STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 20, 1998, between SUNTRUST
BANKS, INC., a Georgia corporation ("Grantee"), and CRESTAR FINANCIAL
CORPORATION, a Virginia corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, as a condition to, and contemporaneous with the execution of
an Agreement and Plan of Merger dated July 20, 1998 ("Agreement") and in
consideration therefor, the parties are entering into this Stock Option
Agreement pursuant to which Issuer has agreed to grant Grantee the Option
(as hereinafter defined):
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Agreement, the parties
hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional, irrevocable
option (the "Option") to purchase, subject to the terms hereof, up to
22,338,161 fully paid and nonassessable shares of common stock, par value
$5.00 ("Common Stock"), of Issuer at a price of $62.875 per share (such
price, as adjusted if applicable, the "Option Price"); provided however
that in no event shall the number of shares of Common Stock for which this
Option is exercisable exceed 19.9% of the Issuer's issued and outstanding
common shares without giving effect to any shares subject to or issued
pursuant to the Option. The number of shares of Common Stock that may be
received upon the exercise of the Option and the Option Price are subject
to adjustment as herein set forth.
(b) If any additional shares of Common Stock are issued or otherwise
become outstanding after the date of this Stock Option Agreement (other
than pursuant to this Stock Option Agreement), the number of shares of
Common Stock subject to the Option shall be increased so that, after such
issuance, such number equals 19.9% of the number of shares of Common Stock
then issued and outstanding without giving effect to any shares subject to
or issued pursuant to the Option. Nothing contained in this Section 1(b) or
elsewhere in this Stock Option Agreement shall be deemed to authorize
Issuer or Grantee to breach any provision of the Agreement.
2. (a) The Holder (as hereinafter defined) may exercise the Option,
in whole or part, if, but only if, both an Initial Triggering Event (as
hereinafter defined) and a Subsequent Triggering Event (as hereinafter
defined) shall have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined), provided that the Holder shall
have sent the written notice of such exercise (as provided in subsection
(e) of this Section 2) within 90 days following such Subsequent Triggering
Event (or such later date as provided in Section 10). Each of the following
shall be an "Exercise Termination Event": (i) the Effective Time of the
Merger; (ii) termination of the Agreement in accordance with the provisions
thereof (other than a termination resulting from a willful breach by Issuer
of a provision of the Agreement) if such termination occurs prior to the
occurrence of an Initial Triggering Event; or (iii) the passage of eighteen
months after termination of the Agreement if such termination follows the
occurrence of an Initial Triggering Event or is a termination by Grantee
pursuant to Section 8.1(h) thereof resulting from a willful breach by
Issuer of a provision of the Agreement. The term "Holder" shall mean the
holder or holders of the Option.
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any of its subsidiaries (each an "Issuer
Subsidiary"), without having received Grantee's prior written consent,
shall have entered into an agreement to engage in, an Acquisition
Transaction (as hereinafter defined) with any person (the term "person" for
purposes of this Stock Option Agreement having the meaning assigned thereto
in Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934
(the "1934 Act"), and the rules and regulations thereunder) other than
Grantee or any of its subsidiaries (each a "Grantee Subsidiary") or the
board of directors of Issuer shall have recommended that the shareholders
of Issuer approve or accept any Acquisition Transaction other than as
contemplated by the Agreement. For purposes of this Stock Option Agreement,
"Acquisition Transaction" shall mean (a) a merger, consolidation or share
exchange, or any similar transaction, involving Issuer or any Issuer
Subsidiary, provided, however, that in no event shall (i) any merger,
consolidation or similar transaction involving only the Issuer and one or
more of the Issuer Subsidiaries, or involving only any two or more of such
Issuer Subsidiaries, or (ii) any merger, consolidation or similar
transaction as to which the shareholders of Issuer immediately prior
thereto own in the aggregate at least 75% of the common stock of the
surviving corporation or its publicly-held parent corporation immediately
following consummation thereof be deemed to be an Acquisition Transaction,
provided that any such transaction is not entered into in violation of the
terms of the Agreement, (b) a purchase, lease or other acquisition of
assets of the Issuer or any Issuer Subsidiary (other than any purchase,
lease or other acquisition not involving all or a substantial portion of
the assets of the Issuer and the Issuer Subsidiaries taken as a whole),
provided that any such transaction is not entered into in violation of the
terms of the Agreement, (c) a purchase or other acquisition (including by
way of merger, consolidation, share exchange or otherwise) of securities
representing 10% or more of the voting power of Issuer or any Issuer
Subsidiary or (d) any substantially similar transaction;.
