As filed with the Securities and Exchange Commission on _______
Registration No. _________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________________________
SYNOVUS FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
_______________________________
|
GEORGIA |
6022 |
58-1134883 |
SUITE 301, ONE ARSENAL PLACE
901 FRONT AVENUE
COLUMBUS, GEORGIA 31901
(706) 649-4751
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive
offices)
_________________________
___________________________________________________
KATHLEEN MOATES, SENIOR VICE PRESIDENT
AND SENIOR DEPUTY GENERAL COUNSEL
SYNOVUS FINANCIAL CORP.
SUITE 202, ONE ARSENAL PLACE
901 FRONT AVENUE
COLUMBUS, GEORGIA 31901
(706) 649-4818
(Name, address, including zip code, and telephone number, including area code, of agent for service)
_________________________
Approximate date of commencement of proposed sale to the public: As soon as practicable following
the effectiveness of this Registration Statement.
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
|
Title Of Each Class |
Amount To Be |
Proposed Maximum Offering Price |
Proposed Maximum |
Amount Of |
|
Common Stock, $1.00 par value per share |
2,503,172(1) |
(2) |
(2) |
$3,243(3) |
|
Common Stock Rights(4) |
2,503,172(4) |
(4) |
(4) |
(4) |
| (1) | This amount is based upon the maximum number of shares of Synovus common stock anticipated to be issued upon the merger of FNB-Newton Bankshares, Inc. with and into Synovus Financial Corp. | |
| (2) | Not applicable | |
| (3) | Determined pursuant to Rule 457(f)(1) under the Securities Act of 1933, as amended, solely for the purpose of calculating the registration fee. Based upon the book value of common stock of FNB Newton Bankshares, Inc. at September 30, 2002, there being 544,980 shares of such stock issued and outstanding on that date, having an aggregate book value on that date of $35,243,857. | |
| (4) | The Common Stock Rights are attached to and trade with the common stock of Synovus Financial Corp. The value, if any, attributable to the Common Stock Rights is reflected in the market price of the common stock of Synovus Financial Corp. |
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
FNB NEWTON BANKSHARES, INC.
4159 Mill Street
Covington, Georgia 30014
SPECIAL MEETING OF SHAREHOLDERS
You are cordially invited to attend a special meeting of shareholders of FNB Newton Bankshares, Inc. (“FNB Newton”) to be held at 4159 Mill Street, Covington, Georgia 30014, on ____________________________, at ____ p.m. local time.
At the special meeting you will be asked to vote upon a proposal to approve the acquisition of FNB Newton by Synovus Financial Corp. by means of the merger of FNB Newton with and into Synovus. FNB Newton’s subsidiary, First Nation Bank, will continue to operate as a separately chartered subsidiary of Synovus following the proposed merger.
In the merger, each share of FNB Newton common stock will be converted into $85.1536 in cash and approximately 4.1353 shares of Synovus common stock. Because the price of Synovus common stock fluctuates, the value of the securities you will receive will fluctuate on a day-to-day basis. Shareholders of FNB Newton generally will not recognize a gain or a loss for tax purposes in connection with the conversion of their shares of FNB Newton common stock into Synovus common stock.
Synovus common stock is traded on the New York Stock Exchange and Synovus has registered 2,503,172 shares of its common stock for issuance in connection with the merger.
FNB Newton has received from its financial advisor, Brown, Burke Capital Partners, L.L.C. (now known as Burke Capital Group, L.L.C.), an opinion that the terms of the transaction are fair from a financial point of view to the shareholders of FNB Newton.
The merger cannot be completed unless holders of a majority of the outstanding shares of FNB Newton common stock approve it. The board of directors urges you to consider the enclosed material carefully and recommends that you vote “FOR” approval of the merger.
Whether or not you plan to attend the special meeting, please take the time to vote by completing and mailing the enclosed proxy card to us. If you fail to return your card or vote in person, the effect will be a vote against the merger.
On behalf of the Board of Directors of FNB Newton, we urge you to vote “FOR” the merger.
| Stephen C. Wood President and Chief Executive Officer FNB Newton Bankshares, Inc. |
Neither the Securities and Exchange Commission nor any state securities commission has approved of the securities to be issued in the merger or determined if this document is accurate or adequate. It is illegal to tell you otherwise. The securities to be issued in the merger are not savings or deposit accounts and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency.
Please see “Risk Factors” beginning on page 6 for a description of the factors that may affect the value of Synovus common stock to be issued in the merger along with several other risk factors that should be considered by FNB Newton shareholders with respect to the merger of FNB Newton with and into Synovus.
The date of this proxy statement/prospectus is __________, 2003, and it is first being mailed to the shareholders of FNB Newton on or about __________, 2003.
REFERENCES TO ADDITIONAL INFORMATION
This document incorporates important business and financial information about Synovus from documents that are not included in or delivered with this document. The information is available to you without charge upon your written or oral request. You can obtain documents incorporated by reference in this document, other than certain exhibits to those documents, by requesting them in writing or by telephone from the appropriate company at the following address:
Synovus Financial Corp.
901 Front Avenue, Suite 301
Columbus, Georgia 31901
Attn: G. Sanders Griffith, III
Senior Executive Vice President,
General Counsel & Secretary
Telephone: (706) 649-2267
If you would like to request documents, please do so by ___________, 2003 in order to receive them before the special meeting.
Please see “Where You Can Find More Information” on page 52 for further information.
FNB NEWTON BANKSHARES, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held on ____________, 2003
To Our Shareholders:
Notice is hereby given that a special meeting of the shareholders of FNB Newton Bankshares, Inc. will be held at 4159 Mill Street, Covington, Georgia 30014, on ________, ___________, 2003, at ____ p.m. local time, for the following purposes:
| 1. | To consider and vote upon a proposal to approve and adopt the merger agreement, dated as of October 31, 2002, between Synovus Financial Corp. and FNB Newton Bankshares, Inc. Under the terms of this merger agreement, FNB Newton Bankshares, Inc. will be merged with and into Synovus, and FNB Newton Bankshares, Inc. shareholders will receive shares of Synovus common stock and cash, as more fully described in the accompanying proxy statement/prospectus dated __________, 2003. | ||
| 2. | To consider and vote upon such other matters as may properly come before the special meeting or any adjournments or postponements of the special meeting. | ||
Only shareholders of record on __________, 2003 are entitled to receive notice of the special meeting and to vote at the special meeting.
The merger is described in the accompanying proxy statement/prospectus, which you are urged to read carefully. A copy of the merger agreement is attached as Appendix “A” to the accompanying proxy statement/prospectus.
Shareholders of FNB Newton Bankshares, Inc. have the right to dissent from the merger and receive payment in cash of the fair value for their shares of FNB Newton Bankshares, Inc. common stock upon compliance with the dissenters’ rights provisions of the Georgia Business Corporation Code, a copy of which is attached as Appendix “B” to the accompanying proxy statement/prospectus.
| By Order of the Board of Directors | |
| Stephen C. Wood President and Chief Executive Officer |
Covington, Georgia
__________, 2003
Please mark, date, sign and promptly return the enclosed proxy card so that your shares may be voted in accordance with your wishes and so that a quorum may be assured. The giving of a proxy does not affect your right to vote in person if you attend the special meeting.
The Board of Directors of FNB Newton Bankshares, Inc. Unanimously Recommends that You Vote in Favor of the Merger.
Do Not Send Stock Certificates With Your Proxy Card.
TABLE OF CONTENTS
Caption Page
------- ----
QUESTIONS AND ANSWERS ABOUT THE MERGER.........................................................................1
WHO CAN HELP ANSWER YOUR QUESTIONS.............................................................................3
SUMMARY........................................................................................................4
The Companies..................................................................................................4
The Merger.....................................................................................................4
FNB Newton's Reasons for the Merger............................................................................4
Opinion of Financial Advisor...................................................................................5
FNB Newton Special Shareholders' Meeting.......................................................................5
Conditions to the Merger.......................................................................................5
Accounting Treatment ..........................................................................................6
Material United States Federal Income Tax Consequences of the Merger...........................................6
Effective Date of Merger.......................................................................................6
Dissenters' Rights.............................................................................................6
Risk Factors...................................................................................................6
Interests of Certain Persons in the Merger.....................................................................7
Termination of the Merger Agreement............................................................................7
No Solicitation................................................................................................7
Effect of Merger on Rights of FNB Newton Shareholders..........................................................7
Comparative Market Price Information and Dividends.............................................................8
SELECTED FINANCIAL DATA........................................................................................9
RISK FACTORS..................................................................................................11
THE SPECIAL MEETING...........................................................................................13
Date, Time and Place..........................................................................................13
Matters to Be Considered at the Special Meeting...............................................................13
Record Date; Stock Entitled to Vote; Quorum...................................................................13
Vote Required.................................................................................................13
Stock Ownership of FNB Newton Directors and Executive Officers................................................14
Voting of Proxies.............................................................................................14
Revoking Proxies..............................................................................................14
Proxy Solicitation............................................................................................15
Recommendation of the FNB Newton Board........................................................................15
THE MERGER....................................................................................................15
Terms of the Merger...........................................................................................15
Background of the Merger......................................................................................16
Recommendation of FNB Newton Board and Reasons for the Merger.................................................17
Opinion of FNB Newton Financial Advisor.......................................................................18
Conditions to the Merger......................................................................................24
No Solicitation...............................................................................................26
Conduct of Business of FNB Newton Pending the Merger..........................................................26
Regulatory Approvals..........................................................................................27
Waiver and Amendment..........................................................................................27
Termination and Termination Fee...............................................................................27
Interests of FNB Newton's Directors and Officers in the Merger................................................28
Employee Benefits.............................................................................................29
Material United States Federal Income Tax Consequences of the Merger..........................................29
Accounting Treatment..........................................................................................33
Expenses......................................................................................................33
New York Stock Exchange Listing...............................................................................33
i
Resales of Synovus Common Stock...............................................................................33
DESCRIPTION OF STOCK AND EFFECT OF MERGER ON RIGHTS OF
FNB NEWTON SHAREHOLDERS.......................................................................................34
Synovus Common Stock..........................................................................................35
FNB Newton Capital Stock......................................................................................39
DISSENTERS' RIGHTS............................................................................................40
DESCRIPTION OF SYNOVUS........................................................................................42
Business......................................................................................................42
Management and Additional Information.........................................................................42
DESCRIPTION OF FNB NEWTON.....................................................................................42
Business......................................................................................................42
Market Area...................................................................................................43
Lending Activities............................................................................................43
Competition...................................................................................................44
Employees.....................................................................................................44
Description of Property.......................................................................................44
Legal Proceedings.............................................................................................45
Related Party Transactions....................................................................................45
Principal Shareholders........................................................................................46
REGULATORY MATTERS............................................................................................46
General.......................................................................................................46
Dividends.....................................................................................................47
Capital Requirements..........................................................................................48
Commitments to Subsidiary Banks...............................................................................49
Prompt Corrective Action......................................................................................49
Safety and Soundness Standards................................................................................50
Depositor Preference Statute..................................................................................50
Gramm-Leach-Bliley Act........................................................................................51
LEGAL MATTERS.................................................................................................51
EXPERTS.......................................................................................................51
OTHER MATTERS.................................................................................................51
SHAREHOLDER PROPOSALS.........................................................................................51
WHERE YOU CAN FIND MORE INFORMATION...........................................................................52
FORWARD-LOOKING STATEMENTS....................................................................................53
PRO FORMA FINANCIAL INFORMATION...............................................................................54
APPENDIX A Agreement and Plan of Merger......................................................................A-1
APPENDIX B Georgia Dissenters' Rights........................................................................B-1
APPENDIX C Fairness Opinion of Brown, Burke Capital Partners, L.L.C.
(now known as Burke Capital Group, L.L.C.)...................................................................C-1
APPENDIX D Tax Opinion of Powell, Goldstein, Frazer & Murphy, LLP............................................D-1
ii
QUESTIONS AND ANSWERS ABOUT THE MERGER
| Q: | Why is the merger being proposed? | ||
| A: | FNB Newton’s board of directors believes the merger is in the best interests of FNB Newton and will provide significant benefits to its shareholders. Synovus’ board of directors believes that the acquisition of FNB Newton will offer Synovus the opportunity to expand its banking operations in the attractive banking market of Atlanta, Georgia. To review the background and reasons for the merger in greater detail, see pages 16 and 17. | ||
| Q: | What will I receive in the merger? | ||
| A: | FNB Newton shareholders will
receive $85.1536 in cash and approximately 4.1353 shares of Synovus common stock
for each share of FNB Newton common stock they hold. Because the market price of
Synovus common stock fluctuates, the value of securities you will receive will
fluctuate on a day-to-day basis. Synovus will not issue fractional shares in the merger. Instead, FNB Newton shareholders will receive a cash payment, without interest, for the value of any fraction of a share of Synovus common stock that they would otherwise be entitled to receive, based upon the closing price of Synovus common stock on the last business day immediately prior to the effective date of the merger. | ||
| Q: | What happens as the market price of Synovus common stock fluctuates? | ||
| A: | Since the market price of Synovus common stock fluctuates, at the time you vote you will not know what the shares will be worth when issued in the merger. | ||
| Q: | When is the merger expected to be completed? | ||
| A: | We expect to complete the merger in the first quarter of 2003. | ||
| Q: | What are the income tax consequences of the merger to me? | ||
| A: | We expect that an FNB Newton
shareholder will recognize gain as a result of the surrender of FNB Newton
common stock in exchange for the receipt of a combination of shares of Synovus
and cash in an amount equal to the lesser of the cash received by such
shareholder or the actual gain realized by such FNB Newton shareholder. The
actual gain realized by an FNB Newton shareholder will be equal to the sum of
the cash and the fair market value of the Synovus common stock received in the
merger minus such shareholder’s basis in the shares of the FNB Newton
common stock surrendered by such FNB Newton shareholder in the merger. Determining the actual tax consequences of the merger to you as an individual taxpayer can be complicated. The tax treatment will depend on your specific situation and many variables not within our control. You should consult your own tax advisor for a full understanding of the tax consequences to you of the merger. | ||
| Q: | What am I being asked to vote upon and what is the required shareholder vote? | ||
| A: | You are being asked to approve
the merger of FNB Newton into Synovus. Approval of the proposal requires the
affirmative vote of holders of a majority of the shares of outstanding common
stock of FNB Newton. FNB Newton’s board of directors encourages you to vote
at the special meeting. The FNB Newton board of directors has unanimously
approved and adopted the merger agreement and recommends that FNB Newton
shareholders vote FOR the approval of the merger.
1 | ||
| Q: | What should I do now? | ||
| A: | You should read this document carefully and determine whether you desire to vote for approval of the merger. | ||
| Q: | Should I send in my stock certificates now? | ||
| A: | No. If the merger is completed, we will send you written instructions for exchanging your FNB Newton common stock certificates for Synovus common stock certificates. |
2
WHO CAN HELP ANSWER YOUR QUESTIONS
If you want additional copies of this document, or if you want to ask any questions about the merger, you should contact:
FNB Newton Bankshares, Inc.
4159 Mill Street
Covington, Georgia 30014
Attn: Thomas R. Kephart
Chief Financial Officer
Telephone: (770) 787-5500
3
SUMMARY
This summary highlights selected information from this document and may not contain all the information that is important to you. For a more complete understanding of the merger and for a more complete description of the legal terms of the merger, you should read this entire document carefully, as well as the additional documents to which we refer you, including the merger agreement.
The Companies (page 42)
Synovus Financial Corp.
Suite 301, One Arsenal Place
901 Front Avenue
Columbus, Georgia 31901
Telephone: (706) 649-4751
Synovus Financial Corp., a Georgia corporation, is a financial services company whose stock is traded on the New York Stock Exchange under the symbol “SNV.” Synovus is registered as a bank holding company under the Bank Holding Company Act of 1956 and became a financial holding company in April 2000. As of September 30, 2002, Synovus had total assets of approximately $18.5 billion, total deposits of $13.6 billion, shareholders’ equity of $2.0 billion and net loans of $13.9 billion. Synovus and its 37 commercial banking affiliates presently provide banking services at approximately 250 offices located in Georgia, Alabama, Florida, South Carolina and Tennessee. Synovus also provides a variety of other financial services including mortgage banking, securities brokerage, insurance agency, equipment leasing and trust services. In addition, Synovus holds an 81% interest in Total System Services, Inc. Total System Services, Inc. is an information technology processor of credit, debit, stored value, commercial and retail cards whose stock is traded on the New York Stock Exchange.
FNB Newton Bankshares, Inc.
4159 Mill Street
Covington, Georgia 30014
Telephone: (770) 787-5500
FNB Newton Bankshares, Inc. is registered as a bank holding company under the Bank Holding Company Act. As of September 30, 2002, FNB Newton had total assets of $340 million, total deposits of $291 million, shareholders’ equity of $35 million and net portfolio loans of $267 million. FNB Newton has one banking subsidiary, First Nation Bank, Covington, Georgia, which provides services through its ten full-service banking offices. All references to FNB Newton refer to FNB Newton Bankshares, Inc. and its subsidiary bank, unless the context otherwise requires.
The Merger (page 15)
If the merger is approved by FNB Newton’s shareholders, FNB Newton will be merged with and into Synovus, and FNB Newton’s banking subsidiary, through which it operates, will become a wholly owned subsidiary of Synovus. The merger requires the approval of the holders of a majority of the FNB Newton common stock outstanding on the record date. The directors and executive officers of FNB Newton together own about 92% of the shares entitled to vote at the meeting, and we expect them to vote their shares in favor of the merger.
We have attached the merger agreement as Appendix “A” to this document. We encourage you to read the merger agreement, as it is the legal document that governs the merger.
FNB Newton's Reasons for the Merger (page 17)
In reaching its decision to approve and recommend approval of the merger agreement, the FNB Newton board of directors considered a number of factors, including the following:
4
Opinion of Financial Advisor (page 18)
FNB Newton asked its financial advisor, Brown, Burke Capital Partners, L.L.C. (now known as Burke Capital Group, L.L.C.), for advice on the fairness, from a financial point of view, of the merger consideration to FNB Newton’s shareholders. Burke Capital has delivered its written opinion to the FNB Newton board that as of October 31, 2002, the date the FNB Newton board approved the merger agreement, the exchange ratio was fair, from a financial point of view, to the shareholders of FNB Newton. The opinion is attached as Appendix “C” to this proxy statement/prospectus. You should read this opinion completely to understand the procedures followed, assumptions made, matters considered and limitations of the review undertaken by Burke Capital. Burke Capital’s opinion is addressed to the FNB Newton board and does not constitute a recommendation to any shareholder as to how to vote with respect to matters relating to the proposed merger.
FNB Newton Special Shareholders’Meeting (page 13)
The special meeting will be held at 4159 Mill Street, Covington, Georgia 30014 on ___________, 2003, at ____ p.m. local time.
Conditions to the Merger (page 24)
Consummation of the merger is subject to various conditions, including:
5
The regulatory approvals necessary to consummate the merger and the other transactions contemplated by the merger agreement include the approval of the Board of Governors of the Federal Reserve System and the Georgia Department of Banking and Finance. The merger has been approved by both of the foregoing agencies.
Accounting Treatment (page 33)
The merger will be accounted for as a purchase for financial reporting purposes.
Material United States Federal Income Tax Consequences of the Merger (page 29)
We expect that Synovus, FNB Newton and FNB Newton shareholders will not recognize any gain or loss for United States federal income tax purposes as a result of the merger, except that FNB Newton shareholders will recognize gain to the extent of the cash received in exchange for the FNB Newton shares surrendered in the merger, but not in excess of the actual gain realized from the exchange. The board of directors of both companies will be receiving an opinion of tax counsel that the above will be the federal income tax consequences of the merger. A copy of this opinion is attached to this document as Appendix “D.” The opinion will not bind the Internal Revenue Service, which could take a different view. This tax treatment will not apply to any FNB Newton shareholder that exercises dissenters’ rights. Determining the actual tax consequences of the merger to you as an individual taxpayer can be complicated. The tax treatment will depend on your specific situation and many variables not within our control. You should consult your own tax advisor for a full understanding of the merger’s tax consequences.
Effective Date of Merger (page 15)
The merger will become effective when all of the conditions to the merger have been satisfied and Articles of Merger are filed with the Georgia Secretary of State. Subject to the conditions specified in the merger agreement, the parties anticipate that the merger will become effective in the first quarter of 2003. There can be no assurances, however, as to whether or when the merger will occur.
Dissenters' Rights (page 40)
Holders of FNB Newton common stock are entitled to dissent from the merger under Georgia law and, if the merger is consummated, to receive payment in cash for the fair value of their shares, upon compliance with the dissenters’ rights provisions of the Georgia Business Corporation Code. To preserve these rights, a shareholder must not vote in favor of the merger and must deliver to FNB Newton a written notice of intent to demand payment for such shareholder’s shares before the vote on the merger at the special meeting of FNB Newton shareholders. The delivery of a proxy or vote against the merger is not considered such a notice. Failure to follow required procedures may result in the loss of statutory dissenters’ rights.
Risk Factors (page 11)
In addition to the other information included in this proxy statement/prospectus, including the matters addressed in “Forward-Looking Statements” on page 53, you should carefully consider the following material risk factors to the merger in determining whether to vote in favor of the approval of the merger:
6
Interests of Certain Persons in the Merger (page 28)
Certain executive officers of FNB Newton have interests in the merger that are different from your interests. Stephen C. Wood, President and Chief Executive Officer of FNB Newton, will enter into an employment agreement with Synovus providing for his continued employment as the President and Chief Executive Officer of First Nation Bank for a period of three years following the merger. In addition, both Mr. Wood and Thomas R. Kephart, Chief Financial Officer for FNB Newton, will receive certain payments and benefits as a result of change of control provisions in their employment agreements, stock plans and executive bonus agreements.
Termination of the Merger Agreement (page 27)
Either FNB Newton or Synovus may terminate the merger agreement under the following circumstances, among others:
Also, FNB Newton may terminate the merger agreement if, during the five (5) business days immediately prior to the effective date of the merger, the total cash consideration paid by Synovus is greater than fifty-five (55%) of the sum of such total cash consideration plus the total stock consideration such that Powell, Goldstein, Frazer & Murphy, LLP cannot issue a tax opinion in which it opines that the merger shall qualify for a tax-free exchange pursuant to the applicable sections of the Internal Revenue Code.
No Solicitation (page 26)
FNB Newton has agreed that until the completion of the merger, FNB Newton will not directly or indirectly take any specified actions with respect to any acquisition proposal. However, notwithstanding these restrictions, FNB Newton may, if necessary to comply with its fiduciary obligations and subject to other qualifications and conditions, furnish information and engage in discussions or negotiations in response to unsolicited acquisition proposals.
Effect of Merger on Rights of FNB Newton Shareholders (page 34)
FNB Newton is a Georgia
corporation and, therefore, the rights of shareholders of FNB Newton currently
are determined by reference to the Georgia Business Corporation Code and FNB
Newton’s Articles of Incorporation and bylaws. At the effective time of the
merger, shareholders of FNB Newton will become shareholders of Synovus, which is
a Georgia corporation. As a result, their rights as shareholders of Synovus will
then be
7 determined by reference to the Georgia Business Corporation Code and
Synovus’ Articles of Incorporation and bylaws. There are various
differences between Synovus’ Articles of Incorporation and bylaws and FNB
Newton’s Articles of Incorporation and bylaws. Comparative Market Price Information and Dividends Synovus common stock is listed on
the NYSE under the symbol “SNV.” On September 30, 2002, there were 55
holders of record of FNB Newton common stock. No established trading market for
FNB Newton common stock exists. Transactions in FNB Newton common stock are
infrequent and are negotiated privately between the persons involved in these
transactions. These transactions are not reported on an exchange or other
organized trading system. For these reasons, FNB Newton lacks reliable data
regarding recent trading activity in FNB Newton common stock. To the knowledge
of management of FNB Newton, the last transaction in FNB Newton common stock
occurred on May 23, 2000 when FNB Newton repurchased a total of 22,680 shares in
two transactions, one of which involved the then-resigning Chief Executive
Officer of FNB Newton, at a price of $43.86 per share. The following table presents, for September 25, 2002 and
___________, 2003: September 25, 2002 was the last
full trading day before the public announcement of the proposed merger, and
_____________, 2003, was the last day for which such information could be
calculated before the date of this document. The equivalent price per share data
for FNB Newton common stock has been determined by multiplying the last reported
sale price of one share of Synovus common stock on each of these dates by the
exchange ratio and then adding the cash portion of the consideration of
$85.1536. (1) Represents the
most recent transaction in the common stock of FNB Newton, to the knowledge of
FNB Newton, which occurred on May 23, 2000. Synovus common stock is listed on
the NYSE under the symbol “SNV.” There is no trading market for FNB
Newton common stock. The table below shows the high and low closing prices of
Synovus common stock and cash dividends declared per share for Synovus and FNB
Newton for the last two fiscal years plus the interim period. 8 Synovus
FNB Newton Cash Cash High Low Dividends Dividends Quarter Ended March 31, 2002 $31.74 $24.75 $0.1475 $0.21 Quarter Ended 28.00 23.02 0.1275 0.21 For year 2001 Quarter Ended June 30, 2000 September 30, 2000 December 31, 2000 For year 2000 SELECTED FINANCIAL DATA The following tables show summary
historical financial data for Synovus. The information in the following tables
was derived from historical financial information contained in annual and
quarterly reports and other information Synovus has filed with the SEC. When you
read the summary financial information provided in the following table, you
should also read the historical financial information contained in annual and
quarterly reports and other information Synovus has filed with the SEC. See
“WHERE YOU CAN FIND MORE INFORMATION” on page 52. [Rest of page intentionally left blank] 9 SYNOVUS FINANCIAL CORP. Nine Months Ended (Unaudited) Years Ended December 31, 2002 2001 2001 2000 1999 1998 1997 Income Statement Data: Net interest income $ 530,897 459,019 $ 629,791 562,332 513,294 455,065 425,920 Provision for losses on loans 49,497 34,956 51,673 44,341 34,007 26,882 32,485 Non-interest income 900,278 861,068 937,697 833,513 739,765 582,213 501,412 Non-interest expense 958,183 914,624 1,005,963 923,274 856,549 695,812 618,691 Net income 260,919 226,405 311,616 262,557 225,307 196,465 170,829 Balance Sheet Data: Investment securities $ 2,162,135 2,090,931 $ 2,088,287 2,077,928 1,993,957 1,877,473 1,702,681 Loans, net of unearned income 14,058,387 11,852,572 12,417,917 10,751,887 9,068,239 7,603,605 6,752,154 Total assets 18,510,215 15,778,199 16,657,947 14,908,092 12,547,001 10,811,592 9,530,541 Deposits 13,644,457 11,525,774 12,146,198 11,161,710 9,440,087 8,797,412 7,928,211 Long-term debt 1,294,091 935,731 1,052,943 840,859 318,620 131,802 131,492 Average total shareholders' equity 1,804,206 1,514,363 1,548,030 1,303,634 1,165,426 1,013,334 865,232 Average total assets 17,034,528 15,153,173 15,375,004 13,466,385 11,438,696 9,827,925 9,067,237 Per Share Data: Net income - basic $ 0.88 0.78 $ 1.07 0.93 0.80 0.72 0.63 Net income - diluted 0.87 0.77 1.05 0.92 0.80 0.71 0.63 Cash dividends declared 0.44 0.38 0.51 0.44 0.36 0.29 0.24 Book value per share 6.54 5.56 5.75 4.98 4.35 3.99 3.50 Ratios: Return on assets (1) 2.05 % 2.00 2.03 % 1.95 1.97 2.00 1.88 Return on equity (1) 19.34 19.99 20.13 20.14 19.33 19.39 19.74 Dividend payout ratio (2) 50.58 49.10 47.67 47.56 43.70 39.55 36.85 Average shareholders' 10.59 9.99 10.07 9.68 10.19 10.31 9.54 10 RISK FACTORS In addition to the other
information included in this prospectus, FNB Newton shareholders should
carefully consider the matters described below in voting on the issuance of
shares of Synovus common stock in the merger. You may receive shares of
Synovus common stock with a market value lower than you expected. Synovus is offering to a pay a
total net consideration of $85.1536 in cash and approximately 4.1353 shares of
Synovus common stock for each share of FNB Newton common stock. This exchange
ratio will not be adjusted for changes in the market price of Synovus common
stock. Any change in the price of Synovus common stock prior to the merger will
affect the value that FNB Newton shareholders will receive in the merger. If the
market price of Synovus common stock declines, then the value of the total net
consideration you will receive will decline as well. Stock price variations may
result from a variety of factors that are beyond our control, including changes
in, or market perceptions of changes in, the business, operations or prospects
of Synovus, market assessments of the likelihood the merger will be consummated,
regulatory considerations, general market and economic conditions and other
factors. The price of Synovus common stock
at the effective date of the merger may vary from its prices on (i) October 31,
2002, the date the merger agreement was executed, (ii) the date of this proxy
statement/prospectus and (iii) the date of FNB Newton’s special
shareholders meeting. Because the effective date of the merger will follow the
date of FNB Newton’s special shareholders meeting, at the time of the
special meeting you will not know the market value of the Synovus common stock
that you may receive upon completion of the merger. The opinion obtained by FNB
Newton from its financial advisor will not reflect changes in circumstances
prior to the merger. On October 31, 2002, Brown, Burke
Capital Partners, L.L.C. (now known as Burke Capital Group, L.L.C.) delivered to
the FNB Newton board of directors its opinion as to the fairness, from a
financial point of view, to the shareholders of FNB Newton, as of that date, of
the aggregate merger consideration to be received by them under the merger
agreement. FNB Newton does not intend to obtain an updated opinion from Burke
Capital. Changes in the consideration and prospects of Synovus or FNB Newton,
general market and economic conditions, and other factors which are beyond the
control of Synovus, and on which the opinion of Burke Capital is based, may
alter the value of Synovus at the time the merger is completed. As a result of
these uncertainties, you should be aware that the opinion of Burke Capital does
not address the fairness of the merger consideration at the time the merger is
completed or at any time other than October 31, 2002. There can be no assurance that
the Internal Revenue Service will treat this merger as a tax-free reorganization
as contemplated by the merger agreement. It is a condition to the
consummation of the merger that Powell, Goldstein, Frazer & Murphy LLP
deliver an opinion that the merger will qualify as a tax-free reorganization
under Section 368(a)(1) of the Internal Revenue Code, which generally means that
the receipt of shares of Synovus common stock in exchange for your shares of FNB
Newton common stock will not be a taxable event. However, the Powell, Goldstein
opinion is not binding on the Internal Revenue Service. If the Internal Revenue
Service successfully asserts that the merger does not qualify as a tax-free
reorganization, you would recognize gain or loss equal to the difference between
your tax basis in the FNB Newton common stock and the sum of the fair market
value of Synovus common stock plus the amount of cash received in the merger. In
addition, FNB Newton would be treated as recognizing taxable gain or loss at the
corporate level on the transfer of its assets in the merger. See “Material
United States Federal Income Tax Consequences of the Merger” on page 29. If we are unable to
successfully integrate the business operations of FNB Newton after the merger,
we will not realize the anticipated benefits from the merger and our business
could be adversely affected. The merger involves the
integration of companies that have previously operated independently. Successful
integration of FNB Newton’s operations with ours will depend on our ability
to consolidate operations, systems and procedures, eliminate redundancies and to
reduce costs. If we are unable to successfully do so, we may not realize 11 fully,
or at all, the anticipated benefits of the merger with FNB Newton. Difficulties
could include the loss of key employees and customers, the disruption of FNB
Newton’s ongoing businesses and possible inconsistencies in standards,
controls, procedures and policies. The realization of expected efficiencies and
cost savings could be adversely affected by a number of factors beyond our
control, and may not materialize after the merger. Changes in our public forecast
may affect the value of your shares. The value of Synovus common stock may
be materially affected by the financial results and expectations relating to the
future financial performance of Synovus’ subsidiary, Total System Services,
Inc. (“TSYS”). Synovus owns approximately 81% of TSYS, a Columbus,
Georgia based payment processing company. Over the past five years TSYS has
contributed approximately 26% of Synovus’ net income on an annual basis. On
October 15, 2002, TSYS issued a press release realigning its forecast of 2003
net income, projecting an increase of 12 – 15% over 2002 net income. This
change in forecast was based upon TSYS’ expectation that it would not sign
a major client by the end of 2002. As of December 31, 2002, TSYS had not signed
a major new client. The assumptions underlying the TSYS net income forecast in
such press release did not include any revenues or expenses associated with
signing or converting a major client. This means that if TSYS signs a major
client in 2003, it may need to readjust its 2003 forecast to reflect such
increased expense that will be incurred in advance of realizing revenue from the
new major client. If TSYS changes its forecast for this reason or any other
reason the share price of any Synovus common stock you receive may decrease. In
addition, the long-term revenue prospects of TSYS and Synovus could be adversely
affected if TSYS fails to sign a new major client. Competition in the banking
industry is intense. Competition in the banking and
financial services industry is intense. In their primary market areas,
Synovus’ subsidiary banks compete with other commercial banks, savings and
loan associations, credit unions, finance companies, mutual funds, insurance
companies and brokerage and investment banking firms operating locally and
elsewhere. Many of these competitors have substantially greater resources and
lending limits than Synovus’ subsidiary banks and may offer certain
services that Synovus’ subsidiary banks do not or cannot provide. The
profitability of Synovus depends upon its continued ability to compete in the
financial services and payment processing market areas. Synovus and its
subsidiaries compete primarily with other financial institutions in the
southeastern United States, but may also compete with financial institutions
located throughout the United States. Synovus and FNB Newton are
subject to risks arising from conditions beyond their control. Synovus and FNB Newton make
forward-looking statements in this document and Synovus makes forward-looking
statements in its public documents, that are subject to risks and uncertainties.
