<PAGE> 1
Pursuant to Rule 424(b)(5)
Registration Statement No. 333-25381-02
PROSPECTUS SUPPLEMENT
(To Prospectus dated May 6, 1997)
$250,000,000
SUNTRUST CAPITAL II
7.90% CAPITAL TRUST PASS-THROUGH SECURITIES(SM) (TRUPS(SM))
(LIQUIDATION AMOUNT $1,000 PER SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
SUNTRUST BANKS, INC.
The 7.90% Capital Trust Pass-through Securities(SM) (TRUPS(SM)) (the "Preferred
Securities") offered hereby represent preferred beneficial ownership interests
in the assets of SunTrust Capital II, a statutory business trust formed under
the laws of the State of Delaware ("SunTrust Capital Trust" or the "Trust").
SunTrust Banks, Inc., a Georgia corporation ("SunTrust" or the "Company"), will
own all the common securities (the "Common Securities" and, together with the
Preferred Securities, the "Trust Securities") representing common beneficial
ownership interests in the assets of the Trust. SunTrust Capital Trust exists
for the sole purpose of issuing the Trust Securities and investing the proceeds
thereof in 7.90% Junior Subordinated Deferrable Interest Debentures to be issued
by SunTrust (the "Subordinated Debentures"). The Subordinated Debentures will
mature on June 15, 2027 (the "Stated Maturity"). Upon an event of default under
the Declaration (as defined herein), the holders of Preferred Securities will
have a preference over the holders of the Common Securities with respect to cash
distributions and amounts payable upon redemption or liquidation. (continued on
next page)
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE PREFERRED SECURITIES,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
SECURITIES AND THE IMPOSITION OF A PENALTY BID DURING AND AFTER THE OFFERING.
FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
SEE "RISK FACTORS" BEGINNING ON PAGE S-4 HEREOF FOR CERTAIN INFORMATION RELEVANT
TO AN INVESTMENT IN THE PREFERRED SECURITIES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OF ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES, ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY
BANK OR A NONBANK SUBSIDIARY THEREOF, AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER OR ANY OTHER
GOVERNMENTAL AGENCY.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT TRUST(1)(3)
<S> <C> <C> <C>
Per Preferred Security................... 99.939% (2) 99.939%
Total.................................... $249,847,500 (2) $249,847,500
</TABLE>
- --------------------------------------------------------------------------------
(1) Plus accrued distributions, if any, from June 6, 1997.
(2) In view of the fact that the proceeds of the sale of the Preferred
Securities will be invested in the Subordinated Debentures, SunTrust has
agreed to pay to Salomon Brothers Inc as compensation for arranging the
investment therein of such proceeds $10.00 per Preferred Security (or
$2,500,000 in the aggregate). See "Underwriting."
(3) Before deducting expenses of the offering payable by SunTrust estimated at
$200,000.
The Preferred Securities offered hereby are offered subject to receipt and
acceptance by Salomon Brothers Inc, to prior sale and to Salomon Brothers Inc's
right to reject any order in whole or in part and to withdraw, cancel or modify
the offer without notice. It is expected that delivery of the Preferred
Securities will be made through the facilities of The Depository Trust Company
on or about June 6, 1997.
- ---------------
(SM) Salomon Brothers Inc has filed applications with the United States Patent
and Trademark Office for the registration of the "Capital Trust
Pass-through Securities" and "TRUPS" service marks.
SALOMON BROTHERS INC
The date of this Prospectus Supplement is June 2, 1997.
<PAGE> 2
(continued from previous page)
Holders of the Preferred Securities are entitled to receive cumulative cash
distributions at a rate of 7.90% per annum in respect of the liquidation amount
of $1,000 per Preferred Security, accruing from the date of original issuance
and payable semi-annually in arrears on the 15th day of June and December of
each year, commencing December 15, 1997 ("Distributions"). So long as SunTrust
is not in default in the payment of interest on the Subordinated Debentures,
SunTrust has the right to defer payments of interest on the Subordinated
Debentures by extending the interest payment period on the Subordinated
Debentures at any time, and from time to time, for up to 10 consecutive
semi-annual periods (each, an "Extension Period"), provided that an Extension
Period may not extend beyond the Stated Maturity of the Subordinated Debentures.
As a consequence of any Extension Period, Distributions on the Preferred
Securities will also be deferred. During such Extension Period, Distributions
will continue to accrue with interest thereon (to the extent permitted by
applicable law) at a rate of 7.90% per annum compounded semi-annually, and
during any Extension Period, holders of Preferred Securities will be required to
include deferred interest income allocable to such holder's Preferred Securities
in their gross income for United States federal income tax purposes in advance
of receipt of the cash Distributions with respect to such deferred interest
payments. There could be multiple Extension Periods of varying lengths
throughout the term of the Subordinated Debentures. See "Description of the
Subordinated Debentures -- Option to Extend Interest Payment Period", "Risk
Factors -- Option to Extend Interest Payment Period" and "United States Federal
Income Taxation -- Interest Income and Original Issue Discount."
The payment of Distributions out of moneys held by SunTrust Capital Trust
and payments upon dissolution of SunTrust Capital Trust or the redemption of
Preferred Securities, as set forth below, are guaranteed by SunTrust (the
"Preferred Securities Guarantee") to the extent described herein and under
"Description of the Preferred Securities Guarantees" in the accompanying
Prospectus. The Preferred Securities Guarantee covers payments of Distributions
and other payments on the Preferred Securities only if and to the extent that
SunTrust Capital Trust has funds available therefor, which will not be the case
unless SunTrust has made a payment of interest or principal or other payments on
the Subordinated Debentures held by SunTrust Capital Trust, which will be its
only assets. The Preferred Securities Guarantee, when taken together with
SunTrust's obligations under the Subordinated Debentures and the Indenture (as
defined herein) and its obligations under the Declaration, including its
liabilities to pay costs, expenses, debts and obligations of SunTrust Capital
Trust (other than with respect to the payment of principal of, premium, if any,
or interest on the Trust Securities), provides a full and unconditional
guarantee of amounts due on the Preferred Securities. The Distribution Rate and
the distribution payment date and other payment dates for the Preferred
Securities will correspond to the interest rate and interest payment date and
other payment dates for the Subordinated Debentures, which will be the only
assets of the Trust. As a result, if SunTrust does not make principal or
interest payments on the Subordinated Debentures, the Trust will not have
sufficient funds to make Distributions on the Preferred Securities, in which
event the Preferred Securities Guarantee will not apply to such Distributions
until the Trust has sufficient funds available therefor. See "Risk
Factors -- Rights Under the Preferred Securities Guarantee." The obligations of
SunTrust under the Preferred Securities Guarantee are unsecured and subordinate
and junior in right of payment to all present and future Senior Indebtedness of
SunTrust (as defined in "Description of the Subordinated Debentures --
Subordination").
The Subordinated Debentures are unsecured and subordinate and junior in
right of payment to all present and future Senior Indebtedness of SunTrust,
which aggregated approximately $2.1 billion at March 31, 1997. In addition,
because SunTrust is a holding company, the Subordinated Debentures (and the
Preferred Securities Guarantee) will be effectively subordinated to all existing
and future liabilities of SunTrust's subsidiaries, including depositors, and
holders of Subordinated Debentures and the Preferred Securities Guarantee should
look only to the assets of the Company for payment on the Subordinated
Debentures and the Preferred Securities Guarantee. The Subordinated Debentures
purchased by the Trust may be subsequently distributed pro rata to holders of
the Trust Securities in connection with the dissolution of the Trust, upon the
occurrence of certain events.
Subject to SunTrust's having received prior approval of the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board") if then
required under applicable law, rules, guidelines or policies of the Federal
Reserve Board, the Subordinated Debentures are redeemable prior to maturity by
SunTrust (i) in whole or
S-2
<PAGE> 3
in part, from time to time, on or after June 15, 2007 or (ii) in whole, but not
in part, at any time within 90 days following the occurrence of a Tax Event or
Capital Treatment Event (each as defined herein) or, if the prior approval of
the Federal Reserve Board is then required for such redemption, on such later
date as promptly as practicable after such approval is obtained, in each case at
the applicable Redemption Prices (as defined herein). If SunTrust redeems
Subordinated Debentures, the Trust must redeem Trust Securities on a pro rata
basis having an aggregate liquidation amount equal to the aggregate principal
amount of the Subordinated Debentures so redeemed at the applicable Redemption
Prices. See "Description of the Preferred Securities -- Mandatory Redemption",
"-- Tax Event Redemption" and "-- Capital Treatment Redemption." The Preferred
Securities will be redeemed upon maturity of the Subordinated Debentures.
SunTrust will have the right at any time to dissolve and liquidate the
Trust and, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, cause the Subordinated Debentures to be distributed
pro rata to holders of the Trust Securities, subject to SunTrust's having
received prior approval of the Federal Reserve Board if then required under
applicable law, rules, guidelines or policies of the Federal Reserve Board. See
"Description of the Preferred Securities -- Tax Event and Capital Treatment
Event Redemption" and "Description of the Subordinated Debentures." In the event
of the involuntary or voluntary dissolution, winding up or termination of the
Trust, the holders of the Preferred Securities will be entitled to receive for
each Preferred Security a liquidation amount of $1,000 plus accrued and unpaid
Distributions thereon to the date of payment, unless, in connection with such
dissolution, winding up or termination, the Subordinated Debentures are
distributed to the holders of the Preferred Securities. See "Description of the
Preferred Securities -- Liquidation Distribution Upon Dissolution."
The Preferred Securities will be represented by one or more global
certificates registered in the name of The Depository Trust Company ("DTC") or
its nominee. Beneficial interests in the Preferred Securities will be shown on,
and transfers thereof will be effected only through, records maintained by DTC
and its participants, including depositaries for Morgan Guaranty Trust Company
of New York, Brussels Office, as operator of the Euroclear System ("Euroclear"),
and CEDEL Bank, societe anonyme ("Cedel"). Except as described herein, Preferred
Securities in certificated form will not be issued in exchange for the global
certificates. See "Description of the Preferred Securities -- Book-Entry Only
Issuance -- The Depository Trust Company." A portion of the Preferred Securities
will be offered by the Underwriters specified herein directly or through their
representative selling agents outside the United States. Investors may elect to
hold a beneficial interest in Preferred Securities through either DTC (in the
United States), Cedel or Euroclear (outside the United States), if they are
participants of such systems, or indirectly through organizations that are
participants in such systems.
NO EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH, A "PLAN"), NO
ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S
INVESTMENT IN THE ENTITY (A "PLAN ASSET ENTITY"), AND NO PERSON INVESTING "PLAN
ASSETS" OF ANY PLAN, MAY ACQUIRE OR HOLD THE PREFERRED SECURITIES OR ANY
INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE
RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS
EXEMPTION ("PTCE") 96-23, 95-60, 91-38, 90-1 OR 84-14 WITH RESPECT TO SUCH
PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THE PREFERRED SECURITIES OR ANY
INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING
THEREOF THAT IT EITHER (A) IS NOT A PLAN OR A PLAN ASSET ENTITY AND IS NOT
PURCHASING SUCH SECURITIES ON BEHALF OF OR WITH "PLAN ASSETS" OF ANY PLAN OR (B)
IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER PTCE 96-23, 95-60, 91-38,
90-1 OR 84-14 WITH RESPECT TO SUCH PURCHASE OR HOLDING.
S-3
<PAGE> 4
RISK FACTORS
Prospective purchasers of Preferred Securities should carefully review the
information contained or incorporated by reference in this Prospectus Supplement
and in the accompanying Prospectus and should particularly consider the
following risk factors. In addition, because holders of Preferred Securities may
receive Subordinated Debentures in exchange therefor upon liquidation of the
Trust, prospective purchasers of Preferred Securities are also making an
investment decision with regard to the Subordinated Debentures and should
carefully review all the information regarding the Subordinated Debentures
contained herein.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE PREFERRED SECURITIES GUARANTEE
AND SUBORDINATED DEBENTURES
SunTrust's obligations under the Preferred Securities Guarantee are
unsecured and subordinate and junior in right of payment to all present and
future Senior Indebtedness of SunTrust. The obligations of SunTrust under the
Subordinated Debentures are unsecured and subordinate and junior in right of
payment to all present and future Senior Indebtedness of SunTrust. No direct or
indirect payment may be made of principal of, premium, if any, or interest on
the Subordinated Debentures, or in respect of any redemption, repayment,
retirement, purchase or other acquisition of any of the Subordinated Debentures
at any time when there is a default in the payment of the principal of, premium,
if any, or interest on, or otherwise in respect of any Senior Indebtedness,
whether at their Stated Maturity or at a date fixed for prepayment or by
declaration or otherwise, unless and until such default shall have been cured or
waived or shall have ceased to exist or all Senior Indebtedness shall have been
repaid. As of March 31, 1997, Senior Indebtedness of SunTrust aggregated
approximately $2.1 billion. Because SunTrust is a holding company, the right of
SunTrust to participate in any distribution of assets of any subsidiary upon
such subsidiary's liquidation or reorganization or otherwise (and thus the
ability of holders of the Preferred Securities to benefit indirectly from such
distribution), is subject to the prior claims of creditors of that subsidiary
except to the extent that SunTrust may itself be recognized as a creditor of
that subsidiary. There are various legal limitations on the extent to which
SunTrust's subsidiaries may extend credit, pay dividends or otherwise supply
funds to SunTrust or certain of its other subsidiaries. Accordingly, the
Subordinated Debentures and Preferred Securities Guarantee will be effectively
subordinated to all existing and future liabilities of SunTrust's subsidiaries,
including depositors, and holders of Subordinated Debentures and the Preferred
Securities Guarantee should look only to the assets of SunTrust for payments on
the Subordinated Debentures and the Preferred Securities Guarantee. There are no
terms in the Preferred Securities, the Subordinated Debentures or the Preferred
Securities Guarantee that limit SunTrust's ability to incur additional
indebtedness, including indebtedness that ranks senior to the Subordinated
Debentures and the Preferred Securities Guarantee. See "Description of the
Preferred Securities Guarantees -- Status of the Preferred Securities
Guarantees" and "Description of the Subordinated Debt Securities" in the
accompanying Prospectus and "Description of the Subordinated
Debentures -- Subordination" herein.
The ability of the Trust to pay amounts due on the Preferred Securities
depends entirely upon SunTrust's making payments on the Subordinated Debentures
as and when required.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Indenture Event of Default (as defined herein) has occurred
and is continuing, SunTrust has the right under the Indenture to defer payments
of interest on the Subordinated Debentures by extending the interest payment
period at any time, and from time to time, for a period not exceeding 10
consecutive semi-annual periods with respect to each Extension Period, provided
that no Extension Period may extend beyond the Stated Maturity of the
Subordinated Debentures. As a consequence of any Extension Period, semi-annual
Distributions on the Preferred Securities will also be deferred by the Trust
(and the amount of Distributions to which holders of the Preferred Securities
are entitled will accumulate additional Distributions thereon at a rate of 7.90%
per annum, compounded semi-annually from the relevant payment date for such
Distributions) during any such Extension Period. During any such Extension
Period, SunTrust may not, and may not permit any subsidiary of SunTrust to, (i)
declare or pay any dividends or distributions on, or prepay, purchase, acquire,
or make a liquidation payment with respect to, any of SunTrust's capital stock,
(ii) make any payment of principal of, premium, if any, or interest on, or
repay, repurchase or redeem any debt securities of SunTrust (including other
S-4
<PAGE> 5
Subordinated Debt Securities) that rank pari passu with, or junior in right of
payment to, the Subordinated Debentures or (iii) make any guarantee payment with
respect to any guarantee by SunTrust of the debt securities of any subsidiary of
SunTrust if such guarantee ranks pari passu with, or junior in right of payment
to, the Subordinated Debentures (other than (a) dividends, distributions,
redemptions, purchases or acquisitions made by SunTrust by way of issuance of
its capital stock (or options, warrants or other rights to subscribe therefor),
(b) any declaration of a dividend in connection with the implementation of a
shareholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (c)
payments under the Preferred Securities Guarantee or Common Securities
Guarantee, (d) the purchase of fractional interests in shares resulting from a
reclassification of the Company's capital stock, (e) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, (f) purchases of common stock related to the issuance of common stock
or rights under any of SunTrust's benefit plans for its directors, officers or
employees and (g) obligations under any of SunTrust's dividend reinvestment or
stock purchase plans). Prior to the termination of any such Extension Period,
SunTrust may further extend the payment of interest provided that such Extension
Period may not exceed 10 consecutive semi-annual periods or extend beyond the
Stated Maturity of the Subordinated Debentures. Upon the termination of any
Extension Period and the payment of all interest accrued and unpaid (together
with interest thereon at a rate of 7.90% per annum, compounded semi-annually
from the interest payment date for such interest, to the extent permitted by
applicable law), SunTrust may commence a new Extension Period subject to the
foregoing requirements. There is no limitation on the number of times that the
Company may elect to begin an Extension Period. The Company has no current
intention of exercising its right to defer payments of interest by extending the
interest payment period of the Subordinated Debentures. See "Description of the
Preferred Securities -- Distributions" and "Description of the Subordinated
Debentures -- Option to Extend Interest Payment Period."
Should an Extension Period occur, each holder of Preferred Securities will
be required to accrue income (as original issue discount ("OID")) in respect of
the deferred stated interest allocable to such holder's Preferred Securities for
United States federal income tax purposes, even though no cash is distributed.
As a result, each such holder of Preferred Securities will include such income
in gross income for United States federal income tax purposes in advance of the
receipt of cash attributable thereto and will not receive the cash from SunTrust
Capital Trust related to such income if such holder disposes of its Preferred
Securities prior to the record date for the date on which Distributions of such
amounts are made. SunTrust has no current intention of exercising its right to
defer payments of interest by commencing an Extension Period with respect to the
Subordinated Debentures. However, should SunTrust elect to exercise such right
in the future, the market price of the Preferred Securities is likely to be
affected. A holder that disposes of its Preferred Securities during an Extension
Period, therefore, might not receive the same return on its investment as a
holder that continues to hold its Preferred Securities. In addition, as a result
of the existence of SunTrust's right to defer interest payments on the
Subordinated Debentures, the market price of the Preferred Securities (which
represent beneficial ownership interests in the Subordinated Debentures) may be
more volatile than the price of other securities that are not subject to such
deferrals. See "Description of the Subordinated Debentures -- Option to Extend
Interest Payment Period."
TAX EVENT OR CAPITAL TREATMENT EVENT -- EXCHANGE OF PREFERRED SECURITIES FOR
SUBORDINATED DEBENTURES OR REDEMPTION
Upon the occurrence and continuation of a Tax Event or Capital Treatment
Event (whether occurring before or after June 15, 2007), the Company has the
right, if certain conditions are met to redeem the Subordinated Debentures in
whole (but not in part) within 90 days following the occurrence of such Tax
Event or Capital Treatment Event at the applicable Redemption Price and thereby
cause a mandatory redemption of the Preferred Securities. The exercise of such
right is subject to the Company's having received prior approval of the Federal
Reserve Board if then required under applicable capital guidelines or policies.
See "Description of the Subordinated Debentures -- Tax Event Redemption" and
"-- Capital Treatment Redemption."
A "Tax Event" means the receipt by the Trust of an opinion of counsel
experienced in such matters to the effect that, as a result of any amendment to,
or change (including any announced proposed change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or
S-5
<PAGE> 6
therein, or as a result of any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, which amendment or
change is effective or which proposed change, pronouncement or decision is
announced on or after the date of issuance of the Preferred Securities under the
Declaration, there is more than an insubstantial risk that (i) the Trust is, or
will be within 90 days of the date of such opinion, subject to United States
federal income tax with respect to income received or accrued on the
Subordinated Debentures, (ii) interest payable by the Company on the
Subordinated Debentures is not, or within 90 days of the date of such opinion,
will not be, deductible by the Company, in whole or in part, for United States
federal income tax purposes or (iii) the Trust is, or will be within 90 days of
the date of the opinion, subject to more than a de minimis amount of other
taxes, duties or other governmental charges.
See "Risk Factors -- Proposed Tax Legislation" for a discussion of certain
legislative proposals that, if adopted, could give rise to a Tax Event, which
may cause a redemption of the Preferred Securities prior to June 15, 2007.
A "Capital Treatment Event" means the reasonable determination by the
Company that, as a result of any amendment to, or change (including any
announced proposed change) in, the laws (or any regulations thereunder) of the
United States or any political subdivision thereof or therein, or as a result of
any official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which proposed change, pronouncement, action or decision is
announced on or after the date of issuance of the Preferred Securities under the
Declaration, there is more than an insubstantial risk that the Company will not
be entitled to treat an amount equal to the liquidation amount of the Preferred
Securities as "Tier 1 Capital" (or the then equivalent thereof) for purposes of
the capital adequacy guidelines of the Federal Reserve Board, as then in effect
and applicable to the Company.
RIGHTS UNDER THE PREFERRED SECURITIES GUARANTEE
The Preferred Securities Guarantee will be qualified as an indenture under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The
First National Bank of Chicago will act as indenture trustee under the Preferred
Securities Guarantee for the purposes of compliance with the provisions of the
Trust Indenture Act (the "Preferred Guarantee Trustee"). The Preferred Guarantee
Trustee will hold the Preferred Securities Guarantee for the benefit of the
holders of the Preferred Securities.
The Preferred Securities Guarantee guarantees to the holders of the
Preferred Securities the payment of (i) any accrued and unpaid Distributions
that are required to be paid on the Preferred Securities, but if and only to the
extent that the Trust has funds available therefor, (ii) the applicable
Redemption Price with respect to Preferred Securities called for redemption by
the Trust, but if and only to the extent that the Trust has funds available
therefor and (iii) upon a voluntary or involuntary dissolution, winding-up or
termination of the Trust (other than in connection with the distribution of
Subordinated Debentures to the holders of Preferred Securities or a redemption
of all the Preferred Securities upon the Stated Maturity or redemption of the
Subordinated Debentures), the lesser of (a) the aggregate of the liquidation
amount of the Preferred Securities plus accrued and unpaid Distributions thereon
to the date of the payment, but if and only to the extent the Trust has funds
available therefor and (b) the amount of assets of the Trust remaining available
for distribution to holders of the Preferred Securities upon dissolution and
liquidation of the Trust. The holders of a majority in liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Preferred Guarantee
Trustee or to direct the exercise of any trust or power conferred upon the
Preferred Guarantee Trustee under the Preferred Securities Guarantee.
Notwithstanding the foregoing, any holder of Preferred Securities may institute
a legal proceeding directly against SunTrust to enforce such holder's rights
under the Preferred Securities Guarantee without first instituting a legal
proceeding against the Trust, the Preferred Guarantee Trustee or any other
person or entity. If SunTrust were to default on its obligation to pay amounts
payable on the Subordinated Debentures or otherwise, the Trust would lack
available funds for the payment of Distributions, the applicable Redemption
Price or other amounts payable in respect of the Preferred Securities, and in
such event, holders of the Preferred Securities would not be able to rely upon
the Preferred Securities Guarantee for payment of such amounts. Instead, holders
of the Preferred Securities would rely on the enforcement (x) by the
Institutional Trustee (as defined herein) of its rights as registered holder of
the Subordinated Debentures against SunTrust pursuant to the terms of the
Subordinated Debentures or (y) by such
S-6
<PAGE> 7
holder of its right against SunTrust to enforce payments on the Subordinated
Debentures. See "Description of the Preferred Securities Guarantees" and
"Description of the Subordinated Debt Securities" in the accompanying
Prospectus. The Declaration provides that each holder of Preferred Securities,
by acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee, including the subordination provisions thereof, and the Indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Declaration Event of Default (as defined herein) occurs and is
continuing, then the holders of Preferred Securities would rely on the
enforcement by the Institutional Trustee of its rights as a holder of the
Subordinated Debentures against SunTrust. In addition, the holders of a majority
in liquidation amount of the Preferred Securities will have the right to direct
the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee or to direct the exercise of any trust or
power conferred upon the Institutional Trustee under the Declaration, including
the right to direct the Institutional Trustee to exercise the remedies available
to it as a holder of the Subordinated Debentures. If the Institutional Trustee
fails to enforce its rights under the Subordinated Debentures, a holder of
Preferred Securities may institute a legal proceeding against SunTrust to
enforce the Institutional Trustee's rights under the Subordinated Debentures
without first instituting any legal proceeding against the Institutional Trustee
or any other person or entity. Notwithstanding the foregoing, if a Declaration
Event of Default has occurred and is continuing and such event is attributable
to the failure of SunTrust to pay interest or principal on the Subordinated
Debentures on the date such interest or principal is otherwise payable (or in
the case of redemption, on the redemption date), then a holder of Preferred
Securities may directly institute a proceeding for enforcement of direct payment
to such holder of the principal of, or interest on, the Subordinated Debentures
having a principal amount equal to the aggregate liquidation amount of the
Preferred Securities held by such holder (a "Direct Action") on or after the
respective due date specified in the Subordinated Debentures. In connection with
such Direct Action, SunTrust will be subrogated to the rights of such holder of
Preferred Securities under the Declaration to the extent of any payment made by
SunTrust to such holder of Preferred Securities in such Direct Action. The
holders of Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Subordinated Debentures. See "Description
of the Preferred Securities -- Declaration Events of Default."
