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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):
April 28, 1995
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LOYOLA CAPITAL CORPORATION
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(Exact name of registrant as specified in its charter)
Maryland 0-15169 52-1479656
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(State of Incorporation) (Commission File Number) (IRS Employer
Identification No.)
1300 North Charles Street
Baltimore, Maryland 21201-5705
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(Address of principal executive offices) (Zip Code)
(410) 787-3100
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(Registrant's telephone number)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Loyola Capital Corporation ("Loyola") and Crestar Financial Corporation
("Crestar") announced on April 28, 1995 the signing of a binding letter
agreement under which each of the approximately 8.1 million outstanding shares
of Loyola Common Stock would be exchanged for .69 shares of Crestar Common
Stock, subject to adjustment based on the price of Crestar Common Stock at the
time the merger is completed.
Crestar's acquisition of Loyola is subject to the execution of a definitive
agreement between the two institutions as well as approval by regulators and
Loyola stockholders. The acquisition is expected to be completed by year-end
1995 or shortly thereafter.
Loyola has granted Crestar an option to purchase approximately 1.6 million
shares of Loyola Common Stock for $25 per share, exercisable in certain events.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) EXHIBITS.
2.1. Letter Agreement dated April 27, 1995.
2.2. Stock Option Agreement dated April 27, 1995.
99.1. Press Release dated April 28, 1995.
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SIGNATURES
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.
Date: April 28, 1995 LOYOLA CAPITAL CORPORATION
By: /s/ James V. McAveney
--------------------------------
James V. McAveney
Executive Vice President,
Chief Financial Officer and Treasurer
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EXHIBIT INDEX
PAGE
2.1 Letter Agreement dated April 27, 1995. 1
2.2 Stock Option Agreement dated April 27, 1995. 7
99.1 Press Release dated April 28, 1995. 14
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[CRESTAR LOGO]
April 27, 1995
HIGHLY CONFIDENTIAL
Board of Directors
Loyola Capital Corporation
1300 North Charles Street
Baltimore, Maryland 21201
Attention: Joseph W. Mosmiller
Chairman of the Board and
Chief Executive Officer
Ladies and Gentlemen:
On behalf of Crestar Financial Corporation ("Crestar"), I am pleased to
make the following binding offer to acquire Loyola Capital Corporation
("Loyola") on the terms set forth in this letter.
1. STRUCTURE: VALUATION AND CONSIDERATION: LOYOLA CAPITALIZATION. The
transaction would be structured as a statutory merger of Loyola into Crestar
(the "Merger"). Crestar and Loyola would use their best efforts to make the
Merger effective on or before January 31, 1996, or, if applicable law or
regulatory authorities do not permit the Merger to be effective by this date, as
soon as practicable thereafter, but not later than March 31, 1996.
In the Merger, each share of Loyola common stock shall be converted into a
fraction of a share of Crestar common stock, determined in accordance with the
Exchange Ratio. The "Exchange Ratio" shall be calculated as follows:
(a) if the Average Closing Price (as defined below) is between
$43.478 and $46.375, the Exchange Ratio shall be 0.690 (the quotient of
(A) $32.00 divided by (B) $46.375).
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Board of Directors
Loyola Capital Corporation
April 27, 1995
Page 2
(b) if the Average Closing Price is greater than $46.375, the
Exchange Ratio shall be the quotient of (A) $32.00 divided by (B) the
Average Closing Price, rounded to the nearest one-one thousandth of a
share, PROVIDED that the Exchange Ratio shall not be less than 0.640.
(c) if the Average Closing Price is less than ($43.478, the Exchange
Ratio shall be the quotient of (A) $30.00 divided by (B) the Average
Closing Price, rounded to the nearest one-one thousandth of a share,
PROVIDED that the Exchange Ratio shall not be greater than 0.750. The
Agreement may be terminated by Loyola, by action of its Board of Directors,
at any time during the five-day period prior to the fifth day prior to the
closing date, if the Average Closing Price is less than $40.00, PROVIDED,
HOWEVER, that Crestar shall have the option of increasing the consideration
to be received by holders of Loyola common stock hereunder by adjusting the
Exchange Ratio to a number equal to a quotient, the numerator of which is
the product of $40.00 times the Exchange Ratio then in effect and the
denominator of which is the Average Closing Price. In such case, Crestar
shall give prompt written notice to Loyola of such election and of the
revised Exchange Ratio, and in such event no termination shall be deemed
to have occurred and the Agreement shall remain in full force and effect in
accordance with its terms.
