or any Crestar
Subsidiary pending or threatened.
4.12 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for liabilities
incurred in connection with this Agreement or the transactions contemplated
hereby, since December 31, 1997, Crestar and its subsidiaries have conducted
their business only in the ordinary course or as disclosed in any Crestar SEC
Reports, and there has not been (1) any change or event having a Material
Adverse Effect on Crestar, (2) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock, or property) with
respect to any of Crestar's capital stock, other than regular quarterly cash
dividends on Crestar Common Stock, (3) any split, combination or
reclassification of any of Crestar's capital stock or any substitution for
shares of Crestar's capital stock, except for issuances of Crestar's Common
Stock upon the exercise of options awarded prior to the date hereof in
accordance with the Crestar Option Plans, (4) except as set forth in the Crestar
Disclosure Letter (A) any granting by Crestar or any of its subsidiaries to any
current or former director, executive officer or other key employee of Crestar
or its subsidiaries of any increase in compensation, bonus or other benefits,
except for normal increases in the ordinary course of business or as was
required under any employment agreements in effect as of the date of the most
recent audited financial statements included in the Crestar SEC Reports filed
and publicly available prior to the date of this Agreement, (B) any granting by
Crestar or any of its subsidiaries to any such current or former director,
executive officer or key employee of any increase in severance or termination
pay, except in the ordinary course of business or pursuant to the Crestar Stock
Option Plans, or (C) any entry by Crestar or any of its subsidiaries into, or
any amendment of, any employment, deferred compensation, consulting, severance,
termination or indemnification agreement with any such current or former
director, executive officer or key employee, other than in the ordinary course
of business, (5) except insofar as may have been disclosed in the Crestar SEC
Reports or required by a change in generally accepted accounting principles, any
change in accounting methods, principles or practices by Crestar materially
affecting its assets, liabilities or business or (6) except insofar as may have
been disclosed in the Crestar SEC Reports, any tax election that individually or
in the aggregate would reasonably be expected to have a Material Adverse Effect.
4.13 LITIGATION. Except as disclosed in the Crestar SEC Reports
filed by Crestar with the Commission prior to the date of this Agreement or as
set forth in the Crestar Disclosure Letter, there is no suit, action or
proceeding pending, or, to the knowledge of Crestar, threatened, against or
affecting Crestar or any Crestar Subsidiary which, either individually or in the
aggregate, would be reasonably expected to have a Material Adverse Effect, nor
is there any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator, outstanding against Crestar or any Crestar Subsidiary
having, or which, insofar as reasonably can be foreseen, in the future would
have, either individually or in the aggregate, a Material Adverse Effect.
4.14 COMPLIANCE WITH LAWS AND ORDERS. Except as set forth in the
Crestar Disclosure Letter or as disclosed in the Crestar SEC Reports filed by
Crestar with the Commission prior to the date of this Agreement, the businesses
of Crestar and the Crestar Subsidiaries are not being conducted in violation of
any law, ordinance, regulation, judgment, order, decree, license or permit of
any Governmental Entity (including, without limitation, in the case of Crestar
Subsidiaries that
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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.
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4.19 CRESTAR ACTION. The Board of Directors of Crestar (at a
meeting duly called, constituted and held) has by the requisite vote of all
directors present (a) determined that the Merger is advisable and in the best
interests of Crestar and its shareholders, (b) approved this Agreement and the
transactions contemplated hereby, including the Merger, and (c) directed that
the Merger be submitted for consideration by Crestar's shareholders at the
Crestar Meeting. Crestar has taken all steps necessary to exempt (i) the
execution of this Agreement, the SunTrust Option Agreement and the Crestar
Option Agreement, (ii) the Merger and (iii) the transactions contemplated hereby
and thereby from, (x) any statute of the Commonwealth of Virginia that purports
to limit or restrict business combinations or the ability to acquire or to vote
shares, including, without limitation, Sections 13.1-725 et seq. and Sections
13.1-728.1 et seq. of the VSCA, (y) the Crestar Rights Agreement and (z) any
applicable provision of Crestar's articles of incorporation or bylaws containing
change of control or anti-takeover provisions. Crestar has (A) duly entered into
an appropriate amendment to the Crestar Rights Agreement and (B) taken all other
action necessary or appropriate so that the execution of this Agreement, and the
consummation of the transactions contemplated hereby (including, without
limitation, the Merger) do not and will not result in the ability of any person
to exercise any rights under the Crestar Rights Agreement or enable or require
the rights to separate from the shares of Crestar Common Stock to which they are
attached or to be triggered or become exercisable.
4.20 VOTE REQUIRED. The affirmative vote of holders of more than
two-thirds of the outstanding shares of Crestar Common Stock entitled to vote
thereon is the only vote of the holders of any class or series of Crestar
capital stock necessary to approve this Agreement and the transactions
contemplated by the Agreement.
4.21 MATERIAL INTERESTS OF CERTAIN PERSONS. Except as disclosed in
Crestar's Proxy Statement for its 1998 Annual Meeting of Shareholders or as set
forth in the Crestar Disclosure Letter, no officer or director of Crestar, or
any "associate" (as such term is defined in Rule 14a-1 under the Exchange Act)
of any such officer or director, has any material interest in any material
contract or property (real or personal), tangible or intangible, used in or
pertaining to the business of Crestar or any Crestar Subsidiary.
4.22 INTELLECTUAL PROPERTY.
(a) Crestar and its subsidiaries own or have a valid license
to use all trademarks, service marks and trade names (including any
registrations or applications for registration of any of the foregoing)
(collectively, the "Crestar Intellectual Property") necessary to carry on its
business substantially as currently conducted, except for such Crestar
Intellectual Property the failure of which to own or validly license
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect. Neither Crestar nor any such subsidiary has received
any notice of infringement of or conflict with, and, to Crestar's knowledge,
there are no infringements of or conflicts with, the rights of others with
respect to the use of any Crestar Intellectual Property that individually or in
the aggregate, in either such case, would reasonably be expected to have a
Material Adverse Effect.
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(b) The consummation of the Merger and the other
transactions contemplated by this Agreement will not result in the loss by
Crestar of any rights to use computer and telecommunications software including
source and object code and documentation and any other media (including, without
limitation, manuals, journals and reference books) necessary to carry on its
business substantially as currently conducted and the loss of which would have a
Material Adverse Effect.
(c) The computer software operated by Crestar which is
material to the conduct of its business is capable of providing or is being
adapted to provide uninterrupted millennium functionality to record, store,
process and present calendar dates falling on or after January 1, 2000 in
substantially the same manner and with the same functionality as such software
records, stores, processes and presents such calendar dates falling on or before
December 31, 1999, except as would not have a Material Adverse Effect. None of
Crestar or any of its subsidiaries has received, or reasonably expects to
receive, a "Year 2000 Deficiency Notification Letter" (as such term is employed
in the Federal Reserve's Supervision and Regulation Letter No. SR 98-3(SUP),
dated March 4, 1998). Crestar has disclosed to SunTrust a complete and accurate
copy of Crestar's plan for addressing the issues set forth in the statements of
the Federal Financial Institutions Examination Council, dated May 5, 1997,
entitled "Year 2000 Project Management Awareness," and December 1997, entitled
"Safety and Soundness Guidelines Concerning the Year 2000 Business Risk," as
such issues affect Crestar and its subsidiaries. The costs of the adaptions and
compliance referred to in this Section 4.22(c) will not have a Material Adverse
Effect.
4.23 INTEREST RATE RISK MANAGEMENT INSTRUMENTS. Except as would not
reasonably be expected to have a Material Adverse Effect, all interest rate
swaps, caps, floors and option agreements and other interest rate risk
management arrangements, whether entered into for the account of Crestar or for
the account of a customer of Crestar or of one of Crestar's subsidiaries, were
entered into in the ordinary course of business and, to Crestar's knowledge, in
accordance with prudent banking practices and applicable rules, regulations and
policies of any Governmental Entity and with counterparties believed to be
financially responsible at the time and are legal, valid and binding obligations
of Crestar or one of its subsidiaries enforceable in accordance with their terms
(except as may be limited by bankruptcy, insolvency, moratorium, reorganization
or similar laws affecting the rights of creditors generally and the availability
of equitable remedies), and are in full force and effect. Except as would not
reasonably be expected to have a Material Adverse Effect, Crestar and each of
Crestar's subsidiaries have duly performed all of their obligations thereunder
to the extent that such obligations to perform have accrued, and, to Crestar's
knowledge, there are no breaches, violations or defaults or allegations or
assertions of such by any party thereunder.
4.24 INSURANCE. Except as would not reasonably be expected to have
a Material Adverse Effect, Crestar and Crestar's subsidiaries have in effect
insurance coverage with reputable insurers which, in respect of amounts,
premiums, types and risks insured, constitutes reasonably adequate coverage
against all risks customarily insured against by bank holding companies and
their subsidiaries comparable in size and operations to Crestar and Crestar's
subsidiaries.
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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
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nothing contained in this Section 5.1 shall prohibit the Board of Directors of
Crestar from furnishing information to, or entering into discussions or
negotiations with, any person or entity that makes an unsolicited, written bona
fide proposal regarding an Acquisition Transaction if, and only to the extent
that (A) the Board of Directors of Crestar concludes in good faith, after
consultation with and based upon the advice of outside counsel, that it is
required to furnish such information or enter into such discussions or
negotiations in order to comply with its fiduciary duties to shareholders under
applicable law, (B) prior to taking such action, Crestar receives from such
person or entity an executed confidentiality agreement and an executed
standstill agreement, each in reasonably customary form (provided that such
agreement is at least as limiting as any such agreement between SunTrust and
Crestar), and (C) the Board of Directors of Crestar concludes in good faith that
the proposal regarding the Acquisition Transaction contains an offer of
consideration that is superior to the consideration set forth herein.
Notwithstanding anything in this Agreement to the contrary, Crestar shall (i)
immediately advise SunTrust orally and in writing of (A) the receipt by it (or
any of the other entities or persons referred to above) of any proposal
regarding an Acquisition Transaction, or any inquiry which could reasonably be
expected to lead to any such proposal, (B) the material terms and conditions of
such proposal or inquiry (whether written or oral), and (C) the identity of the
person making any such proposal or inquiry, (ii) keep SunTrust fully informed of
the status and details of any such proposal or inquiry, and (iii) negotiate in
good faith with SunTrust to make such adjustments in the terms and conditions of
this Agreement as would enable Crestar to proceed with the transactions
contemplated herein on such adjusted terms. Without limiting the foregoing, it
is understood that any violation of the restrictions set forth in the first
sentence of this Section 5.1 by any officer or director of Crestar or any
Crestar Subsidiary or any investment banker, attorney or other advisor,
representative or agent of Crestar or any Crestar Subsidiary, acting on behalf
of or at the request of the Board of Directors of Crestar, shall be deemed to be
a breach of this Section 5.1 by Crestar. Crestar shall immediately terminate and
cease any and all discussions, negotiations and/or contacts with any other
person or entity which may exist relating to or involving an Acquisition
Transaction. For purposes of this Agreement, "Acquisition Transaction" means any
merger, consolidation, share exchange, joint venture, business combination or
similar transaction involving Crestar or any Crestar Subsidiary, or any purchase
of all or any material portion of the assets of Crestar or any Crestar
Subsidiary.
5.2 INTERIM OPERATIONS OF CRESTAR. During the period from the date
of this Agreement to the Effective Time, except as specifically contemplated by
this Agreement or the Crestar Option Agreement, set forth in the Crestar
Disclosure Letter or as otherwise approved expressly in writing by SunTrust:
(a) Crestar shall, and shall cause each of the Crestar
Subsidiaries to, conduct their respective businesses only in, and not take any
action except in, the ordinary course of business consistent with past practice.
Crestar shall use all commercially reasonable efforts to preserve intact the
business organization of Crestar and each of the Crestar Subsidiaries, to keep
available the services of its and their present key officers and employees and
to preserve the goodwill of those having business relationships with Crestar or
the Crestar Subsidiaries. Other than in the ordinary course of business
consistent with past practice, Crestar shall not (i) incur any indebtedness for
borrowed money (it being understood and agreed that incurrence of indebtedness
in the ordinary course of business shall include, without limitation, the
creation of deposit liabilities, purchases of
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federal funds, borrowings pursuant to existing lines of credit, sales of
certificates of deposit and entering into repurchase agreements), (ii) assume,
guarantee, endorse or otherwise as an accommodation become responsible for the
obligations of any other individual, corporation or other entity, or (iii) make
any loan or advance.
(b) Crestar shall not and shall not permit any Crestar
Subsidiary to make any change or amendment to their respective articles of
incorporation or bylaws (or comparable governing instruments) in a manner that
would materially and adversely affect either party's ability to consummate the
Merger or the economic benefits of the Merger to either party.
(c) Crestar shall not, and shall not permit any Crestar
Subsidiary to, issue or sell any shares of capital stock or any other securities
of any of them (other than (i) pursuant to outstanding exercisable stock options
granted pursuant to one of the Crestar Option Plans or pursuant to outstanding
exercisable stock awards reflected in the Crestar Disclosure Letter, (ii)
pursuant to the Crestar Rights Agreement, (iii) pursuant to the terms of 401(k)
plans of Crestar and any Crestar Subsidiary in effect as of the date hereof, or
(iv) pursuant to the Crestar Dividend Reinvestment Plan) or issue any securities
convertible into or exchangeable for, or options, warrants to purchase, scrip,
rights to subscribe for, calls or commitments of any character whatsoever
relating to, or enter into any contract, understanding or arrangement with
respect to the issuance of, any shares of capital stock or any other securities
of any of them (other than pursuant to the Crestar Option Plans) or enter into
any arrangement or contract with respect to the purchase or voting of shares of
their capital stock, or adjust, split, combine or reclassify any of their
capital stock or other securities or make any other changes in their capital
structures. Neither Crestar nor any Crestar Subsidiaries shall grant any
additional stock options, except for stock option grants made in accordance with
existing elections by participants in the Crestar Option Plans.
(d) Crestar shall not, and shall not permit any Crestar
Subsidiary to, declare, set aside, pay or make any dividend or other
distribution or payment (whether in cash, stock or property) with respect to, or
purchase or redeem, any shares of the capital stock of any of them other than
(a) regular quarterly cash dividends in an amount not to exceed $0.33 per share
of Crestar Common Stock payable on the regular historical payment dates and (b)
dividends paid by any Crestar Subsidiary to Crestar or another Crestar
Subsidiary with respect to its capital stock between the date hereof and the
Effective Time.
(e) Crestar shall not, and shall not permit any Crestar
Subsidiary to, acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other manner,
any business or any person.
(f) Crestar shall not, and shall not permit any Crestar
Subsidiary to, sell, lease, license, mortgage or otherwise encumber or subject
to any lien or otherwise dispose of a material amount of its properties or
assets (including securitizations), other than in the ordinary course of
business consistent with past practice.
(g) Except as set forth in the Crestar Disclosure Letter or
as otherwise provided in this Agreement, Crestar shall not, and shall not permit
any Crestar Subsidiary to, adopt or amend
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(except as required by law or other contractual obligations existing on the date
hereof) any bonus, profit sharing, compensation, severance, termination, stock
option, pension, retirement, deferred compensation, employment or other employee
benefit agreements, trusts, plans, funds or other arrangements for the benefit
or welfare of any director, officer or employee, or (except for normal merit
increases in the ordinary course of business consistent with past practice)
increase the compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any existing plan, agreement or
arrangement (including, without limitation, the granting of stock options or
stock appreciation rights) or take any action or grant any benefit not required
under the terms of any existing agreements, trusts, plans, funds or other such
arrangements or enter into any contract, agreement, commitment or arrangement to
do any of the foregoing; provided, however, that nothing contained herein shall
prohibit Crestar from conclusively determining the earned amount of any bonuses
under Crestar's bonus plans in respect of calendar year 1998, based on Crestar's
annualized performance through the Effective Time (determined without regard to
the costs incurred in connection with the transactions contemplated by this
Agreement), such bonuses to be paid in accordance with Crestar's past practice.
SunTrust hereby agrees that any Crestar Employee (as hereinafter defined) who is
involuntarily terminated from employment following the Effective Time shall be
paid any bonus payable in respect of 1998 in accordance with the preceding
sentence. Crestar shall appoint one individual at its discretion and one
individual at SunTrust's direction to serve jointly, as the Administrator of
Crestar's Executive Severance Plan.
(h) At the request of SunTrust, Crestar will modify and
change its loan, litigation, real estate valuation, asset, liquidity and
investment portfolio policies and practices (including loan classifications and
level of reserves) prior to the Effective Time so as to be consistent on a
mutually satisfactory basis with those of SunTrust and generally accepted
accounting principles, at the earlier of (i) such time within seven days prior
to the Effective Time as SunTrust acknowledges in writing that all conditions to
its obligations to consummate the Merger set forth in Sections 7.1 and 7.3 have
been waived or satisfied if the Merger were to be consummated on such date or
(ii) immediately prior to the Effective Time.