These forward-looking statements include information about possible or assumed
future results of our operations. Also, when we use any of the words
“believes,” “expects,” “anticipates” or similar
expressions, we are making forward-looking statements. Many possible events or
factors could affect the financial results and performance of each of our
companies. This could cause results or performances to differ materially from
those expressed in our forward-looking statements. The Private Securities
Litigation Reform Act of 1995 provides a “safe harbor” for such
forward-looking statements. In order to comply with the terms of the safe
harbor, we note that a variety of factors could cause our actual results and
experience to differ materially from the anticipated results or other
expectations expressed in such forward-looking statements. The risks and
uncertainties that may affect the operations, performance, development and
results of our businesses include, but are not limited to, those described
below. You should consider these risks when you vote on the merger. These
possible events or factors include the following: 12 Management of each of Synovus and
FNB Newton believes the forward-looking statements about its company are
reasonable; however, you should not place undue reliance on them.
Forward-looking statements are not guarantees of performance. They involve
risks, uncertainties and assumptions. The future results and shareholder values
of Synovus following completion of the merger may differ materially from those
expressed or implied in these forward-looking statements. Many of the factors
that will determine these results and values are beyond Synovus’ and FNB
Newton’s ability to control or predict. THE SPECIAL MEETING We are furnishing this document to
shareholders of FNB Newton in connection with the solicitation of proxies by the
board of directors of FNB Newton for use at the special meeting of its
shareholders. Date, Time and Place The special meeting will be held
at 4159 Mill Street, Covington, Georgia 30014 on ______________, ___________,
2003, at ____ p.m. local time. Matters to Be Considered at the Special Meeting At the special meeting, the
shareholders of FNB Newton will be asked to consider and vote upon the approval
of the merger, and such other matters as may properly be brought before the
special meeting. The FNB Newton board has
unanimously approved the merger agreement and the transactions contemplated by
the merger agreement and recommends that you vote “FOR”
approval of the merger. Record Date; Stock Entitled to Vote; Quorum Only holders of record of FNB
Newton common stock at the close of business on _____________, 2003, the record
date for the FNB Newton special meeting, are entitled to receive notice of the
special meeting and to vote at the special meeting. Holders of record of shares
of FNB Newton common stock on the record date are each entitled to one vote per
share on each matter to be considered at the special meeting. On the record date, ______________
shares of FNB Newton common stock were issued and outstanding and were held by
____ holders of record. A majority of all the issued and
outstanding shares of FNB Newton common stock, present in person or by proxy,
will constitute a quorum for the special meeting. Vote Required The approval of the merger
requires the affirmative vote of the holders of a majority of the outstanding
shares of FNB Newton common stock. The merger does not require the
approval of Synovus’ shareholders. Synovus’ board of directors
approved the merger on October 31, 2002. 13 Stock Ownership of FNB Newton Directors and Executive
Officers At the close of business on the
record date, the directors and executive officers of FNB Newton beneficially
owned and were entitled to vote approximately 499,576 shares of FNB Newton
common stock. This ownership represents approximately 92% of the shares of FNB
Newton common stock outstanding on that date. Voting of Proxies Shares represented by all properly
executed proxies received in time for the special meeting will be voted at the
special meeting according to the voting instructions of the shareholder who
executed the proxy. Properly executed proxies which do not contain voting
instructions will be voted in favor of the merger. FNB Newton intends to count shares
of FNB Newton common stock present in person at the special meeting but not
voting, and shares of FNB Newton common stock for which proxies are received but
with respect to which holders of shares have abstained from voting on or voted
against any matter, as present at the special meeting for purposes of
determining the presence or absence of a quorum for the special meeting. For voting purposes at the special
meeting, only shares voted in favor of approval of the merger will be counted as
favorable votes for such approval and adoption. A shareholder’s failure to
submit a proxy, failure to vote in person, or abstention from voting with
respect to the approval of the merger will have the same effect as if the
shareholder voted against approval of the merger. Shares held in street name that
have been designated by brokers on proxy cards as not voted with respect to the
merger (“broker non-votes”) will not be counted as votes cast on the
merger. Shares with respect to which proxies have been marked as abstentions
also will not be counted as votes cast on the merger. Shares with respect to
which proxies have been marked as abstentions and broker non-votes will,
however, be treated as shares present for purposes of determining whether a
quorum is present. The proposal to adopt the merger
agreement is a non-discretionary item, meaning that brokerage firms may not vote
shares in their discretion on behalf of a client if the client has not furnished
voting instructions. Because the merger must be approved by the holders of a
majority of the outstanding shares of FNB Newton common stock, abstentions and
broker non-votes will have the same effect as a vote against the merger at the
meeting. Accordingly, the FNB Newton board urges FNB Newton shareholders to
complete, date and sign the accompanying proxy and return it promptly in the
enclosed postage prepaid envelope. We do not expect that any matters
other than the proposal to approve the merger will be brought before the special
meeting. However, if other matters are properly presented for a vote, the
persons named as proxies will vote in accordance with their judgment with
respect to those matters. The persons named as proxies by an
FNB Newton shareholder may propose and vote for one or more adjournments of the
special meeting to permit further solicitations of proxies in favor of approval
of the merger. However, the persons named as proxies will not vote any shares
which are voted against the approval of the merger in favor of such an
adjournment. Revoking Proxies FNB Newton shareholders of record
may revoke their proxies at any time before the time their proxies are voted at
the special meeting. A shareholder may revoke a proxy by taking any of the
following actions: 14 Attendance at the special meeting
alone without voting or abstaining from the vote on the merger will not revoke a
proxy. Any written notice of a revocation of a proxy must be sent so that it
will be delivered to the Corporate Secretary of FNB Newton, at FNB Newton’s
principal executive offices, before the voting begins at the special meeting. Proxy Solicitation FNB Newton will pay the costs of
printing this document and all other costs of soliciting proxies. In addition to
solicitation by mail, the directors, officers and employees of FNB Newton may
solicit proxies from shareholders of FNB Newton by telephone or by other means
of communication. These directors, officers and employees will not be
additionally compensated but may be reimbursed for reasonable out-of-pocket
expenses in connection with the solicitation. FNB Newton will arrange with
brokerage firms and other custodians, nominees and fiduciaries for the
forwarding of solicitation material to the beneficial owners of stock held of
record by such persons, and FNB Newton will reimburse these record holders for
their reasonable out-of-pocket expenses. Recommendation of the FNB Newton Board The FNB Newton board has
unanimously adopted the merger agreement and believes that the proposed
transaction is fair to and in the best interests of FNB Newton and its
shareholders. The FNB Newton board unanimously recommends that FNB Newton
shareholders vote “FOR” approval of the merger. THE MERGER The following is a description of
the material information pertaining to the merger. This description is qualified
in its entirety by reference to the full text of the merger agreement, a copy of
which is attached as Appendix “A” to this document and is incorporated
by reference. All shareholders are urged to read carefully the merger agreement,
as well as the other appendices, in their entirety. The boards of directors of Synovus
and FNB Newton have approved, and the proper officers of Synovus and FNB Newton
have executed and delivered, the merger agreement. Terms of the Merger On the effective date of the
merger, which will be specified in the Articles of Merger to be filed with the
Georgia Secretary of State, each issued and outstanding share of FNB Newton
common stock will be converted into the right to receive $85.1536 in cash and
approximately 4.1353 shares of Synovus common stock. You should obtain current stock
price quotations for Synovus common stock. The market price of Synovus common
stock will fluctuate before and after completion of the merger. You will not
know when you vote on the merger precisely what the shares of Synovus common
stock will be worth when issued in the merger. After the effective date of the
merger, outstanding certificates representing shares of FNB Newton common stock
will represent shares of Synovus common stock and cash. Certificates
representing shares of FNB Newton common stock may be surrendered to Synovus by
the FNB Newton shareholders on or after the effective date of the merger for new
certificates representing shares of Synovus common stock and cash. Until so
surrendered to Synovus, the certificates which previously represented shares of
FNB Newton common stock will be deemed for all corporate purposes to evidence
the ownership of the respective number of shares of Synovus common stock and
cash which the holders are entitled to receive upon their surrender to Synovus
except for the payment of dividends, which is subject to the exchange of stock
certificates. Until the stock certificates
nominally representing shares of FNB Newton common stock are surrendered to
Synovus in exchange for certificates representing shares of Synovus common stock
and cash, no dividends payable as of any date after the effective date of the
merger on the shares of Synovus common stock represented by the FNB Newton
common stock certificates will be paid. However, Forms 1099 reporting the
payment of such dividends will be filed with the Internal Revenue Service and
mailed to each shareholder. Upon the surrender to Synovus of the FNB Newton
common stock certificates, Synovus will pay to the record holders the amount of
dividends which 15 previously had become payable, without interest, upon the shares
of Synovus common stock represented by the outstanding FNB Newton common stock
certificates. Synovus will not issue fractional
shares of Synovus common stock in the merger. Instead, Synovus will pay cash,
without interest, in lieu of fractional shares, in an amount equal to such
fractional part of a share of Synovus common stock multiplied by the closing
price per share of Synovus common stock on the last business day immediately
prior to the effective date of the merger. The delivery of Synovus stock
certificates and other amounts may be subject to forfeiture under applicable
escheat laws if FNB Newton stock certificates are not surrendered for exchange
within the legally specified periods of time, which vary with the state of
residence of the certificate holder. Therefore, we urge all FNB Newton
shareholders to surrender their FNB Newton stock certificates at the earliest
possible date after consummation of the merger in accordance with instructions
provided to you by Synovus in the letter of transmittal described in the
following paragraph. As soon as practicable following
consummation of the merger, Synovus will send each shareholder of FNB Newton
common stock a letter of transmittal explaining the procedure to be followed in
exchanging certificates representing shares of FNB Newton common stock for
certificates representing shares of Synovus common stock and cash. Until the
letter of transmittal is received, shareholders of FNB Newton should continue to
hold their certificates representing shares of FNB Newton common stock. Do not
send any FNB Newton stock certificates with your proxy card. After the effective date of the
merger, each outstanding FNB Newton stock option will be converted into an
option to acquire shares of Synovus common stock. The exercise price of the
converted options shall be equal to the exercise price per share of the FNB
Newton common stock under the original option divided by 8.4578, unless adjusted
pursuant to the merger agreement. The number of shares subject to the converted
options shall be equal to the product of the number of shares of FNB Newton
common stock subject to the original option multiplied by 8.4578, unless
adjusted pursuant to the merger agreement. Background of the Merger The board of directors of FNB
Newton has, over time, considered the possibility of strategic combinations with
a number of other financial institutions in assessing the means by which to
maximize the value of FNB Newton stock to its shareholders. The factors which
the board of directors of FNB Newton have taken into account in evaluating
potential combinations have included, but were not limited to, financial terms
of proposed mergers, trading volume of shares of potential acquirors, employee
and credit cultures, as well as the comparability of business lines and
geographic locations. As part of its ongoing operations, management and the
board of directors of FNB Newton regularly assess the financial services
industry as a whole, including the regulatory and competitive environments for
banking services. In March 2002, FNB Newton
engaged Brown, Burke Capital Partners, L.L.C. (now known as Burke Capital Group,
L.L.C.) to explore its strategic options, including potential merger partners.
Pursuant to this engagement, in July 2002, Burke Capital contacted a number of
financial institutions, including Synovus, regarding their interest in FNB
Newton and the banking market in Newton, Henry and Rockdale Counties.
Indications of interest were received from several financial institutions, and
were analyzed and considered by management and the board of directors of FNB
Newton with the assistance of its financial and legal advisors. On August 12, 2002 the FNB Newton
board held a special meeting to consider the initial bids submitted by potential
acquirors. At this meeting, the board of directors authorized Burke Capital to
invite certain potential acquirors, including Synovus, to conduct due diligence
at FNB Newton. During the first week of September
2002, Synovus conducted preliminary due diligence of FNB Newton. On September
17, 2002, the board of directors of FNB Newton authorized management to pursue
discussions with Synovus. On September 20, 2002, Synovus and FNB Newton executed
a letter of intent with respect to a potential transaction. During the
following weeks, management of the two companies and their respective legal and
financial advisors negotiated the terms of a proposed merger agreement under
which FNB Newton would merge with and into 16 Synovus. During this time period, FNB
Newton conducted due diligence with respect to Synovus, and Synovus concluded
its due diligence with respect to FNB Newton. On October 31, 2002, the board of
directors of FNB Newton held a special meeting to consider the proposed merger
with Synovus. Burke Capital summarized certain financial information with
respect to Synovus and the proposed transaction for the FNB Newton board and
rendered an opinion that, as of October 31, 2002, the terms of the merger as
set forth in the proposed merger agreement were fair to the FNB Newton
shareholders from a financial point of view. Also at this meeting, Powell,
Goldstein, Frazer & Murphy LLP, FNB Newton’s outside legal counsel,
reviewed with the board of directors the terms of the merger and the definitive
agreement documenting the proposed transaction. After questions by and
discussions among the members of the FNB Newton board of directors, and after
consideration of the factors described under “FNB Newton’s Reasons For
the Merger; Recommendation of the FNB Newton Board of Directors,” the FNB
Newton board voted unanimously to approve the merger agreement and the
transactions contemplated thereby and to recommend the approval of the merger
agreement and the transactions contemplated by the merger agreement to the FNB
Newton shareholders. Following the conclusion of the meeting, Synovus and FNB
Newton executed and delivered the merger agreement. Recommendation of FNB Newton Board and Reasons for the Merger On October 31, 2002, the board of
directors of FNB Newton unanimously approved and adopted the merger agreement.
The board of directors of FNB Newton believes that the merger and the terms and
provisions of the merger agreement are fair to and in the best interests of FNB
Newton shareholders. The board of directors of FNB Newton unanimously recommends
that you vote to approve the merger. In reaching its decision to adopt
and recommend approval of the merger agreement, the FNB Newton board considered
a number of factors, including the following: 17 The foregoing discussion of the
information and factors considered by the FNB Newton board is not intended to be
exhaustive, but includes the material factors considered. In view of the variety
of factors considered in connection with its evaluation of the merger and the
offer price, the FNB Newton board did not find it practicable to, and did not,
quantify or otherwise assign relative weights to the specific factors considered
in reaching its determinations and recommendations, and individual directors may
have given differing weights to different factors. Each member of the board of
directors of FNB Newton has indicated that he or she intends to vote his or her
shares of FNB Newton common stock in favor of the merger. FNB NEWTON’S BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT FNB NEWTON’S SHAREHOLDERS VOTE FOR
THE PROPOSAL TO APPROVE THE MERGER AGREEMENT. Management of Synovus believes
that the merger will provide Synovus with expanded market share opportunities
for profitable long-term growth and result in the addition of a well-suited and
positioned banking organization into Synovus’ existing organization. Opinion of FNB Newton’s Financial Advisor Brown, Burke Capital Partners,
L.L.C. (now known as Burke Capital Group, L.L.C.) acted as financial advisor to
FNB Newton in connection with the proposed merger with Synovus and participated
in certain of the negotiations leading to the merger agreement. At the October
31, 2002 meeting at which the board considered and approved the amended merger
agreement, Burke Capital delivered to the board its oral opinion, subsequently
confirmed in writing, that, as of such date, the merger consideration was fair
to FNB Newton shareholders from a financial point of view. The full text of
Burke Capital’s written opinion is attached as Appendix “C” to
this proxy statement/prospectus. The opinion outlines matters considered and
qualifications and limitations on the review undertaken by Burke Capital in
rendering its opinion. The description of the opinion set forth below is
qualified in its entirety by reference to the opinion. We urge you to read the
entire opinion carefully in connection with your consideration of the proposed
merger. Burke Capital’s opinion
speaks only as of the date of the opinion. The opinion was directed to the FNB
Newton board and is directed only to the fairness of the merger consideration to
FNB Newton shareholders from a financial point of view. It does not address the
underlying business decision of FNB Newton to engage in the merger or any other
aspect of the merger and is not a recommendation to any FNB Newton shareholder
as to how such shareholder should vote at the special meeting with respect to
the merger, or any other matter. In connection with rendering its
October 31, 2002 opinion, Burke Capital reviewed and considered, among other
things: 18 FNB NEWTON’S BOARD OF DIRECTORS DID NOT LIMIT THE
INVESTIGATIONS MADE OR THE PROCEDURES FOLLOWED BY BURKE CAPITAL IN GIVING ITS
OPINION. In performing its reviews and
analyses and in rendering its opinion, Burke Capital assumed and relied upon the
accuracy and completeness of all the financial information, analyses and other
information that was publicly available or otherwise furnished to, reviewed by
or discussed with it and further relied on the assurances of management of FNB
Newton and Synovus that they were not aware of any facts or circumstances that
would make such information inaccurate or misleading. Burke Capital was not
asked to and did not independently verify the accuracy or completeness of any of
such information and it did not assume any responsibility or liability for the
accuracy or completeness of any of such information. Burke Capital did not make
an independent evaluation or appraisal of the assets, the collateral securing
assets or the liabilities, contingent or otherwise, of FNB Newton or Synovus or
any of their respective subsidiaries, or the ability to collect any such assets,
nor was it furnished with any such evaluations or appraisals. Burke Capital is
not an expert in the evaluation of allowances for loan losses and it did not
make an independent evaluation of the adequacy of the allowance for loan losses
of FNB Newton or Synovus, nor did it review any individual credit files relating
to FNB Newton or Synovus. With FNB Newton’s consent, Burke Capital assumed
that the respective allowances for loan losses for both FNB Newton and Synovus
were adequate to cover such losses and will be adequate on a pro forma basis for
the combined entity. In addition, Burke Capital did not conduct any physical
inspection of the properties or facilities of FNB Newton or Synovus. Burke
Capital is not an accounting firm and it relied on the reports of the
independent accountants of FNB Newton and Synovus for the accuracy and
completeness of the audited financial statements furnished to it. Burke Capital’s opinion was
necessarily based upon market, economic and other conditions as they existed on,
and could be evaluated as of, the date of its opinion. Burke Capital assumed, in
all respects material to its analysis, that all of the representations and
warranties contained in the merger agreement and all related agreements are true
and correct, that each party to such agreements will perform all of the
covenants required to be performed by such party under such agreements and that
the conditions precedent in the merger agreement are not waived. Burke Capital
also assumed that there has been no material change in FNB Newton’s and
Synovus’ assets, financial condition, results of operations, business or
prospects since the date of the last financial statements made available to
19 them, that FNB Newton and Synovus will remain as going concerns for all periods
relevant to its analyses, and that the merger will qualify as a tax-free
reorganization for federal income tax purposes. In rendering its October 31, 2002
opinion, Burke Capital performed a variety of financial analyses. The following
is a summary of the material analyses performed by Burke Capital, but is not a
complete description of all the analyses underlying Burke Capital’s
opinion. The summary includes information presented in tabular format. In order
to fully understand the financial analyses, these tables must be read together
with the accompanying text. The tables alone do not constitute a complete
description of the financial analyses. The preparation of a fairness opinion is
a complex process involving subjective judgments as to the most appropriate and
relevant methods of financial analysis and the application of those methods to
the particular circumstances. The process, therefore, is not necessarily
susceptible to a partial analysis or summary description. Burke Capital believes
that its analyses must be considered as a whole and that selecting portions of
the factors and analyses considered without considering all factors and
analyses, or attempting to ascribe relative weights to some or all such factors
and analyses, could create an incomplete view of the evaluation process
underlying its opinion. Also, no company included in Burke Capital’s
comparative analyses described below is identical to FNB Newton or Synovus and
no transaction is identical to the merger. Accordingly, an analysis of
comparable companies or transactions involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the companies and other factors that could affect the public trading values or
merger transaction values, as the case may be, of FNB Newton or Synovus and the
companies to which they are being compared. The earnings projections used and
relied upon by Burke Capital in its analyses were based upon internal
projections of FNB Newton and I/B/E/S estimated earnings per share for Synovus.
With respect to all such financial projections and estimates and all projections
of transaction costs, purchase accounting adjustments and expected cost savings
relating to the merger, FNB Newton’s management confirmed to Burke Capital
that they reflected the best currently available estimates and judgments of such
managements of the future financial performance of FNB Newton, and Burke Capital
assumed for purposes of its analyses that such performance would be achieved.
Burke Capital expressed no opinion as to such financial projections or the
assumptions on which they were based. The financial projections furnished to
Burke Capital by FNB Newton were prepared for internal purposes only and not
with a view towards public disclosure. These projections, as well as the other
estimates used by Burke Capital in its analyses, were based on numerous
variables and assumptions which are inherently uncertain and, accordingly,
actual results could vary materially from those set forth in such projections. In performing its analyses, Burke
Capital also made numerous assumptions with respect to industry performance,
business and economic conditions and various other matters, many of which cannot
be predicted and are beyond the control of FNB Newton, Synovus and Burke
Capital. The analyses performed by Burke Capital are not necessarily indicative
of actual values or future results, which may be significantly more or less
favorable than suggested by such analyses. Burke Capital prepared its analyses
solely for purposes of rendering its opinion and provided such analyses to the
FNB Newton board at the October 31st meeting. Estimates on the values of
companies do not purport to be appraisals or necessarily reflect the prices at
which companies or their securities may actually be sold. Such estimates are
inherently subject to uncertainty and actual values may be materially different.
Accordingly, Burke Capital’s analyses do not necessarily reflect the value
of FNB Newton’s common stock or Synovus’ common stock or the prices at
which FNB Newton’s or Synovus’ common stock may be sold at any time. SUMMARY OF PROPOSAL. Burke
Capital reviewed the financial terms of the proposed transaction. Based upon the
closing price of Synovus’ common stock on October 30, 2002 of $20.25, Burke
Capital calculated an implied transaction value of $168.92 per share and based
upon FNB Newton’s September 30, 2002 financial information, Burke Capital
calculated the following ratios: 20 Deal Value Calculations: Deal Multiples: SNV Closing Price (October 30, 2002) $ 20.25 Transaction Value / LTM Net Income 20.7x Shares Issued 2,403,276 Transaction Value / Book Value 2.70x Value of Share Consideration $ 48,666,339 Transaction Value / Tangible Book Value 2.70x Value of Cash Consideration $ 46,407,022 Core Deposit Premium 11.2% Deal Value $ 95,073,361 Deal Value per Share $ 168.92 The aggregate transaction value
was approximately $95.1 million, based upon approximately 563 thousand fully
diluted shares of FNB Newton common stock outstanding, which was determined
using the treasury stock method at the implied per share transaction value. For
purposes of Burke Capital’s analyses, earnings per share were based on
fully diluted earnings per share. STOCK TRADING HISTORY.