(ii) The board of directors of Issuer does not recommend that the
shareholders of Issuer approve the Agreement or publicly withdraws or
modifies, or publicly announces its intention to withdraw or modify, in any
manner adverse to the Grantee, its recommendation that its shareholders
approve the Agreement;
(iii) Any person other than Grantee or any Grantee Subsidiary or
any Issuer Subsidiary acting in a fiduciary capacity shall have acquired
beneficial ownership or the right to acquire beneficial ownership of 10% or
more of the outstanding shares of Common Stock (the term "beneficial
ownership" for purposes of this Stock Option Agreement having the meaning
assigned thereto in Section 13(d) of the 1934 Act, and the rules and
regulations thereunder);
(iv) Any person other than Grantee or any Grantee Subsidiary
shall have made a bona fide proposal to Issuer or its shareholders by
public announcement or written communication that is or becomes the subject
of public disclosure to engage in an Acquisition Transaction;
(v) After a proposal is made by a third party to Issuer or its
shareholders to engage in an Acquisition Transaction, Issuer shall have
breached any covenant or obligation contained in the Agreement and such
breach (x) would entitle Grantee to terminate the Agreement and (y) shall
not have been cured prior to the Notice Date (as defined below);
(vi) Any person other than Grantee or any Grantee Subsidiary,
other than in connection with a transaction to which Grantee has given its
prior written consent, shall have filed an application or notice with The
Board of Governors of the Federal Reserve System (the "FRB") or any other
federal or state bank regulatory authority, which application or notice has
been accepted for processing, for approval to engage in an Acquisition
Transaction;
(vii) The shareholders of Issuer shall have voted and failed to
approve the Agreement and the Merger at a meeting which has been held for
that purpose or any adjournment or postponement thereof, or such meeting
shall not have been held in violation of the Merger Agreement or shall have
been canceled prior to termination of the Merger Agreement if, prior to
such meeting (or if such meeting shall not have been held or shall have
been canceled, prior to such termination), it shall have been publicly
announced that any person (other than Grantee or any Grantee Subsidiary)
shall have made, or disclosed an intention to make, a proposal to engage in
an Acquisition Transaction; or
(viii) Any person other than Grantee or any Grantee Subsidiary
shall have filed with the SEC a registration statement or tender offer
materials with respect to a potential exchange or tender offer that would
constitute an Acquisition Transaction;
(c) The term "Subsequent Triggering Event" shall mean either of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person, other than any Grantee
Subsidiary or any Issuer Subsidiary acting in a fiduciary capacity, of
beneficial ownership of 20% or more of the then outstanding Common Stock;
or
(ii) The occurrence of the Initial Triggering Event described in
clause (i) of subsection 2(b), except that the percentage referred to in
clause (c) shall be 20%.
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event"), it being understood that the giving of such notice by
Issuer shall not be a condition to the right of the Holder to exercise the
Option.
(e) If the Holder is entitled to and wishes to exercise the Option,
it shall send to Issuer a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of shares
it will purchase pursuant to such exercise and (ii) a place and date not
earlier than three business days nor later than 60 business days from the
Notice Date for the closing of such purchase (the "Closing Date"); provided
that if prior notification to or approval of the FRB or any other
governmental authority or regulatory or administrative agency or
commission, domestic or foreign (a "Governmental Entity"), is required in
connection with such purchase, the Holder shall promptly file the required
notice or application for approval and shall expeditiously process the same
and the period of time that otherwise would run pursuant to this sentence
shall run from the later of (x) the date on which any required notification
periods have expired or been terminated and (y) the date on which such
approvals have been obtained and any requisite waiting period or periods
shall have passed. Any exercise of the Option shall be deemed to occur on
the Notice Date relating thereto.
