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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 14, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SUNTRUST BANKS, INC.
(Exact name of registrant as specified in its charter)
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<S> <C>
GEORGIA 58-1575035
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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303 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30308
(404) 588-7711
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
RAYMOND D. FORTIN, ESQ.
SENIOR VICE PRESIDENT
SUNTRUST BANKS, INC.
303 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30308
(404) 588-7165
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES REQUESTED TO:
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<S> <C>
MARY A. BERNARD SUSAN J. SUTHERLAND
KING & SPALDING SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
1185 AVENUE OF THE AMERICAS 919 THIRD AVENUE
NEW YORK, NEW YORK 10036 NEW YORK, NEW YORK 10022
(212) 556-2100 (212) 735-3000
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
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, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(2) OFFERING PRICE(2) FEE
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<S> <C> <C> <C> <C>
Debt Securities.................. $400,000,000(1) 100% $400,000,000 $118,000
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(1) Plus such additional principal amount as may be necessary such that, if Debt
Securities are issued with an original issue discount, the aggregate initial
offering price of all Debt Securities will equal $400,000,000. There remains
$200,000,000 of securities unsold under Registration Statement No. 333-46093
that was filed with the Commission on February 11, 1998 at which time a
filing fee of $147,500 was paid.
(2) Estimated pursuant to Rule 457 under the Securities Act of 1933, solely for
the purpose of calculating the registration fee.
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 THE 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.
PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, THE PROSPECTUS
INCLUDED IN THIS REGISTRATION STATEMENT IS A COMBINED PROSPECTUS RELATING ALSO
TO REGISTRATION STATEMENT NO. 333-46093 PREVIOUSLY FILED BY THE REGISTRANT ON
FORM S-3 AND DECLARED EFFECTIVE ON FEBRUARY 24, 1998. THIS REGISTRATION
STATEMENT, WHICH IS A NEW REGISTRATION STATEMENT, ALSO CONSTITUTES
POST-EFFECTIVE AMENDMENT NO. 1 TO REGISTRATION STATEMENT NO. 333-46093, AND SUCH
POST-EFFECTIVE AMENDMENT NO. 1 SHALL HEREAFTER BECOME EFFECTIVE CONCURRENTLY
WITH THE EFFECTIVENESS OF THIS REGISTRATION STATEMENT.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED AUGUST 14, 1998
PROSPECTUS
$400,000,000
SUNTRUST BANKS, INC.
DEBT SECURITIES
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SunTrust Banks, Inc., a Georgia corporation (the "Corporation"), from time
to time may offer and sell debt securities consisting of debentures, notes or
other evidences of indebtedness in one or more series in an aggregate initial
offering price not to exceed $400,000,000 or its equivalent based on the
applicable exchange rate at the time of the offering if denominated in foreign
currencies (the "Debt Securities"). The Debt Securities may be unsecured and
unsubordinated Debt Securities (the "Senior Debt Securities") or unsecured and
subordinated Debt Securities (the "Subordinated Debt Securities"). The Debt
Securities may be offered as separate series in amounts, at maturities, at
prices and on terms to be determined at the time of the sale as set forth in the
applicable prospectus supplement to this Prospectus (each, a "Prospectus
Supplement"). Although the aggregate initial offering price of the Debt
Securities is limited as set forth above, the respective indentures pursuant to
which the Senior Debt Securities and the Subordinated Debt Securities are to be
issued do not contain any limitation on the aggregate principal amount of the
debt securities covered thereby. The Senior Debt Securities when issued will
rank on a parity with all other unsecured and unsubordinated indebtedness of the
Corporation, and the Subordinated Debt Securities will be unsecured and will be
subordinate to Senior Indebtedness of the Corporation and, under certain
circumstances, to Additional Senior Obligations of the Corporation, each as
defined herein. Unless specifically stated in a Prospectus Supplement, payment
of principal of the Subordinated Debt Securities may be accelerated only in the
case of the bankruptcy of the Corporation. There is no right of acceleration in
the case of a default in the payment of the principal of, or any premium or
interest on, the Subordinated Debt Securities or in the performance of any
covenant or agreement of the Corporation. See "Description of the Debt
Securities."
When a particular series of Debt Securities is offered, a Prospectus
Supplement will be delivered setting forth the terms of such Debt Securities,
including the specific designation, aggregate principal amount, denominations,
maturity, premium, if any, interest rate (which may be fixed or variable) and
time of payment of interest, if any, terms for redemption at the option of the
Corporation or the holder, if any, terms for sinking fund payments, if any,
subordination terms, if any, and any other terms of such Debt Securities, or
otherwise in connection with the offering and sale of the Debt Securities in
respect of which the Prospectus Supplement is being delivered. In addition, the
Prospectus Supplement will set forth the initial public offering price, the
names of any underwriters or agents, the principal amounts, if any, to be
purchased by underwriters, the compensation of such underwriters and agents, if
any, and the net proceeds to the Corporation. The Debt Securities of a series
may be issued in definitive registered form without coupons ("Registered
Securities") or in the form of one or more book-entry securities in registered
form ("Book-Entry Securities").
The Debt Securities may be sold directly by the Corporation to the public
or through agents designated from time to time, through underwriting syndicates
led by one or more managing underwriters or through one or more underwriters
acting alone. If the Corporation, directly or through agents, solicits offers to
purchase the Debt Securities, the Corporation reserves the sole right to accept
and, together with its agents, to reject in whole or in part any proposed
purchase of Debt Securities. See "Plan of Distribution." Any underwriters,
dealers or agents participating in the offering may be deemed "underwriters"
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"). See "Plan of Distribution" for possible indemnification arrangements for
underwriters, agents and their controlling persons.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE THE SALE OF DEBT SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT. THE DEBT SECURITIES WILL BE
UNSECURED OBLIGATIONS OF THE CORPORATION, WILL NOT BE SAVINGS ACCOUNTS, DEPOSITS
OR OTHER OBLIGATIONS OF ANY BANK OR NONBANK SUBSIDIARY OF THE CORPORATION, AND
WILL NOT BE INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK
INSURANCE FUND OR ANY OTHER GOVERNMENT AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS AUGUST , 1998.
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AVAILABLE INFORMATION
The Corporation 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 (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549 and at the Commission's
Regional Offices in New York (13th Floor, 7 World Trade Center, New York, New
York 10048) and Chicago (Suite 1400, 500 West Madison Street, Chicago, Illinois
60661-2511). Information regarding the operation of the public reference
facilities of the Commission may be obtained by calling the Commission at
1-800-SEC-0330. The Commission also maintains a Web site at http://www.sec.gov
that contains reports, proxy statements and other information regarding
registrants that file electronically with the Commission. In addition, such
reports, proxy statements and other information concerning the Corporation can
be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005. This Prospectus does not contain all the information set
forth in the Registration Statement on Form S-3 of which this Prospectus is a
part (together with all exhibits and amendments, the "Registration Statement"),
which the Corporation has filed with the Commission under the Securities Act and
to which reference is hereby made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Corporation hereby incorporates by reference in this Prospectus the
following reports filed with the Commission pursuant to the Exchange Act: (a)
its Annual Report on Form 10-K for the year ended December 31, 1997, (b) its
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998 and June
30, 1998 and (c) its Current Reports on Form 8-K dated January 16, 1998, March
10, 1998, July 20, 1998 and August 12, 1998.
All documents filed by the Corporation pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of the offering of the Debt Securities offered hereby shall be
deemed to be incorporated by reference into this Prospectus and shall be deemed
a part hereof from the respective dates of filing of such documents. Any
statement contained in this Prospectus or any accompanying Prospectus Supplement
or in a document incorporated or deemed to be incorporated by reference herein
or therein shall be deemed to be modified or superseded for purposes of this
Prospectus or such accompanying Prospectus Supplement to the extent that a
statement contained herein or therein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein or
therein modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Registration Statement or this Prospectus.
The Corporation will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon the written or oral request of such
person, a copy of any or all of the documents incorporated by reference herein,
except for exhibits to such documents unless such exhibits are specifically
incorporated by reference into such documents. Written requests should be sent
to: James C. Armstrong, First Vice President -- Investor Relations, SunTrust
Banks, Inc., 303 Peachtree Street, N.E., Atlanta, Georgia 30308. Telephone
requests may be directed to 404-588-7425.
THE CORPORATION
The Corporation is a regional bank holding company with three principal
subsidiaries: SunTrust Banks of Florida, Inc., headquartered in Orlando, Florida
("STB of Florida"); SunTrust Banks of Georgia, Inc., headquartered in Atlanta,
Georgia ("STB of Georgia"); and SunTrust Banks of Tennessee, Inc., headquartered
in Nashville, Tennessee ("STB of Tennessee").
The Corporation, through its subsidiary banks (the "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
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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 securities.
Under the longstanding policy of the Board of Governors of the Federal
Reserve System (the "Federal Reserve"), a bank holding company is expected to
act as a source of financial strength for its subsidiary banks and to commit
resources to support such banks. As a result of this policy, the Corporation may
be required to commit resources to the Subsidiary Banks in circumstances where
it might not otherwise do so.
Because the Corporation is a bank holding company, its rights and the
rights of its creditors, including the holders of the Offered Debt Securities
(as defined herein), to participate in the distribution and payment of assets of
any subsidiary upon the subsidiary's liquidation or recapitalization would be
subject to the prior claims of such subsidiary's creditors except to the extent
that the Corporation may itself be a creditor with recognized claims against the
subsidiary.
The Corporation's principal executive offices are located at 303 Peachtree
Street, N.E., Atlanta, Georgia 30308, and its telephone number is 404-588-7711.
USE OF PROCEEDS
The Corporation currently intends to use the net proceeds from the sale of
any Debt Securities for general corporate purposes, which may include
refinancing of debt, including outstanding commercial paper and other short-term
indebtedness, redemption or repurchase of shares of its outstanding common and
preferred stock, investments at the holding company level, investments in, or
extensions of credit to, its banking and other subsidiaries and other banks and
companies engaged in other financial service activities, possible acquisitions
and such other purposes as may be stated in any Prospectus Supplement. Pending
such use, the net proceeds may be temporarily invested. The precise amounts and
timing of the application of proceeds will depend upon the funding requirements
of the Corporation and its subsidiaries and the availability of other funds.
Except as may be described in any Prospectus Supplement, specific allocations of
the proceeds to such purposes will not have been made at the date of such
Prospectus Supplement.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following table presents the consolidated ratio of earnings to fixed
charges of the Corporation. The consolidated ratio of earnings to fixed charges
has been computed by dividing (i) net income plus all applicable income taxes
plus fixed charges by (ii) fixed charges. Fixed charges represent interest
expense (ratios are presented both including and excluding interest on
deposits), and the portion of net rental expense which is deemed to be
equivalent to interest on long-term debt. Interest expense (other than on
deposits) includes interest on long-term debt, federal funds purchased and
securities sold under agreements to repurchase, mortgages, commercial paper and
other funds borrowed.
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<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
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1998 1997 1997 1996 1995 1994 1993
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Including interest on deposits................. 1.58x 1.60x 1.58x 1.61x 1.61x 1.83x 1.87x
Excluding interest on deposits................. 2.42x 2.86x 2.65x 3.30x 3.20x 4.24x 5.07x
</TABLE>
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CERTAIN REGULATORY CONSIDERATIONS
The following discussion sets forth certain of the elements of the
comprehensive regulatory framework applicable to bank holding companies and
banks and provides certain specific information relevant to the Corporation and
its subsidiaries. Federal and state regulation of financial institutions such as
the Corporation and the Subsidiary Banks is intended primarily for the
protection of depositors and the Federal deposit insurance funds rather than
shareholders or other creditors.
GENERAL
As a bank holding company, the Corporation is subject to the regulation and
supervision of the Federal Reserve. The Corporation's Subsidiary Banks are
subject to regulation, supervision and examination by applicable state and
federal banking agencies, including the Federal Reserve, the Office of the
Comptroller of the Currency (the "Comptroller") and the Federal Deposit
Insurance Corporation (the "FDIC").
The federal banking agencies have broad enforcement powers over depository
institutions, including the power to terminate deposit insurance, to impose
substantial fines and other civil and criminal penalties, and to appoint a
conservator or receiver if certain conditions are met. The federal banking
agencies also have broad enforcement powers over bank holding companies,
including the power to impose substantial fines and other civil and criminal
penalties.