Burke Capital reviewed the history of reported prices of Synovus’ common
stock and the Standard & Poor’s 500 Index (“S&P 500”) on
a five year, 10 year, and 20 year basis. Synovus outperformed the S&P 500 on
each of the periods to which it was compared. Burke Capital also reviewed the
trading characteristics of Synovus’ stock. The average daily trading volume
was approximately 845 thousand shares over the three month period ended October
30, 2002. COMPARABLE COMPANY
ANALYSIS. Burke Capital used publicly available information to compare
selected financial information for FNB Newton and a group of selected financial
institutions. The group consisted of FNB Newton and 13 commercial banks, which
it refers to as the “FNB Newton Peer Group.” The FNB Newton Peer Group
consisted of commercial banks located in the southeast which had a return on
average assets (based on the most recent quarter’s earnings) greater than
1.25%, price to tangible equity of 200% and assets between $100 million and $1
billion. The FNB Newton Peer Group was comprised of the following institutions: 1. American National Bankshares 6. Bank of Kentucky Finl Corp. 10. Bank of the Ozarks Inc. 2. Calvin B. Taylor Bankshares 7. Community Bank of N. Virginia 11. Fauquier Bankshares Inc. 3. Franklin Financial Corp. 8. Greer Bancshares Inc. 12. Middleburg Financial Corp. 4. SNB Bancshares Inc. 9. Southern Financial Bancorp 13. Virginia Commerce Bancorp Inc. 5. WGNB Corporation The analysis compared publicly
available financial information for FNB Newton and the median data for the FNB
Newton Peer Group as of and for each of the years ended December 31, 1996
through 2001. The table below sets forth the comparative data as of and for the
period ended September 30, 2002, with pricing data as of October 30, 2002. 21 Company FNB Newton Bankshares, FNB Newton Total Assets $ 339,614 $ 553,673 Tangible Equity / Total Assets 10.38% 7.89% Intangible Assets / Total Equity 0.00% 0.52% Gross Loans / Total Deposits 92.8% 83.0% Total Borrowings / Total Assets 3.24% 8.71% Non-Performing Assets / Total Assets 0.17% 0.35% Loan Loss Reserve / Gross Loans 1.23% 1.19% Net Interest Margin 5.14% 4.43% Non - Interest Income / Average Assets 1.41% 1.23% Non - Interest Expense / Average Assets 3.46% 2.83% Efficiency Ratio 55.9% 53.3% 3 Year Earnings CAGR 4.2% 20.1% Return on Average Assets 1.72% 1.56% Return on Average Equity 16.97% 16.65% Price / Tangible Book Value per Share NA 1.85x Price / LTM E.P.S. NA 12.7x Dividend Yield NA 1.58% Dividend Payout Ratio 8.10% 18.9% Burke Capital also used publicly
available information to perform a similar comparison of selected financial and
market trading information for Synovus and a group of comparable commercial
banks. It consisted of Synovus and the following twelve publicly traded regional
commercial banks (which it refers to in its discussion as the “Synovus Peer
Group”): 1. AmSouth Bancorp. 5. BB&T Corp. 9. Compass Bancshares Inc. 2. Colonial BancGroup Inc. 6. First Tennessee National Corp. 10. First Virginia Banks, Inc. 3. Hibernia Corp. 7. Regions Financial Corp. 11. SouthTrust Corp. 4. SunTrust Banks Inc. 8. Union Planters Corp. 12. Wachovia Corp. The analysis compared publicly
available financial information for Synovus and the median data for each of the
Synovus Peer Group as of and for each of the years ended December 31, 1996
through 2001. The table below sets forth the comparative data as of and for the
period ended September 30, 2002, with pricing data as of October 30, 2002. 22 Company Synovus Synovus Peer Total Assets $18,510,215 $36,429,231 Tangible Equity / Total Assets 9.93% 7.06% Intangible Assets / Total Equity 6.22% 16.60% Gross Loans / Total Deposits 104.8% 105.7% Total Borrowings / Total Assets 13.01% 21.27% Non-Performing Assets / Total Assets 0.45% 0.51% Loan Loss Reserve / Gross Loans 1.36% 1.39% Net Interest Margin 4.62% 4.28% Non - Interest Income / Average Assets 7.01% 1.97% Non - Interest Expense / Average Assets 7.53% 3.16% Efficiency Ratio 67.7% 57.3% 3 Year E.P.S. CAGR 22.8% 15.1% Return on Average Assets 2.07% 1.36% Return on Average Equity 19.18% 15.15% Price / Tangible Book Value per Share 3.30x 2.46x Price / LTM E.P.S. 17.3x 13.7x Dividend Yield 2.91% 3.01% Dividend Payout Ratio 47.6% 41.2% ANALYSIS OF SELECTED MERGER
TRANSACTIONS. Burke Capital reviewed other comparable recent (announced in
preceding 12 months) transactions involving publicly traded commercial banks as
acquired institutions with transaction values between $100 million and $1
billion and a return on average assets greater than 1.00%. 46 transactions
fitting these criteria were announced nationwide. Burke Capital reviewed the
multiples of transaction value at announcement to last twelve months’
earnings, transaction value to book value, transaction value to tangible book
value, tangible book premium to core deposits, and transaction value to total
assets and computed high, low, mean, median, and quartile multiples and premiums
for the transactions. These multiples and premiums were applied to FNB
Newton’s financial information as of and for the period ended September 30,
2002 and compared it to the implied transaction. As illustrated in the following
table, Burke Capital derived an imputed range of values per share of FNB
Newton’s common stock of $122.15 to $151.30 based upon the median multiples
for nationwide transactions. The median valuations as implied by the application
of the median and mean multiples were $141.40 and $147.33, respectively. The
implied transaction value of the merger as calculated by Burke Capital was
$168.92. Median Implied Implied Mean FNB Transaction Value / LTM E.P.S. 17.5x $ 143.26 18.5x $ 151.30 20.7x Transaction Value / Book Value 2.25x $ 141.40 2.35x $ 147.33 2.70x Transaction Value / Tangible Book Value 2.29x $ 144.20 2.38x $ 149.72 2.70x Tangible Book Premium / Core Deposits (1) 17.3% $ 138.39 17.5% $ 139.44 24.4% Transaction Value / Total Assets 20.1% $ 122.15 21.0% $ 127.62 28.0% Median $ 141.40 $ 147.33 $ 168.92 Mean $ 137.88 $ 143.08 Implied Range $ 122.15<=> $ 144.20 $ 127.62 <=> $ 151.30 23 (1) Assumes $244,905 thousand of core deposits based on the June
30, 2002 core deposit percentage. Burke Capital also ranked the
implied transaction in relation to the 46 comparable deals on a transaction
value to book value basis, a transaction value to last twelve months earnings
basis, and a tangible book premium to core deposits basis. The implied
transaction value ranked tenth, twelfth and ninth, respectively. DISCOUNTED DIVIDEND STREAM AND
TERMINAL VALUE ANALYSIS. Burke Capital performed a discounted earnings
analysis with regard to FNB Newton on a stand alone basis. This analysis
utilized a range of discount rates of 16.0% to 20.0% and a set of terminal
multiples to earnings and book of 17.5x and 2.25x, respectively, derived from
the median multiples paid in the selected merger transactions. The analysis
resulted in a range of present values of $122.97 per share to $142.45 per share
for FNB Newton. The implied transaction value of the merger as calculated by
Burke Capital was $168.92. As indicated above, this analysis was based on
estimates and is not necessarily indicative of actual values or actual future
results and does not purport to reflect the prices at which any securities may
trade at the present or at any time in the future. Burke Capital noted that the
discounted earnings analysis was included because it is a widely used valuation
methodology, but noted that the results of such methodology are highly dependent
upon the numerous assumptions that must be made, including earnings growth
rates, discount rates, and terminal values. PRO FORMA MERGER ANALYSIS.
Burke Capital analyzed certain potential pro forma effects of the merger, based
upon (1) the assumption that each share of the FNB Newton common stock is
exchanged for (i.) cash at a value of $85.1536 per share (which totals an
aggregate of $46,407,022), and (ii.) Synovus common stock at an exchange ratio
of 4.1353 (which totals in aggregate 2,253,666 shares), (2) the earnings per
share estimates and projections of FNB Newton and Synovus, and (3) assumptions
regarding the economic environment, accounting and tax treatment of the merger,
charges and transaction costs associated with the merger and cost savings
determined by the senior managements of FNB Newton and Synovus. The analysis
indicated that for the year ending December 31, 2003, the merger would be
slightly accretive to the combined company’s projected earnings per share
and dilutive to tangible book value per share. The actual results achieved by
the combined company may vary from projected results and the variations may be
material. Conditions to the Merger Each party’s obligation to
effect the merger is subject to the satisfaction or waiver of conditions which
include, in addition to other closing conditions, the following: 24 The obligation of Synovus to
effect the merger is subject to the satisfaction or waiver of conditions, which
include, in addition to the other closing conditions, the following: The obligation of FNB Newton to
effect the merger is subject to the satisfaction or waiver of conditions, which
include, in addition to other closing conditions, the following; 25 No Solicitation In the merger agreement, FNB
Newton has agreed that it will not solicit or encourage any inquiry or proposal
relating to the merger or consolidation of FNB Newton with any entity or the
acquisition of all or a significant portion of its assets or properties or
equity securities by any person or entity, and that, subject to the fiduciary
duties of the board of directors of FNB Newton, it will not negotiate with
respect to any such transaction, nor reach any agreement or understanding with
respect thereto. FNB Newton has also agreed that it will promptly notify Synovus
in the event it receives any inquiry or proposal relating to any such
transaction. These provisions are intended to increase the likelihood that the
merger will be consummated in accordance with the terms of the merger agreement
and may have the effect of discouraging persons who might now or prior to the
effective date of the merger be interested in acquiring all of or a significant
interest in FNB Newton from considering or proposing such an acquisition. Conduct of Business of FNB Newton Pending the Merger The merger agreement provides that
prior to the effective date of the merger, FNB Newton and its subsidiary will
conduct business only in the ordinary course and will not, without the prior
written consent of Synovus: 26 Regulatory Approvals Consummation of the merger and the
other transactions contemplated by the merger agreement is subject to, and
conditioned upon, receipt of the approvals from the Federal Reserve Board and
the Georgia Department of Banking and Finance. Applications in connection with
the merger were filed with the regulatory agencies on or about November 19,
2002. The merger has been approved by both the Federal Reserve Board and the Georgia
Department of Banking and Finance. The U.S. Attorney General has shortened
the period that the merger cannot be consummated from 30 to 15 days
after its approval by the
Federal Reserve Board. During this period, the United States Justice Department
may challenge the merger on antitrust grounds. There can be no assurance that the
regulatory agencies will approve or take other required action with respect to
the merger. Synovus and FNB Newton are not aware of any governmental approvals
or actions that are required in order to consummate the merger except as
described above. Should other approvals or actions be required, it is
contemplated that Synovus and FNB Newton would seek the approval or action.
There can be no assurance as to whether or when any other approval or action, if
required, could be obtained. Waiver and Amendment Before the effective date of the
merger, any provision of the merger agreement may be waived in writing by the
party entitled to the benefits of such provision or by both parties, to the
extent allowed by law. In addition, the merger agreement may be amended at any
time, to the extent allowed by law, by an agreement in writing between the
parties after approval of their respective boards of directors. Termination and Termination Fee The merger agreement may be
terminated prior to the effective date either before or after its approval by
the shareholders of FNB Newton. The merger agreement may be terminated by
Synovus or FNB Newton: In addition, the merger agreement
may be terminated by FNB Newton if, during the five (5) business days
immediately prior to the effective date of the merger, the total cash
consideration paid by Synovus is greater than fifty-five (55%) of the sum of
such total cash consideration plus the total stock consideration such that
Powell, Goldstein, Frazer & Murphy LLP cannot issue a tax opinion in which
it opines that the merger shall qualify for a tax-free exchange pursuant to the
applicable section of the Internal Revenue Code. If either party terminates the
merger agreement due to the failure of the other party to satisfy its
representations, warranties or covenants in the agreement, the terminating party
will be entitled to a cash payment from the other party in the amount of the
terminating party’s expenses related to the merger, up to a maximum of
$150,000. 27 Interests of FNB Newton's Directors and Officers in the Merger Some members of the FNB Newton
board of directors and management have interests in the merger in addition to
their interests generally as shareholders of FNB Newton. The FNB Newton board of
directors was aware of these interests and considered them, in addition to other
matters, in approving the merger agreement. Existing Employment
Agreements. Stephen C. Wood, Chairman and President of FNB
Newton, and Thomas R. Kephart, Chief Financial Officer of FNB Newton, both have
existing employment agreements which contain change of control provisions that
would be triggered by the merger. As such, if the merger is completed as
contemplated, Messrs. Wood and Kephart would each receive a change of control
payment equal to his total compensation for the immediately preceding twelve
month period. Executive Special Bonus
Payments. FNB Newton is a party to an Executive Special Bonus
Agreement with Stephen C. Wood and Thomas R. Kephart, respectively. These
agreements provide for several revenue-based bonuses, as well as the payment of
bonuses to Messrs. Wood and Kephart in the amounts of $50,000 and $25,000,
respectively, in the event a sale of FNB Newton is closed and consummated on or
before April 1, 2003. In addition, these agreements provide that Messrs. Wood
and Kephart will be paid $10,000 and $5,000, respectively, for each full
$1,000,000 amount by which the total value of the sale of FNB Newton exceeds
$90,000,000. As of January 6, 2003, such bonus amounts payable to Messrs.
Wood and Kephart would be approximately $80,000 and $40,000, respectively. Phantom Stock
Plan. FNB Newton is a party to Phantom Stock Agreements with both
Stephen C. Wood and Thomas R. Kephart. Under these agreements, FNB Newton
granted Messrs. Wood and Kephart, phantom stock units which represent
eligibility, subject to a vesting schedule, to receive a cash benefit amount
calculated using a formula defined in the stock plan that takes into account the
increase in book value from the prior fiscal year. These agreements also provide
that participants become 100% vested upon a change of control, and that FNB
Newton has the right to prepay all benefit amounts, in the sole discretion of
FNB Newton. As of the effective date of the merger agreement, the total amounts
payable to Messrs. Wood and Kephart were $15,105.94 and $3,470.19, respectively. Anticipated Employment
Agreements. It is a condition to the merger that Stephen C. Wood
enter into an employment agreement with Synovus before the effective date of the
merger. The proposed employment agreement is for a three-year term with a base
salary equal to that under Mr. Wood’s existing employment agreement and
provides for the election of Mr. Wood as President of First Nation Bank. Mr.
Wood will be granted options to purchase 10,000 shares of common stock of
Synovus at fair market value in connection with the employment agreement. The
proposed employment agreement also provides that should Mr. Wood leave the
employment of Synovus during the three-year term, he shall repay a pro rata
portion of the change of control payment he will receive pursuant to his
existing employment agreement which is referenced in the immediately preceding
section. As part of the employment agreement, Synovus has also agreed to enter
into its standard change of control agreement with Mr. Wood. The agreement
provides severance pay and continuation of certain benefits in the event of a
change of control of Synovus. In order to receive benefits under the agreement,
the executive’s employment must be terminated involuntarily and without
cause, whether actually or constructively, within one year following a change of
control or the executive may voluntarily or involuntarily terminate employment
during the thirteenth month following a change of control. Synovus has also proposed to enter
into an employment agreement with Thomas R. Kephart as Chief Financial Officer
of First Nation Bank for a three-year term with a base salary equal to that of
Mr. Kephart under Mr. Kephart’s existing employment agreement. The
employment agreement would also provide that should Mr. Kephart leave the
employment of Synovus during the three-year term, he shall repay a pro rata
portion of the change of control payment he will receive pursuant to his
existing employment agreement which is referenced in the immediately preceding
section. FNB Newton Stock
Options. FNB Newton has granted stock options from time to time to some
directors, executive officers, key employees, and consultants
(“Optionees”). As of the date of this document, there are outstanding
options to purchase an aggregate of 29,500 shares of FNB Newton common stock
that have been granted to the Optionees. Upon completion of the merger, each
option granted by FNB Newton will be assumed by 28 Synovus and converted
automatically into an option to purchase shares of Synovus common stock. The
number of Synovus shares to be subject to each new option and the exercise price
per share of Synovus common stock under the new option are defined in the merger
agreement. All of the outstanding FNB Newton stock options which are not
otherwise fully exercisable prior to the merger will become immediately
exercisable upon completion of the merger. The following table sets forth, as of
the date of this document, with respect to each Optionee of FNB Newton (a) the
number of shares of FNB Newton common stock subject to options held by such
person, and (b) the number of shares as to which such options will become
exercisable upon completion of the merger. Name Title or Position Shares Subject to FNB Shares as to Steve Wood Chairman of FNB Newton and President of First Nation Bank 10,000 10,000 Darryl Pittard Consultant 10,000
10,000
Thomas Kephart Secretary of FNB Newton and Chief Financial Officer of First Nation Bank 4,500 4,500 Karen Watson Executive Vice President of First Nation Bank 2,000 2,000 Bill Loftin Chief Credit Officer 1,000 1,000 Fred Vick Executive Vice President of First Nation Bank 1,000 1,000 Bill Lankford Member, FNB Newton Board of Directors 1,000 1,000 29,500 29,500 Employee Benefits Synovus has agreed in the merger
agreement that, following the effective date of the merger, Synovus will provide
to employees of FNB Newton employee benefits, including without limitation
pension benefits, health and welfare benefits, life insurance and vacation and
severance arrangements, on terms and conditions that are substantially similar
to those currently provided by FNB Newton and its subsidiary. As soon as
administratively and financially practicable following the effective date of the
merger, Synovus has agreed to provide generally to employees of FNB Newton and
its subsidiary employee benefits which are substantially similar to those
provided by Synovus and its subsidiaries to their similarly situated employees. Material United States Federal Income Tax Consequences of
the Merger The following is a general summary
of the material United States federal income tax consequences of the merger to
Synovus, FNB Newton, and FNB Newton shareholders who hold FNB Newton common
stock as capital assets, assuming that the merger is effected as described in
the merger agreement and this Joint Proxy Statement/Prospectus. This summary is
based on currently existing provisions of the Internal Revenue Code of 1986, as
amended (hereafter referred to as the “Code”), existing Treasury
Regulations thereunder and current 29 administrative rulings and court decisions,
all of which are subject to change, possibly with retroactive effect. This
summary does not address the tax consequences of the merger under foreign, state
or local tax laws or the tax consequences of transactions effectuated prior or
subsequent to or concurrently with the merger (whether or not such transactions
are in connection with the merger), including, without limitation, transactions
in which FNB Newton common stock is acquired or Synovus common stock is disposed
of in such prior or subsequent transactions. The following summary does not
address all U.S. federal income tax considerations that may be relevant to
particular FNB Newton shareholders in light of their particular circumstances.
This summary does not address the U.S. federal income tax considerations
applicable to certain classes of FNB Newton shareholders, including: ACCORDINGLY, FNB NEWTON
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX
CONSEQUENCES OF THE MERGER, INCLUDING THE APPLICABLE FEDERAL, STATE, LOCAL AND
FOREIGN TAX CONSEQUENCES TO THEM OF THE MERGER IN THEIR PARTICULAR
CIRCUMSTANCES. Consummation of the merger is
conditioned upon the receipt by the boards of directors of FNB Newton and
Synovus of an opinion of tax counsel, dated the date of the merger, in form and
substance reasonably satisfactory to such Boards, respectively, that the merger
will be treated as a “reorganization” within the meaning of Section
368(a) of the Code. The opinion will rely on certain facts, assumptions, and
representations set forth or referred to in the opinions, including
representations contained in officers’ certificates of FNB Newton, Synovus,
and others. Assuming that the merger is
transacted in accordance with the opinion of counsel described above, tax
counsel has advised the boards of directors of FNB Newton and Synovus that the
material United States federal income tax consequences of the merger to FNB
Newton, Synovus, and the shareholders of FNB Newton common stock will be as
follows: 30 Under Section 302 of the Code, the
gain recognized by an FNB Newton shareholder in connection with the merger will
be considered capital gain if one of the following tests is met after the
merger: These three tests are applied by
taking into account not only Synovus common stock that a former FNB Newton
shareholder actually owns after the merger, but also Synovus common stock that
such FNB Newton shareholder constructively owns pursuant to Section 318 of the
Code, as described below. 31 Under the constructive ownership
rules of Section 318 of the Code, a shareholder is deemed to constructively own
shares owned by certain related individuals and entities in addition to shares
directly owned by the shareholder. For example, an individual shareholder is
considered to own shares owned by or for his or her spouse, and his or her
children, grandchildren, and parents (“family attribution”). In
addition, a shareholder is considered to own a proportionate number of shares
owned by estates or certain trusts in which the shareholder has a beneficial
interest, by partnerships in which the shareholder is a partner, and by
corporations in which 50% or more in value of the stock is owned directly or
indirectly by or for such shareholder. Similarly, shares directly or indirectly
owned by beneficiaries of estates of certain trusts, by partners of partnerships
and, under certain circumstances, by shareholders of corporations may be
considered owned by these entities (“entity attribution”). A
shareholder is also deemed to own shares that the shareholder has the right to
acquire by exercise of an option. In general, a “complete
termination” will be deemed to have occurred with respect to a former FNB
Newton shareholder if such FNB Newton shareholder does not own actually or
constructively own any shares of Synovus common stock immediately after the
merger. However, a shareholder may qualify for gain or loss treatment under the
“complete termination” requirements even though such shareholder
constructively owns shares of Synovus common stock provided that (1) the former
FNB Newton shareholder constructively owns shares of Synovus common stock only
as a result of the family attribution rules (or, in some cases, as a result of a
combination of the family and entity attribution rules), and (2) the former FNB
Newton shareholder qualifies for and executes a waiver of the family attribution
rules (such waiver being subject to several conditions, one of which is that the
shareholder has no interest in Synovus immediately after the reverse stock
split, including an interest as an officer, director or employee, other than an
interest as a creditor). In general, the receipt of cash
pursuant to the merger stock split will be “substantially
disproportionate” with respect to a former FNB Newton shareholder if (i)
the percentage of Synovus common stock directly and constructively owned by such
former FNB Newton shareholder immediately after the merger is less than (ii) 80%
of the percentage of Synovus common stock that such FNB Newton shareholder would
have directly and constructively owned if the former FNB Newton shareholder had
received only Synovus common stock instead of both cash and Synovus common stock
in the merger (hypothetically assuming that only Synovus common stock was
offered as the merger consideration). In addition, any such former FNB Newton
shareholder cannot own 50% or more of the Synovus common stock immediately after
the reverse stock split. Alternatively, the receipt of cash pursuant to the
reverse stock split will, in general, be “not essentially equivalent to a
dividend” if the reverse stock split results in a “meaningful
reduction” in a former FNB Newton shareholder’s proportionate interest
in Synovus common stock as compared to the Synovus common stock such former FNB
Newton shareholder would have owned if the former FNB Newton shareholder had
received only Synovus common stock instead of both cash and Synovus common stock
in the merger (hypothetically assuming that only Synovus common stock was
offered as the merger consideration). It is anticipated that a former
FNB Newton shareholder who receives both cash and Synovus common stock in the
merger likely will meet both the “complete termination” and the
“substantially disproportionate” redemption requirements because his
or her ownership percentage of Synovus common stock probably will decrease by a
meaningful amount, in excess of 20%, as a result of the receipt of cash (in lieu
of the hypothetical issuance of additional shares of Synovus common stock as
substitute merger consideration). However, since the information regarding the
satisfaction of any of the three redemption requirements depends upon facts that
are personal as to each FNB Newton shareholder, each FNB Newton shareholder is
urged to discuss whether the FNB Newton shareholder will satisfy one of these
requirements with his or her own tax adviser. If none of the three redemption
requirements described above is satisfied, any gain recognized by a former FNB
Newton shareholder will be taxable as a dividend. Capital gain that is
recognized by a former FNB Newton shareholder as a result of the receipt of cash
in connection with the merger is taxed at maximum rate of 20% for U.S. federal
income tax purposes in the case of an individual taxpayer. Dividend income is
taxed as ordinary income at rates of up to 38.6% currently for U.S. federal
income tax purposes. State and local income taxes also may apply. Each FNB Newton shareholder that
receives Synovus common stock in the merger will be required to attach a
statement to such FNB Newton shareholder’s federal income tax return for
the year of the merger that describes the facts of the merger, including
information regarding such FNB Newton shareholder’s basis in the FNB 32 common stock exchanged, and the number of shares of Synovus common stock and
cash received in exchange for FNB Newton common stock. Each FNB Newton
shareholder should also keep as part of his permanent records information
necessary to establish such FNB Newton shareholder’s basis in, and holding
period for, the Synovus common stock received in the merger. No ruling has been or will be
obtained from the Internal Revenue Service in connection with the merger. FNB
Newton shareholders should be aware that the tax opinions described above do not
bind the Internal Revenue Service. The closing conditions regarding receipt of a
tax opinion may not be waived by the boards of directors of either FNB Newton or
Synovus and, accordingly, are irrevocable. THE PRECEDING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER AND DOES NOT
PURPORT TO BE A COMPLETE ANALYSIS OR DISCUSSION OF ALL POTENTIAL TAX EFFECTS
RELEVANT THERETO. THUS, FNB NEWTON SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN
TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER,
INCLUDING TAX RETURN REPORTING REQUIREMENTS, THE APPLICABILITY AND EFFECT OF
NON-U.S., FEDERAL, STATE, LOCAL, AND OTHER APPLICABLE TAX LAWS AND THE EFFECT OF
ANY PROPOSED CHANGES IN THE TAX LAWS. Accounting Treatment The merger will be accounted for
by Synovus as a purchase transaction in accordance with generally accepted
accounting principles in the United States of America. One effect of such
accounting treatment is that the earnings of FNB Newton will be combined with
the earnings of Synovus only from and after the effective date of the merger. Expenses The merger agreement provides that
Synovus and FNB Newton will each pay its own expenses in connection with the
merger and related transactions, including, but not limited to, the fees and
expenses of its own investment bankers, legal counsel and accountants. New York Stock Exchange Listing Synovus common stock is listed on
the NYSE. The shares of Synovus common stock to be issued to the shareholders of
FNB Newton in the merger will be listed on the NYSE. Resales of Synovus Common Stock The shares of Synovus common stock
issued pursuant to the merger agreement will be freely transferable under the
Securities Act of 1933, except for shares issued to any shareholder who may be
deemed to be an “affiliate” of FNB Newton for purposes of Rule 145
under the Securities Act as of the date of the FNB Newton special meeting.
Affiliates may not sell their shares of Synovus common stock acquired in
connection with the merger except pursuant to an effective registration
statement under the Securities Act covering the resale of such shares or in
compliance with Rule 145 promulgated under the Securities Act or another
applicable exemption from the registration requirements of the Securities Act.
Rule 145 imposes restrictions on the manner in which an affiliate may resell and
the quantity of any resale of any of the shares of Synovus common stock received
by the affiliate in the merger. Persons who may be deemed to be affiliates of
FNB Newton generally include individuals or entities that control, are
controlled by or are under common control with FNB Newton and may include
executive officers and directors of FNB Newton as well as principal shareholders
of FNB Newton. FNB Newton has agreed in the
merger agreement to use its best efforts to cause each director, executive
officer and other person who is an affiliate of FNB Newton to enter into an
agreement with Synovus providing that such person will not sell, pledge,
transfer or otherwise dispose of shares of FNB Newton common stock owned by such
person or Synovus common stock to be received by such person in the merger
except in compliance with Rule 145 or in a transaction exempt under the
Securities Act. This prospectus does not cover resales of Synovus common 33 stock
following consummation of the merger, and no person may make use of this
prospectus in connection with any such resale. DESCRIPTION OF STOCK AND EFFECT OF MERGER ON RIGHTS OF If the merger is completed, all
holders of FNB Newton common stock and options will become holders of shares of
Synovus common stock or holders of options for shares of Synovus common stock.