(i) Crestar shall not, and shall not permit any Crestar
Subsidiary to, authorize, or commit or agree to take, any of the actions set
forth in clauses (a) through (g) of this Section 5.2.
5.3 INTERIM OPERATIONS OF SUNTRUST. During the period from the
date of this Agreement to the Effective Time, without the prior written consent
of Crestar, SunTrust will not declare or pay any extraordinary or special
dividend on the SunTrust Common Stock or take any action that would (a)
materially delay or adversely affect the ability of SunTrust to obtain any
approvals of Governmental Entities required to permit consummation of the Merger
or (b) materially adversely affect its ability to perform its obligations under
this Agreement or to consummate the transactions contemplated hereby.
5.4 COORDINATION OF DIVIDENDS. Subject to Section 5.16, each of
SunTrust and Crestar shall coordinate with the other regarding the declaration
and payment of dividends in respect of the SunTrust Common Stock and the Crestar
Common Stock and the record dates and payment dates relating thereto, it being
the intention of SunTrust and Crestar that any holder of SunTrust Common Stock
or Crestar Common Stock shall not receive two dividends, or fail to receive one
dividend, for
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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
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practicable after the date hereof by SunTrust and Crestar, which committee shall
make recommendations to the current Chief Executive Officers of SunTrust and
Crestar.
(d) SunTrust shall, and shall cause the Surviving
Corporation to, maintain without adverse amendment Crestar's deferred
compensation plans with respect to (A) any amounts deferred as of the date
hereof and (B) amounts with respect to which deferral elections are in place as
of the date hereof and relate to bonuses paid to or to be paid in respect of
1997 and 1998. SunTrust further agrees to permit the deferral of any bonus
amounts paid in respect of calendar years 1997 and 1998 and to take no action
with respect to amounts deferred during such years which would prevent such
amounts from becoming entitled to the most favorable interest rates provided in
such deferred compensation plans, notwithstanding the occurrence of a Change of
Control for purposes of Crestar's various bonus and production incentive plans.
SunTrust hereby agrees that any deferral elections made prior to the date hereof
by any Crestar Employee pursuant to the deferred compensation plans shall be
honored notwithstanding (i) the involuntary termination of any such Crestar
Employee's employment as of or following the Effective Time (other than for
cause) or (ii) in the case of those Crestar Employees who are parties to an
Executive Agreement, the termination of any such Crestar Employee's employment
for Good Reason (as defined in such Executive Agreement) as of or following the
Effective Time.
(e) SunTrust acknowledges and agrees that, immediately prior
to the Effective Time, Crestar may make payment in shares of Crestar Common
Stock (net of applicable withholding taxes) in settlement of all awards under
Crestar's Value Share II and Value Share III plans in accordance with the terms
of Crestar's 1993 Stock Incentive Plan and any related agreements, including any
Incentive Award Agreement relating to such awards.
(f) SunTrust's obligations under the first and second
sentences in Section 5.5(a) (and any related provisions of the Crestar
Disclosure Letter) are intended to be for the benefit of, and shall be
enforceable by, any Crestar Employee to which such obligations relate.
5.6 ACCESS AND INFORMATION. Upon reasonable notice, each of the
parties shall (and shall cause each of the parties' subsidiaries to) afford to
the other parties and their representatives (including, without limitation,
directors, officers and employees of the parties and their affiliates, and
counsel, accountants and other professionals retained) such access during normal
business hours throughout the period prior to the Effective Time to the books,
records (including, without limitation, tax returns and work papers of
independent auditors), properties, personnel of such party and its subsidiaries
and to such other information as any party may reasonably request; provided,
however, that no party shall be required to provide access to any such
information if the providing of such access (i) would be reasonably likely, in
the written opinion of counsel, to result in the loss or impairment of any
privilege generally recognized under law with respect to such information or
(ii) would be precluded by any law, ordinance, regulation, judgment, order,
decree, license or permit of any Governmental Entity. The parties hereto will
use reasonable efforts to make appropriate substitute disclosure arrangements
under circumstances in which the restrictions of the preceding sentences apply.
All information furnished by one party to any of the others in connection with
this Agreement or the transactions contemplated hereby shall be kept
confidential by such other party
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in accordance with the terms of the Confidentiality Agreement dated July 17,
1998, between SunTrust and Crestar (the "Confidentiality Agreement").
5.7 CERTAIN FILINGS, CONSENTS AND ARRANGEMENTS. The parties hereto
shall cooperate with each other and use their commercially reasonable efforts to
promptly prepare and file all necessary documentation, to effect all
applications, notices, petitions and filings, and to obtain as promptly as
practicable all permits, consents, approvals and authorizations of all third
parties and Governmental Entities which are necessary or advisable to consummate
the transactions contemplated by this Agreement (including without limitation
the Merger). Crestar and SunTrust shall have the right to review in advance, and
to the extent practicable each will consult the other on, in each case subject
to applicable laws relating to the exchange of information, all the information
relating to Crestar or SunTrust, as the case may be, and any of their respective
Subsidiaries, which appears in any filing made with, or written materials
submitted to, any third party or any Governmental Entity in connection with the
transactions contemplated by this Agreement. In exercising the foregoing right,
each of the parties hereto shall act reasonably and as promptly as practicable.
The parties hereto agree that they will consult with each other with respect to
the obtaining of all permits, consents, approvals and authorizations of all
third parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to completion of the transactions
contemplated herein. SunTrust and Crestar shall promptly furnish each other with
copies of written communications received by SunTrust or Crestar, as the case
may be, or any of their respective Subsidiaries, affiliates or associates from,
or delivered by any of the foregoing to, any Governmental Entity in respect of
the transactions contemplated hereby.
5.8 STATE TAKEOVER STATUTES. Crestar shall take all reasonable
steps to (i) exempt Crestar and the Merger from the requirements of any state
takeover law by action of Crestar's Board of Directors or otherwise and (ii)
upon the request of SunTrust, assist in any challenge by SunTrust to the
applicability to the Merger of any state takeover law.
5.9 INDEMNIFICATION AND INSURANCE.
(a) From and after the Effective Time, SunTrust shall
indemnify, defend and hold harmless the present and former directors and
officers of Crestar and the Crestar Subsidiaries (each, an "Indemnified Party")
against all costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities (collectively, "Costs") incurred
in connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of actions or
omissions occurring at or prior to the Effective Time, which is based upon or
relates to such Indemnified Party's capacity as a director or officer, to the
fullest extent that such persons are permitted to be indemnified under the VSCA
or Crestar's Articles of Incorporation and Bylaws as in effect on the date
hereof. In the event of any such threatened or actual claim, action, suit,
proceeding or investigation (whether asserted or arising before or after the
Effective Time), the Indemnified Parties may retain counsel reasonably
satisfactory to them and to SunTrust; provided, however, that (1) SunTrust shall
have the right to assume the defense thereof and upon such assumption SunTrust
shall not be liable to any Indemnified Party for any legal expenses of other
counsel or any other expenses subsequently incurred by any Indemnified Party in
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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,
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consents and approvals from all applicable Governmental Entities, effecting all
necessary registrations, applications and filings (including, without
limitation, filings under any applicable state securities laws) and obtaining
any required contractual consents and regulatory approvals.
5.11 PUBLICITY. The initial press release announcing this Agreement
shall be a joint press release and thereafter Crestar and SunTrust shall consult
with each other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and in making
any filings with any Governmental Entity or with any national securities
exchange with respect thereto.
5.12 PREPARATION OF THE REGISTRATION STATEMENT AND THE PROXY
STATEMENT; SHAREHOLDERS' MEETINGS.
(a) As soon as practicable following the date of this
Agreement, SunTrust and Crestar shall prepare and file with the Commission the
Proxy Statement and SunTrust shall prepare and file with the Commission the
Registration Statement, in which the Proxy Statement will be included as a
prospectus. Each of Crestar and SunTrust shall use all commercially reasonable
efforts to have the Registration Statement declared effective under the
Securities Act as promptly as practicable after such filing. Crestar shall use
all commercially reasonable efforts to cause the Proxy Statement to be mailed to
Crestar's shareholders, and SunTrust shall use all commercially reasonable
efforts to cause the Proxy Statement to be mailed to SunTrust's shareholders, in
each case as promptly as practicable after the Registration Statement is
declared effective under the Securities Act. SunTrust shall also take any action
(other than qualifying to do business in any jurisdiction in which it is not now
so qualified or to file a general consent to service of process) required to be
taken under any applicable state securities laws in connection with the issuance
of SunTrust Common Stock in the Merger and Crestar shall furnish SunTrust all
information concerning Crestar and the holders of its capital stock and shall
take any action as SunTrust may reasonably request in connection with any such
action. If at any time prior to the Effective Time any information relating to
Crestar, or any of its affiliates, officers or directors, should be discovered
by Crestar which should be set forth in an amendment or supplement to any of the
Registration Statement or the Proxy Statement, so that any of such documents
would not include any misstatement of a material fact or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, Crestar shall promptly
notify SunTrust and Crestar shall cooperate in the filing of any appropriate
amendment or supplement describing such information with the Commission and, to
the extent required, any dissemination thereof to the shareholders of Crestar
and SunTrust.
(b) SunTrust shall, as soon as practicable following the
date of this Agreement, duly call, give notice of, convene and hold a meeting of
its shareholders (the "SunTrust Meeting") for the purpose of approving this
Agreement and shall, through its Board of Directors, recommend to its
shareholders the approval and adoption of this Agreement, the Merger and the
other transactions contemplated hereby.
(c) Crestar shall, as soon as practicable following the date
of this Agreement, duly call, give notice of, convene and hold a meeting of its
shareholders (the "Crestar Meeting") for the
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purpose of approving this Agreement and the Board of Directors of Crestar shall
recommend to its shareholders the approval and adoption of this Agreement, the
Merger and the other transactions contemplated hereby, shall use all reasonable
efforts to solicit such approval and adoption and shall not recommend or present
for shareholder consideration in any manner any other Acquisition Transaction,
tender offer or exchange offer for 20% or more of the outstanding securities of
Crestar, or a transaction contemplating the sale of any material Crestar
Subsidiary or Subsidiaries, or any material assets of Crestar or a Crestar
Subsidiary or Subsidiaries; provided, however, that nothing in this Section
5.12(c) shall prohibit the Board of Directors of Crestar from withdrawing or
modifying in a manner adverse to SunTrust its recommendation to the shareholders
or recommending any other Acquisition Transaction or any other such transaction
described in the foregoing clause if Crestar is not in breach of, and has not
breached, any of the provisions of Section 5.1, Crestar receives an unsolicited,
written bona fide proposal regarding an Acquisition Transaction, and as a result
of such proposal (A) the Board of Directors of Crestar concludes in good faith
that it is required to take such action, but only after consultation with
outside counsel and only if such outside counsel concludes and advises the Board
that the failure to take such action would result in a substantial risk that the
Board of Directors would violate any fiduciary duties of the Crestar Board to
Crestar shareholders under applicable law, and (B) the proposal regarding the
Acquisition Transaction contains an offer of consideration that is superior to
the consideration set forth herein.
(d) Crestar and SunTrust shall use all commercially
reasonable efforts to hold the Crestar Meeting and the SunTrust Meeting on the
same date and as soon as practicable after the date hereof.
5.13 SECURITIES ACT; POOLING-OF-INTERESTS.
(a) Prior to the Effective Time, each of SunTrust and
Crestar shall identify to the other all persons who were, at the time of the
SunTrust Meeting or the Crestar Meeting, as the case may be, "affiliates" of
such party as that term is used in paragraphs (c) and (d) of Rule 145 under the
Securities Act (including at a minimum, all those persons subject to the
reporting requirements of Rule 16(a) under the Exchange Act) and for purposes of
qualifying for "pooling-of-interests" accounting treatment (the "Affiliates").
(b) Each of SunTrust and Crestar shall obtain a written
agreement in the form of Exhibit C and Exhibit D, respectively, from each person
who is identified as an Affiliate of such party pursuant to clause (a) above.
Each of SunTrust and Crestar shall deliver such written agreements to the other
party no later than 30 days prior to the Effective Time.
5.14 STOCK EXCHANGE LISTINGS. SunTrust shall use all commercially
reasonable efforts to list on the New York Stock Exchange, upon official notice
of issuance, the SunTrust Common Stock to be issued pursuant to the Merger.
5.15 SHAREHOLDER LITIGATION. Each of Crestar and SunTrust shall
give the other the reasonable opportunity to participate in the defense of any
shareholder litigation against Crestar or SunTrust, as applicable, and its
directors relating to the transactions contemplated by this Agreement.
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5.16 POOLING-OF-INTERESTS AND TAX-FREE REORGANIZATION TREATMENT.
Neither SunTrust nor Crestar shall knowingly take or cause to be taken any
action, whether before or after the Effective Time, which would disqualify the
Merger as a "pooling of interests" for accounting purposes or as a
"reorganization" within the meaning of Section 368 of the Code.
5.17 LETTERS OF ACCOUNTANTS.
(a) SunTrust shall use all commercially reasonable efforts to
cause to be delivered to Crestar two letters from SunTrust's independent
accountants, one dated a date within two business days before the date on which
the Registration Statement shall become effective and one dated a date within
two business days before the Closing Date, each addressed to Crestar, in form
and substance reasonably satisfactory to Crestar and customary in scope and
substance for comfort letters delivered by independent public accountants in
connection with registration statements similar to the Registration Statement.
(b) SunTrust shall use all commercially reasonable efforts to
cause to be delivered to Crestar and Crestar's independent accountants two
letters from SunTrust's independent accountants addressed to Crestar and
SunTrust, one dated as of the date the Registration Statement is effective and
one dated as of the Closing Date, in each case stating that accounting for the
Merger as a pooling of interests under Opinion 16 of the Accounting Principles
Board and applicable Commission rules and regulations is appropriate if the
Merger is closed and consummated in accordance with this Agreement.
(c) Crestar shall use all commercially reasonable efforts to
cause to be delivered to SunTrust two letters from Crestar's independent
accountants, one dated a date within two business days before the date on which
the Registration Statement shall become effective and one dated a date within
two business days before the Closing Date, each addressed to SunTrust, in form
and substance reasonably satisfactory to SunTrust and customary in scope and
substance for comfort letters delivered by independent public accountants in
connection with registration statements similar to the Registration Statement.
(d) Crestar shall use all commercially reasonable efforts to
cause to be delivered to SunTrust and SunTrust's independent accountants two
letters from Crestar's independent accountants addressed to SunTrust and
Crestar, one dated as of the date the Registration Statement is effective and
one dated as of the Closing Date, in each case stating that accounting for the
Merger as a pooling of interests under Opinion 16 of the Accounting Principles
Board and applicable Commission rules and regulations is appropriate if the
Merger is closed and consummated in accordance with this Agreement.
5.18 EXPENSES. Except as otherwise provided in Section 8.2, each
party shall bear all expenses incurred by it in connection with this Agreement
and the transactions contemplated hereby, except that printing expenses and
commission filing and registration fees shall be shared equally between Crestar
and SunTrust.
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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.
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If all conditions are determined to be satisfied in all material
respects (or are duly waived) at the Closing, the Closing shall be consummated
by the making of all necessary filing required by all Governmental Entities.
6.2 DOCUMENTS AND CERTIFICATES. SunTrust and Crestar shall, on or
prior to Closing, execute and deliver all such instruments, documents or
certificates as may be necessary or advisable, on the advice of counsel, for the
consummation at the Closing of the transactions contemplated by this Agreement
to occur as soon as practicable.
ARTICLE VII
CONDITIONS
7.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) The Merger shall have been approved and adopted by the
requisite vote of the holders of Crestar Common Stock and the issuance of
SunTrust Common Stock shall have been approved by the requisite vote of the
holders of SunTrust Common Stock.
(b) The SunTrust Common Stock issuable in the Merger shall
have been authorized for listing on the New York Stock Exchange, upon official
notice of issuance.
(c) All authorizations, consents, orders or approvals of, and
all expirations of waiting periods imposed by, any Governmental Entity
(collectively, "Consents") which are necessary for the consummation of the
Merger (other than immaterial Consents, the failure to obtain which would not be
materially adverse to the combined businesses of SunTrust, Crestar, SunTrust's
subsidiaries and the Crestar Subsidiaries taken as a whole) shall have been
obtained or shall have occurred and shall be in full force and effect at the
Effective Time; provided, however, that none of the preceding Consents shall be
deemed obtained if it shall have imposed any condition or requirement which
would so materially and adversely impact the economic or business benefits to
SunTrust or Crestar of the transactions contemplated by this Agreement that, had
such condition or requirement been known, such party would not, in its
reasonable judgment, have entered into this Agreement.
