AGREEMENT AND PLAN OF MERGER
by and between
"SUNTRUST BANKS, INC."
and
"NATIONAL COMMERCE FINANCIAL CORPORATION"
---------
Dated as of May 7, 2004
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 7, 2004 (this
"Agreement"),
by and between SUNTRUST BANKS, INC., a Georgia corporation ("STI"),
and NATIONAL
COMMERCE FINANCIAL CORPORATION, a Tennessee corporation ("NCF").
RECITALS:
WHEREAS, the Boards of Directors of STI and NCF have approved, and
deem it
advisable and in the best interests of their respective
corporations and
shareholders to consummate the strategic business combination
transaction
provided for herein in which NCF will, subject to the terms and
conditions set
forth herein, merge with and into STI (the "Merger"), so that STI
is the
surviving corporation (hereinafter sometimes referred to in such
capacity as the
"Surviving Corporation") in the Merger;
WHEREAS, the Boards of Directors of STI and NCF have each
determined that
the Merger and the other transactions contemplated hereby are
consistent with,
and in furtherance of, their respective business strategies and
goals;
WHEREAS, the parties desire to make certain representations,
warranties,
covenants and agreements in connection with the Merger and also to
prescribe
certain conditions to the Merger; and
WHEREAS, for Federal income tax purposes, the parties intend that
the
Merger will qualify as a reorganization under the provisions of
Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), and
the parties
intend, by executing this Agreement, to adopt a plan of
reorganization within
the meaning of Treasury Regulation Section 1.368-2(g).
NOW, THEREFORE, in consideration of the mutual covenants,
representations,
warranties and agreements contained herein, and intending to be
legally bound
hereby, the parties agree as follows:
ARTICLE I.
THE MERGER
1.1 The Merger
(a) Subject to the terms and conditions of this Agreement, in
accordance with the Business Corporation Code of the State of
Georgia (the
"GBCC") and the Business Corporation Act of the State of Tennessee
(the "TBCA"),
at the Effective Time (as defined below), NCF shall merge with and
into STI. STI
shall be the surviving corporation in the Merger, and shall
continue its
corporate existence under the laws of the State of Georgia. The
name of the
Surviving Corporation shall continue to be "SunTrust Banks, Inc."
Upon
consummation of the Merger, the separate corporate existence of NCF
shall
terminate.
(b) The parties agree that STI may at any time change the method of
effecting the combination of NCF and STI, including, without
limitation, by
merging NCF with a direct wholly owned subsidiary of STI, and NCF
shall
cooperate in such efforts, including by entering into an
appropriate amendment
to this Agreement (to the extent such amendment only changes the
method of
effecting the business combination and does not substantively
affect this
Agreement or the rights and obligations of the parties or their
respective
shareholders hereunder); provided, however, that any such
subsidiary shall
become a party to, and shall agree to be bound by, the terms of
this Agreement,
and that any such change shall not (i) alter or change the kind or
amount of
Merger Consideration (as defined below) to be provided to holders
of NCF Common
Stock (as defined below) as provided for in this Agreement, (ii)
adversely
affect the tax treatment of holders of NCF Common Stock as a result
of receiving
the Merger Consideration, (iii) adversely affect the rights of
holders of NCF
Stock Options (hereinafter defined) and NCF Stock-Based Awards
(hereinafter
defined) or (iii) materially impede or delay consummation of the
transactions
contemplated by this Agreement.
1.2 Effective Time. The Merger shall become effective as set forth
in the
certificate of merger (the "Georgia Certificate of Merger") that
shall be filed
with the Secretary of State of the State of Georgia (the "Georgia
Secretary")
and the articles of merger (the "Tennessee Articles of Merger")
that shall be
filed with the Secretary of State of the State of Tennessee (the
"Tennessee
Secretary") on the Closing Date. The term "Effective Time" shall be
the date and
time when the Merger becomes effective, as set forth in the Georgia
Certificate
of Merger and the Tennessee Articles of Merger.
1.3 Effects of the Merger. At and after the Effective Time, the
Merger
shall have the effects set forth in Section 14-2-1106 of the GBCC
and Section
48-21-108 of the TBCA.
1.4 Conversion of NCF Common Stock. At the Effective Time, by
virtue of the
Merger and without any action on the part of NCF, STI or the holder
of any of
the following securities:
(a) Each share of the common stock, par value $2.00 per share, of
NCF
(the "NCF Common Stock") issued and outstanding immediately prior
to the
Effective Time, except for shares of NCF Common Stock held by NCF
or STI (other
than shares of NCF Common Stock (x) held in trust accounts, managed
accounts and
the like, or otherwise held in a fiduciary capacity, that are
beneficially owned
by third parties (any such shares, and shares of STI Common Stock
which are
similarly held, whether held directly or indirectly by NCF or STI,
being
referred to herein as "Trust Account Shares") or (y) held on
account of a debt
previously contracted (any such shares of NCF Common Stock, and
shares of STI
Common Stock which are similarly held directly or indirectly by NCF
or STI,
being referred herein as "DPC Shares")) shall be converted, at the
election of
the holder thereof, in accordance with the procedure set forth in
Article II and
subject to Section 1.4(c) and Section 1.6, into the right to
receive the
following, without interest:
(i) for each share of NCF Common Stock with respect to which an
election to receive cash has been effectively made and not revoked
or lost
pursuant to Article II (a "Cash Election"), the right to receive in
cash from
STI an amount equal to the Per Share Amount (the "Cash
Consideration")
(collectively, "Cash Election Shares");
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(ii) for each share of NCF Common Stock with respect to which an
election to receive common stock, $1.00 par value per share, of STI
(the "STI
Common Stock") has been effectively made and not revoked or lost
pursuant to
Article II (a "Stock Election"), the right to receive from STI the
fraction of a
share of STI Common Stock as is equal to the Exchange Ratio (the
"Stock
Consideration") (collectively, the "Stock Election Shares"); and
(iii) for each share of NCF Common Stock other than shares as to
which a Cash Election or a Stock Election has been effectively made
and not
revoked or lost pursuant to Article II (collectively, "Non-Election
Shares"),
the right to receive from STI such Stock Consideration and/or Cash
Consideration
as is determined in accordance with Section 1.6(b).
"Exchange Ratio" shall mean the quotient, rounded to the nearest
one ten
thousandth, of (A) the Per Share Amount divided by (B) the STI
Closing Price.
"Per Share Amount" shall mean the sum of (A) $8.625 plus (B) the
product,
rounded to the nearest one ten thousandth, of .3713 (the "Share
Ratio") times
the STI Closing Price.
"STI Closing Price" shall mean the average, rounded to the nearest
one ten
thousandth, of the closing sale prices of STI Common Stock on the
New York Stock
Exchange (the "NYSE") as reported by The Wall Street Journal for
the five
trading days immediately preceding the date of the Effective Time.
"Cash Component" shall mean $1.8 billion.
The Cash Consideration and the Stock Consideration are sometimes
referred
to herein collectively as the "Merger Consideration."
(b) All of the shares of NCF Common Stock converted into the right
to
receive the Merger Consideration pursuant to this Article I shall
no longer be
outstanding and shall automatically be cancelled and shall cease to
exist as of
the Effective Time, and each certificate previously representing
any such shares
of NCF Common Stock (each, a "NCF Stock Certificate") shall
thereafter represent
only the right to receive (i) a certificate (each, a "STI Stock
Certificate")
representing the number of whole shares of STI Common Stock, (ii)
the aggregate
Cash Consideration and (iii) cash in lieu of fractional shares,
into which the
shares of NCF Common Stock represented by such NCF Stock
Certificate have been
converted pursuant to this Section 1.4 and Section 2.3(f).
Certificates
previously representing shares of NCF Common Stock shall be
exchanged for
certificates representing whole shares of STI Common Stock, the
aggregate Cash
Consideration deliverable in respect of the shares of NCF Common
Stock
represented thereby and cash in lieu of fractional shares issued in
consideration therefor upon the surrender of such NCF Stock
Certificates in
accordance with Article II, without any interest thereon.
(c) If, between the date of this Agreement and the Effective Time,
the
outstanding shares of STI Common Stock shall have been increased,
decreased,
changed into or exchanged for a different number or kind of shares
or securities
as a result of a reorganization, recapitalization,
reclassification, stock
dividend, stock split, reverse stock split, or other similar
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change in capitalization, an appropriate and proportionate
adjustment shall be
made to the Share Ratio payable pursuant to this Agreement.
(d) Notwithstanding anything in this Agreement to the contrary, at
the
Effective Time, all shares of NCF Common Stock that are held by NCF
or STI
(other than Trust Account Shares and DPC Shares) shall be cancelled
and shall
cease to exist and no Merger Consideration shall be delivered in
exchange
therefor. All shares of STI Common Stock that are held by NCF
(other than Trust
Account Shares and DPC Shares) shall become treasury stock of STI.
