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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1 )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Triangle Bancorp, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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JOINT PROXY STATEMENT
FOR THE SPECIAL MEETINGS OF STOCKHOLDERS OF
TRIANGLE BANCORP, INC. AND CENTURA BANKS, INC.
PROPOSED MERGER
The boards of directors of Triangle Bancorp, Inc., a bank holding company
headquartered in Raleigh, North Carolina, and Centura Banks, Inc., a bank
holding company headquartered in Rocky Mount, North Carolina, have agreed to a
transaction which will result in the acquisition of Triangle by Centura.
If the proposed merger is completed, Triangle stockholders will receive .45
of a share of Centura common stock for each share of Triangle common stock. This
multiple is subject to adjustment in limited circumstances as described in this
joint proxy statement-prospectus. The .45 multiple, as it may be adjusted, is
referred to as the "exchange ratio." The approximate number of shares to be
issued by Centura pursuant to the merger agreement is 12,075,214.
Centura common stock is traded on the New York Stock Exchange under the
symbol "CBC." Based on the closing price of Centura common stock on December 10,
1999 of $45.4375 and the .45 exchange ratio, Triangle stockholders will receive
approximately $20.45 worth of Centura common stock for each share of Triangle
common stock held. The actual value of the Centura common stock received by
Triangle stockholders in the merger will depend on the market value of Centura
common stock at the time of closing.
A special meeting of Triangle stockholders will be held on February 3, 2000
at 4:00 p.m., local time, at The McKimmon Center, Gorman Street at Western
Boulevard, in Raleigh, North Carolina. At the Triangle special meeting, the
Triangle stockholders will be asked to approve the merger agreement governing
the merger. The merger cannot be completed unless the holders of a majority of
the outstanding shares of Triangle common stock approve it.
A special meeting of Centura stockholders will be held on February 3, 2000
at 10:00 a.m., local time, at the Civic Room, 4th Floor, 131 North Church
Street, in Rocky Mount, North Carolina. At the Centura special meeting, the
Centura stockholders will be asked to approve the issuance of the shares of
Centura common stock necessary to consummate the merger. The approval of the
issuance of shares of Centura common stock requires approval by a majority of
the shares of Centura common stock represented at the Centura special meeting.
TRIANGLE STOCKHOLDERS SHOULD CONSIDER CAREFULLY THE RISK FACTORS ON PAGE 14
OF THIS JOINT PROXY STATEMENT-PROSPECTUS.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THE SHARES OF CENTURA COMMON STOCK TO BE ISSUED IN THE MERGER OR
DETERMINED IF THIS JOINT PROXY STATEMENT-PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this joint proxy statement-prospectus is December 10, 1999. It
is first being mailed on December 17, 1999.
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Filed Pursuant to Rule 424(b)(1)
Registration Statement #333-92195
CENTURA BANKS, INC.
134 NORTH CHURCH STREET
ROCKY MOUNT, NORTH CAROLINA 27804
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 3, 2000
Centura Banks, Inc. will hold a special meeting of stockholders at the
Civic Room, 4th Floor, 131 North Church Street, in Rocky Mount, North Carolina,
at 10:00 a.m., local time, on February 3, 2000, to vote on:
(1) Issuance of Shares. The issuance of shares of Centura common
stock necessary to consummate the merger of Triangle Bancorp, Inc., a North
Carolina bank holding company, into a newly-formed, wholly-owned subsidiary
of Centura pursuant to the agreement and plan of reorganization, dated as
of August 22, 1999, between Triangle and Centura.
(2) Other Business. Any other matters that properly come before the
special meeting, or any adjournments or postponements of the special
meeting.
Record holders of Centura common stock at the close of business on December
9, 1999, will receive notice of and may vote at the special meeting, including
any adjournments or postponements. The approval of the issuance of the shares of
Centura common stock requires approval by the holders of a majority of the
shares of Centura common stock represented at the special meeting.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the special
meeting, please take the time to vote by completing and mailing the enclosed
proxy card. If you sign, date and mail your proxy card without indicating how
you want to vote, we will vote your proxy in favor of the stock issuance.
By Order of the Board of Directors
/s/ JOSEPH A. SMITH, JR.
Joseph A. Smith, Jr.
Secretary
December 10, 1999
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU
VOTE FOR APPROVAL OF THE STOCK ISSUANCE.
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Filed Pursuant to Rule 424(b)(1)
Registration Statement #333-92195
TRIANGLE BANCORP, INC.
4300 GLENWOOD AVENUE
RALEIGH, NORTH CAROLINA 27612
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 3, 2000.
Triangle Bancorp, Inc. will hold a special meeting of stockholders at The
McKimmon Center, Gorman Street at Western Boulevard, in Raleigh, North Carolina,
at 4:00 p.m., local time, on February 3, 2000, to vote on:
(1) Merger. The agreement and plan of reorganization, dated as of
August 22, 1999, between Triangle Bancorp, Inc. and Centura Banks, Inc.,
and the transactions contemplated by that agreement and plan of
reorganization and the related plan of merger. These transactions include
the merger of Triangle Bancorp, Inc. into a newly-formed, wholly-owned
subsidiary of Centura Banks, Inc. Immediately after the merger, the merger
subsidiary will be merged into Centura, and Triangle's banking subsidiaries
will be merged into Centura Bank.
(2) Other Business. Any other matters that properly come before the
special meeting, or any adjournments or postponements of the special
meeting.
Record holders of Triangle common stock at the close of business on
December 9, 1999, will receive notice of and may vote at the special meeting,
including any adjournments or postponements. The agreement and plan of
reorganization and the plan of merger require approval by the holders of a
majority of the outstanding shares of Triangle common stock.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the special
meeting, please take the time to vote by completing and mailing the enclosed
proxy card. If you sign, date and mail your proxy card without indicating how
you want to vote, we will vote your proxy in favor of the merger. If you do not
return your card or attend and vote in favor at the special meeting, the effect
will be a vote against the merger.
By Order of the Board of Directors
/s/ SUSAN C. GILBERT
Susan C. Gilbert
Secretary
December 10, 1999
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE MERGER.
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PLEASE NOTE
No one has been authorized to provide Triangle or Centura stockholders with
any information other than the information included in this document and the
documents that are referred to herein. Stockholders of Triangle or Centura
should not rely on other information as being authorized by Triangle or Centura.
This joint proxy statement-prospectus has been prepared as of December 10,
1999. There may be changes in the affairs of Centura or Triangle since that date
which are not reflected in this document.
As used in this joint proxy statement-prospectus, the terms "Triangle" and
"Centura" refer to Triangle Bancorp, Inc. and Centura Banks, Inc., respectively,
and, where the context requires, to Triangle and Centura and their respective
subsidiaries.
HOW TO OBTAIN ADDITIONAL INFORMATION
THIS JOINT PROXY STATEMENT-PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND
FINANCIAL INFORMATION ABOUT CENTURA AND TRIANGLE THAT IS NOT INCLUDED IN OR
DELIVERED WITH THIS DOCUMENT. THIS INFORMATION IS DESCRIBED ON PAGE 70 UNDER
"WHERE YOU CAN FIND MORE INFORMATION." YOU CAN OBTAIN FREE COPIES OF THIS
INFORMATION BY WRITING OR CALLING:
Joseph A. Smith, Jr.
General Counsel and Corporate Secretary
Centura Banks, Inc.
134 North Church Street
Rocky Mount, North Carolina 27804
(Telephone: (252) 454-4400)
Alexander M. Donaldson
Executive Vice President and General Counsel
Triangle Bancorp, Inc.
4300 Glenwood Avenue
Raleigh, North Carolina 27612
(Telephone: (919) 881-0455 ext. 153)
IN ORDER TO OBTAIN TIMELY DELIVERY OF THE DOCUMENTS, YOU MUST REQUEST THE
INFORMATION BY JANUARY 27, 2000.
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A WARNING ABOUT FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements about Centura and
Triangle following the merger. These statements can be identified by our use of
words like "expect," "may," "could," "intend," "project," "estimate" or
"anticipate." These forward-looking statements reflect our current views, but
they are based on assumptions and are subject to risks, uncertainties and other
factors. These factors include the following:
(1) we may not fully realize the expected cost savings from the merger;
(2) deposit attrition, customer loss, or revenue loss following the merger
may be greater than we expect;
(3) competitive pressure in the banking industry may increase
significantly;
(4) costs or difficulties related to the integration of the businesses of
Centura and Triangle may be greater than we expect;
(5) changes in the interest rate environment may reduce margins;
(6) general economic conditions, either nationally or regionally, may be
less favorable than we expect, resulting in, among other things,
credit quality deteriorating;
(7) changes may occur in the regulatory environment;
(8) changes may occur in business conditions and inflation;
(9) changes may occur in the securities markets; and
(10) disruptions of the operations of Centura, Triangle, or any of their
subsidiaries, or any other governmental or private entity may occur as
a result of the "Year 2000 Problem."
The forward-looking earnings estimates included in this joint proxy
statement-prospectus have not been examined or compiled by the independent
public accountants of Centura and Triangle, nor have our independent accountants
applied any procedures to our estimates. Accordingly, such accountants do not
express an opinion or any other form of assurance on them. Further information
on other factors that could affect the financial results of Centura after the
merger is included in the SEC filings incorporated by reference in this joint
proxy statement-prospectus.
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QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHAT AM I BEING ASKED TO VOTE UPON?
A: If you are a Triangle stockholder, you are being asked to approve the
merger agreement and the related plan of merger, which provide for the merger of
Triangle into a newly-formed, wholly-owned subsidiary of Centura. Immediately
after the merger, the merger subsidiary will be merged into Centura and
Triangle's banking subsidiaries will be merged into Centura Bank. As a result of
the merger you will become a stockholder of Centura and Centura will continue
Triangle's business.
If you are a Centura stockholder, you are being asked to approve the
issuance of the shares of Centura common stock necessary to consummate the
merger under the merger agreement.
Q: WHAT SHOULD I DO NOW?
A: Just indicate on your proxy card how you want to vote, and sign, date,
and mail it in the enclosed envelope as soon as possible, so that your shares
will be represented at your meeting.
If you sign, date, and send in your proxy and do not indicate how you want
to vote, your proxy will be voted in favor of the proposal to approve and adopt
the merger agreement and the related plan of merger, if you are a Triangle
stockholder, or to approve the issuance of the shares of Centura common stock
necessary to consummate the merger, if you are a Centura stockholder. If you are
a Triangle stockholder and you do not sign and send in your proxy or attend and
vote at the special meeting, it will have the effect of a vote against the
merger.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker will vote your shares of Triangle common stock or Centura
common stock, as applicable, only if you provide instructions on how to vote.
You should instruct your broker how to vote your shares, following the
directions your broker provides. If you are a Triangle stockholder and you do
not provide instructions to your broker, your shares will not be voted and this
will have the effect of voting against the merger.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. After the merger is completed, we will send Triangle stockholders
written instructions for exchanging Triangle common stock certificates for
Centura common stock certificates. Centura stockholders will NOT be exchanging
their certificates.
WHO CAN HELP ANSWER YOUR QUESTIONS
If you want additional copies of this document, or if you want to ask any
questions about the merger, you should contact:
if you are a Triangle stockholder
Alexander M. Donaldson
Executive Vice President and
General Counsel
TRIANGLE BANCORP, INC.
4300 Glenwood Avenue
Raleigh, North Carolina 27612
(919) 881-0455
or
if you are a Centura stockholder
Joseph A. Smith, Jr.
General Counsel and
Corporate Secretary
CENTURA BANKS, INC.
134 North Church Street
Rocky Mount, North Carolina 27804
(252) 454-4400
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TABLE OF CONTENTS
PAGE
----
SUMMARY..................................................... 1
The Companies.......................................... 1
The Merger............................................. 1
What Triangle Stockholders Will Receive in the
Merger................................................ 1
Effect of the Merger on Triangle Options............... 2
No Dissenters' Rights in the Merger.................... 2
Your Expected Tax Treatment as a Result of the
Merger................................................ 2
Comparative Market Prices of Common Stock.............. 2
Our Reasons for the Merger............................. 3
Fairness Opinion of Triangle's Financial Advisor....... 3
Fairness Opinion of Centura's Financial Advisor........ 3
Special Meetings of Stockholders....................... 3
Stockholder Votes Required............................. 3
Voting Rights at the Special Meetings.................. 3
Recommendations to Stockholders........................ 4
Share Ownership of Management and Certain
Stockholders.......................................... 4
Interests of Certain Persons in the Merger That May Be
Different from Triangle Stockholders.................. 5
Effective Time......................................... 5
Exchange of Stock Certificates......................... 5
Regulatory Approval and Other Conditions............... 5
Waiver, Amendment, and Termination..................... 6
Accounting Treatment................................... 6
Certain Differences in Stockholders' Rights............ 6
Stock Option Agreements................................ 6
Historical and Pro Forma Comparative Per Share Data.... 7
Selected Financial Data................................ 9
Selected Pro Forma Financial Information............... 12
RISK FACTORS................................................ 14
SPECIAL MEETINGS OF STOCKHOLDERS............................ 14
Purpose................................................ 14
Date, Place, and Time.................................. 15
Record Date, Voting Rights, Required Vote, and
Revocability of Proxies............................... 15
Solicitation of Proxies................................ 17
No Dissenters' Rights.................................. 18
Recommendation......................................... 18
DESCRIPTION OF TRANSACTION.................................. 18
The Merger............................................. 18
What Triangle Stockholders Will Receive in the
Merger................................................ 18
Effect of the Merger on Triangle Options............... 21
Expected Tax Treatment as a Result of the Merger....... 21
Background of and Reasons for the Merger............... 22
Opinion of Triangle's Financial Advisor................ 28
Opinion of Centura's Financial Advisor................. 32
Effective Time of the Merger........................... 37
Distribution of Centura Stock Certificates............. 37
Conditions to Consummation of the Merger............... 38
Regulatory Approval.................................... 39
Waiver, Amendment, and Termination..................... 40
Conduct of Business Pending the Merger................. 42
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PAGE
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Management and Operations After the Merger.................. 42
Interests of Certain Persons in the Merger............. 42
Accounting Treatment................................... 44
Expenses and Fees...................................... 44
Resales of Centura Common Stock........................ 45
Stock Option Agreements................................ 45
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS.............. 46
Anti-Takeover Provisions Generally..................... 46
Authorized Capital Stock............................... 47
Amendment of Charter and Bylaws........................ 47
Classified Board of Directors and Absence of Cumulative
Voting................................................ 49
Director Removal and Vacancies......................... 50
Limitations on Director Liability...................... 50
Indemnification........................................ 51
Special Meeting of Stockholders........................ 52
Stockholder Nominations and Proposals.................. 53
Fair Price Provision................................... 53
Stockholder Votes Required for Certain Actions......... 54
Dissenters' Rights of Appraisal........................ 56
Stockholders' Rights to Examine Books and Records...... 56
Dividends.............................................. 57
PRO FORMA FINANCIAL INFORMATION............................. 57
COMPARATIVE MARKET PRICES AND DIVIDENDS..................... 64
BUSINESS OF TRIANGLE........................................ 66
BUSINESS OF CENTURA......................................... 66
General................................................ 66
Recent Developments.................................... 67
Anticipated Operating Results of the Merger............ 67
CERTAIN REGULATORY CONSIDERATIONS........................... 67
DESCRIPTION OF CENTURA CAPITAL STOCK........................ 68
OTHER MATTERS............................................... 69
STOCKHOLDER PROPOSALS....................................... 69
EXPERTS..................................................... 69
OPINIONS.................................................... 69
WHERE YOU CAN FIND MORE INFORMATION......................... 70
APPENDICES:
Appendix A -- Agreement and Plan of Reorganization, dated
as of August 22, 1999, by and between
Triangle Bancorp, Inc. and Centura Banks,
Inc.
Appendix B -- Plan of Merger, dated as of December 1,
1999, by and between Triangle Bancorp, Inc.
and Centura Merger Subsidiary, Inc.
