AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 6, 1995
REGISTRATION NO. 33-------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SUNTRUST BANKS, INC.
(Exact name of registrant as specified in its charter)
Georgia 6022 58-1575035
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorpration or Industrial Classification Identification No.)
organization Code Number)
25 Park Place, N.E.
Atlanta, Georgia 30303
404-588-7711
(Address, including zip code, and telephone number,including area code, of
registrant's principal executive offices)
Raymond D. Fortin
Senior Vice President
SunTrust Banks, Inc.
25 Park Place, N.E.
Atlanta, Georgia 30303
404-588-7165
(Name, address, including zip code, and telephone number
including area code, of agent for service)
Copies to:
Richard B. Hadlow Edward Heveran, CEO
Bush Ross Gardner Warren & Rudy, P.A. Peoples State Bank
220 South Franklin Street 6335 U. S. Highway 19
Tampa, Florida 33602 New Port Richey, Florida 34652
(813) 224-9255 (813) 845-5775
Approximate date of commencement of proposed sale to the public: The
date of mailing the Proxy Statement - Prospectus to the shareholders of
Peoples State Bank.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Amount to maximum maximum
Title of each class of be offering aggregate Amount of
securities to be registered( price per offering registration
registered 1) share(2) price(2) fee
Common Stock, $1.00 par
value per share....... 263,325 $16.62 $7,273,435 $2,508
(1)Maximum number of shares which may be issued by Registrant under its
Agreements in connection with the acquisiton of Peoples State Bank.
(2)Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(f)(2), under the Securities Act of 1933, as amended
(the "Securities Act"), the offering price is based on the book value of
Peoples State Bank common stock as of December 31, 1994. There were
437,508 shares, assuming the exercise of all options, of issued and
outstanding common stock of Peoples State Bank on that date, having an
aggregate book value of $7,273,435.
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 the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
SUNTRUST BANKS, INC.
CROSS REFERENCE SHEET
Item
Number Caption Heading in Prospectus
- ------- --------------------------------------- ------------------------------
A. Information About the Transaction
1 Forepart of Registration Statement and Outside Front Cover Page;
Outside Front Cover Page of Prospectus Facing Page
2. Inside Front and Outside Back Cover Available Information;
Pages of Prospectus Incorporation of Certain
Documents by Reference; Table
of Contents
3. Risk Factors, Ratio of Earnings to Summary; SunTrust and Peoples
Fixed Charges and Other Information Selected Financial Data
4. Terms of the Transaction Summary; The Merger;
Comparison of Rights of
Peoples and SunTrust
Shreholders; Exhibit A
5. Pro Forma Financial Information *
6. Material Contacts with the Company The Merger
Being Acquired
7. Additional Information Required for *
Reoffering by Persons and Parties
Deemed to be Underwriters
8. Interests of Named Experts and Counsel Legal Opinion, Relationships
with Independent Public
Accountants and Experts
9. Disclosure of Commission Position on *
Indemnification for Securities Act
Liabilities
B. Information About the Registrant
10. Information with Respect to S-3 Incorporation of Certain
Registrants Documents by Reference;
Summary - The Parties
11. Incorporation of Certain Information by Incorporation of Certain
Reference Documents by Reference
12. Information with Respect to S-2 or S-3 *
Registrants
13. Incorporation of Certain Information by *
Reference
14. Information with Respect to Registrants *
Other than S-2 or S-3 Registrants
C. Information About the Company Being *
Acquired
15. Information with Respect to S-3 *
Companies
16. Information with Respect to S-2 or S-3 *
Companies
17. Information with Respect to Companies Summary - The Parties;
Other than S-2 or S-3 Companies Business of Peoples
D. Voting and Management Information
18. Information if Proxies, Consents or Incorporation of Certain
Authorizations Are to be Solicited Documents by Reference;
Summary; Information
Concerning The Meeting; The
Merger; Comparison of Rights
of Peoples and SunTrust
Shareholders
19. Information if Proxies, Consents or *
Authorizations Are Not to be Solicited,
or in an Exchange Offer
* Inapplicable, not required or none.
(PEOPLES LETTERHEAD)
Edward Heveran
Chief Executive Officer
March ___, 1995
Dear Fellow Shareholder:
We are pleased to enclose information relating to a Special Meeting of
Shareholders (the "Meeting") of Peoples State Bank ("Peoples") to be held at
the main office of Peoples, 6335 U.S. Highway 19, New Port Richey, Florida,
at _____ a.m. local time on April __, 1995.
At the Meeting, you will be asked to consider and vote upon the adoption
of an Agreement and Plan of Reorganization, dated as of December 6, 1994, by
and between SunTrust Banks, Inc. ("SunTrust") and Peoples and a related Plan
and Agreement of Merger between STI Subsidiary, Inc. ("STI Subsidiary") and
Peoples (collectively the "Agreements"). The Agreements provide for the
conversion of each outstanding share of the $5.00 par value common stock of
Peoples ("Peoples Common Stock"), in accordance with the election by each
Peoples shareholder, into either: (a) .75 shares of $1.00 par value SunTrust
common stock ("SunTrust Common Stock") for each share of Peoples Common Stock
("Share Exchange Ratio") or (b) cash equal to .75 times the average of the
closing prices per share of SunTrust Common Stock as reported on the NYSE
Composite Tape for each of the twenty trading days immediately preceding the
date of the Meeting ("Cash Amount"), subject to an aggregate cash limit equal
to the amount resulting from the conversion of 19.75% of the shares of
Peoples Common Stock into cash (the "Cash Limit"). SunTrust may adjust such
elections on a pro rata basis so that the Cash Limit is met. The Agreements
provide for the merger of STI Subsidiary with and into Peoples. The foregoing
proposed transaction and events are hereinafter referred to as the
"Transaction". It is anticipated that after the Transaction is consumated,
SunBank and Trust Company will be merged with and into Peoples, which will
operate as a wholly owned subsidiary of SunBanks, Inc. under the name SunBank
and Trust Company.
Approval of the Transaction requires the affirmative vote of holders of
a majority of the outstanding shares of Peoples Common Stock as of the record
date.
The Board of Directors of Peoples has approved the Agreements and
believes that the Transaction is fair to and is in the best interests of
Peoples and its shareholders and unanimously recommends that you vote FOR the
approval and ratification of the Agreements and the Transaction.
The receipt of SunTrust Common Stock by Peoples shareholders is not
expected to result in the recognition of gain or loss for federal income tax
purposes. Gain or loss will, however, be recognized for federal income tax
purposes with respect to any Cash Amount received or with regard to any cash
received in lieu of fractional shares or upon the exercise of dissenters'
rights. You should consult with your own tax adviser.
<PAGE>
The enclosed Proxy Statement-Prospectus and the accompanying 1994
SunTrust Annual Report provides information regarding the Transaction, as
well as information regarding Peoples and SunTrust. You should carefully
review and consider all of this information.
Shareholders are entitled to vote all of the shares of Peoples Common
Stock held of record by them on March 3, 1995, the record date for the
Meeting.
We urge you to consider carefully these important matters, which are
described in the attached Proxy Statement-Prospectus. In order to ensure that
your vote is represented at the Meeting, please mark, sign, date and mail the
proxy card in the enclosed envelope. Please return the proxy even if you plan
to attend the Meeting. If you attend the Meeting, you will have the
opportunity to withdraw your proxy and vote in person if you choose to do so.
You should not send in your stock certificates until you receive the
appropriate letter of transmittal form and instructions.
On behalf of the Board of Directors, I urge you to vote FOR approval of
the Agreements and the Transaction.
We look forward to seeing you at the Meeting.
<PAGE>
Edward Heveran
Chief Executive Officer
PEOPLES STATE BANK
6335 U. S. Highway 19
New Port Richey, Florida 34652-2239
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL ,1995
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of Peoples
State Bank ("Peoples") will be held at ____ a.m., local time, on April __,
1995, at Peoples, 6335 U.S. Highway 19, New Port Richey, Florida, for the
following purposes:
1. To consider and vote upon a proposal to approve the Agreements and
the Transaction as described in the attached Proxy Statement-Prospectus. A
copy of the Agreements are included in the attached Proxy
Statement-Prospectus as Exhibit A.
2. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The Board of Directors of Peoples has fixed _____________, 1995, as the
record date for the determination of shareholders entitled to notice of and
to vote at the meeting and at any adjournment or adjournments thereof and,
accordingly, only shareholders of record of Peoples common stock at the close
of business on that date will be entitled to notice of and to vote at the
meeting or any adjournment or adjournments thereof.
Any shareholder of Peoples shall have the right to dissent from the
Transaction and receive payment in cash of the fair value for his or her
shares of Peoples Common Stock upon compliance with the procedures set forth
in Florida Statutes Section 658.44, a copy of which is attached hereto as
Exhibit B. Dissenting shareholders will be entitled to payment in cash of the
fair value of only those shares which are voted against the Transaction or as
to which the shareholder has given written notice to Peoples that the
shareholder dissents from the Transaction in accordance with the procedures
set forth in the accompanying Proxy Statement-Prospectus.
By Order of the Board of Directors of Peoples
Edward Heveran
THE BOARD OF DIRECTORS OF PEOPLES STATE BANK UNANIMOUSLY RECOMENDS THAT THE
HOLDERS OF PEOPLES COMMON STOCK VOTE TO APPROVE THE PROPOSAL.
SHAREHOLDERS ARE URGED TO DATE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY
IN THE ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. IF A SHAREHOLDER RECEIVES MORE THAN ONE PROXY BECAUSE HE OR
SHE OWNS SHARES REGISTERED IN DIFFERENT NAMES OR ADDRESSES, EACH PROXY SHOULD
BE COMPLETED AND RETURNED. YOUR COOPERATION WILL BE APPRECIATED. YOUR PROXY
WILL BE VOTED WITH RESPECT TO THE MATTERS IDENTIFIED THEREON IN ACCORDANCE
WITH ANY SPECIFICATIONS ON THE PROXY AND IF NO SPECIFICATION IS MADE YOUR
PROXY WILL BE VOTED FOR ADOPTION OF THE AGREEMENTS.
<PAGE>
PROXY STATEMENT
OF
PEOPLES STATE BANK
FOR THE SPECIAL MEETING OF SHAREHOLDERS
OF PEOPLES STATE BANK
TO BE HELD ON APRIL __, 1995
PROSPECTUS
OF
SUNTRUST BANKS, INC.
Common Stock
This Proxy Statement-Prospectus is being furnished to the holders of
shares ("Peoples Shareholders") of Common Stock, $5.00 par value ("Peoples
Common Stock"), of Peoples State Bank, a Florida bank ("Peoples"), in
connection with the solicitation of proxies by the Board of Directors of
Peoples for use at the Special Meeting of Shareholders (the "Meeting") to be
held on April __, 1995, at the main office of Peoples, 6335 U. S. Highway 19,
New Port Richey, Florida 34652-2239, and at any adjournments or postponements
thereof. This Proxy Statement-Prospectus also constitutes a prospectus of
SunTrust Banks, Inc. ("SunTrust"), relating to a maximum of 263,325 shares of
SunTrust Common Stock, par value $1.00 per share ("SunTrust Common Stock").
At the Meeting, you will be asked to consider and vote upon the adoption of
an Agreement and Plan of Reorganization, dated as of December 6, 1994, by and
between SunTrust and Peoples and a related Plan and Agreement of Merger
between STI Subsidiary, Inc. ("STI Subsidiary") and Peoples (collectively the
"Agreements"). The Agreements provide for the conversion of each outstanding
share of Peoples Common Stock, in accordance with the election by each
Peoples Shareholder, into either: (a) .75 shares of SunTrust Common Stock for
each share of Peoples Common Stock ("Share Exchange Ratio") or (b) cash equal
to .75 times the average of the closing prices per share of SunTrust Common
Stock as reported on the NYSE Composite Tape for each of the twenty trading
days immediately preceding the date of the Meeting ("Cash Amount"), subject
to an aggregate cash limit equal to the amount resulting from the conversion
of 19.75% of the shares of Peoples Common Stock into cash (the "Cash Limit").
SunTrust may adjust such elections on a pro rata basis so that the Cash Limit
is met. The Agreements provide for the merger of STI Subsidiary with and into
Peoples. The foregoing proposed transaction and events are hereinafter
referred to as the "Transaction" or the "Merger". It is anticipated that
following the Transaction, SunBank and Trust Company will be merged with and
into Peoples, which will operate as a wholly owned subsidiary of SunBanks,
Inc. under the name SunBank and Trust Company.
Dr. James P. Gills, the owner of 86,000 shares of Peoples Common Stock,
has agreed to take either cash or SunTrust Common Stock in an amount that
will result in the Cash Limit being reached after all other Peoples
Shareholders have elected cash or SunTrust Common Stock.
Any shareholder of Peoples shall have the right to dissent from the
Transaction and receive payment in cash of the fair value for his or her
shares of Peoples Common Stock upon compliance with the procedures set forth
in Florida Statutes Section 658.44, a copy of which is attached hereto as
Exhibit B. Dissenting shareholders will be entitled to payment in cash of the
fair value of only those shares which are voted against the Transaction or as
to which the shareholder has given written notice to Peoples that the
shareholder dissents from the Transaction.
The outstanding shares of SunTrust Common Stock are, and the shares
offered hereby will be, listed on The New York Stock Exchange ("NYSE"). The
last reported sale price of SunTrust Common Stock as reported on the NYSE
Composite Transactions Tape on __________ __, 1995 was $_______ per share.
This Proxy Statement-Prospectus and the enclosed proxy are first being
2
<PAGE>
mailed to Peoples Shareholders on or about __________ __, 1995 in connection
with the solicitation of proxies for the Meeting.
THE SHARES OF SUNTRUST COMMON STOCK TO BE ISSUED UNDER THE AGREEMENTS
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROXY STATEMENT-PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE SHARES OF SUNTRUST COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS
ACCOUNTS, DEPOSITS OR OTHER OBLIGATION OF ANY BANK OR SAVINGS ASSOCIATION AND
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK
INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.
The date of this Proxy Statement-Prospectus is March 6, 1995.
3
<PAGE>
TABLE OF CONTENTS
Page
Available Information................................................ 5
Incorporation of Certain Documents by................................ 5
Documents Delivered with This Proxy Statement-....................... 6
Summary.............................................................. 7
The Parties to the Transaction ...................................... 7
The Meeting, Record Date and Vote Required .......................... 8
The Merger........................................................... 8
Market Prices of SunTrust and Peoples Common Stock .................. 11
Pro Forma Equivalent Per Common Share Data .......................... 13
SunTrust Selected Financial Data .................................... 14
Peoples Selected Financial Data ..................................... 15
Information Concerning the Meeting .................................. 16
The Meeting ......................................................... 16
Vote Required ....................................................... 17
The Merger .......................................................... 18
General ............................................................. 18
Exchange of Certificates Representing Peoples Common Stock .......... 18
Background of the Merger ............................................ 19
Reasons for the Merger; Board of Directors Recommendation ........... 19
Fairness Opinion .................................................... 21
Covenants; Conditions; Representations and Warranties; Amendment
and Termination ................................................... 21
Interests of Certain Persons in the Merger .......................... 23
Beneficial Ownership of Peoples Common Stock ........................ 24
Directors of Peoples ................................................ 25
Resales of SunTrust Common Stock .................................... 26
Regulatory Approvals ................................................ 26
Certain Federal Income Tax Consequences ............................. 27
Expenses............................................................. 28
Accounting Treatment ................................................ 28
NYSE Listing ........................................................ 28
Business of SunTrust ................................................ 29
Business of Peoples ................................................. 29
Management's Discussion and Analysis of Financial Condition and
Results of Operations ............................................. 30
Comparison of Rights of Peoples and SunTrust Shareholders ........... 42
Changes in Control .................................................. 42
Anti-Takeover Statutes .............................................. 45
Amendment of Articles of Incorporation .............................. 45
Certain Voting Rights ............................................... 45
Dividends ........................................................... 46
Board of Directors .................................................. 46
Peoples Shareholders Dissenters' Rights ............................. 46
Description of Peoples Capital Stock ................................ 47
Description of SunTrust Capital Stock ............................... 48
SunTrust Common Stock ............................................... 48
SunTrust Provisions Relating to Certain Business Combinations ....... 48
Certain Regulatory Considerations Relating to SunTrust .............. 49
General ............................................................. 49
Payment of Dividends and Other Restrictions ......................... 49
Capital Adequacy .................................................... 50
Support of Subsidiary Banks and Other ............................... 51
Legal Opinion ....................................................... 51
Relationships with Independent Public Accountants and Experts ....... 51
Financial Statements of Peoples State Bank .......................... 53
EXHIBIT A - Agreement and Plan of Reorganization .................... A-1
EXHIBIT B - Dissenters Rights Statute ............................... B-1
EXHIBIT C - Opinion of Allen C. Ewing & Co .......................... C-1
4
<PAGE>
AVAILABLE INFORMATION
SunTrust is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission ("Commission"). Peoples is not subject to
the informational requirements of the Exchange Act. A Registration Statement
on Form S-4 under the Securities Act of 1933, as amended, including this
Proxy Statement-Prospectus, has been filed by SunTrust with the Commission
with respect to the SunTrust Common Stock to be issued upon consummation of
the Merger. For further information pertaining to the shares of SunTrust
Common Stock to which this Proxy Statement- Prospectus relates, reference is
made to such Registration Statement, including the Exhibits and Schedules
filed as a part thereof. As permitted by the rules and regulations of the
Commission, certain information included in the Registration Statement is
omitted from this Proxy Statement-Prospectus. Copies of the Registration
Statement as well as the reports, proxy statements and other information that
SunTrust has filed with the Commission can be obtained from the Commission at
prescribed rates by addressing a written request for such copies to the
Public Reference Section of the Commission at Room 2120, 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549. In addition, such reports,
proxy statements and other information can be inspected and copied at the
public reference facilities referred to above and at the regional offices of
the Commission at: Chicago Regional Office, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and New York Regional Office, 75 Park Place,
New York, New York 10007. SunTrust Common Stock is listed on the NYSE and
such reports, proxy statements and other information concerning SunTrust can
be inspected at the office of the NYSE, 20 Broad Street, New York, New York
10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Proxy Statement-Prospectus incorporates documents by reference
which are not presented herein or delivered herewith. Such documents relating
to SunTrust (other than exhibits to such documents) are available without
charge upon request. Requests for such copies should be directed to SunTrust
Banks, Inc., 25 Park Place, N.E., Atlanta, Georgia 30303, Attention: Raymond
D. Fortin, Senior Vice President, Corporate Secretary, Telephone Number:
(404) 588-7165. Such documents relating to Peoples (other than exhibits to
such documents) are available without charge upon request directed to Peoples
State Bank, 6335 U. S. Highway 19, New Port Richey, Florida 34652-2239. In
order to ensure timely delivery of the documents, any request should be made
at least five (5) days prior to the date of the Meeting of Shareholders.
The following documents filed by SunTrust with the Commission under
Section 13 of the Exchange Act are hereby incorporated by reference into this
Proxy Statement-Prospectus: (i) SunTrust's Annual Report on Form 10-K for the
year ended December 31, 1994; (ii) SunTrust's Proxy Statement in connection
with its 1995 Annual Shareholders' Meeting and (iii) the description of
SunTrust's capital stock on pages 2 to 9 in Amendment No. 1, dated August 4,
1987, to its Registration of SunTrust capital stock on Form 8-B, dated
June 10, 1985, filed under Section 12(b) of the Exchange Act, including any
amendments or reports filed for the purpose of updating such description.
SunTrust's File Number with the Commission is 1-8918.
All documents filed by SunTrust pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act subsequent to the date hereof and prior to the
Meeting are hereby incorporated by reference into this Proxy Statement-
Prospectus and shall be deemed a part hereof from the date of filing of such
documents.
5
<PAGE>
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes hereof to the
extent that a statement contained herein (or in any other subsequently filed
document which also is incorporated by reference herein) modifies or
supersedes such statement. Any statement so modified or superseded shall not
be deemed to constitute a part hereof except as so modified or superseded.
Peoples is not subject to periodic reporting requirements under the
Exchange Act, and, accordingly, no information or documents relating to
Peoples are incorporated herein by reference. All information contained
herein relating to Peoples and its business was provided by Peoples
specifically for inclusion herein and has been included in reliance on
Peoples' representations as to the truth and accuracy thereof. Neither
SunTrust nor Peoples, nor their respective board of directors, assumes
responsibility for the accuracy or completeness of the information contained
herein concerning any party other than itself.
DOCUMENTS DELIVERED WITH THIS PROXY STATEMENT-PROSPECTUS
This Proxy Statement-Prospectus is delivered together with SunTrust's
Annual Report to Shareholders for the year ended December 31, 1994 ("1994
SunTrust Annual Report").
No person is authorized to give any information or to make any
representation not contained in this Proxy Statement-Prospectus and, if given
or made, such information or representation should not be relied upon as
having been authorized. This Proxy Statement-Prospectus does not constitute
an offer to sell, or a solicitation of an offer to purchase, the securities
offered by this Proxy Statement-Prospectus, or the solicitation of a proxy,
in any jurisdiction to any person to whom it is unlawful to make such offer
or solicitation in such jurisdiction. Neither the delivery of this Proxy
Statement-Prospectus or any distribution of the securities to which this
Proxy Statement-Prospectus relates shall, under any circumstances, create any
implication that there has been no change in the affairs of SunTrust or
Peoples since the date of this Proxy Statement-Prospectus.
This Proxy Statement-Prospectus does not relate to any resale of
SunTrust Common Stock received by any person upon consummation of the Merger
and no person is authorized to make any use of this Proxy Statement-
Prospectus in connection with any such resale.
6
<PAGE>
SUMMARY
Certain significant matters discussed in this Proxy Statement-Prospectus
are summarized below. These summaries are not intended to be complete and are
qualified in all respects by reference to the detailed information appearing
elsewhere in this Proxy Statement-Prospectus. Shareholders are urged to
review carefully the entire Proxy Statement-Prospectus (including the
Appendices and other documents to which this Proxy Statement-Prospectus
refers).
The Parties to the Transaction
Peoples
Peoples is an independent, Florida chartered commercial bank
incorporated under the laws of the State of Florida. As of December 31, 1994,
Peoples had total assets of $123 million, loans of $70.3 million, deposits of
$109.2 million, and shareholders' equity of $6.9 million. Peoples conducts
its business through its main branch office in New Port Richey, Florida and
three branches in Pasco County, Florida. Peoples is engaged primarily in the
business of accepting both commercial and personal demand and time deposits
from the general public and using such deposits to make mortgage, commercial
business and consumer loans. The principal executive offices of Peoples are
located at 6335 U. S. Highway 19, New Port Richey, Florida 34652-2239,
telephone number (813) 845-5775.
SunTrust
SunTrust is a regional bank holding company headquartered at 25 Park
Place, N.E., Atlanta, Georgia 30303, telephone number (404) 588-7711. The
three principal subsidiaries of SunTrust are Sun Banks, Inc., headquartered
in Orlando, Florida ("SunBanks"), Trust Company of Georgia, headquartered in
Atlanta, Georgia ("Trust Company"), and Third National Corporation,
headquartered in Nashville, Tennessee ("Third National"). At December 31,
1994, SunTrust had consolidated total assets of $42.7 billion, consolidated
loans of $28.5 billion, consolidated deposits of $32.2 billion, consolidated
realized shareholders' equity of $2.9 billion and consolidated total
shareholders' equity of $3.5 billion. SunBanks owns all the outstanding
capital stock of 14 subsidiary banks that operate in Florida. Trust Company
owns all the outstanding capital stock of 9 subsidiary banks that operate in
Georgia. Third National owns all the outstanding capital stock of 6
subsidiary banks that operate in Tennessee and Alabama.
SunTrust, through its subsidiary banks, conducts a broad range of
commercial banking activities, including accepting demand, time and savings
deposits, making both secured and unsecured business and consumer loans and
leases, extending commercial lines of credit, issuing and servicing credit
cards and certain other types of revolving credit accounts, providing
commercial factoring services, cash management services, investment
counseling, safe deposit services, personal and corporate trust and other
fiduciary services and engaging in leasing, mortgage banking, correspondent
banking, international banking, investment banking, trading in U.S.
government securities and municipal bonds and underwriting certain types of
general obligation municipal bonds.
STI Subsidiary
STI Subsidiary is a wholly owned subsidiary of SunTrust organized solely
to effectuate the Merger. At the Effective Date (as defined below), STI
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<PAGE>
Subsidiary will, pursuant to the terms of the Agreements, merge with and into
Peoples, with Peoples thereby becoming a wholly owned subsidiary of SunTrust.
Additional information about SunTrust and its subsidiaries is included
in documents incorporated by reference in this Proxy Statement-Prospectus.
See "Incorporation of Certain Documents by Reference."
Consideration for Peoples Common Stock
The Agreements provide for the conversion of each outstanding share of
Peoples Common Stock, in accordance with the election by each Peoples
Shareholder, into either: (a) .75 shares of SunTrust Common Stock for each
share of Peoples Common Stock or (b) cash equal to .75 times the average of
the closing prices per share of SunTrust Common Stock as reported on the NYSE
Composite Tape for each of the twenty trading days immediately preceding the
date of the Meeting, subject to the Cash Limit. SunTrust may adjust such
elections on a pro rata basis so that the Cash Limit is met. Cash will be
paid for shares, if any, with respect to which dissenters' rights shall have
been perfected in accordance with the procedures set forth in Exhibit B
hereof.
The Meeting, Record Date and Vote Required
The Meeting is scheduled to be held at the main office of Peoples, 6335
U. S. Highway 19, New Port Richey, Florida on April __, 1995, at 10:00 a.m.,
local time. The purpose of the Meeting is to consider and vote upon a
proposal to approve of the Agreements. Only holders of shares of Peoples
Common Stock of record at the close of business on March 3, 1995, will be
entitled to receive notice of and to vote at the Meeting. The affirmative
vote of the holders of a majority of the shares outstanding on such date is
required to adopt the Agreements. As of the record date, there were 407,258
shares of Peoples Common Stock outstanding and entitled to vote, with each
share entitled to one vote. As of December 31, 1994, approximately 57.2% of
the outstanding shares of Peoples Common Stock were beneficially owned by
officers and directors of Peoples and their affiliates. Peoples has been
advised that such directors and executive officers intend to vote their
shares in favor of approval of the Agreements. The Peoples 401(k) Profit Plan
(the "Plan"), as of December 31, 1994, held 5,300 shares of Peoples Common
Stock representing 1.30% of the total number of shares outstanding and
entitled to be voted. Unallocated shares representing 100% of the shares held
in the Plan will be voted by the Trustees in accordance with their fiduciary
obligations and the provisions of the Plan. Mr. Edward Heveran, President of
Peoples, and Ms. Joan Murcko, Executive Vice President of Peoples, are the
Trustees for the Plan. The Trustees expect that they will vote such shares
for approval of the Agreements. See "Information Concerning the Meeting -
Vote Required."
The Merger
General
The Agreements, a copy of which is attached as Exhibit A and
incorporated by reference in the Proxy Statement-Prospectus, provide for the
Merger of STI Subsidiary with and into Peoples in accordance with the
applicable provisions of the Florida Statutes. The separate existence of STI
Subsidiary will cease following the Merger and Peoples will become a wholly
owned bank subsidiary of SunTrust. It is anticipated that SunBank and Trust
Company, a wholly owned bank subsidiary of SunBanks, Inc., thereafter will be
8
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merged with and into Peoples, with the surviving corporation being called
SunBank and Trust Company.
Background of the Merger
SunTrust and Peoples began preliminary discussions of a potential
combination in early 1994, which discussions did not lead to an agreement at
the time. Discussions resumed in August 1994 resulting in the execution of
the Agreements. The Agreements were approved by the Peoples Board of
Directors on December 6, 1994 and by the Executive Committee of the SunTrust
Board of Directors on November 8, 1994. See "The Merger - Background of the
Merger."
Board of Directors Recommendation
The Board of Directors of Peoples voted to approve the Agreements and
the Transaction as being in the best interests of Peoples and Peoples
Shareholders and unanimously recommends that Peoples Shareholders vote FOR
the adoption of the Agreements. In reaching its determination that the Merger
is in the best interests of the Peoples Shareholders, the Board of Directors
of Peoples considered a number of factors described under "The Merger -
Reasons For the Merger; Board of Directors Recommendation."
Opinion of Financial Advisor
Allen C. Ewing & Co. ("Ewing") has advised Peoples's Board of Directors
that in its opinion the transaction is fair from a financial point of view to
the shareholders of Peoples. The text of Ewing's opinion, dated December 6,
1994, which describes the procedures followed, assumptions made, limitations
on the review taken, and other matters in connection with rendering such
opinion is attached as Exhibit C to this Proxy Statement-Prospectus and
should be read in its entirety by Peoples Shareholders. See "The Merger -
Opinion of Financial Advisors."
Covenants; Conditions; Amendment and Termination
The respective obligations of the parties to consummate the Merger are
subject to, among other things, the requisite vote of Peoples Shareholders
approving the Agreements and the Transaction and compliance with certain
regulatory requirements. Additional conditions to the obligations of SunTrust
and Peoples to consummate the Merger are described under "The Merger -
Covenants; Conditions; Representations and Warranties; Amendment and
Termination." See "Information Concerning the Meeting - Vote Required" and
"The Merger - Covenants; Conditions; Representations and Warranties;
Amendment and Termination."
The Agreements may be amended by agreement between Peoples and SunTrust,
if approved by the Board of Directors of Peoples and SunTrust, except that no
amendment may change the consideration to be received by Peoples Shareholders
in the Merger after the Meeting unless approved by 66-2/3% of the Peoples
Shareholders. The Agreements may be terminated by mutual agreement of
SunTrust and Peoples and by either of them under certain circumstances
described under "The Merger - Covenants; Conditions; Representations and
Warranties; Amendment and Termination."
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Termination Fee
Peoples has agreed that, if on or before September 30, 1995, (a) Peoples
enters into a definitive agreement or consummates a transaction with any
other person or group, other than SunTrust, with respect to (i) the sale of
all or a substantial portion of the assets of Peoples; (ii) the sale of at
least 50% of the then outstanding shares of Peoples's Common Stock; (iii) a
merger involving Peoples, or (b) any person or group acquires beneficial
ownership of at least 50% of the outstanding common stock of Peoples in one
or more transactions that are supported, recommended or endorsed by the Board
of Directors of Peoples, Peoples will pay SunTrust a $750,000 termination fee
unless if the Agreements are terminated by Peoples as a result of a breach of
the Agreements by SunTrust or by Peoples due to a denial of a required
regulatory approval or failure of the Peoples shareholders to adopt the
Agreements, unless at the time of such termination Peoples is in material
breach of the Agreements. The termination fee may discourage competing offers
to the Merger and is intended by SunTrust to increase the likelihood that the
Merger will be consummated. See "The Merger - Covenants; Conditions;
Representations and Warranties; Termination Fee and No Solicitation
Covenant."
Interests of Certain Persons in the Merger
Certain members of Peoples's management have certain interests in the
Merger that are in addition to their interests as Peoples Shareholders
generally. These include, among others, provisions in the Agreements relating
to indemnification, certain payments, the liquidation of stock options and
continuation of certain other employee benefits. See "The Merger - Interests
of Certain Persons in the Merger."
Regulatory or Other Legal Considerations
Consummation of the Merger is subject to, and conditioned upon receipt
of, all required regulatory approvals and expiration of all required waiting
periods, including receipt of approvals from the Board of Governors of the
Federal Reserve System (the "Federal Reserve"), the Federal Deposit Insurance
Corporation (the "FDIC") and the Department of Banking and Finance of the
State of Florida (the "Florida Banking Department"). On December 22, 1994,
applications were submitted to the Federal Reserve and the Florida Banking
Department, and, on December 23, 1994, to the FDIC for permission to
consummate the transactions contemplated by the Agreements. There can be no
assurances as to when, if or with what conditions the required regulatory
approvals will be obtained. As of the date hereof, the Federal Reserve, the
Florida Banking Department and the FDIC have not approved the Merger. See
"Merger - Conditions to the Merger, Regulatory Approvals."
Effective Date
The Effective Date is expected to occur as soon as practicable following
the last to occur of the effective date (including any applicable waiting
period) of the last required federal or state regulatory approval of the
Merger, the date on which the Peoples Shareholders approve the Agreements and
the satisfaction of all conditions precedent to the consummation of the
Merger. See "The Merger - Conditions to the Merger; Regulatory Approvals."
Certain Federal Income Tax Consequences
SunTrust and Peoples anticipate that the Merger will constitute a
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<PAGE>
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code of 1986 (the "Code") and that Peoples Shareholders will not recognize
gain or loss for federal income tax purposes upon the conversion of Peoples
Common Stock into SunTrust Common Stock (except with respect to any cash paid
in lieu of fractional shares of SunTrust Common Stock). Gain or loss will,
however, be recognized for federal income tax purposes with respect to any
Cash Amount received or cash payments made with respect to the exercise of
any dissenters' rights. Consummation of the Merger is conditioned upon
receipt by SunTrust and Peoples of an opinion of King & Spalding, tax counsel
to SunTrust, to such effect. All Peoples shareholders are urged to consult
their own tax advisors as to the specific consequences of the Transaction to
them. See "The Merger - Certain Federal Income Tax Consequences."
Comparison of Rights of Peoples and SunTrust Shareholders
Peoples is a bank chartered under the laws of the State of Florida (the
"Florida Code"). SunTrust is a business corporation organized under the
Georgia Business Corporation Code (the "GBCC"). Peoples Shareholders, whose
rights as shareholders are currently governed by the Florida Code and the
Peoples Articles of Incorporation and By-laws, upon consummation of the
Merger will become shareholders of SunTrust and their rights as SunTrust
shareholders will be governed by the GBCC and the SunTrust Articles of
Incorporation and By-laws. There are differences in the rights of holders of
Peoples Common Stock and SunTrust Common Stock under such laws and governing
documents. In addition, the SunTrust Articles of Incorporation and By- laws
contain certain provisions intended to deter certain takeover attempts. The
Peoples Articles of Incorporation and By-laws do not contain such provisions.
See "Merger - Comparison of Rights of Peoples and SunTrust Shareholders."
Dissenters' Rights
Any holder of Peoples Common Stock who (i) furnishes written notice to
Peoples prior to the vote on the Agreements of his or her intent to exercise
his right to dissent to the Merger and the Agreements; or (ii) at the
Meeting, fails to vote his or her shares, in person or by proxy, in favor of
the Merger, shall be entitled to the fair value of his or her shares of
Peoples Common Stock. Failure to follow the statutory provisions set forth in
Exhibit B precisely may result in a loss of the right to dissent from the
action otherwise approved by the requisite majority interest. These statutory
provisions are set forth in full in Exhibit B hereto and are more fully
summarized under "Comparison of Rights of Peoples and SunTrust Shareholders -
Dissenters' Rights."
Resale of SunTrust Common Stock
Shares of SunTrust Common Stock received in the Merger will be freely
transferable by the holders of such shares except for those shares held by
persons who may be deemed to be "affiliates" of Peoples under applicable
federal securities laws. Shares held by affiliates of Peoples will be subject
to certain transfer and trading restrictions as described herein. See "The
Merger - Resale of SunTrust Common Stock."
Market Prices of SunTrust and Peoples Common Stock
SunTrust Common Stock is listed and traded on the NYSE (symbol: STI).
The closing price for SunTrust Common Stock on March --, 1995 was $----.
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<PAGE>
The following table sets forth for the periods indicated the high and
low sales prices and trading volumes (in thousands of shares) of SunTrust
Common Stock as reported on the NYSE Composite transactions reporting system
(as published in The Wall Street Journal) with respect to each calendar
quarter since January 1, 1992. The following table also shows the cash
dividends declared per share of SunTrust Common Stock.
Shares
High Low Cash Traded
Sale Sale Dividend (in thousands)
1992
1st Quarter................. $ 39.875 35.750 .25 7,693
2nd Quarter................. 41.250 33.500 .25 8,204
3rd Quarter................. 42.250 37.125 .25 7,732
4th Quarter................. 45.625 37.500 .28 5,465
1993
1st Quarter................. 49.625 42.000 .28 7,722
2nd Quarter................. 48.750 42.375 .28 6,855
3rd Quarter................. 48.000 41.375 .28 7,350
4th Quarter................. 46.000 42.500 .32 11,044
1994
1st Quarter................. $ 47.125 44.250 .32 8,196
2nd Quarter................. 50.500 43.500 .32 8,090
3rd Quarter................. 51.375 47.125 .32 5,862
4th Quarter................. 51.125 46.375 .36 7,688
1995
1st Quarter*................ $ XX.XXX XX.XXX .36 X,XXX
* Through March 15, 1995
On February 1, 1995, Peoples had approximately 203 shareholders of
record. There is no established trading market for Peoples Common Stock and
it has been subject to only limited trading. The Peoples Common Stock is not
listed on any exchange or quoted on any automated quotation system and no
institution makes a market in the stock. Prior trading transactions have been
infrequent and negotiated privately between the purchaser and seller. The
following table sets forth the most recent sales prices for such trading
transactions, of which Peoples is aware. The prices are based upon the best
knowledge of Peoples management and are not necessarily indicative of the
fair market value of the stock at the time of the trade and may not reflect
all trades or the price of those trades. Approximately 10,500 shares of
Peoples Common Stock have been traded during the three year period indicated.
To the best knowledge of Peoples management, there have been no trades of
Peoples Common Stock in 1995.
Price Range
1992......................................... $13.00 - $15.00
1993......................................... $15.00 - $16.00
1994......................................... $18.00 - $20.00
The execution of the Agreements relating to the proposed Merger by the
parties was publicly announced on November 8, 1994. The most recent sale of
Peoples Common Stock prior to the announcement of the Transaction, for which
the management of Peoples is aware of the sale price, was on May 5, 1994 at
$20 per share for 200 shares.
Peoples did not declare any cash dividends for the years ended December
31, 1994, 1993 and 1992.
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<PAGE>
The following table sets forth the closing price per share of SunTrust
Common Stock, and the equivalent per share price for Peoples Common Stock
giving effect to the Merger on December 7, 1994, the last business day prior
to the public announcement of the signing of the Agreements; and on March 6,
1995, the last practicable date prior to the mailing of this Proxy Statement-
Prospectus. The equivalent price per share of Peoples Common Stock at each
specified date represents the closing price of a share of SunTrust Common
Stock on such date multiplied by .75, the Share Exchange Ratio provided for
in the Agreements.
SunTrust Equivalent
Common Peoples Per
Stock Share Price
December 7, 1994................... $48.000 $36.000
March __, 1995..................... $__.___ $__.___
Peoples shareholders are advised to obtain current market quotations for
SunTrust Common Stock. Because the exchange ratio is fixed, Peoples
Shareholders are not assured of receiving any specific market value of
SunTrust Common Stock at the Effective Date. The market price of SunTrust
Common Stock at the Effective Date may be higher or lower than the market
prices set forth in the table above or at the time of the Meeting. Subject to
the Cash Limit, Peoples Shareholders may elect to receive cash for their
Peoples Common Stock. The Cash Amount is equal to .75 times the average of
the closing prices per share of SunTrust Common Stock as reported on the NYSE
Composite Tape for each of the twenty trading days immediately preceding the
date of the Meeting.
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<PAGE>
SUNTRUST AND PEOPLES
PRO FORMA EQUIVALENT PER COMMON SHARE DATA(1)
The following table presents selected historical per common share data
for SunTrust and Peoples and Peoples equivalent per common share data on the
basis described in Note 2. All common share data has been restated to reflect
stock splits and stock dividends during the periods presented. This data
should be read in conjunction with the historical financial statements of
SunTrust (incorporated by reference into this Proxy Statement) and of Peoples
(set forth elsewhere in this Proxy Statement).
Pro Forma
Equivalent
Historical Per Share
------------------------ Peoples
SunTrust Peoples Stock(2)
----------- ----------- ----------
Net income per common share for
years ended December 31 (3):
1994 ............................... $4.37 $2.77 $3.28
1993 ............................... 3.77 1.86 2.83
1992 ............................... 3.13 1.16 2.35
1991 ............................... 2.88 1.39 2.16
1990 ............................... 2.72 0.81 2.04
Book value per common share at
December 31 (4):
1994 ............................... 29.85 16.90 22.39
1993 ............................... 29.47 15.80 22.10
1992 ............................... 21.65 13.91 16.24
1991 ............................... 20.05 12.74 15.04
1990 ............................... 18.32 11.34 13.74
Cash dividends declared per common share
for the years ended December 31:
1994 ............................... 1.32 - 0.99
1993 ............................... 1.16 - 0.87
1992 ............................... 1.03 - 0.77
1991 ............................... 0.94 - 0.71
1990 ............................... 0.86 - 0.65
- -----------------------------------------------------------------------------
(1) Pro forma data as shown reflects the Merger as a purchase.
(2) Represents data equivalent to one share of Peoples Common Stock computed
by multiplying SunTrust historical data by the conversion ratio of .75 of
a share of SunTrust Common Stock for each share of Peoples Common Stock.
(3) Net income per common share is based on the average number of common
shares outstanding during the periods presented. Fully diluted per
common share data is not presented because there are no material
differences between those amounts and the per share common stock data as
presented.
(4) SunTrust owns 24,133,248 shares of common stock of The Coca-Cola Company
with an amortized cost of $110,000 and a pre-tax market value of $1.2
billion on December 31, 1994. The shares have been held by subsidiaries
of SunTrust since 1919.
(5) SunTrust declared quarterly dividends per common share of $.36 to
shareholders of record at the close of business on March 1, 1995.
(6) The Agreements restrict the right of Peoples to declare dividends.