1.5 STI Capital Stock. Except as contemplated by Section 1.4(d), at
the
Effective Time each share of STI Capital Stock (as defined below)
issued and
outstanding immediately prior to the Closing Date shall remain
issued and
outstanding and shall not be affected by the Merger.
1.6 Proration.
(a) Notwithstanding any other provision contained in this
Agreement,
the total number of shares of NCF Common Stock to be converted into
Cash
Consideration pursuant to Section 1.4 (the "Cash Conversion
Number") shall be
equal to the quotient obtained by dividing (x) the Cash Component
by (y) the Per
Share Amount. All of the other shares of NCF Common Stock shall be
converted
into Stock Consideration (other than shares of NCF Common Stock to
be canceled
as provided in Section 1.4(d)).
(b) Within five business days after the Effective Time, STI shall
cause the Exchange Agent (as defined below) to effect the
allocation among
holders of NCF Common Stock of rights to receive the Cash
Consideration and the
Stock Consideration as follows:
(i) If the aggregate number of shares of NCF Common Stock with
respect to which Cash Elections shall have been made (the "Cash
Election
Number") exceeds the Cash Conversion Number, then all Stock
Election Shares and
all Non-Election Shares of each holder thereof shall be converted
into the right
to receive the Stock Consideration, and Cash Election Shares of
each holder
thereof will be converted into the right to receive the Cash
Consideration in
respect of that number of Cash Election Shares equal to the product
obtained by
multiplying (x) the number of Cash Election Shares held by such
holder by (y) a
fraction, the numerator of which is the Cash Conversion Number and
the
denominator of which is the Cash Election Number, with the
remaining number of
such holder's Cash Election Shares being converted into the right
to receive the
Stock Consideration; and
(ii) If the Cash Election Number is less than the Cash Conversion
Number (the amount by which the Cash Conversion Number exceeds the
Cash Election
Number being referred to herein as the "Shortfall Number"), then
all Cash
Election Shares shall be converted into the right to receive the
Cash
Consideration and the Non-Election Shares and Stock Election Shares
shall be
treated in the following manner:
(A) If the Shortfall Number is less than or equal to the number
of Non-Election Shares, then all Stock Election Shares shall be
converted
into the right to receive the Stock Consideration and the
Non-Election
Shares of each holder thereof shall convert
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into the right to receive the Cash Consideration in respect of that
number
of Non-Election Shares equal to the product obtained by multiplying
(x) the
number of Non-Election Shares held by such holder by (y) a
fraction, the
numerator of which is the Shortfall Number and the denominator of
which is
the total number of Non-Election Shares, with the remaining number
of such
holder's Non-Election Shares being converted into the right to
receive the
Stock Consideration; or
(B) If the Shortfall Number exceeds the number of Non-Election
Shares, then all Non-Election Shares shall be converted into the
right to
receive the Cash Consideration and Stock Election Shares of each
holder
thereof shall convert into the right to receive the Cash
Consideration in
respect of that number of Stock Election Shares equal to the
product
obtained by multiplying (x) the number of Stock Election Shares
held by
such holder by (y) a fraction, the numerator of which is the amount
by
which (1) the Shortfall Number exceeds (2) the total number of
Non-Election
Shares and the denominator of which is the total number of Stock
Election
Shares, with the remaining number of such holder's Stock Election
Shares
being converted into the right to receive the Stock Consideration.
1.7 Options and Other Stock-Based Awards.
(a) Effective as of the Effective Time, each then outstanding
option
to purchase shares of NCF Common Stock (each a "NCF Stock Option")
granted,
pursuant to the equity-based compensation plans identified on in
Section 4.11 of
the NCF Disclosure Schedule (the "NCF Stock Plans"), to any current
or former
employee or director of, or consultant to, NCF or any of its
Subsidiaries shall
be assumed by STI and shall be converted automatically into an
option to
purchase a number of shares of STI Common Stock (rounded to the
nearest whole
share) (an "Assumed Stock Option") at an exercise price determined
as provided
below (and otherwise subject to the terms of the NCF Stock Plans
and the
agreements evidencing grants thereunder):
(i) The number of shares of STI Common Stock to be subject to the
Assumed Stock Option shall be equal to the product of the number of
shares of
NCF Common Stock subject to the NCF Stock Option and the Exchange
Ratio,
provided that any fractional shares of STI Common Stock resulting
from such
multiplication shall be rounded to the nearest whole share; and
(ii) The exercise price per share of STI Common Stock under the
Assumed Stock Option shall be equal to the exercise price per share
of NCF
Common Stock under the NCF Stock Option divided by the Exchange
Ratio, provided
that such exercise price shall be rounded to the nearest whole
cent.
In the case of any NCF Stock Option to which Section 421 of the
Code applies by
reason of its qualification under Section 422 of the Code, the
conversion
formula shall be adjusted, if necessary, to comply with Section
424(a) of the
Code. Except as otherwise provided herein, the Assumed Stock
Options shall be
subject to the same terms and conditions (including expiration
date, vesting and
exercise provisions) as were applicable to the corresponding NCF
Stock Options
immediately prior to the Effective Time (but taking into account
any changes
thereto,
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including the acceleration of vesting thereof, provided for in the
NCF Stock
Plans or other NCF Benefit Plan (defined below) or in any award
agreement
thereunder by reason of this Agreement or the transactions
contemplated hereby);
provided, however, that references to NCF shall be deemed to be
references to
STI.
(b) At the Effective Time, each right of any kind, contingent or
accrued, to receive shares of NCF Common Stock or benefits measured
by the value
of a number of shares of NCF Common Stock, and each award of any
kind consisting
of shares of NCF Common Stock, granted under the NCF Stock Plans or
any other
NCF Benefit Plan (including restricted stock, restricted stock
units,
performance stock units, deferred stock units and dividend
equivalents), other
than NCF Stock Options (each, a "NCF Stock-Based Award"), whether
vested or
unvested, which is outstanding or unsatisfied immediately prior to
the Effective
Time, shall cease to represent a right or award with respect to
shares of NCF
Common Stock and shall be converted, at the Effective Time, into a
right or
award with respect to shares of STI Common Stock (an "Assumed
Stock-Based
Award"), on the same terms and conditions (including expiration
date, vesting
and exercise provisions) as were applicable under the NCF
Stock-Based Awards
(but taking into account any changes thereto, including the
acceleration
thereof, provided for in the NCF Stock Plans or other NCF Benefit
Plan or in any
award agreement thereunder by reason of this Agreement or the
transactions
contemplated hereby). The number of shares of STI Common Stock
subject to each
such Assumed Stock-Based Award shall be equal to the number of
shares of NCF
Common Stock subject to the NCF Stock-Based Award, multiplied by
the Exchange
Ratio (rounded to the nearest whole share of STI Common Stock). All
dividend
equivalents credited to the account of each holder of a NCF
Stock-Based Award as
of the Effective Time shall remain credited to such holder's
account immediately
following the Effective Time, subject to adjustment in accordance
with the
foregoing.
(c) STI shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of STI Common Stock upon the
exercise of
the Assumed Stock Options and settlement of the Assumed Stock Based
Awards. On
or as soon as practicable following the Closing Date (and in no
event more than
ten business days after the Closing Date), STI shall file a
registration
statement on an appropriate form or a post-effective amendment to a
previously
filed registration statement under the Securities Act (as defined
below) with
respect to the issuance of the shares of STI Common Stock subject
to the Assumed
Stock Options and the Assumed Stock-Based Awards and shall use its
reasonable
efforts to maintain the effectiveness of such registration
statement or
registration statements (and maintain the current status of the
prospectus or
prospectuses contained therein) for so long as such equity awards
remain
outstanding.
(d) NCF shall take such action as is necessary to provide that as
of
no later than three business days prior to the Effective Date no
additional
shares of NCF Common Stock will be purchased under the NCF
Automatic Dividend
Reinvestment Plan (the "NCF DRIP"); provided, however, that such
cessation of
further purchases shall be conditioned upon the consummation of the
Merger.
Immediately prior to and effective as of the Effective Time and
subject to the
consummation of the Merger, NCF shall terminate the NCF DRIP.
1.8 Articles of Incorporation. Subject to the terms and conditions
of this
Agreement, at the Effective Time the Articles of Incorporation of
STI, as
amended (the "STI Articles"), shall
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be the Articles of Incorporation of the Surviving Corporation until
thereafter
amended in accordance with applicable law.
1.9 Bylaws. Subject to the terms and conditions of this Agreement,
at the
Effective Time the Bylaws of STI shall be the Bylaws of the
Surviving
Corporation until thereafter amended in accordance with applicable
law.