Appendix C -- Opinion of Wheat First Securities, a
division of First Union Securities, Inc.
Appendix D -- Opinion of Keefe, Bruyette & Woods, Inc.
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SUMMARY
This summary highlights selected information from this joint proxy
statement-prospectus and may not contain all of the information that is
important to you. You should carefully read this entire document and the other
documents we refer to in this document. These will give you a more complete
description of the transaction we are proposing. For more information about
Centura, see "WHERE YOU CAN FIND MORE INFORMATION" on page 70. We have included
page references in this summary to direct you to other places in this joint
proxy statement-prospectus where you can find a more complete description of the
topics we have summarized.
THE COMPANIES (SEE PAGE 66)
TRIANGLE BANCORP, INC.
4300 Glenwood Avenue
Raleigh, North Carolina 27612
(919) 881-0455
Triangle is a multi-bank holding company headquartered in Raleigh, North
Carolina. Triangle operates through its subsidiary banks, Triangle Bank and Bank
of Mecklenburg. Triangle Bank has 68 branches in eastern North Carolina. Bank of
Mecklenburg has three branches in the Charlotte area of North Carolina. Triangle
also operates through its wholly-owned leasing subsidiary, Coastal Leasing LLC.
On September 30, 1999, Triangle had consolidated assets of approximately
$2.35 billion, consolidated loans of approximately $1.52 billion, consolidated
deposits of approximately $1.74 billion, and consolidated stockholders' equity
of approximately $168 million.
CENTURA BANKS, INC.
134 North Church Street
Rocky Mount, North Carolina 27804
(252) 454-4400
Centura is a registered bank holding company headquartered in Rocky Mount,
North Carolina. Through Centura Bank and various other banking-related
subsidiaries, Centura provides a diversified range of financial services in the
communities in which it operates throughout North Carolina, South Carolina and
parts of Virginia. Centura maintains 227 banking offices and more than 230
automated teller machines.
On March 26, 1999 Centura completed its merger with First Coastal
Bankshares, Inc., that was accounted for as a pooling-of-interests.
On September 30, 1999, Centura had consolidated assets of approximately
$8.88 billion, consolidated loans of approximately $5.85 billion, consolidated
deposits of approximately $6.03 billion, and consolidated stockholders' equity
of approximately $699 million.
THE MERGER (SEE PAGE 18)
Centura will acquire Triangle by means of the merger of Triangle into a
newly-formed, wholly-owned subsidiary of Centura. Immediately after the merger,
the merger subsidiary will be merged into Centura, and Triangle's banking
subsidiaries will be merged into Centura Bank and Triangle's business will
continue to be conducted by Centura. After the merger, seven of Centura's 30
directors will be former directors of Triangle. Mr. Michael S. Patterson, who is
now the Chairman, President and Chief Executive Officer of Triangle, will become
Centura's Chairman of the board of directors. Mr. Patterson will have an
employment agreement with Centura.
WHAT TRIANGLE STOCKHOLDERS WILL RECEIVE IN THE MERGER (SEE PAGE 18)
If we complete the merger, each Triangle stockholder will receive .45 of a
share of Centura common stock for each share of Triangle common stock held by
such stockholder at the date the merger is completed.
Based on the closing price of Centura common stock on December 10, 1999 of
$45.4375, each Triangle stockholder will receive approximately $20.45 worth of
Centura common stock for each share of Triangle common stock held by such
stockholder at the date the merger is completed. This exchange ratio is subject
to change in limited circumstances as described in this joint proxy
statement-prospectus. Also, the market price of Centura common stock may
fluctuate between the date of this joint proxy statement-prospectus and the date
that the merger is completed, altering the value of the shares of Centura common
stock that the Triangle stockholder will receive in the merger. For more
information about what the Triangle stockholders
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will receive if the merger is completed, see "DESCRIPTION OF TRANSACTION -- What
Triangle Stockholders Will Receive in the Merger" on page 18 of this joint proxy
statement-prospectus.
Centura will not issue any fractions of a share of common stock. Rather,
Centura will pay cash (without interest) for any fractional share interest any
Triangle stockholder would otherwise receive in the merger. The cash payment
will be in an amount equal to the fraction multiplied by the closing price of
one share of Centura common stock on the New York Stock Exchange on the last
trading day before the merger is completed.
EFFECT OF THE MERGER ON TRIANGLE OPTIONS
(SEE PAGE 21)
Triangle has granted certain options to acquire Triangle common stock under
existing Triangle stock plans. If the merger is completed, Centura will assume
each outstanding option. Each option will then become an option to purchase
Centura common stock, and Centura will agree to deliver Centura common stock on
the exercise of each option. The number of Centura shares that may be purchased
and the exercise price under the option will be adjusted based on the exchange
ratio which determines the number of shares of Centura common stock that
Triangle stockholders receive in the merger in exchange for each share of
Triangle common stock. Centura will assume all options outstanding at the
effective time of the merger whether or not the holder then has the right to
exercise the option.
NO DISSENTERS' RIGHTS IN THE MERGER
(SEE PAGE 18)
Triangle stockholders do not have statutory dissenters' rights in relation
to the merger.
YOUR EXPECTED TAX TREATMENT AS A RESULT OF THE MERGER (SEE PAGE 21)
We expect that, for federal income tax purposes, Triangle stockholders will
not recognize any gain or loss upon the exchange of all of their Triangle shares
for shares of Centura common stock. But Triangle stockholders may recognize
taxable gain or loss related to any cash Triangle stockholders receive in lieu
of a fractional share of Centura common stock. See the discussion above under
"-- What Triangle Stockholders Will Receive in the Merger." Before the merger
can be completed, Centura and Triangle expect to receive an opinion of Alston &
Bird LLP, with respect to material federal income tax consequences of the
merger. If this opinion is not received and the material federal income tax
consequences of the merger were substantially different from those described in
this joint proxy statement-prospectus, Triangle would resolicit the approval of
its stockholders prior to completing the merger.
Tax matters are very complicated and the tax consequences of the merger to
each Triangle stockholder will depend on that stockholder's specific situation.
Each Triangle stockholder should consult his or her own tax advisors to
determine the effect of the merger under federal, state, local, and foreign tax
laws.
COMPARATIVE MARKET PRICES OF COMMON STOCK (SEE PAGE 64)
Shares of Triangle common stock are traded on the New York Stock Exchange
under the symbol "TGL." Shares of Centura common stock are traded on the New
York Stock Exchange under the symbol "CBC." The table shows you the closing
sales prices for Triangle and Centura common stock on August 20, 1999, the last
trading day before we announced the execution of the agreement, and on December
10, 1999, the latest practicable date before the mailing of this joint proxy
statement-prospectus. The table also shows you the "equivalent price per
Triangle share" or the value Triangle stockholders will receive in the merger
for each share of Triangle common stock such stockholder owns.
EQUIVALENT PRICE
TRIANGLE CENTURA PER TRIANGLE
COMMON STOCK COMMON STOCK SHARE(1)
------------ ------------ ----------------
August 20, 1999..................................... $16.50 $52.00 $23.40
December 10, 1999................................... $20.25 $45.4375 $20.45
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(1) The equivalent price per share of Triangle common stock at each specified
date represents the closing sale price of a share of Centura common stock on
such date multiplied by an exchange ratio of .45. See "COMPARATIVE MARKET
PRICES AND DIVIDENDS" on page 65.
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Triangle stockholders should obtain current stock price quotations for
Centura common stock and Triangle common stock. As described below, the number
of shares of Centura common stock to be issued in connection with the merger is
subject to adjustment under limited circumstances.
OUR REASONS FOR THE MERGER (SEE PAGE 25)
Triangle and Centura believe that the merger will result in a company with
expanded opportunities for profitable growth. In addition, we anticipate that
the combined resources and capital of Triangle and Centura will improve our
ability to compete in the changing and competitive financial services industry.
FAIRNESS OPINION OF TRIANGLE'S FINANCIAL ADVISOR (SEE PAGE 28)
In deciding to approve the merger, the Triangle board considered an opinion
from its financial advisor, Wheat First Securities, a division of First Union
Securities, Inc., that the exchange ratio is fair to Triangle stockholders from
a financial point of view. An updated opinion, dated as of the date of this
joint proxy statement-prospectus, is attached to this joint proxy
statement-prospectus as Appendix C. We encourage Triangle stockholders to read
this opinion.
FAIRNESS OPINION OF CENTURA'S FINANCIAL ADVISOR (SEE PAGE 32)
In deciding to approve the merger, the Centura board considered an opinion
from its financial advisor, Keefe, Bruyette & Woods, Inc., that the exchange
ratio is fair to Centura stockholders from a financial point of view. An updated
opinion, dated as of the date of this joint proxy statement-prospectus, is
attached to this joint proxy statement-prospectus as Appendix D. We encourage
Centura stockholders to read this opinion.
SPECIAL MEETINGS OF STOCKHOLDERS (SEE PAGE 14)
The Triangle special meeting will be held at The McKimmon Center, Gorman
Street at Western Boulevard, in Raleigh, North Carolina, at 4:00 p.m., local
time, on February 3, 2000. At the Triangle special meeting, Triangle
stockholders will be asked:
(1) to approve the merger agreement; and
(2) to act on any other matters that may be put to a vote at the Triangle
special meeting.
In order for the Triangle special meeting to be held, a quorum must be
present. A quorum is established when a majority of the shares of Triangle
common stock entitled to be cast on a matter are represented at the Triangle
special meeting either in person or by proxy.
The Centura special meeting will be held at the Civic Room, 4th Floor, 131
North Church Street, in Rocky Mount, North Carolina, at 10:00 a.m., local time,
on February 3, 2000. At the Centura special meeting, Centura stockholders will
be asked:
(1) to approve the issuance of up to 12,232,714 shares of Centura common
stock to the stockholders of Triangle pursuant to the terms of the
merger agreement;
(2) to act on any other matters put to a vote at the Centura special
meeting.
In order for the Centura special meeting to be held, a quorum must be
present. A quorum is established when a majority of the shares of Centura common
stock entitled to be cast on a matter are represented at the Centura special
meeting, either in person or by proxy.
STOCKHOLDER VOTES REQUIRED (SEE PAGE 15)
Assuming that a quorum is present at the Triangle special meeting, to
approve the merger, stockholders who own a majority of the outstanding shares of
Triangle common stock must vote for the merger.
Assuming that a quorum is present at the Centura special meeting, to
approve the issuance of Centura common stock necessary to consummate the merger,
stockholders who own a majority of the shares represented at the Centura special
meeting must vote to approve the issuance of the shares of Centura common stock.
VOTING RIGHTS AT THE SPECIAL MEETINGS (SEE PAGE 15)
If you owned shares of Triangle common stock as of the close of business on
December 9, 1999, the record date, you are entitled to vote at
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13
the Triangle special meeting. On the Triangle record date, 25,246,579 shares of
Triangle common stock were outstanding. You will be entitled to one vote for
each share of Triangle common stock that was validly issued and outstanding and
that you owned on the Triangle record date. You may vote either by attending the
special meeting and voting your shares or by completing the enclosed proxy card
and mailing it to us in the enclosed envelope.
We are seeking your proxy to use at the Triangle special meeting. We have
prepared this joint proxy statement-prospectus to assist you in deciding how to
vote and whether or not to grant your proxy to us. Please indicate on your proxy
card how you want to vote. Then sign, date and mail it to us as soon as possible
so that your shares will be represented at the Triangle special meeting. If you
sign, date and mail your proxy card without indicating how you wish to vote,
your proxy will be counted as a vote for the merger. If you fail to return your
proxy card and fail to vote at the Triangle special meeting, the effect will be
a vote against the merger. If you sign a proxy, you may revoke it at any time
before the Triangle special meeting or by attending and voting at the Triangle
special meeting. You cannot vote shares held in "street name"; only your broker
can. If you do not provide your broker with instructions on how to vote your
shares, your broker will not be permitted to vote them, and your shares will be
treated as votes against the merger.
If you owned shares of Centura common stock as of the close of business on
December 9, 1999, the Centura record date, you are entitled to vote at the
Centura special meeting. On the Centura record date, 28,100,485 shares of
Centura common stock were outstanding. You will be entitled to one vote for each
share of Centura common stock that was validly issued and outstanding and that
you owned on the Centura record date. You may vote either by attending the
Centura special meeting and voting your shares or by completing the enclosed
proxy card and mailing it to us in the enclosed envelope.
We are seeking your proxy to use at the Centura special meeting. We have
prepared this joint proxy statement-prospectus to assist you in deciding how to
vote and whether or not to grant your proxy to us. Please indicate on your proxy
card how you want to vote. Then sign, date and mail it to us as soon as possible
so that your shares will be represented at the Centura special meeting. If you
sign, date and mail your proxy card without indicating how you wish to vote,
your proxy will be counted as a vote to approve the issuance of shares of
Centura common stock necessary to consummate the merger. If you sign a proxy,
you may revoke it at any time before the Centura special meeting or by attending
and voting at the Centura special meeting. You cannot vote shares held in
"street name"; only your broker can. If you do not provide your broker with
instructions on how to vote your shares, your broker will not be permitted to
vote them.
RECOMMENDATIONS TO STOCKHOLDERS (SEE PAGE 18)
Triangle's board of directors has unanimously approved the merger agreement
and the plan of merger. The Triangle board of directors believes that the
proposed merger is fair to Triangle stockholders and in the best interests of
Triangle stockholders. The Triangle board of directors recommends that Triangle
stockholders vote to approve the merger.
Centura's board of directors unanimously approved the merger agreement and
has approved the issuance of shares of Centura common stock pursuant to the
merger agreement. The Centura board of directors recommends that Centura
stockholders vote to approve the issuance of Centura common stock pursuant to
the merger agreement.
SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN STOCKHOLDERS (SEE PAGES 16 AND 17)
On the Triangle record date, Triangle's directors and executive officers,
their immediate family members and entities they control owned 1,990,250 shares,
or approximately 7.9% of the outstanding shares of Triangle common stock. This
number does not include stock that the Triangle directors and executive officers
may acquire through exercising stock options.
On the Triangle record date, one director of Centura owned 5,500 shares of
Triangle common stock and Centura held no shares of Triangle common stock other
than in a fiduciary capacity for others, or as a result of debts previously
contracted.
-4-
14
On the Centura record date, Centura's directors and executive officers,
their immediate family members and entities they control owned 2,390,758 shares,
or approximately 8.5% of the outstanding shares of Centura common stock. This
number does not include stock that the Centura directors and executive officers
may acquire through exercising stock options.
On the Centura record date, Triangle's directors and executive officers
owned 13,836 shares of Centura common stock and Triangle held no shares of
Centura common stock in a fiduciary capacity for others, or as a result of debts
previously contracted.
INTERESTS OF CERTAIN PERSONS IN THE MERGER THAT MAY BE DIFFERENT FROM TRIANGLE
STOCKHOLDERS (SEE PAGE 42)
Triangle's directors and certain officers have employment or severance
agreements, stock options and other benefit plans and other arrangements that
may provide them with interests in and benefits from the merger that are
different from those of Triangle stockholders. The Triangle board of directors
was aware of these interests and considered them in approving and recommending
the merger.
EFFECTIVE TIME (SEE PAGE 37)
The merger will become final at the time specified in the articles of
merger reflecting the merger to be filed with the Secretary of State in North
Carolina. If Triangle stockholders approve the merger at the Triangle special
meeting, and Centura stockholders approve the issuance of shares of Centura
common stock pursuant to the merger agreement at the Centura special meeting,
and Centura obtains all required regulatory approvals, we currently anticipate
that the merger will be completed during the first quarter of 2000.
Triangle and Centura cannot assure you that we can obtain the necessary
stockholder and regulatory approvals or that the other conditions to
consummation of the merger can or will be satisfied.