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<TABLE>
SUNTRUST BANKS, INC. - SELECTED FINANCIAL DATA
<CAPTION>
Year Ended December 31
(Dollars in millions except per share data) 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Summary of Operations
Interest and dividend income $2,552.3 $2,362.3 $2,537.6 $2,856.4 $2,956.6
Interest expense 932.5 790.7 975.0 1,463.5 1,654.0
Net interest income 1,619.8 1,571.6 1,562.6 1,392.9 1,302.6
Provision for loan losses 137.8 189.1 234.2 209.6 201.6
Net interest income after provision for loan losses 1,482.0 1,382.5 1,328.4 1,183.3 1,101.0
Noninterest income 699.9 726.5 672.7 612.9 556.8
Noninterest expense 1,400.0 1,408.4 1,425.3 1,282.1 1,207.9
Income before provision for income taxes 781.9 700.6 575.8 514.1 449.9
Provision for income taxes 259.2 226.9 171.4 136.8 94.7
Net income $522.7 $473.7 $404.4 $377.3 $355.2
Net interest income (taxable-equivalent) $1,675.6 $1,634.4 $1,632.9 $1,470.5 $1,392.2
Per common share
Net income $4.37 $3.77 $3.13 $2.88 $2.72
Dividends paid 1.32 1.16 1.03 0.94 0.86
Common dividend payout ratio 30.1 % 30.6 % 32.7 % 32.4 % 31.3 %
Market price:
High $ 51 3/8 $ 49 5/8 $ 45 5/8 $ 40 $ 24 1/4
Low 43 1/2 41 3/8 33 1/2 20 1/2 16 1/2
Close 47 3/4 45 43 3/4 39 7/8 22 3/4
Selected Average Balances
Total assets $40,489.2 $37,524.9 $35,356.5 $33,892.0 $31,935.0
Earning assets 36,111.0 34,047.4 32,008.6 30,544.4 28,671.2
Loans 26,412.6 24,162.8 22,489.1 22,144.6 22,058.4
Deposits 30,877.8 29,683.3 28,609.6 27,533.0 25,971.7
Realized shareholders' equity 2,960.1 2,875.1 2,697.9 2,509.5 2,266.9
Total shareholders' equity 3,571.5 2,877.2 2,697.9 2,509.5 2,266.9
At December 31
Total assets $42,709.1 $40,728.4 $37,789.3 $35,682.6 $34,479.4
Earning assets 38,045.6 35,904.5 34,167.7 31,854.3 30,262.3
Loans 28,548.9 25,292.1 23,493.5 22,251.5 22,770.3
Reserve for loan losses 647.0 561.2 474.2 381.0 366.9
Deposits 32,218.4 30,485.8 29,883.0 29,011.5 27,787.9
Long-term debt 930.4 630.4 554.0 477.3 482.4
Realized shareholders' equity 2,883.3 2,845.8 2,769.7 2,622.8 2,377.1
Total shareholders' equity 3,453.3 3,609.6 2,769.7 2,622.8 2,377.1
Ratios and Other
ROA 1.32 % 1.26 % 1.14 % 1.11 % 1.11 %
ROE 17.66 16.48 14.99 15.04 15.67
Net interest margin 4.64 4.80 5.10 4.81 4.86
Total shareholders' equity to assets 8.09 8.86 7.33 7.35 6.90
Nonperforming assets to total loans plus
other real estate owned 0.96 1.61 2.30 3.07 2.70
Number of full-service banking offices 658 656 654 662 654
Number of full-time equivalent employees 19,408 19,532 19,539 19,703 20,339
Average common equivalent shares (thousands) 119,633 125,656 129,307 130,964 130,549
</TABLE>
SunTrust's investment securities, total assets and total shareholders' equity
for 1994 and 1993 include net unrealized securities gain. However, earning
assets exclude this gain as do the calculations of ROA, ROE and the net
interest margin because the gain is not included in net income.
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<TABLE>
PEOPLES STATE BANK - SELECTED FINANCIAL DATA
<CAPTION>
At or for the year ended December 31,
------------------------------------------------
1994 1993 1992 1991 1990
(Dollars in thousands except per share amounts) -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Statement of earnings:
Gross interest margin $4,067 $3,443 $3,339 $2,705 $2,118
Provision for loan losses 139 307 502 262 220
Noninterest revenues 505 355 344 426 219
Noninterest expenses 2,703 2,638 2,376 1,972 1,564
Applicable income taxes 580 272 336 343 230
Change in accounting principle - 176 - - -
-------- -------- -------- -------- --------
Net income $1,150 $757 $469 $554 $323
======== ======== ======== ======== ========
Per common share data:
Net income, before change in accounting principle $2.77 $1.43 $1.16 $1.39 $0.81
Change in accounting principle - .43 - - -
-------- -------- -------- -------- --------
Net income 2.77 1.86 1.16 1.39 0.81
======== ======== ======== ======== ========
Cash dividends declared - - - - -
Book value, end of period 16.90 15.80 13.91 12.74 11.34
Average statement of condition:
Total securities $27,069 $16,034 $10,759 $8,071 $5,881
Loans, net of unearned income 61,503 53,841 53,864 48,204 38,333
Allowance for loan losses 900 803 602 484 339
Total earning assets 92,214 73,109 67,001 59,093 48,555
Total assets 97,702 77,857 71,241 62,632 51,897
Deposits 87,997 72,095 72,658 57,275 46,695
Shareholders' equity 6,475 6,048 5,446 4,781 4,351
======== ======== ======== ======== ========
End of period statement of condition:
Total securities $44,668 $18,827 $11,646 $8,332 $6,125
Loans, net of unearned income 70,328 57,320 55,845 54,558 43,921
Allowance for loan losses 900 911 924 520 437
Total earning assets 114,996 79,062 68,749 65,735 52,896
Total assets 123,014 83,948 73,407 68,803 56,982
Deposits 109,217 77,307 67,659 63,413 51,844
Shareholders' equity 6,879 6,321 5,538 5,069 4,515
======== ======== ======== ======== ========
Selected financial ratios:
Return on average total assets 1.18% 0.97% 0.66% 0.88% 0.62%
Return on average common equity 17.76% 12.52% 8.61% 11.59% 7.42%
Taxable equivalent gross interest margin to
average earning assets 4.44% 4.74% 5.00% 4.60% 4.41%
Operating efficiency ratio 58.84% 69.09% 64.30% 62.68% 66.33%
Dividend payout ratio - - - - -
Average equity ratio to average assets 6.63% 7.77% 7.64% 7.63% 8.38%
Allowance at end of period to loans,
net of unearned income 1.28% 1.59% 1.65% 0.95% 0.99%
Allowance at end of period to
nonperforming loans 1859.18% 72.53% 67.40% 41.60% 110.08%
Nonperforming assets to loans,
net of unearned income, foreclosed assets
and repossession 0.43% 2.62% 3.75% 3.85% 0.96%
</TABLE>
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INFORMATION CONCERNING THE MEETING
The Meeting
Each copy of this Proxy Statement-Prospectus mailed to the holders of
Peoples Common Stock is accompanied by a form of proxy solicited by the Board
of Directors of Peoples for use at the Meeting and at any adjournments or
postponements thereof and the Notice of Special Meeting of Shareholders. The
Meeting is scheduled to be held on April __, 1995, at the main office of
Peoples, 6335 U. S. Highway 19, New Port Richey, Florida. Only holders of
Peoples Common Stock of record at the close of business on _________ __, 1995
are entitled to receive notice of and to vote at the Meeting. As of ______
___ __, 1995, there were 407,258 shares of Peoples Common stock outstanding
and entitled to vote, with each such share entitled to one vote. At the
Meeting, shareholders will consider and vote upon (i) a proposal to approve
the Agreements and (ii) such other matters as may properly be brought before
the Meeting or any adjournments or postponements thereof. It is not
anticipated that any matter other than consideration of the approval of the
Agreements will be brought before the Meeting. If other matters are properly
presented at the Meeting, proxies will be voted in accordance with the best
judgment of the proxy holders in their sole discretion.
When a Peoples proxy is properly executed and returned, the shares of
Peoples Common Stock it represents will be voted in accordance with the
directions indicated on the proxy, or if no directions are indicated on a
proxy that is properly executed and returned, the shares will be voted for
approval of the Agreements. Any Peoples Shareholder giving a proxy has the
power to revoke it at any time before it is voted. Revocation of a Peoples
proxy is effective upon receipt by the Secretary of Peoples at the address
shown on the cover of this Proxy Statement-Prospectus of either (i) an
instrument revoking it or (ii) a duly executed Peoples proxy bearing a later
date. Furthermore, a Peoples Shareholder giving a proxy may attend the
Meeting, withdraw his proxy prior to the vote and vote his shares in person
if he desires to do so.
PEOPLES SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE
ACCOMPANYING PROXY AND RETURN IT PROMPTLY TO PEOPLES IN THE ENCLOSED POSTAGE-
PAID ENVELOPE, EVEN IF THEY ARE PLANNING TO ATTEND THE MEETING. FAILURE TO
RETURN YOUR PROPERLY EXECUTED PROXY OR TO VOTE AT THE MEETING WILL HAVE THE
SAME EFFECT AS A VOTE AGAINST THE APPROVAL OF THE AGREEMENTS.
This Proxy Statement-Prospectus is also furnished by SunTrust to Peoples
Shareholders as a Prospectus in connection with the issuance by SunTrust of
the shares of SunTrust Common Stock upon consummation of the Merger. All
information concerning Peoples in this Proxy Statement-Prospectus has been
furnished by Peoples and all information concerning SunTrust has been
furnished by SunTrust.
Peoples will bear the cost of soliciting proxies from Peoples
Shareholders. The solicitation will be made by mail but also may be made by
telephone or in person by the directors, officers or employees of Peoples
(who will receive no additional compensation for doing so). Peoples will make
arrangements with brokerage firms and other custodians, nominees and
fiduciaries to send proxy materials to their principals or beneficial owners.
PEOPLES SHAREHOLDERS SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH
THEIR PROXIES.
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<PAGE>
Vote Required
Once a quorum is established, the affirmative vote of a majority of the
outstanding shares of Peoples Common Stock entitled to vote is required to
approve the Agreements. The failure to return a properly executed proxy card
or, alternatively, to vote in person at the Meeting, will have the same
effect as a vote against the Agreements and Merger. At March __, 1995, there
were approximately 203 holders of record of Peoples Common Stock and a total
of 407,258 shares of Peoples Common Stock outstanding and entitled to vote at
the Meeting, with each share being entitled to one vote.
At March 1, 1995, neither SunTrust nor any of its affiliates owned any
of the outstanding shares of Peoples Common Stock.
At March 1, 1995, all the directors and executive officers of Peoples as
a group held 233,150 shares of Peoples Common Stock representing 57.2% of the
amount outstanding. Peoples has been advised that such directors and
executive officers intend to vote their shares in favor of approval of the
Agreements. The Peoples 401(k) Profit Sharing Plan and Trust (the "Plan"), as
of March 1, 1995, held 5,300 shares of Peoples Common Stock representing 1.3%
of the total amount of shares outstanding. Unallocated shares representing
approximately 100% of the shares held in the Plan will be voted by the
Trustee in accordance with the provisions of the Plan. The Trustee expects
that it will vote such shares for approval of the Agreements.
The presence, in person or by proxy, of a majority of the outstanding
shares of Peoples Common Stock is necessary to constitute a quorum of the
shareholders in order to take action at a meeting of shareholders. For these
purposes, shares of Peoples Common Stock which are present, or represented by
proxy, at the Meeting will be counted for quorum purposes regardless of
whether the holder of the shares or proxy fails to vote on the Agreements or
whether a broker with discretionary authority fails to exercise its
discretionary voting authority with respect to the Agreements. Once a quorum
is established, approval of the Agreements requires the affirmative vote of a
majority of the outstanding shares of Peoples Common Stock. For voting
purposes, abstentions and failure to return proxies by any brokers will have
the same effect as a vote against the Agreements.
Recommendation of the Peoples Board
The Peoples Board has unanimously approved the Agreements and has
determined that the Transaction is fair to, and in the best interests of,
Peoples and its shareholders. The Board therefore unanimously recommends that
Peoples Shareholders vote FOR approval of the Agreement. For the reasons
described below, the Peoples Board believes that the Transaction will provide
significant value to all Peoples Shareholders and also enable them to
participate in opportunities for future growth that the Board believes the
transaction makes possible. See "THE MERGER - Background of and Reason for
the Merger."
18
<PAGE>
THE MERGER
The descriptions of the terms and conditions of the Merger, the
Agreements, and any related documents in this Proxy Statement-Prospectus are
qualified in their entirety by reference to the copy of the Agreements
attached as Exhibit A to this Proxy Statement-Prospectus, to the Registration
Statement of which this Proxy Statement-Prospectus is a part and to the
exhibits to the Registration Statement.
General
Subject to the terms of the Agreements, STI Subsidiary will be merged
with and into Peoples in accordance with Florida law. Peoples will be the
resulting corporation of the Merger, and will become a wholly owned bank
subsidiary of SunTrust. It is anticipated that following the Merger, SunBank
and Trust Company will merge with and into Peoples, with the surviving
corporation being called SunBank and Trust Company. If all conditions to
consummation of the Merger are satisfied or waived, unless the Agreements are
terminated in accordance with their terms, Articles of Merger reflecting the
Merger will be filed with the Secretary of State of Florida (the "Florida
Secretary") and the Florida Banking Department, and the Merger will then be
come effective at the time and date specified in the Articles of Merger (the
"Effective Date"). It is presently contemplated that the Effective Date will
occur as soon as practicable after the Meeting and the receipt of the
approval of the Federal Reserve, the FDIC and the Florida Department and the
expiration of a statutory Department of Justice waiting period of up to
thirty days following Federal Reserve approval, subject to the conditions
described under "The Merger - Covenants; Conditions; Representations and
Warranties; Amendment and Termination."
Upon completion of the Merger each Peoples Shareholder choosing not to
exercise a statutory right of dissent will be entitled to receive at his or
her election, in exchange for the automatic cancellation and elimination of
each share of Peoples Common Stock of which he or she will then be deemed to
be the owners of record, either .75 shares of SunTrust Common Stock for each
share of Peoples Common Stock or cash equal to .75 times the average of the
clsoing prices per share of SunTrust Common Stock as reported on the NYSE
Composite tape for each of the twenty (20) trading days immediately preceding
the date of the Meeting, subject to the Cash Limit. In the event SunTrust
changes the number of shares of SunTrust Common Stock issued and outstanding
prior to the Effective Date as a result of a stock split, stock dividend or
similar recapitalization, and the record date therefor is prior to the
Effective Date, the ratio under which shares of Peoples Common Stock will be
converted into shares of SunTrust Common Stock will be proportionally
adjusted.
No fractional shares of SunTrust Common Stock will be issued as a result
of the Merger. In lieu of the issuance of fractional shares, each Peoples
Shareholder who otherwise would be entitled to a fractional share of SunTrust
Common Stock will receive a cash payment (without interest) equal to the
product of the closing sales price per share of SunTrust Common Stock on The
New York Stock Exchange on the last business day preceding the Effective Date
multiplied by the fraction of a share of SunTrust Common Stock otherwise
issuable.
Exchange of Certificates Representing Peoples Common Stock
Promptly after the Effective Date, each Peoples Shareholder at the
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Effective Date will receive transmittal materials which will contain
instructions with respect to the surrender of certificates representing
shares of Peoples Common Stock and the distribution of certificates
representing shares of SunTrust Common Stock. Shares of Peoples Common Stock
will be surrendered to the exchange agent (the "Exchange Agent") which will
be the Stock Transfer Department of Trust Company Bank, Atlanta, Georgia.
PEOPLES SHAREHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY
RECEIVE A LETTER OF TRANSMITTAL FORM AND INSTRUCTIONS.
Upon surrender to the Exchange Agent of one or more certificates for
shares of Peoples Common Stock for cancellation, together with properly
completed transmittal materials, the Exchange Agent will distribute to each
Peoples Shareholder a certificate representing the shares of SunTrust Common
Stock into which the holder's shares of Peoples Common Stock have been
converted or a check in the amount of the Cash Amount. Cash will be paid in
lieu of the issuance of factional shares of SunTrust Common Stock. Peoples
Shareholders will not be entitled to receive interest on any such cash to be
received in the Merger. See "The Merger - General."
Until they have surrendered their Peoples Common Stock certificates for
exchange, Peoples Shareholders will not be entitled to receive any dividends
or other distributions that may be declared and payable to holders of record
of SunTrust Common Stock. Upon the surrender of Peoples Common Stock
certificates, however, SunTrust Common Stock certificates (together with all
such withheld dividends or other distributions with respect to the
certificates, without interest) and any withheld cash payment for a
fractional share interest will be delivered and paid (without interest).
SunTrust and Peoples will not be liable to a Peoples Shareholder for any
SunTrust Common Stock or dividends thereon delivered to a public official in
accordance with any state's abandoned property, escheat, or other similar
law. Any SunTrust Common Stock held by the Exchange Agent which remains
undistributed to the Peoples Shareholders for six months after the Effective
Date will be delivered to SunTrust upon demand, and any Peoples Shareholders
who have not surrendered their Peoples Common Stock may thereafter only look
to SunTrust for payment of their claims for SunTrust Common Stock, any cash
in lieu of fractional shares of SunTrust Common Stock and any dividends or
distributions with respect to SunTrust Common Stock. After the Effective
Date, certificates representing shares of Peoples Common Stock converted in
the Merger into SunTrust Common Stock will be deemed for all other corporate
purposes to evidence ownership of the shares of SunTrust Common Stock into
which they were converted.
Background of the Merger
The managements of SunTrust and Peoples began preliminary discussions of
a potential combination in early 1994, which discussions did not lead to an
agreement at the time. Discussions resumed in August 1994 resulting in the
execution of the Agreements on December 6, 1994. The Agreements were approved
by the Peoples Board of Directors on December 6, 1994 and by the Executive
Committee of the SunTrust Board of Directors on November 8, 1994.
Reasons for the Merger; Board of Directors Recommendation
The terms of the Agreements are the result of arms-length negotiations
between representatives of SunTrust and Peoples.
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Reasons for the Merger -- Peoples
In reaching its determination that the Merger and Agreements are fair
to, and in the best interests of, Peoples and its shareholders, the Peoples
Board of Directors consulted with its legal and financial advisors, as well
as with Peoples management, and considered a number of factors, including,
without limitation, the following:
(i) that the current market value of the shares of SunTrust Common Stock
to be issued in the Merger and the cash to be paid in exchange for shares of
Peoples Common Stock represents a premium over the book value and a premium
over the market value of Peoples Common Stock prior to the public
announcement of the Merger and that the market for SunTrust Common Stock is
more liquid than that for Peoples Common Stock;
(ii) the Peoples Board's familiarity with and review of Peoples's
business, operations, earnings, prospects and financial condition;
(iii) the Peoples Board's review, based in part on a presentation by
Peoples management and its financial adviser Ewing, regarding the business,
operations, earnings and financial condition of SunTrust on both a historical
and a prospective basis;
(iv) the Peoples Board's review of alternatives to the Merger (including
the alternatives of remaining independent and growing internally, remaining
independent for a period of time and then selling the bank, and remaining
independent and growing through future acquisitions), the range of possible
values to Peoples Shareholders obtainable through implementation of such
alternatives and the timing and likelihood of actually receiving such values;
(v) the present market prices for banking and thrift institution stocks;
(vi) the current and prospective economic environment and competitive
constraints facing Peoples and comparable financial institutions;
(vii) the Peoples Board's consideration of the following factors: (a)
the current and historical earnings and earning trends of SunTrust and
Peoples; (b) the market price per share of SunTrust Common Stock; (c) the
relative book values per share for SunTrust and Peoples; (d) the respective
returns on shareholders' equity; (e) the cash generated by the respective
operations; (f) the respective dividend payment records; (g) the
characteristics, relative sizes and potential of the respective businesses;
(h) the capitalization of SunTrust and its bank subsidiaries and (i) publicly
available information and reports regarding SunTrust and prospects for
SunTrust Common Stock;
(viii) the expectation that the Merger will generally be a tax-free
transaction to Peoples and its shareholders, except to the extent that cash
is paid in the transaction (see "The Merger - Certain Federal Income Tax
Consequences"); and
(ix) the financial advice of Ewing and the fact that the obligations of
Peoples under the Agreements were conditioned upon receipt of an opinion of
Ewing that the Share Exchange Ratio and Cash Amount were fair to the Peoples
Shareholders from a financial point of view, which opinion was received on
December 6, 1994;
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The Peoples Board did not assign any specific or relative weight to the
factors in reaching their conclusion.
Board of Directors' Recommendation -- Peoples
Based upon the factors set forth above, and such other matters as the
Board deemed relevant, the Board of Directors of Peoples has unanimously
approved the Agreements and recommends that each Peoples Shareholder vote FOR
approval of the Agreements, the Transaction, and all other matters related
thereto presented at the Meeting.
Reasons for the Merger -- SunTrust
SunTrust believes that the Merger will benefit SunTrust by providing
greater access to an attractive Florida market presently served by Peoples
through the acquisition of a well managed and well positioned financial
institution. SunTrust believes that its substantial banking and other
resources of the SunTrust system that will be available to Peoples after the
Merger will enhance Peoples service to its customers.
Fairness Opinion
Peoples has retained Ewing as its investment banking firm in connection
with the Merger. Ewing has delivered to Peoples its written opinion, dated
December 6, 1994, that, as of the date of such opinion, and based on the
conditions set forth and subject to the limitations expressed therein, the
transaction is fair to Peoples Shareholders. Shareholders of Peoples are
urged to read the opinion in its entirety for a description of the
assumptions made, the matters considered and limitations on the review
undertaken in rendering such opinion.
In arriving at its opinion, Ewing, among other things, (i) reviewed the
Agreements; (ii) met with officers of Peoples and SunTrust to discuss
business, financial condition, operating results, dividend history and future
prospects; (iii) reviewed annual audited financial statements for the three
most recent years for Peoples and for SunTrust; (iv) reviewed publicly
available information including recent Securities and Exchange Commission
filings and shareholder communications for Peoples and for SunTrust; (v) made
a comparison of the published financial condition and operating results of
certain companies considered by Ewing to be in business comparable to
Peoples; (vi) analyzed published financial information regarding recent
acquisitions in the banking and thrift industries that were deemed relevant;
(vii) considered the estimated earnings dilution to SunTrust shareholders
resulting from completion of the Merger; (viii) reviewed the historical
prices and trading volumes of the common stocks of Peoples and SunTrust; (ix)
reviewed various published research reports for SunTrust; and (x) made such
other financial studies, analyses, and investigations as deemed appropriate.
Ewing did not make or obtain any independent appraisals of the assets of
either Peoples or SunTrust, nor did it express any opinion regarding the
value of any of Peoples's or SunTrust's respective assets. Ewing did not
fully inspect the articles of incorporation, bylaws, books, minutes of the
Board of Directors' meeting or contracts of either Peoples or SunTrust. Ewing
did not express any opinion as to the prices at which SunTrust Common Stock
will trade if and when they are issued to the shareholders of Peoples upon
consummation of the Merger.
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THE FOREGOING DESCRIPTION OF EWING'S OPINION IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE TEXT OF SAID OPINION WHICH IS ATTACHED HERETO AS
EXHIBIT C.
For the services of Ewing in connection with the Merger, Peoples has
paid Ewing a fee of $12,000.
Covenants; Conditions; Representations and Warranties; Amendment and
Termination
Peoples Covenants
Pursuant to the Agreements, during the period from the date of the
Agreements and continuing until the Effective Date, Peoples has agreed to
carry on its business in, and only in, the usual, regular and ordinary
course. Peoples has also agreed not to take certain actions (unless expressly
contemplated in the Agreements) without the prior written consent of
SunTrust, including, among other things: (i) declaring, setting aside or
paying any dividends; (ii) amending its Articles of Incorporation or By-laws;
(iii) directly or indirectly redeeming, repurchasing, or otherwise acquiring
or exchanging any of its capital stock; and (iv) issuing any shares of
capital stock or granting any rights or options with respect to its capital
stock other than pursuant to its current stock option plan. Peoples also has
agreed not to take certain enumerated actions relating to the conduct of its
business or pertaining to its employees and employee benefit arrangements.
In the Agreements, Peoples has agreed to consent to the use of this
Proxy Statement by SunTrust in connection with the Registration Statement and
to cooperate in the preparation and filing of the Registration Statement and
the distribution of this Proxy Statement. Peoples and its officers also
agreed to use their best efforts to cause the Peoples Shareholders to approve
and adopt the Agreements, and to take all appropriate actions to cause the
Merger to be consummated. Peoples also has covenanted to take all actions
required of it under the Florida Statutes concerning dissenters' rights.
Conditions to Consummation of the Merger
The obligations of Peoples and SunTrust to consummate the Merger are
conditioned upon adoption of the Agreements by Peoples Shareholders owning a
majority of the outstanding shares of Peoples Common Stock under applicable
law, approval of the Merger by the Federal Reserve, the FDIC and the Florida
Department, the absence of any objection by the United States Justice
Department, and approvals by all other appropriate regulatory authorities. As
of the date hereof, such approvals have not been obtained. The Merger may not
be consummated before 30 days (or such shorter period as the Federal Reserve
shall specify) after approval by the Federal Reserve, and during such period
the United States Department of Justice, should it object to the Merger for
competitive reasons, may file suit to enjoin consummation. Consummation of
the Merger by the parties is subject to the further conditions, among others,
that: (i) the representations and warranties of Peoples and SunTrust
contained in the Agreements must be true and correct in all material respects
as of the closing date, and the various covenants of Peoples and SunTrust
must have been duly performed and complied with pursuant to the Agreements;
and (ii) SunTrust and Peoples must have received certain legal opinions as
are customary in a transaction of this kind. In addition, the SunTrust Common
Stock must be listed or approved for listing on The New York Stock Exchange.
It is anticipated that the foregoing conditions will be satisfied but
Peoples and SunTrust may waive any condition to their obligations to
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consummate the transaction, except requisite approvals of shareholders and
regulatory authorities. The Agreements may be terminated by any of the
parties if all of the conditions to closing have not been satisfied or waived
on or before September 30, 1995.
Representations and Warranties
The Agreements contain a number of representations and warranties by
SunTrust and Peoples. The material accuracy of all those representations and
warranties as of the closing date of the Merger is a condition to the
obligation of each party to consummate the Merger. The representations and
warranties relate to matters such as the organization of each company, the
authority of each company to transact its business, to enter into the
Agreements and to consummate the transactions contemplated by the Agreements,
the capitalization of each company, the filing of certain reports by each
company with regulatory authorities and the presentation of information
contained in those reports, the absence of certain changes in Peoples's
financial condition or business since September 30, 1994, the payment of
taxes and filing of tax returns, each company's allowance for possible loan
losses, the absence of material litigation, the compliance with laws by each
company, the information provided by each company for use in the Registration
Statement, the employee benefit plans of each company, the employment
contracts of Peoples and the absence of obligations of any company to brokers
or finders.
Amendment and Termination
The Agreements may be amended by agreement between Peoples and SunTrust
if approved by the Boards of Directors of Peoples and SunTrust, except that
no amendment reducing the consideration to be received by Peoples
Shareholders in the Merger may be made after the Meeting unless approved by
66-2/3% of the Peoples Shareholders. The Agreements may be terminated by
either Peoples or SunTrust upon the failure of conditions to be met on or
before September 30, 1995.
Termination Fee and No Solicitation Covenant
Peoples has agreed that, if on or before September 30, 1995, (a) Peoples
enters into a definitive agreement or consummates a transaction with any
other person or group, other than SunTrust, with respect to (i) the sale of
all or a substantial portion of the assets of Peoples; (ii) the sale of at
least 50% of the then outstanding shares of Peoples Common Stock; (iii) a
merger involving Peoples, or (b) any person or group acquires beneficial
ownership of at least 50% of the outstanding common stock of Peoples in one
or more transactions that are supported, recommended or endorsed by the Board
of Directors of Peoples, Peoples will pay SunTrust a $750,000 termination
fee. No fee will be due, however, if the Agreements are terminated by Peoples
as a result of a breach of the Agreements by SunTrust or by Peoples due to a
denial of a required regulatory approval or failure of the Peoples
shareholders to adopt the Agreements, unless at the time of such termination
Peoples is in material breach of the Agreements. The termination fee may
discourage competing offers to the Merger and is intended by SunTrust to
increase the likelihood that the Merger will be consummated.
Interests of Certain Persons in the Merger
Certain members of Peoples management and the Peoples Board have certain
interests in the Merger that are in addition to their interests as
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Peoples Shareholders generally. The Peoples Board was aware of these
interests and considered them, among other matters, in approving the
Agreements and the transactions contemplated thereby.
Indemnification
Pursuant to the Agreements, SunTrust has agreed to maintain the
indemnification with respect to matters occurring before the Effective Date
for such officers and directors provided by Peoples Articles of Incorporation
and bylaws for a period of six years.
Effect on Peoples Stock Option Plan
Pursuant to the Agreements, all of the holders of options for shares of
Peoples Common Stock under the Peoples Stock Option Plan shall, on or before
the Closing Date, have exercised such options and Peoples shall have issued
the Peoples Common Stock to such option holders, or Peoples shall have
terminated and cashed out such options at any time up until twenty business
days preceding the date of the Meeting at a price per share equal to .75
times the closing price per share of SunTrust Common Stock as reported on the
NYSE Composite Tape on the date the option holder elects to have such options
cashed out less the option price set forth in such holders' option agreement.
If by the date of Closing, options remain outstanding which have not been
exercised or cashed out, the options will be automatically cashed out on the
date of Closing immediately prior to the Merger by Peoples at a price per
share equal to .75 times the arithmetic average of the closing prices per
share of SunTrust Common Stock as reported on the NYSE Composite Tape for
each of the twenty trading days immediately preceding the Meeting less the
option price set forth in such option holders' option agreement.
Agreement with Edward Heveran
As a condition to SunTrust's obligation to effect the Merger, Mr.
Heveran must sign an agreement that provides that for 90 days after the
closing Mr. Heveran shall devote his full time and energies to the day-to-day
operations of the resulting bank, and shall assist in cooperating in all
aspects of the transition of ownership of Peoples. After the initial 90 day
period, Mr. Heveran's duties shall cease, but Mr. Heveran shall be obligated
to continue to cooperate in all respects, as requested, in connection with
the transition and the operation and management of the resulting bank
throughout the remainder of the term of the agreement. The term of the
agreement is for a period of 27 months from the closing date. In
consideration for and subject to the due and complete performance of the
terms of the agreement, SunTrust shall pay to Mr. Heveran $9,415.00 per month
during the term of such agreement. Mr. Heveran will also agree that he shall
not, directly or indirectly, engage in any business in competition with the
business conducted by Peoples within the geographic area consisting of the
Florida counties of Citrus, Hernando, Pasco and Pinellas.
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Beneficial Ownership of Peoples Common Stock
The following table sets forth information, as of December 31, 1994,
regarding the ownership of Peoples Common Stock by each person known to
Peoples to be the beneficial owner of more than five (5)% of Peoples Common
Stock.
Number of Percent of
Name and Address of Beneficial Owner Shares Common Stock
- ---------------------------------------- ----------- ------------
James P. Gills 91,000 22.3%
P. O. Box 1608
Tarpon Springs, Florida 34689
Glen L. Keys & Martha S. Keys 40,000 9.8
P. O. Box 280
Tarpon Springs, Florida 34688
Harvey V. Delzer & Hilda P. Delzer 30,000 7.4
5541 Windward Way
New Port Richey, Florida 34652
Donald F. Kaltenbach 25,000 6.1
7026 Little Road
New Port Richey, Florida 34654
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Directors of Peoples
The following table sets forth each director, such person's name, age,
principal occupation during the past five (5) years, the year he first became
a director and the number of shares of Peoples Common Stock beneficially
owned and the percentage represented by such ownership.
Common Stock
Year Benefically
Percent First Owned at
of Principal Elected December 31,
Name Age Class Occupation Director 1994
- -------------------- --- ------- --------------- -------- --------------
Harvey V. Delzer 63 7.37 Attorney 1987 30,000
David W. Dunbar 42 0.61 EVP, Lending - 1993 2,500
Peoples
Frederick E. Fisher 64 2.01 Philanthropist 1991 8,200
Lew Friedland 46 0.05 President - 1989 200
JIREH, Inc.
Edward Heveran 61 4.91 CEO - Peoples 1987 20,000
Donald F. Kaltenbach 50 6.14 Attorney 1987 25,000
Glen L. Keys 66 9.82 Concrete Products 1987 40,000
Manufacturer
Daniel R. Schmitt 58 1.10 Owner - Schmitt 1991 4,500
Electric
Eugene V. Werner 70 1.47 Builder/Developer 1987 6,000
All Directors and
Executive Officers
as a Group (10 persons) 34.90 142,150
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Resales of SunTrust Common Stock
The shares of SunTrust Common Stock issued pursuant to the Agreements
will be freely transferable under the Securities Act except for shares issued
to any shareholder who may be deemed to be an "affiliate" of Peoples for
purposes of Rule 145 under the Securities Act as of the date of the Meeting.
Affiliates may not sell their shares of SunTrust 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 Peoples generally include individuals or entities
that control, are controlled by or under common control with Peoples and may
include certain officers and directors of Peoples as well as principal
shareholders of Peoples. Peoples has agreed in the Agreements to use its best
efforts to cause each director, executive officer and other person who is an
affiliate of Peoples to enter into an agreement with SunTrust providing that
such person will not sell, pledge, transfer or otherwise dispose of shares of
Peoples Common Stock owned by such person or SunTrust Common Stock to be
received by such person in the Merger, except in compliance with the
applicable provisions of the Securities Act and the rules and regulations
thereunder.
Regulatory Approvals
Consummation of the Merger is subject to, and conditioned upon: (i)
receipt of the approvals from the Federal Reserve, the FDIC and the Florida
Banking Department; and (ii) the failure to interpose objections thereto by
the Justice Department and any other pertinent supervisory and regulatory
authorities. Applications were submitted to the Federal Reserve and the
Florida Banking Department on December 22, 1994 and the FDIC on December 23,
1994. As of the date hereof, the Federal Reserve and the Florida Banking
Department have approved the Transaction. FDIC approval is pending.
The BHC Act provides that the FRB will not approve a transaction (a)
which would result in a monopoly, or which would be in furtherance of any
combination or conspiracy to monopolize or to attempt to monopolize the
business of banking in any part of the United States; or (b) the effect of
which in any section of the country may be substantially to lessen
competition, or to tend to create a monopoly, or which in any other manner
would be in restraint of trade, unless the FRB finds that the anticompetitive
effects of the proposed transaction are clearly out-weighed in the public
interest by the probable effect of the transaction in meeting the convenience
and needs of the community to be served. In conducting its review of any
application for approval, the FRB is required to consider the financial and
managerial resources and future prospects of the company or companies and the
banks concerned, and the convenience and needs of the communities to be
served. The BHC Act also requires the FRB to notify the Attorney General of
the United States of the approval of any transaction. Any action brought
under the antitrust laws by the Attorney General (acting through the
Department of Justice) arising out of any transaction must be commenced by
the Department of Justice prior to the earliest date the transaction could be
consummated, which may be up to 30 days after the FRB approval. The BHC Act
further requires that consummation of approved acquisitions or mergers be
delayed for a period of anywhere from 15 to 30 days following the date of FRB
approval during which time complaining parties may obtain a review of the
FRB's order by filing a petition requesting that the order be set aside in
the United States Court of Appeals for the District of Columbia Circuit, or
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in the United States Court of Appeals for the circuit in which the
complaining party has its principal place of business. The waiting period is
generally 30 days. However, the waiting period can be reduced to 15 days if
the FRB has not received any adverse comments from the Attorney General
relating to the competitive factors and the Attorney General has consented to
such shorter waiting period. If no action based on the antitrust laws is
commenced before the termination of the waiting period, the acquisition or
merger may not be attacked thereafter in any judicial proceeding on the
ground that it alone and of itself constituted a violation of any antitrust
laws other than Section 2 of the Sherman Antitrust Act.
The BHC Act discussed above provides for the publication of notices and
the opportunity for administrative hearings relating to the federal or state
filings noted above and permits interested parties to intervene in the
proceedings. If interested parties intervene, administrative and judicial
proceedings relating to both federal and state filings could substantially
delay the regulatory approvals required for consummation of the Merger.
FDIC
Under Section 18(c) of the Federal Deposit Insurance Act, sometimes
known as the Bank Merger Act, written approval of the FDIC must be obtained
before any insured bank may merge with and assume the depository liabilities
of another insured bank if the surviving or resulting bank is not to be a
member of the Federal Reserve System. Similar approval is also required
wherever any insured bank seeks to merge with a non-insured institution. The
process is initiated by the filing of an application with the Regional Office
of the FDIC for the region in which each subject depository institution is
located, which is thereafter considered by such agency to determine the
potential impact of the merger upon certain defined competitive factors,
including the affected geographic and product markets, the public interest
and the likelihood of the merger substantially lessening competition.
Inquiries are required to be made by the reviewing agency of the Department
of Justice and the other bank regulatory agencies, principally to ensure the
application of uniform standards of review, and, once approval has been
issued the applicable merger may not be completed until the expiration of an
addition thirty (30) day period. Since Peoples is an independent state
chartered bank, it must also file a separate application with the Florida
Banking Department seeking approval to consummate the transaction.
There can be no assurance that the regulatory authorities described
above will approve the Merger, and if the Merger is approved, there can be no
assurance as to the date of such approval. There can also be no assurance
that any such approvals will not contain a condition or requirement which
causes such approvals to fail to satisfy the conditions to consummation of
the Merger set forth in the Agreements. There can likewise be no assurance
that the Department of Justice will not challenge the Merger, or if such a
challenge is made, as to the result thereof.
Certain Federal Income Tax Consequences
The federal income tax discussion set forth in this section is included
for general information only. Peoples Shareholders should consult their own
tax advisers as to the particular tax consequences of the Merger to them,
including the effect of state and local taxes.
General Tax Consequences of the Merger
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It is intended that for federal income tax purposes the Merger will be
treated as a reorganization within the meaning of Section 368 of the Code,
and that, accordingly, (i) no gain or loss will be recognized by either
SunTrust or Peoples as a result of the Merger; (ii) no gain or loss will be
recognized by the Peoples Shareholders upon the receipt of SunTrust Common
Stock in exchange for Peoples Common Stock in connection with the Merger
(except as discussed below with respect to cash received in lieu of a
fractional share interest in SunTrust Common Stock); (iii) the tax basis of
the SunTrust Common Stock to be received by the Peoples Shareholders in
connection with the Merger will be the same as the basis in the Peoples
Common Stock surrendered in exchange therefor (reduced by any amount
allocable to a fractional share interest for which cash is received); and
(iv) the holding period of the SunTrust Common Stock to be received by the
PeoplesShareholders in connection with the Merger will include the holding
period of the Peoples Common Stock surrendered in exchange therefor, provided
that the Peoples Common Stock is held as a capital asset at the Effective
Date. Gain or loss will be recognized for federal income tax purposes with
respect to any Cash Amount received by a Peoples Shareholder. Consummation of
the Merger is dependent upon, among other conditions, receipt by SunTrust and
Peoples of an opinion of King & Spalding, SunTrust's tax counsel, dated as of
the Effective Date, substantially to this effect.
Consequences of Receipt of Cash in Lieu of Fractional Shares
A Peoples Shareholder who is entitled to receive cash in lieu of a
fractional share interest of SunTrust Common Stock in connection with the
Merger will recognize as of the Effective Date gain or loss equal to the
difference between such cash amount and the shareholder's basis in the
fractional share interest. Any gain or loss recognized will be capital gain
or loss if the Peoples Common Stock is held by such shareholder as a capital
asset at the Effective Date.
THE DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY.
IT DOES NOT ADDRESS THE STATE, LOCAL OR FOREIGN TAX ASPECTS OF THE MERGER.
THE DISCUSSION AND THE OPINIONS OF COUNSEL DESCRIBED ABOVE ARE BASED ON
CURRENTLY EXISTING PROVISIONS OF THE INTERNAL REVENUE CODE, EXISTING TREASURY
REGULATIONS THEREUNDER, AND CURRENT ADMINISTRATIVE RULINGS AND COURT
DECISIONS. THE OPINIONS OF COUNSEL DESCRIBED ABOVE ARE NOT BINDING UPON THE
INTERNAL REVENUE SERVICE, AND NO RULINGS OF THE INTERNAL REVENUE SERVICE WILL
BE SOUGHT OR OBTAINED. THERE IS NO ASSURANCE THAT THE INTERNAL REVENUE
SERVICE WILL AGREE WITH THE FOREGOING DISCUSSION OR THE OPINIONS DESCRIBED
ABOVE. ALL OF THE FOREGOING ARE SUBJECT TO CHANGE AND ANY SUCH CHANGE COULD
AFFECT THE CONTINUING VALIDITY OF THIS DISCUSSION AND THE OPINIONS. BECAUSE
OF THE COMPLEXITIES OF THE TAX LAWS, EACH PEOPLES SHAREHOLDER SHOULD CONSULT
HIS OR HER OWN TAX ADVISOR WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF
THE MERGER TO HIM OR HER, INCLUDING THE APPLICATION AND EFFECT OF STATE,
LOCAL AND FOREIGN TAX LAWS.
Expenses
All expenses incurred by or on behalf of the parties in connection with
the Agreements and the transactions contemplated by the Agreements are to be
borne by the party incurring the expense. Notwithstanding the foregoing, if
the Agreements are terminated by SunTrust or Peoples because of the willful
breach by the other of any representation, warranty, covenant, undertaking or
restriction contained therein, then the breaching party will pay all such
cost and expenses incurred by the non-breaching party.
30
<PAGE>
Accounting Treatment
It is anticipated that the Merger will be accounted for using the
purchase method of accounting for financial reporting purposes.
NYSE Listing
The SunTrust Common Stock is listed on the NYSE. The Peoples Common
Stock is not traded on any exchange. The SunTrust Common Stock issued to the
Peoples Shareholders pursuant to the Agreements will be listed on the NYSE.
31
<PAGE>
BUSINESS OF SUNTRUST
SunTrust is a regional bank holding company headquartered at 25 Park
Place, N.E., Atlanta, Georgia 30303, telephone number (404) 588-7711. The
three principal subsidiaries of SunTrust are Sun Banks, Inc., headquartered
in Orlando, Florida ("SunBanks"), Trust Company of Georgia, headquartered in
Atlanta, Georgia ("Trust Company"), and Third National Corporation,
headquartered in Nashville, Tennessee ("Third National"). At December 31,
1994, SunTrust had consolidated total assets of $42.7 billion, consolidated
loans of $28.5 billion, consolidated deposits of $32.2 billion, consolidated
realized shareholders' equity of $2.9 billion and consolidated total
shareholders equity of $3.5 billion. SunBanks owns all the outstanding
capital stock of 14 subsidiary banks that operate in Florida. Trust Company
owns all the outstanding capital stock of 9 subsidiary banks that operate in
Georgia. Third National owns all the outstanding capital stock of 6
subsidiary banks that operate in Tennessee or Alabama.
