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
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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