<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 5, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SYNOVUS FINANCIAL CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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GEORGIA 6022 58-1134883
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
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SUITE 301, ONE ARSENAL PLACE
901 FRONT AVENUE
COLUMBUS, GEORGIA 31901
(706) 649-2387
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
KATHLEEN MOATES, SENIOR VICE PRESIDENT
AND SENIOR DEPUTY GENERAL COUNSEL
SYNOVUS FINANCIAL CORP.
SUITE 202, ONE ARSENAL PLACE
901 FRONT AVENUE
COLUMBUS, GEORGIA 31901
(706) 649-4818
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
--------------------------
COPIES TO:
ALAN J. PRINCE ALFRED C. CHIDESTER
KING & SPALDING BAKER & HOSTETLER LLP
191 PEACHTREE STREET 303 EAST 17TH AVENUE, SUITE 1100
ATLANTA, GEORGIA 30303-1763 DENVER, COLORADO 80203-1264
(404) 572-4600 (303) 861-0600
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable following the effectiveness of this Registration Statement.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
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Title Of Each Class Proposed Maximum Proposed Maximum Amount Of
Of Securities To Amount To Be Offering Price Aggregate Registration
Be Registered Registered Per Share Offering Price Fee
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Common Stock, $1.00 par value per share ..... 1,818,182(1)(5) $ (2) $ (2) $800.20(3)
Common Stock Rights(4) ...................... 1,818,182(1)(5) $ (2) $ (2) (3)
Common Stock, $1.00 par value per share ..... 1,086,524 $ (5) $ (5) (5)
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(1) This amount is based upon the number of shares of Synovus common stock
anticipated to be issued upon the merger of TSYS Acquisition Sub, Inc., a
Delaware corporation and a wholly owned subsidiary of Synovus Financial
Corp., with and into ProCard, Inc., a Delaware corporation.
<PAGE> 2
(2) Not applicable.
(3) Determined pursuant to Rule 457(f)(2) under the Securities Act of 1933, as
amended, solely for the purpose of calculating the registration fee. Based
upon the book value of capital stock of ProCard at December 31, 1999,
there being 5,811,069 shares of such stock issued and outstanding on that
date, having an aggregate book value on that date of approximately
$3,031,066.
(4) The Common Stock Rights (the "Rights") are attached to and trade with the
common stock of Synovus Financial Corp. The value, if any, attributable to
the Rights is reflected in the market price of the common stock of Synovus
Financial Corp.
(5) This Registration Statement also relates to the reoffering from time to
time of 1,086,524 shares of Synovus common stock to be received in the
merger by certain stockholders of ProCard. No separate registration fee is
payable in respect to the resale shares, which are included in the shares
with respect to which a fee is being paid pursuant to Note (3) above.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE> 3
THE INFORMATION IN THIS PROXY STATEMENT/PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROXY
STATEMENT/PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT A
SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION-DATED APRIL 5, 2000
(ProCard Logo)
PROCARD, INC.
1819 Denver West Drive
Building 26, Suite 300
Golden, Colorado 80401
April __, 2000
Dear Stockholder:
You are cordially invited to attend a special meeting of stockholders
of ProCard, Inc. to be held at the offices of ProCard, Inc. at 1819 Denver West
Drive, Building 26, Suite 300, Golden, Colorado on May 10, 2000 at 9:00 a.m.
local time.
At the special meeting you will be asked to consider and vote upon a
proposal to approve a merger agreement and a merger whereby ProCard will become
a subsidiary of Synovus Financial Corp. In the merger, for each share you own
of ProCard common stock, series A preferred stock and series B preferred stock
you will receive between 0.174005 and 0.263644 shares of Synovus common stock
depending upon the average closing price of Synovus common stock during the
twenty (20) trading day period ending three (3) days prior to the closing date
of the merger. Holders of ProCard common stock, series A preferred stock, and
series B preferred stock will receive the same number of shares of Synovus
common stock for each share owned. On April __, 2000, Synovus common stock
closed at $_____. If the average closing price of Synovus common stock for the
measurement period equals $_____, you will receive ____ shares of Synovus
common stock for each of your shares of ProCard common and ProCard preferred
stock. Synovus common stock is traded on the New York Stock Exchange and
Synovus has registered 1,818,182 shares of its common stock for issuance in
connection with the merger, including 1,086,524 shares of common stock for
resale by certain stockholders of ProCard. As a result of the merger, you will
not recognize a gain or loss for tax purposes, except for cash received instead
of fractional shares.
If the average closing price of Synovus common stock during the
measurement period is between $16.50 and $25.00 per share, you will receive
$4.35 worth of Synovus common stock (valued at the average closing price during
the measurement period) in exchange for each of your shares of ProCard capital
stock. In the event the average closing price of Synovus common stock during
the measurement period is less than $16.50 and Synovus does not waive the floor
and the ProCard board does not elect to terminate the merger agreement, you
will receive less than $4.35 worth of Synovus common stock (valued at the
average closing price during the measurement period) in exchange for each of
your shares of ProCard capital stock. The amount that you receive will also be
reduced if ProCard's expenses related to the merger exceed $800,000. According
to the merger agreement, the amount of such expenses in excess of $800,000 will
be borne by the ProCard stockholders and option holders on a pro rata basis.
For example, if there were $100,000 of expenses in excess of $800,000, each
share of ProCard capital stock (or option thereon) will receive $.014500 less
than it would have received had the expenses been $800,000 or less.
The ProCard board has resolved to terminate the merger agreement if
the per share consideration received for each share of ProCard capital stock is
less than $4.00 (valued at the average closing price during the measurement
period) after giving effect to the $16.50 floor and the expense sharing
requirements referenced above. This does not prevent the ProCard board,
however, from deciding to terminate the merger agreement if the average closing
price of Synovus common stock is less than $16.50. Assuming that expenses do
not exceed $800,000 the consideration received for each share of ProCard
capital stock would be less than $4.00 (valued at the average closing price
during the measurement period) if the average closing price of Synovus common
stock during the measurement period is less than $15.18 and Synovus does not
waive the $16.50 floor.
References herein and in the proxy statement/prospectus to the value
of consideration received by you in shares of Synovus common stock or the worth
of shares of Synovus common stock refer to such value or worth
<PAGE> 4
based on the average closing price of Synovus common stock during the twenty
(20) trading day period ending three (3) days prior to the closing date of the
merger. The market price of Synovus common stock fluctuates daily. On any given
day, including the closing date of the merger, the price of a share of Synovus
common stock may be higher or lower than such average closing price.
As an incentive to Synovus to enter into the merger agreement, several
officers and all members of ProCard's board of directors entered into a voting
agreement with Synovus to vote their shares in favor of the merger agreement
and the merger. Pursuant to the voting agreement, Synovus holds proxies to vote
a majority of the ProCard capital stock entitled to vote at the special
meeting. Accordingly, Synovus currently holds proxies to vote enough shares of
ProCard capital stock to approve and adopt the merger agreement and the merger.
A majority of the board of directors has approved and adopted the
merger agreement. Four directors voted for and two directors voted against
approving and adopting the merger agreement. A majority of the board of
directors recommends that you vote in favor of the approval of the merger
agreement and the merger. The directors who voted in favor of the merger
agreement believe that the terms and provisions of the merger agreement and the
proposed merger are fair and in the best interests of ProCard's stockholders.
In reaching its decision, the board of directors considered, among other
things, those items listed on pages 21 through 23 of the attached proxy
statement/prospectus in addition to the written opinion of Fox-Pitt, Kelton,
Inc., ProCard's financial advisor, effective as of March 2, 2000, in which
Fox-Pitt expressed the opinion that the consideration to be received by the
holders of the ProCard common stock and ProCard preferred stock was fair from a
financial point of view.
The attached notice of special meeting and proxy statement/prospectus
explain the proposed merger and provide specific information concerning the
special meeting. In particular, you should read the "Risk Factors" section
beginning on page 11 of the proxy statement/prospectus which describes various
risks you should consider in deciding whether to approve the merger. Please
read these materials carefully. Do not send any certificates representing
ProCard capital stock at this time. If the merger is consummated, instructions
will be mailed to you.
The proposed merger is an important decision for ProCard and its
stockholders. Whether or not you plan to attend the special meeting, I urge you
to sign, date and promptly return the enclosed proxy card to ensure that your
shares will be voted at the special meeting. Failure to return an executed
proxy card will constitute, in effect, a vote against approval of the merger
agreement, the merger and the transactions contemplated thereby.
On behalf of a majority of the board of directors, I urge you to
consider the enclosed materials carefully and recommend you vote "FOR" approval
of the merger agreement, the merger and the transactions contemplated thereby.
Sincerely,
/s/ D. Dale Browning
D. Dale Browning
President and Chief Executive Officer
Neither the Securities and Exchange Commission nor any state securities
commission has approved of the Synovus common stock to be issued in the merger
or determined if this proxy statement/prospectus is accurate or adequate. Any
representation to the contrary is a criminal offense. These securities are not
savings or deposit accounts or other obligations of any bank or non-bank
subsidiary of any of the parties, and they are not insured by the Federal
Deposit Insurance Corporation, the Bank Insurance Fund or any other
governmental agency.
This date of this proxy statement/prospectus is April __, 2000, and it is first
being mailed to ProCard stockholders on or about April __, 2000.
2
<PAGE> 5
SUBJECT TO COMPLETION-DATED APRIL 5, 2000
PROCARD, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 10, 2000
To Our Stockholders:
Notice is hereby given that a special meeting of the stockholders of
ProCard, Inc. will be held at the offices of ProCard, Inc. at 1819 Denver West
Drive, Building 26, Suite 300, Golden, Colorado on May 10, 2000, at 9:00 a.m.
local time, for the following purposes:
1. To consider and vote upon a proposal to approve and adopt the
merger agreement, dated as of March 3, 2000, by and among
Synovus Financial Corp., TSYS Acquisition Sub, Inc. and
ProCard, Inc. pursuant to which TSYS Acquisition Sub will be
merged with and into ProCard, with ProCard as the surviving
corporation, and ProCard stockholders will receive shares of
Synovus common stock, as more fully described in the proxy
statement/prospectus dated April ___, 2000.
2. To consider and vote upon such other matters as may properly
come before the special meeting or any adjournment or
adjournments thereof.
Only stockholders of record on March 15, 2000 are entitled to receive
notice of the special meeting and to vote at the special meeting. Any
stockholder may examine a list of ProCard stockholders of record for any
purpose related to the special meeting during ordinary business hours at the
offices of ProCard at 1819 Denver West Drive, Building 26, Suite 300, Golden,
Colorado.
Stockholders of ProCard who do not vote in favor of the merger
agreement and merger and who deliver to ProCard a proper written demand for an
appraisal of their shares before the taking of a vote at the special meeting
will have the right to seek an appraisal of the fair value of their shares. To
receive an appraisal, the merger must be completed and the stockholders must
comply with the procedures required by Delaware law and explained in the
accompanying proxy statement/prospectus.
The merger is described in the accompanying proxy
statement/prospectus, which you are urged to read carefully. A copy of the
merger agreement is attached as Appendix "A" to the accompanying proxy
statement/prospectus.
By Order of the Board of Directors
D. Dale Browning
D. Dale Browning
President and Chief Executive Officer
Your vote is important.
Please mark, date, sign and promptly return the enclosed proxy card so
that your shares may be voted in accordance with your wishes and so that a
quorum may be assured. The giving of a proxy does not affect your right to vote
in person if you attend the special meeting
You Should Not Send Stock Certificates With Your Proxy Card
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
CAPTION PAGE
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QUESTIONS AND ANSWERS ABOUT THE MERGER............................................................................1
WHO CAN HELP ANSWER YOUR QUESTIONS................................................................................3
SUMMARY...........................................................................................................4
The Companies..................................................................................................4
The Merger.....................................................................................................4
What ProCard Stockholders Will Receive.........................................................................4
ProCard's Reasons for the Merger...............................................................................6
Opinion of Financial Advisor...................................................................................6
ProCard Special Stockholders' Meeting..........................................................................6
Recommendation of ProCard Board of Directors...................................................................6
Vote Required to Approve the Merger............................................................................6
Voting Agreement...............................................................................................7
Interests of Certain Persons in the Merger.....................................................................7
Conditions to the Merger.......................................................................................7
Regulatory Approvals...........................................................................................7
Accounting Treatment as Additional Condition to the Merger.....................................................7
Tax Opinion....................................................................................................7
Effective Date of Merger.......................................................................................8
Waiver and Amendment...........................................................................................8
Appraisal Rights...............................................................................................8
Directors and Officers of the Surviving Corporation............................................................8
Termination and Termination Fee................................................................................8
No Solicitation; Board Action..................................................................................9
Effect of Merger on Rights of ProCard Stockholders.............................................................9
Market Price Information......................................................................................10
Selling Shareholders; Plan of Distribution....................................................................10
RISK FACTORS.....................................................................................................11
Floating Exchange Ratio.......................................................................................11
Expenses......................................................................................................11
A Warning About Forward-Looking Statements....................................................................11
THE SPECIAL MEETING..............................................................................................12
Date, Time and Place..........................................................................................12
Matters to Be Considered at the Special Meeting...............................................................12
Record Date; Stock Entitled to Vote; Quorum...................................................................12
Vote Required.................................................................................................13
Stock Ownership of ProCard Directors, Management and Others...................................................13
Stock Subject to Voting Agreement.............................................................................13
Termination of the Voting Agreement...........................................................................13
Voting of Proxies.............................................................................................13
Revoking Proxies..............................................................................................14
Proxy Solicitation............................................................................................14
Recommendation of the ProCard Board...........................................................................15
THE MERGER.......................................................................................................15
The Merger Agreement..........................................................................................15
Terms of the Merger...........................................................................................15
Background of the Merger......................................................................................18
Recommendation of ProCard Board and Reasons for the Merger....................................................21
Opinion of Financial Advisor..................................................................................23
Conditions to the Merger......................................................................................25
No Solicitation; Board Action.................................................................................26
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Conduct of Business of ProCard Pending the Merger.............................................................28
Regulatory Approvals..........................................................................................29
Waiver and Amendment..........................................................................................30
Directors and Officers of the Surviving Corporation...........................................................30
Termination and Termination Fee...............................................................................30
Interests of Certain Persons in the Merger....................................................................31
Employee Benefits.............................................................................................32
Tax Opinion...................................................................................................32
Accounting Treatment..........................................................................................33
Expenses......................................................................................................33
New York Stock Exchange Listing...............................................................................34
SELECTED FINANCIAL DATA OF SYNOVUS FINANCIAL CORP................................................................34
SELLING SHAREHOLDERS.............................................................................................35
PLAN OF DISTRIBUTION.............................................................................................37
DESCRIPTION OF STOCK AND EFFECT OF MERGER ON RIGHTS OF PROCARD
STOCKHOLDERS.....................................................................................................38
Synovus Common Stock..........................................................................................39
ProCard Capital Stock.........................................................................................44
COMPARATIVE STOCK PRICES AND DIVIDENDS...........................................................................50
DESCRIPTION OF SYNOVUS...........................................................................................51
Business......................................................................................................51
Management and Additional Information.........................................................................51
DESCRIPTION OF PROCARD...........................................................................................51
Business......................................................................................................51
Principal Stockholders........................................................................................52
REGULATORY MATTERS...............................................................................................53
General.......................................................................................................53
Dividends.....................................................................................................54
Capital Requirements..........................................................................................54
Commitments to Subsidiary Banks...............................................................................55
Prompt Corrective Action......................................................................................56
Safety and Soundness Standards................................................................................57
Depositor Preference Statute..................................................................................57
Recent Legislation............................................................................................57
Pooling of Interests Accounting...............................................................................58
LEGAL MATTERS....................................................................................................58
EXPERTS..........................................................................................................58
OTHER MATTERS....................................................................................................58
STOCKHOLDER PROPOSALS............................................................................................58
WHERE YOU CAN FIND MORE INFORMATION..............................................................................59
PRO FORMA FINANCIAL INFORMATION..................................................................................60
APPENDIX "A" MERGER AGREEMENT...................................................................................A-1
APPENDIX "B" FAIRNESS OPINION...................................................................................B-1
APPENDIX "C" TAX OPINION........................................................................................C-1
APPENDIX "D" SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW................................................D-1
</TABLE>
ii
<PAGE> 8
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHY IS THE MERGER BEING PROPOSED?
A: A majority of the ProCard board of directors believes the merger is in
the best interests of ProCard and will provide significant benefits to
its stockholders. Synovus' board of directors believes that the
acquisition of ProCard will offer Synovus the opportunity to further
expand the services offered by Total System Services, Inc., an 80.8%
owned subsidiary of Synovus, to clients who want to build their
commercial card portfolios. To review the background and reasons for
the merger in greater detail, see pages 18 through 22.
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: ProCard stockholders will receive between 0.174005 and 0.263644 shares
of Synovus common stock for each share of ProCard capital stock they
hold. Holders of ProCard common stock, series A preferred stock, and
series B preferred stock will receive the same number of shares of
Synovus common stock for each share owned. The precise exchange ratio
will be based upon the average closing price of Synovus common stock
for the 20-day measurement period ending three business days before
the closing date. Furthermore, the number of shares of Synovus common
stock to be exchanged for shares of ProCard capital stock will be
reduced pro rata to pay for ProCard's expenses related to the merger
that exceed $800,000. For example, if there were $100,000 of expenses
in excess of $800,000, each share of ProCard capital stock will
receive $.014500 less than it would have received had the expenses
been $800,000 or less. ProCard's merger-related expenses as of April
__, 2000 are $_______, and ProCard currently does not expect to exceed
the $800,000 expense threshold.
If the average closing price of Synovus common stock during the
measurement period is between $16.50 and $25.00 per share, the
exchange ratio will be set so that each ProCard stockholder will
receive $4.35 worth of Synovus common stock (valued at the average
closing price during the measurement period) in exchange for each
share of ProCard capital stock the stockholder owns. To the extent
that ProCard's expenses related to the merger exceed $800,000, ProCard
stockholders will receive less than $4.35 worth of Synovus common
stock (valued at the average closing price during the measurement
period) for each share of ProCard stock held by the stockholder.
If the average closing price of Synovus common stock during the
measurement period is less than $16.50, the exchange ratio will be
fixed at 0.263644 and you will receive less than $4.35 worth of
Synovus common stock (valued at the average closing price during the
measurement period) for each of your ProCard shares unless Synovus
waives the floor (absent such a waiver ProCard may terminate the
merger agreement). If the average closing price of Synovus common
stock during the measurement period is greater than $25.00, the
exchange ratio will be fixed at 0.174005 and you will receive greater
than $4.35 worth of Synovus common stock (valued at the average
closing price during the measurement period) for each of your ProCard
shares unless ProCard waives the ceiling (absent such a waiver Synovus
may terminate the merger agreement).
The ProCard board has resolved to terminate the merger agreement if
the per share consideration received for each share of ProCard capital
stock is less than $4.00 (valued at the average closing price during
the measurement period) after giving effect to the $16.50 floor and
the expense sharing requirements referenced above. This does not
prevent the ProCard board, however, from deciding to terminate the
merger agreement if the average closing price of Synovus common stock
is less than $16.50. Assuming that expenses do not exceed $800,000 the
consideration received for each share of ProCard capital stock would
be less than $4.00 (valued at the average closing price during the
measurement period) if the average closing price of Synovus common
stock during the measurement period is less than $15.18 and Synovus
does not waive the $16.50 floor.
<PAGE> 9
Synovus will not issue fractional shares in the merger. Instead,
ProCard stockholders will receive a cash payment, without interest,
for the value of any fraction of a share of Synovus common stock that
they would otherwise be entitled to receive based upon the average
closing price of Synovus common stock during the measurement period.
For Example:
- If the average closing price of Synovus common stock during
the measurement period is $20.00 and you own 100 shares of
ProCard capital stock, then after the merger you will receive
21 shares of Synovus common stock and a check in the amount
of $15.01, a total per share value of $4.35.
- If (1) the average closing price of Synovus common stock
during the measurement period is $15.69, (2) Synovus does not
waive the floor, (3) ProCard does not terminate the merger
agreement, and (4) you own 100 shares of ProCard capital
stock, then after the merger you will receive 26 shares of
Synovus common stock and a check in the amount of $6.01, a
total per share value of $4.14.
- If (1) the average closing price of Synovus common stock
during the measurement period is $20.00, (2) ProCard's
expenses related to the merger are $1,000,000, and (3) you
own 100 shares of ProCard capital stock, then after the
merger you will receive 21 shares of Synovus common stock and
a check in the amount of $12.11, a total per share value of
$4.32.
- If (1) the average closing price of Synovus common stock
during the measurement period is $15.69, (2) Synovus does not
waive the floor, (3) ProCard does not terminate the merger
agreement, (4) you own 100 shares of ProCard capital stock,
and (5) ProCard's expenses related to the merger are
$1,000,000, then after the merger you will receive 26 shares
of Synovus common stock and a check in the amount of $3.11, a
total per share value of $4.11.
References herein to the value of consideration received by you in
shares of Synovus common stock or the worth of shares of Synovus
common stock refer to such value or worth based on the average closing
price of Synovus common stock during the twenty (20) trading day
period ending three (3) days prior to the closing date of the merger.
The market price of Synovus common stock fluctuates daily. On any
given day, including the closing date of the merger, the price of a
share of Synovus common stock may be higher or lower than such average
closing price.
Q: WHAT RISKS SHOULD I CONSIDER?
A: You should review "Risk Factors" beginning on page 11.
You should also review the factors considered by ProCard's board of
directors. See "The Merger Recommendation of ProCard Board and Reasons
for the Merger on page 21.
Q: WHAT HAPPENS AS THE MARKET PRICE OF SYNOVUS COMMON STOCK FLUCTUATES?
A: The exchange ratio floats. Since the market price of Synovus common
stock fluctuates, at the time you vote you will not know what the
shares will be worth when issued in the merger.
Q: WHEN IS THE MERGER EXPECTED TO BE COMPLETED?
A: We are working to complete the merger during the second quarter of
2000.
Q: WHAT ARE THE TAX CONSEQUENCES OF THE MERGER TO ME?
A: We expect that as a result of the merger ProCard stockholders
generally will not recognize gain or loss for United States federal
income tax purposes. ProCard stockholders will, however, recognize
gain or loss on
2
<PAGE> 10
cash received for fractional shares. To review the tax consequences to
ProCard stockholders in greater detail, see pages 32 through 33.
Your tax consequences will depend on your personal situation. You
should consult your tax advisor for a full understanding of the tax
consequences of the merger to you.
Q: WHAT AM I BEING ASKED TO VOTE UPON AND WHAT IS THE REQUIRED
STOCKHOLDER VOTE?
A: You are being asked to approve the merger agreement which provides for
Synovus' acquisition of ProCard through a merger of a subsidiary of
Synovus into ProCard. Following the merger, ProCard will be a wholly
owned subsidiary of Synovus. Approval of the proposal requires the
affirmative vote of a majority of the outstanding capital stock of
ProCard voting as a single class.
A majority of the ProCard board of directors has approved and adopted
the merger agreement and recommends that ProCard stockholders vote
"FOR" the approval of the merger agreement.
Q: WHAT SHOULD I DO NOW?
A: ProCard stockholders should read this proxy statement/prospectus
carefully and determine whether they desire to receive the Synovus
common stock, or whether they desire to exercise their dissenters'
rights under Delaware law.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. If the merger is completed, we will send you written instructions
for exchanging your ProCard capital stock certificates for Synovus
common stock certificates.
WHO CAN HELP ANSWER YOUR QUESTIONS
If you want additional copies of this document, or if you want to ask any
questions about the merger, you should contact:
ProCard, Inc.
1819 Denver West Drive
Building 26, Suite 300
Golden, Colorado 80401
Attention: D. Dale Browning, President
Telephone: (303) 216-4016
3
<PAGE> 11
SUMMARY
This summary highlights selected information from this proxy
statement/prospectus and may not contain all the information that is important
to you. For a more complete understanding of the merger and for a more complete
description of the legal terms of the merger, you should read this entire
document carefully, as well as the additional documents to which we refer you,
including the merger agreement. In addition, we incorporate by reference
important business and financial information about Synovus into this proxy
statement/prospectus. You may obtain the information incorporated by reference
into this proxy statement/prospectus without charge by following the
instructions in the section entitled "Where You Can Find More Information" on
page 60 of this proxy statement/prospectus.
THE COMPANIES (page 51)
Synovus Financial Corp.
Suite 301, One Arsenal Place
901 Front Avenue
Columbus, Georgia 31901
(706) 649-2387
Synovus Financial Corp., a Georgia corporation, is a multi-financial
services company whose stock is traded on the New York Stock Exchange under the
symbol "SNV." Synovus is registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended. As of December 31, 1999, Synovus had
total assets of $12.5 billion, total deposits of $9.4 billion, shareholders'
equity of $1.2 billion and net loans of $8.9 billion. Synovus and its 38
commercial banking affiliates presently provide banking services at
approximately 200 offices located in the States of Georgia, Alabama, Florida
and South Carolina. Synovus also owns nonbanking subsidiaries, including a full
service brokerage firm and an 80.8% interest in Total System Services, Inc.
Total System Services, Inc. is an information technology processor of credit,
debit, commercial and retail cards whose stock is traded on the New York Stock
Exchange.
ProCard, Inc.
1819 Denver West Drive
Building 26, Suite 300
Golden, Colorado 80401
(303) 279-2255
ProCard, Inc., a Delaware corporation, develops and markets software and
services to support bank commercial card programs. Such software and services
include client server and internet based software solutions that enable the
clients of its licensee banks to manage their commercial card program and
manage commercial card transaction data.
THE MERGER (page 15)
Pursuant to the terms of the merger agreement, dated as of March 3, 2000,
TSYS Acquisition Sub, Inc., a Delaware corporation and a wholly owned
subsidiary of Synovus, will be merged with and into ProCard. The merger
requires the approval of the holders of at least a majority of the ProCard
capital stock outstanding on the record date. If this approval is obtained, we
currently expect to complete the merger in the second quarter of 2000, subject
to obtaining certain regulatory approvals and other customary conditions to the
merger.
We have attached the merger agreement (Appendix "A") at the back of this
proxy statement/prospectus. We encourage you to read the merger agreement, as
it is the legal document that governs the merger.
WHAT PROCARD STOCKHOLDERS WILL RECEIVE (page 15)
If the merger is completed, you will receive between 0.174005 and 0.263644
shares of Synovus common stock for each share of ProCard capital stock you own,
plus cash instead of any fractional share of Synovus common stock. Holders of
ProCard common stock, series A preferred stock, and series B preferred stock
will receive the
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<PAGE> 12
same number of shares of Synovus common stock for each share owned. The precise
exchange ratio will be based upon the average closing price of Synovus common
stock for the 20 trading days ending on the third business day before the
closing date of the merger. The number of shares of Synovus common stock to be
exchanged for shares of ProCard capital stock will be reduced to pay for
ProCard's expenses related to the merger that exceed $800,000.
If the average closing price of Synovus common stock during the measurement
period is between $16.50 and $25.00, the exchange ratio will be set so that you
will receive $4.35 worth of Synovus common stock, valued at that average
closing price for each of your shares of ProCard capital stock.
If the average closing price of Synovus common stock is less than $16.50,
the exchange ratio will be fixed at 0.263644 and you will receive less than
$4.35 worth of Synovus common stock (valued at the average closing price during
the measurement period) for each of your ProCard shares. ProCard may terminate
the transaction if the average closing price is less than $16.50 (unless
Synovus waives the floor) in which case the merger would not close and you
would continue to own your shares of ProCard capital stock. The ProCard board
has resolved to terminate the merger agreement if the per share consideration
received for each share of ProCard capital stock is less than $4.00 (valued at
the average closing price during the measurement period) after giving effect to
the $16.50 floor and the expense sharing requirements referenced above. This
does not prevent the ProCard board, however, from deciding to terminate the
merger agreement if the average closing price of Synovus common stock is less
than $16.50. Assuming that expenses do not exceed $800,000 the consideration
received for each share of ProCard capital stock would be less than $4.00
(valued at the average closing price during the measurement period) if the
average closing price of Synovus common stock during the measurement period is
less than $15.18 and Synovus does not waive the $16.50 floor.
If the average closing price of Synovus common stock is greater than
$25.00, the exchange ratio will be fixed at 0.174005 and you will receive
greater than $4.35 worth of Synovus common stock (valued at the average closing
price during the measurement period) for each of your ProCard shares. Synovus
has the right to terminate the transaction if the average closing price is
greater than $25.00 (unless ProCard waives the ceiling) in which case the
merger would not close and you would continue to own your shares of ProCard
capital stock.
If ProCard's expenses related to the merger exceed $800,000, you will
receive less than $4.35 worth of Synovus common stock (valued at the average
closing price during the measurement period) for each of your ProCard shares
because the total number of shares of Synovus common stock to be exchanged for
shares of ProCard capital stock will be reduced for all ProCard expenses
related to the merger that exceed $800,000. For example, $100,000 of expenses
in excess of such $800,000 will result in $.014500 allocated to each share of
ProCard capital stock (or option thereon) held by a ProCard stockholder or
optionholder. ProCard's merger-related expenses as of April __, 2000 are
$________, and ProCard currently does not expect to exceed the $800,000 expense
threshold.
References herein to the value of consideration received by you in shares
of Synovus common stock or the worth of shares of Synovus common stock refer to
such value or worth based on the average closing price of Synovus common stock
during the twenty (20) trading day period ending three (3) days prior to the
closing date of the merger. The market price of Synovus common stock fluctuates
daily. On any given day, including the closing date of the merger, the price of
a share of Synovus common stock may be higher or lower than such average
closing price. Because the market price of Synovus common stock fluctuates, you
will not know when you vote what the shares will be worth when issued in the
merger.
On March 3, 2000, the last full trading day before the public announcement
of the proposed merger, Synovus common stock closed at $15.69. If the average
closing price of Synovus common stock during the measurement period was $15.69
and the merger was consummated, ProCard stockholders would receive 0.263644
shares of Synovus common stock, which would be valued at $4.14 per share for
each share of ProCard capital stock owned, assuming that ProCard's expenses
related to the merger did not exceed $800,000.
On April __, 2000, Synovus common stock closed at _______. If the average
closing price of Synovus common stock during the measurement period was______
and the merger was consummated, ProCard stockholders would receive _____ shares
of Synovus common stock, which would be valued at $_____ for each share of
ProCard capital stock owned, assuming that ProCard's expenses related to the
merger did not exceed $800,000.
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<PAGE> 13
PROCARD'S REASONS FOR THE MERGER (page 21)
In reaching its decision to approve and recommend approval of the merger
agreement, the board of directors considered a number of factors, including the
following:
- - Total System's intent to develop a competing alternative to ProCard's
products.
- - The numerous synergies that exist between Total System and ProCard.
- - The dependence of ProCard's revenues on two banks, the loss of either or
both of which would have a material adverse affect on ProCard and the
ability of ProCard and Total System acting together to influence those
banks to stay with ProCard.
- - The opinion of ProCard's financial advisor, Fox-Pitt, to the effect that
the consideration to be received by the holders of ProCard capital stock
in the merger was fair from a financial point of view.
- - Synovus common stock is a highly liquid currency that provides ProCard's
stockholders the ability to realize cash or to continue with their
investment with "up side" potential.
- - A merger with Synovus would not only protect but enhance ProCard's
stockholder investment.
- - A merger will ensure ProCard's on-going competitiveness and enhance the
services that ProCard provides to ProCard's banks and their corporate
clients.
- - A merger with Synovus would provide ProCard's employees with the
opportunity to work for a company that is recognized as an outstanding
employer while continuing to work at ProCard as a stand-alone entity in
Golden, Colorado.
OPINION OF FINANCIAL ADVISOR (page 23)
In deciding to approve the merger, ProCard's board of directors considered
an opinion from its financial advisor, Fox-Pitt, Kelton, Inc. This opinion
stated that, as of March 2, 2000 and subject to the assumptions and
qualifications stated in the opinion, the exchange ratio in the merger was fair
from a financial point of view to ProCard's stockholders. A copy of the opinion
is attached to this proxy statement/prospectus as Appendix "B".
We urge you to read this opinion in its entirety.
PROCARD SPECIAL STOCKHOLDERS' MEETING (page 12)
The special meeting will be held at the offices of ProCard, Inc., at 1819
Denver West Drive, Building 26, Suite 300, Golden, Colorado, at 9:00 a.m. local
time, on May 10, 2000.
RECOMMENDATION OF PROCARD BOARD OF DIRECTORS (Pages 21 and 47)
A majority of the board of directors of ProCard has determined that the
merger is in the best interests of the stockholders of ProCard and has approved
the merger agreement. Accordingly, a majority of the board of directors
recommends that the stockholders of ProCard vote "FOR" the merger agreement.
VOTE REQUIRED TO APPROVE THE MERGER (page 13)
The approval of the merger and the merger agreement requires the
affirmative vote of the holders of a majority of the outstanding shares of
ProCard common stock and ProCard preferred stock voting together as a single
class at the special meeting.
The merger does not require the approval of Synovus' shareholders. Synovus,
as the sole stockholder of the acquisition subsidiary, approved the merger on
March 3, 2000.
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<PAGE> 14
VOTING AGREEMENT (page 13)
As an incentive to Synovus to enter into the merger agreement, several
officers and all members of ProCard's board of directors entered into a voting
agreement with Synovus to vote their shares in favor of the merger agreement
and the merger. Pursuant to the voting agreement, Synovus holds proxies to vote
a majority of the ProCard capital stock entitled to vote at the special
meeting. Accordingly, Synovus currently holds proxies to vote enough shares of
ProCard capital stock to approve and adopt the merger agreement and the merger.
INTERESTS OF CERTAIN PERSONS IN THE MERGER (page 31)
Certain key employees of ProCard will enter into employment agreements with
Synovus as a condition to the merger. In addition, the past and present
directors and officers of ProCard will be indemnified by the surviving
corporation in the merger for events that occurred prior to the merger or in
connection with the merger.
CONDITIONS TO THE MERGER (page 25)
Consummation of the merger is subject to various conditions, including:
- receipt of ProCard stockholder approval;
- the holders of not more than 5% of the outstanding shares of ProCard
capital stock have elected to exercise their appraisal rights;
- receipt of the necessary regulatory approvals;
- receipt of an opinion from KPMG LLP regarding certain tax aspects of
the merger;
- receipt of a letter from KPMG LLP that the merger qualifies for
pooling of interests accounting treatment; and
- satisfaction of other customary closing conditions.
REGULATORY APPROVALS (page 29)
The regulatory approvals and consents necessary to consummate the
transactions contemplated by the merger agreement include the approval of the
Board of Governors of the Federal Reserve System and the Department of Banking
and Finance of the State of Georgia. Applications have been submitted for such
approvals. The Georgia Banking Department has approved the merger. The Federal
Reserve has not yet approved the merger.
ACCOUNTING TREATMENT AS ADDITIONAL CONDITION TO THE MERGER (page 33)
We expect the merger to qualify as a "pooling of interests," which means
that we will treat our companies as if they had always been one company for
accounting and financial reporting purposes. Synovus has the right not to
complete the merger if Synovus does not receive a letter from its independent
public accountants stating that the merger will qualify as a "pooling of
interests."
TAX OPINION (pages 32)
The merger is structured so that ProCard stockholders will not recognize
gain or loss for federal income tax purposes for the whole shares of Synovus
common stock they receive in the merger. Synovus' independent public
accountants, KPMG LLP, has issued an opinion to this effect, which is attached
to this proxy statement/prospectus as Appendix "C". ProCard stockholders will
be taxed on cash received instead of any fractional share of Synovus common
stock. Tax matters are complicated, and tax results may vary among
stockholders. We urge you to contact your own tax advisor to understand fully
how the merger will affect you.
7
<PAGE> 15
EFFECTIVE DATE OF MERGER (page 15)
The merger will become effective when all of the conditions to the merger
have been satisfied and a certificate of merger is filed with the Secretary of
State of Delaware, or on such later date as the certificate of merger may
specify. Subject to the conditions specified in the merger agreement, the
parties anticipate that the merger will become effective in the second quarter
of 2000. There can be no assurances, however, as to whether or when the merger
will occur.
WAIVER AND AMENDMENT (page 29)
Prior to the effective date of the merger, any provision of the merger
agreement may be waived in writing by the party entitled to the benefits of
such provision or by all parties, to the extent allowed by law. Except as
limited by law, the merger agreement may be amended at any time by an agreement
in writing between Synovus and ProCard.
APPRAISAL RIGHTS (pages 12 and 47)
Holders of ProCard capital stock are entitled to appraisal rights under
Delaware law and, if the merger is consummated, to receive payment in cash for
the statutory "fair value" of their shares, upon compliance with the provisions
of Section 262 of the Delaware General Corporation Law. Under Delaware law,
"fair value" would exclude any element of value arising from the accomplishment
or expectation of the merger. To perfect these rights, a stockholder must not
vote in favor of the merger and must deliver to ProCard a written demand for
appraisal of such stockholder's shares prior to the vote on the merger at the
special meeting of ProCard's stockholders. The delivery of a proxy or vote
against the merger will not constitute such a demand. Failure to follow any of
these or other applicable procedures may result in the loss of statutory
appraisal rights. Holders of Synovus common stock are not entitled to appraisal
rights in connection with the merger.
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION (page 30)
The merger agreement provides that the directors and officers of the
acquisition subsidiary immediately prior to the effective time of the merger
will serve as the directors and officers of ProCard following the merger. Upon
completion of the merger, the officers of ProCard prior to the effective time
of the merger will be appointed to serve as officers of the surviving
corporation.
TERMINATION AND TERMINATION FEE (page 30)
TERMINATION. Either ProCard or Synovus may terminate the merger under the
following circumstances, among others:
- both parties consent in writing;
- the merger is not completed before June 30, 2000; or
- the other party breaches in a material manner any of the
representations or warranties or any covenant or agreement it has
under the merger agreement and such breach is not cured within the
time frames specified in the merger agreement.
Synovus may terminate the merger agreement under the following additional
circumstances, among others:
- the ProCard stockholders do not approve the merger;
- the average closing price of Synovus' common stock during the 20
trading days ending on the third business day before the closing date
is greater than $25.00 if ProCard has not waived the application of
the $25.00 ceiling price; or
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<PAGE> 16
- the ProCard board of directors shall have modified its approval or
recommendation of the merger in a manner adverse to Synovus or causes
ProCard to enter into or endorses or recommends a competing
acquisition proposal.
ProCard may terminate the merger under the following additional
circumstances, among others:
- the average closing price of Synovus' common stock during the 20
trading days ending on the third business day before the closing date
is less than $16.50 if Synovus has not waived the application of the
$16.50 floor price; or
- the ProCard board receives a superior proposal from another person
offering to merge with ProCard, acquire all or a significant portion
of the assets or equity of ProCard, or any similar transaction, and
the board in good faith believes that its fiduciary duties to the
ProCard stockholders requires the termination of the merger agreement
and Synovus has not proposed adjustments to the merger agreement that
would enable ProCard to continue with the merger.
TERMINATION FEE. The merger agreement provides that ProCard must pay
Synovus a termination fee of $1.2 million in the event that the agreement is
terminated because:
- the ProCard stockholders do not approve the merger;
- the ProCard board of directors shall have modified its approval or
recommendation of the merger in a manner adverse to Synovus or causes
ProCard to enter into an agreement or endorses, approves or
recommends a competing acquisition proposal;
- the ProCard board shall have modified its approval or recommendation
of the merger in a manner adverse to Synovus and the parties to the
voting agreement (other than Synovus) shall have notified Synovus
that they will not vote their shares in favor of the merger; or
- the ProCard board receives a proposal from another person offering to
merge with ProCard, acquire all or a significant portion of the
assets or equity of ProCard, or any similar transaction, and the
board in good faith believes that such other proposal is a superior
proposal, the receipt of which requires the board to terminate the
merger agreement in accordance with its fiduciary duties under
Delaware law.
NO SOLICITATION; BOARD ACTION (page 26)
ProCard has agreed that until the completion of the merger, ProCard will
not directly or indirectly take any specified actions with respect to any
"acquisition proposal," as defined in the merger agreement.
However, notwithstanding these restrictions, ProCard may, if necessary to
comply with its fiduciary obligations and subject to other qualifications and
conditions, furnish information and engage in discussions or negotiations in
response to unsolicited acquisition proposals for business combinations and
acquisitions that ProCard's board of directors determines to be a "superior
proposal," as defined in the merger agreement.
ProCard has agreed to notify Synovus of any superior proposal and to give
Synovus the opportunity to propose adjustments to the terms and conditions of
the merger agreement prior to abandoning its recommendation of the merger
agreement to the ProCard stockholders.
EFFECT OF MERGER ON RIGHTS OF PROCARD STOCKHOLDERS (page 38)
ProCard is a Delaware corporation and, therefore, the rights of
stockholders of ProCard currently are determined by reference to the Delaware
General Corporation Law and ProCard's Certificate of Incorporation and bylaws.
At the effective time of the merger, stockholders of ProCard will become
shareholders of Synovus, which is a Georgia corporation. As a result, their
rights as shareholders of Synovus will then be determined by reference to the
Georgia Business Corporation Code and Synovus' Articles of Incorporation and
bylaws. The laws of these jurisdictions
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<PAGE> 17
vary. There are also various differences between Synovus' Articles of
Incorporation and bylaws and ProCard's Certificate of Incorporation and bylaws.
MARKET PRICE INFORMATION (page 50)
Synovus common stock is listed on the New York Stock Exchange. ProCard's
capital stock is not publicly traded. The following table presents:
- the last reported sale price of one share of Synovus common stock, as
reported on the New York Stock Exchange Composite Transaction Tape,
- the estimated sale price for ProCard capital stock, and
- the market value of one share of ProCard capital stock on an
equivalent per share basis.
On March 15, 2000, there were 92 holders of record of ProCard common
stock, 46 holders of record of ProCard series A preferred stock and 59 holders
of record of ProCard series B preferred stock. No established trading market
for ProCard capital stock exists. Transactions in ProCard capital stock are
infrequent and are negotiated privately between the persons involved in these
transactions. These transactions are not reported on an exchange or other
organized trading system. For these reasons, ProCard does not have reliable
data regarding recent trading activity in ProCard capital stock. To the best
knowledge of management of ProCard, the last transaction in ProCard capital
stock prior to announcement of the merger was a sale of ProCard series B
preferred stock on January 11, 2000 at a price of $4.00 per share.
In each case it is assumed that the merger had been completed on March 3,
2000, the last full trading day prior to the public announcement of the
proposed merger, and on April __, 2000, the last day for which such information
could be calculated prior to the date of this proxy statement/prospectus. The
equivalent price per share data for ProCard capital stock has been determined
by multiplying the last reported sale price of one share of Synovus common
stock on each of these dates by the exchange ratio.
<TABLE>
<CAPTION>
EQUIVALENT
PRICE PER
SHARE OF
SYNOVUS PROCARD PROCARD
COMMON CAPITAL CAPITAL
DATE STOCK STOCK STOCK
---- ----- (ESTIMATED) -----
-----------
<S> <C> <C> <C>
March 3, 2000 $ 15.69 $ 4.00 $ 4.14
April __, $ _____ $ ____ $ ____
2000
</TABLE>
SELLING SHAREHOLDERS; PLAN OF DISTRIBUTION (page 35)
This proxy statement/prospectus also relates to the offer and resale by
certain ProCard stockholders, referred to in this document as the "selling
shareholders," of up to approximately 1,086,524 shares of Synovus common stock
issued to them in connection with the merger. The selling shareholders have not
advised Synovus of any specific plans for the distribution of the resale
shares. It is anticipated that the sale or distribution of all or any portion
of the resale shares offered hereby may be effected from time to time by the
selling shareholders directly, indirectly to or through brokers or dealers or
in a distribution by one or more underwriters on a firm commitment or best
efforts basis, on the New York Stock Exchange, in the over-the-counter market,
on any national securities exchange on which the shares are listed or traded,
in privately negotiated transactions, or otherwise, at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices.
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<PAGE> 18
RISK FACTORS
ProCard stockholders should consider carefully the following factors, in
addition to those factors discussed in the documents that Synovus has filed
with the SEC which we have incorporated by reference into this document, and
the other information included in this proxy statement/ prospectus, before
voting on the proposal to approve the merger agreement and the transactions
contemplated by the merger agreement.