SunTrust, through its subsidiary banks, conducts a broad range of
commercial banking activities, including accepting demand, time and savings
deposits, making both secured and unsecured business and consumer loans and
leases, extending commercial lines of credit, issuing and servicing credit
cards and certain other types of revolving credit accounts, providing
commercial factoring services, cash management services, investment
counseling, safe deposit services, personal and corporate trust and other
fiduciary services and engaging in leasing, mortgage banking, correspondent
banking, international banking, investment banking, trading in U.S.
government securities and municipal bonds and underwriting certain types of
general obligation municipal bonds.
For a more complete description of the business of SunTrust and selected
financial data, supplemental financial information, SunTrust's management
discussion and analysis of financial conditions and results of operations,
please see SunTrust's Annual Report for the year ended December 31, 1994
delivered with this Proxy Statement.
BUSINESS OF PEOPLES
Through its four locations in Florida, Peoples provides retail and
commercial lending services typical of those offered by other community
banks. For retail customers, Peoples offers a full range of depository
products including regular and money market checking accounts, regular,
special and money market savings accounts; various types of certificates of
deposit and Individual Retirement Accounts. The principal lending activity of
Peoples historically has been the origination of commercial, real estate and
conventional residential mortgage loans. Peoples also originates conventional
mortgage loans on multi-unit dwellings and other commercial properties, home
equity loans, home investment loans and consumer loans. Peoples makes loans
primarily in Pasco and Pinellas Counties, Florida. Peoples does not have a
trust department.
32
<PAGE>
PEOPLES STATE BANK
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following analysis presents certain financial and other information
concerning Peoples State Bank. It should be read in conjunction with the
audited financial statements (including the notes thereto) included elsewhere
in this Prospectus.
<PAGE>
<TABLE>
PEOPLES STATE BANK - SUMMARY CONDENSED FINANCIAL INFORMATION - HISTORICAL
<CAPTION>
Percent
Year Ended December 31 Increase/(Decrease)
---------------------------------------------------------- --------------------
(Dollars in thousands except per share data) 1994 1993 1992 1991 1990 1994-1993 1993-1992
---------- ---------- ---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue from earning assets $6,942 $5,822 $6,107 $6,079 $5,357 19.24 % (4.67)%
Interest expense 2,875 2,379 2,768 3,374 3,239 20.85 % (14.05)%
---------- ---------- ---------- ---------- ---------- --------- ---------
Gross interest margin 4,067 3,443 3,339 2,705 2,118 18.12 % 3.11 %
Provision for loan losses 139 307 502 262 220 (54.72)% (38.84)%
---------- ---------- ---------- ---------- ---------- --------- ---------
Net interest margin 3,928 3,136 2,837 2,443 1,898 25.26 % 10.54 %
Noninterest revenues 505 355 344 426 219 42.25 % 3.20 %
Noninterest expenses (2,703) (2,638) (2,376) (1,972) (1,564) 2.46 % 11.03 %
---------- ---------- ---------- ---------- ---------- --------- ---------
Income before income taxes 1,730 853 805 897 553 102.81 % 5.96 %
Applicable income taxes 580 272 336 343 230 113.24 % (19.05)%
---------- ---------- ---------- ---------- ---------- --------- ---------
Net income before change in accounting principles 1,150 581 469 554 323 97.93 % 23.88 %
Change in accounting - 176 - - - (100.00)% -
---------- ---------- ---------- ---------- ---------- --------- ---------
Net income $1,150 $757 $469 $554 $323 51.92 % 61.41 %
========== ========== ========== ========== ========== ========= =========
Per common share
Net income $2.77 $1.86 $1.16 $1.39 $0.81 49.35 % 60.22 %
========== ========== ========== ========== ========== ========= =========
Cash dividends declared - - - - - - -
========== ========== ========== ========== ========== ========= =========
Average common shares outstanding 415 408 405 398 398 1.72 % 0.74 %
========== ========== ========== ========== ========== ========= =========
Total assets $123,014 $83,948 $73,407 $68,803 $56,982 46.54 % 14.36 %
========== ========== ========== ========== ========== ========= =========
</TABLE>
33
<PAGE>
PEOPLES STATE BANK
RESULTS OF OPERATIONS
In the year ended December 31, 1994, Peoples reported earnings per share
of common stock of $2.77 versus $1.86 for 1993 and $1.16 in 1992. Net income
increased to $1.2 million in 1994 from $757 thousand in 1993 and $469
thousand in 1992. Earnings were depressed in 1992 as loan quality problems
required an abnormally high provision for loan losses. By 1994, loan quality
had improved substantially and the provision was decreased to $139 thousand.
The return on average assets increased to 1.18% in 1994 from 0.66% in 1992
and the return on average equity was up to 17.76% in 1994 from 8.61% in 1992.
Net income for 1993 was helped by a $176 thousand reduction in income tax
expense related to the adoption Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 109 (Statement 109).
NET INTEREST INCOME
Average earning assets for 1994 increased to $92.2 million from $73.1
million in 1993 and $67.0 million in 1992. The mix of earning assets also
changed over the same time period. Most of the growth in 1994 came from the
acquisition of a $33.8 million deposit office from Community First Bank in
September 1994. $4.1 million in residential real estate loans were also
acquired and the remainder of the funds were invested in U.S. Treasury
securities with maturities ranging from six months to 36 months. As a result,
investment securities, as a percent of total earnings assets increased from
16.1% of total earning assets at December 31, 1992 to 29.4% at
December 31, 1994.
34
<PAGE>
PEOPLES STATE BANK
Table 2 presents the mix of earning assets at December 31, 1994, 1993 and
1992. Table 3 presents three year average balance sheets and an analysis of
interest yields and rates. Table 4 presents changes in interest income and
interest expense due to changes in volume and rate.
<TABLE>
TABLE 2 - COMPOSITION OF AVERAGE EARNING ASSETS
<CAPTION>
Year ended December 31
----------------------------------------------------------------
1994 1993 1992
-------------------- -------------------- --------------------
Average Percent Average Percent Average Percent
balance of total balance of total balance of total
(Dollars in thousands) --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Loans net of unearned income $61,503 66.70% $53,841 73.64% $53,864 80.39%
Investment securities <F1> 27,069 29.35% 16,034 21.93% 10,759 16.06%
Other earning assets <F2> 3,642 3.95% 3,234 4.43% 2,378 3.55%
--------- --------- --------- --------- --------- ---------
Total $92,214 100.00% $73,109 100.00% $67,001 100.00%
========= ========= ========= ========= ========= =========
<F1> Includes investment securities and interest bearing deposits, excludes
Federal funds.
<F2> Includes Federal funds.
</TABLE>
35
<PAGE>
PEOPLES STATE BANK
<TABLE>
TABLE 3 - YIELDS ON AVERAGE EARNING ASSETS AND RATES ON AVERAGE
INTEREST-BEARING LIABILITIES
<CAPTION>
1994 1993 1992
------------------------- ------------------------- -------------------------
Average Revenue/ Yield/ Average Revenue/ Yield/ Average Revenue/ Yield/
(Dollars in thousands; yields on Balance Expense Rate Balance Expense Rate Balance Expense Rate
taxable-equivalent basis) --------- -------- ------ --------- -------- ------ --------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Earning assets -
Loans, net of unearned income $61,503 $5,355 8.71 % $53,841 $4,825 8.96 % $53,864 $5,322 9.88 %
Investment securities:
Taxable securities 26,255 1,397 5.32 15,444 866 5.61 10,117 679 6.71
Tax-exempt securities 814 67 8.23 590 55 9.32 642 36 5.61
--------- -------- ------ --------- -------- ------ --------- -------- ------
Total investment securities 27,069 1,464 5.41 16,034 921 5.74 10,759 715 6.65
Federal funds sold 3,642 146 4.01 3,234 96 2.97 2,378 83 3.49
--------- -------- ------ --------- -------- ------ --------- -------- ------
Total earning assets 92,214 6,965 7.55 73,109 5,842 7.99 67,001 6,120 9.13
Cash and other assets 6,388 ======== ====== 5,551 ======== ====== 4,842 ======== ======
Less allowance for loan losses (900) (803) (602)
--------- --------- ---------
Total assets $97,702 $77,857 $71,241
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest-bearing liabilities:
Interest-bearing demand deposits $21,912 $441 2.01 % $18,439 $401 2.17 % $15,225 $451 2.96 %
Savings deposits 11,140 276 2.48 9,349 254 2.72 5,426 185 3.41
Time deposits 38,137 1,767 4.63 29,311 1,409 4.81 38,429 1,724 4.49
Certificates of deposit $100,000 or more 6,839 316 4.62 6,768 315 4.65 7,440 407 5.47
Federal funds purchased and securities
sold under agreements to repurchase 1,792 75 4.19 8 - - 24 1 4.17
--------- -------- ------ --------- -------- ------ --------- -------- ------
Total interest-bearing liabilities 79,820 2,875 3.60 63,875 2,379 3.72 66,544 2,768 4.16
--------- ======== ====== --------- ======== ====== --------- ======== ======
Incremental interest spread 3.95 % 4.27 % 4.97 %
====== ====== ======
Noninterest-bearing liabilities:
Other liabilities 11,407 7,934 (749)
Shareholders' equity 6,475 6,048 5,446
--------- --------- ---------
Total liabilities and
shareholders' equity $97,702 $77,857 $71,241
========= ========= =========
Gross interest margin/spread on a
taxable equivalent basis 4,090 4.44 % 3,463 4.74 % 3,352 5.00 %
Taxable equivalent adjustment:
Loans - - -
Investment securities 23 20 13
Other earning assets - - -
-------- -------- --------
Total taxable equivalent adjustment $23 $20 $13
======== ======== ========
Gross interest margin $4,067 $3,443 $3,339
======== ======== ========
</TABLE>
36
<PAGE>
PEOPLES STATE BANK
<TABLE>
TABLE 4 - VOLUME AND YIELD RATE VARIANCES
<CAPTION>
1994 Compared to 1993 1993 Compared to 1992
Change due to Change due to
------------------------------- -------------------------------
Volume Yield\Rate Net Volume Yield\Rate Net
(In thousands on a taxable-equivalent basis) --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Revenue earned on loans, net of unearned income $687 ($157) $530 ($2) ($495) ($497)
--------- --------- --------- --------- --------- ---------
Investment securities:
Taxable securities 606 (75) 531 357 (170) 187
Tax-free securities 21 (9) 12 (3) 22 19
--------- --------- --------- --------- --------- ---------
Total investment securities 627 (84) 543 354 (148) 206
--------- --------- --------- --------- --------- ---------
Federal funds sold and securities purchased
under agreements to resell 12 38 50 30 (17) 13
--------- --------- --------- --------- --------- ---------
Total earning assets 1,326 (203) 1,123 382 (660) (278)
--------- --------- --------- --------- --------- ---------
Interest paid on:
Interest-bearing demand deposits 75 (35) 40 95 (145) (50)
Savings deposits 49 (27) 22 134 (65) 69
Time deposits 425 (67) 358 (409) 94 (315)
Certificates of deposit $100,000 or more 3 (2) 1 (37) (55) (92)
Federal funds purchased and agreements
to repurchase 75 - 75 (1) - (1)
--------- --------- --------- --------- --------- ---------
Total interest bearing liabilities 627 (131) 496 (218) (171) (389)
--------- --------- --------- --------- --------- ---------
Gross interest margin on a
taxable equivalent basis $699 ($72) $627 $600 ($489) $111
========= ========= ========= ========= ========= =========
Less taxable equivalent adjustment 3 7
--------- ---------
Gross interest margin $624 $104
========= =========
</TABLE>
37
<PAGE>
PEOPLES STATE BANK
NONINTEREST REVENUES AND NONINTEREST EXPENSES
Table 5 presents noninterest revenue and noninterest expense for the
five years ended December 31, 1994. Most of the increase in other noninterest
revenue in 1994 is from $86 thousand received from Pasco County in connection
with the settlement of a lawsuit. In noninterest expenses, there was a large
swing in other real estate owned, net. In 1992 and 1993 there were expenses
of $321 thousand and $100 thousand, respectively while there were net
recoveries of $52 thousands on the sale of other real estate in 1994.
<TABLE>
TABLE 5 - NONINTEREST REVENUES AND NONINTEREST EXPENSES
<CAPTION>
For the year ended December 31,
-----------------------------------------------------
1994 1993 1992 1991 1990
(In thousands) --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Noninterest revenues:
Service charges on demand accounts $279 $248 $258 $257 $168
Gain on sale of investments, net 3 1 - 65 -
Other 223 106 86 104 51
--------- --------- --------- --------- ---------
Total $505 $355 $344 $426 $219
========= ========= ========= ========= =========
Noninterest expenses:
Compensation $1,383 $1,230 $971 $887 $770
Occupancy 219 229 245 232 215
Data processing 115 132 109 95 74
Advertising 82 90 54 49 35
Real estate taxes 56 78 54 73 63
Supplies 69 71 44 48 55
Professional fees 118 110 74 95 40
Insurance, including regulatory
assessment 290 234 188 166 98
Correspondent bank charges 108 90 89 76 59
Other real estate owned, net (52) 100 321 56 -
Other 315 274 227 195 154
--------- --------- --------- --------- ---------
Total $2,703 $2,638 $2,376 $1,972 $1,563
========= ========= ========= ========= =========
</TABLE>
38
<PAGE>
PEOPLES STATE BANK
INVESTMENT SECURITIES
Table 6 presents the book value of investment securities for the last
three years. Investment securities increased substantially from $11.6 million
at December 31, 1992 to $44.7 million at December 31, 1994. $30 million of
the increase in U.S. Treasury securities in 1994 came from investing the
funds obtained in the branch acquisition from Community First Bank.
TABLE 6 - TOTAL SECURITIES
Book value
at December 31,
----------------------------
(In thousands) 1994 1993 1992
-------- -------- --------
Total securities:
U.S. Treasury and federal agency securities $42,141 $16,441 $8,133
Other securities 2,527 2,386 3,513
-------- -------- --------
Total $44,668 $18,827 $11,646
======== ======== ========
LOANS
Table 7 details the Bank's loan portfolio at year-end for the last five
years. The composition of the portfolio has experienced identifiable trends
over the last five years. Commercial loans have declined from 15.1% of the
total portfolio at December 31, 1990 to 6.9% at year-end 1994. Over the same
time period residential real estate loans have gone from 18.5% of the
portfolio to 31.7%. Commercial real estate and other consumer loans have
remained relatively unchanged as a percent of the total portfolio. $4.1
million of the increase in residential real estate loans in 1994 was the
result of loans purchased from Community First Bank. These loans carried an
adjustable rate with an average yield of 7-3/4%.
<TABLE>
TABLE 7 - COMPOSITION OF LOAN PORTFOLIO
<CAPTION>
At December 31
-----------------------------------------------------
1994 1993 1992 1991 1990
(In thousands) --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Commercial, financial and agriculture $4,836 $4,214 $6,323 $7,355 $6,652
--------- --------- --------- --------- ---------
Commercial real estate:
Mortgage 35,429 32,858 30,318 28,682 23,584
Construction 2,112 504 761 437 997
--------- --------- --------- --------- ---------
Total commercial real estate 37,541 33,362 31,079 29,119 24,581
--------- --------- --------- --------- ---------
Consumer:
Residential first mortgages 22,355 14,573 12,741 13,314 8,132
Other residential mortgages 838 824 650 589 398
Other consumer 4,975 4,548 5,239 4,388 4,345
--------- --------- --------- --------- ---------
Total consumer 28,168 19,945 18,630 18,291 12,875
--------- --------- --------- --------- ---------
Total 70,545 57,521 56,032 54,765 44,108
Less unearned income 217 201 187 207 187
--------- --------- --------- --------- ---------
Total loans, net $70,328 $57,320 $55,845 $54,558 $43,921
========= ========= ========= ========= =========
</TABLE>
39
<PAGE>
PEOPLES STATE BANK
The Bank extends credit to its customers structured either as floating
or fixed rate instruments. Of the Bank's total portfolio of $70.5 million at
December 31, 1994, 69.8% carry a variable rate. Of these, 44% will reprice in
one year or less (primarily commercial loans tied to prime and one year ARM
residential loans) and 56% will reprice in five years or less. Less than 4%
of the total portfolio contains repricing dates greater than five years in
the future. Table 3 contains repricing data for selected loan categories.
ASSET QUALITY
Nonperforming assets include non-accrual loans, loans restructured
because of the debtors financial difficulties, foreclosed properties and
repossessions. Interest accrual is discontinued when it appears that future
collection of principal or interest according to the contractual terms may be
doubtful or when a loan becomes contractually past due ninety days or more
with respect to principal or interest. Table 8 presents nonperforming assets
and loans past due 90 days or more for the last five year-ends.
<TABLE>
TABLE 8 - NONPERFORMING ASSETS
<CAPTION>
1994 1993 1992 1991 1990
(in thousands) --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans $49 $1,256 $1,371 $1,250 $397
Restructured loans - - - - -
--------- --------- --------- --------- ---------
Total nonperforming loans 49 1,256 1,371 1,250 397
Foreclosed properties 250 244 722 773 24
Repossessions - - - - -
--------- --------- --------- --------- ---------
Total nonperforming assets $299 $1,500 $2,093 $2,023 $421
========= ========= ========= ========= =========
Nonperforming assets to total loans, net of
unearned income, foreclosed properties
and repossessions 0.43% 2.62% 3.75% 3.85% 0.96%
========= ========= ========= ========= =========
Accruing loans 90 days past due - - - - -
========= ========= ========= ========= =========
</TABLE>
The Bank experience significant loan quality problems over the last five
years which first began to surface in 1991. Most of the problems related to
commercial loans and more specifically loans related to restaurants and
commercial vehicle floor plans. Management has worked diligently to correct
the situation and has been reducing its exposure to commercial loans and
increased lending to secured residential real estate loans. Table 9 presents
selected information with respect to foreclosed property at December 31, 1994.
40
<PAGE>
PEOPLES STATE BANK
<TABLE>
TABLE 9 - COMPOSITION OF FORECLOSED PROPERTY
<CAPTION>
At December 31, 1994
-------------------------------
Carrying Percent Appraised Coverage
(In thousands) Value of total value ratio
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Land/lots $30 12.00% $60
Commercial building 220 88.00% 230
--------- --------- ---------
$250 100.00% $290
========= ========= =========
Allowance for foreclosed property losses $250 $290 116.00%
========= ========= =========
</TABLE>
ALLOWANCE FOR LOAN LOSSES
At December 31, 1994 the allowance for loan losses was $900 thousand, or
1.28% of total loans, compared to $911 thousand, or 1.59% at December 31,
1993 and $924 thousand, or 1.65% at December 31, 1992. Although the allowance
as a percent of total loans has decreased since 1992, the coverage of
nonperforming assets has increased from 44.2% in 1992 to 301.0% at year-end
1994 as a result of improving credit quality. Charge-offs were abnormally
high in 1993 as the Bank charged off many of the problems discovered
beginning in late 1991. Management considers the allowance to be adequate at
December 31, 1994 although adequacy of the reserve is determinable only on an
approximate basis since estimation of the magnitude and timing of loan losses
involves subjective judgment.
41
<PAGE>
PEOPLES STATE BANK
<TABLE>
TABLE 10 - ALLOWANCE FOR LOAN LOSSES
<CAPTION>
Year Ended December 31
------------------------------------------------
1994 1993 1992 1991 1990
(In thousands) -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance at beginning of period $911 $924 $520 $437 $263
-------- -------- -------- -------- --------
Loans charged off:
Commercial, financial and agricultural 134 80 94 114 23
Commercial real estate mortgage 106 237 - 59 19
Commercial real estate construction - - - - -
Installment 1 16 3 6 3
-------- -------- -------- -------- --------
Total charge-offs 241 333 97 179 45
-------- -------- -------- -------- --------
Recoveries of loans previously charged off:
Commercial, financial and agricultural 14 3 - - -
Commercial real estate mortgage - - - - -
Commercial real estate construction 74 10 - - -
Installment 3 - - - -
-------- -------- -------- -------- --------
Total recoveries 91 13 - - -
-------- -------- -------- -------- --------
Net charge-offs 150 320 97 179 45
-------- -------- -------- -------- --------
Addition to allowance charged to expense 139 307 501 262 219
-------- -------- -------- -------- --------
Balance at end of period $900 $911 $924 $520 $437
======== ======== ======== ======== ========
Loans net of unearned income,
outstanding for the period $70,328 $57,320 $55,845 $54,558 $43,921
======== ======== ======== ======== ========
Average loans net of unearned income,
outstanding for the period $61,503 $53,841 $53,864 $48,204 $38,333
======== ======== ======== ======== ========
Ratios:
Allowance at end of period to loans,
net of unearned income 1.28% 1.59% 1.65% 0.95% 0.99%
Allowance at end of period to average
loans net of unearned income 1.46% 1.70% 1.72% 1.08% 1.15%
Allowance at end of period to
nonperforming loans 1859.18% 72.53% 67.40% 41.60% 110.08%
Allowance at end of period to
nonperforming assets 301.00% 60.73% 44.15% 25.70% 103.80%
Net charge-offs to average loans,
net of unearned income 0.24% 0.59% 0.18% 0.37% 0.12%
Net charge-offs to allowance at
end of period 16.67% 34.91% 10.50% 34.42% 10.30%
Recoveries to prior year charge-offs 28.62% 13.40% - - -
</TABLE>
42
<PAGE>
PEOPLES STATE BANK
TABLE 11 - ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
At December 31, 1994
--------------------------
Percentage
of loans in
category
Allowance to total
allocation loans
(In thousands) ----------- -----------
Commercial $85 9.38%
----------- -----------
Commercial real estate:
Mortgage 458 50.69%
Construction - -
----------- -----------
Total commercial real estate 458 50.69%
----------- -----------
Consumer:
Residential first mortgage 116 32.87%
Other residential mortgages - -
Other consumer 64 7.06%
----------- -----------
Total consumer 180 39.93%
----------- -----------
Unfunded commitments - -
Standby letters of credit - -
Unallocated 177 -
----------- -----------
$900 100.00%
=========== ===========
DEPOSITS
Table 12 presents average deposits for 1990 through l994. Non-interest
bearing demand deposits over the five years have ranged from 10.4% to 11.3% of
total deposits. Interest-bearing demand deposits have ranged between 19.1% and
24.9% of total deposits. Retail certificates of deposit have been the largest
funding source representing between 53.9% and 39.2% of total deposits.
Certificates of deposit peaked in 1992, then declined in 1993 as interest
rates declined, and rose again in 1994 as interest rates rose. The large
increase in deposits in 1994 came from a branch acquisition from Community
First Bank.
43
<PAGE>
PEOPLES STATE BANK
<TABLE>
TABLE 12 - AVERAGE DEPOSITS
<CAPTION>
Year Ended December 31,
-----------------------------------------------------
(In thousands) 1994 1993 1992 1991 1990
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Noninterest-bearing demand $9,969 $8,228 $6,138 $5,467 $4,836
Interest-bearing demand 21,912 18,439 15,225 12,089 8,905
Savings 11,140 9,349 5,426 2,762 1,523
Time:
Retail 36,654 28,257 37,370 28,435 25,185
Individual retirement accounts 1,383 954 995 897 542
Other 100 100 64 - -
--------- --------- --------- --------- ---------
Total time 38,137 29,311 38,429 29,332 25,727
--------- --------- --------- --------- ---------
Certificates of deposit -
$100,000 or more 6,839 6,768 7,440 7,625 5,704
--------- --------- --------- --------- ---------
Total $87,997 $72,095 $72,658 $57,275 $46,695
========= ========= ========= ========= =========
</TABLE>
INTEREST RATE SENSITIVITY
Interest rate sensitivity is the relationship between market interest
rates and net interest income due to the pricing of certain assets and
liabilities. If more assets than liabilities reprice within a given period,
an asset sensitive position is created. When an institution is in an asset
sensitive position, a decline in market rates will have a negative impact on
net interest income. Alternatively, when liabilities reprice more quickly
than assets in a given period, a liability sensitive position exists and a
decline in interest rates will increase net interest income. One way to
reduce the adverse effect of market rate fluctuations on net interest income
is to minimize the difference between rate sensitive assets and liabilities,
referred to as gap, by maintaining a balanced interest rate sensitivity
position. Matching interest sensitivity will reduce some of the risks from
adverse changes in market rates; it will not guarantee a stable net interest
spread because yields and rates may change simultaneously but by different
amounts. These changes in market spreads could materially affect the overall
net interest spread even if assets and liabilities were perfectly matched.
The Bank, through its Asset/Liability Committee, monitors its interest
sensitivity position and provides guidance in the management of such position.
It is the Bank's objective to maintain a reasonably balanced position with
respect to interest rate sensitivity of assets and liabilities in order to
reduce the risk of an unfavorable impact to the income statement and maintain
a more stable net interest spread. The Bank's interest sensitivity position
at December 31, 1994, is presented in Table 13. It should be noted that the
interest sensitivity position is presented at a point in time and can be
altered by management as changing conditions dictate.
44
<PAGE>
PEOPLES STATE BANK
<TABLE>
TABLE 13 - INTEREST RATE SENSITIVITY ANALYSIS
<CAPTION>
91 days to Due after Due after
90 days one year 1-5 years 5 years Total
(Dollars in thousands) ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Interest sensitive assets:
Investment securities $1,977 $14,716 $25,801 $2,174 $44,668
Loans, net of unearned income 18,736 16,151 32,265 3,176 70,328
---------- ---------- ---------- ---------- ----------
Total interest sensitive assets 20,713 30,867 58,066 5,350 114,996
---------- ---------- ---------- ---------- ----------
Interest sensitive liabilities:
Demand accounts 22,765 - - - 22,765
Savings accounts 12,826 - - - 12,826
Time deposits 6,377 18,856 27,603 - 52,836
Certificates of deposit over $100,000 3,938 2,747 2,674 - 9,359
Other borrowed money 5,673 - - - 5,673
---------- ---------- ---------- ---------- ----------
Total interest sensitive liabilities 51,579 21,603 30,277 - 103,459
---------- ---------- ---------- ---------- ----------
Rate sensitivity gap:
Dollar amount ($30,866) $9,264 $27,789 $5,350 $11,537
========== ========== ========== ========== ==========
Percent of total earning assets (149.02)% 30.01% 47.86% 10.03%
Cumulative dollar amount ($30,866) ($21,602) $6,187 $11,537
</TABLE>
<TABLE>
TABLE 14 - SELECTED LOAN SENSITIVITY TO CHANGES IN INTEREST RATES
<CAPTION>
At December 31, 1994
-----------------------------------------------------------
Repricing after
one year but Repricing
Repricing within five years after five years
in one ------------------- -------------------
year or Fixed Variable Fixed Variable
(In thousands) less Rate Rate Rate Rate Total
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial and agriculture $6,674 $4,680 - 277 51 $11,682
Real estate - construction 15,145 14,100 27,076 2,235 307 58,863
--------- --------- --------- --------- --------- ---------
Total $21,819 $18,780 $27,076 $2,512 $358 $70,545
========= ========= ========= ========= ========= =========
</TABLE>
45
<PAGE>
PEOPLES STATE BANK
LIQUIDITY
Liquidity is the ability to raise funds to support asset growth, meet
deposit withdrawals, fund customers' legitimate borrowing needs, satisfy
maturities of short-term borrowings, and maintain reserve requirements.
Liquidity needs can be met from either assets or liabilities. On the asset
side, the primary sources of liquidity are cash and due from banks, time
deposits with banks, federal funds sold and securities purchased under
agreements to resell, short-term marketable investment securities and
scheduled repayments and maturities of loans. On the liability side, the
principal sources of liquidity are deposit growth, the maturity distribution
of purchased funds and the accessibility to money and capital markets.
The Bank monitors its liquidity position continuously in relation to changes
in long-term and short-term interest rates. Maturity distribution and
interest sensitivity of assets and liabilities are adjusted in response to
those changes. The Bank has historically maintained adequate liquidity.
<TABLE>
TABLE 15 - SECURITIES RELATIVE MATURITIES AND WEIGHTED AVERAGE YIELDS
<CAPTION>
Due Due
Due after one but after five but Due
within one year within five years within ten years after 10 years
------------------- ------------------- ------------------- -------------------
Amount Yield Amount Yield Amount Yield Amount Yield
(Dollars in thousands) --------- -------- --------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total securities:
U.S. Treasury and federal
agency securities $13,789 5.20% $26,805 6.02% $1,918 5.56% - -
Other securities 120 4.10% 951 5.31% 270 5.97% 815 5.97%
--------- -------- --------- -------- --------- -------- --------- --------
Total $13,909 5.90% $27,756 6.00% $2,188 5.61% $815 5.97%
========= ======== ========= ======== ========= ======== ========= ========
Percent of total portfolio 31.20% 62.10% 4.90% 1.80%
========= ========= ========= =========
</TABLE>
TABLE 16 - MATURITY OF DEPOSITS $100,000 OR MORE
At December 31,
-------------------------------
(In thousands) 1994 1993 1992
--------- --------- ---------
Three months or less $3,938 $2,922 $2,872
Over three through twelve months 2,747 2,290 2,151
Over one year through five years 2,674 1,423 1,842
--------- --------- ---------
Total $9,359 $6,635 $6,865
========= ========= =========
46
<PAGE>
PEOPLES STATE BANK
CAPITAL
The Bank is required to maintain minimum amounts of capital to total
"risk weighted" assets, as defined by the banking regulators. At December 31,
1994, the Bank was required to have a minimum total capital to risk based
assets ratio of 8%. At December 31, 1994, the Bank's actual total capital to
risk based assets and equity capital ratios was 11.35%.
TABLE 17 - CAPITAL RATIOS
At December 31,
----------------------
1994 1993
(In thousands) ---------- ----------
Risk adjusted capital ratio:
Total assets $123,014 $83,948
Adjusted allowance for loan losses 900 911
Adjustment for risk weighting of balance sheet items (58,834) (28,640)
Adjustment for off-balance sheet items 5,524 3,535
Less certain intangible assets (487) -
---------- ----------
Total risk-adjusted assets 70,117 59,754
---------- ----------
Shareholders' equity 7,548 6,321
Less certain intangible assets (487) -
---------- ----------
Tier 1 capital 7,061 6,321
---------- ----------
Adjusted allowance for loan losses 900 911
Qualifying long term debt - -
---------- ----------
Tier 2 capital $7,961 $7,232
========== ==========
Tier 1 capital to total risk-adjusted assets 10.07% 10.58%
Total capital to total risk-adjusted assets 11.35% 12.10%
Other capital ratios:
Leverage 5.75% 8.12%
Equity to assets 6.14% 7.53%
47
<PAGE>
PEOPLES STATE BANK
<TABLE>
TABLE 18 - RATES OF INTERNAL CAPITAL GENERATION
<CAPTION>
At December 31,
-----------------------------------------------------
1994 1993 1992 1991 1990
(Dollars in thousands) --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Return on average assets 1.18% 0.97% 0.66% 0.88% 0.62%
Average equity to average assets 6.63% 7.77% 7.64% 7.63% 8.38%
Return on average equity 17.76% 12.52% 8.61% 11.59% 7.42%
Earnings retention ratio 100.00% 100.00% 100.00% 100.00% 100.00%
</TABLE>
48
<PAGE>
COMPARISON OF RIGHTS OF PEOPLES AND SUNTRUST SHAREHOLDERS
SunTrust is a business corporation organized under the Georgia Business
Corporation Code (the "GBCC"). Peoples is a bank organized under the Florida
Business Corporations Act and Chapter 658, Florida Statutes (the "Florida
Code"). Peoples Shareholders, whose rights as shareholders are currently
governed by the Florida Code and the Peoples Articles of Incorporation and By-
laws, will become, upon consummation of the Merger, shareholders of SunTrust.
Their rights as shareholders of SunTrust will be governed by the GBCC and the
SunTrust Articles of Incorporation and By-laws. Certain differences between
the rights of Peoples Shareholders and SunTrust Shareholders are summarized
below. The summary does not purport to be a complete statement of the rights
of Peoples Shareholders as compared with the rights of SunTrust Shareholders.
The identification of specific differences is not meant to indicate that
other equally or more significant differences do not exist. The summary is
qualified in its entirety by reference to the Florida Code, the GBCC, and the
respective Articles of Incorporation and By-laws of SunTrust and Peoples.
Changes in Control
SunTrust. Certain provisions of the SunTrust Articles of Incorporation
and By-laws may have the effect of preventing, discouraging or delaying any
change of control of SunTrust. These provisions include the authority to
issue preferred stock with such rights and privileges as the Board of
Directors may deem appropriate from time to time, provisions for the
classification of the SunTrust Board of Directors and provisions relating to
certain business combinations. In addition, the SunTrust By-laws require a
vote of two-thirds of the full Board of Directors following specified notice,
or of 75% of the full Board of Directors, in order to approve certain actions
relating to business combinations involving SunTrust, changes in the terms of
employment of the Chairman of the Board, President or Chief Executive Officer
of SunTrust and the designation of management nominees to the Board of
Directors of SunTrust. The authority of the Board of Directors to issue
preferred stock with such rights and privileges, including voting rights,
dividend, redemption and conversion rights, may enable the Board of Directors
to prevent a change in control despite a shift in ownership of SunTrust
Common Stock. The classification of the SunTrust Board of Directors pursuant
to which one-third of the directors of SunTrust are elected each year for a
three-year term, and the special Board of Directors voting provisions, may
delay the ability of dissatisfied SunTrust Shareholders or anyone who obtains
a controlling interest in SunTrust Common Stock to elect a new Board of
Directors and to exercise control of SunTrust. The provisions of the SunTrust
Articles of Incorporation relating to certain business combinations (the
"Fair Price Provisions") may have the effect of deterring or making more
difficult a change in control or acquisition of SunTrust.
The Fair Price Provisions contained in the SunTrust Articles of
Incorporation are summarized below. The Fair Price Provisions require that
certain business combinations involving an Interested Shareholder (as defined
in the Articles of Incorporation to include a person who beneficially owns
(as defined in the Articles of Incorporation) 10% or more of SunTrust Common
Stock) be approved by the holders of at least 75% of the outstanding shares
of SunTrust Common Stock, including the approval of the holders of at least
75% of the outstanding shares of SunTrust Common Stock that are not owned by
the Interested Shareholder, unless either 75% of the entire SunTrust Board of
Directors approves the transaction or certain minimum price criteria and
procedural safeguards are satisfied. These transactions include any merger or
consolidation of SunTrust into an Interested Shareholder or any affiliates
49
<PAGE>
thereof, any sale of more than $1 million in assets of SunTrust to an
Interested Shareholder or any affiliate thereof, any recapitalization or
reclassification of SunTrust securities or similar transaction increasing the
percentage of ownership by an Interested Shareholder or any proposal for the
liquidation of SunTrust.
The Fair Price Provisions require that a business combination involving
any Interested Shareholder which does not receive the required director or
shareholder vote must meet certain fair price criteria. Those criteria
require, among other things, that the second step consideration in a two-tier
bid be at least equal to the highest of the following four computations:
(i) the highest per share price (including brokerage commissions,
transfer taxes and soliciting dealers' fees) paid by the Interested
Shareholder for any shares of SunTrust Common Stock acquired by it (1) within
the two-year period immediately prior to the first public announcement of the
proposed business combination (the "Announcement Date") or (2) in the
transaction in which it became an Interested Shareholder;
(ii) the highest fair market value per share of SunTrust Common Stock
during the 30-day period ending on the Announcement Date or during the 30-day
period ending on the date on which the Interested Shareholder became an
Interested Shareholder;
(iii) the price per share equal to the highest fair market value per
share as determined in clause (ii) above, multiplied by the ratio of (1) the
highest per share price (including brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested Shareholder for any shares
of SunTrust Common Stock acquired during the two-year period preceding the
Announcement Date, to (2) the fair market value of the SunTrust Common Stock
on the date on which the Interested Shareholder made its first purchase of
shares of SunTrust Common Stock during the two-year period; and
(iv) the book value per share of SunTrust Common Stock on the last day
of the month preceding the consummation of the business combination
multiplied by the ratio of (1) the highest price per share paid by the
Interested Shareholder, as determined in clause (i) above, to (2) the book
value per share of SunTrust Common Stock on the last day of the month
preceding the date on which the highest price as determined pursuant to
clause (i) above was based.
In addition, the consideration paid for SunTrust Common Stock in a
business combination must be either cash or the same form of consideration
paid by the Interested Shareholder to acquire the largest number of shares of
SunTrust Common Stock previously acquired by it. Moreover, the Interested
Shareholder must not (i) have acquired, after having become an Interested
Shareholder, additional shares of SunTrust Common Stock, (ii) have received
the benefit of financial assistance from SunTrust or (iii) have made or
failed to make certain changes in SunTrust dividend payments.
The Fair Price Provisions are designed to discourage attempts to take
over SunTrust by utilizing two-tier pricing tactics or by acquiring less than
all of SunTrust's outstanding shares. The provisions were adopted in response
to the occurrence of non-negotiated attempts to take over publicly owned
corporations. These attempts typically involve the accumulation of a
substantial block of the target corporation's stock by the purchaser or a
tender offer by the purchaser to obtain a major stock interest in the target
corporation, followed by a merger or other reorganization of the acquired
company on terms determined entirely by the purchaser. The terms of these
50
<PAGE>
attempts may include two-tier pricing, which is the practice of paying cash
to acquire a controlling interest in a company and acquiring the remaining
equity interest by paying the remaining shareholders a price that is lower
than the price paid to acquire the controlling interest or by utilizing a
different form of consideration for payment to the remaining shareholders
than was used to purchase the controlling interest.
While the terms of such a non-negotiated takeover could be fair to
SunTrust Shareholders, negotiated transactions may result in more favorable
terms to SunTrust Shareholders because of factors such as timing of the
transaction, the tax effects on the shareholders and the fact that the nature
and amount of the consideration paid to all shareholders will be negotiated
by the parties at arms-length rather than dictated by the purchaser.
Although the federal securities laws and regulations applicable to
certain of the business combinations covered by the Fair Price Provisions
require that disclosure be made to shareholders of the terms of such a
transaction, these laws do not assure shareholders that the financial terms
of the business combination will be fair to them or that they can effectively
prevent its consummation. The Fair Price Provisions are intended to address
some of the effects of these gaps in federal and state laws and prevent some
of the potential inequities of certain acquisitions that involve two or more
steps. The Fair Price Provisions require that, in order to complete a
business combination that is not approved by a 75% vote of the entire
SunTrust Board of Directors, an Interested Shareholder must obtain the
affirmative vote of the holders of at least 75% of the outstanding SunTrust
Common Stock held by SunTrust Shareholders other than the Interested
Shareholder, or meet the minimum price and procedural requirements of the
Fair Price Provisions.
Due to the difficulties of complying with the requirements of the Fair
Price Provisions, the Fair Price Provisions generally may discourage attempts
to acquire control of SunTrust. As a result, holders of SunTrust Common Stock
may be deprived of an opportunity to sell their shares at a premium above the
market price. In addition, the Fair Price Provisions would give veto power to
the holders of a minority of SunTrust Common Stock with respect to certain
business combinations that are opposed by more than 25% of the SunTrust Board
of Directors, but which a majority of shareholders may believe to be
desirable and beneficial. Moreover, in any such business combination not
receiving the requisite approval of SunTrust Shareholders or of directors,
the minimum price provisions of the Fair Price Provisions, while providing
objective pricing criteria, could be arbitrary and not indicative of value.
The Articles of Incorporation of SunTrust also contain provisions (the
"Business Judgment Provisions") that require the SunTrust Board of Directors,
when evaluating certain offers to purchase the equity securities of SunTrust,
to consider certain factors in addition to the consideration offered in the
acquisition proposal in relation to the market price of SunTrust's securities
or assets. The factors include, among others, the estimate by the Board of
Directors of the future value of SunTrust as an independent entity, the
desirability of maintaining SunTrust as an independent entity and the impact
of the proposed transaction on SunTrust's employees and customers and upon
the communities in which SunTrust and its subsidiaries operate. The Peoples
Articles of Incorporation does not contain comparable provisions.
Peoples. The Florida Code restricts the amount of voting stock of a bank
that a person may acquire without the prior approval of banking regulators.
The overall effect of such laws is to make it more difficult to acquire a
bank by tender offer or similar means than it might be to acquire control of
another type of corporation. Consequently, Peoples Shareholders are less
51
<PAGE>
likely to benefit from the rapid increases in stock prices that often result
from tender offers or similar efforts to acquire control of other companies.
Pursuant to the Florida Code, no person or group of persons may,
directly or indirectly or acting by or through one or more persons, purchase
or acquire a controlling interest in any bank which would result in the
change in control of that bank unless the Florida Banking Department first
shall have approved such proposed acquisition. A person or group will be
deemed to have acquired "control" of a bank if he, she or it, directly or
indirectly, or, acting through one or more other persons, (i) owns, controls
or has power to vote 25% or more of any class of voting securities of the
bank, (ii) controls in any manner the election of a majority of the directors
of the bank, or (iii) exercises a controlling influence over the management
or policies of the bank (as otherwise determined by the Florida Banking
Department). Florida law creates a rebuttable presumption of control if a
person or group acquires 10% or more of a bank's voting stock and if one or
more other "control factors" set forth in the statute are present.
Consequently, Florida law requires that the Florida Banking Department grant
its approval before a change in control in the ownership of Peoples may be
effected.
In contrast to the SunTrust Articles of Incorporation and Bylaws, the
Peoples Articles of Incorporation do not contain provisions that serve to
restrict, prevent or delay any change in control if the merger or acquisition
has been approved by the majority vote of the directors of Peoples. The
Peoples Bylaws includes a provision that requires the affirmative vote of the
holders of two-thirds of the outstanding shares of Peoples Common Stock to
approve a merger or acquisition of Peoples unless the merger or acquisition
has been approved by the majority vote of the directors of Peoples. The
Peoples Board of Directors unanimously approved the Merger. Consequently, a
majority of the outstanding shares of Peoples must approve the Merger.
Anti-Takeover Statutes
The GBCC contains fair price requirements applicable to certain mergers
with certain interested shareholders and restricts certain business
combinations with interested shareholders. These statutory requirements
restrict business combinations with, and the accumulation of shares of
voting stock of, certain Georgia corporations. In accordance with the
provisions of these statutes, SunTrust must elect to be covered by the
restrictions imposed by these statutes. SunTrust has not elected to be
covered by such statutes, but it could do so by action of its Board of
Directors at any time.