PROPOSED TAX LEGISLATION
On February 6, 1997, the revenue portion of President Clinton's 1998 budget
proposal (the "Budget Proposal") was released. If enacted, the Budget Proposal
would generally deny deductions for interest or OID on an instrument issued by a
corporation that has a maximum weighted average maturity of more than 40 years.
The Budget Proposal also generally would deny deductions for interest or OID on
an instrument issued by a corporation that has a maximum term of more than 15
years and that is not shown as indebtedness on the separate balance sheet of the
issuer filed with the United States Securities and Exchange Commission (the
"SEC"). For purposes of the preceding sentence, in the case of an instrument
with a maximum term of more than 15 years issued to a related party (other than
a corporation) that is eliminated in the consolidated balance sheet that
includes the issuer and the holder, the issuer will be treated as having
characterized the instrument as equity if the holder or some other related party
issues a related instrument that is not shown as indebtedness on the
consolidated balance sheet filed with the SEC. The above described provisions of
the Budget Proposal are proposed to be effective generally for instruments
issued on or after the date of first Congressional committee action on the
Budget Proposal. Since the Subordinated Debentures cannot have a term exceeding
40 years, the first of the above described budget proposals would be
inapplicable. Furthermore, since SunTrust intends to report the Preferred
Securities as indebtedness on its consolidated balance sheet filed with the SEC,
the Budget Proposal as currently drafted would not appear to apply to the
Subordinated Debentures. Additionally, the Budget Proposal would not apply to
the Subordinated Debentures if they are issued prior to the date of the first
Congressional committee action on the Budget Proposal. There can be no
assurance, however, that similar legislation which would apply to the
Subordinated Debentures will not be enacted, and such legislation could be
retroactive in effect. If any such legislation were enacted, the Company would
be unable to deduct interest on the Subordinated Debentures. Such a change could
give rise to a Tax Event, which would permit the Company to cause a redemption
of the Preferred Securities before June 15, 2007. See "Description of the
Preferred
S-7
<PAGE> 8
Securities -- Tax Event Redemption," "-- Mandatory Redemption" and "Description
of the Subordinated Debentures -- Optional Redemption."
REDEMPTION OR DISTRIBUTION OF THE SUBORDINATED DEBENTURES
SunTrust will have the right at any time to dissolve the Trust and, after
satisfaction of liabilities to creditors of the Trust as required by law, cause
the Subordinated Debentures to be distributed to the holders of Trust Securities
in exchange therefor upon liquidation of the Trust. Furthermore, SunTrust has
the right to redeem the Subordinated Debentures (i) in whole or in part, from
time to time, on or after June 15, 2007 or (ii) in whole, but not in part, at
any time within 90 days following the occurrence of a Tax Event or Capital
Treatment Event. The exercise of such rights is subject to SunTrust's having
received prior approval of the Federal Reserve Board if then required under
applicable law, rules, capital guidelines or policies. See "Description of the
Subordinated Debentures -- Optional Redemption," "Description of the Preferred
Securities -- Tax Event Redemption" and "-- Capital Treatment Event Redemption."
Under current United States federal income tax law and interpretations
thereof and assuming, as expected, that the Trust is classified as a grantor
trust for such purposes, a distribution of Subordinated Debentures upon a
dissolution of the Trust should not be a taxable event to holders of the
Preferred Securities. Upon occurrence of a Tax Event or a Capital Treatment
Event, however, a dissolution of the Trust in which holders of the Preferred
Securities receive cash could be a taxable event to the Trust and such holders.
See "United States Federal Income Taxation -- Receipt of Subordinated Debentures
or Cash Upon Liquidation of the Trust."
There can be no assurance as to the market prices for the Preferred
Securities or the Subordinated Debentures that may be distributed in exchange
for Preferred Securities upon a dissolution of the Trust. Accordingly, the
Preferred Securities that an investor may purchase, whether pursuant to the
offer made hereby or in the secondary market, or the Subordinated Debentures
that a holder of Preferred Securities may receive upon a dissolution of the
Trust, may trade at a discount to the price that the investor paid to purchase
the Preferred Securities offered hereby. Because holders of Preferred Securities
may receive Subordinated Debentures, prospective purchasers of Preferred
Securities are also making an investment decision with regard to the
Subordinated Debentures and should carefully review all the information
regarding the Subordinated Debentures contained herein and in the accompanying
Prospectus. See "Description of the Subordinated Debentures."
POTENTIAL MARKET VOLATILITY DURING EXTENSION PERIOD
As described above, the Company has the right to extend an interest payment
period on the Subordinated Debentures from time to time for a period not
exceeding 10 consecutive semi-annual periods. If the Company elects to begin an
Extension Period, or if the Company thereafter extends an Extension Period or
prepays interest accrued during an Extension Period as described above, the
market price of the Preferred Securities is likely to be affected. In addition,
as a result of such right to defer interest on the Subordinated Debentures, the
market price of the Preferred Securities (which represent beneficial ownership
interests in the Subordinated Debentures) may be more volatile than other
securities that are not subject to optional deferrals. A holder that disposes of
its Preferred Securities during an Extension Period, therefore, may not receive
the same return on its investment as a holder that continues to hold its
Preferred Securities. See "Description of the Subordinated Debentures -- Option
to Extend Interest Payment Period."
CONSEQUENCES OF HIGHLY LEVERAGED TRANSACTION
The Indenture does not contain provisions that afford holders of the
Subordinated Debentures protection in the event of a highly leveraged
transaction, including a change of control, or other similar transactions
involving SunTrust that may adversely affect such holders. See "Description of
the Subordinated Debentures -- General."
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and will
not be entitled to vote to appoint, remove or replace, or to increase or
decrease the number of, Trust Trustees (as defined herein), which voting
S-8
<PAGE> 9
rights are vested exclusively in the holder of the Common Securities. The
Institutional Trustee, the Regular Trustees (all as defined herein) and SunTrust
may amend the Declaration without the consent of the holders of the Preferred
Securities to ensure that the Trust will be classified for United States federal
income tax purposes as a grantor trust unless such action materially and
adversely affects the interests of such holders. See "Description of the
Preferred Securities -- Voting Rights."
TRADING CHARACTERISTICS OF THE PREFERRED SECURITIES
The Trust does not intend to have the Preferred Securities listed on The
New York Stock Exchange or any other securities exchange. See "United States
Federal Income Taxation -- Interest Income and Original Issue Discount" and
"-- Sales of Preferred Securities" for a discussion of the United States federal
income tax consequences that may result from a taxable disposition of the
Preferred Securities.
ABSENCE OF PRIOR PUBLIC MARKET
Prior to this offering, there has been no public market for the Preferred
Securities. There can be no assurance that an active trading market will develop
for the Preferred Securities or that, if such market develops, the market price
will equal or exceed the public offering price set forth on the cover page of
this Prospectus Supplement. The public offering price for the Preferred
Securities has been determined through negotiations between the Company and
Salomon Brothers Inc. Prices for the Preferred Securities will be determined in
the marketplace and may be influenced by many factors, including the liquidity
of the market for the Preferred Securities, investor perceptions of the Company
and general industry and economic conditions.
TRADING PRICE
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest (or OID if the Subordinated
Debentures are treated as having been issued, or re-issued, with OID) with
respect to the underlying Subordinated Debentures. A holder that disposes of its
Preferred Securities between record dates for payments of Distributions thereon
will be required to include as ordinary income either OID (if applicable) or
accrued but unpaid interest on the Subordinated Debentures through the date of
disposition. To the extent the amount realized is less than the holder's
adjusted tax basis, a holder generally will recognize a capital loss. Subject to
certain limited exceptions, capital losses cannot be applied to offset ordinary
income for United States federal income tax purposes. See "United States Federal
Income Taxation -- Sales of Preferred Securities."
S-9
<PAGE> 10
SUNTRUST
GENERAL
The Company is a regional bank holding company which, through its
subsidiary banks (the "Subsidiary Banks"), conducts a broad range of commercial
banking activities, including accepting demand, time and saving deposits, making
secured and unsecured business and consumer loans and leases, extending
commercial lines of credit, issuing and servicing credit cards and certain other
types of revolving credit accounts, providing commercial factoring services,
cash management services, investment counseling, safe deposit services, personal
and corporate trust and other fiduciary services and engaging in leasing,
mortgage banking, correspondent banking, international banking, investment
banking, trading in U.S. government securities and municipal bonds and
underwriting certain types of general obligation municipal bonds.
Under the longstanding policy of the Federal Reserve Board, a bank holding
company is expected to act as a source of financial strength for its subsidiary
banks and to commit resources to support such banks. As a result of this policy,
the Company may be required to commit resources to the Subsidiary Banks in
circumstances where it might not otherwise do so.
Because the Company is a holding company, its rights and the rights of its
creditors, including the holders of the Subordinated Debentures and the
Preferred Securities Guarantee, to participate in the distribution and payment
of assets of any subsidiary upon the subsidiary's liquidation or
recapitalization would be subject to the prior claims of such subsidiary's
creditors except to the extent that the Company may itself be a creditor with
recognized claims against the subsidiary.
The Company's principal executive offices are located at 303 Peachtree
Street, N.E., Atlanta, Georgia 30308, and its telephone number is 404-588-7711.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the consolidated ratio of earnings to fixed
charges of the Company. The consolidated ratio of earnings to fixed charges has
been computed by dividing (i) net income plus all applicable income taxes plus
fixed charges by (ii) fixed charges. Fixed charges represent interest expense
(ratios are presented both including and excluding interest on deposits), and
the portion of net rental expense, which is deemed to be equivalent to interest
on long-term debt. Interest expense (other than on deposits) includes interest
on long-term debt, federal funds purchased and securities sold under agreements
to repurchase, mortgages, commercial paper and other funds borrowed.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------- -------------------------------------
1997 1996 1996 1995 1994 1993 1992
----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Including interest on deposits................ 1.61x 1.58x 1.61x 1.61x 1.83x 1.87x 1.58x
Excluding interest on deposits................ 2.95x 3.27x 3.30x 3.20x 4.24x 5.07x 4.70x
</TABLE>
CERTAIN REGULATORY CONSIDERATIONS
The following discussion sets forth certain of the elements of the
comprehensive regulatory framework applicable to bank holding companies and
banks and provides certain specific information relevant to the Company and its
subsidiaries. Federal and state regulation of financial institutions such as the
Company and the Subsidiary Banks is intended primarily for the protection of
depositors and the Federal deposit insurance funds rather than shareholders or
other creditors.
GENERAL
As a bank holding company, the Company is subject to the regulation and
supervision of the Federal Reserve Board. The Company's Subsidiary Banks are
subject to regulation, supervision and examination by
S-10
<PAGE> 11
applicable state and federal banking agencies, including the Federal Reserve
Board, the Office of the Comptroller of the Currency (the "Comptroller") and the
Federal Deposit Insurance Corporation (the "FDIC").
The federal banking agencies have broad enforcement powers over depository
institutions, including the power to terminate deposit insurance, to impose
substantial fines and other civil and criminal penalties, and to appoint a
conservator or receiver if any of a number of conditions are met. The federal
banking agencies also have broad enforcement powers over bank holding companies,
including the power to impose substantial fines and other civil and criminal
penalties.
Almost every aspect of the operations and financial condition of the
Subsidiary Banks is subject to extensive regulation and supervision and to
various requirements and restrictions under federal and state law, including
requirements governing capital adequacy, liquidity, earnings, dividends,
reserves against deposits, management practices, branching, loans, investments,
and the provision of services. Various consumer protection laws and regulations
also affect the operations of the Subsidiary Banks. The activities and
operations of the Company are also subject to extensive federal supervision and
regulation, which, among other things, limit non-banking activities, impose
minimum capital requirements and require approval to acquire more than 5% of any
class of voting shares or substantially all of the assets of a bank or other
company. In addition to the impact of regulation, banks and bank holding
companies may be significantly affected by legislation, which can change banking
statutes in substantial and unpredictable ways, and by the actions of the
Federal Reserve Board as it attempts to control the money supply and credit
availability in order to influence the economy.
PAYMENT OF DIVIDENDS AND OTHER RESTRICTIONS
The Company is a legal entity separate and distinct from its subsidiaries,
including the Subsidiary Banks. There are various legal and regulatory
limitations under federal and state law on the extent to which the Company's
subsidiaries, including its bank and bank holding company subsidiaries, can
finance or otherwise supply funds to the Company.
The principal source of the Company's cash revenues is dividends from its
subsidiaries and there are certain limitations under federal, Georgia, Florida,
Tennessee and Alabama law on the payment of dividends by such subsidiaries. The
prior approval of the Federal Reserve Board or the Comptroller, as the case may
be, is required if the total of all dividends declared by any state member bank
of the Federal Reserve System or any national banking association in any
calendar year exceeds the bank's net profits (as defined) for that year combined
with its retained net profits for the preceding two calendar years, less any
required transfers to surplus or a fund for the retirement of any preferred
stock. In addition, a dividend may not be paid if a bank's losses equal or
exceed its net profits, and a dividend may not be paid in excess of a bank's net
profits after deduction of losses and bad debts in excess of the allowance for
loan and lease losses. The relevant federal and state regulatory agencies also
have authority to prohibit a state member bank or bank holding company, which
would include SunTrust Banks of Florida, Inc. ("STB of Florida"), SunTrust Banks
of Georgia, Inc. ("STB of Georgia") and SunTrust Banks of Tennessee, Inc. ("STB
of Tennessee"), or a national banking association from engaging in what, in the
opinion of such regulatory body, constitutes an unsafe or unsound practice in
conducting its business. The payment of dividends could, depending upon the
financial condition of the subsidiary, be deemed to constitute such an unsafe or
unsound practice.
Under Georgia law (which would apply to any payment of dividends by the
Company's largest subsidiary, SunTrust Bank, Atlanta, to STB of Georgia) the
prior approval of the Georgia Commissioner of Banking and Finance is required
before any cash dividends may be paid by a state bank if: (i) total classified
assets at the most recent examination of such bank exceed 80% of the equity
capital (as defined, which includes the reserve for loan losses) of such bank;
(ii) the aggregate amount of dividends declared or anticipated to be declared in
the calendar year exceeds 50% of the net profits (as defined) for the previous
calendar year; or (iii) the ratio of equity capital to adjusted total assets is
less than 6%.
Retained earnings of the Company's banking subsidiaries available for
payment of cash dividends under all applicable regulations without obtaining
governmental approval were approximately $413.3 million as of March 31, 1997.
S-11
<PAGE> 12
In addition, the Subsidiary Banks and their subsidiaries are subject to
limitations under Sections 23A and 23B of the Federal Reserve Act with respect
to extensions of credit to, investments in, and certain other transactions with,
the Company and its other subsidiaries. Furthermore, such loans and extensions
of credit, as well as certain other transactions, are also subject to various
collateral requirements.
CAPITAL ADEQUACY
The federal bank regulatory agencies have adopted minimum risk-based and
leverage capital guidelines for United States banking organizations. The minimum
required risk-based capital ratio of qualifying total capital to risk-weighted
assets (including certain off-balance-sheet items, such as standby letters of
credit) is 8%, of which 4% must consist of Tier 1 capital. As of March 31, 1997,
the Company's total risk-based capital ratio was 10.15%, including 6.84% of Tier
1 capital. The minimum required leverage capital ratio (Tier 1 capital to
average total assets) is 3% for banking organizations that meet certain
specified standards, including the standard that they have the highest
regulatory rating. As of March 31, 1997, the Company's leverage capital ratio
was 5.89%. Higher risk-based and leverage ratios may apply to banking
organizations under certain circumstances.
Failure to meet capital guidelines can subject a banking organization to a
variety of enforcement remedies, including additional substantial restrictions
on its operations and activities, termination of deposit insurance by the FDIC,
and under certain conditions the appointment of a receiver or conservator.
Federal banking regulations establish five capital categories for
depository institutions ("well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" and "critically
undercapitalized") and impose significant restrictions on the operations of an
institution that is not at least adequately capitalized. Under certain
circumstances, an institution may be downgraded to a category lower than that
warranted by its capital levels and subjected to the supervisory restrictions
applicable to institutions in the lower capital category. A depository
institution is generally prohibited from making capital distributions (including
paying dividends) or paying management fees to a holding company if the
institution would thereafter be undercapitalized. Adequately capitalized
institutions may accept brokered deposits only with a waiver from the FDIC and
are subject to restrictions on the interest rates that can be paid on such
deposits. Undercapitalized institutions may not accept, renew, or roll over
brokered deposits.
An undercapitalized depository institution is also subject to restrictions
in a number of areas, including asset growth, acquisitions, branching, new lines
of business, and borrowing from the Federal Reserve System. In addition, an
undercapitalized depository institution is required to submit a capital
restoration plan. A depository institution's holding company must guarantee the
capital plan up to an amount equal to the lesser of 5% of the depository
institution's assets at the time it becomes undercapitalized or the amount
needed to restore the capital of the institution to the levels required for the
institution to be classified as adequately capitalized at the time the
institution fails to comply with the plan; and any such guarantee would be
entitled to a priority of payment in bankruptcy. A depository institution is
treated as if it is significantly undercapitalized if it fails to submit a
capital plan that is based on realistic assumptions and likely to succeed in
restoring the depository institution's capital.
Significantly undercapitalized depository institutions may be subject to a
number of additional significant requirements and restrictions, including
requirements to sell sufficient voting stock to become adequately capitalized,
to replace or improve management, to reduce total assets, to cease acceptance of
correspondent bank deposits, to restrict senior executive compensation and to
limit transactions with affiliates. Critically undercapitalized depository
institutions are further subject to restrictions on paying principal or interest
on subordinated debt, making investments, expanding, acquiring or selling
assets, extending credit for highly leveraged transactions, paying excessive
compensation, amending their charters or bylaws and making any material changes
in accounting methods. In general, a receiver or conservator must be appointed
for a depository institution within 90 days after the institution is deemed to
be critically undercapitalized.
SUPPORT OF SUBSIDIARY BANKS
Under Federal Reserve Board policy, the Company is expected to act as a
source of financial strength to, and to commit resources to support, each of the
Subsidiary Banks. This support may be required at times when, absent such
Federal Reserve Board policy, the Company may not be inclined to provide it. In
the event of a bank
S-12
<PAGE> 13
holding company's bankruptcy, any commitment by the bank holding company to a
federal bank regulatory agency to maintain the capital of a subsidiary bank will
be assumed by the bankruptcy trustee and entitled to a priority of payment.
A depository institution insured by the FDIC can be held liable for any
loss incurred by, or reasonably expected to be incurred by, the FDIC in
connection with the default of a commonly controlled FDIC-insured depository
institution or any assistance provided by the FDIC to any commonly controlled
FDIC-insured depository institution "in danger of default". "Default" is defined
generally as the appointment of a conservator or receiver and "in danger of
default" is defined generally as the existence of certain conditions indicating
that a default is likely to occur in the absence of regulatory assistance.
Liability for the losses of commonly controlled depository institutions can lead
to the failure of some or all depository institutions in a holding company
structure, if the remaining institutions are unable to pay the liability
assessed by the FDIC. Any obligation or liability owed by a subsidiary bank to
its parent company or to an affiliate of the subsidiary bank is subordinate to
the subsidiary bank's cross-guarantee liability for losses of commonly
controlled depository institutions.
FDIC INSURANCE ASSESSMENTS
Effective January 1, 1996, the FDIC amended its regulations on insurance
assessments to establish a new assessment rate schedule of $.00 to $.27 per $100
of deposits (subject to a minimum assessment of $2,000 per institution per year)
in replacement of the previous schedule of $.04 to $.31 per $100 of deposits for
institutions whose deposits are subject to assessment by the Bank Insurance Fund
("BIF"). The FDIC has maintained an assessment rate schedule of $.23 to $.31 per
$100 of deposits for the institutions whose deposits are subject to assessment
by the Savings Association Insurance Fund ("SAIF"). Legislation has been
proposed from time to time, which, among other things, would reduce the SAIF
assessment rate schedule, impose a one-time special assessment charge on SAIF
deposits and, possibly, result in higher insurance premiums for BIF-assessed
deposits. The amount of any assessment or rate reduction will depend on
enactment of final legislation. The Company cannot predict whether any such
legislation will be enacted or the form of any final legislation. As of March
31, 1997, the Company had $2.1 billion of deposits resulting from thrift
acquisitions that are insured through SAIF.
INTERSTATE BANKING AND BRANCHING LEGISLATION
The Bank Holding Company Act previously prohibited the Federal Reserve
Board from approving an application from a bank holding company to acquire
shares of a bank located outside the state in which the operations of the
holding company's banking subsidiaries were principally conducted, unless such
an acquisition was specifically authorized by statute in the state in which the
bank whose shares were to be acquired was located. This restriction on
interstate acquisitions was abolished effective September 29, 1995, and bank
holding companies from any state now may acquire banks located in any other
state, subject to certain conditions, including nationwide and state-imposed
concentration limits. Banks also will be able to branch across state lines by
acquisition, merger or de novo, effective June 1, 1997 (unless state law would
permit such interstate branching at an earlier date or would prohibit interstate
branching entirely), provided certain conditions are met, including the
condition that applicable state law must expressly permit interstate de novo
branching and branch acquisitions.
SUNTRUST CAPITAL TRUST
SunTrust Capital Trust is a statutory business trust formed under Delaware
law pursuant to (i) a declaration of trust, originally dated as of April 16,
1997 and executed by SunTrust, as sponsor (the "Sponsor"), and the trustees of
SunTrust Capital Trust (the "Trust Trustees") and (ii) the filing of a
certificate of trust with the Secretary of State of the State of Delaware on
April 16, 1997. Such declaration will be amended and restated in its entirety
(as so amended and restated, the "Declaration") substantially in the form filed
as an exhibit to the Registration Statement of which this Prospectus Supplement
and the accompanying Prospectus form a part. The Declaration will be qualified
as an indenture under the Trust Indenture Act. Upon issuance of the Preferred
Securities, the purchasers thereof will own all of the Preferred Securities. See
"Description of the Preferred
S-13
<PAGE> 14
Securities -- Book-Entry Only Issuance -- The Depository Trust Company."
SunTrust will directly or indirectly acquire Common Securities in an aggregate
liquidation amount equal to at least 3% of the total capital of SunTrust Capital
Trust. SunTrust Capital Trust exists for the exclusive purposes of (x) issuing
the Trust Securities representing undivided beneficial ownership interests in
the assets of the Trust, (y) investing the gross proceeds of the Trust
Securities in the Subordinated Debentures and (z) engaging in only those other
activities necessary or incidental thereto.
Pursuant to the Declaration, the number of SunTrust Capital Trustees will
initially be five. Three of the SunTrust Trustees (the "Regular Trustees") will
be persons who are employees or officers of, or who are affiliated with,
SunTrust. The fourth trustee will be a financial institution that is
unaffiliated with SunTrust, which trustee will serve as institutional trustee
under the Declaration and as indenture trustee for the purposes of compliance
with the provisions of the Trust Indenture Act (the "Institutional Trustee").
Initially, The First National Bank of Chicago ("First Chicago") will be the
Institutional Trustee until removed or replaced by the holder of the Common
Securities as permitted in the Declaration. For the purpose of compliance with
the Trust Indenture Act, First Chicago will also act as Preferred Guarantee
Trustee under the Preferred Securities Guarantee and as Debt Trustee (as defined
herein) under the Indenture. The fifth trustee will be an entity that maintains
its principal place of business in the state of Delaware (the "Delaware
Trustee"). First Chicago Delaware Inc. ("First Chicago Delaware") will act as
Delaware Trustee. See "Description of the Preferred Securities Guarantees" in
the accompanying Prospectus and "Description of the Preferred
Securities -- Voting Rights" herein.
The Institutional Trustee will hold title to the Subordinated Debentures
for the benefit of the holders of the Trust Securities and will have the power
to exercise all rights, powers and privileges under the Indenture as the holder
of the Subordinated Debentures. In addition, the Institutional Trustee will
maintain exclusive control of a segregated non-interest bearing bank account
(the "Property Account") to hold all payments made in respect of the
Subordinated Debentures for the benefit of the holders of the Trust Securities.
The Property Account may be held at the Institutional Trustee or any Paying
Agent of the Institutional Trustee. The Institutional Trustee will make payments
of Distributions and payments on liquidation, redemption and otherwise to the
holders of the Trust Securities out of funds from the Property Account. The
Preferred Guarantee Trustee will hold the Preferred Securities Guarantee for the
benefit of the holders of the Preferred Securities. SunTrust, as the direct or
indirect holder of all the Common Securities, will have the right to appoint,
remove or replace any Trust Trustee and to increase or decrease the number of
Trust Trustees. SunTrust will pay all fees and expenses related to SunTrust
Capital Trust and the offering of the Trust Securities. See "Description of the
Subordinated Debentures -- Miscellaneous."
It is anticipated that the Trust will not be subject to the reporting
requirements under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
SunTrust Capital Trust's principal executive offices are located at 303
Peachtree Street, N.E., Atlanta, Georgia 30308, and its telephone number is
404-558-7711.