(f) At the closing referred to in subsection (e) of this Section 2,
the Holder shall pay to Issuer the aggregate purchase price for the shares
of Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by wire transfer to a bank account designated
by Issuer, provided that failure or refusal of Issuer to designate such a
bank account shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of immediately
available funds as provided in subsection (f) of this Section 2, Issuer
shall deliver to the Holder a certificate or certificates representing the
number of shares of Common Stock purchased by the Holder and, if the Option
should be exercised in part only, a new Option evidencing the rights of the
Holder thereof to purchase the balance of the shares purchasable hereunder,
and the Holder shall deliver to Issuer a copy of this Stock Option
Agreement and a letter agreeing that the Holder will not offer to sell or
otherwise dispose of such shares in violation of applicable law or the
provisions of this Stock Option Agreement.
(h) Certificates for Common Stock delivered at a closing hereunder
may be endorsed with a restrictive legend that shall read substantially as
follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement between the registered holder
hereof and Issuer and to resale restrictions arising under the
Securities Act of 1933, as amended. A copy of such agreement is on
file at the principal office of Issuer and will be provided to the
holder hereof without charge upon receipt by Issuer of a written
request therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933, as amended (the "1933 Act"), in
the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the Holder shall have delivered to Issuer a copy
of a letter from the staff of the Securities and Exchange Commission (the
"SEC"), or an opinion of counsel, in form and substance satisfactory to
Issuer, to the effect that such legend is not required for purposes of the
1933 Act; (ii) the reference to the provisions of this Stock Option
Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Stock Option
Agreement and under circumstances that do not require the retention of such
reference; and (iii) the legend shall be removed in its entirety if the
conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required
by law.
(i) Upon the giving by the Holder to Issuer of the written notice of
exercise of the Option provided for under subsection (e) of this Section 2
and the tender of the applicable purchase price in immediately available
funds, the Holder shall be deemed to be the holder of record of the shares
of Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of Issuer shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually
delivered to the Holder. Issuer shall pay all expenses, and any and all
United States Federal, state and local taxes and other charges that may be
payable in connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of the Holder or its
assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock;
(ii) that it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other
voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer; (iii) promptly to take all action as may from time to
time be required (including (A) complying with all premerger notification,
reporting and waiting period requirements specified in 15 U.S.C. Section
l8a and regulations promulgated thereunder and (B) in the event, under the
Bank Holding Company Act of 1956, as amended, or the Change in Bank Control
Act of 1978, as amended, or any state banking law, prior approval of or
notice to the FRB or to any other Governmental Entity is necessary before
the Option may be exercised, cooperating fully with the Holder in preparing
such applications or notices and providing such information to each such
Governmental Entity as they may require) in order to permit the Holder to
exercise the Option and Issuer duly and effectively to issue shares of
Common Stock pursuant hereto; and (iv) promptly to take all action provided
herein to protect the rights of the Holder against dilution.
4. This Stock Option Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of the Holder, upon
presentation and surrender of this Stock Option Agreement at the principal
office of Issuer, for other agreements providing for Options of different
denominations entitling the holder thereof to purchase, on the same terms
and subject to the same conditions as are set forth herein, in the
aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Stock Option Agreement" and "Option" as used herein include any
Stock Option Agreements and related options for which this Stock Option
Agreement (and the Option granted hereby) may be exchanged. Upon receipt
by Issuer of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Stock Option Agreement, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification,
and upon surrender and cancellation of this Stock Option Agreement, if
mutilated, Issuer will execute and deliver a new Stock Option Agreement of
like tenor and date. Any such new Stock Option Agreement executed and
delivered shall constitute an additional contractual obligation on the part
of Issuer, whether or not the Stock Option Agreement so lost, stolen,
destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section
1 of this Stock Option Agreement, the number of shares of Common Stock
purchasable upon the exercise of the Option shall be subject to adjustment
from time to time as provided in this Section 5.