FLOATING EXCHANGE RATIO
Upon completion of the merger, each share of ProCard capital stock will be
converted into the right to receive not less than 0.174005 shares (unless
ProCard waives the ceiling) nor more than 0.263644 shares (unless Synovus
waives the floor) of Synovus common stock with the precise exchange ratio to be
determined in accordance with the merger agreement as described in "THE MERGER
- - Terms of the Merger" on page 15. (There are termination provisions in the
merger agreement associated with the price of Synovus common stock. See "THE
MERGER - Termination and Termination Fee" on page 30). The price of Synovus
common stock when the merger takes place may vary from its price at the date of
this document and at the date of the special meeting. Such variations in the
price of Synovus common stock may result from changes in the business,
operations or prospects of Synovus, market assessments of the likelihood and
timing of the merger, regulatory considerations, general market and economic
conditions and other factors. At the time of the special meeting, ProCard
stockholders will not know the exact value of the Synovus common stock that
ProCard stockholders will receive when the merger is completed. You are urged
to obtain current market quotations for Synovus common stock.
EXPENSES
The terms of the merger agreement provide that ProCard shall pay its own
expenses in connection with the negotiations and consummation of the merger up
to a maximum of $800,000. The amount of any expenses in excess of such $800,000
shall be withheld from the shares of Synovus common stock to be distributed to
the ProCard stockholders, resulting in a lower amount to be distributed to the
ProCard stockholders. For example, $100,000 of expenses in excess of such
$800,000 will result in $.014500 allocated to each share of ProCard capital
stock (or option thereon) held by a ProCard stockholder or optionholder.
A WARNING ABOUT FORWARD-LOOKING STATEMENTS
Synovus and ProCard make forward-looking statements in this document, and
Synovus makes such statements in its public documents, that are subject to
risks and uncertainties. These forward-looking statements include information
about possible or assumed future results of our operations. Also, when we use
any of the words "believes," "expects," "anticipates" or similar expressions,
we are making forward-looking statements. Many possible events or factors could
affect the financial results and performance of each of our companies. This
could cause results or performances to differ materially from those expressed
in our forward-looking statements. The Private Securities Litigation Reform Act
of 1995 provides a "safe harbor" for such forward-looking statements. In order
to comply with the terms of the safe harbor, we note that a variety of factors
could cause our actual results and experience to differ materially from the
anticipated results or other expectations expressed in such forward-looking
statements. The risks and uncertainties that may affect the operations,
performance, development and results of our businesses include, but are not
limited to, those described under "Risk Factors" and as follows. You should
consider these risks when you vote on the merger. These possible events or
factors include the following:
- our cost savings from the merger are less than we expect, or we
are unable to obtain those cost savings as soon as we expect;
- costs or difficulties relating to the integration of ProCard may
be greater than expected;
- we lose more deposits, customers, or business than we expect;
- competition in the banking industry increases significantly;
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<PAGE> 19
- our integration costs are higher than we expect or our operating
costs after the merger are greater than we expect;
- the merger does not generate the synergies we expect;
- technological changes and systems integration are harder to make
or more expensive than we expect;
- changes in the interest rate environment reduce our margins;
- general economic or business conditions are worse than we
expect;
- legislative or regulatory changes occur which adversely affect
our business;
- changes occur in business conditions and inflation;
- changes occur in the securities markets; and
- we have more trouble obtaining regulatory approvals for the
merger than we expect.
Management of each of Synovus and ProCard believes the forward-looking
statements about its company are reasonable; however, you should not place
undue reliance on them. Forward-looking statements are not guarantees of
performance. They involve risks, uncertainties and assumptions. The future
results and shareholder values of Synovus following completion of the merger
may differ materially from those expressed or implied in these forward-looking
statements. Many of the factors that will determine these results and values
are beyond Synovus' and ProCard's ability to control or predict.
THE SPECIAL MEETING
We are furnishing this proxy statement/prospectus to stockholders of
ProCard in connection with the solicitation of proxies by the board of
directors of ProCard for use at the special meeting of its stockholders.
DATE, TIME AND PLACE
The special meeting will be held at the offices of ProCard, Inc., at 1819
Denver West Drive, Building 26, Suite 300, Golden, Colorado, at 9:00 a.m. local
time, on May 10, 2000.
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
At the special meeting, the stockholders of ProCard will be asked to
consider and vote upon the approval and adoption of the merger agreement and
the merger, and such other matters as may properly be brought before the
special meeting.
The ProCard board has, by a vote of four in favor and two against,
approved the merger agreement, and the transactions contemplated by the merger
agreement. A majority of the board recommends that you vote "FOR" approval of
the merger and the merger agreement.
RECORD DATE; STOCK ENTITLED TO VOTE; QUORUM
Only holders of record of ProCard common stock and ProCard preferred stock
at the close of business on March 15, 2000, the record date for ProCard's
special meeting, are entitled to receive notice of the special meeting and to
vote at the special meeting. Holders of record of shares of ProCard common
stock and ProCard preferred stock on the record date are each entitled to one
vote per share on each matter to be considered at the special meeting.
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<PAGE> 20
On the record date:
- 2,996,505 shares of ProCard common stock were issued and
outstanding and were held by 92 holders of record;
- 1,266,299 shares of ProCard series A preferred stock were issued
and outstanding and were held by 46 holders of record;
- 1,592,165 shares of ProCard series B preferred stock were issued
and outstanding and were held by 59 holders of record;
- ProCard common stock, ProCard series A preferred stock, and
ProCard series B preferred stock, constitute the only
outstanding classes of voting securities of ProCard.
A majority of all the issued and outstanding shares of ProCard common
stock and the ProCard preferred stock, taken together as a single class,
present in person or by proxy, will constitute a quorum for the special
meeting. Shares held by ProCard in its treasury do not count toward a quorum.
VOTE REQUIRED
The approval of the merger and the merger agreement requires the
affirmative vote of the holders of a majority of the outstanding shares of
ProCard common stock and ProCard preferred stock voting as a single class.
The merger does not require the approval of Synovus' shareholders.
Synovus, as the sole stockholder of the acquisition subsidiary, approved the
merger on March 3, 2000.
STOCK OWNERSHIP OF PROCARD DIRECTORS, MANAGEMENT AND OTHERS
At the close of business on the record date, the directors and executive
officers of ProCard and their affiliates beneficially owned and were entitled
to vote approximately 1,814,952 shares of ProCard common stock and 592,434
shares of ProCard series A preferred stock and 737,758 shares of ProCard series
B preferred stock. This ownership represents approximately 54% of the combined
shares of ProCard common stock and ProCard preferred stock outstanding on that
date. All directors (including the two directors who voted against the merger)
and several officers have entered into a voting agreement with Synovus. Those
parties to the voting agreement are obligated to vote in favor of the merger
agreement and the merger.
STOCK SUBJECT TO VOTING AGREEMENT
As an incentive to Synovus to enter into the merger agreement, certain key
stockholders of ProCard entered into a voting agreement with Synovus to vote
their shares of ProCard common stock and ProCard preferred stock in favor of
the merger agreement and the merger. Pursuant to the voting agreement, Synovus
holds proxies to vote shares of ProCard common stock and ProCard preferred
stock representing at least a majority of combined voting power represented by
the shares of ProCard common stock and ProCard preferred stock outstanding on
the record date. Accordingly, Synovus currently holds proxies to vote shares of
ProCard capital stock pursuant to the voting agreement sufficient to approve
and adopt the merger agreement and the merger.
TERMINATION OF THE VOTING AGREEMENT
Prior to the closing date of the merger, the voting agreement may be
terminated and the proxies held by Synovus revoked only if the merger agreement
is terminated pursuant to its terms.
VOTING OF PROXIES
Shares represented by all properly executed proxies received in time for
the special meeting will be voted at the special meeting according to the
voting instructions of the stockholder who executed the proxy. Properly
executed proxies which do not contain voting instructions will be voted in
favor of the merger agreement and the merger.
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<PAGE> 21
ProCard intends to count shares of ProCard capital stock present in person
at the special meeting but not voting, and shares of ProCard capital stock for
which we have received proxies but with respect to which holders of shares have
abstained from voting on or voted against any matter, as present at the special
meeting for purposes of determining the presence or absence of a quorum for the
special meeting.
For voting purposes at the special meeting, only shares voted in favor of
approval and adoption of the merger agreement and the merger will be counted as
favorable votes for such approval and adoption. A stockholder's failure to
submit a proxy (or to vote in person) or a stockholder's abstention from voting
with respect to the approval and adoption of the merger agreement and merger
will have the same effect as if the stockholder voted against approval and
adoption of the merger agreement and the merger.
We do not expect that any matter other than those referred to in this
proxy statement/prospectus will be brought before the special meeting. However,
if other matters are properly presented for a vote, the persons named as
proxies will vote in accordance with their judgment with respect to those
matters.
The persons named as proxies by a ProCard stockholder may propose and vote
for one or more adjournments of the special meeting to permit further
solicitations of proxies in favor of approval and adoption of the merger
agreement and the merger. However, the persons named as proxies will not vote
any shares which are voted against the approval and adoption of the merger
agreement in favor of such an adjournment.
REVOKING PROXIES
ProCard stockholders of record may revoke their proxies at any time prior
to the time their proxies are voted at the special meeting. A stockholder may
revoke a proxy by taking any of the following actions:
- - sending a written notice indicating their intention to revoke the proxy,
including by telegram or facsimile, to the Corporate Secretary of ProCard;
- - submitting a later-dated signed proxy; or
- - attending the special meeting and voting or abstaining from voting in
person.
Attendance at the special meeting alone without voting or abstaining from
the vote on the merger will not revoke a proxy. Any written notice of a
revocation of a proxy must be sent so that it will be delivered to the address
below before the voting begins at the special meeting:
ProCard, Inc.
1819 Denver West Drive
Building 26, Suite 300
Golden, Colorado 80401
Attention: Brigid Davidson, Corporate Secretary
Fax: (303) 279-1044
Proxies for stock held by stockholders who are party to the voting
agreement with Synovus may not be revoked at any time or under any
circumstances so long as the voting agreement is not terminated.
PROXY SOLICITATION
Synovus will pay all the costs of filing and printing this proxy
statement/prospectus except that ProCard will assume the cost of mailing this
proxy statement/prospectus to its stockholders. In addition to solicitation by
mail, the directors, officers and employees of ProCard may solicit proxies from
stockholders of ProCard by telephone or telegram or by other means of
communication. Such directors, officers and employees will not be additionally
compensated but may be reimbursed for reasonable out-of-pocket expenses in
connection with such solicitation.
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<PAGE> 22
Do not send in any stock certificates with your proxy cards. Synovus will
send transmittal forms with instructions for the surrender of certificates
representing shares of ProCard common stock and ProCard preferred stock to
former ProCard stockholders shortly after the merger is completed.
RECOMMENDATION OF THE PROCARD BOARD
A majority of the ProCard board has adopted the merger agreement and
believes that the proposed transaction is fair to and in the best interests of
ProCard and its stockholders. A majority of the ProCard board recommends that
ProCard's stockholders vote "FOR" approval of the merger agreement.
THE MERGER
The following is a description of certain provisions of the merger
agreement, the merger and the consequences of the merger. This description is
qualified in its entirety by reference to the full text of the merger
agreement, a copy of which is attached as Appendix "A" to this proxy
statement/prospectus and is incorporated herein by reference. All stockholders
are urged to read carefully the merger agreement, as well as the other
appendices, in their entirety.
THE MERGER AGREEMENT
The Boards of directors of Synovus, the acquisition subsidiary, and
ProCard have approved, and the proper officers of Synovus, the acquisition
subsidiary, and ProCard have executed and delivered, the merger agreement. The
merger agreement sets forth the terms of the merger and contains: (1)
conditions precedent to each party's obligations to consummate the merger; (2)
representations, warranties and covenants of each of ProCard and Synovus; (3)
provisions relating to ProCard's operations pending consummation of the merger;
and (4) certain other provisions.
TERMS OF THE MERGER
On the effective date of the merger (which will be specified in the
certificate to be issued by the Secretary of State of Delaware causing the
merger to become effective), each issued and outstanding share of ProCard
capital stock will be converted into the right to receive between 0.174005 and
0.263644 shares of Synovus common stock.
The exact exchange ratio will be determined based on the average closing
price of Synovus common stock during a 20-day measurement period ending three
business days before the closing date. If the average closing price of Synovus
common stock during the measurement period is between $16.50 and $25.00 per
share, the exchange ratio will be set so that each ProCard stockholder will
receive $4.35 worth of Synovus common stock (valued at the average closing
price during the measurement period) in exchange for each share of ProCard
capital stock the stockholder owns. The number of shares of Synovus common
stock to be exchanged for shares of ProCard capital stock will be reduced to
pay for ProCard's expenses related to the merger that exceed $800,000. To the
extent that such expenses exceed $800,000, ProCard stockholders will receive
less than $4.35 worth of Synovus common stock (valued at the average closing
price during the measurement period) for each share of ProCard capital stock
held by the stockholder.
If the average closing price of Synovus common stock during the
measurement period is less than $16.50 per share, the board of directors of
ProCard may terminate the merger agreement. If the average closing price of
Synovus common stock is less than $16.50 and the merger is consummated, ProCard
stockholders will receive 0.263644 shares of Synovus common stock for each
share of ProCard capital stock owned, unless Synovus waives the floor.
The ProCard board has resolved to terminate the merger agreement if the
per share consideration received for each share of ProCard capital stock is
less than $4.00 (valued at the average closing price during the measurement
period) after giving effect to the $16.50 floor and the expense sharing
requirements referenced in "Risk Factors - Expenses" above. This does not
prevent the ProCard board, however, from deciding to terminate the merger
agreement if the average closing price is less than $16.50. Assuming that
expenses do not exceed $800,000 the consideration received for each share of
ProCard capital stock would be less than $4.00 (valued at the average
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<PAGE> 23
closing price during the measurement period) if the average closing price of
Synovus common stock during the measurement period is less than $15.18 and
Synovus does not waive the $16.50 floor. ProCard's merger-related expenses as
of April __, 2000 are $________, and ProCard currently does not expect to
exceed the $800,000 expense threshold.
If the average closing price of Synovus common stock during the
measurement period is greater than $25.00 per share, the board of directors of
Synovus may terminate the merger agreement. If the average closing price of
Synovus common stock is more than $25.00 and the merger is consummated, ProCard
stockholders will receive 0.174005 shares of Synovus common stock for each
share of ProCard capital stock owned, unless ProCard waives the ceiling.
The following table provides examples of the operation of the exchange
ratio. The first column shows various possible average closing prices of
Synovus common stock. The second column shows the exchange ratio which would be
applicable based on the corresponding price of Synovus common stock assuming
that the $16.50 floor is not waived by Synovus and that the $25.00 ceiling is
not waived by ProCard and that in each instance, the merger agreement is not
terminated. The exchange ratio is the number of shares of Synovus common stock
which will be issued in exchange for each share of ProCard capital stock. The
third column shows the dollar value of the Synovus common stock, valued at the
average closing price of Synovus common stock during the measurement period,
which ProCard stockholders will be entitled to receive in exchange for each
share of ProCard capital stock owned. Because the market price of Synovus
common stock fluctuates, you will not know when you vote on the merger
precisely what the shares of Synovus common stock will be worth when issued in
the merger.
<TABLE>
<CAPTION>
Average Closing Price
of Synovus Equivalent
Stock during Price Per
Measurement Period Exchange Ratio ProCard Share
------------------ -------------- -------------
<S> <C> <C>
$ 14.00 .263644 $ 3.69
15.00 .263644 3.95
16.00 .263644 4.22
16.50 .263644 4.35
17.00 .255890 4.35
18.00 .241674 4.35
19.00 .228954 4.35
20.00 .217507 4.35
21.00 .207149 4.35
22.00 .197733 4.35
23.00 .189136 4.35
24.00 .181256 4.35
25.00 .174005 4.35
26.00 .174005 4.52
27.00 .174005 4.70
</TABLE>
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<PAGE> 24
The following table provides examples of the operation of the exchange
ratio assuming that the $16.50 floor is waived by Synovus and that the $25.00
ceiling is waived by ProCard.
<TABLE>
<CAPTION>
Average Closing Price
of Synovus Equivalent
Stock during Price Per
Measurement Period Exchange Ratio ProCard Share
------------------ -------------- -------------
<S> <C> <C>
$ 14.00 .310724 $ 4.35
15.00 .290009 4.35
16.00 .271883 4.35
16.50 .263644 4.35
20.00 .217507 4.35
24.00 .181256 4.35
25.00 .174005 4.35
26.00 .167313 4.35
27.00 .161116 4.35
</TABLE>
You should obtain current stock price quotations for Synovus common stock.
The market price of Synovus common stock will fluctuate before and after
completion of the merger. No assurance can be given that the market price of
Synovus common stock at or after the effective date of the merger will be equal
to the average closing price during the measurement period.
After the effective date of the merger, outstanding certificates
representing shares of ProCard capital stock will represent shares of Synovus
common stock. Certificates representing shares of ProCard capital stock will be
surrendered to Synovus by the holders thereof on or after the effective date of
the merger for new certificates representing shares of Synovus common stock.
Until so surrendered to Synovus, the certificates which previously represented
shares of ProCard capital stock will be deemed for all corporate purposes to
evidence the ownership of the respective number of shares of Synovus common
stock which the holders are entitled to receive upon their surrender to Synovus
(except for the payment of dividends, which is subject to the exchange of stock
certificates as provided herein).
Until the stock certificates nominally representing shares of ProCard
capital stock are surrendered to Synovus in exchange for certificates
representing shares of Synovus common stock, no dividends payable as of any
date subsequent to the effective date of the merger on the shares of Synovus
common stock represented by the ProCard capital stock certificates will be paid
(however, forms 1099 reporting the payment of such dividends will be filed with
the Internal Revenue Service and mailed to each shareholder). Upon the
surrender to Synovus of the ProCard capital stock certificates, Synovus will
pay to the record holders the amount of dividends which previously had become
payable, without interest, upon the shares of Synovus common stock represented
by the outstanding ProCard capital stock certificates.
Synovus will not issue fractional shares of Synovus common stock in
connection with the merger. Instead, Synovus will pay cash (without interest)
in lieu of fractional shares, in an amount equal to such fractional part of a
share of Synovus common stock multiplied by the average closing price per share
of Synovus common stock during the measurement period.
The delivery of Synovus stock certificates and other amounts may be
subject to possible forfeiture under applicable escheat laws if ProCard stock
certificates are not surrendered for exchange within the legally specified
periods of time which vary with the state of residence of the certificate
holder. Therefore, we urge all ProCard stockholders to surrender their ProCard
stock certificates at the earliest possible date after consummation of the
merger in accordance with instructions provided to you by Synovus in the letter
of transmittal described below.
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<PAGE> 25
As soon as practicable following consummation of the merger, Synovus will
send each stockholder of ProCard capital stock a letter of transmittal
explaining the procedure to be followed in exchanging certificates representing
shares of ProCard capital stock for certificates representing shares of Synovus
common stock. Until the letter of transmittal is received, stockholders of
ProCard should continue to hold their certificates representing shares of
ProCard capital stock. Do not send any ProCard stock certificates with your
proxy card.
On the basis of the number of shares of ProCard capital stock which were
outstanding on the record date, a maximum of 1,818,182 shares of Synovus common
stock may be issued to the stockholders of ProCard pursuant to the terms of the
merger agreement assuming that the $16.50 floor is not waived by Synovus. If
the $16.50 floor is waived by Synovus and the average closing price of Synovus
common stock during the measurement period were $15.69, the closing price on
the last full trading day before the public announcement of the proposed
merger, 1,912,046 shares of Synovus common stock would be issued to
stockholders of ProCard assuming ProCard's expenses related to the merger did
not exceed $800,000. If the $16.50 floor is waived by Synovus and the average
closing price of Synovus common stock during the measurement period were
$_____, the closing price on April __, 2000, _________ shares of Synovus common
stock would be issued to stockholders of ProCard assuming ProCard's expenses
related to the merger did not exceed $800,000.
After the effective date of the merger, each outstanding ProCard stock
option will be converted into an option to acquire shares of Synovus common
stock. The exercise price of the converted options and the number of shares
subject to the converted options will be adjusted in accordance with the
exchange ratio. All unvested ProCard stock options will immediately vest and
become exercisable at the effective time of the merger.
BACKGROUND OF THE MERGER
ProCard and Total System Services, Inc., an 80.8% owned subsidiary of
Synovus, have a long-standing business relationship. Total System is the
transaction processor for Citibank and Bank One, customers of ProCard that
accounted for more than 80% of ProCard's 1999 revenue. ProCard's software
provides to a bank's commercial customers the ability to generate various
reports and provides accounting functionality, allocation capability and
electronic posting to the customer's general ledger. In 1990 ProCard designed
certain enhanced card transaction authorization software and engaged Total
System to develop the software. This authorization module was installed at
Total System to function in conjunction with Total System's transaction
processing software. The enhanced authorization controls provided by this
software are the base technology that makes purchasing card programs viable.
ProCard had a period of exclusive ownership of the authorization module;
however, in accordance with the terms agreed with Total System, Total System
later gained rights to unrestricted use of the module. Additionally, one of
ProCard's licensee banks requested that the transaction data be provided
electronically to the end user which resulted in Total System and ProCard
developing direct communication links that permitted the transmission of
transaction data directly from Total System to ProCard.
By 1994, that initial generation of processing software had become
obsolete and Total System began the development of its own enhanced proprietary
processing software. ProCard converted to Total System's new processing
software in 1995.
As a result of the foregoing, ProCard and Total System have had a strong
working relationship for over ten years. ProCard personnel and Total System
personnel have worked closely together in coordinating their software
applications to serve mutual customers. ProCard and Total System each possess
in-depth knowledge of the software systems of the other. As a result, the
software solutions developed by ProCard are fully compatible with the
transaction processing services provided by Total System.
Beginning in 1998, Total System embarked on a program to develop software
in conjunction with a third party developer that would provide a comprehensive
Internet solution for a bank's commercial card customers, providing real time
access to data and to administrative and cardholder functions for purchase,
travel and entertainment and fleet transactions. Many of those functions are
provided by ProCard's software. Accordingly, Synovus viewed the acquisition of
ProCard as a logical alternative to achieve Total System's objectives rather
than continuing their development efforts.
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<PAGE> 26
In April 1999 Synovus management expressed to senior management of ProCard
an interest in a strategic partnership with ProCard and discussed a variety of
alternatives including a merger with ProCard. ProCard management requested that
Synovus set forth a written proposal.
In May and June 1999, Synovus and ProCard management met on various
occasions to discuss the synergies between the two companies and to discuss a
possible relationship. By letter dated July 1, 1999, Synovus submitted a
preliminary offer to acquire ProCard for Synovus common stock valued in the
range of $15 to $20 million, the exact price to depend on the results of due
diligence. In early July 1999, ProCard and Synovus entered into a
confidentiality agreement and the Synovus management team performed two days of
due diligence at ProCard's offices and made a presentation to the ProCard board
of directors at a board meeting on July 8, 1999. Thereafter, ProCard management
provided Synovus additional information including projected financial
statements.
By letter dated July 29, 1999, Synovus submitted a revised preliminary
proposal of $24.5 million. This proposal was contingent on satisfactory due
diligence, on the retention of key ProCard personnel and on the ability to
account for the transaction as a pooling of interests.
On August 3, 1999, the ProCard board met to discuss the Synovus proposal.
The ProCard board decided to retain an investment banking firm and to interview
two investment banking firms known to members of the ProCard board. On August
4, 1999, the ProCard board again met by conference telephone call to discuss
the results of the interviews. On August 9, 1999, the ProCard board engaged the
services of Fox-Pitt Kelton, Inc.
At a ProCard board meeting on August 20, 1999, Fox-Pitt reported the
results of the limited market check that ProCard had requested Fox-Pitt to
perform. Fox-Pitt reported that approximately 20 companies had been contacted
on a no-name basis to determine if there was any interest in a possible
acquisition of a company like ProCard. Four had expressed a preliminary
interest. Of these, two were large public companies involved in credit card
transaction processing, one was a small public company involved in e-commerce
and the fourth was a small private company.
At the August 20 ProCard board meeting, the ProCard board expressed
reluctance to accept the $24.5 million proposal but authorized management to
continue negotiations with Synovus in an effort to elicit an offer at the
highest price possible for the purpose of presenting a formal proposal to the
ProCard board. The ProCard board authorized the continuation of the market
check.
In late August ProCard management and Fox-Pitt held further discussions
with Synovus management and further information was submitted to Synovus. On
August 26, 1999, Synovus faxed a revised proposal of $28 million, subject to
certain management approvals. By letter dated August 27, 1999, Synovus
confirmed the $28 million proposal.
On August 26, 1999, the ProCard board met to discuss the latest Synovus
proposal. The ProCard board discussed the contingencies to the proposal,
including satisfactory discussions with ProCard's largest banks, Bank One and
Citibank, with a commitment from each of those banks to maintain its
relationship with ProCard for three years. Fox-Pitt reported that the market
check had resulted in no additional indications of interest other than those
stated at the August 20 board meeting. The ProCard board discussed the four
companies that had expressed preliminary interest. The ProCard board believed
that neither of the two large public data processing companies would have the
same synergies as a Synovus/ProCard combination and that neither was likely to
pay as much for ProCard as Synovus. The other public company was an e-commerce
company with a very high valuation based on earnings and revenue multiples and
whose stock was exposed, as a result, to downside risk. The fourth was a
private company whose stock was illiquid. The ProCard board concluded,
therefore, that none was as attractive a merger candidate as Synovus. The
ProCard board then voted to accept the Synovus $28 million offer subject to the
execution of a definitive agreement, and Fox-Pitt indicated that it would be
willing to render a fairness opinion on the transaction.
From August 26, 1999 until September 30, 1999, representatives of Synovus
and ProCard negotiated the merger agreement. On September 29, 1999, the ProCard
board met to approve the merger agreement subject to the resolution of certain
outstanding issues. The ProCard board approved the merger agreement as
submitted, subject to the changes recommended by ProCard counsel. As so
approved, the merger agreement contained a collar on the price of Synovus
common stock of $17.50 to $25. If the price were to fall below $17.50 the
number of shares
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<PAGE> 27
received in the merger by owners of ProCard capital stock would be determined
by dividing $28 million by $17.50. In such event, the ProCard board would have
the right to terminate the merger. Likewise, if the price were to exceed $25,
the number of shares received in the merger would be determined by dividing $28
million by $25, and Synovus could terminate the merger if the average price
exceeded $25 per share. In addition, the ProCard board adopted a resolution
committing to terminate the merger if the average closing price of Synovus
common stock was less than $15.31 per share.
At the same meeting, the ProCard board approved a proposal from Citibank
to license the ProCard Pathway(TM) software for a $1 million upfront license
fee and annual minimum transaction fees of $1.6 million for four years. On
September 29, 1999, Mr. Browning advised Synovus of the financial arrangement
that had been negotiated with Citibank. On September 30, 1999, Synovus advised
ProCard that it was terminating merger discussions until ProCard and Citibank
had executed a definitive license agreement that permitted Synovus to evaluate
the impact of the license agreement on ProCard's financial projections.
On January 11, 2000, the ProCard board met and was advised by management
that a final agreement with Citibank was expected soon and that management had
furnished to Synovus revised financial projections in anticipation of renewing
the merger discussions. On January 14, 2000, Synovus advised ProCard that
Synovus would propose $24.5 million.
On January 20, 2000, the ProCard board approved the software license
agreement with Citibank and discussed Synovus' view that ProCard's value was
only $24.5 million. The individual board members indicated their view that such
a value was not acceptable and authorized board members Browning, Summerville
and Hoagland to meet with Synovus to discuss the possible merger and valuation.
In December 1999, a member of the ProCard board became aware of a
privately held company (the "Private Company") in connection with the Private
Company's effort to secure venture capital financing. The ProCard board member
perceived potential synergies between ProCard and the Private Company. Three
members of ProCard's board met with management of the Private Company on
February 3, 2000. As a result of that meeting, arrangements were made for
management of the Private Company to meet with ProCard management and the
ProCard board in ProCard's offices.
On February 9, 2000, Messrs. Browning, Hoagland and Summerville met with
senior management of Total System and Synovus in Columbus, Georgia to negotiate
the valuation. At the meeting, Synovus increased its proposal to $28 million.
On February 11, 2000, Synovus increased the offer to $30 million.
On February 14, 2000, the senior management of the Private Company met
with the senior management of ProCard in Golden, Colorado to discuss the
business of the two companies and a potential merger and made a presentation to
the ProCard board on February 15, 2000. ProCard management evaluated the
business prospects of the Private Company and its financial condition. On
February 15, 2000, the ProCard board met to evaluate the possibilities of a
merger with the Private Company and to act on the Synovus $30 million proposal.
ProCard's investment banker, Fox-Pitt, was included in the meeting by
conference telephone. ProCard senior management gave a presentation of the
Private Company's business plan, financial condition, competitive situation and
possible synergies with ProCard. Management concluded that the Private Company
was underestimating the competition, that their possible success in the near
term was questionable, that they had a history of significant operating losses,
that they were attempting to manage a very significant amount of debt and that
there were no real synergies between the two companies. The board discussed in
detail the lack of liquidity of the Private Company's stock and the effect that
would have on ProCard's stockholders.
Mr. Summerville reported on the meeting held with management
representatives of Synovus and Total System on February 9 where Synovus
presented its method of valuation of ProCard. Mr. Hoagland reported that
Synovus presented plans which indicate that a merger of Synovus and ProCard,
given all the synergies of the two companies, would enhance the abilities of
the combined entity to compete in the marketplace. Discussion was held on the
collar on the number of Synovus shares to be issued in the merger. That issue
remained open. Synovus requested a response to its offer within two weeks.
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<PAGE> 28
The ProCard board concluded that, because of the risks involved and the
lack of synergies between ProCard and the Private Company, a decision on the
offer from Synovus should not be postponed. The ProCard board then approved the
merger agreement with Synovus subject to receipt of a fairness opinion from
Fox-Pitt and further approval by the ProCard board of any change in the floor
price of the collar. The ProCard board's vote was four in favor and two
against.
On February 22, 2000, the ProCard board approved a floor price of $16.50
per share and was advised that Synovus had agreed to ProCard's position on the
material open issues. The ProCard board adopted a resolution recommending that
the merger be submitted for vote at a special meeting of stockholders.
On February 24, 2000, a meeting of the ProCard board was held at which
Fox-Pitt presented a draft written and oral report on its fairness opinion and
read its draft fairness opinion to the ProCard board.
On March 3, 2000, the parties executed and delivered the merger agreement
and Fox-Pitt delivered its signed written opinion to the ProCard board that, as
of March 2, 2000 and based upon and subject to certain matters stated therein,
the merger consideration was fair from a financial point of view to the holders
of ProCard capital stock, provided that the value of the Synovus common stock
received by the holders of the ProCard capital stock was not less than $4.00
for each share of ProCard capital stock. See "Fairness Opinion of Financial
Advisor to the ProCard Board." The merger agreement was publicly announced on
March 6, 2000.
On March 31, 2000, the ProCard board adopted a resolution committing to
terminate the merger agreement if the per share consideration received for each
share of ProCard capital stock is less than $4.00 (valued at the average
closing price during the measurement period) after giving effect to the $16.50
floor and the requirement that expenses in excess of $800,000 be borne pro rata
by the holders of ProCard capital stock and options. This does not prevent the
ProCard board, however, from deciding to terminate the merger agreement if the
average closing price of Synovus common stock is less than $16.50. Assuming
that expenses do not exceed $800,000 the consideration received for each share
of ProCard capital stock would be less than $4.00 (valued at the average
closing price during the measurement period) if the average closing price of
Synovus common stock during the measurement period is less than $15.18 and
Synovus does not waive the $16.50 floor. ProCard's merger-related expenses as
of April __, 2000 are $________, and ProCard currently does not expect to
exceed the $800,000 expense threshold.
RECOMMENDATION OF PROCARD BOARD AND REASONS FOR THE MERGER
On February 15, 2000, the board of directors of ProCard approved and
adopted the merger agreement subject to receipt of a fairness opinion from
Fox-Pitt and further approval by the board of any change in the floor price of
the collar. The vote was four in favor and two against. A majority of the board
of directors of ProCard believes that the merger and the terms and provisions
of the merger agreement, including the $30 million consideration, are fair to
and in the best interests of ProCard's stockholders. A majority of the board of
directors of ProCard recommends that you vote to approve the merger agreement
and the transactions contemplated thereby.
In reaching its decision to approve and recommend approval of the merger
agreement, the board of directors of ProCard considered a number of factors,
including the following:
- Total System's intent to develop a competing alternative to ProCard's
products. If ProCard should fail to reach an agreement with Synovus,
Total System will aggressively move ahead with its development effort
and will be a formidable competitor for ProCard. Total System could
be expected to differentiate its product from other competitive
options in the marketplace through pricing incentives, proprietary
technical enhancements and service level commitments that would be
difficult, if not impossible, for others (including ProCard) to
match.
- There are numerous synergies that exist between Total System and
ProCard that would not exist with any other potential partner. A
merger with ProCard would allow Total System to accelerate the
deployment of a Total System-branded product within nine months.
ProCard currently has in place the technical capability for data
transmission with Total System. ProCard and Total System serve mutual
bank customers. There is in-depth expertise on the ProCard staff
regarding Total System technology, data content and technical
architecture.
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<PAGE> 29
- ProCard's revenue stream continues to be dependent on two banks, Bank
One and Citibank, which contribute over 80 percent of ProCard's gross
revenue. ProCard's contract with Citibank expires in four years. It
is possible that if Citibank is unable to complete the development of
its proprietary solution within two years, it may consider the Total
System software as an alternative to ProCard. ProCard's future
relationship with Bank One remains at risk, in that Bank One may be
forced to use alternative software. Even if this does not happen,
Bank One may decide to proceed with its own proprietary solution
given Bank One's growth potential, transaction volumes and the
resulting economic advantages. ProCard on its own has only a limited
ability to influence Bank One's decision. Total System, using its own
proprietary product or in the event of a merger using ProCard
products, could have a substantial influence on this decision. If
these events occur and ProCard has not merged with Synovus, ProCard
risks the loss of both Citibank and Bank One, ProCard's two largest
and most significant partners, and the resulting revenue stream.
- At the present time, a majority of the commercial card market is
controlled by Bank of America, US Bank, Bank One and Citibank. Bank
of America, US Bank and Citibank are developing their own proprietary
solutions that will be competitive with ProCard's products. As a
result, ProCard's market potential is substantially reduced. A merger
between ProCard and Synovus would help to compromise some of those
initiatives. It would be difficult, if not impossible, for ProCard
acting alone to discourage the development of proprietary
alternatives.
- The opinion of ProCard's financial advisor, Fox-Pitt, to the effect
that the consideration to be received by the holders of ProCard
capital stock in the merger was fair from a financial point of view.
- No investment banker or underwriter has advised ProCard that an
initial public offering is a viable strategy. Given the nature of
ProCard's market and business model, ProCard would be unlikely to
attract the extreme valuations and multiples indicative of some
recently announced e-commerce public offerings. For example, ProCard,
while offering an Internet product, does not have some of the key
characteristics possessed by some of these recently announced
Internet start-up companies. ProCard is card-centric, not
enterprise-centric; it sublicenses its products to banks, not to end
users; it has no relationship with a buyer or seller; its technology
is incapable of conducting and consummating transactions between
parties; and it offers only a reporting and accounting mechanism for
corporate end points for transactions conducted on a plastic card.
- Synovus common stock is a highly liquid currency that provides
ProCard's stockholders the ability to realize cash or to continue
with their investment with "up side" potential.
- A merger with Synovus would not only protect but enhance ProCard's
stockholder investment. A merger will ensure ProCard's on-going
competitiveness and enhance the services that ProCard provides to
ProCard's banks and their corporate clients.
- A merger with Synovus would provide ProCard's employees with the
opportunity to work for a company that is recognized as an
outstanding employer while continuing to work at ProCard as a
stand-alone entity in Golden, Colorado.
- The other terms and conditions of the merger agreement, which
provides that the ProCard board can terminate the merger agreement,
upon payment of a $1.2 million "break-up fee," in order to accept a
bona fide unsolicited proposal reasonably expected to lead to an
acquisition, merger or business combination or similar transaction,
so long as the ProCard board determines in good faith after
consultation with (and based in part on the advice of) its
independent financial advisors to be more favorable to ProCard and
its stockholders than the merger with Synovus.
The foregoing discussion of the information and factors considered by the
ProCard board is not intended to be exhaustive, but includes the material
factors considered. In view of the variety of factors considered in connection
with its evaluation of the merger and the offer price, the ProCard board did
not find it practicable to, and did not,
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quantify or otherwise assign relative weight to the specific factors considered
in reaching its determinations and recommendations, and individual directors
may have given differing weight to different factors.
OPINION OF FINANCIAL ADVISOR
ProCard has retained Fox-Pitt, Kelton, Inc. to act as its financial
advisor in connection with the merger. Fox-Pitt is an investment banking and
financial services firm located in New York City, New York. As part of its
investment banking business, Fox-Pitt is regularly engaged in the valuation of
the securities of financial technology companies in connection with
acquisitions, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements and valuations for various other
purposes. As specialists in the securities of financial technology companies,
Fox-Pitt has experience in, and knowledge of, the valuation of such
enterprises. ProCard's board of directors selected Fox-Pitt based upon
Fox-Pitt's familiarity with and knowledge of these enterprises.
Neither Fox-Pitt nor any of its affiliates has a material financial
interest in ProCard or Synovus. However, in the normal course of its business,
Fox-Pitt may trade equity securities of Synovus and Total System for its own
account and for the accounts of customers and, accordingly, may at any time
hold a long or short position in such securities. Fox-Pitt has received a fee
of $300,000 from ProCard for its engagement as ProCard's financial advisor and
will receive an additional fee of $170,000 upon the closing of the merger.
Fox-Pit will also be reimbursed for its out-of-pocket expenses in connection
with this engagement.
Prior to ProCard entering into the merger agreement, Fox-Pitt worked with
senior management at ProCard to develop a list of alternative potential
acquirors to contact to determine their level of interest in a transaction with
ProCard. On August 20, 1999, Fox-Pitt gave a preliminary report to the ProCard
board on the status of this market check. Fox-Pitt reported that of the
companies contacted, four had indicated preliminary interest in learning more
about ProCard and receiving any information that was available. On September
13, 1999, the ProCard board and its Chief Executive Officer determined that for
separate reasons applicable to each of the four companies no further
information should be sent to them. The ProCard board elected not to pursue any
of the companies that expressed preliminary interest. Since September 13, 1999,
Fox-Pitt has had no further contact, with respect to ProCard, with any of the
companies involved in the market check. Senior management and the ProCard board
have also not requested Fox-Pitt to make any contact with these companies.
As part of its role as financial advisor, Fox-Pitt rendered its written
opinion to the ProCard board of directors in a letter dated March 3, 2000, that
as of March 2, 2000, and subject to the factors and assumptions set forth in
that opinion letter, the consideration to be offered to the holders of ProCard
preferred stock and ProCard common stock by Synovus in the merger is fair from
a financial point of view to such stockholders. The form and amount of
consideration to be offered by Synovus to the ProCard stockholders in the
merger was determined through arm's length negotiations between the two
parties. The full text of the Fox-Pitt opinion is attached hereto as Appendix
"B". ProCard's stockholders should read the Fox-Pitt opinion for a discussion
of assumptions made, matters considered and limits on the review undertaken by
Fox-Pitt in rendering its opinion. The summary of the opinion of Fox-Pitt set
forth in this prospectus is qualified in its entirety by reference to the full
text of the Fox-Pitt opinion attached hereto.
Except for the discontinuation of the market check referenced above, no
limitations were imposed by ProCard on the scope of Fox-Pitt's investigation or
the procedures to be followed by Fox-Pitt in rendering its opinion. The
Fox-Pitt opinion is for the use and benefit of the ProCard board of directors
and was rendered to the ProCard board of directors in connection with its
consideration of the merger. The Fox-Pitt opinion is not intended to be and
does not constitute a recommendation to any stockholder of ProCard as to how
such stockholder should vote with respect to the merger.
In arriving at its opinion, Fox-Pitt:
- reviewed and analyzed certain publicly available financial
statements for ProCard, Synovus and Total System and internal
financial information made available to Fox-Pitt by the
management of ProCard;
- analyzed certain internal financial statements, including
financial projections, and other financial and operating data
prepared by the management of ProCard;
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- discussed the past, present and future operations, financial
condition and prospects of ProCard, Synovus and Total System
with the management of ProCard, Synovus and Total System;
- reviewed the stock price performance and trading activity of
Synovus common stock and Total System common stock;
- compared the financial performance and condition of ProCard,
Synovus and Total System with that of certain other comparable
publicly traded companies;
- reviewed the financial terms, to the extent publicly available,
of certain merger and acquisition transactions comparable, in
whole or in part, to the merger;
- reviewed and discussed with the management of ProCard, Synovus
and Total System the strategic objectives of the merger and
certain other benefits of the merger;
- performed a market check to gauge the level of interest among
other potential buyers of ProCard;
- reviewed the merger agreement; and
- performed such other analyses as it deemed appropriate.
In addition, Fox-Pitt had discussions with the senior management of each
of ProCard, Synovus and Total System concerning their respective businesses,
operations, assets, financial conditions and prospects and have undertaken such
other studies, analyses and investigations as it deemed appropriate.
In particular, Fox-Pitt reviewed ProCard's audited financial statements
for the years ended December 31, 1994 through 1998 and the unaudited results
for 1999, and Synovus' audited financial statements for the years ended
December 31, 1994 through December 31, 1999. Fox-Pitt discussed the results of
its review with the senior management of ProCard and Synovus, respectively.
Fox-Pitt reviewed the reported weekly price, trading level and volume of
Synovus common stock during the period from February 1999 through March 2,
2000. Fox-Pitt reviewed the institutional shareholder base of Synovus as well
as publicly-disclosed analyst earnings estimates for the years 2000 and 2001.
Fox-Pitt also compared the financial performance of Synovus, and the
performance of its common stock, to a select group of United States banking
companies.
Fox-Pitt reviewed Total System's audited financial statements for the
years ended December 31, 1994 through 1998. Fox-Pitt reviewed the publicly
available quarterly statements for 1999 and other publicly available
information. Fox-Pitt discussed the results of its review with the management
of ProCard, Synovus and Total System. Fox-Pitt also reviewed the ownership
profile and existing research coverage of Total System.
Fox-Pitt reviewed the reported weekly price, trading level and volume of
Total System common stock during the period from February 1999 through March 2,
2000. Fox-Pitt reviewed the institutional shareholder base of Total System as
well as publicly-disclosed analyst earnings estimates for 2000 and 2001.
Fox-Pitt also compared the financial performance of Total System and the
performance of its common stock relative to a select group of publicly traded
financial technology companies.
Fox-Pitt conducted analyses of selected United States publicly traded
software and technology providers to financial institutions. None of the
companies in the analyses are identical to ProCard. As such, the results of
these analyses are purely financial calculations used to make general
comparisons rather than analyses of the differences in operating
characteristics, business mixes, management quality and capital structures of
the various companies and transactions. Any comparisons made should be regarded
in light of other considerations.
Fox-Pitt performed a review of selected merger and acquisition
transactions involving software and technology companies in the United States
during 1999 and 2000. Not all of the transactions reviewed involved software
and
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technology providers to financial institutions. None of the transactions
are identical to this transaction. As such, the results of the transaction
analyses were purely financial calculations used to make general comparisons
rather than analyses of the differences in operating characteristics, business
mixes, management quality and capital structures of the various companies and
transactions. Any comparisons made should be regarded in light of other
considerations.
Using financial projections provided by management of ProCard, Fox-Pitt
performed a discounted cash flow analysis to determine a range of values as of
January 1, 2000. Fox-Pitt assumed and relied upon, without independent
verification, the accuracy and completeness of all such projections. Fox-Pitt
reviewed this discounted cash flow analysis with the senior management of
ProCard.
Fox-Pitt did not attribute any particular weight to any analysis or factor
considered by it, but rather made qualitative judgments as to the significance
and relevance of each analysis and factor. Accordingly, Fox-Pitt believes that
its analyses must be considered as a whole and that considering any portion of
such analyses and factors, without considering all analyses and factors, could
create a misleading or incomplete view of the process underlying its opinion.