1.10 Tax Consequences. It is intended that the Merger shall
constitute a
"reorganization" within the meaning of Section 368(a) of the Code,
and that this
Agreement shall constitute a "plan of reorganization" for the
purposes of the
Code.
1.11 Directors. At and immediately after the Effective Time, the
directors
of the Surviving Corporation shall consist of the directors of STI
in office
immediately prior to the Effective Time together with four (4)
additional
directors of NCF as provided in Section 6.15 hereof, until their
respective
successors are duly elected or appointed and qualified.
1.12 Officers. At and immediately after the Effective Time, the
officers of
the Surviving Corporation shall consist of the officers of STI in
office
immediately prior to the Effective Time.
1.13 Charitable Giving. The Surviving Corporation intends to
maintain NCF's
annual level of charitable giving in each of Tennessee and the
other regions
within the NCF footprint at levels no less than the amount of
charitable
contributions made in 2003, it being the intention of the Surviving
Corporation
to increase such giving in those areas over time in a manner equal
to the growth
in the Surviving Corporation's annual charitable giving in its
other principal
markets. Such intent shall survive the Effective Time as reflected
in a formal
resolution of the Board of Directors of the Surviving Corporation
to be
reflected in the minutes of the Surviving Corporation following the
Merger.
ARTICLE II.
DELIVERY OF MERGER CONSIDERATION
2.1 Election Procedures. Each holder of record of shares of NCF
Common
Stock ("Holder") shall have the right, subject to the limitations
set forth in
this Article II, to submit an election in accordance with the
following
procedures:
(a) Each Holder may specify in a request made in accordance with
the
provisions of this Section 2.1 (herein called an "Election") (x)
the number of
shares of NCF Common Stock owned by such Holder with respect to
which such
Holder desires to make a Stock Election and (y) the number of
shares of NCF
Common Stock owned by such Holder with respect to which such Holder
desires to
make a Cash Election.
(b) STI shall prepare a form reasonably acceptable to NCF (the
"Form
of Election") which shall be mailed to NCF's shareholders entitled
to vote at
the NCF Stockholders Meeting (as hereinafter defined) so as to
permit NCF's
shareholders to exercise their right to make an Election prior to
the Election
Deadline.
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(c) STI shall make the Form of Election initially available at the
time that the Joint Proxy Statement (as defined herein) is made
available to the
shareholders of NCF, to such shareholders, and shall use all
reasonable efforts
to make available as promptly as possible a Form of Election to any
shareholder
of NCF who requests such Form of Election following the initial
mailing of the
Forms of Election and prior to the Election Deadline. In no event
shall the Form
of Election be made available less than twenty (20) days prior to
the Election
Deadline.
(d) Any Election shall have been made properly only if the person
authorized to receive Elections and to act as exchange agent under
this
Agreement, which person shall be a bank or trust company designated
by STI and
reasonably acceptable to NCF (the "Exchange Agent"), pursuant to an
agreement
(the "Exchange Agent Agreement") entered into prior to the mailing
of the Form
of Election to NCF shareholders and reasonably acceptable to NCF,
shall have
received, by 5:00 p.m. local time in the city in which the
principal office of
such Exchange Agent is located, on the date of the Election
Deadline, a Form of
Election properly completed and signed and accompanied by NCF Stock
Certificates
to which such Form of Election relates or by an appropriate
customary guarantee
of delivery of such certificates, as set forth in such Form of
Election, from a
member of any registered national securities exchange or a
commercial bank or
trust company in the United States; provided, that such
certificates are in fact
delivered to the Exchange Agent by the time required in such
guarantee of
delivery. Failure to deliver shares of NCF Common Stock covered by
such a
guarantee of delivery within the time set forth on such guarantee
shall be
deemed to invalidate any otherwise properly made Election, unless
otherwise
determined by STI, in its sole discretion. As used herein,
"Election Deadline"
means 5:00 p.m. on the date that is the day prior to the date of
the NCF
Stockholders Meeting. NCF and STI shall cooperate to issue a press
release
reasonably satisfactory to each of them announcing the date of the
Election
Deadline not more than fifteen (15) business days before, and at
least five (5)
business days prior to, the Election Deadline.
(e) Any NCF shareholder may, at any time prior to the Election
Deadline, change or revoke his or her Election by written notice
received by the
Exchange Agent prior to the Election Deadline accompanied by a
properly
completed and signed revised Form of Election. Subject to the terms
of the
Exchange Agent Agreement, if STI shall determine in its reasonable
discretion
that any Election is not properly made with respect to any shares
of NCF Common
Stock, such Election shall be deemed to be not in effect, and the
shares of NCF
Common Stock covered by such Election shall, for purposes hereof,
be deemed to
be Non-Election Shares, unless a proper Election is thereafter
timely made.
(f) Any NCF shareholder may, at any time prior to the Election
Deadline, revoke his or her Election by written notice received by
the Exchange
Agent prior to the Election Deadline or by withdrawal prior to the
Election
Deadline of his or her NCF Stock Certificate, or of the guarantee
of delivery of
such certificates, previously deposited with the Exchange Agent.
All Elections
shall be revoked automatically if the Exchange Agent is notified in
writing by
STI or NCF that this Agreement has been terminated in accordance
with Article
VIII.
(g) Subject to the terms of the Exchange Agent Agreement, STI, in
the
exercise of its reasonable discretion, shall have the right to make
all
determinations, not inconsistent with the terms of this Agreement,
governing (A)
the validity of the Forms of Election and compliance by any NCF
shareholder with
the Election procedures set forth herein,
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(B) the manner and extent to which Elections are to be taken into
account in
making the determinations prescribed by Section 1.6, (C) the
issuance and
delivery of STI Stock Certificates into which shares of NCF Common
Stock are
converted in the Merger and (D) the method of payment of cash for
shares of NCF
Common Stock converted into the right to receive the Cash
Consideration and cash
in lieu of fractional shares of STI Common Stock where the holder
of the
applicable NCF Stock Certificate has no right to receive whole
shares of STI
Common Stock.
2.2 Deposit of Merger Consideration. At or prior to the Effective
Time, STI
will deposit with the Exchange Agent (i) certificates representing
the number of
shares of STI Common Stock sufficient to deliver in a timely
manner, and STI
shall instruct the Exchange Agent to timely deliver, the aggregate
Stock
Consideration, and (ii) immediately available funds equal to the
aggregate Cash
Consideration and STI shall instruct the Exchange Agent to timely
pay the Cash
Consideration, and cash in lieu of fractional shares of STI Common
Stock where
the holder of the applicable NCF Stock Certificate has no right to
receive whole
shares of STI Common Stock.
2.3 Delivery of Merger Consideration.
(a) As soon as reasonably practicable, but no later than seven
business days after the Effective Time, the Exchange Agent shall
mail to each
holder of record of a NCF Stock Certificate(s) which immediately
prior to the
Effective Time represented outstanding shares of NCF Common Stock
whose shares
were converted into the right to receive the Merger Consideration
pursuant to
Section 1.4 and any cash in lieu of fractional shares of STI Common
Stock to be
issued or paid in consideration therefor who did not complete an
Election Form,
(i) a letter of transmittal (which shall specify that delivery
shall be
effected, and risk of loss and title to NCF Stock Certificate(s)
shall pass,
only upon delivery of NCF Stock Certificate(s) (or affidavits of
loss in lieu of
such certificates) (the "Letter of Transmittal") to the Exchange
Agent and shall
be substantially in such form and have such other provisions as
shall be
prescribed by the Exchange Agent Agreement and (ii) instructions
for use in
surrendering NCF Stock Certificate(s) in exchange for the Merger
Consideration
and any cash in lieu of fractional shares of STI Common Stock to be
issued or
paid in consideration therefor upon surrender of such certificate
in accordance
with Section 2.3(f) and any dividends or distributions to which
such holder is
entitled pursuant to Section 2.3(c).
(b) Upon surrender to the Exchange Agent of its NCF Stock
Certificate
or Certificates, accompanied by a properly completed Form of
Election or a
properly completed Letter of Transmittal, a holder of NCF Common
Stock will be
entitled to receive promptly after the Effective Time the Merger
Consideration
(elected or deemed elected by it, subject to Sections 1.4 and 1.6)
in respect of
the shares of NCF Common Stock represented by its NCF Stock
Certificate or
Certificates. Until so surrendered, each such NCF Stock Certificate
shall
represent after the Effective Time, for all purposes, only the
right to receive
the Merger Consideration and any cash in lieu of fractional shares
of STI Common
Stock to be issued or paid in consideration therefor upon surrender
of such
certificate in accordance with, and any dividends or distributions
to which such
holder is entitled pursuant to, this Article II.