(a) In the event of any change in Common Stock by reason of
stock dividends, split-ups, mergers, recapitalizations, combinations,
subdivisions, conversions, exchanges of shares or the like, the type and
number of shares of Common Stock purchasable upon exercise hereof shall be
appropriately adjusted.
(b) Whenever the number of shares of Common Stock purchasable
upon exercise hereof is adjusted as provided in this Section 5, the Option
Price shall be adjusted by multiplying the Option Price by a fraction, the
numerator of which shall be equal to the number of shares of Common Stock
purchasable prior to the adjustment and the denominator of which shall be
equal to the number of shares of Common Stock purchasable after the
adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of
Grantee delivered within 90 days (or such later date as may be provided
pursuant to Section 10) of such Subsequent Triggering Event (whether on its
own behalf or on behalf of any subsequent holder of this Option (or part
thereof) or any of the shares of Common Stock issued pursuant hereto),
promptly prepare, file and keep current a shelf registration statement
under the 1933 Act covering any shares issued and issuable pursuant to this
Option and shall use its reasonable best efforts to cause such registration
statement to become effective and remain current in order to permit the
sale or other disposition of any shares of Common Stock issued upon total
or partial exercise of this Option ("Option Shares") in accordance with any
plan of disposition requested by Grantee. Issuer will use its reasonable
best efforts to cause such registration statement first to become effective
and then to remain effective for such period not in excess of 180 days from
the day such registration statement first becomes effective or such shorter
time as may be reasonably necessary to effect such sales or other
dispositions. Grantee shall have the right to demand two such
registrations. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement
relating to the sale of such shares, but only to the extent of obligating
itself in respect of representations, warranties, indemnities and other
agreements customarily included in such underwriting agreements. The
foregoing notwithstanding, if, at the time of any request by Grantee for
registration of Option Shares as provided above, Issuer is in the process
of registration with respect to an underwritten public offering of shares
of Common Stock, and if in the good faith judgment of the managing
underwriter or managing underwriters, or, if none, the sole underwriter or
underwriters, of such offering the inclusion of the Holder's Option or
Option Shares would interfere with the successful marketing of the shares
of Common Stock offered by Issuer, the number of Option Shares otherwise to
be covered in the registration statement contemplated hereby may be
reduced; provided, however, that after any such required reduction the
number of Option Shares to be included in such offering for the account of
the Holder shall constitute at least 25% of the total number of shares to
be sold by the Holder and Issuer in the aggregate; provided further,
however, that if such reduction occurs, then the Issuer shall file a
registration statement for the balance as promptly as practical and no
reduction shall thereafter occur. Each such Holder shall provide all
information reasonably requested by Issuer for inclusion in any
registration statement to be filed hereunder. Upon receiving any request
under this Section 6 from any Holder, Issuer agrees to send a copy thereof
to any other person known to Issuer to be entitled to registration rights
under this Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies.
7. (a) At any time after the occurrence of a Repurchase Event (as
defined below) (i) at the request of the Holder, delivered prior to an
Exercise Termination Event (or such later period as may be provided
pursuant to Section 10), Issuer (or any successor thereto) shall repurchase
the Option from the Holder at a price (the "Option Repurchase Price") equal
to the amount by which (A) the market/offer price (as defined below)
exceeds (B) the Option Price, multiplied by the number of shares for which
this Option may then be exercised and (ii) at the request of the owner of
Option Shares from time to time (the "Owner"), delivered prior to an
Exercise Termination Event (or such later period as may be provided
pursuant to Section 10), Issuer (or any successor thereto) shall repurchase
such number of the Option Shares from the Owner as the Owner shall
designate at a price (the "Option Share Repurchase Price") equal to the
market/ offer price multiplied by the number of Option Shares so
designated. The term "market/offer price" shall mean the highest of (i)
the price per share of Common Stock at which a tender offer or exchange
offer therefor has been made after the date hereof, (ii) the price per
share of Common Stock to be paid by any third party pursuant to an
agreement with Issuer, (iii) the highest closing price for shares of Common
Stock within the six-month period immediately preceding the date the Holder
gives notice of the required repurchase of this Option or the Owner gives
notice of the required repurchase of Option Shares, as the case may be, or
(iv) in the event of a sale of all or substantially all of Issuer's assets,
the sum of the price paid in such sale for such assets and the current
market value of the remaining assets of Issuer as determined by a
nationally recognized investment banking firm selected by the Holder or the
Owner, as the case may be, divided by the number of shares of Common Stock
of Issuer outstanding at the time of such sale. In determining the
market/offer price, the value of consideration other than cash shall be
determined by a nationally recognized investment banking firm selected by
the Holder or Owner, as the case may be, and reasonably acceptable to the
Issuer, whose determination shall be conclusive and binding on all parties.