Almost every aspect of the operations and financial condition of the
Subsidiary Banks is subject to extensive regulation and supervision and to
various requirements and restrictions under federal and state law, including
requirements governing capital adequacy, liquidity, earnings, dividends,
reserves against deposits, management practices, branching, loans, investments,
and the provision of services. Various consumer protection laws and regulations
also affect the operations of the Subsidiary Banks. The activities and
operations of the Corporation also are subject to extensive federal supervision
and regulation which, among other things, limit non-banking activities, impose
minimum capital requirements and require approval to acquire more than 5% of any
class of voting shares or substantially all of the assets of a bank. In addition
to the impact of regulation, banks and bank holding companies may be
significantly affected by legislation, which can change banking statutes in
substantial and unpredictable ways, and by the actions of the Federal Reserve as
it attempts to control the money supply and credit availability in order to
influence the economy.
PAYMENT OF DIVIDENDS AND OTHER RESTRICTIONS
The Corporation is a legal entity separate and distinct from its
subsidiaries, including the Subsidiary Banks. There are various legal and
regulatory limitations under federal and state law on the extent to which the
Corporation's subsidiaries, including its bank and bank holding company
subsidiaries, can finance or otherwise supply funds to the Corporation.
The principal source of the Corporation's cash revenues is dividends from
its subsidiaries and there are certain limitations under federal, Georgia,
Florida, Tennessee and Alabama law on the payment of dividends by such
subsidiaries. The approval of the Federal Reserve 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 or any national bank in any calendar year
exceeds the bank's net income for that year combined with its retained net
income for the preceding two years, less any required transfers to surplus or a
fund for the retirement of any preferred stock. In addition, a dividend may not
be paid if a bank's losses equal or exceed its undivided profits, and a dividend
may not be paid in excess of a bank's undivided profits. The relevant federal
and state regulatory agencies also have authority to prohibit a bank holding
company, which would include STB of Florida, STB of Georgia and STB of
Tennessee, or a state or national bank from engaging in what, in the opinion of
such regulatory body, constitutes an unsafe or unsound practice in conducting
its business. The payment of dividends could, depending upon the financial
condition of the subsidiary, be deemed to constitute such an unsafe or unsound
practice.
Under Georgia law (which would apply to any payment of dividends by the
Corporation's largest subsidiary, SunTrust Bank, Atlanta, to STB of Georgia) the
prior approval of the Georgia Department of
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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,
after taxes but before dividends, for the previous calendar year; or (iii) the
ratio of equity capital to adjusted total assets is less than 6%.
Retained earnings of the Corporation's banking subsidiaries available for
payment of cash dividends under all applicable regulations without obtaining
governmental approval were approximately $540.1 million as of December 31, 1997.
In addition, the Subsidiary Banks and their subsidiaries are subject to
limitations under Sections 23A and 23B of the Federal Reserve Act with respect
to extensions of credit to, investments in, and certain other transactions with,
the Corporation and its other subsidiaries. Furthermore, such loans and
extensions of credit, as well as certain other transactions, are also subject to
various collateral requirements.
CAPITAL ADEQUACY
The Federal Reserve has adopted minimum risk-based and leverage capital
guidelines for bank holding companies. The minimum required risk-based capital
ratio of qualifying total capital to risk-weighted assets (including certain
off-balance-sheet items, such as standby letters of credit) is 8%, of which 4%
must consist of Tier 1 capital. As of June 30, 1998, the Corporation's total
risk-based capital ratio was 13.67%, including 7.16% of Tier 1 capital. The
minimum required leverage capital ratio (Tier 1 capital to average total assets)
is 3% for bank holding companies that meet certain specified criteria, including
that they have the highest regulatory rating. As of June 30, 1998, the
Corporation's leverage capital ratio was 6.80%. Higher risk-based and leverage
ratios may apply under certain circumstances.
The Subsidiary Banks are subject to similar risk-based and leverage capital
requirements adopted by the federal banking agencies.
Failure to meet capital requirements can subject a bank to a variety of
enforcement remedies, including additional substantial restrictions on its
operations and activities, termination of deposit insurance by the FDIC, and
under certain conditions the appointment of a receiver or conservator.
Federal banking regulations establish five capital categories for
depository institutions ("well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" and "critically
undercapitalized"), and impose significant restrictions on the operations of an
institution that is not at least adequately capitalized. Under certain
circumstances, an institution may be downgraded to a category lower than that
warranted by its capital levels, and subjected to the supervisory restrictions
applicable to institutions in the lower capital category. A depository
institution is generally prohibited from making capital distributions (including
paying dividends) or paying management fees to a holding company if the
institution would thereafter be undercapitalized.
An undercapitalized depository institution is subject to restrictions in a
number of areas, including asset growth, acquisitions, branching, new lines of
business, and borrowing from the Federal Reserve. In addition, an
undercapitalized depository institution is required to submit a capital
restoration plan. A depository institution's holding company must guarantee the
capital plan up to an amount equal to the lesser of 5% of the depository
institution's assets at the time it becomes undercapitalized or the amount
needed to restore the capital of the institution to the levels required for the
institution to be classified as adequately capitalized at the time the
institution fails to comply with the plan and any such guarantee would be
entitled to a priority of payment in bankruptcy. A depository institution is
treated as if it is significantly undercapitalized if it fails to submit a
capital plan that is based on realistic assumptions and is likely to succeed in
restoring the depository institution's capital.
Significantly undercapitalized depository institutions may be subject to a
number of additional significant requirements and restrictions, including
requirements to sell sufficient voting stock to become adequately capitalized,
to replace or improve management, to reduce total assets, to cease acceptance of
correspondent bank deposits, to restrict senior executive compensation and to
limit transactions with affiliates. Critically
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undercapitalized depository institutions are further subject to restrictions on
paying principal or interest on subordinated debt, making investments,
expanding, acquiring or selling assets, extending credit for highly-leveraged
transactions, paying excessive compensation, amending their charters or bylaws
and making any material changes in accounting methods. In general, a receiver or
conservator must be appointed for a depository institution within 90 days after
the institution is deemed to be critically undercapitalized.
SUPPORT OF SUBSIDIARY BANKS
Under Federal Reserve policy, the Corporation is expected to serve 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 policy, the Corporation 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.
A depository institution insured by the FDIC can be held liable for any
loss incurred by, or reasonably expected to be incurred by, the FDIC in
connection with the default of a commonly controlled FDIC-insured depository
institution or any assistance provided by the FDIC to any commonly controlled
FDIC-insured depository institution "in danger of default". "Default" is defined
generally as the appointment of a conservator or receiver and "in danger of
default" is defined generally as the existence of certain conditions indicating
that a default is likely to occur in the absence of regulatory assistance.
Liability for the losses of commonly-controlled depository institutions can lead
to the failure of some or all depository institutions in a holding company
structure, if the remaining institutions are unable to pay the liability
assessed by the FDIC. Any obligation or liability owed by a subsidiary bank to
its parent company or to an affiliate of the subsidiary bank is subordinate to
the subsidiary bank's cross-guarantee liability for losses of
commonly-controlled depository institutions.
DESCRIPTION OF THE DEBT SECURITIES
GENERAL
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
and the extent, if any, to which general provisions may apply to such Debt
Securities (the "Offered Debt Securities") will be described in the Prospectus
Supplement relating to such Offered Debt Securities (the "Applicable Prospectus
Supplement").
Senior Debt Securities will be issued from time to time in series under an
Indenture, dated as of May 1, 1993 (the "Senior Indenture"), between the
Corporation and PNC Bank, National Association, as Trustee (the "Senior
Trustee"). Subordinated Debt Securities will be issued under an Indenture, dated
as of May 1, 1993 (the "Subordinated Indenture"), between the Corporation and
The First National Bank of Chicago, as Trustee (the "Subordinated Trustee"). The
Senior Indenture and the Subordinated Indenture are sometimes herein referred to
collectively as the "Indentures" and the Senior Trustee and the Subordinated
Trustee are sometimes herein referred to collectively as the "Trustees". The
Indentures are incorporated by reference as exhibits to the Registration
Statement of which this Prospectus is a part.
The following summaries of certain provisions of the Senior Debt
Securities, the Subordinated Debt Securities, the Senior Indenture and the
Subordinated Indenture, as modified or superseded by the Applicable Prospectus
Supplement, are brief summaries of certain provisions thereof, do not purport to
be complete and are subject to, and are qualified in their entirety by reference
to, all the provisions of the Indenture applicable to a particular series of
Debt Securities (the "Applicable Indenture"), including the definitions therein
of certain terms. Whenever particular provisions or defined terms in one or both
of the Indentures are referred to, such provisions or defined terms are
incorporated herein by reference. Numerical references in parentheses below are
references to the Applicable Indenture. Capitalized terms not otherwise defined
herein shall have the meanings given to them in the Applicable Indenture.
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The Debt Securities will be limited to an aggregate initial offering price
of $400,000,000 or its equivalent based on the applicable exchange rate at the
time of the offering if denominated in foreign currencies and will be direct,
unsecured obligations of the Corporation. The Debt Securities will not be
deposits or other obligations of any bank or nonbank subsidiary of the
Corporation and will not be insured by the FDIC, the Bank Insurance Fund or any
other government agency or instrumentality. The Indentures do not limit the
aggregate principal amount of Debt Securities or of any particular series of
Debt Securities which may be issued thereunder and provide that Debt Securities
issued thereunder may be issued from time to time in one or more series, in each
case with the same or various maturities, at par or at a discount.
The Indentures do not limit the amount of other debt that may be issued by
the Corporation and do not contain financial or similar restrictive covenants.
As of June 30, 1998, the Corporation had an aggregate of $1,225.5 million of
long-term Senior Indebtedness (as defined below under "Subordination of the
Subordinated Debt Securities") outstanding and an aggregate of approximately
$2,151.8 million of short-term Senior Indebtedness outstanding which consisted
primarily of commercial paper. As of June 30, 1998, the Corporation had no
Additional Senior Obligations (as defined below) outstanding. The Corporation
expects from time to time to incur additional indebtedness constituting Senior
Indebtedness and Additional Senior Obligations. The Indentures do not prohibit
or limit the incurrence of additional Senior Indebtedness or Additional Senior
Obligations. As of June 30, 1998, the Corporation had an aggregate of $1,800.0
million of long-term Subordinated Debt Securities outstanding.
The Senior Debt Securities will be unsecured and will rank on a parity with
all other unsecured and unsubordinated indebtedness of the Corporation. The
Subordinated Debt Securities will be unsecured and will be subordinated and
junior to all Senior Indebtedness and, in certain circumstances relating to the
dissolution, winding-up, liquidation or reorganization of the Corporation, to
all Additional Senior Obligations to the extent set forth below under
"Subordination of the Subordinated Debt Securities". Because the Corporation is
a holding company and a legal entity separate and distinct from its
subsidiaries, the rights of the Corporation to participate in any distribution
of assets of any subsidiary upon its liquidation of assets or reorganization or
otherwise (and thus the ability of Holders of Debt Securities to benefit
indirectly from such distribution) would be subject to the prior claims of
creditors of that subsidiary, except to the extent that the Corporation itself
may be a creditor of that subsidiary with recognized claims. However, in the
event of a liquidation or other resolution of an insured depository institution,
the claims of depositors and other general or subordinated creditors are
entitled to a priority of payment over the claims of holders of any obligation
of the institution to its shareholders, including any depository institution
holding company or any shareholder or creditor thereof. Claims on the
Corporation's subsidiary banks by creditors other than the Corporation include
long-term debt and substantial obligations with respect to deposit liabilities
and federal funds purchased, securities sold under repurchase agreements, other
short-term borrowings and various other financial obligations. In addition, the
Indentures and the Debt Securities will not contain any provision that would
provide protection to the Holders of the Debt Securities against a sudden and
dramatic decline in credit quality resulting from a takeover, recapitalization
or similar restructuring of the Corporation or other event involving the
Corporation that may adversely affect the credit quality of the Corporation.