(d) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act. No stop order suspending
the effectiveness of the Registration Statement shall have been issued by the
Commission and remain in effect.
(e) SunTrust and Crestar shall have received a letter, dated
the date of the Closing, from Arthur Andersen LLP or its successor, SunTrust's
independent accountants, and KPMG Peat Marwick LLP or its successor, Crestar's
independent accountants, each to the effect that,
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for financial reporting purposes, the Merger qualifies for pooling-of-interests
accounting treatment under generally accepted accounting principles if
consummated in accordance with this Agreement.
(f) No temporary restraining order, preliminary or permanent
injunction or other order by any federal or state court in the United States
which prevents the consummation of the Merger shall have been issued and remain
in effect.
(g) King & Spalding, counsel to SunTrust, shall have delivered
to SunTrust their opinion, dated on or about the date that is two business days
prior to the date the Proxy Statement is first mailed to the shareholders of
Crestar and the shareholders of SunTrust, and reaffirmed as of the Closing Date,
substantially to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion which are consistent with the state of
facts existing at such time, the Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code.
In rendering such opinion, counsel may require and rely upon representations
contained in certificates of officers of Crestar, SunTrust, and others,
reasonably satisfactory in form and substance to such counsel.
7.2 CONDITIONS TO OBLIGATION OF CRESTAR TO EFFECT THE MERGER. The
obligation of Crestar to effect the Merger shall be subject to the fulfillment
or waiver at or prior to the Effective Time of the additional following
conditions:
(a) SunTrust and Sub shall have performed in all material
respects all covenants contained in this Agreement required to be performed by
each of them at or prior to the Effective Time.
(b) The representations and warranties of SunTrust contained
in Article III shall be true and correct when made and shall be true and correct
as of the Effective Time as if made at and as of such time, except as expressly
contemplated or permitted by this Agreement, except for representations and
warranties relating to a time or times other than the Effective Time which were
or will be true and correct at such time or times and except where the failure
or failures of such representations and warranties to be so true and correct,
individually or in the aggregate, does not result or would not result in a
Material Adverse Effect.
(c) SunTrust shall have furnished Crestar a certificate dated
the date of the Closing, signed by the Chief Executive Officer and Chief
Financial Officer of SunTrust that the conditions set forth in Sections 7.2(a)
and 7.2(b) have been satisfied.
(d) Skadden, Arps, Slate, Meagher & Flom LLP, counsel to
Crestar, shall have delivered to Crestar their opinion, dated on or about the
date that is two business days prior to the date the Proxy Statement is first
mailed to the shareholders of Crestar and the shareholders of SunTrust, and
reaffirmed as of the Closing Date, substantially to the effect that, on the
basis of facts, representations and assumptions set forth in such opinion which
are consistent with the state of facts existing at such time, the Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code. In rendering such opinion, counsel may require
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and rely upon representations contained in certificates of officers of Crestar,
SunTrust, and others, reasonably satisfactory in form and substance to such
counsel.
7.3 CONDITIONS TO OBLIGATION OF SUNTRUST TO EFFECT THE MERGER. The
obligation of SunTrust to effect the Merger shall be subject to the fulfillment
or waiver at or prior to the Effective Time of the additional following
conditions:
(a) Crestar shall have performed in all material respects its
covenants contained in this Agreement required to be performed at or prior to
the Effective Time.
(b) The representations and warranties of Crestar contained in
Article IV shall be true and correct when made and shall be true and correct as
of the Effective Time as if made on and as of such time, except as expressly
contemplated or permitted by this Agreement, except for representations and
warranties relating to a time or times other than the Effective Time which were
or will be true and correct at such time or times and except where the failure
or failures of such representations and warranties to be so true and correct,
individually or in the aggregate, does not result or would not result in a
Material Adverse Effect.
(c) Crestar shall have furnished SunTrust a certificate dated
the date of the Closing signed by the Chief Executive Officer and Chief
Financial Officer of Crestar that the conditions set forth in Sections 7.3(a)
and 7.3(b) have been satisfied.
ARTICLE VIII
MISCELLANEOUS
8.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
shareholders of both Crestar and SunTrust:
(a) by mutual consent of the Board of Directors of SunTrust
and the Board of Directors of Crestar set forth in a written instrument;
(b) by either SunTrust or Crestar if (i) the Merger shall not
have been consummated on or before March 31, 1999; provided, however, that the
right to terminate this Agreement pursuant to this Section 8.1(b)(i) shall not
be available to any party that is in material breach of its obligations under
this Agreement or whose failure to fulfill any of its obligations contained in
this Agreement has been the cause of, or resulted in, the failure of the Merger
to have occurred on or prior to the aforesaid date or (ii) any court or other
Governmental Entity having jurisdiction over a party hereto shall have issued an
order enjoining, restraining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other action
shall have become final and nonappealable;
(c) by either SunTrust or Crestar if this Agreement is not
approved at the Crestar Meeting or the issuance of SunTrust Common Stock is not
approved at the SunTrust Meeting (provided the terminating party is not
otherwise in material breach of its obligations under this Agreement);
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(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
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<PAGE> 49
(iii) SunTrust terminates this Agreement pursuant to
Section 8.1(c) because this Agreement was not approved at the Crestar Meeting.
(b) In order to induce Crestar to enter into this
Agreement and to reimburse and compensate Crestar for its time, expenses and
lost opportunity costs of pursuing the Merger and seeking to consummate the
transactions contemplated by this Agreement, SunTrust will make a cash payment
to Crestar of an amount equal to all out-of-pocket expenses and fees incurred by
Crestar, including without limitation fees and expenses payable to all legal,
accounting, financial and other professional advisors, relating to the Merger or
the transactions contemplated by this Agreement if:
(i) Crestar terminates this Agreement pursuant to Section
8.1(g);
(ii) SunTrust terminates this Agreement pursuant to
Section 8.1(c) because the issuance of SunTrust Common Stock was not approved at
the SunTrust Meeting; or
(iii) Crestar terminates this Agreement pursuant to Section
8.1(c) because the issuance of SunTrust Common Stock was not approved at the
SunTrust Meeting.
(c) Any payment required by this Section 8.2 must be paid
by Crestar or SunTrust, as applicable, to the other party (by wire transfer of
immediately available funds to an account designated by such party) within one
(1) business day after demand by such party; provided, however, that if such
payment is required pursuant to Section 8.2(a)(ii) or Section 8.2(b)(ii), such
payment must be made by Crestar or SunTrust, as applicable, concurrently with,
and as a condition to, such termination of this Agreement.
(d) The parties agree that the agreements contained in
this Section 8.2 are an integral part of the transactions contemplated by this
Agreement. The parties acknowledge and agree that damages upon termination of
the Agreement in the circumstances referred to in Section 8.2(a) and Section
8.2(b) are not reasonably ascertainable and the payment pursuant to this Section
8.2 constitutes liquidated damages and not a penalty. The payment pursuant to
Section 8.2 is intended to provide reimbursement for out-of-pocket expenses and
not damages, for termination of this Agreement under the circumstances referred
to therein, and such payments shall not relieve any party from liability for the
willful breach of any of its representations, warranties, covenants or
agreements contained in this Agreement and the nonbreaching party may pursue any
remedies available to it at law or in equity, including recovery of such damages
to which it may be entitled. Notwithstanding anything to the contrary contained
in this Section 8.2, in addition to any amounts paid or payable pursuant to
Section 8.2(a) or Section 8.2(b), Crestar or SunTrust, as applicable, shall pay
the costs and expenses (including legal fees and expenses) in connection with
any action, including the filing of any lawsuit or other legal action, taken by
the other party to collect payment hereunder, together with interest on the
unpaid amount at the publicly announced prime rate of SunTrust from the date
such amount was required to be paid.
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<PAGE> 50
8.3 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
The representations, warranties, covenants and agreements in this Agreement will
terminate at the Effective Time or the earlier termination of this Agreement
pursuant to Section 7.1, as the case may be; provided, however, that if the
Merger is consummated, Sections 1.6, 2.1 through 2.4, 5.6, 5.9 and this Section
8.3 will survive the Effective Time to the extent contemplated by such Sections;
provided, further, that Section 5.18, the last sentence of Section 5.6 and all
of Section 8.2 will in all events survive any termination of this Agreement.
8.4 WAIVER AND AMENDMENT. Any provision of this Agreement may be
waived at any time by the party which is, or whose shareholders are, entitled to
the benefits thereof, and this Agreement may be amended or supplemented at any
time, provided that no amendment will be made after any shareholder approval of
the Merger which reduces or changes the form of the Merger Consideration without
further shareholder approval. No such waiver, amendment or supplement will be
effective unless in a writing which makes express reference to this Section 8.4
and is signed by the party or parties sought to be bound thereby.
8.5 ENTIRE AGREEMENT. This Agreement together with the Crestar
Option Agreement, the SunTrust Option Agreement and the Confidentiality
Agreement, contain the entire agreement among SunTrust and Crestar with respect
to the Merger and the other transactions contemplated hereby and thereby, and
supersedes all prior agreements among the parties with respect to such matters.
8.6 APPLICABLE LAW. This Agreement will be governed by and
construed in accordance with the laws of the State of Georgia.
8.7 CERTAIN DEFINITIONS; HEADLINES. (a) For purposes of this
Agreement, the term:
(i) "affiliate", "associate" and "significant subsidiary"
shall have the respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the date
hereof.
(ii) "control" (including the terms "controlled by" and
"under common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management or policies of a person, whether through the ownership of stock, as
trustee or executor, by contract or credit arrangement or otherwise;
(iii) "group" shall have the meaning ascribed to such term
in Section 13(d) of the Exchange Act, as in effect on the date hereof.
(iv) "Market Price" means the average of the per share
closing prices on the New York Stock Exchange of SunTrust Common Stock for the
20 consecutive trading days ending at the end of the third trading day
immediately preceding the Effective Time.
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<PAGE> 51
(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
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<PAGE> 52
With a copy to:
SunTrust Banks, Inc.
303 Peachtree Street, N.E
Atlanta, Georgia 30308
Attention: Raymond D. Fortin
General Counsel
Telephone: (404) 588-7165
Telecopy: (404) 581-1664
And an additional copy:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303
Attention: C. William Baxley
Telephone: (404) 572-4600
Telecopy: (404) 572-5100
If to Crestar to:
Crestar Financial Corporation
919 East Main Street
Richmond, Virginia 23261-6665
Attention: Linda G. Rigsby
Senior Vice President and
Corporate Secretary
Telephone: (804) 782-7738
Telecopy: (804) 782-7244
With a copy to:
Hunton &Williams
Riverfront Plaza, East Towers
951 East Byrd Street
Richmond, Virginia 23219-4074
Attention: Lathan M. Ewers, Jr.
Telephone: (804) 788-8200
Facsimile: (804) 788-8218
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<PAGE> 53
and an additional copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: William S. Rubenstein
Telephone: (212) 735-3000
Facsimile: (212) 735-2000
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section 8.8.
8.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original but all of which
together will constitute but one agreement.
8.10 PARTIES IN INTEREST; ASSIGNMENT. Except for Section 2.2 (which
is intended to be for the benefit of the holders of Outstanding Options under
the Crestar Option Plans to the extent contemplated thereby and their
beneficiaries, and may be enforced by such persons) and Section 5.9 hereof
(which are intended to be for the benefit of directors and officers to the
extent contemplated thereby and their beneficiaries, and may be enforced by such
persons), this Agreement is not intended to nor will it confer upon any other
person (other than the parties hereto) any rights or remedies. Without the prior
written consent of the other parties to this Agreement, neither SunTrust,
Crestar nor Sub shall assign any rights or delegate any obligations under this
Agreement. Any such purported assignment or delegation made without prior
consent of the other parties hereto shall be null and void.
8.11 SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other terms and provisions of this Agreement will nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party hereto. Upon any such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto will
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated by this Agreement are consummated to the
extent possible.
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<PAGE> 54
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized representatives to execute this Agreement as of the date first above
written.
SUNTRUST BANKS, INC.
By: /s/ L. Phillip Humann
-----------------------------------
L. Phillip Humann
Chairman of the Board and
Chief Executive Officer
CRESTAR FINANCIAL CORPORATION
By: /s/ Richard G. Tilghman
-----------------------------------
Richard G. Tilghman
Chairman of the Board and
Chief Executive Officer
SMR CORPORATION
By: /s/ L. Phillip Humann
-----------------------------------
L. Phillip Humann
President
<PAGE> 55
EXHIBIT A
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> 56
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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(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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<PAGE> 58
(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> 59
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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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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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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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:
---------------------------------------
Name: L. Phillip Humann
Title: Chairman of the Board and
Chief Executive Officer
CRESTAR FINANCIAL CORPORATION, as Issuer
By:
---------------------------------------
Name: Richard G. Tilghman
Title: Chairman of the Board and
Chief Executive Officer
<PAGE> 69
EXHIBIT B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 20, 1998, between SUNTRUST
BANKS, INC., a Georgia corporation ("Issuer"), and CRESTAR FINANCIAL
CORPORATION, a Virginia corporation ("Grantee").
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 21,097,697
fully paid and nonassessable shares of common stock, par value $1.00 ("Common
Stock"), of Issuer at a price of $87.00 per share (such price, as adjusted if
applicable, the "Option Price"); provided however that in no event shall the
number of shares of Common Stock for which this Option is exercisable exceed
9.9% of the Issuer's issued and outstanding common shares without giving effect
to any shares subject to or issued pursuant to the Option. The number of shares
of Common Stock that may be received upon the exercise of the Option and the
Option Price are subject to adjustment as herein set forth.
(b) If any additional shares of Common Stock are issued or otherwise
become outstanding after the date of this Stock Option Agreement (other than
pursuant to this Stock Option Agreement), the number of shares of Common Stock
subject to the Option shall be increased so that, after such issuance such
number equals 9.9% of the number of shares of Common Stock then issued and
outstanding without giving effect to any shares subject to or issued pursuant to
the Option. Nothing contained in this Section 1(b) or elsewhere in this Stock
Option Agreement shall be deemed to authorize Issuer or Grantee to breach any
provision of the Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), provided that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2) within
90 days following such Subsequent Triggering Event (or such later date as
provided in Section 10). Each of the following shall be an "Exercise Termination
Event": (i) the Effective Time of the Merger; (ii) termination of the
<PAGE> 70
Agreement in accordance with the provisions thereof (other than a termination
resulting from a willful breach by Issuer of a provision of the Agreement) if
such termination occurs prior to the occurrence of an Initial Triggering Event;
or (iii) the passage of eighteen months after termination of the Agreement if
such termination follows the occurrence of an Initial Triggering Event or is a
termination by Grantee pursuant to Section 8.1(g) thereof resulting from a
willful breach by Issuer of a provision of the Agreement. The term "Holder"
shall mean the holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) Issuer or any significant subsidiary of Issuer without
having received Grantee's prior written consent, shall have entered into an
agreement to engage in, an Acquisition Transaction (as hereinafter defined) with
any person (the term "person" for purposes of this Stock Option Agreement having
the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the Securities
Exchange Act of 1934 (the "1934 Act"), and the rules and regulations thereunder)
other than Grantee or any of its subsidiaries (each a "Grantee Subsidiary") or
the board of directors of Issuer shall have recommended that the shareholders of
Issuer approve or accept any Acquisition Transaction other than as contemplated
by the Agreement. For purposes of this Stock Option Agreement, "Acquisition
Transaction" shall mean (a) a merger, consolidation or share exchange involving
Issuer or any significant subsidiary of Issuer, provided, however, that in no
event shall (i) any merger, consolidation or share exchange involving only the
Issuer and one or more of the subsidiaries of Issuer, or involving only any two
or more of such subsidiaries of Issuer be deemed to be an Acquisition
Transaction, or (ii) any merger, consolidation or share exchange (A) in which
Issuer is the surviving entity, or (B) as to which the shareholders of Issuer
immediately prior thereto own in the aggregate at least 40% of the common stock
of the surviving corporation or its publicly-held parent corporation immediately
following consummation thereof be deemed to be an Acquisition Transaction, (b) a
purchase, lease or other acquisition of all or substantially all of the assets
of Issuer and its subsidiaries taken as a whole, or (c) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of securities representing 20% or more of the voting power of Issuer;
(ii) The board of directors of Issuer does not recommend that
the shareholders of Issuer approve the Agreement or publicly withdraws or
modifies, or publicly announces its intention to withdraw or modify, in any
manner adverse to the Grantee, its recommendation that its shareholders approve
the Agreement;
(iii) Any person other than Grantee or any Grantee Subsidiary
or any Issuer Subsidiary acting in a fiduciary capacity shall have acquired
beneficial ownership or the right to acquire beneficial ownership of 20% or more
of the outstanding shares of Common Stock (the term "beneficial ownership" for
purposes of this Stock Option Agreement having the meaning assigned thereto in
Section 13(d) of the 1934 Act, and the rules and regulations thereunder);
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(iv) Any person other than Grantee or any Grantee Subsidiary
shall have made a bona fide proposal to Issuer or its shareholders by public
announcement or written communication that is or becomes the subject of public
disclosure to engage in an Acquisition Transaction;
(v) After a proposal is made by a third party to Issuer or its
shareholders to engage in an Acquisition Transaction, Issuer shall have breached
any covenant or obligation contained in the Agreement and such breach (x) would
entitle Grantee to terminate the Agreement and (y) shall not have been cured
prior to the Notice Date (as defined below);
(vi) Any person other than Grantee or any Grantee Subsidiary,
other than in connection with a transaction to which Grantee has given its prior
written consent, shall have filed an application or notice with The Board of
Governors of the Federal Reserve System (the "FRB") or any other federal or
state bank regulatory authority, which application or notice has been accepted
for processing, for approval to engage in an Acquisition Transaction;
(vii) The shareholders of Issuer shall have voted and failed
to approve the Agreement and the Merger at a meeting which has been held for
that purpose or any adjournment or postponement thereof, or such meeting shall
not have been held in violation of the Merger Agreement or shall have been
canceled prior to termination of the Merger Agreement if, prior to such meeting
(or if such meeting shall not have been held or shall have been canceled, prior
to such termination), it shall have been publicly announced that any person
(other than Grantee or any Grantee Subsidiary) shall have made, or disclosed an
intention to make, a proposal to engage in an Acquisition Transaction; or
(viii) Any person other than Grantee or any Grantee Subsidiary
shall have filed with the SEC a registration statement or tender offer materials
with respect to a potential exchange or tender offer that would constitute an
Acquisition Transaction;
(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person, other than Grantee or any
Grantee Subsidiary or any Issuer Subsidiary acting in a fiduciary capacity, of
beneficial ownership of 25% or more of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described
in clause (i) of subsection 2(b), except that the percentage referred to in
clause (c) shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
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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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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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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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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.