As used herein, "Average Closing Price" shall mean the average closing
price of Crestar common stock as reported on the New York Stock Exchange for
each of the 10 trading days ending on the tenth day prior to the closing date.
At March 31, 1995, Loyola had 8,107,750 shares of common stock issued and
outstanding and outstanding options ("Outstanding Options") covering 1,080,567
shares of Loyola common stock. Except for shares that may become issuable
pursuant to the Stock Option Agreement (referred to below) and shares issued
upon exercise of Outstanding Options, no additional shares of Loyola common
stock or Loyola preferred stock have been issued through the date hereof or
will be issued, and no options for Loyola common stock or Loyola preferred
stock have been granted since March 31, 1995, and none will be granted, between
the date of this letter and the effective date of the Merger.
2. LOYOLA OPTIONS. At the effective time of the Merger, Outstanding
Options granted by Loyola to purchase shares of Loyola common stock which are
unexercised immediately prior thereto shall be converted as to each whole share
subject to such Outstanding Option into an option (each, an "Exchange Option")
to purchase such number of shares of Crestar common stock at such exercise price
as is determined as provided below
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Board of Directors
Loyola Capital Corporation
April 27, 1995
Page 3
(and otherwise having the same duration, tax consequences, and other terms as
the Outstanding Option):
(a) the number of shares of Crestar common stock to be subject to
the Exchange Option shall be equal to the product of (A) the number of
shares of the Loyola common stock subject to the Outstanding Option
multiplied by (B) the Exchange Ratio, the product being rounded, if
necessary, up or down, to the nearest whole share;
(b) the per share exercise price under the Exchange Option shall
be equal to (A) the per share exercise price under the Outstanding Option
divided by (B) the Exchange Ratio, with any fractional cent rounded up to
the next whole cent.
3. CERTAIN CONDITIONS. The Merger would be subject to satisfaction of
certain conditions precedent usual for transactions of this type, including the
following:
(a) Negotiation of a definitive agreement and plan of reorganization
(the "Agreement") incorporating the agreements expressed in this letter and
other terms and conditions usual for contracts of that type. Crestar and
Loyola would negotiate the Agreement in good faith, and we believe we
should be able to execute the Agreement by May 15, 1995. If we are unable
to execute the Agreement by May 31, 1995, however, either Crestar or Loyola
may terminate this letter of agreement, with no liability one to the other.
(b) Receipt of all necessary contractual, creditor, and regulatory
approvals for the Merger, including approvals of the Board of Governors of
the Federal Reserve System; the Bureau of Financial Institutions of the
Virginia State Corporation Commission; the Office of Thrift Supervision;
and any other federal or state regulatory authority having jurisdiction
over the Merger, and the expiration of all waiting periods required by law.
(c) Compliance with requirements of the Securities Act of 1933 and
applicable state securities laws, including filing a registration statement
covering Crestar common stock issuable in the Merger with the Securities
and Exchange Commission.
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Board of Directors
Loyola Capital Corporation
April 27, 1995
Page 4
(d) Compliance with all applicable federal and state laws and
regulations concerning the Merger, the absence in all orders, decrees or
advisory letters of regulatory authorities concerning the Merger of any
conditions or requirements reasonably deemed objectionable to Crestar, and
the absence of any actual or threatened litigation under federal antitrust
laws. Crestar and Loyola agree to cooperate in taking all reasonable
necessary steps to obtain regulatory and corporate approvals, including, as
respects any meeting of Loyola shareholders, the favorable vote of holders
of the requisite majority of outstanding Loyola Common Stock. At the
signing of the definitive Agreement, the members of Loyola's board of
directors would agree to vote their shares in favor of the Merger.
(e) The receipt by Crestar and Loyola of opinions of their respective
counsel to the effect tat the Merger constitutes a tax-free reorganization
for federal income tax purposes.
(f) The taking by Crestar and Loyola of all corporate action
necessary for the Merger by (i) the board of directors and shareholders of
Loyola and (ii) the board of directors of Crestar, as and to the extent
required by law and their respective charters and bylaws.