EXCHANGE OF STOCK CERTIFICATES (SEE PAGE 37)
Promptly after the merger is completed, Triangle stockholders will receive
a letter and instructions on how to surrender their Triangle stock certificates
in exchange for Centura stock certificates. Triangle stockholders will need to
carefully review and complete these materials and return them as instructed
along with their stock certificates for Triangle common stock. Triangle
stockholders should not send Triangle, Centura, or Centura's transfer agent any
stock certificates until they receive these instructions. For Triangle
stockholders who do not have stock certificates but hold shares of Triangle
common stock in the form of a book entry with Triangle's transfer agent, the
transfer agent will automatically exchange the shares.
TRIANGLE STOCKHOLDERS SHOULD NOT SEND IN STOCK CERTIFICATES UNTIL THEY
RECEIVE A LETTER AND INSTRUCTIONS ON HOW TO SURRENDER TRIANGLE STOCK
CERTIFICATES.
CENTURA STOCKHOLDERS WILL NOT EXCHANGE THEIR SHARES OF CENTURA COMMON STOCK
PURSUANT TO THE MERGER AND SHOULD NOT SEND IN THEIR STOCK CERTIFICATES.
REGULATORY APPROVAL AND OTHER CONDITIONS (SEE PAGES 38 AND 39)
Centura is required to notify and obtain approvals from certain government
regulatory agencies before the merger may be completed, including the Federal
Reserve and other federal and state banking regulators. We expect that Centura
will obtain all required regulatory approvals, but we cannot assure this will
happen.
In addition to the required regulatory approvals, the merger will be
completed only if certain conditions, including, but not limited to the
following, are met or waived, if waivable:
(1) Triangle stockholders approve the merger at the Triangle special
meeting;
(2) Centura stockholders approve the issuance of the shares of Centura
common stock pursuant to the merger agreement;
(3) Triangle and Centura receive an opinion of counsel that the merger will
qualify as a tax-free reorganization;
(4) Triangle and Centura receive letters from Centura's accountants and
Triangle's
accountants concerning the pooling-of-
interests accounting treatment of the merger (discussed below under
"-- Accounting Treatment"); and
-5-
15
(5) neither Centura nor Triangle has breached any of its representations or
obligations under the merger agreement.
In addition to these conditions, the merger agreement, attached to this
joint proxy statement-prospectus as Appendix A, describes other conditions that
must be met before the merger may be completed.
WAIVER, AMENDMENT, AND TERMINATION (SEE PAGE 40)
Centura and Triangle may agree to terminate the merger agreement and elect
not to complete the merger at any time before the merger is completed.
Each of the parties also can terminate the merger in certain other
circumstances, including if the merger is not completed by June 30, 2000. But a
party may not terminate the merger agreement for this reason, if (a) it
willfully breached the merger agreement and (b) its breach is the reason the
merger has not been completed.
In addition, the parties may also terminate the merger if other
circumstances occur which are described in the merger agreement, attached to
this joint proxy statement-prospectus as Appendix A.
The merger agreement may be amended by the written agreement of Triangle
and Centura. The parties may amend the merger agreement without stockholder
approval, even if Triangle stockholders have already approved the merger.
However, Triangle and Centura stockholders must approve any amendments that
would modify, in a material respect, the type or amount of consideration that
they will receive in the merger.
ACCOUNTING TREATMENT (SEE PAGE 44)
Centura intends to account for the merger as a pooling-of-interests
transaction for accounting and financial reporting purposes.
Pooling-of-interests is an accounting method that assumes that each
company's stockholders have combined their ownership interests in such a manner
that each group becomes an owner of the combined, enlarged business. Under
pooling-of-interests, the earnings of each company are combined as though the
combination had occurred at the beginning of the earliest financial period
presented, and the assets of the acquired company are carried at their
historical book values.
CERTAIN DIFFERENCES IN STOCKHOLDERS' RIGHTS (SEE PAGE 46)
When the merger is completed each Triangle stockholder will automatically
become a Centura stockholder. The rights of Centura stockholders differ from the
rights of Triangle stockholders in certain important ways. Many of these have to
do with provisions in Centura's articles of incorporation and bylaws and North
Carolina law. Certain of these provisions are intended to make a takeover of
Centura harder if the Centura board of directors does not approve it.
STOCK OPTION AGREEMENTS (SEE PAGE 45)
Triangle and Centura entered into option agreements under which (i)
Triangle granted Centura an option to purchase up to 5,014,000 shares of
Triangle common stock under certain circumstances if the merger is not
consummated and a third party attempts to take control of Triangle, and (ii)
Centura granted Triangle an option to purchase up to 2,256,000 shares of Centura
common stock under certain circumstances if the merger is not consummated and a
third party attempts to take control of Centura.
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16
HISTORICAL AND PRO FORMA COMPARATIVE PER SHARE DATA
The following table shows certain comparative per share data relating to
net income, cash dividends, and book value. The equivalent pro forma information
is based on an exchange ratio of .45.
We present the pro forma and equivalent pro forma data for your information
only. It does not necessarily indicate the results of operations or combined
financial position that would have resulted had Centura completed the merger at
the times indicated, and it does not necessarily indicate what future results of
operations or combined financial position will be.
You should read the information shown below in conjunction with the
historical consolidated financial statements of Centura and Triangle and the
notes provided with them and related financial information appearing elsewhere
in this joint proxy statement prospectus. See "-- Selected Financial Data,"
"BUSINESS OF CENTURA -- Recent Developments" on page 67 of this joint proxy
statement-prospectus and "WHERE YOU CAN FIND MORE INFORMATION" on page 70 of
this joint proxy statement-prospectus.
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CENTURA BANKS, INC.
AND TRIANGLE BANCORP, INC.
HISTORICAL AND PRO FORMA COMPARATIVE PER SHARE DATA
NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED
------------------------ SEPTEMBER 30,
1996 1997 1998 1999
------ ------ ------ -------------
NET INCOME
Centura -- Historical
Basic............................................... $2.66 $3.22 $3.67 $2.60
Diluted............................................. 2.60 3.15 3.60 2.57
Pro forma (Centura and First Coastal)
Basic............................................... 2.52 3.17 3.57 2.60
Diluted............................................. 2.46 3.11 3.50 2.57
Triangle -- Historical
Basic............................................... 0.62 0.79 0.87 0.82
Diluted............................................. 0.60 0.79 0.84 0.80
Pro forma (Centura, First Coastal and Triangle)
Basic............................................... 2.19 2.76 3.10 2.38
Diluted............................................. 2.14 2.70 3.03 2.34
Triangle equivalent pro forma(1)
Basic............................................... 0.99 1.24 1.40 1.07
Diluted............................................. 0.96 1.22 1.36 1.05
CASH DIVIDENDS PER SHARE(2)
Centura -- Historical.................................. $1.00 $1.06 $1.14 $0.93
Pro forma (Centura and First Coastal).................. 0.91 1.03 1.11 0.92
Triangle -- Historical................................. 0.18 0.25 0.32 0.28
Pro forma (Centura, First Coastal and Triangle)........ 0.76 0.89 1.00 0.84
Triangle equivalent pro forma(1)....................... 0.34 0.40 0.45 0.39
DECEMBER 31, SEPTEMBER 30,
1998 1999
------------ -------------
BOOK VALUE
Centura -- Historical..................................... $23.66 $24.51
Pro forma (Centura and First Coastal)..................... 23.88 24.51
Triangle -- Historical.................................... 6.47 6.66
Pro forma (Centura, First Coastal and Triangle)........... 20.27 20.85
Triangle equivalent pro forma(1).......................... 9.12 9.38
- ---------------
(1) The equivalent pro forma per share data for Triangle is computed by
multiplying pro forma information by an exchange ratio of .45.
(2) Centura has assumed that on a pro forma combined basis its pro forma cash
dividends per share would be equivalent to Centura's historical cash
dividends per share.
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SELECTED FINANCIAL DATA
The following tables present for Centura and for Triangle, selected
consolidated financial data for the nine-month periods ended September 30, 1998
and 1999, and for the five-year period ended December 31, 1998. The information
is based on the consolidated financial statements contained in reports Centura
and Triangle have filed with the SEC, including their September 30, 1999
Quarterly Reports on Form 10-Q. All of these documents are incorporated by
reference in this joint proxy statement-prospectus. See "WHERE YOU CAN FIND MORE
INFORMATION" on page 70.
You should read the following tables in conjunction with the consolidated
financial statements of Centura and Triangle described above and with the notes
to them.
Historical results are not necessarily indicative of results to be expected
for any future period. In the opinion of the respective managements of Centura
and Triangle, all adjustments (which include only normal recurring adjustments)
necessary to arrive at a fair statement of interim results of operations of
Centura and Triangle, respectively, have been included. With respect to Centura
and Triangle, results for the nine-month period ended September 30, 1999 are not
necessarily indicative of results which may be expected for any other interim
period or for the year as a whole.
CENTURA SELECTED FINANCIAL DATA*
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------------------------------- -----------------------
1994 1995 1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER COMMON SHARE DATA)
INCOME STATEMENT DATA:
Net interest income......... $ 214,362 $ 239,659 $ 266,800 $ 286,867 $ 318,091 $ 236,139 $ 253,173
Provision for loan losses... 7,495 8,079 9,746 13,643 15,644 11,069 27,077
Investment securities gains
(losses).................. (1,093) (511) 1,798 151 686 662 (1,208)
Other noninterest income.... 62,384 77,462 92,832 112,117 139,835 103,295 119,657
Noninterest expense......... 181,795 205,650 243,439 253,357 290,397 215,478 232,386
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income
taxes..................... 86,363 102,881 108,245 132,135 152,571 113,549 112,159
Applicable income taxes..... 31,161 37,062 39,525 44,974 52,257 38,632 38,051
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income.................. $ 55,202 $ 65,819 $ 68,720 $ 87,161 $ 100,314 $ 74,917 $ 74,108
========== ========== ========== ========== ========== ========== ==========
PER COMMON SHARE DATA:
Basic
Net income................ $ 2.07 $ 2.39 $ 2.52 $ 3.17 $ 3.57 $ 2.67 $ 2.60
Diluted
Net income................ 2.04 2.35 2.46 3.11 3.50 2.62 2.57
Cash dividends............ .74 .85 1.00 1.06 1.14 0.85 0.93
Book value................ 15.40 17.63 18.86 21.14 23.88 23.52 24.51
BALANCE SHEET DATA
(AT PERIOD END):
Total assets................ $5,377,757 $6,483,510 $6,900,110 $7,741,618 $8,795,560 $8,383,120 $8,876,485
Loans....................... 3,681,259 4,349,986 4,563,684 5,053,713 5,852,830 5,460,334 5,852,553
Allowance for loan losses... 52,492 59,038 63,105 68,576 72,310 71,390 72,619
Investment securities....... 1,219,808 1,548,321 1,712,225 1,958,475 2,161,037 2,193,366 2,201,092
Total deposits.............. 4,242,469 4,938,014 5,157,424 5,772,368 6,068,649 5,965,548 6,034,436
Borrowed funds.............. 435,195 644,617 727,306 847,225 1,299,337 1,076,303 1,243,006
Long-term debt
Parent company............ 683 26,539 26,395 100,251 103,093 103,236 103,136
Subsidiary banks.......... 216,718 291,157 380,517 327,962 511,191 438,777 683,966
Total shareholders'
equity.................... 406,316 484,343 516,062 582,485 676,205 664,512 698,507
Average assets.............. 5,192,289 5,873,970 6,573,324 7,209,008 8,185,344 8,059,106 8,773,625
Average shareholders'
equity.................... 398,990 463,825 494,483 552,100 639,787 628,550 697,049
Average shares outstanding
(in thousands)
Basic....................... 26,700 27,519 27,293 27,490 28,116 28,059 28,468
Diluted..................... 27,104 28,058 27,959 28,058 28,675 28,620 28,883
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19
CENTURA SELECTED FINANCIAL DATA (CONTINUED)*
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------------------------------- -----------------------
1994 1995 1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER COMMON SHARE DATA)
PROFITABILITY AND CAPITAL
RATIOS:
Return on average assets.... 1.06% 1.12% 1.05% 1.21% 1.23% 1.24% 1.13%
Return on average equity.... 13.84 14.19 13.90 15.79 15.68 15.94 14.21
Net interest income
(taxable-
equivalent)/average
earning assets............ 4.24 4.17 4.15 4.09 3.98 4.38 4.31
Loan/deposits............... 86.77 88.09 88.49 87.55 96.44 91.53 96.99
Equity/assets (period
end)...................... 7.56 7.47 7.48 7.52 7.69 7.93 7.87
Average total shareholders'
equity/average total
assets.................... 7.68 7.90 7.52 7.66 7.82 7.80 7.94
Leverage ratio.............. 7.11 6.82 6.57 7.47 7.79 7.85 8.07
Tier 1 capital/risk-weighted
assets.................... 10.56 9.92 9.61 10.67 10.18 10.47 10.43
Total capital/risk-weighted
assets.................... 11.78 11.15 10.21 11.29 10.79 11.09 12.93
CREDIT QUALITY RATIOS:
Allowance/period-end
loans**................... 1.44% 1.38% 1.40% 1.37% 1.27% 1.33% 1.26%
Nonperforming loans/total
loans**................... .68 .52 .51 .60 .57 .60 .66
Allowance/nonperforming
loans..................... 2.13x 2.67x 2.76x 2.29x 2.24x 2.20x 1.91x
Nonperforming assets/loans
and foreclosed
properties**.............. .92% .72% .63% .73% .67% .70% .72%
Provision/average loans**... .22 .20 .22 .29 .30 .21 .47
Net charge-offs/average
loans**................... .08 .12 .16 .24 .26 .26 .62
- ---------------
* Restated for the merger with First Coastal Bankshares, Inc., completed March
26, 1999, and accounted for as a pooling of interests.