The rights of a holder of Synovus common stock are similar in some respects and
different in other respects from the rights of a holder of FNB Newton common
stock. The rights of FNB Newton shareholders are currently governed by the
Georgia Business Corporation Code and the Articles of Incorporation and bylaws
of FNB Newton. The rights of Synovus shareholders are currently governed by the
Georgia Business Corporation Code and the Articles of Incorporation and bylaws
of Synovus. The following discussion summarizes the material differences between
the current rights of FNB Newton shareholders and the rights they will have as
Synovus shareholders following the merger. The following comparison of
shareholders’ rights is necessarily a summary, is not intended to be
complete or to identify all differences that may, under given situations, be
material to shareholders and is subject, in all respects, and is qualified by
reference to the Georgia Business Corporation Code, FNB Newton’s Articles
of Incorporation and bylaws, and Synovus’ Articles of Incorporation and
bylaws. 34 Synovus Common Stock Synovus is incorporated under the
Georgia Business Corporation Code. Synovus is authorized to issue 600,000,000
shares of Synovus common stock, of which 299,703,639 shares were outstanding on
September 30, 2002. Synovus has no preferred stock authorized. Synovus’
board of directors may at any time, without additional approval of the holders
of Synovus common stock, issue authorized but unissued shares of Synovus common
stock. As described below, Synovus’
Articles of Incorporation and bylaws presently contain several provisions which
may make Synovus a less attractive target for an acquisition of control by an
outsider who lacks the support of Synovus’ board of directors. Voting Rights; Anti-Takeover Effects; The Voting Amendment Under an amendment to
Synovus’ Articles of Incorporation and bylaws which became effective on
April 24, 1986, referred to in this document as the “voting
amendment,” shareholders of Synovus common stock are entitled to ten votes
on each matter submitted to a vote at a meeting of shareholders for each share
of Synovus common stock which: Holders of shares of Synovus
common stock not described above are entitled to one vote per share for each
such share. A shareholder may own both ten-vote shares and one-vote shares, in
which case he or she will be entitled to ten votes for each ten-vote share and
one vote for each one-vote share. In connection with various
meetings of Synovus’ shareholders, shareholders are required to submit to
Synovus’ board of directors satisfactory proof necessary for it to
determine whether such shareholders’ shares of Synovus common stock are
ten-vote shares. If such information is not provided to Synovus’ board of
directors, 35 shareholders who would, if they had provided such information, be
entitled to ten votes per share, are entitled to only one vote per share. As Synovus common stock is
registered with the SEC and is listed on the NYSE, Synovus common stock is
subject to the provisions of an NYSE rule, which, in general, prohibits a
company’s common stock and equity securities from being authorized or
remaining authorized for listing on the NYSE if the company issues securities or
takes other corporate action that would have the effect of nullifying,
restricting or disparately reducing the voting rights of existing shareholders
of the company. However, such rule contains a “grandfather” provision,
under which Synovus’ voting amendment qualifies, which, in general, permits
grandfathered disparate voting rights plans to continue to operate as adopted.
Synovus’ management believes that all current shareholders of Synovus
common stock are entitled to ten votes per share, and as such, the further
issuance of any ten-vote shares would not disenfranchise any existing
shareholders. In the event it is determined in the future that Synovus cannot
continue to issue ten-vote shares in mergers and acquisitions, Synovus will
consider repealing the voting amendment and restoring the principle of one
share/one vote. If the merger is approved, present
shareholders of FNB Newton common stock, as future shareholders of Synovus
common stock, will, under the voting amendment described above, be entitled to
ten votes per share for each share of Synovus common stock received by them on
the effective date of the merger. Each shareholder of FNB Newton may also
acquire by purchase, stock dividend or otherwise, up to 1,139,063 additional
shares of Synovus common stock which will also be entitled to ten votes per
share. However, if a FNB Newton shareholder acquires by purchase, stock dividend
or otherwise, more than 1,139,063 additional shares of Synovus common stock, he
or she will be entitled to only receive one vote per share for each of the
shares in excess of 1,139,063 shares until they have been held for four years. Except with respect to voting,
ten-vote shares and one-vote shares are identical in all respects and constitute
a single class of stock, i.e., Synovus common stock. Neither the ten-vote
shares nor the one-vote shares have a preference over the other with regard to
dividends or upon liquidation. Synovus common stock does not carry any
pre-emptive rights enabling a holder to subscribe for or receive shares of
Synovus common stock. The Rights Plan Synovus has adopted a shareholder
rights plan under which holders of shares of Synovus common stock also hold
rights to purchase securities that may be exercised upon the occurrence of
“triggering events.” Shareholder rights plans such as Synovus’
plan are intended to encourage potential hostile acquirors to negotiate with the
board of directors of the target corporation to avoid occurrence of the
“triggering events” specified in such plans. Shareholder rights plans
are intended to give the directors of a target corporation the opportunity to
assess the fairness and appropriateness of a proposed transaction to determine
whether or not it is in the best interests of the corporation and its
shareholders. Notwithstanding these purposes and intentions of shareholder
rights plans, such plans, including that of Synovus, could have the effect of
discouraging a business combination that shareholders believe to be in their
best interests. The provisions of Synovus’ shareholder rights plan are
discussed below. On April 27, 1999, the board of
directors of Synovus adopted a rights plan and authorized and declared a
dividend of one common stock purchase right with respect to each outstanding
share of Synovus common stock outstanding on May 4, 1999, and to each holder of
common stock issued thereafter until the date the rights become exercisable or
the expiration or earlier redemption of the rights. Each right entitles the
registered holder to purchase from Synovus one share of common stock at a price
of $225.00 per share, subject to adjustment, once rights become exercisable. The
description and terms of the rights are set forth in the rights agreement
between Synovus and Mellon Investor Services LLC, as the rights agent. Initially, the rights will attach
to all certificates of outstanding shares of common stock, and no separate right
certificates will be distributed. The rights will become exercisable and
separate from the shares of common stock upon the earlier to occur of: 36 Shares of common stock
beneficially owned by Synovus or any subsidiary of Synovus will not be
considered outstanding for purposes of calculating the percentage ownership of
any person. Each of the following persons will
not be deemed to be an acquiring person even if they have acquired, or obtained
the right to acquire beneficial ownership of 15% or more of the outstanding
common stock: Until the distribution date or
earlier redemption or expiration of the rights: As soon as practicable following
the distribution date, separate certificates evidencing the rights will be
mailed to holders of record of the shares of common stock as of the close of
business on the distribution date, and such separate right certificates alone
will evidence the rights. The rights are not exercisable until the distribution
date. The rights will expire at the close of business on May 5, 2009, unless
earlier redeemed by Synovus. If any person becomes an acquiring
person, each holder of a right will thereafter have the “flip-in
right” to receive, upon payment of the purchase price of the right, shares
of common stock, or in some circumstances, cash, property or other securities of
Synovus, having a value equal to two times the purchase price of the right.
Notwithstanding the foregoing, all rights that are, or were, beneficially owned
by an acquiring person or any affiliate or associate of an acquiring person will
be null and void and not exercisable. If, at any time following the
stock acquisition date: (1) Synovus is acquired in a merger or other business
combination transaction in which the holders of all of the outstanding shares of
common stock immediately before 37 the consummation of the transaction are not the
holders of all of the surviving corporation’s voting power, or (2) more
than 30% of Synovus’ assets, cash flow or earning power is sold or
transferred other than in the ordinary course of Synovus’ business, then
each holder of a valid right shall thereafter have the “flip-over
right” to receive, in lieu of shares of common stock and upon exercise and
payment of the purchase price, common shares of the acquiring company having a
value equal to two times the purchase price of the right. If a transaction would
otherwise result in a holder’s having a flip-in as well as a flip-over
right, then only the flip-over right will be exercisable. If a transaction
results in a holder’s having a flip-over right after a transaction
resulting in a holder’s having a flip-in right, a holder will have
flip-over rights only to the extent such holder’s flip-in rights have not
been exercised. The purchase price payable, and
the number of shares of common stock or other securities or property issuable,
upon exercise of the rights are subject to adjustment from time to time to
prevent dilution (1) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the common stock, (2) upon the grant to
holders of the common stock of rights or warrants to subscribe for common stock
or convertible securities at less than the current market price of the common
stock, or (3) upon the distribution to holders of the common stock of evidences
of indebtedness or assets, excluding dividends payable in common stock, or of
subscription rights or warrants, other than those referred to above. However, no
adjustment in the purchase price will be required until cumulative adjustments
require an adjustment of at least 1%. The number of outstanding rights
and the number of shares of common stock issuable upon exercise of each right
are also subject to adjustment in the event of a stock split of the common stock
or a stock dividend on the common stock payable in common stock or subdivisions,
consolidations or combinations of the common stock occurring, in any such case,
before the distribution date. At any time after a person becomes
an acquiring person and before the acquisition by a person of 50% or more of the
outstanding common stock of Synovus, the board of directors may, at its option,
issue common stock or common stock equivalents of Synovus in mandatory
redemption of, or in exchange for, all or part of the then outstanding
exercisable rights, other than rights owned by such acquiring person which would
become null and void, at an exchange ratio of one share of common stock, or
common stock equivalents equal to one share of common stock, per right, subject
to adjustment. To the extent that, after the
triggering of flip-in rights, insufficient shares of common stock are available
for the exercise in full of the rights, holders of rights will receive upon
exercise shares of common stock to the extent available and then cash, property
or other securities of Synovus, in proportions determined by Synovus, so that
the aggregate value received is equal to twice the purchase price. Synovus is not required to issue
fractional shares of common stock. Instead, a payment in cash will be made to
the holder of such rights equal to the same fraction of the current value of a
share of common stock. Following the triggering of the flip-in rights, Synovus
will not be required to issue fractional shares of common stock upon exercise of
the rights. Instead, a payment in cash will be made to the holder of such rights
equal to the same fraction of the current market value of a share of common
stock. At any time before the
distribution date, the board of directors of Synovus may redeem all, but not
less than all, of the then outstanding rights at a price of $.001 per right. The
redemption of the rights may be made effective at such time, on such basis and
with such conditions as the board of directors in its sole discretion may
establish. Immediately upon the action of the board of directors ordering
redemption of the rights, the right to exercise the rights will terminate and
the only right of the holders of rights will be to receive the redemption price. Until a right is exercised, the
holder of the right, as such, will have no rights as a shareholder of Synovus,
including, without limitation, the right to vote or to receive dividends. The issuance of the rights is not
taxable to Synovus or to shareholders under presently existing federal income
tax law, and will not change the way in which shareholders can presently trade
Synovus’ shares of common stock. If the rights should become exercisable,
shareholders, depending on then existing circumstances, may recognize taxable
income. 38 Before the stock acquisition date,
the rights agreement generally may be amended by Synovus without the consent of
the holders of the rights or the common stock. On or after the stock acquisition
date, Synovus may amend the rights agreement only to (1) cure any ambiguity, (2)
correct or supplement any provision which may be defective or inconsistent with
the other provisions of the rights agreement, or (3) change or supplement the
rights agreement in any other manner which Synovus may deem necessary or
desirable, provided that no amendment shall adversely affect the interests of
the holders of rights, other than an acquiring person and its affiliates and
associates. A copy of the rights agreement has
been filed with the SEC as an exhibit to Synovus’ Registration Statement on
Form 8-A with respect to the rights filed with the SEC. The Form 8-A and the
rights agreement are incorporated by reference in this document, and reference
is made to them for the complete terms of the rights agreement and the rights.
This summary description of the rights does not purport to be complete and is
qualified in its entirety by reference to the rights agreement. If the merger is
approved, rights will attach to Synovus common stock issued to the present
shareholders of FNB Newton. Staggered Board of Directors; Supermajority Approvals Under Synovus’ Articles of
Incorporation and bylaws, Synovus’ board of directors is divided into three
classes of directors serving staggered three year terms, with the terms of each
class of directors to expire each succeeding year. Also under Synovus’
Articles of Incorporation and bylaws, the vote or action of shareholders
possessing 66-2/3% of the votes entitled to be cast by the holders of all the
issued and outstanding shares of Synovus common stock is required to: This allows directors to be
removed only for cause by 66-2/3% of the votes entitled to be cast at a
shareholders’ meeting called for that purpose. Vacancies or new
directorships can only be filled by a majority vote of the directors then in
office. Synovus’ staggered board of directors, especially when combined
with the voting amendment, makes it more difficult for its shareholders to force
an immediate change in the composition of the majority of the board. A potential
acquiror with shares recently acquired, and not entitled to 10 votes per share
under the voting amendment, may be discouraged or prevented from soliciting
proxies for the purpose of electing directors other than those nominated by
current management for the purpose of changing the policies or control of
Synovus. Evaluation of Business Combinations Synovus’ Articles of
Incorporation also provide that in evaluating any business combination or other
action, Synovus’ board of directors may consider, in addition to the amount
of consideration involved and the effects on Synovus and its shareholders, the
interests of the employees, customers, suppliers and creditors of Synovus and
its subsidiaries, the communities in which offices of the corporation or its
subsidiaries are located, and any other factors the board of directors deems
pertinent. FNB Newton Capital Stock The Articles of Incorporation of
FNB Newton authorize the issuance of 10,000,000 shares of FNB Newton common
stock, $1.00 par value per share, and 1,000,000 shares of preferred stock, no
par value per share. At September 30, 2002, there were 544,980 shares of FNB
Newton common stock issued and outstanding and no 39 shares of FNB Newton preferred
stock issued and outstanding. The remaining authorized shares of FNB Newton
common stock and preferred stock may be issued from time to time in such amounts
as the board of directors determines. The FNB Newton board may issue shares of
preferred stock in one or more series, and determine the relative rights and
preferences of the shares of each series. Each holder of FNB Newton common stock
has one vote per share upon all matters voted upon by shareholders. Voting
rights are noncumulative so that shareholders holding a majority of the
outstanding shares of FNB Newton common stock are able to elect all members of
the board of directors. All shares of FNB Newton common stock, when issued and
fully paid, are non-assessable and are not subject to redemption or conversion
and have no preemptive rights. Upon the liquidation, dissolution or winding up
of FNB Newton, whether voluntary or involuntary, holders of FNB Newton common
stock are entitled to share ratably, after satisfaction in full of all
liabilities, in all remaining assets of FNB Newton available for distribution.
All shares of FNB Newton common stock are entitled to share equally in such
dividends as the board of directors may declare on the FNB Newton common stock
from sources legally available therefor. FNB Newton is a holding company and
conducts almost all of its operations through its bank subsidiary. Accordingly,
FNB Newton depends on the cash flow of its subsidiary bank to meet its
obligations. FNB Newton’s subsidiary bank is limited in the amount of
dividends it can pay to FNB Newton without prior regulatory approval. Also, bank
regulators have the authority to prohibit FNB Newton’s subsidiary bank from
paying dividends if they think the payment would be an unsafe and unsound
banking practice. Required Shareholder Votes Under FNB Newton’s Articles
of Incorporation and bylaws, FNB Newton’s board of directors is elected by
the affirmative vote of a majority of shares represented at each annual meeting.
There are no provisions requiring supermajority approval for any shareholder
vote or action under FNB Newton’s Articles of Incorporation and bylaws,.
Therefore, provisions of Georgia law relating to shareholder approval of merger
and share exchange prescribe the shareholder vote required to approve the
merger. Georgia law requires that FNB Newton shareholders approve the merger
agreement adopted by the board of directors. The merger agreement must be
approved by a majority of all the votes entitled to be cast on the merger
agreement by all shares entitled to vote on the plan. All shares of FNB Newton
are entitled to vote on the merger agreement. The preceding descriptive
information concerning Synovus common stock and FNB Newton capital stock
outlines certain provisions of Synovus’ Articles of Incorporation and
bylaws, FNB Newton’s Articles of Incorporation and bylaws and certain
statutes regulating the rights of holders of Synovus and FNB Newton capital
stock. The information is not a complete description of those documents and
statutes and is subject in all respects to provisions of the Articles of
Incorporation and bylaws of Synovus, the Articles of Incorporation and bylaws of
FNB Newton and the laws of the State of Georgia. DISSENTERS’ RIGHTS Pursuant to Sections 7-1-537 and
14-2-1301 et. seq. of the Official Code of Georgia Annotated, as amended
(“Georgia Law”), any shareholder of record of FNB Newton common stock
who objects to the merger, and who fully complies with all of the
provisions of Georgia Law, will be entitled to demand and receive payment in
cash of an amount equal to the fair value of his or her shares of FNB Newton
common stock if the merger is consummated. A record shareholder may assert
dissenters’ rights as to fewer than all the shares registered in his or her
name only if the shareholder dissents with respect to all shares beneficially
owned by any one beneficial shareholder and notifies FNB Newton in writing of
the names and addresses of each person on whose behalf he or she asserts
dissenters’ rights. A beneficial owner must dissent with respect to all the
shares he or she owns. For the purpose of determining the amount to be received
in connection with the exercise of statutory dissenters’ rights under
Georgia Law, the fair value of a dissenting shareholder’s FNB Newton common
stock is determined as of the close of the business on the date prior to the
effective date of the merger, excluding any appreciation or depreciation therein
in anticipation of the merger. Any FNB Newton shareholder
desiring to receive payment of the fair value of his or her FNB Newton common
stock in accordance with the requirements of Georgia Law: (i) must file with FNB
Newton prior to the special meeting of shareholders of FNB Newton at which the
vote will be taken on the merger agreement and the merger, or at the special
meeting, but before the vote is taken, a written notice of his or her intent to
demand payment of the fair value of his or her shares of FNB Newton common stock
if the merger agreement is approved 40 and the merger is consummated; (ii) must not
vote in favor of the proposal to which he or she objects (although he or she may
abstain from voting); and (iii) must, by the date specified in the
dissenters’ notice (“Dissenters’ Notice”) mailed to him or
her by FNB Newton, which date shall not be fewer than 30 nor more than 60 days
from the shareholders’ receipt of the Dissenters’ Notice, demand
payment for his or her shares and deposit his or her share certificates in
accordance with the terms of the Dissenters’ Notice. A filing of the
written notice of intent to demand payment for shares and the demand for payment
pursuant to conditions (i) and (iii) above should be sent to: FNB Newton
Bankshares, Inc., 4159 Mill Street, Covington, Georgia 30014. A vote against the
merger agreement and the merger alone will not satisfy the requirements
for the separate written notice of intent to demand payment and the payment
demand referred to in conditions (i) and (iii) above; all three
conditions must be separately complied with. If the merger agreement is
approved and the merger is authorized, FNB Newton will mail within 10 days
thereafter to each FNB Newton shareholder who has complied with conditions (i)
and (ii) above, a Dissenters’ Notice, addressed to the FNB Newton
shareholder at such address as he has furnished FNB Newton in writing, or, if
none, at the FNB Newton shareholder’s address as it appears on the records
of FNB Newton, which notice will: (i) state where the payment demand must be
sent and where and when certificates for certificated shares must be deposited;
(ii) inform holders of uncertificated shares to what extent transfer of the
shares will be restricted after the payment demand is received, and (iii) set a
day by which FNB Newton must receive the payment demand which date may not be
less than 30 nor more than 60 days after the Dissenters’ Notice is
delivered. A record shareholder who does not demand payment or deposit his share
certificates where required, each by the date specified in the Dissenters’
Notice, is not entitled to payment for his shares. If all of the conditions
specified in (i), (ii) and (iii) in the immediately preceding paragraph are
fully complied with, FNB Newton is required to make a written offer, within 10
days of the later of the date the merger is consummated or receipt of the
payment demand, to each dissenting shareholder to purchase all of his or her
shares of FNB Newton common stock at a specified price which Synovus and FNB
Newton consider to be their fair value, plus accrued interest, as of the close
of business on the day prior to the merger, excluding any change in value
induced by the proposed merger or its consummation. The offer of payment must be
accompanied by: Assuming the merger has been
effected, if the shareholder accepts FNB Newton’s and Synovus’ offer
by written notice within 30 days after the offer or is deemed to have accepted
the offer by failing to respond within said 30 days, payment for his or her
shares shall be made within 60 days after the making of the offer of or the
consummation of the merger, whichever is later. If a dissenting
shareholder’s demand for payment under Section 14-2-1327 of Georgia Law
remains unsettled, FNB Newton shall commence a proceeding within 60 days after
receiving the payment demand and petition the Superior Court of Newton County,
Georgia to determine the fair value of the dissenter’s shares and accrued
interest, which interest shall be computed from the effective date of the
merger. If FNB Newton does not commence the proceeding within the 60 day period,
it must pay each dissenter whose demand remains unsettled the amount demanded. The foregoing does not purport to
be a complete statement of the provisions of Georgia Law relating to statutory
dissenters’ rights and is qualified in its entirety by reference to said
provisions, relevant portions of which 41 are reproduced in full in Appendix
“B” to this Proxy Statement/Prospectus, which is incorporated herein
by reference. DESCRIPTION OF SYNOVUS Business The disclosures made in this
document, together with the following information which is specifically
incorporated by reference into this document, describe the business of Synovus: Management and Additional Information
Information relating to executive compensation, various benefit plans, voting securities and the
principal holders of voting securities, relationships and related transactions and other related matters as to
Synovus is incorporated by reference or set forth in Synovus' Annual Report on Form 10-K for the year ended
December 31, 2001 which is incorporated into this document by reference. See "Where You Can Find More Information” on page 52. Shareholders desiring copies of
such documents may contact Synovus at its address or phone number indicated
under “Where You Can Find More Information.” DESCRIPTION OF FNB NEWTON Business FNB Newton Bankshares, Inc. is a
bank holding company registered under the bank holding company laws of the State
of Georgia, whose sole subsidiary and principal asset is First Nation Bank, a
commercial bank chartered under the laws of the State of Georgia. FNB Newton
owns all of the outstanding capital stock of First Nation Bank. Through its
ownership of First Nation Bank, FNB Newton is engaged in a general commercial
banking business and its primary source of earnings is derived from income
generated by First Nation Bank. As of September 30, 2002, FNB Newton, on a
consolidated basis, had total assets of approximately $340 million, net
portfolio loans of approximately $267 million, total deposits of approximately
$291 million, and shareholders’ equity of approximately $35 million. Unless
the context otherwise requires, references herein to FNB Newton include FNB
Newton Bankshares, Inc. and its subsidiary bank on a consolidated basis. First Nation Bank was first
organized in March 1963 as First National Bank of Newton County, a national
banking association. First National Bank of Newton County converted to a state
chartered commercial bank in April 1995 and changed its name to First Newton
Bank. First Newton Bank subsequently became First Nation Bank in May 2000. FNB
Newton was formed in August 1984 to act as a holding company for First Nation
Bank. First Nation Bank engages in general commercial banking and related
businesses from its 10 full-service banking locations in Newton, Henry and
Rockdale Counties, Georgia. The business of First Nation Bank
consists of attracting deposits from the general public in the areas served by
its banking offices and using those deposits, together with funds derived from
other sources, to fund a variety of consumer, commercial and residential real
estate loans in Covington and surrounding areas. The revenues of First Nation
Bank are derived primarily from interest on, and fees received in connection
with, its lending activities and from interest and dividends from investment
securities and short-term investments. The principal sources of funds 42 for First
Nation Bank’s lending and investment activities are deposits, amortization
and repayment of loans, and the maturity and repayments of investment
securities. The principal expenses of First Nation Bank are the interest paid on
deposits and operating and general and administrative expenses. As a general commercial bank,
First Nation Bank offers a broad range of commercial, consumer and residential
real estate loans, and provides a variety of corporate and personal banking
services to individuals, businesses and other institutions located in its market
area. In order to attract funds for loans, First Nation Bank’s deposit
services include certificates of deposit, individual retirement accounts and
other time deposits, checking and other demand deposit accounts, interest paying
checking accounts, savings accounts and money market accounts. The transaction
accounts and time certificates are tailored to the principal market areas at
rates competitive to those in the area. All deposit accounts are insured by the
FDIC up to the maximum limits permitted by law. First Nation Bank also offers
ATM cards (with access to local, state, national, and international networks),
safe deposit boxes, wire transfers, direct deposit, and automatic drafts for
various accounts. First Nation Bank is subject to
examination and comprehensive regulation by the Georgia Department of Banking
and Finance. In addition, the Federal Reserve Bank conducts a periodic
examination of First Nation Bank. As is the case with banking institutions
generally, First Nation Bank’s operations are materially and significantly
influenced by general economic conditions and by related monetary and fiscal
policies of financial institution regulatory agencies, including the FDIC and
the Federal Reserve Board. Deposit flows and cost of funds are influenced by
interest rates on competing investments and general market rates of interest.
Lending activities are affected by the demand for financing of real estate and
other types of loans, which in turn are affected by the interest rates at which
such financing may be offered and other factors affecting local demand and
availability of funds. Market Area First Nation Bank’s
operations are based in Covingtion, Georgia and its market area consists of
Covingtion and the surrounding area of Newton, Henry and Rockdale Counties,
Georgia. Management of First Nation Bank believes that its principal markets
have been the expanding residential market within its primary market area, and
the established commercial, small business, and professional markets in its
market area. Businesses and individuals are solicited through the personal
efforts of the Bank’s directors and officers. Lending Activities The primary source of income
generated by First Nation Bank is the interest earned from both its loan and
investment portfolios. To develop business, First Nation Bank relies to a great
extent on the personalized approach of its directors and officers who have
extensive business and personal contacts in the community. FNB Newton has
attempted to maintain diversification when considering investments and the
approval of loan requests. Emphasis has been placed on the borrower’s
ability to generate cash flow sufficient to support its debt obligations and
other cash related expenses. Lending activities include
commercial and consumer loans, and loans for residential purposes. Commercial
loans include collateralized and uncollateralized loans for working capital
(including inventory and receivables), business expansion (including real estate
acquisitions and improvements), and purchases of equipment and machinery.
Consumer loans include collateralized and uncollateralized loans for the
purchase of automobiles, boats, home improvement, and personal investments.
First Nation Bank provides personal and corporate credit cards issued by a
correspondent bank which assumes all liabilities relating to underwriting of the
credit applicant. First Nation Bank also originates a variety of residential
real estate loans, including the origination of conventional mortgages
collateralized by first mortgage liens to enable borrowers to purchase,
refinance, or to improve homes or real property. In addition, such loans include
those made to individual borrowers collateralized by first mortgage interests on
unimproved parcels of real estate zoned for residential homes on which such
borrowers intend to erect their personal residences. To a lesser extent, First
Nation Bank also has made land acquisition and development loans and
construction loans to developers of residential properties for construction of
residential subdivisions and multi-family residential projects. At September 30, 2002, FNB
Newton’s net loan portfolio was $267 million, representing 79% of total
assets. As of such date, First Nation Bank’s net loan portfolio consisted
of 10% commercial loans, 37% real estate 43 secured loans (non construction and
A&D), 48% real estate construction and land development loans and 5%
installment or consumer loans. Competition First Nation Bank encounters
strong competition both in attracting deposits and in the origination of loans.
The deregulation of the banking industry and the widespread enactment of state
laws which permit multi-bank holding companies as well as the availability of
nationwide interstate banking has created a highly competitive environment for
financial service providers in First Nation Bank’s primary market area. In
one or more aspects of its business, First Nation Bank has competed with other
commercial banks, savings and loan associations, credit unions, finance
companies, mutual funds, insurance companies, brokerage and investment banking
companies and other financial intermediaries operating in its market area and
elsewhere. Most of these competitors, some of which are affiliated with large
bank holding companies, have substantially greater resources and lending limits,
and may offer certain services that First Nation Bank does not provide. In
addition, many of First Nation Bank’s non-bank competitors are not subject to the
same extensive federal regulations that govern bank holding companies and
federally chartered and insured banks. First Nation Bank’s primary
market area is served by 101 commercial banks with 1386 offices. As of November
11, 2002, the total reported deposits in the primary market area were
approximately $56.7 billion. Competition among financial
institutions is based upon interest rates offered on deposit accounts, interest
rates charged on loans and other credit and service charges, the quality of the
services rendered, the convenience of banking facilities, and, in the case of
loans to commercial borrowers, relative lending limits. Employees At September 30, 2002, First
Nation Bank employed 141 full-time equivalent employees. None of these employees
is covered by a collective bargaining agreement and management believes that its
employee relations are good. Description of Property First Nation Bank has designated
as its main office its freestanding 11,000 square foot branch located at 4182
Hwy. 278 in Covington, Georgia. The facility has seven inside teller stations
and four drive-in lanes, and contains eight offices, a vault, a night
depository, a drive-up ATM, new accounts area, employee lounge and a storage
area. The facility is owned by the bank. This branch also services a walk-up ATM
located in the SKC industrial complex nearby. The bank’s Salem Road branch
office is located at 3207 Salem Road in a 3,000 square foot building in Conyers,
Georgia. The facility includes five teller stations, five drive-in teller lanes,
three offices, a vault, a night depository, a new accounts area, ATM terminal, a
storage room and a lounge. The Salem Road branch facility is owned by the bank. The bank’s Newton Station
branch office is located at 5340 Hwy. 20 South in a 1,500 square foot building
in Covington, Georgia. The facility includes three teller stations, two drive-in
teller lanes, an office, a vault, a new accounts area, an ATM, and a lounge. The
1,500 square foot facility is leased by the bank under a three-year lease with a
current monthly rental of $1,935.50. The lease term ends 12/03 but provides for
two three-year renewal options. The bank’s Newton Plaza
branch office is located at 3106 Hwy 278 NW in a 4,702 square foot building in
Covington, Georgia. The facility includes six teller stations, four drive-in
teller lanes, four offices, a vault, a night depository, a new accounts area,
two ATM’s, a storage room and a lounge. The facility is owned by the bank,
but the land is leased under a twenty-year lease at a monthly rental of $7,250.