(g) Receipt by Crestar prior to execution of the Agreement of an
acceptable letter from KPMG Peat Marwick to the effect that the Merger can
be accounted for as a "pooling of interests."
4. INDEMNIFICATION. Crestar acknowledges its obligation to provide, and
agrees to provide, indemnification to the directors and officers of Loyola
following the effective date of the Merger to the same extent as if Loyola were
maintaining its separate existence after such time.
5. GENERAL CONDITION: PREMERGER REVIEW: OPERATING SYNERGIES. The
obligation of Crestar to consummate the Merger would be subject to the condition
that, on the effective date of the Merger, since March 31, 1995, there shall
have been no change not previously agreed to by Crestar in Loyola's capital
structure, dividend policy, stock option plans, material contracts, branches,
credit policies, loan charge-off policies, reserve requirements and securities
portfolio management policies, all to be described in detail in the Agreement.
Without the approval of Crestar, Loyola shall not make any change in the
salaries or bonuses of any of its employees, other than those permitted by
their current
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Board of Directors
Loyola Capital Corporation
April 27, 1995
Page 5
employment policies in the ordinary course of business, any of which changes
shall be reported promptly to Crestar.
Crestar's obligation to enter into the Agreement is subject to a review
(at Crestar's expense and with full cooperation of Loyola) to confirm the
accuracy of Loyola's representations and warranties to be contained on the
Agreement.
With appropriate exceptions and without effect on Loyola's incentive bonus
program, Loyola's management will work with Crestar to achieve appropriate
operating efficiencies and to make appropriate accruals for loan loss reserves
and expenses and, when indicated, charge-offs prior to consummation of the
Merger. Crestar representatives will be given full access to Loyola's books and
records in this undertaking. Loyola shall be under no obligation to make any
adjustments until such time as all terms and conditions of the Agreement have
been satisfied in full and all contingencies to closing have been eliminated.
6. OTHER PROPOSALS. Between the date of this letter and the earlier of
the termination of this letter of the execution of the Agreement, Loyola shall
not, and Loyola shall use its best efforts to ensure that its directors,
officers and advisors do not, institute, pursue, or, subject to the fiduciary
obligations of Loyola's Board of Directors to its shareholders, enter into any
discussions, negotiations, or agreements (whether preliminary or definitive)
with any person or entity other than Crestar contemplating or providing for any
merger, share exchange, acquisition, purchase or sale of a significant amount of
assets, or other business combination or change in control of Loyola.
7. EXPENSES. Each party shall bear its own expenses in connection with
the implementation of this letter of intent, regardless of whether or not the
definitive Agreement is executed.
8. STOCK OPTION AGREEMENT. Simultaneously with the execution of this
binding letter of agreement, Crestar and Loyola are entering into a Stock Option
Agreement pursuant to which Loyola will grant Crestar an option to purchase
1,613,442 of its authorized but unissued shares of common stock at $25.00 cash
per share, exercisable in certain events.
9. TERMINATION. The Agreement will provide for termination in the event
the Merger is not consummated by March 31, 1996.
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Board of Directors
Loyola Capital Corporation
April 27, 1995
Page 6
10. BINDING LETTER OF AGREEMENT. This is a binding letter of agreement
that legally commits the parties to the Merger. The parties agree to negotiate
in good faith the Agreement, which will contain terms and conditions usual to
transactions of this type, and into which this binding letter of agreement will
be merged.
Very truly yours,
CRESTAR FINANCIAL CORPORATION
By /s/ Richard G. Tilghman
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Richard G. Tilghman
Chairman of the Board and
Chief Executive Officer
Accepted and agreed to pursuant
to authorization of the Board
of Directors
LOYOLA CAPITAL CORPORATION
By /s/ Joseph W. Mosmiller
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Joseph W. Mosmiller
Chairman of the Board and
Chief Executive Officer
Dated: April 27, 1995
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4/27/95
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT ("Option Agreement") dated as of April 27,
1995, between LOYOLA CAPITAL CORPORATION ("Loyola"), a Maryland corporation, and
CRESTAR FINANCIAL CORPORATION ("Crestar"), a Virginia corporation, recites and
provides:
A. The Boards of Directors of Loyola and Crestar have approved a binding
letter of agreement dated April 27, 1995 (the "Letter Agreement") (to be merged
into a definitive agreement (the "Merger Agreement")) providing for the merger
(the "Merger") of Loyola with and into Crestar.