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(d) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option is then
exercisable, divided by the Average Price. The exercise price of the Substitute
Option per share of Substitute Common Stock shall then be equal to the Option
Price multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock for which the Option is then exercisable and the
denominator of which shall be the number of shares of Substitute Common Stock
for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for a number of shares that is more
than 9.9% of the shares of Substitute Common Stock outstanding prior to exercise
of the Substitute Option. If the Substitute Option would be exercisable for more
than 9.9% of the shares of Substitute Common Stock outstanding prior to exercise
but for this clause (e), the issuer of the Substitute Option (the "Substitute
Option Issuer") shall make a cash payment to the Holder equal to the excess of
(i) the value of the Substitute Option without giving effect to the limitation
in this clause (e) over (ii) the value of the Substitute Option after giving
effect to the limitation in this clause (e). This difference in value shall be
determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, and reasonably acceptable to the
Issuer.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to the amount by which (i) the Highest Closing
Price (as hereinafter defined) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for which
the Substitute Option may then be exercised, and at the request of the owner
(the "Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
the Highest Closing Price multiplied by the number of Substitute Shares so
designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder or the Substitute Share
Owner, as the case may be, may exercise its respective right to require the
Substitute Option Issuer to repurchase the Substitute Option and the Substitute
Shares pursuant to this Section 9 by surrendering for such purpose to the
Substitute Option Issuer, at its principal office, the agreement for such
Substitute Option (or, in the absence of such an agreement, a copy of this Stock
Option Agreement) and certificates for Substitute Shares accompanied by a
written notice or notices stating that the Substitute Option Holder or the
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Substitute Share Owner, as the case may be, elects to require the Substitute
Option Issuer to repurchase the Substitute Option and/or the Substitute Shares
in accordance with the provisions of this Section 9. As promptly as practicable,
and in any event within five business days after the surrender of the Substitute
Option and/or certificates representing Substitute Shares and the receipt of
such notice or notices relating thereto, the Substitute Option Issuer shall
deliver or cause to be delivered to the Substitute Option Holder the Substitute
Option Repurchase Price and/or to the Substitute Share Owner the Substitute
Share Repurchase Price therefor or the portion thereof which the Substitute
Option Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from repurchasing the Substitute Option and/or the
Substitute Shares in part or in full, the Substitute Option Issuer shall
immediately so notify the Substitute Option Holder and/or the Substitute Share
Owner and thereafter deliver or cause to be delivered, from time to time, to the
Substitute Option Holder and/or the Substitute Share Owner, as appropriate, the
portion of the Substitute Share Repurchase Price, respectively, which it is no
longer prohibited from delivering, within five business days after the date on
which the Substitute Option Issuer is no longer so prohibited; provided,
however, that if the Substitute Option Issuer is at any time after delivery of a
notice of repurchase pursuant to subsection (b) of this Section 9 prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from delivering to the Substitute Option Holder and/or the Substitute
Share Owner, as appropriate, the Substitute Option Repurchase Price and the
Substitute Share Repurchase Price, respectively, in full (and the Substitute
Option Issuer shall use its best efforts to receive all required regulatory and
legal approvals as promptly as practicable in order to accomplish such
repurchase), the Substitute Option Holder or Substitute Share Owner may revoke
its notice of repurchase of the Substitute Option or the Substitute Shares
either in whole or to the extent of the prohibition, whereupon, in the latter
case, the Substitute Option Issuer shall promptly (i) deliver to the Substitute
Option Holder or Substitute Share Owner, as appropriate, that portion of the
Substitute Option Repurchase Price or the Substitute Share Repurchase Price that
the Substitute Option Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock obtained by
multiplying the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Substitute
Option Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder, and the denominator of which is the Substitute Option
Repurchase Price, or (B) to the Substitute Share Owner, a certificate for the
Substitute Option Shares it is then so prohibited from repurchasing.
10. The time periods for exercise of certain rights under Sections
2, 6, 7 and 12 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights, and for the expiration of
all statutory waiting periods; (ii) during the pendency of any temporary
restraining order, injunction or other legal ban to the exercise of such rights;
and (iii) to the extent necessary to avoid liability under Section 16(b) of the
1934 Act by reason of such exercise.
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11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute
and deliver this Stock Option Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Stock Option Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Issuer and no other corporate
proceedings on the part of Issuer are necessary to authorize this Stock Option
Agreement or to consummate the transactions contemplated hereby. This Stock
Option Agreement has been duly and validly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Stock Option Agreement in accordance with
its terms will have reserved for issuance upon the exercise of the Option, that
number of shares of Common Stock equal to the maximum number of shares of Common
Stock at any time and from time to time issuable hereunder, and all such shares,
upon issuance pursuant hereto, will be duly authorized, validly issued, fully
paid, nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
12. Neither of the parties hereto may assign any of its rights and
obligations under this Stock Option Agreement or the Option created hereunder to
any other person, without the express written consent of the other party, except
that in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within 90
days following such Subsequent Triggering Event (or such later period as may be
provided pursuant to Section 10).
13. Each of Grantee and Issuer will use its best efforts to make
all filings with, and to obtain consents of, all third parties and Governmental
Entities necessary to the consummation of the transactions contemplated by this
Stock Option Agreement, including without limitation making application to list
the shares of Common Stock issuable hereunder on the New York Stock Exchange or
such other exchange or market on which the shares of Issuer may be listed upon
official notice of issuance and making any necessary applications to the FRB
under the Bank Holding Company Act and any other Governmental Entities for
approval to acquire the shares issuable hereunder.
14. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Stock Option Agreement by either party
hereto and that the obligations of the parties shall hereto be enforceable by
either party hereto through injunctive or other equitable relief.
15. If any term, provision, covenant or restriction contained in
this Stock Option Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Stock Option Agreement shall remain in full force and effect, and shall in
no way
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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 Issuer
By:
----------------------------------
Name: L. Phillip Humann
Title: Chairman of the Board and
Chief Executive Officer
CRESTAR FINANCIAL CORPORATION, as Grantee
By:
----------------------------------
Name: Richard G. Tilghman
Title: Chairman of the Board and
Chief Executive Officer
<PAGE> 83
EXHIBIT C
FORM OF SUNTRUST AFFILIATE LETTER
_________________, 199_
SunTrust Banks, Inc.
303 Peachtree Street, N.E.
Atlanta, Georgia 30308
Attention:
Crestar Financial Corporation
919 East Main Street
Richmond, Virginia 23261-6665
Attention:
Ladies and Gentlemen:
I have been advised that I may be deemed to be, but do not admit that I
am, an "affiliate" of SunTrust, Banks, Inc., a Georgia corporation ("SunTrust"),
as that term is defined in Rule 145 promulgated by the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"Securities Act"), and/or SEC Accounting Series Releases 130 and 135. I
understand that pursuant to the terms of the Agreement and Plan of Merger, dated
as of July 20, 1998 (the "Merger Agreement"), by and among SunTrust, Crestar
Financial Corporation, a Virginia corporation ("Crestar"), and SMR Corporation,
a Virginia corporation and a wholly owned subsidiary of SunTrust ("Sub"), Sub
plans to merge with and into Crestar (the "Merger"), with Crestar surviving as a
wholly owned subsidiary of SunTrust, and that the Merger is intended to be
accounted for under the "pooling of interests" accounting method.
I have carefully read this letter and reviewed the Merger Agreement and
discussed their requirements and other applicable limitations upon my ability to
sell, transfer, or otherwise dispose of common stock of SunTrust or Crestar, to
the extent I felt necessary, with my counsel or counsel for SunTrust.
I hereby represent, warrant and covenant with and to SunTrust and
Crestar that:
1. I will not sell, transfer or otherwise dispose of, or reduce
my risk relative to, any shares of common stock of SunTrust or
Crestar (whether or not acquired by me in the Merger) during
the period commencing 30 days prior to the effective date of
the Merger and ending at such time as SunTrust advises me that
results covering at least 30 days of combined operations of
SunTrust and Crestar after the Merger have been published by
SunTrust. I understand that SunTrust is not obligated to
publish such combined financial results except in accordance
with its normal financial reporting practice.
<PAGE> 84
2. I further understand and agree that this letter agreement
shall apply to all shares of common stock of SunTrust and
Crestar that I am deemed to beneficially own pursuant to
applicable federal securities laws.
3. If SunTrust advises me in writing that it has been advised by
its accountants that additional restrictions apply to my
ability to sell, transfer, or otherwise dispose of common
stock of SunTrust or Crestar in order for SunTrust to be
entitled to use the "pooling of interests" accounting method,
I will abide by such restrictions.
IN WITNESS WHEREOF, this Letter has been duly executed and delivered by
the duly authorized officers of the parties hereto as of the date first above
written.
-------------------------------
Name:
Accepted this __ day of ________, 1998:
SUNTRUST BANKS, INC.
By ________________________
Name: _____________________
Title:_____________________
CRESTAR FINANCIAL CORPORATION
By ________________________
Name: _____________________
Title: ____________________
2
<PAGE> 85
EXHIBIT D
FORM OF CRESTAR AFFILIATE LETTER
_________________, 199__
Crestar Financial Corporation
919 East Main Street
Richmond, Virginia 23261-6665
Attention:
SunTrust Banks, Inc.
303 Peachtree Street, N.E.
Atlanta, Georgia 30308
Attention:
Ladies and Gentlemen:
I have been advised that I may be deemed to be, but do not
admit that I am, an "affiliate" of Crestar Financial Corporation, a Virginia
corporation ("Crestar"), as that term is defined in Rule 145 promulgated by the
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "Securities Act"), and/or SEC Accounting Series Releases 130 and
135. I understand that pursuant to the terms of the Agreement and Plan of
Merger, dated as of July 20, 1998 (the "Merger Agreement"), by and among
SunTrust, a Georgia corporation ("SunTrust"), Crestar, and SMR Corporation, a
Virginia corporation ("Sub"), Sub plans to merge with and into Crestar with
Crestar surviving as a wholly owned subsidiary of SunTrust (the "Merger") and
that the Merger is intended to be accounted for under the "pooling of interests"
accounting method.
I further understand that as a result of the Merger, I may
receive shares of common stock, par value $1.00 par share, of SunTrust
("SunTrust Stock") in exchange for shares of common stock, par value $5.00 per
share, of Crestar ("Crestar Stock").
I have carefully read this letter and reviewed the Merger
Agreement and discussed their requirements and other applicable limitation upon
my ability to sell, transfer, or otherwise dispose of Crestar Stock and SunTrust
Stock, to the extent I felt necessary, with my counsel or counsel for Crestar.
I represent, warrant and covenant with and to SunTrust that if
I receive any SunTrust Stock as a result of the Merger:
1. I shall not make any sale, transfer, or other
disposition of such SunTrust Stock unless (i) such
sale, transfer or other disposition has been
registered under the Securities Act, (ii) such sale,
transfer or other disposition is made
<PAGE> 86
in conformity with the provisions of Rule 145 under
the Securities Act (as such rule may be amended from
time to time), or (iii) in the opinion of counsel in
form and substance reasonably satisfactory to
SunTrust, or under a "no-action" letter obtained by
me from the staff of the SEC, such sale, transfer or
other disposition will not violate or is otherwise
exempt from registration under the Securities Act.
2. I understand that SunTrust is under no obligation to
register the sale, transfer or other disposition of
shares of SunTrust Stock by me or on my behalf under
the Securities Act or to take any other action
necessary in order to make compliance with an
exemption from such registration available.
3. I understand that stop transfer instructions will be
given to SunTrust's transfer agent with respect to
shares of SunTrust Stock issued to me as a result of
the Merger and that there will be placed on the
certificates for such shares, or any substitutions
therefor, a legend stating in substance:
"The shares represented by this certificate
were issued in a transaction to which Rule
145 promulgated under the Securities Act of
1933 applies. The shares represented by this
certificate may be transferred only in
accordance with the terms of a letter
agreement, dated ___, 199__, between the
registered holder hereof and SunTrust Banks,
Inc., a copy of which agreement is on file
at the principal offices of SunTrust Banks,
Inc."
4. I understand that, unless transfer by me of the
SunTrust Stock issued to me as a result of the Merger
has been registered under the Securities Act or such
transfer is made in conformity with the provisions of
Rule 145(d) under the Securities Act, SunTrust
reserves the right, in its sole discretion, to place
the following legend on the certificates issued to my
transferee:
"The shares represented by this certificate
have not been registered under the
Securities Act of 1933 and were acquired
from a person who received such shares in a
transaction to which Rule 145 under the
Securities Act of 1933 applies. The shares
have been acquired by the holder not with a
view to, or for resale in connection with,
any distribution thereof within the meaning
of the Securities Act of 1933 and may not be
offered, sold, pledged or otherwise
transferred except in accordance with an
exemption from the resignation requirements
of the Securities Act of 1933."
It is understood and agreed that the legends set forth in
paragraphs (3) and (4) above shall be removed by delivery of substitute
certificates without such legends if I shall have delivered
2
<PAGE> 87
to SunTrust (i) a copy of a "no action" letter from the staff of the SEC, or an
opinion of counsel in form and substance reasonably satisfactory to SunTrust, to
the effect that such legend is not required for purposes of the Act, or (ii)
evidence or representations satisfactory to SunTrust that SunTrust Stock
represented by such certificates is being or has been sold in conformity with
the provisions of Rule 145(d).
I further represent, warrant and covenant with and to SunTrust
that I will not sell, transfer or otherwise dispose of, or reduce my risk
relative to, any shares of Crestar Stock or SunTrust Stock (whether or not
acquired by me in the Merger) during the period commencing 30 days prior to the
effective date of the Merger and ending at such time as SunTrust advises me that
results covering at least 30 days of combined operations of SunTrust and Crestar
after the Merger have been published by SunTrust. I understand that SunTrust is
not obligated to publish such combined financial results except in accordance
with its normal financial reporting practice.
I further understand and agree that this letter agreement
shall apply to all shares of Crestar Stock and SunTrust Stock that I am deemed
to beneficially own pursuant to applicable federal securities law and I further
represent, warrant and covenant with and to SunTrust that I will have, and will
cause each of the other parties whose shares are deemed to be beneficially owned
by me to have, all shares of Crestar Stock or SunTrust Stock owned by me or such
parties registered in my name or the name of such parties, as applicable, prior
to the effective date of the Merger and not in the name of any bank, broker or
dealer, nominee or clearing house.
I also understand that the Merger is intended to be treated as
a "pooling of interests" for accounting purposes, and I agree that if Crestar or
SunTrust advises me in writing that it has been advised by its accountants that
additional restrictions apply to my ability to sell, transfer or otherwise
dispose of Crestar Stock or SunTrust Stock in order for SunTrust to be entitled
to use the pooling of interests accounting method, I will abide by such
restrictions.
Very truly yours,
----------------------------
Name:
3
<PAGE> 1
EXHIBIT 2.2
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").
