As filed with the Securities and Exchange Commission on
November 18, 2003March 12, 2004Registration No.
________333-SECURITIES AND EXCHANGE COMMISSIONWASHINGTON,
Washington, D.C. 20549-------------------------FORM S-4
REGISTRATION STATEMENTUNDER
Under
THE SECURITIES ACT OF 1933-----------------------------SYNOVUS FINANCIAL CORP.(Exact
(Exact name ofregistrantRegistrant as specified in its charter)-------------------------------
GEORGIAGeorgia 6022 58-1134883 (State(State or other jurisdictionJurisdiction of(PrimaryIncorporation
or Organization)(Primary Standard Industrial (I.R.S. Employer incorporation or organization)Classification Code
Number)(I.R.S. Employer
IdentificationNumber)No.)SUITESuite 301,
ONE ARSENAL PLACEOne Arsenal Place
901FRONT AVENUE COLUMBUS, GEORGIAFront Avenue
Columbus, Georgia 31901
(706) 649-4751(Address,
(Address, including zip code, and telephone number, including area code, ofregistrant'sregistrant’s principal executive offices)------------------------- KATHLEEN MOATES, SENIOR VICE PRESIDENT AND SENIOR DEPUTY GENERAL COUNSEL SYNOVUS FINANCIAL CORP. SUITEKathleen Moates
Senior Vice President and Senior Deputy General Counsel
Suite 202,ONE ARSENAL PLACEOne Arsenal Place
901FRONT AVENUE COLUMBUS, GEORGIAFront Avenue
Columbus, Georgia 31901
(706) 649-4818(Name,
(Name, address, including zip code, and telephone number, including area code, of agent for service)-------------------------Copies to:
W. Thomas King, Esq.
Smith, Gambrell & Russell, LLP
Promenade II, Suite 3100, 1230 Peachtree Street, NE
Atlanta, Georgia 30309
Telephone: 404-815-3500
Facsimile: 404-685-6978Walter G. Moeling, IV, Esq.
Powell, Goldstein, Frazer & Murphy, LLP
191 Peachtree Street, N.E., Sixteenth Floor
Atlanta, Georgia 30303
Telephone: 404-572-6600
Facsimile: 404-572-6999Approximate date of commencement of proposed sale to the public: As soon as practicable following the effectiveness of this Registration Statement.
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.[ ]oIf this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.[ ]oIf this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.[ ]oCALCULATION OF REGISTRATION FEE
CALCULATION OF REGISTRATION FEE - -------------------------------------------------------------------------------------------------------------------Proposed Proposed Maximum Maximum Amount of Amount to be Offering Price Aggregate Registration Title Ofof Each ClassMaximum Proposed Maximum Amount Of Ofof SecuritiesTo Amount To Beto be RegisteredRegistered Per Share Offering Price Aggregate Registration Be Registered Registered Per Share Offering PriceFee - --------------------------------------------------------------------------------------------------------------------Common Stock, $1.00 par value per share 1,785,000$1,4584,015,517 shares(1) (2) (2) $6,904(3) Common Stock Rights 1,785,000(4) 4,015,517 shares(4) (4) (4) (4)
(1) | This amount is based upon the maximum number of shares of Synovus common stock anticipated to be issued |
(2) | Not applicable. |
(3) | Determined pursuant to Rule 457(f) |
(4) | The Common Stock Rights are attached to and trade with the common stock of Synovus Financial Corp. The value, if any, attributable to the Common Stock Rights is reflected in the market price of the common stock of Synovus Financial Corp. |
The Registrant hereby amends this Registration Statement on each such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance withSection 8(a) of the Securities Act of 1933 or until thisthe Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
PEOPLES FLORIDA BANKING CORPORATION
32845 U.S. Highway 19
Palm Harbor, Florida 34682
TRUST ONE BANK
1715 Aaron Brenner Drive
Memphis, Tennessee 38120
SPECIAL MEETING OF SHAREHOLDERS
, 2004
Dear Shareholder:
You are cordially invited to attend a special meeting of shareholders of Peoples Florida Banking CorporationTrust One Bank to be held at the main office of PeoplesTrust One Bank, 32845 U.S. Highway 19, Palm Harbor, Florida 34682,1715 Aaron Brenner Drive, Suite 120, Memphis, Tennessee 38120, on _________,
_________, 2003,, 2004, at _______ a.m.m. local time.
At the special meeting you will be asked to vote upon a proposal to approve the acquisition of PeoplesTrust One by Synovus Financial Corp., by means of the mergerexchange of Peoples with and into Synovus.shares of Trust One common stock for shares of Synovus common stock.
In the merger,transaction, each share of PeoplesTrust One common stock, excluding those shares of PeoplesTrust One common stock as to which dissenters'dissenters’ rights have been duly and validly exercised in accordance with FloridaTennessee law, will be converted into $14.65
in cash and .7478exchangeable for the right to receive 1.5332 shares of Synovus common stock. Because the price of Synovus common stock fluctuates, the value of the securities you will receive will fluctuate on a day-to-day basis. Assuming the mergertransaction had been completed on
___________,, 2004, you would be entitled to receive $14.65 in cash and Synovus common shares with a market value of approximately $_____$, for each share of PeoplesTrust One common stock that you own.
Synovus common stock is traded on the New York Stock Exchange, and Synovus has registered 1,785,0004,015,517 shares of its common stock for issuance in connection with the merger.
Peoplestransaction.
Trust One has received from its financial advisor, Hovde Financial LLC,SunTrust Robinson Humphrey, an opinion that the terms of the transaction are fair from a financial point of view to the shareholders of Peoples.Trust One.
The mergertransaction cannot be completed unless holders of a majority of the outstanding shares of PeoplesTrust One common stock approve it. The board of directors urges you to consider the enclosed material carefully and recommends that you vote "FOR" “FOR”approval of the merger.transaction.
Whether or not you plan to attend the special meeting, please take the time to vote by completing and mailing the enclosed proxy card to us. If you fail to return your card or vote in person, the effect will be a vote against the merger.transaction.
On behalf of the Board of Directors of Peoples,Trust One, we urge you to vote
"FOR" “FOR”the merger.
David W. Dunbar
President and Chief Executive Officer
Peoples Florida Banking Corporation
transaction.
James P. Farrell | ||
Chairman, President and Chief Executive Officer | ||
Trust One Bank | ||
Neither the Securities and Exchange Commission nor any state securities commission has approved of the securities to be issued in the mergertransaction or determined if this document is accurate or adequate. It is illegal to tell you otherwise. The securities to be issued in the mergertransaction are not savings or deposit accounts and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.
Please see "Risk Factors"“Risk Factors,” beginning on page 10, for a description of the factors that may affect the value of Synovus common stock to be issued in the mergertransaction and that should be considered by PeoplesTrust One shareholders with respect to the mergeracquisition of Peoples with and intoTrust One by Synovus.
The date of this document is __________, 2003,, 2004, and it is first being mailed to the shareholders of PeoplesTrust One on or about __________, 2003.
TRUST ONE BANK
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held on, 2004
To Our Shareholders:
Notice is hereby given that a special meeting of the shareholders of Trust One Bank will be held at the main office of Trust One Bank, 1715 Aaron Brenner Drive, Suite 120, Memphis, Tennessee 38120, on, 2004, atm. local time, for the following purposes:
1. To consider and vote upon a proposal to approve and adopt the share exchange agreement, dated as of December 17, 2003, between Synovus Financial Corp. and Trust One Bank. Under the terms of the share exchange agreement, Trust One will be acquired by Synovus, and Trust One shareholders will receive shares of Synovus common stock as more fully described in the accompanying document dated, 2004. | ||
2. To consider and vote upon such other matters as may properly come before the special meeting or any adjournments or postponements of the special meeting. |
Only shareholders of record on, 2004, are entitled to receive notice of the special meeting and to vote at the special meeting.
The transaction is described in the accompanying document, which you are urged to read carefully. A copy of the share exchange agreement is attached as Appendix “A” to the accompanying document.
EACH SHAREHOLDER OF TRUST ONE HAS THE RIGHT TO DISSENT FROM THE TRANSACTION AND TO OBTAIN THE “FAIR VALUE” OF SUCH SHAREHOLDER’S SHARES, PROVIDED THAT SUCH SHAREHOLDER PERFECTS HIS, HER OR ITS DISSENTERS’ RIGHTS IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER 23 OF TITLE 48 OF THE TENNESSEE BUSINESS CORPORATION ACT. PLEASE SEE THE DISCUSSION OF DISSENTERS’ RIGHTS IN THE ACCOMPANYING DOCUMENT AND CHAPTER 23 OF TITLE 48 OF THE TENNESSEE BUSINESS CORPORATION ACT, A COPY OF WHICH IS ATTACHED ASAPPENDIX “B”TO THE ACCOMPANYING DOCUMENT.
By Order of the Board of Directors | ||
James P. Farrell | ||
Chairman, President and Chief Executive Officer | ||
Memphis, Tennessee , 2004 |
Please mark, date, sign and promptly return the enclosed proxy card so that your shares may be voted in accordance with your wishes and so that a quorum may be assured. The giving of a proxy does not affect your right to vote in person if you attend the special meeting.
The Board of Directors of Trust One unanimously recommends that you vote in favor of the transaction.
Do Not Send Stock Certificates With Your Proxy Card.
REFERENCES TO ADDITIONAL INFORMATION
This document incorporates important business and financial information about Synovus from documents that are not included in or delivered with this document. The information is available to you without charge upon your written or oral request. You can obtain documents incorporated by reference in this document, other than certain exhibits to those documents, by requesting them in writing or by telephone from Synovus at the following address:
Synovus Financial Corp.
901 Front Avenue, Suite 301
Columbus, Georgia 31901
Attn: G. Sanders Griffith, III
Senior Executive Vice President,
General Counsel & Secretary
Telephone: (706) 649-2267
If you would like to request documents, please do so by ___________,
2003, 2004 in order to receive them before the special meeting.
Please see "Where“Where You Can Find More Information"Information” on page 4340 for further information.
PEOPLES FLORIDA BANKING CORPORATION
NOTICE
TABLE OF CONTENTS
Caption | Page | |||
QUESTIONS AND ANSWERS ABOUT THE TRANSACTION | 1 | |||
SUMMARY | 4 | |||
The Companies | 4 | |||
The Transaction | 4 | |||
Trust One’s Reasons for the Transaction | 4 | |||
Opinion of Financial Advisor | 5 | |||
Trust One Special Shareholders’ Meeting | 5 | |||
Conditions to the Transaction | 5 | |||
Accounting Treatment | 6 | |||
Material United States Federal Income Tax Consequences of the Transaction | 6 | |||
Effective Date of Transaction | 6 | |||
Dissenters’ Rights | 6 | |||
Risk Factors | 6 | |||
Interests of Trust One’s Directors and Executive Officers in the Transaction | 6 | |||
Termination of the Share Exchange Agreement | 7 | |||
No Solicitation | 7 | |||
Effect of Transaction on Rights of Trust One Shareholders | 7 | |||
Comparative Market Price Information and Dividends | 7 | |||
SELECTED FINANCIAL DATA | 9 | |||
RISK FACTORS | 10 | |||
THE SPECIAL MEETING | 10 | |||
Date, Time and Place | 10 | |||
Matters to Be Considered at the Special Meeting | 10 | |||
Record Date; Stock Entitled to Vote; Quorum | 10 | |||
Vote Required | 10 | |||
Stock Ownership of Trust One Directors and Executive Officers | 11 | |||
Voting of Proxies | 11 | |||
Revoking Proxies | 11 | |||
Proxy Solicitation | 12 | |||
Recommendation of the Trust One Board | 12 | |||
THE TRANSACTION | 13 | |||
Structure of the Transaction | 13 | |||
Terms of the Transaction and Effective Date | 13 | |||
Background of the Transaction | 14 | |||
Recommendation of the Trust One Board and Reasons for the Transaction | 15 | |||
Opinion of Trust One’s Financial Advisor | 16 | |||
Conditions to the Transaction | 20 | |||
No Solicitation | 22 | |||
Conduct of Business of Trust One Pending the Transaction | 22 | |||
Regulatory Approvals | 23 | |||
Waiver and Amendment | 23 | |||
Termination and Termination Fee | 23 | |||
Interests of Trust One’s Directors and Executive Officers in the Transaction | 23 | |||
Employee Benefits | 24 | |||
Material United States Federal Income Tax Consequences of the Transaction | 24 | |||
Accounting Treatment | 25 | |||
Expenses | 25 | |||
New York Stock Exchange Listing | 25 | |||
Resales of Synovus Common Stock | 25 |
i
DESCRIPTION OF STOCK AND EFFECT OF TRANSACTION ON RIGHTS OF TRUST ONE SHAREHOLDERS | 25 | |||
Synovus Common Stock | 26 | |||
Trust One Common Stock | 30 | |||
DISSENTERS’ RIGHTS | 31 | |||
DESCRIPTION OF SYNOVUS | 33 | |||
Business | 33 | |||
Management and Additional Information | 33 | |||
DESCRIPTION OF TRUST ONE | 33 | |||
Market Area | 33 | |||
Lending Activities | 33 | |||
Competition | 33 | |||
Employees | 34 | |||
Description of Property | 34 | |||
Legal Proceedings | 34 | |||
Related Party Transactions | 34 | |||
Principal Shareholders | 35 | |||
REGULATORY MATTERS | 36 | |||
General | 36 | |||
Dividends | 36 | |||
Capital Requirements | 37 | |||
Commitments to Subsidiary Banks | 38 | |||
Prompt Corrective Action | 38 | |||
Safety and Soundness Standards | 39 | |||
Depositor Preference Statute | 39 | |||
Gramm-Leach-Bliley Act | 39 | |||
LEGAL MATTERS | 40 | |||
EXPERTS | 40 | |||
OTHER MATTERS | 40 | |||
SHAREHOLDER PROPOSALS | 40 | |||
WHERE YOU CAN FIND MORE INFORMATION | 40 | |||
FORWARD-LOOKING STATEMENTS | 41 | |||
PRO FORMA FINANCIAL INFORMATION | 42 | |||
APPENDIX A Agreement and Plan of | A-1 | |||
APPENDIX B | B-1 | |||
APPENDIX C Fairness Opinion of | C-1 | |||
APPENDIX D Tax Opinion of | D-1 |
ii
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: Why is the merger being proposed?
A: Peoples' board of directors believes the merger is in the best
interests of Peoples and will provide significant benefits to its
shareholders. Synovus' board of directors believes that the acquisition
of Peoples will offer Synovus the opportunity to expand its banking
operations in an attractive banking market, the central west coast of
Florida. To review the background and reasons for the merger in greater
detail, see pages 13 through 15.
Q: What will I receive in the merger?
A: Peoples shareholders will receive $14.65 in cash and .7478 shares of
Synovus common stock for each share of Peoples common stock they hold.
Because the market price of Synovus common stock fluctuates, the value
of securities you will receive will fluctuate on a day-to-day basis.
Synovus will not issue fractional shares in the merger. Instead,
Peoples shareholders will receive a cash payment, without interest, for
the value of any fraction of a share of Synovus common stock that they
would otherwise be entitled to receive, based upon the closing price of
Synovus common stock on the last business day immediately prior to the
effective date of the merger.
Q: What happens as the market price of Synovus common stock fluctuates?
A: Since the market price of Synovus common stock fluctuates, at the
time you vote you will not know what the shares will be worth when
issued in the merger.
Q: When is the merger expected to be completed?
A: We expect to complete the merger in the first quarter of 2004.
Q: What are the income tax consequences of the merger to me?
A: KPMG LLP has issued an opinion, which it will confirm as of the
effective date of the merger, that the merger will qualify as a
reorganization under Section 368(a)(1)(A) of the Internal Revenue Code.
Peoples shareholders will recognize gain as a result of the surrender
of Peoples common stock in exchange for the receipt of a combination of
shares of Synovus stock and cash but the amount of the gain recognized
will not exceed the amount of cash received in the merger. Determining
the actual tax consequences of the merger to you as an individual
taxpayer can be complicated. The tax treatment will depend on your
specific situation and many variables not within our control. You
should consult your own tax advisor for a full understanding of the tax
consequences to you of the merger.
Q: What am I being asked to vote upon and what is the required
shareholder vote?
A: You are being asked to approve the merger of Peoples into Synovus.
Approval of the proposal requires the affirmative vote of holders of a
majority of the shares of outstanding common stock of Peoples. Peoples'
board of directors encourages you to vote at the special meeting. The
Peoples board of directors has unanimously approved and adopted the
merger agreement and recommends that Peoples shareholders vote FOR the
approval of the merger.
Q: What should I do now?
A: You should read this document carefully and determine whether you
desire to vote for approval of the merger.
Q: Should I send in my stock certificates now?
A: No. If the merger is completed, we will send you written instructions
for exchanging your Peoples common stock certificates for Synovus
common stock certificates.
TRANSACTION
Q: | Why is the transaction being proposed? | |
A: | Trust One’s board of directors believes the transaction is in the best interests of Trust One and will provide significant benefits to its shareholders. Synovus’ board of directors believes that the acquisition of Trust One will offer Synovus the opportunity to expand its banking operations in an attractive banking market, the greater Memphis metropolitan area. To review the background and reasons for the transaction in greater detail, see pages 14 through 15 | |
Q: | What will I receive in the transaction? | |
A: | Trust One shareholders will receive 1.5332 shares of Synovus common stock for each share of Trust One common stock they hold. Because the market price of Synovus common stock fluctuates, however, the value of securities you will receive will fluctuate on a day-to-day basis. | |
Synovus will not issue fractional shares in the transaction. Instead, Trust One shareholders will receive a cash payment, without interest, for the value of any fraction of a share of Synovus common stock that they would otherwise be entitled to receive, based upon the closing price of Synovus common stock on the last business day immediately prior to the effective date of the transaction. | ||
Q: | What happens as the market price of Synovus common stock fluctuates? | |
A: | Since the market price of Synovus common stock fluctuates, at the time you vote you will not know what the shares will be worth when issued in the transaction. | |
Q: | What is the total transaction value? | |
A: | The transaction value per share will equal the product of the 1.5332 exchange ratio and the closing price of the Synovus common stock on the closing date of the transaction. As of December 15, 2003, the last trading day prior to board approval of the transaction, the implied transaction value was $42.86 per share. The aggregate transaction value will reflect the payment of: | |
(i) the transaction value per share for each share of Trust One common stock outstanding at closing and (ii) the “spread,” or difference between the transaction value per share and the weighted average exercise price per share for each of the then outstanding options to purchase Trust One common stock. As of December 15, 2003, the aggregate transaction value was approximately $109.8 million. Because options may be exercised and the price of the Synovus common stock will fluctuate prior to closing, however, the aggregate transaction value will fluctuate as well. | ||
Q: | When is the transaction expected to be completed? | |
A: | We expect to complete the transaction in the second quarter of 2004. | |
Q: | What are the income tax consequences of the transaction to me? | |
A: | Smith, Gambrell & Russell, LLP has issued an opinion, which it will confirm as of the effective date of the transaction, that the transaction will qualify as a reorganization under Section 368(a) of the Internal Revenue Code. Trust One shareholders generally will not recognize gain for federal income tax purposes as a result of the surrender of Trust One common stock in exchange for the receipt of shares of Synovus stock (except to the extent of cash received in lieu of fractional shares or as a result of the exercise of dissenters’ rights). Your tax treatment may depend on your specific situation, and you should consult your own tax advisor for a full understanding of the federal, state, local or foreign tax consequences to you of the transaction. |
1
Q: | What am I being asked to vote upon and what is the required shareholder vote? | |
A: | You are being asked to approve the acquisition of Trust One by Synovus, which will be accomplished through a statutory share exchange. Approval of the proposal requires the affirmative vote of holders of a majority of the shares of outstanding common stock of Trust One that are entitled to vote on the proposal. Trust One’s board of directors encourages you to vote at the special meeting. The Trust One board of directors has unanimously approved and adopted the share exchange agreement and recommends that Trust One shareholders voteFORthe approval of the transaction | |
Q: | What should I do now? | |
A: | You should read this document carefully and determine whether you desire to vote for approval of the transaction | |
Q: | Should I send in my stock certificates now? | |
A: | No. If the transaction is completed, we will send you written instructions for exchanging your Trust One common stock certificates for Synovus common stock certificates |
2
WHO CAN HELP ANSWER YOUR QUESTIONS
If you want additional copies of this document, or if you want to ask any questions about the merger,transaction, you should contact:
Peoples Florida Banking Corporation
32845 U.S. Highway 19
Palm Harbor, Florida 34682
Trust One Bank
1715 Aaron Brenner Drive
Memphis, Tennessee 38120
Attn: Wayne B. BardCharles E. Dickey, Jr.
Executive Vice President and Chief Financial Officer
Telephone: (727) 786-6677
2
3
SUMMARY
This summary highlights selected information from this document and may not contain all the information that is important to you. For a more complete understanding of the mergertransaction and for a more complete description of the legal terms of the merger,transaction, you should read this entire document carefully, as well as the additional documents to which we refer you, including the mergershare exchange agreement.
The Companies (page(page 33)
Synovus Financial Corp.
Suite 301, One Arsenal Place
901 Front Avenue
Columbus, Georgia 31901
Telephone: (706) 649-4751
Synovus Financial Corp., a Georgia corporation, is a financial services company whose stock is traded on the New York Stock Exchange under the symbol "SNV."“SNV.” Synovus is registered as a bank holding company under the Bank Holding Company Act of 1956 and became a financial holding company in April 2000. As of September 30,December 31, 2003, Synovus had total assets of approximately $21$21.6 billion, total deposits of $15.5$15.9 billion, shareholders'shareholders’ equity of $2.2 billion and net loans of $15.7$16.2 billion. Net income for 2003 was $389 million, or $1.28 per share, an increase of 6.5% from approximately $365 million, or $1.21 per share, for 2002. Return on assets was 1.91% and return on equity was 17.95% for 2003 as compared to 2.10% and 19.69%, respectively, for 2002. Net interest income for 2003 was $763 million, or increase of 6.3% from $718 million for 2002. Synovus and its 4041 commercial banking affiliates presently provide banking services at approximately 260 offices located in Georgia, Alabama, Florida, South Carolina and Tennessee. Synovus also provides a variety of other financial services including mortgage banking, securities brokerage, insurance agency, equipment leasing and trust services. In addition, Synovus holds an 81% interest in Total System Services, Inc. Total System Services, Inc. is an information technology processor of credit, debit, stored value, commercial and retail cards whose stock is traded on the New York Stock Exchange.
Peoples Florida Banking Corporation
32845 U.S. Highway 19
Palm Harbor, Florida 34682
Telephone: (727) 786-6677
Peoples Florida Banking Corporation is registered as a bank holding
companyExchange under the symbol “TSS.”
Trust One Bank
1715 Aaron Brenner Drive
Memphis, Tennessee 38120
Telephone: (901) 759-3500
Trust One Bank Holding Company Act.is a Tennessee state-chartered bank with six locations in Memphis, Germantown and Cordova, Tennessee in east Shelby County. A seventh location is scheduled to open in Collierville, Tennessee during 2004. As of September 30,December 31, 2003, PeoplesTrust One had total assets of approximately $250$432.4 million, total deposits of $196$354.8 million, shareholders'shareholders’ equity of $18$52.7 million, and net loans of $178$311.3 million. Peoples has
one banking subsidiary, Peoples Bank, Palm Harbor, Florida, which provides
services through its four full-service banking offices. All references to
Peoples refer to Peoples Florida Banking Corporation and its subsidiary bank,
unless the context otherwise requires.
The Merger (page 12)Transaction(page 13)
If the merger is approved by Peoples' shareholders Peoplesof Trust One approve the transaction, all of the outstanding shares of the common stock of Trust One will be merged intoexchanged for shares of common stock of Synovus, and Peoples' banking subsidiary, through which it operates,Trust One will become a wholly owned subsidiary of Synovus. The mergertransaction requires the approval of the holders of a majority of the Peoples common stock of Trust One outstanding on the record date. The directors and executive officers of PeoplesTrust One together own approximately 38%24% of the shares entitled to vote at the meeting, and we expect them to vote their shares in favor of the merger.
We have attached the mergershare exchange agreement as Appendix "A"“A” to this document. We encourage you to read the mergershare exchange agreement, as it is the legal document that governs the merger.
Peoples'transaction.
Trust One’s Reasons for the Merger (page 14)Transaction(page 15)
In reaching its decision to approve and recommend approval of the mergershare exchange agreement, the PeoplesTrust One board of directors considered a number of factors, including the following:
*
4
Trust One’s Reasons for the Transaction(page 15)
In reaching its decision to approve and recommend approval of the share exchange agreement, the Trust One board of directors considered a number of factors, including the following:
Opinion of Financial Advisor (page 15)
Peoples(page 16)
Trust One asked its financial advisor, Hovde Financial LLC,SunTrust Robinson Humphrey, for advice on the fairness, from a financial point of view, of the mergertransaction consideration to Peoples'Trust One’s shareholders. Hovde FinancialSunTrust Robinson Humphrey has delivered its written opinion to the PeoplesTrust One board that as of October 7,December 17, 2003, the date following the day the PeoplesTrust One board approved the mergershare exchange agreement, the mergertransaction consideration was fair, from a financial point of view, to the shareholders of Peoples.Trust One. The opinion is attached as Appendix "C"“C” to this document. You should read this opinion completely to understand the procedures followed, assumptions made, matters considered and limitations of the review undertaken by Hovde Financial. Hovde Financial'sSunTrust Robinson Humphrey. SunTrust Robinson Humphrey’s opinion is addressed to the PeoplesTrust One board and does not constitute a recommendation to any shareholder as to how to vote with respect to matters relating to the proposed merger.transaction. You should also be aware that the opinion of Hovde FinancialSunTrust Robinson Humphrey does not address the fairness of the mergertransaction consideration at the time the mergertransaction is completed or at any time other than October 7,December 17, 2003.
Peoples
Trust One Special Shareholders'Shareholders’ Meeting (page(page 10)
The special meeting will be held at the main office of Peoples Bank,
32845 U.S. Highway 19, Palm Harbor, FloridaTrust One, 1715 Aaron Brenner Drive, Suite 120, Memphis, Tennessee 38120 on ______,___________, 2003,, 2004, at _____ a.m.m. local time.
Conditions to the Merger (page 19)Transaction(page 20)
Consummation of the mergertransaction is subject to various conditions, including:
* recipt
5
The regulatory approvals necessary to consummate the mergertransaction and the other transactions contemplated by the mergershare exchange agreement include the approval of the Board of Governors of the Federal Reserve System, the Georgia 4
FloridaTennessee Department of Financial Services.Institutions. The mergertransaction has not yet been approved by the foregoing regulatory agencies.
Accounting Treatment (page(page 25)
The mergertransaction will be accounted for as a purchase for financial reporting purposes.
Material United States Federal Income Tax Consequences of the Merger (pageTransaction(page 24)
KPMG
Smith, Gambrell & Russell, LLP has issued an opinion, which it will confirm as of the effective date of the merger,transaction, that the mergertransaction will qualify as a reorganization under Section 368(a)(1)(A) of the Internal Revenue Code. A copy of this opinion is attached to this document as Appendix "D." Peoples“D.” Trust One shareholders generally will not recognize gain as a result of the surrender of PeoplesTrust One common stock in exchange for the receipt of a combination of shares of Synovus common stock and cash but
the amount of the gain recognized will not exceed the amount of cash received in
the merger.stock. This tax treatment will not apply to any PeoplesTrust One shareholder that exercises dissenters' rights. Determining the actual tax consequencesdissenters’ rights or receives cash in lieu of the
merger to you as an individual taxpayer can be complicated. Thefractional shares. Your tax treatment willmay depend on your specific situation, and many variables not within our
control. Youyou should consult your own tax advisor for a full understanding of the merger'sfederal, state, local or foreign tax consequences.
consequences to you of the transaction.
Effective Date of Merger (page 12)Transaction(page 13)
The mergertransaction will become effective when all of the conditions to the mergertransaction have been satisfied and the Articles of MergerShare Exchange are filed with the Georgia Secretary of State and the DepartmentTennessee Secretary of State of Florida.State. Subject to the conditions specified in the mergershare exchange agreement, the parties anticipate that the mergertransaction will become effective in the firstsecond quarter of 2004. There can be no assurances, however, as to whether or when the mergertransaction will occur.
Dissenters'
Dissenters’ Rights (page 32)(page 31)
Holders of PeoplesTrust One common stock are entitled to dissent from the mergertransaction under FloridaTennessee law and, if the mergertransaction is consummated, to receive payment in cash for the fair value of their shares, upon compliance with the dissenters'dissenters’ rights provisions of the FloridaTennessee Business Corporation Act. To preserve these rights, a shareholder must not vote in favor of the mergertransaction and must deliver to PeoplesTrust One a written notice of intent to demand payment for such shareholder'sshareholder’s shares before the vote on the mergertransaction at the special meeting of PeoplesTrust One shareholders. The delivery of a proxy or vote against the mergertransaction is not considered such a notice. Failure to follow required procedures may result in the loss of statutory dissenters'dissenters’ rights. Dissenters' RightsDissenters’ rights are addressed in more detail beginning on page 32.
31.
Risk Factors (page(page 10)
In addition to the other information included in this document, including the matters addressed in "Forward-Looking Statements"“Forward-Looking Statements” on page 44,41, you should carefully consider the material risk factors to the merger,transaction, beginning on page 10, in determining whether to vote in favor of the merger.
transaction.
Interests of Peoples'Trust One’s Directors and Executive Officers in the Merger (pageTransaction(page 23)
Certain executive officers of PeoplesTrust One have interests in the mergertransaction that are different from your interests. For example, David W. Dunbar,James P. Farrell, Chairman, President and Chief Executive Officer of Peoples,Trust One, has entered into an employment agreement with Synovus, effective on the date the mergertransaction is completed, providing for his continued employment as the Chairman, President and Chief Executive
Officer of Peoples BankTrust One for a period of five years following the merger.transaction. Mr. Farrell’s employment agreement also provides that Synovus will cause Mr. Farrell to be elected as a member of the board of directors of Trust One following the transaction. In addition, Mr. Dunbar, James P. Nelson, Executive Vice President of Peoples, and
Wayne B. Bard, Senior Vice President and Chief Financial Officer of Peoples,
will be entitled to the distribution of certain vested deferred compensation
benefits as a result of the "change of control." Also, Mr. Dunbar, Mr. Nelson,
Mr. BardFarrell and each of the membersdirectors and executive officers of Peoples' boardTrust One hold options that will become exercisable immediately prior to the mergertransaction as a result of the "change of
control."
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6
Termination of the MergerShare Exchange Agreement (page 22)(page 23)
Either PeoplesTrust One or Synovus may terminate the mergershare exchange agreement under the following circumstances, among others:
*
No Solicitation (page 21)
Peoples(page 22)
Trust One has agreed that until the completion of the merger, Peoplestransaction, Trust One will not directly or indirectly take any specified actions with respect to any acquisition proposal. However, notwithstanding these restrictions, PeoplesTrust One may, if necessary to comply with its fiduciary obligations and subject to other qualifications and conditions, furnish information and engage in discussions or negotiations in response to unsolicited acquisition proposals.
Effect of MergerTransaction on Rights of PeoplesTrust One Shareholders (page 26)
Peoples(page 25)
Trust One is a FloridaTennessee banking corporation and, therefore, the rights of shareholders of PeoplesTrust One currently are determined by reference to the FloridaTennessee Business Corporation Act and Peoples'Trust One’s Articles of Incorporation and bylaws.Bylaws. At the effective time of the merger,transaction, shareholders of PeoplesTrust One will become shareholders of Synovus, which is a Georgia corporation. As a result, your rights as shareholders of Synovus will then be determined by reference to the Georgia Business Corporation Code and Synovus'Synovus’ Articles of Incorporation and bylaws. The laws of these jurisdictions vary. There are also various differences between Synovus'Synovus’ Articles of Incorporation and bylaws and Peoples'Trust One’s Articles of Incorporation and bylaws.
Comparative Market Price Information and Dividends
Synovus common stock is listed on the NYSE under the symbol "SNV."“SNV.” On September 30,December 31, 2003, there were 234__ holders of record of PeoplesTrust One common stock. No established trading market for PeoplesTrust One common stock exists. Transactions in PeoplesTrust One common stock are infrequent and are negotiated privately between the persons involved in these transactions. These transactions are not reported on an exchange or other organized trading system. For these reasons, PeoplesTrust One lacks reliable data regarding recent trading activity in PeoplesTrust One common stock. To the knowledge of management of Peoples,Trust One, the last transaction in PeoplesTrust One common stock occurred on May 1,October 30, 2003 when 1,8751,654 shares were sold at a price of $8.50$24.25 per share.
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The following table presents, for October 6,December 16, 2003 and __________, 2003:
* _______ ___, 2004:
December 16, 2003 was the last full trading day before the public announcement of the proposed merger,transaction, and __________, 2003,________ ___, 2004, was the last day for which such information could be calculated before the date of this document. The equivalent price per share data for PeoplesTrust One common stock has been determined by multiplying the last reported sale price of one share of Synovus common stock on each of these dates by the per share exchange ratio and then adding the cash
portion of the consideration of $14.65.
ratio.
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Equivalent Price Per | ||||||||||||
Synovus | Trust One | Share of Trust One | ||||||||||
Date | Common Stock | Common Stock(1) | Common Stock | |||||||||
December 16, 2003 | $ | 27.83 | $ | 24.25 | $ | 42.67 | ||||||
________ ___, 2004 | $ | ____ | $ | ____ | $ | ____ |
(1) | Represents the most recent transaction in the common stock of |
Synovus common stock is listed on the NYSE under the symbol "SNV."“SNV.” There is no trading market for PeoplesTrust One common stock. PeoplesTrust One has never paid a
cash dividend.dividends of $.50 per share on March 30, 2003, $1.00 per share on September 30, 2003, and $.25 per share on March 1, 2004. The table below shows the high and low closing prices of Synovus common stock and cash dividends declared per share for Synovus for the last two fiscal years plus the interim period.
7
Synovus
-------
Cash
High Low Dividends
---- --- ---------
Quarter Endedperiod from January 1, 2004 to March 31, 2003 $20.88 $17.89 $.1650
June 30, 2003 23.62 17.31 0.1650
September 30, 2003 26.69 21.35 0.1650
Quarter Ended
March 31, 2002 $31.74 $24.75 $0.1475
June 30, 2002 30.39 24.31 0.1475
September 30, 2002 27.01 20.17 0.1475
December 31, 2002 21.90 16.81 0.1475
Quarter Ended
March 31, 2001 $28.31 $24.04 $0.1275
June 30, 2001 31.77 26.00 0.1275
September 30, 2001 34.45 24.63 0.1275
December 31, 2001 28.00 23.02 0.1275
, 2004.
Synovus | ||||||||||||||
Cash | ||||||||||||||
High | Low | Dividends | ||||||||||||
Quarter Ended | ||||||||||||||
March 31, 2004 | ||||||||||||||
(through March __, 2004) | $ | __ | $ | __ | — | |||||||||
Quarter Ended | ||||||||||||||
March 31, 2003 | $ | 20.88 | $ | 17.89 | $ | 0.1650 | ||||||||
June 30, 2003 | 23.62 | 17.31 | 0.1650 | |||||||||||
September 30, 2003 | 26.69 | 21.35 | 0.1650 | |||||||||||
December 31, 2003 | 29.04 | 25.99 | 0.1650 | |||||||||||
Quarter Ended | ||||||||||||||
March 31, 2002 | $ | 31.74 | $ | 24.75 | $ | 0.1475 | ||||||||
June 30, 2002 | 30.39 | 24.31 | 0.1475 | |||||||||||
September 30, 2002 | 27.01 | 20.17 | 0.1475 | |||||||||||
December 31, 2002 | 21.90 | 16.81 | 0.1475 |
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SELECTED FINANCIAL DATA
The following tables show summary historical financial data for Synovus. The information in the following tables was derived from historical financial information contained in annual and quarterly reports and other information Synovus has filed with the SEC. When you read the summary financial information provided in the following table, you should also read the historical financial information contained in annual and quarterly reports and other information Synovus has filed with the SEC. See "WHERE YOU CAN FIND MORE
INFORMATION"“Where You Can Find More Information” on page 43.
[Rest of page intentionally left blank]
8
SYNOVUS FINANCIAL CORP.
Selected Financial Data
(Dollars
(Dollars in thousands, except per share data)
Years Ended December 31, | ||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||
Income Statement Data: | ||||||||||||||||||||
Net interest income | $ | 763,064 | 717,504 | 629,791 | 562,332 | 513,294 | ||||||||||||||
Provision for losses on loans | 71,777 | 65,327 | 51,673 | 44,341 | 34,007 | |||||||||||||||
Non-interest income | 1,369,329 | 1,234,822 | 1,164,217 | 1,065,415 | 944,935 | |||||||||||||||
Non-interest expense | 1,422,143 | 1,299,470 | 1,232,483 | 1,155,176 | 1,061,719 | |||||||||||||||
Net income | 388,925 | 365,347 | 311,616 | 262,557 | 225,307 | |||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||
Investment securities | $ | 2,529,257 | 2,237,725 | 2,088,287 | 2,077,928 | 1,993,957 | ||||||||||||||
Loans, net of unearned income | 16,464,914 | 14,463,909 | 12,417,917 | 10,751,887 | 9,068,239 | |||||||||||||||
Total assets | 21,632,629 | 19,036,246 | 16,654,891 | 14,908,092 | 12,547,001 | |||||||||||||||
Deposits | 15,941,609 | 13,928,834 | 12,146,198 | 11,161,710 | 9,440,087 | |||||||||||||||
Long-term debt | 1,575,777 | 1,336,200 | 1,052,943 | 840,859 | 318,620 | |||||||||||||||
Average total shareholders’ equity | 2,166,777 | 1,855,492 | 1,548,030 | 1,303,634 | 1,165,426 | |||||||||||||||
Average total assets | 20,412,853 | 17,414,654 | 15,375,004 | 13,466,385 | 11,438,696 | |||||||||||||||
Per Share Data: | ||||||||||||||||||||
Net income – basic | $ | 1.29 | 1.23 | 1.07 | 0.93 | 0.80 | ||||||||||||||
Net income – diluted | 1.28 | 1.21 | 1.05 | 0.92 | 0.80 | |||||||||||||||
Cash dividends declared | 0.66 | 0.59 | 0.51 | 0.44 | 0.36 | |||||||||||||||
Book value | 7.43 | 6.79 | 5.75 | 4.98 | 4.35 | |||||||||||||||
Ratios: | ||||||||||||||||||||
Return on assets | 1.91 | % | 2.10 | 2.03 | 1.95 | 1.97 | ||||||||||||||
Return on equity | 17.95 | 19.69 | 20.13 | 20.14 | 19.33 | |||||||||||||||
Dividend payout ratio (1) | 51.56 | 48.76 | 48.57 | 47.83 | 45.00 | |||||||||||||||
Average shareholders’ equity to average assets | 10.61 | 10.65 | 10.07 | 9.68 | 10.19 |
(1) | Determined by dividing dividends declared per share (excluding pooled subsidiaries) by net income per diluted share. | |
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RISK FACTORS
In addition to the other information included in this document, PeoplesTrust One shareholders should carefully consider the matter described below in voting on the issuance of shares of Synovus common stock in the merger.
transaction,as well as the risks described in the “Risk Factors” section contained in the most recent Synovus Annual Report onForm 10-K, filed with the Securities and Exchange Commission on March ___, 2004.