(b) The Holder or the Owner, as the case may be, may exercise its
right to require Issuer to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at
its principal office, a copy of this Stock Option Agreement or certificates
for Option Shares, as applicable, accompanied by a written notice or
notices stating that the Holder or the Owner, as the case may be, elects to
require Issuer to repurchase this Option and/or the Option Shares in
accordance with the provisions of this Section 7. As promptly as
practicable, and in any event within five business days after the surrender
of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto, Issuer shall deliver or
cause to be delivered to the Holder the Option Repurchase Price and/or to
the Owner the Option Share Repurchase Price therefor or the portion thereof
that Issuer is not then prohibited under applicable law and regulation from
so delivering.
(c) To the extent that Issuer is prohibited under applicable law or
regulation, or as a consequence of administrative policy, from repurchasing
the Option and/or the Option Shares in full, Issuer shall immediately so
notify the Holder and/or the Owner and thereafter deliver or cause to be
delivered, from time to time, to the Holder and/or the Owner, as
appropriate, the portion of the Option Repurchase Price and the Option
Share Repurchase Price, respectively, that it is no longer prohibited from
delivering, within five business days after the date on which Issuer is no
longer so prohibited; provided, however, that if Issuer at any time after
delivery of a notice of repurchase pursuant to subsection (b) of this
Section 7 is prohibited under applicable law or regulation, or as a
consequence of administrative policy, from delivering to the Holder and/or
the Owner, as appropriate, the Option Repurchase Price and the Option Share
Repurchase Price, respectively, in full (and Issuer hereby undertakes to
use its best efforts to obtain all required regulatory and legal approvals
and to file any required notices as promptly as practicable in order to
accomplish such repurchase), the Holder or Owner may revoke its notice of
repurchase of the Option or the Option Shares either in whole or to the
extent of the prohibition, whereupon, in the latter case, Issuer shall
promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Purchase Price or the Option Share Repurchase Price
that Issuer is not prohibited from delivering; and (ii) deliver, as
appropriate, either (A) to the Holder, a new Stock Option Agreement
evidencing the right of the Holder to purchase that number of shares of
Common Stock obtained by multiplying the number of shares of Common Stock
for which the surrendered Stock Option Agreement was exercisable at the
time of delivery of the notice of repurchase by a fraction, the numerator
of which is the Option Repurchase Price less the portion thereof
theretofore delivered to the Holder and the denominator of which is the
Option Repurchase Price, or (B) to the Owner, a certificate for the Option
Shares it is then so prohibited from repurchasing.
(d) For purposes of this Section 7, a "Repurchase Event" shall be
deemed to have occurred upon the occurrence of any of the following events
or transactions after the date hereof:
(i) the acquisition by any person (other than Grantee or any
Grantee Subsidiary) of beneficial ownership of 50% or more of the then
outstanding Common Stock; or
(ii) the consummation of any Acquisition Transaction described
in Section 2(b) (i) hereof, except that the percentage referred to in
clause (z) shall be 50%.