In its analyses, Fox-Pitt made numerous assumptions with respect to industry
performance, general business and economic conditions and other matters, many
of which are beyond the control of ProCard, Synovus and Total System. Any
estimates contained in these analyses are not necessarily indicative of actual
values or predictive of future values or results, which may be significantly
more or less favorable than as set forth therein. In addition, analyses
relating to the value of businesses do not purport to be appraisals or to
reflect the prices at which businesses may actually be sold.
CONDITIONS TO THE MERGER
Each party's obligation to effect the merger is subject to the
satisfaction or waiver of conditions which include, in addition to other
closing conditions, the following:
- approval of the merger agreement and the transactions contemplated by
that agreement by the affirmative vote of the holders of a majority
of the outstanding shares of ProCard capital stock;
- each of the representations, warranties and covenants of the other
party contained in the merger agreement will be true on, or complied
with by, the closing date in all material respects as if made on such
date (or on the date when made in the case of any representation or
warranty which specifically relates to an earlier date) and each of
the parties will have received a certificate signed by the
appropriate officer of the other party, dated the closing date, to
such effect;
- there will be no suit, action or other proceeding by any third party
pending before any court or governmental body, agency or authority
seeking to restrain or prohibit, or to obtain damages or other relief
in connection with, the merger agreement or the consummation of the
transactions contemplated thereby or which is likely to materially
adversely affect the value of the assets or business of ProCard;
- receipt of an opinion from KPMG LLP to the effect that the merger
will be treated for federal income tax purposes as a tax-free
reorganization within the meaning of Section 368 of the Internal
Revenue Code;
- approval for the listing of Synovus common stock to be issued
pursuant to the merger agreement on the New York Stock Exchange,
subject only to official notice of issuance by Synovus;
- the registration statement of which this proxy statement/prospectus
forms a part will have become effective and no stop order suspending
the effectiveness of the registration statement will have been issued
and no proceedings for that purpose will have been initiated or
threatened by the SEC or any other regulatory authority; and
- neither party will have learned of the occurrence of any material
adverse change in the financial condition, business or results of
operations or prospects of the other party.
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The obligation of Synovus to effect the merger is subject to the
satisfaction or waiver of conditions, which include, in addition to other
closing conditions, the following:
- approval of the merger agreement and the transactions contemplated by
that agreement by the Federal Reserve Board and the Georgia
Department of Banking and Finance;
- receipt of consent to assignment of all ProCard contracts or written
waivers of the provisions of such contracts requiring the consents of
third parties;
- delivery of a certificate by the Secretary of ProCard certifying that
the ProCard board of directors and the holders of ProCard capital
stock have taken all action necessary to authorize the execution,
delivery and performance of the merger agreement and the consummation
of the transactions contemplated thereby;
- delivery of the minute books, stock transfer books and corporate seal
of ProCard;
- receipt of a legal opinion from ProCard's legal counsel;
- execution and delivery to Synovus of a voting agreement granting
Synovus an irrevocable proxy to vote more than 50% of the outstanding
shares of ProCard capital stock in favor of the merger;
- all holders of ProCard capital stock will pay in full all amounts of
any kind owed to ProCard, or such amount shall have been offset on a
dollar-for dollar basis against any indebtedness for borrowed money
owed by ProCard to such stockholder;
- the holders of not more than 5% of the outstanding shares of ProCard
capital stock shall have elected to exercise appraisal rights;
- each of the rule 145 affiliates of ProCard will have executed letters
relating to the disposition of shares of Synovus common stock
received in the merger in a form reasonably acceptable to Synovus;
- all warrants to purchase ProCard stock that have not been exercised
prior to closing date will have been terminated by ProCard; and
- receipt by Synovus of a letter dated as of the effective date of the
merger from KPMG LLP to the effect that the merger will qualify for
pooling of interests accounting treatment.
The obligation of ProCard to effect the merger is subject to the
satisfaction or waiver of conditions, which include, in addition to other
closing conditions, the following:
- delivery of a certificate by the Secretary or any Assistant Secretary
of Synovus certifying that the Synovus board of directors and the
acquisition subsidiary board of directors have adopted all required
corporate resolutions necessary to authorize the execution, delivery
and performance of the merger agreement and the consummation of the
transactions contemplated thereby;
- ProCard shall have received from Synovus' Senior Vice President and
Senior Deputy General Counsel a legal opinion; and
- the holders of less than 10% of the outstanding shares of ProCard
capital stock shall have elected to exercise appraisal rights.
NO SOLICITATION; BOARD ACTION
In the merger agreement, ProCard has agreed that it will not, nor will it
authorize or permit any of its officers, directors, employees, auditors,
attorneys, financial advisors, lenders or other agents to, directly or
indirectly:
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- solicit, initiate or encourage the submission of any acquisition
proposal, as described below; or
- participate in or encourage (including by way of furnishing any
non-public information) any discussions or negotiations
regarding any acquisition proposal.
However, if, at any time prior to the closing date, the board of directors of
ProCard determines in good faith, after consultation with independent outside
legal counsel, that to do otherwise would be inconsistent with its fiduciary
obligations, ProCard and its representatives may, in response to an acquisition
proposal which did not result from a breach of the foregoing covenants and
which could reasonably be expected to constitute, based upon the written advice
of its independent financial advisor, if consummated, a superior proposal, as
described below:
- furnish information regarding ProCard to any person making an
acquisition proposal pursuant to a customary confidentiality
agreement; and
- participate in discussions or negotiations regarding the
acquisition proposal.
The merger agreement provides that:
- the term "acquisition proposal" means any bona fide proposal
with respect to a merger, consolidation, share exchange, tender
offer or similar transaction involving ProCard, or any purchase
or other acquisition of all or any significant portion of the
assets of ProCard or any equity interest in ProCard.
- the term "superior proposal" means any unsolicited proposal (on
its most recently amended or modified terms, if amended or
modified) made by a third party to enter into an alternative
transaction which ProCard's board of directors determines in its
good faith judgment (based on, among other things, the written
advice of an independent financial advisor) to be more favorable
to ProCard's stockholders than the merger, taking into account
all relevant factors (including whether, in the good faith
judgment of ProCard's board of directors, after obtaining the
advice of such independent financial advisor, the third party is
reasonably able to finance the transaction, the potential impact
of a delay in closing the alternative transaction rather than
the merger, the likely due diligence period for the alternative
transaction and costs associated therewith, the likelihood of
obtaining all required regulatory approvals for the alternative
transaction, any other contingencies impacting the closing of
the alternative transaction and any proposed changes to the
merger agreement that may be proposed by Synovus in response to
such alternative transaction).
ProCard has further agreed that neither its board of directors nor any
committee thereof may, except as provided below, (1) withdraw, qualify or
modify, or propose publicly to withdraw, qualify or modify, in a manner adverse
to Synovus, its approval or recommendation of the merger or the merger
agreement, (2) approve or recommend, or propose publicly to approve or
recommend, any transaction involving an alternative transaction, or (3) cause
ProCard to enter into any letter of intent, agreement in principle, acquisition
agreement or other similar agreement related to any alternative transaction.
Notwithstanding the foregoing, the merger agreement contains a "fiduciary out"
clause that provides that upon receipt of a superior proposal ProCard's board
of directors, prior to the closing date, may (subject to additional
requirements set forth in the merger agreement) inform ProCard's stockholders
that it no longer believes that the merger is advisable and no longer
recommends approval thereof and enter into an acquisition agreement with
respect to a superior proposal. ProCard has agreed to provide an opportunity
for Synovus to propose such adjustments to the terms and conditions of the
merger agreement as would enable ProCard to proceed with its recommendation to
its stockholders; provided, however, that any such proposed adjustment shall be
at the discretion of Synovus and ProCard at the time.
Notwithstanding any contrary provision of the merger agreement, ProCard is
obligated to submit the merger agreement (whether or not terminated) to the
ProCard stockholders whether or not ProCard's board of directors determines
that it no longer believes that the merger is advisable and no longer
recommends approval thereof; provided, however, that in the event that
ProCard's board of directors makes such a determination, ProCard will not be
obligated to submit the merger agreement to ProCard's stockholders in the event
that all of the stockholders who
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signed the voting agreement notify Synovus promptly in writing that they will
not vote their ProCard capital stock in favor of the merger.
In connection with the transactions contemplated by the merger agreement,
ProCard's independent financial advisor performed a limited market check. In
addition, ProCard and certain of its directors conducted discussions with
certain other prospective partners described in the merger agreement. None of
such prospective partners made an offer to ProCard and ProCard has made no
offer to any such entity. Such efforts by ProCard's independent financial
advisor and discussions by ProCard with such entities have ceased and such
activities occurring prior to the execution date of the merger agreement will
not be construed, in any circumstances, to be a violation of the prohibition
against solicitation of an alternative transaction, even if such entity
subsequently submits an acquisition proposal.
CONDUCT OF BUSINESS OF PROCARD PENDING THE MERGER
The merger agreement provides that prior to the effective date of the
merger, ProCard will conduct its business only in the ordinary course and will:
- carry on its business in a manner consistent with prior practice
and only in the usual and ordinary course, and use reasonable
efforts to preserve its business organization intact and
conserve the goodwill and relationships of its customers,
suppliers and others having business relations with it;
- maintain its existence and good standing in its jurisdiction of
organization plus in each jurisdiction in which the ownership or
leasing of its property or the conduct of its business requires
such qualification;
- duly and timely file or cause to be filed all reports and
returns required to be filed with any governmental body, agency
or authority and promptly pay or cause to be paid when due all
taxes, assessments and governmental charges, including interest
and penalties levied or assessed, unless diligently contested in
good faith by appropriate proceedings;
- give Synovus and Synovus' employees, counsel, accountants and
advisors, full access upon reasonable notice during normal
business hours to all of the properties, personnel, financial
and operating data, books, tax returns, contracts, commitments,
and records of ProCard in connection with reviewing ProCard and
its properties and operations;
- maintain in full force and effect all existing policies of
insurance except for replacements or renewals in the ordinary
course of business;
- use its reasonable best efforts to permit ProCard to retain the
material benefits provided by all existing contracts and
licenses to which ProCard is a party under arrangements similar
to those in effect prior to the closing date;
- not amend its charter documents or bylaws;
- except for issuances of shares of ProCard common stock prior to
the closing date upon the exercise of options and warrants, not
authorize for issuance, issue or deliver any additional shares
of ProCard capital stock or securities convertible into or
exchangeable for shares of its capital stock, or issue or grant
any right, option or other commitment for the issuance of shares
of its capital stock or of such securities, or split, combine or
reclassify any shares of its capital stock, or not take any
action to cause shares of any series of ProCard stock to be
convertible into more than one share of ProCard common stock;
- not incur any liability, commitment or obligation, except
unsecured current and trade liabilities and other unsecured
liabilities incurred in the ordinary course of business;
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- not borrow, or agree to borrow, any funds other than pursuant to
its existing loan agreements or otherwise than in the ordinary
course of business;
- not sell, transfer or otherwise dispose of assets, except for
(1) the sale or disposition of obsolete or damaged tangible
personal property and (2) the sale of assets in the ordinary
course of business that are not material to ProCard's business;
- not make any material capital commitments;
- not mortgage, pledge or encumber any of its assets or guaranty
the obligations of any party except in the ordinary course of
business;
- not make any adjustments in the salary or wage rate of, or make
or authorize any bonus payments to or consulting arrangements
with, any officer or employee or amend, terminate or adopt any
employee benefit plan;
- not take any action with the intention of causing any of the
representations and warranties made in the merger agreement to
be inaccurate on the closing date;
- not dispose of or permit to lapse any rights to the use of any
patent, trademark, trade name, license or copyright, or dispose
of or disclose to any person, any trade secret, formula,
process, technology or know-how not heretofore a matter of
public knowledge;
- not declare, pay or set aside for payment any dividend or other
distribution in respect of the capital stock or other equity
securities of ProCard and not redeem, purchase or, except for
issuances of shares of ProCard common stock prior to the closing
date upon the exercise of options and warrants, issue any shares
of ProCard capital stock or other securities of ProCard or
rights or obligations convertible into or exchangeable for any
shares of the capital stock or other securities of ProCard or
obligations convertible into such, or any options, warrants or
other rights to purchase or subscribe to any of the foregoing;
- deliver to Synovus on or prior to the 15th business day of each
month a balance sheet as of the end of the prior month and an
income statement for such month in each case accompanied by a
certificate executed by the chief financial officer on behalf of
ProCard that such statements have been prepared in conformity
with GAAP and in a manner consistent with ProCard's historic
accounting practices on a consistent basis, subject to the lack
of full footnote presentations; and
- not take any action outside the ordinary course of business
consistent with past practice.
REGULATORY APPROVALS
As indicated above, consummation of the merger and the transactions
contemplated by the merger agreement is subject to, and conditioned upon,
receipt of the approvals from the Federal Reserve and the Georgia Banking
Department. Applications in connection with the merger were filed with the
Federal Reserve and the Georgia Banking Department on or about March 17, 2000.
The merger has been approved by the Georgia Banking Department but has not yet
been approved by the Federal Reserve.
There can be no assurance that the Federal Reserve or any other applicable
regulatory authority will approve or take other required action with respect to
the merger. Synovus and ProCard are not aware of any governmental approvals or
actions that are required in order to consummate the merger except as described
above. Should such other approval or action be required, it is contemplated
that Synovus and ProCard would seek the approval or action. There can be no
assurance as to whether or when any other approval or action, if required,
could be obtained.
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WAIVER AND AMENDMENT
Prior to the effective date of the merger, any provision of the merger
agreement may be waived in writing by the party entitled to the benefits of
such provision or by both parties, to the extent allowed by law. In addition,
the merger agreement may be amended at any time, to the extent allowed by law,
by an agreement in writing between Synovus and ProCard after approval of their
respective boards of directors.
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
The merger agreement provides that the directors and officers of the
acquisition subsidiary immediately prior to the effective time of the merger
will serve as the directors and officers of ProCard following the merger. Upon
completion of the merger, the officers of ProCard prior to the effective time
of the merger will be appointed to serve as officers of the surviving
corporation.
TERMINATION AND TERMINATION FEE
The merger agreement may be terminated by Synovus:
- in writing by mutual consent of Synovus and ProCard;
- if (1) ProCard breaches or fails to perform in any material
respect any of its agreements contained in the merger agreement
to be performed by it on or prior to the closing date, (2) any
of the representations and warranties of ProCard contained in
the merger agreement are inaccurate in any material respect,
which breach, failure or inaccuracy is not cured within 10 days
after Synovus notifies ProCard of its intent to terminate the
merger agreement; provided, however, that if any such breach,
failure or inaccuracy is not reasonably capable of cure within
such 10-day period and ProCard uses its good faith efforts to
effect such cure at the earliest practicable time, Synovus will
not be permitted to terminate the merger agreement unless such
breach, failure or inaccuracy is not cured within 30 days after
Synovus notifies ProCard of its intent to terminate the merger
agreement;
- if ProCard's board of directors (1) modifies in a manner adverse
to Synovus its approval or recommendation of the merger, (2)
causes ProCard to enter into an agreement with respect to a
competing acquisition proposal, (3) endorses, approves or
recommends a competing acquisition proposal or (4) resolves to
do any of the foregoing;
- if the merger is not approved by ProCard's stockholders at the
special meeting of ProCard's stockholders;
- if the closing has not occurred by June 30, 2000, for any reason
other than delay or nonperformance of Synovus;
- if the average closing price of Synovus common stock for the
20-days measurement period ending three business days before the
closing date is more than $25.00 unless ProCard waives the
ceiling.
The merger agreement may be terminated by ProCard:
- in writing by mutual consent of Synovus and ProCard;
- if (1) Synovus breaches or fails to perform in any material
respect any of its agreements contained in the merger agreement
to be performed by it on or prior to the closing date or (2) any
of the representations and warranties of Synovus contained in
the merger agreement are inaccurate in any material respect,
which breach, failure or inaccuracy is not cured within 10 days
after ProCard notifies Synovus of its intent to terminate the
merger agreement; provided, however, that if any such breach,
failure or inaccuracy is not reasonably capable of cure within
such 10-day period and Synovus uses its good faith efforts to
effect such cure at the earliest practicable time, ProCard will
not be permitted to
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terminate the merger agreement unless such breach, failure or
inaccuracy is not cured within 30 days after ProCard notifies
Synovus of its intent to terminate the merger agreement;
- if the closing has not occurred by June 30, 2000, for any reason
other than delay or nonperformance of ProCard;
- if the board of directors of ProCard modifies in a manner
adverse to Synovus or the acquisition subsidiary its approval or
recommendation of the merger in accordance with the terms of the
merger agreement and all of the parties to the voting agreement
(other than Synovus) notify Synovus in writing that they will
not vote their shares of ProCard capital stock in favor of the
merger pursuant to the fiduciary out contained in the merger
agreement as described under "THE MERGER - No Solicitation;
Board Action" on page 26;
- if the average closing price of Synovus common stock for the
20-day measurement period ending three business days before the
closing date is less than $16.50 unless Synovus waives the
floor;
- if, after the ProCard special stockholder meeting and prior to
the closing date, the ProCard board of directors determines in
good faith, that there is a superior proposal, the receipt of
which, in the good faith judgment as to its fiduciary duties to
its stockholders under Delaware law (after consultation with
outside counsel), requires that the merger agreement be
terminated; provided, however, that ProCard's board of directors
may not terminate the merger agreement until after the 10th
business day following Synovus' receipt of written notice
advising Synovus that ProCard's board of directors has received
a superior proposal. During the 10 business day period, the
closing date will be postponed, and ProCard will provide an
opportunity for Synovus to propose such adjustments to the terms
and conditions of the merger agreement as would enable ProCard
to continue with the merger.
ProCard must pay Synovus a $1.2 million termination fee if:
- the merger agreement is not approved by the ProCard stockholders
at the special meeting;
- the merger agreement is terminated by Synovus because the
ProCard board of directors (1) modifies in a manner adverse to
Synovus its approval or recommendation of the merger, (2) causes
ProCard to enter into an agreement with respect to a competing
acquisition proposal, (3) endorses, approves or recommends a
competing acquisition proposal or (4) resolves to do any of the
foregoing;
- the merger agreement is terminated by ProCard because ProCard's
board of directors modifies in a manner adverse to Synovus or
the acquisition subsidiary its approval or recommendation of the
merger in accordance with the terms of the merger agreement and
all of the parties to the voting agreement (other than Synovus)
notify Synovus in writing that they will not vote their shares
of ProCard capital stock in favor of the merger pursuant to the
fiduciary out contained in the merger agreement; or
- if, prior to the closing date, the merger agreement is
terminated by ProCard because the ProCard board of directors
determines in good faith that there is a superior proposal, the
receipt of which, in the good faith judgment as to its fiduciary
duties to its stockholders under Delaware law (after
consultation with outside counsel), requires that the merger
agreement be terminated.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Some members of the ProCard board of directors and management have
interests in the merger in addition to their interests generally as
stockholders of ProCard. The ProCard board of directors was aware of these
interests and considered them, in addition to other matters, in approving the
merger agreement and the transactions contemplated thereby.
31
<PAGE> 39
EMPLOYMENT AGREEMENTS
It is a condition to the merger that the following key employees of
ProCard: D. Dale Browning, Kirby Slunaker, Sue Bishop, Frederick J. Waugh,
Arthur Horecki, Judd Watts, Scott Hatch, Russ Pulling, Kevin Wirth, Scott Webb,
and Doug Kramer each enter into an employment agreement with Synovus prior to
the effective time of the merger.
INDEMNIFICATION AND DIRECTORS AND OFFICERS
The merger agreement provides that Synovus shall cause the surviving
corporation to indemnify each person who is or was a director or officer of
ProCard (determined as of the date of the merger) pertaining to events
occurring prior to the effective time of the merger or to liabilities arising
out of the merger agreement. Such indemnification obligation includes
advancement of expenses by the surviving corporation to the fullest extent
permitted under applicable law if the person agrees to repay the advances if
such person was not entitled to be indemnified.
VOTING AGREEMENT
In connection with the merger agreement, Synovus and the holders of record
of a majority of ProCard capital stock have entered into a voting agreement
dated March 3, 2000, pursuant to which those stockholders have agreed to vote
their shares in favor of the merger agreement and the merger, and have granted
irrevocable proxies to the officers of Synovus to vote their shares for this
purpose. Such stockholders also have agreed not to directly or indirectly
solicit or encourage any offer from any other party concerning the possible
disposition of any portion of ProCard's business, assets or capital stock,
except if such stockholder is acting in his capacity as a director of ProCard
and the other offer meets the requirements described in the voting agreement.
Accordingly, the officers of Synovus currently hold proxies sufficient to
approve and adopt the merger agreement and the merger. The voting agreement
will remain in effect until the termination of merger agreement or the closing
of the merger.
EMPLOYEE BENEFITS
Synovus has agreed in the merger agreement that, following the effective
date of the merger, Synovus will provide to employees of ProCard employee
benefits, including without limitation pension benefits, health and welfare
benefits, life insurance and vacation and severance arrangements, on terms and
conditions that are comparable to those currently provided by ProCard. As soon
as administratively practicable following the effective time of the merger, and
in accordance with Synovus' past practice, including annual financial
performance criteria established by Synovus and the Chief Executive Officer of
the company surviving the merger, Synovus will provide to employees of ProCard
employee benefits which are substantially similar to those provided by Synovus
and its subsidiaries to their similarly situated officers and employees.
TAX OPINION
The following is a summary description of the material anticipated federal
income tax consequences of the merger generally applicable to the stockholders
of ProCard and to Synovus and ProCard. This summary is not intended to be a
complete description of all of the federal income tax consequences of the
merger. No information is provided with respect to the tax consequences of the
merger under any other tax laws, including applicable state, local and foreign
tax laws. In addition, the following discussion may not be applicable with
respect to certain specific categories of stockholders, including but not
limited to persons who are corporations, trusts, dealers in securities,
financial institutions, insurance companies or tax exempt organizations;
persons who are not United States citizens or resident aliens or domestic
entities (partnerships or trusts); persons who are subject to alternative
minimum tax (to the extent that tax affects the tax consequences of the merger)
or are subject to the "golden parachute" provisions of the Internal Revenue
Code (to the extent that tax affects the tax consequences of the merger);
persons who acquired ProCard capital stock pursuant to employee stock options
or otherwise as compensation if such shares are subject to any restriction
related to employment; persons who do not hold their shares as capital assets;
or persons who hold their shares as part of a "straddle" or "conversion
transaction." No ruling has been or will be requested from the IRS with respect
to the tax effects of the merger. The federal income
32
<PAGE> 40
tax laws are complex, and a stockholder's individual circumstances may affect
the tax consequences to the stockholder.
Synovus and ProCard have received an opinion from KPMG LLP, to the effect
that:
- the merger will constitute a tax-free reorganization under
Section 368(a) of the Internal Revenue Code;
- the basis of Synovus common stock to be received by each ProCard
stockholder will be the same as the basis of ProCard capital
stock being surrendered;
- the holding period of Synovus common stock will include the
holding period of the ProCard capital stock being exchanged,
provided that the ProCard capital stock is held as a capital
asset at the effective date of the merger; and
- that, upon consummation of the merger, no gain or loss will be
recognized by the stockholders of ProCard upon their receipt of
shares of Synovus common stock: (1) with the exception of any
income or loss that will be recognized by any ProCard
stockholders with respect to any cash payments required to be
received by them in lieu of their receipt of fractional shares
of Synovus common stock; and (2) except to the extent that the
share purchase Rights, which are described on pages 41 through
43 of this proxy statement/prospectus, are determined to be
other property within the meaning of Section 356 of the Internal
Revenue Code, as described on pages C-2 and C-7 of the opinion,
which is attached hereto as Appendix "C". The tax opinion was
issued on ________, 2000. The tax opinion is based upon certain
assumptions and representations by the management of each of
Synovus and ProCard (including, in general, the absence of any
plan or intention of ProCard's stockholders to sell or otherwise
dispose of any amount of Synovus common stock received in the
merger that would violate certain precedents regarding
continuity of interest required to exist in a reorganization).
KPMG LLP serves Synovus as its independent public accountants.
All ProCard stockholders are urged to consult their own tax advisors as to
the specific consequences to them of the merger under federal, state, local and
any other applicable income tax laws.
ACCOUNTING TREATMENT
It is anticipated that the merger will be accounted for as a pooling of
interests for financial reporting purposes. Under such accounting method,
holders of ProCard capital stock will be deemed to have combined their existing
voting common stock interest with that of holders of Synovus common stock by
exchanging their shares for shares of Synovus common stock. Accordingly, the
book value of the assets, liabilities and stockholders' equity of ProCard, as
reported on its balance sheet, will be carried over to the consolidated balance
sheet of Synovus, and no goodwill will be created. Synovus will be able to
include in its consolidated income the consolidated income of ProCard for the
entire fiscal year in which the merger occurs; however, certain expenses
incurred to effect the merger must be treated by Synovus as current charges
against income rather than adjustments to its balance sheet. The merger
agreement provides that consummation of the merger is subject to the receipt by
Synovus of a letter from KPMG LLP to the effect that the merger will qualify as
a pooling of interests under generally accepted accounting principles and
applicable rules of the SEC.
EXPENSES
The merger agreement provides that each of Synovus and ProCard will pay
its own expenses in connection with the merger and related transactions,
including, but not limited to, the fees and expenses of its own investment
advisors, brokers, legal counsel, accountants and other outside experts to
conduct due diligence. Expenses of ProCard exceeding $800,000 will, however, be
borne pro rata by the holders of ProCard capital stock and options by
withholding an amount necessary to pay such expenses from the Synovus common
stock to be distributed pursuant to the merger agreement. For example, $100,000
of expenses in excess of such $800,000 will result in $.014500 allocated to
each share of ProCard capital stock (or option thereon) held by a ProCard
stockholder or optionholder.
33
<PAGE> 41
ProCard's merger-related expenses as of April __, 2000 are $________, and
ProCard currently does not expect to exceed the $800,000 expense threshold.
NEW YORK STOCK EXCHANGE LISTING
Synovus common stock is listed on the NYSE. The Synovus common stock
issued to the stockholders of ProCard pursuant to the merger agreement will be
listed on the NYSE.
SELECTED FINANCIAL DATA OF SYNOVUS FINANCIAL CORP.
The following table shows selected historical financial data for Synovus.
The information in the following table was derived from historical financial
information contained in annual and quarterly reports and other information
Synovus has filed with the SEC. Balance sheet data is presented as of the
periods reflected in the following table. When you read the summary financial
information provided in the following table, you should also read the
historical financial information contained in annual and quarterly reports and
other information Synovus has filed with the SEC. See "WHERE YOU CAN FIND MORE
INFORMATION" on page 59.
SYNOVUS FINANCIAL CORP.
SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------------------------------------------------------
1999 1998 1997 1996(b) 1995
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Income Statement:
Total revenues (a) ...................... $ 1,251,857 $ 1,035,979 $ 927,398 $ 821,793 $ 702,412
Net interest income ..................... 513,294 455,065 425,920 386,350 352,355
Provision for losses on loans ........... 34,007 26,882 32,485 32,411 26,841
Non-interest income ..................... 739,765 582,213 501,412 435,443 350,057
Non-interest expense .................... 869,737 706,371 627,834 563,496 460,367
Net income .............................. 225,307 196,465 170,829 144,174 118,338
Per share data:
Net income - basic ...................... 0.80 0.72 0.63 0.54 0.45
Net income - diluted .................... 0.80 0.71 0.63 0.53 0.44
Cash dividends declared ................. 0.36 0.29 0.24 0.19 0.16
Book value .............................. 4.35 3.99 3.50 3.02 2.68
Balance Sheet:
Investment securities ................... 1,993,957 1,877,473 1,702,681 1,685,672 1,527,039
Loans, net of unearned income ........... 9,068,239 7,603,605 6,752,154 6,188,882 5,620,384
Deposits ................................ 9,440,087 8,797,412 7,928,211 7,395,732 6,900,943
Long-term debt .......................... 318,620 131,802 131,492 100,415 109,299
Shareholders' equity .................... 1,226,669 1,111,917 937,222 812,296 718,408
Average total shareholders' equity ...... 1,165,426 1,013,334 865,232 757,302 662,458
Average total assets .................... 11,438,696 9,827,925 9,067,237 8,355,951 7,692,029
Performance ratios and other data:
Return on average assets ................ 1.97% 2.00% 1.88% 1.73% 1.54%
Return on average equity ................ 19.33 19.39 19.74 19.04 17.86
Net interest margin ..................... 5.07 5.23 5.28 5.19 5.15
Efficiency ratio (c) .................... 58.15 58.01 56.45 58.36 60.95
Dividend payout ratio (d) ............... 43.78 41.52 38.10 36.62 36.69
Average shareholders' equity to average
assets................................. 10.19 10.31 9.54 9.06 8.61
Average shares outstanding, basic ....... 280,016 272,416 269,285 268,271 265,546
Average shares outstanding, diluted ..... 283,355 277,223 273,152 272,594 268,395
</TABLE>
(a) Consists of net interest income and non-interest income, excluding
securities gains (losses).
(b) 1996 selected financial data reflects the impact of the special FDIC
assessment. Without the special FDIC assessment, net income would have
been $146,970 and diluted net income per share would have been $.57.
(c) For the banking operations segment.
(d) Determined by dividing dividends declared (excluding pooled subsidiaries)
by consolidated net income.
34
<PAGE> 42
SELLING SHAREHOLDERS
The shares of Synovus common stock issued in the merger will be freely
transferable under the Securities Act, except for shares issued to persons who
may be deemed to be "affiliates" of ProCard for purposes of Rule 145 under the
Securities Act as of the date of the ProCard special meeting. Affiliates may
not sell their shares of Synovus common stock acquired in connection with the
merger except pursuant to an effective registration statement under the
Securities Act covering such shares or in compliance with Rule 145 promulgated
under the Securities Act or another applicable exemption from the registration
requirements of the Securities Act. Persons who may be deemed to be affiliates
of ProCard generally include individuals or entities that control, are
controlled by or are under common control with ProCard and may include certain
officers and directors of ProCard as well as principal stockholders of ProCard.
Synovus will receive an "affiliate letter" from persons deemed to be
"affiliates" of ProCard under Section 2(11) of the Securities Act and Rule
145(c) thereunder. An affiliate letter will constitute an agreement by each
affiliate of ProCard with Synovus to the effect that such affiliate will not
sell, transfer or otherwise dispose of any shares of Synovus common stock
issued to such a person in connection with the merger (i) except in compliance
with the applicable provisions of the Securities Act and the rules and
regulations thereunder; and (ii) during the periods when any such sale, pledge,
transfer or other disposition would, under generally accepted accounting
principles or the rules, regulations or interpretations of the Securities and
Exchange Commission, disqualify the merger for pooling of interests accounting
treatment. Such periods in general encompass the period commencing 30 days
prior to the merger and ending at the time of publication of financial results
covering at least 30 days of combined operations of Synovus and ProCard.
Because the selling shareholders listed in the table below may be deemed to be
affiliates of ProCard, this proxy statement/prospectus will also cover any
offers or sales of the resale shares sold by the selling shareholders.
The registration of theses shares does not necessarily mean that a
particular selling shareholder will sell any or all of his shares of Synovus
common stock. The 1,086,524 shares offered for resale through this prospectus
represent less than 1% of the shares of Synovus common stock outstanding on
February 11, 2000.
The following table sets forth certain information with respect to the
selling shareholders. Because each holder of ProCard capital stock will receive
a number of shares dependent upon the average closing price of Synovus common
stock over a twenty day trading period, the column relating to the securities
owned by the selling shareholders prior to the offering sets forth the minimum
and maximum number of shares each selling shareholder will receive in the
merger in exchange for their ProCard capital stock. The notes to the table
describe the relationship of the selling shareholder to ProCard.
<TABLE>
<CAPTION>
SECURITIES
OFFERED FOR
THE SECURITY SECURITIES
NAME OF SECURITY RELATIONSHIP SECURITIES OWNED PRIOR TO THE HOLDER'S OWNED AFTER
HOLDER WITH PROCARD OFFERING ACCOUNT THE OFFERING
---------------- ------------ ------------------------------- ------------ ------------
MINIMUM (12) MAXIMUM (13)
------------ ------------
<S> <C> <C> <C> <C> <C>
Susan Bishop Senior Vice President 217 329 329 0
DDB Investment (1) 156,604 237,279 237,279 0
Company, LLLP
D. Dale Browning Director/CEO 30,472 46,170 46,170 0
Brigid Davidson Vice President and 4,587 6,951 6,951 0
Corporate
Secretary
LGH Limited (2) 4,350 6,591 6,591 0
Partnership
Laurance R. Hoagland Director 43,480 65,880 65,880 0
Jr.
Arthur A. Horecki Vice President 69 105 105 0
David M. Kirr (3) 52,275 79,205 79,205 0
</TABLE>
35
<PAGE> 43
<TABLE>
<CAPTION>
SECURITIES
OFFERED FOR
THE SECURITY SECURITIES
NAME OF SECURITY RELATIONSHIP SECURITIES OWNED PRIOR TO THE HOLDER'S OWNED AFTER
HOLDER WITH PROCARD OFFERING ACCOUNT THE OFFERING
---------------- ------------ ------------------------------- ------------ ------------
MINIMUM (12) MAXIMUM (13)
------------ ------------
<S> <C> <C> <C> <C> <C>
Marbach, Constance Director (4) 54,794 83,022 83,022 0
and/or Terry JTWROS
Terry B. Marbach, Director 19,817 30,025 30,025 0
Nom & Co. F/A/O KM & (5) 1,252 1,898 1,898 0
Co. EPS & IP, Gregg
T. Summerville
Nom. & Co.- Kirr, (3) 1,305 1,977 1,977 0
Marbach & Co
Employees Profit
Sharing and
Investment Plan
-David M. Kirr
Nom. & Co.- Kirr, (6) 478 725 725 0
Marbach & Co
Employees Profit
Sharing and
Investment Plan
-Terry Marbach
B. LaRae Orullian Director 43,501 65,911 65,911 0
Quest Ventures (7) 30,917 46,844 46,844 0
International
Quest Ventures II (7) 45,232 68,534 68,534 0
Fred W. Reams (8) 64,567 97,829 97,829 0
Strafe & Co F/A/O (5) 4,350 6,591 6,591 0
Gregg T. Summerville
FBO Adam James
Summerville
Strafe & Co F/A/O (5) 4,350 6,591 6,591 0
Gregg T. Summerville
FBO Amy Lynn
Summerville
Strafe & Co FAO (5) 10,875 16,477 16,477 0
KM & Co. EPS - G.
Summerville
Strafe & Co FAO KM & (3) 7,252 10,989 10,989 0
Co. EPS - David Kirr
Strafe & Co FAO KM & (6) 15,265 23,129 23,129 0
Co. EPS - Terry
Marbach
Strafe & Co FBO (5) 6,525 9,886 9,886 0
Gregg Summerville
Gregg T. Summerville Director 109,764 166,310 166,310 0
</TABLE>
36
<PAGE> 44
<TABLE>
<CAPTION>
SECURITIES
OFFERED FOR
THE SECURITY SECURITIES
NAME OF SECURITY RELATIONSHIP SECURITIES OWNED PRIOR TO THE HOLDER'S OWNED AFTER
HOLDER WITH PROCARD OFFERING ACCOUNT THE OFFERING
---------------- ------------ ------------------------------- ------------ ------------
MINIMUM (12) MAXIMUM (13)
------------ ------------
<S> <C> <C> <C> <C> <C>
Jerry H. and Sharon Executive Vice 1,044 1,581 1,581 0
K. Wagner President (9)
Washington Securities (10) 2,610 3,954 3,954 0
Judson A. Watts Vice President 44 68 68 0
The Waugh/Carr (11) 1,104 1,673 1,673 0
Family Trust DTD
11/1/96
</TABLE>
- -------------------------
(1) D. Dale Browning, a director of ProCard, is the beneficial owner of any
shares owned by DDB Investment Company LLLP of which Mr. Browning is a
general partner.
(2) Laurance R. Hoagland, Jr., a director of ProCard, is the beneficial owner
of any shares owned by LGH Limited Partnership of which Mr. Hoagland is a
limited partner.
(3) David M. Kirr owns 10.10% of ProCard series B preferred stock and is the
beneficial owner of these shares.
(4) Constance Marbach is married to Terry B. Marbach, a director of ProCard.
(5) Gregg T. Summerville, a director of ProCard, is the beneficial owner of
these shares.
(6) Terry B. Marbach, a director of ProCard, is the beneficial owner of these
shares.
(7) Lucien Ruby, a director of ProCard, may be deemed to be the beneficial
owner of any shares held by Quest Ventures International and Quest
Ventures II. Mr. Ruby may be deemed to beneficially own such shares as the
general partner of Foray Partners, the general partner of both Quest
entities. Mr. Ruby disclaims beneficial ownership of these shares.
(8) Fred W. Reams owns 20.04% of the ProCard series A preferred stock.
(9) Sharon K. Wagner is married to Jerry H. Wagner.
(10) Gregg T. Summerville, a director of ProCard, is the beneficial owner of
shares held by Washington Securities, a limited partnership, for which Mr.
Summerville is a general partner.
(11) Frederick J. Waugh, a Vice President and the CFO of ProCard, is a
beneficial owner of shares held by The Waugh/Carr Family Trust.
(12) If ProCard exercises its right to waive the $25.00 ceiling price the
selling shareholders will receive less shares than the minimum amount
listed. In addition, to the extent that the costs incurred by ProCard in
the merger exceed $800,000, the number of shares of each holder of ProCard
capital stock will be reduced on a pro rata basis and the selling
shareholders will receive less than the minimum number of shares listed.
(13) If Synovus exercises its right to waive the $16.50 floor price the selling
shareholders will receive more shares than the maximum amount listed.
PLAN OF DISTRIBUTION
Synovus will not receive any proceeds from the sale of the resale shares.
The selling shareholders and their donees, pledgees and other
successors-in-interest may offer their shares of Synovus common stock at
various times in one or more of the following transactions:
- on any of the United States securities exchanges where our
stock is listed, including the New York Stock Exchange;
- in the over-the-counter market;
- in privately negotiated transactions;
- in connection with short sales of shares of Synovus common
stock;
- by pledge to secure debts and other obligations;
- in connection with the writing of non-traded and exchange-
traded call options, in hedge transactions and in
settlement of other transactions in standardized or
over-the-counter options; or
37
<PAGE> 45
- in a combination of any of the above transactions.
The selling shareholders may sell their shares of Synovus common stock at
any of the following prices:
- at market prices prevailing at the time of sale;
- at prices related to such prevailing market prices;
- at negotiated prices; or
- at fixed prices.
The selling shareholders may use broker-dealers to sell their shares of
Synovus common stock. If this happens, broker-dealers may either receive
discounts or commissions from the selling shareholders, or they may receive
commissions from purchasers of shares of Synovus common stock for whom they
acted as agents.
The selling shareholders and the broker-dealers they use to sell their
shares of Synovus common stock may be deemed to be "underwriters" under the
Securities Act and any commission the broker-dealers receive and any profits
they may make in resale of shares of Synovus common stock while acting as
principals may be deemed "underwriting discounts or commissions" under the
Securities Act. If the broker-dealers purchase shares of Synovus common stock
from the selling shareholders for their own accounts as principals, they may
make a profit by reselling the shares of Synovus common stock.
The registration effected hereby is being effected pursuant to the merger
agreement. Synovus will pay substantially all of the expenses incident to the
registration of the shares of Synovus common stock including all costs incident
to the offering and sale of the shares by the selling shareholders to the
public other than (i) any commissions and discounts of underwriters, dealers or
agents and any transfer taxes and (ii) any expenses that, in the opinion of
KPMG LLP, would cause the merger to be accounted for on any basis other than a
pooling of interests. Synovus has agreed to keep the registration statement of
which this prospectus is a part effective until the earlier of ______ __, 2002
or such time as the selling shareholders no longer hold shares of Synovus
common stock covered by this prospectus.
DESCRIPTION OF STOCK AND EFFECT OF MERGER ON RIGHTS
OF PROCARD STOCKHOLDERS
If the merger is completed, all holders of ProCard's common stock,
preferred stock and options will become holders of shares of Synovus common
stock or holders of options for shares of Synovus common stock. The rights of a
holder of Synovus common stock are similar in some respects and different in
other respects from the rights of a holder of ProCard common stock or ProCard
preferred stock. The rights of ProCard stockholders are currently governed by
the Delaware General Corporation Law and the Certificate of Incorporation and
bylaws of ProCard. The rights of Synovus stockholders are currently governed by
the Georgia Business Corporation Code and the Articles of Incorporation and
bylaws of Synovus. The following are summaries of the material differences
between the current rights of ProCard stockholders and the rights they will
have as Synovus shareholders following the merger.
The following comparison of stockholders' rights is necessarily a summary,
is not intended to be complete or to identify all differences that may, under
given situations, be material to stockholders and is subject, in all respects,
and is qualified by reference, to the Delaware General Corporation Law,
ProCard's Certificate of Incorporation, the ProCard bylaws, the Georgia
Business Corporation Code, the Synovus Articles of Incorporation and the
Synovus bylaws. Copies of the Synovus Articles of Incorporation, the Synovus
bylaws, the ProCard Certificate of Incorporation, and the ProCard bylaws are
incorporated by reference in this prospectus.
38
<PAGE> 46
<TABLE>
<CAPTION>
SYNOVUS PROCARD
========================================================== ====================================================
<S> <C>
- - Ten votes for each share held, except in certain - One vote for each share
held limited circumstances described below
- ---------------------------------------------------------- ----------------------------------------------------
- - No cumulative voting rights in the election of - Same as Synovus
directors, meaning that the holders of a
plurality of the shares elect the entire board
of directors
- --------------------------------------------------------- ----------------------------------------------------
- - Dividends may be paid from funds legally - Neither the Series A preferred stockholders
available, subject to contractual and nor the Series B preferred stockholders are
regulatory restrictions entitled to receive cash dividends; common
stockholders have the same dividend rights as
Synovus common stockholders
- --------------------------------------------------------- ----------------------------------------------------
- - Right to participate pro rata in distribution of - Series B preferred stockholders have a $4.00
assets upon liquidation per share liquidation preference over the series
A preferred stockholders, who in turn have a $3.00
per share liquidation preference over the common
stockholders
- --------------------------------------------------------- ----------------------------------------------------
- - No pre-emptive or other rights to subscribe for - Same as Synovus
any additional shares or securities
- --------------------------------------------------------- ----------------------------------------------------
- - No conversion rights - Both the series A and series B preferred
stockholders may convert their stock into common
stock currently on a 1:1 ratio, subject to
adjustment
- --------------------------------------------------------- ----------------------------------------------------
- - Directors serve staggered 3-year terms - Directors serve one-year terms
- --------------------------------------------------------- ----------------------------------------------------
- - Certain corporate actions, including business - Certain corporate actions, including business
combinations, require the affirmative action combinations, require the affirmative action or
or vote of 66-2/3% of the votes entitled to be cast vote of a majority of the outstanding shares of
by the shareholders of all voting stock capital stock
- --------------------------------------------------------- ----------------------------------------------------
- - No preferred stock is authorized - 8,000,000 shares of preferred stock is
authorized
- --------------------------------------------------------- ----------------------------------------------------
- - Common Stock Purchase Rights trade with shares - No comparable provision
as described below
- --------------------------------------------------------- ----------------------------------------------------
</TABLE>
SYNOVUS COMMON STOCK
Synovus is incorporated under the Georgia Business Corporation Code, and
Synovus is authorized to issue 600,000,000 shares of Synovus common stock, of
which 282,014,161 shares were outstanding on December 31, 1999. Synovus has no
preferred stock authorized. Synovus' board of directors may at any time,
without additional approval of the holders of Synovus common stock, issue
authorized but unissued shares of Synovus common stock.
Synovus' Articles of Incorporation and bylaws presently contain several
provisions which may make Synovus a less attractive target for an acquisition
of control by an outsider who does not have the support of Synovus' board of
directors. See "DESCRIPTION OF STOCK AND EFFECT OF MERGER ON RIGHTS OF PROCARD
STOCKHOLDERS; "- Voting Rights; Certain Anti-Takeover Effects; The Voting
Amendment"; " - The Rights Plan"; " - Staggered Board of Directors;
Supermajority Approvals"; and " - Evaluation of Business Combinations."