(c) No dividends or other distributions with respect to STI Common
Stock with a record date after the Effective Time shall be paid to
the holder of
any unsurrendered NCF
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Stock Certificate with respect to the shares of STI Common Stock
represented
thereby, and no cash payment in lieu of fractional shares shall be
paid to any
such holder pursuant to subsection (f) below, and all such
dividends, other
distributions and cash in lieu of fractional shares of STI Common
Stock shall be
paid by STI to the Exchange Agent and shall be included in the
Exchange Fund, in
each case until the surrender of such NCF Stock Certificate in
accordance with
this Article II. Subject to the effect of applicable abandoned
property, escheat
or similar laws, following surrender of any such NCF Stock
Certificate there
shall be paid to the Holder of a STI Stock Certificate representing
whole shares
of STI Common Stock issued in exchange therefor, without interest,
(i) at the
time of such surrender, the amount of dividends or other
distributions with a
record date after the Effective Time theretofore paid with respect
to such whole
shares of STI Common Stock and the amount of any cash payable in
lieu of a
fractional share of STI Common Stock to which such Holder is
entitled pursuant
to subsection (f), and (ii) at the appropriate payment date, the
amount of
dividends or other distributions with a record date after the
Effective Time but
prior to such surrender and with a payment date subsequent to such
surrender
payable with respect to such whole shares of STI Common Stock. STI
shall make
available to the Exchange Agent cash for these purposes, if
necessary.
(d) If any portion of the Merger Consideration is to be paid to a
person other than the person in whose name a NCF Stock Certificate
so
surrendered is registered, it shall be a condition to such payment
that such NCF
Stock Certificate shall be properly endorsed or otherwise be in
proper form for
transfer and the person requesting such payment shall pay to the
Exchange Agent
any transfer or other similar Taxes (as defined herein) required as
a result of
such payment to a person other than the registered holder of such
NCF Stock
Certificate, or establish to the reasonable satisfaction of the
Exchange Agent
that such Tax has been paid or is not payable. The Exchange Agent
(or,
subsequent to the first anniversary of the Effective Time, STI)
shall be
entitled to deduct and withhold from the Merger Consideration
(including cash in
lieu of fractional shares of STI Common Stock) otherwise payable
pursuant to
this Agreement to any holder of NCF Common Stock such amounts as
the Exchange
Agent or STI, as the case may be, is required to deduct and
withhold under the
Code, or any provision of state, local or foreign Tax law, with
respect to the
making of such payment. To the extent the amounts are so withheld
by the
Exchange Agent or STI, as the case may be, such withheld amounts
shall be
treated for all purposes of this Agreement as having been paid to
the holder of
shares of NCF Common Stock in respect of whom such deduction and
withholding was
made by the Exchange Agent or STI, as the case may be.
(e) After the Effective Time there shall be no further registration
or
transfers of shares of NCF Common Stock. If after the Effective
Time, NCF Stock
Certificates are presented to the Surviving Corporation, they shall
be cancelled
and exchanged for the Merger Consideration in accordance with the
procedures set
forth in this Article II.
(f) No STI Stock Certificates representing fractional shares of STI
Common Stock shall be issued upon the surrender for exchange of NCF
Stock
Certificates; no dividend or distribution by STI shall relate to
such fractional
share interests; and such fractional share interests will not
entitle the owner
thereof to vote or to any rights as a shareholder of STI. In lieu
of any such
fractional shares, each Holder of a NCF Stock Certificate who would
otherwise
have been entitled to receive a fractional share interest in
exchange for such
NCF Stock Certificate shall receive from the Exchange Agent an
amount in cash
equal to the product obtained by
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multiplying (A) the fractional share interest to which such Holder
(after taking
into account all shares of NCF Common Stock held by such holder at
the Effective
Time) would otherwise be entitled by (B) the STI Closing Price.
Notwithstanding
any other provision contained in this Agreement, funds utilized to
acquire
fractional shares as aforesaid shall be furnished by STI on a
timely basis and
shall in no event be derived from or diminish the Cash
Consideration available
for distribution as part of the Merger Consideration.
(g) At any time following the first anniversary of the Effective
Time,
STI shall be entitled to require the Exchange Agent to deliver to
it any
remaining portion of the Merger Consideration not distributed to
holders of NCF
Stock Certificates that was deposited with the Exchange Agent at
the Effective
Time (the "Exchange Fund") (including any interest received with
respect thereto
and other income resulting from investments by the Exchange Agent,
as directed
by STI), and holders shall be entitled to look only to STI (subject
to abandoned
property, escheat or other similar laws) with respect to the Merger
Consideration, any cash in lieu of fractional shares of STI Common
Stock and any
dividends or other distributions with respect to STI Common Stock
payable upon
due surrender of their NCF Stock Certificates, without any interest
thereon.
Notwithstanding the foregoing, neither STI nor the Exchange Agent
shall be
liable to any holder of a NCF Stock Certificate for Merger
Consideration (or
dividends or distributions with respect thereto) or cash from the
Exchange Fund
in each case delivered to a public official pursuant to any
applicable abandoned
property, escheat or similar law.
(h) In the event any NCF Stock Certificates shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact
by the Person
claiming such NCF Stock Certificate(s) to be lost, stolen or
destroyed and, if
required by STI or the Exchange Agent, the posting by such person
of a bond in
such sum as STI may reasonably direct as indemnity against any
claim that may be
made against it or the Surviving Corporation with respect to such
NCF Stock
Certificate(s), the Exchange Agent will issue the Merger
Consideration
deliverable in respect of the shares of NCF Common Stock
represented by such
lost, stolen or destroyed NCF Stock Certificates.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF STI
Prior to the execution and delivery of this Agreement, STI has
delivered to
NCF a schedule (the "STI Disclosure Schedule") setting forth, among
other
things, items the disclosure of which is necessary or appropriate
either in
response to an express disclosure requirement contained in a
provision hereof or
as an exception to one or more of STI's representations or
warranties contained
in this Article III, or to one or more of STI's covenants contained
in Section
5.2 (provided that such Disclosure Schedule shall indicate the
Section of this
Agreement to which items disclosed therein apply). No
representation or warranty
of STI contained in this Article III (other than the
representations and
warranties in Sections 3.1(a), 3.2, 3.3(a), 3.3(b)(i), 3.7, 3.8(a)
and 3.23,
which shall be true and correct in all material respects) shall be
deemed untrue
or incorrect, and STI shall not be deemed to have breached a
representation or
warranty, or failed to satisfy a related condition, as a
consequence of the
existence or absence of any fact, circumstance or event unless such
fact,
circumstance or event, individually or taken together
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with all other facts, circumstances or events inconsistent with any
representation or warranty contained in Article III, has had or is
reasonably
likely to have a Material Adverse Effect (as defined below) on STI.
As used in
this Agreement, the term "Material Adverse Effect" means, with
respect to STI or
NCF, as the case may be, an effect which (i) is materially adverse
to the
business, results of operations or financial condition of such
party and its
Subsidiaries taken as a whole, other than any such effect to the
extent
attributable to or resulting from (u) any change in banking or
similar laws,
rules or regulations of general applicability or interpretations
thereof by
courts or governmental authorities, (v) any change in generally
accepted
accounting principles, regulatory accounting principles or
interpretations
thereof, in each case which affects banks or their holding
companies generally,
(w) any change that arises out of this Agreement (including the
announcement
thereof) or in compliance with the terms and conditions hereof, (x)
events,
conditions or trends in economic, business or financial conditions
affecting
banks or their holding companies generally, including, without
limitation,
changes in prevailing interest rates, (y) changes in national or
international
political or social conditions including the engagement by the
United States in
hostilities, whether or not pursuant to the declaration of a
national emergency
or war, or the occurrence of any military or terrorist attack upon
or within the
United States, or any of its territories, possessions or diplomatic
or consular
offices or upon any military installation, equipment or personnel
of the United
States (except to the extent that any such change affects such
party in a
disproportionate manner) or (z) any change in the stock price or
trading volume
of such party, or (ii) materially impairs the ability of such party
and its
Subsidiaries to consummate the transactions contemplated hereby.
Except as set forth in the STI Disclosure Schedule, and subject to
the
standard set forth above, STI hereby represents and warrants to NCF
as set forth
in Sections 3.1 through 3.24:
3.1 Corporate Organization
(a) STI is a corporation duly organized, validly existing and in
good
standing under the laws of the State of Georgia. STI is a bank
holding company
registered under the Bank Holding Company Act of 1956, as amended
(the "BHC
Act"), which has duly elected to become, and meets the applicable
requirements
for qualification as, a financial holding company pursuant to
Section 4(l) of
the BHC Act. True and complete copies of the STI Articles and
Bylaws of STI, as
in effect as of the date of this Agreement, have previously been
made available
by STI to NCF.