B. As a condition to and as consideration for Crestar's entry into the
Letter Agreement and the Merger Agreement and to induce such entry, Loyola has
agreed to grant to Crestar the option set forth herein to purchase authorized
but unissued shares of Loyola Common Stock.
NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS.
Capitalized terms defined in the Letter Agreement or the Merger
Agreement and used herein shall have the same meanings as in the Letter
Agreement or the Merger Agreement, as the case may be.
2. GRANT OF OPTION.
Subject to the terms and conditions set forth herein, Loyola hereby
grants to Crestar an option (the "Option") to purchase up to 1,613,442 shares of
Loyola Common Stock at an exercise price of $25.00 per share payable in cash as
provided in SECTION 4; provided, however, that in the event Loyola issues or
agrees to issue any shares of Loyola Common Stock (other than as permitted under
the Letter Agreement and the Merger Agreement) at a price less than $25.00 per
share (as adjusted pursuant to SECTION 6), the exercise price shall be such
lesser price.
3. EXERCISE OF OPTION.
(a) Unless Crestar shall have breached in any material respect any
material covenant or representation contained in the Letter Agreement or the
Merger Agreement and such breach has not been cured, Crestar may exercise the
Option, in whole or part, at any time or from time to time if a Purchase Event
(as defined below) shall have occurred and be
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continuing; PROVIDED that to the extent the Option shall not have been
exercised, it shall terminate and be of no further force and effect (i) on the
Effective Date of the Merger, or (ii) upon termination of the Letter Agreement
the Merger Agreement in accordance with the provisions thereof (other than a
termination resulting from a willful breach by Loyola of any Specified Covenant
or, following the occurrence of a Purchase Event, failure of Loyola's
stockholders to approve the Merger Agreement by the vote required under
applicable law or under Loyola's Charter), or (iii) 12 months after termination
of the Letter Agreement or the Merger Agreement due to a willful breach by
Loyola of any Specified Covenants or, following the occurrence of a Purchase
Event, failure of Loyola's stockholders to approve the Merger Agreement by the
vote required under applicable law or under Loyola's Charter. Any exercise of
the Option shall be subject to compliance with applicable provisions of law.
(b) As used herein, a "Purchase Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Loyola or Loyola Federal Savings Bank (the "Savings Bank"),
without having received Crestar's prior written consent, shall have entered into
an agreement with any person (x) to merge or consolidate, or enter into any
similar transaction, except as contemplated in the Letter Agreement or the
Merger Agreement, (y) to purchase, lease or otherwise acquire all or
substantially all of the assets of Loyola or the Savings Bank, or (z) to
purchase or otherwise acquire (including by way of merger, consolidation, share
exchange or any similar transaction) securities representing 10% or more of the
voting power of Loyola or the Savings Bank;
(ii) any person (other than Loyola or the Savings Bank in a
fiduciary capacity, or Crestar, Crestar Bank, Crestar Bank N.A. or Crestar Bank
MD in a fiduciary capacity) shall have acquired beneficial ownership or the
right to acquire beneficial ownership of 15% or more of the outstanding shares
of Loyola Common Stock after the date hereof (the term "beneficial ownership"
for purposes of this Option Agreement having the meaning assigned thereto in
Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange Act") and
the regulations promulgated thereunder);
(iii) any person shall have made a bona fide proposal to Loyola
by public announcement or written communication that is or becomes the subject
of public disclosure to acquire Loyola or Savings Bank by merger, consolidation,
purchase of all or substantially all of its assets or any other similar
transaction, and following such bona fide proposal the stockholders of Loyola
vote not to adopt the Merger Agreement; or
(iv) Loyola shall have willfully breached any Specified
Covenant following a bona fide proposal to Loyola or the Savings Bank to acquire
Loyola or the Savings Bank by merger, consolidation, purchase of all or
substantially all of its assets or any other similar transaction, which breach
would entitle Crestar to terminate the Letter Agreement or the Merger Agreement
(without regard to the cure periods provided for
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therein) and such breach shall not have been cured prior to the Notice Date (as
defined below).