VOTING RIGHTS; CERTAIN ANTI-TAKEOVER EFFECTS; THE VOTING AMENDMENT
Pursuant to an amendment to Synovus' Articles of Incorporation and bylaws
which became effective on April 24, 1986 ("Voting Amendment"), shareholders of
Synovus common stock are entitled to ten votes on each matter submitted to a
vote at a meeting of shareholders for each share of Synovus common stock which:
(1) has had the same beneficial owner since April 24, 1986; (2) was acquired by
reason of participation in a dividend
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reinvestment plan offered by Synovus and is held by the same beneficial owner
for whom it was acquired under such plan; (3) is held by the same beneficial
owner to whom it was issued as a result of an acquisition of a company or
business by Synovus where the resolutions adopted by Synovus' board of
directors approving such issuance specifically reference and grant such rights,
including shares of Synovus common stock to be issued to the former
stockholders of ProCard upon consummation of the merger; (4) was acquired under
any employee, officer and/or director benefit plan maintained for one or more
employees, officers and/or directors of Synovus and/or its subsidiaries, and is
held by the same beneficial owner for whom it was acquired under such plan; (5)
is held by the same beneficial owner to whom it was issued by Synovus, or to
whom it was transferred by Synovus from treasury shares, and the resolutions
adopted by Synovus' board of directors approving such issuance and/or transfer
specifically reference and grant such rights; (6) has been beneficially owned
continuously by the same shareholder for a period of 48 consecutive months
prior to the record date of any meeting of shareholders at which the share is
eligible to be voted; (7) was acquired as a direct result of a stock split,
stock dividend or other type of share distribution if the share as to which it
was distributed has had the same beneficial owner for a period of 48
consecutive months prior to the record date of any meeting of shareholders at
which the share is eligible to be voted; or (8) is owned by a holder who, in
addition to shares which are beneficially owned under the provisions of (1)-(7)
above, is the beneficial owner of less than 1,139,063 shares of Synovus common
stock (which amount has been appropriately adjusted to reflect the stock splits
which have occurred subsequent to April 24, 1986 and with such amount to be
appropriately adjusted to properly reflect any other change in Synovus common
stock by means of a stock split, a stock dividend, a recapitalization or
otherwise occurring after April 24, 1986) ("ten-vote shares"). Shareholders of
shares of Synovus common stock not described above are entitled to one vote per
share for each such share ("one-vote shares"). A shareholder may own both
ten-vote shares and one-vote shares, in which case he will be entitled to ten
votes for each ten- vote share and one vote for each one-vote share.
In connection with various meetings of Synovus' shareholders, shareholders
are required to submit to Synovus' board of directors satisfactory proof
necessary for it to determine whether such shareholders' shares of Synovus
common stock are ten-vote shares. If such information is not provided to
Synovus' board of directors, shareholders who would, if they had provided such
information, be entitled to ten votes per share, are entitled to only one vote
per share.
As Synovus common stock is registered with the SEC and is listed on the
NYSE, Synovus common stock is subject to the provisions of an NYSE rule, which,
in general, prohibits a company's common stock and equity securities from being
authorized or remaining authorized for listing on NYSE if the company issues
securities or takes other corporate action that would have the effect of
nullifying, restricting or disparately reducing the voting rights of existing
shareholders of the company. However, such rule contains a "grandfather"
provision, under which Synovus' Voting Amendment falls, which, in general,
permits grandfathered disparate voting rights plans to continue to operate as
adopted. Synovus' management believes that all current shareholders of Synovus
common stock are entitled to ten votes per share, and as such, the further
issuance of any ten-vote shares would not disenfranchise any existing
shareholders. In the event it is determined in the future that Synovus cannot
continue to issue ten-vote shares in mergers and acquisitions, Synovus will
consider repealing the Voting Amendment and restoring the principle of one
share/one vote.
If the merger is approved, present stockholders of ProCard capital stock,
as future shareholders of Synovus common stock, will, pursuant to the Voting
Amendment described above, be entitled to ten votes per share for each share of
Synovus common stock received by them on the effective date of the merger. Such
persons may also acquire by purchase, stock dividend or otherwise, up to
1,139,063 additional shares of Synovus common stock which will also be entitled
to ten votes per share. However, if ProCard stockholders acquire by purchase,
stock dividend or otherwise, more than 1,139,063 additional shares of Synovus
common stock, they will be entitled to only receive one vote per share for each
of such shares in excess of 1,139,063 shares until they have been held for four
years.
Except with respect to voting, ten-vote shares and one-vote shares are
identical in all respects and constitute a single class of stock, i.e., Synovus
common stock. Neither the ten-vote shares nor the one-vote shares have a
preference over the other with regard to dividends or upon liquidation. Synovus
common stock does not carry any pre-emptive rights enabling a holder to
subscribe for or receive shares of Synovus common stock.
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THE RIGHTS PLAN
Synovus has adopted a Shareholder Rights Plan pursuant to which holders of
shares of Synovus common stock also hold rights to purchase securities that may
be exercised upon the occurrence of certain "triggering events." Shareholder
rights plans such as Synovus' plan are intended to encourage potential hostile
acquirors of a target corporation to negotiate with the board of directors of
the target corporation in order to avoid occurrence of the "triggering events"
specified in such plans. Shareholder rights plans are intended to give the
directors of a target corporation the opportunity to assess the fairness and
appropriateness of a proposed transaction in order to determine whether or not
it is in the best interests of the corporation and its shareholders.
Notwithstanding these purposes and intentions of shareholder rights plans, such
plans, including that of Synovus, could have the effect of discouraging a
business combination that shareholders believe to be in their best interests.
The provisions of Synovus' Shareholder Rights Plan are discussed below.
On April 27, 1999, the board of directors of Synovus adopted a Shareholder
Rights Plan pursuant to a Rights Agreement and authorized and declared a
dividend of one Common Stock Purchase Right (a "Right") with respect to each
outstanding share of Synovus common stock outstanding on May 4, 1999, and to
each holder of common stock issued thereafter until the Distribution Date (as
hereinafter defined) or the expiration or earlier redemption of the Rights.
Each Right entitles the registered holder to purchase from Synovus at any time
after the Distribution Date one share of common stock at a price of $225.00 per
share, subject to adjustment (the "Purchase Price"). The description and terms
of the Rights are set forth in the Rights Agreement between Synovus and State
Street Bank and Trust Company, as Rights Agent.
Initially, the Rights will attach to all certificates of outstanding
shares of common stock, and no separate Right Certificates (as hereinafter
defined) will be distributed. The Rights will become exercisable and separate
from the shares of common stock upon the earlier to occur of (1) ten days after
the date (the "Stock Acquisition Date") of a public announcement that a person
or group of affiliated or associated persons has acquired beneficial ownership
of 15% or more of the outstanding common stock (such person or group being
hereinafter referred to as an "Acquiring Person"); or (2) ten business days (or
such later date as the board may determine) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer, the
consummation of which would result in a person or group becoming the beneficial
owner of 15% or more of the outstanding common stock (the earlier of such dates
in clauses (1) and (2) being called the "Distribution Date"). Shares of common
stock beneficially owned by Synovus or any subsidiary of Synovus will not be
considered outstanding for purposes of calculating the percentage ownership of
any person.
Each of the following persons will not be deemed to be an Acquiring Person
even if they have acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding common stock: (1) Synovus, any
subsidiary of Synovus, or any employee benefit plan of Synovus or of any
subsidiary of Synovus; (2) any shareholder who is a descendant of D. Abbott
Turner (the "Turner Family"), any shareholder who is affiliated or associated
with the Turner Family and any person who would otherwise become an Acquiring
Person as a result of the receipt of common stock or a beneficial interest in
common stock from one or more members of the Turner Family by way of gift,
devise, descent or distribution, but not by way of sale, unless any such
person, together with his affiliates and associates, becomes the beneficial
owner of more than 30% of the outstanding shares of common stock; (3) any
person who would otherwise become an Acquiring Person solely by virtue of a
reduction in the number of outstanding shares of common stock unless and until
such person shall become the beneficial owner of any additional shares of
common stock; and (4) any person who as of the Record Date was the beneficial
owner of 15% or more of the outstanding common stock unless and until such
person shall become the beneficial owner of any additional shares of common
stock.
Until the Distribution Date (or earlier redemption or expiration of the
Rights), (1) the Rights will be evidenced by the certificates for the common
stock, (2) the Rights will be transferred with, and only with, the shares of
common stock, (3) new common stock certificates issued after the Record Date
upon transfer or new issuance of shares of common stock will contain a notation
incorporating the Rights Agreement by reference, and (4) the surrender for
transfer of any certificates for shares of common stock outstanding as of the
Record Date, even without such notation, will also constitute the transfer of
the Rights associated with the shares of common stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights (collectively, the "Right Certificates")
will be mailed to holders of record of the shares of common stock as
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of the close of business on the Distribution Date, and such separate Right
Certificates alone will evidence the Rights. The Rights are not exercisable
until the Distribution Date. The Rights will expire at the close of business on
May 5, 2009, unless earlier redeemed by Synovus as described below.
If any person becomes an Acquiring Person, each holder of a Right will
thereafter have the right (the "Flip-In Right") to receive upon payment of the
Purchase Price, shares of common stock (or in certain circumstances, cash,
property or other securities of Synovus) having a value equal to two times the
Purchase Price of the Right. Notwithstanding the foregoing, all Rights that
are, or were, beneficially owned by an Acquiring Person or any affiliate or
associate thereof will be null and void and not exercisable.
If, at any time on or after the Stock Acquisition Date, (1) Synovus is
acquired in a merger or other business combination transaction in which the
holders of all of the outstanding shares of common stock immediately prior to
the consummation of the transaction are not the holders of all of the surviving
corporation's voting power, or (2) more than 30% of Synovus' assets, cash flow
or earning power is sold or transferred other than in the ordinary course of
Synovus' business, then each holder of a Right (except Rights which have
previously been voided as set forth above) shall thereafter have the right (the
"Flip-Over Right") to receive, in lieu of shares of common stock and upon
exercise and payment of the Purchase Price, common shares of the acquiring
company having a value equal to two times the Purchase Price. If a transaction
would otherwise result in a holder's having a Flip-In as well as a Flip-Over
Right, then only the Flip-Over Right will be exercisable. If a transaction
results in a holder's having a Flip-Over Right subsequent to a transaction
resulting in a holder's having a Flip-In Right, a holder will have Flip-Over
Rights only to the extent such holder's Flip-In Rights have not been exercised.
The Purchase Price payable, and the number of shares of common stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustment from time to time to prevent dilution (1) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the common
stock, (2) upon the grant to holders of the common stock of certain rights or
warrants to subscribe for common stock or convertible securities at less than
the current market price of the common stock or (3) upon the distribution to
holders of the common stock of evidences of indebtedness or assets (excluding
dividends payable in common stock) or of subscription rights or warrants (other
than those referred to above). However, no adjustment in the Purchase Price
will be required until cumulative adjustments require an adjustment of at least
1%.
The number of outstanding Rights and the number of shares of common stock
issuable upon exercise of each Right are also subject to adjustment in the
event of a stock split of the common stock or a stock dividend on the common
stock payable in common stock or subdivisions, consolidations or combinations
of the common stock occurring, in any such case, prior to the Distribution
Date.
At any time after a Person becomes an Acquiring Person and before the
acquisition by a Person of 50% or more of the outstanding common stock of
Synovus, the board of directors may, at its option, issue common stock or
common stock equivalents of Synovus in mandatory redemption of, or in exchange
for, all or part of the then outstanding exercisable Rights (other than Rights
owned by such Acquiring Person which would become null and void) at an exchange
ratio of one share of common stock, or common stock equivalents equal to one
share of common stock, per Right, subject to adjustment.
To the extent that, after the triggering of Flip-In Rights, insufficient
shares of common stock are available for the exercise in full of the Rights,
holders of Rights will receive upon exercise shares of common stock to the
extent available and then cash, property or other securities of Synovus, in
proportions determined by Synovus, so that the aggregate value received is
equal to twice the Purchase Price.
Synovus is not required to issue fractional shares of common stock and in
lieu thereof, a payment in cash will be made to the holder of such Rights equal
to the same fraction of the current value of share of common stock. Following
the triggering of the Flip-In Rights, Synovus will not be required to issue
fractional shares of common stock upon exercise of the Rights and, in lieu
thereof, a payment in cash will be made to the holder of such Rights equal to
the same fraction of the current market value of a share of common stock.
At any time prior to the Distribution Date, the board of directors of
Synovus may redeem all, but not less than all, of the then outstanding Rights
at a price of $.001 per Right (the "Redemption Price"). The redemption of the
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Rights may be made effective at such time, on such basis and with such
conditions as the board of directors in its sole discretion may establish.
Immediately upon the action of the board of directors ordering redemption of
the Rights, the right to exercise the Rights will terminate and the only right
of the holders of Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of Synovus, including, without limitation, the right to
vote or to receive dividends.
The issuance of the Rights is not taxable to Synovus or to shareholders
under presently existing federal income tax law, and will not change the way in
which shareholders can presently trade Synovus' shares of common stock. If the
Rights should become exercisable, shareholders, depending on then existing
circumstances, may recognize taxable income.
Prior to the Stock Acquisition Date, the Rights Agreement generally may be
amended by Synovus without the consent of the holders of the Rights or the
common stock. On or after the Stock Acquisition Date, Synovus may amend the
Rights Agreement only to (1) cure any ambiguity, (2) correct or supplement any
provision which may be defective or inconsistent with the other provisions of
the Rights Agreement, or (3) change or supplement the Rights Agreement in any
other manner which Synovus may deem necessary or desirable, provided that no
amendment shall adversely affect the interests of the holders of Rights (other
than any interest of an Acquiring Person or an affiliate or associate of an
Acquiring Person).
A copy of the Rights Agreement has been filed with the SEC as an exhibit
to Synovus' Registration Statement on Form 8-A with respect to the Rights filed
with the SEC. This Registration Statement and the Rights Agreement are
incorporated by reference in this proxy statement/prospectus, and reference is
made to them for the complete terms of the Rights Agreement and the Rights.
This summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement. If the merger
is approved, Rights will attach to Synovus common stock issued to the present
stockholders of ProCard.
STAGGERED BOARD OF DIRECTORS; SUPERMAJORITY APPROVALS
Pursuant to Synovus' Articles of Incorporation and bylaws, Synovus' board
of directors is divided into three classes of directors serving staggered
3-year terms, with the terms of each class of directors to expire each
succeeding year. Also pursuant to Synovus' Articles of Incorporation and
bylaws, the vote or action of shareholders possessing 66-2/3% of the votes
entitled to be cast by the shareholders of all the issued and outstanding
shares of Synovus common stock is required to: (1) call a special meeting of
Synovus' shareholders; (2) fix, from time to time, the number of members of
Synovus' board of directors; (3) remove a member of Synovus' board of
directors; (4) approve any merger or consolidation of Synovus with or into any
other corporation, and the sale, lease, exchange or other disposition of all,
or substantially all, of Synovus' assets to or with any other corporation,
person or entity, with respect to which the approval of Synovus' shareholders
is required by the provisions of the corporate laws of the State of Georgia;
and (5) alter, delete or rescind any provision of Synovus' Articles of
Incorporation.
This allows directors to be removed only for cause by 66-2/3% of the votes
entitled to be cast at a shareholders' meeting called for that purpose.
Vacancies or new directorships can only be filled by a majority vote of the
directors then in office. Synovus' staggered board of directors, especially
when combined with the Voting Amendment, makes it more difficult for its
shareholders to force an immediate change in the composition of the majority of
the board. A potential acquiror with shares recently acquired and not entitled
to 10 votes per share under the Voting Amendment may be discouraged or
prevented from soliciting proxies for the purpose of electing directors other
than those nominated by current management for the purpose of changing the
policies or control of Synovus.
EVALUATION OF BUSINESS COMBINATIONS
Synovus' Articles of Incorporation also provide that in evaluating any
business combination or other action, Synovus' board of directors may consider,
in addition to the amount of consideration involved and the effects on Synovus
and its shareholders, the interests of the employees, customers, suppliers and
creditors of Synovus and its subsidiaries, the communities in which offices of
the corporation or its subsidiaries are located, and any other factors the
board of directors deems pertinent.
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PROCARD CAPITAL STOCK
AUTHORIZED SHARES
The total number of authorized shares of capital stock of ProCard is
25,000,000, consisting of 17,000,000 shares of common stock with a par value of
$.001 per share, 8,000,000 shares of preferred stock with a par value of $.001
per share, of which there are 2,000,000 shares of series A preferred stock and
2,000,000 shares of series B preferred stock. ProCard's Certificate of
Incorporation authorizes the ProCard board of directors to issue shares of
preferred stock in one or more series, the terms of which will be determined by
the board.
NUMBER OF DIRECTORS
The ProCard bylaws provides that the number of directors on the ProCard
board shall be determined from time to time by resolution of the board of
directors. The current board of directors consists of six members. Under
ProCard's Certificate of Incorporation, the holders of the series A preferred
stock, voting as a separate class, are entitled to elect two directors; the
holders of the series B preferred stock, voting as a separate class, are
entitled to elect two directors; and the holders of the series A and series B
preferred stock and the holders of the common stock, voting together as a
class, are entitled to elect two directors. Directors are elected to serve
until the next annual meeting of stockholders or until their successors are
elected and qualified.
CERTIFICATE OF INCORPORATION AND BYLAW AMENDMENTS
Amendments to Certificate of Incorporation. Under Delaware law, the board
of directors must propose an amendment to the Certificate of Incorporation and
a majority of all outstanding shares entitled to vote on the amendment must
approve it. Under Delaware law, amendments which will change the capital stock
by increasing or decreasing the par value or the aggregate number of authorized
shares of a class, or otherwise adversely affecting the rights of a class, must
be approved by the majority vote of each class or series of stock affected,
even if such stock would not otherwise have such voting rights.
Amendment of Bylaws. Under Delaware law and the ProCard Certificate of
Incorporation and bylaws, the ProCard bylaws can be amended or repealed by the
affirmative vote of either the holders of a majority of the outstanding shares
of capital stock entitled to vote and present in person or by proxy at the
meeting or a majority of the members of the ProCard board of directors.
CUMULATIVE VOTING AND PREEMPTIVE RIGHTS
The ProCard Certificate of Incorporation does not allow cumulative voting
for directors or preemptive rights for stockholders.
STOCKHOLDER MEETING PROCEDURES
Special Meetings of Stockholders. Under Delaware law, special meetings of
stockholders may be called by the board of directors or by such person or
persons as may be authorized by the Certificate of Incorporation or bylaws.
Under the ProCard Certificate of Incorporation and bylaws, a special meeting of
the stockholders may be called only by the ProCard chairman, its president, or
upon a written request of a majority of the ProCard board of directors or the
holders of a majority of the issued and outstanding stock of ProCard entitled
to vote at such meeting.
Stockholder Action Without a Meeting. Under ProCard's Certificate of
Incorporation, no action shall be taken by the written consent of all
stockholders in lieu of an annual or special meeting of the stockholders.
BUSINESS COMBINATIONS AND CERTAIN OTHER TRANSACTIONS
Under Delaware law, the affirmative vote of a majority of the outstanding
shares entitled to vote is required to approve mergers, consolidations,
dissolutions and sales of all or substantially all of a corporation's assets.
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BUSINESS COMBINATIONS FOLLOWING A CHANGE IN CONTROL
Under Delaware law, an "interested stockholder" is defined as a holder of
15% or more of the outstanding voting stock. An interested stockholder may
engage in a business combination transaction with ProCard only under one of the
following three scenarios:
- ProCard's board of directors approved the transaction before the
stockholder became an interested stockholder or approved the
transaction in which the stockholder became an interested
stockholder;
- the interested stockholder acquired at least 85% of the voting
stock in the transaction in which it became an interested
stockholder; or
- ProCard's board of directors approve the transaction and the
holders of shares entitled to cast two-thirds of the votes
entitled to be cast by all of the outstanding voting shares held
by all disinterested stockholders approve the transaction at a
meeting.
LIMITATION ON DIRECTORS' LIABILITY
As permitted by Delaware law, ProCard's Certificate of Incorporation
eliminates or limits the personal liability of a director of ProCard to ProCard
or its stockholders for money damages based upon his or her breach of fiduciary
duty. However, a director's liability is not eliminated or limited for:
- any breach of the director's duty of loyalty to ProCard or its
stockholders;
- any acts or omissions made not in good faith;
- any acts which involve intentional misconduct or a knowing
violation of law;
- any transactions from which the director derived an improper
personal benefit; or
- any liability arising under Delaware law relating to unlawful
payment of dividends or unlawful stock purchase or redemption.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Delaware law permits a corporation's board of directors to indemnify any
person against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement, actually incurred by him or her in connection with
any threatened, pending or completed action (except settlements or judgments in
derivative suits), suit or proceeding in which such person is made a party by
reason of his or her being or having been a director, officer, employee or
agent of the company, in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act. Delaware
law provides that indemnification pursuant to its provisions is not exclusive
of other rights of indemnification to which a person may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors, or
otherwise.
ProCard's Certificate of Incorporation and bylaws provide for
indemnification of ProCard's directors and officers to the fullest extent
permitted by law.
DISSENTERS' RIGHTS
Generally, stockholders of a Delaware corporation who object to certain
mergers or a consolidation of the corporation and who comply with the
requirements under Delaware law, are entitled to appraisal rights, requiring
the surviving corporation to pay the fair value of the dissenting shares. There
are, however, no statutory rights of appraisal with respect to stockholders of
a Delaware corporation whose shares of stock are either:
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- listed on a national securities exchange or designated as a
national market system by the National Association of Securities
Dealers, Inc.; or
- held of record by more than 2,000 stockholders.
However, appraisal rights will be available to holders of shares if they are
required by the merger terms to accept anything other than shares of the
survivor, listed or quoted shares or cash in lieu of fractional shares.
In addition, no appraisal rights are available for any shares of stock of
a surviving corporation in a merger if the merger did not require the approval
of the stockholders of such corporation. Further, Delaware law does not provide
appraisal rights to stockholders who dissent from the sale of all or
substantially all of the corporation's assets unless the certificate of
incorporation provides otherwise. ProCard's Certificate of Incorporation does
not provide for appraisal rights upon the sale of all or substantially all of
its assets.
Under Delaware law, the meaning of "fair value" in payment for shares upon
exercise of dissenters' rights does not include any element of value arising
from the completion or expectation of the transaction.
RIGHT TO EXAMINE STOCKHOLDER LIST; RIGHT TO INSPECT CORPORATE RECORDS
Under Delaware law, each stockholder has the right during normal business
hours, for a period of at least ten days prior to any stockholder meeting and
during such meeting, to examine an alphabetical list of stockholders for any
purpose germane to the meeting. The list must show the address of each
stockholder and the number of shares held by each stockholder. Each stockholder
also has the right, following a written request, to inspect for any proper
purpose, a corporation's books and records, including the stockholder list,
during usual business hours.
INTERESTED DIRECTOR TRANSACTIONS
Under Delaware law, certain contracts or transactions in which a director
has an interest are not void or voidable solely by reason of that interest if
the contract or transaction is either (1) approved by the stockholders or by a
majority of the disinterested directors if the material facts are disclosed in
good faith or known, or (2) was fair to the corporation at the time of
approval.
ADDITIONAL RIGHTS OF SERIES A AND SERIES B PREFERRED STOCKHOLDERS
Liquidation Rights. In the event of any liquidation or dissolution or
winding up of ProCard, the holders of the series B preferred shares shall
receive a liquidation value of $4.00 per share before any distribution is made
to any class of common stock or any other series of preferred stock. After the
series B preferred stockholders have received their liquidation distribution,
the holders of the series A preferred stock shall receive the next level of
distributions up to a value equal to $3.00 per share. After the series B
stockholders and the series A stockholders have been paid their liquidation
value, then the holders of common stock shall receive the remainder of the
assets of ProCard.
Conversion Rights. The holders of series A and series B preferred stock
each have the rights to convert their shares into common stock of ProCard. The
current conversion ratio for both the series A and the series B preferred stock
is 1:1, subject to adjustment. Both the series A and the series B preferred
stock shall be converted automatically upon the consummation of a sale of
shares of common stock by ProCard in an underwritten offering registered under
the Securities Act of 1933, as amended.
Redemption Rights. Both the series A and the series B preferred shares are
subject to an optional redemption right which is exercisable by ProCard at any
time after December 31, 2005.
Registration Rights. The holders of the ProCard series A and series B
preferred stock each have one demand registration right and unlimited piggyback
registration rights. Such registration rights are effective only after such
preferred stock have been converted into common stock of ProCard and after the
expiration of 24 months after the
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ProCard common stock has begun public trading. These registration rights expire
on the fourth anniversary after the ProCard common stock has begun public
trading.
APPRAISAL RIGHTS
THE FOLLOWING SUMMARY OF SECTION 262 OF THE DELAWARE GENERAL CORPORATION
LAW ("SECTION 262") IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SECTION 262,
THE COMPLETE TEXT OF WHICH IS ATTACHED HERETO AS APPENDIX "D". THIS SUMMARY
CONTAINS ALL OF THE MATERIAL PROVISIONS OF SECTION 262.
Upon consummation of the merger, holders of record of shares of ProCard
capital stock on the record date will be entitled to have the "fair value" of
their shares as of the effective time (exclusive of any element of value
arising from the accomplishment or expectation of the merger) judicially
determined and paid to them by complying with the provisions of Section 262.
Holders of record of ProCard capital stock who desire to exercise their
appraisal rights must satisfy all of the conditions contained therein.
To exercise rights of appraisal, you must satisfy all of the following
five conditions:
- you must be a stockholder of record on the date you demand your
appraisal rights and you must continue to be stockholder of
record until the merger is completed;
- you must either vote against the merger or abstain from voting on
the merger (you may not vote in favor of the merger and retain
your rights to an appraisal);
- you must deliver a written demand for appraisal of your shares
before the vote on the merger is held at the special meeting;
- within 120 days after the completion of the merger, you must file
a petition in the Delaware Court of Chancery for a determination
of the fair value of your stock; and
- if the Delaware Court of Chancery requests, you must send to the
court your stock certificates so that the court can note on each
certificate that a demand for appraisal has been made.
A written demand for appraisal of shares of ProCard capital stock must be
delivered to ProCard by a ProCard stockholder seeking appraisal before the
taking of the vote of the merger agreement. The written demand must be separate
from any proxy or vote abstaining from or voting against approval and adoption
of the merger agreement. Voting against approval and adoption of the merger
agreement, abstaining from voting or failing to vote with respect to approval
and adoption of the merger agreement will not constitute a demand for appraisal
within the meaning of Section 262. By voting against approval and adopting of
the merger agreement or by abstaining from voting in favor of the merger
agreement, a ProCard stockholder may preserve his rights of appraisal as a
dissenting stockholder.
PROCARD STOCKHOLDERS ELECTING TO EXERCISE THEIR APPRAISAL RIGHTS UNDER
SECTION 262 MUST NOT VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT. A
VOTE BY A PROCARD STOCKHOLDER AGAINST APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT IS NOT REQUIRED IN ORDER FOR SUCH PROCARD STOCKHOLDER TO EXERCISE
APPRAISAL RIGHTS. HOWEVER, IF A PROCARD STOCKHOLDER RETURNS A SIGNED PROXY BUT
DOES NOT SPECIFY A VOTE AGAINST APPROVAL AND ADOPTION OF THE MERGER AGREEMENT
OR A DIRECTION TO ABSTAIN, THE PROXY, IF NOT REVOKED, WILL BE VOTED FOR
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT, WHICH WILL HAVE THE EFFECT OF
WAIVING SUCH PROCARD STOCKHOLDER'S APPRAISAL RIGHTS.
A demand for appraisal will be sufficient if it reasonably informs ProCard
of the identity of the ProCard stockholder and that such ProCard stockholder
intends thereby to demand appraisal. If the ProCard capital stock is owned of
record in a fiduciary capacity, such as by a trustee, guardian, or custodian,
such demand must be executed by the fiduciary. If the ProCard capital stock is
owned of record by more than one person, as in a joint tenancy or tenancy in
common, such demand must be executed by all joint owners. An authorized agent,
including an agent for two or more joint owners, may execute the demand for
appraisal for a ProCard stockholder of record; however, the
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<PAGE> 55
agent must identify the record owner or owners and expressly disclose the fact
that, in exercising the demand, he or she is acting as agent for the record
owner or owners.
A record owner, such as a broker, who holds ProCard capital stock as a
nominee for others, may exercise his or her right of appraisal with respect to
the shares for all or less than all beneficial owners of shares as to which he
or she is the record owner. In such case, the written demand must set forth the
number of shares covered by such demand. Where the number of shares is not
expressly stated, the demand will be presumed to cover all shares of ProCard
capital stock outstanding in the name of such record owner.
A ProCard stockholder who elects to exercise appraisal rights should
mail or deliver his or her written demand to ProCard at the following address
prior to the vote on the merger:
1819 Denver West Drive
Building 26, Suite 300
Golden, Colorado 80401
Attention: Brigid Davidson, Corporate Secretary
The demand must specify such ProCard stockholder's name and mailing address and
the number of shares of ProCard capital stock owned. It is the responsibility
of each ProCard stockholder electing to exercise appraisal rights to ensure
that the written demand is received by ProCard before the taking of the vote at
the special meeting of ProCard's stockholders.
Within 10 days after the effective date of the merger, the surviving
corporation must provide notice as to the effective time of the merger to all
ProCard stockholders who have complied with Section 262(d), summarized above,
and have not voted for approval of the merger agreement.
Within 120 days after the effective time, any ProCard stockholder who has
complied with the provisions of Sections 262(a) and (d), summarized above, is
entitled, upon written request, to receive from the surviving corporation a
statement setting forth the aggregate number of shares of ProCard capital stock
not voted in favor of approval and adoption of the merger and with respect to
which demands for appraisal have been received and the aggregate number of
holders of such shares. Such statement must be mailed within 10 days after the
written request therefor has been received by the surviving corporation or
within 10 days after expiration of the time for delivery of demand for
appraisal under Section 262(d), whichever is later.
Within 120 days after the effective time, either the surviving corporation
or any holder of ProCard capital stock who has complied with the required
conditions of Sections 262(a) and (d) and who is otherwise entitled to
appraisal rights may file a petition in the Court of Chancery of the State of
Delaware (the "Court") demanding a determination of the fair value of the
shares of any dissenting ProCard stockholders. If a petition for an appraisal
is timely filed, at a hearing on such petition, the Court will determine which
ProCard stockholders are entitled to appraisal rights and will appraise the
shares of ProCard capital stock owned by such ProCard stockholders, determining
the fair value of such shares, exclusive of any element of value arising from
the accomplishment or expectation of the merger, together with a fair rate of
interest, if any, to be paid upon the amount determined to be the fair value.
In determining fair value, the Court is to take into account all relevant
factors. In Weinberger v. UOP, Inc., decided in 1983, the Delaware Supreme
Court, in the context of litigation involving holders of common stock of a
Delaware corporation, expanded the factors that could be considered in
determining fair value in an appraisal proceedings, stating that "proof of
value by any techniques or methods which are generally considered acceptable in
the financial community and otherwise admissible in court" should be
considered, and that "[f]air price obviously requires consideration of all
relevant factors involving the value of a company." The Delaware Supreme Court
stated that in making this determination of fair value the Court must consider
market value, asset value, dividends, earnings prospects, the nature of the
enterprise and any other facts which could be ascertained as of the date of the
relevant merger which throw any light on future prospects of the merged
corporation. In Weinberger, the Delaware Supreme Court held that "elements of
future value, including the nature of the enterprise, which are known or
susceptible of proof as of the date of the merger and not the product of
speculation, may be considered."
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<PAGE> 56
ProCard stockholders considering seeking appraisal should be aware that
the fair value of their shares determined under Section 262 could be more than,
the same as or less than the value of the consideration they are to receive
pursuant to the merger agreement if they do not seek appraisal of their shares.
Both fairness opinions and appraisal proceedings review many different
aspects of a company's financial and business circumstances under accepted
valuation techniques, but the perspectives differ. A determination that a
transaction is fair from a financial point of view may be based on a finding
that the price term of a transaction falls within a range of values that would
be fair for other companies involved in similar types of transactions and
circumstances. Such a finding does not determine what the best possible price
would be but looks at the transaction as a whole and determines whether
entering the transaction is a reasonable business decision. In reaching the
determination that an offered price is fair from a financial point of view,
consideration is given to the fact that a purchaser of an entire company may be
willing to pay a "control premium" in excess of the fair market value of the
stock. A determination of fair value in an appraisal proceeding attempts to
reduce all of the elements of value of a company to a set amount rather than
focusing on the range of values in similar transactions. A judicial
determination of the fair value attempts to ensure that each dissenting
shareholder receives the substantial equivalent of his proportionate interest
in a company before the merger occurred. An appraisal proceeding does not
attempt to consider the effects, if any, of the merger transaction itself on
the value of the stock of a company.
The cost of the appraisal proceeding may be determined by the Court and
taxed against the parties as the Court deems equitable in the circumstances.
Upon application of a dissenting ProCard stockholder, the Court may order that
all or a portion of the expenses incurred by any dissenting stockholder in
connection with the appraisal proceeding, including without limitation
reasonable attorneys' fees and the fees and expenses of experts, be charged
against the value of shares of ProCard capital stock entitled to appraisal. In
the absence of such a determination or assessment, each party bears its own
expenses.
A ProCard stockholder who has duly demanded appraisal in compliance with
Section 262 will not, after the effective time, have any rights in respect of
shares subject to such demand except for appraisal rights and the right to
receive payment of dividends or other distributions (if any) on such shares
payable to ProCard stockholders of record as of a date prior to the effective
time.
At any time within 60 days after the effective time, a ProCard stockholder
shall have the right to withdraw his or her demand for appraisal and to accept
the terms of the merger; after this period, the ProCard stockholder may
withdraw his or her demand for appraisal only with the consent of Synovus. Any
such withdrawal must be made in writing. If no petition for appraisal is filed
with the Court within 120 days after the effective time, the ProCard
stockholder's rights to appraisal shall cease. Inasmuch as the surviving
corporation has no obligation to file such a petition, a ProCard stockholder
who desires such a petition to be filed is advised to file it on a timely
basis. No petition timely filed in the Court demanding appraisal may be
dismissed as to a ProCard stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
Your right to an appraisal of your common stock will terminate if:
- for any reason the merger is not completed;
- you fail to make a timely written demand on ProCard;
- you fail to file a timely petition with the Delaware Court of
Chancery;
- you do not, upon request of the court, timely surrender
certificates for notation that demand for appraisal has been made;
- you withdraw your demand in writing within 60 days after the
completion of the merger;
- you withdraw your demand in writing after 60 days after the
completion of the merger and with Synovus' written approval.
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<PAGE> 57
If your right to an appraisal is terminated, you will receive the same
consideration that you would have received if you had not dissented and sought
an appraisal of your shares.
The provisions of Section 262 are technical in nature and complex. ProCard
stockholders desiring to exercise their appraisal rights and obtain appraisal
of the fair value of their ProCard capital stock should consult counsel, since
failure to comply strictly with the provisions of Section 262 may defeat their
appraisal rights.
If holders of 5% or more of the total amount of outstanding ProCard stock
and ProCard preferred stock exercise their appraisal rights, Synovus will have
the right to terminate the merger agreement.
COMPARATIVE STOCK PRICES AND DIVIDENDS
Synovus common stock is listed on the NYSE under the symbol "SNV." The
table below shows the high and low closing prices of Synovus common stock and
cash dividends declared per share for the last two fiscal years. Prices have
been adjusted to account for a three-for-two stock split on May 21, 1998. The
table below shows the cash dividends declared per share for the last two fiscal
years.
<TABLE>
<CAPTION>
SYNOVUS PROCARD
------- -------
CASH CASH
HIGH LOW DIVIDENDS DIVIDENDS
---- --- --------- ---------
<S> <C> <C> <C> <C>
Quarter Ended
March 31, 2000..................... $19.19 $14.50 $.1100 -0-
Quarter Ended
March 31, 1999..................... 25.00 20.50 .0900 -0-
June 30, 1999...................... 23.56 19.13 .0900 -0-
September 30, 1999................. 20.31 17.50 .0900 -0-
December 31, 1999.................. 22.13 18.44 .0900 -0-
For year 1999........................ 25.00 17.50 .3600 -0-
Quarter Ended
March 31, 1998..................... 25.81 20.75 .0733 -0-
June 30, 1998...................... 25.81 21.94 .0733 -0-
September 30, 1998................. 25.00 18.06 .0733 -0-
December 31, 1998.................. 24.06 20.19 .0733 -0-
For year 1998........................ 25.81 18.06 .2932 -0-
</TABLE>
There is no trading market for ProCard common stock, series A preferred
stock, or series B preferred stock. Holders of ProCard series A preferred stock
and series B preferred stock are not entitled to receive any cash dividends. In
the two most recent fiscal years no cash dividends for ProCard common stock
have been declared. ProCard does not anticipate that dividends will be paid on
ProCard common stock in the foreseeable future.
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<PAGE> 58
DESCRIPTION OF SYNOVUS
BUSINESS
The disclosures made in this proxy statement/prospectus, together with the
following information which is specifically incorporated by reference herein,
describe the business of Synovus:
1. Synovus' Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 (which incorporates certain portions of
Synovus' 1999 Annual Report to Shareholders and its Proxy
Statement for its Annual Meeting of Shareholders to be held
on April 20, 2000), as amended by Synovus' Annual Report on
Form 10-K/A for the fiscal year ended December 31, 1999.
2. Synovus' Current Report on Form 8-K dated January 12, 2000.
MANAGEMENT AND ADDITIONAL INFORMATION
Certain information relating to executive compensation, various benefit
plans, voting securities and the principal holders thereof, certain
relationships and related transactions and other related matters as to Synovus
is incorporated by reference or set forth in Synovus' Annual Report on Form
10-K for the year ended December 31, 1999 which is incorporated herein by
reference. See "WHERE YOU CAN FIND MORE INFORMATION." Shareholders desiring
copies of such documents may contact Synovus at its address or phone number
indicated under "WHERE YOU CAN FIND MORE INFORMATION."
DESCRIPTION OF PROCARD
BUSINESS
ProCard, Inc. is a Delaware corporation formed in July 1989. It supports
bank commercial card programs by providing all necessary technology and
back-room support services, thus eliminating the need for a bank to create and
maintain its own infrastructure. ProCard's software and services are currently
marketed exclusively through financial institutions which have entered into
license agreements with ProCard. These financial institutions then sublicense
the software and services to their corporate clients. ProCard's licensee banks
issue credit cards to their clients and manage the overall program, while
ProCard provides the software and services described below to assist the banks'
clients in managing their commercial card program and in controlling the
commercial card transaction data.
ProCard has developed client server and internet based software solutions
that enable the clients of its licensee banks to manage their commercial card
program and manage the commercial card transaction data. ProCard's software
solutions enable such client using the software, among other things, to import
transaction data, split and allocate transactions, generate standard and ad hoc
reports based on the data, generate mapped files and electronically post the
transaction data to general ledger or other systems, create and maintain card
and reporting hierarchies, and perform card management functions.
ProCard's principal executive offices are located at 1819 Denver West
Drive, Building 26, Suite 300, Golden, Colorado 80401 and its telephone number
is 303-279-2255.
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PRINCIPAL STOCKHOLDERS
The following table sets forth, as of March 3, 2000, certain information
on a fully diluted basis regarding (i) persons known by ProCard to own 5% or
more of the common stock of ProCard, (ii) directors of ProCard, (iii) certain
named officers of ProCard, and (iv) officers and directors of ProCard as a
group.
<TABLE>
<CAPTION>
SERIES A SERIES B
COMMON STOCK PREFERRED STOCK PREFERRED STOCK
PERCENT OF PERCENT OF PERCENT OF
NAME OF PRINCIPAL STOCKHOLDER AMOUNT(1) CLASS(2) AMOUNT CLASS AMOUNT CLASS
- ------------------------------ ------------ ---------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Gregg T. Summerville(3)(16) 803,013 21.78% 196,566 15.52% 406,859 25.55%
Terry Marbach(4)(16) 519,271 15.46% 151,072 11.93% 130,084 8.17%
David M. Kirr(5) 349,607 10.64% 119,548 9.44% 160,797 10.10%
Laurance R. Hoagland, Jr.(6)(16) 274,883 8.82% 63,787 5.04% 53,392 3.35%
Fred W. Reams(7) 371,067 11.29% 253,763 20.04% 27,116 1.70%
Lucien Ruby(8)(16) 437,634 13.19% 135,544 10.70% 103,381 6.49%
B. LaRae Orullian(9)(16) 250,000 8.21% 40,166 3.17% 9,792 +
D. Dale Browning(10)(16) 1,075,125 35.58% 0 + 25,000 1.57%
Jerry Wagner(11)(16) 112,250 3.61% 0 + 6,000 +
Kirby Slunaker(12)(16) 25,000 + 0 + 0 +
Scott Webb(13) 5,000 + 0 + 0 +
Russ Pulling(14) 5,000 + 0 + 0 +
All Officers and Directors as
a group(16) 3,717,150 75.88% 592,434 46.78% 737,758 46.34%
</TABLE>
- ------------------------------
+ Indicates percentage values of less than 1.00%.
(1) A person is deemed to be the beneficial owner of voting securities that can
be acquired by such person within 60 days from the date of this proxy
statement/prospectus upon the exercise of options, warrants or convertible
securities. Common stock amount assumes the conversion of ProCard series A
preferred stock and series B preferred stock into common stock, which
shares are convertible into common stock on a one-for-one basis. The common
stock amount also includes options and warrants, currently exercisable or
exercisable within 60 days, to the extent indicated in notes 3 through 16
below. The amounts included in the common stock column do not include
currently unvested options that will become vested upon consummation of the
merger.
(2) Each beneficial owner's percentage ownership is determined by assuming that
convertible securities, options or warrants held by such person (but not
those held by any other person) and which are exercisable within 60 days
from the date of this proxy statement/prospectus have been exercised.
(3) Mr. Summerville's address is 621 Washington Street, Columbus, Indiana
47201. Common stock amount includes (i) warrants to purchase 87,388 shares
of common stock, (ii) 50,000 shares of common stock held in trust for Mr.
Summerville's children, (iii) 7,200 shares of common stock held by Nom. &
Co. for the benefit of Mr. Summerville, and (iv) 15,000 shares of common
stock held by Washington Securities, a limited partnership, for which Mr.
Summerville is a general partner. Series B preferred stock amount includes
100,000 shares of series B preferred stock held by Strafe & Co. for the
benefit of Mr. Summerville.
(4) Mr. Marbach's address is 621 Washington St., Columbus, Indiana 47201.
Common stock amount includes (i) warrants to purchase 48,281 shares of
common stock held by Mr. Marbach, (ii) warrants to purchase 2,750 shares of
common stock held by Nom. & Co. for the benefit of Mr. Marbach, (iii)
warrants to purchase 16,563 shares of common stock held by Terry B. and
Constance Marbach as joint tenants with rights of survivorship, (iv)
141,400 shares of common stock owned by Terry B. and Constance Marbach as
joint tenants with rights of survivorship and (v) warrants to purchase
14,521 shares of common stock held by Strafe & Co. for the benefit of Mr.
Marbach. Series A preferred stock amount includes (i) 29,042 shares of
series A preferred stock held by Strafe & Co. for the benefit of Mr.
Marbach, and (ii) 116,251 shares of series A preferred stock held by Terry
B. and Constance Marbach as joint tenants with rights of survivorship.
Series B preferred stock amount includes (i)
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<PAGE> 60
44,166 shares of series B preferred stock held by Strafe & Co. for the
benefit of Mr. Marbach, and (ii) 40,690 shares of series B preferred stock
held by Terry B. and Constance Marbach as joint tenants with rights of
survivorship.
(5) Mr. Kirr's address is 621 Washington Street, Columbus, Indiana 47201.
Common stock amount includes warrants to purchase 1,562 shares of common
stock held by Mr. Kirr, and warrants to purchase 7,500 of common stock held
by held by Nom. & Co. for the benefit of Mr. Kirr.
(6) Mr. Hoagland's address is 115 Fox Hollow Road, Woodside, California 94062.
Common stock amount includes warrants to purchase 3,344 shares of common
stock. Series B preferred stock amount includes 25,000 shares held by LGH
Limited Partnership, for which Mr. Hoagland is a limited partner.
(7) Mr. Reams' address is 2639 Riverside Drive, Columbus, Indiana 47201. Common
stock amount includes warrants to purchase 10,188 shares of common stock.