(b) STI has the corporate power and authority to own or lease all
of
its properties and assets and to carry on its business as it is now
being
conducted, and is duly licensed or qualified to do business in each
jurisdiction
in which the nature of the business conducted by it or the
character or location
of the properties and assets owned or leased by it makes such
licensing or
qualification necessary.
(c) SunTrust Bank ("SunTrust Bank") is a commercial bank duly
organized, validly existing and in good standing under the laws of
the State of
Georgia. Each STI Subsidiary (i) is duly organized, validly
existing and in good
standing under the laws of its jurisdiction of incorporation or
organization,
(ii) is duly licensed or qualified to do business in all
jurisdictions (whether
federal, state, local or foreign) where its ownership or leasing of
property or
the conduct of its business requires it to be so licensed or
qualified and (iii)
has all requisite
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corporate or other power and authority to own or lease its
properties and assets
and to carry on its business as now conducted. The articles of
incorporation,
by-laws and similar governing documents of each Subsidiary of STI,
copies of
which have previously been made available to NCF, are true,
complete and correct
copies of such documents as of the date of this Agreement. The
deposit accounts
of SunTrust Bank are insured by the Federal Deposit Insurance
Corporation (the
"FDIC") through the Bank Insurance Fund or the Savings Association
Insurance
Fund to the fullest extent permitted by law, and all premiums and
assessments
required to be paid in connection therewith have been paid when
due. As used in
this Agreement, the word "Subsidiary" when used with respect to any
party means
any bank, savings bank, corporation, partnership, limited liability
company, or
other organization, whether incorporated or unincorporated, which
is
consolidated with such party for financial reporting purposes under
GAAP (as
defined herein).
(d) The minute books of STI and each of its Subsidiaries contain
true
and correct records of all meetings and other corporate actions
held or taken
since December 31, 2000 of their respective shareholders and Boards
of Directors
(including committees of their respective Boards of Directors).
3.2 Capitalization
(a) As of April 30, 2004, the authorized capital stock of STI
consists
of seven hundred fifty million (750,000,000) shares of STI Common
Stock, of
which 282,423,271 shares were issued and outstanding, and fifty
million
(50,000,000) shares of preferred stock, no par value per share (the
"STI
Preferred Stock" and, together with the STI Common Stock, the "STI
Capital
Stock"), of which no shares were issued and outstanding or reserved
for
issuance. As of April 30, 2004, no more than 11,739,486 shares of
STI Common
Stock were held in STI's treasury or by STI Subsidiaries. As of
April 30, 2004,
no shares of STI Capital Stock were reserved for issuance except
for 31,979,583
shares of STI Common Stock reserved for issuance upon the exercise
of options to
purchase shares of STI Common Stock (each a "STI Stock Option")
granted pursuant
to the equity-based compensation plans of STI (the "STI Stock
Plans") as
identified in Section 3.2(a) of the STI Disclosure Schedule. All of
the issued
and outstanding shares of STI Capital Stock have been duly
authorized and
validly issued and are fully paid, nonassessable and free of
preemptive rights,
with no personal liability attaching to the ownership thereof.
(b) As of the date of this Agreement, no bonds, debentures, notes
or
other indebtedness having the right to vote on any matters on which
shareholders
may vote ("Voting Debt") of STI are issued or outstanding.
(c) As of the date of this Agreement, except for (i) this
Agreement,
and (ii) the rights under the STI Stock Plans which represented, as
of April 30,
2004, the right to acquire up to an aggregate of 17,467,179 shares
of STI Common
Stock, there are no options, subscriptions, warrants, calls,
rights, commitments
or agreements of any character to which STI or any Subsidiary is a
party or by
which it or any such Subsidiary is bound obligating STI or any
Subsidiary of STI
to issue, deliver or sell, or cause to be issued, delivered or
sold, additional
shares of STI Capital Stock or any Voting Debt or stock
appreciation rights of
STI or of any Subsidiary or obligating STI or any Subsidiary of STI
to grant,
extend or enter into any such
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option, warrant, call, right, commitment or agreement. As of the
date of this
Agreement, there are no outstanding contractual obligations of STI
or any of its
Subsidiaries (A) to repurchase, redeem or otherwise acquire any
shares of
capital stock of STI or any equity security of STI or its
Subsidiaries or any
securities representing the right to purchase or otherwise receive
any shares of
capital stock or any other equity security of STI or its
Subsidiaries or (B)
pursuant to which STI or any of its Subsidiaries is or could be
required to
register shares of STI Capital Stock or other securities under the
Securities
Act of 1933, as amended (the "Securities Act"). The shares of STI
Common Stock
to be issued pursuant to the Merger will be duly authorized and
validly issued
and, at the Effective Time, all such shares will be fully paid and
nonassessable, and free of preemptive rights, with no personal
liability
attaching to the ownership thereof.
(d) As of the date of this Agreement, except as disclosed in the
STI
10-K, STI owns, directly or indirectly, all of the issued and
outstanding shares
of capital stock or other equity ownership interests of each of the
STI
Subsidiaries, free and clear of any liens, pledges, charges,
encumbrances and
security interests whatsoever ("Liens"), and all of such shares or
equity
ownership interests are duly authorized and validly issued and are
fully paid,
nonassessable (subject to 12 U.S.C. ss. 55) and free of preemptive
rights, with
no personal liability attaching to the ownership thereof. As of the
date of this
Agreement, no STI Subsidiary has or is bound by any outstanding
subscription,
option, warrant, call, commitment or agreement of any character
calling for the
purchase of any shares of capital stock or any other equity
security of STI or
its Subsidiaries or any securities representing the right to
purchase or
otherwise receive any shares of capital stock or any other equity
security of
STI or its Subsidiaries. As of the date of this Agreement and
except as
disclosed in the STI 10-K (as defined in Section 3.6), neither STI
nor any of
its Subsidiaries has any equity investment other than investments
in wholly
owned Subsidiaries.
3.3 Authority; No Violation
(a) STI has full corporate power and authority to execute and
deliver
this Agreement and, subject in the case of the consummation of the
Merger to the
STI Shareholder Approval (as defined below), to consummate the
transactions
contemplated hereby. The execution and delivery of this Agreement
and the
consummation of the transactions contemplated hereby have been duly
and validly
approved by the Board of Directors of STI. The Board of Directors
of STI
determined that the Merger is advisable and in the best interests
of STI and its
shareholders and has directed that the approval of the issuance of
STI Common
Stock pursuant to this Agreement be submitted to STI's shareholders
and, except
for the approval of the shareholders of STI of the issuance of STI
Common Stock
pursuant to this Agreement (the "STI Shareholder Approval"), no
other corporate
proceedings on the part of STI are necessary to approve this
Agreement and to
consummate the transactions contemplated hereby. This Agreement has
been duly
and validly executed and delivered by STI and (assuming due
authorization,
execution and delivery by NCF) constitutes valid and binding
obligations of STI,
enforceable against STI in accordance with its terms (except as may
be limited
by bankruptcy, insolvency, moratorium, reorganization or similar
laws affecting
the rights of creditors generally and the availability of equitable
remedies).
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(b) Neither the execution and delivery by STI of this Agreement nor
the consummation by STI of the transactions contemplated hereby,
nor compliance
by STI with any of the terms or provisions hereof, will (i) violate
any
provision of the STI Articles or Bylaws of STI or the governing
documents of any
of its Subsidiaries or (ii) assuming that the consents and
approvals referred to
in Section 3.4 are duly obtained, (x) violate any statute, code,
ordinance,
rule, regulation, judgment, order, writ, decree or injunction
applicable to STI,
any of its Subsidiaries or any of their respective properties or
assets or (y)
violate, conflict with, result in a breach of any provision of or
the loss of
any benefit under, constitute a default (or an event which, with
notice or lapse
of time, or both, would constitute a default) under, result in the
termination
of or a right of termination or cancellation under, accelerate the
performance
required by, or result in the creation of any Lien upon any of the
respective
properties or assets of STI or any of its Subsidiaries under, any
of the terms,
conditions or provisions of any note, bond, mortgage, indenture,
deed of trust,
license, lease, agreement or other instrument or obligation to
which STI or any
of its Subsidiaries is a party, or by which they or any of their
respective
properties or assets may be bound or affected.