** Excludes mortgage loans held for sale.
-10-
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TRIANGLE SELECTED FINANCIAL DATA
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------------------------------------------- -----------------------
1994 1995 1996 1997 1998 1998 1999
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER COMMON SHARE DATA)
INCOME STATEMENT DATA:
Net interest income......... $ 43,619 $ 50,423 $ 58,058 $ 68,390 $ 74,630 $ 55,985 $ 58,508
Provision for losses on
loans..................... 1,008 31 2,515 5,121 5,115 3,829 4,857
Other noninterest income.... 9,383 11,656 12,969 16,922 18,456 12,957 15,461
Noninterest expense......... 41,071 43,072 44,876 50,125 54,896 42,340 38,003
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income
taxes..................... 10,923 18,976 23,636 30,066 33,075 22,773 31,109
Applicable income taxes..... 3,740 6,460 8,840 10,540 11,217 7,668 10,430
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income.................. $ 7,183 $ 12,516 $ 14,796 $ 19,526 $ 21,858 $ 15,105 $ 20,679
========== ========== ========== ========== ========== ========== ==========
PER COMMON SHARE DATA:
Basic
Net income................ $ .31 $ .52 $ .62 $ .79 $ .87 $ .60 $ .82
Diluted
Net income................ .30 .51 .60 .76 .84 .58 .80
Cash dividends............ .05 .11 .18 .25 .32 .23 .28
Book value................ 4.61 5.30 5.66 6.14 6.47 6.44 6.66
BALANCE SHEET DATA
(AT PERIOD END):
Total assets................ $1,194,286 $1,384,135 $1,598,753 $2,015,637 $2,123,084 $2,025,607 $2,346,306
Loans, net of unearned
income.................... 705,618 853,398 1,021,099 1,290,936 1,383,137 1,342,996 1,540,633
Allowance for losses on
loans..................... 14,871 13,738 14,812 17,797 19,584 19,305 21,082
Investment securities....... 373,828 378,244 432,881 547,029 563,293 512,742 591,117
Total deposits.............. 1,000,472 1,137,847 1,344,803 1,550,240 1,625,898 1,608,314 1,742,781
Short-term borrowings....... 25,152 39,822 38,980 61,506 158,980 88,302 260,820
Total stockholders'
equity.................... 108,874 127,259 136,403 152,471 163,027 161,957 168,226
Average assets.............. 1,136,049 1,263,337 1,528,728 1,758,148 2,009,754 1,990,364 2,213,143
Average stockholders'
equity.................... 108,226 118,272 130,939 145,950 159,621 158,483 167,708
Average shares outstanding
(in thousands)
Basic..................... 23,245 23,946 24,056 24,657 25,112 25,093 25,157
Diluted................... 23,623 24,375 24,785 25,561 25,903 25,861 25,757
PROFITABILITY AND CAPITAL
RATIOS:
Return on average assets.... .63% .99% .97% 1.11% 1.09% 1.01% 1.25%
Return on average common
equity.................... 6.64 10.58 11.30 13.38 13.69 12.74 16.49
Net interest income
(taxable-equivalent)/
average earning assets.... 4.21 4.37 4.23 4.36 4.24 4.31 4.07
Loan/deposits............... 70.53 75.00 75.93 83.27 85.07 83.50 88.40
Equity/assets (period
end)...................... 9.12 9.19 8.53 7.56 7.68 8.00 7.17
Average stockholders'
equity/average total
assets.................... 9.53 9.36 8.57 8.30 7.94 7.96 7.58
Leverage ratio.............. 8.27 9.12 8.09 7.70 7.90 7.95 7.56
Tier 1 capital/risk-weighted
assets.................... 10.64 12.91 11.83 10.87 10.17 10.22 10.64
Total capital/risk-weighted
assets.................... 12.32 13.92 12.93 12.08 11.39 11.47 11.89
CREDIT QUALITY RATIOS:
Allowance/period-end
loans..................... 2.11% 1.61% 1.45% 1.38% 1.42% 1.44% 1.37%
Nonperforming loans/total
loans..................... .82 .69 .71 .66 .77 .87 .63
Allowance/nonperforming
loans..................... 258.00 234.00 204.00 208.00 184.00 165.00 217.00
Nonperforming assets/loans
and foreclosed
properties................ .97 .77 .77 .71 .92 .99 .74
Provision/average loans..... .15 .004 .26 .44 .39 .39 .70
Net charge-offs (average
loans).................... .50 .15 .14 .29 .25 .24 .31
- ---------------
-11-
21
SELECTED PRO FORMA FINANCIAL INFORMATION
PRO FORMA COMBINED CONDENSED BALANCE SHEET (UNAUDITED)
The following unaudited pro forma combined condensed balance sheet presents
(a) the historical unaudited consolidated balance sheet of Triangle and Centura
at September 30, 1999, and (b) the pro forma combined condensed balance sheet of
Centura at September 30, 1999, giving effect to the merger, assuming the merger
is accounted for as a pooling of interests. The unaudited pro forma combined
condensed balance sheet should be read in conjunction with the historical
consolidated financial statements of Triangle and the historical consolidated
financial statements of Centura, including the respective notes thereto, which
are incorporated by reference in this joint proxy statement-prospectus, and the
unaudited pro forma financial information appearing elsewhere in this joint
proxy statement-prospectus. The unaudited pro forma combined condensed balance
sheet is not necessarily indicative of actual results that would have been
achieved had the transaction been consummated on the date indicated or which may
be obtained in the future.
CENTURA AND
ADJUSTMENTS TRIANGLE
INCREASE PRO FORMA
CENTURA TRIANGLE (DECREASE) COMBINED
---------- ---------- ----------- -----------
(DOLLARS IN THOUSANDS)
BALANCE SHEET
(AT PERIOD END):
Total assets................................ $8,876,485 $2,346,306 $11,222,791
Loans, net of unearned income............... 5,852,553 1,540,633 7,393,186
Allowance for losses on loans............... (72,619) (21,082) (93,701)
Investment securities....................... 2,201,092 591,117 2,792,209
Deposits.................................... 6,034,436 1,742,781 7,777,217
Borrowed funds.............................. 1,243,006 260,820 1,503,826
Long-term debt.............................. 787,102 143,454 930,556
Total shareholders' equity.................. 698,507 168,226 ($35,660) 831,073
Average assets.............................. 8,773,625 2,213,143 10,986,768
Average shareholders' equity................ 697,049 167,708 864,757
Average shares outstanding
Basic.................................... 28,468,226 25,157,391 39,789,052
Diluted.................................. 28,882,785 25,756,492 40,473,206
- ---------------
-12-
22
PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
The following unaudited pro forma combined condensed statements of income
have been prepared for (i) the nine months ended September 30, 1999, and give
effect to the merger, assuming the merger is accounted for as a pooling of
interests, and (ii) each of the three years in the period ended December 31,
1998 and give effect to the merger, assuming the merger is accounted for as a
pooling of interests, and Centura's merger with First Coastal Bankshares, Inc.
that was completed on March 26, 1999, and accounted for as a pooling of
interests. The unaudited pro forma combined condensed statements of income
should be read in conjunction with the historical consolidated financial
statements of Triangle and the historical consolidated financial statements of
Centura, including the respective notes thereto, appearing elsewhere in this
joint proxy statement-prospectus. The pro forma financial information is not
necessarily indicative of actual results that would have been achieved had the
transactions been consummated at the beginning of the periods presented and is
not necessary indicative of future results.
NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED
------------------------------ SEPTEMBER 30,
1996 1997 1998 1999
-------- -------- -------- -------------
(DOLLARS IN THOUSANDS)
INCOME STATEMENT DATA:
Net interest income............................. $324,858 $355,257 $392,721 $311,681
Provision for loan losses....................... 12,261 18,764 20,759 31,934
Securities gains, (losses), net................. 2,940 2,221 2,357 (623)
Other noninterest income........................ 104,659 126,969 156,620 134,533
Noninterest expense............................. 288,315 303,482 345,293 270,389
-------- -------- -------- --------
Income before income taxes...................... 131,881 162,201 185,646 143,268
Income taxes.................................... 48,365 55,514 63,474 48,481
-------- -------- -------- --------
Net income...................................... $ 83,516 $106,687 $122,172 $ 94,787
======== ======== ======== ========
- ---------------
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RISK FACTORS
If the merger is consummated, Triangle stockholders will receive shares of
Centura common stock in exchange for their shares of Triangle common stock.
Triangle stockholders should be aware of particular risks and uncertainties that
are applicable to an investment in Centura common stock. Specifically, there are
risks and uncertainties that bear on Centura's future financial results and that
may cause Centura's future earnings and financial condition to be less than
Centura's expectations.
Some of the risks and uncertainties relate to economic conditions generally
and would affect other financial institutions in similar ways. These aspects are
discussed above under the heading "A Warning About Forward-Looking Statements."
This section addresses particular risks and uncertainties that are specific to
Centura.
The merger involves the integration of two companies that have previously
operated independently. Successful integration of Triangle's operations will
depend primarily on Centura's ability to consolidate operations, systems and
procedures and to eliminate redundancies and costs. We may not be able to
integrate our operations without encountering difficulties including, without
limitation:
- the loss of key employees and customers;
- the disruption of our businesses;
- possible inconsistencies in standards, control procedures and policies;
- unexpected problems with costs, operations, personnel, technology or
credit; and
- the assimilation of new operations, sites and personnel could divert
resources from regular banking operations.
Further, although we anticipate cost savings as a result of the merger to
be meaningful, we may be unable to fully realize any of the potential cost
savings expected. Finally, any cost savings which are realized may be offset by
losses in revenues or other changes to earnings.
SPECIAL MEETINGS OF STOCKHOLDERS
PURPOSE
TRIANGLE
Centura and Triangle are furnishing this joint proxy statement-prospectus
to holders of Triangle common stock in connection with the proxy solicitation by
Triangle's board of directors. The Triangle board of directors will use the
proxies at the special meeting of stockholders of Triangle to be held on
February 3, 2000, and at any adjournments.
At the Triangle special meeting, holders of Triangle common stock will be
asked to vote upon a proposal to approve the Agreement and Plan of
Reorganization, dated as of August 22, 1999, between Centura and Triangle,
attached to this joint proxy statement-prospectus as Appendix A and the related
plan of merger, between Triangle and Centura Merger Subsidiary, Inc., attached
to this joint proxy statement-prospectus as Appendix B (together, the "merger
agreement"). Pursuant to the merger agreement, Centura will acquire Triangle by
means of the merger of Triangle with and into a newly-formed, wholly-owned
subsidiary of Centura. This subsidiary will be the surviving corporation in the
merger. Immediately after the merger, the subsidiary will be merged with and
into Centura. The outstanding shares of Triangle common stock will be converted
into shares of Centura common stock. Triangle stockholders will receive cash in
lieu of any fractional shares.
CENTURA
Centura and Triangle are furnishing this joint proxy statement-prospectus
to holders of Centura common stock in connection with the proxy solicitation by
Centura's board of directors. The Centura
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board of directors will use the proxies at the Centura special meeting to be
held on February 3, 2000, and at any adjournments.
At the Centura special meeting, holders of Centura common stock will be
asked to vote upon a proposal to approve the issuance of shares of Centura
common stock pursuant to the merger agreement.
DATE, PLACE, AND TIME
TRIANGLE
The special meeting of Triangle's stockholders will be held at The McKimmon
Center, located at Gorman Street at Western Boulevard, in Raleigh, North
Carolina, at 4:00 p.m., local time, on February 3, 2000.
CENTURA
The special meeting of Centura's stockholders will be held at the Civic
Room, 131 North Church Street, in Rocky Mount, North Carolina, at 10:00 a.m.,
local time, on February 3, 2000.
RECORD DATE, VOTING RIGHTS, REQUIRED VOTE, AND REVOCABILITY OF PROXIES
TRIANGLE
Triangle's board of directors fixed the close of business on December 9,
1999, as the record date for determining those Triangle stockholders who are
entitled to notice of and to vote at the Triangle special meeting. Only holders
of Triangle common stock of record on the books of Triangle at the close of
business on December 9, 1999 have the right to receive notice of and to vote at
the Triangle special meeting. On the Triangle record date, there were 25,246,579
shares of Triangle common stock issued and outstanding held by approximately
8,748 holders of record.
At the Triangle special meeting, Triangle stockholders will have one vote
for each share of Triangle common stock owned on the Triangle record date. The
holders of a majority of the outstanding shares of Triangle common stock
entitled to vote on a matter at the Triangle special meeting must be present in
order for a quorum to exist at the Triangle special meeting.
To determine if a quorum is present, Triangle intends to count the
following:
- shares of Triangle common stock present at the Triangle special meeting
either in person or by proxy;
- shares of Triangle common stock present in person at the Triangle special
meeting but not voting; and
- shares of Triangle common stock for which it has received proxies but
with respect to which holders of shares have abstained on any matter.
Approval of the merger requires the affirmative vote of a majority of the votes
entitled to be cast at the Triangle special meeting.
Brokers who hold shares in street name for customers who are the beneficial
owners of such shares may not give a proxy to vote those shares to approve the
merger without specific instructions from their customers. Any abstention,
non-voting share or "broker non-vote" will have the same effect as a vote
AGAINST the approval of the merger.
Properly executed proxies that Triangle receives before the vote at the
Triangle special meeting that are not revoked will be voted in accordance with
the instructions indicated on the proxies. IF NO INSTRUCTIONS ARE INDICATED,
SUCH PROXIES WILL BE VOTED FOR THE PROPOSAL TO APPROVE THE MERGER, AND THE PROXY
HOLDER MAY VOTE THE PROXY IN ITS DISCRETION AS TO ANY OTHER MATTER WHICH MAY
COME PROPERLY BEFORE THE TRIANGLE SPECIAL MEETING. IF NECESSARY, THE PROXY
HOLDERS MAY VOTE IN FAVOR OF A PROPOSAL TO ADJOURN THE TRIANGLE SPECIAL MEETING
IN ORDER TO PERMIT FURTHER SOLICITATION OF PROXIES IF THERE ARE NOT SUFFICIENT
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VOTES TO APPROVE THE PROPOSAL AT THE TIME OF THE TRIANGLE SPECIAL MEETING.
HOWEVER, NO PROXY HOLDER WILL VOTE ANY PROXIES VOTED AGAINST APPROVAL OF THE
MERGER IN FAVOR OF A PROPOSAL TO ADJOURN THE TRIANGLE SPECIAL MEETING.
A Triangle stockholder who has given a proxy solicited by Triangle's board
of directors may revoke it at any time prior to its exercise at the Triangle
special meeting by (1) giving written notice of revocation to the Secretary of
Triangle, (2) properly submitting to Triangle a duly executed proxy bearing a
later date, or (3) attending the Triangle special meeting and voting in person.
All written notices of revocation and other communications with respect to
revocation of proxies should be sent to: Triangle Bancorp, Inc., 4300 Glenwood
Avenue, Raleigh, North Carolina 27612, Attention: Susan C. Gilbert, Secretary.
On the Triangle record date, Triangle's directors and executive officers,
including their immediate family members and affiliated entities owned 1,990,250
shares or approximately 7.9% of the outstanding shares of Triangle common stock,
or approximately 15.5% of the shares required to approve the merger. This number
does not include shares subject to options to purchase Triangle common stock. We
expect that the directors and executive officers of Triangle will vote their
shares in favor of the merger.
On the Triangle record date, Centura held no shares of Triangle common
stock other than in a fiduciary capacity for others, or as a result of debts
previously contracted, and Triangle held no shares of Triangle common stock
other than in a fiduciary capacity for others with respect to which it has sole
or shared voting power. In addition, one director of Centura owned approximately
5,500 shares of Triangle on the Triangle record date, which shares had been
acquired as an investment well in advance of negotiation of the merger.
CENTURA
Centura's board of directors fixed the close of business on December 9,
1999, as the Centura record date for determining those Centura stockholders who
are entitled to notice of and to vote at the Centura special meeting. Only
holders of Centura common stock of record on the books of Centura at the close
of business on December 9, 1999 have the right to receive notice of and to vote
at the Centura special meeting. On the Centura record date, there were
28,100,485 shares of Centura common stock issued and outstanding held by
approximately 13,477 holders of record.
At the Centura special meeting, Centura stockholders will have one vote for
each share of Centura common stock owned on the Centura record date. The holders
of a majority of the outstanding shares of Centura common stock entitled to vote
at the Centura special meeting must be present in order for a quorum to exist at
the Centura special meeting.
To determine if a quorum is present, Centura intends to count the
following:
- shares of Centura common stock present at the Centura special meeting
either in person or by proxy;
- shares of Centura common stock present in person at the Centura special
meeting but not voting; and
- shares of Centura common stock for which it has received proxies but with
respect to which holders of shares have abstained on any matter.
Approval of the issuance of shares of Centura common stock pursuant to the
merger agreement requires the affirmative vote of a majority of the shares
represented at the Centura special meeting.
Brokers who hold shares in street name for customers who are the beneficial
owners of such shares may not give a proxy to vote those shares without specific
instructions from their customers.
Properly executed proxies that Centura receives before the vote at the
Centura special meeting that are not revoked will be voted in accordance with
the instructions indicated on the proxies. IF NO INSTRUCTIONS ARE INDICATED,
SUCH PROXIES WILL BE VOTED FOR THE PROPOSAL TO APPROVE THE ISSUANCE OF THE
SHARES OF CENTURA COMMON STOCK PURSUANT TO THE MERGER AGREEMENT, AND THE PROXY
HOLDER MAY VOTE THE
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PROXY IN ITS DISCRETION AS TO ANY OTHER MATTER WHICH MAY COME PROPERLY BEFORE
THE CENTURA SPECIAL MEETING. IF NECESSARY, THE PROXY HOLDERS MAY VOTE IN FAVOR
OF A PROPOSAL TO ADJOURN THE CENTURA SPECIAL MEETING IN ORDER TO PERMIT FURTHER
SOLICITATION OF PROXIES IF THERE ARE NOT SUFFICIENT VOTES TO APPROVE THE
PROPOSAL AT THE TIME OF THE CENTURA SPECIAL MEETING. HOWEVER, NO PROXY HOLDER
WILL VOTE ANY PROXIES VOTED AGAINST APPROVAL OF THE ISSUANCE OF THE SHARES OF
CENTURA COMMON STOCK PURSUANT TO THE MERGER AGREEMENT IN FAVOR OF A PROPOSAL TO
ADJOURN THE CENTURA SPECIAL MEETING.