The Florida Code does not contain similar protections applicable to
state banks.
Amendment of Articles of Incorporation
Generally, the GBCC requires a majority vote of the outstanding shares
entitled to vote to amend articles of incorporation unless the articles of
incorporation, the board of directors or the GBCC provides otherwise. The
SunTrust Articles of Incorporation requires an affirmative vote by a least
75% of the shares entitled to vote (other than shares held by any Interested
Shareholder) to alter or amend the provisions of the Articles of
Incorporation of SunTrust relating to transactions with any Interested
Shareholder.
52
<PAGE>
The Florida Code also requires a majority vote of the outstanding shares
to amend articles of incorporation. The Peoples' By-laws require the
affirmative vote of at least two-thirds of the shares of Peoples Common Stock
to amend, alter or rescind the provisions relating to mergers and
acquisitions as described above; but in all other instances the Articles of
Incorporation may be amended by a majority vote of the outstanding shares.
Certain Voting Rights
Under the GBCC, unless the articles of incorporation specify otherwise,
a board of directors need not submit a plan of merger to the shareholders of
the surviving corporation if (i) the merger will not effect any change in or
amendment to the articles of incorporation of the surviving corporation, (ii)
each share of the surviving corporation outstanding immediately prior to the
effectiveness of the merger is to remain outstanding and unchanged after the
merger, and (iii) either no new shares of the surviving corporation are to be
issued or any such shares to be issued can be issued by the board of
directors without further authorization by the shareholders. The NYSE,
however, may require shareholder approval as a prerequisite to listing shares
to be issued in certain merger or other acquisition transactions, such as
when the transaction would result in the present or potential increase of
18.5% or more in the outstanding shares of common stock of the acquiring
corporation.
The GBCC provides that unless the articles of incorporation specify
otherwise, a plan of merger submitted to shareholders requires the
affirmative vote of a majority of the shares entitled to vote to adopt such a
plan. The Florida Code requires an affirmative vote of a majority of the
shares entitled to vote to adopt a plan of merger.
As described more fully above, the SunTrust Articles of Incorporation
require a special shareholder vote to approve certain business combinations,
including mergers, consolidations and sales of assets, involving certain
Shareholders. Unless a merger or acquisition has been approved by a majority
vote of the Peoples Board of Directors, the merger must be approved by the
affirmative vote of the holders of two-thirds of the outstanding shares of
Peoples Common Stock.
Dividends
A Georgia corporation may pay dividends out of unreserved and
unrestricted earned surplus, out of net earnings for the fiscal year in which
declared or out of the net earnings of the next preceding fiscal year, or out
of capital surplus if certain conditions are met and the shareholders are
notified concurrently that the distribution is from capital surplus. The
SunTrust Articles of Incorporation authorize distributions out of capital
surplus.
The Florida Code provides that the board of directors of a bank, after
charging off bad debts, depreciation, and other worthless assets if any, and
making provision for reasonably anticipated future losses on loans and other
assets, may quarterly, semiannually, or annually declare a dividend of so
much of the aggregate of the net profits of that period combined with its
retained net profits of the preceding 2 years as they shall judge expedient,
and, with the approval of the Florida Department, any bank or trust company
may declare a dividend from retained net profits which accrued prior to the
preceding 2 years, but each bank or trust company shall, before the
declaration of a dividend on its common stock, carry 20 percent of its net
53
<PAGE>
profits for such preceding period as is covered by the dividend to its
surplus fund, until the same shall at least equal the amount of its common
and preferred stock then issued and outstanding. No bank or trust company
shall declare any dividend at any time at which its net income form the
current year combined with the retained net income from the preceding 2 years
is a loss or which would cause the capital accounts of the bank or trust
company to fall below the minimum amount required by law, regulation, order,
or any written agreement with the department or a state or federal regulatory
agency.
Boards of Directors
As permitted by the GBCC, the SunTrust By-laws divide the SunTrust Board
of Directors into three classes serving staggered three-year terms, with the
terms of one class of directors to expire each year. The classification of
the SunTrust Board of Directors means that approximately one-third of the
SunTrust Board of Directors is elected each year, with the result that it
would take two annual meetings of SunTrust Shareholders to change the
majority of the members constituting the SunTrust Board of Directors. The
classification of directors has the effect of making it more difficult to
change the composition of the board of directors. A classified board of
directors can help promote the continuity and stability of management and
policies because a majority of the directors at any given time will have
prior experience as directors.
In addition, the SunTrust By-laws provide that any or all of the
SunTrust directors may be removed from office at any time with or without
cause, but only by the affirmative vote of at least 75% of the shares
entitled to vote (excluding any shares held by any Interested Shareholder).
As previously described, the Peoples Articles of Incorporation and By-laws do
not contain similar provisions. Under the Florida Code, the entire Board of
Directors or any Director, may be removed without cause by the vote of a
majority of shareholders entitled to vote at an annual meeting.
Peoples Shareholders Dissenters' Rights
The following summary does not purport to be a complete statement of the
procedure to be followed by Peoples Shareholders desiring to exercise
dissenters' rights and is qualified in its entirety by reference to Section
658.44, Florida Statutes, the full text of which is attached hereto as
Exhibit B (the "Dissenter Provisions"). Since the preservation and exercise
of dissenters' rights require strict adherence to the provisions of these
laws, any Peoples Shareholder who desires to exercise such rights should
review such laws carefully, timely consult his or her own legal advisors and
strictly follow the Dissenter Provisions.
Each outstanding share of Peoples Common Stock, the holder of which has
demanded and perfected his or her demand for payment of the fair value of
such share in accordance with the Dissenter Provisions, and who has not
effectively withdrawn or lost his or her right to such payment, shall not be
converted into shares of SunTrust Common Stock, but shall represent only
rights granted with respect to such dissenting Peoples Common Stock purusant
to the Dissenter Provisions. By perfecting demand for payment in accordance
with the Dissenter Provisions, such shareholder shall not be entitled to
receive SunTrust Common Stock as a result of the Merger.
Under the Dissenter Provisions, any holder of Peoples Common Stock shall
be entitled to receive the fair value of his or her shares of such Common
54
<PAGE>
Stock, in cash, if he or she shall have taken the following actions: (i) at
any time before the vote is taken at the Peoples Meeting with respect to
approval of the Merger, the holder furnishes written notice to Peoples of his
or her dissent from the plan of merger and Agreements; or (ii) at the
Meeting, the holder does not vote his or her shares, in person or by proxy,
in favor of the Merger.
ANY PEOPLES SHAREHOLDER INTENDING TO DISSENT FROM THE MERGER AND TO DEMAND
PAYMENT FOR HIS OR HER SHARES IF THE MERGER IS EFFECTUATED SHOULD DELIVER A
WRITTEN NOTICE OF SUCH INTENTION, PRIOR TO THE VOTE ON SUCH MATTER, TO:
PEOPLES STATE BANK
6335 U.S. HIGHWAY 19
NEW PORT RICHEY, FLORIDA 34652-2239
ATTENTION: (MRS.) JOAN B. MURCKO, EXECUTIVE VICE PRESIDENT
NOTICE OF INTENT TO DISSENT MAY ALSO BE EFFECTED AT THE MEETING BY VOTING
SUCH DISSENTING SHARES AGAINST THE MERGER AND AGREEMENTS OR BY DELIVERING A
WRITTEN NOTICE OF SUCH INTENTION, PRIOR TO THE VOTE ON SUCH MATTER.
After the effective date of the Merger, Peoples shall be entitled to
determine an amount which it considers to be not more than the fair market of
the Peoples Common Stock and which it will pay to the holders of all
dissenting shares to the Merger. If the dissenting shareholder accepts the
Peoples offer of fair value, payment for such shares will be made within 30
days after the effective date of the Merger. Should the dissenting
shareholder object to the Peoples determination of fair value, fair value for
such shares shall be determined as of the effective date of the Merger by
three appraisers, one to be selected by the owners of at leasst two-thirds of
such dissenting shares, one to be selected by the board of directors of the
surviving entity of the Merger, namely, Peoples, and the third to be selected
by the two appraisers so chosen. The value agreed upon by any two of the
appraisers shall control and be final and binding on all parties. Should the
appraisers fail to determine the value of such dissenting shares for any
reason within 90 days of the effective date of the Merger, the Florida
Banking Department shall cause an appraisal of such dissenting shares to be
made which will be deemed to be final and binding on all parties. The
appraisal expenses will be paid by Peoples, as the surviving state bank.
55
<PAGE>
DESCRIPTION OF PEOPLES CAPITAL STOCK
Pursuant to its Articles of Incorporation, Peoples is authorized to
issue up to 1,000,000 shares of Peoples Common Stock, par value $5.00 per
share, of which 407,258 shares were issued and outstanding at the record
date.
Each share of Peoples Common Stock is entitled to one vote on all
matters presented to Peoples Shareholders. Cumulative voting is not permitted
in the election of directors or in any other matter. Each share of Peoples
Common Stock also is entitled to dividends, but only when and if declared by
the Board of Directors. The right of Peoples to declare a dividend on Peoples
Common Stock is restricted by the Agreements. Certain limitations under
federal and Florida law apply to the payment of dividends by Peoples. Peoples
has never declared and paid a dividend on its Common Stock, and is not
expected to do so in the foreseeable future. There are preemptive rights to
purchase Peoples Common Stock.
As of January 31, 1995, Peoples had 203 shareholders of record. Peoples
acts as the transfer agent for its Common Stock. Presently, there is no
established market for Peoples Common Stock, and there should be no
expectation that such a market will develop in the foreseeable future.
DESCRIPTION OF SUNTRUST CAPITAL STOCK
SunTrust is authorized by its Articles of Incorporation to issue up to
350,000,000 shares of SunTrust Common Stock, par value $1.00 per share, of
which 115,679,426 shares were issued and outstanding at December 31, 1994 and
up to 50,000,000 shares of Preferred Stock, no par value, none of which were
issued and outstanding on the date hereof.
SunTrust Common Stock
Holders of SunTrust Common Stock are entitled to cast one vote for each
share held of record on all matters submitted to a vote of SunTrust
Shareholders and are not entitled to cumulate votes for the election of
directors. The SunTrust By-laws divided the SunTrust Board of Directors into
three classes with staggered three-year terms, with the members of one class
elected each year. See "The Merger - Comparison of Rights of Peoples and
SunTrust Shareholders." Holders of SunTrust Common Stock do not have
preemptive rights to subscribe for or to purchase any additional shares of
SunTrust. In the event of liquidation, holders of SunTrust Common Stock are
entitled to share in the distribution of assets remaining after payment of
debts and expenses and after required payments to holders of SunTrust
preferred stock. Holders of SunTrust Common Stock are entitled to receive
dividends when declared by the SunTrust Board of Directors out of funds
legally available therefor, subject to the rights of the holders of SunTrust
preferred stock. The outstanding shares of SunTrust Common Stock are, and the
shares of SunTrust Common Stock to be issued in connection with the Merger
will be, when validly issued, fully paid and nonassessable.
The transfer agent and registrar for SunTrust Common Stock is Trust
Company Bank, Post Office Box 4625, Atlanta, Georgia, 30302-4625.
SunTrust Provisions Relating to Certain Business Combinations
The Articles of Incorporation and By-laws of SunTrust include provisions
relating to certain business combinations and providing for a supermajority
vote on such business combinations and certain other matters. These
56
<PAGE>
provisions may render it more difficult to effect a change of control of
SunTrust and, as a result, may have the effect of deterring a tender offer or
other acquisition proposal involving SunTrust. For a discussion of the
reasons for and the effects of these provisions, see "The Merger - Comparison
of Rights of Peoples and SunTrust Shareholders."
CERTAIN REGULATORY CONSIDERATIONS RELATING TO SUNTRUST
General
As a bank holding company, SunTrust is subject to the regulation and
supervision of the Federal Reserve Board. SunTrust's subsidiary banks (the
"Subsidiary Banks") are subject to supervision and examination by applicable
state and federal banking agencies, including the Federal Reserve Board, the
Office of the Comptroller of the Currency (the "Comptroller") and the FDIC.
The Subsidiary Banks are also subject to various requirements and
restrictions under federal and state law, including requirements to maintain
reserves against deposits, restrictions on the types and amounts of loans
that may be granted and the interest that may be charged thereon, and
limitations on the types of investments that may be made and the types of
services that may be offered. Various consumer laws and regulations also
affect the operations of the Subsidiary Banks. In addition to the impact of
regulation, commercial banks are affected significantly by the actions of the
Federal Reserve Board as it attempts to control the money supply and credit
availability in order to influence the economy.
The BHCA currently prohibits the Federal Reserve Board from approving an
application from a bank holding company to acquire shares of a bank located
outside the state in which the operations of the holding company's banking
subsidiaries are principally conducted, unless such an acquisition is
specifically authorized by statute of the state in which the bank whose
shares are to be acquired is located. However, under recently enacted federal
legislation, the restriction on interstate acquisitions will be abolished
effective September 1995, and thereafter, bank holding companies from any
state will be able to acquire banks and bank holding companies located in any
other state, subject to certain conditions, including nationwide and state
imposed concentration limits. Banks also will be able to branch across state
lines by acquisition, merger or de novo, effective June 1, 1997 (unless state
law would permit such interstate branching at an earlier date), provided
certain conditions are met, including that applicable state law must
expressly permit de novo interstate branching.
There are a number of obligations and restrictions imposed on bank
holding companies and their depository institution subsidiaries by federal
law and regulatory policy that are designed to reduce potential loss exposure
to the depositors of such depository institutions and to the FDIC insurance
fund in the event the depository institution becomes in danger of default or
is in default. For example, under a policy of the Federal Reserve Board with
respect to bank holding company operations, a bank holding company is
required to serve as a source of financial strength to its subsidiary
depository institutions and to commit resources to support such institutions
in circumstances where it might not do so absent such policy. In addition,
the "cross-guarantee" provisions of federal law require insured depository
institutions under common control to reimburse the FDIC for any loss suffered
or reasonably anticipated by either the Savings Association Insurance Fund
("SAIF") or the Bank Insurance Fund ("BIF") as a result of the default of a
commonly controlled insured depository institution or for any assistance
provided by the FDIC to a commonly controlled insured depository institution
57
<PAGE>
in danger of default. The FDIC may decline to enforce the cross-guarantee
provisions if it determines that a waiver is in the best interest of the SAIF
or the BIF or both. The FDIC's claim for damages is superior to claims of
shareholders of the insured depository institution or its holding company but
is subordinate to claims of depositors, secured creditors and holders of
subordinated debt (other than affiliates) of the commonly controlled insured
depository institutions.
Payment of Dividends and Other Restrictions
SunTrust is a legal entity separate and distinct from its subsidiaries,
including the Subsidiary Banks. There are various legal and regulatory
limitations under federal and state law on the extent to which SunTrust's
subsidiaries, including its bank and bank holding company subsidiaries, can
finance or otherwise supply funds to SunTrust.
The principal source of SunTrust's cash revenues is dividends from its
subsidiaries and there are certain limitations under federal, Georgia,
Florida and Tennessee law on the payment of dividends by such subsidiaries.
The prior approval of the Federal Reserve Board or the Comptroller, as the
case may be, is required if the total of all dividends declared by any state
member bank of the Federal Reserve System or any national banking association
in any calendar year exceeds the bank's net profits (as defined) for that
year combined with its retained net profits for the preceding two calendar
years, less any required transfers to surplus or a fund for the retirement of
any preferred stock. The relevant federal and state regulatory agencies also
have authority to prohibit a state member bank or bank holding company, which
would include SunBanks, Trust Company and Third National, or a national
banking association from engaging in what, in the opinion of such regulatory
body, constitutes an unsafe or unsound practice in conducting its business.
The payment of dividends could, depending upon the financial condition of the
subsidiary, be deemed to constitute such an unsafe or unsound practice.
Under Georgia law (which would apply to any payment of dividends by
Trust Company Bank to Trust Company) the prior approval of the Georgia
Commissioner of Banking and Finance is required before any cash dividends may
be paid by a state bank if: (i) total classified assets at the most recent
examination of such bank exceed 80% of the equity capital (as defined, which
includes the reserve for loan losses) of such bank; (ii) the aggregate amount
of dividends declared or anticipated to be declared in the calendar year
exceeds 50% of the net profits (as defined) for the previous calendar year;
or (iii) the ratio of equity capital to adjusted total assets is less than
6%.
Retained earnings of SunTrust's banking subsidiaries available for
payment of cash dividends under all applicable regulations without obtaining
governmental approval were approximately $389.4 million as of December 31,
1994.
In addition, the Subsidiary Banks and their subsidiaries are subject to
limitations under Section 23A of the Federal Reserve Act with respect to
extensions of credit to, investments in, and certain other transactions with,
SunTrust and its other subsidiaries. Furthermore, loans and extensions of
credit are also subject to various collateral requirements.
Capital Adequacy
The Federal Reserve Board, the Comptroller and the FDIC have issued
58
<PAGE>
substantially similar risk-based and leverage capital guidelines applicable
to United States banking organizations. In addition, those regulatory
agencies may from time to time require that a banking organization maintain
capital above the minimum levels whether because of its financial condition
or actual or anticipated growth. Under the risk-based capital requirements of
these federal bank regulatory agencies, SunTrust and each of the Bank
Subsidiaries are required to maintain a minimum ratio of total capital to
risk-weighted assets of at least 8%. At least half of the total capital is
required to be "Tier 1 capital", which consists principally of common and
certain qualifying preferred shareholders' equity, less certain intangibles
and other adjustment. The remainder ("Tier 2 capital") consists of a limited
amount of subordinated and other qualifying debt (including certain hybrid
capital instruments) and a limited amount of the general loan loss allowance.
The Tier 1 and total capital to risk-weighted asset ratios of SunTrust as of
December 31, 1994 were 7.95% and 10.05%, respectively, exceeding the minimums
required.
In addition, each of the federal regulatory agencies has established a
minimum leverage capital ratio (Tier 1 capital to average tangible assets).
These guidelines provide for a minimum leverage capital ratio of 3% for banks
and bank holding companies that meet certain specified criteria, including
that they have the highest regulatory examination rating and are not
contemplating significant growth or expansion. All other institutions are
expected to maintain a leverage ratio of at least 100 to 200 basis points
above the minimum. The Tier 1 leverage ratio of SunTrust as of December 31,
1994, was 6.68%, which is above the minimum requirements. The guidelines also
provide that banking organizations experiencing internal growth or making
acquisitions will be expected to maintain strong capital positions
substantially above the minimum supervisory levels, without significant
reliance on intangible assets.
Support of Subsidiary Banks and Other Regulations
Under Federal Reserve Board policy, SunTrust is expected to act as a
source of financial strength to, and to commit resources to support, each of
the Subsidiary Banks. This support may be required at times when, absent such
Federal Reserve Board policy, SunTrust may not be inclined to provide it. In
the event of a bank holding company's bankruptcy, any commitment by the bank
holding company to a federal bank regulatory agency to maintain the capital
of a subsidiary bank will be assumed by the bankruptcy trustee and entitled
to a priority of payment.
The federal banking agencies have broad powers under current federal law
to take prompt corrective action to resolve problems of insured depository
institutions. The extent of these powers depends upon whether the
institutions in question are "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" or "critically
undercapitalized" as such terms are defined under uniform regulations
defining such capital levels issued by each of the federal banking agencies.
In addition, FDIC regulations require that management report on its
institution's responsibility for preparing financial statements, and
establishing and maintaining an internal control structure and procedures for
financial reporting and compliance with designated laws and regulations
concerning safety and soundness; and that independent auditors attest to and
report separately on assertions in management's reports concerning compliance
with such laws and regulations, using FDIC-approved audit procedures.
59
<PAGE>
LEGAL OPINION
The legality of the shares of SunTrust Common Stock to be issued upon
consummation of the Merger will be passed upon for SunTrust by Raymond D.
Fortin, Esq., Senior Vice President of SunTrust.
RELATIONSHIPS WITH
INDEPENDENT PUBLIC ACCOUNTANTS AND EXPERTS
The audited consolidated financial statements of SunTrust Banks, Inc.
and subsidiaries incorporated by reference in this Proxy Statement and
elsewhere in the Registration Statement have been audited by Arthur Andersen
LLP, independent public accountants as indicated in their report with respect
thereto, and are included herein upon the authority of said firm as experts
in giving said report.
The financial statements of Peoples State Bank as of December 31, 1994
and 1993 and for each of the three year periods ended December 31, 1994 have
been included in this Proxy Statement and elsewhere in the Registration
Statement in reliance on the report of KPMG Peat Marwick LLP, independent
public accountants, whose report thereon appears elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing. The report
of KPMG Peat Marwick LLP covering the December 31, 1994 financial statements
refers to a change in the method of accounting for certain investments in
debt and equity securities.
60
<PAGE>
Independent Auditors' Report
The Board of Directors
Peoples State Bank:
We have audited the accompanying balance sheets of Peoples State Bank as of
December 31, 1994 and 1993, and the related statements of operations,
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1994. These financial statements are the
responsibility of the Bank's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Peoples State Bank at
December 31, 1994 and 1993, and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 1994
in conformity with generally accepted accounting principles.
As discussed in note 1 of the notes to the financial statements, the Bank
adopted the provisions of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and equity Securities," as of January 1, 1994.
February 3, 1995
KPMG Peat Marwick LLP
61
<PAGE>
<TABLE>
PEOPLES STATE BANK
BALANCE SHEETS
<CAPTION> At December 31
-----------------------
1994 1993
(In thousands)<F1> ---------- ----------
<S> <C> <C>
ASSETS
Cash and due from banks $3,997 $2,453
Federal funds sold - 2,915
Securities available for sale 31,842 18,013
Securities held to maturity (market values of $12,511 and
$834 in 1994 and 1993, respectively) 12,826 814
Loans, net of allowance for losses of $900 and $911 in
1994 and 1993, respectively 69,428 56,409
Building, furniture, and equipment, net 2,189 2,190
Other real estate owned 250 244
Accrued interest receivable on investments 584 284
Accrued interest receivable on loans 422 320
Deferred tax asset 656 202
Income taxes receivable - 16
Core deposit premium 487 -
Other assets 333 88
---------- ----------
Total assets $123,014 $83,948
========== ==========
LIABILITIES
Deposits $109,217 $77,307
Accrued interest payable 659 147
Income taxes payable 333 -
Federal funds purchased 1,970 -
Repurchase agreements 3,703 -
Other liabilities 253 173
---------- ----------
Total liabilities 116,135 77,627
---------- ----------
STOCKHOLDERS' EQUITY
Common stock, $5 par value 1,000,000 shares authorized
and 407,258 and 400,008 shares issued and outstanding
at December 31, 1994 and 1993, respectively 2,036 2,000
Surplus 1,542 1,501
Unrealized loss on securities available for sale, net (669) -
Retained earnings 3,970 2,820
---------- ----------
Total shareholders' equity 6,879 6,321
Commitments
---------- ----------
Total liabilities and shareholders' equity $123,014 $83,948
========== ==========
<FN>
<F1> See accompanying notes to financial statements.
</TABLE>
62
<PAGE>
<TABLE>
PEOPLES STATE BANK - STATEMENTS OF OPERATIONS
<CAPTION>
Year Ended December 31
-------------------------------
1994 1993 1992
(In thousands)<F1> --------- --------- ---------
<S> <C> <C> <C>
Interest income:
Loans including fees $5,355 $4,825 $5,322
Federal funds sold $146 $96 $83
Investment securities, securities available for
sale, and interest-bearing deposits 1,440 902 703
--------- --------- ---------
Total interest income 6,941 5,823 6,108
--------- --------- ---------
Interest expense:
Deposits 2,800 2,379 2,768
Short-term borrowings 75 1 1
--------- --------- ---------
Total interest expense 2,875 2,380 2,769
--------- --------- ---------
Net interest income before provision for loan losses 4,066 3,443 3,339
Provision for loan losses 139 307 501
--------- --------- ---------
Net interest income 3,927 3,136 2,838
--------- --------- ---------
Other operating income:
Service charges on deposit accounts 279 248 258
Gain on sale of securities available for sale, net 3 1 -
Other income 223 106 86
--------- --------- ---------
Total other operating income 505 355 344
--------- --------- ---------
Other operating expenses:
Compensation 1,383 1,230 971
Occupancy 219 229 245
EDP expense 115 132 109
Advertising and promotion 82 90 54
Real estate taxes 56 78 54
Supplies 69 71 44
Professional fees 118 110 74
Insurance, including regulatory assessment 290 234 188
Correspondent bank charges 108 90 89
Other real estate owned, net (52) 100 321
Other 315 274 227
--------- --------- ---------
Total other operating expenses 2,703 2,638 2,376
--------- --------- ---------
Income before income taxes and cumulative
effect of change in accounting principle 1,729 853 806
Income tax expense 579 272 337
--------- --------- ---------
Income before cumulative effect of change
in accounting principle 1,150 581 469
Cumulative effect of change in accounting principle (note 7) - 176 -
--------- --------- ---------
Net income $1,150 $757 $469
========= ========= =========
<FN>
<F1> See accompanying notes to financial statements.
</TABLE>
63
<PAGE>
<TABLE>
PEOPLES STATE BANK - STATEMENTS OF CASH FLOW
<CAPTION>
Year Ended Ended December 31
-------------------------------
1994 1993 1992
(In thousands)<F1> --------- --------- ---------
<S> <C> <C> <C>
Cash flow from operating activities:
Net income $1,150 $757 $469
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 139 307 501
Provision for losses on other real estate owned 6 71 221
(Gain) loss on sale of other real estate owned (125) (2) (17)
(Gains) loss on sale and retirement of fixed assets, net 3 (3) 1
Depreciation 139 127 136
Amortization of discounts and premiums on
investments securities 123 149 70
Amortization of core deposit premium 13 - -
Gain on sale of securities (3) (1) -
(Increase) decrease in accrued interest receivable (401) (94) 16
Decrease (increase) in other assets (246) 8 (55)
Increase (decrease) in accrued interest payable 512 7 (26)
Increase (decrease) in income taxes payable 333 (4) (110)
Decrease (increase) in income taxes receivable 16 (16) -
Increase in other liabilities 79 107 24
Deferred tax benefit (51) (202) -
--------- --------- ---------
Net cash provided by operating activities 1,687 1,211 1,230
--------- --------- ---------
Cash flow from investing activities:
Increase in loans, net of transfers to other real estate (13,996) (2,878) (3,934)
Purchase of securities available for sale (18,796) (4,966) (6,390)
Purchase of mortgage-backed securities - (8,834) (994)
Purchase of securities held to maturity (15,067) - -
Maturity of securities held to maturity 3,000 - 4,000
Proceeds on sale of securities available for sale 1,996 5,913 -
Proceeds from sale of building, furniture and equipment 24 3 -
Capital expenditures (164) (815) (31)
Principal repayments of mortgage-backed securities 1,832 556 2
Proceeds on sale of other real estate owned 952 1,541 347
Purchase premium of core deposits (500) - -
--------- --------- ---------
Net cash used in investing activities (40,719) (9,480) (7,000)
--------- --------- ---------
Cash flows from financing activities:
Increase in demand, money-market, and savings accounts 5,789 10,240 6,068
Increase (decrease) in certificates of deposit 26,122 (592) (1,822)
Proceeds from exercise of stock options 77 26 -
Net increase in Federal funds purchased 1,970 - -
Net increase in repurchase agreements 3,703 - -
--------- --------- ---------
Net cash provided by financing activities 37,661 9,674 4,246
--------- --------- ---------
Net increase (decrease) in cash (1,371) 1,405 (1,524)
Cash and cash equivalents, beginning of year 5,368 3,963 5,487
--------- --------- ---------
Cash and cash equivalents, end of year $3,997 $5,368 $3,963
========= ========= =========
Supplemental disclosures for cash flow information:
Cash paid during the years for:
Interest $2,364 $2,373 $2,794
Income taxes $281 $334 $447
Transfers of loan to other real estate owned $839 $1,082 $550
Transfers of investment securities to available for sale - $18,013 -
Transfers of other assets to building, furniture and equipment - $28 -
<FN>
<F1> See accompanying notes to financial statements
</TABLE>
64
<PAGE>
<TABLE>
PEOPLES STATE BANK - STATEMENTS OF STOCKHOLDERS' EQUITY
<CAPTION>
Unrealized
loss on
securities
available Total
Common Retained for stockholders'
Stock Surplus earnings sale, net equity
(In thousands) <F1> ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1991 $1,988 $1,487 $1,594 - $5,069
Net income - - 469 - 469
---------- ---------- ---------- ---------- ----------
Balance, December 31, 1992 1,988 1,487 2,063 - 5,538
Net income - - 757 - 757
Stock options exercised 12 14 - - 26
---------- ---------- ---------- ---------- ----------
Balance, December 31, 1993 2,000 1,501 2,820 - 6,321
Net income - - 1,150 - 1,150
Stock options exercised 36 41 - - 77
Unrealized loss on securities
available for sale, net - - - (669) (669)
---------- ---------- ---------- ---------- ----------
Balance, December 31, 1994 $2,036 $1,542 $3,970 ($669) $6,879
========== ========== ========== ========== ==========
<FN>
<F1> See accompanying notes to financial statements.
</TABLE>
65
<PAGE>
Peoples State Bank
Notes to Financial Statements
December 31, 1994, 1993 and 1992
(1) Summary of Significant Accounting Policies
The following is a description of the significant accounting and
reporting policies which Peoples State Bank (the Bank) follows in
preparing and presenting its financial statements. The Bank's primary
market is the Central West Coast of Florida.
(a) Accounting Principles
The financial statements have been prepared in conformity with
generally accepted accounting principles.
(b) Securities Available for Sale
Management determines the appropriate classification of securities
and loans at the time of purchase or origination. On January 1,
1994, the Bank adopted Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" (Statement 115). This statement required the reporting
of certain securities at fair value except for those securities the
Bank has positive intent and ability to hold to maturity.
Securities included in the available for sale category are those
securities that management intends to use as part of its
asset/liability management strategy, and that may be sold in
response to changes in interest rates, regulatory or accounting
changes or various other types of changes. Securities available for
sale are recorded at fair value. Both unrealized gains and unrealized
losses (net of taxes) are included as a separate component of
stockholders'equity in the balance sheet until the gains or losses
are realized. If a security has a decline in fair value that is
other than temporary, then the security will be written own to its
fair value by recording a loss in the statement of operations.
(c) Securities Held to Maturity
Securities that management has the intent and the Bank has the
ability at the time of purchase to hold until maturity are
classified as securities held to maturity. Securities in this
category are carried at amortized cost adjusted for accretion of
discounts and amortization of premiums using the straight-line
method, which approximates the level yield method over the
estimated life of the securities. If a security has a decline in
fair value below its amortized cost that is other than temporary,
then the security will be written down to its new cost basis by
recording a loss in the statement of operations, using the specific
identification method.
(d) Allowance for Loan Losses
The allowance for loan losses is established through a provision
for loan losses charged against operations. Loans are charged
against the allowance for loan losses when management believes that
66
<PAGE>
the collectibility of the principal is unlikely. The allowance for
loan losses is the amount that management believes will be adequate
to absorb possible losses on existing loans that may become
uncollectible, based on evaluations of the collectibility of loans
and prior loan loss experience. While management uses the best
information available to recognize losses an loans, future
additions to the allowance may be necessary based on changes in
economic conditions. In addition, various regulatory agencies, as
an integral part of their examination process, periodically review
the Bank's allowance for losses on loans. Such agencies may require
the Bank to recognize additions to the allowance based on their
judgments of information available to them at the time of their
examination.
Accrual of interest is discontinued on a loan when management
believes, after considering economic and business conditions and
collection efforts, that the borrower's financial condition is such
that collection of interest is doubtful.
(e) Building, Furniture, and Equipment
Building, furniture, and equipment is stated at cost less
accumulated depreciation. Depreciation is provided on a straight-
line basis over the estimated useful lives of the related assets.
Estimated lives are 40 years on the Bank's building, ten years for
building improvements and three to five years for furniture,
fixtures and equipment
Maintenance and repairs are charged to expense as incurred and
improvements are capitalized. The costs and accumulated
depreciation relating to property and equipment retired or
otherwise disposed of are eliminated from the accounts and any
resulting gains and losses are credited or charged to income.
(f) Loan Fees
Loan origination fees and incremental direct loan origination costs
are deferred and amortized over the estimated loan life as an
adjustment of yield.
(g) Other Real Estate Owned
Real estate acquired by foreclosure is initially recorded at the
lower of cost (principal balance of the former mortgage loan) plus
related costs to acquire the real estate, or estimated fair value.
Subsequent valuation adjustments are charged to current period
earnings if net realizable value of the property falls below the
adjusted carrying amount. Gains on sales are recognized, to the
extent allowable, upon disposition of the property. Losses on sales
in excess of amounts previously provided are charged to operations.
(h) Core Deposit Premium
Core deposit premium is being amortized on a straight-line basis
over the estimated life of ten years.
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<PAGE>
(i) Income Taxes
Effective January 1, 1993, the Bank adopted Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 109
(Statement 109), "Accounting for Income Taxes." Under Statement
109, deferred income taxes are recognized for the tax consequences
of "temporary differences" by applying enacted statutory rates
applicable to future years to differences between the financial
statement carrying amounts and the tax basis of existing assets and
liabilities. The effect on deferred income taxes of a change in tax
rates is recognized in income in the period that includes the
enactment date. The Bank reported the cumulative effect of that
change in the method of accounting for income taxes in the 1993
statement of operations.
Prior to 1994, the Bank used the asset and liability method under
Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 96 (Statement 96). Under the asset and
liability method of Statement 96, deferred tax assets and
liabilities were recognized for all events that had been recognized
in the financial statements. Under Statement 96, the future tax
consequences of recovering assets or settling liabilities at their
financial statement carrying amounts were considered in calculating
deferred taxes. Generally, Statement 96 prohibited consideration of
any other future events in calculating deferred taxes.
(j) Statement of Cash Flows
For the statement of cash flows purposes, the Bank considers due
from banks and federal funds sold to be cash equivalents.
Generally, federal funds are sold for one-day periods.
(k) Reclassifications
Certain amounts in prior year financial statements have been
reclassified to conform to the 1994 presentation.
(2) Securities Available for Sale
At December 31, 1994, the Bank's securities available for sale are
recorded at fair value. Unrealized gains and losses on securities
available for sale, bet of taxes, are shown as a separate component of
stockholders' equity.
At December 31, 1994
------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
(In thousands) --------- --------- --------- ---------
U.S. government obligations $26,017 - ($509) $25,508
Corporate securities 547 - (20) 527
Mortgage-backed securities 6,351 - (544) 5,807
--------- --------- --------- ---------
$32,915 - ($1,073) $31,842
========= ========= ========= =========
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<PAGE>
At December 31, 1993, all securities available for sale were recorded at
the lower of amortized cost or fair value.
At December 31, 1993
------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
(In thousands) --------- --------- --------- ---------
U.S. government obligations $8,229 $60 ($23) $8,266
Corporate securities 1,572 18 (4) 1,586
Mortgage-backed securities 8,212 41 (63) 8,190
--------- --------- --------- ---------
$18,013 $119 ($90) $18,042
========= ========= ========= =========
The maturity distribution of the securities available for sale portfolio
based on amortized cost and market values as of December 31, 1994 follows:
Estimated
Amortized fair
cost value
(In thousands) --------- ---------
Due in one year or less $13,959 $13,782
Due after one year through five years 12,058 11,727
--------- ---------
Subtotal 26,017 25,509
Corporate securities 547 527
Mortgage-backed securities 6,351 5,806
--------- ---------
$32,915 $31,842
========= =========
Proceeds from the sale of securities available for sale during 1994 and
1993 were $3,047 thousand and $3,103 thousand, respectively. Net gains of
$3 thousand and $1 thousand, respectively, were realized on the sales in
1994 and 1993. There were no sales of investment securities in 1992.
At December 31, 1994, the Bank had U.S. Government obligations $200
thousand pledged for treasury tax and liability deposits.
(3) Securities Held to Maturity
Securities held to maturity at December 31, 1994 and 1993 are summarized
as follows:
At December 31, 1994
------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
(In thousands) --------- --------- --------- ---------
Municipal securities $814 $2 ($25) $791
U.S. government obligations 12,012 - (292) 11,720
--------- --------- --------- ---------
$12,826 $2 ($317) $12,511
========= ========= ========= =========
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<PAGE>
At December 31, 1993
------------------------------------------
Gross Gross Estimated
Amortized unrealized unrealized fair
cost gains losses value
(In thousands) --------- --------- --------- ---------
Municipal securities $814 $20 - $834
========= ========= ========= =========
The maturity distribution of the securities held to maturity portfolio
based on amortized cost and market values as of December 31, 1994 follows:
Estimated
Amortized fair
cost value
(In thousands) --------- ---------
Due in one year or less $120 $119
Due after one year through five years 12,456 12,159
Due after five years 250 233
--------- ---------
Subtotal $12,826 $12,511
========= =========
At December 31, 1994, the Bank had municipal securities of $190 thousand
pledged for public funds.
(4) Loans, Net
Loans at December 31, 1994 and 1993 follow:
1994 1993
(In thousands) --------- ---------
Commerical $6,465 $5,002
Real estate mortgage 58,952 47,758
Consumer 2,867 3,089
Lease financing 2,260 1,672
--------- ---------
70,544 57,521
Deferred loan fees (216) (201)
Allowance for loan losses (900) (911)
--------- ---------
$69,428 $56,409
========= =========
A summary of activity in the allowance for loan losses for the years
ended December 31, 1994 and 1993 follows:
1994 1993 1992
(In thousands) --------- --------- ---------
Beginning balance $911 $924 $520
Provision for loan losses 139 307 501
Charge-offs (150) (320) (97)
--------- --------- ---------
Ending balance $900 $911 $924
========= ========= =========
The aggregate amount of loans owed to the bank by its executive officers,
directors and their related entities at December 31, 1994 and 1993 was
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approximately $3,782 thousand and $2,308 thousand, respectively. Such
transactions were made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other individuals.
The following summary is information regarding loans on which the accrual
of interest was discontinued:
1994 1993 1992
(Dollars in thousands) --------- --------- ---------
Number of loans 2 14 21
Amount of loans $46 $1,252 $1,376
Amount of forgone interest $6 $79 $58
The Bank grants commercial, commercial real estate, residential and
consumer loans to customers throughout Pasco and Pinellas counties in the
State of Florida. Although the Bank has a diversified loan portfolio, a
substantial portion of its debtors' ability to honor their contracts is
dependent upon the local real estate market and economy.
Generally, commercial and commercial real estate loans are secured by
real estate, equipment, inventory, and accounts receivables. These loans
are expected to be repaid by the cash flow or proceeds from the sale of
selected assets of the borrowers. Additionally, residential loans are
secured by first mortgages on residential property and consumer loans are
primarily secured by automobiles, boats and second mortgages.
In the ordinary course of business, the Bank is a party to financial
instruments with off-balance sheet risk to meet the financing needs of
its customers. These financial instruments include commitments to extend
credit at both fixed and variable rates and standby letters of credit.
These instruments involve, to varying degrees, elements of credit risk in
excess of the amount recognized, if any, in the balance sheet. The Bank's
exposure to credit loss for commitments to extend credit and standby
letters of credit is represented by the contractual amount of these
instruments. The Bank uses the same credit policies in making commitments
and conditional obligations as it does for on-balance sheet instruments.
Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Since many of the commitments
are expected to expire without being drawn upon, the total commitment
amounts do not necessarily represent future cash requirements. The Bank
evaluates each customer's credit worthiness on a case-by-case basis.
Standby letters of credit are conditional commitments issued by the Bank
to guarantee the performance of a customer to a third party. The credit
risk involved in issuing letters of credit is essentially the same as that
involved in extending loan facilities to customers.
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(5) Building, Furniture, and Equipment, Net
A summary of building, furniture, and equipment at December 31, 1994 and
1993 follows:
1994 1993
(In thousands) --------- ---------
Land $659 $659
Bank building 1,262 1,262
Building improvements 406 382
Furniture, fixtures and equipment 620 513
--------- ---------
Sub total 2,947 2,816
Less accumulated depreciation (758) (626)
--------- ---------
Total $2,189 $2,190
========= =========
The Bank leased its branch office under an operating lease in 1992. The
Bank purchased the land and building in 1993. Total rental expense in
1993 and 1992 under this lease was approximately $32 thousand and $48
thousand, respectively.
(6) Core Deposit Premium
During fiscal year 1994, the Bank acquired deposits of $33.8 million,
paying a premium for the core deposit base of $500 thousand. The Bank
incurred approximately $13 thousand in amortization expense in 1994
related to the core deposit base.
(7) Deposits
Deposit accounts as of December 31, 1994 and 1993 are summarized as
follows:
1994 1993
(In thousands) --------- ---------
Non-interest-bearing demand deposits $11,432 $8,475
Interest-bearing demand deposits 22,765 22,317
Regular savings accounts 12,826 10,443
Certificates of deposit 62,194 36,072
--------- ---------
Total $109,217 $77,307
========= =========
A summary of interest on deposits at December 31, 1994 and 1993 follows:
1994 1993 1992
(In thousands) --------- --------- ---------
Interest on interest-bearing
demand deposits $441 $401 $451
Interest on savings accounts 276 254 185
Interest on certificates of deposit 2,083 1,724 2,132
--------- --------- ---------
Total 2,800 2,379 2,768
========= ========= =========
The aggregate amount of time certificates of deposit of $100 thousand or
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more at December 31, 1994 and 1993 was approximately $9.4 million and
$6.6 million, respectively. Interest on certificates of deposit of $100
thousand or more was approximately $315 thousand, $316 thousand and $407
thousand, respectively, during the years ended December 31, 1994, 1993
and 1992.
(8) Repurchase Agreements
The Bank has entered into sales of securities under agreements to
repurchase (repurchase agreements). The repurchase agreements are treated
as financings, and the obligations to repurchase securities sold are
reflected as a liability on the balance sheet. The dollar amount of
securities underlying the agreements remain in the asset accounts.
As of December 31, 1994, the Bank had $3.7 million of repurchase
agreements outstanding with weighted average interest rates of 5.8%. The
repurchase agreements are secured by U.S. treasury notes and FNMA and
FHLMC certificates, with book values of approximately $3.8 million and
market values of approximately $3.6 million, and mature January 1995. The
maximum amount outstanding during any month end was approximately $3.7
million and the average amount outstanding for the year was approximately
$1.8 million.