3.4 Consents and Approvals. Except for (i) the filing of
applications and
notices, as applicable, with the Board of Governors of the Federal
Reserve
System (the "Federal Reserve Board") under the BHC Act and the
Federal Reserve
Act, as amended, and approval of such applications and notices,
(ii) the filing
of any required applications or notices with any other federal,
state or foreign
banking agencies or banking regulatory authorities and approval of
such
applications and notices (the "Other Regulatory Approvals"), (iii)
the filing
with the Securities and Exchange Commission (the "SEC") of a Joint
Proxy
Statement/Prospectus in definitive form relating to the meeting of
NCF's and
STI's shareholders to be held in connection with this Agreement and
the
transactions contemplated hereby (the "Joint Proxy Statement"), and
of the
registration statement on Form S-4 (the "Form S-4") in which the
Joint Proxy
Statement will be included as a prospectus, and declaration of
effectiveness of
the Form S-4, (iv) the filing of the Georgia Certificate of Merger
with the
Georgia Secretary pursuant to the GBCC and the filing of Tennessee
Articles of
Merger with the Tennessee Secretary pursuant to the TBCA, (v) any
notices to or
filings with the Small Business Administration (the "SBA"), (vi)
any notice or
filings under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as
amended (the "HSR Act"), (vii) any consents, authorizations,
approvals, filings
or exemptions in connection with compliance with the applicable
provisions of
federal and state securities laws relating to the regulation of
broker-dealers,
investment companies, investment advisers or transfer agents, and
federal
commodities laws relating to the regulation of futures commission
merchants and
the rules and regulations thereunder and of any applicable industry
self-regulatory organization ("SRO"), and the rules of the NYSE, or
which are
required under consumer finance, mortgage banking and other similar
laws, (viii)
such filings and approvals as are required to be made or obtained
under the
securities or "Blue Sky" laws of various states in connection with
the issuance
of the shares of STI Common Stock pursuant to this Agreement, (ix)
the STI
Shareholder Approval, (x) such applications, filings,
authorizations, approvals
and orders as may be required under the laws of any state or the
federal laws of
the United States in respect of NCF's insurance business, and (xi)
approval of
the listing of STI Common Stock to be issued in the Merger on the
NYSE, no
consents or approvals of or filings or registrations with any
court,
administrative agency or commission or other governmental authority
or
instrumentality (each a "Governmental Entity") or with any third
party are
necessary in connection with (A) the
-15-
execution and delivery by STI of this Agreement and (B) the
consummation by STI
of the Merger and the other transactions contemplated hereby.
3.5 Reports. STI and each of its Subsidiaries have timely filed all
reports, registrations and statements, together with any amendments
required to
be made with respect thereto, that they were required to file since
January 1,
2000 with (i) the Federal Reserve Board, (ii) the Federal Deposit
Insurance
Corporation, (iii) any state regulatory authority (each a "State
Regulator"),
(iv) the Office of the Comptroller of the Currency (the "OCC"), (v)
the SEC,
(vi) any SRO and (vii) the Office of Thrift Supervision (the "OTS")
(collectively "Regulatory Agencies"), and have paid all fees and
assessments due
and payable in connection therewith. Except for normal examinations
conducted by
a Regulatory Agency in the ordinary course of the business of STI
and its
Subsidiaries, no Regulatory Agency has initiated any proceeding or,
to the best
knowledge of STI, investigation into the business or operations of
STI or any of
its Subsidiaries since January 1, 2000. There is no unresolved
violation,
criticism, or exception by any Regulatory Agency with respect to
any report or
statement relating to any examinations of STI or any of its
Subsidiaries.
3.6 Financial Statements. STI has previously made available to NCF
true and
correct copies of (i) the consolidated balance sheets of STI and
its
Subsidiaries as of December 31, 2002 and 2003 and the related
consolidated
statements of income and shareholders' equity and cash flows for
the fiscal
years ended December 31, 2001 through 2003, inclusive, as reported
in STI's
Annual Report on Form 10-K for the fiscal year ended December 31,
2003 (the "STI
10-K"), filed with the SEC under the Exchange Act and accompanied
by the audit
report of PricewaterhouseCoopers LLP ("PWC"), independent public
accountants
with respect to STI, and (ii) the unaudited consolidated balance
sheet of STI
and its Subsidiaries as of March 31, 2003 and 2004, and the related
consolidated
statements of income, shareholders' equity and cash flows for the
three-month
period then ended, as reported in STI's Quarterly Report on Form
10-Q for the
quarterly period ended March 31, 2004 (the "STI 10-Q"). The
December 31, 2003
consolidated balance sheet of STI (including the related notes,
where
applicable) fairly presents in all material respects the
consolidated financial
position of STI and its Subsidiaries as of the date thereof, and
the other
financial statements referred to in this Section 3.6 (including the
related
notes, where applicable) fairly present in all material respects,
and the
financial statements to be filed by STI with the SEC after the date
of this
Agreement will fairly present in all material respects (subject, in
the case of
the unaudited financial statements, to recurring audit adjustments
normal in
nature and amount), the results of the consolidated operations and
changes in
shareholders' equity and consolidated financial position of STI and
its
Subsidiaries for the respective fiscal periods or as of the
respective dates
therein set forth; each of such financial statements (including the
related
notes, where applicable) complies, and the financial statements to
be filed by
STI with the SEC after the date of this Agreement will comply, with
applicable
accounting requirements and with the published rules and
regulations of the SEC
with respect thereto; and each of such financial statements
(including the
related notes, where applicable) has been, and the financial
statements to be
filed by STI with the SEC after the date of this Agreement will be,
prepared in
accordance with accounting principles generally accepted in the
United States
("GAAP") consistently applied during the periods involved, except
as indicated
in the notes thereto or, in the case of unaudited financial
statements, as
permitted by Form 10-Q. The books and records of STI and its
Subsidiaries have
been, and are being, maintained in accordance with applicable legal
and
accounting requirements and reflect only actual
-16-
transactions. PWC has not resigned or been dismissed as independent
public
accountants of STI as a result of or in connection with any
disagreements with
STI on a matter of accounting principles or practices, financial
statement
disclosure or auditing scope or procedure.
3.7 Broker's Fees. Except for Goldman Sachs & Co. and SunTrust
Robinson
Humphrey, neither STI nor any STI Subsidiary nor any of their
respective
officers or directors has employed any broker or finder or incurred
any
liability for any broker's fees, commissions or finder's fees in
connection with
the Merger or related transactions contemplated by this Agreement.
3.8 Absence of Certain Changes or Events
(a) Except as disclosed in any STI Report (defined below) filed
with
the SEC prior to the date of this Agreement, since December 31,
2003, there has
been no change or development or combination of changes or
developments which,
individually or in the aggregate, has had, or is reasonably likely
to have, a
Material Adverse Effect on STI.
(b) Since December 31, 2003 through and including the date of this
Agreement, STI and its Subsidiaries have carried on their
respective businesses
in the ordinary course of business consistent with their past
practices.
(c) Since December 31, 2003 through the date hereof neither STI nor
any of its Subsidiaries has taken any action which would, if taken
after the
date hereof, constitute a breach of Section 5.2.
3.9 Legal Proceedings.
(a) Neither STI nor any of its Subsidiaries is a party to any, and
there are no pending or, to the best of STI's knowledge,
threatened, legal,
administrative, arbitral or other proceedings, claims, actions or
governmental
or regulatory investigations of any nature (in each case, other
than with
respect to Taxes) against STI or any of its Subsidiaries or
challenging the
validity or propriety of the transactions contemplated by this
Agreement.
(b) There is no injunction, order, judgment, decree, or regulatory
restriction (other than those that apply to similarly situated bank
holding
companies or banks) imposed upon STI, any of its Subsidiaries or
the assets of
STI or any of its Subsidiaries.
3.10 Taxes
(a) Each of STI and its Subsidiaries has duly and timely filed all
federal, state, foreign and local information returns and Tax
returns required
to be filed by it (all such returns being accurate and complete in
all material
respects) and has duly and timely paid or made provision for the
payment of all
Taxes that have been incurred or are due or claimed to be due from
it by
federal, state, foreign or local taxing authorities other than
Taxes or other
governmental charges that are not yet due and payable or are being
contested in
good faith, have not been finally determined and have been
adequately reserved
against under GAAP. The federal income Tax returns of STI and its
Subsidiaries
have been examined by the IRS for all years to and including 1998
and any
liability with
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respect thereto has been satisfied or any liability with respect to
deficiencies
asserted as a result of such examination is covered by reserves
that are
adequate under GAAP. There are no material disputes pending, or
claims or
deficiencies asserted, for Taxes or assessments upon STI or any of
its
Subsidiaries for which STI does not have reserves that are adequate
under GAAP.
Neither STI nor any of its Subsidiaries is a party to or is bound
by any
material Tax sharing, allocation or indemnification agreement or
arrangement
(other than such an agreement or arrangement exclusively between or
among STI
and its Subsidiaries). Within the past five years, neither STI nor
any of its
Subsidiaries has been a "distributing corporation" or a "controlled
corporation"
in a distribution intended to qualify under Section 355(a) of the
Code.