A Centura stockholder who has given a proxy solicited by Centura's board of
directors may revoke it at any time prior to its exercise at the Centura special
meeting by (1) giving written notice of revocation to the Secretary of Centura,
(2) properly submitting to Centura a duly executed proxy bearing a later date,
or (3) attending the Centura special meeting and voting in person. All written
notices of revocation and other communications with respect to revocation of
proxies should be sent to: Centura Banks, Inc., 134 North Church Street, Rocky
Mount, North Carolina 27804, Attention: Joseph A. Smith, Jr., Secretary.
On the Centura record date, Centura's directors and executive officers,
including their immediate family members and affiliated entities owned 2,390,758
shares or approximately 8.5% of the outstanding shares of Centura common stock.
This number does not include shares subject to options to purchase Centura
common stock. On the Centura record date, Triangle's directors and executive
officers owned 13,836 shares of Centura common stock. We expect that the
directors and executive officers of Centura and Triangle will vote their shares
in favor of the merger.
On the Centura record date, Triangle held no shares of Centura common stock
other than in a fiduciary capacity for others, or as a result of debts
previously contracted, and Centura held no shares of Centura common stock other
than in a fiduciary capacity for others with respect to which it has sole or
shared voting power.
SOLICITATION OF PROXIES
TRIANGLE
Directors, officers and employees of Triangle may solicit proxies by mail,
in person, or by telephone or telegraph. They will receive no additional
compensation for such services. Triangle may, however, hire a professional proxy
solicitor who will receive a fee for its services. Triangle may also make
arrangements with brokerage firms and other custodians, nominees, and
fiduciaries, if any, for the forwarding of solicitation materials to the
beneficial owners of Triangle common stock held of record by such persons.
Triangle will reimburse any such brokers, custodians, nominees, and fiduciaries
for the reasonable out-of-pocket expenses incurred by them for such services.
Triangle will pay its own expenses in connection with the merger, except that
Centura will pay one-half of the printing costs incurred in connection with the
printing of the registration statement and this joint proxy
statement-prospectus, as provided in the merger agreement. See "DESCRIPTION OF
TRANSACTION -- Expenses and Fees."
CENTURA
Directors, officers and employees of Centura may solicit proxies by mail,
in person, or by telephone or telegraph. They will receive no additional
compensation for such services. Centura may, however, hire a professional proxy
solicitor who will receive a fee for its services. Centura may also make
arrangements with brokerage firms and other custodians, nominees, and
fiduciaries, if any, for the forwarding of solicitation materials to the
beneficial owners of Centura common stock held of record by such persons.
Centura will reimburse any such brokers, custodians, nominees, and fiduciaries
for the reasonable out-of-pocket expenses incurred by them for such services.
Centura will pay its own expenses in connection with the merger, except that
Triangle will pay one-half of the printing costs incurred in connection with the
registration statement and this joint proxy statement-prospectus, as provided in
the merger agreement. See "DESCRIPTION OF TRANSACTION -- Expenses and Fees."
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NO DISSENTERS' RIGHTS
TRIANGLE
Triangle stockholders do not have dissenters' rights with respect to the
merger.
CENTURA
Centura stockholders do not have dissenters' rights with respect to the
issuance of shares of Centura common stock pursuant to the merger agreement.
RECOMMENDATION
TRIANGLE
Triangle's board of directors has unanimously approved the merger and
believes that the proposal to approve the merger is in the best interests of
Triangle and its stockholders. Triangle's board of directors recommends that you
vote FOR approval of the merger.
CENTURA
Centura's board of directors has unanimously approved the issuance of the
shares of Centura common stock pursuant to the merger agreement and believes
that the proposal is in the best interests of Centura and its stockholders.
Centura's board of directors recommends that you vote FOR approval of the
issuance of shares of Centura common stock pursuant to the merger agreement.
DESCRIPTION OF TRANSACTION
The following information describes material aspects of the merger. This
description does not provide a complete description of all the terms and
conditions of the merger agreement. It is qualified in its entirety by the
Appendices hereto, including the text of the merger agreement, which is attached
as Appendices A and B to this joint proxy statement-prospectus. The appendices,
including the merger agreement, are incorporated herein by reference. You are
urged to read the Appendices in their entirety.
THE MERGER
The merger agreement provides for the acquisition of Triangle by Centura
pursuant to the merger of Triangle into a newly-formed, wholly-owned subsidiary
of Centura. Immediately after the merger, the merger subsidiary will be merged
into Centura, and Triangle's banking subsidiaries, Triangle Bank and Bank of
Mecklenburg, will be merged into Centura Bank.
WHAT TRIANGLE STOCKHOLDERS WILL RECEIVE IN THE MERGER
If we complete the merger, each Triangle stockholder will receive .45 of a
share of Centura common stock for each share of Triangle common stock held by
such stockholder at the date the merger is completed.
Under certain limited circumstances described below, the exchange ratio
could be increased pursuant to certain provisions of the merger agreement. UNDER
NO CIRCUMSTANCES WOULD THE EXCHANGE RATIO BE LESS THAN .45 OF A SHARE OF CENTURA
COMMON STOCK FOR EACH SHARE OF TRIANGLE COMMON STOCK. Such an adjustment would
occur only if Triangle's board of directors elects to terminate the merger
agreement pursuant to the provisions of the merger agreement described below and
if Centura then elects to avoid termination of the merger agreement by
increasing the exchange ratio.
For purposes of the description of these provisions and their operation the
following definitions apply:
The "average closing price" is the average of the closing price of Centura
common stock as reported on the New York Stock Exchange (as reported by The Wall
Street Journal, or, if not reported thereby, by
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another authoritative source selected by Centura) for 10 consecutive full
trading days in which such shares are traded on the New York Stock Exchange
ending at the close of trading on the "determination date."
The "determination date" is the latest of the date on which approval of the
merger by the Federal Reserve is received (without regard to any requisite
waiting period), the date the merger is approved by Triangle stockholders, and
the date the issuance of shares of Centura common stock pursuant to the merger
agreement is approved by Centura stockholders.
The "Centura ratio" is the number obtained by dividing the "average closing
price" by $52.00.
The "index price" is the weighted average of the closing prices of the
common stock of the bank holding companies described as the "index group" in the
merger agreement as of a given date.
The "index ratio" is the number obtained by dividing the index price on the
determination date by the index price as of August 20, 1999, and then
subtracting .15 from the result.
If both:
(1) the average closing price is less than $41.60 (i.e. $52.00 (the closing
price of Centura common stock on the last trading day before the public
announcement of the merger) multiplied by .8); and
(2) the Centura ratio is less than the index ratio,
then Triangle may elect to terminate the merger agreement unless Centura
increases the exchange ratio such that the number of shares of Centura common
stock issued in exchange for each share of Triangle common stock has a value
(based on the average closing price) equal to the lesser of (i) $18.72
(corresponding to an average closing price of $41.60) or (ii) the value (based
on the average closing price) of the number of shares of Centura common stock
that would have been exchanged for each share of Triangle common stock if the
relative performance of the Centura common stock as determined above was 15%
lower than the relative performance of the index group. If the merger is
approved by Triangle stockholders, and both of the triggers discussed above are
subsequently met, Triangle's board of directors may elect not to terminate the
merger agreement and to consummate the merger anyway without resoliciting
Triangle stockholders.
These conditions reflect the parties' agreement that Triangle stockholders
will assume the risk of declines in the value of Centura common stock to $41.60.
Any adjustment of the exchange ratio reflecting a decline in the price of
Centura common stock to below $41.60 would be dependent on whether the average
closing price of Centura common stock lags behind a market basket of comparable
bank holding company common stocks (the index group) by more than 15%.
In making its determination of whether to terminate the merger agreement,
the Triangle board of directors will take into account, consistent with its
fiduciary duties, all relevant facts and circumstances that exist at such time,
including, without limitation, information concerning the business, financial
condition, results of operations, and prospects of Centura (including the recent
performance of Centura common stock, the historical financial data of Centura,
customary statistical measurements of Centura's financial performance, and the
future prospects for Centura common stock following the merger), and the advice
of Triangle's financial advisors and legal counsel. If the Triangle board of
directors elects to terminate the merger agreement, Centura would then determine
whether to proceed with the merger at the higher exchange ratio. In making this
determination, the principal factors Centura will consider include the projected
effect of the merger on Centura's pro forma earnings per share and whether
Centura's assessment of Triangle's earning potential as part of Centura
justifies the issuance of an increased number of Centura shares. If Centura
declines to adjust the exchange ratio, Triangle may elect to proceed without the
adjustment, provided it does so within 12 days after the determination date.
Centura is under no obligation to adjust the exchange ratio.
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The operation of the adjustment mechanism can be illustrated by three
scenarios. (For purposes of the scenarios, it has been assumed that the initial
exchange ratio is .45, the starting price of Centura common stock is $52.00, and
the index price, as of the starting date, is $100.)
(1) The first scenario occurs if the average closing price is $41.60
or greater. Under this scenario, regardless of any comparison between the
Centura ratio and the index ratio, there would be no possible adjustment to
the exchange ratio, even though the value of the consideration to be
received by Triangle stockholders could have fallen from a pro forma $23.40
per share, as of the starting date, to a pro forma $18.72 per share, as of
the determination date.
(2) The second scenario occurs if the average closing price is less
than $41.60, but does not represent a decline from the starting price of
more than 15% than the decline of the common stock prices of the index
group. Under this scenario, there also would be no possible adjustment to
the exchange ratio, even though the value of the consideration to be
received by Triangle stockholders would have fallen from a pro forma $23.40
per share, as of the starting date, to an amount based on the then lower
average closing price of Centura common stock, as of the determination
date, of less than a pro forma $18.72 per share.
(3) The third scenario occurs if the average closing price declines
below $41.60 and the Centura ratio is below the index ratio. Under this
scenario, the adjustment in the exchange ratio is designed to ensure,
subject to the Triangle board of directors exercising its rights to
terminate the merger agreement and the Centura board of directors electing
to avoid such termination, that if the merger is consummated the Triangle
stockholders receive shares of Centura common stock having a value (based
on the average closing price) that corresponds to at least $41.60 per
Centura share or a 15% decline from the stock price performance reflected
by the index group, whichever is less.
Example 1 -- If the average closing price were $35.00, and the
ending index price, as of the determination date, were $90, the Centura
ratio (.6730) would be below the index ratio (.75, or .90 minus .15),
and Triangle could terminate the merger agreement unless Centura elected
within five days to increase the exchange ratio to equal .5014, which
represents the lesser of (a) .5348 (the result of dividing $18.72 (the
product of .8, $52.00, and the .45 exchange ratio) by the average
closing price ($35.00), rounded to the nearest ten-thousandth) and (b)
.5014 (the result of dividing the index ratio (.75) times .45 by the
Centura ratio (.6730), rounded to the nearest ten-thousandth). Based on
the assumed $35.00 average closing price, the new exchange ratio would
represent a value to the Triangle stockholders of $17.55 per share.
Example 2 -- If the average closing price were $35.00, and the
ending index price, as of the determination date, were $100, the Centura
ratio (.6730) would be below the index ratio (.85, or 1.00 minus .15),
and Triangle could terminate the merger agreement unless Centura elected
within five days to increase the exchange ratio to equal .5348, which
represents the lesser of (a) .5348 (the result of dividing $18.72 (the
product of .8, $52.00, and the .45 exchange ratio) by the average
closing price ($35.00), rounded to the nearest ten-thousandth) and (b)
.5684 (the result of dividing the index ratio (.85) times .45 by the
Centura ratio (.6730), rounded to the nearest ten-thousandth). Based on
the assumed $35.00 average closing price, the new exchange ratio would
represent a value to the Triangle stockholders of pro forma $18.72 per
share.
However, it is possible that Triangle's board of directors would not
elect to exercise its termination right, even if the average closing price
is below $41.60 and the Centura ratio is below the index ratio. Under these
circumstances, the exchange ratio would remain at .45, regardless of the
fact that the average closing price is below $41.60. Conversely, it is
possible that if Triangle's board of directors does elect to exercise its
termination right, Centura's board of directors would not elect to increase
the exchange ratio to prevent such termination, and under these
circumstances the merger agreement would terminate unless Triangle elects
to proceed without the adjustment.
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The actual market value of a share of Centura common stock at the effective
time of the merger and at the time certificates for those shares are delivered
following surrender and exchange of certificates for shares of Triangle common
stock may be more or less than the average closing price. Triangle stockholders
are urged to obtain current market prices for Centura common stock. See
"COMPARATIVE MARKET PRICES AND DIVIDENDS."
EFFECT OF THE MERGER ON TRIANGLE OPTIONS
When the merger becomes effective, each option granted under Triangle's
stock plans that is outstanding (the "options"), whether or not exercisable,
will become an option to purchase Centura common stock. Centura will assume each
option in accordance with the terms of Triangle's stock plans and stock option
or other agreement that evidences the option and will deliver Centura common
stock upon the exercise of each option. After the merger becomes effective,
(1) Centura and its Compensation Committee will be substituted for Triangle
and the Committee of Triangle's board of directors administering
Triangle's plans;
(2) each option assumed by Centura may be exercised only for shares of
Centura common stock;
(3) the number of shares of Centura common stock subject to the option will
be equal to the number of shares of Triangle common stock subject to
the option immediately before the merger becomes effective multiplied
by the exchange ratio and rounding down to the nearest whole share; and
(4) the per share exercise price under each option will be adjusted by
dividing it by the exchange ratio and rounding up to the nearest cent.
Notwithstanding the foregoing, each Triangle option which is an "incentive
stock option" shall be adjusted as required by Section 424 of the Internal
Revenue Code, and the regulations promulgated thereunder, so as not to
constitute a modification, extension or renewal of the option, within the
meaning of Section 424(h) of the Internal Revenue Code.
For information with respect to stock options held by Triangle's
management, see "-- Interests of Certain Persons in the Merger."
EXPECTED TAX TREATMENT AS A RESULT OF THE MERGER
Centura and Triangle have not and do not intend to seek a ruling from the
Internal Revenue Service ("IRS") as to the federal income tax consequences of
the merger. The opinion of counsel, Alston & Bird LLP, as to certain of the
expected federal income tax consequences of the merger is an exhibit to the
registration statement and supports the following discussion of the anticipated
federal income tax consequences of the merger to stockholders of Triangle. This
discussion does not address, among other matters:
(1) state, local, or foreign tax consequences of the merger;
(2) federal income tax consequences to Triangle stockholders who are
subject to special rules under the Internal Revenue Code, such as
foreign persons, tax-exempt organizations, insurance companies,
financial institutions, dealers in stocks and securities, and persons
who hold their stock as part of a straddle or conversion transaction;
(3) federal income tax consequences affecting shares of Triangle common
stock acquired upon the exercise of stock options, stock purchase plan
rights, or otherwise as compensation;
(4) the tax consequences to holders of options to acquire shares of
Triangle common stock; and
(5) the tax consequences to Centura and Triangle of any income and deferred
gain recognized pursuant to Treasury Regulations issued under Section
1502 of the Internal Revenue Code.
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Assuming that the merger is consummated in accordance with the merger
agreement, it is anticipated that the following federal income tax consequences
will occur:
(1) The merger will constitute a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code.
(2) No gain or loss will be recognized by Centura, Triangle or Centura's
merger subsidiary as a result of the merger.
(3) No gain or loss will be recognized by the stockholders of Triangle as a
result of the exchange of all of the shares of Triangle common stock
that they own for Centura common stock pursuant to the merger, except
that gain or loss will be recognized on the receipt of any cash in lieu
of a fractional share.
(4) The tax basis of Centura common stock to be received by the Triangle
stockholders, who exchange all of their Triangle common stock for
Centura common stock in the merger, will be the same as the tax basis
of the Triangle common stock surrendered in exchange therefor (reduced
by any amount allocable to a fractional share interest for which cash
is received).