Reference is made to the Applicable Prospectus Supplement for the following
terms of the Offered Debt Securities offered thereby: (i) the title of the
Offered Debt Securities; (ii) whether the Offered Debt Securities are Senior
Debt Securities or Subordinated Debt Securities; (iii) any limit upon the
aggregate principal amount of the Offered Debt Securities and the percentage of
such principal amount at which such Offered Debt Securities may be issued; (iv)
the date or dates on which the principal of the Offered Debt Securities is
payable (the "Stated Maturity"); (v) the rate or rates of interest (which may be
fixed or variable) per annum at which the Offered Debt Securities will bear
interest, or the method of determining such rate or rates, if any; (vi) the date
or dates from which such interest, if any, will accrue, the Interest Payment
Dates on which any such interest will be payable, the Regular Record Date for
the interest payable on any Interest Payment Date, the Person to whom any
Offered Debt Security of such series will be payable, if other than the Person
in whose name that Offered Debt Security (or one or more predecessor Debt
Securities) is registered at the close of business on the Regular Record Date
for such interest, and the extent to which, or the manner in which, any interest
payable on a permanent global Offered Debt Security on an
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Interest Payment Date will be paid; (vii) if other than the location specified
in this Prospectus, the place or places where the principal of and premium, if
any, and interest on the Offered Debt Securities will be payable; (viii) the
period or periods within which, the price or prices at which and the terms and
conditions upon which the Offered Debt Securities will, pursuant to any
mandatory sinking fund provisions or otherwise, or may, pursuant to any optional
sinking fund provisions or otherwise, be redeemed in whole or in part by the
Corporation; (ix) if applicable, the period or periods within which, the price
or prices at which and the terms and conditions upon which the Offered Debt
Securities may be repaid, in whole or in part, at the option of the Holders
thereof; (x) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which the Offered Debt Securities shall be
issuable; (xi) if other than the principal amount thereof, the portion of the
principal amount of the Offered Debt Securities which shall be payable upon
declaration of acceleration of the Stated Maturity thereof; (xii) if other than
U.S. dollars, the currency or currency unit of payment of principal and premium,
if any, and interest on such Offered Debt Securities, and any index used to
determine the amount of payment of principal or premium, if any, and interest on
such Offered Debt Securities; (xiii) whether the Offered Debt Securities are to
be issuable in permanent global form and, in such case, the initial depositary
with respect thereto and the circumstances under which such permanent global
Offered Debt Security may be exchanged; (xiv) whether the subordination
provisions summarized below or different subordination provisions, including a
different definition of "Senior Indebtedness", "Entitled Persons", "Existing
Subordinated Indebtedness" or "Additional Senior Obligations", shall apply to
the Offered Debt Securities; (xv) any Events of Default applicable to such
Offered Debt Securities (if not set forth in the applicable Indenture), and any
additional restrictive covenants (if not set forth in the applicable Indenture)
or different restrictive covenants, but not inconsistent with the restrictive
covenants contained in the applicable Indenture; (xvi) if such Offered Debt
Securities are Senior Debt Securities, whether the provisions of the Senior
Indenture relating to "Defeasance and Covenant Defeasance" will be applicable to
such series of Offered Debt Securities; and (xvii) any other terms of the
Offered Debt Securities not specified in this Prospectus.
Unless otherwise indicated in the Applicable Prospectus Supplement,
principal, premium, if any, and interest, if any, on the Debt Securities will be
payable, and the Debt Securities will be transferable, at the Corporate Trust
Office of SunTrust Bank, Atlanta in Atlanta, Georgia, except that interest may
be paid at the option of the Corporation by check mailed to the address of the
Holder entitled thereto as it appears on the Security Register. The Corporation
will have the right to require a holder of any Debt Security, in connection with
the payment of the principal, premium, if any, and interest, if any, on such
Debt Security, to certify information to the Corporation or, in the absence of
such certification, the Corporation will be entitled to rely on any legal
presumption to enable the Corporation to determine its duties and liabilities,
if any, to deduct or withhold taxes, assessments or governmental charges from
such payment.
If the principal, premium, if any, or interest, if any, on any Debt
Securities are to be payable in any currency other than U.S. dollars or, at the
election of the Corporation or a holder thereof, in one or more currencies or
composite currencies, or if any index is used to determine the amount of
payments of principal, premium, if any, or interest, if any, on any series of
Debt Securities, any special federal income tax, accounting and other
considerations applicable thereto will be described in the Prospectus Supplement
relating thereto.
Unless otherwise indicated in the Applicable Prospectus Supplement, the
Debt Securities will be issued only in fully registered form, without coupons,
in denominations of $1,000 and any integral multiple thereof. No service charge
will be made for any registration of transfer or exchange of the Debt
Securities, but the Corporation may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Both Senior Debt Securities and Subordinated Debt Securities may be issued
as Original Issue Discount Securities to be offered and sold at a substantial
discount below their stated principal amount. Federal income tax consequences
and other special considerations applicable to any such Original Issue Discount
Securities will be described in the Applicable Prospectus Supplement. "Original
Issue Discount Security" means any security which provides for an amount less
than the principal amount thereof to be due and payable upon the
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declaration of acceleration of the Stated Maturity thereof in accordance with
the terms of the related Indenture.
Reference is made to the Applicable Prospectus Supplement relating to any
series of Offered Debt Securities that are Original Issue Discount Securities
for the particular provisions relating to acceleration of the maturity of a
portion of the principal amount of such series of Original Issue Discount
Securities upon the occurrence of an Event of Default and the continuation
thereof.
The Corporation has various credit agreements (as amended, the "Credit
Agreements"), between the Corporation and various credit banks, which contain
certain covenants of the Corporation, including a covenant that limits the
Corporation's Total Debt (as defined in the Credit Agreements) to an amount no
greater than its Net Worth (as defined in the Credit Agreements). As of June 30,
1998, the Corporation's Net Worth was approximately $5.9 billion. As of June 30,
1998, the Corporation had no indebtedness outstanding under the Credit
Agreements.
BOOK-ENTRY SECURITIES
The Debt Securities of a series may be issued in the form of one or more
Book-Entry Securities that will be deposited with a Depositary or its nominee
identified in the Applicable Prospectus Supplement (Section 301). In such a
case, one or more Book-Entry Securities will be issued in a denomination or
aggregate denominations equal to the portion of the aggregate principal amount
of Offered Debt Securities of the series to be represented by such Book-Entry
Security or Securities. Unless and until it is exchanged in whole or in part for
Debt Securities in definitive registered form, a Book-Entry Security may not be
transferred except as a whole by the Depositary for such Book-Entry Security to
a nominee of such Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary or by the Depositary or any such nominee to
a successor of the Depositary or a nominee of such successor (Section 305).
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Book-Entry
Security will be described in the Applicable Prospectus Supplement. The
Corporation anticipates that the following provisions will apply to all
depositary arrangements.
Upon the issuance of a Book-Entry Security, the Depositary for such
Book-Entry Security or its nominee will credit, on its book-entry registration
and transfer system, the respective principal amounts of the Securities
represented by such Book-Entry Security to the accounts of persons that have
accounts with such Depositary ("participants"). Such accounts shall be
designated by the underwriters or agents with respect to such Debt Securities or
by the Corporation if such Debt Securities are offered and sold directly by the
Corporation. Participants include securities brokers and dealers, banks and
trust companies, clearing corporations and certain other organizations. Access
to the Depositary's system is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly ("indirect
participants"). Persons who are not participants may beneficially own Book-Entry
Securities held by the Depositary only through participants or indirect
participants.
Ownership of beneficial interests in any Book-Entry Security will be shown
on, and the transfer of that ownership will be effected only through, records
maintained by the Depositary or its nominee (with respect to interests of
participants) for such Book-Entry Security and on the records of participants
(with respect to interests of indirect participants). The laws of some states
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such laws, as well as the limits on participation
in the Depositary's book-entry system, may impair the ability to transfer
beneficial interests in a Book-Entry Security.
So long as the Depositary or its nominee is the registered owner of a
Book-Entry Security, such Depositary or such nominee will be considered the sole
owner or holder of the Debt Securities represented by such Book-Entry Security
for all purposes under the Applicable Indenture. Except as provided below,
owners of beneficial interests in Debt Securities represented by Book-Entry
Securities will not be entitled to have Debt Securities of the series
represented by such Book-Entry Security registered in their names, will not
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receive or be entitled to receive physical delivery of such Debt Securities in
definitive form, and will not be considered the owners or holders thereof under
the Applicable Indenture.
Payments of principal of and any premium and interest on Debt Securities
registered in the name of the Depositary or its nominee will be made to the
Depositary or its nominee, as the case may be, as the registered owner of the
Book-Entry Security representing such Debt Securities. The Corporation expects
that the Depositary for a series of Debt Securities or its nominee, upon receipt
of any payment of principal, premium or interest, will immediately credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the Book-Entry
Security for such Debt Securities, as shown on the records of such Depositary or
its nominee. The Corporation also expects that payments by participants and
indirect participants to owners of beneficial interests in such Book-Entry
Security held through such persons will be governed by standing instructions and
customary practices, as is now the case with securities registered in "street
name", and will be the responsibility of such participants and indirect
participants. Neither the Corporation, the Trustee, any Authenticating Agent,
any Paying Agent, nor the Security Registrar for such Debt Securities will have
any responsibility or liability for any aspect of the records relating to, or
payments made on account of, beneficial ownership interests in the Book-Entry
Security for such Debt Securities or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests (Section 311).
If the Depositary for Debt Securities of a series notifies the Corporation
that it is unwilling or unable to continue as Depositary or if at any time the
Depositary ceases to be a clearing agency registered under the Exchange Act, the
Corporation has agreed to appoint a successor depositary. If such a successor is
not appointed by the Corporation within 90 days, the Corporation will issue Debt
Securities of such series in definitive registered form in exchange for the
Book-Entry Security representing such series of Debt Securities. In addition,
the Corporation may at any time and in its sole discretion determine that the
Debt Securities of any series issued in the form of one or more Book-Entry
Securities shall no longer be represented by such Book-Entry Security or
Securities and, in such event, will issue Debt Securities of such series in
definitive registered form in exchange for such Book-Entry Security or
Securities representing such series of Debt Securities. Further, if the
Corporation so specifies with respect to the Debt Securities of a series, or if
an Event of Default, or an event which with notice, lapse of time or both would
be an Event of Default with respect to the Debt Securities of such series has
occurred and is continuing, an owner of a beneficial interest in a Book-Entry
Security representing Debt Securities of such series may receive Debt Securities
of such series in definitive registered form. In any such instance, an owner of
a beneficial interest in a Book-Entry Security will be entitled to physical
delivery in definitive registered form of Debt Securities of the series
represented by such Book-Entry Security equal in principal amount to such
beneficial interest and to have such Debt Securities registered in its name
(Section 305). Debt Securities so issued in definitive form will be issued in
denominations of $1,000 and integral multiples thereof and will be issued in
registered form only, without coupons.
SUBORDINATION OF THE SUBORDINATED DEBT SECURITIES.
The obligations of the Corporation to make any payment on account of the
principal of and premium, if any, and interest, if any, on any Subordinated Debt
Securities will, to the extent set forth in the Subordinated Indenture, be
subordinate and junior in right of payment to all Senior Indebtedness of the
Corporation and, in certain circumstances relating to the dissolution,
winding-up, liquidation of or reorganization of the Corporation, to all
Additional Senior Obligations (Article 13).
"Senior Indebtedness" is defined in the Subordinated Indenture to mean (a)
all indebtedness of the Corporation for money borrowed, whether now outstanding
or subsequently created, assumed or incurred, other than (i) the Subordinated
Debt Securities, (ii) any obligation Ranking on a Parity with the Subordinated
Debt Securities, or (iii) any obligation Ranking Junior to the Subordinated Debt
Securities and (b) any deferrals, renewals or extensions of any such Senior
Indebtedness. The term "indebtedness of the Corporation for money borrowed" is
defined in the Subordinated Indenture to mean any obligation of, or any
obligation guaranteed by, the Corporation for the repayment of borrowed money,
whether or not evidenced by bonds, debentures, notes or other written
instruments, and any deferred obligation for the payment of the
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purchase price of property or assets acquired other than in the ordinary course
of business. "Additional Senior Obligations" is defined in the Subordinated
Indenture to mean all indebtedness of the Corporation, whether now outstanding
or subsequently created, assumed or incurred, for claims in respect of
derivative products such as interest and foreign exchange rate contracts,
commodity contracts and similar arrangements; provided, however, that Additional
Senior Obligations do not include (a) any claims in respect of Senior
Indebtedness, or (b) any obligations (i) Ranking Junior to the Subordinated Debt
Securities, or (ii) Ranking on a Parity with the Subordinated Debt Securities.
For purposes of this definition, "claims" shall have the meaning assigned
thereto in Section 101(4) of the United States Bankruptcy Code of 1978. The
Subordinated Indenture does not limit or prohibit the incurrence of Senior
Indebtedness or Additional Senior Obligations.
The term "Ranking Junior to the Subordinated Debt Securities" is defined in
the Subordinated Indenture to mean any obligation of the Corporation which (a)
ranks junior to and not equally with or prior to the Subordinated Debt
Securities in right of payment upon the happening of any insolvency,
receivership, conservatorship, reorganization, readjustment of debt, marshalling
of assets and liabilities or similar proceedings or any liquidation or
winding-up of or relating to the Corporation as a whole, whether voluntary or
involuntary, and (b) is specifically designated as ranking junior to the
Subordinated Debt Securities by express provisions in the instrument creating or
evidencing such obligation (Section 101).