S-14
<PAGE> 15
CAPITALIZATION
The following table sets forth the capitalization of SunTrust at March 31,
1997 on an actual basis and as adjusted to give effect to the sale of the
Preferred Securities and the application of the proceeds therefrom. See "Use of
Proceeds." The following table should be read in conjunction with SunTrust's
consolidated financial statements and notes thereto incorporated by reference
herein.
<TABLE>
<CAPTION>
MARCH 31, 1997
----------------------
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Long-term debt(1)........................................... $1,149.9 $2,018.6
Shareholders' Equity
Preferred stock, no par value............................. -- --
Common stock, par value $1.00 per share................... 225.6 225.6
Capital surplus........................................... 302.7 302.7
Retained earnings......................................... 3,085.5 3,085.5
Fair value adjustment on investment securities............ 1,667.9 1,667.9
Deferred compensation..................................... (46.1) (46.1)
Accumulated translation adjustment........................ -- --
Treasury stock............................................ (419.8) (419.8)
-------- --------
Total shareholders' equity............................. 4,815.8 4,815.8
-------- --------
Total............................................. $5,965.7 $6,834.4
======== ========
</TABLE>
- ---------------
(1) Includes (i) $250 million aggregate principal amount of Floating Rate Notes
due April 22, 2002 issued by SunTrust on April 22, 1997, (ii) approximately
$360.9 million aggregate principal amount of Floating Rate Junior
Subordinated Deferrable Interest Debentures, Series A, due May 15, 2027
issued by the Company to SunTrust Capital I on May 15, 1997 and (iii)
approximately $257.8 million aggregate principal amount of Subordinated
Debentures issued by SunTrust to the Trust.
S-15
<PAGE> 16
USE OF PROCEEDS
The Trust will use all proceeds received from the sale of the Preferred
Securities to purchase Subordinated Debentures from SunTrust. SunTrust intends
to use the net proceeds from the sale of the Subordinated Debentures for general
corporate purposes, which may include the reduction of short-term indebtedness,
including commercial paper, repayment of long-term indebtedness, purchase of
equity securities (including purchases by the Company of its common stock
pursuant to its ongoing stock purchase program), investments at the holding
company level, investments in, or extensions of credit to, its banking and other
subsidiaries and other banks and companies engaged in other financial service
activities, possible acquisitions and the purchase of trust-originated capital
securities.
The Company is required by the Federal Reserve Board to maintain certain
levels of capital for bank regulatory purposes. On October 21, 1996, the Federal
Reserve Board announced that cumulative preferred securities having the
characteristics of the Preferred Securities could be included as Tier 1 Capital
for bank holding companies. Such Tier 1 Capital treatment, together with
SunTrust's ability to deduct, for federal income tax purposes, interest payable
on the Subordinated Debentures, will provide SunTrust with a more cost-effective
means of obtaining capital for bank regulatory purposes than other Tier 1
Capital alternatives currently available to it.
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Institutional Trustee will act as indenture trustee for the
Preferred Securities under the Declaration for the purpose of compliance with
the Trust Indenture Act. The terms of the Preferred Securities will include
those stated in the Declaration and those made part of the Declaration by the
Trust Indenture Act. The following description of the Preferred Securities
supplements, and to the extent inconsistent therewith, replaces, the description
of the general terms and provisions of the Preferred Securities set forth in the
accompanying Prospectus. The following description does not purport to be
complete and is subject to, and qualified in its entirety by reference to, the
Declaration, a copy of the form of which is filed as an exhibit to the
Registration Statement of which this Prospectus Supplement and the accompanying
Prospectus form a part, and to the Trust Act and the Trust Indenture Act.
GENERAL
The Declaration authorizes the Regular Trustees to issue on behalf of the
Trust the Trust Securities, which represent undivided beneficial ownership
interests in the assets of the Trust. All of the Common Securities will be
owned, directly or indirectly, by SunTrust. The Common Securities rank pari
passu, and payments will be made thereon on a pro rata basis, with the Preferred
Securities, except that upon the occurrence and during the continuance of a
Declaration Event of Default, the rights of the holders of the Common Securities
to receive payment of periodic distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Preferred Securities. The Declaration does not permit the issuance by the
Trust of any securities other than the Trust Securities or the incurrence of any
indebtedness by the Trust. Pursuant to the Declaration, the Institutional
Trustee will own the Subordinated Debentures purchased by the Trust for the
benefit of the holders of the Trust Securities. The Preferred Securities
Guarantee will be held by First Chicago, the Preferred Guarantee Trustee, for
the benefit of the holders of the Preferred Securities. The Preferred Securities
Guarantee does not cover payment of Distributions when the Trust does not have
sufficient available funds to pay such Distributions. In such event, the remedy
of a holder of Preferred Securities is to vote to direct the Institutional
Trustee to enforce the Institutional Trustee's rights under the Subordinated
Debentures, except in the limited circumstances in which the holder may take
Direct Action. See "-- Declaration Events of Default" and "-- Voting Rights."
DISTRIBUTIONS
Each Preferred Security will be entitled to Distributions at a rate of
7.90% per annum in respect of the liquidation amount of $1,000 per Preferred
Security. Distributions on the Preferred Securities will be cumulative, will
accrue from June 6, 1997 and, except as otherwise described below, will be
payable semi-annually in arrears on the 15th day of June and December of each
year, commencing December 15, 1997, when, as and if available
S-16
<PAGE> 17
for payment. Distributions in arrears for more than one semi-annual period will
bear interest thereon at a rate of 7.90% per annum, compounded semi-annually.
Distributions on the Preferred Securities must be paid on the dates payable
to the extent that the Trust has funds available for the payment of such
Distributions in the Property Account. The Trust's funds available to pay
Distributions to the holders of the Preferred Securities will be limited to
payments received from SunTrust on the Subordinated Debentures. See "Description
of the Subordinated Debentures." The payment of Distributions out of moneys held
by the Trust and payments upon redemption of the Preferred Securities or
liquidation of the Trust are guaranteed by SunTrust as and to the extent
described under "Description of the Preferred Securities Guarantees" in the
accompanying Prospectus.
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which, as long as the Preferred Securities remain in book-entry
only form, will be one Business Day (as defined below) prior to the relevant
payment dates. Such Distributions will be paid through the Institutional
Trustee, which will hold amounts received in respect of the Subordinated
Debentures in the Property Account for the benefit of the holders of the
Preferred Securities. The Property Account may be held at the Institutional
Trustee or any Paying Agent of the Institutional Trustee. Subject to any
applicable laws and regulations and the provisions of the Declaration, each such
payment will be made as described under "-- Book-Entry Only Issuance -- The
Depository Trust Company" below. In the event that the Preferred Securities do
not continue to remain in book-entry form, the record dates for payment of
Distributions will be June 1 and December 1, as applicable. In the event that
any date on which Distributions are payable is not a Business Day, then payment
of the Distributions payable on such date will be made on the next succeeding
day that is a Business Day, except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such payment date (the date on which Distributions are actually payable, a
"Distribution Date"). The period beginning on, and including, the date of
original issuance of the Preferred Securities, and ending on, but excluding, the
first Distribution Date, and each successive period beginning on, and including,
a Distribution Date, and ending on, but excluding, the next succeeding
Distribution Date is herein called a "Distribution Period." A "Business Day"
shall mean any day other than (a) a day on which banking institutions in New
York, New York or Chicago, Illinois are authorized or required by law or
executive order to remain closed or (b) a day on which the Corporate Trust
Office of the Debt Trustee is closed for business.
DEFERRAL OF DISTRIBUTIONS
So long as no Indenture Event of Default has occurred and is continuing,
SunTrust has the right under the Indenture to defer payments of interest on the
Subordinated Debentures by extending the interest payment period at any time,
and from time to time, for a period not exceeding 10 consecutive semi-annual
periods with respect to each Extension Period, provided that no Extension Period
may extend beyond the Stated Maturity of the Subordinated Debentures. As a
consequence of any Extension Period, semi-annual Distributions on the Preferred
Securities will also be deferred by the Trust (and the amount of Distributions
to which holders of the Preferred Securities are entitled will accumulate
additional Distributions thereon at a rate of 7.90% per annum compounded
semi-annually from the relevant payment date for such Distributions) during any
Extension Period. During any such Extension Period, SunTrust may not, and may
not permit any subsidiary to, (i) declare or pay any dividends or distributions
on, or prepay, purchase, acquire, or make a liquidation payment with respect to,
any of SunTrust's capital stock, (ii) make any payment of principal of, premium,
if any, or interest on, or repay, repurchase or redeem any debt securities of
the Company (including other Subordinated Debt Securities) that rank pari passu
with, or junior in right of payment to, the Subordinated Debentures or (iii)
make any guarantee payment with respect to any guarantee by the Company of debt
securities of any subsidiary of the Company if such guarantee ranks pari passu
with, or junior in right of payment to, the Subordinated Debentures (other than
(a) dividends, distributions, redemptions, purchases or acquisitions made by the
Company by way of issuance of its capital stock (or options, warrants or other
rights to subscribe therefor), (b) any declaration of a dividend in connection
with the implementation of a shareholders' rights plan, or the issuance of stock
under any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto, (c) payments under the Preferred Securities Guarantee
or Common Securities Guarantee relating to the Trust Securities, (d) the
purchase of fractional
S-17
<PAGE> 18
interests in shares resulting from a reclassification of the Company's capital
stock, (e) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (f) purchases of common
stock related to the issuance of common stock or rights under any of the
Company's benefit plans for its directors, officers or employees and (g)
obligations under any of the Company's dividend reinvestment or stock purchase
plans). Prior to the termination of any such Extension Period, SunTrust may
further extend the payment of interest provided that such Extension Period may
not exceed 10 consecutive semi-annual periods or extend beyond the Stated
Maturity of the Subordinated Debentures. Upon the termination of any Extension
Period and the payment of all interest accrued and unpaid (together with
interest thereon at a rate of 7.90% per annum compounded semi-annually from the
interest payment date for such interest, to the extent permitted by applicable
law), SunTrust may commence a new Extension Period subject to the foregoing
requirements. There is no limitation on the number of times that the Company may
elect to begin an Extension Period. See "Description of the Subordinated
Debentures -- Interest" and "-- Option to Extend Interest Payment Period."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period of the
Subordinated Debentures.
MANDATORY REDEMPTION
The Subordinated Debentures will mature on June 15, 2027 and are redeemable
in whole or in part, from time to time, at the option of the Company, on or
after June 15, 2007. Upon any such repayment or redemption, in whole or in part,
of the Subordinated Debentures, whether at Stated Maturity or upon such earlier
optional redemption, the proceeds from such repayment or redemption shall
simultaneously be applied to redeem Trust Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Subordinated
Debentures so repaid or redeemed, upon not less than 30 nor more than 60 days
notice prior to the date fixed for redemption, at the applicable Redemption
Price. The applicable Redemption Price shall be equal to (i) in the case of
repayment of the Subordinated Debentures at Stated Maturity, the aggregate
liquidation amount of the Trust Securities being redeemed plus accrued and
unpaid Distributions thereon to the redemption date and (ii) in the case of the
optional redemption of the Subordinated Debentures on or after June 15, 2007, at
the following Redemption Prices (expressed as a percentage of the liquidation
amount of the Trust Securities being redeemed) plus accrued and unpaid
Distributions thereon to the redemption date, if redeemed during the 12-month
period commencing on June 15 of the years set forth below:
<TABLE>
<CAPTION>
REDEMPTION
PERIOD PRICE
- ------ ----------
<S> <C>
2007........................................................ 103.920%
2008........................................................ 103.528
2009........................................................ 103.136
2010........................................................ 102.744
2011........................................................ 102.352
2012........................................................ 101.960
2013........................................................ 101.568
2014........................................................ 101.176
2015........................................................ 100.784
2016........................................................ 100.392
2017 and thereafter......................................... 100.000
</TABLE>
TAX EVENT REDEMPTION
Subject to the prior approval of the Federal Reserve Board, if such
approval is then required under applicable law, rules, guidelines or policies,
if at any time a Tax Event shall occur and be continuing, SunTrust shall have
the right, upon not less than 30 nor more than 60 days' notice, to redeem the
Subordinated Debentures, in whole, but not in part, for cash within 90 days
following the occurrence of such Tax Event (or, if the approval of the Federal
Reserve Board is then required for such redemption, on such later date as
promptly as practicable after such approval is obtained) and, following such
redemption, all Trust Securities shall be redeemed by the Trust (i) if
S-18
<PAGE> 19
such redemption occurs prior to June 15, 2007, at a Redemption Price equal to
the Make-Whole Amount plus accrued and unpaid Distributions thereon to the
redemption date and (ii) if such redemption occurs on or after June 15, 2007, at
the applicable Redemption Price set forth above under "-- Mandatory Redemption"
plus accrued and unpaid Distributions thereon to the redemption date. The
"Make-Whole Amount" shall be an amount equal to the greater of (x) 100% of the
principal amount of the Subordinated Debentures being redeemed and (y) the sum
of the present values of the remaining scheduled payments of principal, premium
and interest thereon through June 15, 2027 discounted to the redemption date on
a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Adjusted Treasury Rate.
"Adjusted Treasury Rate" means, with respect to any redemption date, the
sum of (i) the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, calculated using a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such redemption date calculated on
the third Business Day preceding the redemption date plus (ii) if such
redemption date occurs on or prior to June 15, 1998, 0.71%, and, if such
redemption date occurs after June 15, 1998 but prior to June 15, 2007, 0.50%.
"Quotation Agent" means Salomon Brothers Inc and its respective successors;
provided, however, that if the foregoing shall cease to be a primary U.S.
Government securities dealer in New York City (a "Primary Treasury Dealer"), the
Company shall substitute therefor another Primary Treasury Dealer. "Reference
Treasury Dealer" means (i) the Quotation Agent and (ii) any other Primary
Treasury Dealer selected by the Debt Trustee after consultation with the
Company.
"Comparable Treasury Issue" means, with respect to any redemption date, the
United States Treasury security selected by the Quotation Agent as having a
maturity comparable to the remaining term of the Subordinated Debentures from
the redemption date through June 15, 2027 that would be utilized, at the time of
selection in accordance with customary financial practice, in pricing new issues
of corporate debt securities of comparable maturity to the remaining term of the
Subordinated Debentures from the redemption date through June 15, 2027. If no
United States Treasury security has a maturity which is within a period from
three months before to three months after June 15, 2027, the two most closely
corresponding United States Treasury securities shall be used as the Comparable
Treasury Issue, and the Adjusted Treasury Rate shall be interpolated or
extrapolated on a straight-line basis, rounding to the nearest month using such
securities.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day preceding such redemption date, as set forth in the most recent
weekly statistical release (or any successor release) published by the Federal
Reserve Board and designated "H.15 (519)" or (ii) if such release (or any
successor release) is not published or does not contain such prices during the
week preceding such Business Day, (a) the average of the Reference Treasury
Dealer Quotations for such redemption date, after excluding the highest and
lowest such Reference Treasury Dealer Quotations, or (b) if the Debt Trustee
obtains fewer than three such Reference Treasury Quotations, the average of all
such quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Debt Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as percentage of its principal amount) quoted in writing
to the Debt Trustee by such Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third Business Day preceding such redemption date.
"Tax Event" means the receipt by the Trust of an opinion of counsel to the
Company that is experienced in such matters to the effect that, as a result of
any amendment to, or change (including any announced proposed change) in, the
laws or any regulations thereunder of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which proposed change, pronouncement or decision is announced on or after the
date of issuance of the Preferred Securities under the Declaration, there is
more than an insubstantial risk that (i) the Trust is, or will be within 90 days
of the date of such opinion, subject to United States federal income tax with
respect to income received or accrued on the Subordinated Debentures, (ii)
interest payable by the Company on the Subordinated Debentures is not, or within
S-19
<PAGE> 20
90 days of the date of such opinion, will not be, deductible by the Company, in
whole or in part, for United States federal income tax purposes or (iii) the
Trust is, or will be within 90 days of the date of such opinion, subject to more
than a de minimis amount of other taxes, duties or other governmental charges.
CAPITAL TREATMENT EVENT REDEMPTION
Subject to the prior approval of the Federal Reserve Board, if such
approval is then required under applicable laws, rules, guidelines or policies,
if at any time a Capital Treatment Event shall occur and be continuing, SunTrust
shall have the right, upon not less than 30 nor more than 60 days' notice, to
redeem the Subordinated Debentures, in whole, but not in part, for cash within
90 days following the occurrence of such Capital Treatment Event (or, if the
approval of the Federal Reserve Board is then required for such redemption, on
such later date as promptly as practicable after such approval is obtained) and,
following such redemption, all Trust Securities shall be redeemed by the Trust
at a Redemption Price equal to 100% of the liquidation amount of the Trust
Securities so redeemed plus accrued and unpaid Distributions thereon to the
redemption date.
"Capital Treatment Event" means the reasonable determination by the Company
that, as a result of any amendment to, or change (including any announced
proposed change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision thereof or therein, or as a result of any
official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which proposed change, pronouncement, action or decision is
announced on or after the date of issuance of the Preferred Securities under the
Declaration, there is more than an insubstantial risk that the Company will not
be entitled to treat an amount equal to the liquidation amount of the Preferred
Securities as "Tier 1 Capital" (or the then equivalent thereof) for purposes of
the capital adequacy guidelines of the Federal Reserve Board, as then in effect
and applicable to the Company.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid Distributions have been paid on all
Preferred Securities for all Distribution Periods terminating on or prior to the
date of redemption.
If the Trust gives a notice of redemption in respect of Preferred
Securities (which notice will be irrevocable), then, provided that SunTrust has
paid to the Institutional Trustee a sufficient amount of cash in connection with
the related redemption or maturity of the Subordinated Debentures, the Trust
will irrevocably deposit with the Depositary funds sufficient to pay the
applicable Redemption Price and will give the Depositary irrevocable
instructions and authority to pay the applicable Redemption Price to the holders
of the Preferred Securities. See "-- Book-Entry Only Issuance -- The Depository
Trust Company." If notice of redemption shall have been given and funds
deposited as required, then, from and after the announced redemption date,
Distributions will cease to accrue and all rights of holders of such Preferred
Securities called for redemption will cease, except the right of such holders to
receive the applicable Redemption Price (but without interest on such Redemption
Price). In the event that any date fixed for redemption of Preferred Securities
is not a Business Day, then payment of the applicable Redemption Price payable
on such date will be made on the next succeeding day that is a Business Day
(without any interest or other payment in respect of any such delay), except
that, if such Business Day falls in the next calendar year, such payment will be
made on the immediately preceding Business Day. In the event that payment of the
applicable Redemption Price in respect of Preferred Securities is improperly
withheld or refused and not paid either by the Trust, or by SunTrust pursuant to
the Preferred Securities Guarantee, Distributions on such Preferred Securities
will continue to accrue at the then-applicable rate from the original redemption
date to the date of payment, in which case the actual payment date will be
considered the date fixed for redemption for purposes of calculating the
applicable Redemption Price.
In the event that fewer than all of the outstanding Preferred Securities
are to be redeemed, the Preferred Securities will be redeemed pro rata in
accordance with procedures of the Depository as described below under
"-- Book-Entry Only Issuance -- The Depository Trust Company."
S-20
<PAGE> 21
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws and the regulations of the Federal Reserve
Board), SunTrust or its subsidiaries may at any time, and from time to time,
purchase outstanding Preferred Securities by tender, in the open market or by
private agreement.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture relating to the Subordinated
Debentures (an "Indenture Event of Default") constitutes an event of default
under the Declaration with respect to the Trust Securities (a "Declaration Event
of Default"); provided, that pursuant to the Declaration, the holder of the
Common Securities will be deemed to have waived any Declaration Event of Default
with respect to the Common Securities until all Declaration Events of Default
with respect to the Preferred Securities have been cured, waived or otherwise
eliminated. Until such Declaration Events of Default with respect to the
Preferred Securities have been so cured, waived, or otherwise eliminated, the
Institutional Trustee will be deemed to be acting solely on behalf of the
holders of the Preferred Securities and only the holders of the Preferred
Securities will have the right to direct the Institutional Trustee with respect
to certain matters under the Declaration, and therefore under the Indenture as
well. If the Institutional Trustee fails to enforce its rights under the
Subordinated Debentures after a holder of Preferred Securities has made a
written request, such holder of record of Preferred Securities may institute a
legal proceeding against SunTrust to enforce the Institutional Trustee's rights
under the Subordinated Debentures without first instituting any legal proceeding
against the Institutional Trustee or any other person or entity. Notwithstanding
the foregoing, if a Declaration Event of Default has occurred and is continuing
and such event is attributable to the failure of SunTrust to pay interest or
principal on the Subordinated Debentures on the date such interest or principal
is otherwise payable (or in the case of redemption, on the redemption date),
then a holder of Preferred Securities may institute a Direct Action for
enforcement of payment to such holder directly of the principal of or the
interest on the Subordinated Debentures having a principal amount equal to the
aggregate liquidation amount of the Preferred Securities held by such holder on
or after the respective due date specified in the Subordinated Debentures. In
connection with such Direct Action, SunTrust will be subrogated to the rights of
such holder of Preferred Securities under the Declaration to the extent of any
payment made by SunTrust to such holder of Preferred Securities in such Direct
Action. The holders of Preferred Securities will not be able to exercise
directly any other remedy available to the holders of the Subordinated
Debentures.
Upon the occurrence of a Declaration Event of Default, the Institutional
Trustee, as the sole holder of the Subordinated Debentures, will have the right
under the Indenture to declare the principal of and interest on the Subordinated
Debentures to be immediately due and payable. SunTrust and the Trust are each
required to file annually with the Institutional Trustee an officer's
certificate as to its compliance with all conditions and covenants under the
Declaration.
DISTRIBUTION OF THE SUBORDINATED DEBENTURES
SunTrust will have the right at any time to dissolve the Trust and cause
the Subordinated Debentures to be distributed to the holders of the Trust
Securities, subject to the prior approval of the Federal Reserve Board if such
approval is then required under applicable law, rules, guidelines or policies.
After the date for any distribution of Subordinated Debentures upon
dissolution of the Trust, (i) the Preferred Securities will no longer be deemed
to be outstanding, (ii) the Depositary (as defined herein) or its nominee, as
the record holder of the Preferred Securities, will receive a registered global
certificate or certificates representing the Subordinated Debentures to be
delivered upon such distribution and (iii) any certificates representing
Preferred Securities not held by the Depositary or its nominee will be deemed to
represent Subordinated Debentures having an aggregate principal amount equal to
the aggregate liquidation amount of, with an interest rate identical to the
distribution rate of, and accrued and unpaid interest equal to accrued and
unpaid Distributions on, such Preferred Securities until such certificates are
presented to SunTrust or its agent for transfer or reissuance.
There can be no assurance as to the market prices for either the Preferred
Securities or the Subordinated Debentures that may be distributed in exchange
for the Preferred Securities if a dissolution of the Trust were to
S-21
<PAGE> 22
occur. Accordingly, the Preferred Securities or the Subordinated Debentures may
trade at a discount to the price that investors paid to purchase the Preferred
Securities offered hereby.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Pursuant to the Declaration, the Trust shall dissolve (i) on June 15, 2052,
the expiration of the term of the Trust, (ii) upon the bankruptcy of SunTrust,
(iii) upon the filing of a certificate of dissolution or its equivalent with
respect to SunTrust, the filing of a certificate of cancellation with respect to
the Trust after obtaining the consent of the holders of at least a majority in
liquidation amount of the Trust Securities affected thereby voting together as a
single class to file such certificate of cancellation or the revocation of the
charter of SunTrust and the expiration of 90 days after the date of revocation
without a reinstatement thereof, (iv) upon the distribution of Subordinated
Debentures to holders of the Trust Securities, (v) upon the entry of a decree of
a judicial dissolution of the holder of the Common Securities, SunTrust or the
Trust, or (vi) upon the redemption of all the Trust Securities (in any such
case, a "Dissolution Event").
Upon the occurrence of a Dissolution Event, the holders of Preferred
Securities will be entitled to receive out of the assets of the Trust, after
satisfaction of liabilities to creditors, distributions in an amount equal to
the aggregate of the liquidation amount of $1,000 per Preferred Security plus
accrued and unpaid Distributions thereon to the date of payment (the
"Liquidation Distribution"), unless, in connection with such Dissolution Event,
Subordinated Debentures in an aggregate stated principal amount equal to the
aggregate liquidation amount of such Preferred Securities, with an interest rate
equal to the Distribution Rate of, and bearing accrued and unpaid interest in an
amount equal to accrued and unpaid Distributions on, such Preferred Securities
have been distributed on a pro rata basis to the holders of the Preferred
Securities.
If, upon any such Distribution Event, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets available to pay in
full the aggregate Liquidation Distribution, then the amounts payable directly
by the Trust on the Preferred Securities shall be paid on a pro rata basis. The
holders of the Common Securities will be entitled to receive distributions upon
any such Dissolution Event pro rata with the holders of the Preferred
Securities, except that if a Declaration Event of Default has occurred and is
continuing, the Preferred Securities shall have a preference over the Common
Securities with regard to such distributions.
VOTING RIGHTS
Except as described herein and under "Description of the Preferred
Securities Guarantees -- Modification of the Preferred Securities Guarantees;
Assignment" in the accompanying Prospectus, as provided under the Trust Act and
the Trust Indenture Act, and as otherwise required by law and the Declaration,
the holders of the Preferred Securities will have no voting rights.