If more than one of the transactions giving rise to a Purchase
Event under this SECTION 3(b) is undertaken or effected, then all such
transactions shall give rise only to one Purchase Event, which Purchase Event
shall be deemed continuing for all purposes hereunder until all such
transactions are abandoned. As used in this Option Agreement, "person" shall
have the meanings specified in Sections 3(a)(9) and 13(d)(3) of the Exchange
Act.
(c) In the event Crestar wishes to exercise the Option, it shall send
to Loyola a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of shares it will purchase
pursuant to such exercise, and (ii) a place and date not earlier than three
business days nor later than 60 business days after the Notice Date for the
closing of such purchase ("Closing Date"); provided that if prior notification
to or approval of any federal or state regulatory agency is required in
connection with such purchase, Crestar shall promptly file the required notice
or application for approval and shall expeditiously process the same and the
period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which any required notification period has expired or
been terminated or such approval has been obtained and any requisite waiting
period shall have passed.
(d) As used herein, "Specified Covenant" means any covenant contained
in Section 6 of the Letter Agreement and SECTIONS 1.8, 4.1, 4.2, 4.4, 4.5, 4.6,
4.8, 4.9, 4.11, or 4.13 of the draft Merger Agreement, the table of contents of
which is attached hereto, and, after its execution, comparable provisions in
the Merger Agreement.
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) At the closing referred to in SECTION 3, Crestar shall pay to
Loyola the aggregate purchase price for the shares of Loyola Common Stock
purchased pursuant to the exercise of the Option in immediately available
funds by a wire transfer to a bank account designated by Loyola.
(b) At such closing, simultaneously with the delivery of funds as
provided in SUBSECTION (a), Loyola shall deliver to Crestar a certificate or
certificates representing the number of shares of Loyola Common Stock purchased
by Crestar, and Crestar shall deliver to Loyola a letter agreeing that Crestar
will not offer to sell or otherwise dispose of such shares in violation of
applicable law or the provisions of this Option Agreement.
(c) Certificates for Loyola Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend which shall read
substantially as follows:
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"The transfer of the shares represented by this certificate is
subject to certain provisions of a Stock Option Agreement between the registered
holder hereof and Loyola Capital Corporation and to resale restrictions arising
under the Securities Act of 1933, as amended, a copy of which agreement is on
file at the principal office of Loyola Capital Corporation. A copy of such
agreement will be provided to the holder hereof without charge upon receipt by
Loyola Capital Corporation of a written request."
It is understood and agreed that the above legend shall be removed by
delivery of substitute certificate(s) without such legend if Crestar shall have
delivered to Loyola a copy of a letter from the staff of the Commission, or an
opinion of counsel, in form and substance satisfactory to Loyola, to the effect
that such legend is not required for purposes of the Securities Act.
5. REPRESENTATIONS.
Loyola represents, warrants and covenants to Crestar as follows:
(a) Loyola shall at all times maintain sufficient authorized but
unissued shares of Loyola Common Stock so that the Option may be exercised
without authorization of additional shares of Loyola Common Stock.
(b) The shares to be issued upon due exercise, in whole or in part,
of the Option, when paid for as provided herein, will be duly authorized,
validly issued, fully paid and nonassessable.
6. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
In the event of any change in Loyola Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations, exchanges of
shares or the like, the type and number of shares subject to the Option, and the
purchase price per share, as the case may be, shall be adjusted appropriately.
In the event that any additional shares of Loyola Common Stock are issued or
otherwise become outstanding after the date of this Option Agreement (other than
pursuant to this Option Agreement), the number of shares of Loyola Common Stock
subject to the Option shall be adjusted so that, after such issuance, it equals
19.9% of the number of shares of Loyola Common Stock then issued and outstanding
without giving effect to any shares subject or issued pursuant to the Option.
Nothing contained in this SECTION 6 shall be deemed to authorize Loyola to
breach any provision of the Letter Agreement or the Merger Agreement.