The lease term ends 12/31/03 but provides for two five-year renewal periods.
There is no purchase option on the land in the current lease. 44 The bank’s Salem Station
branch office is located at 13015 Brown Bridge Road in a 1,340 square foot
building in Covington, Georgia. The facility includes four teller stations, two
drive in teller lanes, an office, a vault, a new accounts area, and a lounge.
This facility is leased by the bank under a five-year lease at a monthly rental
of $1,995. The lease term ends 9/05 but provides for two five-year renewal
periods. The bank’s West Avenue branch
office is located at 1143 West Avenue in a 5,200 square foot building in
Conyers, Georgia. The facility includes eight teller stations, four drive-in
teller lanes, three offices, a conference room, a vault, a night depository, a
new accounts area, an ATM, a storage room and a lounge. This branch is also
responsible for servicing an ATM located in the Georgia International Horse Park
which is located nearby. The facility is currently owned by the bank. Synovus
has requested that First Nation Bank sell this facility and subsequently lease it back from a
purchaser. First Nation Bank concurs, and is currently in negotiations for a sale and
leaseback transaction related to this facility. The sale leaseback is expected
to be concluded before the merger is completed. The bank’s Conyers Wal-Mart
Supercenter branch office is located at 1436 Dogwood Drive in a 470 square foot
building in Conyers, Georgia. The facility includes three teller stations, an
office, a vault, an ATM, and a storage room. The facility is leased by the bank
under a five-year lease at a monthly rental of $1,750. The lease term ends
3/31/06 but provides for two five-year renewal periods. The bank’s Eagles Landing
branch office is located at 1767 Rock Quarry Road in a 7,420 square foot building
in Stockbridge, Georgia. The facility includes five teller stations, four
drive-in teller lanes, six offices, a conference room, a vault, a night
depository, a new accounts area, a loan secretary area, an ATM, a storage room
and a lounge. The facility is owned by the bank. The bank’s Jonesboro Road
branch office is located at 285 Jonesboro Road in a 3,436 square foot building in
McDonough, Georgia. The facility includes six teller stations, four drive-in
teller lanes, three offices, a vault, a night depository, a new accounts area,
an ATM, a storage room and a lounge. This facility is owned by the bank. The bank’s McDonough Wal-Mart
branch office is located at 101 Willow Lane in a 690 square foot building in
McDonough , Georgia. The facility includes three teller stations, an office, a
vault, and an ATM. The facility is leased by the bank under a five-year lease at
a monthly rental of $1,750. The lease term ends 3/31/06 but provides for two
five-year renewal periods. The John R. Williams Corporate
Center is located at 4159 Mill Street in Covington, Georgia. The JRW building
currently provides executive offices and houses the cash management/ financial,
loan operations, bookkeeping, item processing and information technology
departments, as well as a group of commercial lenders. One sixth of the 24,000
square foot facility is not in use. Cubicles are currently widely used in this
facility. The bank owns raw land suitable
for a future branch as an out-parcel of the shopping center located at the
intersection of Hwy 138 North and Hwy 10 in Walton County. Legal Proceedings FNB Newton is periodically a party
to or otherwise involved in legal proceedings arising in the normal course of
business, such as claims to enforce liens or foreclose on loan defaults, claims
involving the making and servicing of real property loans, and other issues
incident to its business. Management is not aware of any proceeding threatened
or pending against FNB Newton which, if determined adversely, would have a
material adverse effect on its business or financial position. Related Party Transactions First Nation Bank has had various
loan and other banking transactions in the ordinary course of business with the
directors, executive officers, and principal shareholders of FNB Newton (or an
associate of such person). All such transactions: (i) have been made in the
ordinary course of business; (ii) have been made on substantially the same
terms, including interest rates and collateral on loans, as those prevailing at
the time for comparable transactions with unrelated persons; and (iii) in the
opinion of management do not involve more than the normal risk 45 of collectibility
or present other unfavorable features. At September 30, 2002, the total dollar
amount of extensions of credit to directors, executive officers and FNB Newton
principal shareholders identified below, and any of their associates (excluding
extensions of credit which were less than $60,000 to any one such person and
their associates) were $2,520,316, which represented approximately 7.2% of total
capital. Principal Shareholders The following table sets forth, as
of September 30, 2002, the stock ownership by each of FNB Newton’s
directors, by all directors and executive officers as a group, and by each owner
of more than 5% of the outstanding shares of FNB Newton common stock. Name Shares
Beneficially Percent of Class Kaye W. Cantrell 156,472 28.7115 Thomas R. Kephart 0 0 William C. Lankford, Jr. 0 0 Alyce W. Toonk 156,472 28.7115 John B. Williams 156,632 28.7409 Stephen C. Wood 0 0 Trust FBO Grandchildren of John R. and Ruth Williams 30,000 5.5047 All directors and executive officers, as a group 499,576 91.6686 REGULATORY MATTERS General Synovus is a registered bank
holding company subject to supervision and regulation by the Board of Governors
of the Federal Reserve System under the Bank Holding Company Act of 1956 and by
the Georgia Department of Banking and Finance under the bank holding company
laws of the State of Georgia. Synovus 46 became a financial holding company under
the Gramm-Leach-Bliley Act of 1999 in April 2000. Financial holding companies
may engage in a variety of activities, some of which are not permitted for other
bank holding companies that are not financial holding companies. Synovus’
affiliate national banking associations are subject to regulation and
examination primarily by the Office of the Comptroller of the Currency and,
secondarily, by the FDIC and the Federal Reserve Board. Synovus’
state-chartered banks are subject to primary federal regulation and examination
by the FDIC and, in addition, are regulated and examined by their respective
state banking departments. Numerous other federal and state laws, as well as
regulations promulgated by the Federal Reserve, the state banking regulators,
the OCC and the FDIC govern almost all aspects of the operations of the banks.
Various federal and state bodies regulate and supervise Synovus’
non-banking subsidiaries including its brokerage, investment advisory, insurance
agency and processing operations. These include, but are not limited to, the
SEC, the National Association of Securities Dealers, Inc., federal and state
banking regulators and various state regulators of insurance and brokerage
activities. Dividends Under the laws of the State of
Georgia, Synovus, as a business corporation, may declare and pay dividends in
cash or property unless the payment or declaration would be contrary to
restrictions contained in its Articles of Incorporation, and unless, after
payment of the dividend, it would not be able to pay its debts when they become
due in the usual course of its business or its total assets would be less than
the sum of its total liabilities. Synovus is also subject to regulatory capital
restrictions that limit the amount of cash dividends that it may pay.
Additionally, Synovus is subject to contractual restrictions that limit the
amount of cash dividends it may pay. Under the laws of the State of Georgia, FNB
Newton is subject to similar dividend restrictions. The primary sources of funds for
Synovus’ payment of dividends to its shareholders are dividends and fees to
Synovus from its banking and nonbanking affiliates. Similarly, the primary
source of funds for FNB Newton’s payment of dividends to its shareholders
are dividends to FNB Newton from its banking affiliate, First Nation Bank.
Various federal and state statutory provisions and regulations limit the amount
of dividends that the subsidiary banks of Synovus and FNB Newton may pay. Under
the regulations of the Georgia Department of Banking and Finance, a Georgia bank
must have approval of the Georgia Department of Banking and Finance to pay cash
dividends if, at the time of such payment: In general, the approval of the
Alabama Banking Department, Florida Banking Department and Tennessee Department
of Financial Institutions is required if the total of all dividends declared by
an Alabama, Florida or Tennessee bank, as the case may be, in any year would
exceed the total of its net profits for that year combined with its retained net
profits for the preceding two years less any required transfers to surplus. In
addition, the approval of the OCC is required for a national bank to pay
dividends in excess of the bank’s retained net income for the current year
plus retained net income for the preceding two years. Approval of the Federal
Reserve Board is required for payment of any dividend by a state chartered bank,
like First Nation Bank, that is a member of the Federal Reserve System and
sometimes referred to as a state member bank, if the total of all dividends
declared by the bank in any calendar year would exceed the total of its net
profits (as defined by regulatory agencies) for that year combined with its
retained net profits for the proceeding two years. In addition, a state member
bank may not pay a dividend in an amount greater than its net profits then on
hand. Some of Synovus’ banking
affiliates have in the past been required to secure prior regulatory approval
for the payment of dividends to Synovus in excess of regulatory limits and may
be required to seek approval for the payment of dividends to Synovus in excess
of those limits in the future. If prior regulatory approvals are sought, there
is no assurance that any such regulatory approvals will be granted. 47 Federal and state banking
regulations applicable to Synovus and its banking subsidiaries require minimum
levels of capital which limit the amounts available for payment of dividends.
Synovus’ objective is to pay out at least one-third of prior year’s
earnings in cash dividends to its shareholders. Synovus and its predecessors
have paid cash dividends on their common stock in every year since 1891. Under
restrictions imposed under federal and state laws, Synovus’ subsidiary
banks could declare aggregate dividends to Synovus of approximately $162.6
million during 2002 without obtaining regulatory approval. Capital Requirements Synovus and FNB Newton are
required to comply with the capital adequacy standards established by the
Federal Reserve Board and their banking subsidiaries must comply with similar
capital adequacy standards established by the OCC and FDIC, as applicable. There
are two basic measures of capital adequacy for bank holding companies and their
banking subsidiaries that have been promulgated by the Federal Reserve Board,
the FDIC and the OCC: a risk-based measure and a leverage measure. All
applicable capital standards must be satisfied for a bank holding company or a
bank to be considered in compliance. The risk-based capital standards
are designed to make regulatory capital requirements more sensitive to
differences in risk profile among banks and bank holding companies, to account
for off-balance-sheet exposure, and to minimize disincentives for holding liquid
assets. Assets and off-balance-sheet items are assigned to broad risk
categories, each with appropriate weights. The resulting capital ratios
represent capital as a percentage of total risk-weighted assets and
off-balance-sheet items. The minimum guideline for the
ratio of total capital to risk-weighted assets (including certain
off-balance-sheet items, such as standby letters of credit) is 8.0%. At least
half of total capital must comprise common stock, minority interests in the
equity accounts of consolidated subsidiaries, noncumulative perpetual preferred
stock and a limited amount of cumulative perpetual preferred stock, less
goodwill and certain other intangible assets, referred to as Tier 1
Capital. The remainder may consist of subordinated debt, other preferred stock
and a limited amount of loan loss reserves, referred to as Tier 2 Capital. The
Federal Reserve Board also requires certain bank holding companies that engage
in trading activities to adjust their risk-based capital to take into
consideration market risk that may result from movements in market prices of
covered trading positions in trading accounts, or from foreign exchange or
commodity positions, whether or not in trading accounts, including changes in
interest rates, equity prices, foreign exchange rates or commodity prices. Any
capital required to be maintained under these provisions may consist of new Tier
3 Capital consisting of certain short term subordinated debt. In addition, the
Federal Reserve Board has issued a policy statement, under which a bank holding
company that is determined to have weaknesses in its risk management processes
or a high level of interest rate risk exposure may be required to hold
additional capital. The Federal Reserve Board has also
established minimum leverage ratio guidelines for bank holding companies. These
guidelines provide for a minimum leverage ratio of Tier 1 Capital to average
assets, less goodwill and certain other intangible assets, of 3.0% for bank
holding companies that meet certain specified criteria, including having the
highest regulatory rating. All other bank holding companies generally are
required to maintain a leverage ratio of at least 4.0%. Bank holding companies
are expected to maintain higher-than- minimum capital ratios if they have
supervisory, financial, operational or managerial weaknesses, or if they are
anticipating or experiencing significant growth. Synovus has not been advised by
the Federal Reserve Board of any specific minimum leverage ratio applicable to
it. At September 30, 2002,
Synovus’ total capital ratio was 12.51%, its Tier 1 Capital ratio was
11.33% and its Tier 1 leverage ratio was 10.86%. Assuming the merger had been
consummated on September 30, 2002, the total capital ratio of Synovus would have
been 12.28%, its Tier 1 Capital ratio would have been 11.10% and its Tier 1
leverage ratio would have been 10.72%. Each of these ratios exceeds the current
requirements under the Federal Reserve Board’s capital guidelines. At September 30, 2002, FNB
Newton’s total capital ratio was 12.78%, its Tier 1 Capital ratio was
11.65% and its Tier 1 leverage ratio was 10.20%. Each of these ratios exceeds
the current requirements under the Federal Reserve Board’s capital
guidelines. 48 Each of Synovus’ and FNB
Newton’s banking subsidiaries is subject to similar risk-based and leverage
capital requirements adopted by its applicable federal banking agency, and each
was in compliance with the applicable minimum capital requirements as of
September 30, 2002. Failure to meet capital guidelines
could subject a bank to a variety of enforcement remedies, including issuance of
a capital directive, the termination of deposit insurance by the FDIC, a
prohibition on the taking of brokered deposits and other restrictions on its
business. As described below, substantial additional restrictions can be imposed
upon FDIC-insured depository institutions that fail to meet applicable capital
requirements. See “Prompt Corrective Action” below. Commitments to Subsidiary Banks Under the Federal Reserve
Board’s policy, Synovus is expected to act as a source of financial
strength to its subsidiary banks and to commit resources to support its
subsidiary banks in circumstances when it might not do so absent that policy. In
addition, any capital loans by Synovus to any of its subsidiary banks would also
be subordinate in right of payment to depositors and to certain other
indebtedness of that bank. In the event of Synovus’
bankruptcy, any commitment by Synovus to a federal bank regulatory agency to
maintain the capital of a banking subsidiary will be assumed by the bankruptcy
trustee and entitled to a priority of payment. In addition, the Federal Deposit
Insurance Act provides that any financial institution whose deposits are insured
by the FDIC generally will be liable for any loss incurred by the FDIC in
connection with the default of, or any assistance provided by the FDIC to, a
commonly controlled financial institution. Prompt Corrective Action The Federal Deposit Insurance
Corporation Improvement Act of 1991 establishes a system of prompt corrective
action to resolve the problems of undercapitalized institutions. Under this
system the federal banking regulators are required to rate supervised
institutions on the basis of five capital categories as described below. The
federal banking regulators are also required to take mandatory supervisory
actions, and are authorized to take other discretionary actions, with respect to
institutions in the three undercapitalized categories, the severity of which
will depend upon the capital category in which the institution is placed.
Generally, subject to a narrow exception, the Federal Deposit Insurance
Corporation Improvement Act requires the banking regulator to appoint a receiver
or conservator for an institution that is critically undercapitalized. The
federal banking agencies have specified by regulation the relevant capital level
for each category. Under the Federal Deposit
Insurance Corporation Improvement Act, the Federal Reserve Board, the FDIC, the
OCC and the Office of Thrift Supervision have adopted regulations setting forth
a five-tier scheme for measuring the capital adequacy of the financial
institutions they supervise. Under the regulations, an institution would be
placed in one of the following capital categories: The regulations permit the
appropriate federal banking regulator to downgrade an institution to the next
lower category if the regulator determines (1) after notice and opportunity for
hearing or response, that the 49 institution is in an unsafe or unsound condition
or (2) that the institution has received and not corrected a
less-than-satisfactory rating for any of the categories of asset quality,
management, earnings or liquidity in its most recent examination. Supervisory
actions by the appropriate federal banking regulator depend upon an
institution’s classification within the five categories. Synovus’
management believes that Synovus and its bank subsidiaries have the requisite
capital levels to qualify as well capitalized institutions under the Federal
Deposit Insurance Corporation Improvement Act regulations. The Federal Deposit Insurance
Corporation Improvement Act generally prohibits a depository institution from
making any capital distribution, including payment of a dividend, or paying any
management fee to its holding company if the depository institution would
thereafter be undercapitalized. Undercapitalized depository institutions are
subject to restrictions on borrowing from the Federal Reserve System. In
addition, undercapitalized depository institutions are subject to growth
limitations and are required to submit capital restoration plans. A depository
institution’s holding company must guarantee the capital plan, up to an
amount equal to the lesser of 5% of the depository institution’s assets at
the time it becomes undercapitalized or the amount of the capital deficiency
when the institution fails to comply with the plan. Federal banking agencies may
not accept a capital plan without determining, among other things, that the plan
is based on realistic assumptions and is likely to succeed in restoring the
depository institution’s capital. If a depository institution fails to
submit an acceptable plan, it is treated as if it is significantly
undercapitalized. Significantly undercapitalized
depository institutions may be subject to a number of requirements and
restrictions, including orders to sell sufficient voting stock to become
adequately capitalized, requirements to reduce total assets and cessation of
receipt of deposits from correspondent banks. Critically undercapitalized
depository institutions are subject to appointment of a receiver or conservator. Safety and Soundness Standards The Federal Deposit Insurance Act,
as amended by the Federal Deposit Insurance Corporation Improvement Act and the
Riegle Community Development and Regulatory Improvement Act of 1994, requires
the federal bank regulatory agencies to prescribe standards, by regulations or
guidelines, relating to internal controls, information systems and internal
audit systems, loan documentation, credit underwriting, interest rate risk
exposure, asset growth, asset quality, earnings, stock valuation and
compensation, fees and benefits and such other operational and managerial
standards as the agencies deem appropriate. The federal bank regulatory agencies
have adopted a set of guidelines prescribing safety and soundness standards
under the Federal Deposit Insurance Corporation Improvement Act. The guidelines
establish general standards relating to internal controls and information
systems, internal audit systems, loan documentation, credit underwriting,
interest rate exposure, asset growth and compensation, fees and benefits. In
general, the guidelines require, among other things, appropriate systems and
practices to identify and manage the risks and exposures specified in the
guidelines. The guidelines prohibit excessive compensation as an unsafe and
unsound practice and describe compensation as excessive when the amounts paid
are unreasonable or disproportionate to the services performed by an executive
officer, employee, director or principal shareholder. The federal banking
agencies determined that stock valuation standards were not appropriate. In
addition, the agencies have adopted regulations that authorize, but do not
require, an agency to order an institution that has been given notice by an
agency that it is not satisfying any of such safety and soundness standards to
submit a compliance plan. If, after being so notified, an institution fails to
submit an acceptable compliance plan, the agency must issue an order directing
action to correct the deficiency and may issue an order directing other actions
of the types to which an undercapitalized institution is subject under the
prompt corrective action provisions of the Federal Deposit Insurance Corporation
Improvement Act. See “Prompt Corrective Action” above. If an
institution fails to comply with such an order, the agency may seek to enforce
such order in judicial proceedings and to impose civil money penalties. Depositor Preference Statute Federal law provides that deposits
and certain claims for administrative expenses and employee compensation against
an insured depository institution would be afforded a priority over other
general unsecured claims against such an institution, including federal funds
and letters of credit, in the liquidation or other resolution of such an
institution by any receiver. 50 Gramm-Leach-Bliley Act On November 12, 1999, legislation
was enacted which allows bank holding companies to engage in a wider range of
non-banking activities, including greater authority to engage in securities and
insurance activities. Under the Gramm-Leach-Bliley Act, a bank holding company
that elects to become a financial holding company may engage in any activity
that the Federal Reserve Board, in consultation with the Secretary of the
Treasury, determines by regulation or order is: (1) financial in nature; (2)
incidental to any such financial activity; or (3) complementary to any such
financial activity and does not pose a substantial risk to the safety or
soundness of depository institutions or the financial system generally. The
legislation makes significant changes in United States banking law, principally
by repealing restrictive provisions of the 1933 Glass-Steagall Act. The
legislation specifies certain activities that are deemed to be financial in
nature, including lending, exchanging, transferring, investing for others, or
safeguarding money or securities; underwriting and selling insurance; providing
financial, investment or economic advisory services; underwriting, dealing in or
making a market in, securities; and any activity currently permitted for bank
holding companies by the Federal Reserve Board under Section 4(c)(8) of the Bank
Holding Company Act. The legislation does not authorize banks or their
affiliates to engage in commercial activities that are not financial in nature.
A bank holding company may elect to be treated as a financial holding company
only if all depository institution subsidiaries of the holding company are
well-capitalized, well-managed and have at least a satisfactory rating under the
Community Reinvestment Act. Synovus became a financial holding company in April
2000. In addition to the
Gramm-Leach-Bliley Act, there have been a number of legislative and regulatory
proposals that would have an impact on bank/financial holding companies and
their bank and nonbank subsidiaries. It is impossible to predict whether or in
what form these proposals may be adopted in the future and if adopted, what
their effect will be on Synovus. LEGAL MATTERS The validity of the Synovus common
stock to be issued in connection with the merger will be passed upon by Kathleen
Moates, Senior Vice President and Senior Deputy General Counsel of Synovus. Ms.
Moates beneficially owns shares of Synovus common stock and options to purchase
additional shares of Synovus common stock. As of the date of this document, the
number of shares Ms. Moates owns or has the right to acquire upon exercise of
her options is, in the aggregate, less than 0.1% of the outstanding shares of
Synovus common stock. EXPERTS The consolidated financial
statements of Synovus Financial Corp. and subsidiaries as of December 31, 2001
and 2000 and for each of the years in the three-year period ended December 31,
2001 have been incorporated by reference herein in reliance upon the report of
KPMG LLP, independent accountants, incorporated by reference herein and upon the
authority of said firm as experts in accounting and auditing. The audit report
covering the December 31, 2001 consolidated financial statements refers to a
change in the method of accounting for derivative instruments and hedging
activities. OTHER MATTERS FNB Newton’s board of
directors does not know of any matters to be presented at the special meeting
other than the proposal to approve the merger. If any other matters are properly
brought before the special meeting or any adjournment of the special meeting,
the enclosed proxy will be deemed to confer discretionary authority on the
individuals named as proxies to vote the shares represented by the proxy as to
any such matters. SHAREHOLDER PROPOSALS Synovus’ 2003 annual meeting
of shareholders will be held in April 2003. Any shareholder satisfying the
Securities and Exchange Commission requirements and wishing to submit a proposal
to be included in the proxy statement for the 2003 annual meeting of
shareholders should submit the proposal in writing to the Secretary, Synovus
Financial Corp., 901 Front Avenue, Suite 301, Columbus, Georgia 31901. Synovus
must receive a 51 proposal by November 15, 2002 to consider it for inclusion in the
proxy statement for the 2003 annual meeting of shareholders. If the merger is not consummated,
FNB Newton will inform its shareholders of the date and time of the 2003 annual
meeting of shareholders of FNB Newton. WHERE YOU CAN FIND MORE INFORMATION Synovus files annual, quarterly
and special reports, proxy statements and other information with the Securities
and Exchange Commission. You may read and copy any reports, statements or other
information that Synovus files with the SEC at the SEC’s public reference
rooms at 450 Fifth Street, NW, Washington, D.C. 20549, 233 Broadway, New York,
New York 10048 and Suite 1400, 500 West Madison Street, Chicago, Illinois
60601-2511. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. These SEC filings are also available to the public from
commercial document retrieval services and at the Internet world wide web site
maintained by the SEC at http://www.sec.gov. Reports, proxy statements and other
information should also be available for inspection at the offices of the NYSE. Synovus filed a registration
statement to register with the SEC the Synovus common stock to be issued to FNB
Newton shareholders in the merger. This document is a part of that registration
statement and constitutes a prospectus of Synovus. As allowed by SEC rules, this
document does not contain all the information you can find in Synovus’
registration statement or the exhibits to that registration statement. The SEC allows Synovus to
“incorporate by reference” information into this document, which means
that Synovus can disclose important information to you by referring you to
another document filed separately with the SEC. The information incorporated by
reference is considered part of this document, except for any information
superseded by information contained directly in this document or in later filed
documents incorporated by reference in this document. This document incorporates by
reference the documents set forth below that Synovus has previously filed with
the SEC. These documents contain important information about Synovus and its
business. Synovus SEC Filings (File No. 1-10312) Synovus also incorporates by
reference additional documents that may be filed with the SEC between the date
of this document and the consummation of the merger or termination of the merger
agreement. These include periodic reports, such as Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy
statements. Synovus has supplied all
information contained or incorporated by reference in this document relating to
Synovus, and FNB Newton has supplied all information contained in this document
relating to FNB Newton. 52 You can obtain any of the
documents incorporated by reference from Synovus, the SEC or the SEC’s
Internet web site as described above. Documents incorporated by reference are
available from Synovus without charge, excluding all exhibits, except that if
Synovus has specifically incorporated by reference an exhibit in this document,
the exhibit will also be available without charge. You may obtain documents
incorporated by reference in this document by requesting them in writing or by
telephone from Synovus at the following addresses: Synovus Financial Corp. If you would like to request
documents, please do so by ________, 2003 to receive them before the FNB Newton
special meeting. You should rely only on the
information contained or incorporated by reference in this document. Synovus and
FNB Newton have not authorized anyone to provide you with information that is
different from what is contained in this document. This document is dated
__________, 2003. You should not assume that the information contained in this
document is accurate as of any date other than that date. Neither the mailing of
this document to shareholders nor the issuance of Synovus common stock in the
merger creates any implication to the contrary. FORWARD-LOOKING STATEMENTS Synovus and FNB Newton make
forward-looking statements in this document, and Synovus makes such statements
in its public documents, that are subject to risks and uncertainties. These
forward-looking statements include information about possible or assumed future
results of our operations. Also, when we use any of the words
“believes,” “expects,” “anticipates” or similar
expressions, we are making forward-looking statements. Many possible events or
factors could affect the financial results and performance of each of our
companies. This could cause results or performances to differ materially from
those expressed in our forward-looking statements. The Private Securities
Litigation Reform Act of 1995 provides a “safe harbor” for such
forward-looking statements. In order to comply with the terms of the safe
harbor, we note that a variety of factors could cause our actual results and
experience to differ materially from the anticipated results or other
expectations expressed in such forward-looking statements. The risks and
uncertainties that may affect the operations, performance, development and
results of our businesses include, but are not limited to, those described
below. You should consider these risks when you vote on the merger. These
possible events or factors include the following: 53 Management of each of Synovus and
FNB Newton believes the forward-looking statements about its company are
reasonable; however, you should not place undue reliance on them.
Forward-looking statements are not guarantees of performance. They involve
risks, uncertainties and assumptions. The future results and shareholder values
of Synovus following completion of the merger may differ materially from those
expressed or implied in these forward-looking statements. Many of the factors
that will determine these results and values are beyond Synovus’ and FNB
Newton’s ability to control or predict. PRO FORMA FINANCIAL INFORMATION Pro forma financial information
reflecting the acquisition of FNB Newton by Synovus is not presented in this
document since the pro forma effect is not significant. 54 AGREEMENT AND PLAN OF MERGER, dated as of the 31st day of October, 2002 (the "Plan" or the "Agreement")
by and between SYNOVUS FINANCIAL CORP. ("Synovus") and FNB NEWTON BANKSHARES, INC. ("FNB"). A. Synovus. Synovus
has been duly incorporated and is an existing corporation in good standing under
the laws of Georgia, with its principal executive offices located in Columbus,
Georgia. As of June 30, 2002, Synovus had 600,000,000 authorized shares of
common stock, par value $1.00 per share (“Synovus Common Stock”), of
which 296,488,566 shares are outstanding. All of the issued and outstanding
shares of Synovus Common Stock are duly and validly issued and outstanding and
are fully paid and nonassessable and not subject to any preemptive rights.
Synovus has 39 wholly-owned banking subsidiaries (as defined in Rule 1-02 of
Regulation S-X promulgated by the Securities and Exchange Commission, a
“Subsidiary”) and other non-banking Subsidiaries as of the date
hereof. Each Subsidiary that is a depository institution is an “insured
institution” as defined in the Federal Deposit Insurance Act and the
applicable regulations thereunder, and the deposits in which are insured by the
Federal Deposit Insurance Corporation. B. FNB. FNB has been
duly incorporated and is an existing corporation in good standing under the laws
of Georgia, with its principal executive offices located in Covington, Georgia.