(7) Income Taxes
As discussed in note 1, the Bank adopted Statement 109 as of January 1,
1993. The cumulative effect of this change in accounting for income taxes
was $176 thousand, determined as of January 1, 1993, and is reported
separately in the statement of operations for the year ended December 31,
1993. Prior years' financial statements have not been restated to apply
the provisions of Statement 109.
The provision for income taxes consists of the following:
Current Deferred Total
(In thousands) --------- --------- ---------
Year ended December 31, 1994:
Federal $554 ($43) $511
State 76 (8) 68
--------- --------- ---------
Total $630 ($51) $579
========= ========= =========
Year ended December 31, 1993:
Federal $285 ($41) $244
State 32 (4) 28
--------- --------- ---------
Total $317 ($45) $272
========= ========= =========
Year ended December 31, 1992:
Federal $303 - $303
State 34 - 34
--------- --------- ---------
Total $337 - $337
========= ========= =========
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Income tax expense of the Bank differs from the amount computed by
applying the federal income tax rate of 34 percent to income before
income taxes because of the following:
1994 1993 1992
--------- --------- ---------
Income tax expense at statutory
federal rate 34.0 % 34.0 % 34.0 %
State income taxes, net of federal
income tax benefits 2.6 2.5 2.8
Tax exempt interest (2.1) (4.1) (3.9)
Other, net (1.0) (0.5) 8.9
--------- --------- ---------
Effective tax rate 33.5 % 31.9 % 41.8 %
========= ========= =========
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
December 31, 1994 and 1993 are presented below:
1994 1993
(In thousands) --------- ---------
Deferred tax assets:
Loan receivable due to allowance
for loan losses $267 $227
Other real estate owned 3 2
Deferred loan fees 21 21
Unrealized loss on securities
available for sale 404 -
--------- ---------
Total deferred assets 695 250
Less valuation allowance - -
--------- ---------
Net deferred tax assets 695 250
--------- ---------
Deferred tax liabilities:
Property and equipment, due to
differences in depreciation
methods and useful lives (7) (7)
Cash to accrual conversions (28) (41)
Other (4) -
--------- ---------
Total deferred liabilities (39) (48)
--------- ---------
Net deferred tax asset $656 $202
========= =========
The Bank believes that it has paid sufficient taxes in prior carryback
years which will enable it to recover the net deferred tax asset, and
therefore, no valuation allowance as defined by Statement 109 is required
at December 31, 1994.
(10) Compensation Programs
The Bank's Stock Compensation Program was approved at the annual meeting
of stockholders on February 16, 1988. Under the terms of the program,
40,000 shares of authorized but unissued shares of common stock of the
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Bank are reserved for issuance. The program provides for the grant of
compensatory stock options to certain officers and employees at an option
price at least equal to the fair market value of such shares on the date
the option is granted. Options granted under the program are vested
ratably over a four-year period and exercisable over a period not to
exceed ten years, are not transferable and terminate following termination
of employment with the Bank.
The following is a summary of the activity relating to options under the
program:
Number Price
(Dollars in thousands) --------- ------------
Outstanding, December 31, 1992 39,500 $10.50-15.00
Granted 500 15.00
Exercised (2,500) 10.50
Canceled (7,500) 10.50-15.00
--------- ------------
Outstanding, December 31, 1993 30,000 10.50-15.00
Granted 7,500 15.00
Exercised (7,250) 10.50-11.00
Canceled - -
--------- ------------
Outstanding, December 31, 1994 30,250 $10.50-15.00
========= ============
The Bank provides a thrift and profit-sharing plan covering substantially
all employees with at least six months of service. The Bank matches 50%
of employee savings up to 6% of the employee's gross salary. In addition,
discretionary contributions may be made by the Bank as determined by the
Board of Directors and paid from earnings of the Bank in amounts not to
exceed the amount deductible for Federal tax purposes. Contributions are
invested in certificates of deposit in the Bank and other investments.
Vesting of the Bank-funded contributions is over a five-year period. The
Bank recorded approximately $68 thousand and $30 thousand in expense
related to this plan for 1994 and 1993, respectively.
Effective January 1, 1993, the Bank adopted a defined contribution Money
Purchase Pension Plan, which is in addition to the existing thrift and
profit sharing plan. The Bank contributes 5% of participants'
compensation. Participants are eligible after six months of service and
vest in over a six-year period. Contributions are invested in
certificates of deposit at the Bank and other investments. The Bank
recorded approximately $42 thousand and $33 thousand in expense related
to this plan for 1994 and 1993, respectively.
(11) Commitments
In the normal course of business, various commitments and contingent
liabilities are outstanding, such as commitments to extend credit and
standby letters of credit, which are not reflected in the financial
statements. No losses are anticipated as a result of these transactions.
At December 31, 1994 and 1993, the Bank had commitments to customers of
approximately $319 thousand and $261 thousand, respectively, for standby
letters of credit, $1.7 million and $6.5 million, respectively, available
on approved lines of credit and unfunded firm loan commitments.
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(10) Regulatory Matters
The Federal Deposit Insurance Corporation Improvement Act of 1991
(FDICIA) was signed into law on December 19, 1991. Regulations
implementing the prompt corrective action provisions of FDICIA became
effective on December 19, 1992. In addition to the prompt corrective
action requirements, FDICIA includes significant changes to the legal
and regulatory environment for insured depository institutions,
including reductions in insurance coverage for certain kinds of
deposits, increased supervision by the Federal regulatory agencies,
increased reporting requirements for insured institutions, and new
regulations concerning internal controls, accounting, and operations.
The prompt corrective action regulations define specific capital
categories based on an institution's capital ratios. The capital
categories, in declining order, are "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized," and
"critically undercapitalized." Institutions categorized as
"undercapitalized" or worse are subject to certain restrictions,
including the requirement to file a capital plan with its primary
Federal regulator, prohibitions on the payment of dividends and
management fees, restrictions on executive compensation, and increased
supervisory monitoring, among other things. Other restrictions may be
imposed on the institution by the FDIC, including requirements to raise
additional capital, sell assets, or sell the entire institution. Once an
institution becomes "critically undercapitalized" it must generally be
placed in receivership or conservatorship within 90 days.
The following table summarized the capital thresholds for each prompt
corrective action capital categories. An institution's capital category
is based on whether it meets the threshold for all three capital ratios
within the category.
Tier 1 Total
Leverage risk-based risk-based
Categories ratio ratio ratio
----------------------- ------------ ------------ -------------
"Well capitalized" 5% or higher 6% or higher 10% or higher
"Adequately capitalized 4% or higher 4% or higher 8% or higher
"Under capitalized less than 4% less than 4% less than 8%
"Significantly under
capitalized" less than 3% less than 3% less than 6%
"Critically under An institution is considered "critically
capitalized under capitalized" if its ratio of tangible
equity to total assets is 2% or less
At December 31, 1994, the Bank's total leverage and tangible equity was
5.8%, Tier 1 risk-based ratio was 10.1%, and total risk-based ratio was
11.4%. At December 31, 1994, management believes the Bank is in the "well
capitalized" category.
At December 31, 1993, the Bank's total leverage and tangible equity was
8.3%, Tier 1 risk-based ratio was 10.5%, and total risk-based ratio was
12.0%
On January 25, 1993, the Bank entered into a Memorandum of Understanding
(the Memorandum)with the Federal Deposit Insurance Corporation (the FDIC).
The Memorandum requires the Bank, primarily, to reduce the level of
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classified assets. As of December 31, 1993, the Bank had met the FDIC's
required level for January 1995. On May 16, 1994, the FDIC released the
Bank from the Memorandum.
(13) Merger With SunTrust Banks, Inc.
On December 6, 1994, the Board of Directors approved an Agreement and Plan
of Merger (Agreement) under which the Bank will merge with a subsidiary of
SunTrust Banks, Inc. (SunTrust). The Agreement provides for the conversion
of each outstanding share of Peoples Common Stock, in accordance with the
election by each Peoples Shareholder, into either: (a) .75 shares of
SunTrust Common Stock for each share of Peoples Common Stock or (b) cash
equal to .75 times the average closing price per share of SunTrust Common
Stock as reported on the NYSE Composite Tape for each of the twenty days
immediately preceding the date of the People's shareholder meeting subject
to an aggregate cash limit equal to the amount resulting from the
conversion of 19.75% of the shares of Peoples Common Stock into cash.
SunTrust may adjust such elections on a pro rata basis so that the cash
limit is met. Consummation of the merger is subject to certain conditions,
including approval of the merger by the Bank's common shareholders and by
certain regulatory agencies. Upon consummation of the merger, the Bank
will be merged with a subsidiary of SunTrust.
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EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made and
entered into as of the 6th day of December, 1994, by and between SUNTRUST
BANKS, INC. ("SunTrust"), a corporation organized and existing under the laws
of the State of Georgia, with its principal office located in Atlanta,
Georgia and PEOPLES STATE BANK ("Peoples"), a bank organized and existing
under the laws of the State of Florida, with its principal office located in
New Port Richey, Florida.
PREAMBLE
The Boards of Directors of SunTrust and Peoples are of the opinion that
the transactions described herein are in the best interests of the parties to
this Agreement and their respective shareholders. The Agreement provides for
the formation of an interim banking corporation that will be a wholly owned
subsidiary of SunTrust ("STI Subsidiary"); for the merger of STI Subsidiary
with and into Peoples so that Peoples will be the surviving entity; and for
the holders of shares of common stock of Peoples to receive either cash,
shares of the common stock of SunTrust, or a combination thereof in exchange
for their shares of common stock of Peoples.
The merger described herein is subject to the approvals of the
shareholders of Peoples, the Board of Governors of the Federal Reserve
System, the Department of Banking and Finance of the State of Florida, the
Federal Deposit Insurance Corporation, and the satisfaction of certain other
conditions described in this Agreement.
In consideration of the above and the mutual representations, warranties,
covenants and agreements set forth herein, the parties agree as follows:
ARTICLE ONE
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set forth below
(in their singular and plural forms as applicable) shall have the following
meanings:
1.1 "Agreement" shall mean this Agreement and Plan of Reorganization.
1.2 "BHC Act" shall mean the federal Bank Holding Company Act of 1956, as
amended.
1.3 "Closing" shall mean the closing of the transactions contemplated
hereunder which will take place as described in Section 3.1 of this
Agreement.
1.4 "Effective Date" shall mean the date and time on which the Merger
contemplated by this Agreement becomes effective pursuant to the laws of the
State of Florida as provided in Section 3.2 of this Agreement.
1.5 "ERISA" shall mean Public Law No. 93-406, the Employee Retirement
Income Security Act of 1974, as amended.
1.6 Exhibits 1 through 6, inclusive, and the Schedules referenced herein
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(including the Peoples Disclosure Schedule), shall mean the respective
Exhibits and Schedules so marked, each of which has been initialed for
identification by an officer of SunTrust and an officer of Peoples, and bound
sets of which have been delivered to the respective Parties. Such Exhibits
and Schedules are hereby incorporated by reference herein and made a part
hereof, and may be referred to in this Agreement and any other related
instrument or document without being attached hereto.
1.7 Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System.
1.8 Florida Articles of Merger" shall mean the Articles of Merger to be
executed by STI Subsidiary and Peoples and filed with the Florida Department
and the Florida Secretary relating to the merger of STI Subsidiary into and
with Peoples as contemplated by Section 2.1 of this Agreement.
1.9 "Florida Department" shall mean the Department of Banking and Finance
of the State of Florida.
1.10 "Florida Secretary" shall mean the Secretary of State of Florida.
1.11 "GAAP" shall mean generally accepted accounting principles.
1.12 "Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended.
1.13 "Merger" shall mean the merger of STI Subsidiary into and with
Peoples as provided in Section 2.1 of this Agreement.
1.14 "Party" shall mean either SunTrust or Peoples and "Parties" shall
mean both SunTrust and Peoples.
1.15 "Pension Plans" shall mean any employee pension benefit plan as such
term is defined in Section 3(2) of ERISA which is maintained by Peoples.
1.16 "Peoples Common Stock" shall mean the $5.00 par value common stock
of Peoples.
1.17 "Peoples Disclosure Schedule" shall mean the disclosure schedule
that has been delivered by Peoples to SunTrust prior to the execution of this
Agreement.
1.18 "Peoples Financial Statements" shall mean the financial statements
of Peoples described in Section 4.5 of this Agreement.
1.19 "Peoples Stock Option Plan" shall mean the stock option plan of
Peoples approved by the shareholders of Peoples at its February 16, 1988
meeting, as amended.
1.20 "Plan of Merger" shall mean the Plan of Merger providing for the
merger of STI Subsidiary into and with Peoples, substantially in the form of
Exhibit 1.
1.21 "Previously Disclosed" shall mean information delivered prior to the
date of this Agreement in the manner and to the counsel described in Section
11.8 of this Agreement and describing in reasonable detail the matters
contained therein.
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1.22 "Proxy Statement" shall mean the proxy statement used by Peoples to
solicit the approval of its shareholders of the transactions contemplated by
this Agreement and the Plan of Merger.
1.23 "Registration Statement" shall mean the Registration Statement on
Form S-4, or other appropriate form, filed with the SEC by SunTrust under the
1933 Act in connection with the transactions contemplated by this Agreement.
1.24 "Regulatory Authorities" shall mean collectively, the Federal
Reserve Board, the Florida Department, the Florida Secretary, the Federal
Deposit Insurance Corporation and the SEC.
1.25 "SEC" shall mean the Securities and Exchange Commission.
1.26 "Shareholders' Meeting" shall mean the meeting of the shareholders
of Peoples held pursuant to Section 8.1 of this Agreement.
1.27 "Subsidiaries" shall mean all those corporations, associations or
other entities of which the entity in question owns or controls 5% or more of
the outstanding equity securities either directly or through an unbroken
chain of entities as to each of which 5% or more of the outstanding equity
securities is owned directly or indirectly by its parent; provided, however,
there shall not be included any such entity acquired through foreclosure, any
such entity which owns or operates an automatic teller machine interchange
network and any such entity the equity securities of which are owned or
controlled in a fiduciary capacity.
1.28 "SunTrust Common Stock" shall mean the $1.00 par value common stock
of SunTrust.
1.29 "SunTrust Companies" shall mean collectively, SunTrust and all
SunTrust Subsidiaries.
1.30 "SunTrust Financial Statements" shall mean the financial statements
of SunTrust and Subsidiaries described in Section 5.4 of this Agreement.
1.31 "SunTrust Subsidiaries" shall mean the Subsidiaries of SunTrust.
1.32 "1933 Act" shall mean the Securities Act of 1933, as amended.
1.33 "1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
ARTICLE TWO
TRANSACTIONS AND TERMS OF MERGER
2.1 Merger. Subject to the terms and conditions of this Agreement and
the Plan of Merger, on the Effective Date, STI Subsidiary shall be merged
into and with Peoples in accordance with the provisions of and with the
effect provided in Chapter 658 of the Florida Banking Code. Peoples shall be
the surviving corporation in the Merger and shall continue to be governed by
the laws of the State of Florida. The Merger shall be consummated pursuant
to the terms of this Agreement and the Plan of Merger, substantially in the
form of Exhibit 1. The Merger shall be effected by the issuance of a
Certificate of Merger by the Florida Secretary. The Plan of Merger provides
for the terms and the effects of the Merger which terms are incorporated
herein and made a part of this Agreement by reference.
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2.2 Manner of Converting Shares. All of the shares of SunTrust issued
and outstanding on the Effective Date shall remain issued and outstanding
after the Effective Date and shall be unaffected by the Merger. The manner
and basis of converting the shares of the capital stock of Peoples and STI
Subsidiary upon consummation of the Merger shall be as follows:
(a) STI Subsidiary Capital Stock. Each share of STI Subsidiary capital
stock issued and outstanding at the Effective Date shall be converted into
one share of issued and outstanding common stock of the surviving
corporation, each of which shall be fully paid and nonassessable.
(b) Peoples Common Stock. At the Effective Date, by virtue of the
Merger and without any action on the part of SunTrust, Peoples or the holders
of Peoples Common Stock:
(i) Subject to the other provisions of this Section 2.2, each share
of Peoples Common Stock issued and outstanding immediately prior to the
Effective Date (excluding treasury shares and shares held by dissenting
shareholders (as defined in Section 2.2(d)) shall be converted into (1) the
right to receive .75 shares of SunTrust Common Stock (the "Exchange Ratio"),
(2) the right to receive the Per Share Cash Amount (as defined below), or (3)
the right to receive a combination of shares of SunTrust Common Stock and
cash determined in accordance with subparagraph (iv) of this Section 2.2(b).
The "Per Share Cash Amount" shall mean .75 multiplied by the arithmetic
average of the closing prices per share of SunTrust Common Stock as reported
on the NYSE Composite Tape for each of the twenty trading days immediately
preceding the date of the Shareholders' Meeting. All shares of Peoples
Common Stock shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each certificate
previously evidencing any such shares shall thereafter represent the right to
receive the consideration set forth in this Section 2.2(b). The holders of
such certificates previously evidencing such shares of Peoples Common Stock
outstanding immediately prior to the Effective Date shall cease to have any
rights with respect to such shares of Peoples Common Stock except as
otherwise provided herein or by law. Such certificates previously evidencing
shares of Peoples Common Stock shall be exchanged for (a) certificates
evidencing whole shares of SunTrust Common Stock issued in consideration
therefor or (b) the Per Share Cash Amount, multiplied by the number of shares
previously evidenced by the canceled certificate, in each case in accordance
with the allocation procedure of this Section 2.2(b) and upon the surrender
of such certificates in accordance with the provisions of Section 3.3,
without interest. No fractional shares of SunTrust Common Stock shall be
issued, and, in lieu thereof, a cash payment shall be made pursuant to
Section 2.2(f).
(ii) The number of shares of Peoples Common Stock to be converted
into the right to receive cash in the Merger shall be equal to 19.75% of the
number of shares of Peoples Common Stock outstanding immediately prior to the
Effective Date (the "Cash Election Number"). The number of shares of Peoples
Common Stock to be converted into the right to receive SunTrust Common Stock
in the Merger shall be equal to 80.25% of the number of shares of Peoples
Common Stock outstanding immediately prior to the Effective Date (the "Stock
Election Number").
(iii) Subject to the allocation and election procedures set forth in
this Section 2.2(b), each record holder of shares of Peoples Common Stock
immediately prior to the Effective Date will be entitled (1) to elect to
receive cash for all such shares (a "Cash Election"), or (2) to elect to
receive SunTrust Common Stock for all of such shares (a "Stock Election").
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All such elections shall be made on a form designed for that purpose (a "Form
of Election"). Holders of record of shares of Peoples Common Stock who hold
such shares as nominees, trustees or in other representative capacities (a
"Representative") may submit multiple Forms of Election, provided that such
Representative certifies that each such Form of Election covers all the
shares of Peoples Common Stock held by each such Representative for a
particular beneficial owner.
(iv) James P. Gills, the record holder of 21.12% of the shares of
Peoples Common Stock, has agreed that he has no preference as to the receipt
of cash or SunTrust Common Stock for his shares, and has authorized
SunTrust's exchange agent (selected pursuant to Section 3.3) to allocate his
shares in a manner such that the number of shares of Peoples Common Stock to
be converted into cash equals the Cash Election Number, and the number of
shares of Peoples Common Stock to be converted into SunTrust Common Stock
equals the Stock Election Number. If, after the allocation of James P.
Gills' shares, the number of shares of Peoples Common Stock to be converted
into cash still exceeds the Cash Election Number, the exchange agent shall
determine such number of shares covered by Cash Elections (the "Cash Election
Shares") which must be re-designated as shares covered by Stock Elections
("Stock Election Shares"). All shareholders who made Cash Elections shall,
on a prorata basis, have such number of their Cash Election Shares re-
designated as Stock Election Shares so that the Cash Election Number and the
Stock Election Number are achieved.
(v) After the allocation procedure set forth in Section 2.2(b)(iv)
is completed, all Cash Election Shares shall be converted into the right to
receive cash and all Stock Election Shares shall be converted into the right
to receive SunTrust Common Stock.
(vi) Elections shall be made by holders of Peoples Common Stock by
mailing, faxing or otherwise delivering to the exchange agent a Form of
Election. To be effective, a Form of Election must be properly completed,
signed and submitted to the exchange agent. SunTrust will have the
discretion, which it may delegate in whole or in part to the exchange agent,
to determine whether Forms of Election have been properly completed, signed
and submitted and to disregard immaterial defects in Forms of Election. The
decision of SunTrust (or the exchange agent) in such matters shall be
conclusive and binding. Neither SunTrust nor the exchange agent will be
under any obligation to notify any person of any defect in a Form of
Election. SunTrust or the exchange agent shall also make all computations
contemplated by this Section 2.2(b) and all such computations shall be
conclusive and binding on the holders of Peoples Common Stock.
(vii) A holder of Peoples Common Stock who does not submit a Form of
Election which is received by the exchange agent prior to the Election
Deadline (as hereinafter defined) shall be deemed to have made a Stock
Election. If SunTrust or the exchange agent shall determine that any
purported Cash Election was not properly made, such purported Cash Election
shall be deemed to be of no force and effect and the shareholder making such
purported Cash Election shall for purposes hereof, be deemed to have made a
Stock Election.
(viii) SunTrust and Peoples shall each use its best efforts to mail
the Form of Election to all persons who are holders of Peoples Common Stock
on the record date for the Shareholders' Meeting, on a date that is not less
than ten (10) calendar days prior to the Effective Date. A Form of Election
must be received by the exchange agent by the close of business on the last
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business day prior to the Effective Date (the "Election Deadline") in order
to be effective. All elections will be irrevocable.
(c) Anti-Dilution Provisions. In the event that SunTrust changes the
number of shares of SunTrust Common Stock issued and outstanding prior to the
Effective Date as a result of a stock split, stock dividend or similar
recapitalization and the record date therefor shall be after the date of this
Agreement and prior to the Effective Date, the ratio under which shares of
Peoples Common Stock may be converted into and exchanged for shares of
SunTrust Common Stock pursuant to Section 2.2(b) of this Agreement shall be
proportionally adjusted.
(d) Dissenting Shareholders. Any holder of shares of Peoples Common
Stock who complies with the provisions of Section 658.44 of the Florida
Banking Code and does not vote for or consent to the Merger and delivers to
Peoples, prior to the taking of the vote on the Merger at the Shareholders'
Meeting, written notice of such shareholders' intent to demand payment for
the shares of Peoples Common Stock held by such holder as of the Effective
Date shall be entitled to receive the fair value of such shares in cash as
determined pursuant to Section 658.44 of the Florida Banking Code; provided,
however, that no such payment shall be made to any dissenting shareholder
unless and until such dissenting shareholder has surrendered to Peoples the
certificate or certificates representing the shares of Peoples Common Stock
for which payment is being made.
(e) Treasury Shares. Any and all shares of Peoples Common Stock held
as treasury shares by Peoples shall be canceled and retired on the Effective
Date, and no consideration shall be issued in exchange therefor.
(f) Fractional Shares. No fractional shares of SunTrust Common Stock
will be issued as a result of the Merger. In lieu of the issuance of
fractional shares pursuant to Section 2.2(b) of this Agreement, cash
adjustments (without interest) will be paid to the holders of Peoples Common
Stock in respect of any fraction of a share of SunTrust Common Stock that
would otherwise be issuable to any holder of Peoples Common Stock, and the
amount of such cash adjustment shall be determined by multiplying the
fraction of a share of SunTrust Common Stock otherwise issuable times the
closing sales price per share of SunTrust Common Stock on the New York Stock
Exchange on the last business day preceding the Effective Date as reported in
the Consolidated Transaction Reporting System.
ARTICLE THREE
CLOSING, EFFECTIVE DATE AND DELIVERY OF CONSIDERATION
3.1 Time and Place of Closing. The Closing will take place at 10:00 a.m.
within twenty (20) business days following (i) receipt of shareholder
approval of Peoples' shareholders, and (ii) receipt of all required
regulatory approvals and the expiration of the waiting period following
approval of the Federal Reserve Board, or at such other time as the Parties,
acting through appropriate executive officers, may mutually agree, but in no
event prior to March 31, 1995 without the consent of both Parties. The place
of Closing shall be at the offices of SunTrust located in Atlanta, Georgia or
at such other place as may be mutually agreed upon by the Parties.
3.2 Effective Date. The Merger and other transactions contemplated by
this Agreement and the Plan of Merger shall become effective on the date and
at the time specified in the Florida Articles of Merger reflecting the Merger
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to be filed with the Florida Department and the Florida Secretary. Unless
otherwise mutually agreed upon in writing by appropriate executive officers
of SunTrust and Peoples, the Effective Date will be as soon as practicable
following the date that all of the conditions precedent specified in this
Agreement have been satisfied or waived by the Party or Parties permitted to
do so.
3.3 Exchange of Peoples Common Stock Certificates. SunTrust, or the
exchange agent designated by SunTrust, shall provide appropriate stock
certificate transmittal materials to the shareholders of Peoples promptly
after the Effective Date. After the Effective Date, each holder of shares of
Peoples Common Stock issued and outstanding on the Effective Date (other than
shares held by dissenting shareholders) shall surrender the certificate or
certificates representing such shares to the exchange agent selected by
SunTrust and shall promptly upon surrender receive in exchange therefor the
consideration provided in Section 2.2(b) of this Agreement, without interest.
The certificate or certificates of Peoples Common Stock so surrendered and
transmittal materials shall be duly completed and endorsed as SunTrust or
such exchange agent may require. To the extent required by Section 2.2(f) of
this Agreement, each holder of shares of SunTrust Common Stock issued and
outstanding on the Effective Date also shall receive, upon surrender of the
certificate or certificates representing such shares, cash in lieu of any
fractional shares of SunTrust Common Stock to which such holder may be
entitled. SunTrust shall not be obligated to deliver the consideration to
which any former holder of Peoples Common Stock is entitled as a result of
the Merger until such holder surrenders his certificate or certificates
representing the shares of Peoples Common Stock for exchange as provided in
this Section 3.3. In addition, no dividend or other distribution payable to
the holders of record of SunTrust Common Stock as of any time subsequent to
the Effective Date shall be paid to the holder of any certificate
representing shares of Peoples Common Stock issued and outstanding on the
Effective Date until such holder surrenders such certificate for exchange as
provided in this Section 3.3. However, upon surrender of the Peoples Common
Stock certificate, both the SunTrust Common Stock certificate (together with
all such withheld dividends or other distributions), any cash payments due
and any withheld cash payments for fractional share interests (without
interest) shall be delivered and paid with respect to each share represented
by such certificate. After the Effective Date each outstanding certificate
that represented shares of Peoples Common Stock prior to the Effective Date
shall be deemed for all corporate purposes (other than the payment of
dividends and other distributions to which the former shareholders of Peoples
Common Stock may be entitled) to evidence only the right of the holder
thereof to receive the consideration provided in Section 2.2(b) of this
Agreement in exchange therefor or as provided in Section 3.3 of this
Agreement.
3.4 Dissenting Shareholders. Any holder of shares of Peoples Common
Stock who complies with Section 658.44 of the Florida Banking Code shall not
be entitled to surrender his certificate or certificates representing shares
of Peoples Common Stock and receive in exchange for each share held the
consideration provided in Section 2.2(b) of this Agreement. Peoples shall
give SunTrust prompt notice of any written demand received by Peoples from
any such holder for payment of the fair value of the shares of Peoples Common
Stock held by him, and SunTrust shall have the right to participate in all
negotiations and proceedings with respect to such demand. Peoples agrees
that it will not, except with the prior written consent of SunTrust,
voluntarily make any payment with respect to, or settle or offer to settle,
any such demand for payment. Each holder of shares of Peoples Common Stock
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who becomes entitled, pursuant to Section 658.44 of the Florida Banking Code,
to payment of the fair value of his shares shall receive payment therefor
from Peoples out of Peoples' own funds without any contribution or
reimbursement by SunTrust (but only after the value thereof shall have been
agreed upon or finally determined as provided in Section 658.44 of the
Florida Banking Code).
3.5 Termination of Exchange Right. Any SunTrust Common Stock or cash
held by the exchange agent referred to in Section 3.3 hereof which remains
undistributed to the shareholders of Peoples for six months after the
Effective Date shall be delivered to SunTrust upon demand, and any
shareholders of Peoples who have not theretofore complied with this Article 3
shall thereafter look only to SunTrust for payment of their claims for cash,
SunTrust Common Stock, any cash in lieu of fractional shares of SunTrust
Common Stock and any dividends or distributions with respect to SunTrust
Common Stock.
3.6 No Liability. Neither SunTrust nor Peoples shall be liable to any
holder of shares of Peoples Common Stock for cash, shares of SunTrust Common
Stock (or dividends or distributions with respect thereto) or cash in lieu of
fractional shares of SunTrust Common Stock delivered to public officials
pursuant to any applicable abandoned property, escheat or similar law.
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF PEOPLES
Except as may be set forth in the Peoples Disclosure Schedule, Peoples
hereby represents and warrants to SunTrust as follows:
4.1 Organization, Standing and Authority. Peoples is a bank duly
organized, validly existing and in good standing under the laws of the State
of Florida, is duly qualified to do business and is in good standing in the
States of the United States and foreign jurisdictions where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified and in which the failure to be so duly qualified could have a
material adverse effect on the financial condition or results of operations
of Peoples, and has corporate power and authority to carry on its business as
now conducted and to own, lease and operate its assets, properties and
business, and to execute and deliver this Agreement and perform its terms,
subject, with respect to the consummation of the Merger, to the approval of
the shareholders of Peoples, and has in effect all federal, state, local and
foreign governmental authorization necessary for it to own or lease its
properties and assets and to carry on its business as is now being conducted,
the absence of which, either individually or in the aggregate, would have a
material adverse effect on the business, financial condition or results of
operations of Peoples.
4.2 Capital Stock. The authorized capital stock of Peoples consists of
1,000,000 shares of Peoples Common Stock, of which 407,258 shares were issued
and outstanding as of the date of this Agreement. Peoples does not hold any
shares of its Peoples Common Stock in its treasury. All of the issued and
outstanding shares of Peoples Common Stock are duly and validly issued and
outstanding and are fully paid and non-assessable. None of the outstanding
shares of Peoples Common Stock has been issued in violation of any preemptive
rights of the current or past shareholders of Peoples. As of the date of
this Agreement, Peoples has reserved 40,000 shares of Peoples Common Stock
for issuance under the Stock Option Plan pursuant to which options covering
30,250 shares of Peoples Common Stock are outstanding at the date of this
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Agreement. Except as set forth above, there are no shares of capital stock
or other equity securities of Peoples outstanding and no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of its capital stock of Peoples or contracts,
commitments, understandings, or arrangements by which Peoples was or may be
bound to issue additional shares of its capital stock or options, warrants or
rights to purchase or acquire any additional shares of its capital stock.
4.3 Peoples Subsidiaries. As of the date of this Agreement there are no
Subsidiaries of Peoples.
4.4 Authority.
(a) The execution and delivery of this Agreement, and the consummation
of the transactions contemplated herein, including the Merger, have been duly
and validly authorized by all necessary corporate action in respect thereof
on the part of Peoples, subject, with respect to the consummation of the
Merger, to the approval of the shareholders of Peoples. This Agreement
represents a legal, valid and binding obligation of Peoples, enforceable
against Peoples in accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by Peoples,
nor the consummation by Peoples of the transactions contemplated herein, nor
compliance by Peoples with any of the provisions hereof, will (i) conflict or
result in a breach of any provision of Peoples' Articles of Incorporation or
Bylaws, or (ii) constitute or result in the breach of any term, condition or
provision of, or constitute a default (or an event that, with notice or lapse
of time or both, would constitute a default), under, or give rise to any
right of termination, cancellation, or acceleration with respect to, or
result in the creation of any lien, charge or encumbrance upon, any property
or assets of Peoples pursuant to any note, bond, mortgage, indenture,
license, agreement, lease, or other instrument or obligation to which Peoples
is a party or by which Peoples or any of its properties or assets may be
subject, and that would, in any such events, have a material adverse effect
on the business, financial condition or results of operations of Peoples or
the transactions contemplated hereby, or (iii) subject to receipt of the
requisite approvals referred to in Section 9.6 of this Agreement, to the
knowledge of Peoples' management, violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Peoples or any of its
properties or assets.
(c) Other than in connection or compliance with the provisions of the
applicable state corporate or securities laws, the 1933 Act and the 1934 Act
and the rules and regulations thereunder and rules of the New York Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc.; and
other than consents, authorizations, approvals, or exemptions required from
the Federal Reserve Board, the Florida Department, the Florida Secretary or
the Federal Deposit Insurance Corporation; and other than notices to or
filings with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation with respect to any employee benefit plans; no notice to, filing
with, authorization of, or exemption by, or consent or approval of any public
body or authority is necessary for the consummation by Peoples of the Merger
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and the other transactions contemplated in this Agreement.
4.5 Financial Statements. Peoples has delivered to SunTrust prior to the
execution of this Agreement copies of the following financial statements of
Peoples included in reports filed with the Federal Deposit Insurance
Corporation (collectively referred to herein as the "Peoples Financial
Statements"): (i) audited Statements of Financial Condition of Peoples at
December 31, 1993, 1992 and 1991, and the related Statements of (a) Income,
(b) Stockholders' Equity and (c) Cash Flows for the years then ended and the
notes thereto as reported upon by KPMG Peat Marwick, independent certified
public accountants, and (ii) unaudited Statements of Financial Condition of
Peoples at March 31, June 30 and September 30, 1994, of (a) Income, (b)
Stockholders' Equity and (c) Cash Flows for the three-month periods then
ended and the notes thereto.
The Peoples Financial Statements (as of the dates thereof and for the
periods covered thereby): (i) are in accordance with the books and records
of Peoples, which are complete and accurate in all material respects and
which have been maintained in accordance with good business practices and
applicable banking and other legal requirements, and (ii) present fairly the
financial position and the results of operations and changes in financial
position of Peoples as of the dates and for the periods indicated, in
accordance with GAAP applicable to banks, applied on a basis consistent with
prior periods except as disclosed in the notes thereto.
4.6 Absence of Undisclosed Liabilities. Peoples has no obligation or
liability (contingent or otherwise) that is material to Peoples, or that when
combined with all similar obligations or liabilities would be material to
Peoples, (i) except as disclosed in the Peoples Financial Statements and (ii)
except for letters of credit, acceptance or unfunded loan commitments and
other liabilities or obligations incurred in the ordinary course of its
business since the respective dates of such financial statements, none of
which might reasonably be expected to have a material adverse effect on the
business, financial condition or results of operations of Peoples, consistent
with past practices. Since December 31, 1993, Peoples has not paid any
obligation or liability which would be material on a consolidated basis to
Peoples, except for obligations paid in connection with transactions by it in
the ordinary course of its business consistent with past practices.
4.7 Tax Matters.
(a) All federal, state, local and foreign tax returns and information
returns (i.e. 1099s, etc.) required to be filed by or on behalf of Peoples
have been timely filed or requests for extensions have been timely filed,
granted and have not expired for periods ending on or before December 31,
1993, and all returns filed are complete and accurate to the best information
and belief of Peoples' management. All taxes shown on filed returns have
been paid. As of the date of this Agreement, there is no audit examination,
deficiency or refund litigation or matter in controversy with respect to any
taxes that might result in a determination adverse to Peoples, except as
reserved against in the Peoples Financial Statements. All taxes, interest,
additions and penalties due with respect to completed and settled
examinations or concluded litigation have been paid. The last fiscal year
for which federal income tax returns for Peoples have been audited by the
Internal Revenue Service was 1991. The state tax returns for Peoples have
never been audited by the Florida Department of Revenue.
(b) Peoples has not executed an extension or waiver of any statute of
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limitations on the assessment or collection of any tax due that is currently
in effect.
(c) Adequate provision for any federal, state, local or foreign taxes
due or to become due for Peoples for the period or periods beginning January
1, 1994, or thereafter through and including the Effective Date, has been
made and is reflected on the September 30, 1994 financial statement included
in the Peoples Financial Statements.
(d) Deferred taxes of Peoples have been provided for in accordance with
GAAP applied on a consistent basis.
4.8 Loans. As of the date of this Agreement, to the best knowledge of
Peoples' management, each loan in excess of $100,000 reflected as an asset of
Peoples in the Peoples Financial Statements as of December 31, 1993, or
acquired since that date, is the legal, valid and binding obligation of the
obligor named therein, and no loans having an unpaid balance (principal and
accrued interest) in excess of $100,000, as of December 31, 1993, is subject
to any asserted defense, offset or counterclaim known to Peoples.
4.9 Allowance for Possible Loan Losses. The allowances for possible loan
losses shown on the Statement of Financial Condition of Peoples as of
December 31, 1993 and September 30, 1994, respectively, were adequate in all
material respects to provide for possible losses, net of recoveries relating
to loans previously charged off, on loans outstanding (including accrued
interest receivable) as of December 31, 1993 and September 30, 1994,
respectively.
4.10 Properties. Except as disclosed or reserved against in the Peoples
Financial Statements, Peoples has good and marketable title free and clear of
all material liens, encumbrances, charges, defaults, or equities of whatever
character to all of the respective properties and assets, tangible or
intangible, reflected in the Peoples Financial Statements as being owned by
Peoples as of December 31, 1993. All buildings, and all fixtures, equipment
and other property and assets which are material to its business on a
consolidated basis, held under leases or subleases by Peoples, are held under
valid instruments enforceable in accordance with their respective terms
(except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the
enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceedings may be
brought). The real property owned by Peoples has never been used for the
handling, treatment, storage or disposal of any hazardous or toxic substance
as defined under any applicable state or federal law. The policies of fire,
theft, liability and other insurance maintained with respect to the assets or
businesses of Peoples provide adequate coverage against loss, and the
fidelity bonds in effect as to which Peoples is a named insured are believed
by management of Peoples to be sufficient.
4.11 Compliance with Laws. Peoples:
(a) Is in compliance with all laws, regulations, reporting and
licensing requirements and orders applicable to its business or employees
conducting its business, the breach or violation of which would have a
material adverse effect on the business, financial condition or results of
operations of Peoples; and
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(b) Has received no notification from any agency or department of
federal, state or local government or the Regulatory Authorities or the staff
thereof asserting that Peoples is not in compliance with any of the statutes,
regulations or ordinances which such governmental authority or Regulatory
Authority enforces, which, as a result of such noncompliance, would result in
a material adverse impact on the business, financial condition or results of
operations of Peoples, or threatening to revoke any license, franchise,
permit or governmental authorization which is material to the business,
financial condition or results of operations of Peoples, and is subject to no
written agreement or written understanding with any Regulatory Authorities
with respect to its assets or business.
4.12 Employee Benefit Plans.
(a) Section 4.12 of the Peoples Disclosure Schedule lists every
pension, retirement, profit-sharing, deferred compensation, stock option,
employee stock ownership, severance pay, vacation, bonus or other incentive
plan, any other written or unwritten employee program, arrangement, agreement
or understanding, whether arrived at through collective bargaining or
otherwise, any medical, vision, dental or other health plan, any life
insurance plan, or any other employee benefit plan or fringe benefit plan,
including, without limitation, any "employee benefit plan," as that term is
defined in Section 3(3) of ERISA, currently or expected to be adopted,
maintained by, sponsored in whole or in part by, or contributed to by Peoples
or any affiliate thereof for the benefit of employees, retirees, dependents,
spouses, directors, independent contractors, or other beneficiaries and
under which employees, retirees, dependents, spouses, directors, independent
contractors or other beneficiaries are eligible to participate (collectively,
the "Benefit Plans"). Any of the Benefit Plans which is an "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, or an
"employee welfare benefit plan" as that term is defined in Section 3(1) of
ERISA, is referred to herein as an "ERISA Plan". No Benefit Plan is or has
been a multi-employer plan within the meaning of Section 3(37) of ERISA.
(b) Set forth in Section 4.12 of the Peoples Disclosure Schedule are
the following documents: true, correct and complete copies of all written
Benefit Plans listed in Schedule 4.12 and all trust agreements or other
funding arrangements, including insurance contracts, all amendments thereto
and, where applicable, with respect to any such plans or plan amendments, all
determination letters, rulings, opinion letters, information letters, or
advisory opinions issued by the Internal Revenue Service or the United States
Department of Labor after December 31, 1974, annual reports or returns,
audited or unaudited financial statements, actuarial valuations, and summary
annual reports for the most recent three plan years, the most recent summary
plan descriptions and any material modifications thereto;
(c) All the Benefit Plans and the related trusts comply with, and have
been administered in compliance with, the provisions of ERISA, the provisions
of the Internal Revenue Code and all other applicable laws, rules and
regulations and collective bargaining agreements. Governmental approvals for
the Benefit Plans have been obtained, including, but not limited to,
favorable determination letters on the qualification of the ERISA Plans and
tax exemption of related trusts, as applicable, under the Internal Revenue
Code, and all such governmental approvals continue in full force and effect.
Neither Peoples nor any administrator nor fiduciary of any such Benefit Plan
(or agent or delegate of any of the foregoing) has engaged in any transaction
or acted or failed to act in any manner which could subject Peoples to any
direct or indirect liability for a breach of any fiduciary, co-fiduciary, or
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other duty under ERISA. No oral or written representation or communication
with respect to any aspect of the Benefit Plans has been made to employees of
Peoples prior to the Effective Date which is not in accordance with the
written or otherwise preexisting terms and provisions of such Benefit Plans
in effect immediately prior to the Effective Date. Except as disclosed in
Section 4.12 of the Peoples Disclosure Schedule, there are no unresolved
claims or disputes under the terms of, or in connection with, the Benefit
Plans and no action, legal or otherwise, has been commenced with respect to
any claim.
(d) Since December 31, 1974, no "party in interest" (as defined in
Section 3(14) of ERISA) or "disqualified person" (as defined in Section
4975(e)(2) of the Internal Revenue Code) of any Benefit Plan has engaged in
any "prohibited transaction" (within the meaning of Section 4975(c) of the
Internal Revenue Code or Section 406 of ERISA). There has been no (i)
"reportable event" (as defined in Section 4043 of ERISA), or event described
in Section 4062(f) or Section 4063(a) of ERISA, or (ii) termination or
partial termination, withdrawal or partial withdrawal with respect to any of
the ERISA Plans which: (1) Peoples maintains or contributes to or has
maintained or contributed to or was required to maintain or contribute to for
the benefit of employees of Peoples; or (2) which has been maintained or
contributed to or was required to be maintained or contributed to by any
member of a controlled group of trades or business as defined in ERISA
Section 4001(a)(14) which has, since January 1, 1975, included Peoples.