8. (a) If prior to an Exercise Termination Event, Issuer shall enter
into an agreement (i) to consolidate or merge with any person, other than
Grantee or one of its subsidiaries, and shall not be the continuing or
surviving corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or one of its subsidiaries, to merge into Issuer
and Issuer shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of Common Stock
shall be changed into or exchanged for stock or other securities of any
other person or cash or any other property or the then outstanding shares
of Common Stock shall after such merger represent less than 50% of the
outstanding shares and share equivalents of the merged company, or (iii) to
sell or otherwise transfer all or substantially all of its assets to any
person, other than Grantee or one of its subsidiaries, then, and in each
such case, the agreement governing such transaction shall make proper
provision so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be
converted into, or exchanged for, an option (the "Substitute Option"), at
the election of the Holder, of either (x) the Acquiring Corporation (as
hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if other
than Issuer), (ii) Issuer in a merger in which Issuer is the continuing or
surviving person, and (iii) the transferee of all or substantially all of
Issuer's assets.
(2) "Substitute Common Stock" shall mean the common stock to be
issued by the issuer of the Substitute Option upon exercise of the
Substitute Option.
(3) "Assigned Value" shall mean the market/offer price, as
defined in Section 7.
(4) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year immediately preceding
the consolidation, merger or sale in question, but in no event higher than
the closing price of the shares of Substitute Common Stock on the day
preceding such consolidation, merger or sale; provided, that if Issuer is
the issuer of the Substitute Option, the Average Price shall be computed
with respect to a share of common stock issued by the person merging into
Issuer or by any company which controls or is controlled by such person, as
the Holder may elect.
(c) The Substitute Option shall have the same terms as the
Option, provided, that if the terms of the Substitute Option cannot, for
legal reasons, be the same as the Option, such terms shall be as similar as
possible and in no event less advantageous to the Holder. The issuer of the
Substitute Option shall also enter into an agreement with the then Holder
or Holders of the Substitute Option in substantially the same form as this
Stock Option Agreement, which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option is
then exercisable, divided by the Average Price. The exercise price of the
Substitute Option per share of Substitute Common Stock shall then be equal
to the Option Price multiplied by a fraction, the numerator of which shall
be the number of shares of Common Stock for which the Option is then
exercisable and the denominator of which shall be the number of shares of
Substitute Common Stock for which the Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for a number of shares that is
more than 19.9% of the shares of Substitute Common Stock outstanding prior
to exercise of the Substitute Option. If the Substitute Option would be
exercisable for more than 19.9% of the shares of Substitute Common Stock
outstanding prior to exercise but for this clause (e), the issuer of the
Substitute Option (the "Substitute Option Issuer") shall make a cash
payment to the Holder equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause
(e) over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (e). This difference in value shall be determined
by a nationally recognized investment banking firm selected by the Holder
or the Owner, as the case may be, and reasonably acceptable to the Issuer.
(f) Issuer shall not enter into any transaction described in
subsection (a) of this Section 8 unless the Acquiring Corporation and any
person that controls the Acquiring Corporation assume in writing all the
obligations of Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the Substitute Option Issuer shall repurchase
the Substitute Option from the Substitute Option Holder at a price (the
"Substitute Option Repurchase Price") equal to the amount by which (i) the
Highest Closing Price (as hereinafter defined) exceeds (ii) the exercise
price of the Substitute Option, multiplied by the number of shares of
Substitute Common Stock for which the Substitute Option may then be
exercised, and at the request of the owner (the "Substitute Share Owner")
of shares of Substitute Common Stock (the "Substitute Shares"), the
Substitute Option issuer shall repurchase the Substitute Shares at a price
(the "Substitute Share Repurchase Price") equal to the Highest Closing
Price multiplied by the number of Substitute Shares so designated. The term
"Highest Closing Price" shall mean the highest closing price for shares of
Substitute Common Stock within the six-month period immediately preceding
the date the Substitute Option Holder gives notice of the required
repurchase of the Substitute Option or the Substitute Share Owner gives
notice of the required repurchase of the Substitute Shares, as applicable.