The term "Ranking on a Parity with the Subordinated Debt Securities" is
defined in the Subordinated Indenture to mean any obligation of the Corporation
which (a) ranks equally with and not prior to the Subordinated Debt Securities
in right of payment upon the happening of any insolvency, receivership,
conservatorship, reorganization, readjustment of debt, marshalling of assets and
liabilities or similar proceedings or any liquidation or winding-up of or
relating to the Corporation as a whole, whether voluntary or involuntary, and
(b) is specifically designated as ranking on a parity with the Subordinated Debt
Securities by express provisions in the instrument creating or evidencing such
obligation (Section 101).
The Subordinated Debt Securities will be subordinate in right of payment to
all Senior Indebtedness, as provided in the Subordinated Indenture. No payment
on account of the principal of and premium, if any, or interest in respect of
the Subordinated Debt Securities may be made if there shall have occurred and be
continuing a default in payment with respect to Senior Indebtedness or an event
of default with respect to any Senior Indebtedness resulting in the acceleration
of the maturity thereof. Upon any payment or distribution of assets to creditors
upon any insolvency, receivership, conservatorship, reorganization, readjustment
of debt, marshalling of assets and liabilities or similar proceedings or any
liquidation or winding-up of or relating to the Corporation as a whole, whether
voluntary or involuntary, (a) the holders of all Senior Indebtedness will first
be entitled to receive payment in full before the Holders of the Subordinated
Debt Securities will be entitled to receive any payment in respect of the
principal of and premium, if any, or interest on the Subordinated Debt
Securities, and (b) if after giving effect to the operation of clause (a) above,
(i) any amount of cash, property or securities remains available for payment or
distribution in respect of the Subordinated Debt Securities ("Excess Proceeds"),
and (ii) creditors in respect of Additional Senior Obligations have not received
payment in full of amounts due or to become due thereon or payment of such
amounts has not been duly provided for, then such Excess Proceeds shall first be
applied to pay or provide for the payment in full of all such Additional Senior
Obligations before any payment may be made on the Subordinated Debt Securities.
If the Holders of Subordinated Debt Securities receive payment and are aware at
the time of receiving payment that all Senior Indebtedness and Additional Senior
Obligations have not been paid in full, then such payment shall be held in trust
for the benefit of the holders of Senior Indebtedness and/or Additional Senior
Obligations, as the case may be (Section 1301).
By reason of such subordination, in the event of insolvency, Holders of
Subordinated Debt Securities may recover less, ratably, than holders of Senior
Indebtedness and holders of Additional Senior Obligations. In addition, in the
event of insolvency, creditors of the Corporation who are not holders of Senior
Indebtedness or Holders of the Subordinated Debt Securities may recover less,
ratably, than the holders of Senior Indebtedness and may recover more, ratably,
than the Holders of the Subordinated Debt Securities.
The Applicable Prospectus Supplement may further describe the provisions,
if any, applicable to the subordination of the Subordinated Debt Securities of a
particular series.
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RESTRICTION ON DISPOSITION OF VOTING STOCK OF CERTAIN SUBSIDIARIES
The Senior Indenture contains a covenant that, except as otherwise provided
below, the Corporation will not sell, assign, pledge, transfer or otherwise
dispose of, or permit the issuance of, or permit a Subsidiary to sell, assign,
pledge, transfer or dispose of, any shares of Voting Stock of any Subsidiary or
any securities convertible into Voting Stock of any Subsidiary which is: (a) a
Principal Constituent Bank; or (b) a Subsidiary which owns shares of Voting
Stock or any securities convertible into Voting Stock of a Principal Constituent
Bank; provided, however, that such covenant does not prohibit (i) any
dispositions made by the Corporation or any Subsidiary (A) acting in a fiduciary
capacity for any Person other than the Corporation or any Subsidiary or (B) to
the Corporation or any of its wholly owned (except for directors' qualifying
shares) Subsidiaries or (ii) the merger of a Principal Constituent Bank with and
into a Principal Constituent Bank or the consolidation of any Principal
Constituent Bank into a Principal Constituent Bank. Such covenant also does not
prohibit sales, assignments, pledges, transfers or other dispositions of shares
of Voting Stock of a corporation referred to in (a) or (b) above where: (i) the
sales, assignments, pledges, transfers or other dispositions are made, in the
minimum amount required by law, to any Person for the purpose of the
qualification of such Person to serve as a director; or (ii) the sales,
assignments, pledges, transfers or other dispositions are made in compliance
with an order of a court or regulatory authority of competent jurisdiction or as
a condition imposed by any such court or authority to the acquisition by the
Corporation, directly or indirectly, of any other corporation or entity; or
(iii) in the case of a disposition of shares of Voting Stock or any securities
convertible into Voting Stock of a Principal Constituent Bank, or sales of
Voting Stock or any securities convertible into Voting Stock of any Subsidiary
included in (b) above, the sales, assignments, pledges, transfers or other
dispositions are for fair market value (as determined by the Board of Directors
of the Corporation and the Subsidiary disposing of such shares or securities)
and, after giving effect to such disposition and to any potential dilution (if
the shares or securities are convertible into Voting Stock), the Corporation and
its directly or indirectly wholly owned (except for directors' qualifying
shares) Subsidiaries, will own directly not less than 80% of the Voting Stock of
such Principal Constituent Bank or Subsidiary; or (iv) a Constituent Bank sells
additional shares of Voting Stock to its shareholders at any price, so long as
immediately after such sale the Corporation owns, directly or indirectly, at
least as great a percentage of the Voting Stock of such Constituent Bank as it
owned prior to such sale of additional shares; or (v) a pledge is made or a lien
is created to secure loans or other extensions of credit by a Constituent Bank
subject to Section 23A of the Federal Reserve Act (Section 1005). Any
Constituent Bank the total assets of which equal more than 15% of the total
assets of all Constituent Banks is defined in the Senior Indenture to be a
"Principal Constituent Bank" (Section 101). As of June 30, 1998, SunTrust Bank,
Atlanta was the only Constituent Bank which is a Principal Constituent Bank.
The foregoing covenant is not a covenant for the benefit of the
Subordinated Debt Securities.
EVENTS OF DEFAULT
The Senior Indenture. The following are Events of Default under the Senior
Indenture with respect to Senior Debt Securities of any series: (a) failure to
pay any interest on any Debt Security of that series when due and payable,
continued for 30 days; (b) failure to pay principal of or any premium on any
Debt Security of that series when due; (c) failure to deposit any sinking fund
payment, when due, in respect of any Debt Security of that series; (d) failure
to perform any other covenant of the Corporation in the Senior Indenture (other
than a covenant included in the Senior Indenture solely for the benefit of
series of Debt Securities other than that series), continued for 90 days after
written notice as provided in the Senior Indenture; (e) the entry of a decree or
order for relief in respect of the Corporation by a court having jurisdiction in
the premises in an involuntary case under Federal or state bankruptcy laws and
the continuance of any such decree or order unstayed and in effect for a period
of 60 consecutive days; (f) the commencement by the Corporation of a voluntary
case under Federal or state bankruptcy laws or the consent by the Corporation to
the entry of a decree or order for relief in an involuntary case under any such
law; and (g) any other Event of Default provided with respect to Debt Securities
of that series (Section 501). If an Event of Default with respect to Debt
Securities of any series occurs and is continuing either the Senior Trustee or
the Holders of at least 25% in aggregate principal amount of the Outstanding
Debt Securities of that series may declare by notice in
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writing to the Corporation the principal amount (or, if the Debt Securities of
that series are Original Issue Discount Securities, such portion of the
principal amount as may be specified in the terms of that series) of all the
Debt Securities of that series to be due and payable immediately. At any time
after a judgment or decree based on acceleration has been obtained, the Holders
of a majority in aggregate principal amount of Outstanding Debt Securities of
that series may, under certain circumstances, rescind and annul such
acceleration (Section 502).
Reference is made to the Applicable Prospectus Supplement relating to any
series of Offered Debt Securities that are Original Issue Discount Securities
for the particular provisions relating to acceleration of the Stated Maturity of
a portion of the principal amount of such series of Original Issue Discount
Securities upon the occurrence of an Event of Default and the continuation
thereof.
The Senior Indenture provides that, subject to the duty of the Senior
Trustee during default to act with the required standard of care, the Senior
Trustee will be under no obligation to exercise any of its rights or powers
under the Senior Indenture at the request or direction of any of the Holders,
unless such Holders shall have offered to the Senior Trustee reasonable security
or indemnity (Section 603). Subject to such provisions for the indemnification
of the Senior Trustee and to certain other conditions, the Holders of a majority
in aggregate principal amount of the Outstanding Debt Securities of any series
will have the right to direct the time, method and place of conducting any
proceedings for any remedy available to the Senior Trustee, or exercising any
trust or power conferred on the Senior Trustee, with respect to the Debt
Securities of that series provided that the Senior Trustee may decline to act if
such direction is contrary to law or the Senior Indenture, would unduly
prejudice the rights of other Holders or would involve the Senior Trustee in
personal liability (Section 512).
No Holder of any Debt Security of any series will have any right to
institute any proceeding with respect to the Senior Indenture, or for the
appointment of a receiver or trustee or for any remedy thereunder, unless such
Holder shall have previously given to the Senior Trustee written notice of a
continuing Event of Default with respect to the Debt Securities of that series
and unless the Holders of not less than 25% in aggregate principal amount of the
Outstanding Debt Securities of that series shall have made written request, and
offered reasonable indemnity, to the Senior Trustee to institute such proceeding
as trustee, and the Senior Trustee shall not have received from the Holders of a
majority in principal amount of the Outstanding Debt Securities of that series a
direction inconsistent with such request and shall have failed to institute such
proceeding within 60 days (Section 507). However, the Holder of any Debt
Security will have an absolute right to receive payment of the principal of (and
premium, if any) and interest on such Debt Security on the due dates expressed
in such Debt Security and to institute suit for the enforcement of any such
payment (Section 508).
The Corporation is required to furnish to the Senior Trustee annually a
statement as to performance by the Corporation of certain of its obligations
under the Senior Indenture and as to any default in such performance (Section
1006).
The Subordinated Indenture. The Subordinated Indenture (with respect to
any series of Subordinated Debt Securities) defines an "Event of Default" as any
one of the following events (whatever the reason and whether it be occasioned by
the subordination provisions or be voluntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administration or governmental body): (a) failure to pay any
interest on any Debt Security of that series when due and payable, continued for
30 days; (b) failure to pay principal of or any premium on any Debt Security of
that series when due; (c) failure to deposit any sinking fund payment, when due,
in respect of any Debt Security of that series; (d) failure to perform any other
covenant of the Corporation in the Subordinated Indenture (other than a covenant
included in the Subordinated Indenture solely for the benefit of series of Debt
Securities other than that series), continued for 90 days after written notice
as provided in the Subordinated Indenture; (e) the entry of a decree or order
for relief in respect of the Corporation by a court having jurisdiction in the
premises in an involuntary case under Federal or state bankruptcy laws and the
continuance of any such decree or order unstayed and in effect for a period of
60 consecutive days; (f) the commencement by the Corporation of a voluntary case
under Federal or state bankruptcy laws or the consent by the Corporation to the
entry of a
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decree or order for relief in an involuntary case under any such law; and (g)
any other Event of Default provided with respect to Debt Securities of that
series (Section 501).
Unless specifically stated in the Applicable Prospectus Supplement for a
particular series of Subordinated Debt Securities, the payment of the principal
of the Subordinated Debt Securities may be accelerated only upon the occurrence
of an Event of Default described in clause (e) or clause (f) of the preceding
paragraph (a "Bankruptcy Event of Default") and there is no right of
acceleration of the payment of principal of the Subordinated Debt Securities of
such series upon a default in the payment of principal, premium, if any, or
interest, if any, or in the performance of any covenant or agreement in the
Subordinated Debt Securities or Subordinated Indenture. In the event of a
default in the payment of principal, premium, if any, or interest, if any, or in
the performance of any covenant or agreement in the Subordinated Debt Securities
or Subordinated Indenture, the Subordinated Trustee, subject to certain
limitations and conditions, may institute judicial proceedings to enforce
payment of such principal, premium, if any, or interest, if any, or to obtain
the performance of such covenant or agreement or any other proper remedy
(Section 503). Under certain circumstances, the Subordinated Trustee may
withhold notice to the Holders of the Subordinated Debt Securities of a default
if the Subordinated Trustee in good faith determines that the withholding of
such notice is in the best interest of such Holders, and the Subordinated
Trustee shall withhold such notice for certain defaults for a period of 30 days
(Section 602).