(e) For any given ERISA Plan, the fair market value of such plan's
assets equals or exceeds the present value of all benefits (whether vested or
not) accrued to date by all present or former participants in such plan. For
this purpose the assumptions prescribed by the Pension Benefit Guaranty
Corporation for valuing pension plan assets or liabilities upon plan
termination shall be applied, to the extent such assumptions would be
applicable upon termination of each ERISA Plan. To the extent such
assumptions would not apply to the ERISA Plans, the actuarial assumptions
used to determine funding requirements under the plans shall be applied.
(f) As of the Effective Date, Peoples will not have any material
current or future liability under any Benefit Plan that was not reflected in
the Peoples Financial Statements.
(g) Peoples has not at any time and does not now, maintain a Benefit
Plan providing welfare benefits (as defined in ERISA Section 3(1)) to
employees after retirement.
(h) There is no requirement that SunTrust or its affiliates make any
contributions to any Benefit Plan attributable to any period ending on or
before the Closing Date, and each Benefit Plan may be terminated by SunTrust
in it sole discretion on or after the Closing Date without liability of any
kind or description.
(i) The execution or performance of the transactions contemplated by
this Agreement will not create, cause to be payable, accelerate or increase
any obligations under the Benefit Plans, including any obligation to make any
payment which would be an excess golden parachute payment under Section 280G
of the Internal Revenue Code.
4.13 Material Contracts. Except as set forth in Section 4.13 of the
Peoples Disclosure Schedule or otherwise reflected in the Peoples Financial
Statements or the notes thereto, neither Peoples nor any of its assets,
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businesses or operations is as of the date of this Agreement a party to, or
is bound or affected by, or receives benefits under, (i) any material
agreement, arrangement or commitment not cancelable by it without penalty
other than agreements, arrangements or commitments entered into in the
ordinary course of its business consistent with its past practice, (ii) any
agreement, arrangement or commitment relating to the employment, election or
retention in office of any director or officer, (iii) any contract, agreement
or understanding with any labor union, or (iv) any contract or agreement or
amendment thereto that would be required to be filed as an exhibit to a Form
F-2 filed by Peoples as of the date of this Agreement that has not been filed
as an exhibit to Peoples' Form F-2 filed for 1993 or on a report filed with
the Federal Deposit Insurance Corporation under the 1934 Act and identified
to SunTrust.
4.14 Material Contract Defaults. Peoples is not in default in any
material respect under any material contract, agreement, commitment,
arrangement, lease, insurance policy or other instrument to which it is a
party or by which its respective assets, business or operations may be bound
or affected or under which it or its respective assets, business or
operations receives benefits, and there has not occurred any event that with
the lapse of time or the giving of notice or both would constitute such a
default.
4.15 Legal Proceedings. There are no actions, suits or proceedings
instituted or pending, or to the knowledge of Peoples' management, threatened
(or unasserted but considered probable of assertion and which if asserted
would have at least a reasonable probability of an unfavorable outcome)
against Peoples, or against any property, asset, interest, or right of any of
them, that have a reasonable possibility either individually or in the
aggregate of having a material adverse effect on the business, financial
condition or results of operations of Peoples or that have a reasonable
possibility of threatening or impeding the consummation of the transactions
contemplated by this Agreement. Peoples is not a party to any agreement or
instrument, and is not subject to any charter or other corporate restriction
or any judgment, order, writ, injunction, decree, rule, regulation, code or
ordinance, that threatens or might impede the consummation of the
transactions contemplated by this Agreement.
4.16 Absence of Certain Changes or Events. Since December 31, 1993, the
business of Peoples has been operated only in the ordinary course consistent
with past practices and there has not been, occurred or arisen: (i) any
damage, destruction, loss or casualty whether or not covered by insurance
which has had or is reasonably likely to have a material adverse effect on
the business, financial condition or results of operations of Peoples; (ii)
any declaration, setting aside or payment of any dividend or distribution
(whether in cash, stock or property) in respect of the Peoples Common Stock
or any redemption or other acquisition of the Peoples Common Stock by Peoples
or any split, combination or reclassification of shares of Peoples Common
Stock declared or made; (iii) any extraordinary losses suffered not
adequately reserved against, whether or not in the ordinary course of
business; (iv) any material assets mortgaged, pledged or subjected to any
lien, charge or other encumbrance; (v) any agreement to do any of the
foregoing; or (vi) any other event, development or condition of any character
including any change in results of operations, financial condition, method of
accounting or accounting practices, nature of business, or manner of
conducting the business of Peoples that has had, or is reasonably likely to
have, a material adverse effect on the business, financial condition or
results of operations of Peoples.
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4.17 Reports. Since January 1, 1991, Peoples has filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with (i) the Federal Reserve Board,
(ii) the Florida Department, and (iii) the Federal Deposit Insurance
Corporation, including, but not limited to Forms F-2, Forms F-4 and proxy
statements. Each of such reports and documents, including the financial
statements, exhibits and schedules thereto, at the time of filing thereof
complied in all material respects with the laws and rules and regulations
applicable to it and did not contain any statement which at the time and in
light of the circumstances under which it was made, was false or misleading
with respect to any material fact or which omitted to state any material fact
necessary in order to make the statements contained therein not false or
misleading.
4.18 Statements True and Correct. No representation or warranty made by
Peoples nor any statement or certificate or instrument furnished as
information which is Previously Disclosed or included in an Exhibit or
Schedule by Peoples in connection with this Agreement nor any statement or
certificate to be furnished by Peoples to SunTrust pursuant to this Agreement
or in connection with the transactions contemplated by this Agreement,
contains or will contain any untrue statement of material fact or omits or
will omit to state a material fact necessary to make the statements contained
therein not misleading. None of the information supplied or to be supplied
by Peoples for inclusion in the Registration Statement to be filed by
SunTrust with the SEC in connection with the SunTrust Common Stock to be
issued in the Merger, the Proxy Statement to be mailed to Peoples'
shareholders in connection with the Shareholders' Meeting, and any other
documents to be filed with the SEC or any other Regulatory Authority in
connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and, in the case of the Registration
Statement, when it becomes effective, and with respect to the Proxy
Statement, when first mailed to the shareholders of Peoples, fail to comply
in all material respects with the laws and rules and regulations applicable
to it or be false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements therein not
misleading, or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of the Shareholders' Meetings, be false or
misleading with respect to any material facts, or omit to state any material
fact necessary to correct any statement in any earlier communication with
respect to the solicitation of any proxy for the Shareholders' Meetings. All
documents that Peoples is responsible for filing with the Federal Deposit
Insurance Corporation or any other Regulatory Authority in connection with
the Merger will comply as to form in all material respects with the
provisions of applicable law.
4.19 Regulatory Approvals. Peoples knows of no reason why the regulatory
approvals referred to in Section 9.6 of this Agreement should not be obtained
without imposition of a condition or restriction of the type referred to in
the last sentence of such Section.
4.20 Brokers and Finders. Neither Peoples nor any of their respective
officers, directors or employees, has employed any broker or finder or
incurred any liability for any financial advisory fees, brokerage fees,
commissions or finder's fees, and no broker or finder has acted directly or
indirectly for Peoples in connection with this Agreement or any of the
transactions contemplated hereby.
4.21 Environmental Laws. Peoples is not in violation (either directly,
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including without limitation as a successor-in-interest in connection with
the enforcement of remedies to realize the value of properties serving as
collateral for outstanding loans, or indirectly, including without limitation
as a collateral interest holder) of any judgment, decree, order, law,
license, rule or regulation pertaining to environmental matters, including
those arising under the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, the
Federal Water Pollution Control Act, the Federal Clean Air Act, the Toxic
Substances Control Act or any state, territorial or local statute,
regulation, ordinance, order or decree relating to the environment
("Environmental Laws"), other than any violation which would not have a
material adverse effect on the business, financial condition or results of
operations of Peoples. As of the date hereof, neither Peoples nor, to the
knowledge of Peoples, any of Peoples' borrowers, has received written notice
that it has been identified by the United States Environmental Protection
Agency as a potential responsible party under CERCLA with respect to a site
listed on the National Priorities List, 40 C.F.R. Part 300 Appendix B, nor,
as of the date hereof, has Peoples or to its knowledge, any of Peoples'
borrowers, received any written notification from any government agency that
any hazardous waste (as defined by 42 U.S.C. 6903(5)), any hazardous
substances (as defined by 42 U.S.C. 9601(14)), any "pollutant or
contaminant" (as defined by 42 U.S.C. 9601(33)), or any toxic substance,
hazardous materials or oil regulated by any Environmental Laws ("Hazardous
Substances") that it has disposed of has been found at any site at which a
federal or state agency is conducting a remedial investigation or other
action pursuant to any Environmental Law, which notification would reasonably
be expected to result in a material adverse effect on the business, financial
condition or results of operations of Peoples.
4.22 Deposit Insurance. The deposit accounts of Peoples are insured by
the Federal Deposit Insurance Corporation, in accordance with the provisions
of the Federal Deposit Insurance Act as amended (the "FDIC Act"). Peoples
has paid all regular premiums and special assessments and filed all reports
required under the FDIC Act.
ARTICLE FIVE
REPRESENTATIONS AND WARRANTIES OF SUNTRUST
5.1 Organization, Standing and Authority. SunTrust is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Georgia, is duly qualified to do business and is in good standing in the
States of the United States and foreign jurisdictions where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified and in which the failure to be duly qualified could have a material
adverse effect on the business, financial condition or results of operations
of SunTrust and its Subsidiaries on a consolidated basis, and has corporate
power and authority to carry on its business as now conducted and to own,
lease and operate its assets, properties and business, and to execute and
deliver this Agreement and perform its terms. SunTrust is duly registered as
a bank holding company under the BHC Act.
5.2 Capital Stock. The authorized capital stock of SunTrust consists of
(i) 350,000,000 shares of SunTrust Common Stock, of which 116,602,482 shares
were issued and outstanding as of November 30, 1994 and (ii) 50,000,000
shares of SunTrust preferred stock of no par value, of which no shares are
issued and outstanding as of the date of this Agreement. All of the issued
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and outstanding shares of SunTrust Common Stock are, and the shares of
SunTrust Common Stock to be issued upon consummation of the Merger shall be,
duly and validly issued and outstanding and are fully paid and non-
assessable. None of the outstanding shares of SunTrust Common Stock has been
issued in violation of any preemptive rights of its current or former
shareholders.
5.3 Authority.
(a) The Execution and delivery of this Agreement and the consummation
of the transactions contemplated herein, including the Merger, have been duly
and validly authorized by all necessary corporate action in respect thereof
on the part of SunTrust. This Agreement represents a legal, valid and
binding obligation of SunTrust, enforceable against SunTrust in accordance
with its terms.
(b) Neither the execution and delivery of this Agreement by SunTrust,
nor the consummation by SunTrust of the transactions contemplated herein, nor
compliance by SunTrust with any of the provisions hereof will (i) conflict or
result in a breach of any provision of SunTrust's Articles of Incorporation
or Bylaws, or (ii) constitute or result in the breach of any term, condition
or provision of, or constitute a default (or an event that with notice or
lapse of time or both, would constitute a default) under, or give rise to any
right of termination, cancellation, or acceleration with respect to, or
result in the creation of any lien, charge or encumbrance upon, any property
or assets of any of the SunTrust Companies, pursuant to any note, bond,
mortgage, indenture, license, agreement, lease, or other instrument or
obligation to which any of them is a party or by which any of them or any of
their properties or assets may be subject, and that would, in any such
events, have a material adverse effect on the business, financial condition
or results of operations of SunTrust and its Subsidiaries on a consolidated
basis or the transactions contemplated hereby, or (iii) subject to receipt of
the requisite approvals referred to in Section 9.6 of this Agreement, to the
knowledge of SunTrust's management, violate any order, writ, injunction,
decree, statute, rule or regulation applicable to SunTrust or any of its
Subsidiaries of any of their properties or assets.
(c) Other than in connection or compliance with the provisions of the
applicable state corporate or securities laws, the 1933 Act and the 1934 Act
and the rules and regulations thereunder and rules of the New York Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc.; and
other than consents, authorizations, approvals, or exemptions required from
the Federal Reserve Board, the Florida Department, the Florida Secretary or
the Federal Deposit Insurance Corporation, and other than notices to or
filings with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation with respect to any employee benefit plans, no notice to, filing
with, authorization of, or exemption by, or consent or approval of any public
body or authority is necessary for the consummation by SunTrust of the Merger
and the other transactions contemplated in this Agreement.
5.4 Financial Statements. SunTrust has delivered to Peoples prior to the
execution of this Agreement copies of the following financial statements of
SunTrust and its Subsidiaries included in reports filed with the SEC
(collectively referred to herein as the "SunTrust Financial Statements"):
(i) audited Consolidated Balance Sheets of SunTrust at December 31, 1991,
1992 and 1993, and the related Consolidated Statements of (a) Income, (b)
Shareholders' Equity and (c) Cash Flow for the years then ended and the notes
thereto as reported upon by Arthur Andersen & Co., independent certified
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public accountants and (ii) unaudited Balance Sheets of SunTrust at March 31,
June 30 and September 30, 1994, and the related Consolidated Statements of
(a) Income, (b) Shareholders' Equity and (c) Cash Flow for the three-month
periods then ended and the notes thereto.
The SunTrust Financial Statements (as of the dates thereof and for the
periods covered thereby): (i) are in accordance with the books and records
of the SunTrust Companies, which are complete and accurate in all material
respects and which have been maintained in accordance with good business
practices and applicable legal requirements, and (ii) present fairly, in all
material respects, the consolidated financial position and consolidated
results of operations and cash flow of the SunTrust Companies as of the dates
and for the periods indicated, in accordance with GAAP applicable to banks or
bank holding companies, applied on a basis consistent with prior periods,
except as disclosed in the notes thereto.
5.5 Absence of Undisclosed Liabilities. None of the SunTrust Companies
has any obligation or liability (contingent or otherwise) that is material on
a consolidated basis to SunTrust, or that when combined with all similar
obligations or liabilities would be material, on a consolidated basis to
SunTrust, (i) except as disclosed in the SunTrust Financial Statements or by
this Agreement and (ii) except for liabilities or obligations incurred in the
ordinary course of business since the respective dates of such financial
statements consistent with past practices, none of which might reasonably be
expected to have a material adverse effect on the consolidated financial
condition or results of operations of SunTrust and its subsidiaries. Since
December 31, 1993, none of the SunTrust Companies has paid any obligation or
liability which would be material on a consolidated basis to SunTrust, except
for obligations paid in connection with transactions by it in the ordinary
course of its business consistent with past practices.
5.6 Allowance for Possible Loan Losses. The allowances for possible loan
losses shown on the Consolidated Balance Sheets of SunTrust as of December
31, 1993 and September 30, 1994, respectively, were adequate in all material
respects to provide for possible losses, net of recoveries relating to loans
previously charged off, on loans outstanding (including accrued interest
receivable) as of December 31, 1993.
5.7 Compliance with Laws. To the knowledge of SunTrust's management each
of the SunTrust Companies:
(a) Is in compliance with all laws, regulations, reporting and
licensing requirements and orders applicable to its business or employees
conducting its business, the breach of violation of which would have a
material adverse effect on the financial condition or results of operations
of SunTrust on a consolidated basis; and
(b) Has received no notification from any agency or department of
federal, state or local government or the Regulatory Authorities or the staff
thereof asserting that any of the SunTrust Companies is not in compliance
with any of the statutes, regulations or ordinances which such governmental
authority or Regulatory Authority enforces, which, as a result of such
noncompliance, would result in a material adverse impact on the business,
operations or financial condition of SunTrust on a consolidated basis, or
threatening to revoke any license, franchise, permit or governmental
authorization which is material to the business, operations or financial
condition of SunTrust on a consolidated basis, and is subject to no written
agreement or written understanding with any Regulatory Authorities with
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respect to its assets or business.
5.8 Legal Proceedings. There are no actions, suits or proceedings
instituted or pending, or to the knowledge of SunTrust's management,
threatened (or unasserted but considered probable of assertion and which if
asserted would have at least a reasonable probability of an unfavorable
outcome) against any of the SunTrust Companies, or against any property,
asset, interest, or right of any of them, that are reasonably expected to
have either individually or in the aggregate a material adverse effect on the
business, operations or financial condition of the SunTrust Companies or that
are reasonably expected to materially threaten or materially impede the
consummation of the transactions contemplated by this Agreement. None of the
SunTrust Companies is a party to any agreement or instrument or is subject to
any charter or other corporate restriction or any judgment, order, writ,
injunction, decree, rule, regulation, code or ordinance that threatens or
might impede the consummation of the transactions contemplated by this
Agreement.
5.9 Absence of Certain Changes or Events. Since December 31, 1993,
SunTrust and its Subsidiaries on a consolidated basis have not suffered any
change in their business, operations, assets or condition (financial or
otherwise) that would have a material adverse effect on the business,
financial condition or results of operations of SunTrust and its Subsidiaries
on a consolidated basis.
5.10 Reports. Since January 1, 1994, SunTrust has filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with the SEC, including, but not
limited to Forms 10-K, Forms 10-Q and proxy statements, and the Federal
Reserve Board. Each of such reports and documents, including the financial
statements, exhibits and schedules thereto, at the time of filing thereof
complied in all material respects with the laws and rules and regulations
applicable to it and did not contain any statement which at the time and in
light of the circumstances under which it was made, was false or misleading
with respect to any material fact or which omitted to state any material fact
necessary in order to make the statements contained therein not false or
misleading.
5.11 Statements True and Correct. No representation or warranty made by
SunTrust nor any statement or certificate or instrument furnished as
information which is Previously Disclosed or included in an Exhibit or
Schedule in connection with this Agreement nor any statement or certificate
to be furnished by SunTrust to Peoples pursuant to this Agreement or in
connection with the transactions contemplated by this Agreement, contains or
will contain any untrue statement of material fact or omits or will omit to
state a material fact necessary to make the statements contained therein not
misleading. None of the information supplied or to be supplied by SunTrust
for inclusion in the Registration Statement to be filed by SunTrust with the
SEC in connection with the SunTrust Common Stock to be issued in the Merger,
the Proxy Statement to be mailed to Peoples' shareholders in connection with
the Shareholders' Meeting, and any other documents to be filed with the SEC
or any other Regulatory Authority in connection with the transactions
contemplated hereby, will, at the respective time such documents are filed,
and, in the case of the Registration Statement, when it becomes effective,
and with respect to the Proxy Statement, when first mailed to the
shareholders of Peoples, fail to comply in all material respects with the
laws and rules and regulations applicable to it or be false or misleading
with respect to any material fact, or omit to state any material fact
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necessary in order to make the statements therein not misleading, or, in the
case of the Proxy Statement or any amendment thereof or supplement thereto,
at the time of the Shareholders' Meeting, be false or misleading with respect
to any material facts, or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of any proxy for the Shareholders' Meeting. All documents that
SunTrust is responsible for filing with the FDIC or any other Regulatory
Authority in connection with the Merger will comply as to form in all
material respects with the provisions of applicable law.
5.12 Regulatory Approvals. SunTrust knows of no reason why the
regulatory approvals referred to in Section 9.6 of this Agreement should not
be obtained without imposition of a condition or restriction of the type
referred to in the last sentence of such Section.
ARTICLE SIX
COVENANTS AND AGREEMENTS OF PEOPLES
Peoples hereby covenants and agrees with SunTrust as follows:
6.1 Conduct of Business - Negative Covenants. From the date of this
Agreement until the earlier of the Effective Date or until the termination of
this Agreement, Peoples covenants and agrees that it will not do or agree or
commit to do, any of the following without the prior written consent of the
Chief Executive Officer, Chief Financial Officer or Treasurer of SunTrust,
which consent, in the case of actions described in subparagraphs (e) and (f),
shall not be unreasonably withheld:
(a) Amend its Articles of Incorporation or Bylaws; or
(b) Repurchase, redeem, or otherwise acquire or exchange, directly or
indirectly, any shares of its capital stock or any securities convertible
into any shares of its capital stock; or,
(c) Except as otherwise expressly permitted in this Agreement, make or
effect any change in equity capitalization; or,
(d) Acquire direct or indirect control over any corporation,
association, firm or organization, other than in connection with (i) mergers,
acquisitions, or other transactions approved in advance in writing by
SunTrust, (ii) foreclosures in the ordinary course of business, or (iii)
acquisitions of control by a banking subsidiary in its fiduciary capacity;
or,
(e) Sell or otherwise dispose of any assets other than in the ordinary
course of business for reasonable and adequate consideration; provided,
however, such covenant in this subparagraph (e) shall not be applicable to
the sale of assets sold after the date of this Agreement in transactions not
otherwise prohibited by this Agreement having an aggregate value not in
excess of $50,000; or,
(f) Other than incurring short-term debt of the type issued solely to
banks and other financial institutions that can be paid at any time without
prepayment penalty or premium, incur any additional debt obligation or other
obligation for borrowed money in excess of an aggregate of $100,000 for
Peoples except in the ordinary course of business of Peoples consistent with
past practices (and such ordinary course of business shall include, but shall
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not be limited to, creation of deposit liabilities, purchases of federal
funds, sales of certificates of deposit and entry into repurchase
agreements); or,
(g) Grant any general increase in compensation to its employees as a
class or to any of its officers, except in accordance with past practice or
as required by law; pay any bonus except in accordance with past practice or
the provisions of any applicable program or plan adopted by the Board of
Directors of Peoples prior to the date of this Agreement; grant any material
increase in fees or other increases in compensation or other benefits to any
of its directors except as in accordance with past practice; or effect any
change in retirement benefits for any class of its employees or officers
(unless such change is required by applicable law) that would materially
increase the retirement benefit liabilities of Peoples and its Subsidiaries
on a consolidated basis; or,
(h) Amend any existing employment contract between Peoples and any
person having a salary thereunder in excess of $50,000 per year (unless such
amendment is required by law) to increase the compensation or benefits
payable thereunder or enter into any new employment contract with any person
that Peoples does not have the unconditional right to terminate without
liability (other than liability for services already rendered) at any time on
or after the Effective Date; or,
(i) Adopt any new employee benefit plan of Peoples thereof or make any
material change in or to any existing employee benefit plans of Peoples other
than any such change that is required by law or that, in the opinion of
counsel, is necessary or advisable to maintain the tax qualified status of
any such plan.
6.2 Conduct of Business -- Affirmative Covenants. Unless the prior
written consent of SunTrust shall have been obtained and except as otherwise
contemplated herein, Peoples will operate its business only in the usual,
regular and ordinary course; preserve intact its business organizations and
assets and maintain its rights and franchises; and take no action which would
(i) adversely affect its ability to obtain any necessary approvals of
governmental authorities required for the transactions contemplated hereby
without imposition of a condition or restriction of the type referred to in
Section 9.6 of this Agreement, or (ii) adversely affect the ability of
Peoples to perform its covenants and agreements under this Agreement.
6.3 Adverse Changes in Condition. Peoples hereby agrees to give written
notice promptly to SunTrust concerning any material adverse change in its
condition from the date of this Agreement until the Effective Date that might
adversely affect the consummation of the transactions contemplated hereby or
upon becoming aware of the occurrence or impending occurrence of any event or
circumstance which would cause or constitute a material breach of any of the
representations, warranties or covenants of Peoples contained herein.
Peoples shall use its best efforts to prevent or promptly remedy the same.
6.4 Cooperation. Peoples hereby covenants and agrees to cooperate fully
with SunTrust to provide such support, assistance and information to SunTrust
as may be reasonably requested by it in connection with its application for
all necessary approvals by public authorities, federal, state or local, in
connection with the transactions contemplated hereby, and to consult
regularly with SunTrust in the preparation of any such applications or the
Registration Statement and the Proxy Statement.
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6.5 Investigation and Confidentiality. Prior to the Effective Date,
SunTrust may make or cause to be made such investigation, if any, of the
business and properties of Peoples, and of respective financial and legal
condition as SunTrust reasonably deems necessary or advisable to familiarize
itself and its advisers with such business, properties, and other matters,
provided that such investigation shall be reasonably related to the
transactions contemplated hereby and shall not interfere unnecessarily with
normal operations. Peoples agrees to furnish SunTrust and SunTrust's
advisers with such financial and operating data and other information with
respect to its businesses, properties, and employees as SunTrust shall from
time to time reasonably request. No investigation by SunTrust shall affect
the representations and warranties of Peoples, and subject to Section 10.3 of
this Agreement, each such representation and warranty shall survive any such
investigation. SunTrust shall, and shall cause its advisers and agents, to
maintain the confidentiality of all confidential information furnished to it
by Peoples concerning Peoples' business, operations and financial condition
and, if this Agreement is terminated prior to the Effective Date, shall not
use such information for any purpose for a period of five (5) years from the
date of this Agreement. If this Agreement is terminated prior to the
Effective Date, SunTrust shall promptly return all documents and copies
thereof, and all work papers containing confidential information received
from Peoples.
6.6 Reports. Peoples shall file all reports required to be filed with
the Florida Department and the Federal Deposit Insurance Corporation by
Peoples between the date of this Agreement and the Effective Date and shall
deliver to SunTrust copies of all such reports promptly after the same are
filed. If financial statements are contained in any such reports to the
Federal Deposit Insurance Corporation, such financial statements will fairly
present the financial position of Peoples as of the dates indicated and the
results of operations and changes in financial position for the period then
ended in accordance with GAAP applicable to banks, applied on a consistent
basis. As of their respective dates such reports filed with the Federal
Deposit Insurance Corporation will comply in all material respects with the
rules and regulations promulgated by the Federal Deposit Insurance
Corporation and will not contain any untrue statement of material fact or
omit 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. Any financial statements contained in
any such reports to another Regulatory Authority shall be presented in
accordance with the applicable rules, regulations or standards applicable to
such reports.
6.7 Current Information. During the period from the date of this
Agreement to the Effective Date, Peoples shall cause one or more of its
representatives to confer on a regular and frequent basis with
representatives of SunTrust or SunTrust and to report on the general status
of its ongoing operations. Peoples shall promptly notify SunTrust of any
material change in the normal course of Peoples' business or in the
operations of its properties and of any material governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated) or the institution or the threat of any material litigation
involving Peoples, and will keep SunTrust fully informed with respect to such
events.
6.8 Dividends. From the date of this Agreement to the earlier of the
Effective Date or the termination of this Agreement, Peoples shall not
declare or pay any dividends, or make any cash or in-kind distributions, on
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or in respect of its capital stock without the prior written consent of
SunTrust.
6.9 Capital Stock. Without the prior written consent of SunTrust, from
the date of this Agreement to the earlier of the Effective Date or the
termination of this Agreement, Peoples shall not, and shall not enter into
any agreement to, issue, sell, or otherwise permit to become outstanding any
additional shares of Peoples Common Stock, preferred stock or any other
capital stock of Peoples, including any shares of capital stock held in
Peoples' treasury, or any stock appreciation rights, or any option, warrant,
conversion, or other right to purchase any such stock, or any security
convertible into any such stock; provided, however, such covenant in this
Section 6.9 shall not be applicable with respect to the sale of capital stock
of Peoples upon the exercise of options pursuant to the Peoples Stock Option
Plan.
6.10 Agreement of Affiliates. Peoples agrees to deliver to SunTrust no
later than the date of this Agreement a letter identifying all persons whom
Peoples reasonably believes, at the time the Merger is submitted to a vote of
its shareholders, will be "affiliates" of Peoples for purposes of Rule 145
under the 1933 Act. Peoples shall cause each person who is identified as an
"affiliate" in the letter referred to above to deliver to SunTrust within ten
(10) days of the date of this Agreement, a written agreement, substantially
in the form of Exhibit 2, providing that such person will not sell, pledge,
transfer or otherwise dispose of the shares of Peoples Common Stock held by
such person except as contemplated by this Agreement and will not sell,
pledge, transfer or otherwise dispose of the shares of Peoples Common Stock
to be received by such person upon consummation of the Merger except in
compliance with applicable provisions of the 1933 Act and the rules and
regulations thereunder.
6.11 Certain Actions. Except with respect to this Agreement and
transactions contemplated hereby, Peoples shall not solicit or encourage
(including by way of furnishing any information that it is not legally
obligated to furnish) any inquiry or proposal relating to the merger or
consolidation of Peoples with any entity or the acquisition of Peoples or all
or substantially all of its assets or properties by any person or entity.
Peoples shall not negotiate with respect to any such transaction, nor shall
it reach any agreement or understanding (formal or informal, written or
otherwise) with respect to any such transaction. It may, however,
communicate information about such proposal to its shareholders if and to the
extent that it is required to do so in order to reasonably comply with its
legal obligations. Peoples shall promptly notify SunTrust orally and in
writing in the event it receives any inquiry or proposal relating to any such
transaction.
6.12 Agreement as to Efforts to Consummate. Subject to the terms and
conditions of this Agreement, Peoples hereby agrees to use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper, or advisable under applicable laws and
regulations to consummate and make effective, as soon as practicable after
the date of this Agreement, the transactions contemplated by this Agreement
including, without limitation, using reasonable effort to lift or rescind any
injunction or restraining order or other order adversely affecting the
ability of the Parties to consummate the transaction contemplated herein.
Peoples shall use, and shall cause each of the Peoples Subsidiaries to use,
its best efforts to obtain consents of all third parties and governmental
bodies necessary or desirable for the consummation of the transactions
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contemplated by this Agreement.
6.13 Termination or Exercise of Options. No later than thirty (30) days
after the date of this Agreement, Peoples shall have delivered to SunTrust
letters in the form of Exhibit 6 hereto which have been executed by each
holder of options for shares of Peoples Common Stock. On or before the date
of Closing, all of the holders of options for shares of Peoples Common Stock
under the Peoples Stock Option Plan shall have exercised such options and
Peoples shall have issued the Peoples Common Stock to such option holders, or
Peoples shall have terminated and cashed out such options at any time up
until twenty business days preceding the date of the Shareholders' Meeting at
a price per share equal to .75 times the closing price per share of SunTrust
Common Stock as reported on the NYSE Composite Tape on the date the option
holder elects to have such options cashed out less the option price set forth
in such holders' option agreement. If by the date of Closing options remain
outstanding which have not been exercised or cashed out, the options will be
automatically cashed out on the date of Closing immediately prior to the
merger by Peoples at a price per share equal to .75 times the arithmetic
average of the closing prices per share of SunTrust Common Stock as reported
on the NYSE Composite Tape for each of the twenty trading days immediately
preceding the Shareholders' Meeting less the option price set forth in such
option holders' option agreement.
ARTICLE SEVEN
COVENANTS AND AGREEMENT OF SUNTRUST
SunTrust hereby covenants and agrees with Peoples as follows:
7.1 Conduct of Business. Except as contemplated herein, SunTrust will
take and will cause the SunTrust Subsidiaries to take no action which would
(i) adversely affect the ability of any of them to obtain any necessary
approvals of governmental authorities required for the transactions
contemplated hereby without imposition of a condition or restriction of the
type referred to in Section 9.6 of this Agreement or (ii) adversely affect
the ability of SunTrust to perform its covenants and agreements under this
Agreement.
7.2 Adverse Changes in Condition. SunTrust hereby agrees to give written
notice promptly to Peoples concerning any material adverse change in its
condition or that of any of the SunTrust Subsidiaries from the date of this
Agreement until the Effective Date that might adversely affect the
consummation of the transactions contemplated hereby or upon becoming aware
of the occurrence or impending occurrence of any event or circumstance which
would cause or constitute a material breach of any of the representations,
warranties or covenants of SunTrust contained herein. SunTrust shall use its
best efforts to prevent or promptly remedy the same.
7.3 Investigation and Confidentiality. Prior to the Effective Date,
Peoples may make or cause to be made such investigation, if any, of the
business and properties of SunTrust, the SunTrust Companies and of their
respective financial and legal condition as Peoples reasonably deems
necessary or advisable to familiarize itself and its advisers with such
business, properties, and other matters, provided that such investigation
shall be reasonably related to the transactions contemplated hereby and shall
not interfere unnecessarily with normal operations. SunTrust agrees to
furnish Peoples and Peoples' advisers with such financial and operating data
and other information with respect to its businesses, properties and
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employees as Peoples shall from time to time reasonably request. No
investigation by Peoples shall affect the representations and warranties of
SunTrust, and subject to Section 10.3 of this Agreement, each such
representation and warranty shall survive any such investigation. Peoples
shall, and shall cause it advisers and agents, to maintain the
confidentiality of all confidential information furnished to it by SunTrust
concerning SunTrust's business, operations and financial condition and shall
not use such information for any purpose for a period of five (5) years after
the date of this Agreement except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to the
Effective Date, Peoples shall promptly return all documents and copies
thereof, and all work papers containing confidential information received
from SunTrust.
7.4 Reports. SunTrust shall file all reports required to be filed with
the SEC and the Federal Reserve Board by SunTrust between the date of this
Agreement and the Effective Date and shall deliver to Peoples copies of all
such reports promptly after the same are filed. If financial statements are
contained in such reports to the SEC, such financial statements will fairly
present the financial position of SunTrust and its Subsidiaries on a
consolidated basis as of the date indicated and the results of operations and
changes in the financial position for the period then ended in accordance
with GAAP applicable to banks and bank holding companies, applied on a
consistent basis. As of their respective dates such reports filed with the
SEC will comply in all material respects with the rules and regulations
promulgated by the SEC and will not contain any untrue statement of material
fact or omit 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.
7.5 Approval of Merger. On or before the Effective Date, SunTrust, as
the sole shareholder of STI Subsidiary, will vote all of the issued and
outstanding shares of STI Subsidiary in favor of the Plan of Merger and the
transactions contemplated thereby.
7.6 Applications. SunTrust shall prepare and file, or shall cause to be
prepared and filed, applications with the Federal Reserve Board, the Florida
Department and the Federal Deposit Insurance Corporation seeking the
requisite approvals necessary to consummate the transactions contemplated by
this Agreement, and shall take such other steps and actions in furtherance
thereof as it deems appropriate in order to be able to secure such approvals.
7.7 Listing. The SunTrust Common Stock will either be listed on the New
York Stock Exchange or SunTrust shall use its best efforts to have the New
York Stock Exchange approve the SunTrust Common Stock listing thereon.
7.8 Agreement as to Efforts to Consummate. Subject to the terms and
conditions of this Agreement, SunTrust agrees to use all reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done,
all things necessary, proper, or advisable under applicable laws and
regulations to consummate and make effective, as soon as practicable after
the date of this Agreement, the transactions contemplated by this Agreement,
including, without limitation, using reasonable effort to lift or rescind any
injunction or restraining order or other order adversely affecting the
ability of the Parties to consummate the transaction contemplated herein.
SunTrust shall, and shall cause each of the SunTrust Subsidiaries to, use its
best efforts to obtain consents of all third parties and governmental bodies
necessary or desirable for the consummation of the transactions contemplated
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by this Agreement.
7.9 Indemnification. SunTrust agrees that all rights to indemnification
and all limitations of liability existing in favor of the officers and
directors of Peoples as provided in Peoples' Articles of Incorporation and
Bylaws as of the date hereof with respect to matters occurring prior to the
Effective Date shall survive the Merger and shall continue in full force and
effect, without any amendment thereto, for a period of not less than six (6)
years from the Effective Date; provided, however, that all rights to any
indemnification in respect of any claim (a "Claim") asserted or made within
such period shall continue until the final disposition of such Claim.
ARTICLE EIGHT
ADDITIONAL AGREEMENTS
8.1 Registration and Proxy Statement; Shareholder Approval. As soon as
reasonably practicable after the execution of this Agreement, SunTrust shall
prepare and file the Registration Statement with the FDIC and the SEC, and
SunTrust and Peoples shall use their best efforts to cause the Registration
Statement to become effective under the 1933 Act and shall take any action
required to be taken under the applicable state Blue Sky or securities laws
in connection with the issuance of the shares of SunTrust Common Stock upon
consummation of the Merger. Each Party shall furnish all information
concerning it and the holders of its capital stock as the other Party may
reasonably request in connection with such action. Peoples shall call a
Shareholders' Meeting to be held as soon as reasonably practicable after the
date of this Agreement for the purpose of voting upon this Agreement, the
Plan of Merger, the Merger and such other related matters as it deems
appropriate. In connection with the Shareholders' Meeting, (i) Peoples shall
prepare and file a Proxy Statement with the FDIC and mail it to its
shareholders; (ii) the Board of Directors of Peoples shall recommend (subject
to compliance with their fiduciary duty as advised by counsel and subject to
receipt of the investment banking letter referred to in Section 9.11 of this
Agreement) to its shareholders the approval of this Agreement and the Plan of
Merger, and (iii) Peoples shall use its best efforts to obtain such
shareholders' approval. As soon as practicable after the Shareholders'
Meeting, Peoples shall deliver to SunTrust a certificate of the Secretary of
Peoples containing the names of the shareholders of Peoples that both: (i)
have not voted for the Merger contemplated hereby and (ii) have given written
notice prior to the taking of the vote on the Merger at the Shareholders'
Meeting that they dissent from the Merger ("Certificate of Objections"). The
Certificate of Objections shall include the number of shares of Peoples
Common Stock held by each such shareholder and the mailing address of each
such shareholder.
8.2 Filings with the Florida Department and the Florida Secretary. STI
Subsidiary and Peoples shall execute and file the Florida Articles of Merger
with the Florida Department as provided in Section 3.2 in anticipation of the
Closing of the transactions contemplated by this Agreement, and shall specify
an effective date.
8.3 Tax Opinion. SunTrust and Peoples hereby agree to use their efforts
to obtain a written opinion of King & Spalding, tax counsel to SunTrust,
reasonably acceptable to SunTrust and Peoples to the effect that the
transactions contemplated hereby, including the Merger, will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code and that the exchange in the Merger of SunTrust Common Stock for Peoples
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Common Stock will not give rise to gain or loss to the shareholders of
Peoples with respect to such exchange (except to the extent of any cash paid
in lieu of fractional shares) (the "Tax Opinion").
8.4 Press Releases. Prior to the Effective Date, SunTrust and Peoples
shall consult with each other as to the form and substance of any press
release or other public disclosure materially related to this Agreement or
any other transaction contemplated hereby; provided, however, that nothing in
this Section 8.4 shall be deemed to prohibit any Party from making any
disclosure which its counsel deems necessary or advisable in order to satisfy
such Party's disclosure obligations imposed by law.
ARTICLE NINE
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
The obligations of SunTrust, on the one hand, and Peoples, on the other
hand, to perform this Agreement and consummate the Merger are subject to the
satisfaction of the following conditions, unless waived by SunTrust or
Peoples, as the case may be, pursuant to Section 11.5 of this Agreement:
9.1 Representations and Warranties. The representations and warranties
of the other Party set forth or referred to in this Agreement shall be true
and correct in all material respects as of the date of this Agreement and as
of the Effective Date with the same effect as though all such representations
and warranties had been made on and as of the Effective Date, except for any
such representations and warranties with reference to a specified date, which
shall be true and correct in all material respects as of such date.
9.2 Performance of Agreements and Covenants. Each and all of the
covenants and agreements of the other Party to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby prior
to the Effective Date shall have been duly performed and complied with in all
material respects.
9.3 Certificates. The other Party shall have delivered to the Party a
certificate, dated as of the Effective Date and signed on its behalf by its
Chairman of the Board, its Chief Financial Officer or Treasurer, and its
Controller, to the effect that (i) the conditions of its obligations set
forth in Section 9.1 and Section 9.2 of this Agreement have been satisfied
and (ii) that there has been no material adverse change in the business,
consolidated financial condition or consolidated results of operations of
such other Party from that reflected on the December 31, 1993 and September
30, 1994, financial statements referred to in Section 4.5 as to Peoples and
Section 5.4 as to SunTrust, all in such reasonable detail as the Party shall
request.
9.4 Corporate Authorization. All action necessary to authorize the
execution, delivery and performance of this Agreement, the Florida Articles
of Merger and the consummation of the transactions contemplated hereby and
thereby shall have been duly and validly taken by the other Party. The other
Party shall have furnished to the Party certified copies of resolutions duly
adopted by such other Party's Board of Directors evidencing the same.
9.5 Shareholder Approval. The shareholders of Peoples shall have
approved this Agreement, the Plan of Merger and the Merger, and the
consummation of the transactions contemplated hereby, as and to the extent
required by law and by the provisions of any governing instruments, and
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Peoples shall have furnished to SunTrust certified copies of resolutions duly
adopted by Peoples' shareholders evidencing the same. Holders of more than
ten percent (10%) of the issued and outstanding shares of Peoples Common
Stock shall not have filed written notice with Peoples at or prior to the
Peoples Shareholders' Meeting that they intend to demand payment of the fair
value of their shares of Peoples Common Stock and have voted against, or
abstained from voting for or against, the adoption of the Agreement.
9.6 Consents and Approvals. All approvals and authorizations of, filings
and registrations with, and notifications to, all federal and state
authorities required for consummation of the Merger and for the preventing of
any termination of any right, privilege, license or agreement of either Party
or any of its respective Subsidiaries which, if not obtained or made, would
have a material adverse impact on the financial condition or results of
operation of such Party and its Subsidiaries on a consolidated basis, shall
have been obtained or made and shall be in full force and effect and all
waiting periods required by law shall have expired. To the extent that any
lease, license, loan or financing agreement or other contract or agreement to
which Peoples is a party requires the consent of or waiver from the other
party thereto as a result of the transactions contemplated by this Agreement,
such consent or waiver shall have been obtained, unless (i) waived by
SunTrust in accordance with Section 11.5 of this Agreement, or (ii) the
failure to obtain such consent or waiver would not have a material adverse
impact on the business, operation or financial condition of Peoples following
the Merger or the transactions contemplated hereby. Any approval obtained
from any Regulatory Authority which is necessary to consummate the
transactions contemplated hereby shall not be conditioned or restricted in a
manner in which in the judgment of the Board of Directors of either Party
materially adversely affects the economic assumptions of the transactions
contemplated hereby so as to render inadvisable the consummation of the
Merger.
9.7 Legal Proceedings. No action or proceedings shall have been
instituted by any governmental authority or to the knowledge of the Parties
threatened by any governmental authority seeking to restrain the consummation
of the transactions contemplated by this Agreement which, in the opinion of
the Board of Directors of SunTrust or Peoples, renders it impossible or
inadvisable to consummate the transactions provided for in this Agreement.