As of June 30, 2002, FNB has 10,000,000 authorized shares of common stock, par
value $1.00 per share (“FNB Common Stock”), of which 544,980 shares
are outstanding as of the date hereof and 1,000,000 authorized shares of
preferred stock of no par value per share, of which no shares are outstanding as
of the date hereof. All of the issued and outstanding shares of FNB Common Stock
are duly and validly issued and outstanding and are fully paid and nonassessable
and not subject to any preemptive rights. FNB has one wholly-owned banking
Subsidiary, which Subsidiary is an “insured institution” as defined in
the Federal Deposit Insurance Act and the applicable regulations thereunder, and
the deposits in which are insured by the Federal Deposit Insurance Corporation. C. Rights, Etc. Neither Synovus nor FNB has any shares of its capital stock reserved for
issuance, any outstanding option, call or commitment relating to shares of its capital stock or any outstanding
securities, obligations or agreements convertible into or exchangeable for, or giving any person any right
(including, without limitation, preemptive rights) to subscribe for or acquire from it, any shares of its capital
stock except, in the case of Synovus, as described in filings made with the Securities and Exchange Commission
("SEC") and except in the case of FNB, as described in its audited financial statements for the year ended
December 31, 2001 or in its unaudited financial statements for the period ended September 30, 2002 or except as
otherwise disclosed in the letter referred to in Article III below. A-1 D. Board Approvals. The respective Boards of Directors of Synovus and FNB have unanimously
approved and adopted the Plan and have duly authorized its execution. In the case of FNB, the Board of Directors
has unanimously voted to recommend to its stockholders that the Plan be approved. E. Materiality. Unless the context otherwise requires, any reference in this Agreement to
materiality with respect to any party shall be deemed to be with respect to such party and its Subsidiaries, or
in the case of FNB, its Subsidiary, in each case taken as a whole. F. Material Adverse
Effect. For the purposes of this Plan, the capitalized term “Material
Adverse Effect” as used in relation to a person, means an adverse effect on
the business, results of operations or financial condition of that person or its
Subsidiaries which is material to it and its Subsidiaries, taken as a whole,
provided that “Material Adverse Effect” shall not include or be deemed
to include: (1) the impact of changes which are made and become effective after
the date of this Plan in banking or similar laws of general applicability or
interpretations thereof by courts or governmental authorities; or (2) changes
which are made and become effective after the date of this Plan in generally
accepted accounting principles applicable to banks and their holding companies. In consideration of their mutual
promises and obligations hereunder, and intending to be legally bound hereby,
Synovus and FNB adopt the Plan and prescribe the terms and conditions hereof and
the manner and basis of carrying it into effect, which shall be as follows: (A) Structure of the
Merger. On the Effective Date (as defined in Article VII), FNB will merge
(the “Merger”) with and into Synovus, with Synovus being the surviving
corporation (the “Surviving Corporation”) under the name Synovus
Financial Corp. pursuant to the applicable provisions of the Georgia Business
Corporation Code (“Georgia Act”). On the Effective Date, the articles
of incorporation and bylaws of the Surviving Corporation shall be the articles
of incorporation and bylaws of Synovus in effect immediately prior to the
Effective Date. (B) Effect on Outstanding Shares. A-2- A-3 A-4 A-5 (A) FNB and its Subsidiary shall
conduct their business only in the ordinary course and shall not, without the
prior written consent of Synovus, which consent will not be unreasonably
withheld: (1) issue any options to purchase capital stock or issue any shares of
capital stock; (2) declare, set aside, or pay any dividend or distribution with
respect to the capital stock of FNB other than normal and customary quarterly
cash dividends in an amount not to exceed $0.21 per share of FNB Common Stock;
(3) directly or indirectly redeem, purchase or otherwise acquire any capital
stock of FNB or its Subsidiary; (4) effect a split or reclassification of the
capital stock of FNB or its Subsidiary or a recapitalization of FNB or its
Subsidiary; (5) amend the articles of incorporation or bylaws of FNB or its
Subsidiary; (6) grant any increase in the salaries payable or to become payable
by FNB or its Subsidiary to any employee and other than normal, annual salary
increases to be made with regard to the employees of FNB or its Subsidiary; (7)
make any change in any bonus, group insurance, pension, profit sharing, deferred
compensation, or other benefit plan, payment or arrangement made to, for or with
respect to any employees or directors of FNB or its Subsidiary, except to the
extent such changes are required by applicable laws or regulations; (8) enter
into, terminate, modify or amend any contract, lease or other agreement with any
officer or director of FNB or its Subsidiary or any “associate” of any
such officer or director, as such term is defined in Regulation 14A under the
Securities Exchange Act of 1934, as amended (“Exchange Act”), other
than in the ordinary course of their banking business; (9) incur or assume any
liabilities, other than in the ordinary course of their banking business; (10)
dispose of any of their assets or properties, other than in the ordinary course
of their banking business; (11) solicit, encourage or authorize any individual,
corporation or other entity, including its directors, officers and other
employees, to solicit from any third party any inquiries or proposals relating
to the disposition of its business or assets, or the acquisition of its voting
securities, or the merger of it or its Subsidiary with any corporation or other
entity other than as provided by this Agreement, or subject to the fiduciary
obligations of its Board of Directors, provide any individual, corporation or
other entity with information or assistance or negotiate with any individual,
corporation or other entity in furtherance of such inquiries or to obtain such a
proposal (and FNB shall promptly notify Synovus of all of the relevant details
relating to all inquiries and proposals which it may receive relating to any of
such matters); (12) take any other action or permit its A-6 Subsidiary to take any
action not in the ordinary course of business of it and its Subsidiary; or (13)
directly or indirectly agree to take any of the foregoing actions. (B) Without the prior written
consent of FNB, which consent will not be unreasonably withheld, Synovus will
not take any action that would: (a) delay or adversely affect the ability of
Synovus to obtain any necessary approvals of regulatory authorities required for
the transactions contemplated hereby; or (b) adversely affect its ability to
perform its covenants and agreements on a timely basis under this Plan. Synovus hereby represents and
warrants to FNB, and FNB represents and warrants to Synovus, that, except as
previously disclosed in a letter of Synovus or FNB, respectively, of even date
herewith delivered to the other party: (A)
the representations set forth
in Recitals A through D of the Plan with respect to it are true and correct and
constitute representations and warranties for the purpose of Article V
“Conditions to Consummation,” hereof; (B) the outstanding shares of
capital stock of it and its Subsidiaries are duly authorized, validly issued and
outstanding, fully paid and (subject to 12 U.S.C.§ 55 in the case of a national
bank subsidiary) non-assessable, and subject to no preemptive rights of current
or past shareholders; (C) each of it and its
Subsidiaries has the power and authority, and is duly qualified in all
jurisdictions (except for such qualifications the absence of which either
individually or in the aggregate, will not have a Material Adverse Effect) where
such qualification is required to carry on its business as it is now being
conducted, to own all its material properties and assets, and has all federal,
state, local, and foreign governmental authorizations necessary for it to own or
lease its properties and assets and to carry on its business as it is now being
conducted, except for such authorizations the absence of which, either
individually or in the aggregate, would not have a Material Adverse Effect; (D) the shares of capital stock of
each of its Subsidiaries are owned by it (except for director’s qualifying
shares) free and clear of all liens, claims, encumbrances and restrictions on
transfer; (E) subject, in the case of FNB,
to the receipt of any required shareholder approval of this Plan, the Plan has
been authorized by all necessary corporate action of it and, subject to receipt
of such approvals of shareholders and required regulatory approvals, is a legal,
valid and A-7 binding agreement of it enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors’ rights and to general equity principles involving specific
performance or injunctive relief; (F) the execution, delivery and
performance of the Plan by it does not, and the consummation of the transactions
contemplated hereby by it will not, constitute: (1) a breach or violation of, or
a default under, any law, rule or regulation or any judgment, decree, order,
governmental permit or license, or agreement, indenture or instrument of it or
its Subsidiaries or to which it or its Subsidiaries (or any of their respective
properties) is subject which breach, violation or default would have a Material
Adverse Effect, or enable any person to enjoin any of the transactions
contemplated hereby; or (2) a breach or violation of, or a default under, the
certificate or articles of incorporation or bylaws of it or any of its
Subsidiaries; and the consummation of the transactions contemplated hereby will
not require any consent or approval under any such law, rule, regulation,
judgment, decree, order, governmental permit or license or the consent or
approval of any other party to any such agreement, indenture or instrument,
other than the required approvals of applicable regulatory authorities and the
approval of the shareholders of FNB, both of which are referred to in Article
V(A) and any consents and approvals the absence of which will not have a
Material Adverse Effect; (G) in the case of Synovus, since
December 31, 2001, it has filed all forms, reports and documents with the SEC
required to be filed by it pursuant to the federal securities laws and SEC rules
and regulations thereunder (the”SEC Reports”), each of which complied
as to form, at the time such form, report or document was filed, in all material
respects with the applicable requirement of the Securities Act of 1933, as
amended (“Securities Act”), the Exchange Act and the applicable rules
and regulations thereunder. As of their respective dates, none of the SEC
Reports, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. Each of the balance sheets in or incorporated by reference into the
SEC Reports (including the related notes and schedules) fairly presents the
financial position of the entity or entities to which it relates as of its date
and each of the statements of operations and retained earnings and of cash flows
and changes in financial position or equivalent statements in or incorporated by
reference into the SEC Reports (including any related notes and schedules)
fairly presents the results of operations, retained earnings and cash flows and
changes in financial position, as the case may be, of the entity or entities to
which it relates for the periods set forth therein (subject, in the case of
unaudited interim statements, to normal year-end audit adjustments that are not
material in amount or effect), in each case in accordance with generally
accepted accounting principles applicable to bank holding companies consistently
applied during the periods involved, except as may be noted therein. It has no
material obligations or liabilities (contingent or otherwise) except as
disclosed in the SEC Reports. A-8 For purposes of this paragraph, material shall
have the meaning as defined under the Securities Act, the Exchange Act and the
rules promulgated thereunder; (H) in the case of FNB: (1) it has
previously delivered to Synovus copies of the financial statements of FNB, and
of FNB’s Subsidiary, as of and for each of the years ended December 31,
2000 and 2001, and for the period ended September 30, 2002, and FNB shall
deliver to Synovus, as soon as practicable following the preparation of
additional financial statements for each subsequent calendar quarter of FNB and
FNB’s Subsidiary, the additional financial statements of FNB and FNB’s
Subsidiary (including, with respect to the Subsidiary, call reports of
FNB’s Subsidiary) as of and for subsequent calendar quarter (such financial
statements, unless otherwise indicated, being hereinafter referred to
collectively as the “Financial Statements of FNB” and the
“Financial Statements of FNB’s Subsidiary,” respectively); and
(2) each of the Financial Statements of FNB and each of the Financial Statements
of FNB’s Subsidiary (including the related notes), have been or will be
prepared in all material respects in accordance with generally accepted
accounting principles, which principles have been and will be consistently
applied during the periods involved, except as otherwise noted therein, and all
the books and records of FNB and FNB’s Subsidiary have been, are being, and
will be maintained in all material respects in accordance with applicable legal
and accounting requirements and reflect only actual transactions. Each of the
Financial Statements of FNB and each of the Financial Statements of FNB’s
Subsidiary (including the related notes) fairly present or will fairly present
the financial position of FNB on a consolidated basis and the financial position
of FNB’s Subsidiary as of the respective dates thereof and fairly present
or will fairly present the results of operations of FNB on a consolidated basis
and the results of operations of FNB’s Subsidiary for the respective
periods therein set forth. FNB and FNB’s Subsidiary have no material
obligations (contingent or otherwise) except as disclosed in the Financial
Statements of FNB and the Financial Statements of FNB’s Subsidiary. (I) it has no material liabilities
and obligations secured or unsecured, whether accrued, absolute, contingent or
otherwise, known or unknown, due or to become due, including, but not limited to
tax liabilities, that should have been but are not reflected in or reserved
against in its audited financial statements as of December 31, 2001 or disclosed
in the notes thereto; (J) there has not been the
occurrence of one or more events, conditions, actions or statements of fact
which have caused a Material Adverse Effect with respect to it since December
31, 2001; (K) all material federal, state,
local, and foreign tax returns required to be filed by or on behalf of it or any
of its Subsidiaries have been timely filed or requests for extensions have been
timely filed and any such extension shall have been granted and not have
expired; and to the best of its knowledge, all such returns filed are complete
and accurate in all material respects. All taxes shown on returns filed by it
have been paid in full or adequate provision has been made for A-9 any such taxes on
its balance sheet (in accordance with generally accepted accounting principles).
As of the date of the Plan, there is no audit, examination, deficiency, or
refund litigation with respect to any taxes of it that would result in a
determination that would have a Material Adverse Effect. All taxes, interest,
additions, and penalties due with respect to completed and settled examinations
or concluded litigation relating to it have been paid in full or adequate
provision has been made for any such taxes on its balance sheet (in accordance
with generally accepted accounting principles). It has not executed an extension
or waiver of any statute of limitations on the assessment or collection of any
material tax due that is currently in effect. Deferred taxes have been provided
for in its financial statements in accordance with generally accepted accounting
principles applied on a consistent basis; (M) neither it nor its
Subsidiaries are in default in any material respect under any material contract
(as defined in Item 601(b)(10)(i) and (ii) of Regulation S-K) and there has not
occurred any event that with the lapse of time or the giving of notice or both
would constitute such a default; (N) all “employee benefit
plans,” as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974 (“ERISA”), that cover any of its or its
Subsidiaries’ employees, comply in all material respects with all
applicable requirements of ERISA, the Code and other applicable laws; neither it
nor any of its Subsidiaries has engaged in a “prohibited transaction”
(as defined in Section 406 of ERISA or Section 4975 of the Code) with respect to
any such plan which is likely to result in any material penalties or taxes under
Section 502(i) of ERISA or Section 4975 of the Code; no material liability to
the Pension Benefit Guaranty Corporation has been or is expected by it or them
to be incurred with respect to any such plan which is subject to Title IV of
ERISA (“Pension Plan”), or with respect to any “single-employer
plan” (as defined in Section 4001(a)(15) of ERISA) currently or formerly
maintained by it, them or any entity which is considered one employer with it
under Section 4001 of ERISA or Section 414 of the Code; no Pension Plan had an
“accumulated funding deficiency” (as defined in Section 302 of ERISA A-10 (whether or not waived) as of the last day of the end of the most recent plan
year ending prior to the date hereof; the fair market value of the assets of
each Pension Plan exceeds the present value of the “benefit
liabilities” (as defined in Section 4001(a)(16) of ERISA) under such
Pension Plan as of the end of the most recent plan year with respect to the
respective Plan ending prior to the date hereof, calculated on the basis of the
actuarial assumptions used in the most recent actuarial valuation for such
Pension Plan as of the date hereof; to the actual knowledge of its executive
officers, there are no pending or anticipated material claims against or
otherwise involving any of its employee benefit plans and no suit, action or
other litigation (excluding claims for benefits incurred in the ordinary course
of activities of such plans) has been brought against or with respect to any
such plan, except for any of the foregoing which would not have a Material
Adverse Effect; no notice of a “reportable event” (as defined in
Section 4043 of ERISA) for which the 30-day reporting requirement has not been
waived has been required to be filed for any Pension Plan within the 12-month
period ending on the date hereof; it and its Subsidiaries have not contributed
to a “multi-employer plan”, as defined in Section 3(37) of ERISA; and
it and its Subsidiaries do not have any obligations for retiree health and life
benefits under any benefit plan, contract or arrangement, except as required by
Section 4980B of the Code and Part 6 of Subtitle B of Title I of ERISA; (O) each of it and its
Subsidiaries has good and marketable title to its respective properties and
assets, tangible or intangible (other than property as to which it is lessee),
except for such defects in title which would not, in the aggregate, have a
Material Adverse Effect; (P) it knows of no reason why the
regulatory approvals referred to in Article V(A)(2)and (3) should not be
obtained without the imposition of any condition of the type referred to in the
proviso following such Article V(A)(2) and (3) and it has taken no action or
agreed to take any action that is reasonably likely to prevent the Merger from
qualifying for treatment as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code for federal income tax purposes; (Q) in the case of Synovus, its
reserve for possible loan and lease losses as shown in its audited financial
statements as of December 31, 2001 was, and its reserve for possible loan and
lease losses as shown in all Quarterly Reports on Form 10-Q filed prior to the
Effective Date will be, adequate in all material respects under generally
accepted accounting principles applicable to banks and bank holding companies,
and in the case of FNB, its reserve for possible loan and lease losses as shown
in its audited financial statements as of December 31, 2001 was, and its reserve
for possible loan and lease losses as shown in its unaudited quarterly financial
statements prepared for all quarters ending prior to the Effective Date will be,
adequate in all material respects under generally accepted accounting principles
applicable to banks and bank holding companies; (R) it and each of its
Subsidiaries has all material permits, licenses, certificates of authority,
orders, and approvals of, and has made all filings, applications, and
registrations with, A-11 federal, state, local, and foreign governmental or
regulatory bodies that are required in order to permit it to carry on its
business as it is presently conducted and the absence of which would have a
Material Adverse Effect; all such permits, licenses, certificates of authority,
orders, and approvals are in full force and effect, and to the best knowledge of
it no suspension or cancellation of any of them is threatened; (S) in the case of Synovus, the
shares of capital stock to be issued pursuant to the Plan, when issued in
accordance with the terms of the Plan, will be duly authorized, validly issued,
fully paid and nonassessable and subject to no preemptive rights of any current
or past shareholders; (T) neither it nor any of its
Subsidiaries is a party to, or is bound by, any collective bargaining agreement,
contract, or other agreement or understanding with a labor union or labor
organization, nor is it or any of its Subsidiaries the subject of a proceeding
asserting that it or any such Subsidiary has committed an unfair labor practice
or seeking to compel it or such Subsidiary to bargain with any labor
organization as to wages and conditions of employment, nor is there any strike
or other labor dispute involving it or any of its Subsidiaries pending or
threatened; (U) other than services provided
by Brown, Burke Capital Partners, L.L.C., which has been retained by FNB and the
arrangements with which, including fees, have been disclosed to Synovus prior to
the date hereof, neither it nor any of its Subsidiaries, nor any of their
respective officers, directors, or employees, has employed any broker or finder
or incurred any liability for any financial advisory fees, brokerage fees,
commissions, or finder’s fees, and no broker or finder has acted directly
or indirectly for it or any of its Subsidiaries, in connection with the Plan or
the transactions contemplated hereby; (V) the information to be supplied
by it for inclusion in: (1) the Registration Statement on Form S-4 and/or such
other form(s) as may be appropriate to be filed under the Securities Act, with
the SEC by Synovus for the purpose of, among other things, registering the
Synovus Common Stock to be issued to the shareholders of FNB in the Merger (the
“Registration Statement”); or (2) the proxy statement to be filed with
the SEC under the Exchange Act and distributed in connection with FNB’s
meeting of its shareholders to vote upon this Plan (as amended or supplemented
from time to time, the “Proxy Statement”, and together with the
prospectus included in the Registration Statement, as amended or supplemented
from time to time, the “Proxy Statement/Prospectus”) will not at the
time such Registration Statement becomes effective, and in the case of the Proxy
Statement/Prospectus at the time it is mailed and at the time of the meeting of
stockholders contemplated under this Plan, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading; A-12 “Hazardous Substance”
means any substance or waste presently listed, defined, designated or classified
as hazardous, toxic, radioactive or dangerous, or otherwise regulated, under any
Environmental Law, whether A-13 by type or by quantity, including any material
containing any such substance as a component. Hazardous Substances include
without limitation petroleum or any derivative or by-product thereof, asbestos,
radioactive material, and polychlorinated biphenyls. “Loan Portfolio Properties
and Other Properties Owned” means those properties owned or operated by
Synovus or FNB as applicable, or any of their respective Subsidiaries; and (X) in the case of FNB, all
securities issued by it (or any other person), convertible into FNB Common Stock
shall, as a result and upon consummation of the Merger be convertible only into
Synovus Common Stock. Synovus hereby covenants to FNB,
and FNB hereby covenants to Synovus, that: (A) it shall take or cause to be taken
all action necessary or desirable under the Plan on its part as promptly as
practicable, including the filing of all necessary applications and the
Registration Statement, so as to permit the consummation of the transactions
contemplated by the Plan at the earliest possible date and cooperate fully with
the other party hereto to that end; (B) in the case of FNB, it shall:
(1) take all steps necessary to duly call, give notice of, convene and hold a
meeting of its shareholders for the purpose of approving the Plan as soon as is
reasonably practicable; (2) distribute to its shareholders the Proxy
Statement/Prospectus in accordance with applicable federal and state law and
with its articles of incorporation and bylaws; (3) recommend to its shareholders
that they approve the Plan (unless it has been advised in writing that to do so
would constitute a breach of fiduciary or legal duties of its Board of
Directors); and (4) cooperate and consult with Synovus with respect to each of
the foregoing matters; (C) it will cooperate in the
preparation and filing of the Proxy Statement/Prospectus and Registration
Statement in order to consummate the transactions contemplated by the Plan as
soon as is reasonably practicable; (D) Synovus will advise FNB,
promptly after Synovus receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or amendment has
been filed, of the issuance of any stop order or the suspension of the
qualification of the shares of Synovus Common Stock issuable pursuant to the
Plan for offering or sale in any jurisdiction, A-14 of the initiation or threat of
any proceeding for any such purpose or of any request by the SEC for the
amendment or supplement of the Registration Statement or for additional
information; (E) in the case of Synovus, it
shall take all actions to obtain, prior to the effective date of the
Registration Statement, all applicable state securities law or “Blue
Sky” permits, approvals, qualifications or exemptions for the Synovus
shares to be issued pursuant to this Plan; (F) subject to its disclosure
obligations imposed by law or regulatory authority, unless reviewed and agreed
to by the other party hereto in advance, it will not issue any press release or
written statement for general circulation relating to the transactions
contemplated hereby; provided however, that nothing in this Article IV(F) shall
be deemed to prohibit either party from making any disclosure which its counsel
deems necessary or advisable in order to satisfy such party’s disclosure
obligations imposed by law;
(G) from and subsequent to the
date hereof, it will: (1) give to the other party hereto and its respective
counsel and accountants reasonable access to its premises and books and records
during normal business hours for any reasonable purpose related to the
transactions contemplated hereby; and (2) cooperate and instruct its respective
counsel and accountants to cooperate with the other party hereto and with its
respective counsel and accountants with regard to the formulation and production
of all necessary information, disclosures, financial statements, registration
statements and regulatory filings with respect to the transactions encompassed
by the Plan. Any nonpublic information regarding either party shall be held
subject to the terms of that certain letter agreement between Synovus and Brown,
Burke Capital Partners, LLC dated July 1, 2002; (H) it shall notify the other
party hereto as promptly as practicable of: (1) any breach of any of its
representations, warranties or agreements contained herein; (2) any occurrence,
or impending occurrence, of any event or circumstance which would cause or
constitute a material breach of any of the representations, warranties or
agreements of it contained herein; and (3) any material adverse change in its
financial condition, results of operations or business; and (4) it shall use its
best efforts to prevent or remedy the same; (I) it shall cooperate and use its
best efforts to promptly prepare and file all necessary documentation, to effect
all necessary applications, notices, petitions, filings and other documents, and
to obtain all necessary permits, consents, approvals and authorizations of all
third parties and governmental bodies or agencies, including, in the case of
Synovus, submission of applications for approval of the Plan and the
transactions contemplated hereby to the Board of Governors of the Federal
Reserve System (the “Board of Governors”) in accordance with the
provisions of the Bank Holding Company Act of 1956, as amended (the “BHC
Act”) and the Georgia Department of Banking and Finance (“Georgia
Department”), and to such other regulatory agencies as required by law; A-15 (J) it will use its best efforts
to cause the Merger to qualify as a reorganization within the meaning of Section
368(a) of the Code for federal income tax purposes; (K) Synovus shall use its best
efforts to cause the shares of Synovus Common Stock to be issued pursuant to the
terms of this Plan to be approved for listing on the NYSE, and each such share
shall be entitled to ten (10) votes per share in accordance with and subject to
those certain Articles of Amendment to Synovus’ Articles of Incorporation
dated April 24, 1986; (L) following the Effective Date,
Synovus shall continue to provide generally to officers and employees of FNB and
its Subsidiary employee benefits, including, without limitation, pension
benefits, health, life insurance and other welfare benefits, and vacation and
severance arrangements (collectively, “Employee Benefits”), on terms
and conditions which, when taken as whole, are substantially similar to those
currently provided by FNB and its Subsidiary. As soon as administratively and
financially practicable following the Effective Date, Synovus shall provide to
officers and employees of FNB and its Subsidiary Employee Benefits which are the
same as those provided from time to time by Synovus and its Subsidiaries to
their similarly situated officers and employees. With respect to Employee
Benefits maintained by Synovus in which FNB participates after the Effective
Date, Synovus agrees to treat service by employees of FNB and its Subsidiary
prior to the Effective Date as service with Synovus (1) (a) for eligibility and
vesting purposes in providing Employee Benefits other than those identified in
clause (b); and (b) for eligibility, vesting and benefit accrual purposes in
providing severance benefits and in administering payroll practices that do not
rise to the level of an employee benefit plan subject to ERISA, such as vacation
and other leave policies; and (2) in making employment determinations, including
promotions and layoffs. Synovus also agrees to waive pre-existing condition
limitations, if any, as would otherwise be applied to participating employees of
FNB and its Subsidiary upon the implementation of such Employee Benefits
constituting “group health plans” within the meaning of Section
5000(b)(i) of the Code (each, a “Synovus Health Plan”) and, where a
transition to a Synovus Health Plan is made during the plan year of one or more
group health plan(s) maintained by FNB or its Subsidiary, to credit such
employees with expenses incurred under any such group health plan for purposes
of applying deductible and out-of-pocket limitations under the Synovus Health
Plan (on a pro-rata basis in the event of a difference in plan years between the
predecessor and successor plans). Finally, Synovus shall recognize the paid time
off accrued by employees of FNB and its Subsidiary as of the Effective Date and
shall not require such accrued paid time off to be utilized prior to the end of
the calendar year which contains the Effective Date; (M) it shall promptly furnish the
other party with copies of all documents filed prior to the Effective Date with
the SEC and all documents filed with other governmental or regulatory agencies
or bodies in connection with the Merger; A-16 (N) FNB shall use its best efforts
to cause each director, executive officer and other person who is an
“affiliate” (for purposes of Rule 145 under the Securities Act) to
deliver to Synovus as soon as practicable after the date hereof, but in no event
after the date of the FNB shareholders’ meeting called to approve the
Merger, a written agreement providing that such person will not sell, pledge,
transfer or otherwise dispose of any shares of FNB Common Stock held by such
“affiliate” and the shares of Synovus Common Stock to be received by
such “affiliate” in the Merger: (1) in the case of shares of Synovus
Common Stock only, except in compliance with the applicable provisions of the
Securities Act and the rules and regulations thereunder. The certificates of
Synovus Common Stock issued to affiliates of FNB will bear an appropriate legend
reflecting the foregoing; (O) it will not directly or
indirectly take any action or omit to take any action to cause any of its
representations and warranties made in this Plan to become untrue; (P) in the case of Synovus, it
shall take no action which would cause the shareholders of FNB to recognize gain
or loss as a result of the Merger to the extent such shareholders would not
otherwise recognize gain or loss as described in Article V(A)(8); (Q) FNB shall coordinate with
Synovus the declaration of any dividends in respect of FNB Common Stock and the
record dates and payment dates relating thereto, it being the intention of the
parties hereto that holders of FNB Common Stock shall not receive two dividends,
or fail to receive one dividend, for any single calendar quarter with respect to
their shares of FNB Common Stock and any shares of Synovus Common Stock any such
holder receives in exchange therefor in the Merger; (R) FNB will, within thirty (30)
days after the date hereof, engage a firm satisfactory to Synovus to conduct:
(a) a Phase I environmental site assessment of the banking facilities currently
owned by FNB upon which FNB is conducting a banking business, which assessment
shall meet the standards of ASTM E1527-00 and shall include at a minimum a site
history, on-site inspection, asbestos sampling of presumed asbestos containing
material, evaluation of surrounding properties and soil tests if the results of
the Phase I indicate a need therefor; and (b) a transaction screen that meets
the standards of ASTM E 1528 for the property that FNB leases, and in addition,
FNB agrees to conduct a Phase I assessment of the leased property if, in
Synovus’ reasonable judgment, the transaction screen indicates potential
environmental liabilities associated with the leased properties accruing to FNB
or FNB’s successor. Synovus has requested such inspection and testing in an
effort to reasonably determine whether potential liabilities exist relating to
Environmental Law. Delivery of the Phase I assessments and transaction screen
satisfactory to Synovus is an express condition precedent to the consummation of
the Merger. Within fifteen (15) days after receipt of these reports, Synovus
shall notify FNB in writing whether or not, in the reasonable judgment of
Synovus, the potential liabilities identified in such reports will have a
Material Adverse Effect on FNB. In the event that Synovus determines, in its A-17 reasonable judgment, that the results of such reports will have a Material
Adverse Effect on FNB, such written notification shall include a statement by
Synovus regarding whether or not it intends to terminate this Agreement based
upon the results of such reports. The Parties agree that Synovus has given FNB
good and valuable consideration for its agreement to obtain and pay the cost of
such inspection and testing, and Synovus shall be entitled to rely on same; (S) Prior to the Effective Date,
FNB shall purchase for, and on behalf of, its current and former officers and
directors, extended coverage under the current directors’ and
officers’ liability insurance policy maintained by FNB to provide for
continued coverage of such insurance for a period of three years following the
Effective Date with respect to matters occurring prior to the Effective Date; A-18 (U) prior to the Effective Date,
FNB will use its best efforts to take all steps required to exempt the
transactions contemplated by this Agreement from any applicable state
anti-takeover law; and (V) at the request of Synovus, FNB
and the Subsidiary shall immediately prior to the Effective Date establish and