If a Bankruptcy Event of Default with respect to the Debt Securities of any
series at the time outstanding occurs and is continuing, either the Subordinated
Trustee or the Holders of at least 25% in aggregate principal amount of the
Outstanding Debt Securities of that series may declare the principal amount (or,
if the Debt Securities of that series are Original Issue Discount Securities,
such portion of the principal amount as may be specified in the terms thereof)
of all the Debt Securities of that series to be due and payable immediately. At
any time after a declaration of acceleration with respect to Debt Securities of
any series has been made, but before a judgment or decree based on acceleration
has been obtained, the Holders of a majority in aggregate principal amount of
Outstanding Debt Securities of that series may, under certain circumstances,
rescind and annul such acceleration (Section 502).
Reference is made to the Applicable Prospectus Supplement relating to any
series of Offered Debt Securities that are Original Issue Discount Securities
for the particular provisions relating to acceleration of the Stated Maturity of
a portion of the principal amount of such series of Original Issue Discount
Securities upon the occurrence of an Event of Default and the continuation
thereof.
The Subordinated Indenture provides that, subject to the duty of the
Subordinated Trustee during default to act with the required standard of care,
the Subordinated Trustee will be under no obligation to exercise any of its
rights or powers under the Subordinated Indenture at the request or direction of
any of the Holders, unless such Holders shall have offered to the Subordinated
Trustee reasonable security or indemnity (Section 603). Subject to such
provisions for the indemnification of the Subordinated Trustee and to certain
other conditions, the Holders of a majority in aggregate principal amount of the
Outstanding Debt Securities of any series will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Subordinated Trustee, or exercising any trust or power conferred on the
Subordinated Trustee, with respect to the Debt Securities of that series,
provided that the Subordinated Trustee may decline to act if such direction is
contrary to law or the Subordinated Indenture, would unduly prejudice the right
of other Holders or would involve the Subordinated Trustee in personal liability
(Section 512).
No Holder of any Debt Security of any series will have any right to
institute any proceeding with respect to the Subordinated Indenture, or for the
appointment of a receiver or trustee or for any remedy thereunder, unless such
Holder shall have previously given the Subordinated Trustee written notice of a
continuing Event of Default with respect to the Debt Securities of that series
and unless the Holders of not less than 25% in aggregate principal amount of the
Outstanding Debt Securities of that series shall have made written request, and
offered reasonable indemnity, to the Subordinated Trustee to institute such
proceeding as trustee, and the Subordinated Trustee shall not have received from
the Holders of a majority in principal amount of the Outstanding Debt Securities
of that series a direction inconsistent with such request and shall have failed
to institute such proceeding within 60 days (Section 507). However, the Holder
of any Debt Security will have
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<PAGE> 16
an absolute right to receive payment of the principal of (and premium, if any)
and interest on such Debt Security on the due dates expressed in such Debt
Security and to institute suit for the enforcement of any such payment (Section
508).
The Corporation is required to furnish to the Subordinated Trustee annually
a statement as to performance by the Corporation of certain of its obligations
under the Subordinated Indenture and as to any default in such performance
(Section 1005).
DEFEASANCE AND COVENANT DEFEASANCE
The Senior Indenture provides that, to the extent indicated in the
Applicable Prospectus Supplement, the Corporation, at the Corporation's option,
(a) will be discharged from any and all obligations in respect of the Senior
Debt Securities of a particular series (except for certain obligations to
register the transfer or exchange of Senior Debt Securities of such series, to
replace stolen, lost or mutilated Senior Debt Securities of such series, to
maintain paying agencies and to hold money for payment in trust) or (b) need not
comply with certain restrictive covenants of the Senior Indenture, including
those described under "Restrictions on Disposition of Voting Stock of Certain
Subsidiaries" and "Consolidation, Merger and Transfer of Assets" and the
occurrence of an event described in clause (d) under "Events of Default" under
the Senior Indenture shall no longer be an Event of Default with respect to such
series of Senior Debt Securities, in each case, if the Corporation deposits, in
trust, with the Senior Trustee money and/or Government Obligations, which
through the payment of interest thereon and principal thereof in accordance with
their terms will provide money in an amount sufficient, without reinvestment, to
pay all the principal of and any premium and interest on the Senior Debt
Securities of such series and any mandatory sinking fund payments or analogous
payments on the dates such payments are due in accordance with the terms of the
Senior Debt Securities of such series and the Senior Indenture. Such a trust may
only be established if, among other things, (i) no Event of Default or event
which with the giving of notice or lapse of time, or both, would become an Event
of Default with respect to such series under the Senior Indenture shall have
occurred and be continuing on the date of such deposit, (ii) such defeasance
will not cause the Senior Trustee to have any conflicting interest with respect
to other securities of the Corporation and (iii) the Corporation shall have
delivered an Opinion of Counsel to the effect that the Holders will not
recognize income, gain or loss for federal income tax purposes as a result of
such defeasance and will be subject to federal income tax on the same amounts,
in the same manner, and at the same times as if such defeasance had not
occurred. In the event the Corporation exercises its option to omit compliance
with certain covenants of the Senior Indenture with respect to the Senior Debt
Securities of any series and the Senior Debt Securities of such series are
declared due and payable because of the occurrence of any Event of Default under
the Senior Indenture, the amount of money and Government Obligations on deposit
with the Trustee will be sufficient to pay amounts due on the Senior Debt
Securities of such series at the time of their Stated Maturity but may not be
sufficient to pay amounts due on the Senior Debt Securities of such series at
the time of the acceleration resulting from such Event of Default under the
Senior Indenture. However, the Corporation will remain liable with respect to
such payments (Article 13).
The foregoing defeasance and covenant defeasance provisions are not for the
benefit of the Subordinated Debt Securities.
MODIFICATION AND WAIVER
Modifications to and amendments of the Indentures may be made by the
Corporation and the Trustees with the consent of the Holders of 66 2/3% in
aggregate principal amount of the Outstanding Debt Securities of each series
affected by such modification or amendment; provided, however, that no such
modification or amendment may without the consent of the Holder of each
Outstanding Debt Security affected thereby (a) change the stated maturity date
of the principal of, or any installment of principal or interest on, any Debt
Security, (b) reduce the principal amount of, or any premium or rate of interest
on, any Debt Security, (c) reduce the amount of principal of an Original Issue
Discount Security payable upon acceleration of the maturity thereof, (d) change
the place or currency of payment of principal of, or any premium or interest on,
any Debt Security, (e) impair the right to institute suit for the enforcement of
any payment on or with respect to any Debt Security, or (f) reduce the
percentage in principal amount of Outstanding Debt Securities of any
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<PAGE> 17
series, the consent of whose Holders is required for modification or amendment
of the Indentures or for waiver of compliance with certain provisions of the
Indentures or for waiver of certain defaults (Section 902).
The Holders of at least 66 2/3% in aggregate principal amount of the
Outstanding Debt Securities of each series may, on behalf of all Holders of Debt
Securities of that series, waive, insofar as that series is concerned,
compliance by the Corporation with certain restrictive provisions of the
Indentures, including with respect to Senior Debt Securities those provisions
described above under "Restriction on Disposition of Voting Stock of Certain
Subsidiaries" (Senior Indenture Section 1007; Subordinated Indenture Section
1006). The Holders of not less than a majority in principal amount of the
Outstanding Debt Securities of any series may, on behalf of all Holders of Debt
Securities of that series, waive any past default under the Applicable
Indenture, except a default in the payment of principal of, or any premium or
interest on, any Debt Security of that series or a default in respect of a
covenant or provision which under the Indentures cannot be modified or amended
without the consent of the Holder of each Outstanding Debt Security of the
series affected (Section 513).
CONSOLIDATION, MERGER AND TRANSFER OF ASSETS
The Corporation may consolidate with or merge into, or transfer its assets
substantially as an entirety to, any corporation organized under the laws of the
United States, any state thereof or the District of Columbia, provided that the
successor corporation assumes the Corporation's obligations on the Debt
Securities and under the Indentures, that after giving effect to the transaction
no Event of Default, and no event which, after notice or lapse of time, would
become an Event of Default, shall have occurred and be continuing, and that
certain other conditions are met (Section 801).
TRUSTEES
Either or both of the Trustees may resign or be removed with respect to one
or more series of Debt Securities and a successor Trustee may be appointed to
act with respect to such series (Section 610). In the event that two or more
persons are acting as Trustee with respect to different series of Debt
Securities, each such Trustee shall be a Trustee of a trust under the related
Indenture separate and apart from the trust administered by any other such
Trustee, and any action described herein to be taken by the "Trustee" may then
be taken by each such Trustee with respect to, and only with respect to, the one
or more series of Debt Securities for which it is Trustee (Section 611).
In the normal course of business, the Corporation and its subsidiaries
conduct banking transactions with the Trustees, and the Trustees conduct banking
transactions with the Corporation and its subsidiaries.
PLAN OF DISTRIBUTION
The Corporation may sell Debt Securities to or through underwriters to be
designated from time to time, and also may sell Debt Securities directly to
other purchasers or through agents. The distribution of the Debt Securities may
be effected from time to time in one or more transactions at a fixed price or
prices, which may be changed from time to time, at market prices prevailing at
the time of sale, at prices related to such prevailing market prices or at
negotiated prices. Each Prospectus Supplement will describe the method of
distribution of the Offered Debt Securities.
The Debt Securities will be new issues of securities with no established
trading market and unless otherwise specified in the applicable Prospectus
Supplement, the Corporation will not list any series of the Debt Securities on
any exchange. It has not presently been established whether the underwriters, if
any, of the Debt Securities will make a market in the Debt Securities. If a
market in the Debt Securities is made by any such underwriters, such market
making may be discontinued at any time without notice. No assurance can be given
as to the liquidity of the trading market for the Debt Securities.
In connection with the sale of Debt Securities, underwriters or agents
acting on behalf of the Corporation may receive compensation from the
Corporation or from purchasers of Debt Securities for whom they may act as
agents in the form of discounts, concessions or commissions. Underwriters may
sell Debt Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or
16
<PAGE> 18
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents. Underwriters, dealers and agents that participate
in the distribution of Debt Securities may be deemed to be underwriters, and any
discounts or commissions received by them from the Corporation and any profit on
the trade of Debt Securities by them may be deemed to be underwriting discounts
and commissions, under the Securities Act. Any such underwriter or agent will be
identified, and any such compensation received from the Corporation will be
described, in the Prospectus Supplement relating to such Debt Securities.
Under agreements which may be entered into by the Corporation,
underwriters, dealers, agents and their controlling persons who participate in
the distribution of Debt Securities may be entitled to indemnification by the
Corporation against certain liabilities, including liabilities under the
Securities Act, and to certain rights of contribution from the Corporation.
If so indicated in the Prospectus Supplement relating to any Offered Debt
Securities, the Corporation will authorize underwriters or other persons acting
as the Corporation's agents to solicit offers by certain institutions to
purchase any Offered Debt Securities from the Corporation pursuant to delayed
delivery contracts providing for payment and delivery on a future date.
Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by the Corporation. The obligations of any
purchaser under any such contract will be subject to the condition that the
purchase of any Offered Debt Securities shall not at the time of delivery be
prohibited under the laws of the jurisdiction to which such purchaser is
subject. The underwriters and such other agents will not have any responsibility
in respect of the validity or performance of such contracts.
The participation of any affiliate of the Corporation in the offer and sale
of Offered Debt Securities will be made pursuant to and will conform with the
provisions of Rule 2720 of the Conduct Rules of the National Association of
Securities Dealers, Inc.
Underwriters or agents and their associates may be customers of (including
borrowers from), engage in transactions with, and/or perform services for, the
Corporation and its subsidiaries, the Senior Trustee and the Subordinated
Trustee, in the ordinary course of business.
LEGAL MATTERS
Certain legal matters with respect to the Offered Debt Securities will be
passed upon for the Corporation by Raymond D. Fortin, Senior Vice
President -- Legal and Corporate Secretary, and by King & Spalding, and for any
underwriters by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York. As
of June 30, 1998, Mr. Fortin beneficially owned 23,000 shares of common stock of
the Corporation and held options to purchase 3,000 shares of common stock of the
Corporation. Skadden, Arps, Slate, Meagher & Flom LLP will rely upon the opinion
of Mr. Fortin and of King & Spalding as to matters of Georgia law.
EXPERTS
The audited consolidated financial statements of the Corporation
incorporated by reference in this Prospectus 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
incorporated herein in reliance upon the authority of said firm as experts in
giving said report.
The consolidated financial statements of Crestar Financial Corporation and
Subsidiaries as of December 31, 1997 and 1996, and for each of the years in the
three-year period ended December 31, 1997, have been incorporated by reference
herein and in the Registration Statement in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing. The report of KPMG Peat Marwick LLP refers to their reliance on
another auditors' report with respect to amounts related to Citizens Bancorp for
1996 and 1995 included in the aforementioned consolidated financial statements.