9.8 Material Adverse Change. There shall have been no determination by
the Board of Directors of the Party that the Merger or the other transactions
contemplated by this Agreement have become impractical because of any state
of war, national emergency, or banking moratorium shall have been declared in
the United States or a general suspension of trading on the New York Stock
Exchange shall have occurred. There shall have been no determination by the
Board of Directors of the Party that the consummation of the Merger or the
other transactions contemplated by this Agreement is not in the best
interests of such Party or its shareholders by reason of a material adverse
change in the business, consolidated financial condition or consolidated
results of operations of the other Party from that reflected in the December
31, 1993 and September 30, 1994, financial statements of such Party referred
to in Section 4.5 as to Peoples and Section 5.4 as to SunTrust.
9.9 Opinions of Counsel. SunTrust, in the case solely of Peoples'
conditions, shall have delivered to Peoples an opinion of corporate counsel
to SunTrust, dated as of the Effective Date, substantially in the form and to
the effect specified in Exhibit 3, and Peoples, in the case of SunTrust's
conditions, shall have delivered to SunTrust an opinion of Bush Ross Gardner
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Warren & Rudy, P.A. or of other counsel reasonably satisfactory to SunTrust
and its counsel, dated as of the Effective Date, substantially in the form
and to the effect specified in Exhibit 4.
9.10 Tax Matters. Each Party shall have delivered to the other Party a
Certificate, dated as of the Effective Date, signed by its Chairman of the
Board, its Chief Financial Officer or Treasurer, and by its Controller to the
effect that, to the best knowledge and belief of such officers, the statement
of facts and representations made on behalf of the management of such Party,
presented to the legal counsel delivering the Tax Opinion, were at the date
of such presentation true, correct and complete, and are on the date of such
Certificate true, correct and complete, as though such statement of facts and
representations had been made on the date of such Certificate. Each Party
shall have received a copy of the Tax Opinion referred to in Section 8.3 of
this Agreement.
9.11 Letter from Investment Banking Firm. Peoples shall have received,
for a fee not to exceed $12,000, a letter from Allen C. Ewing & Co., dated
within seven (7) days after the date of this Agreement, to the effect that in
the opinion of such firm the terms of the Merger are fair to the shareholders
of Peoples from a financial point of view.
9.12 Registration Statement. The Registration Statement shall be
effective under the 1933 Act and no stop orders 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 1934 Act, and
with respect to the transactions contemplated hereby, shall be pending before
or threatened by the SEC.
9.13 Agreement with Edward Heveran. With respect solely to SunTrust's
conditions, Edward Heveran shall have executed and delivered to SunTrust an
agreement in the form attached hereto as Exhibit 5.
9.14 Termination or Exercise of Options. With respect solely to
SunTrust's conditions, all of the holders of options for shares of Peoples
Common Stock shall have exercised such options or Peoples shall have
terminated and cashed out such options in accordance with Section 6.13
herein.
ARTICLE TEN
TERMINATION
10.1 Termination. Notwithstanding any other provision of this Agreement
or the Plan of Merger and notwithstanding the approval of this Agreement and
the Plan of Merger by the shareholders of Peoples, this Agreement may be
terminated and the Merger abandoned at any time prior to the Closing Date:
(a) By a vote of a majority of the Board of Directors of both SunTrust
and Peoples; or
(b) By a vote of a majority of the Board of Directors of either
SunTrust or Peoples in the event of a material breach by the other Party of
any representation, warranty, covenant or agreement contained herein which
cannot be or has not been cured within thirty (30) days after the giving of
written notice to the breaching Party of such breach; or
(c) By a vote of a majority of the Board of Directors of either
SunTrust or Peoples in the event that the Merger shall not have been
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consummated by September 30, 1995, other than as a result of a material
breach by such party of any representation, warranty or agreement of such
party contained herein; or
(d) By a vote of a majority of the Board of Directors of either
SunTrust or Peoples in the event (i) any approval of any governmental or
other Regulatory Authority required for consummation of the Merger and the
other transactions contemplated hereby shall have been denied by final non-
appealable action of such authority or if any action taken by such authority
is not appealed within the time limit for appeal or (ii) if the shareholders
of Peoples fail to vote their approval of the Merger and the transactions
contemplated hereby as required by the Florida Banking Code at the
Shareholders' Meeting where the transactions were presented to such
shareholders for approval; or
(e) By the Chairman of the Board, the Chief Financial Officer or
Treasurer of SunTrust on or before January 6, 1995, if such officer
determines, in his sole discretion, that as a result of information
discovered during SunTrust's investigation of the business and properties of
Peoples pursuant to Section 6.5, the proposed transaction is no longer
desirable to SunTrust.
10.2 Effect of Termination. In the event of the termination of this
Agreement and the Plan of Merger pursuant to Section 10.1 of this Agreement,
this Agreement and the Plan of Merger and the obligation of the Parties to
consummate the transactions contemplated hereby shall terminate without
prejudice to the rights of any Party terminating this Agreement pursuant to
subparagraph (b) above to seek damages or other remedies against the
breaching party in respect of the breach of this Agreement, except that the
provisions of Sections 10.4 and 11.1 of this Agreement shall survive any such
termination.
10.3 Representations, Warranties and Covenants not to Survive. The
respective representations and warranties of the Parties contained in this
Agreement and the Plan of Merger and in the instruments and certificates
delivered pursuant hereto and thereto shall expire on, and be terminated and
extinguished on the Effective Date; provided, however, that any
representation or warranty in any agreement, contract, report, opinion,
undertaking, or other document or instrument delivered hereunder in whole or
in part by any person other than Peoples, SunTrust or STI Subsidiary (or
directors or officers thereof in their capacities as such) shall not so
terminate and shall not be so extinguished; and provided further that no
representation or warranty of Peoples, or SunTrust contained herein shall be
deemed to be terminated or extinguished so as to deprive Peoples or SunTrust
of any defense at law or in equity which any of them otherwise would have to
any claim against them by any person, including, without limitation, any
shareholder or former shareholder of either Peoples or SunTrust, the
representations and warranties aforesaid (except to the extent that they
shall have been waived in accordance herewith) being material inducements to
the consummation by Peoples and SunTrust of the Merger and other transactions
contemplated hereby.
10.4 Termination Fee. If on or before September 30, 1995, (a) Peoples
enters into a definitive agreement ("Definitive Agreement") or consummates a
transaction with any corporation, partnership, person or other entity or
group (other than any of the SunTrust Companies) with respect to (i) the sale
of all or a substantial portion of the assets of Peoples, (ii) the sale of at
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least 50% of the then outstanding shares of Peoples Common Stock, or (iii) a
merger (except for a merger pursuant to which Peoples acquires another bank
and such transaction does not result in the shareholders of Peoples
immediately prior to such merger owning less than 50% of the voting
securities of the ultimate parent of the surviving entity immediately after
the transaction), consolidation or other business combination involving
Peoples or (b) any corporation, partnership, person or other entity or group
(other than any of the SunTrust Companies) acquires beneficial ownership (as
the terms "person" and "beneficial ownership" are defined for purposes of
Rule 13d-3 under the 1934 Act) of at least 50% of the then outstanding shares
of Peoples Common Stock in one or more transactions that are supported,
recommended or endorsed by the Board of Directors of Peoples, Peoples shall
pay to SunTrust a termination fee of $750,000 ("Fee"); provided, however,
that no Fee shall be due and payable hereunder if this Agreement is
terminated (i) pursuant to Sections 10.1(a), 10.1(c) or 10.1(e), or (ii)
pursuant to Section 10.1(b) if Peoples is the terminating party, or (iii)
pursuant to Section 10.1(d) hereof unless at the time that the termination of
this Agreement is effected (y) there exists any material breach by Peoples of
any representation, warranty, covenant or agreement contained herein or (z)
any of the transactions described in (a) and (b) of this Section 10.4 have
been announced. The payment of any Fee due under this Section 10.4 shall be
made by wire transfer of immediately available funds within five (5) business
days after the first of the following to occur: (A) execution of a
Definitive Agreement to any transaction described in clauses (a) or (b) of
this Section 10.4 and (B) consummation of any transaction described in
clauses (a) or (b) of this Section 10.4. Any overdue amount of the Fee that
becomes due and payable under this Section 8.3 shall accrue interest at the
Prime Rate plus two percent (2%) per annum. For purposes of this Section
10.4, the term "Prime Rate" shall mean the lesser of (x) that rate of
interest from time to time publicly announced by Trust Company Bank, Atlanta,
Georgia as its "prime rate" of interest and (y) the maximum rate of interest
allowable by law.
ARTICLE ELEVEN
MISCELLANEOUS
11.1 Expenses.
(a) Except as provided in Section 11.1(b) of this Agreement, each of
the Parties shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial or other consultants,
investment bankers, accountants and counsel.
(b) Notwithstanding the provisions of Section 11.1(a) of this Agreement,
if for any reason this Agreement and the Plan of Merger are terminated by any
Party before the Closing is concluded, SunTrust, on the one hand, and
Peoples, on the other hand, shall bear and pay one-half of the following
expenses: the printing costs incurred in connection with the printing of the
Registration Statement, the Proxy Statement, and all filing fees paid by
SunTrust or Peoples in connection with any regulatory applications.
Notwithstanding the foregoing, if this Agreement and the Plan of Merger are
terminated by SunTrust or Peoples pursuant to Section 10.1(b) of this
Agreement because of the willful breach by the other of any representation,
warranty, covenant, undertaking or restriction contained herein, if the
terminating Party shall not have been in breach (in any material respect) of
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any representation, warranty, covenant, undertaking or restriction contained
herein or in the Plan of Merger, then the breaching Party shall pay all such
costs and expenses, plus costs of counsel, investment bankers and accountants
of the terminating Party. Final settlement with respect to payment of such
fees and expenses by the Parties shall be made within thirty (30) days of the
termination of this Agreement and the Plan of Merger.
11.2 Brokers and Finders. Each of the Parties represents and warrants
that neither it nor any of its officers, directors, employees, affiliates or
Subsidiaries has employed any broker or finder or incurred any liability for
any financial advisory fees, investment bankers' fees, brokerage fees,
commissions, or finders' fees in connection with this Agreement or the
transactions contemplated hereby. In the event of a claim by any broker or
finder based upon his or its representing or being retained by or allegedly
representing or being retained by either SunTrust or Peoples, SunTrust or
Peoples, as the case may be, agrees to indemnify and hold the other Party
harmless from and against any such claim.
11.3 Entire Agreement. Except as otherwise expressly provided herein,
this Agreement and the Plan of Merger contain the entire agreement between
the Parties with respect to the transactions contemplated hereunder and
thereunder, and such agreements supersede all prior arrangements or
understandings with respect thereto, written or oral. The terms and
conditions of this Agreement and the Plan of Merger shall inure to the
benefit of and be binding upon the Parties and the parties thereto and their
respective successors. Nothing in this Agreement or the Plan of Merger
expressed or implied, is intended to confer upon any Party, other than the
Parties or their respective successors, any rights, remedies, obligations or
liabilities under or by reason of this Agreement or the Plan of Merger,
except as expressly provided herein or therein.
11.4 Amendments. To the extent permitted by law, this Agreement may be
amended by a subsequent writing signed by all of the Parties upon the
approval of the Boards of Directors of each of the Parties; provided,
however, that the provisions of Section 2.2 of this Agreement relating to the
manner or basis in which shares of Peoples Common Stock will be exchanged for
SunTrust Common Stock shall not be amended after the Shareholders' Meeting
without the approval of the holders of at least a two-thirds majority of the
issued and outstanding shares of Peoples Common Stock.
11.5 Waivers. Prior to or on the Effective Date, SunTrust, acting
through its Board of Directors, Chairman, Chief Financial Officer or
Treasurer, shall have the right to waive any default in the performance of
any term of this Agreement by Peoples, to waive or extend the time for the
compliance or fulfillment by Peoples of any and all of its obligations under
this Agreement and to waive any or all of the conditions precedent to the
obligations of Peoples under this Agreement, except any condition which, if
not satisfied, would result in the violation of any law or applicable
governmental regulation. Prior to or on the Effective Date, Peoples, acting
through its Board of Directors, Chairman or President, shall have the right
to waive any default in the performance of any term of this Agreement by
SunTrust, to waive or extend the time for the compliance or fulfillment by
SunTrust of any and all of its obligations under this Agreement, and to waive
any or all of the conditions precedent to the obligations of Peoples under
this Agreement, except any condition which, if not satisfied, would result in
the violation of any law or applicable governmental regulation.
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11.6 No Assignment. None of the Parties may assign any of its rights or
obligations under this Agreement or the Plan of Merger to any other person.
11.7 Specific Enforceability. The Parties recognize and hereby
acknowledge that it is impossible to measure in money the damages that would
result to a Party by reason of the failure of any of the Parties to perform
any of the obligations imposed on it by this Agreement. Accordingly, if
after the Shareholders' Meeting any Party should institute an action or
proceeding seeking specific enforcement of the provisions hereof, each Party
against which such action or proceeding is brought hereby waives the claim or
defense that the Party instituting such action or proceeding has an adequate
remedy at law and hereby agrees not to assert in any such action or
proceeding the claim or defense that such a remedy at law exists.
11.8 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered
personally by facsimile transmission or by registered or certified mail,
postage pre-paid to the persons at the addresses set forth below (or at such
other address as may be provided hereunder), and shall be deemed to have been
delivered as of the date so delivered:
SunTrust: SunTrust Banks, Inc.
55 Park Place, NE
Center 635
Atlanta, Georgia 30303
Attention: Donald T. Heroman
Fax #: (404) 827-6491
Copy to Counsel: SunTrust Banks, Inc.
Legal and Regulatory Affairs
25 Park Place
Center 643
Atlanta, Georgia 30303
Attention: Raymond D. Fortin
Fax #: (404) 581-1637
with copies to: King & Spalding
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1763
Attention: Robert Woodward
Fax #: (404) 572-5147
Peoples: Peoples State Bank
6335 U. S. Highway 19
New Port Richey, Florida 34652-2239
Attention: Edward Heveran
Fax #: (813) 849-8490
Copy to Counsel: Bush Ross Gardner Warren & Rudy, P.A.
220 South Franklin Street
Tampa, Florida 33602
Attention: Richard B. Hadlow
Fax #: (813) 223-9620
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11.9 Governing Law. This Agreement and the Plan of Merger shall be
governed by and construed in accordance with the laws of the State of Florida
except to the extent federal law shall be applicable.
11.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto duly authorized all as of the day and year
first above written.
SunTrust Banks, Inc.
By: Donald T. Heroman
Title: Treasurer and Senior Vice President
ATTEST:
Secretary
[CORPORATE SEAL]
Peoples State Bank
By: Edward Heveran
Title: Chairman of the Board and President
ATTEST:
Secretary
[CORPORATE SEAL]
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PLAN AND AGREEMENT OF MERGER
STI SUBSIDIARY, INC.
with and into
PEOPLES STATE BANK
under the charter of
PEOPLES STATE BANK
with the title
"PEOPLES STATE BANK"
THIS AGREEMENT dated as of January 5, 1995, made by and between STI
Subsidiary, Inc. (hereinafter referred to as "STI Subsidiary"), a successor
banking corporation incorporated under the laws of Florida, with its main
office located at 6335 U.S. Highway 19, New Port Richey, Florida 34656-2133,
having no additional branches, with a Capital of $100 divided into 20 shares
of common stock, each of $5.00 par value, Surplus of $0, and Undivided
Profits including Capital Reserves of $0 as of September 30, 1994, and
Peoples State Bank (hereinafter "Peoples"), a banking corporation organized
under the laws of the State of Florida with its main office located at 6335
U.S. Highway 19, New Port Richey, Florida 34656-2133, with branches as set
forth on Exhibit A, with a Capital of $2,036,000, divided into 407,258 shares
of common stock, each of $5.00 par value, Surplus of $1,542,000 and Undivided
Profits including Capital Reserves and net unrealized gains and losses on
securities of $3,155,000 as of September 30, 1994, each acting pursuant to a
resolution of its Board of Directors, adopted by the vote of a majority of
its directors, pursuant to the authority given by and in accordance with the
provisions of Sections 658.40 through 658.45, Florida Statutes, witnesseth as
follows:
SECTION 1
STI Subsidiary shall be merged with and into Peoples under the state
charter of Peoples.
SECTION 2
The name of the resulting bank shall be "Peoples State Bank" (the
"Resulting Bank").
SECTION 3
The business of the Resulting Bank shall be that of a state banking
corporation. This business shall be conducted by the Resulting Bank at its
main office which shall be located at 6335 U.S. Highway 19, New Port Richey,
Florida 34656-2133, and at each existing branch office as set forth on
Exhibit A.
SECTION 4
The amount of capital of the Resulting Bank shall be $100, divided into
20 shares of common stock, each $5.00 par value, and at the time the merger
shall become effective, the Resulting Bank shall have a Surplus of
$12,143,900 and Undivided Profits including Capital Reserves of $3,607,000,
which when combined with the capital and surplus will be equal to the
combined capital structures of the merging banks as stated in the preamble of
this Agreement, adjusted, however, for normal earnings and expenses between
September 30,1994, and the effective time of the merger.
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SECTION 5
At the effective time of the merger, all the rights, privileges,
immunities and franchises of the merging banks and all of their property,
real, personal and mixed, and all the debts due on whatever account to either
of them, as well as all other choses in action belonging to either of them,
including appointments, designations and nominations and all other rights and
interests in any fiduciary capacity, shall be transferred to and vested in
the Resulting Bank, without further act or deed, and all claims, demands,
property and other interests shall be the property of the Resulting Bank, and
the title to all real estate vested in either of the merging banks shall not
revert or be in any way impaired by reason of the merger, but shall be vested
in the Resulting Bank. The rights of creditors of either merging bank shall
not in any manner be impaired, nor shall any liability or obligation,
including taxes due or to become due, or any claim or demand in any cause
existing against such merging bank, or any stockholder, director or officer
thereof, be released or impaired by the merger, but, except as otherwise
provided in this Agreement, the Resulting Bank shall be deemed to have
assumed, and shall be liable for, all liabilities (including liabilities
arising from the exercise of fiduciary powers) and obligations of each of the
merging banks in the same manner and to the same extent as if the Resulting
Bank had itself incurred such liabilities or obligations. The stockholders,
directors and officers of the merging banks shall continue to be subject to
all the liabilities, claims and demands existing against them as existed at
or before the merger.
SECTION 6
Manner of Converting Shares. The manner and basis of converting the
shares of the capital stock of Peoples and STI Subsidiary upon consummation
of the merger shall be as follows:
(a) STI Subsidiary Capital Stock. Each share of STI Subsidiary
capital stock issued and outstanding at the effective date of the merger (the
"Effective Date") shall be converted into one share of issued and outstanding
common stock of the surviving corporation, each of which shall be fully paid
and nonassessable.
(b) Peoples Common Stock. As used herein, the term "SunTrust
Common Stock" shall mean the $1.00 par value common stock of SunTrust Banks,
Inc. ("SunTrust"). At the Effective Date, by virtue of the merger and
without any action on the part of SunTrust, Peoples or the holders of shares
of common stock of Peoples ("Peoples Common Stock") shall be converted as
follows:
(i) Subject to the other provisions of this Section 6, each share
of Peoples Common Stock issued and outstanding immediately prior to the
Effective Date (excluding treasury shares and shares held by dissenting
shareholders (as defined in Section 6(d)) shall be converted into (1) the
right to receive .75 shares of SunTrust Common Stock (the "Exchange Ratio"),
(2) the right to receive the Per Share Cash Amount (as defined below), or (3)
the right to receive a combination of shares of SunTrust Common Stock and
cash determined in accordance with subparagraph (iv) of this Section 6(b).
The "Per Share Cash Amount" shall mean .75 multiplied by the arithmetic
average of the closing prices per share of SunTrust Common Stock as reported
on the NYSE Composite Tape for each of the twenty trading days immediately
preceding the date of the meeting of the shareholders of Peoples to approve
the merger (the "Shareholders' Meeting"). All shares of Peoples Common Stock
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shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each certificate previously evidencing
any such shares shall thereafter represent the right to receive the
consideration set forth in this Section 6(b). The holders of such
certificates previously evidencing such shares of Peoples Common Stock
outstanding immediately prior to the Effective Date shall cease to have any
rights with respect to such shares of Peoples Common Stock except as
otherwise provided herein or by law. Such certificates previously
evidencing shares of Peoples Common Stock shall be exchanged for (a)
certificates evidencing whole shares of SunTrust Common Stock issued in
consideration therefor or (b) the Per Share Cash Amount, multiplied by the
number of shares
previously evidenced by the canceled certificate, in each case in accordance
with the allocation procedure of this Section 6 and upon the surrender of
such certificates in accordance with the provisions of Section 3.3 of the
Agreement and Plan of Reorganization dated December 6, 1994 between SunTrust
and Peoples (the "Reorganization Agreement"), without interest. No
fractional shares of SunTrust Common Stock shall be issued, and, in lieu
thereof, a cash payment shall be made pursuant to Section 6(f).
(ii) The number of shares of Peoples Common Stock to be converted
into the right to receive cash in the Merger shall be equal to 19.75% of the
number of shares of Peoples Common Stock outstanding immediately prior to the
Effective Date (the "Cash Election Number"). The number of shares of Peoples
Common Stock to be converted into the right to receive SunTrust Common Stock
in the Merger shall be equal to 80.25% of the number of shares of Peoples
Common Stock outstanding immediately prior to the Effective Date (the "Stock
Election Number").
(iii) Subject to the allocation and election procedures set
forth in this Section 6, each record holder of shares of Peoples Common Stock
immediately prior to the Effective Date will be entitled (1) to elect to
receive cash for all such shares (a "Cash Election"), or (2) to elect to
receive SunTrust Common Stock for all of such shares (a "Stock Election").
All such elections shall be made on a form designed for that purpose (a "Form
of Election"). Holders of record of shares of Peoples Common Stock who hold
such shares as nominees, trustees or in other representative capacities (a
"Representative") may submit multiple Forms of Election, provided that such
Representative certifies that each such Form of Election covers all the
shares of Peoples Common Stock held by each such Representative for a
particular beneficial owner.
(iv) James P. Gills, the record holder of 21.12% of the shares of
Peoples Common Stock, has agreed that he has no preference as to the receipt
of cash or SunTrust Common Stock for his shares, and has authorized
SunTrust's exchange agent (selected pursuant to Section 3.3 of the
Reorganization Agreement) to allocate his shares in a manner such that the
number of shares of Peoples Common Stock to be converted into cash equals the
Cash Election Number, and the number of shares of Peoples Common Stock to be
converted into SunTrust Common Stock equals the Stock Election Number. If,
after the allocation of James P. Gills' shares, the number of shares of
Peoples Common Stock to be converted into cash still exceeds the Cash
Election Number, the exchange agent shall determine such number of shares
covered by Cash Elections (the "Cash Election Shares") which must be re-
designated as shares covered by Stock Elections ("Stock Election Shares").
All shareholders who made Cash Elections shall, on a prorata basis, have such
number of their Cash Election Shares re-designated as Stock Election Shares
so that the Cash Election Number and the Stock Election Number are achieved.
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(v) After the allocation procedure set forth in Section 6(b)(iv)
is completed, all Cash Election Shares shall be converted into the right to
receive cash and all Stock Election Shares shall be converted into the right
to receive SunTrust Common Stock.
(vi) Elections shall be made by holders of Peoples Common Stock by
mailing, faxing or otherwise delivering to the exchange agent a Form of
Election. To be effective, a Form of Election must be properly completed,
signed and submitted to the exchange agent. SunTrust will have the
discretion, which it may delegate in whole or in part to the exchange agent,
to determine whether Forms of Election have been properly completed, signed
and submitted and to disregard immaterial defects in Forms of Election. The
decision of SunTrust (or the exchange agent) in such matters shall be
conclusive and binding. Neither SunTrust nor the exchange agent will be
under any obligation to notify any person of any defect in a Form of
Election. SunTrust or the exchange agent shall also make all computations
contemplated by this Section 6(b) and all such computations shall be
conclusive and binding on the holders of Peoples Common Stock.
(vii) A holder of Peoples Common Stock who does not submit a
Form of Election which is received by the exchange agent prior to the
Election Deadline (as hereinafter defined) shall be deemed to have made a
Stock Election. If SunTrust or the exchange agent shall determine that any
purported Cash Election was not properly made, such purported Cash Election
shall be deemed to be of no force and effect and the shareholder making such
purported Cash Election shall for purposes hereof, be deemed to have made a
Stock Election.
(viii) SunTrust and Peoples shall each use its best efforts to
mail the Form of Election to all persons who are holders of Peoples Common
Stock on the record date for the Shareholders' Meeting, on a date that is not
less than ten (10) calendar days prior to the Effective Date. A Form of
Election must be received by the exchange agent by the close of business on
the last business day prior to the Effective Date (the "Election Deadline")
in order to be effective. All elections will be irrevocable.
(c) Anti-Dilution Provisions. In the event that SunTrust changes
the number of shares of SunTrust Common Stock issued and outstanding prior to
the Effective Date as a result of a stock split, stock dividend or similar
recapitalization and the record date therefor shall be after the date of this
Agreement and prior to the Effective Date, the ratio under which shares of
Peoples Common Stock may be converted into and exchanged for shares of
SunTrust Common Stock pursuant to Section 6(b) of this Agreement shall be
proportionally adjusted.
(d) Dissenting Shareholders. Any holder of shares of Peoples
Common Stock who complies with the provisions of Section 658.44 of the
Florida Banking Code and does not vote for or consent to the merger and
delivers to Peoples, prior to the taking of the vote on the merger at the
Shareholders' Meeting, written notice of such shareholders' intent to demand
payment for the shares of Peoples Common Stock held by such holder as of the
Effective Date shall be entitled to receive the fair value of such shares in
cash as determined pursuant to Section 658.44 of the Florida Banking Code;
provided, however, that no such payment shall be made to any dissenting
shareholder unless and until such dissenting shareholder has surrendered to
Peoples the certificate or certificates representing the shares of Peoples
Common Stock for which payment is being made.
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(e) Treasury Shares. Any and all shares of Peoples Common Stock
held as treasury shares by Peoples shall be canceled and retired on the
Effective Date, and no consideration shall be issued in exchange therefor.
(f) Fractional Shares. No fractional shares of SunTrust Common
Stock will be issued as a result of the merger. In lieu of the issuance of
fractional shares pursuant to Section 6(b) of this Agreement, cash
adjustments (without interest) will be paid to the holders of Peoples Common
Stock in respect of any fraction of a share of SunTrust Common Stock that
would otherwise be issuable to any holder of Peoples Common Stock, and the
amount of such cash adjustment shall be determined by multiplying the
fraction of a share of SunTrust Common Stock otherwise issuable times the
closing sales price per share of SunTrust Common Stock on the New York Stock
Exchange on the last business day preceding the Effective Date as reported in
the Consolidated Transaction Reporting System.
SECTION 7
(a) The Board of Directors of the Resulting Bank immediately after the
effective time of the merger shall be:
Name Address
Edward Heveran 611 Dornoch Ct., Tarpon Springs, FL 34689
Harvey V. Delzer 5541 Windward Way, New Port Richey, FL 34652
David W. Dunbar 1614 Santa Barbara Drive, Dunedin, FL 34698
Donald F. Kaltenbach 7312 Cessna Drive, New Port Richey, FL 34653
Glen L. Keys 1818 Circle Drive, Tarpon Springs, FL 34689
Eugene V. Werner 4932 Marlin Drive, New Port Richey, FL 34652
Lew Friedland 24028 Frederick Drive, Brooksville, FL 34601
Frederick E. Fisher 1019 Royal Troom Ct., Tarpon Springs, FL 34689
Daniel R. Schmitt 6205 Roxboro Drive, Spring Hill, FL 34606
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(b) The executive officers of the Resulting Bank immediately after the
effective time of the merger shall be:
Name Title Address
Edward Heveran President and Chief 6335 U. S. Highway 19
Executive Officer New Port Richey, Florida
Joan B. Murcko Executive Vice 6335 U. S. Highway 19
President, Cashier New Port Richey, Florida
and Corporate
Secretary
David W. Dunbar Executive Vice 6335 U. S. Highway 19
President, Senior New Port Richey, Florida
Loan Officer
Scott S. Melhecker Senior Vice President 6335 U. S. Highway 19
Commercial Loan New Port Richey, Florida
Officer
(c) All such directors and officers of the Resulting Bank immediately
after the effective time of the merger shall hold office in accordance with
the bylaws of the Resulting Bank.
SECTION 8
This Agreement shall be ratified and confirmed by the affirmative vote
of the majority of the shares of each bank entitled to vote thereon.
SECTION 9
The merger shall be effective as of the date specified in the
Certificate of merger issued by the Comptroller of the State of Florida,
Department of Banking and Finance pursuant to Section 658.45(1), Florida
Statutes, or, if permitted by the terms of such approval, at such other time
as STI Subsidiary and Peoples may agree upon.
SECTION 10
The Agreement is also subject to the following terms and conditions:
(a) The Florida Department of Banking and Finance shall have approved
this Plan and Agreement of Merger and shall have issued all other necessary
authorizations and approvals for the merger, including a Certificate of
Merger.
(b) The appropriate federal regulatory agencies shall have approved the
merger and shall have issued all other necessary authorizations and approvals
for the merger, and any statutory waiting periods shall have expired.
SECTION 11
Effective as of the time this merger shall become effective as specified
in the Certificate of Merger to be issued by the Comptroller of the State of
Florida, the Articles of Incorporation and bylaws of the Resulting Bank shall
be the Articles of Incorporation and bylaws of Peoples, which are set forth
in Exhibit B attached hereto.
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IN WITNESS WHEREOF, this Plan and Agreement of Merger has been executed
under seal by the duly authorized officers of STI Subsidiary and Peoples as
of the date first written above.
STI Subsidiary, Inc.
(in organization)
By:
Raymond D. Fortin
President
(Seal)
ATTEST:
Margaret U. Hodgson
Secretary
Peoples State Bank
By:
Edward Heveran
Chairman of the Board and President
(Bank Seal)
ATTEST:
Joan B. Murko, Executive Vice President,
Cashier and Corporate Secretary
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EXHIBIT A
Peoples Branches
Name Address
Bayonet Point Office 12000 U.S. Highway 19, Bayonet Point, FL 34667
Ridge Road Office 6709 Ridge Road, Suite 100, Port Richey, FL 34668
Holiday Lakes Office 1103 Alternate 19, Holiday, FL 34691
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EXHIBIT B
ARTICLES OF INCORPORATION AND BYLAWS
OF RESULTING BANK
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EXHIBIT 2
[Form of Affiliate Letter]
SunTrust Banks, Inc.
25 Park Place
Atlanta, Georgia 30303
Gentlemen:
I have been advised that, as of the date hereof, I may be deemed to be
an "affiliate" of Peoples State Bank, a bank organized under the laws of the
State of Florida ("Peoples"), as the term "affiliate" is defined for purposes
of paragraphs (c) and (d) of Rule 145 of the Rules and Regulations (the
"Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act").
Pursuant to the terms of the Agreement and Plan of Reorganization, to be
dated as of _____________________ , 1994 (the "Agreement") among Peoples and
SunTrust Banks, Inc., a Georgia corporation ("SunTrust"), Peoples will be
merged with and into a temporary subsidiary of SunTrust formed for such
purpose and Peoples, as the surviving corporation, will be a wholly owned
subsidiary of SunTrust (the "Merger").
As a result of the proposed Merger, I may receive shares of Common
Stock, par value $1.00 per share, of SunTrust (the "SunTrust Common Stock").
I would receive such shares in exchange for shares owned by me of common
stock, par value $5.00 per share, of Peoples.
I represent, warrant and covenant to SunTrust and Peoples that in the
event I receive any SunTrust Common Stock as a result of the proposed Merger:
0. I shall not make any sale, transfer or other disposition of the
SunTrust Common Stock in violation of the Act or the Rules and Regulations.
1. I have carefully read this letter and the Agreement and discussed
its requirements and other applicable limitations upon my ability to sell,
transfer or otherwise dispose of SunTrust Common Stock, to the extent I felt
necessary, with my counsel or counsel for Peoples.
2. I have been advised that the issuance of SunTrust Common Stock to
me pursuant to the Merger will be registered with the Commission under the
Act on a Registration Statement on Form S-4. However, I have also been
advised that, since at the time the Merger will be submitted for a vote of
the shareholders of Peoples, I may be deemed to be an affiliate of Peoples
and the distribution by me of the SunTrust Common Stock would not have
registered under the Act, I may not sell, transfer or otherwise dispose of
SunTrust Common Stock issued to me in the Merger unless (i) such sale,
transfer or other disposition has been registered under the Act, (ii) such
sale, transfer or other disposition is made in conformity with the volume and
other limitations of Rule 145 promulgated by the Commission under the Act, or
(iii) in the opinion of counsel reasonably acceptable to SunTrust, such sale,
transfer or other disposition is otherwise exempt from registration under the
Act.
3. I understand that SunTrust is under no obligation to register the
sale, transfer or other disposition of the SunTrust Common Stock by me or on
my behalf under the Act or to take any other action necessary in order to
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make compliance with an exemption from such registration available.
4. I also understand that, if I am an "affiliate" of Peoples
immediately prior to the vote on the Merger and the Agreement, stop transfer
instructions will be given to SunTrust's transfer agent with respect to the
SunTrust Common Stock to be issued to me and that there will be placed on the
certificates for the SunTrust Common Stock to be issued to me, or any
substitutions therefor, a legend stating in substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act of 1933
applies. The shares represented by this certificate may only be transferred
in accordance with the terms of an agreement dated _________, 1994 between
the registered holder hereof and SunTrust, a copy of which agreement is on
file at the principal offices of SunTrust."
It is understood and agreed that the legend set forth in paragraph
5 above shall be removed by delivery of substitute certificates without such
legend if the undersigned shall have delivered to SunTrust a copy of a letter
from the staff of the Commission, or an opinion of counsel in form and
substance reasonably satisfactory to SunTrust, to the effect that such legend
is not required for purposes of the Act or, in the case of paragraph 5, the
appropriate period of time has lapsed.
Very truly yours,
By:
______________________________
Name:
Accepted this ___ day of
_______________, 1995, by
SUNTRUST BANKS, INC.
By:__________________________
Name:
Title:
EXHIBIT 3
SunTrust's Counsel Opinion
The opinion of Counsel of SunTrust shall be subject to appropriate
assumptions, qualifications and limitations and shall be to the effect that:
(i) SunTrust is a corporation duly organized, validly existing and
in good standing under the laws of the State of Georgia.
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(ii) STI Subsidiary is a successor institution banking corporation
organized and validly existing under the laws of the State of Florida.
(iii) SunTrust and SunTrust Subsidiary have the full corporate
power and authority to conduct the businesses and own the properties
described in the Proxy Statement.
(iv) The authorized capital stock of SunTrust consists of (a)
350,000,000 shares of SunTrust Common Stock, of which, as of ________ ,
1995, ________________ shares were issued and outstanding and
shares were held as treasury shares, and (b) 50,000,000 shares of Preferred
Stock, of which, as of
, 1995, no shares were outstanding. The shares of
SunTrust Common Stock that are issued and outstanding were not issued in
violation of any statutory preemptive rights of shareholders, were duly
authorized, validly issued and are fully paid and nonassessable.
(v) SunTrust has the full corporate power and authority to carry
out the transactions provided for in the Merger Agreement, and the execution
and delivery of the Merger Agreement contemplated thereby did not, and the
consummation of the transactions contemplated thereby will not, violate any
provision of SunTrust's Articles of Incorporation of Bylaws.
(vi) The Board of Directors of SunTrust and the holders of SunTrust
Common Stock have taken all actions required by law, by the Articles of
Incorporation and the Bylaws of SunTrust or otherwise, if any, to authorize
the execution of the Merger Agreement and the consummation of the
transactions contemplated thereby, and (assuming the valid authorization,
execution and delivery of the Merger Agreement by Peoples) the Merger
Agreement constitutes the valid and binding agreement of SunTrust enforceable
in accordance with its terms, except as the enforceability thereof may be
limited by applicable bankruptcy, reorganization, moratorium or similar laws
of general application and except that no opinion is expressed with respect
to the availability of equitable remedies.
(vii) Except as provided in paragraph (viii) below, all
required regulatory approvals of the Merger have been received and the delay
period prescribed by the Bank Holding Company Act of 1956 with respect to the
Merger has expired. To my knowledge, there is no action pending brought by
the Attorney General of the United States under the antitrust laws arising
out of the Merger, which action was commenced prior to the earliest time
under such Act at which the approved transaction might be consummated.
(viii) Upon the filing of the Articles of Merger setting forth
the Plan of Merger with the Florida Department and receipt of approval
thereof and upon the issuance of a Certificate of Merger by the Secretary of
State of Florida, or at such other date and time as may be specified in the
Articles, the Merger will be effective in accordance with the laws of the
State of Florida.
(ix) The SunTrust Common Stock to be issued to the shareholders of
Peoples at the Effective Time is duly authorized and, when issued as
contemplated by the Agreement, will be validly issued, fully paid and
nonassessable.
(x) Nothing has come to the attention of Counsel that caused such
Counsel to believe, as of the date of the meeting of shareholders of Peoples
to approve the Merger, that the Registration Statement (other than the
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financial statements and schedules and the other financial or satistical data
therein), as to which no opinion is expressed, contained with respect to
SunTrust or any Subsidiary any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(xi) To my knowledge, except as described in the Proxy Statement,
there are no actions, suits or proceedings pending or threatened against or
affecting SunTrust or its Subsidiaries, at law or equity, or before or by any
federal, state, municipal or other government entity that, if determined
adversely to SunTrust or its Subsidiaries, would have a material adverse
affect on the business or financial condition of SunTrust and its
Subsidiaries taken as a whole.
This opinion will be limited to the federal laws of the United
States and the laws of the States of Florida and Georgia.
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EXHIBIT 4
Opinion of Counsel for Peoples
The opinion of counsel of Peoples shall be subject to appropriate
assumptions, qualifications and limitations and shall be to the effect that:
(i) Peoples is a bank duly organized, validly existing and in good
standing under the laws of the State of Florida.
(ii) Peoples has the full corporate power and authority to conduct
the businesses and own the properties described in the Proxy Statement.
(iii) The authorized capital stock of Peoples consists of
1,000,000 shares of Peoples Common Stock, of which 407,258 shares are issued
and outstanding. The shares of Peoples Common Stock that are issued and
outstanding were not issued in violation of any statutory preemptive rights
of shareholders, were duly authorized, validly issued and are fully paid and
nonassessable. To our knowledge, there are no options or securities
convertible into stock of Peoples and no subscriptions, warrants, calls,
rights or commitments of any kind obligating Peoples to issue any of its
securities or to acquire any of its securities under any circumstances other
than options to purchase up to 30,250 shares of Peoples Common Stock pursuant
to the Peoples Stock Option Plan.
(iv) Peoples has the full corporate power and authority to carry
out the transactions provided for in the Merger Agreement; the execution and
delivery of the Merger Agreement did not, and the consummation of the
transactions contemplated thereby will not, violate any provision of Peoples'
Articles of Incorporation or Bylaws or result in the breach of, or constitute
a default under, any agreement to which Peoples is a party or by which its
properties or assets may be bound, that has been specifically identified (as
to parties and dates) on a list furnished to us by Peoples, the list having
been specified as a complete listing of all agreements of Peoples that are
material to Peoples no later than five days prior to the Effective Time.
(v) The Board of Directors of Peoples and the holders of Peoples
Common Stock have taken all actions required by law, by the Articles of
Incorporation and the Bylaws of Peoples or otherwise to authorize the
execution of the Merger Agreement and the consummation of the transactions
contemplated thereby, and (assuming the valid authorization, execution and
delivery of the Merger Agreement by SunTrust) the Merger Agreement is a valid
and binding agreement of Peoples enforceable in accordance with its terms,
except as the enforceability thereof may be limited by applicable bankruptcy,
reorganization, moratorium or similar laws of general application and except
that no opinion is expressed with respect to the availability of equitable
remedies.
(vi) Upon the filing of the Articles of Merger setting forth the
Plan of Merger with the Florida Department and receipt of approval thereof
and upon the issuance of a Certificate of Merger by the Secretary of State of
Florida, or at such other date and time as may be specified in the Articles,
the Merger will be effective in accordance with the laws of the State of
Florida.
(vii) Nothing has come to the attention of Counsel that caused
such Counsel to believe, as of the date of the meeting of shareholders of
Peoples to approve the Merger, that the Registration Statement (other than
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the financial statements and schedules and the other financial or satistical
data therein), as to which no opinion is expressed, contained with respect to
Peoples any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(viii) To our knowledge, except as described in the Proxy
Statement or the Peoples Disclosure Schedule, there are no actions, suits, or
proceedings pending or threatened against or affecting Peoples, at law or in
equity, or before or by any federal, state, municipal or other government
entity that, if determined adversely to Peoples, would have a material
adverse effect on the business or financial condition of Peoples.
This opinion will be limited to the federal laws and the laws of
the State of Florida.
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<PAGE>
EXHIBIT B
658.44 Approval by stockholders; rights of dissenters; preemptive rights.
(1) The department shall not issue a certificate of merger to a resulting
state bank or trust company unless the plan of merger and merger agreement,
as adopted by a majority of the entire board of directors of each constituent
bank or trust company, and as approved by each appropriate federal regulatory
agency and by the department, has been approved.
(a) By the stockholders of each constituent national bank as provided
by, and in accordance with the procedures required by, the laws of the United
States applicable thereto, and
(b) After notice as hereinafter provided, by the affirmative vote or
written consent of the holders of at least a majority of the shares entitled
to vote thereon of each constituent state bank or state trust company, unless
any class of shares of any constituent state bank or state trust company is
entitled to vote thereon as a class, in which event as to such constituent
state bank or state trust company the plan of merger and merger agreement
shall be approved by the stockholders upon receiving the affirmative vote or
written consent of the holders of a majority of the shares of each class of
shares entitled to vote thereon as a class and of the total shares entitled
to vote thereon. Such vote of stockholders of a constituent state bank or
state trust company shall be at an annual or special meeting of stockholders
or by written consent of the stockholders without a meeting as provided in
s.607.0704.