7. REGISTRATION RIGHTS.
If requested by Crestar, Loyola shall as expeditiously as possible
file a registration statement on a form of general use under the Securities Act
if necessary in order to permit the sale or other disposition of the shares of
Loyola Common Stock that have been
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acquired upon exercise of the Option in accordance with the intended method of
sale or other disposition requested by Crestar. Crestar shall provide all
information reasonably requested by Loyola for inclusion in any registration
statement to be filed hereunder. Loyola will use its best efforts to cause such
registration statement first to become effective and then to remain effective
for such period not in excess of 270 days from the day such registration
statement first becomes effective as may be reasonably necessary to effect such
sales or other dispositions. The first registration effected under this SECTION
7 shall be at Loyola's expense except for underwriting commissions and the fees
and disbursements of Crestar's counsel attributable to the registration of such
Loyola Common Stock. A second registration may be requested hereunder at
Crestar's expense. In no event shall Loyola be required to effect more than two
registrations hereunder. The filing of any registration statement hereunder may
be delayed for such period of time as may reasonably be required to facilitate
any public distribution by Loyola of Loyola Common Stock. If requested by
Crestar, in connection with any such registration, Loyola will become a party to
any underwriting agreement relating to the sale of such shares, but only to the
extent of obligating itself in respect of representations, warranties,
indemnities and other agreements customarily included in such underwriting
agreements. Upon receiving any request from Crestar or assignee thereof under
this SECTION 7, Loyola agrees to send a copy thereof to Crestar and to any
assignee thereof known to Loyola, in each case by promptly mailing the same,
postage prepaid, to the address of record of the persons entitled to receive
such copies.
8. SEVERABILITY.
If any term, provision, covenant or restriction contained in this
Option Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Option
Agreement shall remain in full force and effect, and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Option will not permit the holder to acquire the
full number of shares of Loyola Common Stock provided in SECTION 2 (as adjusted
pursuant to SECTION 6), it is the express intention of Loyola to allow the
holder to acquire such lesser number of shares as may be permissible, without
any amendment or modification hereof.
9. MISCELLANEOUS.
(a) EXPENSES. Except as otherwise provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
(b) ENTIRE AGREEMENT. Except as otherwise expressly provided
herein, this Option Agreement contains the entire agreement between the parties
with respect to the transactions contemplated hereunder and supersedes all
prior arrangements or understandings with respect thereto, written or oral.
The terms and conditions of this Option Agreement
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shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns. Nothing in this Option Agreement, expressed
or implied, is intended to confer upon any party, other than the parties hereto,
and their respective successors and assigns, any rights, remedies, obligations
or liabilities under or by reason of this Option Agreement, except as expressly
provided herein.
(c) ASSIGNMENT. Neither of the parties hereto may assign any of its
rights or obligations under this Option Agreement or the Option created
hereunder to any other person, without the express written consent of the other
party, except that in the event a Purchase Event shall have occurred and be
continuing Crestar may assign in whole or in part its rights and obligations
hereunder; provided, however, that to the extent required by applicable
regulatory authorities, Crestar may not assign its rights under the Option
except in (i) a widely dispersed public distribution, (ii) a private placement
in which no one party acquires the right to purchase in excess of 2% of the
voting shares of Loyola, (iii) an assignment to a single party (e.g., a broker
or investment banker) for the purpose of conducting a widely dispersed public
distribution on Crestar's behalf, or (iv) any other manner approved by
applicable regulatory authorities.
(d) NOTICES. All notices or other communications which are required
or permitted hereunder shall be in writing and sufficient if delivered in the
manner and to the addresses provided for in or pursuant to SECTION 8.4 of the
draft Merger Agreement and, after its execution, the Merger Agreement.
(e) COUNTERPARTS. This Option Agreement may be executed in any
number of counterparts, and each such counterpart shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement.
(f) SPECIFIC PERFORMANCE. The parties agree that damages would be an
inadequate remedy for a breach of the provisions of this Option Agreement by
either party hereto and that this Option Agreement may be enforced by either
party hereto through injunctive or other equitable relief.
(g) GOVERNING LAW. This Option Agreement shall be governed by and
construed in accordance with the laws of Virginia applicable to agreements made
and entirely to be performed within such state and such federal laws as may be
applicable.
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IN WITNESS WHEREOF, each of the parties hereto has executed this Option
Agreement as of the day and year first written above.