take such reserves and accruals as Synovus reasonably shall request to conform
FNB’s Subsidiary’s loan, accrual, reserve and other accounting
policies to the policies of Synovus, provided however, such requested conforming
adjustment shall not be taken into account in determining whether and event or
events have had a Material Adverse Effect on FNB. (A) The respective obligations of
Synovus and of FNB to effect the Merger shall be subject to the satisfaction
prior to the Effective Date of the following conditions: (1) the Plan and the transactions
contemplated hereby shall have been approved by the requisite vote of the
shareholders of FNB in accordance with applicable law and FNB shall have
furnished to Synovus certified copies of resolutions duly adopted by FNB’s
shareholders evidencing the same; (2) the procurement by Synovus and FNB of approval of the Plan and the transactions
contemplated hereby by the Board of Governors and by the Georgia Department;
(3) procurement of all other
regulatory consents and approvals which are necessary to the consummation of the
transactions contemplated by the Plan; provided, however, that no approval or
consent in Articles V(A)(2) and (3) shall be deemed to have been received if it
shall include any conditions or requirements (other than conditions or
requirements which are customarily included in such an approval or consent which
do not have a Material Adverse Effect) which would have such a Material Adverse
Effect on the economic or business benefits of the transactions contemplated
hereby as to render inadvisable the consummation of the Merger in the reasonable
opinion of the Board of Directors of Synovus or FNB; A-19 (4) the satisfaction of all other
statutory or regulatory requirements, including the requirements of NYSE or
other self regulating organizations, which are necessary to the consummation of
the transactions contemplated by the Plan; (5) no party hereto shall be
subject to any order, decree or injunction or any other action of a United
States federal or state court of competent jurisdiction permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement; (6) no party hereto shall be
subject to any order, decree or injunction or any other action of a United
States federal or state governmental, regulatory or administrative agency or
commission permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement; (7) the Registration Statement
shall have become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the SEC, and Synovus shall have received all state securities law
and “Blue Sky” permits, approvals, qualifications or exemptions
necessary to consummate the transactions contemplated hereby; (8) each party shall have received
an opinion (“Tax Opinion”) from Powell, Goldstein on or before the
Effective Date, to the effect that the Merger will be treated for federal income
tax purposes as a reorganization within the meaning of Section 368(a)(1)(A) of
the Code and that, accordingly: (i) no gain or loss will be recognized by
Synovus or FNB as a result of the Merger; and (ii) gain, but not loss, will be
recognized by each shareholder of FNB who exchanges his or her shares of FNB
Common Stock for shares of Synovus Common Stock pursuant to the Merger equal to
the lesser of (A) the cash received by such shareholder or (B) the gain realized
(but not less than zero) by such shareholder from such exchange, which will
equal the sum of the cash and the fair market value of the Synovus Common Stock
received by such shareholder over such shareholder’s basis in his or her
FNB Common Stock; and (9) each party shall have
delivered to the other party a certificate, dated as of the Effective Date,
signed by its Chairman of the Board, or its Chief Financial Officer, and by its
Controller to the effect that, to the best knowledge and belief of such
officers, the statement of facts and representations made on behalf of the
management of such party, presented to Powell, Goldstein in delivering the Tax
Opinion, were at the date of such presentation true, correct and complete. Each
party shall have received a copy of the Tax Opinion referred to in Article
V(A)(8). (B) The obligation of Synovus to
effect the Merger shall be subject to the satisfaction prior to the Effective
Date of the following additional conditions: A-20 (1) each of the representations,
warranties and covenants contained herein of FNB shall be true on, or complied
with by, the Effective Date in all material respects as if made on such date (or
on the date when made in the case of any representation or warranty which
specifically relates to an earlier date) and Synovus shall have received a
certificate signed by the President of FNB, dated the Effective Date, to such
effect; (2) there shall be no discovery of
facts, or actual or threatened causes of action, investigations or proceedings
by or before any court or other governmental body that relates to or involves
either FNB or its Subsidiary: (a) which, in the reasonable judgment of Synovus,
would have a Material Adverse Effect, or which may be foreseen to have a
Material Adverse Effect on, either FNB or the consummation of the transactions
contemplated by this Agreement; (b) that challenges the validity or legality of
this Agreement or the consummation of the transactions contemplated by this
Agreement; or (c) that seeks to restrain or invalidate the consummation of the
transactions contemplated by this Agreement or seeks damages in connection
therewith; (3) Synovus shall not have learned
of any fact or condition with respect to the business, properties, assets,
liabilities, deposit relationships or earnings of FNB which, in the reasonable
judgment of Synovus, is materially at variance with one or more of the
warranties or representations set forth in this Agreement or which, in the
reasonable judgment of Synovus, has or will have a Material Adverse Effect on
FNB; (4) Stephen C. Wood shall have entered into an employment agreement with Synovus as
proposed by Synovus and approved by Mr. Wood which will become effective as of the Effective Date;
(5) on the Effective Date, First
Nation Bank will have a CAMELS rating of at least 2 and a Compliance Rating and
Community Reinvestment Act Rating of at least Satisfactory; (6) on the Effective Date, FNB
will have a loan loss reserve of at least 1.25% of loans and which will be
adequate in all material respects under generally accepted accounting principles
applicable to banks; (7)
FNB shall have delivered to Synovus the
environmental reports referenced in Article IV (R);
(8)
the results of any regulatory exam of FNB and its Subsidiary occurring between the
date hereof and the Effective Date shall be reasonably satisfactory to Synovus;
(9)
each of the officers and
directors of FNB shall have delivered a letter to Synovus to the effect that
such person is not aware of any claims he might have against FNB other A-21 than
routine compensation, benefits and the like as an employee, or ordinary rights
as a customer; and (10) there shall have been no
determination by Synovus that any fact, event or condition exists or has
occurred that, in the reasonable judgement of Synovus, would render the Merger
impractical because of any state of war, national emergency, banking moratorium
or general suspension of trading on the NYSE or other national securities
exchange. (C) The obligation of FNB to
effect the Merger shall be subject to the satisfaction prior to the Effective
Date of the following additional conditions: (1) each of the representations,
warranties and covenants contained herein of Synovus shall be true on, or
complied with by, the Effective Date in all material respects as if made on such
date (or on the date when made in the case of any representation or warranty
which specifically relates to an earlier date) and FNB shall have received a
certificate signed by the Chief Executive Officer of Synovus, dated the
Effective Date, to such effect; (2) the listing for trading of the
shares of Synovus Common Stock which shall be issued pursuant to the terms of
this Plan on the NYSE, shall have been approved by the NYSE subject to official
notice of issuance; (3) there shall be no discovery of
facts, or actual or threatened causes of action, investigations or proceedings
by or before any court or other governmental body that relates to or involves
either Synovus or its Subsidiaries: (a) which, in the reasonable judgment of
FNB, would have a Material Adverse Effect on, or which may be foreseen to have a
material Adverse Effect on, either Synovus or the consummation of the
transactions contemplated by this Agreement; (b) that challenges the validity or
legality of this Agreement or the consummation of the transactions contemplated
by the Agreement; or (c) that seeks to restrain or invalidate the consummation
of the transactions contemplated by this Agreement or seeks damages in
connection therewith; (4) FNB shall not have learned of
any fact or condition with respect to the business, properties, assets,
liabilities, deposit relationships or earnings of Synovus which, in the
reasonable judgment of FNB, is materially at variance with one or more of the
warranties or representations set forth in this Agreement or which, in the
reasonable judgment of FNB, has or will have a Material Adverse Effect on
Synovus; (5) FNB shall have received from
the Senior Deputy General Counsel of Synovus an opinion to the effect that
Synovus is duly organized, validly existing and in good standing, the Plan has
been duly and validly authorized by all necessary corporate action on the part
of Synovus, has been duly and validly executed and delivered by Synovus, is the
valid and A-22 binding obligation of Synovus, enforceable in accordance with its
terms except as such may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and that the shares of Synovus Common Stock to
be issued in the Merger are duly authorized, validly issued, fully paid,
nonassessable, and not subject to any preemptive rights of any current or past
shareholders; (6) FNB shall have received from
Brown, Burke Capital Partners, L.L.C. a letter to the effect that, in the
opinion of such firm, the Per Share Cash Consideration and the Per Share Stock
Consideration are fair, from a financial point of view, to the holders of FNB
Common Stock; and (7) there shall have been no
determination by FNB that any fact, event or condition exists or has occurred
that, in the reasonable judgement of FNB, would render the Merger impractical
because of any state of war, national emergency, banking moratorium or general
suspension of trading on the NYSE or other national securities exchange. A. The Plan may be terminated prior to the Effective Date, either before or after its approval by
the stockholders of FNB: (1) by the mutual consent of Synovus and FNB, if the Board of Directors of each so
determines by vote of a majority of the members of its entire Board;
(2) by Synovus or FNB if
consummation of the Merger does not occur by reason of the failure of any of the
conditions precedent set forth in Article V hereof unless the failure to meet
such condition precedent is due to a breach of the Plan by the party seeking to
terminate; (3) by Synovus or FNB if its Board
of Directors so determines by vote of a majority of the members of its entire
Board in the event that the Merger is not consummated by March 31, 2003 (but the
parties agree to use their best efforts to consummate the Merger on or before
February 28, 2003) unless the failure to so consummate by such time is due to
the breach of the Plan by the party seeking to terminate; and (4)
by FNB, A-23 B. In the event of the termination
and abandonment of this Agreement pursuant to Article VI(A) of this Agreement,
this Agreement shall become void and have no effect, except as set forth in
Paragraph (A) of Article VIII, and there shall be no liability on the part of
any party hereto or their respective officers or directors; provided, however,
that: (1) FNB shall be entitled to a cash payment from Synovus for FNB’s
reasonable out-of-pocket expenses relating to the Merger in an amount not to
exceed $150,000, which amount shall not be deemed an exclusive remedy or
liquidated damages, in the event of the termination of this Agreement due to the
failure by Synovus to satisfy any of its representations, warranties or
covenants set forth herein; and (2) Synovus shall be entitled to a cash payment
from FNB for Synovus’ reasonable out-of-pocket expenses relating to the
Merger and for reimbursement of the fair market value of services provided by
internal counsel and due diligence team members in connection with the Merger in
an amount not to exceed $150,000, which amount shall not be deemed an exclusive
remedy or liquidated damages, in the event of the termination of this Agreement
due to the failure by FNB to satisfy any of its representations, warranties or
covenants set forth herein. A-24 The “Effective Date”
shall be the date on which the Merger becomes effective as specified in the
Certificate of Merger to be filed with the Secretary of State of Georgia
approving the Merger. (A) The agreements and covenants
of the parties which by their terms apply in whole or in part after the
Effective Date shall survive the Effective Date. Except for Article III(S), and
Article IV(N) which shall survive the Effective Date, no other representations,
warranties, agreements and covenants shall survive the Effective Date. If the
Plan shall be terminated, the agreements of the parties in Article IV(G),
Article VI(B) and Articles VIII(E) and (F) shall survive such termination. (B) Prior to the Effective Date,
any provision of the Plan may be: (1) waived by the party benefitted by the
provision or by both parties; or (2) amended or modified at any time (including
the structure of the transaction) by an agreement in writing between the parties
hereto approved by their respective Boards of Directors (to the extent allowed
by law) or by their respective Boards of Directors. (C) This Plan may be executed in
multiple and/or facsimile originals, and each copy of the Plan bearing the
manually executed, facsimile transmitted or photocopied signature of each of the
parties hereto shall be deemed to be an original. (D) The Plan shall be governed by,
and interpreted in accordance with, the laws of the State of Georgia. (E) Each party hereto will bear
all expenses incurred by it in connection with the Plan and the transactions
contemplated hereby, including, but not limited to, the fees and expenses of its
respective counsel and accountants. (F) Each of the parties and its
respective agents, attorneys and accountants will maintain the confidentiality
of all information provided in connection herewith which has not been publicly
disclosed unless it is advised by counsel that any such information is required
by law to be disclosed. (G) All notices, requests,
acknowledgments and other communications hereunder to a party shall be in
writing and shall be deemed to have been duly given when delivered by hand,
telecopy, telegram or telex (confirmed in writing), by overnight courier or sent
by registered or A-25 certified mail, postage paid, to such party at its address set
forth below or such other address as such party may specify by notice to the
other party hereto. (H) All terms and provisions of
the Plan shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns. Except as expressly provided
for herein, nothing in this Plan is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this Plan. A-26 (I) The Plan represents the entire
understanding of the parties hereto with reference to the transactions
contemplated hereby and supersedes any and all other oral or written agreements
heretofore made. (J) This Plan may not be assigned
by any party hereto without the written consent of the other parties. [THIS SPACE INTENTIONALLY LEFT BLANK.] A-27 In Witness Whereof, the parties
hereto have caused this instrument to be executed in counterparts by their duly
authorized officers as of the day and year first above written. A-28 14-2-1301 Definitions. - As used in this article, the term:
(1) “Beneficial
Shareholder” means the person who is a beneficial owner of shares held in a
voting trust or by a nominee as the record shareholder. (2) “Corporate action”
means the transaction or other action by the corporation that creates
dissenters’ rights under Code Section 14-2-1302. (3) “Corporation” means
the issuer of shares held by a dissenter before the corporate action, or the
surviving or acquiring corporation by merger or share exchange of that issuer. (4) “Dissenter” means a
shareholder who is entitled to dissent from corporate action under Code Section
14-2-1302 and who exercises that right when and in the manner required by Code
Sections 14-2-1320 through 14-2-1327. (5) “Fair value,” with
respect to a dissenter’s shares, means the value of the shares immediately
before the effectuation of the corporate action to which the dissenter objects,
excluding any appreciation or depreciation in anticipation of the corporate
action. (6) “Interest” means
interest from the effective date of the corporate action until the date of
payment, at a rate that is fair and equitable under all the circumstances. (7) “Record shareholder”
means the person in whose name shares are registered in the records of a
corporation or the beneficial owner of shares to the extent of the rights
granted by a nominee certificate on file with a corporation. 14-2-1302 Right To Dissent. - (a) A record shareholder of the corporation is entitled to dissent from, and obtain
payment of the fair value of his shares in the event of, any of the following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a party:
(A) If approval of the
shareholders of the corporation is required for the merger by Code Section
14-2-1103 or 14-2-1104 or the articles of incorporation and the shareholder is
entitled to vote on the merger; or (B)
If the corporation is a subsidiary that is merged with its parent under Code Section 14-2-1104;
(2)
Consummation of a plan of
share exchange to which the corporation is a party as the corporation whose
shares will be acquired, if the shareholder is entitled to vote on the plan; (3)
Consummation of a sale or
exchange of all or substantially all of the property of the corporation if a
shareholder vote is required on the sale or exchange pursuant to Code Section
14-2-1202, but not including a sale pursuant to court order or a sale for cash
pursuant to a plan by which all or substantially all of the net proceeds of the
sale will be distributed to the shareholders within one year after the date of
sale; (4)
An amendment of the articles
of incorporation that materially and adversely affects rights in respect of a
dissenter’s shares because it: (A)
Alters or abolishes a preferential right of the shares; B-1 (B) Creates, alters, or abolishes
a right in respect of redemption, including a provision respecting a sinking
fund for the redemption or repurchase, of the shares; (C)
Alters or abolishes a preemptive right of the holder of the shares to acquire
shares or other securities; (D) Excludes or limits the right of the shares to
vote on any matter, or to cumulate votes, other than a limitation by
dilution through issuance of shares or other securities with similar voting rights; (E) Reduces the number of shares
owned by the shareholder to a fraction of a share if the fractional share so
created is to be acquired for cash under Code Section 14-2-604; or (F) Cancels, redeems, or repurchases all or part of the shares of the class; or
(5) Any corporate action taken
pursuant to a shareholder vote to the extent that Article 9 of this chapter, the
articles of incorporation, bylaws, or a resolution of the board of directors
provides that voting or nonvoting shareholders are entitled to dissent and
obtain payment for their shares. (b) A shareholder entitled to
dissent and obtain payment for his shares under this article may not challenge
the corporate action creating his entitlement unless the corporate action fails
to comply with procedural requirements of this chapter or the articles of
incorporation or bylaws of the corporation or the vote required to obtain
approval of the corporate action was obtained by fraudulent and deceptive means,
regardless of whether the shareholder has exercised dissenter’s rights. (c) Notwithstanding any other
provision of this article, there shall be no right of dissent in favor of the
holder of shares of any class or series which, at the record date fixed to
determine the shareholders entitled to receive notice of and to vote at a
meeting at which a plan of merger or share exchange or a sale or exchange of
property or an amendment of the articles of incorporation is to be acted on,
were either listed on a national securities exchange or held of record by more
than 2,000 shareholders, unless: (1) In the case of a plan of
merger or share exchange, the holders of shares of the class or series are
required under the plan of merger or share exchange to accept for their shares
anything except shares of the surviving corporation or another publicly held
corporation which at the effective date of the merger or share exchange are
either listed on a national securities exchange or held of record by more than
2,000 shareholders, except for scrip or cash payments in lieu of fractional
shares; or (2)
The articles of incorporation or a resolution of the board of directors approving the transaction provides otherwise.
14-2-1303 Dissent By
Nominees And Beneficial Owners. — A record shareholder may assert
dissenters’ rights as to fewer than all the shares registered in his name
only if he dissents with respect to all shares beneficially owned by any one
beneficial shareholder and notifies the corporation in writing of the name and
address of each person on whose behalf he asserts dissenters’ rights. The
rights of a partial dissenter under this Code section are determined as if the
shares as to which he dissents and his other shares were registerd in the names
of different shareholders. B-2 14-2-1320
Notice Of
Dissenters’ Rights. — (a) If proposed corporate action creating
dissenters’ rights under Code Section 14-2-1302 is submitted to a vote at a
shareholders’ meeting, the meeting notice must state that shareholders are
or may be entitled to assert dissenters’ rights under this article and be
accompanied by a copy of this article. (b)
If corporate action creating
dissenters’ rights under Code Section 14-2-1302 is taken without a vote of
shareholders, the corporation shall notify in writing all shareholders entitled
to assert dissenters’ rights that the action was taken and send them the
dissenters’ notice described in Code Section 14-2-1322 no later than ten
days after the corporate action was taken. 14-2-1321
Notice Of
Intent To Demand Payment. — (a) If proposed corporate action creating
dissenters’ rights under Code Section 14-2-1302 is submitted to a vote at a
shareholders’ meeting, a record shareholder who wishes to assert
dissenters’ rights:
(1)
Must deliver to the corporation before the vote is taken written notice of his intent to demand payment for his
shares if the proposed action is effectuated; and
(2) Must not vote his shares in favor of the proposed action.
(b) A record shareholder who does
not satisfy the requirements of subsection (a) of this Code section is not
entitled to payment for his shares under this article. 14-2-1322
Dissenters’ Notice. — (a) If proposed corporate action creating
dissenters’ rights under Code Section 14-2-1302 is authorized at a
shareholders’ meeting, the corporation shall deliver a written
dissenters’ notice to all shareholders who satisfied the requirements of
Code Section 14-2-1321. (b)
The dissenters' notice must be sent no later than ten days after the corporate action was taken
and must: (1) State where the payment demand must be sent and where and when certificates for certificated shares must be
deposited; (2) Inform holders of uncertificated shares to what extent transfer of the shares will be restricted after the payment
demand is received; (3) Set a date by which the
corporation must receive the payment demand, which date may not be fewer than 30
nor more than 60 days after the date the notice required in subsection (a) of
this Code section is delivered; and (4) Be accompanied by a copy of
this article. 14-2-1323
Duty To Demand
Payment. — (a) A record shareholder sent a dissenters’ notice
described in Code Section 14-2-1322 must demand payment and deposit his
certificates in accordance with the terms of the notice. (b) A record shareholder who
demands payment and deposits his shares under subsection (a) of this Code
section retains all other rights of a shareholder until these rights are
canceled or modified by the taking of the proposed corporate action. (c)
A record shareholder who does
not demand payment or deposit his share certificates where required, each by the
date set in the dissenters’ notice, is not entitled to payment for his
shares under this article. B-3 14-2-1324
Share
Restrictions. — (a) The corporation may restrict the transfer of
uncertificated shares from the date the demand for their payment is received
until the proposed corporate action is taken or the restrictions released under
Code Section 14-2-1326. (b)
The person for whom
dissenters’ rights are asserted as to uncertificated shares retains all
other rights of a shareholder until these rights are canceled or modified by the
taking of the proposed corporate action. 14-2-1325
Offer Of
Payment. — (a) Except as provided in Code Section 14-2-1327, within ten
days of the later of the date the proposed corporate action is taken or receipt
of a payment demand, the corporation shall by notice to each dissenter who
complied with Code Section 14-2-1323 offer to pay to such dissenter the amount
the corporation estimates to be the fair value of his or her shares, plus
accrued interest. (b)
The offer of payment must be accompanied by:
(1)
The corporation’s balance
sheet as of the end of a fiscal year ending not more than 16 months before the
date of payment, an income statement for that year, a statement of changes in
shareholders’ equity for that year, and the latest available interim
financial statements, if any; (2)
A statement of the corporation’s estimate of the fair value of the shares; (3) An explanation of how
the interest was calculated; (4) A statement of the
dissenter’s right to demand payment under Code Section 14-2-1327; and (5) A
copy of this article. (c) If the shareholder accepts the
corporation’s offer by written notice to the corporation within 30 days
after the corporation’s offer or is deemed to have accepted such offer by
failure to respond within said 30 days, payment for his or her shares shall be
made within 60 days after the making of the offer or the taking of the proposed
corporate action, whichever is later. 14-2-1326
Failure To
Take Action. — (a) If the corporation does not take the proposed action
within 60 days after the date set for demanding payment and depositing share
certificates, the corporation shall return the deposited certificates and
release the transfer restrictions imposed on uncertificated shares. (b)
If, after returning deposited
certificates and releasing transfer restrictions, the corporation takes the
proposed action, it must send a new dissenters’ notice under Code Section
14-2-1322 and repeat the payment demand procedure. 14-2-1327
Procedure If
Shareholder Dissatisfied With Payment Or Offer. — (a) A dissenter may
notify the corporation in writing of his own estimate of the fair value of his
shares and amount of interest due, and demand payment of his estimate of the
fair value of his shares and interest due, if: (1)
The dissenter believes that
the amount offered under Code Section 14-2-1325 is less than the fair value of
his shares or that the interest due is incorrectly calculated; or (2)
The corporation, having failed
to take the proposed action, does not return the deposited certificates or
release the transfer restrictions imposed on uncertificated shares within 60
days after the date set for demanding payment. (b)
A dissenter waives his or her
right to demand payment under this Code section and is deemed to have accepted
the corporation’s offer unless he or she notifies the corporation of
B-4 his or
her demand in writing under subsection (a) of this Code section within 30 days
after the corporation offered payment for his or her shares, as provided in Code
Section 14-2-1325. (c)
If the corporation does not offer payment within the time set forth in subsection (a) of Code Section 14-2-1325: (1) The shareholder may demand the information required under subsection (b) of Code Section 14-2-1325,
and the
corporation shall provide the information to the shareholder within ten days after receipt of a written demand for the information;
and
(2) The shareholder may at any
time, subject to the limitations period of Code Section 14-2-1332, notify the
corporation of his own estimate of the fair value of his shares and the amount
of interest due and demand payment of his estimate of the fair value of his
shares and interest due. 4-2-1330
Court
Action. — (a) If a demand for payment under Code Section 14-2-1327
remains unsettled, the corporation shall commence a proceeding within 60 days
after receiving the payment demand and petition the court to determine the fair
value of the shares and accrued interest. If the corporation does not commence
the proceeding within the 60 day period, it shall pay each dissenter whose
demand remains unsettled the amount demanded. (b)
The corporation shall commence
the proceeding, which shall be a nonjury equitable valuation proceeding, in the
superior court of the county where a corporation’s registered office is
located. If the surviving corporation is a foreign corporation without a
registered office in this state, it shall commence the proceeding in the county
in this state where the registered office of the domestic corporation merged
with or whose shares were acquired by the foreign corporation was located. (c)
The corporation shall make all
dissenters, whether or not residents of this state, whose demands remain
unsettled parties to the proceeding, which shall have the effect of an action
quasi in rem against their shares. The corporation shall serve a copy of the
petition in the proceeding upon each dissenting shareholder who is a resident of
this state in the manner provided by law for the service of a summons and
complaint, and upon each nonresident dissenting shareholder either by registered
or certified mail or statutory overnight delivery or by publication, or in any
other manner permitted by law. (d)
The jurisdiction of the court
in which the proceeding is commenced under subsection (b) of this Code section
is plenary and exclusive. The court may appoint one or more persons as
appraisers to receive evidence and recommend decision on the question of fair
value. The appraisers have the powers described in the order appointing them or
in any amendment to it. Except as otherwise provided in this chapter, Chapter 11
of Title 9, known as the “Georgia Civil Practice Act,” applies to any
proceeding with respect to dissenters’ rights under this chapter. (e)
Each dissenter made a party to
the proceeding is entitled to judgment for the amount which the court finds to
be the fair value of his shares, plus interest to the date of judgment. 14-2-1331
Court Costs
And Counsel Fees. — (a) The court in an appraisal proceeding commenced
under Code Section 14-2-1330 shall determine all costs of the proceeding,
including the reasonable compensation and expenses of appraisers appointed by
the court, but not including fees and expenses of attorneys and experts for the
respective parties. The
B-5 court shall assess the costs against the corporation,
except that the court may assess the costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court finds
the dissenters acted arbitrarily, vexatiously, or not in good faith in demanding
payment under Code Section 14-2-1327. (b)
The court may also assess the
fees and expenses of attorneys and experts for the respective parties, in
amounts the court finds equitable: (1)
Against the corporation and in
favor of any or all dissenters if the court finds the corporation did not
substantially comply with the requirements of Code Sections 14-2-1320 through
14-2-1327; or (2)
Against either the corporation
or a dissenter, in favor of any other party, if the court finds that the party
against whom the fees and expenses are assessed acted arbitrarily, vexatiously,
or not in good faith with respect to the rights provided by this article. (c)
If the court finds that the
services of attorneys for any dissenter were of substantial benefit to other
dissenters similarly situated, and that the fees for those services should not
be assessed against the corporation, the court may award to these attorneys
reasonable fees to be paid out of the amounts awarded the dissenters who were
benefited. 14-2-1332
Limitation Of
Actions. — No action by any dissenter to enforce dissenters’
rights shall be brought more than three years after the corporate action was
taken, regardless of whether notice of the corporate action and of the right to
dissent was given by the corporation in compliance with the provisions of Code
Section 14-2-1320 and Code Section 14-2-1322. B-6 Appendix C BROWN, BURKE CAPITAL PARTNERS, L.L.C. Board of Directors Members of the Board: FNB Newton Bankshares, Inc. (“FNB Newton”) and Synovus
Financial Corporation (“Synovus”) have entered into an Agreement and
Plan of Merger, dated as of the 31st day of October, 2002 (the
“Agreement”), pursuant to which FNB Newton will be merged with and
into Synovus (the “Merger”). Under the terms of the Agreement, upon
consummation of the Merger, each share of FNB Newton common stock, par value
$1.00 per share, issued and outstanding immediately prior to the Merger (the
“FNB Newton Shares”) will be converted into the right to receive (a)
4.1353 shares of common stock, par value $1.00 per share, of Synovus and (b)
cash in an amount equal to $85.1536, subject to the Agreement, which provides
generally, among other things, that the aggregate consideration for non-option
shares to be exchanged in the Merger shall consist of 2,253,666 shares of
Synovus common stock with such number to be adjusted as necessary to reflect the
exercise of options to purchase FNB Newton common stock between the date of this
Agreement (“Total Stock Consideration”) and $46,407,022 in cash
(“Total Cash Consideration”). The terms and conditions of the Merger
are more fully set forth in the Agreement. You have requested our opinion as to
the fairness, from a financial point of view, as of the date hereof, of the
merger consideration to the holders of FNB Newton Shares. Brown, Burke Capital Partners, L.L.C. is familiar with FNB
Newton having acted as an advisor in connection with, and having participated in
certain of the negotiations leading to, the Agreement. We also have provided
certain services to Synovus and its affiliates from time to time. In connection with this opinion, we have reviewed, among other
things: (i) the Agreement and certain of the schedules thereto; (ii) certain publicly available financial statements and other historical
financial information of FNB Newton that we deemed relevant; C-1 FIFTEEN PIEDMONT CENTER, SUITE 840 Board of Directors - FNB Newton Bankshares, Inc. (iii) certain publicly available financial statements and other
historical financial information of Synovus that we deemed relevant; (iv) projected earnings estimates for FNB Newton for the years
ending December 31, 2002 and 2003 prepared by and reviewed with management of
FNB Newton and the views of senior management of FNB Newton, based on
discussions with members of senior management, regarding FNB Newton’s
business, financial condition, results of operations and future prospects; (v) earnings per share estimates for Synovus for the years
ending December 31, 2002 and 2003 published by I/B/E/S, and the views of senior
management of Synovus, based on limited discussions with members of senior
management, regarding Synovus’ business, financial condition, results of
operations and future prospects; (vi) the pro forma financial impact of the Merger on Synovus,
based on assumptions relating to transaction expenses, purchase accounting
adjustments and cost savings determined by senior managements of FNB Newton and
Synovus; (vii) the publicly reported historical price and trading
activity for Synovus’ common stock, including a comparison of certain
financial and stock market information for Synovus with similar publicly
available information for certain other companies the securities of which are
publicly traded; (viii) the financial terms of certain recent business combinations in the commercial banking industry, to the
extent publicly available; (ix) the current
market environment generally and the banking environment in particular; and (x) such other information, financial studies, analyses and
investigations and financial, economic and market criteria as we considered
relevant. In performing our review, we have relied upon the accuracy and
completeness of all of the financial and other information that was available to
us from public sources, that was provided to us by FNB Newton or Synovus or
their respective representatives or that was otherwise reviewed by us and have
assumed such accuracy and completeness for purposes of rendering this opinion.