You may receive shares of Synovus common stock with a market value lower than you expected.
Synovus is offering to a pay a total net consideration of $14.65 in
cash and .74781.5332 shares of Synovus common stock for each share of PeoplesTrust One common stock. This exchange ratio will not be adjusted for changes in the market price of Synovus common stock. Any change in the price of Synovus common stock prior to the mergertransaction will affect the value that PeoplesTrust One shareholders will receive in the merger.transaction. If the market price of Synovus common stock declines, then the value of the total net consideration you will receive will decline as well. Stock price variations may result from a variety of factors that are beyond our control, including changes in, or market perceptions of changes in, the business operations or prospects of Synovus, market assessments of the likelihood the mergertransaction will be consummated, regulatory considerations, general market and economic conditions and other factors.
The price of Synovus common stock at the effective date of the mergertransaction may vary from its prices on (a) October 7,December 17, 2003, the date the mergershare exchange agreement was executed and the fairness opinion was rendered, (b) the date of this document and (c) the date of Peoples'Trust One’s special meeting of shareholders. Because the effective date of the mergertransaction will follow the date of Peoples'Trust One’s special meeting of shareholders, at the time of the special meeting you will not know the market value of the Synovus common stock that you may receive upon completion of the merger.
transaction.
THE SPECIAL MEETING
We are furnishing this document to shareholders of PeoplesTrust One in connection with the solicitation of proxies by the board of directors of PeoplesTrust One for use at the special meeting of its shareholders.
Date, Time and Place
The special meeting will be held at the main office of Peoples Bank,
32845 U.S. Highway 19, Palm Harbor, Florida 34684 on______, ___________, 2003,Trust One, 1715 Aaron Brenner Drive, Suite 120, Memphis, Tennessee 38120 on, 2004, at _____ a.m.m. local time.
Matters to Be Considered at the Special Meeting
At the special meeting, the shareholders of PeoplesTrust One will be asked to consider and vote upon the approval of the merger,transaction and such other matters as may properly be brought before the special meeting.
The PeoplesTrust One board has unanimously approved the mergershare exchange agreement and the transactions contemplated by the mergershare exchange agreement and recommends that you vote "FOR" “FOR”approval of the merger.
transaction.
Record Date; Stock Entitled to Vote; Quorum
Only holders of record of PeoplesTrust One common stock at the close of business on ___________, 2003,, the record date for the PeoplesTrust One special meeting, are entitled to receive notice of the special meeting and to vote at the special meeting. Holders of record of shares of PeoplesTrust One common stock on the record date are each entitled to one vote per share on each matter to be considered at the special meeting.
On the record date, ________________, _______, shares of PeoplesTrust One common stock were issued and outstanding and were held by __ holders of record.
A majority of all the issued and outstanding shares of PeoplesTrust One common stock, present in person or by proxy, will constitute a quorum for the special meeting.
10
Vote Required
The approval of the mergertransaction requires the affirmative vote of the holders of a majority of the outstanding shares of PeoplesTrust One common stock.
10
The mergertransaction does not require the approval of Synovus'Synovus’ shareholders. Synovus'Synovus’ board of directors approved the mergertransaction on October 7,December 17, 2003.
Stock Ownership of PeoplesTrust One Directors and Executive Officers
At the close of business on the record date, the directors and executive officers of PeoplesTrust One owned and were entitled to vote approximately 785,326601,627 shares of PeoplesTrust One common stock. This ownership represents approximately 38%24% of the shares of PeoplesTrust One common stock outstanding on that date.
Voting of Proxies
Shares represented by all properly executed proxies received in time for the special meeting will be voted at the special meeting according to the voting instructions of the shareholder who executed the proxy. Properly executed proxies which do not contain voting instructions will be voted in favor of the merger.
Peoplestransaction.
Trust One intends to count shares of PeoplesTrust One common stock present in person at the special meeting but not voting, and shares of PeoplesTrust One common stock for which proxies are received but with respect to which holders of shares have abstained from voting on or voted against any matter, as present at the special meeting for purposes of determining the presence or absence of a quorum for the special meeting.
For voting purposes at the special meeting, only shares voted in favor of approval of the mergertransaction will be counted as favorable votes for such approval and adoption. A shareholder'sshareholder’s failure to submit a proxy, failure to vote in person, or abstention from voting with respect to the approval of the mergertransaction will have the same effect as if the shareholder voted against approval of the merger.transaction.
Shares held in street name that have been designated by brokers on proxy cards as not voted with respect to the merger ("transaction (“broker non-votes"non-votes”) will not be counted as votes cast on the merger.transaction. Shares with respect to which proxies have been marked as abstentions also will not be counted as votes cast on the merger.transaction. Shares with respect to which proxies have been marked as abstentions and broker non-votes will, however, be treated as shares present for purposes of determining whether a quorum is present.
The proposal to adopt the mergershare exchange agreement is a non-discretionary item, meaning that brokerage firms may not vote shares in their discretion on behalf of a client if the client has not furnished voting instructions. Because the mergertransaction must be approved by the holders of a majority of the outstanding shares of PeoplesTrust One common stock, abstentions and broker non-votes will have the same effect as a vote against the mergertransaction at the meeting. Accordingly, the PeoplesTrust One board urges PeoplesTrust One shareholders to complete, date and sign the accompanying proxy and return it promptly in the enclosed postage prepaid envelope.
We do not expect that any matters other than the proposal to approve the mergertransaction will be brought before the special meeting. However, if other matters are properly presented for a vote, the persons named as proxies will vote in accordance with their judgment with respect to those matters.
The persons named as proxies by a PeoplesTrust One shareholder may propose and vote for one or more adjournments of the special meeting to permit further solicitations of proxies in favor of approval of the merger.transaction. However, the persons named as proxies will not vote any shares which are voted against the approval of the mergertransaction in favor of such an adjournment.
Revoking Proxies
Peoples
Trust One shareholders of record may revoke their proxies at any time before the time their proxies are voted at the special meeting. A shareholder may revoke a proxy by taking any of the following actions:
11
*
11
Attendance at the special meeting alone without voting or abstaining from the vote on the mergertransaction will not revoke a proxy. Any written notice of a revocation of a proxy must be sent so that it will be delivered to the Corporate Secretary of Peoples,Trust One, at Peoples'Trust One’s principal executive offices, before the voting begins at the special meeting.
Proxy Solicitation
Peoples
Trust One will pay the costs of printing this document and all other costs of soliciting proxies. In addition to solicitation by mail, the directors, officers and employees of PeoplesTrust One may solicit proxies from shareholders of PeoplesTrust One by telephone or by other means of communication. These directors, officers and employees will not be additionally compensated but may be reimbursed for reasonable out-of-pocket expenses in connection with the solicitation. PeoplesTrust One will arrange with brokerage firms and other custodians, nominees and fiduciaries for the forwarding of solicitation material to the beneficial owners of stock held of record by such persons, and PeoplesTrust One will reimburse these record holders for their reasonable out-of-pocket expenses.
Recommendation of the PeoplesTrust One Board
The PeoplesTrust One board has unanimously adopted the mergershare exchange agreement and believes that the proposed transaction is fair to and in the best interests of PeoplesTrust One and its shareholders. The PeoplesTrust One board unanimously recommends that PeoplesTrust One shareholders vote "FOR" “FOR”approval of the merger.
transaction.
12
THE MERGERTRANSACTION
The following is a description of the material information pertaining to the merger.transaction. This description is qualified in its entirety by reference to the full text of the mergershare exchange agreement, a copy of which is attached as Appendix "A"“A” to this document and is incorporated by reference. All shareholders are urged to read carefully the mergershare exchange agreement, as well as the other appendices, in their entirety.
The boards of directors of Synovus and PeoplesTrust One have approved, and the proper officers of Synovus and PeoplesTrust One have executed and delivered, the mergershare exchange agreement.
Structure of the MergerTransaction
On the effective date of the merger, Peoplestransaction, Trust One will merge withbe acquired by, and intobecome a wholly owned subsidiary of, Synovus. The Articles of Incorporation and bylaws of Trust One will remain the Articles of Incorporation and bylaws of Trust One in effect immediately prior to the Effective Date, and the articles of incorporation and bylaws of Synovus with Synovus aswill remain the surviving corporation and retaining the name
Synovus Financial Corp. The articles of incorporation and bylaws of Synovus in effect immediately prior to the effective date of the merger will remain the
articles of incorporation and bylaws of the surviving corporation after the
effective date.
Terms of the MergerTransaction and Effective Date
On the effective date of the merger,transaction, which will be specified in the Articles of MergerShare Exchange to be filed with the Georgia Secretary of State and the DepartmentTennessee Secretary of State, of Florida, each issued and outstanding share of PeoplesTrust One common stock as to which a dissenters' right hasdissenters’ rights have not been exercised will be converted into the right to receive $14.65 in cash and .74781.5332 shares of Synovus common stock.
You should obtain current stock price quotations for Synovus common stock. The market price of Synovus common stock will fluctuate before and after completion of the merger.transaction. You will not know when you vote on the mergertransaction precisely what the shares of Synovus common stock will be worth when issued in the merger.
12
The aggregate transaction value will fluctuate as well. The transaction value per share will equal the product of the 1.5332 exchange ratio and the closing price of the Synovus common stock on the closing date of the transaction. As of December 16, 2003, the last trading day prior to board approval of the transaction, the implied transaction value was $42.86 per share. The aggregate transaction value will reflect the payment of: (i) the transaction value per share for each share of Trust One common stock outstanding at closing and (ii) the “spread,” or difference between the transaction value per share and the weighted average exercise price per share for each of the then outstanding options to purchase Trust One common stock. As of December 15, 2003, the aggregate transaction value was approximately $109.8 million. Because options may be exercised and the price of the Synovus common stock will fluctuate prior to closing, however, the aggregate transaction value will fluctuate as well.
After the effective date of the merger,transaction, outstanding certificates representing shares of PeoplesTrust One common stock will represent shares of Synovus common stock and cash.stock. Certificates representing shares of PeoplesTrust One common stock may be surrendered to Synovus by the PeoplesTrust One shareholders on or after the effective date of the mergertransaction for new certificates representing shares of Synovus common stock and cash.stock. Until so surrendered to Synovus, the certificates which previously represented shares of PeoplesTrust One common stock will be deemed for all corporate purposes to evidence the ownership of the respective number of shares of Synovus common stock and cash which the holders are entitled to receive upon their surrender to Synovus except for the payment of dividends, which is subject to the exchange of stock certificates.
Until the stock certificates nominally representing shares of PeoplesTrust One common stock are surrendered to Synovus in exchange for certificates representing shares of Synovus common stock, and cash, no dividends payable as of any date after the effective date of the mergertransaction on the shares of Synovus common stock represented by the PeoplesTrust One common stock certificates will be paid. However, Forms 1099 reporting the payment of such dividends will be filed with the Internal Revenue Service and mailed to each shareholder. Upon the surrender to Synovus of the PeoplesTrust One common stock certificates, Synovus will pay to the record holders the cash consideration and the amount of dividends which previously had become payable, without interest, upon the shares of Synovus common stock represented by the outstanding PeoplesTrust One common stock certificates. Beginning sixty days after the effective date of the transaction, former shareholders of Trust One will not be entitled to vote at a Synovus shareholders’ meeting unless they have exchanged their Trust One certificates for Synovus stock certificates.
Synovus will not issue fractional shares of Synovus common stock in the merger.transaction. Instead, Synovus will pay cash, without interest, in lieu of fractional shares, in an amount equal to such fractional part of a share of Synovus common stock multiplied by the closing price per share of Synovus common stock on the last business day immediately prior to the effective date of the merger.transaction.
13
The delivery of Synovus stock certificates and other amounts may be subject to forfeiture under applicable escheat laws if PeoplesTrust One stock certificates are not surrendered for exchange within the legally specified periods of time, which vary with the state of residence of the certificate holder. Therefore, we urge all PeoplesTrust One shareholders to surrender their PeoplesTrust One stock certificates at the earliest possible date after consummation of the mergertransaction in accordance with instructions provided to you by Synovus in the letter of transmittal described in the following paragraph.
As soon as practicable following consummation of the merger,transaction, Synovus will send each shareholder of PeoplesTrust One common stock a letter of transmittal explaining the procedure to be followed in exchanging certificates representing shares of PeoplesTrust One common stock for certificates representing shares of Synovus common stock and cash.stock. Until the letter of transmittal is received, shareholders of PeoplesTrust One should continue to hold their certificates representing shares of PeoplesTrust One common stock. Do not send any PeoplesTrust One stock certificates with your proxy card.
After the effective date of the merger,transaction, each outstanding PeoplesTrust One stock option will be converted into an option to acquire shares of Synovus common stock. The exercise price of the converted options shall be equal to the exercise price per share of the PeoplesTrust One common stock under the original option divided by 1.3372.1.5332 and rounded up to the nearest cent. The number of shares subject to the converted options shall be equal to the product of the number of shares of PeoplesTrust One common stock subject to the original option multiplied by 1.3372.
1.5332, rounded to the nearest whole share.
Background of the MergerTransaction
The board of directors of PeoplesTrust One has, over time, considered the possibility of strategic combinations with a number of other financial institutions in assessing the means by which to maximize the value of PeoplesTrust One common stock, provide liquidity for the shareholders of Trust One, ensure the continuity of management oversight, and diversify the Trust One shareholders’ exposure to its shareholders.a single market concentration. The factors which the board of directors of Peoples
haveTrust One has taken into account in evaluating potential combinations have included, but were not limited to, financial terms of the proposed mergers, trading volume of shares of potential acquirors,acquirers, employee and credit cultures, as well asand the comparabilitypreservation of the business linesoperating culture and geographic locations. As partcustomer relationships of its ongoing
operations,Trust One. In exercising their fiduciary responsibility to shareholders, Trust One’s management and the board of directors of Peoples regularly assess the financial services industry as a whole, including the regulatory and competitive environmentsenvironment for banking services. In May, 2003, Peoples engaged Hovde Financial LLCcontext with this assessment, management has, from time to time, met with representatives from other financial institutions and received unsolicited indications of interest for a potential merger. In addition, management has met with representatives of several financial advisors to explore its strategic options, includingoptions.
On July 1, 2003, the board of directors of Trust One engaged SunTrust Robinson Humphrey to research and review potential merger partners. Also the board of directors engaged Powell, Goldstein, Frazer & Murphy, LLP of Atlanta, Georgia, to provide legal advice to Trust One and its board of directors throughout this review period. Pursuant to this engagement, in June,August 2003, Hovde FinancialSunTrust contacted a number of financial institutions, including Synovus, regarding their interest in PeoplesTrust One and the Shelby County, Tennessee banking market in Pinellas and Pasco Counties, Florida.market. Indications of interest were received from several financial institutions and were analyzed and considered by management and the board of directors of PeoplesTrust One with the assistance of its financial and legal advisors.
13
On August 21,September 9, 2003, the Peoples board of directors of Trust One held a special meeting to consider the initial bids submitted by potential acquirors. At this meeting,acquirers. After reviewing the bids, the management of Trust One and its board of directors concluded that only four of the offers, which included the Synovus offer, warranted further consideration and only the Synovus offer satisfied all of the factors identified by the board of directors authorized Hovde Financial to invite Synovus to conduct due diligence
at Peoples. On August 26, 2003, Synovus submittedas a letter of interest to pursueprerequisite for entering into a merger with Peoples.strategic alliance.
During the weeklast two weeks of September 8, 2003,October and the first two weeks of November, Synovus conducted preliminary due diligence of Peoples.Trust One, concluding with an on-site review of the credit portfolio that was completed on Tuesday, November 11, 2003. During the following weeks, management of the two companies and their respective legal and financial advisors negotiated the terms of athe proposed mergershare exchange agreement under which PeoplesTrust One would merge with and intobe acquired by Synovus. DuringIt was also during this same time period Peoplesthat Trust One conducted due diligence with respect to Synovus,Synovus.
On December 17, 2003, management and Synovus concluded its due diligence with respect to Peoples.
On October 6, 2003, the board of directors of PeoplesTrust One held a special meeting to analyze and consider the proposed mergertransaction with Synovus. Hovde FinancialPowell, Goldstein, Frazer & Murphy, LLP reviewed the fiduciary obligations of the Trust One board of directors with respect to the consideration of a possible share exchange and reviewed the terms of the transaction and the definitive agreement from a legal point of view. SunTrust Robinson Humphrey summarized certain financial information with respect to Synovus and the proposed transaction for the PeoplesTrust One board and rendered an opinion that, as of October 7,December 17, 2003, the terms of the mergertransaction as set forth in the proposed mergershare exchange agreement were fair to Peoplesthe shareholders of Trust One Bank from a financial point of view. Also, the board
engaged Pennington, Moore, Wilkinson, Bell & Dunbar, P. A., Peoples' outside
legal counsel, to review the terms of the mergerAfter a general question and the definitive agreement
documenting the proposed transaction. After questions by and discussionsdiscussion period among the members of the Peoplesboard, management, and their financial and legal advisers, the Trust One board of directors and after consideration of the
strategic factors described below, Peoples' board voted unanimously to approve the mergershare exchange agreement and the transactions contemplated thereby and to recommend the approval of the mergershare exchange agreement and the transactions contemplated by the mergershare
14
exchange agreement to Peoples shareholders. Following the conclusionshareholders of Trust One. Subsequent to the meeting, Synovus and PeoplesTrust One executed and delivered the mergershare exchange agreement.
Recommendation of the PeoplesTrust One Board and Reasons for the MergerTransaction
On October 6,December 17, 2003, the board of directors of PeoplesTrust One voted unanimously approvedto approve and adoptedadopt the mergershare exchange agreement. The board of directors of PeoplesTrust One believes that the mergertransaction and the terms and provisions of the mergershare exchange agreement are fair to and in the best interestsinterest of Peoples shareholders.all shareholders of Trust One. The Trust One board of directors of Peoples unanimously recommends that youeach shareholder vote to approve the merger.proposed transaction with Synovus.
In reaching its decision to adopt and recommend the approval of the mergershare exchange agreement, the PeoplesTrust One board considered a number of factors, including, but not limited to, the following:
*
The foregoing discussion of the information and factors considered by the Peoples board of Trust One is not intended to be exhaustive, but includes the material factors considered. In view of the variety of factors considered in connection with its evaluation of the mergertransaction and the offeroffering price, the Peoples board of directors of Trust One did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determinations and recommendations, and individual directors may have given differing weights to different factors.
Each member of the board of directors of PeoplesTrust One has indicated that he or she intends to vote his or her shares of PeoplesTrust One common stock in favor of the merger.
PEOPLES'transaction.
THE BOARD OF DIRECTORS OF TRUST ONE UNANIMOUSLY RECOMMENDS THAT PEOPLESTHE SHAREHOLDERS OF TRUST ONE VOTE FOR THE PROPOSAL TO APPROVE THE MERGERSHARE EXCHANGE AGREEMENT.
Management of Synovus believes that the merger will provide Synovus
with expanded market share opportunities for profitable long-term growth and
result in the addition of a well-suited and positioned banking organization into
Synovus' existing organization.
15
Opinion of Peoples'Trust One’s Financial Advisor
Hovde Financial has delivered to the Peoples board its opinion that,
based upon and subject to the various considerations set forth in its written
opinion dated October 7, 2003, the transaction is fair from a financial point of
view to the holders of Peoples common stock as of such date. In requesting Hovde
Financial's advice and opinion, no limitations were imposed by Peoples upon
Hovde Financial with respect to the investigations made or procedures followed
by it in rendering its opinion. The full text of the opinion of Hovde Financial,
dated October 7, 2003, which describes the procedures followed, assumptions
made, matters considered and limitations on the review undertaken, is attached
hereto as Appendix "C." Peoples shareholders should read this opinion in its
entirety.
Hovde Financial is a nationally recognized investment banking firm and,
as part of its investment banking business, is continually engaged in the
valuation of financial institutions in connection with mergers and acquisitions,
private placements and valuations for other purposes. As a specialist in
securities of financial institutions, Hovde Financial has experience in, and
knowledge of, banks, thrifts and bank and thrift holding companies. Peoples'
board of directors selected Hovde Financial to act as
Trust One asked its financial advisor in
connection with the mergeradviser, SunTrust Robinson Humphrey, a division of SunTrust Capital Markets, Inc., for advice on the basis of the firm's reputation and expertise
in transactions such as the merger.
Hovde Financial will receive a fee contingent upon the completion of
the merger for services rendered in connection with advising Peoples regarding
the merger, including the fairness opinion and financial advisory services
provided to Peoples. As of October 7, 2003, such fee would have been
approximately $1.1 million. Hovde Financial will receive the entirety of such
fee upon the closing of the transaction.
Hovde Financial's opinion is directed only to the fairness, from a financial point of view, of the share exchange consideration to the shareholders of Trust One. At the December 17, 2003 meeting of the Trust One board of directors, SunTrust Robinson Humphrey reviewed with the Board its financial analysis of the proposed transaction and does not constitute a
recommendationdelivered its written opinion to any Peoples shareholdersthe effect that, as of that date and based upon and subject to how the shareholder should vote
at the Peoples meeting. The summary ofmatters described in the opinion, the consideration to be offered in the proposed transaction was fair, from a financial point of Hovde Financial set forth
in this document is qualified in its entirety by referenceview, to the shareholders of Trust One. No limitations were imposed by the Trust One board upon SunTrust Robinson Humphrey with respect to the investigation made or the procedures followed by SunTrust Robinson Humphrey in rendering its opinion.
The full text of SunTrust Robinson Humphrey’s written opinion dated December 17, 2003, which describes the opinion.
15
SUNTRUST ROBINSON HUMPHREY’S OPINION IS ADDRESSED TO THE BOARD OF DIRECTORS OF TRUST ONE AND RELATES ONLY TO THE FAIRNESS, FROM A FINANCIAL POINT OF VIEW, OF THE CONSIDERATION TO BE OFFERED IN THE PROPOSED TRANSACTION TO THE SHAREHOLDERS OF TRUST ONE, AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY SHAREHOLDER AS TO HOW TO VOTE WITH RESPECT TO MATTERS RELATING TO THE PROPOSED TRANSACTION. THE SUMMARY OF SUNTRUST ROBINSON HUMPHREY’S OPINION DESCRIBED BELOW IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF ITS OPINION WHICH IS ATTACHED AS APPENDIX “C”.
The following is a summary of the analyses performed by Hovde FinancialSunTrust Robinson Humphrey in connection with its fairness opinion. The summary set forth below does not purport to be a complete description of the analyses performed by Hovde
FinancialSunTrust Robinson Humphrey in rendering its opinion to the PeoplesTrust One board, but it does summarize all of the material analyses performed by Hovde Financial.SunTrust Robinson Humphrey.
Material and Information Considered with Respect to the Proposed Transaction
In arriving at its opinion, SunTrust Robinson Humphrey:
In rendering its opinion, SunTrust Robinson Humphrey assumed and relied upon, without independent verification, the accuracy and completeness of the financial and other information discussed with or reviewed by SunTrust Robinson Humphrey in arriving at its opinion. With respect to the financial forecasts provided to or discussed with SunTrust Robinson Humphrey, SunTrust
16
Robinson Humphrey assumed, at the direction of the management of Trust One and without independent verification or investigation, that such forecasts had been reasonably prepared on bases reflecting the best currently available information, estimates and judgments of the management of Trust One as to the future financial performance of Trust One. In arriving at its opinion, SunTrust Robinson Humphrey did not conduct a physical inspection of the properties and facilities of Trust One and did not make nor obtain any evaluations or appraisals of the assets or liabilities (including, without limitation, any potential environmental liabilities), contingent or otherwise, of Trust One. SunTrust Robinson Humphrey also assumed the following:
SunTrust Robinson Humphrey’s opinion is necessarily based upon market, economic and other conditions as they may have existed and could be evaluated as of December 17, 2003. SunTrust Robinson Humphrey expressed no opinion as to the underlying valuation, future performance or long-term viability of Trust One or Synovus. SunTrust Robinson Humphrey does not have any obligation to update or revise its opinion.
In connection with the preparation of its fairness opinion, SunTrust Robinson Humphrey performed financial and comparative analyses, the material portions of which are summarized below. The summary set forth below includes the financial analyses used by SunTrust Robinson Humphrey and deemed to be material, but does not purport to be a complete description of the analyses performed by SunTrust Robinson Humphrey in arriving at its opinion. The preparation of a fairness opinion involves various determinations as to the most appropriate and relevant methods of financial analysesanalysis and the application of those methods to the particular circumstances.circumstances, and, therefore, such an opinion is not readily susceptible to partial analysis or summary description. In arriving at its
opinion, Hovde Financial did not attribute any particular weight to any analysis
and factor considered by it, but rather made qualitative judgments as to the
significance and relevance of each analysis and factor. Hovde Financial may have
given various analyses more or less weight than other analyses. Accordingly,
Hovde Financialaddition, SunTrust Robinson Humphrey believes that its analyses and the following summary must be considered as aan integrated whole, and that selecting portions of itssuch analyses and the factors considered by it, without considering all factorsof such analyses and analyses,factors, could create ana misleading or incomplete view of the process underlying theits analyses set forth in its report to the Peoples board and
its fairness opinion.
In performing its analyses, Hovde FinancialSunTrust Robinson Humphrey made numerous assumptions with respect to industry performance, general business and economic conditions,
and other matters, many of which are beyond the control of Peoples andTrust One or Synovus. TheAny estimates contained in such analyses performed by Hovde Financial are not necessarily indicative of actual valuepast or actual future results or values, which may be significantly more or less favorable than suggested by such analyses. Such analyses were prepared solely as partset forth therein. Estimates of Hovde Financial's analysisvalues of the fairness of the transaction, from a
financial point of view, to the Peoples shareholders. The analysescompanies do not purport to be an appraisalappraisals or necessarily to reflect the pricesprice at which a company mightsuch companies may actually be sold, and such estimates are inherently subject to substantial uncertainty. No company, business or transaction used in such analyses as a comparison is identical to Trust One, Synovus, their respective businesses or the prices at which any securities may trade at the present
time or at any time in the future. Hovde Financial's opinion does not address
the relative meritsproposed transaction, and an evaluation of the merger as compared to anyresults of those analyses is not entirely mathematical. Rather, the analyses involve complex considerations and judgments concerning financial and operating characteristics and other business combination
in which Peoples might engage. In addition, as described above, Hovde
Financial'sfactors that could affect the acquisition, public trading or other values of the companies, businesses or transactions analyzed.
SunTrust Robinson Humphrey’s opinion to the Peoples board wasand financial analyses were only one of many factors takenconsidered by Trust One’s board of directors in its evaluation of the proposed transaction and should not be viewed as determinative of the views of Trust One’s board of directors or management with respect to the proposed transaction or the consideration offered in the proposed transaction. The type and amount of consideration offered in the proposed transaction was determined through direct negotiation between Trust One and Synovus. The decision to enter into considerationthe proposed transaction was solely that of the Trust One board of directors.
The following is a summary of the material financial analyses presented by SunTrust Robinson Humphrey to the PeoplesTrust One board of directors in makingconnection with its determinationopinion.
Analysis of Selected Publicly-Traded Reference Companies
Reference company analysis analyzes a company’s operating performance relative to approvea reference group of publicly-traded companies. Based on relative performance and outlook for a company, this analysis enables an implied unaffected market trading value to be determined. SunTrust Robinson Humphrey analyzed the merger agreement.
Duringfinancial and stock market information for the coursefollowing selected publicly-traded bank holding companies with between $250 million and $750 million in assets located in or near cities in the states of its engagement,Alabama, Georgia, North Carolina, South Carolina, Tennessee and as a basis for arriving at its
opinion, HovdeVirginia (the “Reference Companies”):
17
SunTrust Robinson Humphrey reviewed and analyzed, material bearing upon the
financial and operating condition of Peoples and Synovus and material prepared
in connection with the merger, including, among other things, the following:
* the merger agreement;
* certain historical publicly available information concerning Peoples
and Synovus;
* the nature and terms of recent merger transactions; and
* financial and other information provided to Hovde Financial by the
management of Peoples and Synovus. Hovde Financial conducted meetings
and had discussions with members of senior management of Peoples and
Synovus for purposes of reviewing the future prospects of Peoples and
Synovus. Hovde Financial also took into account its experience in
other transactions,market price as well as its knowledge of the commercial banking
industry and its general experience in securities valuations.
In rendering its opinion, Hovde Financial assumed, without independent
verification, the accuracy and completeness of the financial and other
information and relied upon the accuracy of the representations of the parties
contained in the merger agreement. Hovde Financial also assumed that the
financial forecasts furnished to or discussed with Hovde Financial by Peoples or
Synovus were reasonably prepared and reflected the best currently available
estimates and judgments of senior management of Peoples and Synovus as to the
future financial performance of Peoples, Synovus or the combined entity, as the
case may be. Hovde Financial has not made any independent evaluation or
appraisal of any properties, assets or liabilities of Peoples. Hovde Financial
assumed and relied upon the accuracy and completeness of the publicly available
and other financial and other information provided to it, relied upon the
representations and warranties of Peoples and Synovus made pursuant to the
merger agreement, and did not independently attempt to verify any of such
information.
Analysis of Selected Mergers. As part of its analysis, Hovde Financial
reviewed comparable mergers involving banks in Florida announced in the two year
period since October 7, 2001, in which the selling institution had assets
between $100 million and $1 billion (the "Florida Merger Group"). This Florida
Merger Group consisted of the following 8 transactions:
16
Buyer Seller
---- ------
Colonial BancGroup Inc. (AL) Sarasota Bancorp.
F.N.B. Corp. (FL) Charter Banking Corp.
South Financial Group Inc. (SC) Central Bank of Tampa
Synovus Financial Corp. (GA) United Financial Holdings Inc.
Royal Bank of Canada (Can) Admiralty Bancorp Inc.
Colonial BancGroup Inc. (AL) Palm Beach National Holding Co.
South Financial Group Inc. (SC) Gulf West Banks Inc.
F.N.B. Corp. (FL) Central Bank Shares Inc.
Hovde Financial also reviewed comparable mergers involving banks
headquartered in the Southeast United States announced in the two year period
since October 7, 2001, in which the total assets of the seller were between $200
million and $500 million (the "Southeast Merger Group"). This Southeast Merger
Group consisted of the following 10 transactions:
Buyer Seller
----- ------
CNB Holdings Inc. (GA) First Capital Bancorp Inc. (GA)
Southern Community Financial (NC) Community Bank (NC)
BancTrust Financial Group Inc. (AL) CommerceSouth Inc. (AL)
United Community Banks Inc. (GA) First Georgia Holding Inc. (GA)
Main Street Banks Inc. (GA) First Colony Bancshares Inc. (GA)
SNB Bancshares Inc. (GA) Bank of Gray (GA)
Synovus Financial Corp. (GA) FNB Newton Bankshares, Inc. (GA)
First Citizens Bancorp. of SC (SC) First Banks, Inc. (GA)
Synovus Financial Corp. (GA) Community Financial Group Inc. (TN)
Yadkin Valley Bank and Trust (NC) Main Street BankShares Inc. (NC)
Hovde Financial calculated the medians and averages for the following
relevant transaction ratios in the Florida Merger Group and the Southeast Merger
Group: the percentage of the offer value to the acquired company's total assets,
thea multiple of the offer value to the acquired company'sof:
All multiples were based on closing stock prices as of December 15, 2003.
The following table sets forth the tangiblemultiples indicated by this analysis for the Reference Companies as of December 15, 2003:
Average | Median | |||||||
Reference Companies’ Market Price to: | ||||||||
Latest Twelve Months EPS | 20.55x | 20.52x | ||||||
Projected 2003 EPS | 19.64x | 19.64x | ||||||
Projected 2004 EPS | 17.91x | 17.91x | ||||||
Book Value Per Share | 2.55x | 2.60x | ||||||
Tangible Book Value Per Share | 2.63x | 2.61x | ||||||
Assets Per Share | 20.72 | % | 20.32 | % |
SunTrust Robinson Humphrey then applied the median multiples resulting from the analysis above to the values for Trust One for the latest twelve months EPS, projected 2003 EPS, projected 2004 EPS, book value premium to core deposits, each as of the
announcement date of the transaction. Hovde Financial compared these multiples
with the corresponding multiples for the merger, valuing the total consideration
that would be received pursuant to the merger agreement, as of October 7, 2003,
at $78.1 million ($30 million in cash and $48.1 million in Synovus common
stock), or $34.69 per share, of Peoples common stock. In calculating the
multiples for the merger, Hovde Financial used Peoples' earnings per share for
the 12 month period ended June 30, 2002, and Peoples' tangible book value per share totaland assets and total depositsper share as of JuneNovember 30, 2002.2003. This analysis yielded implied equity values per share for Trust One of approximately $41.10, $39.07, $44.02, $34.24, $34.34 and $35.52, respectively. These implied equity values per share were compared to the implied proposed transaction consideration of $42.86 per share, based on Synovus’ closing price on the New York Stock Exchange on December 15, 2003 of $27.95 per share.
The resultstable below sets forth the implied proposed transaction consideration of $42.86 as a multiple of the Trust One values used by SunTrust Robinson Humphrey in its analysis above.
Trust One Value | Implied Transaction Multiple | |||||||
Latest Twelve Months EPS | $ | 2.00 | 21.40x | |||||
Projected 2003 EPS | $ | 1.99 | 21.54x | |||||
Projected 2004 EPS | $ | 2.46 | 17.44x | |||||
Book Value Per Share | $ | 13.17 | 3.40x | |||||
Tangible Book Value Per Share | $ | 13.17 | 3.40x | |||||
Assets Per Share | $ | 174.79 | 26.13 | % |
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Analysis of Selected Merger and Acquisition Transactions
Reference merger and acquisition transaction analysis provides a valuation range based upon consideration paid for selected bank holding companies in recent transactions. SunTrust Robinson Humphrey reviewed the financial terms, to the extent publicly available, of 15 proposed, pending or completed merger and acquisition transactions from January 1, 1999 to December 15, 2003, involving selected bank holding companies located in or near cities in the southeastern United States other than the state of Florida (the “Reference Transactions”). For the Reference Transactions, SunTrust Robinson Humphrey calculated various financial multiples based on publicly available information for each of the selected acquisition transactions.
SunTrust Robinson Humphrey reviewed and analyzed, among other things, market price as a multiple of:
All multiples for the selected transactions were based on publicly available information at the time of announcement of the relevant transaction.
The average and median multiples indicated by this analysis are as follows:
Offer Value to
--------------------------------------
12 months Ratio of Tangible
Tangible Preceding Book Value
Total Book Value Earnings Premium to Core
Assets Per Share Per Share Deposits
(%) (x) (x) (%)
--------------- -------------- -------------- -------------------
Peoples Florida Banking Corporation 31.5 4.56 26.7 37.2
Florida Merger Group median 25.3 3.26 25.7 28.8
Florida Merger Group average 26.7 3.21 27.2 28.3
Florida Merger Group high 34.5 3.92 37.7 37.3
Florida Merger Group low 20.0 2.38 16.8 20.4
Southeast Merger Group median 23.4 2.07 23.4 16.96
17
Southeast Merger Group average 22.7 2.43 22.8 20.25
Southeast Merger Group high 32.3 4.00 36.5 37.97
Southeast Merger Group low 12.3 1.68 14.5 7.06
Discounted Earnings Stream Analysis. Hovde Financial estimated
Average | Median | |||||||
Market Price to: | ||||||||
Latest Twelve Months EPS | 23.20x | 23.13x | ||||||
Book Value Per Share | 2.53x | 2.07x | ||||||
Tangible Book Value Per Share | 2.62x | 2.07x | ||||||
Assets Per Share | 20.68 | % | 18.20 | % |
SunTrust Robinson Humphrey then applied the presentmedian multiple resulting from the analysis above to the latest twelve months EPS, book value per share, tangible book value per share and assets per share for Trust One as of November 30, 2003. This analysis yielded implied equity values per share for Trust One of approximately $46.33, $27.26, $27.26 and $31.81, respectively. These implied equity values per share were compared to the implied proposed transaction consideration of $42.86 per share, based on Synovus’ closing price on the New York Stock Exchange on December 15, 2003 of $27.95 per share.
The table below sets forth the implied proposed transaction consideration of $42.86 as a multiple of the PeoplesTrust One values used by SunTrust Robinson Humphrey in its analysis above.
Trust One Value | Implied Transaction Multiple | ||||||||||
Latest Twelve Months EPS | $ | 2.00 | 21.40x | ||||||||
Book Value Per Share | $ | 13.17 | 3.40x | ||||||||
Tangible Book Value Per Share | $ | 13.17 | 3.40x | ||||||||
Assets Per Share | $ | 174.79 | 26.13 | % |
Dividend Discount Analysis
SunTrust Robinson Humphrey performed a dividend discount analysis to estimate a range of present values per share of Trust One common stock, assuming Trust One continued to operate as a stand-alone entity. SunTrust Robinson Humphrey discounted five years of estimated cash flows for Trust One, assuming a dividend rate sufficient to maintain an equity capital ratio (defined as common equity divided by estimating the valuetotal assets) of Peoples'
estimated future earnings stream beginning in 2004. Reflecting Peoples internal
projections, Hovde Financial assumed net income in 20047.00% and 2005 of $3.8 million
and $4.4 million, respectively. Subsequently, from 2006 through 2008, Hovde
Financial assumed earnings would grow at an annually compounded rate of 15.4%,
resulting in net income estimates for 2006, 2007, and 2008 of $5.0 million, $5.8
million, and $6.6 million, respectively. The present value of these earnings was
calculated based onusing a range of discount rates of 10.5%, 12.0%, and 13.5%from 10% to 12%. In order to derive the terminal value of Peoples'Trust One’s earnings steamstream beyond 2008, Hovde
FinancialSunTrust Robinson Humphrey assumed an average earnings growth rate of 4% into perpetuity. Thisperpetuity ranging from 3% to 5%. The present value of this terminal amount was then calculated based on the range of discount rates mentioned above. These rates and values were chosen to reflect different assumptions regarding the required rates of return of holders
19
or prospective buyers of PeoplesTrust One common stock. This analysis and its underlying assumptions yielded a range of stand-alone values for Trust One common stock of approximately $27.62 (at a discount rate of 12% and a perpetual growth rate of 3%) to $48.80 (at a discount rate of 10% and a perpetual growth rate of 5%) per share, with an average value of $35.21 per share. These implied equity values per share were compared to the implied proposed transaction consideration of $42.86 per share, based on Synovus’ closing price on the New York Stock Exchange on December 15, 2003 of $27.95 per share. Estimated financial data for Trust One was based on internal estimates of the management of Trust One.
Information Concerning Trust One’s Financial Advisor
SunTrust Robinson Humphrey is a nationally recognized investment banking firm and, as a customary part of its investment banking activities, is regularly engaged in the valuation of businesses and securities in connection with mergers and acquisitions, negotiated underwritings, private placements, and valuations for corporate and other purposes. Trust One retained SunTrust Robinson Humphrey because of its experience, expertise, reputation in the financial services industry and familiarity with Trust One and transactions similar to the proposed transaction. In the ordinary course of business, SunTrust Robinson Humphrey and its affiliates may actively trade or hold the securities and other instruments and obligations of Synovus for their own account and for the Companyaccounts of approximately $74.4
million (atcustomers and, accordingly, may at any time hold long or short positions in such securities, instruments or obligations.