(8) Mr. Ruby's address is 333 Bush Street, Suite 1750, San Francisco,
California 94104. The shares listed are held by Quest Ventures
International and Quest Ventures II in the following amounts: (i) Quest
Ventures International holds 177,682 shares of common stock (assuming full
conversion of its series A preferred stock, series B preferred stock and
warrants to purchase common stock), 55,029 shares of series A preferred
stock, 41,972 shares of series B preferred stock and 33,519 warrants to
purchase common stock, (ii) Quest Ventures II holds 259,952 shares of
common stock (assuming full conversion of its series A preferred stock and
series B preferred stock and warrants to purchase common stock), 80,515
shares of series A preferred stock, 61,409 shares of series B preferred
stock and warrants to purchase 49,040 shares of common stock. Mr. Ruby may
be deemed to beneficially own such shares as the general partner of Foray
Partners, the general partner of both Quest entities. Mr. Ruby disclaims
beneficial ownership of these shares.
(9) Ms. Orullian's address is 35 South Ammons Street, Lakewood, Colorado 80226.
(10) Mr. Browning's address is 79 South Eldridge Way, Golden, Colorado 80401.
Common stock amount includes 900,000 shares owned by DDB Investment
Company, LLLP of which Mr. Browning is a General Partner.
(11) Mr. Wagner's address is 7800 Fox Creek Trail, Franktown, Colorado 80116.
Common stock amount includes options to purchase 106,250 shares of common
stock.
(12) Mr. Slunaker's address is 143 Grey Squirrel Way, Franktown, Colorado
80116. Common stock amount includes options to purchase 25,000 shares of
common stock.
(13) Mr. Webb's address is 1585 Bluebird Drive, Bailey, Colorado 80421. Common
stock amount includes options to purchase 5,000 shares of common stock.
(14) Mr. Pulling's address is 10066 South Deer Creek Street, Highlands Ranch,
Colorado 80126. Common stock amount includes options to purchase 5,000
shares of common stock.
(15) Common stock amount includes warrants to purchase 255,406 shares of common
stock and options to purchase 326,600 shares of common stock. If all of the
ProCard series A preferred and series B preferred shares were converted
into common stock, and if all options and warrants to purchase common stock
were exercised, the directors and officers of ProCard would own 54.05% of
the issued and outstanding shares of ProCard capital stock.
(16) Shares are subject to a voting agreement between Synovus and certain
directors and key officers of ProCard. Only 272,559 of the shares
beneficially owned by Mr. Marbach are subject to the voting agreement.
REGULATORY MATTERS
GENERAL
As a bank holding company, Synovus is subject to regulation under the Bank
Holding Company Act, and to inspection, examination and supervision by the
Federal Reserve. Under the Bank Holding Company Act, bank holding companies
generally may not acquire the ownership or control of more than 5% of the
voting shares or substantially all the assets of any company, including a bank,
without the Federal Reserve's prior approval. In addition, bank holding
companies generally may engage, directly or indirectly, only in banking and
such other activities expressly found by the Federal Reserve, prior to November
11, 1999, to be closely related to banking.
Synovus' affiliate national banking associations are subject to regulation
and examination primarily by the Office of the Comptroller of the Currency
("OCC") and, secondarily, by the FDIC and the Federal Reserve. Synovus'
state-chartered banks are subject to primary federal regulation and examination
by the FDIC and, in addition, are regulated and examined by their respective
state banking departments.
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<PAGE> 61
Numerous other federal and state laws, as well as regulations promulgated
by the Federal Reserve, the state banking regulators, the OCC and the FDIC
govern almost all aspects of the operations of the banks.
DIVIDENDS
Under the laws of the State of Georgia, Synovus, as a business
corporation, may declare and pay dividends in cash or property unless the
payment or declaration would be contrary to restrictions contained in its
Articles of Incorporation, and unless, after payment of the dividend, it would
not be able to pay its debts when they become due in the usual course of its
business or its total assets would be less than the sum of its total
liabilities. Synovus is also subject to certain regulatory capital restrictions
that limit the amount of cash dividends that it may pay. Additionally, Synovus
is subject to certain contractual restrictions that limit the amount of cash
dividends it may pay.
The primary sources of funds for Synovus' payment of dividends to its
shareholders are dividends and fees to Synovus from its banking and nonbanking
affiliates. Various federal and state statutory provisions and regulations
limit the amount of dividends that the subsidiary banks of Synovus may pay.
Pursuant to the regulations of the Georgia Banking Department, a Georgia bank
must have approval of the Georgia Banking Department to pay cash dividends if,
at the time of such payment: (1) the ratio of such banking affiliate's equity
capital (defined to include the aggregate par value of all outstanding common
stock, paid-in surplus, retained earnings, capital resources, reserves for loan
losses, aggregate par value of outstanding preferred stock which is not
redeemable and other outstanding instruments which are required to be converted
into common stock) to its adjusted total assets is less than 6%; (2) the
aggregate amount of dividends to be declared or anticipated to be declared
during the current calendar year exceeds 50% of its net after-tax profit for
the previous calendar year; or (3) its total classified assets in its most
recent regulatory examination exceeded 80% of its equity capital (as defined
above) as reflected in such examination. In general, the approval of the
Alabama Banking Department and the Florida Banking Department, as applicable,
is required if the total of all dividends declared by an Alabama or Florida
bank, as the case may be, in any year would exceed the total of its net profits
(as defined) for that year combined with its retained net profits for the
preceding two years less any required transfers to surplus. In addition, the
approval of the OCC is required for a national bank to pay dividends in excess
of the bank's retained net income (as defined) for the current year plus
retained net income for the preceding two years.
Certain of Synovus' banking affiliates have in the past been required to
secure prior regulatory approval for the payment of dividends to Synovus in
excess of regulatory limits and may be required to seek approval for the
payment of dividends to Synovus in excess of such limits in the future. If such
prior regulatory approvals are sought, there is no assurance that any such
regulatory approvals will be granted.
Federal and state banking regulations applicable to Synovus and its
banking subsidiaries require minimum levels of capital which limit the amounts
available for payment of dividends. Synovus' objective is to pay out at least
one-third of prior year's earnings in cash dividends to its shareholders.
Synovus and its predecessors have paid cash dividends on their common
stock in every year since 1891. Under restrictions imposed under federal and
state laws, Synovus' subsidiary banks could declare aggregate dividends to
Synovus of approximately $109.7 million during 2000 without obtaining
regulatory approval.
Holders of ProCard series A preferred and series B preferred stock are not
entitled to receive any dividends. In the two most recent fiscal years no cash
dividends for ProCard common stock have been declared. ProCard does not
anticipate that dividends will be paid on ProCard common stock in the
foreseeable future.
CAPITAL REQUIREMENTS
Synovus is required to comply with the capital adequacy standards
established by the Federal Reserve and its banking subsidiaries must comply
with similar capital adequacy standards established by the OCC and FDIC, as
applicable. There are two basic measures of capital adequacy for bank holding
companies and their banking subsidiaries that have been promulgated by the
Federal Reserve, the FDIC and the OCC: a risk-based measure and a leverage
measure. All applicable capital standards must be satisfied for a bank holding
company or a bank to be considered in compliance.
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<PAGE> 62
The risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profile among banks and bank
holding companies, to account for off-balance-sheet exposure, and to minimize
disincentives for holding liquid assets. Assets and off-balance-sheet items are
assigned to broad risk categories, each with appropriate weights. The resulting
capital ratios represent capital as a percentage of total risk-weighted assets
and off-balance-sheet items.
The minimum guideline for the ratio of total capital to risk-weighted
assets (including certain off-balance-sheet items, such as standby letters of
credit) is 8.0%. At least half of total capital must comprise common stock,
minority interests in the equity accounts of consolidated subsidiaries,
noncumulative perpetual preferred stock, and a limited amount of cumulative
perpetual preferred stock, less goodwill and certain other intangible assets
("Tier 1 Capital"). The remainder may consist of subordinated debt, other
preferred stock, and a limited amount of loan loss reserves ("Tier 2 Capital").
The Federal Reserve also requires certain bank holding companies that engage in
trading activities to adjust their risk-based capital to take into
consideration market risk that may result from movements in market prices of
covered trading positions in trading accounts, or from foreign exchange or
commodity positions, whether or not in trading accounts, including changes in
interest rates, equity prices, foreign exchange rates or commodity prices. Any
capital required to be maintained pursuant to these provisions may consist of
new "Tier 3 Capital" consisting of certain short term subordinated debt. In
addition, the Federal Reserve has issued a policy statement, pursuant to which
a bank holding company that is determined to have weaknesses in its risk
management processes or a high level of interest rate risk exposure may be
required to hold additional capital.
The Federal Reserve has also established minimum leverage ratio guidelines
for bank holding companies. These guidelines provide for a minimum ratio (the
"leverage ratio") of Tier 1 Capital to average assets, less goodwill and
certain other intangible assets, of 3.0% for bank holding companies that meet
certain specified criteria, including having the highest regulatory rating. All
other bank holding companies generally are required to maintain a leverage
ratio of at least 4.0%. Bank holding companies are expected to maintain
higher-than-minimum capital ratios if they have supervisory, financial,
operational, or managerial weaknesses, or if they are anticipating or
experiencing significant growth. Synovus has not been advised by the Federal
Reserve of any specific minimum leverage ratio applicable to it.
At December 31, 1999, Synovus' total capital ratio was 13.77%, its Tier 1
Capital ratio was 12.51% and its Tier 1 leverage ratio was 10.52%. Assuming the
merger had been consummated on December 31, 1999, the total capital ratio of
Synovus would have been 13.75%, its Tier 1 Capital ratio would have been 12.50%
and its Tier 1 leverage ratio would have been 10.54%. Each of these ratios
exceeds the current requirements under the Federal Reserve's capital
guidelines.
Each of Synovus' banking subsidiaries is subject to similar risk-based and
leverage capital requirements adopted by its applicable federal banking agency,
and each was in compliance with the applicable minimum capital requirements as
of December 31, 1999.
Failure to meet capital guidelines could subject a bank to a variety of
enforcement remedies, including issuance of a capital directive, the
termination of deposit insurance by the FDIC, a prohibition on the taking of
brokered deposits, and certain other restrictions on its business. As described
below, substantial additional restrictions can be imposed upon FDIC-insured
depository institutions that fail to meet applicable capital requirements. See
"Prompt Corrective Action."
COMMITMENTS TO SUBSIDIARY BANKS
Under the Federal Reserve's policy, Synovus is expected to act as a source
of financial strength to its subsidiary banks and to commit resources to
support its subsidiary banks in circumstances when it might not do so absent
such policy. In addition, any capital loans by Synovus to any of its subsidiary
banks would also be subordinate in right of payment to depositors and to
certain other indebtedness of such bank.
In the event of Synovus' bankruptcy, any commitment by Synovus to a
federal bank regulatory agency to maintain the capital of a banking subsidiary
will be assumed by the bankruptcy trustee and entitled to a priority of
payment. In addition, the Federal Deposit Insurance Act provides that any
financial institution whose deposits are
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insured by the FDIC generally shall be liable for any loss incurred by the FDIC
in connection with the default of, or any assistance provided by the FDIC to, a
commonly controlled financial institution.
PROMPT CORRECTIVE ACTION
The Federal Deposit Insurance Corporation Act of 1991 ("FDICIA")
establishes a system of prompt corrective action to resolve the problems of
undercapitalized institutions. Under this system the federal banking regulators
are required to rate supervised institutions on the basis of five capital
categories (well capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized, and critically undercapitalized) and to take
certain mandatory supervisory actions, and are authorized to take other
discretionary actions, with respect to institutions in the three
undercapitalized categories, the severity of which will depend upon the capital
category in which the institution is placed. Generally, subject to a narrow
exception, FDICIA requires the banking regulator to appoint a receiver or
conservator for an institution that is critically undercapitalized. The federal
banking agencies have specified by regulation the relevant capital level for
each category.
Pursuant to FDICIA, the Federal Reserve, the FDIC, the OCC and the Office
of Thrift Supervision have adopted regulations setting forth a five-tier scheme
for measuring the capital adequacy of the financial institutions they
supervise. Under the regulations, an institution would be placed in one of the
following capital categories: (1) well capitalized (an institution that has a
total capital ratio of at least 10%, a Tier 1 Capital ratio of at least 6% and
a Tier 1 leverage ratio of at least 5%); (2) adequately capitalized (an
institution that has a total capital ratio of at least 8%, a Tier 1 Capital
ratio of at least 4% and a Tier 1 leverage ratio of at least 4%); (3)
undercapitalized (an institution that has a total capital ratio of under 8%, a
Tier 1 Capital ratio of under 4% or a Tier 1 leverage ratio of under 4%); (4)
significantly undercapitalized (an institution that has a total capital ratio
of under 6%, a Tier 1 Capital ratio of under 3% or a Tier 1 leverage ratio of
under 3%); and (5) critically undercapitalized (an institution whose tangible
equity is not greater than 2% of total tangible assets). The regulations permit
the appropriate federal banking regulator to downgrade an institution to the
next lower category if the regulator determines (1) after notice and
opportunity for hearing or response, that the institution is in an unsafe or
unsound condition or (2) that the institution has received (and not corrected)
a less-than-satisfactory rating for any of the categories of asset quality,
management, earnings or liquidity in its most recent examination. Supervisory
actions by the appropriate federal banking regulator depend upon an
institution's classification within the five categories. Synovus' management
believes that Synovus and its bank subsidiaries have the requisite capital
levels to qualify as well capitalized institutions under the FDICIA
regulations.
FDICIA generally prohibits a depository institution from making any
capital distribution (including payment of a dividend) or paying any management
fee to its holding company if the depository institution would thereafter be
undercapitalized. Undercapitalized depository institutions are subject to
restrictions on borrowing from the Federal Reserve System. In addition,
undercapitalized depository institutions are subject to growth limitations and
are required to submit capital restoration plans. A depository institution'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 of the capital deficiency when the institution
fails to comply with the plan. Federal banking agencies may not accept a
capital plan without determining, among other things, that the plan is based on
realistic assumptions and is likely to succeed in restoring the depository
institution's capital. If a depository institution fails to submit an
acceptable plan, it is treated as if it is significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total
assets and cessation of receipt of deposits from correspondent banks.
Critically undercapitalized depository institutions are subject to appointment
of a receiver or conservator.
SAFETY AND SOUNDNESS STANDARDS
The Federal Deposit Insurance Act, as amended by FDICIA and the Riegle
Community Development and Regulatory Improvement Act of 1994, requires the
federal bank regulatory agencies to prescribe standards, by regulations or
guidelines, relating to internal controls, information systems and internal
audit systems, loan documentation, credit underwriting, interest rate risk
exposure, asset growth, asset quality, earnings, stock valuation and
compensation, fees and benefits and such other operational and managerial
standards as the agencies deem
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appropriate. The federal bank regulatory agencies have adopted a set of
guidelines prescribing safety and soundness standards pursuant to FDICIA. The
guidelines establish general standards relating to internal controls and
information systems, internal audit systems, loan documentation, credit
underwriting, interest rate exposure, asset growth and compensation, fees and
benefits. In general, the guidelines require, among other things, appropriate
systems and practices to identify and manage the risks and exposures specified
in the guidelines. The guidelines prohibit excessive compensation as an unsafe
and unsound practice and describe compensation as excessive when the amounts
paid are unreasonable or disproportionate to the services performed by an
executive officer, employee, director or principal stockholder. The federal
banking agencies determined that stock valuation standards were not
appropriate. In addition, the agencies adopted regulations that authorize, but
do not require, an agency to order an institution that has been given notice by
an agency that it is not satisfying any of such safety and soundness standards
to submit a compliance plan. If, after being so notified, an institution fails
to submit an acceptable compliance plan, the agency must issue an order
directing action to correct the deficiency and may issue an order directing
other actions of the types to which an undercapitalized institution is subject
under the prompt correction action provisions of FDICIA. See "Prompt Corrective
Action." If an institution fails to comply with such an order, the agency may
seek to enforce such order in judicial proceedings and to impose civil money
penalties.
DEPOSITOR PREFERENCE STATUTE
Legislation has been enacted providing that deposits and certain claims
for administrative expenses and employee compensation against an insured
depository institution would be afforded a priority over other general
unsecured claims against such an institution, including federal funds and
letters of credit, in the "liquidation or other resolution" of such an
institution by any receiver.
RECENT LEGISLATION
On November 12, 1999, President Clinton signed into law legislation which
allows bank holding companies to engage in a wider range of non-banking
activities, including greater authority to engage in securities and insurance
activities. Under the Gramm-Leach-Bliley Act (the "Act"), a bank holding
company that elects to become a financial holding company may engage in any
activity that the Federal Reserve, in consultation with the Secretary of the
Treasury, determines by regulation or order is: (1) financial in nature; (2)
incidental to any such financial activity; or (3) complementary to any such
financial activity and does not pose a substantial risk to the safety or
soundness of depository institutions or the financial system generally. This
Act makes significant changes in United States banking law, principally by
repealing certain restrictive provisions of the 1933 Glass-Steagall Act. The
Act specifies certain activities that are deemed to be financial in nature,
including lending, exchanging, transferring, investing for others, or
safeguarding money or securities; underwriting and selling insurance; providing
financial, investment, or economic advisory services; underwriting, dealing in
or making a market in, securities; and any activity currently permitted for
bank holding companies by the Federal Reserve under Section 4(c)(8) of the Bank
Holding Company Act. The Act does not authorize banks or their affiliates to
engage in commercial activities that are not financial in nature. A bank
holding company may elect to be treated as a financial holding company only if
all depository institution subsidiaries of the holding company are
well-capitalized, well-managed and have at least a satisfactory rating under
the Community Reinvestment Act.
National banks are also authorized by the Act to engage, through
"financial subsidiaries," in any activity that is permissible for a financial
holding company (as described above) and any activity that the Secretary of the
Treasury, in consultation with the Federal Reserve, determines is financial in
nature or incidental to any such financial activity, except: (1) insurance
underwriting; (2) real estate development or real estate investment activities
(unless otherwise permitted by law); (3) insurance company portfolio
investments; and (4) merchant banking. The authority of a national bank to
invest in a financial subsidiary is subject to a number of conditions,
including, among other things, requirements that the bank must be well-managed
and well-capitalized (after deducting from the bank's capital outstanding
investments in financial subsidiaries). The Act provides that state banks may
invest in financial subsidiaries (assuming they have the requisite investment
authority under applicable state law) subject to the same conditions that apply
to national bank investments in financial subsidiaries.
The Act also contains a number of other provisions that will affect
Synovus' operations and the operations of all financial institutions. One of
the new provisions relates to the financial privacy of consumers, authorizing
federal banking regulators to adopt rules that will limit the ability of banks
and other financial entities to disclose non-public
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information about consumers to non-affiliated entities. These limitations will
likely require more disclosure to consumers, and in some circumstances, will
require consent by the consumer before information is allowed to be provided to
a third party.
On March 29, 2000, Synovus filed a declaration with the Federal Reserve to
become a financial holding company. It is anticipated that Synovus' declaration
will become effective on May 1, 2000, although there are no assurances that
such will be the case.
At this time, it is not possible to predict the impact of the Act on
Synovus' financial condition or results of operations.
POOLING OF INTERESTS ACCOUNTING
The Financial Accounting Standards Board ("FASB") has published The FASB
Exposure Draft on Business Combinations and Intangible Assets that would, if
adopted, eliminate the availability of pooling of interest accounting treatment
for most, if not all, mergers and acquisitions. Under purchase accounting, an
amount equal to the difference between the value of the consideration paid and
the value of the net assets acquired is characterized as "goodwill," recorded
as an asset of the acquiring company, and amortized as a charge against
earnings over a period of years. If adopted as presently proposed, this change
in accounting standards would be effective for acquisitions agreed to and
announced after the end of 2000 or earlier in certain circumstances.
LEGAL MATTERS
The validity of the Synovus common stock to be issued in connection with
the merger will be passed upon by Kathleen Moates, Senior Vice President and
Senior Deputy General Counsel of Synovus. Ms. Moates beneficially owns shares
of Synovus common stock and options to purchase additional shares of Synovus
common stock. As of the date of this proxy statement/prospectus, the number of
shares Ms. Moates owns or has the right to acquire upon exercise of her options
is, in the aggregate, less than 0.1% of the outstanding shares of Synovus
common stock.
EXPERTS
The consolidated balance sheets of Synovus and its subsidiaries as of
December 31, 1999 and 1998, and the related consolidated statements of income,
changes in shareholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1999, all of which are incorporated by
reference in this proxy statement/prospectus, have been audited by KPMG LLP,
independent public accountants, whose report thereon is incorporated herein by
reference. Such financial statements have been so incorporated herein by
reference in reliance upon the report of KPMG LLP and upon their authority as
experts in accounting and auditing.
OTHER MATTERS
ProCard's board of directors does not know of any matters to be presented
at the special meeting other than those set forth above. If any other matters
are properly brought before the special meeting or any adjournment thereof, the
enclosed proxy will be deemed to confer discretionary authority on the
individuals named as proxies therein to vote the shares represented by the
proxy as to any such matters.
STOCKHOLDER PROPOSALS
Synovus' 2001 annual meeting of shareholders will be held in April 2001.
Any shareholder satisfying the Securities and Exchange Commission requirements
and wishing to submit a proposal to be included in the proxy statement for the
2001 annual meeting of shareholders should submit the proposal in writing to
the Secretary, Synovus Financial Corp., 901 Front Avenue, Suite 301, Columbus,
Georgia 31901. Synovus must receive a proposal by November 16, 2000 in order to
consider it for inclusion in the proxy statement for the 2001 annual meeting of
shareholders.
If the merger is not consummated, ProCard will inform its stockholders of
the date and time of the 2000 annual meeting of stockholders of ProCard.
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WHERE YOU CAN FIND MORE INFORMATION
Synovus files annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any reports, statements or other information that Synovus files with the
SEC at the SEC's public reference rooms in Washington, D.C., New York, New York
and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. These SEC filings are also available
to the public from commercial document retrieval services and at the Internet
world wide web site maintained by the SEC at "http://www.sec.gov." Reports,
proxy statements and other information should also be available for inspection
at the offices of the NYSE.
Synovus filed a registration statement to register with the SEC the
Synovus common stock to be issued to ProCard stockholders in the merger. This
proxy statement/prospectus is a part of that registration statement and
constitutes a prospectus of Synovus. As allowed by SEC rules, this proxy
statement/prospectus does not contain all the information you can find in
Synovus' registration statement or the exhibits to that registration statement.
The SEC allows Synovus to "incorporate by reference" information into this
proxy statement/prospectus, which means that Synovus can disclose important
information to you by referring you to another document filed separately with
the SEC. The information incorporated by reference is considered part of this
proxy statement/prospectus, except for any information superseded by
information contained directly in this proxy statement/prospectus or in later
filed documents incorporated by reference in this proxy statement/prospectus.
This proxy statement/prospectus incorporates by reference the documents
set forth below that Synovus has previously filed with the SEC. These documents
contain important information about Synovus and its business.
Synovus SEC Filings (File No. 1-10312)
(1) Synovus' Annual Report on Form 10-K for the year ended
December 31, 1999, as amended by Synovus' Annual Report on
Form 10-K/A for the fiscal year ended December 31, 1999;
(2) Synovus' Current Report on Form 8-K dated January 12, 2000;
(3) the description of Synovus common stock contained in Synovus'
Registration Statement on Form 8-A filed with the SEC on
August 21, 1989; and
(4) the description of the shareholder rights plan of Synovus
contained in Synovus' Registration Statement on Form 8-A
filed with the SEC on April 28, 1999.
Synovus also incorporates by reference additional documents that may be
filed with the SEC between the date of this proxy statement/prospectus and the
date that the reoffering or resale of securities acquired pursuant to this
registration is completed. These include periodic reports, such as Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K, as well as proxy statements.
Synovus has supplied all information contained or incorporated by
reference in this proxy statement/prospectus relating to Synovus, ProCard has
supplied all information contained or incorporated by reference in this proxy
statement/prospectus relating to ProCard and the selling shareholders have
supplied all information contained in this proxy statement/prospectus relating
to the selling shareholders.
You can obtain any of the documents incorporated by reference from the
companies, the SEC or the SEC's Internet web site as described above. Documents
incorporated by reference are available from the companies without charge,
excluding all exhibits, except that if the companies have specifically
incorporated by reference an exhibit in this proxy statement/prospectus, the
exhibit will also be available without charge. You may obtain documents
incorporated by reference in this proxy statement/prospectus by requesting them
in writing or by telephone from the appropriate company at the following
addresses:
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Synovus Financial Corp.
901 Front Avenue, Suite 301
Columbus, Georgia 31901
Attn: G. Sanders Griffith, III
Senior Executive Vice President,
General Counsel & Secretary
Telephone: (706)649-2267
If you would like to request documents from us, please do so by May 3,
2000 to receive them before the ProCard special meeting.
You should rely only on the information contained or incorporated by
reference in this proxy statement/prospectus. Synovus and ProCard have not
authorized anyone to provide you with information that is different from what
is contained in this proxy statement/prospectus. This proxy
statement/prospectus is dated April __, 2000. You should not assume that the
information contained in this proxy statement/prospectus is accurate as of any
date other than that date. Neither the mailing of this proxy
statement/prospectus to shareholders nor the issuance of Synovus common stock
in the merger creates any implication to the contrary.
PRO FORMA FINANCIAL INFORMATION
Pro forma financial information reflecting the acquisition of ProCard
by Synovus is not presented herein since the pro forma effect is not
significant.
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APPENDIX "A"
MERGER AGREEMENT
MERGER AGREEMENT
by and among
SYNOVUS FINANCIAL CORP.,
TSYS ACQUISITION SUB, INC.
and
PROCARD, INC.
As of March 3, 2000
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<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
Exhibit 2.1 Conversion Ratio Table
Exhibit 4.1(c) Independent Advisor Opinion
Exhibit 7.1(e)(iv) Opinion of Counsel for the Company
Exhibit 7.1(g) Voting Agreement
Exhibit 8.1(c)(iii) Opinion of Counsel for Parent and Sub
</TABLE>
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MERGER AGREEMENT
THIS MERGER AGREEMENT, dated as of March 3, 2000 (the "Agreement"), by
and among SYNOVUS FINANCIAL CORP., a Georgia corporation ("Parent"), TSYS
ACQUISITION SUB, INC., a Delaware corporation and a wholly owned subsidiary of
Parent ("Sub"), and PROCARD, INC., a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Parent and Sub each have approved this Agreement and the
merger (the "Merger") of Sub with and into the Company on the terms and
conditions contained herein and in accordance with the Delaware General
Corporation Law (the "DGCL");
WHEREAS, Parent, as the sole stockholder of Sub, has approved this
Agreement, the Merger and the transactions contemplated hereby pursuant to
action taken by written consent in accordance with the requirements of the
Georgia Business Corporation Code (the "GBCC"), the DGCL and the Articles of
Incorporation and the Bylaws of Sub;
WHEREAS, the Board of Directors of the Company has approved this
Agreement and the Merger pursuant to action taken at a meeting in accordance
with the requirements of the DGCL and the Articles of Incorporation and the
Bylaws of the Company, and has directed that this Agreement and the Merger be
submitted to the stockholders of the Company (the "Stockholders") for their
approval;
WHEREAS, certain of the stockholders of the Company have duly executed
and delivered to Parent a voting agreement and irrevocable proxy (the "Voting
Agreement") relating to the shares of capital stock of the Company entitled to
vote on the Merger owned by such stockholder;
WHEREAS, the Merger will be effected by the filing of a certificate of
merger (the "Certificate of Merger") with the Secretary of State of Delaware;
and
WHEREAS, the parties to this Agreement intend that the Merger
qualify as a "reorganization" within the meaning of Section 368 of the Internal
Revenue Code of 1986 (the "Code").
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
ARTICLE 1
The Merger
1.1 Surviving Corporation. Subject to the provisions of this Agreement
and the DGCL, at the Effective Time (as hereinafter defined), Sub shall be
merged with and into the Company, and the separate corporate existence of Sub
shall cease. The Company shall be the surviving corporation in the Merger
(hereinafter sometimes called the "Surviving Corporation") and shall continue
its corporate existence under the laws of the State of Delaware.
1.2 Articles of Incorporation. The Articles of Incorporation of Sub
shall be the Articles of Incorporation of the Surviving Corporation.
1.3 Bylaws. The Bylaws of Sub shall be the Bylaws of the Surviving
Corporation.
1.4 Directors. The directors of the Surviving Corporation shall consist
of the directors of Sub immediately prior to the Effective Time, such directors
to keep their positions on the Board of Directors of the Surviving Corporation
until their respective successors are duly elected and qualified.
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1.5 Officers. The officers of the Surviving Corporation shall consist
of the officers of Sub immediately prior to the Effective Time, such officers to
hold office from the Effective Time until their respective successors are duly
elected and qualified.
1.6 Effective Time. Upon satisfaction or waiver of the conditions set
forth in Articles 7 and 8 hereof, and if this Agreement shall not have been
terminated in accordance with Article 9 hereof, the parties hereto shall cause
the Certificate of Merger to be properly executed and filed with the Secretary
of State of Delaware on the Closing Date (as hereinafter defined). The Merger
shall become effective as of the time of filing of a properly executed
Certificate of Merger or at such later date and time as is specified in the
Certificate of Merger. The date and time when the Merger becomes effective is
herein referred to as the "Effective Time."
1.7 Tax-Free Reorganization. The Merger is intended to be a
reorganization within the meaning of Section 368 of the Code, and this Agreement
is intended to be a "plan of reorganization" within the meaning of the
regulations promulgated under Section 368 of the Code.
1.8 Registration Statement and Proxy Statement.
(a) The shares of voting common stock, par value $1.00 per
share, of Parent ("Parent Common Stock") to be issued in the Merger
will be registered under the Securities Act of 1933 (the "Securities
Act") pursuant to a registration statement on Form S-4 (the
"Registration Statement"). The Registration Statement shall be filed
with the Securities and Exchange Commission ("SEC"), and each of Parent
and the Company shall use its commercially reasonable efforts to
respond to the comments of the SEC and to cause the Registration
Statement to be declared effective and the definitive proxy statement
that will form a part of the Registration Statement (the "Proxy
Statement") to be mailed to the Stockholders as soon as reasonably
practicable. Parent and the Company shall each provide any information
for inclusion in the Registration Statement or Proxy Statement which
may be required under applicable law and which is reasonably requested
by such other party. Parent and the Company shall promptly notify the
other of the receipt of the comments of the SEC and of any request from
the SEC for amendments or supplements to the Registration Statement or
for additional information, and will promptly supply the other with
copies of all correspondence between it or its representatives, on the
one hand, and the SEC or members of its staff, on the other hand, with
respect to the Registration Statement. If (i) at any time prior to the
Stockholders' Meeting (as hereinafter defined), any event should occur
relating to the Company which should be set forth in an amendment of,
or a supplement to, the Proxy Statement, the Company will promptly
inform Parent and (ii) at any time prior to the Stockholders' Meeting,
any event should occur relating to Parent or Sub or any of their
respective affiliates that should be set forth in an amendment of, or a
supplement to, the Registration Statement, Parent will promptly inform
the Company, and in the case of (i) or (ii) the Company and Parent,
will, upon learning of such event, promptly prepare, and Parent shall
file and, if required, the Company shall mail such amendment or
supplement to the Stockholders; provided, however, that prior to such
filing or mailing, the Company and Parent shall consult with each other
with respect to such amendment or supplement and shall incorporate the
other's comments thereto. The Company will notify Parent at least 24
hours prior to the mailing of the Proxy Statement, or any amendment or
supplement thereto, to the Stockholders.
(b) The Company hereby consents to the inclusion in the Proxy
Statement of the recommendation of the Board of Directors of the
Company described in Section 6.7, subject to any modification,
amendment or withdrawal thereof, and represents that the Independent
Advisor (as hereinafter defined) has, subject to the terms of its
engagement letter with the Company and the Board of Directors of the
Company (the "Independent Advisor Engagement Letter"), consented to the
inclusion of references to its opinion in the Proxy Statement.
(c) The Registration Statement (or at the discretion of
Parent, an additional registration statement on Form S-3) shall also
register under the Securities Act the resale of shares of Parent Common
Stock received in the Merger by affiliates of the Company, and Parent
shall use its reasonable efforts to keep such resale registration
statement effective for a period of two (2) years after the Effective
Time. Prior to the Effective Time, Parent and such Company affiliates
shall use their reasonable efforts to enter into a
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registration rights agreement relating to such resale registration
statement, in form satisfactory to the parties thereto.
ARTICLE 2
Conversion of Shares
2.1 Manner of Converting of Shares. As of the Effective Time, by virtue
of the Merger and without any action on the part of any holder thereof, the
shares of the constituent corporations shall be converted as follows:
(a) Subject to Section 2.2, each share of (i) common stock,
par value $.001 per share, of the Company ("Company Common Stock"),
(ii) Series A Convertible Preferred Stock, par value $.001 per share,
of the Company ("Company Series A Stock"), and (iii) Series B
Convertible Preferred Stock, par value $.001 per share, of the Company
("Company Series B Stock" and, together with the Company Common Stock
and the Company Series A Stock collectively referred to herein as the
"Company Capital Stock"), issued and outstanding immediately prior to
the Effective Time (except for Dissenting Shares (as defined below) and
treasury shares) shall automatically be converted into the right to
receive such number of shares of Parent Common Stock as determined by
multiplying each such share by the conversion ratio, as the same may be
revised, as set forth on Exhibit 2.1 hereto (the "Conversion Ratio").
For the purposes of calculating the Conversion Ratio, each share of
Parent Common Stock shall be valued at the arithmetic average of the
closing price per share of Parent Common Stock, as reported on a
consolidated basis on the New York Stock Exchange (the "NYSE") for each
of the twenty (20) consecutive trading days ending with the trading day
which occurs three (3) trading days prior to the Closing Date (the
"Average Closing Price"). Notwithstanding the foregoing, for the
purposes of this Agreement, if the preceding sentence results in an
Average Closing Price (i) less than $16.50 per share of Parent Common
Stock, then the Average Closing Price shall equal $16.50 (the "Floor
Price") per share, unless Parent waives such requirement (by written
notice to Company) that the Average Closing Price equal the Floor
Price, in which event the Average Closing Price shall equal the amount
determined in the preceding sentence or (ii) greater than $25.00 per
share of Parent Common Stock, then the Average Closing Price shall
equal $25.00 (the "Ceiling Price") per share, unless Company waives
such requirement (by written notice to Parent) that the Average Closing
Price equal the Ceiling Price, in which event the Average Closing Price
shall equal the amount determined in the preceding sentence. The shares
of Parent Common Stock issued in the Merger shall have ten (10) votes
per share, in accordance with Parent's Articles of Incorporation. If,
between the date hereof and the Closing Date (as defined below), Parent
effects any stock split, stock combination, stock dividend or similar
transaction with respect to the outstanding shares of Parent Common
Stock, the dollar amounts in the preceding sentence shall be adjusted
simultaneously with the effectiveness of such transaction by
multiplying such dollar amounts by a fraction, the numerator of which
shall equal the number of outstanding shares of Parent Common Stock
outstanding immediately prior to the effectiveness of such transaction,
and the denominator of which shall equal the number of outstanding
shares of Parent Common Stock outstanding immediately following the
effectiveness of such transaction.
(b) Each share of Company Capital Stock that is held in the
Company's treasury immediately prior to the Effective Time (if any)
shall be cancelled and retired and all rights in respect thereof shall
cease to exist, without any conversion thereof or payment of any
consideration therefor.
(c) Each share of common stock, par value $.01 per share, of
Sub that is issued and outstanding immediately prior to the Effective
Time shall be converted into one share of common stock, par value $.01
per share, of the Surviving Corporation.
2.2 Fractional Shares. No scrip or fractional shares of Parent Common
Stock shall be issued in the Merger. All fractional shares of Parent Common
Stock to which a Stockholder immediately prior to the Effective Time would
otherwise be entitled at the Effective Time shall be aggregated. If a fractional
share results from such aggregation, such Stockholder shall be entitled, after
the later of (a) the Effective Time or (b) the surrender of such Stockholder's
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Certificate(s) (as defined below) that represent such shares of Company Capital
Stock, to receive from Parent an amount in cash in lieu of such fractional
share, based on the Average Closing Price.
2.3 Exchange of Company Capital Stock.
(a) As promptly as practicable following the Closing, Parent
shall make available to each record holder who, as of the Effective
Time, was a holder of an outstanding certificate or certificates which
immediately prior to the Effective Time represented shares of the
Company Capital Stock (the "Certificate" or "Certificates"), a form of
letter of transmittal and instructions for use in effecting the
surrender of the Certificates for payment therefor and conversion
thereof. Delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates
to Parent and the form of letter of transmittal shall so reflect. Upon
surrender to Parent of a Certificate, together with such letter of
transmittal duly executed, the holder of such Certificate shall be
entitled to receive in exchange therefor (i) one or more certificates
as requested by the holder (properly issued, executed and
countersigned, as appropriate) representing that number of whole shares
of fully paid and nonassessable shares of Parent Common Stock to which
such holder of Company Capital Stock shall have become entitled
pursuant to the provisions of Section 2.1 hereof, (ii) as to any
fractional share of Parent Common Stock, a check representing the cash
consideration to which such holder shall have become entitled pursuant
to Section 2.2 hereof, and (iii) any dividend or other distribution to
which such holder is entitled pursuant to Section 2.3(b) hereof, and
the Certificate so surrendered shall forthwith be cancelled. No
interest will be paid or accrued on the cash payable upon the surrender
of the Certificates. If any portion of the consideration to be received
pursuant to Sections 2.1, 2.2 and 2.3(b) upon exchange of a Certificate
(whether a certificate representing shares of Parent Common Stock or by
check representing cash for a fractional share) is to be issued or paid
to a person other than the person in whose name the Certificate
surrendered in exchange therefor is registered, it shall be a condition
of such issuance and payment that the Certificate so surrendered shall
be properly endorsed or otherwise in proper form for transfer and that
the person requesting such exchange shall pay in advance any transfer
or other taxes required by reason of the issuance of a Certificate
representing cash for a fractional share to such other person, or
established to the satisfaction of Parent that such tax has been paid
or that such tax is not applicable. From the Effective Time until
surrender in accordance with the provisions of this Section 2.3, each
Certificate shall represent for all purposes only the right to receive
the consideration provided in Sections 2.1, 2.2 and 2.3(b). All
payments of respective shares of Parent Common Stock that are made upon
surrender of Certificates in accordance with the terms hereof shall be
deemed to have been made in full satisfaction of rights pertaining to
the shares of Company Capital Stock evidenced by such Certificates.
(b) No dividends or other distributions with respect to Parent
Common Stock with a record date after the Effective Time shall be paid
to the holder of any unsurrendered Certificate with respect to the
shares of Parent Common Stock, and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section
2.2, in each case until the surrender of such Certificate in accordance
with this Article 2. Following surrender of any such Certificate, there
shall be paid to the holder of the certificate representing whole
shares of Parent Common Stock issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of any cash
payable in lieu of a fractional share of Parent Common Stock to which
such holder is entitled pursuant to Section 2.2 and the amount of
dividends or other distributions with a record date after the Effective
Time theretofore paid with respect to such whole shares of Parent
Common Stock and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective
Time but prior to such surrender and with a payment date subsequent to
such surrender payable with respect to such whole shares of Parent
Common Stock.
(c) In the case of any lost, mislaid, stolen or destroyed
Certificates, the holder thereof may be required, as a condition
precedent to delivery to such holder of the consideration described in
Sections 2.1, 2.2 and 2.3(b) hereof, to deliver to Parent a bond in
such reasonable sum as indemnity against any claim that may be made
against Parent or the Surviving Corporation with respect to the
Certificate alleged to have been lost, mislaid, stolen or destroyed.
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(d) After the Effective Time, there shall be no transfers on
the stock transfer books of the Surviving Corporation of the shares of
Company Capital Stock that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for transfer, they shall be
cancelled and exchanged for the consideration described in Sections
2.1, 2.2 and 2.3(b) hereof.
(e) Any shares of Parent Common Stock or cash due former
stockholders of the Company pursuant to Sections 2.1, 2.2 and 2.3(b)
hereof that remain unclaimed by such former stockholders for six (6)
months after the Effective Time shall be held by Parent, and any former
holder of Company Capital Stock who has not theretofore complied with
Section 2.3(a) shall thereafter look only to Parent for issuance of the
number of shares of Parent Common Stock and other consideration to
which such holder has become entitled pursuant to the provisions of
Sections 2.1, 2.2 and 2.3(b) hereof; provided, however, that neither
Parent nor any party hereto shall be liable to a former holder of
shares of Company Capital Stock for any amount required to be paid to a
public official pursuant to any applicable abandoned property, escheat
or similar law.
(f) To the extent that appraisal rights are available under
the DGCL, shares of Company Capital Stock that are issued and
outstanding immediately prior to the Effective Time and that have not
been voted for adoption of the Merger and with respect to which
appraisal rights have been properly demanded in accordance with the
DGCL ("Dissenting Shares") shall not be converted into the right to
receive the consideration provided for in this Article 2 at or after
the Effective Time unless and until the holder of such shares becomes
ineligible for such appraisal rights. If a holder of Dissenting Shares
becomes ineligible for appraisal, then, as of the Effective Time or
the occurrence of such event, whichever later occurs, such holder's
Dissenting Shares shall cease to be Dissenting Shares and shall be
converted into and represent the right to receive the consideration
provided for in this Article 2 (subject to all of the rights and
obligations of the Stockholders hereunder). If any Stockholder asserts
the right to be paid for the fair value of such Company Capital Stock
as described above, the Company shall give Parent notice of such
assertion and Parent shall have the right to participate in all
negotiations and proceedings with respect to any such demands. The
Company shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to, or settle or offer to
settle, any such demand for payment. Payment for Dissenting Shares
shall be made as required by the DGCL.
2.4 Treatment of the Company's Employee Stock Options. Parent, at the
Effective Time, and by operation of this Agreement, shall:
(a) assume the Company's 1995 Incentive Stock Option Plan (the
"Plan") as in effect at such time and each stock option granted under
the Plan which remains outstanding at such time (an "Option") and, as
for each such Option:
(b) (A) substitute a number of shares of Parent Common Stock
for the number of shares of Company Common Stock subject to each such
Option by multiplying the number of shares of such Company Common Stock
by the Conversion Ratio, rounding down to the nearest whole share, and
(B) convert the option price for the Company Common Stock subject to
each such Option to an option price for the Parent Common Stock by
dividing the option price for a each share of Company Common Stock by
the Conversion Ratio, rounding up to the nearest cent.
(c) Within thirty (30) days after the Effective Time, Parent
shall notify each holder of an Option of the assumption, substitution
and conversion effected pursuant to this Section 2.4 and the revisions
to the Options shall be effected thereby. No changes shall be made to
the terms and conditions of each Option except for such substitution
and conversion and for such changes as required to give full effect to
such substitution and conversion and except that all unvested shares
will immediately vest upon consummation of the Merger, and an Option
holder shall be entitled to exercise the Option as to 100% of the
shares covered by the Option. No payment shall be made as compensation
for the rounding down with respect to shares or the rounding up with
respect to option prices called for in this Section 2.4. The Company
agrees that no option shall be granted to purchase Company Common Stock
on or after the date of this Agreement and that no Option which is
outstanding on such date thereafter shall be modified, amended or
extended in any manner whatsoever.
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(d) Parent shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Parent Common
Stock for delivery upon exercise of the Options. In the event that
Options in excess of twenty-five percent (25%) of those outstanding as
of the date of this Agreement remain outstanding and unexercised at
the Effective Time, at or as promptly as practicable following the
Effective Time, Parent shall file a registration statement on Form S-8
(or any successor or other appropriate form) with respect to the
shares of Parent Common Stock subject to the Options and shall use its
best efforts to maintain the effectiveness of such registration
statement for so long as the Options remain outstanding or otherwise
register such shares of Parent Common Stock for issuance.
ARTICLE 3
The Closing
The consummation of the transactions contemplated by this agreement is
referred to as the "Closing." The "Closing Date" is the date on which the
Closing occurs. The Closing shall occur within five (5) business days after
satisfaction or waiver of all of the conditions set forth in Articles 7 and 8
hereof. The Closing shall take place at 10:00 a.m. (local time) at the offices
of King & Spalding, 191 Peachtree Street, Atlanta, Georgia, or at such other
time and place as the parties may mutually agree.