Subject to the requirement of the Institutional Trustee's obtaining a tax
opinion in certain circumstances set forth in the following paragraph, the
holders of a majority in aggregate liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Institutional Trustee, or to direct
the exercise of any trust or power conferred upon the Institutional Trustee
under the Declaration including the right to direct the Institutional Trustee,
as holder of the Subordinated Debentures, to (i) exercise the remedies available
to it under the Indenture as a holder of the Subordinated Debentures, (ii) waive
any past Indenture Event of Default that is waivable under the Indenture, (iii)
exercise any right to rescind or annul a declaration that the principal of all
the Subordinated Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or the Subordinated
Debentures where such consent of the holders of the Subordinated Debentures
shall be required; provided, however, that, where a consent or action under the
Indenture would require the consent or act of holders of more than a majority in
principal amount of the Subordinated Debentures (a "Super-Majority") affected
thereby, only the holders of at least such Super-Majority in aggregate
liquidation amount of the Preferred Securities may direct the Institutional
Trustee to give such consent or take such action. If the Institutional Trustee
fails to enforce its rights under the Subordinated Debentures after a holder of
record of Preferred Securities has made a written request, such holder of record
of Preferred Securities may institute a legal proceeding directly
S-22
<PAGE> 23
against SunTrust to enforce the Institutional Trustee's rights under the
Subordinated Debentures without first instituting any legal proceeding against
the Institutional Trustee or any other person or entity.
Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of
SunTrust to pay interest or principal on the Subordinated Debentures on the date
such interest or principal is otherwise payable (or in the case of redemption on
the redemption date), then a holder of Preferred Securities may institute a
Direct Action for enforcement of payment to such holder of the principal of or
interest on the Subordinated Debentures having a principal amount equal to the
aggregate liquidation amount of the Preferred Securities held by such holder on
or after the respective due date specified in the Subordinated Debentures. The
Institutional Trustee shall within 90 days notify all holders of the Preferred
Securities of any notice of default received from the Debt Trustee with respect
to the Subordinated Debentures. Such notice shall state that such Indenture
Event of Default also constitutes a Declaration Event of Default. Except with
respect to directing the time, method and place of conducting a proceeding for a
remedy, the Institutional Trustee shall not take any of the actions described in
clauses (i), (ii) or (iii) of the preceding paragraph unless the Institutional
Trustee has obtained an opinion of a nationally recognized tax counsel
experienced in such matters to the effect that, as a result of such action, for
the purposes of United States federal income tax the Trust will not be
classified as other than a grantor trust. The holders of a majority in aggregate
outstanding principal amount of Subordinated Debentures may annul any
declaration of acceleration under the Indenture and waive any default if the
default has been cured and a sum sufficient to pay all matured installments of
interest and principal due otherwise than by acceleration has been deposited
with the Debt Trustee. In the case of the Subordinated Debentures held by the
Institutional Trustee on behalf of the Trust, a waiver of any default shall not
be effective until a majority in liquidation amount of the Trust Securities
shall have consented to such waiver; provided, that if the Indenture requires
the consent of a Super-Majority, such waiver shall be effective only if the
holders of at least the proportion in liquidation amount of the Trust Securities
that the relevant Super-Majority represents of the aggregate principal amount of
the Subordinated Debentures outstanding so consent.
In the event the consent of the Institutional Trustee, as the holder of the
Subordinated Debentures, is required under the Indenture with respect to any
amendment, modification or termination of the Indenture, the Institutional
Trustee shall request the direction of the holders of the Trust Securities with
respect to such amendment, modification or termination and shall vote with
respect to such amendment, modification or termination as directed by a majority
in liquidation amount of the Trust Securities voting together as a single class;
provided, however, that where a consent under the Indenture would require the
consent of a Super-Majority, the Institutional Trustee may give such consent
only at the direction of the holders of at least the proportion in liquidation
amount of the Trust Securities that the relevant Super-Majority represents of
the aggregate principal amount of the Subordinated Debentures outstanding. The
Institutional Trustee shall not take any such action in accordance with the
directions of the holders of the Trust Securities unless the Institutional
Trustee has obtained an opinion of a nationally recognized tax counsel
experienced in such matters to the effect that for the purposes of United States
federal income tax the Trust will not be classified as other than a grantor
trust on account of such action.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Preferred Securities may
be given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of all of the holders of Trust Securities or pursuant
to written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
mailed to each holder of record of Preferred Securities. Each such notice will
include a statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken; (ii) a description
of any resolution proposed for adoption at such meeting on which such holders
are entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents. No vote or consent
of the holders of Preferred Securities will be required for the Trust to redeem
and cancel Preferred Securities or distribute Subordinated Debentures in
accordance with the Declaration.
S-23
<PAGE> 24
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by SunTrust or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, SunTrust, shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if such Preferred Securities
were not outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below; see "-- Book-Entry Only Issuance -- The
Depository Trust Company."
Holders of the Preferred Securities will have no rights to appoint or
remove the Trust Trustees, who may be appointed, removed or replaced solely by
SunTrust as the indirect or direct holder of all of the Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by the Regular
Trustees (and in certain circumstances the Institutional Trustee and/or the
Delaware Trustee), provided that, if any proposed amendment provides for, or the
Regular Trustees otherwise propose to effect, (i) any amendment that would
adversely affect the rights, privileges or preferences of any holder of Trust
Securities, whether by way of amendment to the Declaration or otherwise or (ii)
the dissolution, winding-up or termination of the Trust other than pursuant to
the terms of the Declaration, then the holders of the Trust Securities voting
together as a single class will be entitled to vote on such amendment or
proposal (but not on any other amendment or proposal) and such amendment or
proposal shall not be effective except with the approval of the holders of at
least a majority in liquidation amount of the Trust Securities affected thereby;
provided, however, that, if any amendment or proposal referred to in clause (i)
above would adversely affect only the Preferred Securities or only the Common
Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a majority in liquidation amount of such class of
Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for purposes of United States federal income taxation as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the Institutional Trustee or (iii) cause the Trust to be deemed an "investment
company" that is required to be registered under the Investment Company Act of
1940, as amended (the "1940 Act").
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body, except as
described below. The Trust may, with the consent of the Regular Trustees and
without the consent of the holders of the Trust Securities, the Institutional
Trustee or the Delaware Trustee, consolidate, amalgamate, merge with or into, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, a trust organized as such under the laws of any
State of the United States; provided, that (i) if the Trust is not the survivor,
such successor entity either (a) expressly assumes all of the obligations of the
Trust under the Trust Securities or (b) substitutes for the Trust Securities
other securities having substantially the same terms as the Trust Securities
(the "Successor Securities") so long as the Successor Securities rank the same
as the Trust Securities with respect to Distributions and payments upon
liquidation, redemption and otherwise, (ii) SunTrust expressly acknowledges a
trustee of such successor entity possessing the same powers and duties as the
Institutional Trustee as the holder of the Subordinated Debentures, (iii) the
Preferred Securities or any Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any national
securities exchange or another organization on which the Preferred Securities
are then listed or quoted, (iv) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not cause the Preferred
Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of the
Trust Securities (including any Successor Securities) in any material respect
(other than with respect to any dilution of the holders' interest in the
S-24
<PAGE> 25
new entity), (vi) such successor entity has a purpose substantially identical to
that of the Trust, (vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, SunTrust has received an opinion of
a nationally recognized independent counsel to the Trust experienced in such
matters to the effect that: (a) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the Trust Securities (including any
Successor Securities) in any material respect (other than with respect to any
dilution of the holders' interest in the new entity), (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, neither
the Trust nor such successor entity will be required to register as an
investment company under the 1940 Act and (c) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease the
Trust (or the successor entity) will continue to be classified as a grantor
trust for United States federal income tax purposes, and (viii) SunTrust
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Preferred Securities Guarantee
and the Common Securities Guarantee. Notwithstanding the foregoing, the Trust
shall not, except with the consent of holders of 100% in liquidation amount of
the Trust Securities, consolidate, amalgamate, merge with or into, or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it, if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause the
Trust or the Successor Entity to be classified as other than a grantor trust for
United States federal income tax purposes.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary (the
"Depositary") for the Preferred Securities. The Preferred Securities will be
issued only as fully registered securities registered in the name of Cede & Co.
(DTC's nominee) or such other nominee as selected by DTC. One or more fully
registered global Preferred Securities certificates, representing the total
aggregate number of Preferred Securities, will be issued and will be deposited
with DTC.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form
("Certificated Securities"). Such laws may impair the ability to transfer
beneficial interests in the global Preferred Securities as represented by a
global certificate.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Participants in DTC
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Participants and by the New York Stock Exchange, the
American Stock Exchange, Inc., and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others, such as
securities brokers and dealers, banks and trust companies that clear
transactions through or maintain a direct or indirect custodial relationship
with a Direct Participant either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on file
with the SEC.
Purchases of Preferred Securities within the DTC system must be made by or
through Participants, which will receive a credit for the Preferred Securities
on DTC's records. The ownership interest of each actual purchaser of each
Preferred Security ("Beneficial Owner") is in turn to be recorded on the
Participants' and Indirect Participants' records, including Euroclear and Cedel.
Beneficial Owners will not receive written confirmation from DTC of their
purchases, but Beneficial Owners are expected to receive written confirmations
providing details of the transactions, as well as periodic statements of their
holdings, from the Direct or Indirect Participants through which the Beneficial
Owners purchased Preferred Securities. Transfers of ownership interests in the
Preferred Securities are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership interests
S-25
<PAGE> 26
in the Preferred Securities, except in the event that use of the book-entry
system for the Preferred Securities is discontinued.
Transfers between Participants will be effected in accordance with DTC's
procedures and will be settled in same-day funds. Transfers between participants
in Euroclear and Cedel will be effected in the ordinary way in accordance with
their respective rules and operating procedures.
Cross-market transfers between Participants, on the one hand, and Euroclear
participants or Cedel participants, on the other hand, will be effected in DTC
in accordance with DTC's rules on behalf of Euroclear or Cedel, as the case may
be, by its respective depositary; however, such cross-market transactions will
require delivery of instructions to Euroclear or Cedel, as the case may be, by
the counterparty in such system in accordance with the rules and procedures and
within the established deadlines (Brussels time) of such system. Euroclear or
Cedel, as the case may be, will, if the transaction meets its settlement
requirements, deliver instructions to its respective depositary to take action
to effect final settlement on its behalf by delivering or receiving interests in
the Preferred Securities in DTC, and making or receiving payment in accordance
with normal procedures for same-day funds settlement applicable to DTC.
Euroclear participants and Cedel participants may not deliver instructions
directly to the depositaries for Euroclear or Cedel.
Because of time zone differences, the securities account of a Euroclear or
Cedel participant purchasing an interest in a Preferred Security from a
Participant in DTC will be credited, and any such crediting will be reported to
the relevant Euroclear participant or Cedel participant, during the securities
settlement processing day (which must be a business day for Euroclear and Cedel,
as the case may be) immediately following the DTC settlement date. Cash received
in Euroclear or Cedel as a result of sales of interests in a Preferred Security
by or through a Euroclear or Cedel participant to a Participant in DTC will be
received with value on the DTC settlement date, but will be available in the
relevant Euroclear or Cedel cash account only as of the business day for
Euroclear or Cedel following the DTC settlement date.
DTC has no knowledge of the actual Beneficial Owners of the Preferred
Securities. DTC's records reflect only the identity of the Direct Participants
to whose accounts such Preferred Securities are credited, which may or may not
be the Beneficial Owners. The Participants and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Certificate, DTC or such nominee, as the case may be, will be considered
the sole owner or holder of the Preferred Securities represented thereby for all
purposes under the Declaration and the Preferred Securities. No beneficial owner
of an interest in a Global Certificate will be able to transfer that interest
except in accordance with DTC's applicable procedures, in addition to those
provided for under the Declaration.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Preferred Securities (including the presentation of
Preferred Securities for exchange as described below) only at the direction of
one or more Participants to whose account the DTC interests in the Global
Certificates are credited and only in respect of such portion of the aggregate
liquidation amount of Preferred Securities as to which such Participant or
Participants has or have given such direction. However, if there is an Event of
Default under the Preferred Securities, DTC will exchange the Global
Certificates for Certificated Securities, which it will distribute to its
Participants.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants, and by Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
Redemption notices in respect of the Preferred Securities held in
book-entry form will be sent to Cede & Co. If less than all of the Preferred
Securities are being redeemed, DTC will determine the amount of the interest of
each Participant to be redeemed in accordance with its procedures.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to the Trust as soon as possible
after the record date. The
S-26
<PAGE> 27
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those
Participants to whose accounts the Preferred Securities are credited on the
record date (identified in a listing attached to the Omnibus Proxy).
Distributions on the Preferred Securities held in book-entry form will be
made to DTC in immediately available funds. DTC's practice is to credit
Participants' accounts on the relevant payment date in accordance with their
respective holdings shown on DTC's records unless DTC has reason to believe that
it will not receive payments on such payment date. Payments by Participants and
Indirect Participants to Beneficial Owners will be governed by standing
instructions and customary practices and will be the responsibility of such
Participants and Indirect Participants and not of DTC, the Trust or the Company,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of Distributions to DTC is the responsibility of the
Trust, disbursement of such payments to Participants is the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners is the
responsibility of Participants and Indirect Participants.
Except as provided herein, a Beneficial Owner of an interest in a Global
Certificate will not be entitled to receive physical delivery of Preferred
Securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC to exercise any rights under the Preferred Securities.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Certificates among Participants of DTC, DTC
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. Neither the Company, the Trust
nor the Trust Trustees will have any responsibility for the performance by DTC
or its Participants or Indirect Participants under the rules and procedures
governing DTC. DTC may discontinue providing its services as securities
depositary with respect to the Preferred Securities at any time by giving notice
to the Trust. Under such circumstances, in the event that a successor securities
depositary is not obtained, Preferred Security certificates are required to be
printed and delivered. Additionally, the Trust (with the consent of the Company)
may decide to discontinue use of the system of book-entry transfers through DTC
(or a successor depositary). In that event, certificates for the Preferred
Securities will be printed and delivered. In each of the above circumstances,
the Company will appoint a paying agent with respect to the Preferred
Securities.
The information in this section concerning DTC and DTC's book entry system
has been obtained from sources that the Company and the Trust believe to be
reliable, but neither the Company nor the Trust takes responsibility for the
accuracy thereof.
PAYMENT
Payments in respect of the Preferred Securities represented by the Global
Certificates shall be made to DTC, which shall credit the relevant accounts at
DTC on the applicable Distribution Dates or, in the case of Preferred Securities
represented by Certificated Securities, such payments shall be made by check
mailed to the address of the holder entitled thereto as such address shall
appear on the Securities Register.
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
First Chicago will act as registrar, transfer agent and paying agent for
the Preferred Securities (the "Paying Agent"). First Chicago is presently
located at One First National Plaza, Suite 0126, Chicago, Illinois 60670-0126.
If the Preferred Securities do not remain in book-entry only form, one or more
additional paying agents may be appointed if so required by any rule or
regulation of any securities exchange upon which the Preferred Securities may be
listed at such time. The Paying Agent shall be permitted to resign as Paying
Agent upon 30 days' written notice to the Trust Trustees. In the event that
First Chicago shall no longer be the Paying Agent, the Institutional Trustee
shall appoint a successor to act as Paying Agent (which shall be a bank or trust
company acceptable to the Company).
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of the Trust, but upon payment (with the giving of such
indemnity as the Trust or the Company may require) in respect of any tax or
other government charges that may be imposed in relation thereto.
The Trust will not be required to register or cause to be registered the
transfer of Preferred Securities after such Preferred Securities have been
called for redemption.
S-27
<PAGE> 28
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with
respect to the Trust Securities and after the curing of any default that may
have occurred, undertakes to perform only such duties as are specifically set
forth in the Declaration and, after default, shall exercise the same degree of
care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provisions, the Institutional Trustee is under no
obligation to exercise any of the powers vested in it by the Declaration at the
request of any holder of Preferred Securities, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities that might
be incurred thereby, provided, that the Institutional Trustee shall not be
relieved of its obligation to exercise the rights and powers vested in it by the
Declaration following the occurrence of a Declaration Event of Default. The
Institutional Trustee also serves as Preferred Guarantee Trustee under the
Preferred Securities Guarantee and Debt Trustee under the Indenture. For
information concerning the relationship between the Institutional Trustee and
the Company, see "SunTrust Capital Trust."
GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate the Trust in
such a way so that the Trust will not be required to register as an "investment
company" under the 1940 Act or characterized as other than a grantor trust for
United States federal income tax purposes. SunTrust is authorized and directed
to conduct its affairs so that the Subordinated Debentures will be treated as
indebtedness of SunTrust for United States federal income tax purposes. In this
connection, SunTrust and the Regular Trustees are authorized to take any action,
not inconsistent with applicable law, the certificate of trust of the Trust or
the articles of incorporation of SunTrust, that each of SunTrust and the Regular
Trustees determine in their discretion to be necessary or desirable to achieve
such end, as long as such action does not adversely affect the interests of the
holders of the Preferred Securities or vary the terms thereof.
Holders of the Preferred Securities have no preemptive rights.
S-28
<PAGE> 29
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE
Pursuant to the Preferred Securities Guarantee, SunTrust will irrevocably
and unconditionally agree, to the extent set forth therein, to pay in full to
the holders of the Preferred Securities issued by the Trust, the Guarantee
Payments (as defined in the accompanying Prospectus) (except to the extent paid
by the Trust), as and when due, regardless of any defense, right of set-off or
counterclaim that the Trust may have or assert. The Company's obligation to make
a Guarantee Payment may be satisfied by direct payment of the required amounts
by the Company to the holders of Preferred Securities or by causing the Trust to
pay such amounts to such holders. The Preferred Securities Guarantee will be
qualified as an indenture under the Trust Indenture Act. First Chicago will act
as the Preferred Guarantee Trustee under the Preferred Securities Guarantee. The
terms of the Preferred Securities Guarantee will be those set forth in such
Preferred Securities Guarantee and those made part of such Preferred Securities
Guarantee by the Trust Indenture Act. The Preferred Securities Guarantee will be
held by the Preferred Guarantee Trustee for the benefit of the holders of the
Preferred Securities. A summary description of the Preferred Securities
Guarantee appears in the accompanying Prospectus under the caption "Description
of the Preferred Securities Guarantees."
DESCRIPTION OF THE SUBORDINATED DEBENTURES
The following description of the specific terms of the Subordinated
Debentures supplements, and to the extent inconsistent therewith, replaces, the
description of the general terms and provisions of the Subordinated Debentures
set forth in the accompanying Prospectus under the caption "Description of the
Subordinated Debt Securities" to which description reference is hereby made. The
following description does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the Indenture, dated as of May 6,
1997 (the "Base Indenture"), between SunTrust and First Chicago, as Trustee (the
"Debt Trustee"), as supplemented by a Second Supplemental Indenture, dated as of
June 2, 1997 (the Base Indenture, as so supplemented, is hereinafter referred to
as the "Indenture"), the forms of which are filed as exhibits to the
Registration Statement of which this Prospectus Supplement and the accompanying
Prospectus form a part. Certain capitalized terms used herein are defined in the
Indenture.
SunTrust has the right to dissolve the Trust and cause the Subordinated
Debentures to be distributed to the holders of the Trust Securities.
GENERAL
The Subordinated Debentures will be issued as unsecured indebtedness under
the Indenture. The Company may issue additional series of junior subordinated
debentures under the Base Indenture, and any such series will rank pari passu
with the Subordinated Debentures. The Subordinated Debentures that are the
subject of this Prospectus Supplement will be limited in aggregate principal
amount to $257,750,000, such amount being the sum of the aggregate stated
liquidation amount of the Preferred Securities and the Common Securities.
The Subordinated Debentures are not subject to a sinking fund provision.
The entire principal amount of the Subordinated Debentures will mature and
become due and payable, together with any accrued and unpaid interest thereon
including Compounded Interest (as defined in the Indenture) and Additional Sums
(as defined herein), if any, on June 15, 2027.
If Subordinated Debentures are distributed to holders of Trust Securities
in liquidation of such holders' interests in the Trust, such Subordinated
Debentures will initially be issued as a Global Security (as defined herein). As
described herein, Subordinated Debentures may be issued in certificated form in
exchange for a Global Security. See "-- Book-Entry and Settlement" below. In the
event that Subordinated Debentures are issued in certificated form, such
Subordinated Debentures will be in denominations of $1,000 and integral
multiples thereof and may be transferred or exchanged at the offices described
below. Payments on Subordinated Debentures issued as a Global Security will be
made to DTC, a successor depositary or, in the event that no depositary is used,
to a Paying Agent for the Subordinated Debentures. In the event Subordinated
Debentures are issued in certificated form, principal and interest will be
payable, the transfer of the Subordinated Debentures will be registrable and
Subordinated Debentures will be exchangeable for Subordinated Debentures of
other
S-29
<PAGE> 30
denominations of a like aggregate principal amount at the corporate trust office
of (i) the Institutional Trustee in New York, New York (currently located at c/o
First Chicago Trust Company of New York, 14 Wall Street, 8th Floor -- Window 2,
New York, New York 10005) or (ii) any other Paying Agent or transfer agent
appointed in addition or in lieu thereof provided, that payment of interest may
be made at the option of SunTrust by check mailed to the address of the holder
entitled thereto or by wire transfer to an account appropriately designated by
the holder entitled thereto. Notwithstanding the foregoing, so long as the
holder of any Subordinated Debentures is the Institutional Trustee, the payment
of principal and interest on the Subordinated Debentures held by the
Institutional Trustee will be made at such place and to such account as may be
designated by the Institutional Trustee.
Any moneys deposited with or paid to the Debt Trustee or any Paying Agent
for payment of the principal of, premium, if any, or interest on, Subordinated
Debentures and not applied but remaining unclaimed by the holders thereof for
two years after the date upon which such principal of, premium, if any, or
interest on such Subordinated Debentures, as the case may be, shall have become
due and payable, shall be repaid to SunTrust by the Debt Trustee or Paying Agent
on written demand. Thereafter the holder of any such Subordinated Debenture
shall look only to SunTrust for any payment that such holder may be entitled to
collect and all liability of the Debt Trustee or Paying Agent with respect to
such moneys shall thereupon cease.
The Indenture does not contain provisions that afford holders of the
Subordinated Debentures protection in the event of a highly leveraged
transaction or other similar transaction involving SunTrust that may adversely
affect such holders.
SUBORDINATION
The Indenture provides that the Subordinated Debentures are subordinated
and junior in right of payment to all present and future Senior Indebtedness and
rank pari passu and are equivalent to creditor obligations of those holding
general unsecured claims not entitled to statutory priority under the United
States Bankruptcy Code of 1978, as amended, or otherwise. In addition, no direct
or indirect payment may be made of principal of, premium, if any, or interest on
the Subordinated Debentures, or in respect of any redemption, repayment,
retirement, purchase or other acquisition of any of the Subordinated Debentures,
at any time when there is a default in the payment of the principal of, premium,
if any, or interest on, or otherwise with respect to, any Senior Indebtedness,
whether at maturity or any date fixed for prepayment or by declaration or
otherwise, unless and until such default shall have been cured or waived or
shall have ceased to exist or all Senior Indebtedness shall have been paid. Upon
any payment or distribution of assets of the Company to creditors upon any
dissolution, winding-up, liquidation or reorganization, whether voluntary or
involuntary, or in a bankruptcy, insolvency, receivership or similar proceedings
of SunTrust, (i) the payment of the principal of and interest on the
Subordinated Debentures will, to the extent set forth in the Indenture, be
subordinated in right of payment to the prior payment in full of all Senior
Indebtedness of SunTrust and (ii) the holders of all Senior Indebtedness will
first be entitled to receive payment in full of all amounts due or to become due
thereon before the holders of the Subordinated Debentures will be entitled to
receive and retain any payments in respect of the principal of, premium, if any,
or interest on, the Subordinated Debentures. By reason of such subordination, in
the event of the insolvency of the Company, holders of Senior Indebtedness may
receive more, ratably, and holders of Subordinated Debentures having a claim
pursuant to such securities may receive less, ratably, than other creditors of
SunTrust.
The term "Senior Indebtedness" means, the principal of, premium, if any,
and interest on (i) every obligation of the Company for money borrowed; (ii)
every obligation of the Company evidenced by bonds, debentures, notes or other
similar instruments, including obligations incurred in connection with the
acquisition of property, assets or businesses; (iii) every reimbursement
obligation of the Company with respect to letters of credit, banker's
acceptances or similar facilities issued for the account of the Company; (iv)
every obligation of the Company issued or assumed as the deferred purchase price
of property or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business); (v) every capital lease
obligation of the Company; (vi) every obligation of the Company for claims in
respect of derivative products, including interest rate, foreign exchange rate
and commodity forward contracts, options and swaps and other similar
arrangements; and (vii) every obligation of the type referred to in clauses (i)
through (vi) of another
S-30
<PAGE> 31
person and all dividends of another person the payment of which, in either case,
the Company has guaranteed or is responsible or liable for, directly or
indirectly, as obligor or otherwise, whether outstanding on the date of
execution of the Indenture or thereafter created, assumed or incurred, except
such indebtedness that by its terms is expressly stated to be not superior in
right of payment to the Subordinated Debentures or to rank pari passu with the
Subordinated Debentures, and any deferrals, renewals or extensions of such
Senior Indebtedness.