SunTrust Robinson Humphrey is acting as financial advisor to Trust One in connection with the proposed transaction. Pursuant to an engagement letter dated July 1, 2003, Trust One agreed to pay SunTrust Robinson Humphrey for its services in connection with the proposed transaction a 10.5% discount rate) to $49.6 million (at a 13% discount rate),
compared to total merger considerationfee of $78.1 million.
History of Publicly Traded Stock. Hovde Financial reviewed the history
of reported prices of Synovus' common stock and the Standard & Poor's 500 Index
("S&P 500") on a one-year, five-year, 10-year, and 20-year basis. Synovus
outperformed the S&P 500 on each1.0% of the periodsconsideration payable to which it was compared.
Comparable Company Analysis. Using publicly available information,
Hovde Financial comparedTrust One shareholders in the financial performanceproposed transaction, payable upon consummation of the proposed transaction and stock market valuation of
Synovus withbased on the following Southeastern publicly traded banking institutions
with assets greater than $15 billion:
Company Name Headquarters Total Assets ($mm)
------------ ------------ -------------------
BB&T Corporation Winston-Salem, NC 80,445
SunTrust Banks, Inc. Atlanta, GA 120,857
SouthTrust Corporation Birmingham, AL 51,708
Compass Bancshares, Inc. Birmingham, AL 25,623
Hibernia Corporation New Orleans, LA 17,920
Colonial BancGroup, Inc. Montgomery, AL 16,208
Regions Financial Corporation Birmingham, AL 49,548
Union Planters Corporation Memphis, TN 34,987
Indications of such financial performance and stock market valuation
included profitability (return on average assets and return on average equity)
for the three months ended June 30, 2003, the ratio of tangible equity to
tangible assets (TER) and non-performing assets (NPAs) to total assets at June
30, 2003, the marketlast closing price per share divided byprior to the last twelve months earningsclosing of the transaction. Based on Synovus’ closing price on the New York Stock Exchange on March 1, 2004 of $25.19 per share, (Pricethe fee payable to LTM EPS)SunTrust Robinson Humphrey under the preceding formula would equal approximately $1.0 million. Trust One has also agreed to reimburse SunTrust Robinson Humphrey for its out-of-pocket expenses incurred in connection with its engagement, and 2004 estimated earnings per share (Price to 2004 Est. EPS) as of October 6, 2003. The calculation of price-to-2004 estimated
earnings used estimates from "First Call" as of October 6, 2003.
NPAs Price to Price to Price to
ROAA ROAE TER Assets Tang. Book LTM EPS 2004 Est.
(%) (%) (%) (%) Value (x) (x) EPS (x)
------ ------- ----- ------- ----------- --------- ----------
Synovus 1.88 17.69 8.91 0.55 4.21 20.3 18.3
Comparable Company Median 1.38 13.86 6.93 0.50 2.83 13.4 12.2
Pro Forma Merger Analysis. Hovde Financial analyzed certain potential
pro forma effects of the merger, based upon 1) the assumption that 39% of the
Peoples shares are exchanged for a) cash at the value of $14.65 per share (which
totals $30 million) and b) 61% of the Peoples shares are exchanged for Synovus
common stock at an exchange ratio of 0.7478 (which totals an aggregate of
1,785,000 shares), 2) the earnings per share estimates and projections of
Peoples and Synovus, and 3) assumptions regarding the economic environment,
accounting and tax treatment of the merger, charges and transaction costs
associatedindemnify SunTrust Robinson Humphrey against specified liabilities, including liabilities under federal securities laws incurred in connection with the merger and cost savings determined by the senior managements
of Peoples and
18
Synovus. The analysis indicated that for the year ending December 31,
2004, the first full year following the merger, the merger would be slightly
accretive to the combined company's projected earnings per share and dilutive to
tangible book value per share. The actual results achieved by the company may
vary from projected results and the variations may be material.
Based upon the foregoing analyses and other investigations and
assumptions set forth in its opinion, without giving specific weight to any one
factor or comparison, Hovde Financial determined that the transaction was fair
from a financial point of view to the Peoples shareholders.
engagement.
Conditions to the MergerTransaction
Each party'sparty’s obligation to effect the mergertransaction is subject to the satisfaction or waiver of conditions which include, in addition to other closing conditions, the following:
*
The obligation of Synovus to effect the mergertransaction is subject to the satisfaction or waiver of conditions, which include, in addition to the other closing conditions, the following:
*
20
the date when made in the case of any representation or warranty which specifically relates to an earlier date, and Synovus will have received a certificate signed by the Chief Executive Officer of Trust One, dated the effective date, to such effect; |
The obligation of Trust One to effect the transaction is subject to the satisfaction or waiver of conditions, which include, in addition to other closing conditions, the following:
21
No Solicitation
In the mergershare exchange agreement, PeoplesTrust One has agreed that it will not solicit or encourage any inquiry or proposal relating to the disposition of its business or assets, or the acquisition of its voting securities, or the mergertransaction of PeoplesTrust One or any of its subsidiaries with any individual, corporation or other entity, or, subject to the fiduciary duties of the board of directors of Peoples,Trust One, provide any individual, corporation or other entity with information or assistance or negotiate with any individual, corporation or other entity in furtherance of such inquiries or to obtain such a proposal. PeoplesTrust One has also agreed that it will promptly notify Synovus in the event it receives any inquiry or proposal relating to any such transaction. These provisions are intended to increase the likelihood that the mergertransaction will be consummated in accordance with the terms of the mergershare exchange agreement and may have the effect of discouraging persons who might now or prior to the effective date of the mergertransaction be interested in acquiring all of or a significant interest in PeoplesTrust One from considering or proposing such an acquisition.
Conduct of Business of PeoplesTrust One Pending the MergerTransaction
The mergershare exchange agreement provides that prior to the effective date of the merger, Peoplestransaction, Trust One and its subsidiaries will conduct business only in the ordinary course and will not, without the prior written consent of Synovus:
*
22
Regulatory Approvals
Consummation of the mergertransaction and the other transactions contemplated by the mergershare exchange agreement is subject to, and conditioned upon, receipt of the approvals from the Federal Reserve Board, the Georgia Department of Banking and Finance and the FloridaTennessee Department of Financial Services.Institutions. Applications in connection with the mergertransaction were filed with the regulatory agencies on or about November 3, 2003.February 13, 2004. The mergertransaction has not yet been approved by the regulatory agencies.
There can be no assurance that the regulatory agencies will approve or take other required action with respect to the merger.transaction. Synovus and PeoplesTrust One are not aware of any governmental approvals or actions that are required in order to consummate the mergertransaction except as described above. Should other approvals or actions be required, it is contemplated that 21
PeoplesTrust One would seek the approval or action. There can be no assurance as to whether or when any other approval or action, if required, could be obtained.
Waiver and Amendment
Before the effective date of the merger,transaction, any provision of the mergershare exchange agreement may be waived in writing by the party entitled to the benefits of such provision or by both parties, to the extent allowed by law. In addition, the mergershare exchange agreement may be amended at any time, to the extent allowed by law, by an agreement in writing between the parties after approval of their respective boards of directors.
Termination and Termination Fee
The mergershare exchange agreement may be terminated prior to the effective date either before or after its approval by the shareholders of Peoples.Trust One. The mergershare exchange agreement may be terminated by Synovus or Peoples:
* Trust One:
If either party terminates the mergershare exchange agreement due to the failure of the other party to satisfy its representations, warranties or covenants in the agreement, the terminating party will be entitled to a cash payment from the other party in the amount of the terminating party'sparty’s expenses related to the merger,transaction, up to a maximum of $150,000. This amount, with respect to either Synovus or Peoples,Trust One, is not deemed an exclusive remedy or liquidated damages, in the event of a termination of the mergershare exchange agreement due to the failure of Synovus or Peoples,Trust One, as the case may be, to satisfy any of its representations, warranties or covenants contained in the mergershare exchange agreement.
22
Interests of Peoples'Trust One’s Directors and Executive Officers in the MergerTransaction
Some members of the PeoplesTrust One board of directors and management have interests in the mergertransaction in addition to their interests generally as shareholders of Peoples.Trust One. The PeoplesTrust One board of directors was aware of these interests and considered them, in addition to other matters, in approving the mergershare exchange agreement.
Employment agreement.agreement. It is a condition to the mergertransaction that David W.
Dunbar,James P. Farrell, Chairman, President and Chief Executive Officer of Peoples,Trust One, enter into an employment agreement with Synovus before the effective date of the merger.transaction. On November 7,December 17, 2003, Mr. DunbarFarrell entered into the employment agreement, effective on the date the mergertransaction is completed with Synovus. The employment agreement provides for Mr. Dunbar'sFarrell’s employment as the Chairman, President and Chief Executive
Officer of Peoples BankTrust One for a period of five years following the merger.effective date of the transaction. Under the employment agreement, Synovus will pay Mr. DunbarFarrell base annual compensation of $198,640$215,000 and Mr. DunbarFarrell will be eligible to be chosen as a participant in, and eligible to receive a bonus under, Synovus'Synovus’ incentive bonus plan. The employment agreement also provides Mr. DunbarFarrell with certain additional benefits, including an automobile allowancepayment of dinner club dues and reimbursement for businesstravel expenses, along with other perquisites. Additionally, Synovus will pay Mr. Dunbar will be granted optionsFarrell an additional $70,000 per year during which Mr. Farrell is subject to purchase 10,000 shares of Synovus common stock at fair market valuethe covenant not to compete contained in
connection with the employment agreement. As part of Mr. Dunbar'sFarrell’s employment agreement, Synovus and Mr. DunbarFarrell have also agreed to enter into Synovus'Synovus’ standard change of control agreement. The change of control agreement provides severance pay and continuation of certain benefits in the event of a change of control of Synovus. In order to receive benefits under the change of control agreement, the executive's executive’s
23
employment must be terminated involuntarily and without cause, whether actually or constructively, within one year following a change of control or the executive may voluntarily or involuntarily terminate employment during the thirteenth month following a change of control.
In addition, Mr. Dunbar, James P. Nelson, Executive Vice President of
Peoples,
Directors’ and Wayne B. Bard, Senior Vice President and Chief Financial Officer of
Peoples, will be entitled to the distribution of certain vested deferred
compensation benefits as a result of the "change of control."
Directors' and officers'officers’ insurance and indemnity.indemnity. Prior to the completion of the merger, Peoplestransaction, Trust One will purchase for, and on behalf of, its current and former officers and directors, extended coverage under the current directors'directors’ and officers'officers’ liability insurance policy maintained by PeoplesTrust One to provide for continued coverage of such insurance for a period of four years following the completion of the mergertransaction with respect to matters occurring prior to the completion of the merger.transaction. In addition, subject to certain conditions set forth in the mergershare exchange agreement, for a period of four years after the effective date of the mergertransaction Synovus has agreed to indemnify each person entitled to indemnification from PeoplesTrust One and its subsidiaries against any liability arising out of actions or omissions occurring at or prior to the effective date of the merger,transaction, including the transactions contemplated by the mergershare exchange agreement, to the fullest extent permitted under FloridaTennessee law and by the applicable articles of incorporation and bylaws as in effect on the date of the mergershare exchange agreement, including provisions relating to advances of expenses incurred in the defense of any litigation.
Peoples
Trust One stock and options ownership. Peoples'ownership. Trust One’s executive officers and members of its board of directors beneficially own in the aggregate approximately 38%24% of the outstanding shares of PeoplesTrust One common stock. In addition, Peoples'Trust One’s executive officers and members of Peoples'Trust One’s board of directors hold options under Peoples'Trust One’s stock option plan for an aggregate of 137,25071,373 shares of PeoplesTrust One common stock with an exercise price of approximately $4.47prices ranging from $12.00 to $22.54 per share. All options under the stock option plan will become exercisable immediately prior to the merger.
23
Employee Benefits
Synovus has agreed in the mergershare exchange agreement that, following the effective date of the merger,transaction, Synovus will provide to employees of PeoplesTrust One employee benefits, including without limitation pension benefits, health and welfare benefits, life insurance and vacation and severance arrangements, on terms and conditions that are substantially similar to those currently provided by PeoplesTrust One and its subsidiaries. As soon as administratively and financially practicable following the effective date of the merger,transaction, Synovus has agreed to provide generally to employees of PeoplesTrust One and its subsidiaries employee benefits which are substantially similar to those provided by Synovus and its subsidiaries to their similarly situated employees.
Material United States Federal Income Tax Consequences of the MergerTransaction
The following is a summary description of the material anticipated federal income tax consequences of the mergertransaction generally applicable to the shareholders of Peoples.Trust One. This summary is not intended to be a complete description of all of the federal income tax consequences of the merger.transaction. No information is provided with respect to the tax consequences of the mergertransaction under any other tax laws, including applicable state, local and foreign tax laws,
other than certain state tax laws. In addition, the following discussion may not be applicable with respect to specific categories of shareholders, including but not limited to persons who are corporations, trusts, dealers in securities, financial institutions, insurance companies or tax exempt organizations; persons who are not United States citizens or resident aliens or domestic entities (partnerships or trusts); persons who are subject to alternative minimum tax (to the extent that tax affects the tax consequences of the merger)transaction) or are subject to the "golden parachute"“golden parachute” provisions of the Internal Revenue Code (to the extent that tax affects the tax consequences of the merger)transaction); persons whose shares of PeoplesTrust One stock are treated as "section“section 306 stock"stock” under Section 306 of the Internal Revenue Code; persons who acquired shares of PeoplesTrust One stock by exercising employee stock options or otherwise as compensation; persons who do not hold their shares as capital assets; or persons who hold their shares as part of a "straddle"“straddle” or "conversion“conversion” transaction. No ruling has been or will be requested from the IRS with respect to the tax effects of the merger.transaction. The federal income tax laws are complex, and a shareholder'sshareholder’s individual circumstances may affect the tax consequences to the shareholder.
Synovus and PeoplesTrust One have received an opinion from KPMGSmith, Gambrell & Russell, LLP, which it will confirm as of the effective date of the merger,transaction, to the effect that:
* The mergerthat, for federal income tax purposes:
24
Synovus common stock in the merger will not recognize gain
for federal income tax purposes attributable to Synovus'
shareholders rights plan.
* The State of Florida for income tax purposes will treat the merger
in the same manner as treated by the Internal Revenue Service for
federal income tax purposes.
* The State of Georgia for income tax purposes will treat the merger
in the same manner as treated by the Internal Revenue Service for
federal income tax purposes.
The tax opinion was issued on November 18, 2003, and is based upon customary assumptions and certain factual representations by the management of Synovus and Peoples. KPMG
LLP serves Synovus as its independent public accounting firm.
The tax opinion will need to be confirmed by KPMG LLP on the proposed
effective date of the merger. If, at that time, the aggregate fair market value
of the Synovus common stock to be issued in the merger does not represent at
least 45% of the aggregate merger consideration, KPMG will not confirm its tax
opinion, and the merger will not be completed.Trust One.
All shareholders of PeoplesTrust One are urged to consult their own tax advisors as to the specific consequences to them of the mergertransaction under federal, state, local and any other applicable income tax laws.
Backup Withholding and Information Reporting
Cash received in the merger may be subject to backup withholding at a
28% rate. Backup withholding will not apply, however, to a taxpayer who (1)
furnishes a correct taxpayer identification number on IRS Form W-9 or an
appropriate substitute form and certifies on such form that he or she is not
subject to backup withholding, (2) provides a certificate of foreign status on
IRS Form W-8BEN or an appropriate substitute form, or (3) is otherwise exempt
from backup withholding. Any amount paid as backup withholding will be credited
against the taxpayer's federal income tax liability.
As shareholders of Peoples who will receive shares of Synovus common
stock in the merger, shareholders also must comply with the information
reporting requirements of the Treasury Regulations under Section 368 of the
Internal Revenue Code. In general, these regulations require any taxpayer who
receives stock, securities or other property, including cash, in a
reorganization described in Section 368(a) of the Internal Revenue Code to
include with his or her federal income tax return a complete statement of the
facts pertaining to the nonrecognition of gain or loss, including (1) the cost
or other basis of the stock transferred in the exchange and (2) the amount of
stock, securities or other property received by the taxpayer, and the taxpayer
is required to maintain permanent records. All shareholders of Peoples are
encouraged to consult their own tax advisors to determine the specific
information required to be filed by them.
Accounting Treatment
The mergertransaction will be accounted for by Synovus as a purchase transaction in accordance with generally accepted accounting principles in the United States of America. One effect of such accounting treatment is that the earnings of PeoplesTrust One will be combined with the earnings of Synovus only from and after the effective date of the merger.
transaction.
Expenses
The mergershare exchange agreement provides that Synovus and PeoplesTrust One will each pay its own expenses in connection with the mergertransaction and related transactions, including, but not limited to, the fees and expenses of its own investment bankers, legal counsel and accountants.
New York Stock Exchange Listing
Synovus common stock is listed on the NYSE. The shares of Synovus common stock to be issued to the shareholders of PeoplesTrust One in the mergertransaction will be listed on the NYSE.
25
Resales of Synovus Common Stock
The shares of Synovus common stock issued pursuant to the mergershare exchange agreement will be freely transferable under the Securities Act of 1933, except for shares issued to any shareholder who may be deemed to be an "affiliate"“affiliate” of PeoplesTrust One for purposes of Rule 145 under the Securities Act as of the date of the PeoplesTrust One special meeting. Affiliates may not sell their shares of Synovus common stock acquired in connection with the mergertransaction except pursuant to an effective registration statement under the Securities Act covering the resale of such shares or in compliance with Rule 145 promulgated under the Securities Act or another applicable exemption from the registration requirements of the Securities Act. Rule 145 imposes restrictions on the manner in which an affiliate may resell and the quantity of any resale of any of the shares of Synovus common stock received by the affiliate in the merger.transaction. Persons who may be deemed to be affiliates of PeoplesTrust One generally include individuals or entities that control, are controlled by or are under common control with PeoplesTrust One and may include executive officers and directors of PeoplesTrust One as well as principal shareholders of Peoples.
PeoplesTrust One.
Trust One has agreed in the mergershare exchange agreement to use its best efforts to cause each director, executive officer and other person who is an affiliate of PeoplesTrust One to enter into an agreement with Synovus providing that such person will not sell, pledge, transfer or otherwise dispose of shares of PeoplesTrust One common stock owned by such person or Synovus common stock to be received by such person in the mergertransaction except in compliance with Rule 145 or in a transaction exempt under the Securities Act. This prospectus does not cover resales of Synovus common stock following consummation of the merger,transaction, and no person may make use of this prospectus in connection with any such resale.
DESCRIPTION OF STOCK AND EFFECT OF MERGERTRANSACTION ON RIGHTS OF
PEOPLES
TRUST ONE SHAREHOLDERS
If the mergertransaction is completed, all holders of PeoplesTrust One common stock and options will become holders of shares of Synovus common stock or holders of options for shares of Synovus common stock. The rights of a holder of Synovus common stock are similar in some respects and different in other respects from the rights of a holder of PeoplesTrust One common stock. The rights of PeoplesTrust One shareholders are currently governed by the FloridaTennessee Business Corporation Act, the Tennessee Banking Act and the Articles of Incorporation and bylawsBylaws of Peoples.Trust One. The rights of Synovus shareholders are currently governed by the Georgia Business Corporation Code and the Articles of Incorporation and bylawsBylaws of Synovus. The following discussion summarizes the material differences between the current rights of PeoplesTrust One shareholders and the rights they will have as Synovus shareholders following the merger.transaction.
The following comparison of shareholders'shareholders’ rights is necessarily a summary, is not intended to be complete or to identify all differences that may, under given situations, be material to shareholders and is subject to, in all respects, and is qualified by reference to the FloridaTennessee Business Corporation Act, Peoples'Trust One’s Articles of Incorporation and bylaws,Bylaws, the Georgia Business Corporation Code and Synovus'Synovus’ Articles of Incorporation and bylaws.
Bylaws.
25
SYNOVUS | TRUST ONE | |||||
• | Ten votes for each share held, except in limited | • | One vote for each share held | |||
• | No cumulative voting rights in the election of | • | Same as Synovus | |||
• | Dividends may be paid from funds legally | • | Same as Synovus | |||
• | Right to participate pro rata in distribution of | • | Same as Synovus | |||
• | No pre-emptive or other rights to subscribe for | • | Same as Synovus | |||
• | No conversion rights | • | Same as Synovus | |||
• | Directors serve staggered 3-year terms | • | Same as Synovus | |||
• | Some corporate actions, including business | • | Corporate actions, including business combinations, require the affirmative vote of a majority of the votes entitled to be cast at the meeting | |||
• | No preferred stock is authorized | • | 5,000,000 shares of preferred stock authorized but none outstanding | |||
• | Common Stock Purchase Rights trade with shares as | • | No comparable provision |
Synovus Common Stock
Synovus is incorporated under the Georgia Business Corporation Code. Synovus is authorized to issue 600,000,000 shares of Synovus common stock, of which 301,441,645302,090,128 shares were outstanding on September 30, 2002.December 31, 2003. Synovus has no preferred stock authorized. Synovus'Synovus’ board of directors may at any time, without additional approval of the holders of Synovus common stock, issue authorized but unissued shares of Synovus common stock.
As described below, Synovus'Synovus’ Articles of Incorporation and bylaws presently contain several provisions which may make Synovus a less attractive target for an acquisition of control by an outsider who lacks the support of Synovus'Synovus’ board of directors.
Voting Rights; Anti-Takeover Effects; The Voting Amendment
Under an amendment to Synovus'Synovus’ Articles of Incorporation and bylaws which became effective on April 24, 1986, referred to in this document as the "voting“voting amendment,"” shareholders of Synovus common stock are entitled to ten votes on each matter submitted to a vote at a meeting of shareholders for each share of Synovus common stock which:
*
26
Holders of shares of Synovus common stock not described above are entitled to one vote per share for each such share. A shareholder may own both ten-vote shares and one-vote shares, in which case he or she will be entitled to ten votes for each ten-vote share and one vote for each one-vote share.
In connection with various meetings of Synovus'Synovus’ shareholders, shareholders are required to submit to Synovus'Synovus’ board of directors satisfactory proof necessary for it to determine whether such shareholders'shareholders’ shares of Synovus common stock are ten-vote shares. If such information is not provided to Synovus'Synovus’ board of directors, shareholders who would, if they had provided such information, be entitled to ten votes per share, are entitled to only one vote per share.
As Synovus common stock is registered with the SEC and is listed on the NYSE, Synovus common stock is subject to the provisions of an NYSE rule, which, in general, prohibits a company'scompany’s common stock and equity securities from being authorized or remaining authorized for listing on the NYSE if the company issues securities or takes other corporate action that would have the effect of nullifying, restricting or disparately reducing the voting rights of existing shareholders of the company. However, such rule contains a "grandfather"“grandfather” provision, under which Synovus'Synovus’ voting amendment qualifies, which, in general, permits grandfathered disparate voting rights plans to continue to operate as adopted. Synovus'Synovus’ management believes that all current shareholders of Synovus common stock are entitled to ten votes per share, and as such, the further issuance of any ten-vote shares would not disenfranchise any existing shareholders. In the event it is determined in the future that Synovus cannot continue to issue ten-vote shares in mergers and acquisitions, Synovus will consider repealing the voting amendment and restoring the principle of one share/one vote.
If the mergertransaction is approved, present shareholders of PeoplesTrust One common stock, as future shareholders of Synovus common stock, will, under the voting amendment described above, be entitled to ten votes per share for each share of Synovus common stock received by them on the effective date of the merger.transaction. Each shareholder of PeoplesTrust One may also acquire by purchase, stock dividend or otherwise, up to 1,139,063 additional shares of Synovus common stock which will also be entitled to ten votes per share. However, if a PeoplesTrust One shareholder acquires by purchase, stock dividend or otherwise, more than 1,139,063 additional shares of Synovus common stock, he or she will be entitled to only receive one vote per share for each of the shares in excess of 1,139,063 shares until they have been held for four years.
Except with respect to voting, ten-vote shares and one-vote shares are identical in all respects and constitute a single class of stock,i.e., Synovus common stock. Neither the ten-vote shares nor the one-vote shares have a preference over the other with regard to dividends or upon liquidation. Synovus common stock does not carry any pre-emptivepreemptive rights enabling a holder to subscribe for or receive shares of Synovus common stock.
The Rights Plan
Synovus has adopted a shareholder rights plan under which holders of shares of Synovus common stock also hold rights to purchase securities that may be exercised upon the occurrence of "triggering“triggering events."” Shareholder rights plans such as Synovus'Synovus’ plan are intended to encourage potential hostile acquirors to negotiate with the board of directors of the target corporation to avoid occurrence of the "triggering events"“triggering events” specified in such plans. Shareholder rights plans are intended to give the directors of a target corporation the opportunity to assess the fairness and appropriateness of a proposed transaction to determine whether or not it is in the
27
best interests of the corporation and its shareholders. Notwithstanding these purposes and intentions of shareholder rights plans, such plans, including that of Synovus, could have the effect of discouraging a business combination that shareholders believe to be in their best interests. The provisions of Synovus'Synovus’ shareholder rights plan are discussed below.
On April 27, 1999, the board of directors of Synovus adopted a rights plan and authorized and declared a dividend of one common stock purchase right with respect to each outstanding share of Synovus common stock outstanding on May 4, 1999, and to each holder of common stock issued thereafter until the date the rights become
28
Initially, the rights will attach to all certificates of outstanding shares of common stock, and no separate right certificates will be distributed. The rights will become exercisable and separate from the shares of common stock upon the earlier to occur of:
*
Shares of common stock beneficially owned by Synovus or any subsidiary of Synovus will not be considered outstanding for purposes of calculating the percentage ownership of any person.
Each of the following persons will not be deemed to be an acquiring person even if they have acquired, or obtained the right to acquire beneficial ownership of 15% or more of the outstanding common stock:
*
Until the distribution date or earlier redemption or expiration of the rights:
*
As soon as practicable following the distribution date, separate certificates evidencing the rights will be mailed
29
28
If any person becomes an acquiring person, each holder of a right will thereafter have the "flip-in right"“flip-in right” to receive, upon payment of the purchase price of the right, shares of common stock, or in some circumstances, cash, property or other securities of Synovus, having a value equal to two times the purchase price of the right. Notwithstanding the foregoing, all rights that are, or were, beneficially owned by an acquiring person or any affiliate or associate of an acquiring person will be null and void and not exercisable.
If, at any time following the stock acquisition date: (1) Synovus is acquired in a merger or other business combination transaction in which the holders of all of the outstanding shares of common stock immediately before the consummation of the transaction are not the holders of all of the surviving corporation'scorporation’s voting power, or (2) more than 30% of Synovus'Synovus’ assets, cash flow or earning power is sold or transferred other than in the ordinary course of Synovus'Synovus’ business, then each holder of a valid right shall thereafter have the "flip-over right"“flip-over right” to receive, in lieu of shares of common stock and upon exercise and payment of the purchase price, common shares of the acquiring company having a value equal to two times the purchase price of the right. If a transaction would otherwise result in a holder'sholder’s having a flip-in as well as a flip-over right, then only the flip-over right will be exercisable. If a transaction results in a holder'sholder’s having a flip-over right after a transaction resulting in a holder'sholder’s having a flip-in right, a holder will have flip-over rights only to the extent such holder'sholder’s flip-in rights have not been exercised.
The purchase price payable, and the number of shares of common stock or other securities or property issuable, upon exercise of the rights are subject to adjustment from time to time to prevent dilution (1) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the common stock, (2) upon the grant to holders of the common stock of rights or warrants to subscribe for common stock or convertible securities at less than the current market price of the common stock, or (3) upon the distribution to holders of the common stock of evidences of indebtedness or assets, excluding dividends payable in common stock, or of subscription rights or warrants, other than those referred to above. However, no adjustment in the purchase price will be required until cumulative adjustments require an adjustment of at least 1%.
The number of outstanding rights and the number of shares of common stock issuable upon exercise of each right are also subject to adjustment in the event of a stock split of the common stock or a stock dividend on the common stock payable in common stock or subdivisions, consolidations or combinations of the common stock occurring, in any such case, before the distribution date.
At any time after a person becomes an acquiring person and before the acquisition by a person of 50% or more of the outstanding common stock of Synovus, the board of directors may, at its option, issue common stock or common stock equivalents of Synovus in mandatory redemption of, or in exchange for, all or part of the then outstanding exercisable rights, other than rights owned by such acquiring person which would become null and void, at an exchange ratio of one share of common stock, or common stock equivalents equal to one share of common stock, per right, subject to adjustment.
To the extent that, after the triggering of flip-in rights, insufficient shares of common stock are available for the exercise in full of the rights, holders of rights will receive upon exercise shares of common stock to the extent available and then cash, property or other securities of Synovus, in proportions determined by Synovus, so that the aggregate value received is equal to twice the purchase price.
Synovus is not required to issue fractional shares of common stock. Instead, a payment in cash will be made to the holder of such rights equal to the same fraction of the current value of a share of common stock. Following the triggering of the flip-in rights, Synovus will not be required to issue fractional shares of common stock upon exercise of the rights. Instead, a payment in cash will be made to the holder of such rights equal to the same fraction of the current market value of a share of common stock.
At any time before the distribution date, the board of directors of Synovus may redeem all, but not less than all, of the then outstanding rights at a price of $.001 per right. The redemption of the rights may be made effective at such time, on such basis and with such conditions as the board of directors in its sole discretion may establish. Immediately 30
Until a right is exercised, the holder of the right, as such, will have no rights as a shareholder of Synovus, including, without limitation, the right to vote or to receive dividends.
The issuance of the rights is not taxable to Synovus or to shareholders under presently existing federal income tax law, and will not change the way in which shareholders can presently trade Synovus'Synovus’ shares of common stock. If the rights should become exercisable, shareholders, depending on then existing circumstances, may recognize taxable income.
29
Before the stock acquisition date, the rights agreement generally may be amended by Synovus without the consent of the holders of the rights or the common stock. On or after the stock acquisition date, Synovus may amend the rights agreement only to (1) cure any ambiguity, (2) correct or supplement any provision which may be defective or inconsistent with the other provisions of the rights agreement, or (3) change or supplement the rights agreement in any other manner which Synovus may deem necessary or desirable, provided that no amendment shall adversely affect the interests of the holders of rights, other than an acquiring person and its affiliates and associates.
A copy of the rights agreement has been filed with the SEC as an exhibit to Synovus'Synovus’ Registration Statement on Form 8-A with respect to the rights filed with the SEC. The Form 8-A and the rights agreement are incorporated by reference in this document, and reference is made to them for the complete terms of the rights agreement and the rights. This summary description of the rights does not purport to be complete and is qualified in its entirety by reference to the rights agreement. If the mergertransaction is approved, rights will attach to Synovus common stock issued to the present shareholders of Peoples.
Trust One.
Staggered Board of Directors; Supermajority Approvals
Under Synovus'Synovus’ Articles of Incorporation and bylaws, Synovus'Synovus’ board of directors is divided into three classes of directors serving staggered three year terms, with the terms of each class of directors to expire each succeeding year. Also under Synovus'Synovus’ Articles of Incorporation and bylaws, the vote or action of shareholders possessing 66-2/3% of the votes entitled to be cast by the holders of all the issued and outstanding shares of Synovus common stock is required to:
*
This allows directors to be removed only for cause by 66-2/3% of the votes entitled to be cast at a shareholders'shareholders’ meeting called for that purpose. Vacancies or new directorships can only be filled by a majority vote of the directors then in office. Synovus'Synovus’ staggered board of directors, especially when combined with the voting amendment, makes it more difficult for its shareholders to force an immediate change in the composition of the majority of the board. A potential acquiror with shares recently acquired, and not entitled to 10 votes per share under the voting amendment, may be discouraged or prevented from soliciting proxies for the purpose of electing directors other than those nominated by current management for the purpose of changing the policies or control of Synovus.
Evaluation of Business Combinations
Synovus'
Synovus’ Articles of Incorporation also provide that in evaluating any business combination or other action, Synovus'Synovus’ board of directors may consider, in addition to the amount of consideration involved and the effects on
31
Peoples
Trust One Common Stock
The Articles of Incorporation of PeoplesTrust One authorize the issuance of 3,000,00010,000,000 shares of PeoplesTrust One common stock and 5,000,000 shares of preferred stock. At September 30,December 31, 2003, there were 2,047,1842,457,132 shares of PeoplesTrust One common stock issued and outstanding, and no shares of preferred stock outstanding. The remaining authorized shares of PeoplesTrust One common stock may be issued from time to time in such amounts as the board of directors determines.shareholders determine. Each holder of PeoplesTrust One common stock has one vote per share upon all matters voted upon by shareholders. Voting rights are noncumulative so that shareholders holding a majority of the outstanding shares of PeoplesTrust One common stock are able to elect all members of the board of directors. All shares of PeoplesTrust One common stock when issued and fully
paid, are non-assessable and are not subject to redemption or conversion and have no preemptive rights. Upon the liquidation, dissolution or winding up of Peoples,Trust One, whether voluntary or involuntary, holders of PeoplesTrust One common stock are entitled to share ratably, after satisfaction in full of all liabilities, in all remaining assets of PeoplesTrust One available for distribution. All shares of PeoplesTrust One common stock are entitled to share equally in such dividends as
30
the board of directors may declare on the PeoplesTrust One common stock from sources legally available therefor. Peoples is a holding company and conducts almost all of its operations
through its bank subsidiary. Accordingly, Peoples depends on the cash flow of
its subsidiary bank to meet its obligations. Peoples' subsidiary bank is limited
in the amount of dividends it can pay to Peoples without prior regulatory
approval. Also, bankBank regulators have the authority to prohibit Peoples'
subsidiary bankTrust One from paying dividends if they think the payment would be an unsafe and unsound banking practice.
Required Shareholder Vote
Under Peoples'Trust One’s Articles of Incorporation and bylaws, Peoples'Trust One’s board of directors is elected by the affirmative vote of a majority of shares represented at each annual meeting. There are no provisions requiring supermajority approval for any shareholder vote or action under Peoples'Trust One’s Articles of Incorporation and bylaws,.bylaws. Therefore, provisions of FloridaTennessee law relating to shareholder approval of merger anda share exchange prescribe the shareholder vote required to approve the merger. Floridatransaction. Tennessee law requires that PeoplesTrust One shareholders approve the mergershare exchange agreement adopted by the board of directors. The mergershare exchange agreement must be approved by a majority of all the votes entitled to be cast on the mergershare exchange agreement by all shares entitled to vote on the plan. All shares of PeoplesTrust One are entitled to vote on the mergershare exchange agreement.
The preceding descriptive information concerning Synovus common stock and PeoplesTrust One capital stock outlines certain provisions of Synovus'Synovus’ Articles of Incorporation and bylaws, Peoples'Trust One’s Articles of Incorporation and bylaws and certain statutes regulating the rights of holders of Synovus and PeoplesTrust One capital stock. The information is not a complete description of those documents and statutes and is subject in all respects to provisions of the Articles of Incorporation and bylaws of Synovus, the Articles of Incorporation and bylaws of PeoplesTrust One and the laws of the Statestates of Georgia.
DISSENTERS'Georgia and Tennessee.
DISSENTERS’ RIGHTS
Pursuant to Sections 607.1302 and 607.1320Section 45-2-1309 of the FloridaTennessee Banking Act and the provisions of Chapter 23 of Title 48 of the Tennessee Business Corporation Act (attached to this document as Appendix “B”), including Sections 48-23-102 and 48-23-202 thereof, any shareholder of record of PeoplesTrust One common stock who objects to the merger,transaction, and who fully complies with all the applicable provisions of Section
607.1320,Chapter 23 of Title 48, will be entitled to demand and receive payment in cash of an amount equal to the fair value of his or her shares of PeoplesTrust One common stock if the mergertransaction is consummated.
Any PeoplesTrust One shareholder desiring to receive payment of the fair value of his or her PeoplesTrust One common stock in accordance with the requirements of Section 607.1320:
* 48-23-202:
A vote against the mergertransaction by itself will not satisfy the notice requirements of Section 607.1320.48-23-202.
Within 10 days after the special meeting at whichtransaction was authorized by the voteshareholders or effectuated, whichever is taken
approving the merger, Peoplesfirst to occur, Trust One must give written notice of the adoption of the mergershare exchange agreement to each PeoplesTrust One common shareholder who filed a notice of intent 32
shares. Within 20 daysshares and otherwise satisfied the requirements of § 48-23-202. Among other things, the notice must:
Within such time set forth in the dissenters’ notice, any Trust One shareholder sent a dissenter’s notice must:
Any shareholder who electsdoes not demand payment or deposit the shareholder’s share certificates as required is not entitled to dissent must file
with Peoples a notice of his or her election stating:
* the shareholder's name and address;
* the number, classes, and series of Peoples shares as to which he o
she dissents; and
* a demandpayment for the payment of the fair value of his or her Peoples
shares.
Any shareholder failing to file an election to dissent within the
20-day periodshareholder’s shares and will be bound by the terms of the mergershare exchange agreement. Any
shareholder filing an election to dissent must deposit his or her certificates
with Peoples simultaneously with the filing of the election to dissent. The notices referred to above should be sent to: Peoples Florida Banking
Corporation,Trust One Bank, Attn: Corporate Secretary, 32845 U.S. Highway 19, Palm Harbor,
Florida 34682.1715 Aaron Brenner Drive, Memphis, Tennessee 38120.
31
Upon filing of a notice of election to dissent,demand for payment, a PeoplesTrust One shareholder will thereafter be entitled only to payment of the fair value of his or her shares of PeoplesTrust One common stock and will not be entitled to vote or exercise any of the rights of a shareholder. A notice of electiondemand for payment may not be withdrawn in writing
byunless Trust One consents thereto.
As soon as the Peoples shareholder at any time before an offertransaction is made by Peoples to pay
for hiseffectuated, or her shares.
Within 10 days after the expirationupon receipt of the period in which Peoples
shareholders may file their notice of election to dissent, or within 10 days
after the merger takes place,a payment demand, whichever is later, (but in no case later than 90
days fromTrust One shall pay each dissenter who filed a demand for payment the date ofamount the special meeting), Peoples will make a written offer to
each dissenting shareholder who has made proper demand to pay an amount Peoplescorporation estimates to be the fair value of the Peoples shares. If the merger has not been
consummated before the expiration of the 90-day period after the special
meeting, the offer may be made conditional upon the consummation of the merger.