(b) The Substitute Option Holder or the Substitute Share Owner,
as the case may be, may exercise its respective right to require the
Substitute Option Issuer to repurchase the Substitute Option and the
Substitute Shares pursuant to this Section 9 by surrendering for such
purpose to the Substitute Option Issuer, at its principal office, the
agreement for such Substitute Option (or, in the absence of such an
agreement, a copy of this Stock Option Agreement) and certificates for
Substitute Shares accompanied by a written notice or notices stating that
the Substitute Option Holder or the Substitute Share Owner, as the case may
be, elects to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares in accordance with the
provisions of this Section 9. As promptly as practicable, and in any event
within five business days after the surrender of the Substitute Option
and/or certificates representing Substitute Shares and the receipt of such
notice or notices relating thereto, the Substitute Option Issuer shall
deliver or cause to be delivered to the Substitute Option Holder the
Substitute Option Repurchase Price and/or to the Substitute Share Owner the
Substitute Share Repurchase Price therefor or the portion thereof which the
Substitute Option Issuer is not then prohibited under applicable law and
regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, from repurchasing the Substitute Option and/or the
Substitute Shares in part or in full, the Substitute Option Issuer shall
immediately so notify the Substitute Option Holder and/or the Substitute
Share Owner and thereafter deliver or cause to be delivered, from time to
time, to the Substitute Option Holder and/or the Substitute Share Owner, as
appropriate, the portion of the Substitute Share Repurchase Price,
respectively, which it is no longer prohibited from delivering, within five
business days after the date on which the Substitute Option Issuer is no
longer so prohibited; provided, however, that if the Substitute Option
Issuer is at any time after delivery of a notice of repurchase pursuant to
subsection (b) of this Section 9 prohibited under applicable law or
regulation, or as a consequence of administrative policy, from delivering
to the Substitute Option Holder and/or the Substitute Share Owner, as
appropriate, the Substitute Option Repurchase Price and the Substitute
Share Repurchase Price, respectively, in full (and the Substitute Option
Issuer shall use its best efforts to receive all required regulatory and
legal approvals as promptly as practicable in order to accomplish such
repurchase), the Substitute Option Holder or Substitute Share Owner may
revoke its notice of repurchase of the Substitute Option or the Substitute
Shares either in whole or to the extent of the prohibition, whereupon, in
the latter case, the Substitute Option Issuer shall promptly (i) deliver to
the Substitute Option Holder or Substitute Share Owner, as appropriate,
that portion of the Substitute Option Repurchase Price or the Substitute
Share Repurchase Price that the Substitute Option Issuer is not prohibited
from delivering; and (ii) deliver, as appropriate, either (A) to the
Substitute Option Holder, a new Substitute Option evidencing the right of
the Substitute Option Holder to purchase that number of shares of the
Substitute Common Stock obtained by multiplying the number of shares of the
Substitute Common Stock for which the surrendered Substitute Option was
exercisable at the time of delivery of the notice of repurchase by a
fraction, the numerator of which is the Substitute Option Repurchase Price
less the portion thereof theretofore delivered to the Substitute Option
Holder, and the denominator of which is the Substitute Option Repurchase
Price, or (B) to the Substitute Share Owner, a certificate for the
Substitute Option Shares it is then so prohibited from repurchasing.
10. The time periods for exercise of certain rights under Sections 2,
6, 7 and 12 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights, and for the
expiration of all statutory waiting periods; (ii) during the pendency of
any temporary restraining order, injunction or other legal ban to the
exercise of such rights; and (iii) to the extent necessary to avoid
liability under Section 16(b) of the 1934 Act by reason of such exercise.
11. Issuer hereby represents and warrants to Grantee as follows:
(a) Issuer has full corporate power and authority to execute and
deliver this Stock Option Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Stock Option
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of Issuer and no
other corporate proceedings on the part of Issuer are necessary to
authorize this Stock Option Agreement or to consummate the transactions
contemplated hereby. This Stock Option Agreement has been duly and validly
executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize
and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Stock Option Agreement in accordance
with its terms will have reserved for issuance upon the exercise of the
Option, that number of shares of Common Stock equal to the maximum number
of shares of Common Stock at any time and from time to time issuable
hereunder, and all such shares, upon issuance pursuant hereto, will be duly
authorized, validly issued, fully paid, nonassessable, and will be
delivered free and clear of all claims, liens, encumbrances and security
interests and not subject to any preemptive rights.