(b) As used in this Agreement, the term "Tax" or "Taxes" means (i)
all
federal, state, local, and foreign income, excise, gross receipts,
gross income,
premiums, ad valorem, profits, gains, property, capital, sales,
transfer, use,
payroll, employment, severance, withholding, duties, intangibles,
franchise,
backup withholding, and other taxes, charges, levies or like
assessments
together with all penalties and additions to tax and interest
thereon and (ii)
any liability for Taxes described in the foregoing clause (i) under
Treasury
Regulation Section 1.1502-6 (or any similar provision of state,
local or foreign
law).
3.11 SEC Reports. STI has previously made available to NCF an
accurate and
complete copy of each (a) final registration statement, prospectus,
report,
schedule and definitive proxy statement filed since January 1, 2001
by STI with
the SEC pursuant to the Securities Act or the Securities Exchange
Act of 1934,
as amended (the "Exchange Act"), and prior to the date hereof and
(b)
communication mailed by STI to its shareholders since January 1,
2001 and prior
to the date hereof. STI has timely filed all required reports,
schedules,
registration statements and other documents with the SEC since
January 1, 2001
(the "STI Reports"). As of their respective dates of filing with
the SEC (or, if
amended or superseded by a filing prior to the date hereof, as of
the date of
such filing), the STI Reports complied with the requirements of the
Securities
Act or the Exchange Act, as the case may be, and the rules and
regulations of
the SEC thereunder applicable to such STI Reports, and none of the
STI Reports
when filed 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 therein, in light of the circumstances under which they
were made,
not misleading. No executive officer of STI has failed in any
respect to make
the certifications required of him or her under Section 302 or 906
of the
Sarbanes-Oxley Act of 2002 and no enforcement action has been
initiated against
STI by the SEC relating to disclosures contained in any STI Report.
3.12 Compliance with Applicable Law. STI and each of its
Subsidiaries:
(a) is in compliance, in the conduct of its business, with all
applicable federal, state, local and foreign statutes, laws,
regulations,
ordinances, rules, judgments, orders or decrees applicable thereto
or to the
employees conducting such businesses, including the Sarbanes-Oxley
Act of 2002,
the Equal Credit Opportunity Act, the Fair Housing Act, the
Community
Reinvestment Act, the Home Mortgage Disclosure Act, the Uniting and
Strengthening America by Providing Appropriate Tools Required to
Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, all other
applicable fair
lending laws or other laws relating to discrimination and the Bank
Secrecy Act,
and, as of the date hereof, STI, and each other depository
Subsidiary of STI,
has a Community Reinvestment Act rating of "satisfactory" or
better;
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(b) has all permits, licenses, franchises, certificates, orders,
and
approvals of, and has made all filings, applications, and
registrations with,
Governmental Entities that are required in order to permit STI and
each of its
Subsidiaries to carry on its business as currently conducted;
(c) has, since December 31, 2000, received no notification or
communication from any Governmental Entity (i) asserting that STI
or any of its
Subsidiaries is not in compliance with any statutes, regulations or
ordinances,
(ii) threatening to revoke any permit, license, franchise,
certificate of
authority or other governmental authorization, or (iii) threatening
or
contemplating revocation or limitation of, or which would have the
effect of
revoking or limiting, FDIC deposit insurance; and
(d) is not a party to or subject to any order, decree, agreement,
memorandum of understanding or similar arrangement with, or a
commitment letter,
supervisory letter or similar submission to, and has not adopted
any board
resolution at the request of, any Governmental Entity charged with
the
supervision or regulation of depository institutions or engaged in
the insurance
of deposits or the supervision or regulation of STI or any of its
Subsidiaries
and neither STI nor any of its Subsidiaries has been advised by any
such
Governmental Entity that such Governmental Entity is contemplating
issuing or
requesting (or is considering the appropriateness of issuing or
requesting) any
such order, decree, agreement, memorandum of understanding,
commitment letter,
supervisory letter or similar submission or request.
3.13 Ownership of NCF Common Stock. Neither STI nor any of its
affiliates
or associates (as such terms are defined under the Exchange Act),
(a)
beneficially owns, directly or indirectly, or (b) is a party to any
agreement,
arrangement or understanding for the purpose of acquiring, holding,
voting or
disposing of, in each case, shares of NCF Common Stock representing
in the
aggregate more than 5% of the outstanding shares of NCF Common
Stock (other than
Trust Account Shares and DPC Shares).
3.14 Interest Rate Risk Management Instruments
(a) All Derivative Transactions (as defined below) entered into by
STI
or any of its Subsidiaries or for the account of any of its
customers were
entered into in accordance with applicable laws, rules, regulations
and
regulatory policies of any Governmental Entity, and in accordance
with the
investment, securities, commodities, risk management and other
policies,
practices and procedures employed by STI and its Subsidiaries, and
were entered
into with counterparties believed at the time to be financially
responsible and
able to understand (either alone or in consultation with their
advisers) and to
bear the risks of such Derivative Transactions. STI and its
Subsidiaries have
duly performed all of their obligations under the Derivative
Transactions to the
extent that such obligations to perform have accrued, and, to the
knowledge of
STI, there are no breaches, violations or defaults or allegations
or assertions
of such by any party thereunder.
(b) For purposes of this Agreement, the term "Derivative
Transaction"
means any swap transaction, option, warrant, forward purchase or
sale
transaction, futures transaction, cap transaction, floor
transaction or collar
transaction relating to one or more currencies,
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commodities, bonds, equity securities, loans, interest rates,
catastrophe
events, weather-related events, credit-related events or conditions
or any
indexes, or any other similar transaction (including any option
with respect to
any of these transactions) or combination of any of these
transactions,
including collateralized mortgage obligations or other similar
instruments or
any debt or equity instruments evidencing or embedding any such
types of
transactions, and any related credit support, collateral or other
similar
arrangements related to such transactions.
3.15 Labor Relations. Neither STI 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 STI
or any of its Subsidiaries the subject of any proceeding asserting
that STI or
any such Subsidiary has committed an unfair labor practice or
seeking to compel
STI or such Subsidiary to bargain with any labor organization as to
wages or
conditions of employment, nor is there any strike involving STI or
any of its
Subsidiaries pending or, to the knowledge of STI, threatened, nor
is STI aware
of any activity involving its or any of its Subsidiaries' employees
seeking to
certify a collective bargaining unit or engaging in any other
organizational
activity.
3.16 Environmental Matters
(a) Each of STI and its Subsidiaries and, to the knowledge of STI,
each of the Participation Facilities and the Loan Properties (each
as defined
below, for so long as they were Loan Properties or Participation
Facilities) are
and have been in compliance with all applicable federal, state and
local laws
including common law, regulations and ordinances and with all
applicable decrees
and orders, in each case relating to pollution or the discharge of,
or exposure
to Hazardous Materials (as defined below) in the environment or
workplace
("Environmental Laws");
(b) There is no suit, claim, action or proceeding pending or, to
the
knowledge of STI, threatened, before any Governmental Entity or
other forum in
which STI, any of its Subsidiaries, and, to the knowledge of STI,
any
Participation Facility or any Loan Property, has been or, with
respect to
threatened proceedings, is reasonably likely to be, named as a
defendant (i) for
alleged noncompliance (including by any predecessor) with any
Environmental Laws
or (ii) relating to the release, threatened release or exposure of
any Hazardous
Material whether or not occurring at or on a site owned, leased or
operated by
STI or any of its Subsidiaries, any Participation Facility or any
Loan Property;
and
(c) To the knowledge of STI, during the period of: (i) STI's or any
of
its Subsidiaries' ownership or operation of any of their respective
current or
former properties, (ii) STI's or any of its Subsidiaries'
participation in the
management of any Participation Facility, or (iii) STI's or any of
its
Subsidiaries' interest in a Loan Property, there has been no
release of
Hazardous Materials in, on, under or
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affecting any such property, which could reasonably be expected to
require
remediation pursuant to any Environmental Law. To the knowledge of
STI, prior to
the period of (x) STI's or any of its Subsidiaries' ownership or
operation of
any of their respective current or former properties, (y) STI's or
any of its
Subsidiaries' participation in the management of any Participation
Facility, or
(z) STI's or any of its Subsidiaries' interest in a Loan Property,
there was no
release or threatened release of Hazardous Materials in, on, under
or affecting
any such property, Participation Facility or Loan Property, which
could
reasonably be expected to require remediation pursuant to any
Environmental Law.
(d) The following definitions apply for purposes of this Agreement:
(i) "Hazardous Materials" means any chemicals, pollutants,
contaminants, wastes,
toxic substances, petroleum or other regulated substances or
materials; (ii)
"Loan Property" means any property in which STI or any of its
Subsidiaries holds
a security interest and, where required by the context, said term
means the
owner or operator of such property; and (iii) "Participation
Facility" means any
facility in which STI or any of its Subsidiaries participates in
the management
and, where required by the context, said term means the owner or
operator of
such property.