The notice and offer willeach dissenter’s shares, plus accrued interest. Any such payment must be accompanied, among other things, by: (1) a consolidated
Within one (1) month of payment therefor shall be made within 90 days after the makingor offer of payment by Trust One, a dissenter may notify Trust One in writing of the offer, or the consummationdissenter’s own estimate of the merger, whichever is later. Uponfair value of the dissenter’s shares and amount of interest due, and demand payment of the agreeddissenter’s estimate (less any payment already made by Trust One), or reject Trust One’s offer and demand payment of the fair value dissenting shareholders shall cease to have anyof the dissenter’s shares and interest in
theirdue, if:
If a demand for payment pursuant to the previous paragraph remains unsettled, Trust One shall or at its election at any time within
such 60 days may, file an actioncommence a proceeding in any court of competent jurisdiction in PinellasShelby County, Florida, requesting thatTennessee within two (2) months after receiving such payment demand, and shall petition the court to determine the fair value of the shares be
determined. The court shall also determine whether each dissenting shareholder,
as to whom Peoples requested the court to make a determination, is entitled to
receive payment for his or her shares.and accrued interest. If Peoples fails to instituteTrust One does not commence the proceeding any dissenting shareholder may do so inwithin the name of Peoples. Peoples
willtwo-month period, it shall pay each dissenting shareholderdissenter whose demand remains unsettled the amount found to be due him or her
within 10 days after final determination of the proceedings.demanded.
The foregoing does not purport to be a complete statement of the provisions of FloridaTennessee law relating to statutory dissenters'dissenters’ rights and is qualified in its entirety by reference to these provisions, the relevant portions of which are reproduced in full in Appendix "B"“B” to this document.
32
DESCRIPTION OF SYNOVUS
Business
The disclosures made in this document, together with the following information which is specifically incorporated by reference into this document, describe the business of Synovus:
1. Synovus' Annual Report on Form 10-K for the fiscal year ended December
31, 2002 (which incorporates certain portions of Synovus' Proxy
Statement, including the Financial Appendix thereto, for its Annual
Meeting of Shareholders held on April 24, 2003), as amended by
Synovus' Annual Report on Form 10-K/A filed on April 22, 2003.
33
2. Synovus' Quarterly Reports on Form 10-Q for the quarters ended March
31, 2003, June 30, 2003 and September 30, 2003.
3. Synovus' Current Reports on Form 8-K dated January 15, 2003, April 16,
2003, July 17, 2003 and October 15, 2003.
1. | Synovus’ Annual Report on Form 10-K for the fiscal year ended December 31, 2003 (which incorporates certain portions of Synovus’ Proxy Statement, including the Financial Appendix thereto, for its Annual Meeting of Shareholders to be held on April 22, 2004. | |||||
2. | Synovus’ Current Report on Form 8-K dated January 21, 2004. | |||||
Management and Additional Information
Information relating to executive compensation, various benefit plans, voting securities and the principal holders of voting securities, relationships and related transactions and other related matters as to Synovus is incorporated by reference or set forth in Synovus'Synovus’ Annual Report on Form 10-K for the year ended December 31, 20022003 which is incorporated into this document by reference. See "Where“Where You Can Find More Information"Information” on page 43.40. Shareholders desiring copies of such documents may contact Synovus at its address or phone number indicated under "Where“Where You Can Find More Information."
”
DESCRIPTION OF PEOPLES
Business
Peoples Florida Banking Corporation is a one-bank holding company and
is the parent company of its wholly owned subsidiary, Peoples Bank. The holding
company was established September 17, 1999 under authority of the Bank Holding
Company Act through approval by the Federal Reserve Board.
Peoples Bank is a state chartered commercial bank organized and founded
in 1996 and member of the Federal Deposit Insurance Corporation. The bank
operates four full service banking offices serving Pinellas and Pasco Counties
in the Tampa Bay Area of Florida. Peoples Bank provides a comprehensive range of
financial services to individuals, corporations, professional associations,
non-profit organizations and local governments throughout its market area.
The business of Peoples Bank consists of attracting deposits from the
general public in the areas served by its banking offices and using those
deposits, together with funds derived from other sources, to fund a variety of
consumer, commercial and residential real estate loans in Pinellas and Pasco and
surrounding areas. The revenues of Peoples Bank are derived primarily from
interest on, and fees received in connection with, its lending activities and
from interest and dividends from investment securities and short-term
investments. The principal expenses of Peoples Bank are the interest paid on
deposits and operating and general and administrative expenses.
As a general commercial bank, Peoples Bank offers a broad range of
commercial consumer and residential real estate loans, and provides a variety of
corporate and personal banking services to individuals, businesses and other
institutions located in its market area. In order to attract funds for loans,
Peoples Bank's deposit services include certificates of deposit, individual
retirement accounts and other time deposits, checking and other demand deposit
accounts, interest paying checking accounts, savings accounts and money market
accounts. The transaction accounts and time certificates are tailored to the
principal market areas at rates competitive to those in the area. All deposit
accounts are insured by the FDIC up to the maximum limits permitted by law.
Peoples Bank also offers ATM cards, allowing access to local, state, national,
and international networks, safe deposit boxes, wire transfers, direct deposit,
and automatic drafts for various accounts.
Peoples Bank is subject to examination and comprehensive regulation by
the Florida Department of Financial Services. In addition, the FDIC conducts
periodic examinations of Peoples Bank. As is the case with banking institutions
generally, Peoples Bank's operations are materially and significantly influenced
by general economic conditions and by related monetary and fiscal policies of
financial institution regulatory agencies, including the FDIC and the Federal
Reserve Board. Deposit flows and cost of funds are influenced by interest rates
on competing investments and general market rates of interest. Lending
activities are affected by the demand for financing of real estate and other
types of loans, which in turn are affected by the interest rates at which such
financing may be offered and other factors affecting local demand and
availability of funds.
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Market Area
Peoples Bank's
Trust One’s operations are based in Palm Harbor, FloridaMemphis, Tennessee and its primary market area consists of Pinellas and Pasco countiesShelby County and the surrounding area. Management of Peoples BankTrust One believes that its principal markets have been the expanding residential, market within its primary market area, and the established
commercial, small business and professional markets inwithin its primary market area.
Businesses and individuals are solicited through the personal efforts of the
bank's directors and officers.
Lending Activities
The primary source of income generated by Peoples BankTrust One is the interest earned from both its loan and investment portfolios. To develop business, Peoples BankTrust One relies to a great extent on the personalized approach of its directors and officers, who have extensive business and personal contacts in the community. Peoples BankTrust One has attempted to maintain diversification when considering investments and the approval of loan requests. Emphasis has been
placedlending opportunities, with particular emphasis on the borrower'sborrower’s ability to generate cash flow sufficient to support its debt obligations and other cash relatedcash-related expenses.
Lending activities include commercial and consumer loans and loans for residential purposes. Commercial loans are directed towards businesses and include loans made to individual, partnership or corporate borrowers. Consumer loans include collateralized loans for the purchase of automobiles, boats, home improvement, and personal investments. Peoples BankTrust One provides personal and corporate credit cards issued by a correspondent bank, which assumes all liabilities relating to underwriting of the credit applicant. Peoples BankTrust One also originates a variety of residential real estate loans, including the origination of conventional mortgages collateralized by first mortgage loans to enable borrowers to purchase, refinance, or to improve homes or real property. In addition, such loans include those made to individual borrowers collateralized by first mortgage interests on unimproved parcels of real estate zoned for residential homes on which such borrowers intend to erect their personal residences. To a lesser extent, Peoples BankTrust One also has made land acquisition and development loans and construction loans to developers of residential properties for construction of residential subdivisions and multi-family residential projects.
At September 30,December 31, 2003, Peoples Bank'sTrust One’s net loan portfolio was $180$311.3 million, representing approximately 72% of total assets. As of such date, Peoples Bank'sTrust One’s net loan portfolio consisted of 13%22% commercial loans, 70%59% real estate secured loans, excluding construction and land development loans, 15%4% real estate construction and land development loans and 2%4% installment or consumer loans.
Competition
Peoples Bank
Trust One encounters strong competition both in attracting deposits and in the origination of loans. The deregulation of the banking industry and the widespread enactment of state laws which permit multi-bank holding companies as well as the availability of
33
nationwide interstate banking has created a highly competitive environment for financial service providers in Peoples Bank'sTrust One’s primary market area. In one or more aspects of its business, Peoples BankTrust One has competed with other commercial banks, savings and loan associations, credit unions, finance companies, mutual funds, insurance companies, brokerage and investment banking companies and other financial intermediaries operating in its market area and elsewhere. Most of these competitors, some of which are affiliated with large bank holding companies, have substantially greater resources and lending limits, and may offer certain services that Peoples BankTrust One does not provide. In addition, many of Peoples Bank'sTrust One’s non-bank competitors are not subject to the same extensive federal regulations that govern bank holding companies and federally chartered and insured banks.
Competition among financial institutions is based upon interest rates offered on deposit accounts, interest rates charged on loans and other credit and service charges, the quality of the services rendered, the convenience of banking facilities, and, in the case of loans to commercial borrowers, relative lending limits.
Employees
As of September 30, 2003, Peoples BankJanuary 1, 2004, Trust One employed 7170 full-time equivalent employees. None of these employees is covered by a collective bargaining agreement and management believes that its employee relations are good.
35
Description of Property
Peoples Bank has designated as
Trust One operates its main office and five additional branch locations in east Memphis, Germantown and Cordova, Tennessee. All of its freestanding 11,291
square foot building located at 32845 US Highway 19 N., Palm Harbor, FL. The
facilitybranches have automated teller machine services and all of its branches except the main office contain drive-through facilities. In addition, Trust One has 4 inside teller stations and 4 drive-thru lanes, private offices,been approved to open a new accounts area, vault, drive-up night depository, walk-up ATM, and storage
area onbranch location in west Collierville, Tennessee during the first floor. The second floor contains a boardroom, loan department
with private offices and workstations, document vault, storage area, and
mortgage department with private offices. The facilityhalf of 2004. Trust One is owned byleasing each of the bank.
Pasco County branchoffice locations.
Set forth below is a 7,680summary of the approximate square foot freestanding building
located at 6435 Ridge Road, Port Richey, FL. The facility contains private
offices, 3 teller stations, 2 drive-thru lanes, walk-up ATM, vault, drive-up
night depository, new account area, storage area and employee break room. The
second floor contains a boardroom, private offices, three third-party tenants
and employee break room. The facility is owned by the bank.
Clearwater branch is a 4,539 square foot freestanding building located
at 1680 Gulf-to-Bay Blvd., Clearwater, FL. The facility contains private
offices, 5 teller stations, 3 drive-thru lanes, walk-up ATM, vault, drive-up
night depository, new account area, storage area, boardroom and employee break
room. The facility is owned by the bank.
Oldsmar branch is a 4,000 square foot freestanding building located at
4018 Tampa Road, Oldsmar, FL. The facility contains private offices, 4 teller
stations, 3 drive-thru lanes, walk-up ATM, vault, drive-up night depository, new
account area, a storage area, boardroom and employee break room. The facility is
owned by the bank.
The Bank's Operations Center is a 3,750 square foot freestanding
building located at 32804 U.S Highway 19 N., Palm Harbor adjacent to the Palm
Harbor Main Office. The facility contains 5 offices, 8 employee stations,
training room, document vault, storage area and employee break room. The
facility is owned by the bank.
footage of each location:
Trust One Branches | Square Footage | |||
2105 S. Houston Levee Road1 | 2,700 | |||
7540 North Street | 4,000 | |||
1760 International Place | 3,400 | |||
1715 Aaron Brenner Drive | 15,399 | |||
3100 Forest Hill-Irene | 3,400 | |||
370 Grove Park | 3,000 | |||
1010 N. Germantown Pkwy | 2,500 | |||
Average | 4,914 | |||
1New branch scheduled to open in 2004. |
Legal Proceedings
Peoples
Trust One is periodically a party to or otherwise involved in legal proceedings arising in the normal course of business, such as claims to enforce liens or foreclose on loan defaults, claims involving the making and servicing of real property loans, and other issues incident to its business. Management is not aware of any proceeding threatened or pending against PeoplesTrust One which, if determined adversely, would have a material adverse effect on its business or financial position.
Related Party Transactions
Peoples Bank
Trust One has had various loan and other banking transactions in the ordinary course of business with the directors, executive officers, and principal shareholders of Peoples Bank,Trust One, or an associate of such person. All such transactions: (a) have been made in the ordinary course of business; (b) have been made on substantially the same terms, including interest rates and collateral on loans, as those prevailing at the time for comparable transactions with unrelated persons; and (c) in the opinion of management do not involve more than the normal risk of collectibility or present other unfavorable features. At September 30,December 31, 2003, the total dollar amount of extensions of credit to directors, executive officers and Peoples BankTrust One principal shareholders identified below, and any of their associates, excluding extensions of credit which were less than $60,000 to any one such person and their associates, were $7,913,746$9.2 million, which represented approximately 43.9%28% of total capital.
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Principal Shareholders
The following table sets forth, as of September 30, 2003,February 9, 2004, the stock ownership by each of Peoples'Trust One’s directors, by all directors and executive officers as a group, and by each owner of more than 5% of the outstanding shares of PeoplesTrust One common stock.
Name | Shares Beneficially Owned(1) | Percentage of Class | |||||||
Five Percent Shareholders | |||||||||
J. Fredric Farrell | 178,008 | (2) | 7.2 | % | |||||
Larry L. Lambiotte, Sr. | 157,722 | (3) | 6.3 | % | |||||
Directors | |||||||||
Dale H. Bullen | 21,508 | (4) | * | ||||||
Charles E. Bolton | 13,867 | (5) | * | ||||||
David P. Edmundson | 37,153 | (6) | 1.5 | % | |||||
James P. Farrell | 313,202 | (7) | 12.3 | % | |||||
R. Michael Kiser | 36,793 | (8) | 1.5 | % | |||||
Lewis K. McKee, Jr. | 20,983 | (9) | * | ||||||
Lattimore M. Michael | 22,479 | (10) | * | ||||||
Terry E. Pagliari | 30,172 | (11) | 1.2 | % | |||||
Philip R. Zanone | 68,676 | (12) | 2.8 | % | |||||
Named Executive Officers | |||||||||
Frank R. Bloom | 10,333 | (13) | * | ||||||
Charles E. Dickey, Jr. | 99,334 | (14) | 3.9 | % | |||||
All Directors and Executive Officers, as a Group (11 Persons) | 674,500 | (15) | 26.3 | % |
* | Represents beneficial ownership of | |
(1) | The information contained in this table with respect to Trust One common stock ownership reflects “beneficial ownership” as determined in accordance with Rule 13d-3 under the Exchange Act. Information with respect to beneficial ownership is based upon information furnished by each owner. With respect to certain of the individual directors and executive officers | |
(2) | Includes 178,008 shares held by | |
(3) | Includes 157,722 shares held by Lambiotte Investments, LLC, of which Mr. Lambiotte is managing member. | |
(4) | Includes 3,000 shares issuable upon the exercise of stock options that may be exercised on or before April 9, 2004. | |
(5) | Includes 4,500 shares issuable upon the exercise of stock options that may be exercised on or before April 9, 2004. | |
(6) | Includes 24,477 shares held by Mid-South Marketing Profit Sharing Plan of which Mr. Edmundson is the beneficiary, and | |
(7) | Includes 12,675 shares held by Mr. Farrell’s spouse, 1,500 shares held by Mr. Farrell’s minor children, 37,834 shares held by the Paul M. Farrell Residue Trust, | |
(8) | Includes 5,333 shares held by Kiser Floor Fashions, Inc., 3,128 shares held by the | |
(9) | Includes 1,000 shares held by Mr. McKee’s spouse, 500 shares held by Mr. McKee’s minor children, and 3,000 shares issuable upon the exercise of stock options that may be exercised on or before April 9, 2004. | |
(10) | Includes 4,500 shares issuable upon the exercise of stock options that may be exercised on or before April 9, 2004. | |
(11) | Includes 4,500 shares issuable upon the exercise of stock options that may be exercised on or before April 9, 2004. | |
(12) | Includes 49,872 shares held by S.W.I. Partnership, a |
35
(13) | Includes 5,333 shares | |
(14) | Includes 25,412 shares | |
(15) | Includes 71,373 shares |
REGULATORY MATTERS
General
Synovus is a registered bank holding company subject to supervision and regulation by the Board of Governors of the Federal Reserve System under the Bank Holding Company Act of 1956 and by the Georgia Department of Banking and Finance under the bank holding company laws of the State of Georgia. Synovus became a financial holding company under the Gramm-Leach-Bliley Act of 1999 in April 2000. Financial holding companies may engage in a variety of activities, some of which are not permitted for other bank holding companies that are not financial holding companies. Synovus'Synovus’ affiliate national banking associations are subject to regulation and examination primarily by the Office of the Comptroller of the Currency and, secondarily, by the FDIC and the Federal Reserve Board. Synovus'Synovus’ state-chartered banks are subject to primary federal regulation and examination by the FDIC and, in addition, are regulated and examined by their respective state banking departments. Numerous other federal and state laws, as well as regulations promulgated by the Federal Reserve, the state banking regulators, the OCC and the FDIC govern almost all aspects of the operations of the banks. Various federal and state bodies regulate and supervise Synovus'Synovus’ non-banking subsidiaries including its brokerage, investment advisory, insurance agency and processing operations. These include, but are not limited to, the SEC, the National Association of Securities Dealers, Inc., federal and state banking regulators and various state regulators of insurance and brokerage activities.
Dividends
Under the laws of the State of Georgia, Synovus, as a business corporation, may declare and pay dividends in cash or property unless the payment or declaration would be contrary to restrictions contained in its Articles of Incorporation, and unless, after payment of the dividend, it would not be able to pay its debts when they become due in the usualnormal course of its business or its total assets would be less than the sum of its total liabilities. Synovus is also subject to regulatory capital restrictions that limit the amount of cash dividends that it may pay. Additionally, Synovus is subject to contractual restrictions that limit the amount of cash dividends it may pay. Under the laws of the State of Florida, PeoplesTennessee, Trust One is subject to similar dividend restrictions.
The primary sources of funds for Synovus'Synovus’ payment of dividends to its shareholders are dividends and fees to Synovus from its banking and nonbanking affiliates. Similarly, theThe primary source of funds for Peoples'Trust One’s payment of dividends to its shareholders are dividends to Peoples from itsis the banking affiliate, Peoples Bank.operations of Trust One. Various federal and state statutory provisions and regulations limit the amount of dividends that the subsidiary banks of Synovus and PeoplesTrust One may pay. Under the regulations of the Georgia Department of Banking and Finance, a Georgia bank must have approval of the Georgia Department of Banking and Finance to pay cash dividends if, at the time of such payment:
*
In general, the approval of the Alabama Banking Department, Florida Department of Financial Services and Tennessee Department of Financial Institutions is required if the total of all dividends declared by an Alabama, Florida or Tennessee bank, as the case may be, in any year would exceed the total of its net profits for that year combined with its retained net profits for the preceding two years less any required transfers to surplus. In addition, the approval of the OCC is required for a national bank to pay dividends in excess of the bank'sbank’s retained net income for the current year plus retained net income for the preceding two years. Approval of the Federal Reserve Board is required for payment of any dividend by a state chartered bank that is a member of the Federal Reserve System and sometimes referred to as a state member bank, if the total of all dividends declared by the bank in any calendar year would exceed the total of its net 38
Some of Synovus'Synovus’ banking affiliates have in the past been required to secure prior regulatory approval for the payment of dividends to Synovus in
36
excess of regulatory limits and may be required to seek approval for the payment of dividends to Synovus in excess of those limits in the future. If prior regulatory approvals are sought, there is no assurance that any such regulatory approvals will be granted.
Federal and state banking regulations applicable to Synovus and its banking subsidiaries require minimum levels of capital which limit the amounts available for payment of dividends. Synovus'Synovus’ objective is to pay out at least one-third of prior year'syear’s earnings in cash dividends to its shareholders. Synovus and its predecessors have paid cash dividends on their common stock in every year since 1891. Under restrictions imposed under federal and state laws, Synovus'Synovus’ subsidiary banks could declare aggregate dividends to Synovus of approximately $162.6$224.4 million during 20032004 without obtaining regulatory approval.
Capital Requirements
Synovus and PeoplesTrust One are required to comply with the capital adequacy standards established by the Federal Reserve Board and theirSynovus’ banking subsidiaries and Trust One must comply with similar capital adequacy standards established by the OCC and FDIC, as applicable. There are two basic measures of capital adequacy for bank holding companies and their banking subsidiaries that have been promulgated by the Federal Reserve Board, the FDIC and the OCC: a risk-based measure and a leverage measure. All applicable capital standards must be satisfied for a bank holding company or a bank to be considered in compliance.
The risk-based capital standards are designed to make regulatory capital requirements more sensitive to differences in risk profile among banks and bank holding companies, to account for off-balance-sheet exposure, and to minimize disincentives for holding liquid assets. Assets and off-balance-sheet items are assigned to broad risk categories, each with appropriate weights. The resulting capital ratios represent capital as a percentage of total risk-weighted assets and off-balance-sheet items.
The minimum guideline for the ratio of total capital to risk-weighted assets, including certain off-balance-sheet items, such as standby letters of credit, is 8.0%. At least half of total capital must comprise common stock, minority interests in the equity accounts of consolidated subsidiaries, noncumulative perpetual preferred stock and a limited amount of cumulative perpetual preferred stock, less goodwill and certain other intangible assets, referred to as Tier 1 Capital.capital. The remainder of total capital may consist of subordinated debt, other preferred stock and a limited amount of loan loss reserves, referred to as Tier 2 Capital.capital. The Federal Reserve Board also requires certain bank holding companies that engage in trading activities to adjust their risk-based capital to take into consideration market risk that may result from movements in market prices of covered trading positions in trading accounts, or from foreign exchange or commodity positions, whether or not in trading accounts, including changes in interest rates, equity prices, foreign exchange rates or commodity prices. Any capital required to be maintained under these provisions may consist of new Tier 3 Capitalcapital consisting of certain short term subordinated debt. In addition, the Federal Reserve Board has issued a policy statement, under which a bank holding company that is determined to have weaknesses in its risk management processes or a high level of interest rate risk exposure may be required to hold additional capital.
The Federal Reserve Board has also established minimum leverage ratio guidelines for bank holding companies. These guidelines provide for a minimum leverage ratio of Tier 1 Capitalcapital to average total consolidated assets, less goodwill and certain other intangible assets, of 3.0% for bank holding companies that meet certain specified criteria, including having the highest regulatory rating. All other bank holding companies generally are required to maintain a Tier 1 leverage ratio of at least 4.0%. Bank holding companies are expected to maintain higher-than- minimumhigher-than-minimum capital ratios, if they have supervisory, financial, operational or managerial weaknesses, or if they are anticipating or experiencing significant growth. Synovus has not been advised by the Federal Reserve Board of any specific minimum leverage ratio applicable to it.
At September 30,December 31, 2003, Synovus'Synovus’ total risk-based capital ratio was 12.97%13.08%, its Tier 1 Capitalrisk-based capital ratio was 10.30%10.45% and its Tier 1 leverage ratio was 9.84%10.09%. Assuming the mergertransaction had been consummated on September 30,December 31, 2003, the total risk-based capital ratio of Synovus would have been 12.95%13.02%, its Tier 1 Capitalrisk-based capital ratio would have been 10.29%10.43% and its Tier 1 leverage ratio would 39
9.81%10.02%. Each of these ratios exceeds the current requirements under the Federal Reserve Board'sBoard’s capital guidelines.
At September 30,December 31, 2003, Peoples'Trust One’s total risk-based capital ratio was 10.43%10.75%, its Tier 1 Capitalrisk-based capital ratio was 9.29%9.54% and its Tier 1 leverage ratio was 7.45%7.49%. Each of these ratios exceeds the current requirements under the capital guidelines of the FDIC and the Federal Reserve Board's
capital guidelines.Board for banks.
Each of Synovus' and Peoples'Synovus’ banking subsidiaries is subject to similar risk-based and leverage capital requirements adopted by its applicable federal banking agency, and each was in compliance with the applicable minimum capital requirements as of September 30,December 31, 2003.
Failure to meet capital guidelines could subject a bank to a variety of enforcement remedies, including issuance of a capital directive, the termination of deposit insurance by the FDIC, a prohibition on the taking of brokered deposits and other restrictions on
37
its business. As described below, substantial additional restrictions can be imposed upon FDIC-insured depository institutions that fail to meet applicable capital requirements. See "Prompt“Prompt Corrective Action"Action” below.
Commitments to Subsidiary Banks
Under the Federal Reserve Board'sBoard’s policy, Synovus is expected to act as a source of financial strength to its subsidiary banks and to commit resources to support its subsidiary banks in circumstances when it might not do so absent that policy. In addition, any capital loans by Synovus to any of its subsidiary banks would also be subordinate in right of payment to depositors and to certain other indebtedness of that bank.
In the event of Synovus'Synovus’ bankruptcy, any commitment by Synovus to a federal bank regulatory agency to maintain the capital of a banking subsidiary will be assumed by the bankruptcy trustee and entitled to a priority of payment. In addition, the Federal Deposit Insurance Act provides that any financial institution whose deposits are insured by the FDIC generally will be liable for any loss incurred by the FDIC in connection with the default of, or any assistance provided by the FDIC to, a commonly controlled financial institution.
Prompt Corrective Action
The Federal Deposit Insurance Corporation Improvement Act of 1991 establishes a system of prompt corrective action to resolve the problems of undercapitalized institutions. Under this system the federal banking regulators are required to rate supervised institutions on the basis of five capital categories as described below. The federal banking regulators are also required to take mandatory supervisory actions, and are authorized to take other discretionary actions, with respect to institutions in the three undercapitalized categories, the severity of which will depend upon the capital category in which the institution is placed. Generally, subject to a narrow exception, the Federal Deposit Insurance Corporation Improvement Act requires the banking regulator to appoint a receiver or conservator for an institution that is critically undercapitalized. The federal banking agencies have specified by regulation the relevant capital level for each category.
Under the Federal Deposit Insurance Corporation Improvement Act, the Federal Reserve Board, the FDIC, the OCC and the Office of Thrift Supervision have adopted regulations setting forth a five-tier scheme for measuring the capital adequacy of the financial institutions they supervise. Under the regulations, an institution would be placed in one of the following capital categories:
*
The regulations permit the appropriate federal banking regulator to downgrade an institution to the next lower category if the regulator determines (1) after notice and opportunity for hearing or response, that the institution is in an unsafe or unsound condition or (2) that the institution has received and not corrected a less-than-satisfactory rating for any of the categories of asset quality, management, earnings or liquidity in its most recent examination. Supervisory actions by the appropriate federal banking regulator depend upon an institution'sinstitution’s classification within the five categories. Synovus'Synovus’ management believes that Synovus and its bank subsidiaries have the requisite capital levels to qualify as well capitalized institutions under the Federal Deposit Insurance Corporation Improvement Act regulations.
The Federal Deposit Insurance Corporation Improvement Act generally prohibits a depository institution from making any capital distribution, including payment of a dividend, or paying any management fee to its holding company if the depository institution would thereafter be undercapitalized. Undercapitalized depository institutions are subject to restrictions on borrowing from the Federal Reserve System. In addition, undercapitalized depository institutions are subject to growth limitations and are required to submit capital restoration plans. A depository institution'sinstitution’s holding company must guarantee the capital plan, up to an amount equal to the lesser of 5% of the depository institution'sinstitution’s assets at the time it becomes undercapitalized or the amount of the capital deficiency when the institution fails to comply with the plan. Federal banking agencies may not accept a capital plan without determining,
38
among other things, that the plan is based on realistic assumptions and is likely to succeed in restoring the depository institution'sinstitution’s capital. If a depository institution fails to submit an acceptable plan, it is treated as if it is significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to a number of requirements and restrictions, including orders to sell sufficient voting stock to become adequately capitalized, requirements to reduce total assets and cessation of receipt of deposits from correspondent banks. Critically undercapitalized depository institutions are subject to appointment of a receiver or conservator.
Safety and Soundness Standards
The Federal Deposit Insurance Act, as amended by the Federal Deposit Insurance Corporation Improvement Act and the Riegle Community Development and Regulatory Improvement Act of 1994, requires the federal bank regulatory agencies to prescribe standards, by regulations or guidelines, relating to internal controls, information systems and internal audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, asset quality, earnings, stock valuation and compensation, fees and benefits and such other operational and managerial standards as the agencies deem appropriate. The federal bank regulatory agencies have adopted a set of guidelines prescribing safety and soundness standards under the Federal Deposit Insurance Corporation Improvement Act. The guidelines establish general standards relating to internal controls and information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth and compensation, fees and benefits. In general, the guidelines require, among other things, appropriate systems and practices to identify and manage the risks and exposures specified in the guidelines. The guidelines prohibit excessive compensation as an unsafe and unsound practice and describe compensation as excessive when the amounts paid are unreasonable or disproportionate to the services performed by an executive officer, employee, director or principal shareholder. The federal banking agencies determined that stock valuation standards were not appropriate. In addition, the agencies have adopted regulations that authorize, but do not require, an agency to order an institution that has been given notice by an agency that it is not satisfying any of such safety and soundness standards to submit a compliance plan. If, after being so notified, an institution fails to submit an acceptable compliance plan, the agency must issue an order directing action to correct the deficiency and may issue an order directing other actions of the types to which an undercapitalized institution is subject under the prompt corrective action provisions of the Federal Deposit Insurance Corporation Improvement Act. See "Prompt“Prompt Corrective Action"Action” above. If an institution fails to comply with such an order, the agency may seek to enforce such order in judicial proceedings and to impose civil money penalties.
Depositor Preference Statute
Federal law provides that deposits and certain claims for administrative expenses and employee compensation against an insured depository institution would be afforded a priority over other general unsecured claims against such an 41
Gramm-Leach-Bliley Act
On November 12, 1999, legislation was enacted which allows bank holding companies to engage in a wider range of non-banking activities, including greater authority to engage in securities and insurance activities. Under the Gramm-Leach-Bliley Act, a bank holding company that elects to become a financial holding company may engage in any activity that the Federal Reserve Board, in consultation with the Secretary of the Treasury, determines by regulation or order is: (1) financial in nature; (2) incidental to any such financial activity; or (3) complementary to any such financial activity and does not pose a substantial risk to the safety or soundness of depository institutions or the financial system generally. The legislation makes significant changes in United States banking law, principally by repealing restrictive provisions of the 1933 Glass-Steagall Act. The legislation specifies certain activities that are deemed to be financial in nature, including lending, exchanging, transferring, investing for others, or safeguarding money or securities; underwriting and selling insurance; providing financial, investment or economic advisory services; underwriting, dealing in or making a market in, securities; and any activity currently permitted for bank holding companies by the Federal Reserve Board under Section 4(c)(8) of the Bank Holding Company Act. The legislation does not authorize banks or their affiliates to engage in commercial activities that are not financial in nature. A bank holding company may elect to be treated as a financial holding company only if all depository institution subsidiaries of the holding company are well-capitalized, well-managed and have at least a satisfactory rating under the Community Reinvestment Act. Synovus became a financial holding company in April 2000.
In addition to the Gramm-Leach-Bliley Act, there have been a number of legislative and regulatory proposals that would have an impact on bank/financial holding companies and their bank and nonbank subsidiaries. It is impossible to predict whether or in what form these proposals may be adopted in the future and if adopted, what their effect will be on Synovus.
39
LEGAL MATTERS
The validity of the Synovus common stock to be issued in connection with the mergertransaction will be passed upon by Kathleen Moates, Senior Vice President and Senior Deputy General Counsel of Synovus. Ms. Moates beneficially owns shares of Synovus common stock and options to purchase additional shares of Synovus common stock. As of the date of this document, the number of shares Ms. Moates owns or has the right to acquire upon exercise of her options is, in the aggregate, less than 0.1% of the outstanding shares of Synovus common stock.
Certain legal matters relating to the transaction are being passed upon for Synovus by the law firm of Smith, Gambrell & Russell, LLP, Atlanta, Georgia. Certain legal matters relating to the transaction are being passed upon for Trust One by the law firm of Powell, Goldstein, Frazer & Murphy, LLP.
EXPERTS
The consolidated financial statements of Synovus Financial Corp. and subsidiaries as of December 31, 20022003 and 20012002 and for each of the years in the three-year period ended December 31, 20022003 have been incorporated by reference herein in reliance upon the report of KPMG LLP, independent accountants, incorporated by reference herein and upon the authority of said firm as experts in accounting and auditing. The audit report covering the December 31, 20022003 consolidated financial statements refers to a change in the method of accounting for goodwill in 2002 and a change in the method of accounting for derivative instruments and hedging activities in 2001.
OTHER MATTERS
Peoples'
Trust One’s board of directors does not know of any matters to be presented at the special meeting other than the proposal to approve the merger.transaction. If any other matters are properly brought before the special meeting or any adjournment of the special meeting, the enclosed proxy will be deemed to confer discretionary authority on the individuals named as proxies to vote the shares represented by the proxy as to any such matters.
SHAREHOLDER PROPOSALS
Synovus'
Synovus’ 2004 annual meeting of shareholders will be held inon April 22, 2004. Any shareholder satisfying the Securities and Exchange CommissionSEC requirements and wishing to submit a proposal to be included in the proxy
42
receivehave received a proposal by November 15, 2003 to consider it for inclusion in the proxy statement for the 2004 annual meeting of shareholders.
If the mergertransaction is not consummated, PeoplesTrust One will inform its shareholders of the date and time of the 2004 annual meeting of shareholders of Peoples.
Trust One.
WHERE YOU CAN FIND MORE INFORMATION
Synovus files annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission.SEC. You may read and copy any reports, statements or other information that Synovus files with the SEC at the SEC'sSEC’s public reference roomsroom at 450 Fifth Street, NW,N.W., Room 1200, Washington, D.C. 20549, 233 Broadway, New York, New York 10048 and Suite 1400, 500 West
Madison Street, Chicago, Illinois 60601-2511.20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. These SEC filings are also available to the public from commercial document retrieval services and at the Internet world wide web site maintained by the SEC at http://www.sec.gov. Reports, proxy statements and other information should also be available for inspection at the offices of the NYSE.
Synovus filed a registration statement to register with the SEC the Synovus common stock to be issued to PeoplesTrust One shareholders in the merger.transaction. This document is a part of that registration statement and constitutes a prospectus of Synovus. As allowed by SEC rules, this document does not contain all the information you can find in Synovus'Synovus’ registration statement or the exhibits to that registration statement.
The SEC allows Synovus to "incorporate“incorporate by reference"reference” information into this document, which means that Synovus can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered part of this document, except for any information superseded by information contained directly in this document or in later filed documents incorporated by reference in this document.
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This document incorporates by reference the documents set forth below that Synovus has previously filed with the SEC. These documents contain important information about Synovus and its business.
Synovus SEC Filings (File No. 1-10312)
(1) Synovus' Annual Report on Form 10-K for the year ended December 31,
2002, as amended on April 22, 2003;
(2) Synovus' Quarterly Reports on Form 10-Q for the quarters ended March
31, 2003, June 30, 2003 and September 30, 2003;
(3) Synovus' Current Reports on Form 8-K dated January 15, 2003, April 16,
2003, July 16, 2003 and October 15, 2003;
(4) the description of Synovus common stock contained in Synovus'
Registration Statement on Form 8-A filed with the SEC on August 21,
1989; and
(5) the description of the shareholder rights plan of Synovus contained in
Synovus'
(1) | Synovus’ Annual Report on Form 10-K for the year ended December 31, 2003; |
(2) | Synovus’ Current Report on Form 8-K dated January 21, 2004; |
(3) | the description of Synovus common stock contained in Synovus’ Registration Statement on Form 8-A filed with the SEC on August 21, 1989; and |
(4) | the description of the shareholder rights plan of Synovus contained in Synovus’ Registration Statement on Form 8-A filed with the SEC on April 28, 1999. |
Synovus also incorporates by reference additional documents that may be filed with the SEC between the date of this document and the consummation of the mergertransaction or termination of the mergershare exchange agreement. These include periodic reports, such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy statements.
Synovus has supplied all information contained or incorporated by reference in this document relating to Synovus, and PeoplesTrust One has supplied all information contained in this document relating to Peoples.
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You can obtain any of the documents incorporated by reference from Synovus, the SEC or the SEC'sSEC’s Internet web site as described above. Documents incorporated by reference are available from Synovus without charge, excluding all exhibits, except that if Synovus has specifically incorporated by reference an exhibit in this document, the exhibit will also be available without charge. You may obtain documents incorporated by reference in this document by requesting them in writing or by telephone from Synovus at the following addresses:
Synovus Financial Corp.
901 Front Avenue, Suite 301
Columbus, Georgia 31901
Attn: G. Sanders Griffith, III
Senior Executive Vice President,
General Counsel & Secretary
Telephone: (706) 649-2267
If you would like to request documents, please do so by _______, 2003, 2004 to receive them before the PeoplesTrust One special meeting.
You should rely only on the information contained or incorporated by reference in this document. Synovus and PeoplesTrust One have not authorized anyone to provide you with information that is different from what is contained in this document. This document is dated __________, 2003., 2004. You should not assume that the information contained in this document is accurate as of any date other than that date. Neither the mailing of this document to shareholders nor the issuance of Synovus common stock in the mergertransaction creates any implication to the contrary.
FORWARD-LOOKING STATEMENTS
Synovus and PeoplesTrust One make forward-looking statements in this document, and Synovus makes such statements in its public documents, that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our operations. Also, when we use any of the words "believes," "expects," "anticipates"“believes,” “expects,” “anticipates” or similar expressions, we are making forward-looking statements. Many possible events or factors could affect the financial results and performance of each of our companies. This could cause results or performances to differ materially from those expressed in our forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"“safe harbor” for such forward-looking statements. In order to comply with the terms of the safe harbor, we note that a variety of factors could cause our actual results and experience to differ materially from the anticipated results or other expectations expressed in such forward-looking statements. The risks and uncertainties that may affect the operations, performance, development and results of our businesses include, but are not
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limited to, those described below. You should consider these risks when you vote on the merger.transaction. These possible events or factors include the following:
*
Management of each of Synovus and PeoplesTrust One believes the forward-looking statements about its company are reasonable; however, you should not place undue reliance on them. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. The future results and shareholder values of Synovus following completion of the mergertransaction may differ materially from those expressed or implied in these forward-looking statements. Many of the factors that will determine these results and values are beyond Synovus'Synovus’ and Peoples'Trust One’s ability to control or predict.
PRO FORMA FINANCIAL INFORMATION
Pro forma financial information reflecting the acquisition of PeoplesTrust One by Synovus is not presented in this document since the pro forma effect is not significant.
Acq\Peoples\s-4.doc
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Appendix "A"
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
SHARE EXCHANGE
AGREEMENT AND PLAN OF MERGER,SHARE EXCHANGE, dated as of the 7th17th day of October,December, 2003 (the "Plan"“Plan” or the "Agreement"“Agreement”) by and betweenSYNOVUS FINANCIAL CORP.
("Synovus"(“Synovus”) and PEOPLES FLORIDA BANKING CORPORATION ("Peoples"TRUST ONE BANK(“Trust One”).
RECITALS:
A.Synovus.Synovus has been duly incorporated and is an existing corporation in good standing under the laws of Georgia, with its principal executive offices located in Columbus, Georgia. As of August 31,November 30, 2003, Synovus had 600,000,000 authorized shares of common stock, par value $1.00 per share ("(“Synovus Common Stock"Stock”), of which 301,320,726302,025,778 shares were outstanding on said date. All of the issued and outstanding shares of Synovus Common Stock are duly and validly issued and outstanding and are fully paid and nonassessable and not subject to any preemptive rights. Synovus has 40 wholly-owned banking subsidiaries (as defined in Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange Commission, a "Subsidiary"“Subsidiary”) and other non-banking Subsidiaries as of the date hereof. Each Subsidiary that is a depository institution is an "insured institution"“insured institution” as defined in the Federal Deposit Insurance Act and the applicable regulations thereunder, and the deposits in which are insured by the Federal Deposit Insurance Corporation.