Approval by the stockholders of a constituent bank or trust company of a plan
of merger and merger agreement shall constitute the adoption by the
stockholders of the articles of incorporation of the resulting state bank or
state trust company as set forth in the plan of merger and merger agreement.
(2) Written notice of the meeting of, or proposed written consent action
by, the stockholders of each constituent state bank or state trust company
shall be given to each stockholder of record, whether or not entitled to
vote, and whether the meeting is an annual or a special meeting or whether
the vote is to be by written consent pursuant to s.607.0704, and the notice
shall state that the purpose or one of the purposes of the meeting, or of the
proposed action by the stockholders without a meeting, is to consider the
proposed plan of merger and merger agreement. Except to the extent provided
otherwise with respect to stockholders of a resulting bank or trust company
pursuant to subsection (7), the notice shall also state that dissenting
stockholders will be entitled to payment in cash of the value of only those
shares held by the stockholders:
(a) Which at a meeting of the stockholders are voted against the
approval of the plan of merger and merger agreement;
(b) As to which, if the proposed action is to be by written consent of
stockholders pursuant to s.607.0704, such written consent is not given by the
holder thereof; or
(c) With respect to which the holder thereof has given written notice
to the constituent state bank or trust company, at or prior to the meeting of
stockholders or on or prior to the date specified for action by the
stockholders without a meeting pursuant to s.607.0704 in the notice of such
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<PAGE>
proposed action, that the stockholder dissents from the plan of merger and
merger agreement.
Hereinafter in this section, the term "dissenting shares" means and includes
only those shares, which may be all or less than all the shares of any class
owned by a stockholder, described in paragraphs (a), (b) and (c).
(3) On or promptly after the effective date of the merger, the resulting
state bank or trust company, or a bank holding company which, as set out in
the plan of merger or merger agreement, is offering shares rights,
obligations, or other securities or property in exchange for shares of the
constituent banks or trust companies, may fix an amount which it considers to
be not more than the fair market value of the shares of a constituent bank or
trust company and which it will pay to the holders of dissenting shares of
that constituent bank or trust company and, if it fixes such amount, shall
offer to pay such amount to the holders of all dissenting shares of that
constituent bank or trust company. The amount payable pursuant to any such
offer which is accepted by the holders of dissenting shares, and the amount
payable to the holders of dissenting shares pursuant to an appraisal, shall
constitute a debt of the resulting state bank or state trust company.
(4) The owners of dissenting shares who have accepted an offer made
pursuant to subsection (3) shall be entitled to receive the amount so offered
for such shares in cash upon surrendering the stock certificates representing
such shares at any time within 30 days after the effective date of the
merger, and the owners of dissenting shares, the value of which is to be
determined by appraisal, shall be entitled to receive the value of such
shares in cash upon surrender of the stock certificates representing such
shares at any time within 30 days after the value of such shares has been
determined by appraisal made on or after the effective date of the merger.
(5) The value of dissenting shares of each constituent state bank or
state trust company, the owners of which have not accepted an offer for such
shares made pursuant to subsection (3), shall be determined as of the
effective date of the merger by three appraisers, one to be selected by the
owners of at least two-thirds of such dissenting shares, one to be selected
by the board of directors of the resulting state bank, and the third to be
selected by the two so chosen. The value agreed upon by any two of the
appraisers shall control and be final and binding on all parties. If, within
90 days from the effective date of the merger, for any reason one or more of
the appraisers is not selected as herein provided, or the appraisers fail to
determine the value of such dissenting shares, the department shall cause an
appraisal of such dissenting shares to be made which will be final and
binding on all parties. The expenses of appraisal shall be paid by the
resulting state bank or trust company.
(6) Upon the effective date of the merger, all the shares of stock of
every class of each constituent bank or trust company, whether or not
surrendered by the holders thereof, shall be void and deemed to be canceled,
and no voting or other rights of any kind shall pertain thereto or to the
holders thereof except only such rights as may be expressly provided in the
plan of merger and merger agreement or expressly provided by law.
(7) The provisions of subsection (6) and, unless agreed by all the
constituent banks and trust companies and expressly provided in the plan of
merger and merger agreement, subsection (3), (4) and (5) are not applicable
to a resulting bank or trust company or to the shares or holders of shares of
a resulting bank or trust company the cash, shares, rights, obligations or
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other securities or property of which, in whole or in part, is provided in
the plan of merger or merger agreement to be exchanged for the shares of the
other constituent banks or trust companies.
(8) The stock, rights, obligations and other securities of a resulting
bank or trust company may be issued as provided by the terms of the plan of
merger and merger agreement, free from any preemptive rights of the holders
of any of the shares of stock or of any of the rights, obligations or other
securities of such resulting bank or trust company or of any of the
constituent banks or trust companies.
(9) After approval of the plan of merger and merger agreement by the
stockholders as provided in subsection (1), there shall be filed with the
department, within 30 days after the time limit in s.658.43(5), a fully
executed counterpart of the plan of merger and merger agreement as so
approved if it differs in any respect from any fully executed counterpart
thereof theretofore filed with the department, and copies of the resolutions
approving the same by the stockholders of each constituent bank or trust
company, certified by the president, or chief executive officer if other than
the president, and the cashier or corporate secretary of each constituent
bank or trust company, respectively, with the corporate seal impressed
thereon.
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EXHIBIT C
ALLEN C. EWING & CO. 50 North Laura Street, Suite 3625
INVESTMENT BANKERS Jacksonville, Florida 32202-3812
Telephone 904-354-5573
Telecopier 904-354-7033
December 6, 1994
Board of Directors
Peoples State Bank
6335 U.S. Highway 19
New Port Richey, Florida 34652-2239
Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to the shareholders of the Peoples State Bank ("Bank") of New Port
Richey, Florida, of the consideration to be paid to the shareholders of the
Bank by SunTrust Banks, Inc. ("Sun") of Atlanta, Georgia. Allen C. Ewing &
Co. ("Ewing") is a regional investment banking firm that has specialized in
the research, trading and provision of corporate finance services to the
banking and thrift industries in Florida. Senior members and the author of
this opinion have had extensive experience in providing a wide variety of
services involving banking institutions for over twenty-five years.
Pursuant to the Agreement and Plan of Reorganization ("Agreement") to be
executed by the parties on December 6, 1994, Sun will acquire all of the
outstanding shares of the Bank via a tax-free reorganization by exchanging
shares of Sun common stock for shares of the Bank. Up to 19.75% of the
Bank's shares may be exchanged for cash.
As a result of the proposed transaction, the Bank will be merged into a
subsidiary of Sun, and the Bank and its shares will cease to exist.
In rendering our opinion, we have, among other things:
1. Reviewed the first draft of the Agreement and discussed its terms
with the management of the Bank.
2. Reviewed the quarterly Call Reports for the years ended December 31,
1991, December 31, 1992 and December 31, 1993, as well as the Call
Report for the period ended September 30, 1994.
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Board of Directors
Page Two
December 6, 1994
3. Reviewed the securities portfolio including mark-to-market
adjustments for the "held for sale" portion of the portfolio.
4. Discussed with management the operations and future prospects of the
Bank including accounting policies, pending litigation, etc.
5. Examined the number and nature of competitive banking institutions in
the Bank's marketing area.
6. Compared the Bank's financial condition and operating results to
other banking institutions operating in Florida.
7. Compared the pricing ratios of the proposed Sun transaction with
other recent acquisitions of companies of similar size in Florida.
8. Analyzed the financial condition of the Bank as to asset quality,
earnings, capital adequacy, etc.
In arriving at our opinion, we have relied upon the accuracy and completeness
of the information provided to us by the Bank and upon representations and
warranties in the Agreement and have not conducted any independent
verification of such information or performed any independent appraisal of
the Bank's assets.
This fairness opinion is supported by the information and analysis contained
in the evaluation and analysis report which has been prepared by Ewing and
will be delivered to the Board of Directors of the Bank. The report contains
a discussion and financial analysis of the Bank, an analysis of current
economic conditions in the Bank's primary market area, and a financial and
market pricing comparison with a selected group of banking institutions,
which transactions have been completed or are pending and which we deem to be
comparable to the Sun/Bank transaction.
Based on the foregoing and on our general knowledge of and experience in the
valuation of banks, we are of the opinion that as of December 6, 1994, the
consideration proposed to be paid by Sun for shares of Common Stock of the
Bank is fair, from a financial point of view, to the shareholders of the
Bank.
Very truly yours,
ALLEN C. EWING & CO.
Benjamin C. Bishop, Jr.
Chairman
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Part II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Part 5 of Article 8 of the Georgia Business Corporation Code states:
14-2-850. Part Definitions.
As used in this part, the term:
(1) "Corporation" includes any domestic or foreign predecessor entity
of a corporation in a merger or other transaction in which the predecessor's
existence ceased upon consummation of the transaction.
(2) "Director" means an individual who is or was a director of a
corporation or an individual who, while a director of a corporation, is or
was serving at the corporation's request as a director, officer, partner,
trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, employee benefit plan, or other
enterprise. A director is considered to be serving an employee benefit plan
at the corporation's request if his duties to the corporation also impose
duties on, or otherwise involve services by, him to the plan or to
participants in or beneficiaries of the plan. Director includes, unless the
context requires otherwise, the estate or personal representative of a
director.
(3) "Expenses" include attorney's fees.
(4) "Liability" means the obligation to pay a judgment, settlement,
penalty, fine (including an excise tax assessed with respect to an employee
benefit plan), or reasonable expenses incurred with respect to a proceeding.
(5) "Party" includes an individual who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(6) "Proceeding" means any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or
investigative and whether formal or informal.
14-2-851. Authority to indemnify.
(a) Except as provided in subsections (d) and (e) of this Code section,
a corporation may indemnify or obligate itself to indemnify an individual
made a party to a proceeding because he is or was a director against
liability incurred in the proceeding if he acted in a manner he believed in
good faith to be in or not opposed to the best interests of the corporation
and, in the case of any criminal proceeding, he had no reasonable cause to
believe his conduct was unlawful.
(b) A director's conduct with respect to an employee benefit plan for a
purpose he believed in good faith to be in the interests of the participants
in and beneficiaries of the plan is conduct that satisfies the requirement of
subsection (a) of this Code section.
(c) The termination of a proceeding by judgment, order, settlement, or
conviction, or upon a plea of nolo contendere or its equivalent is not, of
itself, determinative that the director did not meet the standard of conduct
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set forth in subsection (a) of this Code section.
(d) A corporation may not indemnify a director under this Code section:
(1) In connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the corporation; or
(2) In connection with any other proceeding in which he was adjudged
liable on the basis that personal benefit was improperly received by him.
(e) Indemnification permitted under this Code section in connection
with a proceeding by or in the right of the corporation is limited to
reasonable expenses incurred in connection with the proceeding.
14-2-852. Mandatory indemnification.
Unless limited by its articles of incorporation, 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, or in defense of any claim, issue, or
matter therein, because he is or was a director of the corporation, the
corporation shall indemnify the director against reasonable expenses incurred
by him in connection therewith.
14-2-853. Advance for expenses.
(a) A corporation may pay for or reimburse the reasonable expenses
incurred by a director who is a party to a proceeding in advance of final
disposition of the proceeding if:
(1) The director furnishes the corporation a written affirmation of
his good faith belief that he has met the standard of conduct set forth in
subsection (a) of Code Section 14-2-851; and
(2) The director furnishes the corporation a written undertaking,
executed personally or on his behalf, to repay any advances if it is
ultimately determined that he is not entitled to indemnification under this
part.
(b) The undertaking required by paragraph (2) of subsection (a) of this
Code section must be an unlimited general obligation of the director but need
not be secured and may be accepted without reference to financial ability to
make repayment.
14-2-854. Court-ordered indemnification and advances for expenses.
Unless a corporation's articles of incorporation provide otherwise, a
director of the corporation who is a party to a proceeding may apply for
indemnification or advances for expenses to the court conducting the
proceeding or to another court of competent jurisdiction. On receipt of an
application, the court after giving any notice the court considers necessary
may order indemnification or advances for expenses if it determines:
(1) The director is entitled to mandatory indemnification under Code
Section 14-2-852, in which case the court shall also order the corporation to
pay the director's reasonable expenses incurred to obtain court ordered
indemnification;
(2) The director is fairly and reasonably entitled to indemnification
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in view of all the relevant circumstances, whether or not he met the standard
of conduct set forth in subsection (a) of Code Section 14-2-851 or was
adjudged liable as described in subsection (d) of Code Section 14-2-851, but
if he was adjudged so liable his indemnification is limited to reasonable
expenses incurred unless the articles of incorporation or a by-law, contract,
or resolution approved or ratified by the shareholders pursuant to Code
Section 14-2-856 provides otherwise; or
(3) In the case of advances for expenses, the director is entitled,
pursuant to the articles of incorporation, bylaws, or any applicable
resolution or agreement, to payment or reimbursement of his reasonable
expenses incurred as a party to a proceeding in advance of final disposition
of the proceeding.
14-2-855. Determination and authorization of indemnification.
(a) A corporation may not indemnify a director under Code Section 14-2-
851 unless authorized thereunder and a determination has been made in the
specific case that indemnification of the director is permissible in the
circumstances because he has met the standard of conduct set forth in
subsection (a) of Code Section 14-2-851.
(b) The determination shall be made:
(1) By the board of directors by majority vote of a quorum
consisting of directors not at the time parties to the proceeding;
(2) If a quorum cannot be obtained under paragraph (1) of this
subsection, by majority vote of a committee duly designated by the board of
directors (in which designation directors who are parties may participate),
consisting solely of two or more directors not at the time parties to the
proceeding;
(3) By special legal counsel:
(A) Selected by the board of directors or its committee in the
manner prescribed in paragraph (1) or (2) of this subsection; or
(B) If a quorum of the board of directors cannot be obtained under
paragraph (1) of this subsection and a committee cannot be designated under
paragraph (2) of this subsection, selected by majority vote of the full board
of directors (in which selection directors who are parties may participate);
or
(4) By the shareholders, but shares owned by or voted under the
control of directors who are at the time parties to the proceeding may not be
voted on the determination.
(c) Authorization of indemnification or an obligation to indemnify and
evaluation as to reasonableness of expenses shall be made in the same manner
as the determination that indemnification is permissible, except that if the
determination is made by special legal counsel, authorization of
indemnification and evaluation as to reasonableness of expenses shall be made
by those entitled under paragraph (3) of subsection (b) of this Code section
to select counsel.
14-2-856. Shareholder approved indemnification.
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(a) If authorized by the articles of incorporation or a bylaw,
contract, or resolution approved or ratified by the shareholders by a
majority of the votes entitled to be cast, a corporation may indemnify or
obligate itself to indemnify a director made a party to a proceeding
including a proceeding brought by or in the right of the corporation, without
regard to the limitations in other Code sections of this part.
(b) The corporation shall not indemnify a director under this Code
section for any liability incurred in a proceeding in which the director is
adjudged liable to the corporation or is subjected to injunctive relief in
favor of the corporation:
(1) For any appropriation, in violation of his duties, of any
business opportunity of the corporation;
(2) For acts or omissions which involve intentional misconduct or a
knowing violation of law;
(3) For the types of liability set forth in Code Section 14-2-832;
or
(4) For any transaction from which he received an improper personal
benefit.
(c) Where approved or authorized in the manner described in subsection
(a) of this Code section, a corporation may advance or reimburse expenses
incurred in advance of final disposition of the proceeding only if:
(1) the director furnishes the corporation a written affirmation of
his good faith belief that his conduct does not constitute behavior of the
kind described in subsection (b) of this Code section; and
(2) The director furnishes the corporation a written undertaking,
executed personally or on his behalf, to repay any advances if it is
ultimately determined that he is not entitled to indemnification under this
Code section.
14-2-857. Indemnification of officers, employees, and agents.
Unless a corporation's articles of incorporation provide otherwise:
(1) An officer of the corporation who is not a director is entitled
to mandatory indemnification under Code Section 14-2-852 and is entitled to
apply for court ordered indemnification under Code Section 14-2-854, in each
case to the same extent as a director; and
(2) A corporation may also indemnify and advance expenses to an
officer, 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, general or specific action of its board of directors, or contract.
14-2-858. Insurance.
A corporation may purchase and maintain insurance on behalf of an
individual who is or was a director, officer, employee, or agent of the
corporation or who, while a director, officer, employee, or agent of the
corporation, is or was serving at the request of the corporation as a
director, officer, partner, trustee, employee, or agent of another foreign or
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domestic corporation, partnership, joint venture, trust, employee benefit
plan, or other enterprise against liability asserted against or incurred by
him in that capacity or arising from his status as a director, officer,
employee, or agent, whether or not the corporation would have power to
indemnify him against the same liability under Code Section 14-2-851 or Code
Section 14-2-852.
14-2-859. Application of Part.
(a) A provision treating a corporation's indemnification of or advance
for expenses to directors that is contained in its articles of incorporation,
bylaws, a resolution of its shareholders or board of directors, or in a
contract or otherwise, is valid only if and to the extent the provision is
consistent with this part. If articles of incorporation limit
indemnification or advance for expenses, indemnification and advance for
expenses are valid only to the extent consistent with the articles.
(b) This part does not limit a corporation's power to pay or reimburse
expenses incurred by a director in connection with his appearance as a
witness in a proceeding at a time when he has not been made a named defendant
or respondent to the proceeding.
Articles of Incorporation Authority
Article 14 of SunTrust's Articles of Incorporation provides:
In addition to any powers provided by law, in the Bylaws, or otherwise,
the Corporation shall have the power to indemnify any person who becomes a
party or who is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (including any action by or in the right of the
Corporation), by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise.
Bylaw Authority
Article VII of SunTrust's Bylaws provides:
Section 1. Indemnified Parties; Reliance. Every person (and the heirs
and personal representatives of such person) who is or was a director,
officer or employee of the Corporation, or of any other entity in which he
served as such at the request of the Corporation, may be indemnified by the
Corporation in accordance with the provisions of this Article VII against any
and all liability and reasonable expense (including, without limitation,
counsel fees and disbursements, and amounts of judgments, fines or penalties
against, or amounts paid in settlement by, a director, officer or employee)
that may be incurred by him in connection with or resulting from any claim,
action, suit or proceeding, whether civil, criminal, administrative or
investigative, or in connection with any appeal relating thereto, in which he
may become involved, as a party or otherwise, or with which he may be
threatened, by reason of his being or having been a director, officer or
employee of the Corporation or such other entity or by reason of any action
taken or omitted by him in his capacity as such director, officer or
employee, whether or not he continues to be such at the time such liability
or expense shall have been incurred. Each person who shall act as a
director, officer or employee of the Corporation or of any other entity
referred to in this Section shall be deemed to be doing so in reliance upon
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the right of indemnification provided for in this Article VII.
Section 2. Indemnification As of Right. Every person (and the heirs
and personal representatives of such person) referred to in Section 1 of this
Article VII who has been wholly successful on the merits with respect to any
claim, action, suit or proceeding of the character described in Section 1,
shall be entitled to indemnification as of right.
Section 3. Indemnification Based on Review. Except as provided in
Section 2 of this Article VII, any indemnification under this Article VII
shall be made:
(A) In the case of a claim, action, suit or proceeding other than by
or in the right of the Corporation to procure a judgment in its favor, only
if the Board of Directors or the Executive Committee of such Board, acting by
a quorum consisting of directors who are not parties to such claim, action,
suit or proceeding, shall find, or independent legal counsel (who may be the
regular counsel of the Corporation) shall render an opinion, or the
shareholders by the affirmative vote of a majority of the shares entitled to
vote thereon shall determine, that the director, officer or employee acted in
good faith in what he reasonably believed to be the best interests of the
Corporation or such other entity, as the case may be, and, in addition, in
any criminal action or proceeding, had no reasonable cause to believe that
his conduct was unlawful; and
(B) In the case of a claim, action, suit or proceeding by or in the
right of the Corporation to procure a judgment in its favor, only if the
Board of Directors or the Executive Committee of such Board, acting by a
quorum consisting of directors who are not parties to such claim, action,
suit or proceeding, shall find, or independent legal counsel (who may be the
regular legal counsel of the Corporation) shall render an opinion, or the
shareholders by the affirmative vote of the majority of the shares entitled
to vote thereon shall determine, that the director, officer or employee acted
in good faith in what he reasonably believed to be the best interests of the
Corporation or such other entity, as the case may be; provided, however, that
no indemnification under this Subsection (B) shall be made with regard to (1)
any claim, issue or matter as to which such director, officer or employee
shall have been adjudged to be liable to the Corporation unless and only to
the extent that the court in which such action or suit was brought shall
determine that, despite the adjudication of liability but in view of all the
circumstances of the case, such director, officer or employee is fairly and
reasonably entitled to indemnity for such expenses which the court shall deem
proper, or (2) amounts paid, or expenses incurred, in connection with the
settlement of any such claim, action, suit or proceeding, without the
approval of a court of competent jurisdiction.
For the purpose of Subsection (A) only, the termination of any claim, action,
suit or proceeding, civil, criminal, administrative, or investigative, by
judgment, settlement (either with or without court approval) or conviction,
upon a pleas of guilty or of nolo contendere or its equivalent, shall not
create a presumption that a director, officer or employee did not meet the
standards of conduct set forth in such Subsection.
Section 4. Advances. Expenses incurred with respect to any claim,
action, suit or proceeding of the character described in this Article VII may
be advanced by the Corporation prior to the final disposition thereof upon
receipt of any undertaking by or on behalf of the recipient to repay such
amount unless it shall be ultimately determined that he is entitled to
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indemnification under this Article VII.
Section 5. Indemnification Not Exclusive. The rights of
indemnification provided in this Article VII shall be in addition to any
rights to which any such director, officer, employee or other person may
otherwise be entitled by contract or as a matter of law.
SunTrust has purchased a policy of directors and officers liability
(including Company reimbursement coverage) insurance that provides certain
coverage for SunTrust and its subsidiaries and their respective directors and
officers with respect to, among other things, liability under federal and
state securities laws.
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 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 even 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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Item 21. Exhibits.
Exhibit Description
2.1 Plan and Agreement of Reorganization, dated as of December 6,
1994, by and between Registrant and Peoples State Bank, including
as an Exhibit thereto the Plan of Merger (attached as Exhibit A to
the Proxy Statement-Prospectus) filed as part of this Registration
Statement.
3.1 Amended and Restated Articles of Incorporation of the
Registrant (incorporated by reference to Exhibit 3.1 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1989).
3.2 Amended and Restated Bylaws of the Registrant (incorporated by
reference to Exhibit 3.2 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1990).
5 Legal Opinion of Raymond D. Fortin, Senior Vice President,
regarding the legality of the Registrant's Common Stock being
issued in the Merger.
5.1 Opinion of King & Spalding, tax counsel to SunTrust,
concerning certain federal income tax consequences of the Merger.
13.1 Registrant's 1994 Annual Report on Form 10-K, as filed with
the Securities and Exchange Commission (the "Commission") on
February 22, 1995, which incorporates by reference therein
Registrant's Proxy Statement for its 1995 Annual Meeting of
Shareholders (incorporated herein by reference).
23.1 Consent of Arthur Andersen & Co. LLP
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of Raymond D. Fortin (included in Exhibit 5).
99 Form of Proxy
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Item 22 Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) 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) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the 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.
(2) 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 that time shall be deemed to be the
initial bona fide offering thereof.
(3) 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.
(4) 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, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(b)(1) 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.
(b)(2) 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
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liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide public offering thereof.
(c) 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.
(d) 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.
(e) 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.
))-10
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
1933, SunTrust Banks, Inc. certifies that it has reasonable grounds to
believe that it meets all of 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 Atlanta, State of
Georgia, on the 14th day of February 1995.
SUNTRUST BANKS, INC.
By:/s/ James B. Williams
James B. Williams
Chairman of the Board
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below, constitutes and appoints John W. Spiegel and Raymond D. Fortin, and
each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, to do any and all acts and things
and execute, in the name of the undersigned, any and all instruments which
said attorneys-in-fact and agents may deem necessary or advisable in order to
enable SunTrust Banks, Inc. to comply with the Securities Act of 1933 and any
requirements of the Securities and Exchange Commission in respect thereof, in
connection with the filing with the Securities and Exchange Commission of the
registration statement on Form S-4 under the Securities Act of 1933,
including specifically but without limitation, power and authority to sign
the name of the undersigned to such registration statement, and to file the
same with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and to
perform each and every act and thing requisite or necessary to be done in and
about the premises, as fully and to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, and any of them, or their
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated as of the 14th day of February 1995.
Signature Title
/s/ James B. Williams Chairman of the Board
James B. Williams and Chief Executive Officer
/s/ L. Phillip Humann President
L. Phillip Humann and Director
/s/ John W. Spiegel Executive Vice President
John W. Spiegel and Chief Financial Officer
/s/ William P. O'Halloran Senior Vice President
William P. O'Halloran and Chief Accounting Officer
II-11
<PAGE>
/s/ J. Hyatt Brown Director
J. Hyatt Brown
/s/ Warren M. Cason Director
Warren M. Cason
/s/ Roberto C. Goizueta Director
Roberto C. Goizueta
/s/ T. Marshall Hahn, Jr. Director
T. Marshall Hahn, Jr.
/s/ David H. Hughes Director
David H. Hughes
/s/ Joseph L. Lanier, Jr. Director
Joseph L. Lanier, Jr.
/s/ H. G. Pattillo Director
H. G. Pattillo
/s/ Scott L. Probasco, Jr. Director
Scott L. Probasco, Jr.
/s/ Robert W. Scherer Director
Robert W. Scherer
/s/ J. Walter Tucker, Jr. Director
J. Walter Tucker, Jr.
/s/ James H. Williams Director
James H. Williams
II-12
<PAGE>
EXHIBIT INDEX
Exhibit Description
2.1 Plan and Agreement of Reorganization, dated as of December 6,
1994, by and between Registrant and Peoples State Bank, including
as an Exhibit thereto the Plan of Merger (attached as Exhibit A to
the Proxy Statement-Prospectus) filed as part of this Registration
Statement.
3.1 Amended and Restated Articles of Incorporation of the
Registrant (incorporated by reference to Exhibit 3.1 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1989).
3.2 Amended and Restated Bylaws of the Registrant (incorporated by
reference to Exhibit 3.2 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1990).
5 Legal Opinion of Raymond D. Fortin, Senior Vice President,
regarding the legality of the Registrant's Common Stock being
issued in the Merger.
5.1 Opinion of King & Spalding, tax counsel to SunTrust,
concerning certain federal income tax consequences of the Merger.
13.1 Registrant's 1994 Annual Report on Form 10-K, as filed with
the Securities and Exchange Commission (the "Commission") on
February 22, 1995, which incorporates by reference therein
Registrant's Proxy Statement for its 1995 Annual Meeting of
Shareholders (incorporated herein by reference).
23.1 Consent of Arthur Andersen & Co. LLP
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of Raymond D. Fortin (included in Exhibit 5).
99 Form of Proxy
<PAGE>
March 6, 1995
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street
Washington, D.C. 20549
Ladies and Gentlemen:
As Senior Vice President, Managing Attorney and Secretary for SunTrust
Banks, Inc. (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 March 6, 1995, pursuant to
which the Registrant proposes to issue up to 263,325 shares of its $1.00 par
value common stock ("Registrant's Common Stock") to the shareholders of
Peoples State Bank upon the merger of Peoples State Bank, with a wholly-owned
subsidiary of 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 said
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,
RDF/jj
<PAGE>
Exhibit 8
KING & SPALDING
191 PEACHTREE STREET
ATLANTA, GEORGIA
30303-1763
TELEPHONE: 404/572-4600
FACSIMILE: 404/572-5100
February 28, 1995
SunTrust Banks, Inc.
25 Park Place, NE
Atlanta, Georgia 30303
Peoples State Bank
6335 U.S. Highway 19
New Port Richey, Florida 34652
Re: Federal Income Tax Consequences of Merger of STI Subsidiary,
Inc., a Wholly Owned Subsidiary of SunTrust Banks, Inc., with and
into Peoples State Bank
Ladies and Gentlemen:
We have acted as tax counsel to SunTrust Banks, Inc. ("SunTrust")
in connection with the merger (the "Merger") of STI Subsidiary, Inc. ("STI
Subsidiary"), a wholly owned subsidiary of SunTrust, with and into Peoples
State Bank ("Peoples"), pursuant to the Agreement and Plan of
Reorganization dated as of December 6, 1994 (the "Agreement") by and
between SunTrust and Peoples. In our capacity as SunTrust's tax counsel,
you have requested our opinion regarding certain of the federal income tax
consequences of the Merger.
We understand that our opinion will be referred to in the Proxy
Statement-Prospectus (the "Proxy Statement") that forms part of the
Registration Statement on Form S-4 to be filed with the Securities and
Exchange Commission in connection with the Merger. We hereby consent to
such use of our opinion.
All capitalized terms used herein without definition have the
respective meanings specified in the Agreement.
INFORMATION RELIED ON
In rendering the opinion expressed herein, we have examined such
documents as we have deemed appropriate, including the Agreement and the
Proxy Statement. In our examination of documents, we have assumed, with
your consent, that all documents submitted to us as photocopies or
telecopies faithfully reproduce the originals thereof, that such originals
are authentic, that all such documents have been or will be duly executed
to the extent required, and that all statements set forth in such documents
are accurate. We also have obtained such additional information and
representations as we have deemed relevant and necessary through
consultation with various representatives of SunTrust and Peoples.
Likewise, we have obtained written certificates from SunTrust and Peoples
to verify certain relevant facts that have been represented to us or that
we have assumed in rendering this opinion.
Based upon the aforementioned consultations and certificates, we
have assumed that the following statements are true on the date hereof and
will be true at the time of the Merger:
(1) The Merger will be consummated in compliance with the
material terms of the Agreement and none of the material terms and
conditions therein have been waived or modified and neither SunTrust nor
Peoples has any plan or intention to waive or modify any such material term
or condition.
(2) There is no plan or intention by the shareholders of
Peoples who own one percent or more of the Peoples Common Stock, and to the
best of the knowledge of the management of Peoples, there is no plan or
intention on the part of the remaining shareholders of Peoples to sell,
exchange, or otherwise dispose of a number of shares of SunTrust Common
Stock received in the Merger that would reduce the Peoples shareholders'
ownership of SunTrust Common Stock to a number of shares having a value, as
of the date of the Merger, of less than 50 percent of the value of all of
the formerly outstanding Peoples Common Stock as of the same date. For
purposes of this representation, shares of Peoples Common Stock exchanged
for cash or other property, surrendered by dissenters, or exchanged for
cash in lieu of fractional shares of SunTrust Common Stock will be treated
as outstanding Peoples Common Stock on the date of the Merger. Moreover,
shares of Peoples Common Stock and shares of SunTrust Common Stock held by
Peoples shareholders and otherwise sold, redeemed, or disposed of prior or
subsequent to the Merger will be considered in making this representation.
(3) Immediately following the Merger, Peoples will hold at
least 90 percent of the fair market value of its net assets and at least 70
percent of the fair market value of its gross assets held immediately prior
to the Merger. For purposes of this representation, amounts paid by
Peoples to dissenters, amounts paid by Peoples to shareholders who receive
cash or other property, amounts used by Peoples to pay reorganization
expenses, and all redemptions and distributions (except for regular, normal
dividends) made by Peoples will be included as assets of Peoples held
immediately prior to the Merger.
(4) Following the Merger, Peoples will hold at least 90
percent of the fair market value of STI Subsidiary's net assets and at
least 70 percent of the fair market value of STI Subsidiary's gross assets
held immediately prior to the Merger. For purposes of this representation,
amounts paid by STI Subsidiary to dissenters, amounts paid by STI
Subsidiary to shareholders who receive cash or other property, and amounts
used by STI Subsidiary to pay reorganization expenses will be included as
assets of STI Subsidiary held immediately prior to the Merger, unless such
amounts were transferred to STI Subsidiary by SunTrust pursuant to the
Merger.
(5) SunTrust will not take any action immediately
subsequent to the Merger that will cause Peoples to hold less than 90
percent of the fair market value of its net assets and less than 70 percent
of the fair market value of its gross assets held immediately prior to the
Merger. For purposes of this representation, amounts paid by Peoples to
dissenters, amounts paid by Peoples to shareholders who receive cash or
other property, amounts used by Peoples to pay reorganization expenses, and
all redemptions and distributions (except for regular, normal dividends)
made by Peoples will be included as assets of Peoples held immediately
prior to the Merger where funds held by Peoples immediately prior to the
Merger are used in making such payments.
(6) Prior to the Merger, SunTrust will own all of the
outstanding shares of stock of STI Subsidiary.
(7) Peoples has no plan or intention to issue, prior to the
Merger, additional shares of its stock that would result in SunTrust owning
less than 80 percent of the total combined voting power of all classes of
Peoples stock entitled to vote and at least 80 percent of the total number
of shares of all other classes of Peoples stock.
(8) SunTrust has no plan or intention to cause Peoples to
issue additional shares of Peoples stock that would result in SunTrust (or
a wholly owned subsidiary of SunTrust) owning less than 80 percent of the
total combined voting power of all classes of Peoples stock entitled to
vote and at least 80 percent of the total number of shares of all other
classes of Peoples stock.
(9) SunTrust has no plan or intention to reacquire any of
the shares of SunTrust Common Stock issued in the Merger.
(10) SunTrust has no current plan or intention to liquidate
Peoples; to sell or otherwise dispose of any of the capital stock of
Peoples acquired in the Merger, except for transfers of stock to a
corporation of which SunTrust owns all of the outstanding stock; or
to cause Peoples to sell or otherwise dispose of any of its assets or any
of the assets acquired from STI Subsidiary, except for dispositions made in
the ordinary course of business. It is anticipated that, following the
consummation of the Merger, SunTrust will contribute all of the Peoples
Common Stock to SunBanks, Inc., a wholly owned subsidiary of SunTrust, and
thereafter SunBank and Trust Company, a wholly owned subsidiary of
SunBanks, Inc., will be merged with and into Peoples.
(11) STI Subsidiary will have no liabilities at the time of
the Merger, and will not transfer to Peoples any assets subject to
liabilities in the transaction.
(12) SunTrust has no current plan or intention to cause
Peoples to discontinue its historic business or to use a significant
portion of its historic business assets other than in a business.
(13) Each of SunTrust, STI Subsidiary, and Peoples will pay
all expenses incurred by it or on its behalf in connection with the Merger.
The shareholders of Peoples will pay their expenses, if any, incurred in
connection with the Merger.
(14) There is no intercorporate indebtedness existing
between SunTrust and Peoples or between STI Subsidiary and Peoples that was
or will be issued, acquired, or settled at a discount.
(15) In the Merger, SunTrust will acquire shares of Peoples
Common Stock representing at least 80 percent of the total combined voting
power of all classes of Peoples stock entitled to vote and at least 80
percent of the total number of shares of all other classes of Peoples
stock, solely in exchange for voting stock of SunTrust. For purposes of
this representation, Peoples Common Stock redeemed for cash or other
property furnished by SunTrust will be considered as acquired by SunTrust,
and Peoples Common Stock held by dissenting shareholders of Peoples which
is converted into the right to receive cash payments will be considered as
redeemed by Peoples.
(16) Immediately after the Merger, Peoples will not have
outstanding any warrants, options, convertible securities, or any other
type of right pursuant to which any person could acquire stock in Peoples
that, if exercised or converted, would affect SunTrust's acquisition or
retention of Peoples Common Stock representing at least 80 percent of the
total combined voting power of all classes of Peoples stock entitled to
vote and at least 80 percent of the total number of shares of all other
classes of Peoples stock.
(17) Neither SunTrust nor any subsidiary of SunTrust owns,
directly or indirectly, nor have they owned during the past five years,
directly or indirectly, any capital stock of Peoples.
(18) Neither Peoples, SunTrust, nor STI Subsidiary is a
regulated investment company, a real estate investment trust, or a
corporation 50 percent or more of the value of whose total assets
(excluding cash, cash items, receivables and U.S. government securities)
are stock or securities and 80 percent or more of the value of whose total
assets are assets held for investment. For purposes of the 50 percent and
80 percent determinations under the preceding sentence, stock and
securities in any subsidiary corporation shall be disregarded, and the
parent corporation shall be deemed to own its ratable share of the
subsidiary's assets. A corporation shall be considered a subsidiary for
purposes of this paragraph if the parent owns 50 percent or more of the
combined voting power of all classes of stock entitled to vote, or 50
percent or more of the total value of shares of all classes of stock
outstanding.
(19) On the date of the Merger, the fair market value of the
assets of Peoples will exceed the sum of its liabilities, plus the amount
of liabilities, if any, to which the assets are subject.
(20) Peoples is not under the jurisdiction of a court in a
case under Title 11 of the United States Code or a receivership,
foreclosure, or similar proceeding in a federal or state court.
(21) None of the compensation received by any shareholder-
employees of Peoples in contemplation of or as a result of the Merger will
be separate consideration for, or allocable to, any of their shares of
Peoples Common Stock; none of the shares of SunTrust Common Stock received
by any shareholder-employees of Peoples pursuant to the Merger will be
separate consideration for, or allocable to, any employment agreement; and
the compensation paid to any shareholder-employees pursuant to the Merger
will be for services actually rendered and will be commensurate with
amounts paid to third parties bargaining at arm's length for similar
services.
(22) The payment of cash in lieu of fractional shares of
SunTrust Common Stock is solely for the purpose of avoiding the expense and
inconvenience to SunTrust of issuing fractional shares and does not
represent separately bargained-for consideration. The total cash
consideration that will be paid in the Merger to the Peoples shareholders
instead of issuing fractional shares of SunTrust Common Stock will not
exceed .24 percent of the total consideration that will be issued in the
Merger to the Peoples shareholders in exchange for their shares of Peoples
Common Stock. The fractional share interests of each Peoples shareholder
will be aggregated and no Peoples shareholder will receive cash in an
amount equal to or greater than the value of one full share of SunTrust
Common Stock.
OPINION
Based upon the foregoing, it is our opinion that:
(1) The Merger will constitute a "reorganization" within the
meaning of Sections 368(a)(1)(A) and (a)(2)(E) of the Code;
(2) The exchange in the Merger of Peoples Common Stock for
SunTrust Common Stock will not give rise to gain or loss to the Peoples
shareholders;
(3) The tax basis of the SunTrust Common Stock received in
the Merger (including any fractional share interest) by a Peoples shareholder
will be the same as the Peoples Common Stock exchanged for such SunTrust
Common Stock;
(4) The holding period for the SunTrust Common Stock received
in the Merger by a Peoples shareholder will include the holding period of
such shareholder in the Peoples Common Stock exchanged for such SunTrust
Common Stock, provided that the Peoples Common Stock is held as a capital
asset at the Effective Date of the Merger; and
(5) A Peoples shareholder who receives cash in lieu of a
fractional share of SunTrust Common Stock will recognize gain or loss equal
to the difference between such cash amount and the shareholder's basis in the
fractional share interest.
The opinion expressed herein is based upon existing statutory,
regulatory, and judicial authority, any of which may be changed at any time
with retroactive effect. In addition, our opinion is based solely on the
documents that we have examined, the additional information and certificates
that we have obtained, and the statements set out herein that we have assumed
to be true on the day hereof and at the time of the Merger. Our opinion
cannot be relied upon if any of the material facts contained in such
documents, in such certificates, or in any such additional information are,
or later become, inaccurate or if any of the material statements set out
herein are, or later become, inaccurate. Finally, our opinion is limited to
the tax matters specifically covered thereby, and we have not been asked to
address herein, nor have we addressed herein, any other tax consequences of
the Merger.
Very truly yours,
KING & SPALDING
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
January 31, 1995 and incorporated by reference in SunTrust Banks, Inc.'s Form
10-K for the year ended December 31, 1994 and to all references to our firm
included in this registration statement.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 6, 1995
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-4
of our report dated February 3, 1995 on our audits of the financial
statements of Peoples State Bank as of December 31, 1994 and 1993 and for
each of the years in the three year period ended December 31, 1994. We also
consent to the reference to our firm under the caption "Relationships with
Independent Public Accountants and Experts."
KPMG PEAT MARWICK LLP
Tampa, Florida
March 6, 1995
<PAGE>
Exhibit 99
[Face of Proxy Card]
Peoples State Bank
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder of Peoples State Bank ("Peoples") hereby
constitutes and appoints Edward Heveran and Joan B. Murcko, or any of them,
the true and lawful attorneys and proxies of the undersigned, each with full
power of substitution, for and on behalf of the undersigned, to act at and
vote at the Special Meeting of Shareholders ("Meeting") to be held on April
___, 1995, at ________a.m., New Port Richey time, at the Peoples' Main
Office, 6335 U.S. Highway 19, New Port Richey, Florida, and at any
adjournment or adjournments thereof:
1. For [] Against [] Abstain []
The approval of an Agreement and Plan of Reorganization, dated
as of December 6, 1994, by and between SunTrust Banks, Inc.
("SunTrust") and Peoples and a related Plan and Agreement of Merger
between STI Subsidiary, Inc. ("STI Subsidiary") and Peoples.
Further, approval for the conversion of each outstanding share of
the $5.00 par value common stock of Peoples ("Peoples Common
Stock"), in accordance with the election by each Peoples
shareholder, into either: (a) .75 shares of $1.00 par value
SunTrust common stock ("SunTrust Common Stock") for each share of
Peoples Common Stock or (b) cash equal to .75 times the average of
the closing prices per share of SunTrust Common Stock as reported
on the NYSE Composite Tape for each of the twenty trading days
immediately preceding the date of the Meeting, subject to an
aggregate cash limit equal to the amount resulting from the
conversion of 19.75% of the shares of Peoples Common Stock into
cash.
2. In their discretion, to act and vote upon such other business as
may come before the meeting or any adjournment or adjournments
thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED ABOVE, IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1 SET FORTH
ABOVE.
(Continued, and to be signed, on the other side)
<PAGE>
[Reverse of Proxy Card]
The undesigned hereby acknowledges receipt of the Notice of Special
Meeting of Shareholders dated March __, 1995, and the Proxy Statement-
Prospectus and accompanying documents forwarded therewith and ratifies all
lawful action taken by the above-named attorneys and proxies.
Date: ______________________, 1995 ____________________________(SEAL)
____________________________(SEAL)
Note: Signature(s) should agree with
name(s) on Peoples stock
certificate(s). Executors,
administrators, trustees and other
fiduciaries, and persons signing on
behalf of corporations or partnerships,
should so indicate when signing.