3.17 Approvals; Reorganization. As of the date of this Agreement,
STI (a)
knows of no reason why (i) all regulatory approvals from any
Governmental Entity
required for the consummation of the transactions contemplated by
this Agreement
should not be obtained on a timely basis or (ii) the opinion of tax
counsel
referred to in Section 7.3(c) should not be obtained on a timely
basis and (b)
has no reason to believe that the Merger will fail to qualify as a
reorganization under Section 368(a) of the Code.
3.18 Property. Each of STI and its Subsidiaries has good title free
and
clear of all Liens to all of the properties and assets, real and
personal,
tangible or intangible, which are reflected on the consolidated
statement of
financial condition of STI as of March 31, 2004 or acquired after
such date,
except (a) Liens for taxes not yet due and payable, (b) pledges to
secure
deposits and other Liens incurred in the ordinary course of
business, (c)
mechanics', materialmen's, workmen's, repairmen's, warehousemen's,
carrier's and
other similar Liens arising in the ordinary course of business, or
(d) Liens
that do not interfere in any material respect with the current use
of such
property or asset. All leases pursuant to which STI or any
Subsidiary of STI, as
lessee, leases real or personal property are valid and enforceable
against STI
in accordance with their respective terms and neither STI nor any
of its
Subsidiaries nor, to the knowledge of STI, any other party thereto
is in default
thereunder.
3.19 Intellectual Property
(a) To the knowledge of STI, STI and its Subsidiaries own or have a
valid license to use all STI Intellectual Property (as defined
below), free and
clear of all Liens, royalty or other payment obligations (except
for royalties
or payments with respect to off-the-shelf Software at standard
commercial
rates). To the knowledge of STI, STI Intellectual Property
constitutes all of
the Intellectual Property necessary to carry on the business of STI
and its
Subsidiaries as currently conducted. STI Intellectual Property
owned by STI or
any of its Subsidiaries, and to the knowledge of STI, all other STI
Intellectual
Property, is valid and has not been cancelled, forfeited, expired
or abandoned,
and neither STI nor any of its Subsidiaries has received notice
challenging the
validity or enforceability of STI Intellectual Property. To the
knowledge of
STI, the conduct of the business of STI and its Subsidiaries does
not violate,
misappropriate or infringe upon the Intellectual Property rights of
any third
party. The consummation of the Merger will not result in the loss
or impairment
of the right of STI or any of its Subsidiaries to own or use any of
STI
Intellectual Property.
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(b) For purposes of this Agreement, the term "Intellectual
Property"
means (i) trademarks, service marks, trade names, Internet domain
names,
designs, logos, slogans, and general intangibles of like nature,
together with
all goodwill, registrations and applications related to the
foregoing; (ii)
patents and industrial designs (including any continuations,
divisionals,
continuations-in-part, renewals, reissues, and applications for any
of the
foregoing); (iii) copyrights (including any registrations and
applications for
any of the foregoing); (iv) computer programs, whether in source
code or object
code form (including any and all software implementation of
algorithms, models
and methodologies), databases and compilations (including any and
all data and
collections of data), and all documentation (including user manuals
and training
materials) related to the foregoing (collectively, "Software"); and
(v)
technology, trade secrets and other confidential information,
know-how,
proprietary processes, formulae, algorithms, models, and
methodologies. For
purposes of this Agreement, the term "STI Intellectual Property"
means the
Intellectual Property used in or held for use in the conduct of the
business of
STI or any of its Subsidiaries.
3.20 Administration of Fiduciary Accounts. STI and each of its
Subsidiaries
has properly administered in all material respects all accounts for
which it
acts as a fiduciary, including but not limited to accounts for
which it serves
as a trustee, agent, custodian, personal representative, guardian,
conservator
or investment advisor, in accordance with the terms of the
governing documents
and applicable state and federal law and regulation and common law.
Neither STI
nor any of its Subsidiaries nor any of their respective directors,
officers or
employees has committed any breach of trust with respect to any
such fiduciary
account, and the accountings for each such fiduciary account are
true and
correct in all material respects and accurately reflect the assets
of such
fiduciary account.
3.21 Information Supplied. None of the information supplied or to
be
supplied by STI for inclusion or incorporation by reference in (i)
the Form S-4
will, at the time the Form S-4 is filed with the SEC and at the
time it becomes
effective under the Securities Act, contain any untrue statement of
a material
fact or omit to state any material fact required to be stated
therein or
necessary to make the statements therein not misleading, and (ii)
the Joint
Proxy Statement will, at the date of mailing to shareholders and at
the times of
the meetings of shareholders to be held in connection with the
Merger, 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 were made,
not
misleading. The Joint Proxy Statement will comply as to form in all
material
respects with the requirements of the Exchange Act and the rules
and regulations
of the SEC thereunder, except that no representation or warranty is
made by STI
with respect to statements made or incorporated by reference
therein based on
information supplied by NCF for inclusion or incorporation by
reference in the
Joint Proxy Statement.
3.22 Internal Controls. The records, systems, controls, data and
information of STI and its Subsidiaries are recorded, stored,
maintained and
operated under means (including any electronic, mechanical or
photographic
process, whether computerized or not) that are under the exclusive
ownership and
direct control of STI or its Subsidiaries or accountants (including
all means of
access thereto and therefrom). Since December 31, 2002, STI and its
Subsidiaries
have devised and maintain a system of internal accounting controls
sufficient to
provide reasonable assurances regarding the reliability of
financial reporting
and the preparation of financial
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statements in accordance with GAAP. STI (i) has designed disclosure
controls and
procedures to ensure that material information relating to STI,
including its
consolidated Subsidiaries, is made known to the management of STI
by others
within those entities, and (ii) has disclosed, based on its most
recent
evaluation prior to the date hereof, to STI's auditors and the
audit committee
of STI's Board of Directors (x) any significant deficiencies in the
design or
operation of internal controls which could adversely affect in any
material
respect STI's ability to record, process, summarize and report
financial data
and have identified for STI's auditors any material weaknesses in
internal
controls and (y) any fraud, whether or not material, that involves
management or
other employees who have a significant role in STI's internal
controls. STI has
made available to NCF a summary of any such disclosure made by
management to
STI's auditors and audit committee since January 1, 2002. STI has
initiated its
process of compliance with Section 404 of the Sarbanes-Oxley Act of
2002 and
expects to be in full compliance therewith by the mandated
compliance date.
3.23 Opinion of STI Financial Advisor. STI has received the opinion
of its
financial advisor, Goldman Sachs & Co., dated the date of this
Agreement, to the
effect that, as of the date thereof and based upon and subject to
the matters
set forth therein, the Merger Consideration is fair, from a
financial point of
view, to STI.
3.24 Investment Adviser Subsidiaries; Funds; Clients
(a) For purposes of this Agreement, a "STI Advisory Entity" means,
if
applicable, STI and any of its Subsidiaries that provides
investment management,
investment advisory or sub-advisory services to any person
(including management
and advice provided to separate accounts and participation in wrap
fee
programs); "STI Advisory Contract" means each STI contract for such
services
provided by a STI Advisory Entity; "STI Advisory Client" means each
party to a
STI Advisory Contract other than the applicable STI Advisory
Entity; "STI Fund
Client" means each STI Advisory Client that is required to be
registered as an
investment company under the Investment Company Act; and
"Sponsored" means, when
used with reference to any STI Fund Client or NCF Fund Client (as
defined in
Section 4.27), any such STI Fund Client or NCF Fund Client, as the
case may be,
a majority of the officers of which are employees of STI or any of
its
Subsidiaries or NCF or any of its Subsidiaries, as the case may be,
or of which
STI or any of its Subsidiaries or NCF or any of its Subsidiaries,
as the case
may be, holds itself out as the sponsor.
(b) Each Sponsored STI Fund Client and STI Advisory Entity (i) has
since January 1, 1999 operated and is currently operating in
compliance with all
laws, regulations, rules, judgments, orders or rulings of any
Governmental
Entity applicable to it or its business and (ii) has all permits,
licenses,
exemptions, orders and approvals required for the operation of its
business or
ownership of its properties and assets as presently conducted.
There is no
action, suit, proceeding or investigation pending or, to the
knowledge of STI,
threatened which would reasonably be expected to lead to the
revocation,
amendment, failure to renew, limitation, suspension or restriction
of any such
permits, licenses, exemptions, orders and approvals.
(c) Each STI Advisory Entity has been and is in compliance with
each
STI Advisory Contract to which it is a party.
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(d) The accounts of each STI Advisory Client subject to ERISA have
been managed by the applicable STI Advisory Entity in compliance
with the
applicable requirements of ERISA.
(e) Neither STI nor any of the STI Advisory Entities nor any
"affiliated