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
THE ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
CORPORATION OR ANY AGENT OR UNDERWRITER. THIS PROSPECTUS AND THE ACCOMPANYING
PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER
THE DELIVERY OF THIS PROSPECTUS OR THE ACCOMPANYING PROSPECTUS SUPPLEMENT NOR
ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CORPORATION
SINCE THE DATE HEREOF.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Corporation....................... 2
Use of Proceeds....................... 3
Consolidated Ratio of Earnings to
Fixed Charges....................... 3
Certain Regulatory Considerations..... 4
Description of Debt Securities........ 6
Plan of Distribution.................. 16
Legal Matters......................... 17
Experts............................... 17
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
SUNTRUST
------------------------------
PROSPECTUS
AUGUST , 1998
------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 20
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Estimated expenses in connection with the issuance and distribution of the
Debt Securities being registered, other than underwriting compensation, are as
follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $118,000
National Association of Securities Dealers, Inc. filing
fee....................................................... 30,500
Blue Sky fees and expenses.................................. 5,000
Attorneys' fees and expenses................................ 10,000
Accounting fees and expenses................................ 15,000
Printing and engraving expenses............................. 25,000
Fees of indenture trustees.................................. 20,000
Paying Agent fees........................................... 9,500
Rating Agency fees.......................................... 100,000
Miscellaneous expenses...................................... 10,000
--------
Total..................................................... $343,000
========
</TABLE>
ITEM 15. 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" or "officer" means an individual who is or was a
director or officer, respectively, of a corporation or who, while a
director or officer of the corporation, is or was serving at the
corporation's request as a director, officer, partner, trustee, employee,
or agent of another domestic or foreign corporation, partnership, joint
venture, trust, employee benefit plan, or other entity. A director or
officer is considered to be serving an employee benefit plan at the
corporation's request if his or her duties to the corporation also impose
duties on, or otherwise involve services by, the director or officer to the
plan or to participants in or beneficiaries of the plan. Director or
officer includes, unless the context otherwise requires, the estate or
personal representative of a director or officer.
(3) "Disinterested director" means a director who at the time of a
vote referred to in subsection (c) of Code Section 14-2-853 or a vote or
selection referred to in subsection (b) or (c) of Code Section 14-2-855 or
subsection (a) of Code Section 14-2-856 is not:
(A) A party to the proceeding; or
(B) An individual who is a party to a proceeding having a familial,
financial, professional, or employment relationship with the director
whose indemnification or advance for expenses is the subject of the
decision being made with respect to the proceeding, which relationship
would, in the circumstances, reasonably be expected to exert an
influence on the director's judgment when voting on the decision being
made.
(4) "Expenses" include counsel fees.
(5) "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.
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(6) "Official capacity" means:
(A) When used with respect to a director, the office of director in
a corporation; and
(B) When used with respect to an officer, as contemplated in Code
Section 14-2-857, the office in a corporation held by the officer.
Official capacity does not include service for any other domestic or
foreign corporation or any partnership, joint venture, trust, employee benefit
plan, or other entity.
(7) "Party" means an individual who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(8) "Proceeding" means any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, arbitrative,
or investigative and whether formal or informal.
14-2-851. AUTHORITY TO INDEMNIFY
(a) Except as otherwise provided in this Code section, a corporation may
indemnify an individual who is a party to a proceeding because he or she is or
was a director against liability incurred in the proceeding if:
(1) Such individual conducted himself or herself in good faith; and
(2) Such individual reasonably believed:
(A) In the case of conduct in his or her official capacity, that
such conduct was in the best interests of the corporation;
(B) In all other cases, that such conduct was at least not opposed
to the best interests of the corporation; and
(C) In the case of any criminal proceeding, that the individual had
no reasonable cause to believe such conduct was unlawful.
(b) A director's conduct with respect to an employee benefit plan for a
purpose he or she 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 subparagraph (a)(1)(B) 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
described in 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, except for reasonable expenses incurred in connection with the
proceeding if it is determined that the director has met the relevant
standard of conduct under this Code section; or
(2) In connection with any proceeding with respect to conduct for
which he was adjudged liable on the basis that personal benefit was
improperly received by him, whether or not involving action in his official
capacity.
14-2-852. MANDATORY INDEMNIFICATION
A corporation shall indemnify a director who was wholly successful, on the
merits or otherwise, in the defense of any proceeding to which he or she was a
party because he or she was a director of the corporation against reasonable
expenses incurred by the director in connection with the proceeding.
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<PAGE> 22
14-2-853. ADVANCE FOR EXPENSES
(a) A corporation may, before final disposition of a proceeding, advance
funds to pay for or reimburse the reasonable expenses incurred by a director who
is a party to a proceeding because he or she is a director if he or she delivers
to the corporation:
(1) A written affirmation of his or her good faith belief that he or
she has met the relevant standard of conduct described in Code Section
14-2-851 or that the proceeding involves conduct for which liability has
been eliminated under a provision of the articles of incorporation as
authorized by paragraph (4) of subsection (b) of Code Section 14-2-202; and
(2) His or her written undertaking to repay any funds advanced if it
is ultimately determined that the director 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 the financial ability of
the director to make repayment.
(c) Authorizations under this Code section shall be made:
(1) By the board of directors:
(A) When there are two or more disinterested directors, by a
majority vote of all the disinterested directors (a majority of whom
shall for such purpose constitute a quorum) or by a majority of the
members of a committee of two or more disinterested directors appointed
by such a vote; or
(B) When there are fewer than two disinterested directors, by the
vote necessary for action by the board in accordance with subsection (c)
of Code Section 14-2-824, in which authorization directors who do not
qualify as disinterested directors may participate; or
(2) By the shareholders, but shares owned or voted under the control
of a director who at the time does not qualify as a disinterested director
with respect to the proceeding may not be voted on the authorization.
14-2-854. COURT-ORDERED INDEMNIFICATION AND ADVANCES FOR EXPENSES
(a) A director who is a party to a proceeding because he or she is a
director may apply for indemnification or advance for expenses to the court
conducting the proceeding or to another court of competent jurisdiction. After
receipt of an application and after giving any notice it considers necessary,
the court shall:
(1) Order indemnification or advance for expenses if it determines
that the director is entitled to indemnification under this part; or
(2) Order indemnification or advance for expenses if it determines, in
view of all the relevant circumstances, that it is fair and reasonable to
indemnify the director or to advance expenses to the director, even if the
director has not met the relevant standard of conduct set forth in
subsections (a) and (b) of Code Section 14-2-851, failed to comply with
Code Section 14-2-853, or was adjudged liable in a proceeding referred to
in paragraph (1) or (2) of subsection (d) of Code Section 14-2-851, but if
the director was adjudged so liable, the indemnification shall be limited
to reasonable expenses incurred in connection with the proceeding.
(b) If the court determines that the director is entitled to
indemnification or advance for expenses under this part, it may also order the
corporation to pay the director's reasonable expenses to obtain court-ordered
indemnification or advance for expenses.
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<PAGE> 23
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 for a specific
proceeding that indemnification of the director is permissible in the
circumstances because he or she has met the relevant standard of conduct set
forth in Code Section 14-2-851.
(b) The determination shall be made:
(1) If there are two or more disinterested directors, by the board of
directors by a majority vote of all the disinterested directors (a majority
of whom shall for such purpose constitute a quorum) or by a majority of the
members of a committee of two or more disinterested directors appointed by
such a vote;
(2) By special legal counsel:
(A) Selected in the manner prescribed in paragraph (1) of this
subsection; or
(B) If there are fewer than two disinterested directors, selected
by the board of directors (in which selection directors who do not
qualify as disinterested directors may participate); or
(3) By the shareholders, but shares owned by or voted under the
control of a director who at the time does not qualify as a disinterested
director 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 there are
fewer than two disinterested directors or 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 subparagraph
(b)(2)(B) of this Code section to select special legal counsel.
14-2-856. SHAREHOLDER APPROVED INDEMNIFICATION
(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, but shares owned or voted under the control of a director
who at the time does not qualify as a disinterested director with respect to any
existing or threatened proceeding that would be covered by the authorization may
not be voted on the authorization.
(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 the director's 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 or she 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 or her good faith belief that his or her conduct does not constitute
behavior of the kind described in subsection (b) of this Code section; and
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<PAGE> 24
(2) The director furnishes the corporation a written undertaking,
executed personally or on his or her behalf, to repay any advances if it is
ultimately determined that the director is not entitled to indemnification
under this Code section.
14-2-857. INDEMNIFICATION OF OFFICERS, EMPLOYEES, AND AGENTS
(a) A corporation may indemnify and advance expenses under this part to an
officer of the corporation who is a party to a proceeding because he or she is
an officer of the corporation:
(1) To the same extent as a director; and
(2) If he or she is not a director, to such further extent as may be
provided by the articles of incorporation, the bylaws, a resolution of the
board of directors, or contract except for liability arising out of conduct
that constitutes:
(A) Appropriation, in violation of his or her duties, of any
business opportunity of the corporation;
(B) Acts or omissions which involve intentional misconduct, or a
knowing violation of law;
(C) The types of liability set forth in Code Section 14-2-832; or
(D) Receipt of an improper personal benefit.
(b) The provisions of paragraph (2) of subsection (a) of this Code section
shall apply to an officer who is also a director if the sole basis on which he
or she is made a party to the proceeding is an act or omission solely as an
officer.
(c) An officer of the corporation who is not a director is entitled to
mandatory indemnification under Code Section 14-2-852, and may apply to a court
under Code Section 14-2-854 for indemnification or advances for expenses, in
each case to the same extent to which a director may be entitled to
indemnification or advances for expenses under those provisions.
(d) A corporation may also indemnify and advance expenses to an employee or
agent who is not a director to the extent, consistent with public policy, that
may be provided by its articles of incorporation, bylaws, 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 a director, officer, employee, or agent of the corporation or
who, while a director, officer, employee, or agent of the corporation, serves at
the corporation's request as a director, officer, partner, trustee, employee, or
agent of another domestic or foreign corporation, partnership, joint venture,
trust, employee benefit plan, or other entity against liability asserted against
or incurred by him or her in that capacity or arising from his or her status as
a director, officer, employee, or agent, whether or not the corporation would
have power to indemnify or advance expenses to him or her against the same
liability under this part.
14-2-859. APPLICATION OF PART
(a) A corporation may, by a provision in its articles of incorporation or
bylaws or in a resolution adopted or a contract approved by its board of
directors or shareholders, obligate itself in advance of the act or omission
giving rise to a proceeding to provide indemnification or advance funds to pay
for or reimburse expenses consistent with this part. Any such obligatory
provision shall be deemed to satisfy the requirements for authorization referred
to in subsection (c) of Code Section 14-2-853 or subsection (c) of Code Section
14-2-855. Any such provision that obligates the corporation to provide
indemnification to the fullest extent permitted by law shall be deemed to
obligate the corporation to advance funds to pay for or reimburse expenses in
accordance with Code Section 14-2-853 to the fullest extent permitted by law,
unless the provision specifically provides otherwise.
II-5
<PAGE> 25
(b) Any provision pursuant to subsection (a) of this Code section shall not
obligate the corporation to indemnify or advance expenses to a director of a
predecessor of the corporation, pertaining to conduct with respect to the
predecessor, unless otherwise specifically provided. Any provision for
indemnification or advance for expenses in the articles of incorporation,
bylaws, or a resolution of the board of directors or shareholders, partners, or,
in the case of limited liability companies, members or managers of a predecessor
of the corporation or other entity in a merger or in a contract to which the
predecessor is a party, existing at the time the merger takes effect, shall be
governed by paragraph (3) of subsection (a) of Code Section 14-2-1106.
(c) A corporation may, by a provision in its articles of incorporation,
limit any of the rights to indemnification or advance for expenses created by or
pursuant to this part.
(d) This part does not limit a corporation's power to pay or reimburse
expenses incurred by a director or an officer in connection with his or her
appearance as a witness in a proceeding at a time when he or she is not a party.
(e) Except as expressly provided in Code Section 14-2-857, this part does
not limit a corporation's power to indemnify, advance expenses to, or provide or
maintain insurance on behalf of an employee or agent.
ARTICLES OF INCORPORATION AUTHORITY
Article 14 of the Corporation'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 the Corporation's Bylaws provides:
Section 1. DEFINITIONS As used in this Article, the term:
(A) "Corporation" includes any domestic or foreign predecessor entity
of this Corporation in a merger or other transaction in which the
predecessor's existence ceased upon consummation of the transaction.