WITNESETH:
WHEREAS, as a condition to, and contemporaneous with the execution of
an Agreement and Plan of Merger dated July 20, 1998 ("Agreement") and in
consideration therefor, the parties are entering into this Stock Option
Agreement pursuant to which Issuer has agreed to grant Grantee the Option (as
hereinafter defined):
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Agreement, the parties
hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to 22,338,161
fully paid and nonassessable shares of common stock, par value $5.00 ("Common
Stock"), of Issuer at a price of $62.875 per share (such price, as adjusted if
applicable, the "Option Price"); provided however that in no event shall the
number of shares of Common Stock for which this Option is exercisable exceed
19.9% of the Issuer's issued and outstanding common shares without giving effect
to any shares subject to or issued pursuant to the Option. The number of shares
of Common Stock that may be received upon the exercise of the Option and the
Option Price are subject to adjustment as herein set forth.
(b) If any additional shares of Common Stock are issued or otherwise
become outstanding after the date of this Stock Option Agreement (other than
pursuant to this Stock Option Agreement), the number of shares of Common Stock
subject to the Option shall be increased so that, after such issuance, such
number equals 19.9% of the number of shares of Common Stock then issued and
outstanding without giving effect to any shares subject to or issued pursuant to
the Option. Nothing contained in this Section 1(b) or elsewhere in this Stock
Option Agreement shall be deemed to authorize Issuer or Grantee to breach any
provision of the Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), provided that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2) within
90 days following such Subsequent Triggering Event (or such later date as
provided in Section 10). Each of the following shall be an "Exercise Termination
Event": (i) the Effective Time of the Merger; (ii) termination of the Agreement
in accordance with the provisions thereof (other than a termination resulting
from a willful breach by Issuer of a provision of the Agreement) if such
termination occurs prior to the occurrence of an Initial Triggering Event; or
(iii) the passage of eighteen months after termination
<PAGE> 2
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.
-3-
<PAGE> 4
(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
-5-
<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
-6-
<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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<PAGE> 8
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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<PAGE> 9
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.
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<PAGE> 10
(d) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option is then
exercisable, divided by the Average Price. The exercise price of the Substitute
Option per share of Substitute Common Stock shall then be equal to the Option
Price multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock for which the Option is then exercisable and the
denominator of which shall be the number of shares of Substitute Common Stock
for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for a number of shares that is more
than 19.9% of the shares of Substitute Common Stock outstanding prior to
exercise of the Substitute Option. If the Substitute Option would be exercisable
for more than 19.9% of the shares of Substitute Common Stock outstanding prior
to exercise but for this clause (e), the issuer of the Substitute Option (the
"Substitute Option Issuer") shall make a cash payment to the Holder equal to the
excess of (i) the value of the Substitute Option without giving effect to the
limitation in this clause (e) over (ii) the value of the Substitute Option after
giving effect to the limitation in this clause (e). This difference in value
shall be determined by a nationally recognized investment banking firm selected
by the Holder or the Owner, as the case may be, and reasonably acceptable to the
Issuer.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to the amount by which (i) the Highest Closing
Price (as hereinafter defined) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for which
the Substitute Option may then be exercised, and at the request of the owner
(the "Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
the Highest Closing Price multiplied by the number of Substitute Shares so
designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder or the Substitute Share
Owner, as the case may be, may exercise its respective right to require the
Substitute Option Issuer to repurchase the Substitute Option and the Substitute
Shares pursuant to this Section 9 by surrendering for such purpose to the
Substitute Option Issuer, at its principal office, the agreement for such
Substitute Option (or, in the absence of such an agreement, a copy of this Stock
Option Agreement) and certificates for Substitute Shares accompanied by a
written notice or notices stating that the Substitute Option Holder or the
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<PAGE> 11
Substitute Share Owner, as the case may be, elects to require the Substitute
Option Issuer to repurchase the Substitute Option and/or the Substitute Shares
in accordance with the provisions of this Section 9. As promptly as practicable,
and in any event within five business days after the surrender of the Substitute
Option and/or certificates representing Substitute Shares and the receipt of
such notice or notices relating thereto, the Substitute Option Issuer shall
deliver or cause to be delivered to the Substitute Option Holder the Substitute
Option Repurchase Price and/or to the Substitute Share Owner the Substitute
Share Repurchase Price therefor or the portion thereof which the Substitute
Option Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from repurchasing the Substitute Option and/or the
Substitute Shares in part or in full, the Substitute Option Issuer shall
immediately so notify the Substitute Option Holder and/or the Substitute Share
Owner and thereafter deliver or cause to be delivered, from time to time, to the
Substitute Option Holder and/or the Substitute Share Owner, as appropriate, the
portion of the Substitute Share Repurchase Price, respectively, which it is no
longer prohibited from delivering, within five business days after the date on
which the Substitute Option Issuer is no longer so prohibited; provided,
however, that if the Substitute Option Issuer is at any time after delivery of a
notice of repurchase pursuant to subsection (b) of this Section 9 prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from delivering to the Substitute Option Holder and/or the Substitute
Share Owner, as appropriate, the Substitute Option Repurchase Price and the
Substitute Share Repurchase Price, respectively, in full (and the Substitute
Option Issuer shall use its best efforts to receive all required regulatory and
legal approvals as promptly as practicable in order to accomplish such
repurchase), the Substitute Option Holder or Substitute Share Owner may revoke
its notice of repurchase of the Substitute Option or the Substitute Shares
either in whole or to the extent of the prohibition, whereupon, in the latter
case, the Substitute Option Issuer shall promptly (i) deliver to the Substitute
Option Holder or Substitute Share Owner, as appropriate, that portion of the
Substitute Option Repurchase Price or the Substitute Share Repurchase Price that
the Substitute Option Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock obtained by
multiplying the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Substitute
Option Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder, and the denominator of which is the Substitute Option
Repurchase Price, or (B) to the Substitute Share Owner, a certificate for the
Substitute Option Shares it is then so prohibited from repurchasing.
10. The time periods for exercise of certain rights under Sections 2,
6, 7 and 12 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights, and for the expiration of
all statutory waiting periods; (ii) during the pendency of any temporary
restraining order, injunction or other legal ban to the exercise of such rights;
and (iii) to the extent necessary to avoid liability under Section 16(b) of the
1934 Act by reason of such exercise.
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<PAGE> 12
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute
and deliver this Stock Option Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Stock Option Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Issuer and no other corporate
proceedings on the part of Issuer are necessary to authorize this Stock Option
Agreement or to consummate the transactions contemplated hereby. This Stock
Option Agreement has been duly and validly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Stock Option Agreement in accordance with
its terms will have reserved for issuance upon the exercise of the Option, that
number of shares of Common Stock equal to the maximum number of shares of Common
Stock at any time and from time to time issuable hereunder, and all such shares,
upon issuance pursuant hereto, will be duly authorized, validly issued, fully
paid, nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
(c) Issuer has taken all action (including, if required,
redeeming all of the Rights or amending or terminating the Company Rights
Agreement (as defined in the Merger Agreement)) so that the entering into of
this Stock Option Agreement, the acquisition of shares of Common Stock hereunder
and the other transactions contemplated thereby do not and will not result in
the grant of any rights of any person under the Company Rights Agreement or
enable or require the Rights (as defined in the Company Rights Agreement) to be
exercised, distributed or triggered.
12. Neither of the parties hereto may assign any of its rights and
obligations under this Stock Option Agreement or the Option created hereunder to
any other person, without the express written consent of the other party, except
that in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within 90
days following such Subsequent Triggering Event (or such later period as may be
provided pursuant to Section 10).
13. Each of Grantee and Issuer will use its best efforts to make
all filings with, and to obtain consents of, all third parties and Governmental
Entities necessary to the consummation of the transactions contemplated by this
Stock Option Agreement, including without limitation making application to list
the shares of Common Stock issuable hereunder on the New York Stock Exchange or
such other exchange or market on which the shares of Issuer may be listed upon
official notice of issuance and making any necessary applications to the FRB
under the Bank Holding Company Act and any other Governmental Entities for
approval to acquire the shares issuable hereunder.
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<PAGE> 13
14. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Stock Option Agreement by either party
hereto and that the obligations of the parties shall hereto be enforceable by
either party hereto through injunctive or other equitable relief.
15. If any term, provision, covenant or restriction contained in
this Stock Option Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Stock Option Agreement shall remain in full force and effect, and shall in
no way be affected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Holder is not permitted to acquire, or
Issuer is not permitted to repurchase pursuant to Section 7, the full number of
shares of Common Stock provided in Section 1(a) hereof (as adjusted pursuant to
Sections 1(b) or 5 hereof), it is the express intention of Issuer to allow the
Holder to acquire or to require Issuer to repurchase such lesser number of
shares as may be permissible, without any amendment or modification hereof.
16. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Agreement.
17. This Stock Option Agreement shall be governed by and construed
in accordance with the laws of the State of Georgia, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
18. This Stock Option Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
19. Except as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
20. Except as otherwise expressly provided herein or in the
Agreement, this Stock Option Agreement contains the entire agreement between the
parties with respect to the transactions contemplated hereunder and supersedes
all prior arrangements or understandings with respect thereof, written or oral.
The terms and conditions of this Stock Option Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Stock Option Agreement,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, and their respective successors except as assigns, any rights,
remedies, obligations or liabilities under or by reason of this Stock Option
Agreement, except as expressly provided herein.
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<PAGE> 14
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]
<PAGE> 15
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
<PAGE> 1
EXHIBIT 2.3
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 20, 1998, between SUNTRUST
BANKS, INC., a Georgia corporation ("Issuer"), and CRESTAR FINANCIAL
CORPORATION, a Virginia corporation ("Grantee").
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 21,097,697
fully paid and nonassessable shares of common stock, par value $1.00 ("Common
Stock"), of Issuer at a price of $87.00 per share (such price, as adjusted if
applicable, the "Option Price"); provided however that in no event shall the
number of shares of Common Stock for which this Option is exercisable exceed
9.9% of the Issuer's issued and outstanding common shares without giving effect
to any shares subject to or issued pursuant to the Option. The number of shares
of Common Stock that may be received upon the exercise of the Option and the
Option Price are subject to adjustment as herein set forth.
(b) If any additional shares of Common Stock are issued or otherwise
become outstanding after the date of this Stock Option Agreement (other than
pursuant to this Stock Option Agreement), the number of shares of Common Stock
subject to the Option shall be increased so that, after such issuance such
number equals 9.9% of the number of shares of Common Stock then issued and
outstanding without giving effect to any shares subject to or issued pursuant to
the Option. Nothing contained in this Section 1(b) or elsewhere in this Stock
Option Agreement shall be deemed to authorize Issuer or Grantee to breach any
provision of the Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), provided that the Holder shall have sent the written
notice of such exercise (as provided in subsection (e) of this Section 2) within
90 days following such Subsequent Triggering Event (or such later date as
provided in Section 10). Each of the following shall be an "Exercise Termination
Event": (i) the Effective Time of the Merger; (ii) termination of the Agreement
in accordance with the provisions thereof (other than a termination resulting
from a willful breach by Issuer of a provision of the Agreement) if such
termination occurs prior to the
<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(g) thereof resulting from a willful breach by Issuer of
a provision of the Agreement. The term "Holder" shall mean the holder or holders
of the Option.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) Issuer or any significant subsidiary of Issuer without
having received Grantee's prior written consent, shall have entered into an
agreement to engage in, an Acquisition Transaction (as hereinafter defined) with
any person (the term "person" for purposes of this Stock Option Agreement having
the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the Securities
Exchange Act of 1934 (the "1934 Act"), and the rules and regulations thereunder)
other than Grantee or any of its subsidiaries (each a "Grantee Subsidiary") or
the board of directors of Issuer shall have recommended that the shareholders of
Issuer approve or accept any Acquisition Transaction other than as contemplated
by the Agreement. For purposes of this Stock Option Agreement, "Acquisition
Transaction" shall mean (a) a merger, consolidation or share exchange involving
Issuer or any significant subsidiary of Issuer, provided, however, that in no
event shall (i) any merger, consolidation or share exchange involving only the
Issuer and one or more of the subsidiaries of Issuer, or involving only any two
or more of such subsidiaries of Issuer be deemed to be an Acquisition
Transaction, or (ii) any merger, consolidation or share exchange (A) in which
Issuer is the surviving entity, or (B) as to which the shareholders of Issuer
immediately prior thereto own in the aggregate at least 40% of the common stock
of the surviving corporation or its publicly-held parent corporation immediately
following consummation thereof be deemed to be an Acquisition Transaction, (b) a
purchase, lease or other acquisition of all or substantially all of the assets
of Issuer and its subsidiaries taken as a whole, or (c) a purchase or other
acquisition (including by way of merger, consolidation, share exchange or
otherwise) of securities representing 20% or more of the voting power of Issuer;
(ii) The board of directors of Issuer does not recommend that
the shareholders of Issuer approve the Agreement or publicly withdraws or
modifies, or publicly announces its intention to withdraw or modify, in any
manner adverse to the Grantee, its recommendation that its shareholders approve
the Agreement;
(iii) Any person other than Grantee or any Grantee Subsidiary
or any Issuer Subsidiary acting in a fiduciary capacity shall have acquired
beneficial ownership or the right to acquire beneficial ownership of 20% or more
of the outstanding shares of Common Stock (the term "beneficial ownership" for
purposes of this Stock Option Agreement having the meaning assigned thereto in
Section 13(d) of the 1934 Act, and the rules and regulations thereunder);
(iv) Any person other than Grantee or any Grantee Subsidiary
shall have made a bona fide proposal to Issuer or its shareholders by public
announcement or written communication that is or becomes the subject of public
disclosure to engage in an Acquisition Transaction;
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<PAGE> 3
(v) After a proposal is made by a third party to Issuer or its
shareholders to engage in an Acquisition Transaction, Issuer shall have breached
any covenant or obligation contained in the Agreement and such breach (x) would
entitle Grantee to terminate the Agreement and (y) shall not have been cured
prior to the Notice Date (as defined below);
(vi) Any person other than Grantee or any Grantee Subsidiary,
other than in connection with a transaction to which Grantee has given its prior
written consent, shall have filed an application or notice with The Board of
Governors of the Federal Reserve System (the "FRB") or any other federal or
state bank regulatory authority, which application or notice has been accepted
for processing, for approval to engage in an Acquisition Transaction;
(vii) The shareholders of Issuer shall have voted and failed
to approve the Agreement and the Merger at a meeting which has been held for
that purpose or any adjournment or postponement thereof, or such meeting shall
not have been held in violation of the Merger Agreement or shall have been
canceled prior to termination of the Merger Agreement if, prior to such meeting
(or if such meeting shall not have been held or shall have been canceled, prior
to such termination), it shall have been publicly announced that any person
(other than Grantee or any Grantee Subsidiary) shall have made, or disclosed an
intention to make, a proposal to engage in an Acquisition Transaction; or
(viii) Any person other than Grantee or any Grantee Subsidiary
shall have filed with the SEC a registration statement or tender offer materials
with respect to a potential exchange or tender offer that would constitute an
Acquisition Transaction;
(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person, other than Grantee or any
Grantee Subsidiary or any Issuer Subsidiary acting in a fiduciary capacity, of
beneficial ownership of 25% or more of the then outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event described
in clause (i) of subsection 2(b), except that the percentage referred to in
clause (c) shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) If the Holder is entitled to and wishes to exercise the Option, it
shall send to Issuer a written notice (the date of which being herein referred
to as the "Notice Date") specifying (i) the total number of shares it will
purchase pursuant to such exercise and (ii) a place and date not earlier than
three business days nor later than 60 business days from the Notice Date for the
closing of such
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<PAGE> 4
purchase (the "Closing Date"); provided that if prior notification to or
approval of the FRB or any other governmental authority or regulatory or
administrative agency or commission, domestic or foreign (a "Governmental
Entity"), is required in connection with such purchase, the Holder shall
promptly file the required notice or application for approval and shall
expeditiously process the same and the period of time that otherwise would run
pursuant to this sentence shall run from the later of (x) the date on which any
required notification periods have expired or been terminated and (y) the date
on which such approvals have been obtained and any requisite waiting period or
periods shall have passed. Any exercise of the Option shall be deemed to occur
on the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2, the
Holder shall pay to Issuer the aggregate purchase price for the shares of Common
Stock purchased pursuant to the exercise of the Option in immediately available
funds by wire transfer to a bank account designated by Issuer, provided that
failure or refusal of Issuer to designate such a bank account shall not preclude
the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer shall
deliver to the Holder a certificate or certificates representing the number of
shares of Common Stock purchased by the Holder and, if the Option should be
exercised in part only, a new Option evidencing the rights of the Holder thereof
to purchase the balance of the shares purchasable hereunder, and the Holder
shall deliver to Issuer a copy of this Stock Option Agreement and a letter
agreeing that the Holder will not offer to sell or otherwise dispose of such
shares in violation of applicable law or the provisions of this Stock Option
Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder may
be endorsed with a restrictive legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement between the registered holder
hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on file
at the principal office of Issuer and will be provided to the holder
hereof without charge upon receipt by Issuer of a written request
therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the Securities and Exchange Commission (the "SEC"), or an opinion of counsel,
in form and substance satisfactory to Issuer, to the effect that such legend is
not required for purposes of the 1933 Act; (ii) the reference to the provisions
of this Stock Option Agreement in the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the shares have been sold
or transferred in compliance with the provisions of this Stock Option Agreement
and under circumstances that do not require the retention of such reference; and
(iii) the
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<PAGE> 5
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2 and
the tender of the applicable purchase price in immediately available funds, the
Holder shall be deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer books of
Issuer shall then be closed or that certificates representing such shares of
Common Stock shall not then be actually delivered to the Holder. Issuer shall
pay all expenses, and any and all United States Federal, state and local taxes
and other charges that may be payable in connection with the preparation, issue
and delivery of stock certificates under this Section 2 in the name of the
Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including (A) complying with all premerger notification, reporting and waiting
period requirements specified in 15 U.S.C. Section l8a and regulations
promulgated thereunder and (B) in the event, under the Bank Holding Company Act
of 1956, as amended, or the Change in Bank Control Act of 1978, as amended, or
any state banking law, prior approval of or notice to the FRB or to any other
Governmental Entity is necessary before the Option may be exercised, cooperating
fully with the Holder in preparing such applications or notices and providing
such information to each such Governmental Entity as they may require) in order
to permit the Holder to exercise the Option and Issuer duly and effectively to
issue shares of Common Stock pursuant hereto; and (iv) promptly to take all
action provided herein to protect the rights of the Holder against dilution.