We have further relied on the assurances of management of FNB Newton and Synovus
that they are not aware of any facts or circumstances that would make any of
such information inaccurate or misleading. We have not been asked to and have
not undertaken an independent verification of any of such information and we do
not assume any responsibility or liability for the accuracy or completeness
thereof. We did not make an independent evaluation or appraisal of the specific
assets, the collateral securing assets or the liabilities (contingent or
otherwise) of FNB Newton or Synovus or any of their subsidiaries, or the
collectibility of any such assets, nor have we been furnished with any such
evaluations or appraisals. We did not make an independent evaluation of C-2 Board of Directors - FNB Newton Bankshares, Inc. the adequacy of the allowance for loan losses of FNB Newton or
Synovus nor have we reviewed any individual credit files relating to FNB Newton
or Synovus. We have assumed, with your consent that the respective allowances
for loan losses for both FNB Newton and Synovus are adequate to cover such
losses and will be adequate on a pro forma basis for the combined entity. With
respect to the earnings estimates for FNB Newton and Synovus and all projections
of transaction costs, purchase accounting adjustments and expected cost savings
prepared by and reviewed with the managements of FNB Newton and Synovus and used
by Brown, Burke Capital Partners, L.L.C. in its analyses, Brown, Burke Capital
Partners, L.L.C. assumed, with your consent, that they reflected the best
currently available estimates and judgments of the respective managements of the
respective future financial performances of FNB Newton and Synovus and that such
performances will be achieved. We express no opinion as to such earnings
estimates or financial projections or the assumptions on which they are based.
We have also assumed that there has been no material change in FNB Newton’s
or Synovus’ assets, financial condition, results of operations, business or
prospects since the date of the most recent financial statements made available
to us. We have assumed in all respects material to our analysis that FNB Newton
and Synovus will remain as going concerns for all periods relevant to our
analyses, that all of the representations and warranties contained in the
Agreement and all related agreements are true and correct, that each party to
such agreements will perform all of the covenants required to be performed by
such party under such agreements, that the conditions precedent in the Agreement
are not waived and that the Merger will not be taxable for federal income tax
purposes at the corporate level. Our opinion is necessarily based on financial, economic, market
and other conditions as in effect on, and the information made available to us
as of, the date hereof. Events occurring after the date hereof could materially
affect this opinion. We have not undertaken to update, revise, reaffirm or
withdraw this opinion or otherwise comment upon events occurring after the date
hereof. We are expressing no opinion herein as to what the value of
Synovus’ common stock will be when issued to FNB Newton’s shareholders
pursuant to the Agreement or the prices at which FNB Newton’s or
Synovus’ common stock may trade at any time. We will receive a fee for our services as financial advisor to
FNB Newton and for rendering this opinion, a substantial portion of which is
contingent upon closing of the Merger. This opinion is directed to the Board of Directors of FNB Newton
and may not be reproduced, summarized, described or referred to or given to any
other person without our prior consent. Notwithstanding the foregoing, this
opinion may be included in the proxy statement/prospectus to be mailed to the
holders of FNB Newton Common Stock in connection with the Merger, provided that
this opinion will be reproduced in such proxy statement/prospectus in full, and
any description of or reference to us or our actions, or any summary of the
opinion in such proxy statement/prospectus, will be in form reasonably
acceptable to us and our counsel. C-3 Board of Directors - FNB Newton Bankshares, Inc. Based upon and subject to the foregoing, it is our opinion that,
as of the date hereof, the consideration is fair to the holders of FNB Newton
common stock from a financial point of view. Very Truly Yours, C-4 Appendix D [Letterhead of Powell, Goldstein, Frazer & Murphy] January 6, 2003 FNB Newton Bancshares, Inc.
Synovus Financial Corp. Ladies and Gentlemen: We have participated in the
preparation of the discussion set forth under the heading “THE MERGER
– Material United States Federal Income Tax Consequences of the
Merger,” set forth in the Proxy Statement/Prospectus. In our opinion,
subject to our receipt of the representations contemplated in the Merger
Agreement by and between Synovus Financial Corp. and FNB Newton Bancshares,
Inc., such discussion is accurate in all material respects. We hereby consent to the filing of
this opinion as an exhibit to such Proxy Statement/Prospectus and the reference
to our firm and the above-mentioned opinion under the heading “THE MERGER
– Material United States Federal Income Tax Consequences of the
Merger,” included in the Registration Statement. In giving such consent, we
do not thereby admit that we are acting within the category of persons whose
consent is required under Section 7 of the Securities Act and the rules and
regulations of the Securities and Exchange Commission thereunder. D-1
Equivalent Price Per Share
Synovus
FNB Newton (1)
of FNB Newton
Date
Common Stock
Common Stock
Common Stock
September 25, 2002
$20.87
$43.86
$171.46
_____________ 2003
$_____
$43.86
$______
June 30, 002
30.39
24.31
0.1475
0.21
September 30, 2002
27.01
20.17
0.1475
0.21
March 31, 2001
$28.31
$24.04
$0.1275
$0.00
June 30, 2001
31.77
26.00
0.1275
0.00
September 30, 2001
34.45
24.63
0.1275
0.15
December 31, 2001
$34.45
$23.02
$0.5100
$0.36
March 31, 2000
$19.19
$14.50
$0.1100
$0.00
20.94
17.56
0.1100
0.00
21.44
17.94
0.1100
0.00
27.19
19.31
0.1100
0.00
$27.19
$14.50
$0.4400
$0.00
Selected Financial Data
Dollars in thousands, except per share data)
September 30
equity to average assets
(1)
Ratios for the nine month periods have been annualized.
(2)
Determined by dividing dividends declared by net income, excluding pooled subsidiaries.
Danville, VA
Florence, KY
Little Rock, AR
Berlin, MD
Sterling, VA
Warrenton, VA
Franklin, TN
Greer, SC
Middleburg, VA
Macon, GA
Warrenton, VA
Arlington, VA
Carrollton, GA
Inc.
Peer Group
Median
Birmingham, AL
Winston-Salem, NC
Birmingham, AL
Montgomery, AL
Memphis, TN
Falls Church, VA
New Orleans, LA
Birmingham, AL
Birmingham, AL
Atlanta, GA
Memphis, TN
Charlotte, NC
Financial
Corp.
Group
Median
Multiple
Value
Value
Multiple
Newton
Options
which Options
will Vest at Time
of Merger
FNB NEWTON SHAREHOLDERS
SYNOVUS
FNB NEWTON
•
Ten votes for each share held, except in limited
circumstances described below•
One vote for each share held
•
No cumulative voting rights in the election of
directors, meaning that the holders
of a plurality
of the shares elect the entire board of directors•
Same as Synovus
•
Dividends may be paid from funds legally
available, subject to
contractual and regulatory
restrictions•
Same as Synovus
•
Right to participate pro rata in distribution of assets
upon liquidation•
Same as Synovus
•
No pre-emptive or other rights to subscribe for any
additional shares or securities•
Same as Synovus
•
No conversion rights
•
Same as Synovus
•
Directors serve staggered 3-year terms
•
Directors serve one-year terms
•
Some corporate actions, including business
combinations,
require the affirmative action or vote
of 66-2/3% of the votes entitled
to be cast by the
shareholders of all voting stock•
Corporate actions require the affirmative vote of
a majority
of the votes cast at the meeting, unless
otherwise required by law
•
No preferred stock is authorized
•
One million shares of preferred stock authorized;
none issued
•
Common Stock Purchase Rights trade with shares
as described below•
No comparable provision
(1)
A copy of FNB Newton’s
balance sheet as of the end of a fiscal year not more than 16 months before the
date of payment, an income statement for that year, a statement of changes in
shareholders’ equity for that year, and the latest available interim
financial statements, if any;
(2)
A statement of FNB Newton's and Synovus' estimate of the fair value of the shares;
(3)
An explanation of how the interest was calculated;
(4)
A statement of the dissenter's right to demand payment under Section 14-2-1327 of Georgia Law; and
(5)
A copy of Section 14-2-1301 et. seq. of Georgia Law, a copy of which is attached to this Proxy
Statement/Prospectus as Appendix "B."
1.
Synovus’ Annual Report on
Form 10-K for the fiscal year ended December 31, 2001 (which incorporates
certain portions of Synovus’ Proxy Statement, including the Financial
Appendix thereto, for its Annual Meeting of Shareholders held on April 24,
2002), as amended by Synovus’ Annual Report on Form 10-K/A filed on April
10, 2002.
2.
Synovus' Quarterly Reports on Form 10-Q for the quarters ended March 31, 2002, June 30, 2002 and
September 30, 2002.
3.
Synovus’ Current Reports
on Form 8-K dated January 16, 2002, April 15, 2002, July 12, 2002, July 17,
2002, August 8, 2002 and October 15, 2002.
Owned
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(1)
Comprised of the following nominally held shares: 1) 89,371 shares held by Williams Partners, LP;
2) 61,101 shares held by The 2000 Williams Investment Company, LLC; and 3) 6,000 shares held by Trust F.B.O.
Children of John R. and Ruth Williams. The business address of Kaye W. Cantrell is 4159 Mill Street,
Covington, Georgia 30014.
(2)
Mr. Kephart holds two options to purchase an aggregate of 4,500 shares, which were exercisable as
to 667 shares on September 30, 2002. The business address of Mr. Kephart is 4159 Mill Street, Covington,
Georgia 30014.
(3)
Mr. Lankford holds an option to purchase 1,000 shares which was not exercisable on September 30, 2002.
The business address of Mr. Lankford is Suite 325, 780 Johnson Ferry Road, Atlanta, Georgia 30342.
(4)
Comprised of the following nominally held shares: 1) 89,371 shares held by Williams Partners, LP;
2) 61,101 shares held by The 2000 Williams Investment Company, LLC; and 3) 6,000 shares held by Trust
F.B.O. Children of John R. and Ruth Williams. The business address of Alyce W. Toonk is 4159 Mill Street,
Covington, Georgia 30014.
(5)
Comprised of the following nominally held shares: 1) 89,371 shares held by Williams Partners, LP;
2) 61,101 shares held by The 2000 Williams Investment Company, LLC; and 3) 6,000 shares held by Trust
F.B.O. Children of John R. and Ruth Williams. In addition, Mr. Williams owns 160 shares in his own name.
The business address of John B. Williams is 4159 Mill Street, Covington, Georgia 30014.
(6)
Mr. Wood holds an option to purchase 10,000 shares, which was exercisable as to 3,333 shares on
September 30, 2002. The business address of Mr. Wood is 4159 Mill Street, Covington, Georgia 30014.
(7)
The trustees of the Trust F.B.O. Grandchildren of John R. and Ruth Williams
are John B. Willams and William C. Lankford, Jr. Mr. Lankford is a director of FNB Newton.
The business address of the Trust F.B.O. Grandchildren of John R. and Ruth Williams is 4159 Mill Street,
Covington, Georgia 30014.
(1)
Synovus’ Annual Report on
Form 10-K for the year ended December 31, 2001, as amended on April 10, 2002;
(2)
Synovus' Quarterly Reports on Form 10-Q for the quarters ended March 31, 2002, June 30, 2002
and September 30, 2002;
(3)
Synovus’ Current Reports
on Form 8-K dated January 16, 2002, April 15, 2002, July 12, 2002, July 17,
2002, August 8, 2002 and October 15, 2002;
(4)
the description of Synovus
common stock contained in Synovus’ Registration Statement on Form 8-A
filed with the SEC on August 21, 1989; and
(5)
the description of the
shareholder rights plan of Synovus contained in Synovus’ Registration
Statement on Form 8-A filed with the SEC on April 28, 1999.
901 Front Avenue, Suite 301
Columbus, Georgia 31901
Attn: G. Sanders Griffith, III
Senior Executive Vice President,
General Counsel & Secretary
Telephone: (706) 649-2267
Appendix A
AGREEMENT AND PLAN OF MERGER
RECITALS:
I. THE MERGER
(1)
By virtue of the Merger,
automatically and without any action on the part of the holder thereof, subject
to Article VI(A)(4), each share of FNB Common Stock issued and outstanding on
the Effective Date, except as to shares of FNB Common Stock as to which
dissenters’ rights have been duly and validly exercised in accordance with
the Georgia Act, shall be converted into and exchangeable for the
(a)
4.1353 shares of Synovus Common Stock ("Per Share Stock Consideration"); and
(b)
cash in an amount equal to $85.1536 (the "Per Share Cash Consideration).
(2)
No fractional shares of
Synovus Common Stock shall be issued in connection with the Merger. Each holder
of FNB Common Stock who would otherwise have been entitled to receive a fraction
of a share of Synovus Common Stock shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of Synovus
Common Stock multiplied by the closing price per share of Synovus Common Stock
on the NYSE on the last business day immediately preceding the Effective Date.
(3)
Each shareholder of FNB Common
Stock will be entitled to ten (10) votes for each share of Synovus Common Stock
to be received by him/her on the Effective Date pursuant to a set of resolutions
adopted by the Board of Directors of Synovus on October 31, 2002, in accordance
with and subject to those certain Articles of Amendment to Synovus’
Articles of Incorporation, dated April 24, 1986. Synovus shall provide FNB with
certified copies of such resolutions prior to the Effective Date.
(4)
The shares of the Synovus
Common Stock issued and outstanding immediately prior to the Effective Date
shall remain outstanding and unchanged after the Merger.
(5)
If, between the date of this
Agreement and the Effective Date, the outstanding shares of Synovus Common Stock
shall be increased, decreased, changed into or exchanged for a different number
or class of shares by reason of any reorganization, reclassification,
recapitalization, stock dividend, stock split, reverse stock split, or other
like changes in Synovus’ capitalization, then an appropriate and
proportionate adjustment shall be made to the Per Share Cash Consideration and
the Per Share Stock Consideration so as to prevent the dilutive effect of such
transaction on a percentage of ownership basis.
(C)
General Procedures.
(1)
Certificates which represent
shares of FNB Common Stock that are outstanding on the Effective Date (each, a
“Certificate”) and are converted into shares of Synovus Common Stock
or cash pursuant to the Plan shall, after the Effective Date, be
(2)
As promptly as practicable
after the Effective Date, Synovus shall send to each holder of record of shares
of FNB Common Stock outstanding on the Effective Date transmittal materials for
use in exchanging the Certificates for such shares for certificates for shares
of the Synovus Common Stock or cash into which such shares of the FNB Common
Stock have been converted pursuant to the Plan. Upon surrender of a Certificate,
duly endorsed as Synovus may require, the holder of such Certificate shall be
entitled to receive in exchange therefor the consideration set forth in Article
I(B) and such Certificate shall forthwith be canceled. No dividend or other
distribution payable after the Effective Date with respect to the Synovus Common
Stock shall be paid to the holder of any unsurrendered Certificate until the
holder thereof surrenders such Certificate, at which time such holder shall
receive all dividends and distributions, without interest thereon, previously
withheld from such holder pursuant hereto. After the Effective Date, there shall
be no transfers on the stock transfer books of FNB of shares of FNB Common Stock
which were issued and outstanding on the Effective Date and converted pursuant
to the provisions of the Plan. If after the Effective Date, Certificates are
presented for transfer to FNB, they shall be canceled and exchanged for the
shares of Synovus Common Stock or cash deliverable in respect thereof as
determined in accordance with the provisions of Article I(B) and in accordance
with the procedures set forth in this Article I(C). In the case of any lost,
mislaid, stolen or destroyed Certificate, the holder thereof may be required, as
a condition precedent to the delivery to such holder of the consideration
described in Article 1(B), to deliver to Synovus a bond in such sum as Synovus
may direct as indemnity against any claim that may be made against the exchange
agent, Synovus or FNB with respect to the Certificate alleged to have been lost,
mislaid, stolen or destroyed.
(3)
After the Effective Date,
holders of FNB Common Stock shall cease to be, and shall have no rights as,
stockholders of FNB, other than to receive shares of Synovus Common Stock or
cash into which such shares have been converted, fractional share payments
pursuant to the Plan and any dividends or distributions with respect to such
shares of Synovus Common Stock. Until sixty (60) days after the Effective Date,
former shareholders of record of FNB shall be entitled to vote at any meeting of
Synovus shareholders the number of shares of Synovus Common Stock into which
their respective FNB Common Stock are converted regardless of
(4)
Notwithstanding the foregoing,
neither Synovus nor FNB nor any other person shall be liable to any former
holder of shares of FNB Common Stock for any amounts paid or property delivered
in good faith to a public official pursuant to applicable abandoned property,
escheat or similar laws.
(D)
Options.
(1)
On the Effective Date, each
option granted by FNB to purchase shares of FNB Common Stock (each an “FNB
Stock Option”), whether vested or unvested, which is outstanding and
unexercised immediately prior thereto, shall be assumed by Synovus and converted
automatically into an option to purchase shares of Synovus Common Stock (each a
“Synovus Stock Option”) in an amount and at an exercise price
determined as provided below (and otherwise having the same duration and other
terms as the original option):
(a)
The number of shares of
Synovus Common Stock to be subject to the new option shall be equal to the
product of the number of shares of FNB Common Stock subject to the original
option multiplied by 8.4578 (“Synovus Option Value Multiple”), unless
adjusted pursuant to Article VI(A)(4), provided that any fractional shares of
Synovus Common Stock resulting from such multiplication shall be rounded to the
nearest whole share; and
(b)
The exercise price per share
of Synovus Common Stock under the new option shall be equal to the exercise
price per share of FNB Common Stock under the original option divided by 8.4578
(“Synovus Option Price Divisor”), unless adjusted pursuant to Article
VI(A)(4), provided that such exercise price shall be rounded up to the nearest
cent.
(2)
The adjustment provided herein
with respect to any options which are “incentive stock options” (as
defined in Section 422 of the Internal Revenue Code of 1986 (the
“Code”)) shall be and is intended to be effected in a manner which is
consistent with Section 424(a) of the Code.
(3)
Within thirty (30) days after
the Effective Date, Synovus shall notify each holder of an option to purchase
FNB Common Stock of the assumption of such options by Synovus and the revisions
to the options shall be effected thereby. No payment shall be made for
fractional interests. From and after the date hereof, no additional II. ACTIONS PENDING MERGER
III. REPRESENTATIONS AND WARRANTIES
(L)
(1) no litigation, proceeding
or controversy before any court or governmental agency is pending, and there is
no pending claim, action or proceeding against it or any of its Subsidiaries,
which is likely to have a Material Adverse Effect or to prevent consummation of
the transactions contemplated hereby, and, to the best of its knowledge, no such
litigation, proceeding, controversy, claim or action has been threatened or is
contemplated; and
(2) neither it nor any of its
Subsidiaries is subject to any agreement, memorandum of understanding,
commitment letter, board resolution or similar arrangement with, or transmitted
to, any regulatory authority materially restricting its operations as conducted
on the date hereof or requiring that certain actions be taken which could
reasonably be expected to have a Material Adverse Effect;
(W)
(1) to the actual knowledge of
its executive officers and the executive officers of its Subsidiaries, except
such which will not have, or result in, a Material Adverse Effect, there are no
actions, suits, demands, notices, claims, investigations or proceedings pending
or threatened against it and its Subsidiaries relating to the Loan Portfolio
Properties and Other Properties Owned by it or its Subsidiaries under any
Environmental Law, including without limitation any notices, demand letters or
requests for information from any federal or state environmental agency relating
to any such liabilities under or violations of Environmental Law, nor are there
any circumstances which could lead to such actions, suits, demands, notices,
claims, investigations or proceedings.
(2)
for purposes of this Article III(W), the following terms shall have the indicated
meaning:
“Environmental Law”
means any federal, state or local law, statute, ordinance, rule, regulation,
code, license, permit, authorization, approval, consent, order, judgment,
decree, injunction or agreement with any governmental entity relating to: (1)
the protection, preservation or restoration of the environment (including,
without limitation, air, water vapor, surface water, groundwater, drinking water
supply, surface soil, subsurface soil, plant and animal life or any other
natural resource); and/or (2) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production, release
or disposal of Hazardous Substances. The term Environmental Law includes without
limitation: (1) the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 U.S.C.§ 9601, et seq; the Resource Conservation and
Recovery Act, as amended, 42 U.S.C.§ 6901, et seq; the Clean Air Act, as amended,
42 U.S.C.§ 7401, et seq; the Federal Water Pollution Control Act, as amended, 33
U.S.C.§ 1251, et seq; the Toxic Substances Control Act, as amended, 15 U.S.C.§
9601, et seq; the Emergency Planning and Community Right to Know Act, 42 U.S.C.§
11001, et seq; the Safe Drinking Water Act, 42 U.S.C.§ 300f, et seq; all
accompanying federal regulations and all comparable state and local laws; and
(2) any common law (including without limitation common law that may impose
strict liability) that may impose liability or obligations for injuries or
damages due to, or threatened as a result of, the presence of or exposure to any
Hazardous Substance.
IV. COVENANTS
(T)
(1) in the case of Synovus,
subject to the conditions set forth in Article IV(T)(2) below, for a period of
four (4) years after the Effective Date, Synovus shall indemnify, defend and
hold harmless each person entitled to indemnification from FNB and its
Subsidiary (each, an “Indemnified Party”) against all liabilities
arising out of actions or omissions occurring at or prior to the Effective Date
(including the transactions contemplated by this Agreement) to the fullest
extent permitted under Georgia law and by FNB’s and its Subsidiary’s
Articles of Incorporation and bylaws as in effect on the date hereof, including
provisions relating to advances of expenses incurred in the defense of any
litigation. Without limiting the foregoing, in any case in which approval by
Synovus is required to effectuate any indemnification, Synovus shall direct, at
the election of the Indemnified Party, that the determination of any such
approval shall be made by independent counsel mutually agreed upon between
Synovus and the Indemnified Party;
(2)
Any Indemnified Party wishing
to claim indemnification under Article IV(T)(1) upon learning of any such
liability or litigation, shall promptly notify Synovus thereof. In the event of
any such litigation (whether arising before or after the Effective Date), (a)
Synovus shall have the right to assume the defense thereof, and Synovus shall
not be liable to such Indemnified Parties for any legal expenses of other
counsel or any other expenses subsequently incurred by such Indemnified Parties
in connection with the defense thereof, except that if Synovus elects not to
assume such defense or counsel for the Indemnified Parties advises that there
are substantive issues which raise conflicts of interest between Synovus and the
Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to
them, and Synovus shall pay all reasonable fees and expenses of such counsel for
the Indemnified Parties promptly as statements therefor are received; provided,
that Synovus shall be obligated pursuant to this Article IV(T)(2) to pay for
only one firm of counsel for all Indemnified Parties in any jurisdiction, (b)
the Indemnified Parties will cooperate in the defense of any such litigation,
and (c) Synovus shall V. CONDITIONS TO CONSUMMATION
VI. TERMINATION
(a)
if, during the five (5)
business days immediately prior to the Effective Date, the Total Cash
Consideration is greater than fifty-five percent (55%) of the Tax-Free
Calculation Denominator such
(b)
Definitions:
(i)
“Tax-Free Calculation Denominator” shall be equal to the sum of the
Total Cash Consideration plus the Total Stock Consideration.
(ii)
“Total Cash
Consideration” shall be equal to the Per Share Cash Consideration
multiplied by 544,980 (or the then outstanding number of shares of FNB Common
Stock), plus any additional cash paid by Synovus pursuant to dissenters rights
exercised in accordance with the Georgia Act.
(iii)
“Total Stock
Consideration” shall be equal to the Per Share Stock Consideration
multiplied by 544,980 (or the then outstanding number of shares of FNB Common
Stock), multiplied by the closing price of Synovus Common Stock on the New York
Stock Exchange on the Effective Date. VII. EFFECTIVE DATE
VIII. OTHER MATTERS
If to Synovus:
Mr. Thomas J. Prescott
Chief Financial Officer
Synovus Financial Corp.
901 Front Avenue, Suite 301
Columbus, Georgia 31901
Fax (706) 649-2342
With a copy to:
Ms. Kathleen Moates
Senior Deputy General Counsel
Synovus Financial Corp.
901 Front Avenue, Suite 202
Columbus, Georgia 31901
Fax (706) 644-1957
If to FNB:
Mr. Stephen C. Wood
FNB Newton Bankshares, Inc.
4159 Mill Street
Covington, Georgia 30015
Fax (770) 784-0778
With a copy to:
Ms. Kathryn Knudson
Powell, Goldstein, Frazer & Murphy LLP
16th Floor
191 Peachtree Street, N.E.
Atlanta, Georgia 30303-1736
Fax (404) 572-6999
SYNOVUS FINANCIAL CORP.
By: /s/Thomas J. Prescott
Title: EVP and CFO
Attest: /s/Kathy Moates
Title: Assistant Secretary
FNB NEWTON BANKSHARES, INC.
By: /s/Stephen C. Wood
Title: Chairman/President
Attest: /s/Thomas R. Kephart
Title: Secretary
Appendix B
GEORGIA BUSINESS CORPORATION CODE
ARTICLE 13.
DISSENTERS’ RIGHTS
PART 1. RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
PART 2. PROCEDURE FOR EXERCISE OF DISSENTERS’ RIGHTS
PART 3. JUDICIAL APPRAISAL OF SHARES
ATLANTA, GEORGIA
October 31, 2002
FNB Newton Bankshares, Inc.
4159 Mill Street
Covington, Georgia 30014
3575 PIEDMONT ROAD, N.E., ATLANTA, GEORGIA 30305
TEL. (404)364-2092 / FAX (404)364-2058
October 31, 2002
Page Two
October 31, 2002
Page Three
October 31, 2002
Page Four
/s/Brown,Burke Capital Partners, L.L.C.
Brown, Burke Capital Partners, L.L.C.
4159 Mill Street
Covington, Georgia 30015
901 Front Avenue
Suite 301
Columbus, Georgia 31901
Re:
Merger pursuant to the Agreement and Plan of Merger dated October 31, 2002 by and between Synovus Financial Corp.
and FNB Newton Bancshares, Inc. (the "Agreement")
Very truly yours,
/s/Powell, Goldstein, Frazer & Murphy
POWELL, GOLDSTEIN, FRAZER & MURPHY