ARTICLE 4
Representations and Warranties
The Company represents and warrants to Parent that:
4.1 Corporate Organization; Authorization.
(a) The Company has the requisite power and authority to
execute and deliver this Agreement and all agreements, documents and
instruments executed and delivered by the Company in connection with
the transactions contemplated by this Agreement (the "Company Ancillary
Agreements") and to fully perform its obligations hereunder and
thereunder, and the execution and delivery of this Agreement and the
Company Ancillary Agreements by the Company, and the Company's
performance of the transactions contemplated herein and therein have
been duly authorized by action of the Board of Directors of the Company
and, if approved by the Stockholders of the Company at the
Stockholders' Meeting, will have been authorized by all requisite
corporate and stockholder action.
(b) The Company is a corporation validly existing and in good
standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own, operate and lease its property
and to carry on its business as now being conducted. The Company is
qualified to conduct business as a foreign corporation in each
jurisdiction in which the ownership or leasing of its properties or the
conduct of its business requires such qualification. Schedule 4.1(b)
sets forth (i) a list of all jurisdictions in which the Company is
qualified to do business and (ii) a list of all jurisdictions in which
the Company is operating under a trade name, and each jurisdiction in
which any such trade name is registered.
(c) Fox-Pitt, Kelton Inc., as independent advisor to the
Company (the "Independent Advisor") has delivered to the Board of
Directors of the Company its written opinion, dated as of the date of
this Agreement, that, as of such date and based on the assumptions,
qualifications and limitations contained therein, the consideration to
be received by the holders of Company Capital Stock in the Merger is
fair, from a financial point of view, to such holders. A copy of such
opinion is attached hereto as Exhibit 4.1(c).
4.2 No Violation. Except as set forth in Schedule 4.2, neither the
execution and delivery of this Agreement or any of the Company Ancillary
Agreements by the Company nor the consummation of the transactions
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contemplated hereby or thereby by the Company shall (a) violate or result in a
breach of or constitute a default under any provision of the Company's charter
documents or bylaws, (b) violate any order, arbitration award, judgment, decree,
law, ordinance, regulation or any other restriction of any kind or character to
which the Company is a party or is bound or to which any property of the Company
is subject or is bound, (c) violate or result in a breach of or constitute a
default (or would result in or constitute such a breach or default with notice
or lapse of time or both) under any provision of any Company Contract (as
defined below), (d) require the consent of any other party to any of the items
described in this subsection, other than the approval of the Stockholders of the
Company or (e) require the consent or approval of any governmental body, agency
or authority.
4.3 Enforceability. The Company has duly executed and delivered this
Agreement and each of the Company Ancillary Agreements, and this Agreement and
each of the Company Ancillary Agreements constitutes a valid and binding
agreement, enforceable against the Company in accordance with its respective
terms, except as enforceability may be limited by laws of general application
relating to bankruptcy, insolvency and debtors' relief, and by general
principles of equity.
4.4 Ownership Interests.
(a) The authorized capital stock of the Company consists of
(i) 17,000,000 shares of Company Common Stock, of which 2,996,505
shares have been issued and are outstanding, (ii) 2,000,000 shares of
Company Series A Stock, of which 1,266,299 shares have been issued and
are outstanding, and (iii) 2,000,000 shares of Company Series B Stock,
of which 1,592,165 shares have been issued and are outstanding (the
"Shares"). The Shares constitute all of the issued and outstanding
shares of the capital stock of the Company. All of the Shares are
validly issued, fully paid and non-assessable, free of pre-emptive
rights, and no such Shares have been issued in violation of any federal
or state securities law.
(b) (i) Each share of Company Series A Stock is convertible
into not more than one share of Company Common Stock; and (ii) each
share of Company Series B Stock is convertible into not more than one
share of Company Common Stock.
(c) No person has given notice to the Company that he has nor
could any person be reasonably expected to have any valid claim or
action that is enforceable against any of the Company, Parent, the
Surviving Corporation or any of their affiliates, and no fact or
circumstance exists which could give rise to any such right, claim or
action on behalf of any person, arising out of any prior offer, issue,
redemption, call, transfer or transaction of any nature with respect to
any capital stock or equity interest of the Company, or any corporation
or organization which has been merged into the Company. The Company
does not own an equity interest in any corporation, limited liability
company, partnership or other entity.
(d) Except as set forth in this Section 4.4 and on Schedule
4.4(d) hereto, there are no shares of capital stock of the Company
outstanding, and there are no subscriptions, options, convertible
securities, calls, rights, warrants or other agreements, claims or
commitments of any nature whatsoever (collectively, "Rights"),
obligating the Company to issue, transfer, deliver or sell, or cause to
be issued, transferred, delivered or sold, additional shares of capital
stock or other securities of the Company or obligating the Company to
grant, extend or enter into any such agreement or commitment. Schedule
4.4(d) sets forth a true and complete summary of all Rights, including
the name, registered address and tax identification number of the
holder thereof, the class and number of shares of Company Capital Stock
to which each holder is entitled upon the valid exercise, conversion or
redemption thereof, and a summary of all material terms thereof. Since
the date of this Agreement, there has been no increase in the number of
shares of Company Capital Stock to which any holder of Rights is
entitled. The Company has previously provided Parent with true and
complete copies of all agreements relating to the Rights.
(e) All outstanding and unexercised Options will, pursuant to
the terms thereof, immediately vest at the Effective Time. All
outstanding and unexercised warrants to acquire shares of Company
Capital Stock will, pursuant to the terms thereof, expire at the
Effective Time.
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4.5 Financial Statements. The Company's balance sheet as of the end of,
and related audited statements of income, retained earnings and cash flow for,
the fiscal years ended December 31, 1999 (unaudited) and 1998 (audited)
(December 31, 1999 being hereinafter referred to as the "Financial Statement
Date"), are attached hereto as Schedule 4.5 and are referred to herein as the
"1999 Financial Statements." The 1999 Financial Statements (i) present fairly,
in all material respects, the financial position, results of operations and
changes in cash flows, as the case may be, of the Company as of and for the
periods reflected therein, and (ii) were prepared in conformity with generally
accepted accounting principles ("GAAP") in a manner consistent with the
Company's historic accounting practices applied on a consistent basis, except as
otherwise indicated in the text of such statements. The Company's balance sheet
as of December 31, 1999 is referred to herein as the "1999 Balance Sheet."
4.6 Unreported and Contingent Liabilities. Except as set forth (a) on
Schedule 4.6 or (b) in the 1999 Balance Sheet, the Company has no liabilities or
obligations, whether accrued, absolute, fixed, known or unknown, contingent or
otherwise, existing, arising out of or relating to any transaction entered into,
or state of facts existing, on or prior to the date of this Agreement, except
unsecured trade payables and other unsecured liabilities incurred in the
ordinary course of business, and capital expenditures or contracts and
commitments for capital expenditures made or entered into in the ordinary course
of business and except for the Company's obligations under the engagement letter
with the Independent Advisor attached as Exhibit 4.1(c) hereto and legal,
accounting and out-of-pocket expenses relating to the transactions contemplated
by this Agreement.
4.7 Absence of Certain Changes. Since the Financial Statement Date, the
business of the Company has been conducted only in the ordinary course, and
except as set forth on Schedule 4.7, there has not been (a) any material adverse
change (or any event that is reasonably likely to result in a material adverse
change) in the condition (financial or otherwise), assets, liabilities,
earnings, business or operations of the Company; (b) any damage, destruction,
casualty or other similar occurrence or event (whether or not insured against),
which either singly or in the aggregate materially adversely affects the assets,
liabilities, earnings, business or operations of the Company; (c) any mortgage
or pledge of or encumbrance attached to any of the properties or assets of the
Company not in the ordinary course of business; (d) any incurrence or creation
of any liability, commitment or obligation in excess of $10,000 by the Company,
except unsecured trade payables and other unsecured liabilities incurred in the
ordinary course of business, and capital expenditures or contracts and
commitments for capital expenditures made or entered into in the ordinary course
of business and except for the Company's obligations under the engagement letter
with the Independent Advisor attached as Exhibit 4.1(c) hereto and legal,
accounting and out-of-pocket expenses relating to the transactions contemplated
by this Agreement; or (e) any sale, transfer or other disposition by the Company
of any of its assets in excess of $10,000 in the aggregate, except for inventory
and equipment sold by the Company in the ordinary course of business.
4.8 Licenses and Permits. The Company possesses all material licenses
or permits necessary to conduct its business as now operated. Such licenses and
permits are valid and in full force and effect. No action or claim is pending,
or, to the knowledge of the Company, threatened, to revoke or terminate any such
licenses or permits or declare any of them invalid in any respect and the
transactions contemplated by this Agreement will not result in the revocation or
termination of any such licenses or permits. A list of all such licenses and
permits is attached as Schedule 4.8.
4.9 Litigation. Except as set forth on Schedule 4.9, there is not
pending against the Company or, to the knowledge of Company, threatened against
the Company any claim, action, suit, arbitration proceeding, governmental
proceeding or investigation or other proceeding of any character (a) demanding
money damages from the Company, or (b) demanding a temporary restraining order,
preliminary injunction or a permanent injunction or order of specific
performance against the Company. All pending suits, actions, claims, proceedings
or investigations relating to or involving the Company (or any of its officers
or directors as such) are adequately provided for in the 1999 Balance Sheet in
accordance with GAAP. The Company is not subject to any judgment, decree,
injunction, rule or order of any court, nor is the Company subject to any
governmental restriction which is reasonably likely (i) to have a material
adverse effect on the assets, liabilities, results of operations, financial
condition, business or prospects of the Company or (ii) to cause a material
limitation on Parent's ability to operate the business of the Company after the
Closing.
4.10 Environmental Matters. Except as set forth in Schedule 4.10:
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(a) the Company is not subject to any claim, obligation,
liability, loss, damage or expense of whatever kind or nature,
contingent or otherwise, incurred or imposed or based upon any
provision of any local, state or federal law or regulation relating to
the protection of the environment, pollution control, product
registration or hazardous materials (as defined below) and arising out
of any act or omission of the Company or their respective employees,
agents or representatives or arising out of the ownership, use, control
or operation by the Company of any plant, facility, site, area or
property (including, without limitation, any plant, facility, site,
area or property currently or previously owned or leased by the
Company) from which any hazardous materials were released into the
environment (the term "release" meaning any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing into the environment, and the term
"environment" meaning any surface or ground water, drinking water
supply, soil, surface or subsurface strata or medium, or the ambient
air);
(b) the Company has heretofore provided Parent with true,
correct and complete copies of all files of the Company relating to
environmental matters, and Schedule 4.10(b) sets forth the amount of
all fines, penalties or assessments paid within the last five years by
the Company with respect to environmental matters, including the date
of payment and the basis for the assertions of liability; and
(c) none of the real property owned or leased by the Company
nor improvements or equipment included within such real property
contains any asbestos, PCBs or underground storage tanks.
As used in this Section 4.10, the term "hazardous materials" means any
pollutant, hazardous substance, toxic, ignitable, reactive or corrosive
substance, hazardous waste, special waste, industrial substance, by-product,
process intermediate product or waste, petroleum or petroleum-derived substance
or waste, chemical liquids or solids, liquid or gaseous products, or any
constituent of any such substance or waste, the use, handling or disposal of
which by the Company is in any way governed by or subject to any applicable
law, rule or regulation of any governmental or regulatory authority.
4.11 Compliance With Laws Generally. Except as set forth in Schedule
4.11, the Company has complied and is in current compliance in all material
respects with all laws, rules, regulations and ordinances to which it is subject
or by which it is bound, including, but not limited to applicable federal and
state securities laws. Except for laws, rules, regulations or ordinances that
are or are to be of general applicability, there are no existing or, to the
knowledge of the Company, proposed laws, rules, regulations or ordinances of
such a nature as could reasonably be expected to materially adversely affect the
continued conduct of the Company's business in the manner presently conducted.
4.12 Employee Benefit Plans. Except as set forth on Schedule 4.12:
(a) There are no plans, programs, policies or arrangements
(whether written or oral) providing cash or other compensation or
benefits of any kind or description whatsoever (whether current or
deferred) to, or on behalf of, any current or former officer, employee
or director of the Company or any or any of their dependents under
which the Company has any liability, duty or obligation whatsoever,
whether fixed or contingent, including but not limited to, any
employment, consulting or severance agreement and any "employee benefit
plan" as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (individually an "Employee
Benefit Plan" and collectively the "Employee Benefit Plans").
(b) The Company has furnished to Parent: (i) a correct,
complete and current copy of (A) each written Employee Benefit Plan and
all amendments to such plan together with any trust agreements or other
contracts or agreements which are a part of such plan, and (B) all
Internal Revenue Service, Department of Labor and Pension Benefit
Guaranty Corporation rulings or determinations, annual reports, summary
plan descriptions, actuarial and other financial reports for all
periods ending on or after December 31, 1995, with respect to each such
Employee Benefit Plan, (ii) an accurate written summary of all material
provisions of each unwritten Employee Benefit Plan; and (iii) such
other documentation with respect to any Employee Benefit Plan as is
reasonably requested by Parent.
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(c) All of the assets which have been set aside in a trust or
insurance company separate account to satisfy any obligations under any
Employee Benefit Plan are shown on the books and records of each such
trust and each such account at their current fair market value as of
the most recent valuation date for such trust or account, the fair
market value of all such assets as of each such valuation date equals
or exceeds the present value of any obligation under any Employee
Benefit Plan, and the liabilities for all other obligations under any
Employee Benefit Plan are accurately set forth in the Company's 1999
Balance Sheet.
(d) Each Employee Benefit Plan has been established,
maintained and administered in compliance with all applicable laws, and
all applicable reporting and disclosure requirements with respect to
each Employee Benefit Plan have been satisfied on a timely basis,
including all such requirements under the Code and ERISA. No Employee
Benefit Plan is described in ERISA Sections 3(37), 4 (b)(4), 4063 or
4064 or is subject to Code Section 412, and the Company has never
maintained or contributed directly or indirectly to (or had an
obligation to contribute directly or indirectly to) such a plan. No
Employee Benefit Plan which is described in ERISA Section 3(1) provides
any benefits after a termination of employment except to the extent
such benefits are required to satisfy the minimum requirements under
Part 6 of Title I of ERISA.
(e) There are no pending or threatened claims with respect to
an Employee Benefit Plan (other than routine and reasonable claims for
benefits made in the ordinary course of the plan's operations) or with
respect to the terms and conditions of employment or termination of
employment of any employee or former employee of the Company, which
claims could reasonably be expected to result in any liability to the
Company, and no audit or investigation by any domestic or foreign
governmental or other law enforcement agency is pending or, to the
Company's knowledge, has been proposed with respect to any Employee
Benefit Plan.
(f) Each Employee Benefit Plan which the Company has treated
as satisfying the requirements of Code Section 401 and each trust which
the Company has treated as satisfying the requirements of Code Section
501 at all times have in fact satisfied such requirements.
(g) There have been no prohibited transactions or breaches of
fiduciary duty under ERISA or prohibited transactions under the Code
for which the Company has any liability or, to the Company's knowledge,
for which the Company has any indemnification obligation to any other
person.
(h) The Company has the right pursuant to the terms of each
Employee Benefit Plan and all agreements related to such plan
unilaterally to terminate such plan (or its participation in such plan)
or to amend the terms of such plan at any time without triggering a
penalty or an obligation to make any additional contributions to such
plan, and the Parent immediately after the Closing shall have exactly
the same rights as the Company unilaterally to take such action without
triggering any penalty or any obligation to make any additional
contributions to such plan.
(i) The transactions contemplated by this Agreement will not
result in any additional payments to or benefit accruals for, or any
increase the vested interest of, any current or former officer,
employee or director or their dependents under any Employee Benefit
Plan. The transactions contemplated by this Agreement will not result
in any payments to any current or former officer, employee or director
of the Company which will be subject to Section 280G of the Code.
(j) The term "Company" under this Section 4.12 shall include
any organization whose employees are treated as employees of the
Company under Code Section 414(b), (c), (m) or (o), and the Plan
described in Section 2.4 was timely approved by the Company's
Stockholders to the extent required for options granted under such Plan
to meet the requirements for an "incentive stock option" under Section
422 of the Code.
4.13 Intellectual Property. Attached hereto as Schedule 4.13 is a list
of all copyrights, trade names and trademarks, trade secrets, service marks or
patents which are used in the business of the Company or as to which the Company
claims an ownership interest or as to which the Company is a licensee or
licensor (the "Intellectual Property") and jurisdictions where registered (if
any). The Company has good and marketable title to or possesses adequate
licenses or other valid rights to use the Intellectual Property, free and clear
of all liens, charges, claims and
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other encumbrances. To the knowledge of the Company, the use of the Intellectual
Property does not misappropriate, infringe upon or conflict with any patent,
copyright, trade name, trade secret or trademark of any third party. No party
has filed a claim (or, to the knowledge of Company, threatened to file a claim)
against the Company alleging that it has violated, infringed on or otherwise
improperly used the intellectual property rights of such party and, to the
knowledge of Company, the Company has not violated or infringed any patent,
trademark, trade name, service mark, service name, copyright or trade secret
held by others.
4.14 Tax Matters. Except as set forth in Schedule 4.14(a):
(a) The Company has timely filed, including applicable
extensions, all federal, state, local and foreign Tax returns required
to be filed by it, all such returns are accurate and complete in all
material respects, and the Company has paid or made adequate provision
on its books and records for the payment of all Taxes (as defined in
Section 4.14(c)) (including any interest, penalties and additions to
Tax) required to be paid by the Company for all tax periods ending on
or prior to the Closing Date, whether or not in connection with such
returns. All deficiencies asserted against the Company as a result of
any examinations by the Internal Revenue Service or any other taxing
authority have been paid, fully settled or adequately provided for in
the 1999 Balance Sheet. The liability for Taxes reflected in the 1999
Balance Sheet (excluding any reserve for deferred Taxes or portion
thereof which is attributable to differences between the timing of
income or deductions for tax and financial accounting purposes) is or
will be sufficient for the payment of all unpaid Taxes which are owed
by the Company (including interest, penalties and additions to Tax),
whether or not disputed, that are accrued or applicable for the period
ended December 31, 1999 (as applicable) and for all years and periods
ended prior thereto. There are no pending claims asserted for Taxes of
the Company or outstanding agreements or waivers extending the
statutory period of limitation applicable to any Tax return of the
Company for any period. The Company has complied for all prior periods
with the Tax withholding provisions of all applicable federal, state,
local and other laws. All accounting periods and methods used by the
Company for Tax reporting purposes are permissible periods and methods
under applicable law. The Company has not been a member of an
affiliated group of corporations filing a consolidated federal income
tax return. The Company has made available to Parent true, complete and
correct copies of its federal income tax returns for the last three (3)
taxable years and made available such other tax returns requested by
Parent.
(b) Schedule 4.14(b) sets forth a true and complete list of
each jurisdiction in which the Company has filed sales or use tax
returns prior to the date hereof.
(c) "Taxes" means all state, federal, and foreign taxes,
levies, duties, assessments, reassessments and other charges of any
nature whatsoever including income tax, profits tax, gross receipts
tax, franchise tax, corporation tax, sales and use tax, wage tax,
payroll tax, worker's compensation levy, capital tax, stamp duty, real
and personal property tax, land transfer tax, customs or excise duty,
excise tax, turnover or value added tax on goods sold or services
rendered, withholding tax, social security, unemployment insurance
charges or retirement contributions.
(d) "Income Taxes" means all state, federal, and foreign
taxes measured on the income of the Company, but shall not include
other items contained in the definition of Taxes.
4.15 No Broker Involved. Neither the Stockholder Parties nor the
Company have engaged any broker, finder or agent with respect to the
transactions contemplated by this Agreement or with respect to the Company's
sale or merger or any other transaction relating to the disposition of the
Company's assets, except for the Independent Advisor.
4.16 Contracts. Schedule 4.16 contains a true and complete list of the
following (hereinafter referred to as the "Company Contracts"):
(a) all bonds, debentures, notes, mortgages, indentures or
guarantees to which the Company is a party or by which any of its
properties or assets (real, personal or mixed, tangible or intangible)
is bound pursuant to which any indebtedness of the Company in the
aggregate principal amount in excess of $10,000 is outstanding;
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(b) all leases to which the Company is a party or by which any
of its properties or assets (real, personal or mixed, tangible or
intangible) is bound involving an annual rental payment in excess of
$10,000 individually;
(c) all loans and credit commitments to the Company which are
outstanding and pursuant to which any indebtedness of the Company in
the aggregate principal amount in excess of $10,000 is outstanding,
together with a brief description of such commitments and the name of
each financial institution granting the same;
(d) all contracts or agreements which limit or restrict in any
material respect the Company from engaging in any business in any
jurisdiction; and
(e) all existing agreements, contracts and commitments,
written or oral (other than those described in subparagraph (a), (b),
(c), or (d) of this Section 4.16) to which the Company is a party or by
which the Company or any of its properties or assets may be bound (i)
involving an annual commitment or annual payment by any party thereto
of more than $10,000 individually, (ii) which cannot be terminated by
the Company without penalty or further obligations on not more than 90
days' notice or (iii) which is otherwise material to the Company.
True and complete copies of all Company Contracts, including all amendments
thereto, have been made available to Parent. The Company Contracts are valid
and enforceable in accordance with their respective terms with respect to the
Company and valid and enforceable in accordance with their respective terms
with respect to any other party thereto, except as the enforceability may be
limited by laws of general application relating to bankruptcy, insolvency, and
debtor's relief and by the general principles of equity. The Company has
physical possession of all equipment and other assets which are covered by
leases set forth on Schedule 4.16. There is not under any of the Company
Contracts any existing breach, default or event of default by the Company or
event that with notice or lapse of time or both would constitute a breach,
default or event of default by the Company, nor does the Company know of, and
the Company has not received notice of, or made a claim with respect to, any
breach or default by any other party thereto.
4.17 Officers and Employees. Schedule 4.17 contains a true and complete
list of all of the officers and managers of the Company, specifying their title
and annual rate of compensation, bonus eligibility and a true and complete list
of all of the employees of the Company as of the date hereof with whom the
Company has a written employment agreement or to whom the Company has made
verbal commitments which are binding on the Company under applicable law.
4.18 Insurance. Schedule 4.18 sets forth a true and complete list of
the current insurance coverages for the Company, including names of carriers,
amounts of coverage and premiums therefor. The Company has made available to
Parent true and complete copies of all such insurance policies.
4.19 Title to Property and Related Matters. The Company has good and
valid title to or valid leasehold interest in its personal property, as
reflected in the 1999 Balance Sheet or acquired after the date thereof (other
than property sold or otherwise disposed of in the ordinary course of business
since such date), and all of such properties are held free and clear of all
title defects, liens, encumbrances, security interests and restrictions
whatsoever, except, with respect to all such properties, (a) liens securing debt
reflected as liabilities on the 1999 Balance Sheet and (b) (i) liens for current
taxes and assessments not in default or which are being contested in good faith,
and (ii) mechanics', carriers', workmen's, repairmen's, statutory or common law
liens relating to payments that are not delinquent and which are being contested
in good faith.
4.20 Computer Hardware and Software.
(a) Schedule 4.20 sets forth a true and complete list of: (i)
all software owned by the Company or licensed to or used in connection
with the business of the Company (the "Company Proprietary Software");
and (ii) all software (other than the Company Proprietary Software)
used in connection with the business of the Company (the "Company
Licensed Software" and together with the Company Proprietary Software,
the
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"Company Software"); (iii) all technical and restricted materials other
than inventory relating to the acquisition, design, development, use or
maintenance of computer code program documentation and materials used
in connection with the business of the Company (the "Technical
Documentation"); and (iv) all Company Hardware (as defined below). The
Technical Documentation includes the source code, metadata, systems
documentation, statements of principles of operation and schematics for
all software programs, as well as any pertinent commentary or
explanation that may be necessary to render such materials
understandable and usable by a trained computer programmer. The
Technical Documentation also includes any program (including
compilers), "workbenches," tools and higher level (or "proprietary")
language used for the development, maintenance and implementation of
the software program. The Company employs individuals who are familiar
with the business of the Company and who are qualified to maintain the
Company Software and the related computer hardware used by the Company
in its operations (the "Computer Hardware").
(b) Except for rights granted pursuant to the license
agreements and related agreements listed on Schedule 4.16, the Company
has all right, title and interest in and to all intellectual property
rights in the Company Proprietary Software, and the Company Proprietary
Software is free and clear of all liens, claims and encumbrances. The
use of the Company Licensed Software and the use and distribution of
the Company Proprietary Software does not breach any terms of any
license or other contract between the Company and any third party. The
Company is in compliance in all material respects with the terms and
conditions of all license agreements in favor of the Company relating
to the Company Licensed Software (the "Company License Agreements").
(c) The Company Proprietary Software, the Company's
distribution thereof and its customers' use thereof do not infringe any
United States patent, copyright or trade secret or any other
intellectual property right of any third party. The source code for the
Company Proprietary Software has been maintained in confidence in a
manner sufficient to maintain such source code a trade secret under
applicable laws.
(d) The Company Proprietary Software was: (i) developed by the
Company employees working within the scope of their employment at the
time of such development; (ii) developed by agents, consultants,
contractors or others who have executed appropriate instruments of
assignment in favor of the Company as assignee that have conveyed to
the Company ownership of all of their intellectual property rights in
the Company Proprietary Software; or (iii) acquired by the Company in
connection with acquisitions in which the Company obtained appropriate
representations, warranties and indemnities from the transferring party
relating to the title to such Company Proprietary Software. The Company
has not received notice from any third party claiming any right, title
or interest in the Company Proprietary Software.
(e) The Company has not granted rights in the Company Software
to any third party except as set forth in the license agreements and
related agreements listed on Schedule 4.16.
(f) The Company Software and the Company Hardware are adequate
in all material respects, together with the other assets of the
Company, for the current operations of the Company's business.
4.21 Year 2000 Compliance. To the best of the Company's knowledge, the
software, hardware and other computer and information technology (collectively,
"Information Technology") owned or controlled and used by Company (the "Company
Information Technology") did not suffer any material failure to process
information as a result of the calendar change from the year 1999 to year 2000,
and, to the best of the Company's knowledge, will, in all material respects,
continue to accurately receive, provide and process data, including time data,
(including calculating, comparing and sequencing) from, into and between the
twentieth and twenty-first centuries, including the years 1999 and 2000, and
leap year calculations and will not, in any material respects, malfunction,
cease to function, or provide invalid or incorrect results as a result of data,
including time data, to the extent that other Information Technology, used in
combination with the Company's Information Technology, properly exchanges data,
including time data, with it.
4.22 Customer Relations. Except as set forth on Schedule 4.22, the
Company has not received any notice (oral or written) that any single supplier,
client or customer of Company during calendar year 1999 may terminate or
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materially alter its level of business with the Company in 2000 or thereafter or
intends to put its business out to bid or for requests for proposals during 2000
or thereafter.
4.23 Transactions with Affiliates. Except as disclosed on Schedule
4.23(a), Schedule 4.16 or Schedule 4.4(d), no Stockholder or officer of the
Company, or any person with whom any such Stockholder or officer has any direct
or indirect relation by blood, marriage or adoption, or any entity (other than
the Company) in which any such person owns any beneficial interest (other than a
publicly held corporation whose stock is traded on a national securities
exchange or in the over-the-counter market and less than 1% of the stock of
which is beneficially owned by all such persons) (in any such case, an
"Affiliate") has any interest in: (i) any contract, arrangement or understanding
with, or relating to, the business or operations of the Company; (ii) any loan,
arrangement, understanding, agreement or contract for or relating to
indebtedness of the Company; or (iii) any property (real, personal or mixed),
tangible or intangible, used or currently intended to be used in, the business
or operations of the Company. Following the Closing, the Company will not have
any obligations of any kind to any Stockholder or any Affiliate of a Stockholder
except for (i) accrued salary for the pay period commencing immediately prior to
the Closing Date, (ii) Options listed on Schedule 4.4(d) or (iii) the
obligations set forth on Schedule 4.23(b) (collectively, the "Related Party
Obligations").
4.24 Accounts Receivable. All the Company's accounts receivable which
are reflected on the 1999 Balance Sheet (a) are valid, existing and fully
collectible within ninety (90) days following the Effective Time without resort
to legal proceedings or collection agencies, (b) represent monies due for goods
sold and delivered or services rendered in the ordinary course of business and
(c) are not subject to any refunds or adjustments or any defenses, rights of set
off, assignment, restrictions, security interests or other encumbrances. Except
for reserves specified and allocated to specific accounts receivable, as shown
on Schedule 4.24, all such accounts receivable are current, and there are no
disputes regarding the collectibility of any such accounts receivable.
4.25 Nondisclosed Payments. Neither the Company nor any of the
Company's officers or directors, nor anyone acting on behalf of any of them, has
made or received any payments not correctly categorized and fully disclosed in
the Company's books and records in connection with or in any way relating to or
affecting the Company or its business.
4.26 Securities Matters.
(a) None of the information with respect to the Company, the
Stockholders or the Merger (or any of the officers or directors of the
Company) to be included in the Proxy Statement will, on the date the
Proxy Statement is first mailed to the Stockholders or on the date of
the Stockholders' Meeting referred to in Section 6.8, contain any
untrue statement of a material fact, or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are
made, not misleading.
(b) None of the information with respect to the Company, the
Stockholders or the Merger (or any of the officers or directors of the
Company) to be included in the Registration Statement will, at the time
it becomes effective and on the Effective Date, contain any untrue
statement of a material fact, or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are
made, not misleading.
(c) Schedule 4.26(c) lists each Stockholder who is an
"affiliate" of the Company for the purposes of Rule 145 under the
Securities Act (the "Rule 145 Affiliates").
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ARTICLE 5
Representations and Warranties of Parent and Sub
Parent and Sub jointly and severally represent and warrant to the
Company that:
5.1 Corporate Organization. Parent is a corporation validly existing
and in good standing under the laws of Georgia. Sub is a corporation validly
existing and in good standing under the laws of Delaware.
5.2 Authorization and Approval of Agreement. Parent and Sub have all
requisite corporate power and authority to execute and deliver this Agreement
and the other agreements, documents and instruments executed and delivered by
Parent or Sub in connection with the transactions contemplated by this Agreement
(the "Parent Ancillary Agreements"), and to fully perform the obligations
required to be performed by them hereunder and thereunder. All corporate
proceedings required by Parent's and Sub's respective charter documents or
otherwise required by law for the execution and delivery of this Agreement and
the Parent Ancillary Agreements and for the consummation of the transactions
provided for herein and therein have been duly taken. This Agreement and each of
the Parent Ancillary Agreements has been duly and validly executed and delivered
by Parent and Sub and is enforceable against Parent and Sub in accordance with
its respective terms, except as the enforceability may be limited by laws of
general application relating to bankruptcy, insolvency and debtors' relief, and
by the general principles of equity.
5.3 Ability to Carry Out Agreement. The execution and delivery of this
Agreement and the Parent Ancillary Agreements by Parent and Sub and the
performance by Parent and Sub of their obligations hereunder and thereunder will
not conflict with, violate or result in any breach of or constitute a default
under any provisions of Parent's and Sub's charter documents or of any of the
provisions of any material indenture, mortgage, lease, agreement, license,
permit, instrument, order, arbitration award, judgment, decree, law, ordinance,
regulation or any other restriction of any kind or character to which Parent or
Sub is a party or by which either of them is bound. Except for compliance with
the applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 (the "HSR Act"), if any, and the Securities Act, the Securities Exchange
Act of 1934, (the "Exchange Act"), applicable state securities laws and the
rules of the NYSE and approvals required from the Federal Reserve Board and the
Georgia Department of Banking and Finance, no consent of any governmental
authority or other third party is required to be obtained on the part of Parent
in connection with Parent's execution, delivery or performance of this Agreement
or the Parent Ancillary Agreements.
5.4 No Broker Involved. Parent and Sub have not expressly or impliedly
engaged any broker, finder or agent with respect to the transactions
contemplated by this Agreement.
5.5 Parent Common Stock. The shares of Parent Common Stock to be issued
in the Merger will be validly issued, fully paid, nonassessable and free of
pre-emptive rights.
5.6 Parent SEC Reports. Parent has provided to Company true and
complete copies of each report and proxy statement filed by Parent with the SEC
since January 1, 1999, (collectively, the "Parent SEC Reports"), all of which,
as of their respective filing dates, complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act, and the
rules and regulations promulgated thereunder. None of such Parent SEC Reports,
as of the respective dates they were filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the audited
consolidated financial statements of Parent (including any related notes and
schedules) included (incorporated by reference) in its Annual Report on Form
10-K for the fiscal year ended December 31, 1998, fairly present, in conformity
with GAAP applied on a consistent basis (except as may be indicated in the notes
thereto), the consolidated financial position of Parent and its subsidiaries as
of the date thereof and the consolidated results of their operations and their
cash flows for the periods there ended.
5.7 Securities Matters.
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(a) None of the information with respect to Parent or Sub to
be included (or incorporated by reference) in the Proxy Statement will,
on the date the Proxy Statement is first mailed to the Stockholders, or
on the date of the Stockholders' Meeting referred to Section 6.8,
contain any untrue statement of a material fact, or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they are made, not misleading. The Proxy Statement will comply as to
form in all material respects with the provisions of the Securities
Act, except that no representation is made with respect to information
supplied in writing by the Company or the Stockholder Parties
specifically for inclusion in the Proxy Statement.
(b) None of the information with respect to Parent or Sub to
be included (or incorporated by reference) in the Registration
Statement will, at the time it becomes effective or on the Effective
Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under
which they are made, not misleading. The Registration Statement will
comply as to form in all material respects with the provisions of the
Securities Act, except that no representation is made with respect to
information supplied in writing by the Company or the Stockholder
Parties specifically for inclusion in the Registration Statement.
ARTICLE 6
Covenants
6.1 Conduct of Business. The Company covenants and agrees that from the
date of this Agreement to the Closing Date, the Company shall (except as
otherwise consented to in writing by Parent):
(a) carry on its business in a manner consistent with prior
practice and only in the usual and ordinary course, and use reasonable
efforts to preserve its business organization intact and conserve the
good will and relationships of its customers, suppliers and others
having business relations with it;
(b) maintain its existence and good standing in its
jurisdiction of organization plus in each jurisdiction in which the
ownership or leasing of its property or the conduct of its business
requires such qualification;
(c) duly and timely file or cause to be filed all reports and
returns required to be filed with any governmental body, agency or
authority and promptly pay or cause to be paid when due all taxes,
assessments and governmental charges, including interest and penalties
levied or assessed, unless diligently contested in good faith by
appropriate proceedings;
(d) give Parent and Parent's employees, counsel, accountants
and advisors, full access upon reasonable notice during normal business
hours to all of the properties, personnel, financial and operating
data, books, tax returns, contracts, commitments, and records of the
Company in connection with reviewing the Company and its properties and
operations;
(e) maintain in full force and effect all existing policies of
insurance except for replacements or renewals in the ordinary course of
business;
(f) use its reasonable best efforts to permit the Company to
retain the material benefits provided by all existing contracts and
licenses to which the Company is a party under arrangements similar to
those in effect prior to the Closing Date;
(g) not amend its charter documents or bylaws;
(h) (i) except for issuances of shares of Common Stock between
the date hereof and the Closing Date upon the exercise of Rights, not
authorize for issuance, issue or deliver any additional shares of its
capital stock or securities convertible into or exchangeable for shares
of its capital stock, or issue or grant any
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right, option or other commitment for the issuance of shares of its
capital stock or of such securities, or split, combine or reclassify
any shares of its capital stock, or (ii) not take any action to cause
the representation and warranty contained in Section 4.4(b) hereof
become inaccurate;
(i) not incur any liability, commitment or obligation, except
unsecured current and trade liabilities and other unsecured liabilities
incurred in the ordinary course of business;
(j) not borrow, or agree to borrow, any funds other than
pursuant to its existing loan agreements or otherwise than in the
ordinary course of business;
(k) not sell, transfer or otherwise dispose of assets,
including without limitation any Company Software, except for (i) the
sale or disposition of obsolete or damaged tangible personal property;
and (ii) the sale of assets in the ordinary course of business that are
not material to the Company's business;
(l) not make any material capital commitments;
(m) not mortgage, pledge or encumber any of its assets or
guaranty the obligations of any party except in the ordinary course of
business;
(n) not make any adjustments in the salary or wage rate of, or
make or authorize any bonus payments to or consulting arrangements
with, any officer or employee or amend, terminate or adopt any employee
benefit plan;
(o) take any action with the intention of causing any of the
representations and warranties made herein to be inaccurate on the
Closing Date;
(p) not dispose of or permit to lapse any rights to the use of
any patent, trademark, trade name, license or copyright, or dispose of
or disclose to any person, any trade secret, formula, process,
technology or know-how not heretofore a matter of public knowledge;
(q) not declare, pay or set aside for payment any dividend or
other distribution in respect of the capital stock or other equity
securities of the Company and not redeem, purchase or, except for
issuances of shares of Common Stock between the date hereof and the
Closing Date upon the exercise of Rights, issue any shares of the
capital stock or other securities of the Company or rights or
obligations convertible into or exchangeable for any shares of the
capital stock or other securities of the Company or obligations
convertible into such, or any options, warrants or other rights to
purchase or subscribe to any of the foregoing;
(r) deliver to Parent on or prior to the fifteenth (15th)
business day of each month a balance sheet of the Company in the form
of the balance sheet attached as Schedule 4.5 hereto as of the end of
the prior month and an income statement for such month in each case
accompanied by a certificate executed by the chief financial officer on
behalf of the Company that such statements have been prepared in
conformity with GAAP and in a manner consistent with the Company's
historic accounting practices on a consistent basis, subject to
year-end closing adjustments and the lack of full footnote
presentations; and
(s) not take any action outside the ordinary course of
business consistent with past practice (unless contemplated by this
Agreement).
6.2 Public Announcements. The timing and content of all announcements
regarding any aspect of this Agreement or the Merger to the financial community,
government agencies, employees or the general public shall be mutually agreed
upon in advance (unless Parent determines that any such announcement or other
disclosure not mutually agreed upon in advance is required to be made by law or
applicable rule of the NYSE, and then only after consulting the other party and
making reasonable efforts to comply with the provisions of this Section).
6.3 Supplements to Schedules. From time to time prior to the Closing
Date, the Company and Parent will each promptly supplement or amend the
respective disclosure schedules which they have delivered pursuant to this
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Agreement with respect to any matter hereafter arising which, if existing or
occurring at or prior to the date of this Agreement, would have been required to
be set forth or described in the disclosure schedule or which is necessary to
correct any information in any such disclosure schedule which has been rendered
inaccurate thereby. No supplement or amendment to any such disclosure schedule
shall have any effect for the purpose of determining satisfaction of the
conditions set forth in Sections 7.1(a) or 8.1(a) of this Agreement.
6.4 The NYSE Additional Shares Listing Application. Parent will file an
additional shares listing application with the NYSE to approve for listing,
subject to official notice of issuance, the shares of Parent Common Stock to be
issued in the Merger. Parent shall exercise reasonable efforts to cause its
shares of Parent Common Stock to be issued in the Merger to be approved for
listing on the NYSE, subject to official notice of issuance, prior to the
Closing Date.
6.5 Regulatory Filings. As soon as practicable following the execution
of this Agreement, Parent and the Company, as applicable, shall make the
necessary filings, if any, relating to the transactions contemplated by this
Agreement with the Federal Reserve Board, the Georgia Department of Banking and
Finance, the Federal Trade Commission and the Department of Justice. Parent and
the Company, as applicable, shall use their respective reasonable efforts to
cause the approval, if necessary, of such filings by such governmental
authorities to be issued as soon as possible.
6.6 No Solicitation of Transactions. The Company shall not, nor shall
it authorize or permit any of its officers, directors, employees, auditors,
attorneys, financial advisors, lenders or other agents (collectively,
"Representatives") to, directly or indirectly, (a) solicit, initiate or
encourage the submission of any Acquisition Proposal (as hereinafter defined) or
(b) participate in or encourage any discussion or negotiations regarding, or
furnish to any person any non-public information with respect to, or take any
other action to facilitate any inquiries or the making of, any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal;
provided, however, that the foregoing shall not prohibit the Board of Directors
of the Company from furnishing information to, or entering into discussions or
negotiations with, any person or entity that makes an unsolicited Acquisition
Proposal prior to the Closing Date if, and to the extent that, (i) the Board of
Directors of the Company, after consultation with independent outside legal
counsel, determines in good faith that such action is required for the Board of
Directors of the Company to comply with its fiduciary obligations to the
Stockholders under applicable Delaware law, (ii) prior to taking such action,
the Company receives from such person or entity an executed agreement in
reasonably customary form relating to the confidentiality of information to be
provided to such person or entity and (iii) the Board of Directors of the
Company concludes in good faith, based upon written advice from its independent
financial advisor, that the Acquisition Proposal is a Superior Proposal (as
hereinafter defined). The Company shall provide immediate oral notice and
written notice within 24 hours to Parent of (a) the receipt of any such
Acquisition Proposal or any inquiry which could reasonably be expected to lead
to any Acquisition Proposal, (b) the material terms and conditions of such
Acquisition Proposal or inquiry, (c) the identity of such person or entity
making any such Acquisition Proposal or inquiry and (d) the Company's intention
to furnish information to, or enter into discussions or negotiations with, such
person or entity. The Company shall continue to keep Parent informed of the
status and details of any such Acquisition Proposal or inquiry. For purposes of
this Agreement, "Acquisition Proposal" means any bona fide proposal with respect
to a merger, consolidation, share exchange, tender offer or similar transaction
involving the Company, or any purchase or other acquisition of all or any
significant portion of the assets of the Company or any equity interest in the
Company. In connection with the services performed by the Independent Advisor in
connection with the transactions contemplated by this Agreement, the Independent
Advisor performed a limited market check. In addition, the Company or certain of
its directors have conducted discussions with Cardsystems Solutions, Inc. and
Extensity.com. Neither entity has made an offer to the Company and the Company
has made no offer to either entity. Such efforts by the Independent Advisor and
discussions by the company with such entities have ceased and such activities
occurring prior to the date hereof shall not be construed, in any circumstances,
to be a violation of this Section, whether or not any entity or person
referenced above or contacted by the Independent Advisor shall submit an
Acquisition Proposal.
6.7 Stockholder Approval.
(a) The Company shall call a meeting (the "Stockholders'
Meeting") of the Stockholders to be held no later than the 20th
business day after the mailing of the Proxy Statement (subject to
adjournment to
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accommodate Parent's proposed adjustments to the terms and conditions
of this Agreement during the ten (10) business day period specified in
Section 6.7(b)) for the purpose of voting upon the approval of the
Merger and the other transactions contemplated by this Agreement. In
connection with the Merger and the Stockholders' Meeting, the Board of
Directors of the Company shall (i) subject to Section 6.7(b), recommend
to the holders of the Company Capital Stock to vote in favor of the
Merger and use all commercially reasonable efforts to obtain the
necessary approvals by the Stockholders of this Agreement and (ii)
otherwise comply with all legal requirements applicable to such
meeting.