To the extent of any payments made on Senior Indebtedness, the rights of
the holders of the Subordinated Debentures will be subrogated to the rights of
holders of the Senior Indebtedness of SunTrust until all amounts owing to the
holders of the Subordinated Debentures are paid in full. Such Senior
Indebtedness shall continue to be Senior Indebtedness and be entitled to the
benefits of the subordination provisions irrespective of any amendment,
modification or waiver of any term of such Senior Indebtedness.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be incurred by SunTrust. As of March 31, 1997, Senior Indebtedness of
SunTrust aggregated approximately $2.1 billion. In addition, because SunTrust is
a holding company, the Subordinated Debentures are effectively subordinated to
all existing and future liabilities of SunTrust's subsidiaries, including
depositors of its banking subsidiaries.
OPTIONAL REDEMPTION
Optional Redemption After June 15, 2007. Subject to the prior approval of
the Federal Reserve Board, if such approval is then required under applicable
law, rules, guidelines or policies, SunTrust shall have the right to redeem the
Subordinated Debentures, in whole or in part, from time to time, on or after
June 15, 2007, upon not less than 30 nor more than 60 days' notice, at the
following Redemption Prices (expressed as a percentage of the principal amount
of the Subordinated Debentures being redeemed) plus accrued and unpaid interest
thereon to the redemption date, if redeemed during the 12-month period
commencing on June 15 of the years set forth below:
<TABLE>
<CAPTION>
REDEMPTION
PERIOD PRICE
- ------ ----------
<S> <C>
2007........................................................ 103.920%
2008........................................................ 103.528
2009........................................................ 103.136
2010........................................................ 102.744
2011........................................................ 102.352
2012........................................................ 101.960
2013........................................................ 101.568
2014........................................................ 101.176
2015........................................................ 100.784
2016........................................................ 100.392
2017 and thereafter......................................... 100.000
</TABLE>
Tax Event Redemption. Subject to the prior approval of the Federal Reserve
Board, if such approval is then required under applicable law, rules, guidelines
or policies, if at any time a Tax Event shall occur and be continuing, SunTrust
shall have the right, upon not less than 30 nor more than 60 days' notice, to
redeem the Subordinated Debentures, in whole, but not in part, for cash within
90 days following the occurrence of such Tax Event (or, if the approval of the
Federal Reserve Board is then required for such redemption, on such later date
as promptly practicable after such approval is obtained) (i) if such redemption
occurs prior to June 15, 2007, at a Redemption Price equal to the Make-Whole
Amount plus accrued and unpaid interest thereon, including Additional Sums, if
any, to the redemption date and (ii) if such redemption occurs on or after June
15, 2007, at the applicable Redemption Price set forth above under "-- Optional
Redemption After June 15, 2007" plus accrued and unpaid interest thereon,
including Additional Sums, if any, to the redemption date. For a description of
the Make-Whole Amount, see "Description of the Preferred Securities -- Tax Event
Redemption."
Capital Treatment Event Redemption. Subject to the prior approval of the
Federal Reserve Board, if such approval is then required under applicable law,
rules, guidelines or policies, if at any time a Capital Treatment Event shall
occur and be continuing, SunTrust shall have the right, upon not less than 30
nor more than 60 days' notice, to redeem the Subordinated Debentures, in whole,
but not in part, for cash within 90 days following the
S-31
<PAGE> 32
occurrence of such Capital Treatment Event (or, if the approval of the Federal
Reserve Board is then required for such redemption), on such later date as
promptly as practicable after such approval is obtained) at a Redemption Price
equal to 100% of the principal amount of such Subordinated Debentures plus
accrued and unpaid interest thereon to the redemption date.
Registration of Transfer. In the event of any redemption, neither
SunTrust, the Debt Trustee nor any Paying Agent shall be required to issue,
register the transfer of or exchange (i) Subordinated Debentures for the period
beginning 15 days before the day of selection of Subordinated Debentures to be
redeemed and ending on the day of the mailing of the redemption notice or (ii)
Subordinated Debentures so selected for redemption, except, in the case of any
Subordinated Debentures being redeemed in part, any portion thereof not to be
redeemed.
INTEREST
The Subordinated Debentures shall bear interest at a rate of 7.90% per
annum (the "Interest Rate") from June 6, 1997, payable semi-annually in arrears
on the 15th day of June and December of each year, commencing December 15, 1997,
to the person in whose name such Subordinated Debentures is registered, subject
to certain exceptions, at the close of business on the Business Day next
preceding such Interest Payment Date (as defined below). In the event the
Subordinated Debentures are not in book-entry form (except if the Subordinated
Debentures are held by the Institutional Trustee), the record dates shall be the
June 1 and December 1 prior to the applicable Interest Payment Date.
In the event that any interest payment date is not a Business Day, then
payment of the interest payable on such date will be made on the next succeeding
day that is a Business Day, except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date (the date on which the interest payment is actually payable, an
"Interest Payment Date"). The period beginning on, and including, the date of
original issuance of the Subordinated Debentures, and ending on, but excluding,
the first Interest Payment Date, and each successive period beginning on, and
including, an Interest Payment Date, and ending on, but excluding, the next
succeeding Interest Payment Date is herein called an "Interest Period." The
amount of interest payable on the Subordinated Debentures for any Interest
Period will be computed on the basis of the actual number of days in the
applicable Interest Period divided by 360 and rounding the resulting figure to
the nearest cent (with one-half cent or more being rounded upwards).
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Indenture Event of Default has occurred and is continuing,
SunTrust has the right under the Indenture to defer payments of interest on the
Subordinated Debentures by extending the interest payment period at any time,
and from time to time, for a period not exceeding 10 consecutive semi-annual
periods with respect to each Extension Period, provided that no Extension Period
may extend beyond the Stated Maturity of the Subordinated Debentures. As a
consequence of any Extension Period, semi-annual Distributions on the Trust
Securities would also be deferred by the Trust (and the amount of Distributions
to which holders of the Trust Securities are entitled will accumulate additional
Distributions thereon at a rate of 7.90% per annum, compounded semi-annually
from the relevant payment date for such Distributions) during such Extension
Period. During any such Extension Period, SunTrust shall not, and may not permit
any subsidiary of SunTrust to, (i) declare or pay any dividends or distributions
on, or prepay, purchase, acquire, or make a liquidation payment with respect to,
any of SunTrust's capital stock, (ii) make any payment of principal of, premium,
if any, or interest on, or repay, repurchase or redeem any debt securities of
SunTrust (including other Subordinated Debt Securities) that rank pari passu
with, or junior in right of payment to, the Subordinated Debentures or (iii)
make any guarantee payment with respect to any guarantee by the Company of the
debt securities of any subsidiary of the Company if such guarantee ranks pari
passu with, or junior in right of payment to, the Subordinated Debentures (other
than (a) dividends, distributions, redemptions, purchases or acquisitions made
by the Company by way of issuance of its capital stock (or options, warrants or
other rights to subscribe therefor), (b) any declaration of a dividend in
connection with the implementation of a shareholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the Preferred
Securities Guarantee or Common Securities Guarantee, (d) the purchase of
S-32
<PAGE> 33
fractional interests in shares resulting from a reclassification of the
Company's capital stock, (e) the purchase of fractional interests in shares of
the Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (f) purchases
of common stock related to the issuance of common stock or rights under any of
the Company's benefit plans for its directors, officers, or employees and (g)
obligations under any of the Company's dividend reinvestment or stock purchase
plans). Prior to the termination of any such Extension Period, SunTrust may
further extend the payment of interest provided that such Extension Period may
not exceed 10 consecutive semi-annual periods or extend beyond the Stated
Maturity of the Subordinated Debentures. Upon the termination of any Extension
Period and the payment of all interest accrued and unpaid (together with
interest thereon at a rate of 7.90% per annum, compounded semi-annually from the
interest payment date for such interest, to the extent permitted by applicable
law), SunTrust may commence a new Extension Period subject to the foregoing
requirements. There is no limitation on the number of times that the Company may
elect to begin an Extension Period. No interest shall be due and payable during
an Extension Period, except at the end thereof. SunTrust has no present
intention of exercising its right to defer payments of interest by extending the
interest payment period on the Subordinated Debentures.
If the Institutional Trustee is the only registered holder of the
Subordinated Debentures, SunTrust shall give the Regular Trustees, the Debt
Trustee and the Institutional Trustee notice of its selection of such Extension
Period five Business Days before the earlier of (i) the next succeeding date on
which Distributions on the Trust Securities issued by the Trust are payable or
(ii) the date the Trust is required to give notice of the record date, or the
date such Distributions are payable, to any national securities exchange or
inter-dealer quotation system or to holders of the Preferred Securities issued
by the Trust, but in any event at least five Business Days before such record
date. The Regular Trustees shall give notice of SunTrust's selection of such
Extension Period to the holders of the Trust Securities. If the Institutional
Trustee is not the only registered holder of the Subordinated Debentures at the
time the Company selects an Extension Period, the Company shall give the holders
and the Debt Trustee written notice of its selection of such Extension Period at
least 10 Business Days before the earlier of (i) the next succeeding Interest
Payment Date or (ii) the date the Company is required to give notice of the
record or payment date of such interest payment to any national securities
exchange or inter-dealer quotation system or to the Holders.
ADDITIONAL SUMS
In the event a Tax Event has occurred and is continuing and the Trust shall
be required to pay any taxes, duties, assessments or governmental charges of
whatever nature (other than withholding taxes) imposed by the United States, or
any other taxing authority, then, in any such case, SunTrust will pay as
additional sums ("Additional Sums") such additional amounts as shall be required
so that the net amounts received and retained by the Trust after paying any such
taxes, duties, assessments or other governmental charges will be not less than
the amounts the Trust would have received had it not been subject to such taxes,
duties, assessments or other governmental charges as a result of such Tax Event.
PROPOSED TAX LEGISLATION
On February 6, 1997, the revenue portion of President Clinton's 1998 budget
proposal (the "Budget Proposal") was released. If enacted, the Budget Proposal
would generally deny deductions for interest or OID on an instrument issued by a
corporation that has a maximum weighted average maturity of more than 40 years.
The Budget Proposal also generally would deny deductions for interest or OID on
an instrument issued by a corporation that has a maximum term of more than 15
years and that is not shown as indebtedness on the separate balance sheet of the
issuer filed with the SEC. For purposes of the preceding sentence, in the case
of an instrument with a maximum term of more than 15 years issued to a related
party (other than a corporation) that is eliminated in the consolidated balance
sheet that includes the issuer and the holder, the issuer will be treated as
having characterized the instrument as equity if the holder or some other
related party issues a related instrument that is not shown as indebtedness on
the consolidated balance sheet filed with the SEC. The above described
provisions of the Budget Proposal are proposed to be effective generally for
instruments issued on or after the date of first Congressional committee action
on the Budget Proposal. Since the Subordinated Debentures cannot have a term
exceeding 40 years, the first of the above described budget proposals would be
inapplicable.
S-33
<PAGE> 34
Furthermore, since SunTrust intends to report the Preferred Securities as
indebtedness on its consolidated balance sheet filed with the SEC, the Budget
Proposal as currently drafted would not appear to apply to the Subordinated
Debentures. Additionally, the Budget Proposal would not apply to the
Subordinated Debentures if they are issued prior to the date of the first
Congressional committee action on the Budget Proposal. There can be no
assurance, however, that similar legislation which would apply to the
Subordinated Debentures will not be enacted, and such legislation could be
retroactive in effect. If any such legislation were enacted, the Company would
be unable to deduct interest on the Subordinated Debentures. Such a change could
give rise to a Tax Event, which would permit the Company to cause a redemption
of the Trust Securities before June 15, 2007. See "Description of the Preferred
Securities -- Tax Event Redemption," "-- Capital Treatment Event Redemption,"
"-- Mandatory Redemption" and "Description of the Subordinated
Debentures -- Optional Redemption."
INDENTURE EVENTS OF DEFAULT
If any Indenture Event of Default shall occur and be continuing, the
Institutional Trustee, as the holder of the Subordinated Debentures, will have
the right to declare the principal of, premium, if any, and interest on, the
Subordinated Debentures (including any Compounded Interest and Additional
Interest, if any) and any other amounts payable under the Indenture to be
forthwith due and payable and to enforce its other rights as a creditor with
respect to the Subordinated Debentures. See "Description of the Subordinated
Debt Securities -- Events of Default, Waiver and Notice" in the accompanying
Prospectus for a description of the Indenture Events of Default. An Indenture
Event of Default also constitutes a Declaration Event of Default. In certain
circumstances, the holders of Preferred Securities have the right to direct the
Institutional Trustee to exercise its rights as the holder of the Subordinated
Debentures. See "Description of the Preferred Securities -- Declaration Events
of Default" and "-- Voting Rights." The holders of a majority in aggregate
outstanding principal amount of Subordinated Debentures may annul any
declaration of acceleration under the Indenture and waive any default if the
default has been cured and a sum sufficient to pay all matured installments of
interest and principal due otherwise than by acceleration has been deposited
with the Debt Trustee. In the case of the Subordinated Debentures held by the
Institutional Trustee on behalf of the Trust, a waiver of any default shall not
be effective until a majority in liquidation amount of the Trust Securities
shall have consented to such waiver; provided that, if the Indenture requires
the consent of a Super-Majority, such waiver shall be effective only if the
holders of at least the proportion in liquidation amount of the Trust Securities
that the relevant Super-Majority represents of the aggregate principal amount of
the Subordinated Debentures outstanding so consent.
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing, and such event is attributable to the failure of SunTrust to pay
interest or principal on the Subordinated Debentures on the date such interest
or principal is otherwise payable (or in the case of redemption, on the
redemption date), SunTrust acknowledges that a holder of Preferred Securities
may then institute a Direct Action for payment on or after the respective due
date specified in the Subordinated Debentures. Notwithstanding any payment made
to such holder of Preferred Securities by SunTrust in connection with a Direct
Action, SunTrust shall remain obligated to pay principal and interest on the
Subordinated Debentures held by the Trust or the Institutional Trustee of the
Trust, and the rights of SunTrust as holder of the Common Securities shall be
subrogated to the rights of the holder of such Preferred Securities with respect
to payments on the Preferred Securities to the extent of any payments made by
the Company to such holder in any Direct Action. The holders of Preferred
Securities will not be able to exercise directly any other remedy available to
the holders of the Subordinated Debentures.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Preferred Securities in connection with the
involuntary or voluntary dissolution, winding-up or liquidation of the Trust,
the Subordinated Debentures will be issued in the form of one or more global
certificates (each a "Global Security") registered in the name of the Depositary
or its nominee. Except under the limited circumstances described below,
Subordinated Debentures represented by the Global Security will not be
exchangeable for, and will not otherwise be issuable as, Subordinated Debentures
in definitive form. The Global Securities described above may not be transferred
except by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or to a
successor depositary or its nominee.
S-34
<PAGE> 35
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in such a Global
Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Subordinated
Debentures in definitive form and will not be considered the holders (as defined
in the Indenture) thereof for any purpose under the Indenture, and no Global
Security representing Subordinated Debentures shall be exchangeable, except for
another Global Security of like denomination and tenor to be registered in the
name of the Depositary or its nominee or to a successor depositary or its
nominee. Accordingly, each Beneficial Owner must rely on the procedures of the
Depositary or if such person is not a Participant, on the procedures of the
Participant through which such person owns its interest to exercise any rights
of a holder under the Indenture.
THE DEPOSITARY
If Subordinated Debentures are distributed to holders of Preferred
Securities in liquidation of such holders' interests in the Trust, DTC will act
as securities depositary for the Subordinated Debentures. For a description of
DTC and the specific terms of the depositary arrangements, see "Description of
the Preferred Securities -- Book-Entry Only Issuance -- The Depository Trust
Company." As of the date of this Prospectus Supplement, the description therein
of DTC's book-entry system and DTC's practices as they relate to purchases,
transfers, notices and payments with respect to the Preferred Securities apply
in all material respects to any debt obligations represented by one or more
Global Securities held by the Depositary. SunTrust may appoint a successor to
DTC or any successor depositary in the event DTC or such successor depositary is
unable or unwilling to continue as a depositary for the Global Securities.
None of SunTrust, the Trust, the Institutional Trustee, any paying agent
and any other agent of SunTrust, or the Debt Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Security
for such Subordinated Debentures or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
A Global Security shall be exchangeable for Subordinated Debentures
registered in the names of persons other than the Depositary or its nominee only
if (i) the Depositary notifies SunTrust that it is unwilling or unable to
continue as a depositary for such Global Security and no successor depositary
shall have been appointed, (ii) the Depositary, at any time, ceases to be a
clearing agency registered under the Exchange Act at which time the Depositary
is required to be so registered to act as such depositary and no successor
depositary shall have been appointed, (iii) SunTrust, in its sole discretion,
determines that such Global Security shall be so exchangeable or (iv) there
shall have occurred an Indenture Event of Default with respect to such
Subordinated Debentures. Any Global Security that is exchangeable pursuant to
the preceding sentence shall be exchangeable for Subordinated Debentures
registered in such names as the Depositary shall direct. It is expected that
such instructions will be based upon directions received by the Depositary from
its Participants with respect to ownership of beneficial interests in such
Global Security.
GOVERNING LAW
The Indenture and the Subordinated Debentures will be governed by, and
construed in accordance with, the laws of the State of New York.
INFORMATION CONCERNING THE DEBT TRUSTEE
The Debt Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Debt Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Subordinated Debentures, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities that might
be incurred thereby. The Debt Trustee is not required to expend or risk its own
funds or otherwise incur
S-35
<PAGE> 36
personal financial liability in the performance of its duties if the Debt
Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it. The Debt Trustee also serves as the Institutional
Trustee under the Declaration and the Preferred Guarantee Trustee under the
Preferred Securities Guarantee.
MISCELLANEOUS
The Indenture will provide that SunTrust will pay all fees and expenses
related to (i) the offering of the Trust Securities and the Subordinated
Debentures, (ii) the organization, maintenance and dissolution of the Trust,
(iii) the retention of the Trust Trustees and (iv) the enforcement by the
Institutional Trustee of the rights of the holders of the Preferred Securities.
The payment of such fees and expenses will be fully and unconditionally
guaranteed by SunTrust.
EFFECT OF OBLIGATIONS UNDER THE SUBORDINATED DEBENTURES
AND THE PREFERRED SECURITIES GUARANTEE
As set forth in the Declaration, the Trust exists for the exclusive
purposes of (i) issuing the Trust Securities representing undivided beneficial
interests in the assets of the Trust, (ii) investing the gross proceeds of the
Trust Securities in the Subordinated Debentures and (iii) engaging in only those
other activities necessary or incidental thereto.
As long as payments of interest and other payments are made when due on the
Subordinated Debentures, such payments will be sufficient to cover Distributions
and payments due on the Trust Securities because of the following factors: (i)
the aggregate principal amount of Subordinated Debentures will be equal to the
sum of the aggregate stated liquidation amount of the Trust Securities; (ii) the
interest rate and the interest and other payment dates on the Subordinated
Debentures will match the distribution rate and distribution and other payment
dates for the Preferred Securities; (iii) SunTrust shall pay, and the Trust
shall not be obligated to pay, directly or indirectly, all costs, expenses,
debt, and obligations of the Trust (other than with respect to the Trust
Securities); and (iv) the Declaration further provides that the Trust Trustees
shall not take or cause or permit the Trust, among other things, to engage in
any activity that is not consistent with the purposes of the Trust.
Payments of Distributions (to the extent funds are available therefor) and
other payments due on the Preferred Securities (to the extent funds are
available therefor) are guaranteed by SunTrust as and to the extent set forth
under "Description of the Preferred Securities Guarantees" in the accompanying
Prospectus. If SunTrust does not make interest payments on the Subordinated
Debentures purchased by the Trust, the Trust will not have sufficient funds to
pay Distributions on the Preferred Securities. The Preferred Securities
Guarantee does not apply to any payment of Distributions unless and until the
Trust has sufficient funds for the payment of such Distributions. The Preferred
Securities Guarantee covers the payment of Distributions and other payments on
the Preferred Securities if and to the extent that SunTrust has made a payment
of interest or principal on the Subordinated Debentures held by the Trust as its
sole asset. The Preferred Securities Guarantee, when taken together with
SunTrust's obligations under the Subordinated Debentures and the Indenture and
its obligations under the Declaration, including its obligations to pay costs,
expenses, debts and liabilities of the Trust (other than with respect to the
payment of principal of, premium, if any, or interest on the Trust Securities),
provides a full and unconditional guarantee on a subordinated basis of amounts
due on the Preferred Securities.
If SunTrust fails to make interest or other payments on the Subordinated
Debentures when due (taking into account any Extension Period), the Declaration
provides a mechanism whereby the holders of the Preferred Securities, using the
procedures described in "Description of the Preferred Securities -- Book-Entry
Only Issuance -- The Depository Trust Company" and "-- Voting Rights," may
direct the Institutional Trustee to enforce its rights under the Subordinated
Debentures. If the Institutional Trustee fails to enforce its rights under the
Subordinated Debentures, a holder of Preferred Securities may institute a legal
proceeding against SunTrust to enforce the Institutional Trustee's rights under
the Subordinated Debentures without first instituting any legal proceeding
against the Institutional Trustee or any other person or entity. Notwithstanding
the foregoing, if a Declaration Event of Default has occurred and is continuing
and such event is attributable to the failure of SunTrust to pay interest or
principal on the Subordinated Debentures on the date such interest or principal
is otherwise payable (or in the case of redemption on the redemption date), then
a holder of Preferred Securities
S-36
<PAGE> 37
may institute a Direct Action for payment on or after the respective due date
specified in the Subordinated Debentures. In connection with such Direct Action,
SunTrust will be subrogated to the rights of such holder of Preferred Securities
under the Declaration to the extent of any payment made by SunTrust to such
holder of Preferred Securities in such Direct Action. SunTrust, under the
Preferred Securities Guarantee, acknowledges that the Preferred Guarantee
Trustee shall enforce the Preferred Securities Guarantee on behalf of the
holders of the Preferred Securities. If SunTrust fails to make payments under
the Preferred Securities Guarantee, any holder of Preferred Securities may
institute a Direct Action against SunTrust to enforce the Preferred Guarantee
Trustee's rights under the Preferred Securities Guarantee without first
instituting a legal proceeding against the Trust, the Preferred Guarantee
Trustee, or any other person or entity.
S-37
<PAGE> 38
UNITED STATES FEDERAL INCOME TAXATION
GENERAL
The following is a summary of certain United States federal income tax
consequences of the purchase, ownership, and disposition of the Preferred
Securities. Unless otherwise stated, this summary deals only with Preferred
Securities held as capital assets (generally, assets held for investment) by
holders who purchase the Preferred Securities upon original issuance. The tax
treatment of a holder of Preferred Securities may vary depending on such
holder's particular situation. This summary does not address all of the tax
consequences that may be relevant to holders who may be subject to special tax
treatment such as, for example, insurance companies, broker-dealers, tax-exempt
organizations, or, except to the extent described below, foreign taxpayers. In
addition, this summary does not address any aspects of state, local, or foreign
tax laws. This summary is based on the United States federal income tax law in
effect as of the date hereof, which is subject to change, possibly on a
retroactive basis. Each investor is urged to consult his or her tax advisor as
to the particular tax consequences of purchasing, owning, and disposing of the
Preferred Securities, including the application and effect of United States
federal, state, local, foreign, and other tax laws.
CLASSIFICATION OF THE SUBORDINATED DEBENTURES
In connection with the issuance of the Subordinated Debentures, King &
Spalding, special tax counsel to SunTrust and the Trust ("Tax Counsel"), will
render an opinion generally to the effect that under current law and assuming
full compliance with the terms of the Indenture and certain other documents, and
based on certain facts and assumptions contained in such opinion, the
Subordinated Debentures to be held by the Trust will be classified, for United
States federal income tax purposes, as indebtedness of SunTrust.
CLASSIFICATION OF SUNTRUST CAPITAL TRUST
In connection with the issuance of the Preferred Securities, Tax Counsel
will render an opinion generally to the effect that, under current law and
assuming full compliance with the terms of the Declaration, the Indenture, and
certain other documents, and based on certain facts and assumptions contained in
such opinion, the Trust will be classified, for United States federal income tax
purposes, as a grantor trust and not as an association taxable as a corporation.
Accordingly, for United States federal income tax purposes, each holder of
Preferred Securities will generally be treated as the owner of an undivided
interest in the Subordinated Debentures and, as further discussed below, each
holder will be required to include in gross income his or her allocable share of
interest (or OID) paid or accrued on the Subordinated Debentures.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under recently issued Treasury regulations (the "Regulations"), a debt
instrument will be deemed to be issued with OID if there is more than a "remote"
contingency that periodic, stated interest payments due on the instrument will
not be timely paid. Because the exercise by SunTrust of its option to defer the
payment of stated interest on the Subordinated Debentures would prevent SunTrust
from declaring dividends on any class of equity, SunTrust believes that the
likelihood of its exercising the option is "remote" within the meaning of the
Regulations. As a result, SunTrust intends to take the position, based on the
advice of Tax Counsel, that the Subordinated Debentures will not be deemed to be
issued with OID. Accordingly, based on this position, stated interest payments
on the Subordinated Debentures will be includible in the gross income of a
holder at the time that such payments are paid or accrued in accordance with the
holder's regular method of accounting. Because the Regulations have not yet been
addressed in any published rulings or other published interpretations issued by
the Internal Revenue Service, it is possible that the Internal Revenue Service
could take a position contrary to the position taken by the Company.