4. This Stock Option Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender of this Stock Option Agreement at the principal office of Issuer,
for other agreements providing for Options of different denominations entitling
the holder thereof to purchase, on the same terms and subject to the same
conditions as are set forth herein, in the aggregate the same number of shares
of Common Stock purchasable hereunder. The terms "Stock Option Agreement" and
"Option" as used herein include any Stock Option Agreements and related options
for which this Stock Option Agreement (and the Option granted hereby) may be
exchanged. Upon receipt by Issuer of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Stock Option Agreement, and
(in the case of loss, theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of this Stock Option
Agreement, if mutilated, Issuer will execute and deliver a new Stock Option
Agreement of like tenor and date. Any such new Stock Option Agreement executed
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<PAGE> 6
and delivered shall constitute an additional contractual obligation on the part
of Issuer, whether or not the Stock Option Agreement so lost, stolen, destroyed
or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of
Common Stock that are purchasable upon exercise of the Option pursuant to
Section 1 of this Stock Option Agreement, the number of shares of Common Stock
purchasable upon the exercise of the Option shall be subject to adjustment from
time to time as provided in this Section 5.
(a) In the event of any change in Common Stock by reason of
stock dividends, split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares or the like, the type and number
of shares of Common Stock purchasable upon exercise hereof shall be
appropriately adjusted.
(b) Whenever the number of shares of Common Stock purchasable
upon exercise hereof is adjusted as provided in this Section 5, the Option Price
shall be adjusted by multiplying the Option Price by a fraction, the numerator
of which shall be equal to the number of shares of Common Stock purchasable
prior to the adjustment and the denominator of which shall be equal to the
number of shares of Common Stock purchasable after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that
occurs prior to an Exercise Termination Event, Issuer shall, at the request of
Grantee delivered within 90 days (or such later date as may be provided pursuant
to Section 10) of such Subsequent Triggering Event (whether on its own behalf or
on behalf of any subsequent holder of this Option (or part thereof) or any of
the shares of Common Stock issued pursuant hereto), promptly prepare, file and
keep current a shelf registration statement under the 1933 Act covering any
shares issued and issuable pursuant to this Option and shall use its reasonable
best efforts to cause such registration statement to become effective and remain
current in order to permit the sale or other disposition of any shares of Common
Stock issued upon total or partial exercise of this Option ("Option Shares") in
accordance with any plan of disposition requested by Grantee. Issuer will use
its reasonable best efforts to cause such registration statement first to become
effective and then to remain effective for such period not in excess of 180 days
from the day such registration statement first becomes effective or such shorter
time as may be reasonably necessary to effect such sales or other dispositions.
Grantee shall have the right to demand two such registrations. If requested by
any such Holder in connection with such registration, Issuer shall become a
party to any underwriting agreement relating to the sale of such shares, but
only to the extent of obligating itself in respect of representations,
warranties, indemnities and other agreements customarily included in such
underwriting agreements. The foregoing notwithstanding, if, at the time of any
request by Grantee for registration of Option Shares as provided above, Issuer
is in the process of registration with respect to an underwritten public
offering of shares of Common Stock, and if in the good faith judgment of the
managing underwriter or managing underwriters, or, if none, the sole underwriter
or underwriters, of such offering the inclusion of the Holder's Option or Option
Shares would interfere with the successful marketing of the shares of Common
Stock offered by Issuer, the number of Option Shares otherwise to be covered
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<PAGE> 7
in the registration statement contemplated hereby may be reduced; provided,
however, that after any such required reduction the number of Option Shares to
be included in such offering for the account of the Holder shall constitute at
least 25% of the total number of shares to be sold by the Holder and Issuer in
the aggregate; provided further, however, that if such reduction occurs, then
the Issuer shall file a registration statement for the balance as promptly as
practical and no reduction shall thereafter occur. Each such Holder shall
provide all information reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder. Upon receiving any request under
this Section 6 from any Holder, Issuer agrees to send a copy thereof to any
other person known to Issuer to be entitled to registration rights under this
Section 6, in each case by promptly mailing the same, postage prepaid, to the
address of record of the persons entitled to receive such copies.
7. (a) At any time after the occurrence of a Repurchase Event (as
defined below) (i) at the request of the Holder, delivered prior to an Exercise
Termination Event (or such later period as may be provided pursuant to Section
10), Issuer (or any successor thereto) shall repurchase the Option from the
Holder at a price (the "Option Repurchase Price") equal to the amount by which
(A) the market/offer price (as defined below) exceeds (B) the Option Price,
multiplied by the number of shares for which this Option may then be exercised
and (ii) at the request of the owner of Option Shares from time to time (the
"Owner"), delivered prior to an Exercise Termination Event (or such later period
as may be provided pursuant to Section 10), Issuer (or any successor thereto)
shall repurchase such number of the Option Shares from the Owner as the Owner
shall designate at a price (the "Option Share Repurchase Price") equal to the
market/offer price multiplied by the number of Option Shares so designated. The
term "market/offer price" shall mean the highest of (i) the price per share of
Common Stock at which a tender offer or exchange offer therefor has been made
after the date hereof, (ii) the price per share of Common Stock to be paid by
any third party pursuant to an agreement with Issuer, (iii) the highest closing
price for shares of Common Stock within the six-month period immediately
preceding the date the Holder gives notice of the required repurchase of this
Option or the Owner gives notice of the required repurchase of Option Shares, as
the case may be, or (iv) in the event of a sale of all or substantially all of
Issuer's assets, the sum of the price paid in such sale for such assets and the
current market value of the remaining assets of Issuer as determined by a
nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, divided by the number of shares of Common Stock of
Issuer outstanding at the time of such sale. In determining the market/offer
price, the value of consideration other than cash shall be determined by a
nationally recognized investment banking firm selected by the Holder or Owner,
as the case may be, and reasonably acceptable to the Issuer, whose determination
shall be conclusive and binding on all parties.
(b) The Holder or the Owner, as the case may be, may exercise its right
to require Issuer to repurchase the Option and any Option Shares pursuant to
this Section 7 by surrendering for such purpose to Issuer, at its principal
office, a copy of this Stock Option Agreement or certificates for Option Shares,
as applicable, accompanied by a written notice or notices stating that the
Holder or the Owner, as the case may be, elects to require Issuer to repurchase
this Option and/or the Option Shares in accordance with the provisions of this
Section 7. As promptly as practicable, and in any event within five business
days after the surrender of the Option and/or certificates representing
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<PAGE> 8
Option Shares and the receipt of such notice or notices relating thereto, Issuer
shall deliver or cause to be delivered to the Holder the Option Repurchase Price
and/or to the Owner the Option Share Repurchase Price therefor or the portion
thereof that Issuer is not then prohibited under applicable law and regulation
from so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing the
Option and/or the Option Shares in full, Issuer shall immediately so notify the
Holder and/or the Owner and thereafter deliver or cause to be delivered, from
time to time, to the Holder and/or the Owner, as appropriate, the portion of the
Option Repurchase Price and the Option Share Repurchase Price, respectively,
that it is no longer prohibited from delivering, within five business days after
the date on which Issuer is no longer so prohibited; provided, however, that if
Issuer at any time after delivery of a notice of repurchase pursuant to
subsection (b) of this Section 7 is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering to the
Holder and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in full (and Issuer hereby
undertakes to use its best efforts to obtain all required regulatory and legal
approvals and to file any required notices as promptly as practicable in order
to accomplish such repurchase), the Holder or Owner may revoke its notice of
repurchase of the Option or the Option Shares either in whole or to the extent
of the prohibition, whereupon, in the latter case, Issuer shall promptly (i)
deliver to the Holder and/or the Owner, as appropriate, that portion of the
Option Purchase Price or the Option Share Repurchase Price that Issuer is not
prohibited from delivering; and (ii) deliver, as appropriate, either (A) to the
Holder, a new Stock Option Agreement evidencing the right of the Holder to
purchase that number of shares of Common Stock obtained by multiplying the
number of shares of Common Stock for which the surrendered Stock Option
Agreement was exercisable at the time of delivery of the notice of repurchase by
a fraction, the numerator of which is the Option Repurchase Price less the
portion thereof theretofore delivered to the Holder and the denominator of which
is the Option Repurchase Price, or (B) to the Owner, a certificate for the
Option Shares it is then so prohibited from repurchasing.
(d) For purposes of this Section 7, a "Repurchase Event" shall be
deemed to have occurred upon the occurrence of any of the following events or
transactions after the date hereof:
(i) the acquisition by any person (other than Grantee or any
Grantee Subsidiary) of beneficial ownership of 50% or more of the then
outstanding Common Stock; or
(ii) the consummation of any Acquisition Transaction described
in Section 2(b) (i) hereof, except that the percentage referred to in
clause (z) shall be 50%.
8. (a) If prior to an Exercise Termination Event, Issuer shall enter
into an agreement (i) to consolidate or merge with any person, other than
Grantee or one of its subsidiaries, and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any person, other
than Grantee or one of its subsidiaries, to merge into Issuer and Issuer shall
be the continuing or surviving corporation, but, in connection with such merger,
the then outstanding shares of
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<PAGE> 9
Common Stock shall be changed into or exchanged for stock or other securities of
any other person or cash or any other property or the then outstanding shares of
Common Stock shall after such merger represent less than 50% of the outstanding
shares and share equivalents of the merged company, or (iii) to sell or
otherwise transfer all or substantially all of its assets to any person, other
than Grantee or one of its subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provision so that the
Option shall, upon the consummation of any such transaction and upon the terms
and conditions set forth herein, be converted into, or exchanged for, an option
(the "Substitute Option"), at the election of the Holder, of either (x) the
Acquiring Corporation (as hereinafter defined) or (y) any person that controls
the Acquiring Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other than
Issuer), (ii) Issuer in a merger in which Issuer is the continuing or surviving
person, and (iii) the transferee of all or substantially all of Issuer's assets.
(2) "Substitute Common Stock" shall mean the common stock to
be issued by the issuer of the Substitute Option upon exercise of the Substitute
Option.
(3) "Assigned Value" shall mean the market/offer price, as
defined in Section 7.
(4) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year immediately preceding the
consolidation, merger or sale in question, but in no event higher than the
closing price of the shares of Substitute Common Stock on the day preceding such
consolidation, merger or sale; provided, that if Issuer is the issuer of the
Substitute Option, the Average Price shall be computed with respect to a share
of common stock issued by the person merging into Issuer or by any company which
controls or is controlled by such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as the
Option, provided, that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to the Holder. The issuer of the Substitute
Option shall also enter into an agreement with the then Holder or Holders of the
Substitute Option in substantially the same form as this Stock Option Agreement,
which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option is then
exercisable, divided by the Average Price. The exercise price of the Substitute
Option per share of Substitute Common Stock shall then be equal to the Option
Price multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock
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<PAGE> 10
for which the Option is then exercisable and the denominator of which shall be
the number of shares of Substitute Common Stock for which the Substitute Option
is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for a number of shares that is more
than 9.9% of the shares of Substitute Common Stock outstanding prior to exercise
of the Substitute Option. If the Substitute Option would be exercisable for more
than 9.9% of the shares of Substitute Common Stock outstanding prior to exercise
but for this clause (e), the issuer of the Substitute Option (the "Substitute
Option Issuer") shall make a cash payment to the Holder equal to the excess of
(i) the value of the Substitute Option without giving effect to the limitation
in this clause (e) over (ii) the value of the Substitute Option after giving
effect to the limitation in this clause (e). This difference in value shall be
determined by a nationally recognized investment banking firm selected by the
Holder or the Owner, as the case may be, and reasonably acceptable to the
Issuer.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase the
Substitute Option from the Substitute Option Holder at a price (the "Substitute
Option Repurchase Price") equal to the amount by which (i) the Highest Closing
Price (as hereinafter defined) exceeds (ii) the exercise price of the Substitute
Option, multiplied by the number of shares of Substitute Common Stock for which
the Substitute Option may then be exercised, and at the request of the owner
(the "Substitute Share Owner") of shares of Substitute Common Stock (the
"Substitute Shares"), the Substitute Option issuer shall repurchase the
Substitute Shares at a price (the "Substitute Share Repurchase Price") equal to
the Highest Closing Price multiplied by the number of Substitute Shares so
designated. The term "Highest Closing Price" shall mean the highest closing
price for shares of Substitute Common Stock within the six-month period
immediately preceding the date the Substitute Option Holder gives notice of the
required repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder or the Substitute Share
Owner, as the case may be, may exercise its respective right to require the
Substitute Option Issuer to repurchase the Substitute Option and the Substitute
Shares pursuant to this Section 9 by surrendering for such purpose to the
Substitute Option Issuer, at its principal office, the agreement for such
Substitute Option (or, in the absence of such an agreement, a copy of this Stock
Option Agreement) and certificates for Substitute Shares accompanied by a
written notice or notices stating that the Substitute Option Holder or the
Substitute Share Owner, as the case may be, elects to require the Substitute
Option Issuer to repurchase the Substitute Option and/or the Substitute Shares
in accordance with the provisions of this Section 9. As promptly as practicable,
and in any event within five business days after the surrender of the Substitute
Option and/or certificates representing Substitute Shares and the receipt of
such notice or notices relating thereto, the Substitute Option Issuer shall
deliver or cause to be
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<PAGE> 11
delivered to the Substitute Option Holder the Substitute Option Repurchase Price
and/or to the Substitute Share Owner the Substitute Share Repurchase Price
therefor or the portion thereof which the Substitute Option Issuer is not then
prohibited under applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from repurchasing the Substitute Option and/or the
Substitute Shares in part or in full, the Substitute Option Issuer shall
immediately so notify the Substitute Option Holder and/or the Substitute Share
Owner and thereafter deliver or cause to be delivered, from time to time, to the
Substitute Option Holder and/or the Substitute Share Owner, as appropriate, the
portion of the Substitute Share Repurchase Price, respectively, which it is no
longer prohibited from delivering, within five business days after the date on
which the Substitute Option Issuer is no longer so prohibited; provided,
however, that if the Substitute Option Issuer is at any time after delivery of a
notice of repurchase pursuant to subsection (b) of this Section 9 prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from delivering to the Substitute Option Holder and/or the Substitute
Share Owner, as appropriate, the Substitute Option Repurchase Price and the
Substitute Share Repurchase Price, respectively, in full (and the Substitute
Option Issuer shall use its best efforts to receive all required regulatory and
legal approvals as promptly as practicable in order to accomplish such
repurchase), the Substitute Option Holder or Substitute Share Owner may revoke
its notice of repurchase of the Substitute Option or the Substitute Shares
either in whole or to the extent of the prohibition, whereupon, in the latter
case, the Substitute Option Issuer shall promptly (i) deliver to the Substitute
Option Holder or Substitute Share Owner, as appropriate, that portion of the
Substitute Option Repurchase Price or the Substitute Share Repurchase Price that
the Substitute Option Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to the Substitute Option Holder, a new
Substitute Option evidencing the right of the Substitute Option Holder to
purchase that number of shares of the Substitute Common Stock obtained by
multiplying the number of shares of the Substitute Common Stock for which the
surrendered Substitute Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Substitute
Option Repurchase Price less the portion thereof theretofore delivered to the
Substitute Option Holder, and the denominator of which is the Substitute Option
Repurchase Price, or (B) to the Substitute Share Owner, a certificate for the
Substitute Option Shares it is then so prohibited from repurchasing.