(b) Neither the Board of Directors of the Company nor any
committee thereof shall, except as expressly permitted by this Section
6.7(b), (i) withdraw, qualify or modify, or propose publicly to
withdraw, qualify or modify, in a manner adverse to Parent, the
approval or recommendation of such Board of Directors or such committee
of the Merger or this Agreement, (ii) approve or recommend, or propose
publicly to approve or recommend, any transaction involving an
Acquisition Proposal from a third party (an "Alternative Transaction"),
or (iii) cause the Company to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar
agreement (each, an "Acquisition Agreement") related to any Alternative
Transaction. Notwithstanding the foregoing, if, prior to the Closing
Date, the Board of Directors of the Company determines in good faith,
after it has received a Superior Proposal in compliance with Section
6.6 and after consultation with outside counsel, that it is required to
do so by its fiduciary duties to the Stockholders under applicable law,
the Board of Directors of the Company may (subject to this and the
following sentences) inform the Stockholders that it no longer believes
that the Merger is advisable and no longer recommends approval thereof
(a "Subsequent Determination") and enter into an Acquisition Agreement
with respect to a Superior Proposal, but only at a time that is after
the tenth (10th) business day following Parent's receipt of written
notice advising Parent that the Board of Directors of the Company has
received a Superior Proposal. Such written notice shall specify the
material terms and conditions of such Superior Proposal (and include a
copy thereof with all accompanying documentation, if in writing),
identify the person making such Superior Proposal and state that the
Board of Directors of the Company intends to make a Subsequent
Determination. During such ten (10) business day period, the Company
shall provide an opportunity for Parent to propose such adjustments to
the terms and conditions of this Agreement as would enable the Company
to proceed with its recommendation to the Stockholders without a
Subsequent Determination; provided, however, that any such proposed
adjustment shall be at the discretion of the parties hereto at the
time. For purposes of this Agreement, a "Superior Proposal" means any
unsolicited proposal (on its most recently amended or modified terms,
if amended or modified) made by a third party to enter into an
Alternative Transaction which the Board of Directors of the Company
determines in its good faith judgment (based on, among other things,
the written advice of an independent financial advisor) to be more
favorable to the Stockholders than the Merger, taking into account all
relevant factors (including whether, in the good faith judgment of the
Board of Directors of the Company, after obtaining the advice of such
independent financial advisor, the third party is reasonably able to
finance the transaction, the potential impact of a delay in closing the
Alternative Transaction rather than the Merger, the likely due
diligence period for the Alternative Transaction and costs associated
therewith, the likelihood of obtaining all required regulatory
approvals for the Alternative Transaction, any other contingencies
impacting the closing of the Alternative Transaction and any proposed
changes to this Agreement that may be proposed by Parent in response to
such Alternative Transaction). Notwithstanding any other provision of
this Agreement, the Company shall submit this Agreement (whether or not
terminated) to the Stockholders whether or not the Board of Directors
of the Company makes a Subsequent Determination; provided, however,
that in the event that the Board of Directors of the Company makes a
Subsequent Determination, the Company shall not be obligated to submit
this Agreement to the Stockholders in the event that all of the
Stockholder Parties have notified Parent promptly in writing that they
will not vote their Company Capital Stock in favor of the Merger and
this Agreement.
6.8 Company Stockholders' Meeting.
(a) The Company shall cause the Stockholders' Meeting to be
duly called and held as soon as practicable for the purpose of voting
on the approval and adoption of this Agreement and the Merger. The
Company shall take all action necessary in accordance with applicable
law and the Company's charter documents and bylaws to duly call, give
notice of, and convene the Stockholders' Meeting.
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(b) The Company shall, at the direction of Parent, solicit
from holders of shares of Company Capital Stock entitled to vote at the
Stockholders' Meeting proxies in favor of such approval and shall take
all other action necessary or, in the reasonable judgment of Parent,
helpful to secure the vote or consent of such holders required by the
DGCL or this Agreement to effect the Merger.
6.9 Reasonable Efforts; Further Assurances; Cooperation. Subject to the
other provisions of this Agreement, the parties hereto shall each use their
reasonable good faith efforts to perform their obligations herein and to take,
or cause to be taken or do, or cause to be done, all things necessary, proper or
advisable under applicable law to obtain all regulatory approvals and satisfy
all conditions to the obligations of the parties under this Agreement and to
cause the Merger and the other transactions contemplated herein to be effected
on or prior to May 31, 2000 in accordance with the terms hereof and shall
cooperate fully with each other and their respective officers, directors,
employees, agents and other representatives in connection with any steps
required to be taken as a part of their respective obligations under this
Agreement.
6.10 Exercise, Conversion and Termination of Warrants. Except for
Options which shall be converted to options to acquire shares of Parent Common
Stock pursuant to Section 2.4 hereof, all outstanding warrants will be duly and
validly exercised, converted or shall terminate on or prior to the Closing Date
and there will be no such warrants outstanding as of the Closing.
6.11 Employee Benefits. From and after the Effective Time, Parent shall
or shall cause the Surviving Corporation to provide the employees of the Company
employee benefits, including without limitation pension benefits, health and
welfare benefits, life insurance and vacation and severance arrangements (a)
comparable in the aggregate to those to which such employees received from the
Company prior to execution of this Agreement, and (b) as soon as
administratively practicable following the Effective Time and in accordance with
Parent's past practice, including annual financial performance criteria
established by Parent and the Chief Executive Officer of the Surviving
Corporation, substantially similar to those provided by Parent and its
subsidiaries to their similarly situated officers and employees.
6.12 Indemnification of Directors and Officers.
(a) From and after the Effective Time, Parent shall cause the
Surviving Corporation to indemnify and hold harmless each present and
former director and officer of the Company, determined as of the
Effective Time, against any claims, losses, liabilities, damages,
judgments, fines, fees, costs or expenses, including, without
limitation, attorneys' fees and disbursements incurred by them in their
capacities as such officers or directors and in connection with any
claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of or pertaining
to such matters existing or occurring at or prior to the Effective Time
(including, without limitation, the Merger, the preparation, filing and
mailing of the Proxy Statement and the other transactions and actions
contemplated by this Agreement) whether asserted or claimed prior to,
at or after the Effective Time, to the fullest extent permitted under
applicable law (and the Surviving Corporation shall also advance
expenses as incurred to the fullest extent permitted under applicable
law provided the person to whom expenses are advanced provides an
undertaking to repay such advances if it is ultimately determined that
such person is not entitled to indemnification).
(b) Parent shall cause the Surviving Corporation to maintain
(to the extent available in the market) in effect directors' and
officers' liability insurance tail coverage covering those directors
and officers of the Company who are currently covered by the Company's
directors' and officers' liability insurance policy (a copy of which
has been heretofore delivered to Parent) for a period of three (3)
years after the Effective Time.
6.13 Pooling of Interests Accounting. From and after the date hereof
and until the Closing Date, each of the Parent and the Company shall not, and
each of them shall use its best efforts to ensure that none of its affiliates,
takes any action that would jeopardize the treatment of the Merger as a "pooling
of interests" for accounting purposes.
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6.14 Invoices. Company shall use its reasonable efforts to deliver on
or prior to the Closing Date all invoices relating to the Expenses (as herein
defined) of Company.
6.15 Affiliate Letters. Company shall use its best efforts to cause
each director, executive officer and other person who is an "affiliate" (for
purposes of Rule 145 under the Securities Act and for purposes of qualifying for
"pooling of interests" treatment as described below) to deliver to Parent as
soon as practicable after the date hereof, but in no event after the date of the
Company Stockholders meeting called to act upon the approval of the Merger, a
written agreement providing that such person will not sell, pledge, transfer or
otherwise dispose of any shares of Company Capital Stock held by such
"affiliate" and the shares of Parent Common Stock to be received by such
"affiliate" in the Merger: (1) in the case of shares of Parent Common Stock
only, except in compliance with the applicable provisions of the Securities Act
and the rules and regulations thereunder; and (2) during the periods during
which any such sale, pledge, transfer or other disposition would, under
generally accepted accounting principles or the rules, regulations or
interpretations of the SEC, disqualify the Merger for "pooling of interests"
accounting treatment, except as permitted by Staff Accounting Bulletin No. 76
issued by the SEC. The certificates of Parent Common Stock issued to affiliates
of Company will bear an appropriate legend reflecting the foregoing. The parties
understand that such periods in general encompass the period commencing 30 days
prior to the Merger and ending at the time of the publication of financial
results covering at least 30 days of combined operations of Parent and Company
within the meaning of Section 201.01 of the SEC's Codification of Financial
Reporting Policies.
6.16 December 31, 1999 Audited Financial Statements. On or prior to the
close of business on the tenth (10) day after the date hereof, Company shall
deliver to Parent Company's audited balance sheet as of, and related audited
statements of income, retained earnings and cash flow for, the year ended
December 31, 1999, which audited financial statements shall be the same in all
material respects as the unaudited financial statements attached as Schedule 4.5
hereto.
ARTICLE 7
Conditions Precedent To Obligations Of Parent and Sub
7.1 Conditions Precedent. Parent's and Sub's obligation to consummate
the Merger and the transactions contemplated by this Agreement is subject to the
fulfillment on or before the Closing Date of each of the following conditions:
(a) Representations, Warranties and Covenants. The
representations and warranties of the Company set forth herein shall be
accurate in all material respects on and as of the Closing Date as if
made on and as of such date (or any date, including the date of this
Agreement, at which a representation or warranty is expressly made),
and the Company shall have complied in all material respects with or
performed in all material respects all agreements, covenants and
conditions on their part to be performed or complied with on or prior
to the Closing Date.
(b) Legal Actions. No suit, action or other proceeding by any
third party shall be pending before any court or governmental body,
agency or authority seeking to restrain or prohibit, or to obtain
damages or other relief in connection with, this Agreement or the
consummation of the transactions contemplated hereby or which is likely
to materially adversely affect the value of the assets or business of
the Company.
(c) Regulatory Approval. All authorizations and approvals of
the Federal Reserve Board and the Georgia Department of Banking and
Finance required in connection with the execution, delivery and
performance of this Agreement shall have been obtained and remain in
full force and effect.
(d) Consents. Parent shall have received consents to
assignment of all Company Contracts or written waivers of the
provisions of any Company Contracts requiring the consents of third
parties as set forth in Schedule 7.1(d).
(e) Deliveries. The Company shall have delivered to Parent:
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(i) A certificate executed by the Company certifying
to the accuracy on the Closing Date of the Company's
representations and warranties set forth in Article 4;
(ii) A certificate by the Secretary of the Company as
to the Board of Directors and Stockholders of the Company
having taken all actions necessary to authorize the execution,
delivery and performance of this Agreement by the Company and
the consummation of the transactions contemplated thereby;
(iii) The minute books, stock transfer books
(containing canceled stock certificates representing all
transfers of its capital stock prior to the Closing Date) and
corporate seal of the Company which are in the Company's
possession;
(iv) The opinion of counsel for the Company in the
form of Exhibit 7.1(e)(iv) hereto;
(v) The audited financial statements referenced in
Section 6.16 hereof; and
(vi) Such other documents and items as are
contemplated by this Agreement or the Voting Agreement or as
Parent may reasonably request.
(f) Listing of Parent Common Stock. The Parent Common Stock to
be issued pursuant to the Merger shall have been approved for listing
on the NYSE, subject only to official notice of issuance by Parent.
(g) Voting Agreement. Each Company stockholder reflected as a
party to the Voting Agreement attached as Exhibit 7.1(g) hereto shall
have executed and delivered to Parent such Voting Agreement,
substantially in the form attached hereto as Exhibit 7.1(g).
(h) No Material Adverse Change. There shall not have occurred
after the date hereof any material adverse change in the financial
condition, business or results of operations or prospects of the
Company.
(i) Related Party Obligations. Each Stockholder shall have
paid in full all amounts of any kind owed by such Stockholder or its
Affiliate to the Company, or such amount shall have been offset on a
dollar-for-dollar basis against any indebtedness for borrowed money
owed by the Company to such Stockholder or its Affiliate and the
Company shall have no Related Party Obligations.
(j) Dissenting Shares. The holders of not more than five
percent (5%) of the outstanding shares of the Company Capital Stock
shall have elected to exercise appraisal rights pursuant to the DGCL.
(k) Stockholder Approval. The Merger and the transactions
contemplated by this Agreement shall have been approved at the
Stockholders' Meeting referred to in Section 6.8 by the holders of a
majority of the outstanding shares of the Company Capital Stock.
(l) Registration Statement. The Registration Statement shall
be effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall be in effect and no
proceedings for such purpose, or under the proxy rules of the SEC
pursuant to the Exchange Act and with respect to the transactions
contemplated by this Agreement, shall be pending before or threatened
by the SEC. All applicable state securities laws shall have been
complied with in connection with the issuance of Parent Common Stock to
be issued pursuant to the Merger, and no stop order suspending the
effectiveness of any qualification or registration of such Parent
Common Stock under such state securities laws shall have been issued
and pending or threatened by the authorities of any such state.
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(m) Employment Agreements. Each of the employees of the
Company listed on Schedule 7.1(m) hereto (the "Key Employees") shall
have executed and delivered employment agreements in the form and
substance reasonably acceptable to Parent.
(n) Due Diligence. Parent shall have performed such due
diligence of the Company as it, in its sole discretion deems
appropriate, and Parent shall not have discovered any facts or
circumstances which in Parent's sole discretion may have a material
effect on the assets, liabilities, results of operations, financial
condition, business or prospects of the Company or the Surviving
Corporation; provided, however, that in order to exercise its right to
terminate this Agreement for failure of this condition, Parent must
terminate this Agreement on or before the close of business the
fourteenth (14th) day after the date hereof. Failure to give such
notice shall constitute a waiver of this condition.
(o) Affiliate Letters. Each of the Rule 145 Affiliates shall
have executed and delivered to Parent letters in form reasonably
acceptable to Parent (the "Affiliate Letters").
(p) Rights. The transactions contemplated by Section 6.10
hereof shall have been completed.
(q) Tax Opinion. Parent shall have received an opinion (the
"Tax Opinion") from KPMG LLP, as tax advisor to Parent, dated the
Effective Time, substantially to the effect that on the basis of facts,
representations and assumptions set forth in such opinion which are
consistent with the state of facts existing as of the Effective Time,
for federal income tax purposes:
(i) the Merger will constitute a "reorganization"
within the meaning of Section 368(a) of the Code, and the
Company, Sub and Parent will each be a party to that
reorganization within the meaning of Section 368(b) of the
Code;
(ii) no gain or loss will be recognized by Parent,
Sub or the Company as a result of the Merger; and
(iii) no gain or loss will be recognized by the
Stockholders upon the conversion of the Company Capital Stock
into shares of Parent Common Stock pursuant to the Merger.
(r) Pooling. Parent shall have received a letter dated as of
the Closing Date from KPMG LLP, its independent certified public
accountants, to the effect that the Merger will qualify for pooling of
interests accounting treatment. Prior to the receipt of said letter,
Company shall have received a letter from Arthur Andersen LLP,
Company's certified public accountants, stating that Company meets the
criteria for pooling of interests accounting treatment and a copy of
such letter shall have been received by Parent.
7.2 Waiver. Parent shall have the right to waive the foregoing
conditions, or any of them, wholly or in part; provided, however, that no such
waiver shall be deemed to have occurred unless the same is set out in writing
and executed by Parent. Any waiver made by Parent hereunder shall also
constitute a waiver with respect to any rights or remedies that Parent may
otherwise have in respect of or relating to the specific conditions waived.
ARTICLE 8
Conditions Precedent to Obligations of the Company
8.1 Conditions Precedent. The obligation of the Company to consummate
the Merger and the transactions contemplated by this Agreement is subject to the
fulfillment, on or before the Closing Date, of each of the following conditions:
(a) Representations, Warranties and Covenants. The
representations and warranties made by Parent and Sub herein shall be
accurate in all material respects on and as of the Closing Date to the
same extent as if made on and as of such date, and Parent and Sub shall
have complied in all material respects with
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or performed in all material respects all agreements, covenants and
conditions on their part to be performed or complied with on or prior
to the Closing Date.
(b) Legal Actions. No suit, action or other proceeding by any
third party shall be pending before any court or governmental agency
seeking to restrain or prohibit, or to obtain damages or other relief
in connection with, this Agreement or the consummation of the
transactions contemplated hereby.
(c) Deliveries. Parent shall have delivered to the Company:
(i) A certificate executed by Parent and Sub
certifying to the accuracy on the Closing Date of Parent's and
Sub's representations and warranties set forth in Article 5;
(ii) A certificate by the Secretary or any Assistant
Secretary of Parent and Sub as to the due adoption by the
Board of Directors of Parent and the Board of Directors and
stockholders of Sub of the required corporate resolutions
authorizing the execution, delivery and performance of this
Agreement by Parent and Sub and the consummation of the
transactions contemplated thereby; and
(iii) The opinion of counsel for Parent and Sub in
the form of Exhibit 8.1(c)(iii) hereto.
(d) Listing of Parent Common Stock. The Parent Common Stock to
be issued pursuant to the Merger shall have been approved for listing
on the NYSE, subject only to official notice of issuance by Parent.
(e) Registration Statement. The Registration Statement shall
be effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall be in effect and no
proceedings for such purpose shall be pending before or threatened by
the SEC. All applicable state securities laws shall have been complied
with in connection with the issuance of Parent Common Stock to be
issued pursuant to the Merger, and no stop order suspending the
effectiveness of any qualification or registration of such Parent
Common Stock under such state securities laws shall have been issued
and pending or threatened by the authorities of any such state.
(f) Stockholder Approval. The Merger, this Agreement and the
transactions contemplated hereby shall have been approved at the
Stockholders meeting by the holders of a majority of the outstanding
shares of Company Capital Stock.
(g) No Material Adverse Change. There shall not have occurred
after the date hereof any material adverse change in the financial
condition, business or results of operations or prospects of Parent.
(h) Tax Opinion. The Company shall have received the Tax
Opinion (addressed to Parent and Company) contemporaneously with the
mailing of the Proxy Statement for the Stockholders' Meeting and
reaffirmed at the Closing.
(i) Dissenting Shares. The holders of less than ten percent
(10%) of the outstanding shares of the Company Capital Stock shall have
elected to exercise appraisal rights pursuant to the DGCL.
8.2 Waiver. The Company shall have the right to waive the foregoing
conditions, or any of them, wholly or in part; provided, however, that no such
waiver shall be deemed to have occurred unless the same is set out in writing
and executed by the Company. Any waiver made by the Company hereunder shall also
constitute a waiver with respect to any rights or remedies that the Company may
otherwise have against Parent in respect of or relating to the specific
conditions waived.
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ARTICLE 9
Termination
9.1 Termination. Except as otherwise set forth in this Section 9.1,
this Agreement may be terminated at any time at or prior to the Closing (the
"Termination Date"):
(a) in writing by mutual consent of Parent and the Company;
(b) by written notice from the Company to Parent if (i) Parent
or Sub shall breach or fail to perform in any material respect any of
its agreements contained herein required to be performed by it on or
prior to the Closing Date or (ii) any of the representations and
warranties of Parent and Sub contained herein shall be inaccurate in
any material respect, which breach, failure or inaccuracy is not cured
within ten (10) days after the Company has notified Parent of its
intent to terminate this Agreement pursuant to this subparagraph (b);
provided, however, that if any such breach, failure or inaccuracy is
not reasonably capable of cure within such 10-day period and Parent is
using its good faith efforts to effect such cure at the earliest
practicable time, the Company shall not be permitted to terminate this
Agreement pursuant to this subparagraph (b) unless such breach, failure
or inaccuracy is not cured within thirty (30) days after the Company
has notified Parent of its intent to terminate this Agreement pursuant
to this subparagraph (b);
(c) by written notice from Parent to the Company, if (i) the
Company shall breach or fail to perform in any material respect any of
its agreements contained herein to be performed by it on or prior to
the Closing Date, (ii) any of the representations and warranties of the
Company contained herein shall be inaccurate in any material respect,
which breach, failure or inaccuracy is not cured within ten (10) days
after Parent has notified the Company of its intent to terminate this
Agreement pursuant to this subparagraph (c); provided, however, that if
any such breach, failure or inaccuracy is not reasonably capable of
cure within such 10-day period and the Company is using its good faith
efforts to effect such cure at the earliest practicable time, Parent
shall not be permitted to terminate this Agreement pursuant to this
subparagraph (c) unless such breach, failure or inaccuracy is not cured
within thirty (30) days after Parent has notified the Company of its
intent to terminate this Agreement pursuant to this subparagraph (c);
(d) by written notice from either Parent or the Company to the
other, if the Closing has not occurred by June 30, 2000, for any reason
other than delay or nonperformance of the party seeking such
termination;
(e) by written notice from Parent to the Company if (i) the
Board of Directors of the Company (A) shall have modified in a manner
adverse to Parent or Sub its approval or recommendation of the Merger
or this Agreement, (B) causes the Company to enter into an agreement
with respect to an Acquisition Proposal, (C) shall have endorsed,
approved or recommended any Acquisition Proposal or (D) shall have
resolved to do any of the foregoing or (ii) this Agreement and the
Merger shall fail to be approved and adopted by the Stockholders at the
Stockholders' Meeting;
(f) by written notice from the Company to Parent if the Board
of Directors of the Company shall have modified in a manner adverse to
Parent or Sub its approval or recommendation of the Merger or this
Agreement in accordance with the terms of this Agreement and all of the
parties to the Voting Agreement (other than Parent) have notified
Parent in writing that they will not vote their shares of Company
Capital Stock in favor of the Merger and this Agreement pursuant to
Section 6.7(b) hereof;
(g) by written notice from the Company to Parent, which shall
be delivered no less than two (2) days after determination of the
Average Closing Price, if the Average Closing Price is less than
sixteen and 50/100 dollars ($16.50) per share of Parent Common Stock
and if the Parent shall not have waived the application of the Floor
Price;
(h) by written notice from Parent to the Company, which shall
be delivered no less than two (2) days after determination of the
Average Closing Price, if the Average Closing Price is greater than
twenty-five dollars ($25.00) per share of Parent Common Stock and if
the Company shall not have waived the application of the Ceiling Price;
or
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(i) after the Stockholders' Meeting and prior to the
Closing, by written notice from the Company to Parent, if the
Board of Directors of the Company determines in good faith,
that there is a Superior Proposal (as defined in Section 6.6),
the receipt of which, in the good faith judgment as to its
fiduciary duties to its stockholders under Delaware law (after
consultation with outside counsel), requires that this
Agreement be terminated; provided, however, that the Board
will not terminate this Agreement until after the tenth (10th)
business day following Parent's receipt of written notice
advising Parent that the Board of Directors of the Company has
received a Superior Proposal. Such written notice shall
specify the material terms and conditions of such Superior
Proposal (and include a copy thereof with all accompanying
documentation, if in writing), identify the person making such
Superior Proposal and state that the Board of Directors of the
Company intends to terminate this Agreement. During such ten
(10) business day period, the Closing shall be postponed, and
the Company shall provide an opportunity for Parent to propose
such adjustments to the terms and conditions of this Agreement
as would enable the Company to continue with the Merger.
9.2 Specific Performance and Other Remedies. The parties hereto each
acknowledge that the rights of each party to consummate the transactions
contemplated hereby are special, unique and of extraordinary character, and
that, in the event that any party violates or fails or refuses to perform any
covenant or agreement prior to the Closing Date made by it herein, the
non-breaching party may be without an adequate remedy at law. The parties each
agree, therefore, that in the event that either party violates or fails or
refuses to perform any covenant or agreement made by such party herein, the
non-breaching party or parties may, subject to the terms of this Agreement and
in addition to any remedies at law for damages or other relief, institute and
prosecute an action in any court of competent jurisdiction to enforce specific
performance of such covenant or agreement or seek any other equitable relief.
9.3 Effect of Termination. In the event of termination of this
Agreement pursuant to this Article 9, this Agreement shall forthwith become void
and there shall be no liability on the part of any party or its respective
officers, directors or stockholders, except for obligations under Sections 6.2,
9.4, Article 10 and this Section, all of which shall survive the Termination
Date. Notwithstanding the foregoing, nothing contained herein shall relieve any
party from liability for any breach of this Agreement, except as provided in
Section 9.4(b).
9.4 Termination Fee.
(a) If this Agreement is terminated by Parent or the Company,
as applicable, pursuant to Sections 9.1(e), 9.1(f), or 9.1(i), the
Company shall pay to Parent within two (2) business days following such
termination (by wire transfer of immediately available funds to an
account designated by Parent) the amount of one million two hundred
thousand dollars ($1,200,000.00) (the "Termination Fee"). If such
Termination Fee is not paid when due, the Termination Fee shall accrue
simple interest at the prime rate as set forth in the Wall Street
Journal on the date of termination of this Agreement from the due date
until paid in full.
(b) The payment of the Termination Fee pursuant to Section
9.4(a) shall be treated as liquidated damages and shall relieve the
Company from any liability to Parent and Sub with respect to any breach
of this Agreement that occurs prior to the payment of the Termination
Fee. Notwithstanding the foregoing, nothing contained herein shall
relieve the Company from any liability for any breach of Section 6.6 of
this Agreement.
ARTICLE 10
Expenses
The Company, on the one hand, and Parent, on the other hand, shall each
pay its own expenses in connection with the negotiations leading up to and the
preparation of this Agreement and the consummation of the transactions provided
for herein (collectively, "Expenses"), including without limitation fees and
expense of their respective investment advisors, brokers, legal counsel,
accountants and other outside experts retained to conduct due diligence;
provided, however, that Expenses of the Company in excess of eight hundred
thousand dollars ($800,000) shall be borne solely by the Stockholders and the
holders of Options, which amount shall be provided for by withholding from the
Parent Common Stock to be distributed an amount necessary to pay such excess
Expenses.
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ARTICLE 11
Miscellaneous
11.1 Cooperation Following the Closing. Following the Closing, the
Company and Parent shall execute and deliver to the other such further
information and documents as the other shall reasonably request in order to
consummate or confirm the transactions provided for herein, to accomplish the
purpose of this Agreement or to assure to the other the benefits of this
Agreement.
11.2 Benefits and Burdens; Third Party Beneficiaries; Assignment. This
Agreement shall inure to the benefit of and shall be binding upon the Company,
Sub and Parent, and the respective successors and permitted assigns of the
Company, Sub and Parent. No party to this Agreement may assign its rights or
delegate its obligations hereunder without the prior written consent of each of
the other parties hereto; provided, however, that this Agreement may be assigned
by Parent to any of its affiliates without the consent of any party hereto. The
directors and officers of the Company are intended third party beneficiaries of
the provisions of Section 6.12 of this Agreement, and the employees of the
Company are intended third party beneficiaries of Section 6.11 of this
Agreement; provided that such employees shall be employees at will and nothing
herein shall be construed as giving any such employee a right to employment or
any employment contract and, as a result, any such employee (except as may
otherwise be provided in the Employment Agreements referenced in Section 7.1(m)
hereof) may be terminated after the Effective Time in Parent's and Surviving
Corporation's sole and absolute discretion.
11.3 Amendment. This Agreement may be amended only by an instrument in
writing signed by the Company and Parent.
11.4 Notices. All notices, communications and deliveries hereunder
shall be made in writing signed by or on behalf of the party making the same,
shall specify the Section hereunder pursuant to which it is given or being made,
and shall be delivered personally or by telecopy transmission or sent by
registered or certified mail (return receipt requested) or by any national
overnight courier service (with postage and other fees prepaid) as follows:
If to Parent or, after the Closing, the Company:
Synovus Financial Corp.
901 Front Avenue, Suite 301
One Arsenal Place
Columbus, Georgia 31901
Attention: G. Sanders Griffith, III
Telecopy: (706) 649-2479
With a copy to:
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: Alan J. Prince, Esq.
Telecopy: (404) 572-5135
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If to the Company, prior to Closing:
ProCard, Inc.
1819 Denver West Drive
Bldg. 26, Suite 300
Golden, Colorado 80401
Attention: D. Dale Browning
Telecopy: (303) 279-1044
With a copy to:
Baker & Hostetler LLP
303 East 17th Avenue, Suite 1100
Denver, Colorado 80203-1264
Attention: Alfred C. Chidester, Esq.
Telecopy: (303) 861-2307
or to such other address or to such other person or persons designated in
writing by such party or counsel, as the case may be. Any such notice,
communication or delivery shall be deemed given or made (a) on the date of
delivery if delivered in person, (b) on the date after delivery to a national
overnight courier service, (c) upon transmission by facsimile or electronic
mail if receipt is confirmed by telephone or (d) on the fifth (5th) business
day after it is mailed by registered or certified mail.
11.5 Non-Survival of Representations and Warranties. None of the
representations and warranties of the parties hereto in this Agreement shall
survive the Merger nor shall their respective stockholders, directors or
officers have any liability to the other after the Effective Time on account of
any breach of any representation or warranty or the incorrectness of any other
representations or warranties contained herein; provided, however, the foregoing
shall not apply to any claim based on a representation or warranty actually
known on the date hereof or the Closing Date by the representing person or
entity to be untrue.
11.6 Entire Understanding. This Agreement, the Voting Agreement and
that certain Reciprocal Non-Disclosure Agreement, dated July 8, 1999, by and
between Total System Services, Inc. and the Company and the Schedules and
Exhibits referred to herein represent the entire understanding of the parties
with respect to the subject matter hereof and supersedes all correspondence,
memoranda, conversations or other communications with respect thereto.
11.7 Headings. The section headings in this Agreement are intended
solely for convenience and shall be given no effect in the construction and
interpretation hereof.
11.8 Counterparts. This Agreement may be executed in two (2) or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument, and, when signed by all
of the parties hereto, shall become legally binding on such parties effective as
of the date set forth at the beginning of this Agreement.
11.9 Governing Law. This Agreement shall be governed by and interpreted
under the laws of the State of Delaware applicable to contracts made and to be
performed entirely within such State and without giving effect to the choice of
law principles of such State.
11.10 Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
11.11 Time. Time is of the essence under this Agreement.
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11.12 Knowledge. The phrase "to the knowledge of the Company" or its
equivalent as used herein shall mean to the actual knowledge, after reasonable
inquiry, of the following persons: D. Dale Browning, Kirby Slunaker, Jerry
Wagner, Art Horecki and Fred Waugh.
11.13 Statutes. Any reference herein to any federal, state or local
statute shall include all amendments to such statute through the date of this
Agreement or the Effective Time, as applicable.
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IN WITNESS WHEREOF, the parties have executed or caused to be executed
this Agreement effective as of the day and year first above written.
SYNOVUS FINANCIAL CORP.
Name: /s/ Thomas J. Prescott
--------------------------
Title: Executive Vice President
---------------------------
TSYS ACQUISITION SUB, INC.
Name: /s/ Thomas J. Prescott
--------------------------
Title: President
--------------------------
PROCARD, INC.
Name: /s/ D. Dale Browning
--------------------------
Title: President
--------------------------
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EXHIBIT 2.1
Conversion Ratio Table
The Conversion Ratio of shares of Parent Common Stock for Company
Capital Stock to be issued upon consummation of the Merger shall be computed in
accordance with the following principles:
1. On the date hereof, there are a total of 6,939,635 shares of
outstanding Common Stock on a fully diluted basis, consisting of:
(a) 2,996,505 outstanding shares of Common Stock;
(b) Outstanding warrants to purchase 311,295 shares of
Common Stock. Any such warrants that are unexercised at the Closing Date expire
by their terms;
(c) Options under the Company's 1995 Incentive Stock
Option Plan to purchase 773,371 shares of Common Stock. Any Options remaining
unexercised at the Closing Date will be treated in accordance with Section 2.4
of the Agreement. All such unexercised options will become fully vested on the
Closing Date; and
(d) Outstanding shares of Series A Stock (1,266,299
shares) and Series B Stock (1,592,165 shares).
2. The aggregate number of shares of Parent Common Stock (the
"Aggregate Shares) to be issued or made subject to outstanding but unexercised
Options on the Closing Date shall be the number obtained by dividing thirty
million dollars ($30,000,000) (the "Total Value") by the Average Closing Price,
provided that the Total Value shall be reduced on a dollar for dollar basis by
the amount Expenses of the Company exceed eight hundred thousand dollars
($800,000).
3. The Conversion Ratio shall be determined by dividing the
Aggregate Shares by the sum of the number of shares outstanding immediately
prior to the Effective Time of Common Stock, Series A Stock, Series B Stock and
shares of Common Stock (both vested and unvested) subject to outstanding and
unexercised Options.
<PAGE> 101
APPENDIX "B"
FAIRNESS OPINION
STRICTLY CONFIDENTIAL
March 3, 2000
The Board of Directors
ProCard, Inc.
Building 26, Suite 300
1819 Denver West Drive
Golden, CO 80401
Fox-Pitt, Kelton Inc. ("Fox-Pitt, Kelton") understands that ProCard Inc.
("ProCard") and Synovus Financial Corporation ("Synovus") propose to enter into
an agreement and plan of merger dated as of March 3, 2000 (the "Merger
Agreement"), which provides, among other things, for the merger of ProCard with
and into Synovus (the "Merger"). Pursuant to the Merger Agreement and subject
to certain exceptions set forth therein, at the effective time of the Merger,
each issued and outstanding share of Common Stock (par value $0.001) of ProCard
("ProCard Common Stock") and each share of Series A Convertible Preferred Stock
(par value $0.001) and Series B Convertible Preferred Stock (par value $0.001)
(collectively "ProCard Capital Stock"), shall be converted into the right to
receive such number of shares of Synovus common stock as determined in
accordance with the Merger Agreement (the "Merger Consideration"). Each share
of each class of ProCard Capital Stock will receive the same number of shares
of Synovus common stock in the Merger. Fox-Pitt, Kelton has assumed, with the
permission of the Board, that the per share Merger Consideration on the closing
date as defined in the Merger Agreement will not be less than $4.00 per share
of ProCard Capital Stock. Fox-Pitt, Kelton expresses no opinion as to market
price at which the Merger Consideration will trade before or after the Merger.
The terms and conditions of the Merger are more fully set forth in the Merger
Agreement.
You have requested the opinion of Fox-Pitt, Kelton as to whether the
consideration is fair, from a financial point of view, to the holders of
ProCard Capital Stock. In arriving at the opinion set forth below, Fox-Pitt,
Kelton has, among other things:
a) reviewed and analyzed certain publicly available financial statements
for ProCard, Synovus and Total System Services Inc. ("Total System")
and internal financial information made available to us by the
management of ProCard;
b) analyzed certain internal financial statements, including financial
projections, and other financial and operating data prepared by the
management of ProCard;
c) discussed the past, present and future operations, financial condition
and prospects of ProCard, Synovus and Total System with the management
of ProCard, Synovus and Total System;
d) reviewed the stock price performance and trading activity of Synovus
common stock and Total System common stock;
e) compared the financial performance and condition of ProCard, Synovus
and Total System with that of certain other comparable publicly traded
companies;
f) reviewed the financial terms, to the extent publicly available, of
certain merger and acquisition transactions comparable, in whole or in
part, to the Merger;
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g) reviewed and discussed with the management of ProCard, Synovus and
Total System the strategic objectives of the Merger and certain other
benefits of the Merger;
h) performed a market check to gauge the level of interest among other
potential buyers of ProCard;
i) reviewed the Merger Agreement; and
j) performed such other analyses as we have deemed appropriate.
With respect to paragraph (h), Fox-Pitt, Kelton reported the results of the
market check to the Board, including the fact that several potential buyers were
interested on a preliminary basis. The Board and senior management, however,
decided not to pursue further any communication with these potential buyers, and
Fox-Pitt, Kelton at the direction of the Board and senior management did not
contact any potential buyers.
Fox-Pitt, Kelton has assumed and relied upon, without independent verification,
the accuracy and completeness of all of the financial and other information it
has reviewed for the purposes of providing this opinion, and has not assumed
any responsibility for independent verification of such information. Fox-Pitt,
Kelton has not assumed any responsibility for any independent valuation or
appraisal of the assets and liabilities of ProCard and has not been furnished
with any such valuation or appraisal.
Fox-Pitt, Kelton is not an expert in valuation of allowances for loan losses.
Fox-Pitt, Kelton has not assumed responsibility for the independent valuation
of the adequacy of allowances for loan losses for Synovus or Total System.
Fox-Pitt, Kelton has assumed that loan losses are adequate.
With respect to the financial projections, Fox-Pitt, Kelton has assumed that
they have been reasonably prepared by the management of ProCard on bases
reflecting the best currently available estimates and judgments of the future
financial performance of ProCard. Fox-Pitt, Kelton expresses no view as to such
projections or the assumptions on which they are based. Fox-Pitt, Kelton has
assumed that the Merger described in the Merger Agreement will be consummated
on the terms set forth therein without material waiver or modification.
Fox-Pitt, Kelton's opinion is necessarily based upon economic, market and other
conditions as they exist and can be evaluated on March 2, 2000.
In the normal course of its investment banking business, Fox-Pitt, Kelton is
regularly engaged in the valuation of the securities of financial technology
companies in connection with acquisitions, negotiated underwritings, secondary
distributions of listed and unlisted securities, private placements and
valuations for various other purposes. As specialists in the securities of
financial technology companies, Fox-Pitt, Kelton has experience in, and
knowledge of, the valuation of such enterprises.
In the normal course of its business, Fox-Pitt, Kelton may trade equity
securities of Synovus and Total System for its own account and for the accounts
of customers and, accordingly, may at any time hold a long or short position in
such securities. We have acted as financial advisor to ProCard in connection
with the Merger, have received a fee in connection with our engagement and will
receive an additional fee upon the closing of the Merger.
It is understood that this letter is solely for the information of the Board of
Directors of ProCard and is not intended to confer any rights or remedies upon
any other entity or persons, and may not be used for any other purpose without
our prior written consent, except for inclusion in a proxy or information
statement related to the Merger that we have had an opportunity to review. This
opinion does not constitute a recommendation to any holder of ProCard as to how
such shareholder should vote on the Merger.
Based upon and subject to the foregoing, Fox-Pitt, Kelton is of the opinion
that, as of March 2, 2000, the Merger Consideration is fair, from a financial
point of view, to the holders of ProCard Capital Stock.
Very truly yours,
FOX-PITT, KELTON INC.
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APPENDIX "C"
FORM OF TAX OPINION
[SUBJECT TO COMPLETION]
April __, 2000
PRIVATE & CONFIDENTIAL
Board of Directors Board of Directors
Synovus Financial Corp. Procard, Inc.
P.O. Box 120 1819 Denver West Drive
Columbus, GA 31902 Building 26, Suite 300
Golden, CO 80401
Board Members:
You have requested the opinion of KPMG LLP ("KPMG") regarding certain Federal
income tax consequences relating to the merger (the "Merger") of TSYS
Acquisition Sub, Inc. ("SUB"), a wholly owned subsidiary of Synovus Financial
Corp. ("Synovus") with and into Procard, Inc. ("Procard"). Specifically, you
have requested us to opine that the form and substance of the Merger
constitutes a tax-free reorganization under Section 368(a)(1)(A) and Section
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code")
(hereinafter all section references are to the Code unless otherwise indicated)
and that under the Code no gain or loss will be recognized by the stockholders
of Procard upon receipt of the Synovus common stock in exchange for their
Procard capital stock upon consummation of the merger. ALL AFFECTED PROCARD
CAPITAL STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISERS ON THESE MATTERS.
FACTS
Synovus is a bank holding company organized and existing under the laws of
Georgia and having its principal office in Muscogee County, Georgia. It has
authorized 600,000,000 shares of $1.00 par value common stock of which
282,193,668 were outstanding at December 31, 1999. Synovus common stock is
widely held, is publicly traded and is listed on the New York Stock Exchange.
SUB, a wholly owned subsidiary of Synovus, is organized and existing under the
laws of Delaware and having its principal office in Columbus, Georgia. SUB has
authorized 1,000 shares of $1.00 par value common stock. As of February 29,
2000, 100 shares of SUB common stock were issued and outstanding.
Synovus common stock carries ten votes per share unless the shares do not meet
certain ownership tests, in which case each share is entitled to only one vote.
In accordance with the amendment to Synovus' Articles of Incorporation which
was adopted by the shareholders of Synovus and became effective on April 24,
1986, a holder of Synovus common stock will be entitled to ten votes on each
matter submitted to a vote of shareholders for each share of Synovus common
stock beneficially owned on the record date for any meeting of shareholders
which: (1) has had the same beneficial owner since April 24, 1986; (2) was
acquired by reason of participation in a dividend reinvestment plan offered by
Synovus and is held by the same beneficial owner for whom it was acquired under
such plan; (3) is held by the same beneficial owner to whom it was issued as a
result of an acquisition of a company or business by Synovus where the
resolutions adopted by Synovus' Board of Directors approving such issuance
specifically reference and grant such rights; (4) was acquired under any
employee, officer and/or director benefit plan maintained for one or more
employees, officers and/or directors of Synovus and/or its subsidiaries, and is
held by the same beneficial owner for whom it was acquired under any such plan;
(5) is held by the same beneficial owner to whom it was issued by Synovus, or
to whom it was transferred by Synovus from treasury shares, and the resolutions
adopted by Synovus' Board of Directors approving such issuance and/or transfer
specifically reference and grant such rights; (6) was acquired as a direct
result of a stock split, stock dividend or other type of share distribution if
the share as to which it was distributed has been held by the same beneficial
owner for a period of 48
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consecutive months prior to the record date of any meeting of shareholders at
which the share is eligible to be voted; (7) has been beneficially owned
continuously by the same shareholder for a period of 48 consecutive months
prior to the record date of any meeting of shareholders at which the share is
eligible to be voted; or (8) is owned by a holder who, in addition to shares
that are beneficially owned under the provisions of (1)-(7) above, is the
beneficial owner of less than 1,139,063 shares of Synovus common stock (which
amount has been appropriately adjusted to reflect the stock splits which have
occurred subsequent to April 24, 1986, and with such amount to be appropriately
adjusted to properly reflect any other change in Synovus common stock by means
of a stock split, a stock dividend, a recapitalization or otherwise occurring
after April 24, 1986). There are no other classes of stock authorized. Ten-vote
shares will be issued to the Procard shareholders in the proposed transaction.
Effective April 7, 1999, the Board of Directors of Synovus adopted a plan that
provides the common shareholders of Synovus with Common Stock Purchase Rights
("poison pill rights"), i.e., rights to acquire the stock of Synovus or its
successor.
Under the terms of the plan, holders of Synovus common stock received a poison
pill right for each share of Synovus common stock held by them. A shareholder's
ability to exercise his poison pill rights is contingent upon the occurrence of
either a tender offer for 15% or more, or the actual acquisition of 10% or
more, of Synovus common stock by a corporation or individual (the "acquiring
person") without the approval of the Synovus' Board of Directors.
In general, the poison pill rights become exercisable on the earlier of (1) ten
days following a public announcement that, without prior approval of Synovus, a
person or group of affiliated persons has acquired, or obtained the right to
acquire, beneficial ownership of 10% or more of the outstanding common stock of
Synovus, or (2) ten days following the commencement or announcement of an
intention to make a tender offer or exchange offer, without the prior written
consent of Synovus, for 15% or more of the outstanding shares of Synovus common
stock. Until the poison pill rights become exercisable, they cannot be
transferred separately from the underlying common stock on which they were
distributed, nor are the rights represented by any certificate other than the
underlying stock certificate itself. Additionally, Synovus may redeem the
poison pill rights for 1 cent per right until the date that specified events
occur. The poison pill rights expire on May 5, 2009.
Once they become exercisable, the poison pill rights entitle the holder to
purchase from Synovus one share of common stock. No fractional shares of common
stock will be issued upon exercise of the poison pill right. In lieu thereof, a
payment in cash will be made to the holder of such poison pill right equal to
the same fraction of the current market value of a share of common stock.
If, after the poison pill rights become exercisable, a "flip-in" or "flip-over"
event occurs, all holders of such rights, except the acquiring person, are
entitled to purchase, at a 50 percent discount, the stock of either Synovus or
the acquiring corporation (whichever is applicable). A "flip-in" event is
either (1) the acquisition by the acquiring person of 15% or more of the
outstanding stock of Synovus, or (2) the conduct of certain self-dealing
transactions between an acquiring person or any of its affiliates or associates
and Synovus. A "flip-over" event is either (1) a merger or other business
combination in which Synovus is not the surviving corporation, or (2) a sale or
transfer of more than 30% of the assets or earning power of Synovus and its
subsidiaries (taken as a whole) in one or a series of transactions.
Procard is a corporation organized and existing under the laws of Delaware and
having its principal office in Golden, Colorado. The authorized capital stock
of Procard consists of (i) 17,000,000 shares of common stock, par value $.001
per share, of which 2,996,505 shares have been issued and are outstanding, (ii)
2,000,000 shares of Series A convertible preferred stock, par value $.001 per
share, of which 1,266,299 shares have been issued and are outstanding, and
(iii) 2,000,000 shares of Series B convertible preferred stock, par value $.001
per share, of which 1,592,165 shares have been issued and are outstanding (the
"capital stock"). Procard shares are not listed on an exchange and are not
publicly traded. At the time of the Merger, there will be no outstanding
securities or debt obligations of Procard convertible into shares of Procard
capital stock.
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PROPOSED TRANSACTION
For what has been represented to be valid business purposes, SUB and Procard
want to combine their businesses. In order to reach that result, the following
transaction is proposed:
1. Pursuant to the Merger Agreement dated March 3, 2000 (the "Merger
Agreement"), by and among Synovus, SUB and Procard , SUB will merge with
and into Procard in accordance with Delaware state law. Procard will
survive the merger and the separate corporate existence of SUB will cease.
2. As a result of the Merger and on its effective date, Procard stockholders
will be entitled to receive from Synovus a certain number of shares of
Synovus common stock for each share of Procard capital stock (the "Per
Share Exchange Ratio") as specified in the Merger Agreement. The maximum
number of shares of Synovus common stock to be issued in the Merger is
specified in the Merger Agreement.