B. Peoples. PeoplesTrust One. Trust One has been duly incorporated and is an existing banking corporation in good standing under the laws of Florida,Tennessee, with its principal executive offices located in Tampa, Florida.Memphis, Tennessee. As of August 31,November 30, 2003, PeoplesTrust One had 3,000,00010,000,000 authorized shares of common stock, par value $.10$5.00 per share ("Peoples(“Trust One Common Stock"Stock”), of which 2,047,1842,457,132 shares are outstanding as of the date hereof, and 5,000,000 authorized shares of preferred stock, no par value (“Trust One Preferred Stock”), of which no shares are outstanding as of the date hereof. All of the issued and outstanding shares of PeoplesTrust One Common Stock are duly and validly issued and outstanding and are fully paid and nonassessable and not subject to any preemptive rights. PeoplesTrust One has one wholly-owned banking
Subsidiary, Peoples Bank, which Subsidiary is an "insured institution" as
defined in the Federal Deposit50%-owned non-banking subsidiary, Trust One Insurance Act and the applicable regulations
thereunder, and the deposits in which are insured by the Federal Deposit
Insurance Corporation and one non-banking subsidiary.
C. Services, LLC, a Tennessee limited liability company.
C. Rights, Etc.Neither Synovus nor PeoplesTrust One has any shares of its capital stock reserved for issuance, any outstanding option, call or commitment relating to shares of its capital stock or any outstanding securities, obligations or agreements convertible into or exchangeable for, or giving any person any right (including, without limitation, preemptive rights) to subscribe for or acquire from it, any shares of its capital stock except, in the case of Synovus, as described in filings made with the Securities and Exchange Commission ("SEC"(“SEC”) and except, in the case of Peoples,Trust One, as described in its audited financial statements for the year ended December 31, 2002 or in its unaudited financial statements for the period ended JuneSeptember 30, 2003, or except as otherwise disclosed in the Disclosure Schedules referred to in Article III below.
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D.
D. Board Approvals.The respective Boards of Directors of Synovus and PeoplesTrust One have unanimously approved and adopted the Plan and have duly authorized its execution. In the case of Peoples,Trust One, the Board of Directors has unanimously voted to recommend to its stockholdersshareholders that the Plan be approved.
E.Materiality.Unless the context otherwise requires, any reference in this Agreement to materiality with respect to any party shall be deemed to be with respect to such party and its Subsidiaries taken as a whole.
F.Material Adverse Effect.For the purposes of this Plan, the capitalized term "Material“Material Adverse Effect"Effect” as used in relation to a person, means an adverse effect on the business, results of operations or financial condition of that person or its Subsidiaries which is material to it and its Subsidiaries, taken as a whole, provided that "Material“Material Adverse Effect"Effect” shall not include or be deemed to include: (1) the impact of changes which are made and become effective after the date of this Plan in banking or similar laws of general applicability or interpretations thereof by courts or governmental authorities; or (2) changes which are made and become effective after the date of this Plan in generally accepted accounting principles applicable to banks and their holding companies.
In consideration of their mutual promises and obligations hereunder, and intending to be legally bound hereby, Synovus and PeoplesTrust One each hereby adopt the Plan and prescribe the terms and conditions hereof and the manner and basis of carrying it into effect, which shall be as follows:
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I. THE MERGERSHARE EXCHANGE
(A) StructureShare Exchange.Subject to the terms and conditions of the Merger. Onthis Plan, on the Effective Date (as defined in Article VII), Peoples will merge (the "Merger") and in accordance with and into Synovus, with
Synovus being the surviving corporation (the "Surviving Corporation") under the
name Synovus Financial Corp. pursuant to the applicable provisions of the Georgia Business Corporation Code ("Georgia Act"(the “Georgia Act”) and the FloridaTennessee Banking Act and the Tennessee Business Corporation Act ("Florida Act"(collectively, the “Tennessee Act”)., Trust One shall become a wholly owned subsidiary of Synovus pursuant to a statutory share exchange (the “Share Exchange”) as provided in the Georgia Act and the Tennessee Act and as otherwise set forth in the Articles of Share Exchange to be filed with the Secretary of State of Georgia and the Department of State of Tennessee. The separate corporate existence of each of Synovus and Trust One shall continue following the Share Exchange. On the Effective Date, the articles of incorporation and bylaws of Trust One shall be the Surviving Corporationarticles of incorporation and bylaws of Trust One in effect immediately prior to the Effective Date and the articles of incorporation and bylaws of Synovus shall be the articles of incorporation and bylaws of Synovus in effect immediately prior to the Effective Date. The directors and officers of Trust One in office immediately prior to the Effective Date, together with such additional persons as may thereafter be elected, shall serve as the directors and officers of Trust One from and after the Effective Date in accordance with the bylaws of Trust One. The directors and officers of Synovus in office immediately prior to the Effective Date, together with such additional persons as may thereafter be elected, shall serve as the directors and officers of Synovus from and after the Effective Date in accordance with the bylaws of Synovus.
(B) Effect on Outstanding Shares.By virtue of the Merger,Share Exchange, automatically and without any action on the part of the holder thereof, subject
to paragraph (A)(4) of Article VI, each share of PeoplesTrust One Common Stock issued and outstanding on the Effective Date, other than shares of PeoplesTrust One Common Stock as to which dissenters'dissenters’ rights have been duly and validly exercised in accordance with the FloridaTennessee Act, shall be converted into and exchangeable for the right to receive both:
(a) .74781.5332 shares of Synovus Common Stock ("Per(the “Per Share Stock
Consideration"Exchange Ratio”); and
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(b) cash in an amount equal to $14.65 (the "Per Share Cash
Consideration).
As of the Effective Date, each share of PeoplesTrust One Common Stock held as treasury stock of PeoplesTrust One shall be canceled, retired and cease to exist, and no payment shall be made in respect thereof.
No fractional shares of Synovus Common Stock shall be issued in connection with the Merger.Share Exchange. Each holder of PeoplesTrust One Common Stock who would otherwise have been entitled to receive a fraction of a share of Synovus Common Stock shall receive, in lieu thereof, cash (without interest) in an amount equal to such fractional part of a share of Synovus Common Stock multiplied by the closing price per share of Synovus Common Stock on the NYSE on the last business day immediately preceding the Effective Date.
Each holder of PeoplesTrust One Common Stock will be entitled to ten (10) votes for each share of Synovus Common Stock to be received by him/her on the Effective Date pursuant to a set of resolutions adopted by the Board of Directors of Synovus on October 7,December 17, 2003, in accordance with and subject to those certain Articles of Amendment to Synovus'Synovus’ Articles of Incorporation, dated April 24, 1986. Synovus shall provide PeoplesTrust One with certified copies of such resolutions prior to the Effective Date.
The shares of Synovus Common Stock issued and outstanding immediately prior to the Effective Date shall remain outstanding and unchanged after the Merger.Share Exchange.
If, between the date of this Agreement and the Effective Date, the outstanding shares of Synovus Common Stock shall be increased, decreased, changed into or exchanged for a different number or class of shares by reason of any reorganization, reclassification, recapitalization, stock dividend, stock split, reverse stock split, or other like changes in Synovus'Synovus’ capitalization, then an appropriate and proportionate adjustment shall be made to the Per Share Cash Consideration and the Per Share Stock ConsiderationExchange Ratio so as to prevent the dilutive effect of such transaction on a percentage of ownership basis.
(C) General Procedures.Certificates which represent shares of PeoplesTrust One Common Stock that are outstanding on the Effective Date (each, a "Certificate"“Certificate”) and are converted into shares of Synovus Common Stock or cash pursuant to the Plan shall, after the Effective Date, be deemed to represent shares of the Synovus Common Stock or cash into which such shares have become converted and shall be exchangeable by the holders thereof in the manner provided in the transmittal materials described below for new certificates representing the shares of Synovus Common Stock or cash into which such shares have been converted.
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As promptly as practicable after the Effective Date, Synovus shall send to each holder of record of shares of PeoplesTrust One Common Stock outstanding on the Effective Date transmittal materials for use in exchanging the Certificates for such shares for certificates for shares of the Synovus Common Stock and cash
into which such shares of the PeoplesTrust One Common Stock have been converted pursuant to the Plan. Upon surrender of a Certificate, duly endorsed as Synovus may require, the holder of such Certificate shall be entitled to receive in exchange therefor the consideration set forth in paragraph (B) of Article I and such Certificate shall forthwith be canceled. No dividend or other distribution payable after the Effective Date with respect to the Synovus Common Stock shall be paid to the holder of any unsurrendered Certificate until the holder thereof surrenders such Certificate, at which time such holder shall
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receive all dividends and distributions, without interest thereon, previously withheld from such holder pursuant hereto. After the Effective Date, there shall be no transfers on the stock transfer books of PeoplesTrust One of shares of PeoplesTrust One Common Stock which were issued and outstanding on the Effective Date and converted pursuant to the provisions of the Plan. If after the Effective Date, Certificates are presented for transfer to Peoples,Trust One, they shall be canceled and exchanged for the shares of Synovus Common Stock, and cash deliverable in respect thereof as determined in accordance with the provisions of paragraph (B) of Article I and in accordance with the procedures set forth in this paragraph. In the case of any lost, mislaid, stolen or destroyed Certificate, the holder thereof may be required, as a condition precedent to the delivery to such holder of the consideration described in paragraph (B) of Article I, to deliver to Synovus a bond, in such sum as Synovus may direct, as indemnity against any claim that may be made against the exchange agent, Synovus or PeoplesTrust One with respect to the Certificate alleged to have been lost, mislaid, stolen or destroyed.
After the Effective Date, holders of PeoplesTrust One Common Stock (other than Synovus) shall cease to be, and shall have no rights as, stockholdersshareholders of Peoples,Trust One, other than to receive shares of Synovus Common Stock and cash into which such shares have been converted, fractional share payments pursuant to the Plan and any dividends or distributions with respect to such shares of Synovus Common Stock. Until sixty (60) days after the Effective Date, former shareholders of record of PeoplesTrust One shall be entitled to vote at any meeting of Synovus shareholders the number of shares of Synovus Common Stock into which their respective Peoplesshares of Trust One Common Stock are converted, regardless of whether such holders have exchanged their certificates pursuant to the Plan.
Notwithstanding the foregoing, neither Synovus nor PeoplesTrust One nor any other person shall be liable to any former holder of shares of PeoplesTrust One Common Stock for any amounts paid or property delivered in good faith to a public official pursuant to applicable abandoned property, escheat or similar laws.
(D) Options.On the Effective Date, each option granted by PeoplesTrust One to purchase shares of PeoplesTrust One Common Stock (each a "Peoples“Trust One Stock Option"Option”), whether vested or unvested, which is outstanding and unexercised immediately prior thereto, shall be assumed by Synovus and converted automatically into an option to purchase shares of Synovus Common Stock (each a A-4
"Synovus“Synovus Stock Option"Option”) in an amount and at an exercise price determined as provided below (and otherwise having the same duration and other terms as the original option):
(1) The number of shares of Synovus Common Stock
to be subject to the new option shall be
equal to the product of the number of shares
of Peoples Common Stock subject to the
original option multiplied by 1.3372
("Synovus Option Value Multiple"), unless
adjusted pursuant to paragraph (A)(6) of
Article VI, provided that any fractional
shares of Synovus Common Stock resulting
from such multiplication shall be rounded to
the nearest whole share; and
(2) The exercise price per share of Synovus
Common Stock under the new option shall be
equal to the exercise price per share of
Peoples Common Stock under the original
option divided by 1.3372 ("Synovus Option
Price Divisor"), unless adjusted pursuant to
paragraph (A)(6) of Article VI,
(1) | The number of shares of Synovus Common Stock to be subject to the new option shall be equal to the product of the number of shares of Trust One Common Stock subject to the original option multiplied by the Per Share Exchange Ratio, provided that any fractional shares of Synovus Common Stock resulting from such multiplication shall be rounded to the nearest whole share; and |
(2) | The exercise price per share of Synovus Common Stock under the new option shall be equal to the exercise price per share of Trust One Common Stock under the original option divided by the Per Share Exchange Ratio, provided that such exercise price shall be rounded up to the nearest cent. |
The adjustment provided herein with respect to any options which are "incentive“incentive stock options"options” (as defined in Section 422 of the Internal Revenue Code of 1986 (the "Code"“Code”)) shall be and is intended to be effected in a manner which is consistent with Section 424(a) of the Code.
Within thirty (30) days after the Effective Date, Synovus shall notify each holder of an option to purchase PeoplesTrust One Common Stock of the assumption of such options by Synovus andSynovus. Such notice will effect the revisions to the options, which shall be effected
thereby.effective as of the Effective Date. No payment shall be made for fractional interests. From and after the date hereof, no additional options to purchase PeoplesTrust One Common Stock shall be granted. Synovus shall take all corporate action necessary to reserve for issuance a sufficient number of shares of Synovus Common Stock for delivery upon exercise of the Synovus Stock Options. As soon as practicable after the Effective Date, Synovus shall file a registration statement on Form S-8 (or any successor or other appropriate forms) with respect to the shares of Synovus Common Stock subject to any Synovus Stock Options held by persons who are or were directors, officers or employees of PeoplesTrust One.
(E) Dissenting Shareholders.Any holder of shares of Trust One Common Stock who perfects such holder’s dissenters’ rights in accordance with the Tennessee Act shall be entitled to receive from Trust One the value of such shares in cash as determined pursuant to such provision of the Tennessee Act; provided, that no such payment shall be made to any dissenting shareholder unless and until such dissenting shareholder has complied with the applicable provisions of the Tennessee Act and surrendered to Trust One the certificate or its Subsidiaries.
certificates representing the shares for which payment is being made. In the event that after the Effective Date a dissenting shareholder of Trust One fails to perfect, or effectively withdraws or loses, such holder’s right to appraisal of and payment for such holder’s shares, Synovus shall issue and deliver the consideration to which such holder of shares of Trust One Common Stock is entitled under paragraph (B) of this Article I (without interest) upon surrender by such holder of the certificate or certificates representing the shares of Trust One Common Stock held by such holder.
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II. ACTIONS PENDING MERGERSHARE EXCHANGE
(A) PeoplesTrust One covenants to Synovus that Peoples and its SubsidiariesTrust One shall conduct theirits business only in the ordinary course and shall not, without the prior written consent of Synovus, which consent will not be unreasonably withheld: (1) issue any options to purchase capital stock or issue any shares of capital stock, other than shares of PeoplesTrust One Common Stock issued in connection with the exercise of currently outstanding options to purchase shares of PeoplesTrust One Common Stock; (2)
A-5 declare, set aside, or pay any dividend or distribution with respect to the capital stock of Peoples;Trust One, except that Trust One may pay a quarterly cash dividend of $0.25 per share for each quarter in which its shareholders are not entitled to receive Synovus cash dividends; (3) directly or indirectly redeem, purchase or otherwise acquire any capital stock of Peoples or its Subsidiaries;Trust One; (4) effect a split or reclassification of the capital stock of Peoples or its SubsidiariesTrust One or a recapitalization of PeoplesTrust One or its Subsidiaries; (5) amend the articles of incorporation or bylaws of Peoples or its Subsidiaries;Trust One; (6) grant any increase in the salaries payable or to become payable by Peoples or its SubsidiariesTrust One to any employee and other than normal, annual salary increases to be made with regard to the employees of Peoples or its Subsidiaries;Trust One; (7) make any change in any bonus, group insurance, pension, profit sharing, deferred compensation, or other benefit plan, payment or arrangement made to, for or with respect to any employees or directors of Peoples or its Subsidiaries,Trust One, except to the extent such changes are required by applicable laws or regulations; (8) enter into, terminate, modify or amend any contract, lease or other agreement with any officer or director of Peoples or its SubsidiariesTrust One or any "associate"“associate” of any such officer or director, as such term is defined in Regulation 14A under the Securities Exchange Act of 1934, as amended ("(“Exchange Act"Act”), other than in the ordinary course of theirits business; (9) incur or assume any liabilities, other than in the ordinary course of their business; (10) dispose of any of theirits assets or properties, other than in the ordinary course of their business; (11) solicit, encourage or authorize any individual, corporation or other entity, including its directors, officers and other employees, to solicit from any third party any inquiries or proposals relating to the disposition of all or substantially all of its business or assets, or the acquisition of its voting securities, or the merger of it or its
Subsidiaries with any corporation or other entity other than as provided by this Agreement, or subject to the fiduciary obligations of its Board of Directors, provide any individual, corporation or other entity with information or assistance or negotiate with any individual, corporation or other entity in furtherance of such inquiries or to obtain such a proposal (and PeoplesTrust One shall promptly notify Synovus of all of the relevant details relating to all inquiries and proposals which it may receive relating to any of such matters); (12) take any other action or permit its Subsidiaries to take any action not in the ordinary course of business of it and its Subsidiaries;business; or (13) directly or indirectly agree to take any of the foregoing actions.
(B) Synovus covenants to PeoplesTrust One that without the prior written consent of Peoples,Trust One, which consent will not be unreasonably withheld, Synovus will not take any action that would: (a) delay or adversely affect the ability of Synovus to obtain any necessary approvals of regulatory authorities required for the transactions contemplated hereby; or (b) adversely affect its ability to perform its covenants and agreements on a timely basis under this Plan.
III. REPRESENTATIONS AND WARRANTIES
Synovus hereby represents and warrants to Peoples,Trust One, and PeoplesTrust One represents and warrants to Synovus, that, except as previously disclosed in the Synovus and PeoplesTrust One Disclosure Schedules of even date herewith delivered to the other party:
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(A) the representations set forth in Recitals A through D of the Plan with respect to it are true and correct and constitute representations and warranties for the purpose of Article V hereof;
(B) the outstanding shares of capital stock of it and its Subsidiaries are duly authorized, validly issued and outstanding, fully paid and (subject to 12 U.S.C. ss.55§55 in the case of a national bank subsidiary) non-assessable, and subject to no preemptive rights of current or past shareholders;
(C) each of it and its Subsidiaries has the power and authority, and is duly qualified in all jurisdictions (except for such qualifications the absence of which, either individually or in the aggregate, will not have a Material Adverse Effect) where such qualification is required to carry on its business as it is now being conducted, to own all its material properties and assets, and has all federal, state, local, and foreign governmental authorizations necessary for it to own or lease its properties and assets and to carry on its business as it is now being conducted, except for such authorizations the absence of which, either individually or in the aggregate, would not have a Material Adverse Effect;
(D) the shares of capital stock of each of its Subsidiaries are owned by it (except for director'sdirector’s qualifying shares) free and clear of all liens, claims, encumbrances and restrictions on transfer;transfer, except for such restrictions on transfer as may arise under applicable federal or state securities laws;
(E) subject, in the case of Peoples,Trust One, to the receipt of any required shareholder approval of this Plan, the Plan has been authorized by all necessary corporate action of it and, subject to receipt of suchall required shareholder approvals, of
shareholders, filing of all required governmental filings and notices, receipt of all required regulatory approvals and compliance with all applicable securities and banking laws, is a legal, valid and binding agreement of it enforceable against it in accordance with its terms, subject as to
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enforcement to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors'creditors’ rights and to general equity principles including the remedies of specific performance or injunctive relief;
(F) subject to receipt of all required shareholder approvals, filing of all required governmental filings and notice, receipt of all required regulatory approvals and compliance with all applicable securities and banking laws, the execution, delivery and performance of the Plan by it does not, and the consummation of the transactions contemplated hereby by it will not, constitute: (1) a breach or violation of, or a default under, any law, rule or regulation or any judgment, decree, order, governmental permit or license, or agreement, indenture or instrument of it or its Subsidiaries or to which it or its Subsidiaries (or any of their respective properties) is subject which breach, violation or default would have a Material Adverse Effect, or enable any person to enjoin any of the transactions contemplated hereby; or (2) a breach or violation of, or a default under, the certificate or articles of incorporation or bylaws of it or any of its Subsidiaries; and the consummation of the transactions contemplated hereby will not require any consent or approval under any such law, rule, regulation, judgment, decree, order, governmental permit or license or the consent or approval of any A-7
other party to any such agreement, indenture or instrument, other than the required approvals of applicable regulatory authorities and the approval of the shareholders of Peoples,Trust One, both of which are referred to in paragraph (A) of Article V and any consents and approvals the absence of which will not have a Material Adverse Effect;
(G) in the case of Synovus, since December 31, 2001, it has filed all forms, reports and documents with the SEC required to be filed by it pursuant to the federal securities laws and SEC rules and regulations thereunder (the "SEC
Reports"“SEC Reports”), each of which complied as to form, at the time such form, report or document was filed, in all material respects with the applicable requirementrequirements of the Securities Act of 1933, as amended ("(“Securities Act"Act”), the Exchange Act and the applicable rules and regulations thereunder. As of their respective dates, none of the SEC Reports, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. Each of the balance sheets in or incorporated by reference into the SEC Reports (including the related notes and schedules) fairly presents the financial position of the entity or entities to which it relates as of its date and each of the statements of operations and retained earnings and of cash flows and changes in financial position or equivalent statements in or incorporated by reference into the SEC Reports (including any related notes and schedules) fairly presents the results of operations, retained earnings and cash flows and changes in financial position, as the case may be, of the entity or entities to which it relates for the periods set forth therein (subject, in the case of unaudited interim statements, to normal year-end audit adjustments that are not material in amount or effect), in each case in accordance with generally accepted accounting principles applicable to bank holding companies consistently applied during the periods involved, except as may be noted therein. It has no material obligations or liabilities (contingent or otherwise) except as disclosed in the SEC Reports. For purposes of this paragraph, material shall have the meaning as defined under the Securities Act, the Exchange Act and the rules promulgated thereunder;
(H) in the case of Peoples:Trust One: (1) it has previously delivered to Synovus copies of the financial statements of Peoples, and of Peoples' Subsidiaries,Trust One as of and for each of the years ended December 31, 2001 and 2002, and for the period ended JuneSeptember 30, 2003, and PeoplesTrust One shall deliver to Synovus, as soon as practicable following the preparation of additional financial statements for each subsequent calendar quarter of Peoples and Peoples' Subsidiaries,Trust One, the additional financial statements of Peoples and Peoples' SubsidiariesTrust One (including
with respect to Peoples Bank, call reports of Peoples Bank)Trust One) as of and for each subsequent calendar quarter (such financial statements, unless otherwise indicated, being hereinafter referred to collectively as the "Financial“Financial Statements of Peoples" and the "Financial Statements of Peoples' Subsidiaries,"
respectively)Trust One”); and (2) each of the Financial Statements of Peoples and each of
the Financial Statements of Peoples' SubsidiariesTrust One (including the related notes), have been or will be prepared in all material respects in accordance with generally accepted accounting principles, which principles have been and will be consistently applied during the periods involved, except as otherwise noted therein, and all the books and records A-8
of Peoples and Peoples' SubsidiariesTrust One have been, are being, and will be maintained in all material respects in accordance with applicable legal and accounting requirements and reflect only actual transactions. Each of theThe Financial Statements of Peoples and each of the Financial Statements of Peoples'
SubsidiariesTrust One (including the related notes) fairly present or will fairly present the financial position of PeoplesTrust One on a consolidated basis and the financial
position of Peoples' Subsidiaries as of the respective dates thereof and fairly present or will fairly present the results of operations of PeoplesTrust One on a consolidated basis and the results of operations of Peoples' Subsidiaries for the respective periods therein set forth. Peoples and Peoples' Subsidiaries have
no material obligations (contingent or otherwise) except as disclosed in the
Financial Statements of Peoples and the Financial Statements of Peoples'
Subsidiaries.
(I) it has no material liabilities and obligations secured or unsecured, whether accrued, absolute, contingent or otherwise, known or unknown, due or to become due, including, but not limited to tax liabilities, that should have been but are not reflected in or reserved against in its audited financial statements as of December 31, 2002 or disclosed in the notes thereto;
(J) there has not been the occurrence of one or more events, conditions, actions or statements of fact which have caused a Material Adverse Effect with respect to it since December 31, 2002;
(K) all material federal, state, local, and foreign tax returns required to be filed by or on behalf of it or any of its Subsidiaries have been timely filed or requests for extensions have been timely filed and any such extension shall have been granted and not have expired; and to the best of its knowledge, all such returns filed are complete and accurate in all material respects. All taxes shown on returns filed by it have been paid in full or adequate provision has been made for any such taxes on its balance sheet (in accordance with generally accepted accounting principles). As of the date of the Plan, there is no audit, examination, deficiency, or
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refund litigation with respect to any taxes of it that would result in a determination that would have a Material Adverse Effect. All taxes, interest, additions, and penalties due with respect to completed and settled examinations or concluded litigation relating to it have been paid in full or adequate provision has been made for any such taxes on its balance sheet (in accordance with generally accepted accounting principles). It has not executed an extension or waiver of any statute of limitations on the assessment or collection of any material tax due that is currently in effect. Deferred taxes have been provided for in its financial statements in accordance with generally accepted accounting principles applied on a consistent basis;
(L)(1) no litigation, proceeding or controversy before any court or governmental agency is pending, and there is no pending claim, action or proceeding against it or any of its Subsidiaries, which is likely to have a Material Adverse Effect or to prevent consummation of the transactions contemplated hereby, and, to the best of its knowledge, no such litigation, proceeding, controversy, claim or action has been threatened or is contemplated; and (2) neither it nor any of its Subsidiaries is subject to any agreement, memorandum of understanding, commitment letter, board resolution or A-9
similar arrangement with, or transmitted to, any regulatory authority materially restricting its operations as conducted on the date hereof or requiring that certain actions be taken which could reasonably be expected to have a Material Adverse Effect;
(M) neither it nor its Subsidiaries are in default in any material respect under any material contract (as defined in Item 601(b)(10)(i) and (ii) of Regulation S-K) and there has not occurred any event that with the lapse of time or the giving of notice or both would constitute such a default;
(N) all "employee“employee benefit plans,"” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"(“ERISA”), that cover any of its or its Subsidiaries'Subsidiaries’ employees, comply in all material respects with all applicable requirements of ERISA, the Code and other applicable laws; neither it nor any of its Subsidiaries has engaged in a "prohibited transaction"“prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) with respect to any such plan which is likely to result in any material penalties or taxes under Section 502(i) of ERISA or Section 4975 of the Code; no material liability to the Pension Benefit Guaranty Corporation has been or is expected by it or them to be incurred with respect to any such plan which is subject to Title IV of ERISA ("(“Pension Plan"Plan”), or with respect to any "single-employer plan"“single-employer plan” (as defined in Section 4001(a)(15) of ERISA) currently or formerly maintained by it, them or any entity which is considered one employer with it under Section 4001 of ERISA or Section 414 of the Code; no Pension Plan had an "accumulated“accumulated funding deficiency"deficiency” (as defined in Section 302 of ERISA (whether or not waived) as of the last day of the end of the most recent plan year ending prior to the date hereof; the fair market value of the assets of each Pension Plan exceeds the present value of the "benefit liabilities"“benefit liabilities” (as defined in Section 4001(a)(16) of ERISA) under such Pension Plan as of the end of the most recent plan year with respect to the respective Planplan ending prior to the date hereof, calculated on the basis of the actuarial assumptions used in the most recent actuarial valuation for such Pension Plan as of the date hereof; to the actual knowledge of its executive officers, there are no pending or anticipated material claims against or otherwise involving any of its employee benefit plans and no suit, action or other litigation (excluding claims for benefits incurred in the ordinary course of activities of such plans) has been brought against or with respect to any such plan, except for any of the foregoing which would not have a Material Adverse Effect; no notice of a "reportable event"“reportable event” (as defined in Section 4043 of ERISA) for which the 30-day reporting requirement has not been waived has been required to be filed for any Pension Plan within the 12-month period ending on the date hereof; it and its Subsidiaries have not contributed to a "multi-employer plan"“multi-employer plan”, as defined in Section 3(37) of ERISA; and it and its Subsidiaries do not have any obligations for retiree health and life benefits under any benefit plan, contract or arrangement, except as required by Section 4980B of the Code and Part 6 of Subtitle B of Title I of ERISA;
(O) each of it and its Subsidiaries has good and marketable title to its respective properties and assets, tangible or intangible (other than property as to which it is lessee), except for such defects in title which would not, in the aggregate, have a Material Adverse Effect;
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(P) it knows of no reason why the regulatory approvals referred to in paragraphs (A)(2) and (A)(3) of Article V should not be obtained without the imposition of any condition of the type referred to in the proviso following such paragraphs (A)(2) and (3) and it has taken no action or agreed to take any action that is reasonably likely to prevent the MergerShare Exchange from qualifying for treatment as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code for federal income tax purposes;
(Q) in the case of Synovus, its reserve for possible loan and lease losses as shown in its audited financial statements as of December 31, 2002 was, and its reserve for possible loan and lease losses as shown in all Quarterly Reports on Form 10-Q filed subsequent to December 31, 2002 and prior to the Effective Date will be, adequate in all material respects under generally accepted accounting principles applicable to banks and bank holding companies, and in the case of Peoples,Trust One, its reserve for possible loan and lease losses as shown in its audited financial statements as of December 31, 2002 was, and its reserve for possible loan and lease losses as shown in its unaudited quarterly financial statements prepared for all quarters subsequent to December 31, 2002 and ending prior to the Effective Date will be, adequate in all material respects under generally accepted accounting principles applicable to banks and bank holding companies;
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(R) it and each of its Subsidiaries has all material permits, licenses, certificates of authority, orders, and approvals of, and has made all filings, applications, and registrations with, federal, state, local, and foreign governmental or regulatory bodies that are required in order to permit it to carry on its business as it is presently conducted and the absence of which would have a Material Adverse Effect; all such permits, licenses, certificates of authority, orders, and approvals are in full force and effect, and to the best knowledge of it, no suspension or cancellation of any of them is threatened;
(S) in the case of Synovus, the shares of capital stock to be issued pursuant to the Plan, when issued in accordance with the terms of the Plan, will be duly authorized, validly issued, fully paid and nonassessable and subject to no preemptive rights of any current or past shareholders;
(T) neither it nor any of its Subsidiaries is a party to, or is bound by, any collective bargaining agreement, contract, or other agreement or understanding with a labor union or labor organization, nor is it or any of its Subsidiaries the subject of a proceeding asserting that it or any such Subsidiary has committed an unfair labor practice or seeking to compel it or such Subsidiary to bargain with any labor organization as to wages and conditions of employment, nor is there any strike or other labor dispute involving it or any of its Subsidiaries pending or threatened;
(U) other than services provided by Hovde Financial, L.L.C.SunTrust Capital Markets, Inc., which has been retained by PeoplesTrust One and the arrangements with which, including fees, have been disclosed to Synovus prior to the date hereof, neither it nor any of its Subsidiaries, nor any of their respective officers, directors, or employees, has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions, or finder'sfinder’s fees, and no broker or finder has acted directly or
A-11 indirectly for it or any of its Subsidiaries, in connection with the Plan or the transactions contemplated hereby;
(V) the information to be supplied by it for inclusion in: (1) the Registration Statement on Form S-4 and/or such other form(s) as may be appropriate to be filed under the Securities Act, with the SEC by Synovus for the purpose of, among other things, registering the Synovus Common Stock to be issued to the shareholders of PeoplesTrust One in the MergerShare Exchange (the "Registration
Statement"“Registration Statement”); or (2) the proxy statement to be filed with the SEC under the Exchange Act and distributed in connection with Peoples'Trust One’s meeting of its shareholders to vote upon this Plan (as amended or supplemented from time to time, the "Proxy Statement"“Proxy Statement”, and together with the prospectus included in the Registration Statement, as amended or supplemented from time to time, the "Proxy“Proxy Statement/Prospectus"Prospectus”) will not at the time such Registration Statement becomes effective, and in the case of the Proxy Statement/Prospectus at the time it is mailed and at the time of the meeting of shareholders contemplated under this Plan, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading;
(W) for purposes of this section,Agreement, the following terms shall have the indicated meaning:
"Environmental Law"
“Environmental Law” means any federal, state or local law, statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, order, judgment, decree, injunction or agreement with any governmental entity relating to: (1) the protection, preservation or restoration of the environment (including, without limitation, air, water vapor, surface water, groundwater, drinking water supply, surface soil, subsurface soil, plant and animal life or any other natural resource); and/or (2) the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Hazardous Substances. The term Environmental Law includes without limitation: (1) the Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C. ss.§ 9601, et seq; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. ss.§ 6901, et seq; the Clean Air Act, as amended, 42 U.S.C. ss.§ 7401, et seq; the Federal Water Pollution Control Act, as amended, 33 U.S.C. ss.§ 1251, et seq; the Toxic Substances Control Act, as amended, 15 U.S.C. ss.§ 9601, et seq; the Emergency Planning and Community Right to Know Act, 42 U.S.C. ss.§ 11001, et seq; the Safe Drinking Water Act, 42 U.S.C. ss.§ 300f, et seq; all accompanying federal regulations and all comparable state and local laws; and (2) any common law (including without limitation common law that may impose strict liability) that may impose liability or obligations for injuries or damages due to, or threatened as a result of, the presence of or exposure to any Hazardous Substance.
"Hazardous Substance"
“Hazardous Substance” means any substance or waste presently listed, defined, designated or classified as hazardous, toxic, radioactive or dangerous, or otherwise regulated,
A-12 under any Environmental Law, whether by type or by quantity, including any material containing any such substance as a component. Hazardous Substances include without limitation petroleum or any derivative or by-product thereof, asbestos, radioactive material, and polychlorinated biphenyls.
"Loan
“Loan Portfolio Properties and Other Properties Owned"Owned” means those properties owned or operated by Synovus or PeoplesTrust One as applicable, or any of their respective Subsidiaries.
(1) there
There are no actions, suits, demands, notices, claims, investigations or proceedings pending or, to the actual knowledge of its executive officers, threatened against it and its Subsidiaries relating to the Loan Portfolio Properties and Other Properties Owned by it
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or its Subsidiaries under any Environmental Law, including without limitation any notices, demand letters or written requests for information from any federal or state environmental agency relating to any such liabilities under or violations of Environmental Law, nor, in the actual knowledge of its executive officers and the executive officers of its Subsidiaries, are there any circumstances which could lead to such actions, suits, demands, notices, claims, investigations or proceedings, except such which willcould not reasonably have, or result in, individually or in the aggregate, a Material Adverse Effect; and
(X) in the case of Peoples,Trust One, all securities issued by it (or any other person), convertible into PeoplesTrust One Common Stock shall, as a result and upon consummation of the MergerShare Exchange be convertible only into Synovus Common Stock.