LOYOLA CAPITAL CORPORATION
By: /s/ Joseph W. Mosmiller
-------------------------------------
Joseph W. Mosmiller
Chairman of the Board and
Chief Executive Officer
CRESTAR FINANCIAL CORORATION
By: /s/ Richard G. Tilghman
-----------------------------------
Richard G. Tilghman
Chairman of the Board and
Chief Executive Officer
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[LOYOLA LETTERHEAD]
CONTACTS: LOYOLA CAPITAL CORPORATION CRESTAR BANK
James V. McAveney MEDIA: Barry Koling
(410) 332-7210 (804) 782-7845
INVESTMENT COMMUNITY:
Eugene Putnam
(804) 782-5619
FOR IMMEDIATE RELEASE
LOYOLA CAPITAL CORPORATION AND CRESTAR FINANCIAL CORPORATION
SIGN BINDING LETTER AGREEMENT TO MERGE
Richmond, April 28, 1995 -- Loyola Capital Corporation and Crestar
Financial Corporation announced today the signing of a binding letter agreement
under which Crestar would acquire Loyola, the Baltimore-based holding company of
Loyola Federal Savings Bank. With $2.5 billion in assets, $1.5 billion in
deposits and some 800 employees, Loyola operates 35 branches, primarily in
central Maryland and Maryland's Eastern Shore, including 15 in the Baltimore
metropolitan area.
Under terms of the binding letter agreement, Loyola shareholders will
receive Crestar stock in exchange for their Loyola holdings. Each of the 8.1
million Loyola shares outstanding would be exchanged for .69 shares of Crestar
Financial Corporation stock, subject to adjustment based on the price of Crestar
shares at the time the merger is completed. The total value of the transaction
is approximately $259.2 million, or $32 per Loyola share, based on Loyola's
outstanding shares and Crestar's April 21, 1995 closing price of $46.375.
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Crestar's acquisition of Loyola is subject to the execution of a definitive
agreement between the two institutions, anticipated within the next two weeks,
as well as approval by regulators and Loyola shareholders. The acquisition is
expected to be completed by year-end 1995 or shortly thereafter.
The acquisition of Loyola would represent a natural extension of Crestar's
existing Maryland operations as well as provide the Bank with locations in new
and attractive markets. Specifically, the acquisition will extend Crestar's
presence into Baltimore and other parts of central Maryland and enhance its
strength in Washington's Maryland suburbs and in the Annapolis areas.
Upon completion of this transaction, Crestar's banking franchise will
extend the full length of the Baltimore-Washington corridor, the nation's fourth
largest consolidated metropolitan area and one of the most attractive banking
markets in the country. Census bureau data show the area is home to a higher
proportion of affluent, highly educated individuals than any other metropolitan
area. Crestar's expanded Maryland presence will also complement the bank's
number one market position in Virginia.
Based on first quarter 1995 data, the acquisition would increase Crestar's
total assets by 17 percent to $16.9 billion and bring Crestar's total branch
network to more than 380.
Richard G. Tilghman, Crestar Chairman and Chief Executive Officer, said
that pending the execution of the definitive merger agreement, no final
decisions have been made relative to branches, personnel, business integration
or other merger-related issues. He noted, however,
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there is little overlap between the Crestar and Loyola branch networks, and that
Crestar anticipated maintaining the Loyola branch network essentially intact.
"We look forward to bringing Loyola business and individual customers the
same high level of service they currently enjoy, plus the benefits of Crestar's
broad range of products and services, including the kinds of technology-based
and investment-related services made possible by the resources of a larger
financial institution," Mr. Tilghman said.
"We believe this transaction will benefit all of our constituents," said
Joseph W. Mosmiller, Chairman of the Board and Chief Executive Officer of Loyola
Capital Corporation. "Crestar brings resources and services which enable us to
more effectively compete with the larger institutions which have entered our
market through merger and acquisition. Loyola Capital Corporation's Board of
Directors concluded that all of their constituencies would best be served by
affiliating with a larger institution and they deemed the culture and strength
of Crestar to be the most beneficial."
Loyola has granted Crestar an option to purchase from the company
approximately 1.6 million Loyola shares, exercisable in certain events.
Loyola Capital Corporation is the holding company for Loyola F.S.B., a
community banking and financial services enterprise headquartered in Baltimore
and serving customers in Maryland, Virginia, Delaware, Pennsylvania, South
Carolina, Florida and the District of
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Columbia. With nearly $2.5 billion in assets, Loyola's core businesses of real
estate and consumer lending, loan servicing, and retail banking have been
complemented in recent years by small business financing, financial planning,
mutual funds, insurance products and credit card products.
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