(B) "Director" means an individual who is or was a director of the
Corporation or an individual who, while a director of the 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 entity. 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.
(C) "Disinterested director" means a director who at the time of a
vote referred to in Section 3(C) or a vote or selection referred to in
Section 4(B), 4(C) or 7(A) is not: (i) a party to the proceeding; or (ii)
an individual who is a party to a proceeding having a familial, financial,
professional, or employment relationship with the director whose
indemnification or advance for expenses is the subject of the decision
being made with respect to the proceeding, which relationship would, in the
circumstances, reasonably be expected to exert an influence on the
director's judgment when voting on the decision being made.
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<PAGE> 26
(D) "Employee" means an individual who is or was an employee of the
Corporation or an individual who, while an employee of the 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. An "Employee" 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. "Employee" includes,
unless the context requires otherwise, the estate or personal
representative of an employee.
(E) "Expenses" includes counsel fees.
(F) "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.
(G) "Officer" means an individual who is or was an officer of the
Corporation which for purposes of this Article VII shall include an
assistant officer, or an individual who, while an Officer of the
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 entity. An "Officer" 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. "Officer" includes, unless
the context requires otherwise, the estate or personal representative of an
Officer.
(H) "Official capacity" means: (i) when used with respect to a
director, the office of a director in a corporation; and (ii) when used
with respect to an Officer, the office in a corporation held by the
Officer. Official capacity does not include service for any other domestic
or foreign corporation or any partnership, joint venture, trust, employee
benefit plan, or other entity.
(I) "Party" means an individual who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(J) "Proceeding" means any threatened, pending or completed action,
suit, or proceeding, whether civil, criminal, administrative, arbitrative
or investigative and whether formal or informal.
Section 2. BASIC INDEMNIFICATION ARRANGEMENT
(A) Except as provided in subsections 2(D) and 2(E) below and, if
required by Section 4 below, upon a determination pursuant to Section 4 in
the specific case that such indemnification is permissible in the
circumstances under this subsection because the individual has met the
standard of conduct set forth in this subsection (A), the Corporation shall
indemnify an individual who is made a party to a proceeding because he is
or was a director or Officer against liability incurred by him in the
proceeding if he conducted himself in good faith and, in the case of
conduct in his official capacity, he reasonably believed such conduct was
in the best interest of the Corporation, or in all other cases, he
reasonably believed such conduct was at least 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 person's conduct with respect to an employee benefit plan for a
purpose he believes 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 2(A) above.
(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 proposed indemnitee did not meet the
standard of conduct set forth in subsection 2(A) above.
(D) The Corporation shall not indemnify a person under this Article in
connection with (i) a proceeding by or in the right of the Corporation,
except for reasonable expenses incurred in connection with the proceeding
if it is determined that such person has met the relevant standard of
conduct under
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<PAGE> 27
this section, or (ii) with respect to conduct for which such person was
adjudged liable on the basis that personal benefit was improperly received
by him, whether or not involving action in his official capacity.
Section 3. ADVANCES FOR EXPENSES
(A) The Corporation may advance funds to pay for or reimburse the
reasonable expenses incurred by a director or Officer who is a party to a
proceeding because he is a director or Officer in advance of final
disposition of the proceeding if: (i) such person furnishes the Corporation
a written affirmation of his good faith belief that he has met the relevant
standard of conduct set forth in subsection 2(A) above or that the
proceeding involves conduct for which liability has been eliminated under
the Corporation's Articles of Incorporation; and (ii) such person furnishes
the Corporation a written undertaking meeting the qualifications set forth
below in subsection 3(B), executed personally or on his behalf, to repay
any funds advanced if it is ultimately determined that he is not entitled
to any indemnification under this Article or otherwise.
(B) The undertaking required by subsection 3(A)(ii) above must be an
unlimited general obligation of the director or Officer but need not be
secured and shall be accepted without reference to financial ability to
make repayment.
(C) Authorizations under this Section shall be made: (i) By the Board
of Directors: (a) when there are two or more disinterested directors, by a
majority vote of all disinterested directors (a majority of whom shall for
such purpose constitute a quorum) or by a majority of the members of a
committee of two or more disinterested directors appointed by such a vote;
or (b) when there are fewer than two disinterested directors, by a majority
of the directors present, in which authorization directors who do not
qualify as disinterested directors may participate; or (ii) by the
shareholders, but shares owned or voted under the control of a director who
at the time does not qualify as a disinterested director with respect to
the proceeding may not be voted on the authorization.
Section 4. AUTHORIZATION OF AND DETERMINATION OF ENTITLEMENT TO
INDEMNIFICATION
(A) The Corporation shall not indemnify a director or Officer under
Section 2 above unless authorized thereunder and a determination has been
made for a specific proceeding that indemnification of such person is
permissible in the circumstances because he has met the relevant standard
of conduct set forth in subsection 2(A) above; provided, however, that
regardless of the result or absence of any such determination, to the
extent that a director or Officer has been wholly successful, on the merits
or otherwise, in the defense of any proceeding to which he was a party
because he is or was a director or Officer, the Corporation shall indemnify
such person against reasonable expenses incurred by him in connection
therewith.
(B) The determination referred to in subsection 4(A) above shall be
made:
(i) If there are two or more disinterested directors, by the board
of directors by a majority vote of all the disinterested directors (a
majority of whom shall for such purpose constitute a quorum) or by a
majority of the members of a committee of two or more disinterested
directors appointed by such a vote;
(ii) by special legal counsel:
(1) selected by the Board of Directors or its committee in the
manner prescribed in subdivision (i); or
(2) if there are fewer than two disinterested directors,
selected by the Board of Directors (in which selection directors who
do not qualify as disinterested directors may participate); or
(iii) by the shareholders; but shares owned by or voted under the
control of a director who at the time does not qualify as a
disinterested director may not be voted on the determination.
(C) Authorization of indemnification or an obligation to indemnify and
evaluation as to reasonableness of expenses of a director or Officer in the
specific case shall be made in the same manner as the
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<PAGE> 28
determination that indemnification is permissible, as described in
subsection 4(B) above, except that if there are fewer than two
disinterested directors or 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 subsection
4(B)(ii)(2) above to select counsel.
(D) The Board of Directors, a committee thereof, or special legal
counsel acting pursuant to subsection (B) above or Section 5 below, shall
act expeditiously upon an application for indemnification or advances, and
cooperate in the procedural steps required to obtain a judicial
determination under Section 5 below.
(E) The Corporation may, by a provision in its Articles of
Incorporation or Bylaws or in a resolution adopted or a contract approved
by its Board of Directors or shareholders, obligate itself in advance of
the act or omission giving rise to a proceeding to provide indemnification
or advance funds to pay for or reimburse expenses consistent with this
part. Any such obligatory provision shall be deemed to satisfy the
requirements for authorization referred to in Section 3(C) or Section 4(C).
Section 5. COURT-ORDERED INDEMNIFICATION AND ADVANCES FOR EXPENSES. A
director or Officer who is a party to a proceeding because he is a director or
Officer may apply for indemnification or advances for expenses to the court
conducting the proceeding or to another court of competent jurisdiction. After
receipt of an application and after giving any notice it considers necessary,
the court shall order indemnification or advances for expenses if it determines
that:
(i) The director is entitled to indemnification under this part; or
(ii) In view of all the relevant circumstances, it is fair and
reasonable to indemnify the director or Officer or to advance expenses to
the director or Officer, even if the director or Officer has not met the
relevant standard of conduct set forth in subsection 2(A) above, failed to
comply with Section 3, or was adjudged liable in a proceeding referred to
in subsections (i) or (ii) of Section 2(D), but if the director or Officer
was adjudged so liable, the indemnification shall be limited to reasonable
expenses incurred in connection with the proceeding, unless the Articles of
Incorporation of the Corporation or a Bylaw, contract or resolution
approved or ratified by shareholders pursuant to Section 7 below provides
otherwise.
If the court determines that the director or Officer is entitled to
indemnification or advance for expenses, it may also order the Corporation to
pay the director's or Officer's reasonable expenses to obtain court-ordered
indemnification or advance for expenses.
Section 6. INDEMNIFICATION OF OFFICERS AND EMPLOYEES.
(A) Unless the Corporation's Articles of Incorporation provide
otherwise, the Corporation shall indemnify and advance expenses under this
Article to an employee of the Corporation who is not a director or Officer
to the same extent, consistent with public policy, as to a director or
Officer.
(B) The Corporation may indemnify and advance expenses under this
Article to an Officer of the Corporation who is a party to a proceeding
because he is an Officer of the Corporation: (i) to the same extent as a
director; and (ii) if he is not a director, to such further extent as may
be provided by the Articles of Incorporation, the Bylaws, a resolution of
the Board of Directors, or contract except for liability arising out of
conduct that is enumerated in subsections (A)(i) through (A)(iv) of Section
7.
The provisions of this Section shall also apply to an Officer who is also a
director if the sole basis on which he is made a party to the proceeding is an
act or omission solely as an Officer.
Section 7. SHAREHOLDER APPROVED INDEMNIFICATION.
(A) If authorized by the Articles of Incorporation or a Bylaw,
contract or resolution approved or ratified by shareholders of the
Corporation by a majority of the votes entitled to be cast, the Corporation
may indemnify or obligate itself to indemnify a person 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 sections of this
Article, but shares owned or voted under the control of a director who at
the time does not
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qualify as a disinterested director with respect to any existing or
threatened proceeding that would be covered by the authorization may not be
voted on the authorization. The Corporation shall not indemnify a person
under this Section 7 for any liability incurred in a proceeding in which
the person is adjudged liable to the Corporation or is subjected to
injunctive relief in favor of the Corporation:
(i) for any appropriation, in violation of his duties, of any
business opportunity of the Corporation;
(ii) for acts or omissions which involve intentional misconduct or
a knowing violation of law;
(iii) for the types of liability set forth in Section 14-2-832 of
the Georgia Business Corporation Code; or
(iv) for any transaction from which he received an improper
personal benefit.
(B) Where approved or authorized in the manner described in subsection
7(A) above, the Corporation may advance or reimburse expenses incurred in
advance of final disposition of the proceeding only if:
(i) the proposed indemnitee furnishes the Corporation a written
affirmation of his good faith belief that his conduct does not
constitute behavior of the kind described in subsection 7(A)(i)-(iv)
above; and
(ii) the proposed indemnitee 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.
Section 8. LIABILITY INSURANCE. The Corporation may purchase and maintain
insurance on behalf of an individual who is 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
domestic corporation, partnership, joint venture, trust, employee benefit plan,
or other entity 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 Section 2 or Section 3 above.
Section 9. WITNESS FEES. Nothing in this Article shall limit the
Corporation's power to pay or reimburse expenses incurred by a person in
connection with his appearance as a witness in a proceeding at a time when he is
not a party.
Section 10. REPORT TO SHAREHOLDERS. If the Corporation indemnifies or
advances expenses to a director in connection with a proceeding by or in the
right of the Corporation, the Corporation shall report the indemnification or
advance, in writing, to shareholders with or before the notice of the next
shareholders' meeting.
Section 11. SEVERABILITY. In the event that any of the provisions of this
Article (including any provision within a single section, subsection, division
or sentence) is held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, the remaining provisions of this Article shall remain
enforceable to the fullest extent permitted by law.
Section 12. INDEMNIFICATION NOT EXCLUSIVE. The rights of indemnification
provided in this Article VII shall be in addition to any rights which any such
director, Officer, employee or other person may otherwise be entitled by
contract or as a matter of law.
UNDERWRITING AGREEMENT
Pursuant to the form of underwriting agreement, incorporated by reference
as Exhibit 1.1 to this Registration Statement, the Corporation has agreed to
indemnify the underwriters, if any, against certain liabilities under federal
and state securities laws.
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INSURANCE
The Registrant has purchased a policy of directors and officers liability
(including company reimbursement coverage) insurance that provides certain
coverage for the Registrant and its subsidiaries and their respective directors
and officers with respect to, among other things, liability under federal and
state securities laws.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
1 -- Form of Underwriting Agreement (incorporated by reference to
Exhibit 1 to the Corporation's Registration Statement on
Form S-3 (Registration No. 333-46093), filed with the
Commission on February 11, 1998).
4.1 -- Indenture, dated as of May 1, 1993, between the Corporation
and PNC Bank, National Association, as Trustee (incorporated
by reference to Exhibit 4(a) to the Corporation's
Registration Statement on Form S-3 (Registration No.
33-62162), filed with the Commission on May 5, 1993).