IV. COVENANTS
Synovus hereby covenants to Peoples,Trust One, and PeoplesTrust One hereby covenants to Synovus, that:
(A) it shall take or cause to be taken all action necessary or desirable under the Plan on its part as promptly as practicable, including the filing of all necessary applications and the Registration Statement, so as to permit the consummation of the transactions contemplated by the Plan at the earliest possible date and cooperate fully with the other party hereto to that end;
(B) in the case of Peoples,Trust One, it shall: (1) take all steps necessary to duly call, give notice of, convene and hold a meeting of its shareholders for the purpose of approving the Plan as soon as is reasonably practicable; (2) distribute to its shareholders the Proxy Statement/Prospectus in accordance with applicable federal and state law and with its articles of incorporation and bylaws; (3) recommend to its shareholders that they approve the Plan (unless it has been advised in writing that to do so would constitute a breach of fiduciary or legal duties of its Board of Directors); and (4) cooperate and consult with Synovus with respect to each of the foregoing matters;
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(C) it will cooperate in the preparation and filing of the Proxy Statement/Prospectus and Registration Statement in order to consummate the transactions contemplated by the Plan as soon as is reasonably practicable;
(D) Synovus will advise Peoples,Trust One, promptly after Synovus receives notice thereof, of the time when the Registration Statement has become effective or any supplement or amendment has been filed, of the issuance of any stop order or the suspension of the qualification of the shares of Synovus Common Stock issuable pursuant to the Plan for offering or sale in any jurisdiction, of the initiation or threat of any proceeding for any such purpose or of any request by the SEC for the amendment or supplement of the Registration Statement or for additional information;
(E) in the case of Synovus, it shall take all actions to obtain, prior to the effective date of the Registration Statement, all applicable state securities law or "Blue Sky"“Blue Sky” permits, approvals, qualifications or exemptions for the Synovus shares to be issued pursuant to this Plan;
(F) subject to its disclosure obligations imposed by law or regulatory authority, unless reviewed and agreed to by the other party hereto in advance, it will not issue any press release or written statement for general circulation relating to the transactions contemplated hereby; provided however, that nothing in this paragraph (F) shall be deemed to prohibit either party from making any disclosure which its counsel deems necessary or advisable in order to satisfy such party'sparty’s disclosure obligations imposed by law;
(G) from and subsequent to the date hereof, it will: (1) give to the other party hereto and its respective counsel and accountants reasonable access to its premises and books and records during normal business hours for any reasonable purpose related to the transactions contemplated hereby; and (2) cooperate and instruct its respective counsel and accountants to cooperate with the other party hereto and with its respective counsel and accountants with regard to the formulation and production of all necessary information, disclosures, financial statements, registration statements and regulatory filings with respect to the transactions encompassed by the Plan;
(H) it shall notify the other party hereto as promptly as practicable of: (1) any breach of any of its representations, warranties or agreements contained herein; (2) any occurrence, or impending occurrence, of any event or circumstance which would cause or constitute a material breach of any of the representations, warranties or agreements of it contained herein; and (3) any material adverse change in its financial condition, results of operations or business; and (4) it shall use its best efforts to prevent or remedy the same;
(I) it shall cooperate and use its best efforts to promptly prepare and file all necessary documentation, to effect all necessary applications, notices, petitions, filings and other documents, and to obtain all necessary permits, consents, approvals and authorizations of all third parties and governmental bodies or agencies, including, in the case of Synovus, submission of applications for A-14
approval of the Plan and the transactions contemplated hereby to the Board of Governors of the Federal Reserve System (the "Board
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“Board of Governors"Governors”) in accordance with the provisions of the Bank Holding Company Act of 1956, as amended (the "BHC Act"“BHC Act”), the Tennessee Department of Financial Institutions (“Tennessee Department”), the Georgia Department of Banking and Finance ("(“Georgia Department"), the Florida Department of Financial Services ("Florida
Department"Department”) and to such other regulatory agencies as required by law;law, and each party shall notify the other of any comments or communications received from any such regulators;
(J) it will use its best efforts to cause the MergerShare Exchange to qualify as a reorganization within the meaning of Section 368(a) of the Code for federal income tax purposes;
(K) Synovus shall use its best efforts to cause the shares of Synovus Common Stock to be issued pursuant to the terms of this Plan to be approved for listing on the NYSE, and shall cause each such share shallto be entitled to ten (10) votes per share in accordance with and subject to those certain Articles of Amendment to Synovus'Synovus’ Articles of Incorporation dated April 24, 1986;
(L) following the Effective Date, Synovus shall continue to provide
generally tomaintain, on behalf of the Trust One officers and employees, of Peoples and its Subsidiariesthe Trust One employee benefits, including without limitation pension benefits, health and welfare benefits, life insurance and vacation and severance arrangements (collectively, "Employee Benefits"“Employee Benefits”), on terms and conditions which, when taken as a whole, are substantially similar to those currently provided by Peoples and its
Subsidiaries.Trust One. As soon as administratively and financially practicable following the Effective Date, Synovus shall provide generallypermit Trust one to adopt for the benefit of its officers and employees of
Peoples and its Subsidiaries Employee Benefits which, when taken as a whole, are substantially similar to those provided from time to time by Synovus and its Subsidiaries to their similarly situated officers and employees. With respect to Employee Benefits maintained by Synovus in which PeoplesTrust One participates after the Effective Date, Synovus agrees: (1) to treat service by PeoplesTrust One employees prior to the Effective Date as service with Synovus for eligibility and vesting purposes only; and (2) to waive pre-existing condition limitations, if any, as would otherwise be applied to participating employees of PeoplesTrust One upon the implementation of such Employee Benefits constituting "group“group health plans"plans” within the meaning of Section 5000(b)(i) of the Code;
(M) in the case of Synovus, it shall promptly furnish PeoplesTrust One with copies of all documents filed prior to the Effective Date with the SEC and all documents filed with other governmental or regulatory agencies or bodies in connection with the MergerShare Exchange and, in the case of Peoples,Trust One, it will furnish to Synovus, promptly after the preparation and/or receipt by PeoplesTrust One thereof, copies of its unaudited monthly financial statements, and shall furnish to
Synovus, promptly after the preparation and/or receipt by Peoples or its
Subsidiaries copies of all monthly financial statements of its Subsidiaries, and
all call reports of Peoples BankTrust One for the applicable periods then ended, and such financial statements and call reports shall, upon delivery to Synovus, be treated for purposes of paragraph (H) of Article III hereof, as among the Financial Statements of Peoples and Financial Statements of Peoples'
Subsidiaries;
A-15Trust One;
(N) PeoplesTrust One shall use its best efforts to cause each director, executive officer and other person who is an "affiliate"“affiliate” (for purposes of Rule 145 under the Securities Act) to deliver to Synovus as soon as practicable after the date hereof, but in no event after the date of the Peoples shareholders'Trust One shareholders’ meeting called to approve the Merger,Share Exchange, a written agreement providing that such person will not sell, pledge, transfer or otherwise dispose of any shares of PeoplesTrust One Common Stock held by such "affiliate"“affiliate” except as contemplated by this Agreement and will not sell, pledge, transfer or otherwise dispose of the shares of Synovus Common Stock to be received by such "affiliate"“affiliate” in the Merger,Share Exchange, except in compliance with the applicable provisions of the Securities Act and the rules and regulations thereunder. The certificates of Synovus Common Stock issued to affiliates of PeoplesTrust One will bear an appropriate legend reflecting the foregoing;
(O) it will not directly or indirectly take any action or omit to take any action to cause any of its representations and warranties made in this Plan to become untrue;
(P) in the case of Synovus, it shall take no action which would cause the shareholders of PeoplesTrust One to recognize gain or loss as a result of the MergerShare Exchange to the extent such shareholders would not otherwise recognize gain or loss as described in paragraph (A)(8) of Article V;
(Q) PeoplesTrust One will, within thirty (30) days after the date hereof, engage a firm reasonably satisfactory to Synovus to conduct: (a) a Phase I environmental site assessmentassessments (“Phase I’s”) of the banking facilitiesany real property currently owned by PeoplesTrust One upon which PeoplesTrust One is conducting a banking business, which assessmentassessments substantially shall meet the standards of ASTM E1527-00 and also shall include at a minimum a site history, on-site inspection, asbestos sampling of presumed asbestos containing material evaluation of surrounding properties(as defined pursuant to Environmental Law) and soil tests if the results of the Phase I indicate a need therefor;I’s recommend Phase II soil testing; and (b) a transaction screen that meets the standards of ASTM E 1528 for the property that PeoplesTrust One leases, and in addition, PeoplesTrust One agrees to conduct a Phase I assessment of the leased property if, in Synovus'Synovus’ reasonable judgment, the transaction screen indicates potential environmental liabilities associated with the leased properties accruing to PeoplesTrust One or Peoples'Trust One’s successor. Synovus has requested such inspection and testing in an effort to reasonably determine whether potential liabilities exist relating to Environmental Law. Delivery of the Phase I assessmentsI’s and transaction screenscreens reasonably satisfactory to Synovus is an express condition precedent to the consummation of the Merger.Share Exchange. Within fifteen (15) days after receipt of these reports, Synovus shall notify PeoplesTrust One in writing whether or not, in the reasonable judgment of Synovus, theany potential liabilities identified in such reports willcould reasonably be expected to have or result in a
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Material Adverse Effect on Peoples.Trust One. In the event that Synovus determines, in its reasonable judgment, that the results ofany potential liabilities identified in such reports willcould reasonably be expected to have or result in a Material Adverse Effect on Peoples,Trust One, such written notification shall include a statement by Synovus regarding whether or not it intends to terminate this Agreement based upon the results of such reports. The Parties agree that Synovus has given PeoplesTrust One good and valuable consideration for its agreement to obtain and pay the cost of such inspection and testing, and Synovus shall be entitled to rely on same;
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(R) Prior to the Effective Date, PeoplesTrust One shall purchase for, and on behalf of, its current and former officers and directors, extended coverage under the current directors'directors’ and officers'officers’ liability insurance policy maintained by PeoplesTrust One to provide for continued coverage of such insurance for a period of four (4) years following the Effective Date with respect to matters occurring prior to the Effective Date;
(S) (1) In the case of Synovus, subject to the conditions set forth in paragraph (S)(2) below, for a period of four (4) years after the Effective Date, Synovus shall indemnify, defend and hold harmless each person entitled to indemnification from Peoples and its SubsidiariesTrust One (each, an "Indemnified Party"“Indemnified Party”) against all liabilities arising out of actions or omissions occurring at or prior to the Effective Date (including the transactions contemplated by this Agreement) to the fullest extent permitted under FloridaTennessee law and by Peoples' and
its Subsidiaries' ArticlesTrust One’s articles of Incorporationincorporation and bylaws as in effect on the date hereof, including provisions relating to advances of expenses incurred in the defense of any litigation. Without limiting the foregoing, in any case in which approval by Synovus is required to effectuate any indemnification, Synovus shall direct, at the election of the Indemnified Party, that the determination of any such approval shall be made by independent counsel mutually agreed upon between Synovus and the Indemnified Party;
(2) Any Indemnified Party wishing to claim indemnification under paragraph (S)(1) above, Article IV(S)(1) upon learning of any such liability or litigation, shall promptly notify Synovus thereof. In the event of any such litigation (whether arising before or after the Effective Date), (a) Synovus shall have the right to assume the defense thereof, and Synovus shall not be liable to such Indemnified Parties for any legal expenses of other counsel or any other expenses subsequently incurred by such Indemnified Parties in connection with the defense thereof, except that if Synovus elects not to assume such defense or counsel for the Indemnified Parties advises that there are substantive issues which raise conflicts of interest between Synovus and the Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to them, and Synovus shall pay all reasonable fees and expenses of such counsel for the Indemnified Parties promptly as statements therefor are received; provided, that Synovus shall be obligated pursuant to this paragraph (S)(2) to pay for only one firm of counsel for all Indemnified Parties in any jurisdiction, (b) the Indemnified Parties will cooperate in the defense of any such litigation, and (c) Synovus shall not be liable for any settlement effected without its prior written consent, which consent will not unreasonably be withheld; and provided further, that Synovus shall not have any obligation hereunder to any Indemnified Party when and if a court of competent jurisdiction shall determine, and such determination shall have become final, that the indemnification of such Indemnified Party in the manner contemplated hereby is prohibited by applicable law; and
(T) prior to the Effective Date, PeoplesTrust One will use its best efforts to take all steps required to exempt the transactions contemplated by this Agreement from any applicable state anti-takeover law.
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law; and
(U) on or before December 31, 2003, Trust One shall take all action necessary to cause its subsidiary, Trust One Insurance Services, LLC, to be dissolved under the laws of Tennessee.
V. CONDITIONS TO CONSUMMATION
(A) The respective obligations of Synovus and of PeoplesTrust One to effect the MergerShare Exchange shall be subject to the satisfaction prior to the Effective Date of the following conditions:
(1) the Plan and the transactions contemplated hereby shall have been approved by the requisite vote of the shareholders of PeoplesTrust One in accordance with applicable law and PeoplesTrust One shall have furnished to Synovus certified copies of resolutions duly adopted by Peoples'Trust One’s shareholders evidencing the same;
(2) the procurement by Synovus and PeoplesTrust One of approval of the Plan and the transactions contemplated hereby by the Board of Governors, the GeorgiaTennessee Department and the FloridaGeorgia Department;
(3) procurement of all other regulatory consents and approvals which are necessary to the consummation of the transactions contemplated by the Plan; provided, however, that no approval or consent in paragraphs (A)(2) and (A)(3) of this Article V shall be deemed to have been received if it shall include any conditions or requirements (other than conditions or requirements which are customarily included in such an approval or consent which do not have a Material Adverse Effect) which would have such a Material Adverse Effect on the economic or business benefits of the transactions contemplated hereby as to render inadvisable the consummation of the MergerShare Exchange in the reasonable opinion of the Board of Directors of Synovus or Peoples;Trust One;
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(4) the satisfaction of all other statutory or regulatory requirements, including the requirements of NYSE or other self regulating organizations, which are necessary to the consummation of the transactions contemplated by the Plan;
(5) no party hereto shall be subject to any order, decree or injunction or any other action of a United States federal or state court of competent jurisdiction permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement;
(6) no party hereto shall be subject to any order, decree or injunction or any other action of a United States federal or state governmental, regulatory or administrative agency or commission permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement;
(7) the Registration Statement shall have become effective under the Securities Act and no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been initiated or threatened by the SEC, and Synovus shall have received all state securities law and "Blue Sky"“Blue Sky” permits, approvals, qualifications or exemptions necessary to consummate the transactions contemplated hereby;
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(8) each party shall have received an opinion ("(“Tax Opinion"Opinion”) from KPMGSmith, Gambrell & Russell, LLP certified public accountants ("KPMG"(“SGR”), on or before the Effective Date, to the effect that the Merger will be treated for federal income tax purposes (a) the Share Exchange will be treated as a reorganization within the meaning of Section 368(a)(1)(A) of the Code, and that, accordingly: (i) no(b) the exchange in the Share Exchange of Trust One Common Stock for Synovus Common Stock will not give rise to gain or loss to the shareholders of Trust One with respect to such exchange (except to the extent of cash received in lieu of fractional shares), (c) neither Trust One nor Synovus will be recognized by Synovusrecognize gain or Peoplesloss as a resultconsequence of the Merger;Share Exchange except for income and (ii)deferred gain but not loss, will be
recognized by each shareholder of Peoples who exchanges his or her shares of
Peoples Common Stock for shares of Synovus Common Stock pursuant to the Merger
equal to the lesser of (A) the cash received by such shareholder or (B) the gain
realized (but not less than zero) by such shareholder from such exchange, which
will equal the sumTreasury regulations issued under Section 1502 of the cashInternal Revenue Code. In rendering such Tax Opinion, SGR shall be entitled to rely upon representations of officers of Trust One and the fair market value of the Synovus Common
Stock received by such shareholder over such shareholder's basisreasonably satisfactory in his or her
Peoples Common Stock;form and substance to SGR; and
(9) each party shall have delivered to the other party a certificate, dated as of the Effective Date, signed by its Chief Executive Officer and its Chief Financial Officer, to the effect that, to the best knowledge and belief of such officers, the statement of facts and representations made on behalf of the management of such party, presented to KPMG,SGR, in delivering the Tax Opinion, were at the date of such presentation true, correct and complete. Each party shall have received a copy of the Tax Opinion referred to in paragraph (A)(8) of this Article V.
(B) The obligation of Synovus to effect the MergerShare Exchange shall be subject to the satisfaction prior to the Effective Date of the following additional conditions:
(1) the representations and warranties of PeoplesTrust One contained in this Agreement shall be true and correct in all material respects, in each case on the date hereof and on the Effective Date (unless the representations and warranties address matters as of a particular date, in which case they shall remain true and correct in all material respects as of such date) and the covenants contained herein shall be complied with by the Effective Date; provided, however, if any such representation or warranty shall be subject to a qualification as to materiality, such qualified representation and warranty shall be true and correct in all respects, in each case on the date hereof and on the Effective Date (unless the representations and warranties address matters as of a particular date, in which case they shall remain true and correct in all respects as of such date);
(2) there shall be no discovery of facts, or actual or threatened causes of action, investigations or proceedings by or before any court or other governmental body that relates to or involves either Peoples or
its Subsidiaries:Trust One: (a) which, in the reasonable judgment of Synovus, would have a Material Adverse Effect, or which may be foreseen to have a Material Adverse Effect on, either PeoplesTrust One or the consummation of the transactions contemplated by this Agreement; (b) that challenges the validity or legality of this Agreement or the consummation of the transactions contemplated by this Agreement; or (c) that seeks to restrain or invalidate the consummation of the transactions contemplated by this Agreement or seeks damages in connection therewith;
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(3) Synovus shall not have learned of any fact or condition with respect to the business, properties, assets, liabilities, deposit relationships or earnings of PeoplesTrust One which, in the reasonable judgment of Synovus, is materially at variance with one or more of the warranties or representations set forth in this Agreement or which, in the reasonable judgment of Synovus, has or will have a Material Adverse Effect on Peoples;Trust One;
(4) David W. DunbarJames P. Farrell shall have entered into an employment agreement with Synovus as proposed by Synovus and approved by Mr. DunbarFarrell which will become effective as of the Effective Date;
(5) on the Effective Date, Peoples BankTrust One will have a CAMELS rating of at least 2 and a Compliance Rating and Community Reinvestment Act Rating of at least Satisfactory;
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(6) on the Effective Date, PeoplesTrust One will have a non-performing assets ratio (with such ratio to be determined as follows: nonaccrual and restructured loans plus other real estate divided by total loans net of unearned income plus other real estate) of not more than .50%0.75%, an annualized net charge off ratio (based on the six month period ending on the Effective Date) of not more than .25%0.25% and an allowance for loan losses which will be adequate in all material respects under generally accepted accounting principles and regulatory requirements applicable to banks;banks. For purposes of this Article V(B)(6), the non-performing assets ratio and annualized net charge off ratio shall be calculated without taking into account any lending relationships with, or charge offs associated with, Robert C. Bates but only to the extent of the charge offs proposed under the caption “Additional Information” contained in the Trust One Disclosure Schedules;
(7) PeoplesTrust One shall have delivered to Synovus the environmental reports referenced in Article IV(R)IV(Q);
(8) the results of any regulatory exam of Peoples and its
SubsidiariesTrust One occurring between the date hereof and the Effective Date shall be reasonably satisfactory to Synovus; and
(9) each of the officers and directors of PeoplesTrust One shall have delivered a letter to Synovus to the effect that such person is not aware of any claims he might have against PeoplesTrust One other than routine compensation, benefits and the like as an employee, or ordinary rights as a customer.customer;
(10) Synovus shall have received an opinion from Powell, Goldstein, Frazer & Murphy LLP, dated as of the Effective Date, in a form reasonably satisfactory to Synovus; and
(11) holders of more than 5% of the shares of Trust One Common Stock shall not have validly exercised their dissenters’ rights in accordance with paragraph (E) of Article I of this Agreement and the provisions of the Tennessee Act.
(C) The obligation of PeoplesTrust One to effect the MergerShare Exchange shall be subject to the satisfaction prior to the Effective Date of the following additional conditions:
(1) the representations and warranties of Synovus contained in this Agreement shall be true and correct in all material respects, in each case on the date hereof and on the Effective Date (unless the representations and warranties address matters as of a particular date, in which case they shall remain true and correct in all material respects as of such date) and the covenants contained herein shall be complied with by the Effective Date; provided, however, if any such representation or warranty shall be subject to a qualification as to materiality, such qualified representation and warranty shall be true and correct in all respects, in each case on the date hereof A-20
and on the Effective Date (unless the representations and warranties address matters as of a particular date, in which case they shall remain true and correct in all respects as of such date);
(2) the listing for trading of the shares of Synovus Common Stock which shall be issued pursuant to the terms of this Plan on the NYSE, shall have been approved by the NYSE subject to official notice of issuance and the Board of Directors of Synovus shall have adopted a resolution granting 10 votes per share with respect to the shares constitutingof Synovus Common Stock which shall be issued pursuant to the Stock Consideration
underterms of this Agreement;Plan;
(3) there shall be no discovery of facts, or actual or threatened causes of action, investigations or proceedings by or before any court or other governmental body that relates to or involves either Synovus or its Subsidiaries: (a) which, in the reasonable judgment of Peoples,Trust One, would have a Material Adverse Effect on, or which may be foreseen to have a material Adverse Effect on, either Synovus or the consummation of the transactions contemplated by this Agreement; (b) that challenges the validity or legality of this Agreement or the consummation of the transactions contemplated by the Agreement; or (c) that seeks to restrain or invalidate the consummation of the transactions contemplated by this Agreement or seeks damages in connection therewith;
(4) PeoplesTrust One shall not have learned of any fact or condition with respect to the business, properties, assets, liabilities, deposit relationships or earnings of Synovus which, in the reasonable judgment of Peoples,Trust One, is materially at variance with one or more of the warranties or representations set forth in this Agreement or which, in the reasonable judgment of Peoples,Trust One, has or will have a Material Adverse Effect on Synovus;Synovus or which has or may materially affect the value and preferences of the Synovus Common Stock;
(5) PeoplesTrust One shall have received from the Senior Deputy General Counsel of Synovus an opinion to the effect that Synovus is duly organized, validly existing and in good standing, the Plan has been duly and validly authorized by all necessary corporate action on the part of Synovus, has been duly and validly executed and delivered by Synovus, is the valid and binding obligation of Synovus, enforceable in accordance with its terms except as such may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors'creditors’ rights generally and that the shares of Synovus
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Common Stock to be issued in the MergerShare Exchange are duly authorized, validly issued, fully paid, nonassessable, and not subject to any preemptive rights of any current or past shareholders; and
(6) PeoplesTrust One shall have received from Hovde Financial, L.L.C.SunTrust Capital Markets, Inc. a letter to the effect that, in the opinion of such firm, the Per Share Cash
Consideration andconsideration to be received by the Per Share Stock Consideration areshareholders of Trust One is fair, from a financial point of view, to the holders of PeoplesTrust One Common Stock; andStock.
(7) Synovus shall not have issued any shares of stock with preferences superior to those of the Synovus Common Stock to be issued to the shareholders of PeoplesTrust One in connection with the Merger.
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Share Exchange.
VI. TERMINATION
A. The Plan may be terminated prior to the Effective Date, either before or after its approval by the stockholdersshareholders of Peoples:Trust One:
(1) by the mutual consent of Synovus and Peoples,Trust One, if the Board of Directors of each so determines by vote of a majority of the members of its entire Board;
(2) by Synovus or PeoplesTrust One if consummation of the MergerShare Exchange does not occur by reason of the failure of any of the conditions precedent set forth in Article V hereof unless the failure to meet such condition precedent is due to a breach of the Plan by the party seeking to terminate; and
(3) by Synovus or PeoplesTrust One if its Board of Directors so determines by vote of a majority of the members of its entire Board in the event that the MergerShare Exchange is not consummated by March 31,June 30, 2004 unless the failure to so consummate by such time is due to the breach of the Plan by the party seeking to terminate; and
(4) by Peoples if the closing price of Synovus Common Stock on
the NYSE decreases by more than 15% from $24.12 and such decrease as measured
from August 19, 2003 exceeds the change in the aggregate closing price per share
of an index of Southeastern Bank Holding Company stocks consisting of BB&T
Corporation, SunTrust Banks, Inc., SouthTrust Corporation, Compass Bancshares,
Inc., Hibernia Corporation, The Colonial BancGroup, Inc., Regions Financial
Corporation, Union Planters Corporation, AmSouth, National Commerce, and First
Tennessee National on any date of determination, including the Effective Date,
by more than 15 percentage points. Synovus shall perform such calculation on a
monthly basis and notify Peoples of any such change and Peoples shall thereafter
have ten business days in which to make a determination to terminate this
Agreement;
(5) by Synovus, if the closing price of Synovus Common Stock
on the NYSE exceeds $24.12 by 15% or more and such percentage increase over
$24.12, as measured from the first date the closing price of Synovus Common
Stock on the NYSE exceeds $24.12, exceeds the change in the aggregate closing
price per share of the index of Southeastern Bank Holding Company stocks in the
paragraph (A)(4) above, on any date of determination, including the Effective
Date, by more than 15 percentage points. Synovus shall perform such calculation
on a monthly basis and notify Peoples of any such change and Synovus shall
thereafter have ten business days in which to make a determination to terminate
this Agreement.
(6) by Peoples,
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(a) if, during the five (5) business days immediately
prior to the Effective Date, the Total Cash
Consideration is greater than fifty-five percent
(55%) of the Tax-Free Calculation Denominator such
that the KPMG cannot issue the Tax Opinion pursuant
to paragraph (A)(8) of Article V, then Peoples can
either terminate the Agreement or negotiate with
Synovus to adjust the Per Share Cash Consideration
and/or the Per Share Stock Consideration as well as
the Synovus Option Value Multiple and the Synovus
Option Price Divisor so as to enable KPMG to issue
the Tax Opinion.
(b) Definitions:
(i) "Tax-Free Calculation Denominator"
shall be equal to the sum of the
Total Cash Consideration plus the
Total Stock Consideration.
(ii) "Total Cash Consideration" shall be
equal to the Per Share Cash
Consideration multiplied by
2,047,184 (or the then outstanding
number of shares of Peoples Common
Stock), plus any additional cash
paid by Synovus pursuant to
dissenters rights exercised in
accordance with the Florida Act.
(iii) "Total Stock Consideration" shall be
equal to the Per Share Stock
Consideration multiplied by
2,047,184 (or the then outstanding
number of shares of Peoples Common
Stock), multiplied by the closing
price of Synovus Common Stock on the
New York Stock Exchange on the
Effective Date.terminate.
B. In the event of the termination and abandonment of this Agreement pursuant to paragraph (A) of Article VI of this Agreement, this Agreement shall become void and have no effect, except as set forth in paragraph (A) of Article VIII, and there shall be no liability on the part of any party hereto or their respective officers or directors; provided, however, that: (1) PeoplesTrust One shall be entitled to a cash payment from Synovus for Peoples'Trust One’s reasonable out-of-pocket expenses relating to the MergerShare Exchange, in an amount not to exceed $150,000, which amount shall not be deemed an exclusive remedy or liquidated damages, in the event of the termination of this Agreement due to the failure by Synovus to satisfy any of its representations, warranties or covenants set forth herein; and (2) Synovus shall be entitled to a cash payment from PeoplesTrust One for Synovus'Synovus’ reasonable out-of-pocket expenses relating to the MergerShare Exchange and for reimbursement of the fair market value of services provided by internal counsel and due diligence team members in connection with the MergerShare Exchange in an amount not to exceed $150,000, which amount shall not be deemed an exclusive remedy or liquidated damages, A-23
in the event of the termination of this Agreement due to the failure by PeoplesTrust One to satisfy any of its representations, warranties or covenants set forth herein.
VII. EFFECTIVE DATE
The "Effective Date"“Effective Date” shall be the date on which the MergerShare Exchange becomes effective as specified in the CertificateArticles of MergerShare Exchange to be filed with the Secretary of State of Georgia and the Department of State of Florida.
Tennessee.
VIII. OTHER MATTERS
(A) The agreements and covenants of the parties which by their terms apply in whole or in part after the Effective Date shall survive the Effective Date. Except for paragraph (S)(U) of Article III, and paragraph (N) of Article IV which shall survive the Effective Date, no other representations, warranties, agreements and covenants shall survive the Effective Date. If the Plan shall be terminated, the agreements of the parties in paragraph (G)(F) of Article IV, paragraph (B) of Article VI and paragraphs (E) and (F) of this Article shall survive such termination.
(B) Prior to the Effective Date, any provision of the Plan may be: (1) waived by the party benefited by the provision or by both parties; or (2) amended or modified at any time (including the structure of the transaction) by an agreement in writing between the parties hereto approved by their respective Boards of Directors (to the extent allowed by law) or by their respective Boards of Directors.
(C) This Plan may be executed in multiple and/or facsimile originals, and each copy of the Plan bearing the manually executed, facsimile transmitted or photocopied signature of each of the parties hereto shall be deemed to be an original.
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(D) The Plan shall be governed by, and interpreted in accordance with, the laws of the State of Georgia.
(E) Each party hereto will bear all expenses incurred by it in connection with the Plan and the transactions contemplated hereby, including, but not limited to, the fees and expenses of its respective counsel and accountants.
(F) Each of the parties and its respective agents, attorneys and accountants will maintain the confidentiality of all information provided in connection herewith which has not been publicly disclosed unless it is advised by counsel that any such information is required by law to be disclosed.
(G) All notices, requests, acknowledgments and other communications hereunder to a party shall be in writing and shall be deemed to have been duly given when delivered by hand, A-24
telecopy, telegram or telex (confirmed in writing), by overnight courier or sent
by registered or certified mail, postage paid, to such party at its address set forth below or such other address as such party may specify by notice to the other party hereto.
If to Synovus:
Mr. Thomas J. Prescott
Chief Financial Officer
Synovus Financial Corp.
901 Front Avenue, Suite 301
Columbus, Georgia 31901
Fax (706) 649-2342
With a copy to:
Ms. Kathleen Moates
Senior Deputy General Counsel
Synovus Financial Corp.
901 Front Avenue, Suite 202
Columbus, Georgia 31901
Fax (706) 644-1957
If to Peoples:
David W. Dunbar
President and Chief Executive Officer
32845 U.S. Highway 19
Palm Harbor, FL 34684
With a copy to:
Cathi C. Wilkinson
Pennington, Moore, Wilkinson, Bell &
Dunbar, P.A.
P.O. Box 10095
Tallahassee, FL 32302-2095
If to Synovus: | ||||
Mr. Thomas J. Prescott Chief Financial Officer Synovus Financial Corp. 901 Front Avenue, Suite 301 Columbus, Georgia 31901 Fax (706) 649-2342 | ||||
With a copy to: | ||||
Ms. Kathleen Moates Senior Deputy General Counsel Synovus Financial Corp. 901 Front Avenue, Suite 202 Columbus, Georgia 31901 Fax (706) 644-1957 | ||||
If to Trust One: | ||||
Mr. James P. Farrell President and Chief Executive Officer Trust One Bank 1715 Aaron Brenner Drive Memphis, Tennessee 38120 Fax (901) 759-3580 | ||||
With a copy to: | ||||
Walter G. Moeling, IV, Esq. Powell, Goldstein, Frazer & Murphy LLP 191 Peachtree Street, NE, 16th Floor Atlanta, Georgia 30303 Fax (404) 572-6999 |
(H) All terms and provisions of the Plan shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. Except as expressly provided for herein, nothing in this Plan is intended to confer upon any other person any rights or remedies of any nature whatsoever under or by reason of this Plan.
(I) The Plan represents the entire understanding of the parties hereto with reference to the transactions contemplated hereby and supersedes any and all other oral or written agreements heretofore made.
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(J) This Plan may not be assigned by either party hereto without the written consent of the other party.
[Signature page follows]
A-14
In Witness Whereof,witness whereof, the parties hereto have caused this instrument to be executed in counterparts by their duly authorized officers as of the day and year first above written.
SYNOVUS FINANCIAL CORP.
By: /s/ Thomas J. Prescott
-----------------------------------------------------
Title: Executive V.P. and CFO
--------------------------------------------
Attest: /s/Kathy Moates
------------------------------------------------------
Title: Assistant Secretary
--------------------------------------------
PEOPLES FLORIDA BANKING CORPORATION
By: /s/David W. Dunbar
-----------------------------------------------------
Title: Chairman and CEO
---------------------------------------------
Attest: /s/William B. Bard
-----------------------------------------------------
Title: Senior V.P. and CFO
---------------------------------------------
acq\Peoples\ appendix A.doc
A-26
Appendix "B"
Florida Statutes
Dissenters' Rights
607.1301 Dissenters' rights; definitions. --
SYNOVUS FINANCIAL CORP. | ||
By: | /s/ Thomas J. Prescott | |
Title: | Executive Vice President and CFO | |
Attest: | /s/ Kathleen Moates | |
Title: | Assistant Secretary | |
TRUST ONE BANK | ||
By: | /s/ James P. Farrell | |
Title: | President and Chief Executive Officer | |
Attest: | ||
Title: | ||
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APPENDIX B
TENNESSEE CODE ANNOTATED
Copyright (c) 1955-2003 by The followingState of Tennessee
All rights reserved.
*** CURRENT THROUGH THE 2003 SESSION ***
*** ANNOTATIONS CURRENT THROUGH OCTOBER 17, 2003 ***
TITLE 48. CORPORATIONS AND ASSOCIATIONS
FOR-PROFIT BUSINESS CORPORATIONS
CHAPTER 23. DISSENTERS’ RIGHTS
48-23-101. Chapter definitions apply to
ss. 607.1302 and 607.1320
As used in this chapter, unless the context otherwise requires:
(1) "Corporation"“Beneficial shareholder” means the person who is a beneficial owner of shares held by a nominee as the record shareholder;
(2) “Corporation” means the issuer of the shares held by a dissenting
shareholderdissenter before the corporate action, or the surviving or acquiring corporation by merger or share exchange of that issuer.
(2) "Fair value,"issuer;
(3) “Dissenter” means a shareholder who is entitled to dissent from corporate action under § 48-23-102 and who exercises that right when and in the manner required by part 2 of this chapter;
(4) “Fair value”, with respect to a dissenter'sdissenter’s shares, means the value of the shares asimmediately before the effectuation of the close of business oncorporate action to which the day prior to the
shareholders' authorization date,dissenter objects, excluding any appreciation or depreciation in anticipation of the corporate action;
(5) “Interest” means interest from the effective date of the corporate action unless exclusion
would be inequitable.
(3) "Shareholders' authorization date"that gave rise to the shareholder’s right to dissent until the date of payment, at the average auction rate paid on United States treasury bills with a maturity of six (6) months (or the closest maturity thereto) as of the auction date for such treasury bills closest to such effective date;
(6) “Record shareholder” means the date on which the
shareholders' vote authorizing the proposed action was taken, the date
on which the corporation received written consents without a meeting
from the requisite number of shareholdersperson in order to authorize the
action, or,whose name shares are registered in the case of a merger pursuant to s.607.1104, the day
prior to the date on which a copy of the plan of merger was mailed to
each shareholder of record of the subsidiary corporation.
607.1302 Right of shareholders to dissent. --
(1) Any shareholderrecords of a corporation hasor the rightbeneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation; and
(7) “Shareholder” means the record shareholder or the beneficial shareholder.
48-23-102. Right to dissent
(a) A shareholder is entitled to dissent from, and obtain payment of the fair value of his or herthe shareholder’s shares in the event of, any of the following corporate actions:
(a)
(1) Consummation of a plan of merger to which the corporation is a party:
1.
(A) If shareholder approval is required for the merger by § 48-21-104 or the charter and the shareholder is entitled to vote on the merger,merger; or
2.
(B) If the corporation is a subsidiary that is merged with its parent under s.607.1104, and§ 48-21-105;
(2) Consummation of a plan of share exchange to which the shareholders would have beencorporation is a party as the corporation whose shares will be acquired, if the shareholder is entitled to vote on action taken, except for the applicability of
s.607.1104;
(b)plan;
(3) Consummation of a sale or exchange of all, or substantially all, of the property of the corporation other than in the usual and regular course of business, if the shareholder is entitled to vote on the sale or exchange, pursuant to
s.607.1202, including a sale in dissolution, but not including a sale pursuant to court order or a sale for cash pursuant to a plan by which all or substantially all of the net proceeds of the sale will be distributed to the shareholders within 1one (1) year after the date of sale;
(c) As provided in s. 607.0902(11), the approval of a
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control-share acquisition;
(d) Consummation of a plan of share exchange to which the
corporation is a party as the corporation the shares of which
will be acquired, if the shareholder is entitled to vote on
the plan;
(e) Any
(4) An amendment of the articles of incorporation if the
shareholder is entitled to vote on the amendmentcharter that materially and if such
amendment would adversely affect such shareholder by:
1. Altering or abolishing any preemptiveaffects rights attached to
any of his or her shares;
2. Altering or abolishing the voting rights pertaining to
any of his or her shares, except as such rights may be
affected by the voting rights of new shares then being
authorized of any existing or new class or series of
shares;
3. Effecting an exchange, cancellation, or reclassification
of any of his or her shares, when such exchange,
cancellation, or reclassification would alter or abolish
the shareholder's voting rights or alter his or her
percentage of equity in the corporation, or effecting a
reduction or cancellation of accrued dividends or other
arrearages in respect to such shares;
4. Reducing the stated redemption price of anya dissenter’s shares because it:
(A) Alters or abolishes a preferential right of the shareholder's redeemable shares, alteringshares;
(B) Creates, alters, or abolishing
anyabolishes a right in respect of redemption, including a provision relating to anyrespecting a sinking fund for the redemption or purchaserepurchase, of anythe shares;
(C) Alters or abolishes a preemptive right of his or herthe holder of the shares to acquire shares or making any of hisother securities;
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(D) Excludes or her shares subject to redemption
when they are not otherwise redeemable;
5. Making noncumulative, in whole or in part, dividends of
anylimits the right of the shareholder's preferred shares which had
theretofore been cumulative;
6. Reducing the stated dividend preference of any of the
shareholder's preferred shares; or
7. Reducing any stated preferential amount payableto vote on any matter, or to cumulate votes, other than a limitation by dilution through issuance of shares or other securities with similar voting rights; or
(E) Reduces the shareholder's preferrednumber of shares upon voluntaryowned by the shareholder to a fraction of a share, if the fractional share is to be acquired for cash under § 48-16-104; or
involuntary liquidation; or
(f)
(5) Any corporate action taken pursuant to a shareholder vote to the extent the articlescharter, bylaws, or a resolution of incorporation providethe board of directors provides that a voting or nonvoting shareholder
isshareholders are entitled to dissent and obtain payment for his or hertheir shares.
(2) A shareholder dissenting from any amendment specified in paragraph
(1)(e) has the right to dissent only as to those of his
or her shares which are adversely affected by the amendment.
(3) A shareholder may dissent as to less than all the shares registered in
his or her name. In that event, the shareholder's rights shall be
determined as if the shares as to which he or she has dissented and his
or her other shares were registered in the names of different
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shareholders.
(4) Unless the articles of incorporation otherwise provide, this section
does not apply with respect to a plan of merger or share exchange or a
proposed sale or exchange of property, to the holders of shares of any
class or series which, on the record date fixed to determine the
shareholders entitled to vote at the meeting of shareholders at which
such action is to be acted upon or to consent to any such action
without a meeting, were either registered on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc., or held of record by not fewer than 2,000 shareholders.
(5)
(b) A shareholder entitled to dissent and obtain payment for his or herthe shareholder’s shares under this sectionchapter may not challenge the corporate action creating his or herthe shareholder’s entitlement unless the action is unlawful or fraudulent with respect to the shareholder or the corporation.
607.1320 Procedure for exercise
(c) Notwithstanding the provisions of dissenters'subsection (a), no shareholder may dissent as to any shares of a security which, as of the date of the effectuation of the transaction which would otherwise give rise to dissenters’ rights, is listed on an exchange registered under § 6 of the Securities Exchange Act of 1934, as amended, or is a “national market system security,” as defined in rules promulgated pursuant to the Securities Exchange Act of 1934, as amended.
48-23-103. Dissent by nominees and beneficial owners
(a) A record shareholder may assert dissenters’ rights as to fewer than all the shares registered in the record shareholder’s name only if the record shareholder dissents with respect to all shares beneficially owned by any one (1) person and notifies the corporation in writing of the name and address of each person on whose behalf the record shareholder asserts dissenters’ rights. --The rights of a partial dissenter under this subsection are determined as if the shares as to which the partial dissenter dissents and the partial dissenter’s other shares were registered in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters’ rights as to shares of any one (1) or more classes held on the beneficial shareholder’s behalf only if the beneficial shareholder:
(1) Submits to the corporation the record shareholder’s written consent to the dissent not later than the time the beneficial shareholder asserts dissenters’ rights; and
(2) Does so with respect to all shares of the same class of which the person is the beneficial shareholder or over which the person has power to direct the vote.
48-23-201. Notice of dissenters’ rights
(a) If a proposed corporate action creating dissenters'dissenters’ rights under s.
607.1302§ 48-23-102 is submitted to a vote at a shareholders'shareholders’ meeting, the meeting notice shallmust state that shareholders are or may be entitled to assert dissenters'dissenters’ rights under this chapter and be accompanied by a copy of ss.607.1301,
607.1302,this chapter.
(b) If corporate action creating dissenters’ rights under § 48-23-102 is taken without a vote of shareholders, the corporation shall notify in writing all shareholders entitled to assert dissenters’ rights that the action was taken and 607.1320.send them the dissenters’ notice described in § 48-23-203.
(c) A corporation’s failure to give notice pursuant to this section will not invalidate the corporate action.
48-23-202. Notice of intent to demand payment
(a) If proposed corporate action creating dissenters’ rights under § 48-23-102 is submitted to a vote at a shareholders’ meeting, a shareholder who wishes to assert dissenters'dissenters’ rights shall:
1.must:
(1) Deliver to the corporation, before the vote is taken, written notice of the shareholder'sshareholder’s intent to demand payment for his
or herthe shareholder’s shares if the proposed action is effectuated,effectuated; and
2.
(2) Not vote his or herthe shareholder’s shares in favor of the proposed action. A
proxy or vote against the proposed action does not constituteNo such awritten notice of intent to demand payment.payment is required of any shareholder to whom the corporation failed to provide the notice required by § 48-23-201.
(b) A shareholder who does not satisfy the requirements of subsection (a) is not entitled to payment for the shareholder’s shares under this chapter.
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48-23-203. Dissenters’ notice
(a) If proposed corporate action creating dissenters'dissenters’ rights under s.
607.1302§ 48-23-102 is effectuated by written consent withoutauthorized at a shareholders’ meeting, the corporation shall deliver a copywritten dissenters’ notice to all shareholders who satisfied the requirements of ss.607.1301, 607.1302, and 607.1320
to each shareholder simultaneously with any request for the
shareholder's written consent or, if such a request is not made, within
10§ 48-23-202.
(b) The dissenters’ notice must be sent no later than ten (10) days after the datecorporate action was authorized by the corporation received written consents
without a meeting fromshareholders or effectuated, whichever is the requisite numberfirst to occur, and must:
(1) State where the payment demand must be sent and where and when certificates for certificated shares must be deposited;
(2) Inform holders of shareholders necessaryuncertificated shares to authorizewhat extent transfer of the action.