Exercise of Deferral Option. If SunTrust were to exercise its option to
defer the payment of stated interest on the Subordinated Debentures, the
Subordinated Debentures would be treated, solely for purpose of the OID rules,
as being "re-issued" at such time with OID. Under these rules, a holder of the
Subordinated Debentures would be required to include OID in gross income, on a
current basis, over the period that the instrument is held,
S-38
<PAGE> 39
even though SunTrust would not be making any actual cash payments during the
extended interest payment period. The amount of interest income includible in
the taxable income of a holder of the Subordinated Debentures would be
determined on the basis of a constant yield method over the remaining term of
the instrument and the actual receipt of future payments of stated interest on
the Subordinated Debentures would no longer be separately reported as taxable
income. The amount of OID that would accrue, in the aggregate, during the
extended interest payment period would be approximately equal to the amount of
the cash payment of interest due at the end of such period. Any OID included in
income would increase the holder's adjusted tax basis in the Subordinated
Debentures and the holder's actual receipt of interest payments would reduce
such basis.
Because income on the Preferred Securities will constitute interest income
for United States federal income tax purposes, corporate holders of Preferred
Securities will not be entitled to claim a dividends-received deduction in
respect of such income.
RECEIPT OF SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST
The Company has the right, at any time, to dissolve the Trust and cause the
Subordinated Debentures to be distributed to the holders of the Preferred
Securities in exchange therefor upon liquidation of the Trust. Such right is
subject to the Company's having received prior approval of the Federal Reserve
Board if then required under applicable capital guidelines or policies. If
SunTrust exercises its right to dissolve the Trust and cause the Subordinated
Debentures to be distributed on a pro rata basis to the holders of the Preferred
Securities, such distribution (assuming, as expected, that the Trust is
classified as a grantor trust) should be treated as a nontaxable event to the
holders. In such event, each holder of Preferred Securities would have an
adjusted tax basis in the Subordinated Debentures received in the liquidation
equal to the adjusted tax basis in its Preferred Securities surrendered therefor
and the holding period of the Subordinated Debentures would include the period
during which the holder had held the Preferred Securities. Should there be a
change in law, a change in legal interpretation, a Tax Event or other
circumstances, however, the distribution could be a taxable event to holders of
the Preferred Securities. If the Company elects neither to redeem the
Subordinated Debentures prior to their Stated Maturity nor to dissolve the Trust
and distribute the Subordinated Debentures to holders of the Preferred
Securities in exchange therefor, the Preferred Securities will remain
outstanding until the Stated Maturity of the Subordinated Debentures.
If, however, the Subordinated Debentures are redeemed for cash and the
proceeds of such redemption are distributed to holders in redemption of their
Preferred Securities, the redemption would be treated as a sale of the Preferred
Securities, in which gain or loss would be recognized, as described immediately
below.
SALES OF PREFERRED SECURITIES
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Subordinated Debentures. A holder that disposes of its Preferred Securities
between record dates for payments of Distributions thereon will be required to
include as ordinary income either OID (if applicable) or accrued but unpaid
interest on the Subordinated Debentures through the date of disposition. To the
extent the amount realized is less than a holder's adjusted tax basis, the
holder generally will recognize a capital loss. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is, as to the United
States, a foreign corporation, a nonresident alien individual, a foreign
partnership, or a nonresident fiduciary of a foreign estate or trust.
Payments made to a holder of a Preferred Securities who is a United States
Alien Holder will not be subject to withholding of United States federal income
tax, provided that (a) the beneficial owner of the Preferred Securities does not
actually or constructively (as determined under certain attribution rules
prescribed by the Code) own 10% or more of the total combined voting power of
all classes of stock of SunTrust entitled to vote, (b) the beneficial owner of
the Preferred Securities is not a controlled foreign corporation that is related
to
S-39
<PAGE> 40
SunTrust through stock ownership, and (c) either (A) the beneficial owner of the
Preferred Securities certifies to the Trust or its agent, under the penalty of
perjury, that it is not a United States holder and provides its name and address
or (B) a securities clearing organization, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or business
(a "Financial Institution"), and holds the Preferred Securities in such
capacity, certifies to the Trust or its agent, under the penalty of perjury,
that such statement has been received from the beneficial owner by it or by a
Financial Institution between it and the beneficial owner and furnishes the
Trust or its agent with a copy thereof. In addition, a United States Alien
Holder of Preferred Securities will not be subject to withholding of United
States federal income tax on any gain realized upon the sale or other
disposition of a Preferred Security.
PROPOSED TAX LEGISLATION
On February 6, 1997, the revenue portion of the Budget Proposal was
released. If enacted, the Budget Proposal would generally deny deductions for
interest or OID on an instrument issued by a corporation that has a maximum
weighted average maturity of more than 40 years. The Budget Proposal also
generally would deny deductions for interest or OID on an instrument issued by a
corporation that has a maximum term of more than 15 years and that is not shown
as indebtedness on the separate balance sheet of the issuer filed with the SEC.
For purposes of the preceding sentence, in the case of an instrument with a
maximum term of more than 15 years issued to a related party (other than a
corporation) that is eliminated in the consolidated balance sheet that includes
the issuer and the holder, the issuer will be treated as having characterized
the instrument as equity if the holder or some other related party issues a
related instrument that is not shown as indebtedness on the consolidated balance
sheet filed with the SEC. The above described provisions of the Budget Proposal
are proposed to be effective generally for instruments issued on or after the
date of first Congressional committee action on the Budget Proposal. Since the
Subordinated Debentures cannot have a term exceeding 40 years, the first of the
above described budget proposals would be inapplicable. Furthermore, since
SunTrust intends to report the Preferred Securities as indebtedness on its
consolidated balance sheet filed with the SEC, the Budget Proposal as currently
drafted would not appear to apply to the Subordinated Debentures. Additionally,
the Budget Proposal would not apply to the Subordinated Debentures if they are
issued prior to the date of the first Congressional committee action on the
Budget Proposal. There can be no assurance, however, that similar legislation
which would apply to the Subordinated Debentures will not be enacted, and such
legislation could be retroactive in effect. If any such legislation were
enacted, the Company would be unable to deduct interest on the Subordinated
Debentures. Such a change could give rise to a Tax Event, which would permit the
Company to cause a redemption of the Preferred Securities before June 15, 2007.
See "Description of the Preferred Securities -- Tax Event and Capital Treatment
Event Redemption," "-- Mandatory Redemption" and "Description of the
Subordinated Debentures -- Optional Redemption."
INFORMATION REPORTING TO HOLDERS
Interest paid on the Subordinated Debentures, or the amount of OID accruing
on the Subordinated Debentures (if any), deemed held of record by individual
citizens or residents of the United States, or certain trusts, estates, and
partnerships, will be reported to the Internal Revenue Service on Forms 1099,
which forms should be mailed to such holders of Preferred Securities by January
31 following each calendar year. Payments made on, and proceeds from the sale
of, the Preferred Securities may be subject to a "backup" withholding tax
(currently at 31%) unless the holder complies with certain identification and
other requirements. Any amounts withheld under the backup withholding rules will
be allowed as a credit against the holder's United States federal income tax
liability, provided that the required information is furnished to the Internal
Revenue Service.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA")
and the Code impose certain restrictions on (a) employee benefit plans (as
defined in Section 3(3) of ERISA which are subject to the fiduciary
responsibility provisions of Part 4 of Title I of ERISA), (b) plans described in
Section 4975(e)(1) of the Code, including individual retirement accounts and
plans maintained for self-employed individuals, (c) any entities whose
underlying assets include plan assets by reason of a plan's investment in such
entities (each plan
S-40
<PAGE> 41
and entity described in (a), (b) and this (c) being a "Plan") and on (d) persons
who have certain relationships to any such Plan which are defined in ERISA and
the Code (each such person being a "party in interest" under ERISA and a
"disqualified person" under the Code). ERISA also imposes duties on a person who
is a fiduciary with respect to a Plan which is subject to ERISA and makes any
such person liable for a violation of such duty, and ERISA and the Code prohibit
certain transactions between a Plan and a party in interest or a disqualified
person with respect to such Plan and can impose sanctions on any party in
interest or disqualified person who engages in any such transactions.
The Company (the obligor with respect to the Subordinated Debentures held
by the Trust) and its affiliates and the Institutional Trustee may be a party in
interest or a disqualified person with respect to a Plan which purchases or
holds Preferred Securities, and a prohibited transaction under ERISA and the
Code includes a direct or indirect loan or other extension of credit between a
Plan and a party in interest or a disqualified person with respect to such Plan.
Thus, a purchase or holding of Preferred Securities by a Plan may constitute or
result in a prohibited transaction under ERISA or Section 4975 of the Code,
unless such Preferred Securities are acquired pursuant to and in accordance with
an applicable class prohibited transaction exemption, such as Prohibited
Transaction Class Exemption ("PTCE") 84-14 (an exemption for certain
transactions determined by an independent qualified professional asset manager),
PTCE 91-38 (an exemption for certain transactions involving bank collective
investment funds), PTCE 90-1 (an exemption for certain transactions involving
insurance company pooled separate accounts), PTCE 95-60 (an exemption for
transactions involving certain insurance company general accounts) or PTCE 96-23
(an exemption for certain transactions determined by an in-house asset manager).
Any purchaser or holder of the Preferred Securities or any interest therein will
be deemed to have represented by its purchase and holding thereof that either
(a) it is not a Plan or an entity whose underlying assets include "plan assets"
by reason of any Plan's investment in that entity and is not purchasing such
securities on behalf of or with "plan assets" of any Plan or (b) such purchase
or holding is exempt from the prohibited transaction provisions of ERISA and the
Code under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 with respect to such purchase
or holding.
In addition, a Plan fiduciary considering the purchase of Preferred
Securities should be aware that the assets of the Trust may be considered "plan
assets" of the Plan under ERISA unless the Preferred Securities meet the
conditions for the "publicly offered security" exception to the Department of
Labor's plan asset regulations as set forth in 29 CFR sec. 2510.3-101. This
exception (in relevant part) requires that the Preferred Securities (i) be
freely transferable, (ii) be a part of a class of securities that is widely held
and (iii) be sold to the Plan as part of an offering of securities to the public
pursuant to an effective registration statement under the Securities Act of 1933
and be registered under the Exchange Act within the time period prescribed in
these regulations. Whether a security is freely transferable is a facts and
circumstances question. On the other hand, a class of securities will be deemed
to be widely held only if it is a class of securities that is owned by 100 or
more investors independent of the issuer and one another. While the Preferred
Securities will be sold pursuant to an effective registration statement under
the Securities Act of 1933 and while the Company proposes to register such
securities under the Exchange Act; no assurance can be made that the Preferred
Securities will satisfy all the conditions to this exemption.
In the event that the "publicly offered securities" exception were not
available and the assets of the Trust were, accordingly, deemed to be "plan
assets" of each Plan that invests in the Preferred Securities, the Institutional
Trustee, as well as any other person who exercises any discretion with respect
to the Subordinated Debentures, could be a fiduciary and party in interest with
respect to the investing Plan. In an effort to avoid certain additional
prohibited transactions under ERISA and the Code that could thereby result, each
investing Plan, by purchasing the Preferred Securities, will be deemed to have
directed the Trust to invest in the Subordinated Debentures and to have
appointed the Institutional Trustee. In this regard, it should be noted that, in
the event of a Declaration Event of Default, the Company may not remove the
Institutional Trustee. Any Plan fiduciary proposing to acquire Preferred
Securities for any Plan should consult with its counsel before effecting such
purchase.
S-41
<PAGE> 42
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement"), the form of which has been filed as an exhibit
to the Registration Statement of which this Prospectus Supplement and the
accompanying Prospectus form a part, SunTrust Capital Trust has agreed to sell
to Salomon Brothers Inc, and Salomon Brothers Inc has agreed to purchase, all of
the Preferred Securities. In the Underwriting Agreement, Salomon Brothers Inc
has agreed, subject to the terms and conditions set forth therein, to purchase
all the Preferred Securities offered hereby if any of the Preferred Securities
are purchased.
Salomon Brothers Inc proposes to offer the Preferred Securities, in part,
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus Supplement, and, in part, to certain securities
dealers at such price less a concession not in excess of $6.00 per Preferred
Security. Salomon Brothers Inc may allow, and such dealers may reallow, a
discount not in excess of $2.50 per Preferred Security to certain other dealers.
After the Preferred Securities are released for sale to the public, the offering
price and other selling terms may from time to time be varied by Salomon
Brothers Inc.
In view of the fact that the proceeds of the sale of the Preferred
Securities will ultimately be used to purchase the Subordinated Debentures of
SunTrust, the Underwriting Agreement provides that SunTrust will pay as
compensation ("Underwriters' Compensation") to Salomon Brothers Inc an amount in
immediately available funds of $10.00 per Preferred Security (or $2,500,000 in
the aggregate).
Salomon Brothers Inc may not confirm sales to any accounts over which it
exercises discretionary authority without the prior approval of the transaction
by the customer.
During the period from the date of the Underwriting Agreement and
continuing to and including the closing date for the sale of the Preferred
Securities, neither SunTrust Capital Trust nor SunTrust will, without the prior
written consent of Salomon Brothers Inc, directly or indirectly, sell, offer to
sell, or otherwise dispose of, any Preferred Securities, any other beneficial
interests in the assets of the Trust, or any preferred securities or any other
securities of the Trust or SunTrust that are substantially similar to the
Preferred Securities, including any guarantee of such securities (except for the
Preferred Securities offered hereby).
A portion of the Preferred Securities may be offered by Salomon Brothers
Inc directly or through its representative selling agents outside the United
States. Investors may elect to hold beneficial interests in the Preferred
Securities through either DTC (in the United States), Cedel or Euroclear
(outside the United States), if they are participants of such systems, or
indirectly through organizations which are participants in such systems.
The Preferred Securities are a new issue of securities with no established
trading market. The Trust does not intend to apply for listing of the Preferred
Securities on a national securities exchange, but has been advised by Salomon
Brothers Inc that it presently intends to make a market in the Preferred
Securities as permitted by applicable laws and regulations. Salomon Brothers Inc
is not obligated, however, to make a market in the Preferred Securities and any
such market-making may be discontinued at any time at the sole discretion of
Salomon Brothers Inc. Accordingly, no assurance can be given as to the liquidity
of, or trading markets for, the Preferred Securities.
SunTrust Capital Trust and SunTrust have agreed to indemnify Salomon
Brothers Inc against, or contribute to payments that Salomon Brothers Inc may be
required to make in respect of, certain liabilities, including liabilities under
the Securities Act of 1933, as amended.
Salomon Brothers Inc may engage in stabilizing transactions, syndicate
covering transactions and penalty bids in accordance with Rule 104 under the
Exchange Act. Stabilizing transactions permit bids to purchase the underlying
security so long as the stabilizing bids do not exceed a specified maximum.
Syndicate covering transactions involve purchases of the Preferred Securities in
the open market after the distribution has been completed in order to cover
syndicate short positions. Penalty bids permit such managing underwriter to
reclaim a selling concession from a syndicate member when the Preferred
Securities originally sold by such syndicate member are purchased in a syndicate
covering transaction to cover syndicate short positions. Such stabilizing
transactions, syndicate covering transactions and penalty bids may cause the
price of the Preferred Securities to be higher than it would otherwise be in the
absence of such transactions.
S-42
<PAGE> 43
Salomon Brothers Inc engages in transactions with, and, from time to time,
performed services for, SunTrust and its subsidiaries in the ordinary course of
business.
LEGAL MATTERS
The validity of the Subordinated Debentures and the Preferred Securities
Guarantee will be passed upon for SunTrust by King & Spalding, New York, New
York. Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon for SunTrust Capital Trust by Skadden, Arps,
Slate, Meagher & Flom LLP, special Delaware counsel to SunTrust Capital Trust.
Certain United States income taxation matters will be passed upon for SunTrust
and SunTrust Capital Trust by King & Spalding, Atlanta, Georgia. Certain other
legal matters will be passed upon for SunTrust by Raymond D. Fortin, Senior Vice
President and Counsel of SunTrust. Certain legal matters will be passed upon for
Salomon Brothers Inc by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New
York. As of December 31, 1996, Raymond D. Fortin was the record and beneficial
owner of 20,800 shares of common stock of SunTrust and held options to purchase
3,000 shares of common stock of SunTrust.
S-43
<PAGE> 44
PROSPECTUS
SUNTRUST BANKS, INC.
SUBORDINATED DEBT SECURITIES
---------------------------
SUNTRUST CAPITAL I
SUNTRUST CAPITAL II
PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED BY
SUNTRUST BANKS, INC.
---------------------------
SunTrust Banks, Inc., a Georgia corporation ("SunTrust" or the "Company"),
may offer from time to time, in one or more series, subordinated debt securities
consisting of debentures, notes or other evidences of indebtedness (the
"Subordinated Debt Securities") in amounts, at prices and on terms to be
determined at the time of such offering. The Subordinated Debt Securities when
issued will be unsecured obligations of the Company. The Company's obligations
under the Subordinated Debt Securities will be subordinate and junior in right
of payment to certain other indebtedness, as may be described in a prospectus
supplement (a "Prospectus Supplement") accompanying this prospectus (the
"Prospectus").
SunTrust Capital I and SunTrust Capital II (each, a "SunTrust Capital
Trust"), each a statutory business trust formed under the laws of the State of
Delaware, may offer and sell, from time to time, preferred securities,
representing beneficial ownership interests in the assets of the respective
SunTrust Capital Trust ("Preferred Securities"). The Company will be the owner
of the common securities (the "Common Securities," and together with the
Preferred Securities, the "Trust Securities") representing beneficial ownership
interests in the assets of such SunTrust Capital Trusts. The payment of periodic
cash distributions ("distributions") with respect to Preferred Securities of a
SunTrust Capital Trust out of moneys held by such SunTrust Capital Trust, and
payments on liquidation, redemption or otherwise with respect to such Preferred
Securities, will be guaranteed by SunTrust to the extent described herein (each
a "Preferred Securities Guarantee"). See "Description of the Preferred
Securities Guarantees." SunTrust's obligations under the Preferred Securities
Guarantees will be subordinate and junior in right of payment to certain other
indebtedness of SunTrust as may be described in an accompanying Prospectus
Supplement. Subordinated Debt Securities may be issued and sold from time to
time in one or more series to a SunTrust Capital Trust, or a trustee of such
SunTrust Capital Trust, in connection with the investment of the proceeds from
the offering of Preferred Securities and Common Securities of such SunTrust
Capital Trust. The Subordinated Debt Securities purchased by a SunTrust Capital
Trust may be subsequently distributed pro rata to holders of Trust Securities in
connection with the dissolution of such SunTrust Capital Trust as may be
described in an accompanying Prospectus Supplement. The Subordinated Debt
Securities and the Preferred Securities and the related Preferred Securities
Guarantees are sometimes collectively referred to hereafter as the "Offered
Securities."
Specific terms of the Subordinated Debt Securities of any series or the
Preferred Securities of any SunTrust Capital Trust, the terms of which will
mirror the terms of the Subordinated Debt Securities held by such SunTrust
Capital Trust in respect of which this Prospectus is being delivered, will be
set forth in the Prospectus Supplement with respect to such securities, which
will describe, without limitation and where applicable, the following: (i) in
the case of
(Continued on next page)
---------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------------
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR SAVINGS ACCOUNTS AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY OR INSTRUMENTALITY.
The date of this Prospectus is May 6, 1997
<PAGE> 45
(continued from previous page)
Subordinated Debt Securities, the specific designation, aggregate principal
amount, denomination, maturity, premium, if any, any exchange, redemption or
sinking fund provisions, if any, interest rate (which may be fixed or variable),
if any, the time and method of calculating interest payments, if any, dates on
which premium and interest will be payable, the right of SunTrust, if any, to
defer payment of interest on the Subordinated Debt Securities and the maximum
length of such deferral period, the initial public offering price, subordination
terms, and any listing on a securities exchange and other specific terms of the
offering; and (ii) in the case of Preferred Securities, the designation, number
of securities, liquidation preference per security, initial public offering
price, any listing on a securities exchange, distribution rate (or method of
calculation thereof), dates on which distributions will be payable and dates
from which distributions shall accrue, any voting rights, terms for any exchange
into other securities, any redemption, exchange or sinking fund provisions, any
other rights, preferences, privileges, limitations or restrictions relating to
the Preferred Securities and the terms upon which the proceeds of the sale of
the Preferred Securities shall be used to purchase a specific series of
Subordinated Debt Securities of SunTrust. If so specified in the Prospectus
Supplement, Offered Securities may be issued in whole or in part in the form of
one or more temporary or permanent global securities ("Global Securities"). If,
as set forth in a Prospectus Supplement, the Company has the right to defer
payments of interest on a series of Subordinated Debt Securities by extending
the interest payment period of such series of Subordinated Debt Securities, and
the Company exercises that right, distributions on the corresponding series of
Preferred Securities will also be deferred.
If, as set forth in a Prospectus Supplement, the Company has the right to
defer payments of interest on a series of Subordinated Debt Securities by
extending the interest payment period of such series of Subordinated Debt
Securities, and the Company exercises that right, distributions on the
corresponding series of Preferred Securities will also be deferred.
The Offered Securities may be offered in amounts, at prices and on terms to
be determined at the time of offering. The Prospectus Supplement relating to any
series of Offered Securities will contain information concerning the United
States federal income tax considerations applicable to the Offered Securities.
SunTrust and/or each of the SunTrust Capital Trusts may sell the Offered
Securities directly to purchasers, through agents designated from time to time,
to dealers or through underwriters or a group of underwriters. If any agents of
SunTrust and/or any SunTrust Capital Trust or any underwriters or dealers are
involved in the sale of the Offered Securities, the names of such agents,
underwriters or dealers and any applicable commissions and discounts will be set
forth in the related Prospectus Supplement.
This Prospectus may not be used to consummate sales of securities unless
accompanied by a Prospectus Supplement.
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS
SUPPLEMENT IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS OR ANY
ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY SUNTRUST,
ANY SUNTRUST CAPITAL TRUST OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS
PROSPECTUS OR ANY ACCOMPANYING PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER
AND THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF SUNTRUST OR ANY SUNTRUST CAPITAL TRUST
SINCE THE DATE HEREOF OR THEREOF. NEITHER THIS PROSPECTUS NOR ANY ACCOMPANYING
PROSPECTUS SUPPLEMENT CONSTITUTES AN OFFER OR SOLICITATION BY ANYONE IN ANY
STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
---------------------
2
<PAGE> 46
AVAILABLE INFORMATION
This Prospectus constitutes a part of the Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") filed by SunTrust and the SunTrust Capital Trusts with the
Securities and Exchange Commission (the "SEC" or the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Offered Securities. This Prospectus does not contain all of the information set
forth in such Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the SEC, although it does include a
summary of the material terms of the Indenture (as defined herein) and the
Declaration of Trust (as defined herein) of each SunTrust Capital Trust to be
used in connection with the issuance of Subordinated Debt Securities and
Preferred Securities, respectively. Reference is made to such Registration
Statement and to the exhibits thereto for further information with respect to
the Company, the SunTrust Capital Trusts and the Offered Securities. Any
statements contained herein concerning the provisions of any document filed as
an exhibit to the Registration Statement or otherwise filed with the SEC or
incorporated by reference herein are not necessarily complete, and, in each
instance, reference is made to the copy of such document filed as an exhibit to
the Registration Statement. Each such statement is qualified in its entirety by
such reference.
SunTrust is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements and other information with the SEC.
Such reports, proxy statements and other information concerning the Company can
be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549 and at the Commission's Regional Offices in New York (13th Floor, 7
World Trade Center, New York, New York 10048) and Chicago (Suite 1400, 500 West
Madison Street, Chicago, Illinois 60661-2511). The Commission also maintains a
Web site at http://www.sec.gov. that contains reports, proxy statements and
other information regarding registrants that file electronically with the
Commission. In addition, such reports, proxy statement and other information
concerning the Company can be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
No separate financial statements of the SunTrust Capital Trusts have been
included herein. SunTrust does not consider that such financial statements would
be material to holders of the Preferred Securities because (i) all of the voting
securities of the SunTrust Capital Trusts will be owned, directly or indirectly,
by SunTrust, a reporting company under the Exchange Act, (ii) the SunTrust
Capital Trusts have no independent operations and exist for the sole purpose of
issuing securities representing undivided beneficial interests in their
respective assets and investing the proceeds thereof in Subordinated Debt
Securities issued by SunTrust, and (iii) SunTrust's obligations described herein
and in any accompanying Prospectus Supplement to provide certain indemnities in
respect of and be responsible for certain costs, expenses, debts and liabilities
of each of the SunTrust Capital Trusts under the Indenture and any supplemental
indenture thereto and pursuant to the applicable Declaration of Trust, the
applicable Preferred Securities Guarantee issued with respect to Preferred
Securities issued by such SunTrust Capital Trust, the Subordinated Debt
Securities purchased by such SunTrust Capital Trust and the Indenture, taken
together, constitute a full and unconditional guarantee of payments due on the
Preferred Securities. See "Description of the Subordinated Debt Securities" and
"Description of the Preferred Securities Guarantees."