10. The time periods for exercise of certain rights under Sections
2, 6, 7 and 12 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights, and for the expiration of
all statutory waiting periods; (ii) during the pendency of any temporary
restraining order, injunction or other legal ban to the exercise of such rights;
and (iii) to the extent necessary to avoid liability under Section 16(b) of the
1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute
and deliver this Stock Option Agreement and to consummate the transactions
contemplated hereby. The execution and
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<PAGE> 12
delivery of this Stock Option Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of Issuer and no other corporate proceedings on the part of Issuer are
necessary to authorize this Stock Option Agreement or to consummate the
transactions contemplated hereby. This Stock Option Agreement has been duly and
validly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Stock Option Agreement in accordance with
its terms will have reserved for issuance upon the exercise of the Option, that
number of shares of Common Stock equal to the maximum number of shares of Common
Stock at any time and from time to time issuable hereunder, and all such shares,
upon issuance pursuant hereto, will be duly authorized, validly issued, fully
paid, nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
12. Neither of the parties hereto may assign any of its rights and
obligations under this Stock Option Agreement or the Option created hereunder to
any other person, without the express written consent of the other party, except
that in the event a Subsequent Triggering Event shall have occurred prior to an
Exercise Termination Event, Grantee, subject to the express provisions hereof,
may assign in whole or in part its rights and obligations hereunder within 90
days following such Subsequent Triggering Event (or such later period as may be
provided pursuant to Section 10).
13. Each of Grantee and Issuer will use its best efforts to make
all filings with, and to obtain consents of, all third parties and Governmental
Entities necessary to the consummation of the transactions contemplated by this
Stock Option Agreement, including without limitation making application to list
the shares of Common Stock issuable hereunder on the New York Stock Exchange or
such other exchange or market on which the shares of Issuer may be listed upon
official notice of issuance and making any necessary applications to the FRB
under the Bank Holding Company Act and any other Governmental Entities for
approval to acquire the shares issuable hereunder.
14. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Stock Option Agreement by either party
hereto and that the obligations of the parties shall hereto be enforceable by
either party hereto through injunctive or other equitable relief.
15. If any term, provision, covenant or restriction contained in
this Stock Option Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained in
this Stock Option Agreement shall remain in full force and effect, and shall in
no way be affected, impaired or invalidated. If for any reason such court or
regulatory agency determines that the Holder is not permitted to acquire, or
Issuer is not permitted to repurchase pursuant to Section 7, the full number of
shares of Common Stock provided in Section 1(a) hereof (as adjusted pursuant to
Sections 1(b) or 5 hereof), it is the express intention of Issuer to allow the
Holder to
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<PAGE> 13
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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<PAGE> 14
IN WITNESS WHEREOF, each of the parties has caused this Stock Option
Agreement to be executed on its behalf by their officers thereunto duly
authorized, all as of the date first above written.
SUNTRUST BANKS, INC., as Issuer
By: /s/ L. Phillip Humann
----------------------------------
Name: L. Phillip Humann
Title: Chairman of the Board and
Chief Executive Officer
CRESTAR FINANCIAL CORPORATION,
as Grantee
By: /s/ Richard G. Tilghman
----------------------------------
Name: Richard G. Tilghman
Title: Chairman of the Board and
Chief Executive Officer
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<PAGE> 1
EXHIBIT 99.1
[SUNTRUST BANK LOGO] [CRESTAR LOGO]
CONTACTS:
SUNTRUST BANKS, INC. CRESTAR FINANCIAL CORPORATION:
James C. Armstrong Media: Barry Koling
(404) 588-7425 (804) 782-7845
Investors: Eugene S. Putnam, Jr.
(804) 782-5619
FOR IMMEDIATE RELEASE
SUNTRUST BANKS, CRESTAR FINANCIAL CORPORATION AGREE TO MERGE
ATLANTA, GA and RICHMOND, VA, July 20, 1998 - SunTrust Banks, Inc. ("SunTrust")
(NYSE:STI) and Crestar Financial Corporation ("Crestar") (NYSE:CF) today
announced that they have signed a definitive agreement to merge. The boards of
directors of both companies have unanimously approved the agreement. The
transaction is subject to regulatory approvals and the approval of shareholders
of both companies. SunTrust expects to close the transaction in the fourth
quarter of 1998.
The terms of the merger, which will be accounted for as a pooling-of-interests,
call for a tax-free exchange of 0.96 shares of SunTrust common stock for each
common share of Crestar. Based on SunTrust's closing stock price on July 17,
1998 of $87.44 and Crestar's 113.5 million fully diluted common shares
outstanding, the transaction would have a value of $83.94 per Crestar common
share and an aggregate value of $9.5 billion. The merger is expected to be
accretive to SunTrust's earnings per share beginning in 1999.
Upon completion of the merger, Crestar will become a wholly-owned subsidiary of
SunTrust, and will operate under its current name and management as one of
SunTrust's four locally-focused bank holding companies. L. Phillip Humann will
remain chairman, president and chief executive officer of SunTrust. Richard G.
Tilghman, chairman and chief executive officer of Crestar, will continue in
those posts, and will become vice chairman of the board of directors of
SunTrust. Three additional representatives from the Crestar board will join the
current 12 members on the SunTrust board of directors.
- more -
<PAGE> 2
- 2 -
"Our approach to banking is built on a local focus on our customers and our
communities," said Mr. Tilghman. "We are delighted to have found in SunTrust a
merger partner that gives us the best of both worlds - the relationship
approach to banking that sets us apart in our marketplace, combined with
additional resources to broaden our products and services, and to continue to
compete effectively. Our customers will see the same faces in the same places,
with no disruption, just the knowledge that what we do for them will be
enhanced."
"Crestar is first class - a disciplined, well-managed bank with a reputation
for quality service throughout its region. We're pleased to welcome Crestar and
its people to the SunTrust family," said Mr. Humann. "Together, our financial,
product and cultural strengths should be enormously appealing to the people and
businesses of our rapidly-growing markets. Crestar fits perfectly with our
business philosophy; it has the management orientation and the efficiency of
operation to thrive within SunTrust's decentralized banking structure."
The merger will create the tenth-largest banking company in the United States,
based on assets of $88 billion, and will provide a full line of consumer and
commercial banking services to more than 3.3 million customers through its
1,093 branches in Florida, Georgia, Tennessee, Alabama, Virginia, Maryland, and
the District of Columbia. The estimated market capitalization of the merged
company will be $25.4 billion.
SunTrust estimates that the combined company can reduce its expenses by more
than $130 million annually. On an annual basis, 75 percent of these cost
reductions are expected to be achieved by the end of 1999, with the balance to
be achieved in 2000. These cost reductions will be spread across a broad range
of operational activities and staff functions of both companies.
- more -
<PAGE> 3
-3-
SunTrust and Crestar do not overlap geographically, but are contiguous. There
will be no merger-related branch closings in either company's area. SunTrust
expects to incur pre-tax merger-related restructuring charges of $200 million
in 1998. In addition, a $50 million charge will be taken to align the
companies' accounting and reserving policies. The companies believe there will
be minimal job losses as a result of the merger and that any reductions would
be accomplished primarily through attrition. Transition teams comprising
representatives of both companies will analyze best practices and identify both
cost savings and revenue enhancement possibilities.
The 1999 earnings estimate for the combined company includes modest revenue
enhancements. The companies believe additional revenue enhancement
opportunities will grow out of the merger, both from a greater ability to
address the growth potential of the combined company's key market regions and
from the ability to cross-sell each company's products and services to the
other's customers. The initial benefits will come from increased capital
leverage. SunTrust brings to the merger particular strengths in trust and
investment management, investment banking, corporate banking and treasury
management, while Crestar adds strength in mortgage banking, leasing and
student lending.
SunTrust has ceased its share repurchase program.
SunTrust as advised by and received a fairness opinion from Lehman Brothers and
was advised by the law firm of King & Spalding. Crestar was advised by Morgan
Stanley Dean Witter, and the law firms of Skadden, Arps, Slate, Meagher & Flom
and Hunton & Williams.
Crestar Financial Corporation is the holding company for Crestar Bank with 396
banking offices and 684 ATMs in Virginia, Maryland and the District of
Columbia. Other subsidiaries provide insurance, equipment and automobile
leasing, mortgage banking and full-service securities and investment advisory
services. At June 30, 1998, Crestar had total assets of $26.2 billion and total
deposits of $17.9 billion. Equity capital of $2.2 billion represented 8.4% of
total assets. Book value per share was $19.65.
-more-
<PAGE> 4
-4-
SunTrust Banks, Inc. is a bank holding company based in Atlanta, Georgia. It
offers traditional deposit and credit services as well as trust and investment
services through 697 full-service banking offices in Florida, Georgia, Tennessee
and Alabama. Various SunTrust subsidiaries provide credit cards, mortgage
banking, credit-related insurance, data processing and information services,
discount brokerage and investment banking services. As of June 30, 1998,
SunTrust had total assets of $61.4 billion, total deposits of $37.0 billion,
total shareholders' equity of $5.9 billion and a book value of $28.32 per share.
###
THIS NEWS RELEASE CONTAINS, AMONG OTHER THINGS, CERTAIN FORWARD-LOOKING
STATEMENTS REGARDING THE COMBINED COMPANY FOLLOWING THE MERGER, INCLUDING
STATEMENTS RELATING TO COST SAVINGS, ENHANCED REVENUE AND ACCRETION TO REPORTED
EARNINGS THAT MAY BE REALIZED FROM THE MERGER AND CERTAIN RESTRUCTURING CHARGES
EXPECTED TO BE INCURRED IN CONNECTION WITH THE MERGER. SUCH FORWARD-LOOKING
STATEMENTS INVOLVE CERTAIN RISKS AND UNCERTAINTIES, INCLUDING A VARIETY OF
FACTORS THAT MAY CAUSE THE COMBINED COMPANY'S ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THE ANTICIPATED RESULTS OR OTHER EXPECTATIONS EXPRESSED IN SUCH
FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE,
BUT ARE NOT LIMITED TO: (1) EXPECTED COST SAVINGS FROM THE MERGER MAY NOT BE
FULLY REALIZED WITHIN THE EXPECTED TIME FRAME; (2) REVENUES FOLLOWING THE MERGER
MAY BE LOWER THAN EXPECTED, OR DEPOSIT ATTRITION, OPERATING COSTS OR CUSTOMER
LOSS AND BUSINESS DISRUPTION FOLLOWING THE MERGER MAY BE GREATER THAN EXPECTED;
(3) COMPETITIVE PRESSURES AMONG DEPOSITORY AND OTHER FINANCIAL INSTITUTIONS MAY
INCREASE SIGNIFICANTLY; (4) COSTS OR DIFFICULTIES RELATED TO THE INTEGRATION OF
THE BUSINESS OF THE COMPANIES MAY BE GREATER THAN EXPECTED; (5) CHANGES IN THE
INTEREST RATE ENVIRONMENT MAY REDUCE MARGINS; (6) GENERAL ECONOMIC OR BUSINESS
CONDITIONS, EITHER NATIONALLY OR IN THE STATES OR REGIONS IN WHICH THE COMPANIES
DO BUSINESS, MAY BE LESS FAVORABLE THAN EXPECTED, RESULTING IN, AMONG OTHER
THINGS, A DETERIORATION IN CREDIT QUALITY OR A REDUCED DEMAND FOR CREDIT; (7)
LEGISLATIVE OR REGULATORY CHANGES MAY ADVERSELY AFFECT THE BUSINESSES IN WHICH
THE COMPANIES ARE ENGAGED; AND (8) CHANGES MAY OCCUR IN THE SECURITIES MARKETS.
<PAGE> 1
EXHIBIT 99.2
- --------------------------------------------------------------------------------
SUNTRUST
AND
CRESTAR
A PRE-EMINENT PARTNERSHIP IN THE SOUTHEAST
July 20, 1998
- --------------------------------------------------------------------------------
<PAGE> 2
FORWARD-LOOKING INFORMATION
- --------------------------------------------------------------------------------
This presentation contains estimates of future operating results for 1998, 1999
and 2000 for both SunTrust and Crestar on a stand-alone and pro forma combined
basis, as well as estimates of financial condition, operating efficiencies and
revenue creation on a combined basis. These estimates constitute forward-looking
statements (within the meaning of the Private Securities Litigation Reform Act
of 1995), which involve significant risks and uncertainties. Actual results may
differ materially from the results discussed in these forward-looking
statements. Factors that might cause such a difference include, but are not
limited to, general economic conditions, changes in interest rates, deposit
flows, loan demand, real estate values, and competition; changes in accounting
principles, policies, or guidelines; changes in legislation or regulation; and
other economic, competitive, governmental, regulatory, and technological factors
affecting each Company's operations, pricing, products and services.