(2) Within 10 daysshares will be restricted after the shareholders' authorizationpayment demand is received;
(3) Supply a form for demanding payment that includes the date the
corporation shall give written notice of such authorization or consent
or adoption of the plan of merger, as the case may be,first announcement to each
shareholder who filed a notice of intentnews media or to demand payment for his or
her shares pursuant to paragraph (1)(a) or, in the case of action
authorized by written consent, to each shareholder, excepting any who
voted for, or consented in writing to, the proposed action.
(3) Within 20 days after the giving of notice to him or her, any
shareholder who elects to dissent shall file with the corporation a
notice of such election, stating the shareholder's name and address,
the number, classes, and series of shares as to which he or she
dissents, and a demand for paymentshareholders of the fair value of his or her
shares. Any shareholder failing to file such election to dissent within
the period set forth shall be bound by theprincipal terms of the proposed corporate action. Anyaction and requires that the person asserting dissenters’ rights certify whether or not the person asserting dissenters’ rights acquired beneficial ownership of the shares before that date;
(4) Set a date by which the corporation must receive the payment demand, which date may not be fewer than one (1) nor more than two (2) months after the date the subsection (a) notice is delivered; and
(5) Be accompanied by a copy of this chapter if the corporation has not previously sent a copy of this chapter to the shareholder filing an electionpursuant to dissent shall
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48-23-204. Duty to demand payment
(a) A shareholder sent a dissenters’ notice described in § 48-23-203 must demand payment, certify whether the shareholder acquired beneficial ownership of the shares before the date required to be set forth in the dissenters’ notice pursuant to § 48-23-203(b)(3), and deposit his or herthe shareholder’s certificates for certificated sharesin accordance with the corporation simultaneously with the filingterms of the electionnotice.
(b) The shareholder who demands payment and deposits the shareholder’s share certificates under subsection (a) retains all other rights of a shareholder until these rights are cancelled or modified by the effectuation of the proposed corporate action.
(c) A shareholder who does not demand payment or deposit the shareholder’s share certificates where required, each by the date set in the dissenters’ notice, is not entitled to dissent.payment for the shareholder’s shares under this chapter.
(d) A demand for payment filed by a shareholder may not be withdrawn unless the corporation with which it was filed, or the surviving corporation, consents thereto.
48-23-205. Share restrictions
(a) The corporation may restrict the transfer of uncertificated shares from the date the shareholder's electiondemand for their payment is received until the proposed corporate action is effectuated or the restrictions released under § 48-23-207.
(b) The person for whom dissenters’ rights are asserted as to dissent is filed with the
corporation.
(4) Upon filing a notice of election to dissent, the shareholder shall
thereafter be entitled only to payment as provided in this section and
shall not be entitled to vote or to exercise anyuncertificated shares retains all other rights of a shareholder. A notice of election may be withdrawn in writingshareholder until these rights are cancelled or modified by the shareholder at any time before an offer is made byeffectuation of the corporation,proposed corporate action.
48-23-206. Payment
(a) Except as provided in subsection (5), to pay for his or her shares. After such
offer, no such notice of election may be withdrawn unless§ 48-23-208, as soon as the
corporation consents thereto. However, the right of such shareholder to
be paid the fair value of his or her shares shall cease, and the
shareholder shall be reinstated to have all his or her rights as a
shareholder as of the filing of his or her notice of election,
including any intervening preemptive rights and the right to payment of
any intervening dividend or other distribution or, if any such rights
have expired or any such dividend or distribution other than in cash
has been completed, in lieu thereof, at the election of the
corporation, the fair value thereof in cash as determined by the board
as of the time of such expiration or completion, but without prejudice
otherwise to any corporate proceedings that may have been taken in the
interim, if:
(a) Such demand is withdrawn as provided in this section;
(b) The proposed corporate action is abandonedeffectuated, or rescinded or the
shareholders revoke the authority to effect such action;
(c) Noupon receipt of a payment demand, or petition for the determination of fair value by a
court has been made or filed within the time provided in this
section; or
(d) A court of competent jurisdiction determines that such
shareholder is not entitled to the relief provided by this
section.
(5) Within 10 days after the expiration of the period in which shareholders
may file their notices of election to dissent, or within 10 days after
such corporate action is effected, whichever is later, (but in no case
later than 90 days from the shareholders' authorization date), the corporation shall make a written offer topay each dissenting shareholderdissenter who has made demand as provided in this section to pay ancomplied with § 48-23-204 the amount the corporation estimates to be the fair value for such shares. If the
corporate action has not been consummated before the expiration of the
90-day period after the shareholders' authorization date, the offer may
be made conditional upon the consummation of such action. Such notice
and offer shalleach dissenter’s shares, plus accrued interest.
(b) The payment must be accompanied by:
(a) A
(1) The corporation’s balance sheet of the corporation, the shares of which the
dissenting shareholder holds, as of the latest available date
andend of a fiscal year ending not more than 12sixteen (16) months prior to the making of such offer;
and
(b) A profit and loss statement of such corporation for the
12-month period ended onbefore the date of such balance sheet or,payment, an income statement for that year, a statement of changes in shareholders’ equity for that year, and the latest available interim financial statements, if any;
(2) A statement of the corporation’s estimate of the fair value of the shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter’s right to demand payment under § 48-23-209; and
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(5) A copy of this chapter if the corporation washas not in existence
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throughout such 12-month period, forpreviously sent a copy of this chapter to the portion thereof
during which it was in existence.
(6)shareholder pursuant to § 48-23-201 or § 48-23-203.
48-23-207. Failure to take action
(a) If the corporation does not effectuate the proposed action that gave rise to the dissenters’ rights within 30 daystwo (2) months after the makingdate set for demanding payment and depositing share certificates, the corporation shall return the deposited certificates and release the transfer restrictions imposed on uncertificated shares.
(b) If, after returning deposited certificates and releasing transfer restrictions, the corporation effectuates the proposed action, it must send a new dissenters’ notice under § 48-23-203 and repeat the payment demand procedure.
48-23-208. After-acquired shares
(a) A corporation may elect to withhold payment required by § 48-23-206 from a dissenter unless the dissenter was the beneficial owner of such offer any shareholder
accepts the same, payment for hisshares before the date set forth in the dissenters’ notice as the date of the first announcement to news media or her shares shall be made within 90
days afterto shareholders of the making of such offer or the consummationprincipal terms of the proposed corporate action.
(b) To the extent the corporation elects to withhold payment under subsection (a), after effectuating the proposed corporate action, whichever is later. Uponit shall estimate the fair value of the shares, plus accrued interest, and shall pay this amount to each dissenter who agrees to accept it in full satisfaction of the dissenter’s demand. The corporation shall send with its offer a statement of its estimate of the fair value of the shares, an explanation of how the interest was calculated, and a statement of the dissenter’s right to demand payment under § 48-23-209.
48-23-209. Procedure if shareholder dissatisfied with payment or offer
(a) A dissenter may notify the corporation in writing of the dissenter’s own estimate of the fair value of the dissenter’s shares and amount of interest due, and demand payment of the agreeddissenter’s estimate (less any payment under § 48-23-206), or reject the corporation’s offer under § 48-23-208 and demand payment of the fair value of the dissenting shareholder shall cease to have anydissenter’s shares and interest in such shares.
(7) Ifdue, if:
(1) The dissenter believes that the amount paid under § 48-23-206 or offered under § 48-23-208 is less than the fair value of the dissenter’s shares or that the interest due is incorrectly calculated;
(2) The corporation fails to make such offerpayment under § 48-23-206 within the period specified
therefor in subsection (5) or if it makes the offer and any dissenting
shareholder or shareholders fail to accept the same within the period
of 30 days thereafter, then the corporation, within 30 days after
receipt of written demand from any dissenting shareholder given within
60 daystwo (2) months after the date set for demanding payment; or
(3) The corporation, having failed to effectuate the proposed action, does not return the deposited certificates or release the transfer restrictions imposed on which such corporateuncertificated shares within two (2) months after the date set for demanding payment.
(b) A dissenter waives the dissenter’s right to demand payment under this section unless the dissenter notifies the corporation of the dissenter’s demand in writing under subsection (a) within one (1) month after the corporation made or offered payment for the dissenter’s shares.
48-23-301. Court action was effected,
(a) If a demand for payment under § 48-23-209 remains unsettled, the corporation shall or at its election at any timecommence a proceeding within suchtwo (2) months after receiving the payment demand and petition the court to determine the fair value of the shares and accrued interest. If the corporation does not commence the proceeding within the two-month period, of 60 days
may, file an actionit shall pay each dissenter whose demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in anya court of competentrecord having equity jurisdiction in the county where the corporation’s principal office (or, if none in this state, its registered office) is located. If the corporation is a foreign corporation without a registered office in this state, it shall commence the proceeding in the county in this state where the registered office of the domestic corporation is
located requesting thatmerged with or whose shares were acquired by the fair value of such shares be determined.foreign corporation was located.
(c) The courtcorporation shall also determine whether each dissenting shareholder, as
to whom the corporation requests the court to make such determination,
is entitled to receive payment for his or her shares. If the
corporation fails to institute the proceeding as herein provided, any
dissenting shareholder may do so in the name of the corporation. All
dissenting shareholdersall dissenters (whether or not residents of this state), other
than shareholders who have agreed with the corporation as to the value
of their shares, shall be made whose demands remain unsettled, parties to the proceeding as in an action against their shares. The corporation shall serveshares and all parties must be served with a copy of the initial
pleading in such proceeding upon each dissenting shareholder who is a
resident of this state in the manner provided by law for the service of
a summons and complaint and upon each nonresident dissenting
shareholder eitherpetition. Nonresidents may be served by registered or certified mail andor by publication or
in such other manner as is permittedprovided by law.
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(d) The jurisdiction of the court in which the proceeding is commenced under subsection (b) is plenary and exclusive. All shareholders who are proper parties
to the proceeding are entitled to judgment against the corporation for
the amount of the fair value of their shares. The court may if it so
elects, appoint one (1) or more persons as appraisers to receive evidence and recommend a decision on the question of fair value. The appraisers shall have such power and authority as is specifiedthe powers described in the order of
their appointmentappointing them, or anin any amendment thereof.to it. The corporation shall pay
each dissenting shareholderdissenters are entitled to the same discovery rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to judgment:
(1) For the amount, found to be due him or her
within 10 days after final determinationif any, by which the court finds the fair value of the proceedings. Upon
paymentdissenter’s shares, plus accrued interest, exceeds the amount paid by the corporation; or
(2) For the fair value, plus accrued interest, of the judgment,dissenter’s after-acquired shares for which the dissenting shareholdercorporation elected to withhold payment under § 48-23-208.
48-23-302. Court costs and counsel fees
(a) The court in an appraisal proceeding commenced under § 48-23-301 shall cease to have
any interest in such shares.
(8) The judgment may, at the discretiondetermine all costs of the court, include a fair rateproceeding, including the reasonable compensation and expenses of interest, to be determinedappraisers appointed by the court. (9) The court shall assess the costs against the corporation, except that the court may assess costs against all or some of the dissenters, in amounts the court finds equitable, to the extent the court finds the dissenters acted arbitrarily, vexatiously, or not in good faith in demanding payment under § 48-23-209.
(b) The court may also assess the fees and expenses of any such proceeding shall be determined bycounsel and experts for the respective parties, in amounts the court finds equitable against:
(1) The corporation and shall be assessed against the corporation, but all or any
partin favor of such costs and expenses may be apportioned and assessed as the
court deems equitable against any or all ofdissenters if the dissenting shareholders
who are parties to the proceeding, to whomcourt finds the corporation has made an
offer to pay fordid not substantially comply with the shares,requirements of part 2 of this chapter; or
(2) Either the corporation or a dissenter, in favor of any other party, if the court finds that the action of such
shareholders in failing to accept such offer was arbitrary, vexatious,party against whom the fees and expenses are assessed acted arbitrarily, vexatiously, or not in good faith. Such expenses shall include reasonable
compensation for, and reasonable expenses of,faith with respect to the appraisers, but shall
excluderights provided by this chapter.
(c) If the fees and expensescourt finds that the services of counsel for any dissenter were of substantial benefit to other dissenters similarly situated, and experts employed by,
any party. If
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fair value of the shares, as determined, materially
exceeds the amount whichfees for those services should not be assessed against the corporation, offered to pay therefor or if
no offer was made, the court in its discretion may award to any
shareholder who is a partythese counsel reasonable fees to be paid out of the amounts awarded to the proceeding such sum as the court
determines to be reasonable compensation to any attorney or expert
employed by the shareholder in the proceeding.
(10) Shares acquired by a corporation pursuant to payment of the agreed
value thereof or pursuant to payment of the judgment entered therefor,
as provided in this section, may be held and disposed of by such
corporation as authorized but unissued shares of the corporation,
except that, in the case of a merger, they may be held and disposed of
as the plan of merger otherwise provides. The shares of the surviving
corporation into which the shares of such dissenting shareholders would
have been converted had they assented to the merger shall have the
status of authorized but unissued shares of the surviving corporation.
Peoples\appendixB.doc
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Appendix "C"
Hovde Financial LLC
Investment Bankers & Financial Advisors
October 7,dissenters who were benefited.
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APPENDIX C
[SunTrust Robinson Humphrey Letterhead]
December 18, 2003
Board of Directors
Peoples Florida Banking Corporation
32845 U.S. Highway 19 North
Palm Harbor, FL 34684
Dear Members of the Board:
Trust One Bank
1715 Aaron Brenner Drive
Suite 120
Memphis, TN 38120
Gentlemen:
We understand that Trust One Bank (the “Company”) is considering a proposed sale of the Company to Synovus Financial Corporation ("Synovus"Corp. (“Synovus”) via the exchange of all of the Company’s shares and options for an aggregate of 3,930,000 shares of Synovus (the “Proposed Transaction”), a Georgia
corporation,which represents an exchange ratio of 1.5332 shares for each Company share and Peoples Florida Banking Corporation ("Peoples"option outstanding as of the date of this opinion (the “Exchange Ratio”), a Florida
corporation, have entered into an. The terms and conditions of the Proposed Transaction are set forth in more detail in the Agreement and Plan of MergerShare Exchange, dated as of the 17th day of December, 2003, by and between the Company and Synovus (the "Agreement"“Agreement”)
dated October 7, 2003, pursuant.
We have been requested by the Company to whichrender our opinion to the Board of Directors of both Synovus
and Peoples have determined that it is in the best interests of their respective
shareholders to merge their respective holding companies in a transaction
pursuant to which Peoples will be mergedCompany with and into Synovus (the "Merger").
As set forth in paragraphs (B)(a) and (B)(b) of Article I of the Agreement, at
the Effective Date of the Merger (as defined in the Agreement) each share of
Peoples Common Stock issued and outstanding on the Effective Date shall be
converted into and exchangeable for the right to receive both 0.7478 shares of
Synovus Common Stock ("Per Share Stock Consideration") and cash in the amount
equal to $14.65 ("Per Share Cash Consideration"). Additionally, each Peoples
Stock Option outstanding shall be converted into an option to purchase shares of
Synovus Common Stock pursuant to Article I, paragraphs (D)(1) and (D)(2) of the
Agreement. In connection therewith, you have requested our opinion asrespect to the fairness, from a financial point of view, of the Mergerconsideration to be received by the shareholders of Peoples.
Hovde Financial LLC ("Hovde"), as part of its investment banking
business, is continually engagedthe Company in the valuation of businessesProposed Transaction.
In arriving at our opinion, we reviewed and their
securities in connection with mergersanalyzed: (1) the Agreement and acquisitions, negotiated
underwritings, competitive bidding, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate and
other purposes. We are familiar with Peoples, having acted as its financial
advisor in connection with, and having participated in the negotiations leading
to, the Agreement. We are also familiar with Synovus, through our continued
Merger negotiations and due diligence.
1826 Jefferson Place, N.W. * Washington, DC 20036 * Telephone 202.775.8109
* Facsimile 202.775.8365
1629 Colonial Parkway * Inverness, IL 60067 * Telephone 847.991.6622
* Facsimile 847.991.5928
1801 North Flagler Drive * Suite 207 * West Palm Beach Fl 33407 * Telephone
561.659.0061 * Facsimile 561.805.9889
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Board of Directors
Peoples Florida Banking Corporation
October 7, 2003
Page 2 of 4
We were retained by Peoples to act as its financial advisor in
connection with the Merger. We will receive compensation from Peoples in
connection with our services, a significant portion of which is contingent upon
the consummation of the Merger. Peoples has agreed to indemnify us forexhibits thereto; (2) certain
liabilities arising out of our engagement.
During the course of our engagement and for the purposes of the opinion
set forth herein, we have:
(i) reviewed the Agreement;
(ii) reviewed certain historical publicly available business and
financial information concerning the Company and Synovus and Peoples;
(iii) reviewed certain internal financial statements and otherwhich we believe to be relevant to our inquiry; (3) financial and operating data concerning Synovusinformation with respect to the business, operations and Peoples;
(iv) analyzed certain financial projections preparedprospects of the Company furnished to us by the managementsCompany; (4) the trading history of SynovusSynovus’ common stock for the past five years; (5) a comparison of the historical financial results and Peoples;
(v) conducted meetingspresent financial condition of the Company with membersthose of publicly traded companies which we deemed relevant; and (6) a comparison of the financial terms of the Proposed Transaction with the publicly available financial terms of certain other recent transactions which we deemed relevant. In addition, we have had discussions with the management of the Company concerning its business, operations, assets, present condition, future prospects and the potential benefits expected by the senior management of Synovus and Peoples for the purposeCompany to result from a combination of reviewing the future
prospectsbusinesses of Synovus and Peoples, including financial
forecasts related to the respective businesses, earnings,
assets, liabilitiesCompany and the amount and timing of cost savings
and revenue enhancements (the "Synergies") expected to be
achieved as a result of the Merger;
(vi) evaluated the pro forma contribution of Peoples's assets,
liabilities, equity and earnings to the pro forma company;
(vii) reviewed the terms of recent merger and acquisition
transactions, to the extent publicly available, involving
banks and bank holding companies that we considered relevant;
(viii) analyzed the pro forma impact of the Merger on the combined
company's earnings per share, consolidated capitalization and
financial ratios; and
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Board of Directors
Peoples Florida Banking Corporation
October 7, 2003
Page 3 of 4
(ix) performedundertook such other studies, analyses and considered such other
factorsinvestigations as we have deemed appropriate.
We also took into account our assessment of general economic, markethave assumed and financial conditions and our experience in other transactions, as well as
our knowledge of the banking industry and our general experience in securities
valuations.
In rendering this opinion, we have assumed,relied upon, without independent verification, the accuracy and completeness of the financial and other information and representations containeddiscussed with or reviewed by us in arriving at our opinion. With respect to the materialsfinancial forecasts of the Company provided to us by
Synovus and Peoples and in the discussionsor discussed with the Synovus and Peoples
management teams. In that regard,us, we have assumed, at the direction of the management of the Company and without independent verification or investigation, that the financialsuch forecasts
including, without limitation, the Synergies and projections regarding
under-performing and non-performing assets and net charge-offs have been reasonably prepared on a basisbases reflecting the best currently available information, estimates and judgments and estimates of Synovus and Peoples and that such
forecasts will be realized in the amounts and at the times contemplated thereby.
We are not experts in the evaluation of loan and lease portfolios for purposes
of assessing the adequacy of the allowances for losses with respect thereto andmanagement of the Company as to the future financial performance of the Company. In arriving at our opinion, we have assumed that such allowances for Synovus and Peoples are in the aggregate
adequate to cover such losses. We were not retained to and did not conductconducted a physical inspection of anythe properties and facilities of the properties or facilities of Synovus or
Peoples. In addition, weCompany and have not reviewed individual credit filesmade nor have we
made an independent evaluationobtained any evaluations or appraisalappraisals of the assets andor liabilities (including, without limitation, any potential environmental liabilities), contingent or otherwise, of Synovus and Peoples and we were not furnished with any such evaluations or
appraisals.the Company. We have also assumed that the MergerProposed Transaction will be consummated substantially in accordance with the terms set forth inof the Agreement. We have further assumedAgreement and that the MergerProposed Transaction will be accounted fortreated as a purchase-of-interests under generally
accepted accounting principles. We have assumed that the Merger is, and will be,
in compliance with all laws and regulations that are applicable to Synovus and
Peoples. In rendering this opinion, we have been advised by Synovus and Peoples
and we have assumed that there are no factors that would impede any necessary
regulatory or governmental approval of the Merger and we have further assumed
that, in the course of obtaining the necessary regulatory and governmental
approvals, no restriction will be imposed on Peoples or the contemplated
benefits of the Merger that would have a material adverse effect on Synovus or
the surviving corporation.tax-free reorganization for federal income tax purposes. We have also assumed that there would not occurall material governmental, regulatory or other consents and approvals necessary for the consummation of the Proposed Transaction will be obtained without any change in applicable lawadverse effect on the Company or regulation that would cause a material adverse
change inon the prospects or operations
C-1
expected benefits of Synovus or the surviving corporation
after the Merger.
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Board of Directors
Peoples Florida Banking Corporation
October 7, 2003
Page 4 of 4Proposed Transaction. Our opinion is necessarily based solely upon the information available to us and
themarket, economic market and other circumstancesconditions as they exist on, and can be evaluated as of, the date hereof. Events occurring and informationof this letter. We express no opinion as to the underlying valuation, future performance or long-term viability of the Company. It should be understood that, becomes available afteralthough subsequent developments may affect this opinion, we do not have any obligation to update or revise the date
hereof could materially affect the assumptions and analyses used in preparing
this opinion.
We have not undertaken to reaffirm or revise this opinion or
otherwise comment upon any events occurring or information that becomes
available after the date hereof.
This letter is solely for the information of the Board of Directors of
Peoples and is not to be used, circulated, quoted or otherwise referred to for
any other purpose, nor is it to be filed with, included in or referred to in
whole or in part in any registration statement, proxy statement or any other
document, except in each case in accordance with our prior written consent which
shall not be unreasonably withheld; provided, however, that we hereby consentacted as financial advisor to the inclusion and reference to this letter in any registration statement, proxy
statement, information statement or tender offer document to be delivered to the
holders of Peoples StockCompany in connection with the Merger ifProposed Transaction and only ifwill receive a fee for our services that is contingent upon the consummation of the Proposed Transaction. In addition, the Company has agreed to indemnify us for certain liabilities arising out of the rendering of this letter is quotedopinion. We and our affiliates (including SunTrust Banks, Inc.) may have other financing and business relationships with the Company and Synovus in full or attached as an exhibit to such documentthe ordinary course of business.
Based upon and this
letter has not been withdrawn prior to the date of such document.
Subjectsubject to the foregoing, and based on our experience as investment
bankers, our activities and assumptions as described above, andsuch other factors as we
have deemed relevant, we are of the opinion as of the date hereof that the Per
Share Stock Consideration and the Per Share Cash Consideration detailed in the
Agreement and payableconsideration to be received by the shareholders of Peoples by Synovusthe Company in the Proposed Transaction is fair for
Peoples' shareholders, from a financial point of view. Sincerely,
/s/Hovde Financial LLC
HOVDE FINANCIAL LLC
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Appendix "D"
KPMG [Logo]
303 Peachtree Street Telephone 404.222.3000
Suite 2000 Fax 404.222.3050
Atlanta, GA 30308
November 18, 2003This opinion is being rendered at the behest of the Board of Directors and is for the benefit of the Board of Directors in its evaluation of the Proposed Transaction, and does not constitute a recommendation as to how any stockholder should act or vote with respect to any matters relating to the Proposed Transaction. This opinion may be referred to and may be reproduced in full in any filing made by the Company with the Securities and Exchange Commission in connection with the Proposed Transaction.
/s/ SUNTRUST CAPITAL MARKETS, INC.
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APPENDIX D
[Letterhead of Smith, Gambrell & Russell, LLP]
March 12, 2004
Synovus Financial Corp
Suite 301, One Arsenal Place
901 Front Avenue
Columbus, Georgia 31901
Trust One Bank
1715 Aaron Bremmer Drive
Memphis, Tennessee 38120
Re: Agreement and Plan of Reorganization under which Trust One Bank will become a wholly-owned subsidiary of Synovus Financial Corp. |
Ladies and Gentlemen:
We have acted as special counsel to Synovus Financial Corp. 901 Front Avenue
Suite 301
Columbus, GA 31901
Board(“Synovus”) in connection with the proposed share exchange (the “Reorganization”) in which the shareholders of Directors
Peoples Florida Banking Corporation
32845 U. S. Highway 19
Palm Harbor, FL 34682
LadiesTrust One Bank (“Trust One”) will exchange their shares of capital stock of Trust One for shares of voting common stock of Synovus. As a result of the Reorganization, Trust One will become a wholly-owned subsidiary of Synovus pursuant to the terms of and Gentlemen:
You have requestedas described in that certain Agreement and Plan of Share Exchange (the “Share Exchange Agreement”) dated as of December 17, 2003 by and between Synovus and Trust One, as described in the Synovus Registration Statement on Form S-4 (the “Registration Statement”), to be filed with the Securities and Exchange Commission (the “Commission”) on or about March 12, 2004. At your request, in connection with the filing by Synovus of the Registration Statement and the Proxy Statement-Prospectus of Trust One and Synovus (the “Proxy Statement-Prospectus”) included as part of the Registration Statement, we are rendering our opinion of KPMG LLP ("KPMG") regardingconcerning certain federal income tax consequences resulting from the merger of Peoples Florida Banking
Corporation ("Peoples") with and into Synovus Financial Corp. ("Synovus"), a
bank holding company (the "Merger"). Upon the consummation of the Merger, the
separate existence of Peoples will cease and Peoples shareholders will receive a
combination of Synovus Common Stock and cash, as described in the Merger
Agreement.
You have submitted for our consideration:
* certain representations as to the proposed transactions;
* a copy of the Agreement and Plan of Merger, dated October 7, 2003 (the
"Merger Agreement"); and
* a copy of the Form S-4 Registration Statement filed with the SEC (the
Merger Agreement and the Form S-4 collectively being the "Documents").
We have not reviewed the legal documents necessary to effectuate the steps to be
undertaken and we assume thatReorganization. Unless otherwise indicated, all steps will be effectuated under state and
federal law and will be consistent with the legal documentation and with the
description of the steps in the Documents.
You have the consent of KPMG LLP to include a copy of this opinion letter in the
Form S-4 Registration Statement relating to the merger discussed in this opinion
letter.
D-1
November 18, 2003
Page 2
Facts and Representations
Synovus is a registered bank holding company organized under the laws of the
State of Georgia. Synovus has authorized 600,000,000 shares of common stock, par
value $1.00 per share ("Synovus Common Stock"), of which 301,441,645 shares were
outstanding as of September 30, 2003.
Peoples has been duly incorporated and is an existing corporation in good
standing under the laws of Florida, with its principal executive offices located
in Tampa, Florida. As of August 31, 2003, Peoples had 3,000,000 authorized
shares of common stock, par value $.10 per share ("Peoples Common Stock"), of
which 2,047,184 shares are outstanding on September 30, 2003. Peoples has one
wholly-owned banking Subsidiary, Peoples Bank, which subsidiary is an "insured
institution" as defined in the Federal Deposit Insurance Act and the applicable
regulations thereunder, and the deposits in which are insured by the Federal
Deposit Insurance Corporation and one non-banking subsidiary.
For valid corporate business purposes, pursuant to the Merger Agreement and on
the Effective Date (as that term is defined in the Merger Agreement), Peoples
will merge with and into Synovus, with Synovus being the surviving corporation.
The Merger Agreement provides that upon the Merger, subject to provisions of the
Merger Agreement, each share of Peoples Common Stock outstanding as to which a
dissenter's right has not been duly and validly exercised shall be converted
into and exchangeable for the right to receive, as provided in and subject to
provisions of the Merger Agreement: (1) .7478 shares of Synovus Common Stock
("Per Share Stock Consideration") and (2) $14.65 in cash ("Per Share Cash
Consideration").
Synovus will not issue any fractional shares of Synovus Common Stock in
connection with the Merger. Instead, each holder of Peoples Common Stock who
would otherwise have been entitled to receive a fraction of a share of Synovus
Common Stock shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of Synovus Common Stock
multiplied by the closing price per share of Synovus Common Stock on the New
York Stock Exchange ("NYSE") on the last business day immediately preceding the
Effective Date of the Merger.
On the Effective Date, each option granted by Peoples to purchase shares of
Peoples Common Stock (each a "Peoples Stock Option"), whether vested or
unvested, which is outstanding and unexercised immediately prior thereto, shall
be assumed by Synovus and converted automatically into an option to purchase
shares of Synovus Common Stock (each a "Synovus Stock Option") in an amount and
at an exercise price determined as provided below (and otherwise having the same
duration and othercapitalized terms as the original option): (1) the number of shares of
Synovus Common Stock to be subject to the new option shall be equal to the
product of the number of shares of Peoples Common Stock
D-2
November 18, 2003
Page 3
subject to the original option multiplied by 1.3372, (unless otherwise adjusted
pursuant to the terms of the Merger Agreement) provided that any fractional
shares of Synovus Common Stock resulting from such multiplication shall be
rounded to the nearest whole share; and (2) the exercise price per share of
Synovus Common Stock under the new option shall be equal to the exercise price
per share of Peoples Common Stock under the original option divided by 1.3372,
(unless otherwise adjusted pursuant to the terms of the Merger Agreement)
provided that such exercise price shall be rounded up to the nearest cent. The
adjustment provided herein with respect to any options which are "incentive
stock options" (as defined in Section 422 of the Internal Revenue Code of 1986
(the "Code")) shall be and is intended to be effected in a manner which is
consistent with Section 424(a) of the Code.
Effective April 27, 1999, the Board of Directors of Synovus adopted a plan that
provides the common shareholders of Synovus with Common Stock Purchase Rights
("poison pill rights"), i.e. rights to acquire the stock of Synovus or its
successor. Under the terms of the plan, holders of Synovus Common Stock received
a poison pill right for each share of Synovus Common Stock held by them. A
shareholder's ability to exercise his rights is contingent upon the occurrence
of either a tender offer for 15% or more, or the actual acquisition of 15% or
more, of Synovus Common Stock by a corporation or individual (the "acquiring
person") without the approval of Synovus's Board of Directors.
In general, the rights become exercisable on the earlier of (1) ten days
following a public announcement that, without prior approval of Synovus, a
person or group of affiliated persons has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of the outstanding common stock of
Synovus, or (2) ten days following the commencement or announcement of an
intention to make a tender offer or exchange offer, without the prior written
consent of Synovus, for 15% or more of the outstanding shares of Synovus Common
Stock. Until the rights become exercisable, they cannot be transferred
separately from the underlying common stock on which they were distributed, nor
are the rights represented by any certificate other than the underlying stock
certificate itself. In addition, Synovus may redeem the poison pill rights for 1
cent per right until the date that specified events occur. The poison pill
rights expire on May 5, 2009.
Once they become exercisable, the poison pill rights entitle the holder to
purchase from Synovus one share of common stock. No fractional shares of common
stock will be issued upon exercise of a poison pill right. In lieu thereof, a
payment in cash will be made to the holder of such poison pill right equal to
the same fraction of the current market value of a share of common stock.
If, after the rights become exercisable, a "flip-in" or "flip-over" event
occurs, all holders of such rights, except the acquiring person, are entitled to
purchase, at a 50 percent discount, the stock of either Synovus or the acquiring
corporation (whichever is applicable). A "flip-in" event is either (1) the
acquisition by the acquiring person of 15%
D-3
November 18, 2003
Page 4
or more of the outstanding stock of Synovus, or (2) the conduct of certain
self-dealing transactions between an acquiring person or any of its affiliates
or associates and Synovus. A "flip-over" event is either (1) a merger or other
business combination in which Synovus is not the surviving corporation, or (2) a
sale or transfer of more than 30% of the assets or earning power of Synovus and
its subsidiaries (taken as a whole) in one or a series of transactions.
In the event that, subsequent to the date of the Merger Agreement but prior to
the Effective Date, the outstanding shares of Synovus Common Stock shall have
been increased, decreased, changed into or exchanged for a different number or
kind of shares or securities through reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, or other
like changes in Synovus' capitalization, then an appropriate and proportionate
adjustment shall be made to the Per Share Stock Consideration and the Per Share
Cash Consideration so as to prevent the dilutive effect of such transaction on a
percentage of ownership basis.
The Merger has been approved by the Boards of Directors of Peoples and Synovus
and is subject to the receipt of regulatory approval from appropriate parties,
including the Board of Governors of the Federal Reserve System, the Georgia
Department of Banking and Finance and by the Florida Department of Financial
Services.
In addition to the foregoing statement of facts, Synovus and/or Peoples have
made the following representations, as applicable, to KPMG in connection with
the Merger. KPMG has not independently verified the completeness and accuracy of
any of the following representations. KPMG is relying on these representations
in rendering the opinion contained herein.
With Respect to the Merger
(a) The fair market value of Synovus Common Stock and other consideration, if
any, received by each shareholder of Peoples will be approximately equal
to the fair market value of Peoples Common Stock surrendered in the
exchange.
(b) None of Synovus, Peoples, or any subsidiary or related person has any
plan or intention to reacquire any of Synovus shares issued in the Merger
or (other than the share for share exchanges described above) to acquire
any share of Peoples prior to the Merger. Peoples is not aware of any
plan or intention on the part of its shareholders to sell Peoples Common
Stock to Peoples, Synovus, or any person related to Peoples or Synovus
prior to the transaction, or to sell Synovus Common Stock to any such
person after the transaction. In addition, Peoples does not intend to
redeem any Peoples Common Stock or declare an extraordinary dividend with
respect to Peoples Common Stock prior to the transaction.
D-4
November 18, 2003
Page 5
For purposes of this representation, two persons are "related" if the
persons are corporations and either immediately before or immediately
after a transaction are members of the same "affiliated group."
"Affiliated group" for these purposes generally means two or more
corporations currently linked or which pursuant to a plan will be linked
with a common parent through ownership chains comprising at least 80
percent of the voting power of each corporation and 80 percent of the
value of each corporation's shares. In addition, "related person"
includes two or more corporations for whom a purchase of the stock of one
corporation by another corporation would be treated as a distribution in
redemption of the stock of the first corporation. This treatment as a
distribution in redemption occurs (a) when a person holding any amount of
shares in a parent corporation or, (b) when a person in control of each
of two corporations sells shares of one controlled corporation to the
other corporation. For these purposes, "control" means the ownership of
shares possessing at least 50 percent of the value (or vote) of all
classes of shares. Ownership of shares is determined with reference to
constructive ownership provisions, which attribute ownership between
corporations and their five-percent or greater shareholders, partnerships
and their partners, and trusts and their beneficiaries, and between
certain members of a family. In the case of an acquisition by a
partnership, each partner shall be treated as owning or acquiring any
stock owned or acquired, as the case may be, by the partnership in
accordance with that partner's interest in the partnership.
(c) Synovus has no plan or intention to sell or otherwise dispose of any of
the assets of Peoples acquired in the transaction, except for
dispositions made in the ordinary course of business or transfers
described in Section 368(a)(2)(C). (Unless otherwise stated, all
"Section" and "Regulation Section." references herein are to the Internal
Revenue Code of 1986, as amended, and the regulations thereunder.)
(d) The liabilities of Peoples assumed by Synovus and the liabilities to
which the transferred assets of Peoples are subject were incurred by
Peoples in the ordinary course of its business.
(e) Following the Merger, Synovus will continue the historical business of
Peoples (including the business of its subsidiaries) or use a significant
portion of the historic business assets of Peoples (including the
historic business assets of its subsidiaries) in a business.
(f) Synovus, Peoples, and the shareholders of Peoples will pay their
respective expenses, if any, incurred in connection with the Merger.
(g) No inter-corporate indebtedness exists between Synovus and Peoples that
was issued, acquired, or will be settled at a discount.
D-5
November 18, 2003
Page 6
(h) No two parties to the Merger are investment companies as defined in
Section 368(a)(2)(F)(iii) and (iv). For purposes of the foregoing, an
"investment company" is a corporation that is a regulated investment
company, a real estate investment trust, or a corporation fifty
percent or more of the value of whose total assets are stock and
securities and eighty percent or more of the value of whose total
assets are assets held for investment. In making the fifty percent and
eighty percent determinations under the preceding sentence, stock and
securities in any subsidiary corporation shall be disregarded and the
parent corporation shall be deemed to own its ratable share of the
subsidiary's assets, and a corporation shall be considered a
subsidiary if the parent owns fifty percent or more of the combined
voting power of all classes of stock entitled to vote or fifty percent
or more of the total value of shares of all classes of stock
outstanding. In determining total assets for purposes of this
representation, there shall be excluded cash and cash items (including
receivables), government securities, and assets acquired (through
incurring indebtedness or otherwise) for the purposes of ceasing to be
an investment company.
(i) On the date of the Merger, the fair market value of the assets of Peoples
transferred to Synovus will equal or exceed the sum of the liabilities
assumed by Synovus, plus the amount of liabilities, if any, to which the
transferred assets are subject.
(j) No event has occurred that would make the poison pill rights exercisable.
(k) Neither Synovus nor Peoples is under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section 368(a)(3)(A).
(l) None of the compensation received by any shareholder-employees of Peoples
will be separate consideration for, or allocable to, any of their shares
of Peoples Common Stock; none of the shares of Synovus Common Stock
received by any shareholder-employee of Peoples will be separate
consideration for, or allocable to, any employment agreement and the
compensation paid to any shareholder-employees of Peoples will be for
services actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's length for similar services.
(m) The distribution of cash proceeds to Peoples shareholders in lieu of
fractional shares of Synovus will be made solely for the purpose of
avoiding the expense and inconvenience to Synovus of issuing fractional
shares and does not represent separately bargained for consideration. The
total cash consideration that Synovus will pay in the transaction to
Peoples shareholders instead of issuing fractional shares will not exceed
one percent of the total consideration that Synovus will issue in the
transaction to Peoples shareholders in exchange for their shares of
Peoples. The fractional share interests of each Peoples shareholder will
be aggregated, and
D-6
November 18, 2003
Page 7
no Peoples shareholder will receive cash in an amount equal to or greater
than the value of one full share of Synovus Common Stock.
(n) Synovus Common Stock issued pursuant to the Merger will represent at
least 45% of the value of the consideration received by Peoples
shareholders (including cash in lieu of fractional shares). This
representation is true even if the poison pill rights are not treated as
part of Synovus Common Stock, but rather as other property.
(o) On November 17, 2003, and the Effective Date, the exercise of the poison
pill rights is remote and speculative.
(p) The Merger will qualify as a statutory merger under Georgia and Florida
law.
(q) Synovus will be the surviving entity as a result of the Merger.
(r) The Merger is being effected for bona fide corporate business reasons.
(s) The Merger Agreement represents the full and complete agreement among
Synovus and Peoples regarding the Merger and there are no other written
or oral agreements regarding the Merger, except as otherwise described in
the Documents.
(t) Synovus and Peoples adopted the Merger Agreement as their plan of
reorganization.
(u) The excess of the aggregate fair market value of the Synovus Stock
Options immediately after the exchange over the aggregate option price of
such shares is not more than the excess of the aggregate fair market
value of the Peoples Stock Options immediately before the exchange over
the aggregate option price of such shares, and a Synovus Stock Option
does not give the employee additional benefits which he did not have
under a Peoples Stock Option.