3. No fractional shares of Synovus common stock will be issued in the Merger.
Instead, Procard stockholders who would otherwise be entitled to a
fractional share of Synovus common stock will be paid in cash for the
fractional shares to be determined based upon the average of the closing
price per share of Synovus common stock on the NYSE for each of the twenty
consecutive trading days ending with the trading day which occurs three
trading days prior to the closing date.
4. Each Procard stockholder has the right, pursuant to the state laws of
Delaware, to dissent from the Merger. Each dissenting stockholder will be
entitled to receive from Procard, the fair value of his or her shares in
cash as established by Delaware law.
5. Effective on the effective date of the Merger, Synovus will enter into
employment agreements with certain key employees. The agreements will
provide for key employees to continue to receive substantially the same
base salary and benefits which they presently receive, and certain
severance benefits and participation in various Synovus incentive, welfare
and benefit plans.
The following assumptions of fact have been made in regard to the proposed
merger (and they form an integral part of the opinions contained herein) each
of which you have examined and agree with:
a) The fair market value of the Synovus voting common stock and
cash to be received by each of the Procard stockholders as a
result of the Merger will be approximately equal, in each
instance, to the fair market value of the Procard capital
stock exchanged therefor.
b) None of (i) Synovus, (ii) any member of Synovus's affiliated
group as defined in Section 1504 of the Code without regard
to Section 1504(b) of the Code (iii) any corporation in which
at least fifty percent (50%) of the total combined voting
power of all classes of stock entitled to vote or at least
fifty percent (50%) of the value of all classes of stock
outstanding is owned directly or indirectly by Synovus, or
(iv) any entity that is treated as a partnership for federal
income tax purposes and has as an owner a corporation
described in (i), (ii) or (iii) of this paragraph has
acquired or will acquire, in a transaction that may be
considered in connection with the Merger, acquire or redeem
(directly or indirectly) any shares of Synovus common stock
issued pursuant to the Merger for consideration other than
Synovus common stock, except for repurchases, if any, by
Synovus of a small percentage of its stock in the open market
as part of any ongoing stock repurchase program not created
or modified in any way in connection with the Merger. For
purposes hereof, any entity described in (ii), (iii), or (iv)
shall be referred to as a Synovus Related Party. An entity
will be treated as a Synovus Related Party if the requisite
relationship exists immediately before or immediately after
the acquisition or redemption. In addition, an entity (other
than Procard or any Procard Related Party) will be treated as
a Synovus Related Party if the requisite relationship is
created in connection with the Merger. A Procard Related
Party means any corporation in which at least fifty percent
(50%) of the total combined voting power of all classes of
stock entitled to vote or at least fifty percent (50%) of the
value of all classes of stock outstanding is owned directly
or indirectly by Procard. Neither Procard nor any Procard
Related Party has acquired or will acquire, in a transaction
that may be considered in connection with the Merger,
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any shares of Procard capital stock. An entity will be treated
as a Procard Related Party if the requisite relationship
exists immediately before or immediately after the
acquisition. In addition, any entity that is treated as a
partnership for federal income tax purposes and as an owner
that is a Procard Related Party will be treated as a Procard
Related Party.
c) Procard will hold at least 90 percent of the fair market value
of SUB's and its net assets and at least 70 percent of the
fair market value of the SUB's and its gross assets held by
Procard and SUB immediately prior to the transaction. For
purposes of this representation, amounts paid by Procard to
stockholders who receive cash or other property, Procard
assets used to pay its reorganization expenses, and all
redemptions and distributions (except for "regular, normal"
dividends) made by Procard immediately preceding the
transfer, will be included as assets of Procard held
immediately prior to the transaction.
d) Prior to the Merger, Synovus will be in control of SUB within
the meaning of Section 368(c) of the Code.
e) Following the Merger, Procard will not issue additional shares
of its capital stock that would result in Synovus losing
control of Procard within the meaning of Section 368(c).
f) Synovus has no plan or intention to liquidate Procard, to
merge Procard with and into another corporation, to sell or
otherwise dispose of the stock of Procard, or to cause to
sell or otherwise dispose of any assets of Procard acquired
in the transaction, except for dispositions made in the
ordinary course of business or transfers described in Section
368(a)(2)(C).
g) The liabilities, if any, of SUB assumed by Procard and the
liabilities to which the transferred assets of SUB are
subject were incurred by SUB in the ordinary course of its
business.
h) Following the Merger, Procard will continue its historic
business or use a significant portion of its historic assets
in a business.
i) Synovus, SUB, Procard, and the shareholders of Procard will
each pay their own fees, expenses, and disbursements in
connection with the Merger.
j) There is no intercorporate debt existing between Synovus and
Procard or between SUB and Procard that was issued, acquired,
settled or will be settled at a discount.
k) No parties to the Merger (i.e., Synovus, SUB and Procard) are
investment companies within the meaning of such term as used
in Section 368(a)(2)(F)(iii) and (iv).
l) Procard is not under the jurisdiction of a court in a Title 11
or similar case within the meaning of 368(a)(3)(A).
m) On the effective date of the Merger, the fair market value of
the assets of SUB transferred to Procard will exceed the sum
of its liabilities, if any, assumed by Procard plus the
amount of liabilities to which the assets are subject.
n) None of the Synovus common stock being issued to the Procard
stockholders will represent compensation for past or future
services. The compensation to be paid to Procard directors,
officers, and employees who are stockholders of Procard and
who will be employed following the Merger will not be part of
the consideration paid for their Procard capital stock but
will be commensurate, in each instance, with past or future
services.
o) No distributions were made by Procard prior to the Merger.
p) The maximum amount of cash to be paid in lieu of fractional
shares of Synovus voting common stock will, in the aggregate,
be less than one percent of the total consideration paid to
the Procard
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stockholders in the transaction. The payment of cash in lieu
of fractional shares of Synovus common stock is solely for
the purpose of avoiding the expense and inconvenience of
issuing fractional shares and does not represent separately
bargained-for consideration.
q) No event has occurred which would make the poison pill rights
exercisable.
r) At the time of Merger, each option to purchase with respect to
shares of Procard capital stock pursuant to stock options
granted by Procard, which are outstanding at the time of the
Merger, whether or not exercisable, shall be converted into
and become rights with respect to Synovus common stock, and
Synovus shall assume each Procard option, in accordance with
the terms of the Procard stock plan by which it is evidenced
in substantially the same terms and conditions.
s) Procard shareholders will receive Synovus common stock in
exchange for an amount of Procard capital stock constituting
Code Section 368(c) control (i.e., stock possessing at least
80% of voting power and at least 80% of each class of
nonvoting stock) of Procard.
The opinions expressed in this letter are rendered only with respect to the
specific matters discussed herein and we express no opinion with respect to any
other legal, federal, or state income tax aspect of this transaction.
Therefore, no inference should be drawn on any matter not expressly opined on.
The opinions contained herein are based on the facts, circumstances, and
assumptions stated above. If any of the above-stated facts, circumstances or
assumptions are not entirely complete or accurate, it is imperative that we be
informed immediately, as the incompleteness or inaccuracy could have a material
effect on our conclusions and we have not independently verified each of the
above facts or assumptions.
In rendering our opinion, we are relying upon the relevant provisions of the
Code; the regulations thereunder; and judicial and administrative
interpretations thereof, all of which are subject to change or modification by
subsequent legislative, regulatory, administrative or judicial decisions. Such
change could be retroactive in effect and therefore could have an effect on our
conclusions. We undertake no responsibility to update our opinions in the event
of any such change.
DISCUSSION
MERGER
CLASSIFICATION AS A REORGANIZATION
Section 368(a)(1)(A) provides that the term "reorganization" includes a
statutory merger. The term statutory merger refers to a merger effected
pursuant to the corporate laws of the United States, a state or territory, or
the District of Columbia, Treasury Regulation Section 1.368-2(b).
Section 368(a)(2)(E) provides that a transaction otherwise qualifying as a
statutory merger under Section 368(a)(1)(A) will not be disqualified if the
stock of a corporation (the "controlling corporation"), which before the merger
was in control of the merged corporation, is used to acquire substantially all
of the properties of another corporation if no stock of the merged corporation
is used in the transaction. Control for this purpose is defined in Section
368(c) as the direct ownership of stock possessing at least 80 percent of the
total combined voting power and at least 80 percent of the total number of
shares of all other classes of stock.
The term "substantially all" as used in Section 368(a)(2)(E) has the same
meaning as does the phrase when used in Section 368(a)(1)(C) and in Regulation
Section 1.368-2(b)(2). Section 368(a)(1)(C) and the regulations promulgated
thereunder do not define what constitutes substantially all of the properties
of a corporation. The Internal Revenue Service (the "Service") has established
a quantitative test as to the amount of assets of a corporation that will
satisfy the "substantially all" properties requirement for purposes of
obtaining a private letter ruling. Under Revenue Procedure 77-37, 1977-2 C.B.
568, the "substantially all" requirement is satisfied if the acquiring
corporation acquired properties of the transferor corporation representing at
least 90 percent of the fair market value of the net assets and at least 70
percent of the fair market value of the gross assets held by the
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transferor corporation immediately prior to the reorganization. In the case of
a forward triangular reorganization under Section 368(a)(2)(D), the transferor
corporation is the disappearing corporation.
The "ninety/seventy" guidelines are arbitrary percentages selected by the
Service that do not necessarily represent judicial interpretations of the
meaning of the phrase "substantially all of the properties" under the various
subdivisions of Section 368. See Louis F. Viereck v. United States, 83-2
U.S.T.C. para. 9664 (Cl. Cts.), Ralph C. Wilson, Sr., 46 T.C. 334 (1966), John
G. Moffar, 42 T.C. 558, 363 F2d 860 (9th Cir. 1966)(Aff'g T.C.) 66-2 U.S.T.C.
para 9498, James Armour, Inc., 43 T.C. 295 (1964), Smothers v. United States,
642 f. 2d 894 (5th Cir. 1981) (Affg DC), 79-1 U.S.T.C. para. 9216 and American
Manufacturing Company, Inc. 55 T.C. 204 (1970).
What constitutes "substantially all of the properties" in a situation other
than a request for a ruling from the Service depends upon the facts and
circumstances in each case rather than upon any particular percentage, Revenue
Ruling 57-518, 1957-2 C.B. 253. The Service is of the view that the
"substantially all" properties requirement applies separately to each trade or
business of the transferor corporation. In this transaction, however, it has
been assumed as a fact that the ninety/seventy test will be met, thus, based on
that assumption, the substantially all requirement should clearly be met.
Requisite to all reorganizations under Section 368(a)(1) are (1) a valid
business purpose; (2) a continuity of the business enterprise under the
modified corporate form; and (3) a continuity of interest in the corporation
surviving the merger on the part of those persons who directly or indirectly
were the owners of the merged corporation prior to the reorganization,
Regulation Section 1.368-1(b). The term "reorganization" does not embrace the
mere purchase by one corporation of the properties of another, Regulation
Section 1.368-2(a). These regulations reflect well-developed judicial
interpretation of the statutory definition of a reorganization, the purpose of
which is to exclude from the scope of the reorganization provisions those
transactions that are in fact sales.
Continuity of business enterprise requires that the transferee corporation
either continue the transferor corporation's historic business or use a
significant portion of the transferor corporation's historic business assets,
Regulation Section 1.368-1(d)(2). It is assumed that this will be satisfied in
this transaction as per assumption "h" above.
The regulations under Section 368(a) do not establish the amount of qualifying
consideration necessary to satisfy the continuity of shareholder interest
requirement. However, the Service has promulgated a definite test as to the
requirement for purposes of obtaining a private letter ruling. Under Revenue
Procedure 77-37, 1977-2 C.B. 568, the continuity of interest requirement of
Regulation Section 1.368-1(b) is satisfied if:
[T]here is continuing interest through stock ownership in the acquiring or
transferee corporation.... on the part of the former shareholders of the
acquired or transferor corporation which is equal in value, as of the effective
date of the reorganization, to at least 50 percent of the value of all the
formerly outstanding stock of the acquired or transferor corporation as of the
same date. It is not necessary that each shareholder of the acquired or
transferor corporation receive in the exchange, stock of the acquiring of
transferor corporation... which is equal in value to at least 50 percent of the
value of his former stock interest in the acquired or transferor corporation,
so long as one or more of the shareholders of the acquired or transferor
corporation have a continuing interest through stock ownership in the acquiring
or transferee corporation... which is, in the aggregate, equal in value to at
least 50 percent of the value of all of the formerly outstanding stock of the
acquired or transferor corporation.
The 50 percent definitive test of this revenue procedure does not as a matter
of law establish the amount of qualifying consideration necessary to meet the
continuity of interest requirement of Regulation Section 1.368-1(b). In other
words, the continuation of a capital stock ownership in the acquiring
corporation equal to less than 50 percent of the value of the stock of the
acquired corporation does not itself mark a discontinuity of interest. The
Supreme Court in John A. Nelson Co. v. Helvering, 296 U.S. 374 (1935), 36-1
U.S.T.C. para 9019, held that there was a reorganization even though the
shareholders of the acquired corporation received less than half of their total
consideration in the form of stock of the acquiring corporation and received
nonvoting preferred stock. It is only necessary that the shareholders continue
to have a definite and substantial equity interest in the assets of the
acquiring corporation, Revenue Ruling 61-156, 1961-2 C.B. 62. This requirement
should be met in this transaction as per representation "b" above.
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In addition to the foregoing, it has been assumed that this transaction is
being undertaken for a bona fide corporate business reason, thus satisfying the
first requirement stated above.
The merger of SUB with and into Procard will constitute a reorganization within
the meaning of Section 368(a)(1)(A) and Section 368(a)(2)(E) provided that (1)
the merger of SUB with and into Procard qualified as a statutory merger under
the applicable federal and state laws and is undertaken for a valid business
purpose as stated in the above facts; (2) after the transaction Procard
continues its historic business; (3) Procard stockholders exchange for Synovus
voting common stock an amount of the Procard capital stock meeting the
continuity of shareholder interest test; (4) Procard stockholders receive
Synovus common stock in exchange for an amount of Procard capital stock
constituting Code Section 368(c) control; and (5) Procard ends up with
substantially all of its and SUB's assets. Synovus, SUB and Procard will each
be "a party to a reorganization" within the meaning of Section 368(b). As
discussed above, each of the foregoing will be complied with in this
transaction.
FEDERAL INCOME TAX CONSEQUENCES TO EXCHANGING SHAREHOLDERS
Section 354(a)(1) provides that no gain or loss will be recognized if stock of
a corporation which is a party to a reorganization is, pursuant to the plan or
reorganization, exchanged solely for stock of such corporation or of another
corporation which is a party to the reorganization. Section 356(a)(1) in
relevant part provides that if money or other property is received in an
exchange to which section 354 would otherwise apply, then gain, if any, to the
recipient will be recognized to the extent of the sum of the money and fair
market value of the property received. If the exchange has the effect of the
distribution of a dividend, then the amount of gain recognized that is not in
excess of each distributee shareholder's ratable share of the undistributed
earnings and profits of the acquired corporation will be treated as a dividend,
Section 356(a)(2). No loss will be recognized on the exchange, Section 356(c).
Section 358 provides that, generally, shareholders are entitled to a carryover
basis for stock received in a reorganization transaction qualifying under
Section 354 or 356.
The Procard capital stockholders who receive solely Synovus common stock in
exchange for their Procard capital stock will not recognize any gain or loss
pursuant to Section 354(a)(1). The tax basis which these Procard shareholders
will have in their newly received Synovus common stock will be the same as
their tax basis in the Procard capital stock immediately prior to the Merger
under Section 358(a).
If the property received in an exchange (i.e., Synovus common stock) has the
same (i.e., carryover) basis as the property given up, then Section 1223(1)
applies to determine the holding period for the property received. Section
1223(1) provides that the period during which the taxpayer held the property
surrendered in the exchange is added to the period he or she holds the property
received in the exchange in order to determine the holding period of the
property received. This tacking of the previous holding period applies only if
the property exchanged (i.e., Procard capital stock) was a capital asset in the
taxpayer's hands at the time of the exchange, Section 1223(1). The status of
the property as a capital asset is determined under Section 1221, which defines
"capital asset" as any property of a taxpayer other than property within
specified classifications. As a general rule, stock of a corporation would be
treated as a capital asset under this section. Provided that his or her Procard
capital stock is a capital asset, then each Procard stockholder will be able to
include his or her respective ownership period of the Procard capital stock in
determining the holding period of the Synovus common stock received in the
proposed transaction.
POISON PILL RIGHTS
The shares of Synovus common stock to be issued to the Procard stockholders
entitle such stockholders to receive the poison pill rights which will become
excercisable upon the happening of future events as described above. An issue
with respect to the poison pill rights is whether the rights should be
considered separable from the Synovus common stock and therefore "other
property" within the meaning of Section 356(a) or rather as an attribute of the
Synovus common stock, that is, a right to a future dividend inseparable from
the other rights inherent in the stock and not personal to the shareholders.
Presently, the Service has not published any direct authoritative position
regarding the treatment of poison pill rights in the context of a corporate
reorganization that can be cited as precedent. Nor are there any judicial
opinions specifically addressing poison pill rights in the context of a
corporate reorganization.
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The only available guidance consists of Private Letter Rulings ("PLRs") that
address the shareholder tax consequences upon the receipt of capital stock
incorporating a poison pill rights plan in the context of a corporate
reorganization. Under Section 6110(j)(3), PLRs may not be used or cited as
precedent. If the Service issues further authority, such authority could be
prospective only in accordance with the provisions of Section 7805.
In PLR 8808081, the Service ruled that poison pill rights incorporated in the
terms of capital stock issued in a corporate reorganization constituted "other
property" within the meaning of Section 356(a). Accordingly, the filing held
that the acquired corporation's shareholders recognized gain, to the extent of
the fair market value of the poison pill rights, in the exchange for capital
stock of the acquiring corporation.
Subsequently, however, the Service reversed its position and ruled in PLR
8925087, PLR 8925088, PLR 9040069, PLR 9040042, PLR 9120006, and PLR 199904013
(among others) that poison pill rights did not constitute other property within
the meaning of Section 356(a).
Indirect support for the proposition that poison pill rights do not constitute
"other property" can also be found in Revenue Ruling 90-11, 1990-1 C.B. 10.
Although not in the context of a corporate reorganization, the Service
concluded that the initial issuance of poison pill rights is not a distribution
of property which would give rise to current tax to the shareholders. The terms
of the poison pill plan described in the ruling are comparable to the terms of
the Synovus plan. This ruling is a published ruling, and therefore may be cited
as precedent. This published ruling indicates that the more recent private
letter rulings cited immediately above reflect the current thinking of the
Service, i.e., that poison pill rights do not constitute other property when
associated with stock received in a corporate reorganization. Should the
Service successfully maintain that the poison pill rights are other property,
then gain, if any, realized by a Procard shareholder receiving such rights
would be recognized to the extent of the fair market value of such rights.
CONCLUSION
Based on the foregoing, it is the opinion of KPMG that:
1. The merger of SUB with and into Procard, provided it is in accordance with
Delaware state law, will be treated as a reorganization under Section
368(a)(1)(A) and Section 368(a)(2)(E), and that Synovus, SUB and Procard
will each be a party to the reorganization as defined in Section 368(b).
2. No gain or loss will be recognized by the stockholders of Procard who
receive solely shares of Synovus voting common stock for their Procard
capital stock upon consummation of the Merger. The basis of the Synovus
shares received by such Procard shareholders will be the same as the basis
of the Procard capital stock surrendered in the exchange. Provided that
the Procard capital stock was a capital asset in the stockholder's hands,
the holding period of the Synovus common stock will include the holding
period of the Procard capital stock.
3. The payment by Synovus of cash in lieu of fractional share interests in
its common stock will, for federal income tax purposes, be treated as if
Synovus actually issued the fractional share interests to the Procard
common shareholders and then Synovus redeemed such fractional shares for
cash. See Revenue Ruling 66-365, 1966-2 C.B. 116. Each affected Procard
stockholder should consult their own tax advisor for the tax effect to
them of such redemption (i.e., exchange treatment or dividend).
4. Under Sections 357(a) and 361, no gain or loss will be recognized by
Procard upon the transfer of its capital stock in exchange for solely
shares of Synovus common stock. Under Section 361(c), Procard will not
recognize any gain or loss upon the distribution of the Synovus common
stock to its stockholders in pursuance of the plan of reorganization.
5. Based on the discussion above under Poison Pill Rights, the Synovus
poison pill rights plan adopted on April 27, 1999 should be treated as
an attribute of the Synovus common stock, a right that is inseparable
from other rights inherent in the stock and does not constitute other
property received by the Procard stockholders in
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exchange for their Procard capital stock. However, in view of the lack
of precedent, there can be no assurance that the Service will agree
with this conclusion. In the event the Service ultimately establishes
that such poison pill rights constitute other property, then the
Procard stockholders, who realize gain on the exchange of their shares
for Synovus common stock, will recognize such gain to the extent of
the value of the poison pill rights received.
6. Where a Procard stockholder elects to receive cash by exercising statutory
dissenter's rights, such cash will be treated as having been received by
the shareholder as a distribution in redemption of his or her Procard
capital stock subject to the provisions and limitations of Section 302 of
the Code.
We are furnishing this opinion to you solely in connection with Section 7.1(q)
and 8.1(h) of the Merger Agreement. This opinion is solely for your benefit and
is not to be used, circulated, quoted or otherwise referred to for any purpose
without our express written permission.
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APPENDIX "D"
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
262 APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to ss.228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and
the words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions
thereof, solely of stock of a corporation, which stock is deposited with the
depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to ss.251 (other than a merger effected pursuant to ss.251(g)
of this title), ss.252, ss.254, ss.257, ss.258, ss.263 or ss.264 of this title:
(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or series of stock,
which stock, or depository receipts in respect thereof, at the record date
fixed to determine the stockholders entitled to receive notice of and to vote
at the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held of
record by more than 2,000 holders; and further provided that no appraisal
rights shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for its approval
the vote of the stockholders of the surviving corporation as provided in
subsection (f) of ss.251 of this title.
(2) Notwithstanding paragraph (1) of this subsection,
appraisal rights under this section shall be available for the shares of any
class or series of stock of a constituent corporation if the holders thereof
are required by the terms of an agreement of merger or consolidation pursuant
to ss.ss.251, 252, 254, 257, 258, 263 and 264 of this title to accept for such
stock anything except:
a. Shares of stock of the corporation surviving or
resulting from such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or
depository receipts in respect thereof, which shares of stock (or depository
receipts in respect thereof) or depository receipts at the effective date of
the merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers, Inc. or
held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock,
depository receipts and cash in lieu of fractional shares or fractional
depository receipts described in the foregoing subparagraphs a., b. and c. of
this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under ss.253 of this title is not owned
by the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
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(c) Any corporation may provide in its certificate of incorporation
that appraisal rights under this section shall be available for the shares of
any class or series of its stock as a result of an amendment to its certificate
of incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal
rights are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to the
meeting, shall notify each of its stockholders who was such on the record date
for such meeting with respect to shares for which appraisal rights are
available pursuant to subsections (b) or (c) hereof that appraisal rights are
available for any or all of the shares of the constituent corporations, and
shall include in such notice a copy of this section. Each stockholder electing
to demand the appraisal of such stockholder's shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation, a
written demand for appraisal of such stockholder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal of
such stockholder's shares. A proxy or vote against the merger or consolidation
shall not constitute such a demand. A stockholder electing to take such action
must do so by a separate written demand as herein provided. Within 10 days
after the effective date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in favor of
or consented to the merger or consolidation of the date that the merger or
consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to
ss.228 or ss.253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days thereafter,
shall notify each of the holders of any class or series of stock of such
constituent corporation who are entitled to appraisal rights of the approval of
the merger or consolidation and that appraisal rights are available for any or
all shares of such class or series of stock of such constituent corporation,
and shall include in such notice a copy of this section; provided that, if the
notice is given on or after the effective date of the merger or consolidation,
such notice shall be given by the surviving or resulting corporation to all
such holders of any class or series of stock of a constituent corporation that
are entitled to appraisal rights. Such notice may, and, if given on or after
the effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal of
such holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (i) each such constituent
corporation shall send a second notice before the effective date of the merger
or consolidation notifying each of the holders of any class or series of stock
of such constituent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the surviving or
resulting corporation shall send such a second notice to all such holders on or
within 10 days after such effective date; provided, however, that if such
second notice is sent more than 20 days following the sending of the first
notice, such second notice need only be sent to each stockholder who is
entitled to appraisal rights and who has demanded appraisal of such holder's
shares in accordance with this subsection. An affidavit of the secretary or
assistant secretary or of the transfer agent of the corporation that is
required to give either notice that such notice has been given shall, in the
absence of fraud, be prima facie evidence of the facts stated therein. For
purposes of determining the stockholders entitled to receive either notice,
each constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that if
the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record date
is fixed and the notice is given prior to the effective date, the record date
shall be the close of business on the day next preceding the day on which the
notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who
has complied with subsections (a) and (d) hereof and who is otherwise entitled
to appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock
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of all such stockholders. Notwithstanding the foregoing, at any time within 60
days after the effective date of the merger or consolidation, any stockholder
shall have the right to withdraw such stockholder's demand for appraisal and to
accept the terms offered upon the merger or consolidation. Within 120 days
after the effective date of the merger or consolidation, any stockholder who
has complied with the requirements of subsections (a) and (d) hereof, upon
written request, shall be entitled to receive from the corporation surviving
the merger or resulting from the consolidation a statement setting forth the
aggregate number of shares not voted in favor of the merger or consolidation
and with respect to which demands for appraisal have been received and the
aggregate number of holders of such shares. Such written statement shall be
mailed to the stockholder within 10 days after such stockholder's written
request for such a statement is received by the surviving or resulting
corporation or within 10 days after expiration of the period for delivery of
demands for appraisal under subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of
a copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the
Court shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court may,
in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on the
list filed by the surviving or resulting corporation pursuant to subsection (f)
of this section and who has submitted such stockholder's certificates of stock
to the Register in Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that such stockholder is not
entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the
shares, together with interest, if any, by the surviving or resulting
corporation to the stockholders entitled thereto. Interest may be simple or
compound, as the Court may direct. Payment shall be so made to each such
stockholder, in the case of holders of uncertificated stock forthwith, and the
case of holders of shares represented by certificates upon the surrender to the
corporation of the certificates representing such stock. The Court's decree may
be enforced as other decrees in the Court of Chancery may be enforced, whether
such surviving or resulting corporation be a corporation of this State or of
any state.
(j) The costs of the proceeding may be determined by the Court and
taxed upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation,
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reasonable attorney's fees and the fees and expenses of experts, to be charged
pro rata against the value of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation,
no stockholder who has demanded appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall
deliver to the surviving or resulting corporation a written withdrawal of such
stockholder's demand for an appraisal and an acceptance of the merger or
consolidation, either within 60 days after the effective date of the merger or
consolidation as provided in subsection (e) of this section or thereafter with
the written approval of the corporation, then the right of such stockholder to
an appraisal shall cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery shall be dismissed as to any stockholder
without the approval of the Court, and such approval may be conditioned upon
such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation. (Last amended by Ch.
339, L. '98, eff. 7-1-98.)
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS; UNDERTAKINGS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Subsection (a) of Section 14-2-851 of the Georgia Business Corporation
Code provides that a corporation may indemnify or obligate itself to indemnify
an individual made a party to a proceeding because he or she is or was a
director against liability incurred in the proceeding if such individual
conducted himself or herself in good faith and such individual reasonably
believed, in the case of conduct in an official capacity, that such conduct was
in the best interests of the corporation and, in all other cases, that such
conduct was at least not opposed to the best interests of the corporation and,
in the case of any criminal proceeding, such individual had no reasonable cause
to believe such conduct was unlawful. Subsection (d) of Section 14-2-851 of the
Georgia Business Corporation Code provides that a corporation may not indemnify
a director in connection with a proceeding by or in the right of the
corporation except for reasonable expenses incurred if it is determined that
the director has met the relevant standard of conduct, or in connection with
any proceeding with respect to conduct under Section 14-2-851 of the Georgia
Business Corporation Code for which he was adjudged liable on the basis that
personal benefit was improperly received by him. Notwithstanding the foregoing,
pursuant to Section 14-2-854 of the Georgia Business Corporation Code a court
may order a corporation to indemnify a director or advance expenses if such
court determines that the director is entitled to indemnification under the
Georgia Business Corporation Code or that the director is fairly and reasonably
entitled to indemnification in view of all the relevant circumstances, whether
or not such director met the standard of conduct set forth in subsections (a)
and (b) of Section 14-2-851 of the Georgia Business Corporation Code, failed to
comply with Section 14-2-853 of the Georgia Business Corporation Code or was
adjudged liable as described in paragraph (1) or (2) of subsection (d) of
Section 14-2-851 of the Georgia Business Corporation Code.
Section 14-2-852 of the Georgia Business Corporation Code provides
that to the extent that a director has been successful, on the merits or
otherwise, in the defense of any proceeding to which he was a party, because he
or she is or was a director of the corporation, the corporation shall indemnify
the director against reasonable expenses incurred by the director in connection
therewith.
Section 14-2-857 of the Georgia Business Corporation Code provides
that a corporation may indemnify and advance expenses to an officer of the
corporation who is a party to a proceeding because he or she is an officer of
the corporation to the same extent as a director and if he or she is not a
director to such further extent as may be provided in its Articles of
Incorporation, bylaws, action of its board of directors or contract except for
liability arising out of conduct specified in Section 14-2-857(a)(2) of the
Georgia Business Corporation Code. Section 14-2-857 of the Georgia Business
Corporation Code also provides that an officer of the corporation who is not a
director is entitled to mandatory indemnification under Section 14-2-852 and
is entitled to apply for court ordered indemnification or advances for expenses
under Section 14-2-854, in each case to the same extent as a director. In
addition, Section 14-2-857 provides that a corporation may also indemnify and
advance expenses to an employee or agent who is not a director to the extent,
consistent with public policy, that may be provided by its Articles of
Incorporation, bylaws, action of its board of directors or contract.
In accordance with Article VIII of the Company's Bylaws, every person
who is or was (and the heirs and personal representatives of such person) a
director, officer, employee or agent of the Company shall be indemnified and
held harmless by the Company from and against the obligation to pay a judgment,
settlement, penalty, fine (including an excise tax assessed with respect to an
employee benefits plan), and reasonable expenses (including attorneys' fees and
disbursements) that may be imposed upon or incurred by him or her in connection
with or resulting from any threatened, pending, or completed, action, suit, or
proceeding, whether civil, criminal, administrative, investigative, formal or
informal, in which he or she is, or is threatened to be made, a named defendant
or respondent: (a) because he or she is or was a director, officer, employee,
or agent of the Company; (b) because he or she or is or was serving at the
request of the Company as a director, officer, partner, trustee, employee, or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise; or (c) because he or she is or was serving as
an employee of the corporation who was employed to render professional services
as a lawyer or accountant to the corporation; regardless of whether such person
is acting in such a capacity at the time such obligation shall have been
imposed or incurred, if (1) such person acted in a manner
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he or she believed in good faith to be in or not opposed to the best interest
of such corporation, and, with respect to any criminal proceeding, if such
person had no reasonable cause to believe his or her conduct was unlawful or
(2), with respect to an employee benefit plan, such person believed in good
faith that his or her conduct was in the interests of the participants in and
beneficiaries of the plan.
Pursuant to Article VIII of the Bylaws of the Company, reasonable
expenses incurred in any proceeding shall be paid by the Company in advance of
the final disposition of such proceeding if authorized by the board of
directors in the specific case, or if authorized in accordance with procedures
adopted by the board of directors, upon receipt of a written undertaking
executed personally by or on behalf of the director, officer, employee or agent
to repay such amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the Company, and a written affirmation of his or
her good faith belief that he or she has met the standard of conduct required
for indemnification.
The foregoing rights of indemnification and advancement of expenses
are not intended to be exclusive of any other right to which those indemnified
may be entitled, and the Company has reserved the right to provide additional
indemnity and rights to its directors, officers, employees or agents to the
extent they are consistent with law.
The Company carries insurance for the purpose of providing
indemnification to its directors and officers. Such policy provides for
indemnification of the Company for losses and expenses it might incur to its
directors and officers for successful defense of claims alleging negligent
acts, errors, omissions or breach of duty while acting in their capacity as
directors or officers and indemnification of its directors and officers for
losses and expense upon the unsuccessful defense of such claims.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Act"), may be permitted to directors,
officers and controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
ITEM 21. Exhibits and Financial Statement Schedules
The following Exhibits are filed as part of this Registration
Statement:
Exhibit No. Description
2 Agreement and Plan of Merger is attached as Appendix "A" to
the Proxy Statement/Prospectus included in this Registration
Statement.
4.1 Articles of Incorporation of Synovus Financial Corp., as
amended, incorporated by reference to Exhibit 4(a) of Synovus
Financial Corp.'s Registration Statement on Form S-8 filed
with the Securities and Exchange Commission on July 23, 1990
(File No. 33-35926).
4.2 Bylaws, as amended, of Synovus Financial Corp., incorporated
by reference to Exhibit 3.2 of Synovus Financial Corp.'s
Annual Report on Form 10-K for the fiscal year ended December
31, 1999 filed with the Securities and Exchange Commission on
March 22, 2000.
4.3 Form of Rights Agreement incorporated by reference to Exhibit
4.1 of Synovus Financial Corp.'s Registration Statement on
Form 8-A dated April 28, 1999 filed with the Securities and
Exchange Commission on April 28, 1999 pursuant to Section 12
of the Securities Exchange Act of 1934, as amended.
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<PAGE> 118
5 Legal opinion of the Senior Deputy General Counsel of Synovus
regarding the legality of the Synovus Common Stock being
issued in the merger.
8 Tax opinion of KPMG LLP regarding the tax consequences of the
merger to stockholders of ProCard, Inc. capital stock is
attached as Appendix "C" to the Proxy Statement/Prospectus
included in this Registration Statement.
23.1 The consent of KPMG LLP re: Consolidated Financial Statements
of Synovus Financial Corp. and Subsidiaries.
23.2 The consent of KPMG LLP regarding its tax opinion filed as
Appendix "C" to the Proxy Statement/Prospectus included in
this Registration Statement.
23.3 The consent of the Senior Deputy General Counsel of Synovus
is contained in her opinion filed as Exhibit 5 to the
Registration Statement.
23.4 The consent of Fox-Pitt, Kelton Inc. regarding its opinion as
to the fairness of the consideration to be received by
ProCard stockholders.
24 Powers of Attorney contained on the signature pages of the
Registration Statement.
99.1 Form of Proxy
99.2 Opinion of Fox-Pitt, Kelton Inc. as to the fairness of the
consideration to be received by ProCard stockholders is
attached as Appendix "B" to the Proxy/Statement prospectus
included in the Registration Statement.
The Registrant agrees to provide to the Commission, upon request,
copies of instruments defining the rights of holders of long-term debt of the
Registrant.
Item 22. Undertakings.
(1) The undersigned registrant hereby undertakes: (a) to file, during
any period in which offers or sales are being made, a post-effective amendment
to this registration statement: (i) to include any prospectus required by
section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the
prospectus any facts or events arising after the effective date of the
registration statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the effective
registration statement; and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement; (b) that, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to be
the initial bona fide offering thereof; and (c) to remove from registration by
means of a post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(2) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities offered
therein,
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<PAGE> 119
and the offering of such securities at the time shall be deemed to be
the initial bona fide offering thereof.
(3) The undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(4) The registrant undertakes that every prospectus (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(5) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
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<PAGE> 120
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all the requirements for filing on Form S-4 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Columbus, State of Georgia, on the
5th day of April, 2000.
SYNOVUS FINANCIAL CORP. (Registrant)
By: /s/ James H. Blanchard
-----------------------------------
James H. Blanchard,
Chairman of the Board and
Principal Executive Officer
<PAGE> 121
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints James H. Blanchard, James D. Yancey and
Richard E. Anthony, and each of them, his or her true and lawful
attorney(s)-in-fact and agent(s), with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments to this Registration
Statement and to file the same, with all exhibits and schedules thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney(s)-in-fact and agent(s) full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorney(s)-in-fact and agent(s), or their
substitute(s), may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on this 5th day of April, 2000.
/s/ William B. Turner Date: 4/5/00
- -------------------------------
William B. Turner,
Director and Chairman of
the Executive Committee
/s/ James H. Blanchard Date: 4/5/00
- -------------------------------
James H. Blanchard,
Chairman of the Board and
Principal Executive Officer
/s/ James D. Yancey Date: 4/5/00
- -------------------------------
James D. Yancey,
President and Director
/s/ Richard E. Anthony Date: 4/5/00
- -------------------------------
Richard E. Anthony,
Vice Chairman of the Board
/s/ Walter M. Deriso, Jr. Date: 4/5/00
- -------------------------------
Walter M. Deriso, Jr.,
Vice Chairman of the Board
/s/ Thomas J. Prescott Date: 4/5/00
- -------------------------------
Thomas J. Prescott,
Executive Vice President,
Treasurer, Principal Accounting
and Financial Officer
/s/ Joe E. Beverly Date: 4/5/00
- -------------------------------
Joe E. Beverly,
Director
/s/ Richard Y. Bradley Date: 4/5/00
- -------------------------------
Richard Y. Bradley,
Director
<PAGE> 122
Date:
- -------------------------------
C. Edward Floyd,
Director
/s/ Gardiner W. Garrard, Jr. Date: 4/5/00
- -------------------------------
Gardiner W. Garrard, Jr.,
Director
/s/ V. Nathaniel Hansford Date: 4/5/00
- -------------------------------
V. Nathaniel Hansford,
Director
/s/ John P. Illges, III Date: 4/5/00
- -------------------------------
John P. Illges, III,
Director
/s/ Mason H. Lampton Date: 4/5/00
- -------------------------------
Mason H. Lampton,
Director
/s/ Elizabeth C. Ogie Date: 4/5/00
- -------------------------------
Elizabeth C. Ogie,
Director
/s/ H. Lynn Page Date: 4/5/00
- -------------------------------
H. Lynn Page,
Director
Date:
- -------------------------------
Robert V. Royall, Jr.,
Director
/s/ Melvin T. Stith Date: 4/5/00
- -------------------------------
Melvin T. Stith,
Director
2
<PAGE> 1
EXHIBIT 5
LEGAL OPINION OF SENIOR DEPUTY GENERAL COUNSEL OF SYNOVUS
[SYNOVUS LETTERHEAD]
April 5, 2000
Synovus Financial Corp.
901 Front Avenue, Suite 301
Columbus, Georgia 31902
Ladies and Gentlemen:
As Senior Vice President and Senior Deputy General Counsel of Synovus
Financial Corp. (the "Registrant"), I am familiar with the preparation and
filing of the Registrant's Registration Statement on Form S-4, as filed with
the Securities and Exchange Commission on or about April 5, 2000, pursuant to
which the Registrant proposes to issue up to 1,818,182 shares of its $1.00 par
value common stock ("Registrant's Common Stock") to certain of the former
shareholders of ProCard, Inc. upon its acquisition by Registrant.
I have examined, and am familiar with, the originals or copies,
certified or otherwise, of the documents, corporate records and other
instruments of the Registrant relating to the proposed issuance of Registrant's
Common Stock which I deem relevant and which form the basis of the opinion
hereinafter set forth.
I am of the opinion that under the laws of the State of Georgia, the
jurisdiction in which the Registrant is incorporated and the jurisdiction in
which the Registrant has its principal office, upon the issuance of the shares
of the Registrant's Common Stock pursuant to the aforesaid Registration
Statement, all such shares when so issued will be duly authorized, validly
issued and outstanding, and will be fully paid and non-assessable shares of the
Registrant's Common Stock, and no personal liability will attach to the holders
of any of the shares of the Registrant's Common Stock.
The undersigned counsel to the Registrant hereby consents to the use
of my opinion as Exhibit 5 to the aforesaid Registration Statement.
Sincerely,
/s/ Kathleen Moates
-------------------
Kathleen Moates
<PAGE> 1
EXHIBIT 23.1
ACCOUNTANTS' CONSENT
The Board of Directors
Synovus Financial Corp.:
We consent to the incorporation by reference in this registration statement on
Form S-4 of Synovus Financial Corp. of our report dated January 12, 2000,
relating to the consolidated balance sheets of Synovus Financial Corp. and
subsidiaries as of December 31, 1999 and 1998, and the related consolidated
statements of income, changes in shareholders' equity, and cash flows for each
of the years in the three-year period ended December 31, 1999, which report
appears in the December 31, 1999 annual report on Form 10-K of Synovus
Financial Corp. and to the reference to our firm under the heading "Experts" in
the Proxy Statement/Prospectus.
/s/ KPMG LLP
Atlanta, Georgia
April 3, 2000
<PAGE> 1
EXHIBIT 23.2
KPMG'S CONSENT REGARDING TAX OPINION
The Board of Directors
Synovus Financial Corp.
P.O. Box 120
Columbus, GA 31902
We consent to the use of our tax opinion included herein as Appendix C and to
the reference to our firm under the heading of "Experts" and "Tax Opinion" in
the prospectus.
/s/ KPMG LLP
Memphis, Tennessee
April 4, 2000
<PAGE> 1
EXHIBIT 23.4
CONSENT OF FINANCIAL ADVISOR
Fox-Pitt, Kelton Inc. consents to the use in the Registration Statement on Form
S-4 of Synovus Financial Corporation, Registration Number 333-_______, of our
opinion letter dated March 3, 2000, related to the acquisition of ProCard, Inc.
included in the Proxy Statement/Prospectus to such Registration Statement at
Appendix "B" and to all references to Fox-Pitt, Kelton in the Registration
Statement and related Proxy Statement/Prospectus.
/s/ Fox-Pitt Kelton, Inc.
April 3, 2000
<PAGE> 1
EXHIBIT 99.1
PROCARD, INC.
PROXY FOR A SPECIAL MEETING OF THE STOCKHOLDERS
TO BE HELD ON MAY 10, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED STOCKHOLDER OF PROCARD, INC. HEREBY CONSTITUTES AND
APPOINTS D. DALE BROWNING, FREDERICK J. WAUGH, AND BRIGID DAVIDSON, OR ANY OF
THEM ACTING SINGLY, EACH WITH THE POWER OF SUBSTITUTION, AS ATTORNEYS AND
PROXIES TO VOTE ALL OF THE SHARES WHICH THE UNDERSIGNED IS ENTITLED TO VOTE AT
THE SPECIAL MEETING OF STOCKHOLDERS OF PROCARD TO BE HELD AT THE OFFICES OF
PROCARD ON WEDNESDAY, MAY 10, 2000, AT 9:00 A.M., LOCAL TIME, AND AT ANY AND
ALL ADJOURNMENTS THEREOF, WITH THE SAME FORCE AND EFFECT AS IF THE UNDERSIGNED
WERE PERSONALLY PRESENT, AND THE UNDERSIGNED HEREBY INSTRUCTS THE ABOVE-NAMED
ATTORNEYS AND PROXIES TO VOTE AS FOLLOWS:
1. To consider and vote upon a proposal to approve and adopt the merger
agreement, dated as of March 3, 2000, by and among Synovus Financial
Corp., TSYS Acquisition Sub, Inc. and ProCard, Inc., pursuant to which
TSYS Acquisition Sub will be merged with and into ProCard, with
ProCard as the surviving corporation, and ProCard stockholders will
receive shares of Synovus common stock, as more fully described in the
proxy statement/prospectus dated _______, 2000.
For [ ] Against [ ] Abstain [ ]
2. In their discretion, the proxies are authorized to consider and vote
upon such other matters as may properly come before the special
meeting or any adjournment or adjournments thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1.
Name: Number of Shares Owned:
Common
--------------------------
Series A Preferred
-------------
Series B Preferred
-------------
DATED: _____________________________, 2000
- ----------------------------------------------------------
(Signature)
- ----------------------------------------------------------
(Signature)
NOTE: Please sign exactly as your name or names appear on this card. Joint
owners should each sign personally. When signing as attorney, executor,
administrator, personal representative, trustee or guardian, please give your
full title as such. For a corporation or a partnership, please sign in the full
corporate name by the President or other authorized officer or the full
partnership name by an authorized person, as the case may be. (Please mark,
sign, date and return this proxy in the enclosed envelope.)