- --------------------------------------------------------------------------------
2
<PAGE> 3
OVERVIEW - CONTINUATION OF TRADITION
- --------------------------------------------------------------------------------
- - Consistent with SunTrust philosophy
- Accretive to earnings in first year
- Quality organization with leading market positions
- Proven management team
- Strong and growing markets
- Accelerates growth prospects - Maintains consistency
of earnings
- --------------------------------------------------------------------------------
3
<PAGE> 4
- ------------------------------------------------------------------------------
TRANSACTION SUMMARY
- ------------------------------------------------------------------------------
<PAGE> 5
TRANSACTION SUMMARY
- ------------------------------------------------------------------------------
<TABLE>
<S> <C>
Fixed Exchange Ratio: 0.96 SunTrust share for each Crestar share
Implied Price Per Crestar Share:(a) $83.94
Indicated Transaction Value:(a) $9.5 billion
Terms: 19.9% option granted to SunTrust,
9.9% option granted to Crestar
Structure: Pooling-of-interests; tax-free exchange
Due Diligence: Completed, including Y2K review
Closing: Expected late 4th quarter 1998
Key Closing Conditions: SunTrust and Crestar shareholder
approvals; customary regulatory approvals
</TABLE>
(a) Based on SunTrust's closing stock price of $87.44 as of July 17, 1998 and
113.5 million fully diluted Crestar shares
- ------------------------------------------------------------------------------
5
<PAGE> 6
FINANCIAL SUMMARY
- ------------------------------------------------------------------------------
- - Accretive to SunTrust's EPS by 3.6% in 1999 and by 4.4% in 2000
- - IRR of 16%
- - Conservative and realizable assumptions:
- Cost savings of $130 million - 17% of Crestar's core expenses
- Incremental income opportunities in core businesses
- Additional income from capital management strategies
- - Restructuring charges - $200 million (pretax)
- - Accounting and reserve alignments - $50 million (pretax)
- - Earnings growth increases to 12% from 11% (analyst estimates)
- ------------------------------------------------------------------------------
6
<PAGE> 7
CREATES A POWERFUL COMBINATION
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRO FORMA
(Dollars in Millions) SUNTRUST(a) CRESTAR(a) COMBINED
----------- ---------- ------------
<S> <C> <C> <C>
Market Capitalization(a) $18,249 $7,182 $25,431
Assets(b) 61,393 26,161 87,554
Deposits(b) 36,983 17,870 54,853
Loans(b) 41,647 15,951 57,598(c)
Realized Shareholders' Equity(b) 3,292 2,206 5,498
Total Shareholders' Equity(b) 5,912 2,206 8,118(c)
# of Banking Offices 697 396 1,093
States Served 4 3(d) 7
</TABLE>
(a) Based on closing stock prices as of July 17, 1998
(b) As of June 30, 1998
(c) Excludes restructuring charges
(d) Includes District of Columbia
- -------------------------------------------------------------------------------
7
<PAGE> 8
SOUTHEAST POSITION - EXPANDED FOOTPRINT
- -------------------------------------------------------------------------------
Maryland District of Columbia
#3 #5
Virginia
Tennessee #2
#4
Alabama Georgia
#2
Florida
#3
- SunTrust Branch (Map of Maryland, District of Columbia, Virginia,
- Crestar Branch Tennessee, Alabama, Georgia & Florida listing
SunTrust & Crestar Branch Locations)
- -------------------------------------------------------------------------------
8
<PAGE> 9
RANK BY STATE - BALANCED AND LEADING
MARKET PRESENCE
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRO FORMA
--------------------------------------------------------
(Dollars in Millions) DEPOSITS(a) BRANCHES MARKET SHARE(a) RANK(a)
----------- ---------- --------------- -------
<S> <C> <C> <C> <C>
Georgia $10,266 212 12.6% 2
Virginia 10,090 239 11.9 2
Florida 18,454 367 10.1 3
Maryland 5,229 129 8.6 3
Tennessee 5,653 118 9.3 4
District of Columbia 923 28 12.7 5
Greater Washington(b) 8,200 185 15.3 1
</TABLE>
(a) Source: SNL Database
(b) Includes $3.8 billion of deposits located in Virginia and $3.5 billion of
deposits located in Maryland
- -------------------------------------------------------------------------------
9
<PAGE> 10
CREATING SHAREHOLDER VALUE
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CONTRIBUTION%
---------------------------
(Dollars in Millions) PRO FORMA SUNTRUST CRESTAR
--------------- ------------- ------------
<S> <C> <C> <C>
BALANCE SHEET ITEMS(A)
Total Assets $87,554 70% 30%
Total Shareholders' Equity 8,118 73 27
Total Tangible Equity 7,480 73 27
Realized Shareholders' Equity 5,498 60 40
NET INCOME
LTM Net Income $ 1,041 68 32
1998E Net Income(b) 1,085 68 32
1999E Net Income(b) 1,175 67 33
1999E Net Income with Synergies(c) 1,323 63 37
OWNERSHIP (SHARES IN MILLIONS)
FD Shares Outstanding
Including Share Reissue 321.4 66 34
</TABLE>
(a) As of June 30, 1998
(b) Based on IBES median estimates
(c) Assumes fully phased-in synergies
- -------------------------------------------------------------------------------
10
<PAGE> 11
IMPLIED TRANSACTION MULTIPLES
- ------------------------------------------------------------------------------
Multiple of Transaction Price Per Share To:
LTM EPS 28.3X
1998E EPS(a) 27.1
1999E EPA(a) 24.7
Book Value Per Share 4.27
(a) Based on SunTrust's closing stock price of $87.44 as of July 17, 1998 and
IBES median estimates
- ------------------------------------------------------------------------------
11
<PAGE> 12
POWER OF A PREMIUM MULTIPLE
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TRANSACTION MULTIPLE
AS % OF BUYER'S P/E(A)
---------------------------
BUYER SELLER CURRENT YEAR FORWARD YEAR
- ---------------------- ------------------ ------------- -------------
- ------------------------------------------------------------------------
SUNTRUST CRESTAR 108% 110%
- ------------------------------------------------------------------------
<S> <C> <C> <C>
MARKET EXTENSION
Star Banc Firstar 97 107
Regions First Commercial 137 139
First American Deposit Guaranty 127 125
National City First of America 133 136
SOUTHEAST
NationsBank Barnett 153 167
First Union Signet 163 153
Wachovia Central Fidelity 122 122
</TABLE>
(a) Based on IBES median estimates
- ------------------------------------------------------------------------------
12
<PAGE> 13
- --------------------------------------------------------------------------------
REASONS FOR THE MERGER
- --------------------------------------------------------------------------------
<PAGE> 14
STRATEGIC RATIONALE
- --------------------------------------------------------------------------------
- - Creation of a premier financial services franchise
- Leading market positions in 5 Southeastern States
- Premier platform in fastest growing Southeaster markets
- Emphasis on rapid growth fee businesses
- 8th largest U.S. banking company in market capitalization and 10th
largest in assets
- - Combination with preferred partner
- Similar market economies
- Comparable customer demographics
- Compatible management styles
- - Balance mix of consumer and corporate customers
- - Established record of strong credit culture
- - Excellent combined management team
- -------------------------------------------------------------------------------
14
<PAGE> 15
FEE-BASED BUSINESSES - LARGE & GROWING(A)
- --------------------------------------------------------------------------------
(Dollars in Billions) SUNTRUST CRESTAR COMBINED
-------- ------- --------
Fee Income/Total Revenue 37% 33% 36%
Assets under Administration $100 $41 $141
Assets under Management 70 18 88
Mutual Fund Assets 12 5 17
Mortgage Loan Originations(b) 6.5 9.5 16
Mortgage Servicing Portfolio 18 14 32
(a) As of or for the quarter ended June 30, 1998
(b) Projected for full year 1998
- -------------------------------------------------------------------------------
15
<PAGE> 16
BALANCED LOAN PORTFOLIO
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions)
SUNTRUST(a) CRESTAR(b)
----------- ----------
<S> <C> <C>
Business Loans:
Commercial $16,198 $ 5,136
Real Estate -
Construction 1,452 403
Other 4,821 1,176
Consumer Loans:
Installment 4,615 5,386
Bank Card 983 507
Real Estate -
Mortgage 13,195 3,343
------- -------
TOTAL $41,264 $15,951
</TABLE>
(a) As of March 31, 1998
(b) As of June 30, 1998
- ------------------------------------------------------------------------------
16
<PAGE> 17
STRONG CORE DEPOSIT MIX
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions)
SUNTRUST(a) CRESTAR(b)
----------- ----------
<S> <C> <C>
Demand Deposits $ 7,902 $ 3,766
Interest-Bearing Demand Deposits 10,909 6,919
Regular Savings Deposits 5,239 1,397
Domestic Time Deposits 6,878 3,920
CD $100,000 and Over 5,388 1,868
------- -------
TOTAL DEPOSITS $36,316 $17,870
</TABLE>
- ------------------------------------------------------------------------------
(a) Average for the quarter ended March 31, 1998
(b) As of June 30, 1998
17
<PAGE> 18
- ------------------------------------------------------------------------------
CRESTAR
MARKET REACH
- ------------------------------------------------------------------------------
<PAGE> 19
THE CRESTAR FRANCHISE
- --------------------------------------------------------------------------------
- - $26 billion bank holding company
- - 396 banking offices and 684 ATMs in Virginia, Maryland and
Washington, D.C.
- - 1.2+ million households
- - 72,000 small business relationships
- - Baltimore/Washington - 4th largest consolidated MSA
- - Greater Washington region - highest per capita income in the nation
- --------------------------------------------------------------------------------
19
<PAGE> 20
MARKET SHARE LEADERSHIP
- --------------------------------------------------------------------------------
- - Significant Commercial Banking Position
- 52% penetration in Virginia of companies with over $50M sales
- 35% penetration in Virginia of companies with $5-50M sales
- - Trust & Investment Management
- $41 billion in assets ($18 billion under management)
- #2 in region
- - Crestar Mortgage
- #1 in Virginia/#26 nationally
- $9.5 billion in projected 1998 originations
- - Student Lending
- Ranked in top 25 nationally
- #1 in Virginia, #6 in California
- --------------------------------------------------------------------------------
20
<PAGE> 21
SOLID FINANCIAL PERFORMANCE
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
'93 '94 '95 '96 '97
<S> <C> <C> <C> <C> <C>
EPS GROWTH(a)
11% CAGR $1.84 $2.24 $2.40 $2.33 $2.77
EFFICIENCY RATIO (%)(a) 66.4 65.1 60.8 58.4 54.5
</TABLE>
(a) Originally reported, excluding merger related charges
- ------------------------------------------------------------------------------
21
<PAGE> 22
SOLID FINANCIAL PERFORMANCE
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
'93 '94 '95 '96 '97
<S> <C> <C> <C> <C> <C>
ROA (%)(a) 1.12 1.24 1.26 1.21 1.42
ROE (%)(a) 13.9 15.4 15.0 14.7 16.5
</TABLE>
(a) Originally reported, excluding merger related charges
- ------------------------------------------------------------------------------
22
<PAGE> 23
- ------------------------------------------------------------------------------
PRO FORMA
FINANCIAL IMPACT
- ------------------------------------------------------------------------------
<PAGE> 24
Pro Forma Combined Earnings
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions, Except Per Share Data)
1999 2000
------ ------
<S> <C> <C>
Net Income(a)
SunTrust Projected $ 792 $ 853
Crestar Projected 383 413
------ ------
Pro Forma Combined 1,175 1,266
------ ------
Adjustments (after tax)
Cost Savings 62 86
Incremental Income 13 18
Capital Management 48 83
------ ------
Pro Forma Earnings $1,298 $1,453
====== ======
Pro Forma EPS(b) $ 4.04 $ 4.52
Stand alone EPS 3.90 4.33
Accretion 3.6% 4.4%
</TABLE>
(a) Based on IBES median estimates for both companies; Does NOT constitute
management forecasts; Excludes merger related changes
(b) Based on 321.4 million pro forma fully diluted shares
- ------------------------------------------------------------------------------
24
<PAGE> 25
COST SAVINGS -
CONSERVATIVE AND READILY ATTAINABLE
- ------------------------------------------------------------------------------
<TABLE>
<S> <C>
(Dollars in Millions)
Business Line Optimization $ 30
System and Operations 50
G&A/Other 50
----
TOTAL $130
====
</TABLE>
Note: Pretax based on 1999 fully phased-in cost savings
- ------------------------------------------------------------------------------
25
<PAGE> 26
MERGER RELATED CHARGES
- ------------------------------------------------------------------------------
<TABLE>
<S> <C>
(Dollars in Millions)
Conversion Costs
- Bank Operations & Data Processing $ 45
- Other Operations 20
----
Total 65
Severance/Retention 100
Accounting & Reserve Alignments 50
Transaction-Related Costs 35
----
TOTAL (PRETAX) $250
====
</TABLE>
- ------------------------------------------------------------------------------
26
<PAGE> 27
ATTRACTIVE COMBINED PERFORMANCE RATIOS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Q2 1998 ANNUALIZED
------------------------------------------------
PHASED-IN
SUNTRUST CRESTAR COMBINED
------------- ----------- -------------
<S> <C> <C> <C>
ROA 1.32%(a) 1.39% 1.48%
ROE 21.9 (a) 16.5 21.8
Net Interest Margin 3.96 4.06 4.00
Efficiency Ratio 60.24 53.63 56.19
</TABLE>
(a) Excluding returns attributable to ownership of Coca-Cola stock
- -------------------------------------------------------------------------------
27
<PAGE> 28
SUMMARY -
TRADITION OF SHAREHOLDER VALUE
- -------------------------------------------------------------------------------
- - Creates pre-eminent partnership in the Southeast
- - Accretive to SunTrust's EPS in first full year
- - Accelerates growth prospects
- - Maintains earnings consistency
- - Quality organization with proven management team
- - Leading positions in attractive markets
- -------------------------------------------------------------------------------
28
<PAGE> 29
- -------------------------------------------------------------------------------
APPENDIX
- -------------------------------------------------------------------------------
<PAGE> 30
STRONG COMBINED BALANCE SHEET
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
(Dollars in Millions) SUNTRUST(a) CRESTAR(a) PRO FORMA(b)
----------- ---------- ------------
Gross Loans $41,647 $15,951 $57,598
Loan Loss Reserve (763) (246) (1,009)
Other Assets 20,509 10,456 30,965
------- ------- -------
Total Assets $61,393 $26,161 $87,554
======= ======= =======
Deposits $36,983 $17,870 $54,853
Other Liabilities 18,498 6,085 24,583
------- ------- -------
Total Liabilities 55,481 23,955 79,436
Shareholders's Equity 5,912 2,206 8,118
------- ------- -------
Total Liabilities & Shareholders' Equity $61,393 $26,161 $87,554
======= ======= =======
</TABLE>
(a) As of June 30, 1998
(b) Before transaction effects
- -------------------------------------------------------------------------------
30
<PAGE> 31
CONSERVATIVE CAPITAL RATIOS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(Dollars in Millions, PRO
Except Per Share Data) SUNTRUST(a) CRESTAR(a) FORMA(b)
----------- ---------- --------
<S> <C> <C> <C>
Total Shareholders' Equity $5,912 $2,206 $8,118
Book Value $28.32 $19.65 $25.65
Tangible Book Value $26.23 $17.88 $23.64
Total Equity/Total Assets 9.63% 8.43% 9.27%
Tangible Equity/Tangible Assets 8.98% 7.73% 8.61%
</TABLE>
(a) As of June 30, 1998
(b) Before transaction effects
- -------------------------------------------------------------------------------
31
<PAGE> 32
SUPERIOR CREDIT QUALITY
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRO
SUNTRUST(a) CRESTAR(a) FORMA(b)
----------- ---------- --------
<S> <C> <C> <C>
Reserves/Gross Loans 1.83% 1.54% 1.75%
Net Charge-offs/Average Loans(c) 0.28 0.54 0.36
Non-Accrual Loans/Gross Loans 0.33 0.37 0.34
Non-Performing Assets/Gross 0.39 0.48 0.42
Loans & OREO
Reserves/Non-Performing Loans 558 415 515
</TABLE>
(a) As of June 30, 1998
(b) Before transactions effects
(c) 2nd quarter 1998 net charge-offs, annualized
- -------------------------------------------------------------------------------
32
<PAGE> 33
POWERFUL SOUTHEAST MARKET PRESENCE
- --------------------------------------------------------------------------------
(Dollars in millions)
<TABLE>
<CAPTION>
MARYLAND
--------------------------------------------
INSTITUTION BRANCHES TOTAL SHARE
---------------- -------- ------- -------
<S> <C> <C> <C> <C>
1 NationsBank 210 $ 9,355 17.0
2 First Maryland 144 5,938 10.8
- ------------------------------------------------
3 SunTrust/Crestar 136 5,229 9.5
- ------------------------------------------------
4 Mercantile 153 5,144 9.3
5 First Union 129 4,173 7.6
Total 1,641 $55,102
</TABLE>
<TABLE>
<CAPTION>
TENNESSEE
--------------------------------------------
INSTITUTION BRANCHES TOTAL SHARE
---------------- -------- ----- -------
<C> <C> <C> <C> <C>
1 First Tennessee 160 $ 8,723 14.4
2 First American 195 8,309 13.7
3 Union Planters 193 6,739 11.1
- ------------------------------------------------
4 SunTrust/Crestar 141 5,653 9.3
- ------------------------------------------------
5 NationsBank 111 4,544 7.5
Total 1,786 $60,766
</TABLE>
<TABLE>
<CAPTION>
DISTRICT OF COLUMBIA
-------------------------------------------
INSTITUTION BRANCHES TOTAL SHARE
---------------- -------- ------- -------
<S> <C> <C> <C> <C>
1 Riggs National 35 $ 2,884 28.4
2 First Union 39 1,840 18.1
3 NationsBank 32 1,837 18.1
4 Citigroup 15 924 9.1
- ------------------------------------------------
5 SunTrust/Crestar 29 923 9.1
- ------------------------------------------------
Total 208 $10,160
</TABLE>
<TABLE>
<CAPTION>
VIRGINIA
--------------------------------------------
INSTITUTION BRANCHES TOTAL SHARE
---------------- -------- ----- -------
<S> <C> <C> <C> <C>
1 First Union 252 $13,100 17.2
- ------------------------------------------------
2 SunTrust/Crestar 242 10,090 13.3
- ------------------------------------------------
3 NationsBank 201 10,043 13.2
4 Wachovia 325 9,613 12.6
5 First Virginia 307 6,171 8.1
Total 2,400 $76,118
</TABLE>
Source: SNL Securities
- --------------------------------------------------------------------------------
33
<PAGE> 34
Powerful Southeast Market Presence
- --------------------------------------------------------------------------------
(Dollars in millions)
<TABLE>
<CAPTION>
GEORGIA
---------------------------------------------------------------
INSTITUTION BRANCHES TOTAL SHARE
----------- -------- ------- -----
<S> <C> <C> <C> <C>
1 NationsBank 279 $14,050 17.2
- ------------------------------------------------------------------------
2 SunTrust/Crestar 219 10,266 12.6
- ------------------------------------------------------------------------
3 Wachovia 120 8,612 10.5
4 First Union 122 7,573 9.3
5 Synovus Financial 127 4,711 5.8
Total 2,052 $81,697
</TABLE>
<TABLE>
<CAPTION>
FLORIDA
---------------------------------------------------------------
INSTITUTION BRANCHES TOTAL SHARE
----------- -------- -------- -----
<S> <C> <C> <C> <C>
1 NationsBank 1,022 $ 52,794 28.8
2 First Union 554 29,752 16.2
- ------------------------------------------------------------------------
3 SunTrust/Crestar 380 18,454 10.1
- ------------------------------------------------------------------------
4 SouthTrust 275 10,042 5.5
5 Washington Mutual 120 7,031 3.8
Total 4,233 $183,620
</TABLE>
<TABLE>
<CAPTION>
ALABAMA
---------------------------------------------------------------
INSTITUTION BRANCHES TOTAL SHARE
----------- -------- ------- -----
<S> <C> <C> <C> <C>
1 Regions Financial 194 $ 8,971 19.0
2 SouthTrust 174 7,434 15.8
3 AmSouth Bancorp 126 6,709 14.2
4 Compass Bancshares 89 4,208 8.9
5 Colonial Bancgroup 128 3,276 7.0
- ------------------------------------------------------------------------
15 SunTrust/Crestar 9 306 0.7
- ------------------------------------------------------------------------
Total 1,371 $47,150
</TABLE>
Source: SNL Securities
- --------------------------------------------------------------------------------
34