(v) At the time of the Merger, no Peoples shareholder will own more than 1%
of the then outstanding Synovus Common Stock. Ownership of Synovus Common
Stock is determined with reference to constructive ownership provisions
of Section 318, which attribute ownership between corporations and their
shareholders, partnerships and their partners, and trusts and their
beneficiaries, and between certain members of a family.
D-7
November 18, 2003
Page 8
Discussion
Classification as a Reorganization
Section 368(a)(1)(A) provides that the term "reorganization" includes a
statutory merger. The term statutory merger refers to a merger effected pursuant
to the corporate laws of the United States, a state or territory, or the
District of Columbia. Regulation Section 1.368-2(b). Based on representation "p"
above, the Merger will qualify as a statutory merger under Georgia and Florida
law and will thus satisfy the statutory merger requirement.
Requisite to all reorganizations under Section 368(a)(1) are a (1) valid
business purpose; (2) continuity of the business enterprise under the modified
corporate form; and (3) continuity of interest in the corporation surviving the
merger. Regulation Section 1.368-1(b). The term "reorganization" does not
embrace the mere purchase by one corporation of the properties of another.
Regulation Section 1.368-2(a). These regulations reflect well-developed judicial
interpretation of the statutory definition of a reorganization, the purpose of
which is to exclude from the scope of the reorganization provisions those
transactions that are in fact sales.
With respect to the valid business purpose requirement, Regulation Section
1.368-2(g) states that reorganizations must be "undertaken for reasons germane
to the continuation of the business of a corporation," and that the statute
"contemplates genuine corporate reorganizations which are designed to effect a
readjustment of continuing interests under modified corporate forms." Based on
the statement of facts and representation "r" above, the Merger is being
effected for bona fide business purposes and thus will satisfy the valid
business purpose requirement.
Continuity of business enterprise requires that the transferee corporation
either continue the transferor corporation's historical business or use a
significant portion of the transferor corporation's historical business assets.
Regulation Section 1.368-1(d)(2). Based on representation "e" above, Synovus
intends to continue the historical business of Peoples so that the Merger will
satisfy the continuity of business enterprise requirement.
With respect to the continuity of interest requirement, the regulations under
Section 368(a) do not establish the amount of qualifying consideration necessary
to satisfy such requirement. However, the Service has promulgated a safe harbor
for purposes of obtaining a private letter ruling. Under Revenue Procedure
77-37, 1977-2 C.B. 568, the continuity of interest requirement of Regulation
Section 1.368-1(b) is satisfied if:
There is continuing interest through stock ownership in the acquiring or
transferee corporation...on the part of the former shareholders of the
acquired or transferor corporation which is equal in value, as of the
effective date of the
D-8
November 18, 2003
Page 9
reorganization, to at least 50 percent of the value
of all the formerly outstanding stock of the acquired or transferor
corporation as of the same date. It is not necessary that each shareholder
of the acquired or transferor corporation receive in the exchange, stock
of the acquiring or transferee corporation...which is equal in value to at
least 50 percent of the value of his former stock interest in the acquired
or transferor corporation, so long as one or more of the shareholders of
the acquired or transferee corporation have a continuing interest through
stock ownership in the acquiring or transferor corporation...which is, in
the aggregate, equal in value to at least 50 percent of the value of all
of the formerly outstanding stock of the acquired or transferor
corporation.
The 50 percent test of the revenue procedure does not as a matter of law
establish the amount of qualifying consideration necessary to meet the
continuity of interest requirement of Regulation Section 1.368-1(b). In other
words, the continuation of a common stock ownership in the acquiring corporation
equal to less than 50 percent of the value of the stock of the acquired
corporation does not itself mark a discontinuity of interest. It is only
necessary that the shareholders continue to have a definite and substantial
equity interest in the assets of the acquiring corporation. Rev. Rul. 61-156,
1961-2 C.B. 62. Thus, the Supreme Court in John A. Nelson C. v. Helvering, 296
U.S. 374 (1935), 36-1 U.S.T.C. para 9019, held that a reorganization satisfied
the continuity of interest requirement even though the shareholders of the
acquired corporation received only 38.8 percent of their total consideration in
the form of stock, in that case nonvoting preferred stock, of the acquiring
corporation. Based on representation "n" above, at least 45 percent of the value
of consideration received by the Peoples shareholders will consist of Synovus
Common Stock. In addition, based on representation "b" above, there will be no
transactions that could cause the continuity of interest requirement to be
failed under Regulation Section 1.368-1(b). Accordingly, the Merger will meet
the continuity of interest requirement.
In that (1) the merger of Peoples with and into Synovus will qualify as a
statutory merger under Georgia and Florida law; (2) the Merger is motivated by a
valid business purpose as stated in the above facts; (3) after the transaction,
Synovus will continue the historical business of Peoples; and (4) Peoples
shareholders will exchange for Synovus Common Stock an amount of Peoples Common
Stock meeting the continuity of shareholder interest test; the merger of Peoples
with and into Synovus will constitute a reorganization within the meaning of
Section 368(a)(1)(A). Synovus and Peoples will each be "a party to a
reorganization" within the meaning of Section 368(b).
Federal Income Tax Consequences to Exchanging Shareholders
Section 354(a)(1) provides that no gain or loss will be recognized if stock of a
corporation that is a party to a reorganization is, pursuant to the plan or
reorganization, exchanged solely for stock of such corporation or of another
corporation that is a party to
D-9
November 18, 2003
Page 10
the reorganization. Section 356(a)(1) in relevant part provides that, if money
or other property is received in an exchange to which Section 354 would
otherwise apply, then the recipient shall recognize gain, if any, to the extent
of the sum of the money and the fair market value of the property received. If
the exchange has the effect of the distribution of a dividend, then the amount
of gain recognized that is not in excess of each distributee shareholder's
ratable share of the undistributed earnings and profits of the acquired
corporation will be treated as a dividend. Section 356(a)(2). No loss will be
recognized on the exchange. Section 356(c).
The payment of cash in lieu of fractional share interests of Synovus Common
Stock will be treated as if the fractional share interests of Synovus Common
Stock were distributed as part of the Merger to Peoples shareholder and then
redeemed by Synovus. The cash payments will be treated as having been received
as distributions in full payment for the fractional share interests redeemed.
Section 302(a), Rev. Rul. 66-365, 1966-2 C.B.116 and Rev. Proc. 77-41, 1977-2
C.B. 574.
Based on the Merger's qualification under Section 368(a)(1)(A), Peoples common
shareholders will recognize gain only to the extent of cash received in the
Merger. Section 356(a)(1). The tax basis these Peoples common shareholders will
have in their newly received Synovus Common Stock (including the fractional
shares of Synovus Common Stock they are deemed to receive) will be the same as
their tax basis in Peoples Common Stock immediately prior to the merger under
Section 358(a), less the value of any other property received (not including the
cash received in lieu of fractional shares), plus any gain (including gain
treated as a dividend, but not gain associated with the fractional shares) that
is recognized on the exchange. Section 358(a).
If the property received in an exchange (i.e., Synovus Common Stock) has the
same (i.e., carryover) basis as the property given up, then Section 1223(1)
applies to determine the holding period for the property received. Section
1223(1) provides that the period during which the taxpayer held the property
surrendered in the exchange is added to the period he or she holds the property
received in the exchange in order to determine the holding period of the
property received.
This tacking of the previous holding period applies only if the property
exchanged (i.e., Peoples Common Stock) was a capital asset in the taxpayer's
hands at the time of the exchange. Section 1223(1). The status of the property
as capital asset is determined under Section 1221, which defines "capital asset"
as any property of a taxpayer other than property within specified
classifications. As a general rule, stock of a corporation would be treated as a
capital asset under this section. Provided that his or her Peoples Common Stock
is a capital asset, then each Peoples shareholder will be able to include his or
her respective ownership period of Peoples Common Stock in determining the
holding period of Synovus Common Stock received in the proposed transaction.
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November 18, 2003
Page 11
Poison Pill Rights
The shares of Synovus Common Stock to be issued to Peoples shareholders entitle
such shareholders to receive the poison pill rights, which will become
exercisable upon the happening of future events as described above. An issue
with respect to the poison pill rights is whether the rights should be
considered separable from Synovus Common Stock and therefore "other property"
within the meaning of Section 356(a) or rather as an attribute of Synovus Common
Stock, that is, a right to a future dividend inseparable from the other rights
inherent in the stock and not personal to the shareholders.
Presently the Service has not published any direct authoritative position
regarding the treatment of poison pill rights in the context of a corporate
reorganization that can be cited as precedent. Nor are there any judicial
opinions specifically addressing poison pill rights in the context of a
corporate reorganization.
The only available guidance consists of Private Letter Rulings ("PLRs") that
address the shareholder tax consequences upon the receipt of common stock
incorporating a poison pill rights plan in the context of a corporate
reorganization. Under Section 6110(j)(3), PLRs may not be used or cited as
precedent. If the Service issues further authority, such authority could be
prospective only in accordance with the provisions of Section 7805.
In PLR 8808081, the Service ruled that poison pill rights incorporated in the
terms of common stock issued in a corporate reorganization constituted "other
property" within the meaning of Section 356(a). Accordingly, the filing held
that the acquired corporation's shareholders recognized gain, to the extent of
the fair market value of the poison pill rights, in the exchange for common
stock of the acquiring corporation.
Subsequently, however, the Service reversed its position and ruled in PLR
8925087, PLR 8925088, PLR 9040069, PLR 9040042, PLR 9120006, and PLR 199904013
(among others) that poison pill rights did not constitute other property within
the meaning of Section 356(a).
Indirect support for the proposition that poison pill rights do not constitute
"other property" can also be found in Revenue Ruling 90-11, 1990-1 C.B. 10.
Although not in the context of a corporate reorganization, the Service concluded
that the initial issuance of poison pill rights is not a distribution of
property that would give rise to current tax to the shareholders. The terms of
the poison pill plan described in the ruling are comparable to the terms of
Synovus plan. This ruling is a published ruling, and therefore, may be cited as
precedent. This published ruling indicates that the more recent private letter
rulings cited immediately above reflect the current thinking of the Service,
i.e., that poison pill rights do not constitute other property when associated
with stock received in a corporate reorganization. Should the Service
successfully maintain that the poison pill
D-11
November 18, 2003
Page 12
rights are other property, then gain, if any, realized by a common shareholder
receiving such rights would be recognized to the extent of the fair market value
of such rights.
Opinions
Based solely on the Documents, the above Facts and Representations and subject
to the Scope of the Opinions below, it is the opinion of KPMG that:
Federal Income Tax Consequences
(1) The Merger will constitute a reorganization within the meaning of
Section 368(a).
(2) Peoples and Synovus will each be a party to the reorganization within
the meaning of Section 368(b).
(3) Synovus will recognize no gain or loss upon the receipt of the assets
of Peoples, a party to the reorganization, subject to its liabilities,
in exchange for cash and its common stock in the Merger. Section
1032(a); Treas. Reg. Section 1.1032-1.
(4) Peoples's shareholders will recognize gain, if any, as a result of the
Merger, only to the extent of the cash (other than cash received in
lieu of fractional shares) received for their stock in Peoples,
pursuant to the Merger Agreement. Section 354(a)(1); Section 356(a)(1).
Any gain recognized by a Peoples shareholder will be capital gain
provided that such Peoples shareholder held their Peoples Common Stock
as a capital asset on the date of the Merger. Any capital gain
recognized will be long-term capital gain, if such Peoples shareholder
held their Peoples Common Stock for more than one year as of the date
of the Merger.
(5) We believe it is more likely than not that Synovus' poison pill rights
plan adopted April 27, 1999, will be treated for federal income tax
purposes as an attribute of Synovus Common Stock, a right that is
inseparable from other rights inherent in the stock, that does not
constitute "other property" within the meaning of Section 356(a)
received by the Peoples common shareholders in exchange for their
Peoples Common Stock, and, the Peoples shareholders will not recognize
gain for federal income tax purposes attributable to the poison pill
rights upon the Merger. However, in view of the lack of precedent,
there can be no assurance that the Service will agree with this
conclusion. In the event that the Service ultimately establishes that
such poison pill rights constitute other property, then Peoples
shareholders, who realize gain on the exchange of their shares for
Synovus Common Stock, will recognize such gain to the extent of the
value of the poison pill rights received.
D-12
November 18, 2003
Page 13
(6) The basis of a share of Synovus Common Stock received by a shareholder
of Peoples (including any fractional share interests which they are
deemed to receive under opinion (8), below) will be the same as the
basis in Peoples Common Stock surrendered in the exchange therefor
decreased by the amount of money and value of other property (but not
including cash received in lieu of fractional shares) received and
increased by the amount of any gain recognized (including gain treated
as a dividend, but not gain associated with the fractional shares).
Section 358(a)(1).
(7) The holding period of a share of Synovus Common Stock received by a
shareholder of Peoples (including any fractional share interests that
they are deemed to receive under opinion (8), below) will include the
shareholder's holding period of Peoples Common Stock surrendered in
exchange therefor, provided that the Peoples Common Stock is held as a
capital asset in the hands of the shareholder of Peoples on the date of
the Merger. Section 1223(1).
(8) The payment of cash in lieu of fractional share interests of Synovus
Common Stock will be treated as if the fractional share interests of
Synovus Common Stock were distributed as part of the Merger to the
Peoples shareholder and then redeemed by Synovus. The cash payments
will be treated as having been received as distributions in full
payment for the fractional share interests redeemed as provided in
Section 302(a). Rev. Rul. 66-365, 1966-2 C.B. 116 and Rev. Proc. 77-41,
1977-2 C.B. 574.
(9) Peoples will recognize no gain or loss upon the transfer of its assets,
subject to its liabilities, to Synovus in the Merger. Sections 357(a)
and 361(a). The deemed distribution of qualified property by Peoples to
its shareholders will be nontaxable. Section 361(c). Peoples will
recognize no gain upon the distribution of any other consideration
received from Synovus because such property will have a fair market
value tax basis. Section 358(a)(2).
(10) The basis of the assets of Peoples in the hands of Synovus will be the
same, in each instance, as the basis of such assets in the hands of
Peoples immediately prior to the Merger. Section 362(b).
(11) The holding period of the assets of Peoples in the hands of Synovus
will include, in each instance, the period during which Peoples held
such assets immediately prior to the Merger. Section 1223(2).
(12) For purposes of Section 381, Synovus will be the acquiring corporation
in the Merger. Treas. Reg. Section 1.381(a)-1(b)(2). Thus, subject to
the conditions and limitations specified in Sections 381, 382, 383, and
384,
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November 18, 2003
Page 14
and the regulations thereunder, Synovus will succeed to and take
into account the items of Peoples described in Section 381(c). Section
381(a) and Treas. Reg. Section 1.381(a)-1.
State Income Tax Consequences
It is our opinion that the State of Florida for income tax purposes will treat
the Merger in the same manner as treated under the Internal Revenue Code for
federal income tax purposes as set forth in the Opinions relating to Federal
Income Tax Consequences contained in this opinion letter. Fla. Stat. chs.
220.11, 12 and 13; Fla. Admin. Code Ann. r. 12C-1.0511.
It is our opinion that the State of Georgia for income tax purposes will treat
the Merger in the same manner as treated under the Internal Revenue Code for
federal income tax purposes as set forth in the Opinions relating to Federal
Income Tax Consequences contained in this opinion letter. Ga. Code Ann. Sections
48-7-21 and -27.
Scope of the Opinions
The opinions contained herein are effective as of the Effective Date of the
Merger and are based upon the facts, assumptions and representations set forth
in this letter, as well as the information contained in the Documents. You
represented to us that you have provided us with all facts and circumstances
that you know or have reason to know are pertinent to this opinion letter. If
any of these facts, assumptions or representations is not entirely complete or
accurate, it is imperative that we be informed immediately in writing because
the incompleteness or inaccuracy could cause us to change our opinions.
Our advice in this opinion letter is limited tohave the conclusions specifically set
forth herein undersame meanings as given therefor in the heading Opinions. KPMG expresses no opinion with respect
to any other federal, state, local, or foreign tax or legal aspectShare Exchange Agreement.
For purposes of the
transactions described herein. No inference should be drawn on any matter not
specifically opined on above. In addition, this opinion letter may not be
applicable with respect to specific categories of shareholders, including but
not limited to persons who are corporations, trusts, dealers in securities,
financial institutions, insurance companies or tax exempt organizations; persons
who are not United States citizens or resident aliens or domestic entities
(partnerships or trusts); persons who are subject to alternative minimum tax (to
the extent that tax affects the tax consequences of the merger) or are subject
to the "golden parachute" provisions of the Internal Revenue Code of 1986 (to
the extent that tax affects the tax consequences of the merger); persons whose
shares of Peoples stock are treated as "section 306 stock" under Section 306 of
the Internal Revenue Code; persons who acquired Peoples common stock with
employee stock options or otherwise as compensation if such shares are subject
to any restriction related to employment; persons who do not hold their shares
as capital assets; or persons who hold their shares as part of
D-14
November 18, 2003
Page 15
a "straddle" or "conversion transaction." No ruling has been or will be
requested from the IRS with respect to the tax effects of the merger. The
federal income tax laws are complex, and a shareholder's individual
circumstances may affect the tax consequences to the shareholder.
In rendering our opinions,opinion herein, we are relying upon the relevant provisionshave conducted an examination of the Internal Revenue Code of 1986, as amended (the “Code”), and such other applicable laws, regulations, rulings and decisions as we have deemed necessary. With respect to factual matters, we have relied upon the Florida Statues,Share Exchange Agreement, including, without limitation, the Coderepresentations and warranties of Georgia, the regulations thereunder,parties set forth therein, and judicialupon certain statements and administrative
interpretations thereof, all asrepresentations made to us in effectcertificates of officers of Synovus and certificates of officers of Trust One, in each case without independent verification of the accuracy or completeness thereof. With the consent of Synovus and Trust One, we have relied on the dateaccuracy and completeness of the statements and representations described in the preceding sentence, and have assumed that such statements and representations will also be complete and accurate as of the Effective Date. We have also assumed that any representation or statement made on which we have relied which is qualified “to the best of knowledge” of the party making such statement or representation, or which is otherwise similarly qualified, is correct and complete without such qualification. With respect to any matter as to which a person or entity making a representation or statement described in this paragraph has represented or stated that such person or entity either is not a party to, or does not have, or is not aware of, any plan or intention, understanding or agreement with respect to certain matters of fact, we have assumed that there is in fact no such plan, intention, understanding or agreement with respect to such matters.
For purposes of this letter. These
authorities areopinion, we have assumed that (1) the shares of Trust One stock constitute capital assets in the hands of each holder thereof, (2) the Share Exchange Agreement is enforceable against each of the parties thereto, and (3) the Reorganization will be consummated according to the Share Exchange Agreement.
Based on the foregoing, and subject to change or modification retroactively and/or
prospectivelythe assumptions, limitations and any such changes could affectqualifications set forth herein, we are of the validity or correctnessopinion that:
(1) the Reorganization will be treated as a reorganization within the meaning of our opinion. WeSection 368(a) of the Code;
(2) the exchange in the Reorganization of Trust One Common Stock solely for Synovus Common Stock will not update our advice for subsequent changesgive rise to gain or modificationsloss to the law and regulations orshareholders of Trust One with respect to such exchange (except to the judicialextent of cash received in lieu of fractional shares);
(3) neither Trust One nor Synovus will recognize gain or loss as a consequence of the Reorganization; and administrative
interpretations thereof, unless you separately engage us
(4) the federal income tax basis of the Synovus common stock for which shares of Trust One common stock are exchanged pursuant to do sothe transaction will be the same as the basis of such shares of Trust One common stock exchanged therefor (including basis allocable to any fractional interest in writing
afterany share of Synovus common stock), and the holding period of such subsequent change or modification. TheseSynovus common stock will include the holding period of the Trust One common stock exchanged therefor.
The opinions expressed herein are not binding on
the Internal Revenue Service, any other tax authority, or any court,based upon our interpretation of existing legal authorities, and no assurance can be given that such interpretations would be followed if the exchange of shares contemplated by the Reorganization became the subject of administrative or judicial proceedings. Statements of opinion herein are opinions only and should not be interpreted as guarantees of the current status of the law, nor should they be accepted as a position contraryguarantee that a court of law or administrative agency will concur in such statement.
No opinion is expressed with respect to any of the following:
(i) The appropriate method to determine the fair market value of any stock or other consideration received in any sale or exchange;
(ii) The state, local or foreign tax consequences of any aspect of the Reorganization; or
(iii) The federal income tax consequences of any aspect of the Reorganization to holders of Trust One stock who are subject to special tax treatment for federal income tax purposes, as described in the Proxy Statement-Prospectus.
We hereby consent to the use of our name under the captions “Material United States Federal Income Tax Consequences of the Transaction” and “Legal Matters” in the Proxy Statement-Prospectus and the filing of this opinion with the Commission as an exhibit to the Registration Statement. In giving this consent, we do not thereby concede that we are within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Commission promulgated thereunder. The opinions expressed herein will
not be asserted by a tax authorityare given as of the date hereof and ultimately sustained by a court.
Very truly yours,
KPMG LLP
/s/KPMG LLP
Thomas W. Avent, Jr.
Partner-in-Charge, Southeast M&A Tax Practice
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apply only to the Reorganization. We disclaim any undertaking to advise you of any subsequent changes of the facts stated or assumed herein or any subsequent changes in applicable law.
Very truly yours, | ||
SMITH, GAMBRELL & RUSSELL, LLP | ||
By: | /s/ David W. Santi David W. Santi |
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PART II
-------
INFORMATION NOT REQUIRED IN PROSPECTUS; UNDERTAKINGS
----------------------------------------------------
PROSPECTUS
Item 20. Indemnification of Directors and OfficersOfficers.
Subsection (a) of Section 14-2-851 of the Georgia Business Corporation Code provides that a corporation may indemnify or obligate itself to indemnify an individual made a party to a proceeding because he or she is or was a director against liability incurred in the proceeding if such individual conducted himself or herself in good faith and such individual reasonably believed, in the case of conduct in an official capacity, that such conduct was in the best interests of the corporation and, in all other cases, that such conduct was at least not opposed to the best interests of the corporation and, in the case of any criminal proceeding, such individual had no reasonable cause to believe such conduct was unlawful. Subsection (d) of Section 14-2-851 of the Georgia Business Corporation Code provides that a corporation may not indemnify a director in connection with a proceeding by or in the right of the corporation except for reasonable expenses incurred if it is determined that the director has met the relevant standard of conduct, or in connection with any proceeding with respect to conduct under Section 14-2-851 of the Georgia Business Corporation Code for which he was adjudged liable on the basis that personal benefit was improperly received by him. Notwithstanding the foregoing, pursuant to Section 14-2-854 of the Georgia Business Corporation Code a court may order a corporation to indemnify a director or advance expenses if such court determines that the director is entitled to indemnification under the Georgia Business Corporation Code or that the director is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not such director met the standard of conduct set forth in subsections (a) and (b) of Section 14-2-851 of the Georgia Business Corporation Code, failed to comply with Section 14-2-853 of the Georgia Business Corporation Code or was adjudged liable as described in paragraph (1) or (2) of subsection (d) of Section 14-2-851 of the Georgia Business Corporation Code.
Section 14-2-852 of the Georgia Business Corporation Code provides that to the extent that a director has been successful, on the merits or otherwise, in the defense of any proceeding to which he was a party, because he or she is or was a director of the corporation, the corporation shall indemnify the director against reasonable expenses incurred by the director in connection therewith.
Section 14-2-857 of the Georgia Business Corporation Code provides that a corporation may indemnify and advance expenses to an officer of the corporation who is a party to a proceeding because he or she is an officer of the corporation to the same extent as a director and if he or she is not a director to such further extent as may be provided in its articles of incorporation, bylaws, action of its board of directors or contract except for liability arising out of conduct specified in Section 14-2-857(a)(2) of the Georgia Business Corporation Code. Section 14-2-857 of the Georgia Business Corporation Code also provides that an officer of the corporation who is not a director is entitled to mandatory indemnification under Section 14-2-852 and is entitled to apply for court ordered indemnification or advances for expenses under Section 14-2-854, in each case to the same extent as a director. In addition, Section 14-2-857 provides that a corporation may also indemnify and advance expenses to an employee or agent who is not a director to the extent, consistent with public policy, that may be provided by its articles of incorporation, bylaws, action of its board of directors or contract.
In accordance with Article VIII of the Company'sCompany’s Bylaws, every person who is or was (and the heirs and personal representatives of such person) a director, officer, employee or agent of the Company shall be indemnified and held harmless by the Company from and against the obligation to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan), and reasonable expenses (including attorneys'attorneys’ fees and disbursements) that may be imposed upon or incurred by him or her in connection with or resulting from any threatened, pending, or completed, action, suit, or proceeding, whether civil, criminal, administrative, investigative, formal or informal, in which he or she is, or is threatened to be made, a named defendant or respondent: (a) because he or she is or was a director, officer, employee, or agent of the Company; (b) because he or she or is or was serving at the request of the Company as a director, officer, partner, trustee, employee, or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise; or (c) because he or she is or was serving as an employee of the corporation who was employed to render professional services as a lawyer or accountant to the corporation; regardless of whether such person is acting in such a capacity at the time such obligation shall have been imposed or incurred, if (i) such person acted in a manner he or she believed in good faith to be in or not opposed to the best interest of such corporation, and, with respect to any criminal proceeding, if such person had no reasonable cause to believe his or her conduct was unlawful or (ii), with respect to an employee benefit plan, such person believed in good faith that his or her conduct was in the interests
Pursuant to Article VIII of the Company’s Bylaws, of the Company, reasonable expenses incurred in any proceeding shall be paid by the Company in advance of the final disposition of such proceeding if authorized by the Board of Directors in the specific case, or if authorized in accordance with procedures adopted by the Board of Directors, upon receipt of a written undertaking executed personally by or on behalf of the director, officer, employee or agent to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Company, and a written affirmation of his or her good faith belief that he or she has met the standard of conduct required for indemnification.
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The foregoing rights of indemnification and advancement of expenses are not intended to be exclusive of any other right to which those indemnified may be entitled, and the Company has reserved the right to provide additional indemnity and rights to its directors, officers, employees or agents to the extent they are consistent with law.
The Company carries insurance for the purpose of providing indemnification to its directors and officers. Such policy provides for indemnification of the Company for losses and expenses it might incur to its directors and officers for successful defense of claims alleging negligent acts, errors, omissions or breach of duty while acting in their capacity as directors or officers and indemnification of its directors and officers for losses and expense upon the unsuccessful defense of such claims.
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the "Act"“Act”), may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
Item 21. Exhibits and Financial Statement SchedulesSchedules.
The following Exhibitsis a list of exhibits that are filed as part of this Registration
Statement:
Exhibit No. Description
- ---------- -----------
2 Agreement and Plan of Merger is attached as Appendix "A" to the
Proxy Statement/Prospectus included in this Registration
Statement.
4.1 Articles of Incorporation of Synovus Financial Corp., as amended,
incorporated by reference to Exhibit 4(a) of Synovus Financial
Corp.'s Registration Statement on Form S-8 filed with the
Securities and Exchange Commission on July 23, 1990 (File No.
33-35926).
4.2 Bylaws, as amended, of Synovus Financial Corp., incorporated by
reference to Exhibit 4.2 of Synovus Financial Corp.'s
Registration Statement on Form S-4 filed with the Securities and
Exchange Commission on January 6, 2003 (File No. 333-102370).
4.3 Form of Rights Agreement incorporated by reference to Exhibit 4.1
of Synovus Financial Corp.'s Registration Statement on Form 8-A
dated April 28, 1999 filed with the Securities and Exchange
Commission on April 28, 1999 pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended.
5 Legal opinion of the Senior Deputy General Counsel of Synovus
regarding the legality of the
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Synovus Common Stock being issued in the Merger.
8 Tax opinion of KPMG LLP regarding the tax consequences of the
Merger to shareholders of Peoples Common Stock is attached as
Appendix "D" to the Proxy Statement/Prospectus included in this
Registration Statement.
23.1 The consent of KPMG LLP re: Consolidated Financial Statements of
Synovus Financial Corp. and Subsidiaries.
23.2 The consent of KPMG LLP regarding its tax opinion filed as
Appendix "D" to the Proxy Statement/Prospectus included in this
Registration Statement is contained in its opinion filed as
Exhibit 8 to the Registration Statement.
23.3 The consent of the Senior Deputy General Counsel of Synovus is
contained in her opinion filed as Exhibit 5 to the Registration
Statement.
23.4 The consent of Hovde Financial LLC regarding its opinion as to
the fairness of the exchange ratio to be received by Peoples
shareholders filed as Appendix "C" to the Proxy
Statement/Prospectus included in the Registration Statement.
24 Powers of Attorney contained on the signature pagesPart II of the Registration Statement. 99.1 Form of Proxy
99.2 Opinion of Hovde Financial LLC as toSuch exhibits are separately indexed elsewhere in the fairness of the exchange
ratio to be received by Peoples shareholders is attached as
Appendix "C"Registration Statement.
Description | ||
2.1 | Agreement and Plan of Share Exchange between Synovus Financial Corp. and Trust One Bank, dated as of December 17, 2003, is attached as Appendix “A” to the Proxy Statement/Prospectus included in this Registration Statement. | |
4.1 | Articles of Incorporation of Synovus Financial Corp., as amended, incorporated by reference to Exhibit 4(a) of Synovus Financial Corp.’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on July 23, 1990 (File No. 33-35926) | |
4.2 | Bylaws, as amended, of Synovus Financial Corp., incorporated by reference to Exhibit 4.2 of Synovus Financial Corp.’s Registration Statement on Form S-4 filed with the Securities and Exchange Commission on January 16, 2003 (File No. 333-102370) | |
4.3 | Form of Rights Agreement incorporated by reference to Exhibit 4.1 of Synovus Financial Corp.’s Registration Statement on Form 8-A dated April 28, 1999 filed with the Securities and Exchange Commission on April 28, 1999 pursuant to Section 12 of the Securities Exchange Act of 1934, as amended. | |
5 | Legal opinion of the Senior Deputy General Counsel of Synovus regarding the legality of the Synovus Common Stock being issued in the Transaction. | |
8 | Tax opinion of Smith, Gambrell & Russell, LLP regarding the tax consequences of the Share Exchange to shareholders of Trust One Common Stock is attached as Appendix “D” to the Proxy Statement/Prospectus included in this Registration Statement. | |
23.1 | The consent of KPMG LLP regarding Consolidated Financial Statements of Synovus Financial Corp. and Subsidiaries. | |
23.2 | The consent of Smith, Gambrell & Russell, LLP regarding its tax opinion filed as Appendix “D” to the Proxy Statement/Prospectus included in this Registration Statement is contained in its opinion filed as Exhibit 8 to the Registration Statement. | |
23.3 | The consent of the Senior Deputy General Counsel of Synovus is contained in her opinion filed as Exhibit 5 to the Registration Statement. | |
23.4 | The consent of SunTrust Robinson Humphrey regarding its opinion as to the fairness of the exchange ratio to be received by Trust One shareholders is filed as Appendix “C” to the Proxy Statement/Prospectus included in the Registration Statement. | |
24 | Powers of Attorney are contained on the signature pages of the Registration Statement. |
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Description | ||
99.1 | Form of Proxy of Trust One | |
99.2 | Opinion of SunTrust Robinson Humphrey as to the fairness of the exchange ratio to be received by Trust One shareholders is attached as Appendix “C” to the Proxy Statement/Prospectus included in the Registration Statement. |
The Registrant agrees to provide to the Commission, upon request, copies of instruments defining the rights of holders of long-term debt of the Registrant.
Item 22. Undertakings.
The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant'sRegistrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan'splan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this Registration Statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form.
The Registrant undertakes that every prospectus (i) that is filed pursuant to the immediately preceding paragraph or (ii) that purports to meet the requirements of Section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the Registration Statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide public offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors,
II-3
The undersigned Registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes the information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.
acq\Peoples\PartII.doc
II-4
II-3
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Columbus, State of Georgia, on the 18th12th day of November, 2003.
SYNOVUS FINANCIAL CORP.
(Registrant)
By: /s/James H. Blanchard
--------------------------------
James H. Blanchard,
Principal Executive Officer
March, 2004.
SYNOVUS FINANCIAL CORP. | ||||
By: | /s/ JAMES H. BLANCHARD James H. Blanchard Its Principal Officer |
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints James H. Blanchard, James D. Yancey and Richard E. Anthony, and each of them, his or her true and lawful attorney(s)-in-fact and agent(s), with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments to this Registration Statement and to file the same, with all exhibits and schedules thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney(s)-in-fact and agent(s) full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney(s)-in-fact and agent(s), or their substitute(s), may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
/s/James H. Blanchard Date: November 18, 2003
- --------------------------------------
James H. Blanchard,
Principal Executive Officer and Director
/s/James D. Yancey Date: November 18, 2003
- ----------------------------------------
James D. Yancey,
Chairman of the Board
/s/Richard E. Anthony Date: November 18, 2003
- ----------------------------------------
Richard E. Anthony,
President and Director
/s/Thomas J. Prescott Date: November 18, 2003
- ----------------------------------------
Thomas J. Prescott,
Executive Vice President,
Principal Accounting and Financial Officer
/s/Daniel P. Amos Date: November 18, 2003
- ----------------------------------------
Daniel P. Amos,
Director
Date: ________, 2003
- ----------------------------------------
Joe E. Beverly,
Director
/s/Richard Y. Bradley Date: November 18, 2003
- ----------------------------------------
Richard Y. Bradley,
Director
Date: ________, 2003
- -----------------------------------------
C. Edward Floyd,
Director
Date: ________, 2003
- ----------------------------------------
Elizabeth W. Camp,
Director
/s/Gardiner W. Garrard, Jr. Date: November 18, 2003
- ----------------------------------------
Gardiner W. Garrard, Jr.,
Director
Date: ________, 2003
- ----------------------------------------
V. Nathaniel Hansford,
Director
/s/John P. Illges, III Date: November 18, 2003
- ----------------------------------------
John P. Illges, III,
Director
Date: ________, 2003
- ----------------------------------------
Alfred W. Jones III,
Director
/s/Elizabeth C. Ogie Date: November 18, 2003
- ----------------------------------------
Mason H. Lampton,
Director
/s/H. Lynn Page Date: November 18, 2003
- ----------------------------------------
Elizabeth C. Ogie,
Director
Date: ________, 2003
- ----------------------------------------
H. Lynn Page,
Director
Date: ________, 2003
- ----------------------------------------
J. Neal Purcell,
Director
Date: ________, 2003
- ----------------------------------------
Melvin T. Stith,
Director
/s/William B. Turner, Jr. Date: November 18, 2003
- ----------------------------------------
William B. Turner, Jr.,
Director
Signatures | Title | Date | ||
/s/ JAMES H. BLANCHARD James H. Blanchard | Chief Executive Officer and Director (Principal Executive Officer) | ** | ||
/s/ JAMES D. YANCEY James D. Yancey | Chairman of the Board | ** | ||
/s/ RICHARD E. ANTHONY Richard E. Anthony | President and Director | ** | ||
/s/ THOMAS J. PRESCOTT Thomas J. Prescott | Executive Vice President (Principal Accounting and Financial Officer) | ** | ||
/s/ DANIEL P. AMOS Daniel P. Amos | Director | ** | ||
/s/ JOE E. BEVERLY Joe E. Beverly | Director | ** | ||
/s/ RICHARD Y. BRADLEY Richard Y. Bradley | Director | ** | ||
Frank W. Brumley | Director | |||
/s/ C. EDWARD FLOYD C. Edward Floyd | Director | ** | ||
/s/ ELIZABETH W. CAMP Elizabeth W. Camp | Director | ** | ||
/s/ GARDINER W. GARRARD, JR. Gardiner W. Garrard, Jr. | Director | |||
T. MICHAEL GOODRICH | Director | ** | ||
/s/ V. NATHANIEL HANSFORD V. Nathaniel Hansford | Director | ** | ||
/s/ JOHN P. ILLGES, III John P. Illges, III | Director | ** |
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Signatures | Title | Date | ||
/s/ ALFRED W. JONES III Alfred W. Jones III | Director | ** | ||
/s/ MASON H. LAMPTON Mason H. Lampton | Director | ** | ||
/s/ ELIZABETH C. OGIE Elizabeth C. Ogie | Director | ** | ||
/s/ H. LYNN PAGE H. Lynn Page | Director | ** | ||
/s/ J. NEAL PURCELL J. Neal Purcell | Director | ** | ||
/s/ MELVIN T. STITH Melvin T. Stith | Director | ** | ||
/s/ WILLIAM B. TURNER, JR. William B. Turner, Jr. | Director | ** | ||
** Dated: March 12, 2004 |
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EXHIBIT INDEX
Exhibit | Description | |
2.1 | Agreement and Plan of Share Exchange between Synovus Financial Corp. and Trust One Bank, dated as of December 18, 2003, is attached as Appendix “A” to the Proxy Statement/Prospectus included in this Registration Statement and incorporated herein by reference. | |
4.1 | Articles of Incorporation of Synovus Financial Corp., as amended, incorporated by reference to Exhibit 4(a) of Synovus Financial Corp.’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission on July 23, 1990 (File No. 33-35926) | |
4.2 | Bylaws, as amended, of Synovus Financial Corp., incorporated by reference to Exhibit 4.2 of Synovus Financial Corp.’s Registration Statement on Form S-4 filed with the Securities and Exchange Commission on January 16, 2003 (File No. 333-102370) | |
4.3 | Form of Rights Agreement incorporated by reference to Exhibit 4.1 of Synovus Financial Corp.’s Registration Statement on Form 8-A dated April 28, 1999 filed with the Securities and Exchange Commission on April 28, 1999 pursuant to Section 12 of the Securities Exchange Act of 1934, as amended. | |
5 | Legal opinion of the Senior Deputy General Counsel of Synovus regarding the legality of the Synovus Common Stock being issued in the Transaction. | |
8 | Tax opinion of Smith, Gambrell & Russell, LLP regarding the tax consequences of the Share Exchange to shareholders of Trust One Common Stock is attached as Appendix “D” to the Proxy Statement/Prospectus included in this Registration Statement. | |
23.1 | The consent of KPMG LLP regarding Consolidated Financial Statements of Synovus Financial Corp. and Subsidiaries. | |
23.2 | The consent of Smith, Gambrell & Russell, LLP regarding its tax opinion filed as Appendix “D” to the Proxy Statement/Prospectus included in this Registration Statement is contained in its opinion filed as Exhibit 8 to the Registration Statement. | |
23.3 | The consent of the Senior Deputy General Counsel of Synovus is contained in her opinion filed as Exhibit 5 to the Registration Statement. | |
23.4 | The consent of SunTrust Robinson Humphrey regarding its opinion as to the fairness of the exchange ratio to be received by Trust One shareholders is contained in its opinion filed as Exhibit 99.2 to the Registration Statement. | |
24 | Powers of Attorney are contained on the signature pages of the Registration Statement. | |
99.1 | Form of Proxy of Trust One | |
99.2 | Opinion of SunTrust Robinson Humphrey as to the fairness of the exchange ratio to be received by Trust One shareholders is attached as Appendix “C” to the Proxy Statement/Prospectus included in the Registration Statement. |
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