The SunTrust Capital Trusts are not currently subject to the informational
requirements of the Exchange Act. The SunTrust Capital Trusts will become
subject to such requirements upon the effectiveness of the Registration
Statement, although they intend to seek and expect to receive exemptions
therefrom.
3
<PAGE> 47
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this Prospectus its Annual
Report on Form 10-K for the year ended December 31, 1996.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of the offering of the Offered Securities shall be deemed to be
incorporated by reference into this Prospectus and shall be deemed a part hereof
from the date of filing of such documents. Any statement contained in this
Prospectus or any accompanying Prospectus Supplement or in a document
incorporated or deemed to be incorporated by reference herein or therein shall
be deemed to be modified or superseded for purposes of this Prospectus or such
accompanying Prospectus Supplement to the extent that a statement contained
herein or therein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein or therein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of the
Registration Statement or this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the documents incorporated by reference herein, except for
exhibits to such documents unless such exhibits are specifically incorporated by
reference into such documents. Written requests for any such documents should be
sent to: James C. Armstrong, First Vice President -- Investor Relations,
SunTrust Banks, Inc., 303 Peachtree Street, N.E., Atlanta, Georgia 30308.
Telephone requests may be directed to 404-588-7425.
4
<PAGE> 48
THE COMPANY
GENERAL
The Company is a regional bank holding company which, through its
subsidiary banks (the "Subsidiary Banks"), conducts a broad range of commercial
banking activities, including accepting demand, time and saving deposits, making
secured and unsecured business and consumer loans and leases, extending
commercial lines of credit, issuing and servicing credit cards and certain other
types of revolving credit accounts, providing commercial factoring services,
cash management services, investment counseling, safe deposit services, personal
and corporate trust and other fiduciary services and engaging in leasing,
mortgage banking, correspondent banking, international banking, investment
banking, trading in U.S. government securities and municipal bonds and
underwriting certain types of general obligation municipal bonds.
Under the longstanding policy of the Federal Reserve Board, a bank holding
company is expected to act as a source of financial strength for its subsidiary
banks and to commit resources to support such banks. As a result of this policy,
the Company may be required to commit resources to the Subsidiary Banks in
circumstances where it might not otherwise do so.
Because the Company is a holding company, its rights and the rights of its
creditors, including the holders of the Subordinated Debt Securities and the
Preferred Securities Guarantees, to participate in the distribution and payment
of assets of any subsidiary upon the subsidiary's liquidation or
recapitalization would be subject to the prior claims of such subsidiary's
creditors except to the extent that the Company may itself be a creditor with
recognized claims against the subsidiary.
The Company's principal executive offices are located at 303 Peachtree
Street, N.E., Atlanta, Georgia 30308, and its telephone number is 404-588-7711.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the consolidated ratio of earnings to fixed
charges of the Company. The consolidated ratio of earnings to fixed charges has
been computed by dividing (i) net income plus all applicable income taxes plus
fixed charges by (ii) fixed charges. Fixed charges represent interest expense
(ratios are presented both including and excluding interest on deposits), and
the portion of net rental expense which is deemed to be equivalent to interest
on long-term debt. Interest expense (other than on deposits) includes interest
on long-term debt, federal funds purchased and securities sold under agreements
to repurchase, mortgages, commercial paper and other funds borrowed.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1996 1995 1994 1993 1992
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Including interest on deposits............................. 1.61x 1.61x 1.83x 1.87x 1.58x
Excluding interest on deposits............................. 3.30x 3.20x 4.24x 5.07x 4.70x
</TABLE>
THE TRUSTS
Each SunTrust Capital Trust is a statutory business trust formed under
Delaware law pursuant to (i) a separate declaration of trust (each a
"Declaration") executed by the Company, as sponsor for such trust (the
"Sponsor"), and the Trust Trustees (as defined herein) for such trust and (ii)
the filing of a certificate of trust with the Delaware Secretary of State. Each
SunTrust Capital Trust exists for the exclusive purposes of (i) issuing its
Preferred Securities and Common Securities, (ii) investing the gross proceeds of
such Trust Securities in the Subordinated Debt Securities and (iii) engaging in
only those other activities necessary or incidental thereto. The Common
Securities of a SunTrust Capital Trust will rank pari passu, and payments will
be made thereon pro rata, with the Preferred Securities of such SunTrust Capital
Trust except that upon an event of default under the related Declaration, the
rights of the holders of the Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the
5
<PAGE> 49
Preferred Securities. The Company will, directly or indirectly, acquire Common
Securities in an aggregate liquidation amount equal to at least 3% of the total
capital of each SunTrust Capital Trust.
The number of trustees of each SunTrust Capital Trust (the "Trust
Trustees") shall initially be five. The duties and obligations of the Trust
Trustees shall be governed by the Declaration of such SunTrust Capital Trust.
Three of such Trust Trustees will be employees or officers of, or affiliated
with, the Company (the "Regular Trustees"). The fourth of such Trust Trustees
will be a financial institution that will be unaffiliated with the Company and
will act as property trustee and as indenture trustee for purposes of the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), pursuant to the
terms set forth in a Prospectus Supplement (the "Institutional Trustee"). In
addition, unless the Institutional Trustee maintains a principal place of
business in the State of Delaware, and otherwise meets the requirements of
applicable law, one Trust Trustee of each SunTrust Capital Trust will have its
principal place of business or reside in the State of Delaware (the "Delaware
Trustee"). The Company will pay all fees and expenses related to the SunTrust
Capital Trusts and the offering of Trust Securities, the payment of which will
be guaranteed by the Company. No amendment or modification may be made to the
Declaration of a Trust that would adversely affect the powers, preferences or
special rights of the Trust Securities issued thereby without the approval of
the holders of a majority in liquidation amount of such Trust Securities. If any
such amendment or modification would adversely affect only the Preferred
Securities or the Common Securities, then only the affected class will be
entitled to vote on such amendment or modification and such amendment or
modification shall not be effective except with the approval of the holders of a
majority in liquidation amount of such class of Trust Securities.
The First National Bank of Chicago ("First Chicago") will act as indenture
trustee for purposes of the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), pursuant to the terms set forth in the Prospectus Supplement
(the "Institutional Trustee") and First Chicago Delaware Inc. will act as the
Delaware Trustee for each SunTrust Capital Trust. The office of the Delaware
Trustee in the State of Delaware is 300 King Street, Wilmington, Delaware 19801.
The principal executive offices of each SunTrust Capital Trust are located at
303 Peachtree Street, N.E., Atlanta, Georgia 30308, and the telephone number of
each SunTrust Capital Trust is 404-588-7711.
USE OF PROCEEDS
Each SunTrust Capital Trust will use all proceeds received from the sale of
the Preferred Securities to purchase Subordinated Debt Securities from the
Company. Except as otherwise set forth in the applicable Prospectus Supplement,
the Company intends to use the proceeds from the sale of its Subordinated Debt
Securities for general corporate purposes, including investments in, or loans
to, its subsidiaries, refinancing of debt, including outstanding commercial
paper and other short-term indebtedness, redemption or repurchase of shares of
its outstanding common and preferred stock, the satisfaction of other
obligations, the purchase of trust-originated capital securities or for such
other purposes as may be specified in the applicable Prospectus Supplement.
DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES
Subordinated Debt Securities may be issued from time to time in one or more
series under an Indenture, which term includes all supplements thereto (the
"Indenture"), to be entered into by the Company and First Chicago, as trustee
(the "Debt Trustee"). The terms of such Subordinated Debt Securities will
include those stated in the Indenture, which shall be filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and those made
part of the Indenture by the Trust Indenture Act. The following summary of the
material terms of the Indenture does not purport to be complete and is subject
in all respects to the provisions of, and is qualified in its entirety by
reference to, the Indenture and the Trust Indenture Act. Whenever particular
provisions or defined terms in the Indenture are referred to herein, such
provisions or defined terms are incorporated by reference herein.
6
<PAGE> 50
GENERAL
The Subordinated Debt Securities will be unsecured, subordinated
obligations of the Company. The Indenture does not limit the aggregate principal
amount of Subordinated Debt Securities that may be issued thereunder and
provides that the Subordinated Debt Securities may be issued from time to time
in one or more series. The Subordinated Debt Securities are issuable in one or
more series pursuant to an indenture supplemental to the Indenture or a
resolution of the Company's Board of Directors or a committee appointed thereby
(each, a "Supplemental Indenture").
In the event Subordinated Debt Securities are issued to a SunTrust Capital
Trust or a Trust Trustee thereof in connection with the issuance of Trust
Securities by such SunTrust Capital Trust, such Subordinated Debt Securities
subsequently may be distributed pro rata to the holders of such Trust Securities
in connection with the dissolution of such SunTrust Capital Trust as described
in the Prospectus Supplement relating to such Trust Securities. Only one series
of Subordinated Debt Securities will be issued to a SunTrust Capital Trust or a
Trust Trustee thereof in connection with the issuance of Trust Securities by
such SunTrust Capital Trust.
Reference is made to the Prospectus Supplement relating to the particular
series of Subordinated Debt Securities being offered thereby for the following
terms: (i) the title of the Subordinated Debt Securities; (ii) any limit upon
the aggregate principal amount of the Subordinated Debt Securities that may be
authenticated and delivered under the Indenture; (iii) the date or dates on
which the principal of and premium, if any, on the Subordinated Debt Securities
is payable; (iv) the rate or rates at which the Subordinated Debt Securities
shall bear interest, if any, or the method by which such interest may be
determined, the date or dates from which such interest shall accrue, the
interest payment dates on which such interest shall be payable or the manner of
determination of such interest payment dates and the record dates for the
determination of holders to whom interest is payable on any such interest
payment dates; (v) the place or places where the principal of, premium, if any,
and any interest on the Subordinated Debt Securities shall be payable; (vi) the
right, if any, to extend the interest payment periods and the duration of such
extension; (vii) the price or prices at which, the period or periods within
which, the event or events giving rise to, and the terms and conditions upon
which, Subordinated Debt Securities may be redeemed, in whole or in part, at the
option of the Company, pursuant to any sinking fund or otherwise; (viii) the
obligation, if any, of the Company to redeem or purchase the Subordinated Debt
Securities pursuant to any sinking fund or analogous provisions or at the option
of a holder thereof and the price or prices at which, and the period or periods
within which, and the terms and conditions upon which, Subordinated Debt
Securities shall be redeemed, purchased or repaid, in whole or in part, pursuant
to such obligation; (ix) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which the Subordinated Debt Securities
shall be issuable; (x) any event of default with respect to the Subordinated
Debt Securities, if not set forth in the Indenture; (xi) the form of the
Subordinated Debt Securities including the form of the certificate of
authentication; (xii) any trustee, authenticating or paying agent, warrant
agent, transfer agent or registrar with respect to the Subordinated Debt
Securities; (xiii) whether the Subordinated Debt Securities shall be issued in
whole or in part in the form of one or more Global Securities and, in such case,
the Global Depositary (as defined herein) for such Global Security or Global
Securities, and certain other matters relating to such Global Securities; and
(xiv) any other terms of the series.
If a Prospectus Supplement specifies that a series of Subordinated Debt
Securities is denominated in a currency or currency unit other than United
States dollars, such Prospectus Supplement shall also specify the denomination
in which such Subordinated Debt Securities will be issued and the coin or
currency in which the principal of, premium, if any, and interest, if any, on,
such Subordinated Debt Securities will be payable, which may be United States
dollars based upon the exchange rate for such other currency or currency unit
existing on or about the time a payment is due.
The Indenture does not contain provisions that would afford holders of the
Subordinated Debt Securities protection in the event of a highly leveraged
transaction or other similar transaction involving SunTrust that may adversely
affect such holders.
7
<PAGE> 51
FORM, EXCHANGE, REGISTRATION, TRANSFER AND PAYMENT
Unless otherwise specified in a Prospectus Supplement, the Subordinated
Debt Securities will be issued in fully registered form without coupons and in
denominations of $1,000 and integral multiples of $1,000. No service charge will
be made for any transfer or exchange of the Subordinated Debt Securities, but
the Company or the Debt Trustee may require payment of a sum sufficient to cover
any tax or other government charge payable in connection therewith.
Unless otherwise provided in a Prospectus Supplement, principal, premium,
if any, or interest, if any, will be payable and the Subordinated Debt
Securities may be surrendered for payment or transferred at the offices of the
Debt Trustee as paying and authenticating agent, provided that payment of
interest, if any, may be made at the option of the Company (i) by check mailed
to the address of the person entitled thereto as it appears in the Security
Register or (ii) by wire transfer to an account maintained by the person
entitled thereto as specified in the applicable Security Register.
BOOK-ENTRY SUBORDINATED DEBT SECURITIES
The Subordinated Debt Securities of a series may be issued in whole or in
part in the form of one or more Global Securities that will be deposited with,
or on behalf of, a depositary (the "Global Depositary") or its nominee,
identified in the Prospectus Supplement relating to such series. In such case,
one or more Global Securities will be issued in a denomination or aggregate
denomination equal to the portion of the aggregate principal amount of
Outstanding Subordinated Debt Securities of the series to be represented by such
Global Security or Securities. Unless and until it is exchanged in whole or in
part for Subordinated Debt Securities in definitive registered form, a Global
Security may not be registered for transfer or exchange except as a whole by the
Global Depositary for such Global Security to a nominee for such Global
Depositary and except in the circumstances described in the applicable
Prospectus Supplement.
The specific terms of the depositary arrangement with respect to any
portion of a series of Subordinated Debt Securities to be represented by a
Global Security and a description of the Global Depositary will be provided in
the Prospectus Supplement.
SUBORDINATION
The Subordinated Debt Securities will be subordinated and junior in right
of payment to certain other indebtedness of the Company (which may include both
senior and subordinated indebtedness for money borrowed) to the extent set forth
in a Prospectus Supplement.
CERTAIN COVENANTS OF THE COMPANY
The Company has covenanted that it will not, and will not permit any
subsidiary of the Company to, (i) declare or pay any dividends or distributions
on, or prepay, purchase, acquire, or make a liquidation payment with respect to,
any of SunTrust's capital stock, (ii) make any payment of principal of, premium,
if any, or interest on, or repay, repurchase or redeem any debt securities of
the Company (including other Subordinated Debt Securities) that rank pari passu
with, or junior in right of payment to, the Subordinated Debt Securities or
(iii) make any guarantee payment with respect to any guarantee by the Company of
debt securities of any subsidiary of the Company if such guarantee ranks pari
passu with, or junior in right of payment to, the Subordinated Debt Securities
(other than (a) dividends, distributions, redemptions, purchases or acquisitions
made by the Company by way of issuance of its capital stock (or options,
warrants or other rights to subscribe therefor), (b) any declaration of a
dividend in connection with the implementation of a shareholders' rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the Preferred
Securities Guarantee or Common Securities Guarantee relating to Trust Securities
issued by the SunTrust Capital Trust holding the Subordinated Debt Securities,
(d) the purchase of fractional shares resulting from a reclassification of the
Company's capital stock, (e) the purchase of fractional interests in shares of
the Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (f) purchases
of common stock related to the issuance of common stock or rights under any of
the Company's benefit plans for its directors, officers or
8
<PAGE> 52
employees and (g) obligations under any of the Company's dividend reinvestment
or stock purchase plans), if at such time (i) there shall have occurred any
event of which the Company has actual knowledge that (a) with the giving of
notice or the lapse of time, or both, would constitute an "Event of Default"
under the Indenture with respect to the Subordinated Debt Securities of such
series and (b) in respect of which the Company shall not have taken reasonable
steps to cure, (ii) if such Subordinated Debt Securities are held by the
Institutional Trustee, the Company shall be in default with respect to its
payment of obligations under the Preferred Securities Guarantee or Common
Securities Guarantee relating to such SunTrust Capital Trust or (iii) the
Company shall have given notice of its election of the exercise of its right to
defer payment of interest on such Subordinated Debt Securities by extending the
interest payment period as provided in the Indenture with respect to the
Subordinated Debt Securities and shall not have rescinded such notice, or such
period, or any extension thereof, shall be continuing.
In the event Subordinated Debt Securities are issued to a SunTrust Capital
Trust or Trust Trustee thereof in connection with the issuance of Trust
Securities of such SunTrust Capital Trust, for so long as such Trust Securities
remain outstanding, the Company will covenant (i) to maintain, directly or
indirectly, 100% ownership of the Common Securities of such SunTrust Capital
Trust, provided that certain successors that are permitted pursuant to the
Indenture may succeed to the Company's ownership of the Common Securities, (ii)
as issuer of the Subordinated Debt Securities, not to voluntarily terminate,
wind-up or liquidate such SunTrust Capital Trust, except upon prior approval of
the Federal Reserve Board (if then required under applicable capital guidelines
or policies of the Federal Reserve Board) and in connection with (a) a
distribution of Subordinated Debt Securities to the holders of the Trust
Securities in liquidation of the SunTrust Capital Trust or (b) certain mergers,
consolidations or amalgamations permitted by the Declaration of such SunTrust
Capital Trust, (iii) to use its reasonable efforts, consistent with the terms
and provisions of the Declaration of such SunTrust Capital Trust to cause such
SunTrust Capital Trust to remain classified as a grantor trust and not as an
association taxable as a corporation for United States federal income tax
purposes and (iv) to use its reasonable efforts to cause the Subordinated Debt
Securities to continue to be classified as indebtedness of the Company for
United States federal income tax purposes.
LIMITATION ON MERGERS AND SALES OF ASSETS
The Company shall not consolidate with, or merge into, any corporation or
convey or transfer its properties and assets substantially as an entirety to any
Person unless (i) the successor entity shall expressly assume the obligations of
the Company under the Indenture and (ii) after giving effect thereto, no Event
of Default, and no event that, after notice or lapse of time, or both, would
become an Event of Default, shall have occurred and be continuing under the
Indenture.
EVENTS OF DEFAULT, WAIVER AND NOTICE
The Indenture provides that any one or more of the following described
events that has occurred and is continuing constitutes an "Event of Default"
with respect to each series of Subordinated Debt Securities:
(i) default for 30 days in payment of any interest on the Subordinated
Debt Securities of that series when due; provided, however, that a valid
extension of the interest payment period by the Company shall not
constitute a default in the payment of interest for this purpose; or
(ii) default in payment of principal or premium, if any, on the
Subordinated Debt Securities of that series when due either at maturity,
upon redemption, by declaration or otherwise; provided, however, that a
valid extension of the maturity of such Subordinated Debt Securities shall
not constitute a default for this purpose; or
(iii) default by the Company in the performance or breach, in any
material respect, of any other of the covenants or agreements in the
Indenture that shall not have been remedied for a period of 90 days after
written notice to the Company by the Debt Trustee or to the Debt Trustee
and the Company by the holders of not less than 25% in principal amount of
the Subordinated Debt Securities of that series; or
(iv) certain events of bankruptcy, insolvency or reorganization of the
Company; or
9
<PAGE> 53
(v) any other Event of Default provided with respect to a particular
series of Subordinated Debt Securities as described in the related
Prospectus Supplement.
The Indenture provides that the Debt Trustee may withhold notice to the
holders of a series of Subordinated Debt Securities (except in payment of
principal, premium, if any, or interest on, such Subordinated Debt Securities)
if the Trustee considers it in the interest of such holders to do so.
The Indenture provides that if an Event of Default with respect to any
series of Subordinated Debt Securities shall have occurred and be continuing,
either the Debt Trustee or the holders of 25% in principal amount of the
Subordinated Debt Securities of such series affected thereby then outstanding
may declare the principal of all such Subordinated Debt Securities of such
series to be due and payable immediately, but upon certain conditions, such
declarations may be annulled and past defaults may be waived (except defaults in
payment of principal of, or interest or premium, if any, on, the Subordinated
Debt Securities) by the holders of a majority in principal amount of the
Subordinated Debt Securities of such series then outstanding.
The holders of a majority in principal amount of the Subordinated Debt
Securities of any series affected and then outstanding shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Debt Trustee under the Indenture with respect to such series,
provided that the holders of the Subordinated Debt Securities shall have offered
to the Debt Trustee reasonable indemnity against expenses and liabilities. The
Indenture also provides that, notwithstanding any other provision of the
Indenture, the holder of any Subordinated Debt Security of any series shall have
the right to institute suit for the enforcement of any payment of principal of,
or premium, if any, and interest on, such Subordinated Debt Security on the
Stated Maturity (as defined in the Indenture) or upon repayment or redemption of
such Subordinated Debt Security and that such right shall not be impaired
without the consent of such holder. The Indenture requires the annual filing by
the Company with the Debt Trustee of a certificate as to the absence of certain
defaults under the Indenture.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Debt
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Subordinated Debt Securities of all series
affected by such modification at the time outstanding, to amend the Indenture or
modify the rights of the holders of the Subordinated Debt Securities; provided,
that no such amendment shall (i) change the fixed maturity of any Subordinated
Debt Securities, or reduce the principal amount thereof or reduce the rate or
extend the time of payment of interest thereon, or make the principal of, or
interest or premium, if any, on, the Subordinated Debt Securities payable in any
coin or currency other than that provided in the Subordinated Debt Securities,
or impair or affect the right of any holder of Subordinated Debt Securities to
institute suit for the payment thereof or reduce any amount payable on
prepayment, without the consent of the holder of each Subordinated Debt Security
so affected, or (ii) reduce the aforesaid percentage of Subordinated Debt
Securities, for which the consent of the holders is required for any such
modification, without the consent of the holders of each Subordinated Debt
Security affected. If Subordinated Debt Securities of a series are held by a
SunTrust Capital Trust or a Trust Trustee thereof, a supplemental indenture
requiring such consent will not be effective until the holders of a majority in
liquidation amount of the Trust Securities of the applicable SunTrust Capital
Trust shall have consented to such supplemental indenture; provided, that if the
consent of the holders of each outstanding Subordinated Debt Security of a
series is required, such supplemental indenture shall not be effective until
each holder of the Trust Securities of the applicable SunTrust Capital Trust
shall have consented to such supplemental indenture. As a result of these
pass-through voting rights with respect to modifications to the Indenture, no
modification thereto shall be effective until the holders of a majority in
liquidation amount of the Trust Securities consent to such modification and no
modification described in clauses (i) or (ii) shall be effective without the
consent of each holder of Preferred Securities and each holder of Common
Securities of the applicable SunTrust Capital Trust.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Subordinated Debt
Securities of a series not previously delivered to the Debt Trustee for
cancellation (i) have become due and payable or (ii) will become due
10
<PAGE> 54
and payable at their Stated Maturity within one year, and the Company deposits
or causes to be deposited with the Debt Trustee trust funds, in trust, for the
purpose of, and in an amount sufficient for, payment and discharge of the entire
indebtedness on the Subordinated Debt Securities of such series not previously
delivered to the Debt Trustee for cancellation, for the principal (and premium,
if any) and interest to the date of the deposit or to the Stated Maturity, as
the case may be, then the Indenture will cease to be of further effect with
respect to that series (except as to the Company's obligations to pay all other
sums due with respect to that series pursuant to the Indenture and to provide
the officers' certificates and opinions of counsel described therein), and the
Company will be deemed to have satisfied and discharged the Indenture with
respect to that series.
GOVERNING LAW
The Indenture and the Subordinated Debt Securities will be governed by, and
construed in accordance with, the laws of the State of New York.
THE DEBT TRUSTEE
First Chicago, which serves as the Debt Trustee, the Institutional Trustee
and the Preferred Guarantee Trustee (as defined herein), has a principal
corporate trust office at One First National Plaza, Suite 0126, Chicago,
Illinois 60670-0126. The Company and its affiliates have normal banking
relationships with the Debt Trustee and its affiliates in the ordinary course of
business.