(5) The holding period of the Centura common stock to be received by
Triangle stockholders, who exchange all of their Triangle common stock
for Centura common stock in the merger (and cash received in lieu of
fractional shares of Centura common stock), will include the holding
period of the Triangle common stock surrendered in exchange therefor,
provided the Triangle shares were held as a capital asset by the
Triangle stockholders on the date of the exchange.
(6) The payment of cash to Triangle stockholders in lieu of fractional
share interests of Centura common stock will be treated for federal
income tax purposes as if the fractional shares were distributed as
part of the exchange and then were redeemed by Centura. These cash
payments will be treated as having been received as distributions in
full payment in exchange for the Centura common stock redeemed, as
provided in Section 302 of the Internal Revenue Code.
The obligation of Centura and Triangle to complete the merger is
conditioned on, among other things, receipt by Centura and Triangle of an
opinion of Alston & Bird LLP, with respect to certain of the federal income tax
consequences of the merger. The conditions relating to the receipt of the tax
opinion may be waived by both Centura and Triangle. Neither Centura nor Triangle
currently intends to waive the conditions relating to the receipt of the tax
opinion. If the conditions relating to the receipt of the tax opinion were
waived and the material federal income tax consequences of the merger were
substantially different from those described in this joint proxy
statement-prospectus, Triangle would resolicit the approval of its stockholders
prior to completing the merger.
Tax consequences of the merger may vary depending upon the particular
circumstances of each Triangle stockholder. Accordingly, Triangle stockholders
are urged to consult their own tax advisors as to the specific tax consequences
to them of the merger, including the applicability and effect of state, local,
and foreign tax laws.
BACKGROUND OF AND REASONS FOR THE MERGER
BACKGROUND.
Triangle Bank was established in 1988. At the time the purpose was to
create a new, locally focused bank that could offer quality banking services to
consumers and small-to-medium sized businesses in the Raleigh, North Carolina
area. Triangle was established in 1992 as the parent holding company of Triangle
Bank.
Following an acquisition in each of 1991 and 1993, Triangle's management
determined in 1994 that a well executed acquisition plan in concert with
internal growth would benefit Triangle. In particular, management believed a
well executed acquisition plan could (1) provide opportunities to achieve
economies of scale that would increase Triangle's efficiency and profitability;
(2) improve Triangle's ability
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to compete with the many financial institutions doing business in Triangle's
market area; (3) result in an institution better able to respond to
technological changes; and (4) enable the resulting institution to better
respond to the needs of its customers and the communities it serves.
Triangle carried out this plan with success from 1995 to September 1998,
the date of its last acquisition. As a result of these acquisitions, Triangle
increased in asset size from approximately $302.7 million at December 31, 1993
to approximately $2.3 billion as of September 30, 1999. During the same period,
the number of Triangle Bank's branches has increased from 12 to 68, located
primarily in the central and eastern regions of North Carolina. In addition,
Bank of Mecklenburg, Triangle's other bank subsidiary, has three branches in
Charlotte. As of September 30, 1999, Triangle had a market capitalization of
approximately $467 million, compared to a market capitalization of approximately
$33 million at December 31, 1993.
As part of its acquisition plan, Triangle reviewed its performance against
its peers, both in North Carolina and nationally, at least once a year. Triangle
also periodically conducted a strategic review during which Triangle examined
its strategic business alternatives, devoting particular attention to the
continuing consolidation and increasing competition in the banking and financial
services industries in North Carolina. North Carolina is home to many large,
aggressive commercial banking entities, including Triangle, and the banking
market in North Carolina in particular has been subject to significant
consolidation in recent years. As a result, competition in the local banking and
financial services industries has intensified. Triangle reaped the benefit of
this consolidation from 1993 through 1998.
From 1994 through 1997, Triangle common stock out-performed most of its
peers as well as most securities markets in general. The latter half of 1998,
however, saw the price of Triangle common stock decline along with most other
bank issues and the markets in general. Despite Triangle's continued good
financial performance, the price of Triangle common stock remained essentially
flat through 1999 until the announcement of the merger.
In recent years, Triangle had received inquiries from potential acquirors.
These inquiries were analyzed by Triangle's board of directors or its executive
committee, with the assistance of its financial advisor, Wheat First Securities,
a division of First Union Securities, Inc. ("Wheat First"). In general, any
possible price suggested in these inquiries was deemed inadequate by Triangle,
in consultation with Wheat First, based on Triangle's performance and prospects
compared to the performance and prospects of the potential acquirors. In light
of Triangle's performance and prospects, and the continued appreciation of
Triangle common stock, Triangle's board of directors had determined in the past
several years that Triangle stockholders, employees and communities would be
better served by remaining independent.
In 1999, Triangle received preliminary expressions of interest from two
bank holding companies prior to the time that Centura contacted Triangle.
Management of Triangle reviewed the bank holding companies' expressions of
interest with Wheat First and Triangle's executive committee and determined that
it was not in the best interests of Triangle or the Triangle stockholders to
pursue these preliminary expressions of interest further.
On August 4, 1999, Centura's Chairman and Chief Executive Officer, Cecil
Sewell, visited Triangle's President and Chief Executive Officer, Michael S.
Patterson, to discuss the relative merits of a merger of Triangle and Centura.
Mr. Sewell and Mr. Patterson had previously worked together at one of Centura's
predecessor institutions and had continued to keep in contact, discussing from
time to time general economic and business conditions affecting their
institutions and the possibility, in very general terms, of combining the two
companies. Mr. Sewell stated that Triangle was Centura's top strategic
acquisition priority, based on similar cultures and markets, and suggested a
possible price in the mid-$20's for each share of Triangle common stock in a
stock-for-stock merger of the parties.
After his meeting with Mr. Sewell, Mr. Patterson informed Robert L.
Guthrie, Chairman of the executive committee to Triangle's board of directors,
of Mr. Sewell's inquiry and Mr. Guthrie authorized Mr. Patterson to analyze the
merits of a possible merger with Centura. The proposed merger, including the
exchange ratio implied by the suggested price per share for Triangle common
stock as indicated by
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Mr. Sewell, was given to Triangle's financial advisor, Wheat First, to review.
Wheat First's analysis indicated that a merger of Centura and Triangle, in the
price range indicated by Mr. Sewell, would be fair from a financial point of
view to the Triangle stockholders. On August 12, 1999, Mr. Patterson met with
Mr. Sewell to further discuss a possible merger with Centura at which meeting a
proposal was presented to Triangle by Centura, including an exchange ratio of
.45 of a share of Centura common stock for each share of Triangle common stock.
On August 17, 1999, Triangle's executive committee met to consider the
Centura proposal, including the exchange ratio. An analysis prepared by Wheat
First was reviewed. Triangle's executive committee considered the alternatives
available to Triangle, including remaining independent or merging with another
party. Triangle's executive committee unanimously approved the exchange ratio
and basic parameters of the merger and authorized Mr. Patterson to seek to
negotiate a definitive merger agreement with Centura. Negotiations ensued,
Centura executed a confidentiality agreement and the parties conducted due
diligence with respect to each other through August 21, 1999.
In considering Centura's proposal, Triangle's executive committee compared
the two companies and found a similarity in corporate cultures as well as a
shared history of serving similar markets and engaging in small business and
retail lending. In addition, Triangle's executive committee considered Centura's
established electronic banking program, proven sales culture, existing fee-based
lines of business, such as insurance, brokerage, asset management and investment
banking services. By comparison, Triangle was just beginning to implement the
development of an electronic delivery channel for its products and services and
the development of a sales culture to further penetrate its existing markets.
Both of these initiatives would require the expenditure of a great deal of money
in hiring people, buying or leasing equipment and software, and training
employees, and would present a number of execution risks. The expense of these
items would have a significant impact on Triangle's future earnings. This
potential negative impact, coupled with Triangle's recent stock price, could
have been damaging to Triangle's ability to execute its strategic plan and to
provide an acceptable level of performance for the Triangle stockholders. In
addition, Triangle's management realized that its past practice of growing by
acquisition would be hampered in the future if the price of Triangle common
stock did not rise.
Triangle's executive committee met again on August 22, 1999. At this
meeting, Triangle's management reviewed the progress of the negotiations with
Centura and Wheat First reviewed in detail the financial terms of Centura's
proposal. Wheat First reviewed the economic implications of Centura's proposed
exchange ratio of .45 of a share of Centura common stock for each share of
Triangle common stock. Based on the closing price of Centura common stock of
$52.00 on August 20, 1999, the exchange ratio represented $23.40 per share or
approximately 3.56 times Triangle's stated book value per share as of June 30,
1999 and approximately 21.7 times Triangle's annualized last quarter earnings,
based upon Triangle's earnings per share in the second quarter of 1999. Wheat
First compared the merger to 11 transactions announced since October 1, 1998
that Wheat First identified as comparable. Wheat First also reviewed with
Triangle's executive committee the possibility that Centura common stock might
currently be undervalued when compared to Centura's current performance and that
there was potential for appreciation inherent in Centura common stock that could
make the exchange ratio more attractive to Triangle stockholders.
During the meeting, Triangle's executive committee also considered the
complementary nature of Centura's and Triangle's businesses and the synergies
that could be achieved by offering all of these business lines across an
expanded customer base. Triangle's executive committee also considered that Mr.
Patterson would become Chairman of the Board of the combined company and receive
an employment agreement with Centura and that seven of Centura's 30 directors
after the merger would be current members of Triangle's board of directors.
Triangle's executive committee considered these management and board
arrangements to be in the best interests of Triangle stockholders as continuing
stockholders of Centura. Triangle's executive committee also considered the
alternative of Triangle remaining independent and discussed that, given
competition in the marketplace and the expenditures required to upgrade and
expand Triangle's infrastructure, an independent Triangle would be unable to
achieve in the foreseeable future the same stockholder value represented by the
merger. Triangle's
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executive committee also considered in general the terms of the proposed
agreement. After extensive discussion, Triangle's executive committee concluded
that it was in the best interests of Triangle and the Triangle stockholders and
other constituencies to merge with Centura and voted unanimously to recommend
the merger to the full Triangle board of directors.
Later on August 22, 1999, all members of Triangle's board of directors met
to consider the merger. Wheat First again presented its analysis of the merger
and Triangle's board of directors considered in detail all of the matters
described above. After extensive discussion, the directors concluded that the
merger was in the best interests of Triangle and the Triangle stockholders and
other constituencies and unanimously approved the execution and delivery of the
merger agreement.
REASONS FOR THE MERGER.
TRIANGLE. Triangle's board of directors has determined that the merger is
in the best interests of Triangle and the Triangle stockholders and has
unanimously approved the merger agreement and the plan of merger. In reaching
its determination, Triangle's board of directors considered a number of factors,
including, but not limited to, the following:
(1) Information with respect to the financial condition, results of
operations, business, and prospects of Triangle and Centura (see
"BUSINESS OF TRIANGLE," "BUSINESS OF CENTURA," and "COMPARATIVE MARKET
PRICES OF COMMON STOCK") and a review, based in part on presentations
by Wheat First and the due diligence reviews by Wheat First and
management, of the business, operations, financial condition,
earnings, and prospects of Centura;
(2) The structure of the contemplated transaction, together with the
exchange ratio in the merger from a number of valuation perspectives,
as presented by Wheat First, and the current market value of the
merger to the Triangle stockholders. Triangle's board of directors
considered that, based upon the closing prices of Centura common stock
and Triangle common stock on the last trading day preceding its
approval of the merger (August 20, 1999), the exchange ratio
represented a market premium at such time of $6.90 per share, or
approximately 42%;
(3) The opinion of Wheat First that as of August 22, 1999, the exchange
ratio of .45 of a share of Centura common stock for each share of
Triangle common stock was fair to the Triangle stockholders from a
financial point of view (See "-- Opinion of Triangle's Financial
Advisor");
(4) The current and prospective economic and competitive environment
facing Triangle; the range of possible values available to the
Triangle stockholders by remaining independent and by pursuing other
strategic options, including the likelihood of actually receiving
those values; and the inability of Triangle to achieve comparable
value in the foreseeable future by remaining independent;
(5) The potential for appreciation of Centura common stock due to Centura
being undervalued relative to its peers;
(6) The potential ability of Centura, after the merger, to enhance the
products and services currently provided by Triangle to its customers
and the combined market share, after the merger, of Triangle and
Centura in important markets in North Carolina;
(7) The effect of the merger on Triangle's employees, customers and the
communities it serves, including the impact of divestitures and cost
saving measures associated with the merger;
(8) The projected financial effects of the merger, including the cost
savings (resulting from back office efficiencies, reductions in force,
consolidations and other cost savings) of approximately $23 million in
2000 and $32 million in 2001 and an increase in Centura earnings per
share of approximately 0.4% ($.02 per share) in 2001 anticipated to
result from the merger, and the effects of the merger on the
risked-based and leverage capital ratios of the entity and its
subsidiaries (see "PRO FORMA FINANCIAL INFORMATION" and "-- Management
and Operations After the Merger");
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(9) The number of seats on Centura's board of directors to be held by
current Triangle directors, together with Mr. Patterson's management
role in the combined entity and the terms of his employment agreement
with Centura (see "-- Interests of Certain Persons in the Merger");
(10) The terms and conditions of the merger agreement and the plan of
merger, including the tax-free nature of the merger and the treatment
of the merger as a pooling-of-interests for accounting purposes, the
stock option agreements, and the other documents executed in
connection with the merger;
(11) The fact that the pooling-of-interests accounting method is
anticipated to be unavailable sometime in 2001, and the potential
impact of the loss of such accounting method on values financial
institutions can expect to receive in future transactions;
(12) The provisions of the merger agreement permitting Triangle to
terminate the merger if the price of Centura common stock falls more
than a specified amount both in absolute terms and relative to an
index based on the stock of other financial institutions, unless
Centura agrees to adjust the exchange ratio upwards to offset the fall
(see "-- What Triangle Stockholders Will Receive in the Merger" and
"-- Conditions to Consummation of the Merger"); and
(13) An evaluation of the risks to consummation of the merger, including,
among others, the risks associated with obtaining all necessary
regulatory approvals without the imposition of any condition which
differs from conditions customarily imposed in approving acquisitions
of the type contemplated by the merger agreement and compliance with
which would materially adversely affect the anticipated benefits of
the transaction to Centura.
The foregoing discussion of the information and factors considered by
Triangle's board of directors is not intended to be exhaustive, but constitutes
all material factors considered by Triangle's board of directors. In view of the
variety of factors considered in connection with its evaluation of the merger,
Triangle's board of directors did not find it practicable to, and did not,
quantify or otherwise attempt to assign relative weights to the specific factors
considered in reaching its determination and individual directors may have given
different weight to different factors. In considering and approving the merger,
Triangle's board of directors relied upon information and analysis prepared by
management and by Wheat First. Throughout their deliberations, Triangle's
executive committee and Triangle's board of directors received the advice of
special counsel experienced in bank merger matters.
Triangle's board of directors believes that the merger is in the best
interests of Triangle and the Triangle stockholders. ACCORDINGLY, TRIANGLE'S
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE TRIANGLE STOCKHOLDERS VOTE
FOR THE MERGER.
CENTURA. Centura's board of directors has determined that the merger is in
the best interests of Centura and the Centura stockholders and has unanimously
approved the merger agreement. In reaching its determination, Centura's board of
directors considered a number of factors, including, but not limited to, the
following:
(1) Transaction Strengthens Centura's North Carolina Franchise. There is
significant overlap of markets served by the two companies as Centura
is in every market served by Triangle. The merger will increase the
presence of the combined company in a number of markets. This is
particularly true in Metropolitan Statistical Areas (i.e., non-rural)
such as the Research Triangle area of North Carolina.
(2) Transaction Leverages Centura's Strategy and Investments. The merger
will allow Centura to apply its customer information know-how and sales
culture to a substantially increased number of households. This should
result in providing additional and needed services to customers and
greater profitability.