(c) Issuer has taken all action (including, if required,
redeeming all of the Rights or amending or terminating the Company Rights
Agreement (as defined in the Merger Agreement)) so that the entering into
of this Stock Option Agreement, the acquisition of shares of Common Stock
hereunder and the other transactions contemplated thereby do not and will
not result in the grant of any rights of any person under the Company
Rights Agreement or enable or require the Rights (as defined in the Company
Rights Agreement) to be exercised, distributed or triggered.
12. Neither of the parties hereto may assign any of its rights and
obligations under this Stock Option Agreement or the Option created
hereunder to any other person, without the express written consent of the
other party, except that in the event a Subsequent Triggering Event shall
have occurred prior to an Exercise Termination Event, Grantee, subject to
the express provisions hereof, may assign in whole or in part its rights
and obligations hereunder within 90 days following such Subsequent
Triggering Event (or such later period as may be provided pursuant to
Section 10).
13. Each of Grantee and Issuer will use its best efforts to make all
filings with, and to obtain consents of, all third parties and Governmental
Entities necessary to the consummation of the transactions contemplated by
this Stock Option Agreement, including without limitation making
application to list the shares of Common Stock issuable hereunder on the
New York Stock Exchange or such other exchange or market on which the
shares of Issuer may be listed upon official notice of issuance and making
any necessary applications to the FRB under the Bank Holding Company Act
and any other Governmental Entities for approval to acquire the shares
issuable hereunder.
14. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Stock Option Agreement by either
party hereto and that the obligations of the parties shall hereto be
enforceable by either party hereto through injunctive or other equitable
relief.
15. If any term, provision, covenant or restriction contained in this
Stock Option Agreement is held by a court or a federal or state regulatory
agency of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and covenants and restrictions contained
in this Stock Option Agreement shall remain in full force and effect, and
shall in no way be affected, impaired or invalidated. If for any reason
such court or regulatory agency determines that the Holder is not permitted
to acquire, or Issuer is not permitted to repurchase pursuant to Section 7,
the full number of shares of Common Stock provided in Section 1(a) hereof
(as adjusted pursuant to Sections 1(b) or 5 hereof), it is the express
intention of Issuer to allow the Holder to acquire or to require Issuer to
repurchase such lesser number of shares as may be permissible, without any
amendment or modification hereof.
16. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person,
by cable, telegram, telecopy or telex, or by registered or certified mail
(postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Agreement.
17. This Stock Option Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia, regardless of the laws
that might otherwise govern under applicable principles of conflicts of
laws thereof.
18. This Stock Option Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
19. Except as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
20. Except as otherwise expressly provided herein or in the
Agreement, this Stock Option Agreement contains the entire agreement
between the parties with respect to the transactions contemplated hereunder
and supersedes all prior arrangements or understandings with respect
thereof, written or oral. The terms and conditions of this Stock Option
Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. Nothing in
this Stock Option Agreement, expressed or implied, is intended to confer
upon any party, other than the parties hereto, and their respective
successors except as assigns, any rights, remedies, obligations or
liabilities under or by reason of this Stock Option Agreement, except as
expressly provided herein.
21. Terms used in this Stock Option Agreement and not defined herein
but defined in the Agreement shall have the meanings assigned thereto in
the Agreement.
[signatures follow on separate pages]
IN WITNESS WHEREOF, each of the parties has caused this Stock Option
Agreement to be executed on its behalf by their officers thereunto duly
authorized, all as of the date first above written.
SUNTRUST BANKS, INC., as Grantee
By: /s/ L. Xxxxxxx Xxxxxx
____________________________
Name: L. Xxxxxxx Xxxxxx
Title: Chairman of the Board and
Chief Executive Officer
CRESTAR FINANCIAL CORPORATION, as Issuer
By: /s/ Xxxxxxx X. Xxxxxxxx
_______________________________
Name: Xxxxxxx X. Xxxxxxxx
Title: Chairman of the Board and
Chief Executive Officer