DESCRIPTION OF THE PREFERRED SECURITIES
Each SunTrust Capital Trust may issue only one series of Preferred
Securities and such series shall have the terms described in the Prospectus
Supplement relating thereto. The Declaration of each SunTrust Capital Trust
authorizes the Regular Trustees of such SunTrust Capital Trust to issue on
behalf of such SunTrust Capital Trust one series of Preferred Securities. Each
such Declaration will be qualified as an indenture under the Trust Indenture
Act. The Preferred Securities will have such terms, including with respect to
distributions, redemption, voting, liquidation rights and such other preferred,
deferred or other special rights or such restrictions as shall be set forth in
the related Declaration, which shall be filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, and such terms as are made part
of such Declaration by the Trust Indenture Act. The terms of the Preferred
Securities will mirror the terms of the related Subordinated Debt Securities
held by the relevant SunTrust Capital Trust and described in the Prospectus
Supplement relating thereto. Reference is made to the Prospectus Supplement
relating to the particular Preferred Securities of a SunTrust Capital Trust for
specific terms, including (i) the distinctive designation of such Preferred
Securities; (ii) the number and the initial public offering price of Preferred
Securities issued by such SunTrust Capital Trust; (iii) the annual distribution
rate (or method of determining such rate) for Preferred Securities issued by
such SunTrust Capital Trust, the date or dates upon which such distributions
shall be payable and the date or dates from which distributions shall accrue;
(iv) whether distributions on Preferred Securities issued by such SunTrust
Capital Trust shall be cumulative, and, in the case of Preferred Securities
having such cumulative distribution rights, the date or dates or method of
determining the date or dates from which distributions on Preferred Securities
issued by such SunTrust Capital Trust shall be cumulative; (v) the amount or
amounts that shall be paid out of the assets of such SunTrust Capital Trust to
the holders of Preferred Securities of such SunTrust Capital Trust upon
voluntary or involuntary dissolution, winding-up or termination of such SunTrust
Capital Trust; (vi) the obligation, if any, of such SunTrust Capital Trust to
purchase or redeem Preferred Securities issued by such SunTrust Capital Trust
and the price or prices at which, the period or periods within which, and the
terms and conditions upon which, Preferred Securities issued by such SunTrust
Capital Trust shall be purchased or redeemed, in whole or in part, pursuant to
such obligation; (vii) the voting rights, if any, of Preferred Securities issued
by such SunTrust Capital Trust in addition to those required by law, including
the number of votes per Preferred Security and any requirement for the approval
by the holders of Preferred Securities, or of Preferred Securities issued by one
or more SunTrust Capital Trusts, or of both, as a condition to specified action
or amendments to the Declaration of such SunTrust Capital Trust; (viii) the
terms and conditions, if any, upon which the Subordinated Debt Securities may be
distributed to holders of Preferred Securities; (ix) the right and/or
obligation, if any, of SunTrust to redeem or purchase such Preferred Securities
pursuant to any sinking fund or analogous provision, or at the option of the
11
<PAGE> 55
holder thereof, and the period or periods for which, the price or prices at
which, and the terms and conditions upon which, such Preferred Securities shall
be redeemed or repurchased, in whole or in part, pursuant to such right and/or
obligation; (x) the terms and conditions, if any, upon which the Preferred
Securities may be converted into shares of the common stock of SunTrust,
including the conversion price and the circumstances, if any, under which such
conversion right shall expire; (xi) if applicable, any securities exchange upon
which the Preferred Securities shall be listed; and (xii) any other relevant
rights, preferences, privileges, limitations or restrictions of Preferred
Securities issued by such SunTrust Capital Trust not inconsistent with the
Declaration of such SunTrust Capital Trust or with applicable law. All Preferred
Securities offered hereby will be guaranteed by the Company to the extent set
forth below under "Description of the Preferred Securities Guarantees." Certain
United States federal income tax considerations applicable to any offering of
Preferred Securities will be described in the Prospectus Supplement relating
thereto.
In connection with the issuance of Preferred Securities, each SunTrust
Capital Trust will issue one series of Common Securities. The Declaration of
each SunTrust Capital Trust authorizes the Regular Trustees of such trust to
issue on behalf of such SunTrust Capital Trust one series of Common Securities
having such terms including distributions, redemption, voting, liquidation
rights or such restrictions as shall be set forth therein. Except for voting
rights, the terms of the Common Securities issued by a SunTrust Capital Trust
will be identical to the terms of the Preferred Securities issued by such
SunTrust Capital Trust and the Common Securities will rank pari passu and
payments will be made thereon pro rata with the Preferred Securities except
that, upon an Event of Default under the Declaration, the rights of the holders
of the Common Securities to payment in respect of distributions and payments
upon liquidation, redemption and otherwise will be subordinated to the rights of
the holders of the Preferred Securities. Except in certain limited
circumstances, the Common Securities will also carry the right to vote to
appoint, remove or replace any of the Trust Trustees of a SunTrust Capital
Trust. All of the Common Securities of each SunTrust Capital Trust will be
directly or indirectly owned by the Company.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If an Event of Default under the Declaration of a SunTrust Capital Trust
occurs and is continuing, then the holders of Preferred Securities of such
SunTrust Capital Trust will rely on the enforcement by the Institutional Trustee
of its rights as a holder of the applicable series of Subordinated Debt
Securities against the Company. In addition, the holders of a majority in
liquidation amount of the Preferred Securities of such SunTrust Capital Trust
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Institutional Trustee or to direct
the exercise of any trust or power conferred upon the Institutional Trustee
under the applicable Declaration, including the right to direct the
Institutional Trustee to exercise the remedies available to it as a holder of
the Subordinated Debt Securities. If the Institutional Trustee fails to enforce
its rights under the applicable series of Subordinated Debt Securities, a holder
of Preferred Securities of such SunTrust Capital Trust may institute a legal
proceeding directly against the Company to enforce the Institutional Trustee's
rights under the applicable series of Subordinated Debt Securities without first
instituting any legal proceeding against the Institutional Trustee or any other
person or entity. Notwithstanding the foregoing, if an Event of Default under
the applicable Declaration has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest on, premium, if any,
or principal on the applicable series of Subordinated Debt Securities on the
date such interest, premium or principal is otherwise payable (or in the case of
redemption, on the redemption date), then a holder of Preferred Securities of
such SunTrust Capital Trust may directly institute a proceeding for enforcement
of payment to such holder of the principal of, premium, if any, or interest on,
the applicable series of Subordinated Debt Securities having a principal amount
equal to the aggregate liquidation amount of the Preferred Securities of such
holder (a "Direct Action") on or after the respective due date specified in the
applicable series of Subordinated Debt Securities. In connection with such
Direct Action, the Company will be subrogated to the rights of such holder of
Preferred Securities under the applicable Declaration to the extent of any
payment made by the Company to such holder of Preferred Securities in such
Direct Action.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
For information concerning the relationship between First Chicago, the
Institutional Trustee, and the Company, see "Description of the Subordinated
Debt Securities -- The Debt Trustee."
12
<PAGE> 56
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEES
A Preferred Securities Guarantee will be executed and delivered by SunTrust
for the benefit of the holders from time to time of Preferred Securities issued
by each SunTrust Capital Trust. Each such Preferred Securities Guarantee will be
qualified as an indenture under the Trust Indenture Act. First Chicago will act
as trustee under each Preferred Securities Guarantee for purposes of the Trust
Indenture Act (the "Preferred Guarantee Trustee"). The terms of each Preferred
Securities Guarantee, which shall be filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, will be those set forth therein
and those made part of such Preferred Securities Guarantee by the Trust
Indenture Act. The summary of the material terms of the Preferred Securities
Guarantees set forth below does not purport to be complete and is subject in all
respects to the provisions of, and is qualified in its entirety by reference to,
each such Preferred Securities Guarantee and the Trust Indenture Act. Each
Preferred Securities Guarantee will be held by the Preferred Guarantee Trustee
for the benefit of the holders of the Preferred Securities of the applicable
SunTrust Capital Trust.
GENERAL
Pursuant to each Preferred Securities Guarantee, the Company will
irrevocably and unconditionally agree, to the extent set forth therein, to pay
in full, to the holders of the Preferred Securities issued by a SunTrust Capital
Trust, the Guarantee Payments (as defined herein) (except to the extent paid by
such SunTrust Capital Trust), as and when due, regardless of any defense, right
of set-off or counterclaim that such SunTrust Capital Trust may have or assert.
The following payments with respect to Preferred Securities issued by a SunTrust
Capital Trust, to the extent not paid by such SunTrust Capital Trust (the
"Guarantee Payments"), will be subject to the Preferred Securities Guarantee
thereon (without duplication): (i) any accrued and unpaid distributions that are
required to be paid on such Preferred Securities, but if and only to the extent
such SunTrust Capital Trust shall have funds available therefor; (ii) the
redemption price, including all accrued and unpaid distributions to the date of
payment (the "Redemption Price"), but if and only to the extent such SunTrust
Capital Trust has funds available therefor with respect to any Preferred
Security called for redemption by such SunTrust Capital Trust; and (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of such SunTrust
Capital Trust (other than in connection with the distribution of Subordinated
Debt Securities to the holders of Preferred Securities or the redemption of all
of the Preferred Securities upon the maturity or redemption of the Subordinated
Debt Securities), the lesser of (a) the aggregate of the liquidation amount and
all accrued and unpaid distributions on such Preferred Securities to the date of
payment, but if and only to the extent such SunTrust Capital Trust has funds
available therefor and (b) the amount of assets of such SunTrust Capital Trust
remaining available for distribution to holders of such Preferred Securities in
liquidation of such SunTrust Capital Trust. The redemption price and liquidation
amount will be fixed at the time the Preferred Securities are issued. The
Company's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Company to the holders of Preferred
Securities or by causing the applicable SunTrust Capital Trust to pay such
amounts to such holders.
No Preferred Securities Guarantee will apply to any payment of
distributions, except to the extent such SunTrust Capital Trust shall have funds
available therefor. If the Company does not make interest payments on the
Subordinated Debt Securities purchased by a SunTrust Capital Trust, such
SunTrust Capital Trust will not pay distributions on the Preferred Securities
issued by such SunTrust Capital Trust and will not have funds available
therefor. See "Description of the Subordinated Debt Securities -- Certain
Covenants of the Company." The Preferred Securities Guarantee, when taken
together with the Company's obligations under the Subordinated Debt Securities,
the Indenture and the Declaration, including its obligations as issuer of the
Subordinated Debt Securities to pay costs, expenses, debts and liabilities of
such SunTrust Capital Trust (other than with respect to the payment of
principal, premium, if any, and interest on the Trust Securities), will provide
a full and unconditional guarantee on a subordinated basis by the Company of
payments due on the Preferred Securities.
MODIFICATION OF THE PREFERRED SECURITIES GUARANTEES; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required),
each Preferred Securities Guarantee may be amended only with the prior approval
of the holders of not less than a majority in liquidation amount of the
outstanding Preferred Securities
13
<PAGE> 57
issued by the applicable SunTrust Capital Trust. The manner of obtaining any
such approval of holders of such Preferred Securities will be as set forth in an
accompanying Prospectus Supplement. All guarantees and agreements contained in a
Preferred Securities Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Company and shall inure to the benefit of
the holders of the Preferred Securities of the applicable SunTrust Capital Trust
then outstanding.
The Company has also separately agreed to guarantee irrevocably and
unconditionally the obligations of the SunTrust Capital Trusts with respect to
the Common Securities (the "Common Securities Guarantees") to the same extent as
the Preferred Securities Guarantees, except that upon an Event of Default under
the Indenture, holders of Preferred Securities shall have priority over holders
of Common Securities with respect to distributions and payments on liquidation,
redemption or otherwise.
TERMINATION
Each Preferred Securities Guarantee will terminate as to the Preferred
Securities issued by the applicable SunTrust Capital Trust (i) upon full payment
of the Redemption Price of all Preferred Securities of such SunTrust Capital
Trust, (ii) upon distribution of the Subordinated Debt Securities held by such
SunTrust Capital Trust to the holders of the Preferred Securities of such
SunTrust Capital Trust or (iii) upon full payment of the amounts payable in
accordance with the Declaration of such SunTrust Capital Trust upon liquidation
of such SunTrust Capital Trust. Each Preferred Securities Guarantee will
continue to be effective or will be reinstated, as the case may be, if, at any
time, any holder of Preferred Securities issued by the applicable SunTrust
Capital Trust must restore payment of any sums paid under such Preferred
Securities or such Preferred Securities Guarantee.
EVENTS OF DEFAULT
An event of default under a Preferred Securities Guarantee will occur upon
the failure of the Company to perform any of its payment or other obligations
thereunder.
The holders of a majority in liquidation amount of the Preferred Securities
relating to such Preferred Securities Guarantee have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Preferred Guarantee Trustee in respect of the Preferred Securities Guarantee
or to direct the exercise of any trust or power conferred upon the Preferred
Guarantee Trustee under such Preferred Securities. If the Preferred Guarantee
Trustee fails to enforce such Preferred Securities Guarantee, any holder of
Preferred Securities relating to such Preferred Securities Guarantee may
institute a legal proceeding directly against the Company to enforce the
Preferred Guarantee Trustee's rights under such Preferred Securities Guarantee,
without first instituting a legal proceeding against the relevant SunTrust
Capital Trust, the Preferred Guarantee Trustee or any other person or entity.
Notwithstanding the foregoing, if the Company has failed to make a Guarantee
Payment, a holder of Preferred Securities may directly institute a proceeding
against the Company for enforcement of the Preferred Securities Guarantee for
such payment. The Company waives any right or remedy to require that any action
be brought first against such SunTrust Capital Trust or any other person or
entity before proceeding directly against the Company.
STATUS OF THE PREFERRED SECURITIES GUARANTEES
Unless otherwise provided in the applicable Prospectus Supplement, the
Preferred Securities Guarantees with respect to the Preferred Securities of any
SunTrust Capital Trust will constitute unsecured obligations of the Company and
will rank (i) subordinate and junior in right of payment to certain liabilities
of the Company (which may include both senior and subordinated indebtedness for
money borrowed) to the extent set forth in a Prospectus Supplement, (ii) pari
passu with any guarantee now or hereafter entered into by SunTrust in respect of
any other SunTrust Capital Trust or any other similar financing vehicle
sponsored by SunTrust and (iii) senior to all capital stock now or hereafter
issued by the Company and to any guarantee now or hereafter entered into by the
Company in respect of any of its capital stock. The terms of the Preferred
Securities provide that each holder of Preferred Securities issued by the
applicable SunTrust Capital Trust, by acceptance thereof, agrees to the
subordination provisions and other terms of the Preferred Securities Guarantee
relating thereto as described in the applicable Prospectus Supplement.
14
<PAGE> 58
The Preferred Securities Guarantees will constitute a guarantee of payment
and not of collection (that is, the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under the
Preferred Securities Guarantee without instituting a legal proceeding against
any other person or entity).
INFORMATION CONCERNING THE PREFERRED GUARANTEE TRUSTEE
The Preferred Guarantee Trustee, prior to the occurrence of a default with
respect to a Preferred Securities Guarantee, undertakes to perform only such
duties as are specifically set forth in such Preferred Securities Guarantee and,
after default, shall exercise the same degree of care as a prudent individual
would exercise in the conduct of his or her own affairs. Subject to such
provisions, the Preferred Guarantee Trustee is under no obligation to exercise
any of the powers vested in it by a Preferred Securities Guarantee at the
request of any holder of Preferred Securities, unless offered reasonable
indemnity against the costs, expenses and liabilities that might be incurred
thereby.
For information concerning the relationship between the Preferred Guarantee
Trustee and the Company, see "Description of the Subordinated Debt
Securities -- The Debt Trustee."
GOVERNING LAW
The Preferred Securities Guarantees will be governed by and construed in
accordance with the laws of the State of New York.
EFFECT OF OBLIGATIONS UNDER THE SUBORDINATED DEBT SECURITIES
AND THE PREFERRED SECURITIES GUARANTEES
As set forth in the Declaration of each of the SunTrust Capital Trusts, the
sole purpose of each is to issue the Trust Securities evidencing undivided
beneficial interests in the assets of such SunTrust Capital Trust, and to invest
the proceeds from such issuance and sale in the Subordinated Debt Securities.
As long as payments of interest and other payments are made when due on the
Subordinated Debt Securities held by a given SunTrust Capital Trust, such
payments will be sufficient to cover distributions and payments due on the Trust
Securities of such SunTrust Capital Trust because of the following factors: (i)
the aggregate principal amount of such Subordinated Debt Securities will be
equal to the sum of the aggregate stated liquidation amount of such Trust
Securities; (ii) the interest rate and payment dates for the Subordinated Debt
Securities will match the distribution rate and payment dates for the Preferred
Securities; (iii) SunTrust, as issuer of the Subordinated Debt Securities, shall
pay, and the applicable SunTrust Capital Trust shall not be obligated to pay,
directly or indirectly, all costs, expenses, debts, and obligations of the
applicable SunTrust Capital Trust (other than with respect to the payment of
principal, premium, if any, and interest on the Trust Securities); and (iv) the
related Declaration further provides that the Trust Trustees shall not take or
cause or permit such SunTrust Capital Trust, among other things, to engage in
any activity that is not consistent with the purposes of that SunTrust Capital
Trust.
Payments of distributions (to the extent funds are available therefor) and
other payments due on the Preferred Securities (to the extent funds are
available therefor) are guaranteed by SunTrust as and to the extent set forth
under "Description of the Preferred Securities Guarantees." If SunTrust does not
make interest payments on the Subordinated Debt Securities purchased by the
applicable SunTrust Capital Trust, it is expected that such SunTrust Capital
Trust will not have sufficient funds to pay distributions on the Preferred
Securities issued thereby. A Preferred Securities Guarantee does not apply to
any payment of distributions unless and until the applicable SunTrust Capital
Trust has sufficient funds for the payment of such distributions. A Preferred
Securities Guarantee covers the payment of distributions and other payments on
the related Preferred Securities only if, and to the extent that, SunTrust has
made a payment of interest or principal on the Subordinated Debt Securities held
by the applicable SunTrust Capital Trust as its sole asset. A Preferred
Securities Guarantee, when taken together with SunTrust's obligations under the
related Subordinated Debt Securities, and the Indenture and the related
Declaration, including its obligations to pay costs, expenses, debts and
liabilities of the applicable
15
<PAGE> 59
SunTrust Capital Trust (other than with respect to the Trust Securities),
provides a full and unconditional guarantee on a subordinated basis of amounts
due on the related Preferred Securities.
If SunTrust fails to make interest or other payments on the Subordinated
Debt Securities held by a SunTrust Capital Trust when due (taking into account
any Extension Period), the related Declaration provides a mechanism whereby the
holders of the Preferred Securities issued thereunder, using the procedures
described in "Description of the Preferred Securities -- Book-Entry Only
Issuance -- The Depository Trust Company" and "-- Voting Rights" in the
accompanying Prospectus Supplement, may direct the Institutional Trustee to
enforce its rights under such Subordinated Debt Securities. If the Institutional
Trustee fails to enforce its rights under the Subordinated Debt Securities, a
holder of Preferred Securities may institute a legal proceeding against SunTrust
to enforce the Institutional Trustee's rights under the Subordinated Debt
Securities without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of SunTrust to pay interest or
principal on the Subordinated Debt Securities on the date such interest or
principal is otherwise payable (or in the case of redemption, on the redemption
date), then a holder of Preferred Securities may institute a Direct Action for
payment on or after the respective due date specified in the Subordinated Debt
Securities. In connection with such Direct Action, SunTrust will be subrogated
to the rights of such holder of Preferred Securities under the Declaration to
the extent of any payment made by SunTrust to such holder of Preferred
Securities in such Direct Action. SunTrust, under each Preferred Securities
Guarantee, acknowledges that the Preferred Guarantee Trustee shall enforce the
Preferred Securities Guarantee on behalf of the holders of the related Preferred
Securities. If SunTrust fails to make payments under a Preferred Securities
Guarantee, the Preferred Securities Guarantee provides a mechanism whereby the
holders of the related Preferred Securities may direct the Preferred Guarantee
Trustee to enforce its rights thereunder. Any holder of Preferred Securities may
institute a legal proceeding directly against SunTrust to enforce the Preferred
Guarantee Trustee's rights under the related Preferred Securities Guarantee
without first instituting a legal proceeding against the applicable SunTrust
Capital Trust, the Preferred Guarantee Trustee, or any other person or entity.
SunTrust and each of the SunTrust Capital Trusts believe that the above
mechanisms and obligations, taken together, provide a full and unconditional
guarantee by SunTrust on a subordinated basis of payments due on Preferred
Securities issued by any such Trust. See "Description of the Preferred
Securities Guarantees -- General."
PLAN OF DISTRIBUTION
SunTrust may sell the Subordinated Debt Securities and either SunTrust
Capital Trust may sell Preferred Securities in any of, or any combination of,
the following ways: (i) directly to purchasers, (ii) through agents designated
from time to time, (iii) through underwriters or groups of underwriters, and
(iv) through dealers. Such agents, underwriters or dealers may be affiliates of
SunTrust, and offers or sales of Offered Securities may include secondary market
transactions by affiliates of SunTrust.
Offers to purchase Offered Securities may be solicited directly by SunTrust
and/or either SunTrust Capital Trust, as the case may be, or by agents
designated by SunTrust and/or either SunTrust Capital Trust, as the case may be,
from time to time. Any such agent, who may be deemed to be an underwriter (as
that term is defined in the Securities Act) involved in the offer or sale of the
Offered Securities in respect of which this Prospectus is delivered will be
named, and any commissions payable by SunTrust to such agent will be set forth,
in the Prospectus Supplement. Unless otherwise indicated in the Prospectus
Supplement, any such agent will be acting on a best efforts basis for the period
of its appointment (ordinarily five business days or less). Agents, dealers and
underwriters may be customers of, engage in transactions with, or perform
services for the Company in the ordinary course of business.
If an underwriter or underwriters are utilized in the sale, SunTrust will
execute an underwriting agreement with such underwriters at the time of sale and
the names of the underwriters and the terms of the transaction will be set forth
in the Prospectus Supplement, which will be used by the underwriters to make
resales of the Offered Securities in respect of which this Prospectus is
delivered.
16
<PAGE> 60
If a dealer is utilized in the sale of the Offered Securities in respect of
which this Prospectus is delivered, SunTrust and/or either SunTrust Capital
Trust, as the case may be, will sell such Offered Securities to the dealer as
principal. The dealer may then resell such Offered Securities to the public at
varying prices to be determined by such dealer at the time of resale. The name
of the dealer and the terms of the transaction will be set forth in the
applicable Prospectus Supplement.
Agents, underwriters and dealers may be entitled under the relevant
agreements to indemnification by SunTrust and/or either SunTrust Capital Trust,
as the case may be, against certain liabilities, including liabilities under the
Securities Act.
The offer and sale of the Offered Securities will comply with Rule 2810 of
the Rules of Conduct of the National Association of Securities Dealers, Inc.
(the "NASD"). In addition, no NASD member participating in offers and sales of
securities will execute a transaction in the Offered Securities in a
discretionary account without the prior specific written approval of the
member's customer.
Underwriters, agents or their controlling persons may engage in
transactions and perform services for SunTrust and its affiliates in the
ordinary course of business.
LEGAL MATTERS
Unless otherwise indicated in the applicable Prospectus Supplement, the
validity of the Subordinated Debt Securities and the Preferred Securities
Guarantees will be passed upon for SunTrust by King & Spalding. Certain matters
of Delaware law relating to the validity of the Preferred Securities will be
passed upon on behalf of each of the SunTrust Capital Trusts by Skadden, Arps,
Slate, Meagher & Flom (Delaware), special Delaware counsel to the SunTrust
Capital Trusts. Certain other legal matters will be passed upon for SunTrust by
Raymond D. Fortin, Senior Vice President and Counsel of SunTrust. Certain legal
matters will be passed upon for agents or underwriters, if any, by Skadden,
Arps, Slate, Meagher & Flom LLP. As of December 31, 1996 Raymond D. Fortin was
the record and beneficial owner of 20,800 shares of common stock of SunTrust and
held options to purchase 3,000 shares of common stock of SunTrust.
EXPERTS
The consolidated financial statements of SunTrust included in the Annual
Report on Form 10-K for the year ended December 31, 1996, incorporated herein by
reference, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
incorporated herein by reference in reliance upon the authority of said firm as
experts in accounting and auditing in giving said report.
17
<PAGE> 61
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS OR AN OFFER TO SELL THE SOLICITATION OF AN OFFER TO
BUT SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Risk Factors......................... S-4
SunTrust............................. S-10
Certain Regulatory Considerations.... S-10
SunTrust Capital Trust............... S-13
Capitalization....................... S-15
Use of Proceeds...................... S-16
Description of the Preferred
Securities......................... S-16
Description of the Preferred
Securities Guarantee............... S-29
Description of the Subordinated
Debentures......................... S-29
Effect of Obligations under the
Subordinated Debentures and the
Preferred Securities Guarantee..... S-36
United States Federal Income
Taxation........................... S-38
ERISA Considerations................. S-40
Underwriting......................... S-42
Legal Matters........................ S-43
PROSPECTUS
Available Information................ 3
Incorporation of Certain Documents by
Reference.......................... 4
The Company.......................... 5
The Trusts........................... 5
Use of Proceeds...................... 6
Description of the Subordinated Debt
Securities......................... 6
Description of the Preferred
Securities......................... 11
Description of the Preferred
Securities Guarantees.............. 13
Effect of Obligations under the
Subordinated Debt Securities and
the Preferred Securities
Guarantees......................... 15
Plan of Distribution................. 16
Legal Matters........................ 17
Experts.............................. 17
</TABLE>
$250,000,000
SUNTRUST
CAPITAL TRUST II
7.90% CAPITAL TRUST PASS-THROUGH
SECURITIES(SM) (TRUPS(SM))
(LIQUIDATION AMOUNT $1,000
PER SECURITY)
FULLY AND UNCONDITIONALLY
GUARANTEED TO THE EXTENT SET
FORTH HEREIN BY
SUNTRUST BANKS, INC.
SALOMON BROTHERS INC
PROSPECTUS SUPPLEMENT
DATED JUNE 2, 1997