(3) Information Concerning Triangle. Centura's board of directors
considered information in part derived from presentations by Keefe,
Bruyette & Woods, Inc. and the due diligence review by Keefe, Bruyette
& Woods, Inc. and management as well as its financial and legal
advisors
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concerning the business, operations, earnings, asset quality, and
financial condition of Triangle, and aspects of the Triangle franchise,
including the market position of Triangle in each of the markets in
which it operates and the compatibility of the community bank
orientation of the operations of Triangle to that of Centura. Centura's
board of directors concluded that Triangle is a well managed financial
institution which is well positioned in its market areas and which
presents an attractive opportunity for Centura to strengthen its
franchise in all markets in which Triangle operates and to achieve
certain economies of scale that would allow the combined entity to
increase efficiency and enable cost savings in areas in which the
franchises overlap.
(4) Financial Terms of the Merger. Centura's board of directors considered
various financial aspects of the merger as reported by Centura's
management and Centura's financial advisor, Keefe, Bruyette & Woods,
Inc., including:
- the relationship of the value of the consideration issuable in the
merger to the market value (which represented a premium to Triangle's
market price of approximately 42% as of August 20, 1999);
- the anticipated effect of the merger on Centura's book value per share
(with the merger resulting in an estimated decrease in tangible book
value per share of approximately 11.5%);
- a comparison of Triangle to selected peer banks and comparing pricing
aspects of the merger to pricing characteristics of other merger
transactions involving financial institutions; and
- the projected financial effects of the merger, including the cost
savings (resulting from back office efficiencies, reductions in force,
consolidations and other cost savings) of approximately $23 million in
2000 and $32 million in 2001 and an increase in Centura earnings per
share of approximately 0.4% ($.02 per share) in 2001 anticipated to
result from the merger, and the effects of the merger on the
risk-based and leverage capital ratios of the entity and its
subsidiaries (see "Pro Forma Financial Information" and "-- Management
and Operations After the Merger");
(5) Fairness of the Exchange Ratio to the Centura Stockholders. Centura's
board of directors considered the opinion of Keefe, Bruyette & Woods,
Inc. that, as of August 22, 1999, the exchange ratio of .45 of a share
of Centura common stock for each share of Triangle common stock was
fair from a financial point of view to the Centura stockholders.
(6) Nonfinancial Terms of the Merger. Centura's board of directors
considered various nonfinancial aspects of the merger, including the
treatment of the merger as a tax-free exchange of Triangle common stock
for Centura common stock for federal income tax purposes the
anticipated level of divestitures and the likelihood of the merger
being approved by applicable regulatory authorities without undue
conditions or delay.
(7) Pooling-of-Interests Accounting Treatment. Centura's board of
directors considered the fact that the pooling-of-interests accounting
method is anticipated to be unavailable sometime in 2001, and the
potential impact of the loss of such accounting method on values
financial institutions can expect to receive in future transactions.
(8) Transaction Risks. Centura's board of directors also considered the
risk associated with the merger, including, among others, the risks
associated with obtaining all necessary regulatory approvals without
the imposition of any condition which differs from conditions
customarily imposed in approving acquisitions of the type contemplated
by the merger agreement and compliance with which would materially
adversely affect the anticipated benefits of the transaction to
Centura.
The foregoing discussion of the information and factors considered by
Centura's board of directors is not intended to be exhaustive but includes all
material factors considered by Centura's board of directors. In reaching its
determination to approve the merger and the merger agreement, Centura's board of
directors did not assign any relative or specific weights to the foregoing
factors, and individual directors
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may have given differing weights to different factors. After deliberating with
respect to the merger and the other transactions contemplated by the merger
agreement, and considering, among other things, the matters discussed above and
the opinion of Keefe, Bruyette & Woods, Inc. referred to above, Centura's board
of directors determined that the merger is in the best interests of the Centura
stockholders and unanimously approved the merger agreement. CENTURA'S BOARD OF
DIRECTORS RECOMMENDS THAT THE CENTURA STOCKHOLDERS VOTE FOR THE ISSUANCE OF THE
SHARES OF CENTURA COMMON STOCK NECESSARY TO CONSUMMATE THE MERGER.
OPINION OF TRIANGLE'S FINANCIAL ADVISOR
Triangle retained Wheat First to act as its financial advisor in connection
with the merger and to render an opinion to Triangle's board of directors as to
the fairness, from a financial point of view, of the exchange ratio to the
holders of Triangle common stock. Wheat First is a nationally recognized
investment banking firm regularly engaged in the valuation of businesses and
their securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate and
other purposes. Wheat First regularly publishes research reports regarding the
financial services industry and the businesses and securities of publicly owned
companies in that industry. In the ordinary course of its business, Wheat First
and its affiliates may actively trade in the securities of Triangle or Centura
for their accounts and the accounts of their customers, and therefore may from
time to time hold long or short positions in such securities. The Triangle board
of directors selected Wheat First to serve as its financial advisor in
connection with the merger on the basis of such firm's expertise.
Representatives of Wheat First participated in the meeting of Triangle's
board of directors on August 22, 1999, at which the merger agreement was
considered and approved. At the meeting, Wheat First issued an oral opinion
that, as of such date, the exchange ratio was fair, from a financial point of
view, to the holders of Triangle common stock. A written opinion dated August
22, 1999 has been delivered to Triangle's board of directors to the effect that,
as of such date, the exchange ratio was fair, from a financial point of view, to
the holders of Triangle common stock. Wheat First has also delivered an updated
opinion dated as of the date of this joint proxy statement-prospectus to
Triangle's board of directors to the effect that as of such date, the exchange
ratio is fair to the holders of Triangle common stock.
The full text of Wheat First's updated opinion, which sets forth certain
assumptions made, matters considered and limitations on review undertaken, is
attached as Appendix C to this joint proxy statement-prospectus, is incorporated
herein by reference, and should be read in its entirety in connection with this
joint proxy statement-prospectus. The summary of the August 22, 1999 opinion of
Wheat First set forth in this joint proxy statement-prospectus is qualified in
its entirety by reference to the opinion. No limitations were imposed by
Triangle's board of directors upon Wheat First with respect to the
investigations made or procedures followed by it in rendering the Triangle
fairness opinion. Wheat First's opinion has been furnished to Triangle's board
of directors for its benefit and use. Wheat First's opinion is directed only to
the fairness, from a financial point of view, of the exchange ratio to the
holders of Triangle common stock and does not constitute a recommendation to any
stockholder of Triangle as to how such stockholder should vote on the merger.
In arriving at its opinion of August 22, 1999, Wheat First reviewed certain
publicly available business and financial information relating to Triangle and
Centura and certain other information provided to it, including, among other
things the following: (1) Triangle's Annual Reports to Stockholders, Annual
Reports on Form 10-K and related financial information for the three fiscal
years ended December 31, 1998; (2) Triangle's Quarterly Reports on Form 10-Q and
related financial information for the periods ended March 31, 1999 and June 30,
1999; (3) Centura's Annual Reports to Stockholders, Annual Reports on Form 10-K
and related financial information for the three fiscal years ended December 31,
1998; (4) Centura's Quarterly Reports on Form 10-Q and related financial
information for the periods ended March 31, 1999 and June 30, 1999; (5) certain
publicly available information with respect to historical market prices and
trading activities for Triangle common stock and Centura common stock and for
certain
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publicly traded financial institutions which Wheat First deemed relevant; (6)
certain publicly available information with respect to banking companies and the
financial terms of certain other mergers and acquisitions which Wheat First
deemed relevant; (7) the merger agreement; (8) certain estimates of the cost
savings, revenue enhancements and divestitures projected by Triangle and Centura
for the combined company; (9) other financial information concerning the
businesses and operations of Triangle and Centura, including certain audited and
unaudited financial information and certain internal financial analyses and
forecasts for Triangle and Centura prepared by the senior managements of these
companies; and (10) such financial studies, analyses, inquiries and other
matters as Wheat First deemed necessary. In addition, Wheat First met with
members of the senior managements of Triangle and Centura to discuss the
business and prospects of each company.
In connection with its review, Wheat First relied upon and assumed the
accuracy and completeness of all of the foregoing information provided to it or
publicly available, including representations and warranties of Triangle and
Centura included in the merger agreement, and Wheat First has not assumed any
responsibility for independent verification of such information. Wheat First
relied upon the managements of Triangle and Centura as to the reasonableness and
achievability of their financial and operational forecasts and projections, and
the assumptions and bases therefor, provided to Wheat First, and assumed that
such forecasts and projections reflect the best currently available estimates
and judgments of such managements and that such forecasts and projections will
be realized in the amounts and in the time periods currently estimated by such
managements. Wheat First also assumed, without independent verification, that
the aggregate allowances for loan losses and other contingencies for Triangle
and Centura are adequate to cover such losses. Wheat First did not review any
individual credit files of Triangle or Centura, nor did it make an independent
evaluation or appraisal of the assets or liabilities of Triangle or Centura.
In connection with rendering its opinion dated as of August 22, 1999, Wheat
First performed a variety of financial analyses. The preparation of a fairness
opinion involves various determinations as to the most appropriate and relevant
methods of financial analysis and the application of those methods to the
particular circumstances and, therefore, such an opinion is not readily
susceptible to partial analysis or summary description. Moreover, the evaluation
of the fairness, from a financial point of view, of the exchange ratio to
holders of Triangle common stock (other than Centura and its affiliates) was to
some extent a subjective one based on the experience and judgment of Wheat First
and not merely the result of mathematical analysis of financial data.
Accordingly, notwithstanding the separate factors summarized below, Wheat First
believes that its analyses must be considered as a whole and that selecting
portions of its analyses and of the factors considered by it, without
considering all analyses and factors, could create an incomplete view of the
evaluation process underlying its opinion. The ranges of valuations resulting
from any particular analysis described below should not be taken to be Wheat
First's view of the actual value of Triangle or Centura.
In performing its analyses, Wheat First made numerous assumptions with
respect to industry performance, business and economic conditions and other
matters, many of which are beyond the control of Triangle or Centura. The
analyses performed by Wheat First are not necessarily indicative of actual
values or future results, which may be significantly more or less favorable than
suggested by such analyses. Additionally, analyses relating to the values of
businesses do not purport to be appraisals or to reflect the prices at which
businesses actually may be sold. In rendering its opinion, Wheat First assumed
that, in the course of obtaining the necessary regulatory approvals for the
merger, no conditions will be imposed that will have a material adverse effect
on the contemplated benefits of the merger, on a pro forma basis, to Centura.
Wheat First's opinion is just one of the many factors taken into
consideration by Triangle's board of directors in determining to approve the
merger agreement. Wheat First's opinion does not address the relative merits of
the merger as compared to any alternative business strategies that might exist
for Triangle, nor does it address the effect of any other business combination
in which Triangle might engage.
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The following is a summary of the analyses performed by Wheat First in
connection with its written opinion delivered to Triangle's board of directors
on August 22, 1999:
Comparison of Selected Companies. Wheat First compared the financial
performance and market trading information of Centura to that of a group of
regional bank holding companies (the "Group"). This Group included: AmSouth
Bancorp, BB&T Corp., CCB Financial Corp., Colonial BancGroup, Inc., Compass
Bancshares Inc., First Citizens BancShares, Inc., First Virginia Banks, Inc.,
Mercantile Bankshares Corp., Regions Financial Corp., Riggs National Corp.,
SouthTrust Corp. and Union Planters Corp.
The following table compares Centura to the Group on certain financial
ratios which are based on balance sheet and financial data as of or for the
three months ended June 30, 1999 (annualized where appropriate):
GROUP
---------------------------
CENTURA AVERAGE MINIMUM MAXIMUM
------- ------- ------- -------
Equity/assets............................................ 7.85% 8.17% 6.19% 12.58%
Non-performing assets/assets............................. 0.75 0.56 0.19 1.75
Reserves/non-performing assets........................... 114.96 230.63 60.16 518.12
Return on average assets................................. 1.32 1.34 0.70 2.06
Return on average equity................................. 16.58 16.39 11.12 20.87
The following table compares Centura to the Group on certain valuation
measures which are based on market values as of August 20, 1999, balance sheet
and financial data as of June 30, 1999, and "First Call" (as hereinafter
defined) estimated earnings per share. "First Call" is a data service that
monitors and publishes a compilation of earnings estimates produced by selected
research analysts regarding companies of interest to institutional investors.
GROUP
---------------------------
CENTURA AVERAGE MINIMUM MAXIMUM
------- ------- ------- -------
Price/book............................................... 215.2% 237.5% 119.7% 363.9%
Dividend yield........................................... 2.5 2.6 1.0 4.6
Price/1999 earnings per share estimate................... 13.1x 14.6x 10.2x 17.7x
Price/2000 earnings per share estimate................... 11.7 13.2 9.6 16.1
Analysis of Selected Transactions. Wheat First performed an analysis of
premiums paid in eleven selected pending or recently completed bank acquisitions
in the eastern United States announced since October 1, 1998 where the announced
deal value was between $200 million and $1 billion (the "Selected
Transactions"). Price paid relative to current market price, book value,
estimated current year earnings, trailing twelve months earnings latest quarter
earnings annualized and the transaction price to earnings ratio relative to the
acquiror's price to earnings ratio in the Selected Transactions were compared to
the multiples and premiums implied by the consideration offered by Centura in
the merger. The Selected Transactions included the following pending
transactions: Old National/ANB Corp.; BB&T Corp./ Premier Bancshares; Fifth
Third Bancorp/Peoples Bank Corp.; Hudson United Bancorp/JeffBanks, Inc.; Sky
Financial Group, Inc./Mahoning National Bancorp; Citizens Banking Corp/F&M
Bancorporation; Old Kent Financial Corp./Pinnacle Banc Group, Inc.; Union
Planters Corp./Republic Banking; Summit Bancorp/Prime Bancorp; BB&T
Corp./Mason-Dixon Bancshares, Inc.; and Sky Financial Group, Inc./First Western
Bancorp.
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Based on the market value of Centura common stock on August 20, 1999, and
financial data as of June 30, 1999, the analysis yielded ratios of the implied
consideration to be paid by Centura to Triangle. The following table compares
these implied values to the considerations paid in the Selected Transactions.
SELECTED TRANSACTIONS
---------------------------
CENTURA OFFER AVERAGE MINIMUM MAXIMUM
------------- ------- ------- -------
Premium to market price.............................. 41.8% 32.5% (5.2)% 74.2%
Price/Book value..................................... 356.2 292.8 205.1 417.8
Price/estimated earnings per share................... 19.2x 21.3x 19.0x 25.2x
Price/latest twelve months earnings per share........ 22.7 23.0 16.5 27.4
Price/latest quarter annualized earnings per share... 21.7 23.2 19.2 28.6
Premium to acquiror price/earnings per share......... 64.5% 26.2% 3.3% 62.5%
The following table outlines comparisons which are based on financial data
as of the period ended June 30, 1999, for Triangle and the twelve months
reporting period prior to the announcement of each transaction for each acquiree
in the Selected Transactions:
SELECTED TRANSACTION ACQUIREES
------------------------------
TRIANGLE AVERAGE MINIMUM MAXIMUM
-------- -------- -------- --------
Equity/assets............................................ 7.21% 9.12% 6.72% 12.01%
Nonaccrual loans plus loans ninety days past
due/assets............................................. 0.47 0.49 0.12 1.18
Return on average assets................................. 1.24 1.22 0.96 1.79
Return on average equity................................. 16.28 13.57 10.00 16.52
Efficiency ratio......................................... 48.73 58.63 45.86 66.73
Contribution Analysis. Wheat First analyzed the relative contribution of
Triangle and Centura to the pro forma combined company based upon certain
balance sheet and income statement items including assets, deposits,
stockholders' equity and estimated earnings. This analysis included balance
sheet data as of June 30, 1999, market values as of August 20, 1999, and First
Call consensus earnings estimates for Centura and Triangle. Wheat First then
compared the relative contribution of such balance sheet and income statement
items with the fully diluted ownership percentage of the combined company of
approximately 29% for Triangle stockholders based on the exchange ratio. The
contribution analysis showed that under the Centura proposal, Triangle would
contribute approximately 21% of the combined assets, 23% of the combined
deposits, 19% of the combined stockholder's equity (before merger-related
expenses) and 20% of the 1999 estimated earnings of the two companies (before
cost savings).