4.2 -- Indenture, dated as of May 1, 1993, between the Corporation
and The First National Bank of Chicago, as Trustee
(incorporated by reference to Exhibit 4(b) to the
Corporation's Registration Statement on Form S-3
(Registration No. 33-62162), filed with the Commission on
May 5, 1993).
5 -- Opinion of Raymond D. Fortin, General Counsel of the
Corporation, as to the legality of the securities being
registered.
12 -- Statement setting forth computation of ratios of earnings to
fixed charges.
23.1 -- Consent of Arthur Andersen LLP.
23.2 -- Consent of KPMG Peat Marwick LLP.
23.3 -- Consent of Deloitte & Touche LLP.
23.4 -- Consent of Raymond D. Fortin, Counsel of the Corporation
(included in Exhibit 5).
25.1* -- Statement of eligibility of PNC Bank, National Association,
as Trustee on Form T-1.
25.2* -- Statement of eligibility of The First National Bank of
Chicago, as Trustee on Form T-1.
</TABLE>
- ---------------
* To be filed by amendment or incorporated by reference.
ITEM 17. 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 thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar volume of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume or price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
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<PAGE> 31
(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;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference 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.
(b) 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.
(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.
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<PAGE> 32
SIGNATURES
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-3 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 11th day of August,
1998.
SUNTRUST BANKS, INC.
By: /s/ L. PHILLIP HUMANN
------------------------------------
L. Phillip Humann
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints L.
PHILLIP HUMANN, Chairman of the Board, Chief Executive Officer and a Director of
the Corporation, JOHN W. SPIEGEL, Executive Vice President and Chief Financial
Officer of the Corporation, RAYMOND D. FORTIN, Secretary of the Corporation, or
any one of them, his true and lawful attorney for him and in his name for the
purpose of executing on his behalf (i) any amendments or supplements to this
Registration Statement or any related registration statement filed pursuant to
Rule 462(b) of the Securities Act of 1933; (ii) any application for registration
or qualification (or exemption therefrom) of such debt securities under the Blue
Sky or other federal or state securities laws and regulations; and (iii) any
other document or instrument deemed necessary or appropriate by any of them in
connection with such application for registration or qualification (or exemption
therefrom); and for the purpose of causing any such registration statement or
any subsequent amendment or supplement to such registration statement to be
filed with the Securities and Exchange Commission pursuant to the Securities Act
of 1933, as amended, together with all exhibits thereto and other documents in
connection therewith.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ L. PHILLIP HUMANN Chairman of the Board and Chief August 11, 1998
- ----------------------------------------------------- Executive Officer
L. Phillip Humann
/s/ JOHN W. SPIEGEL Executive Vice President and August 11, 1998
- ----------------------------------------------------- Chief Financial Officer
John W. Spiegel
/s/ WILLIAM P. O'HALLORAN Senior Vice President and Chief August 11, 1998
- ----------------------------------------------------- Accounting Officer
William P. O'Halloran
/s/ J. HYATT BROWN Director August 11, 1998
- -----------------------------------------------------
J. Hyatt Brown
/s/ A. W. DAHLBERG Director August 11, 1998
- -----------------------------------------------------
A. W. Dahlberg
/s/ ALSTON D. CORRELL Director August 11, 1998
- -----------------------------------------------------
Alston D. Correll
</TABLE>
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<PAGE> 33
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ SUMMERFIELD K. JOHNSTON, JR. Director August 11, 1998
- -----------------------------------------------------
Summerfield K. Johnston, Jr.
/s/ DAVID H. HUGHES Director August 11, 1998
- -----------------------------------------------------
David H. Hughes
/s/ M. DOUGLAS INVESTER Director August 11, 1998
- -----------------------------------------------------
M. Douglas Invester
/s/ JOSEPH L. LANIER, JR. Director August 11, 1998
- -----------------------------------------------------
Joseph L. Lanier, Jr.
/s/ LARRY L. PRINCE Director August 11, 1998
- -----------------------------------------------------
Larry L. Prince
/s/ SCOTT L. PROBASCO, JR. Director August 11, 1998
- -----------------------------------------------------
Scott L. Probasco, Jr.
/s/ R. RANDALL ROLLINS Director August 11, 1998
- -----------------------------------------------------
R. Randall Rollins
/s/ JAMES B. WILLIAMS Director August 11, 1998
- -----------------------------------------------------
James B. Williams
</TABLE>
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<PAGE> 1
EXHIBIT 5
August 13, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Registration of $400,000,000 of Debt Securities
Ladies and Gentlemen:
I have acted as counsel for SunTrust Banks, Inc., a Georgia
corporation ("SunTrust"), in connection with the registration pursuant to a
registration statement on Form S-3 (the "Registration Statement") filed by
SunTrust with the Securities and Exchange Commission under the Securities Act
of 1933, as amended (the "Act"), of $400,000,000 aggregate principal amount of
either (i) Senior Debt Securities of SunTrust (the "Senior Debt Securities"),
to be issued pursuant to that certain Indenture (the "Senior Indenture"), dated
as of May 1, 1993, between SunTrust and PNC Bank, National Association, as
Trustee (the "Senior Trustee") or (ii) Subordinated Debt Securities of SunTrust
(the "Subordinated Debt Securities") to be issued pursuant to that certain
Indenture (the "Subordinated Indenture"), dated as of May 1, 1993, between
SunTrust and The First National Bank of Chicago, as Trustee (the "Subordinated
Trustee").
In so acting, I have examined and relied upon the accuracy of
original, certified, conformed or photographic copies of such records,
agreements, certificates and other documents as I have deemed necessary or
appropriate to enable me to render the opinions set forth below. In all such
examination, I have assumed the genuineness of signatures on original documents
and the conformity to such original documents of all copies submitted to me as
certified, conformed or photographic copies and, as to certificates of public
officials, I have assumed the same to have been properly given and to be
accurate.
I have assumed that the execution and delivery of, and the performance
of all obligations under, the Senior Indenture and the Subordinated Indenture
have been duly authorized by all requisite action by each party thereto (other
than SunTrust), and that such documents are the valid and binding agreements of
each party thereto (other than SunTrust) enforceable against each party thereto
(other than SunTrust) in accordance with their respective terms.
<PAGE> 2
This opinion is limited in all respects to the laws of the State of
Georgia, and no opinion is expressed with respect to the laws of any other
jurisdiction or any effect that such laws may have on the opinions expressed
herein. This opinion is limited to the matters stated herein, and no opinion is
implied or may be inferred beyond the matters expressly stated herein.
Based upon the foregoing, I am of the opinion that:
(i) The Senior Indenture has been duly authorized,
executed and delivered by SunTrust and constitutes the valid and
binding obligation of SunTrust enforceable against SunTrust in
accordance with its terms (subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium or other
laws affecting creditors' rights generally from time to time in effect
and, as to rights of acceleration and the enforcement of remedies, to
general principles of equity);
(ii) The Subordinated Indenture has been duly authorized,
executed and delivered by SunTrust and constitutes the valid and
binding obligation of SunTrust enforceable against SunTrust in
accordance with its terms (subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium or other
laws affecting creditors' rights generally from time to time in effect
and, as to rights of acceleration and the enforcement of remedies, to
general principles of equity);
(iii) The Senior Debt Securities, when the definitive terms
and provisions thereof have been established and when executed and
delivered by SunTrust and authenticated by the Senior Trustee under
the Senior Indenture and delivered to and paid for by the purchasers
thereof, will be validly issued and will constitute valid and binding
obligations of SunTrust enforceable against SunTrust in accordance
with their terms (subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium or other
laws affecting creditors' rights generally from time to time in effect
and, as to rights of acceleration and the enforcement of remedies, to
general principles of equity); and
(iv) The Subordinated Debt Securities, when the definitive
terms and provisions thereof have been established and when executed
and delivered by SunTrust and authenticated by the Subordinated
Trustee under the Subordinated Indenture and delivered to and paid for
by the purchasers thereof, will be validly issued and will constitute
valid and binding obligations of SunTrust enforceable against SunTrust
in accordance with their terms (subject, as to enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights generally from
time to time in effect and, as to rights of acceleration and the
enforcement of remedies, to general principles of equity).
2
<PAGE> 3
This opinion is given as of the date hereof, and I assume no
obligation to update this opinion to reflect any fact or circumstance that may
hereafter come to my attention or any change in any law or regulation that may
hereafter occur.
I consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to me under the caption "Legal
Matters" in the prospectus that forms a part thereof. In giving such consent, I
do not thereby admit that I am in the category of persons whose consent is
required under Section 7 of the Act.
Sincerely,
/s/ Raymond D. Fortin
-----------------------------------
Name: Raymond D. Fortin
Title: Senior Vice President and
Corporate Secretary
3
<PAGE> 1
EXHIBIT 12
SunTrust Banks, Inc.
Ratio of Earnings to Fixed Charges
(In thousands)
<TABLE>
<CAPTION>
Six Months
Ended
June 30, Year Ended December 31,
---------------------------------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio 1 - including deposit interest
Earnings:
Income before income taxes $ 553,551 $ 503,353 $1,025,966 $ 903,200 $ 825,925 $ 781,965 $ 700,662
Fixed charges 957,096 837,057 1,771,603 1,476,392 1,363,702 946,283 804,281
----------------------------------------------------------------------------------------
Total $1,510,647 $1,340,410 $2,797,569 $2,379,592 $2,189,627 $1,728,248 $1,504,943
========================================================================================
Fixed charges:
Interest on deposits 568,307 566,898 1,151,157 1,083,035 988,725 704,803 632,307
Interest on funds purchased 207,741 155,445 345,116 245,502 239,080 122,055 87,900
Interest on other short-term borrowings 45,775 43,315 91,592 48,264 54,843 42,519 21,623
Interest on long-term debt 127,063 63,631 168,508 85,031 68,114 63,119 48,839
Portion of rents representative of
the interest factor (1/3) of rental
expense 8,210 7,768 15,230 14,560 12,940 13,787 13,612
----------------------------------------------------------------------------------------
Total $ 957,096 $ 837,057 $1,771,603 $1,476,392 $1,363,702 $ 946,283 $ 804,281
========================================================================================
Earnings to fixed charges 1.58x 1.60x 1.58x 1.61x 1.61x 1.83x 1.87x
Ratio 2 - excluding deposit interest
Earnings:
Income before income taxes $ 553,551 $ 503,353 $1,025,966 $ 903,200 $ 825,925 $ 781,965 $ 700,662
Fixed charges 388,789 270,159 620,446 393,357 374,977 241,480 171,974
----------------------------------------------------------------------------------------
Total $ 942,340 $ 773,512 $1,646,412 $1,296,557 $1,200,902 $1,023,445 $ 872,636
========================================================================================
Fixed charges:
Interest on funds purchased 207,741 155,445 345,116 245,502 239,080 122,055 87,900
Interest on other short-term borrowings 45,775 43,315 91,592 48,264 54,843 42,519 21,623
Interest on long-term debt 127,063 63,631 168,508 85,031 68,114 63,119 48,839
Portion of rents representative of
the interest factor (1/3) of rental
expense 8,210 7,768 15,230 14,560 12,940 13,787 13,612
----------------------------------------------------------------------------------------
Total $ 388,789 $ 270,159 $ 620,446 $ 393,357 $ 374,977 $ 241,480 $ 171,974
=========================================================================================
Earnings to fixed charges 2.42x 2.86x 2.65x 3.30x 3.20x 4.24x 5.07x
</TABLE>
<PAGE> 1
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 30, 1998
included in SunTrust Banks, Inc.'s Form 10-K for the year ended December 31,
1997 and to all references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
August 14, 1998
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT ACCOUNTANT'S CONSENT
The Board of Directors
Crestar Financial Corporation
We consent to the use of our report dated January 14, 1998, with respect to the
consolidated balance sheets of Crestar Financial Corporation and Subsidiaries as
of December 31, 1997 and 1996, and the related consolidated statements of
income, cash flows and changes in shareholders' equity for each of the years in
the three-year period ended December 31, 1997, which report is included in
SunTrust Banks, Inc.'s Current Report on Form 8-K, dated August 12, 1998,
incorporated herein by reference, and to the reference to our firm under the
heading "Experts" in the Prospectus. Our report refers to our reliance on
another auditors' report with respect to amounts related to Citizens Bancorp for
1996 and 1995 included in the aforementioned consolidated financial statements.
/s/ KPMG Peat Marwick LLP
Richmond, Virginia
August 14, 1998
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
SunTrust Banks, Inc. of Form S-3 of our report dated January 16, 1997 on the
consolidated financial statements of Citizens Bancorp as of December 31, 1996
and 1995, and for each of the three years in the period ended December 31, 1996.
/s/ Deloitte & Touche LLP
Richmond, Virginia
August 14, 1998