Discounted Dividends Analysis. Using discounted dividends analysis, Wheat
First estimated the present value of the future stream of dividends that
Triangle could produce over the next five years, under various circumstances,
assuming the company performed in accordance with the earnings forecasts of
management and an assumed level of synergies was achieved. Wheat First then
estimated the terminal values for Triangle common stock at the end of the period
by applying multiples ranging from 11x to 14x projected earnings in year five.
The dividend streams and terminal values were then discounted to present values
using different discount rates (ranging from 14% to 18%) chosen to reflect
different assumptions regarding the required rates of return to holders or
prospective buyers of Triangle common stock. This discounted dividend analysis
indicated reference ranges of between $20.64 and $28.85 per share of Triangle
common stock. These values compare to the consideration offered by Centura to
Triangle in the merger of $23.40 per share of Triangle common stock based on the
market value of Centura common stock on August 20, 1999.
Impact Analysis. Wheat First analyzed the pro forma financial impact of
the merger on Centura's fully diluted GAAP earnings per share. For purposes of
these analyses, Wheat First utilized earnings per share projections provided by
management of Centura for Centura and Triangle for 2000. Wheat First performed
this analysis using Centura management assumptions with respect to operating
synergies, required regulatory divestitures and deposit repricing, and assumed
that those synergies, divestitures and
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margin enhancements were fully phased-in for the entirety of 2000. Wheat First's
analyses of the merger from Centura's perspective showed that the merger,
compared to continued operation of Centura on a stand-alone basis, would be
accretive to Centura's GAAP estimated earnings in 2000.
No company or transaction used as a comparison in the above analysis is
identical to Triangle, Centura or the merger. Accordingly, an analysis of the
results of the foregoing necessarily involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the companies and other factors that could affect the public trading value of
the companies used for comparison in the above analysis.
In connection with its written opinion as of the date of this joint proxy
statement-prospectus, Wheat First confirmed the appropriateness of its reliance
on the analyses used to render its August 22, 1999 opinion by performing
procedures to update certain of such analyses and by reviewing the assumptions
on which such analyses were based and the factors considered in connection
therewith.
Wheat First's opinion dated as of the date of this joint proxy
statement-prospectus is based solely upon the information available to Wheat
First and the economic, market and other circumstances as they existed as of
such date. Events occurring after that date could materially affect the
assumptions and conclusions contained in the opinion of Wheat First. Wheat First
has not undertaken to reaffirm or revise its opinion or otherwise comment on any
events occurring after the date hereof.
As compensation for Wheat First's services, Triangle has agreed to pay
Wheat First total advisory fees of .85% of the aggregate consideration received
by Triangle stockholders at the time of closing. Triangle has agreed also to
reimburse Wheat First for its out-of-pocket expenses incurred in connection with
the activities contemplated by its engagement, regardless of whether the merger
is consummated. Triangle has further agreed to indemnify Wheat First against
certain liabilities, including certain liabilities under federal securities
laws. The payment of the above fees is not contingent upon Wheat First rendering
a favorable opinion with respect to the merger.
OPINION OF CENTURA'S FINANCIAL ADVISOR
On August 16, 1999, Centura engaged Keefe, Bruyette & Woods, Inc. or KBW to
provide a fairness opinion in connection with the merger with Triangle. Pursuant
to the terms of its engagement, KBW agreed to assist Centura in analyzing,
structuring, negotiating and effecting a transaction with Triangle. Centura
selected KBW because KBW is a nationally recognized investment banking firm with
substantial experience in transactions similar to the merger and is familiar
with Centura and its business. As part of its investment banking business, KBW
is continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions.
As part of its engagement, representatives of KBW attended the meeting of
Centura's board of directors held on August 22, 1999, at which Centura's board
of directors considered and approved the merger agreement. At the August 22,
1999 meeting, KBW rendered an oral opinion (subsequently confirmed in writing)
that, as of such date, the exchange ratio was fair to the holders of shares of
the Centura common stock from a financial point of view. Such opinion was
reconfirmed in writing as of the date of this joint proxy statement-prospectus.
The full text of KBW's updated written opinion dated as of the date of this
joint proxy statement-prospectus is attached as Appendix D to this joint proxy
statement-prospectus and is incorporated herein by reference. The description of
the opinion set forth herein is qualified in its entirety by reference to
Appendix D. The Centura stockholders are urged to read the opinion in its
entirety for a description of the procedures followed, assumptions made, matters
considered, and qualifications and limitations on the review undertaken by KBW
in connection therewith.
KBW'S OPINION IS DIRECTED TO CENTURA'S BOARD OF DIRECTORS AND ADDRESSES
ONLY THE EXCHANGE RATIO. IT DOES NOT ADDRESS THE UNDERLYING BUSINESS DECISION TO
PROCEED WITH THE MERGER AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY CENTURA
STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD VOTE AT THE SPECIAL MEETING WITH
RESPECT TO THE MERGER OR ANY OTHER MATTER RELATED THERETO.
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KBW has informed Centura that in arriving at its written opinion dated
August 22, 1999, KBW, among other things: (1) reviewed Centura's Annual Reports
on Form 10-K and related audited financial information for the three fiscal
years ended December 31, 1998 and Centura's quarterly reports on Form 10-Q and
related unaudited financial information for the quarterly periods ended March
31, 1999 and June 30, 1999; (2) reviewed Triangle's Annual Reports on Form 10-K
and related audited financial information for the three fiscal years ended
December 31, 1998 and Triangle's quarterly reports on Form 10-Q and related
unaudited financial information for the quarterly periods ended March 31, 1999
and June 30, 1999; (3) reviewed certain limited financial information, including
financial forecasts, relating to the respective businesses, earnings, assets and
prospects of Centura and Triangle furnished to KBW by senior management of
Centura and Triangle, as well as projected cost savings estimates and
transaction related expenses expected to result from the merger furnished to it
by Centura's senior management; (4) conducted certain limited discussions with
members of senior management of Centura and Triangle concerning the respective
businesses, financial condition, earnings, assets, liabilities, operations,
regulatory condition, financial forecasts, contingencies and prospects of
Centura and Triangle and their respective views as to the future financial
performance of Centura, Triangle, and the combined entity, as the case may be,
following the merger; (5) reviewed the historical market prices and trading
activity for Centura common stock and Triangle common stock and compared them
with that of certain publicly traded companies which KBW deemed to be relevant;
(6) compared the respective results of operations of Centura and Triangle with
those of certain companies which KBW deemed to be relevant; (7) reviewed the
amount and timing of the expected savings following the merger as prepared, and
discussed with it, by Centura's senior management; (8) considered, based upon
information provided by Centura's senior management, the pro forma impact of the
merger on Centura's earnings and book value per share, consolidated
capitalization and certain balance sheet and profitability ratios; (9) reviewed
the merger agreement; and (10) reviewed such other financial studies and
analyses and performed such other investigations and took into account such
other matters as KBW deemed necessary.
In preparing its opinion, KBW, with Centura's consent, assumed and relied
on the accuracy and completeness of all financial and other information supplied
or otherwise made available to it by Centura and Triangle, including that
contemplated in the numbered items above, and KBW has not assumed responsibility
for independently verifying such information or undertaken an independent
evaluation or appraisal of the assets or liabilities, contingent or otherwise,
of Centura or Triangle or any of the subsidiaries of Centura or Triangle, nor
has it been furnished any such evaluation or appraisal. KBW is not an expert in
the evaluation of allowances for loan losses, and, with Centura's consent, it
has not made an independent evaluation of the adequacy of the allowance for loan
losses of Centura or Triangle, nor has it reviewed any individual credit files
relating to Centura or Triangle, and, with Centura's consent, it assumed that
the respective aggregate allowances for loan losses for both Centura and
Triangle are adequate to cover such losses and will be adequate on a pro forma
basis for the combined entity. In addition, it has not conducted any physical
inspection of the properties or facilities of Centura or Triangle. With
Centura's consent, KBW also assumed and relied upon the senior management of
Centura and Triangle as to the reasonableness and achievability of the financial
forecasts (and the assumptions and bases therefor) provided to, and discussed
with, KBW. In that regard, KBW has assumed with Centura's consent that such
forecasts, including without limitation, financial forecasts, evaluations of
contingencies, expected savings and operating synergies resulting from the
merger and projections regarding underperforming and non-performing assets, net
charge-offs, adequacy of reserves, future economic conditions and results of
operations reflect the best currently available estimates and judgments of the
senior management of Centura and Triangle and/or the combined entity, as the
case may be. KBW's opinion is predicated on the merger receiving the tax and
accounting treatment contemplated in the merger agreement. KBW's opinion was
necessarily based on economic, market and other conditions as in effect on, and
the information made available to it as of, the date of its opinion.
KBW's opinion was rendered without regard to the necessity for, or level
of, any restrictions, obligations, undertakings or divestitures which may be
imposed or required in the course of obtaining regulatory approval for the
merger.
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In connection with rendering its opinion dated August 22, 1999, KBW
performed a variety of financial analyses, consisting of those summarized below.
The summary set forth below does not purport to be a complete description of the
analyses performed by KBW in this regard, although it describes all material
analyses performed by KBW. The preparation of a fairness opinion involves
various determinations as to the most appropriate and relevant methods of
financial analysis and the application of these methods to the particular
circumstances and, therefore, such an opinion is not readily susceptible to a
partial analysis or summary description. Accordingly, notwithstanding the
separate factors summarized below, KBW believes that its analyses must be
considered as a whole and that selecting portions of KBW's analyses and factors
considered by it, without considering all analyses and factors, or attempting to
ascribe relative weights to some or all such analyses and factors, could create
an incomplete view of the evaluation process underlying KBW's opinion.
In performing its analyses, KBW made numerous assumptions with respect to
industry performance, general business and economic conditions and other
matters, many of which are beyond the control of Centura, Triangle and KBW. The
analyses performed by KBW are not necessarily indicative of actual values or
future results, which may be significantly more or less favorable than suggested
by such analyses. Such analyses were prepared solely as part of KBW's analysis
of the fairness to the Centura stockholders of the exchange ratio and were
provided to Centura's board of directors in connection with the delivery of
KBW's opinion. KBW gave the various analyses described below approximately
similar weight and did not draw any specific conclusions from or with regard to
any one method of analysis. With respect to the comparison of selected companies
analysis and the analysis of selected merger transactions summarized below, no
company utilized as a comparison is identical to Centura or Triangle.
Accordingly, an analysis of comparable companies and comparable business
combinations is not mathematical; rather it involves complex considerations and
judgments concerning the differences in financial and operating characteristics
of the companies and other factors that could affect the public trading values
or announced merger transaction values, as the case may be, of the companies
concerned. The analyses do not purport to be appraisals or to reflect the
process at which Centura and Triangle might actually be sold or the prices at
which any securities may trade at the present time or at any time in the future.
In addition, as described above, KBW's opinion is just one of many factors taken
into consideration by the Centura board.
The projections furnished to KBW and used by it in certain of its analyses
were prepared by the senior management of Centura and Triangle. Centura and
Triangle do not publicly disclose internal management projections of the type
provided to KBW in connection with its review of the merger, and as a result,
such projections were not prepared with a view towards public disclosure. The
projections were based on numerous variables and assumptions which are
inherently uncertain, including, without limitation, factors related to general
economic and competitive conditions, and accordingly, actual results could vary
significantly from those set forth in such projections.
The following is a summary of the material analyses presented by KBW to
Centura's board of directors on August 22, 1999 (the "KBW Report") in connection
with its August 22, 1999 opinion.
Summary of Proposal. KBW calculated multiples which were based on the
assumed per share purchase price of $23.40 (derived by multiplying the exchange
ratio of .45 by $52.00, the last reported sale price for the Centura common
stock before the public announcement of the execution of the merger agreement).
Triangle's June 30, 1999 stated book value was $6.57, stated tangible book value
was $5.67, and 1999 and 2000 earnings per share estimates (provided by I/B/E/S,
a nationally recognized earnings consolidator) were $1.09 and $1.20,
respectively. Based on this data, the price to stated book value multiple was
3.56 times, the price to stated tangible book value multiple was 4.12 times, and
the price to the 1999 and 2000 earnings estimates per share was 21.47 and 19.50
times, respectively.
Analysis of Selected Merger Transactions. KBW reviewed certain financial
data related to comparable nationwide in-market or overlapping pooling
acquisitions of bank holding companies announced between August 23, 1997 and
August 20, 1999 with announced deal values from $200 million to $2 billion. The
transactions included in the comparable transactions group were: BB&T
Corporation/ Premier Bancshares Inc., Fifth Third Bancorp/People Bank Corp. of
Indianapolis, Webster Financial
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Corp./New England Community Bancorp Inc., Peoples Heritage Financial
Group/Banknorth Group Inc., Zions Bancorporation/Pioneer Bancorporation,
Chittenden Corporation/Vermont Financial Services Corp., BB&T
Corporation/MainStreet Financial Corp., FirstMerit Corporation/Signal Corp.,
First Commonwealth Financial/Pioneer Bancshares Inc., Old Kent Financial
Corp./First Evergreen Corporation, First Midwest Bancorp/Heritage Financial
Services Inc., United Bankshares Inc./George Mason Bankshares. The results of
KBW's review are set forth in the following table.
ANNOUNCED ANNOUNCED
COMPARABLE GROUP COMPARABLE GROUP
TRANSACTION AVERAGE MEDIAN
----------- ---------------- ----------------
Deal price/book value............................. 356% 317% 318%
Deal price/tangible book value.................... 412 347 321
Deal price/trailing 12 months earnings per
share........................................... 24.33x 25.93x 26.50x
Deal price/total assets........................... 26.60% 28.94% 29.88%
Estimated cost savings............................ 55 31 30
No company or transaction used as a comparison in the above analysis is
identical to Centura, Triangle or the merger. Accordingly, an analysis of the
results of the foregoing is not mathematical; rather, it involves complex
considerations and judgements concerning differences in financial and operating
characteristics of the companies and other factors that could affect the public
trading value of the companies to which they are being compared.
Selected Peer Groups Analyses. KBW compared the financial performance and
market performance of Centura and the pro forma company based on various
financial measures of earnings performance, operating efficiency, capital
adequacy and asset quality and various measures of market performance, including
market/book values, price to earnings and dividend yields to those of a group of
comparable Southeastern and Mid-Atlantic bank holding companies. For purposes of
such analysis, the financial information used by KBW was as of and for the
quarter ended June 30, 1999, and data for Centura was as of and for the six
months ended June 30, 1999. Stock price information was as of August 19, 1999.
The companies in the peer group were First Tennessee National Corp, Compass
Bancshares, Inc., Hibernia Corporation, Colonial BancGroup, Inc., FirstMerit
Corporation, First Virginia Banks, Inc., CCB Financial Corporation, Mercantile
Bankshares Corp., National Commerce Bancorp., Trustmark Corporation, One Valley
Bancorp, Inc., Riggs National Corporation, United Bankshares, Inc., and
Provident Bankshares Corp. The results of these comparisons are set forth in the
following table.
PEER GROUP PEER GROUP
CENTURA PRO FORMA AVERAGE MEDIAN
------- --------- ---------- ----------
Return on average assets(1).......................... 1.26% 1.51% 1.38% 1.39%
Return on average equity(1).......................... 15.92 18.23 16.36 16.28
Net interest margin.................................. 4.24 4.37 4.22 4.08
Efficiency ratio..................................... 60.58 52.61 56.36 56.42
Equity/assets........................................ 7.92 8.29 8.37 8.44
Tangible equity/tangible assets...................... 6.18 6.67 7.65 7.65
Loan loss reserves/non-performing loans.............. 135.00 n/a 379.00 386.00
Net charge-offs/average loans........................ .35 .35 .25 .24
Non-performing assets/loans + other real estate
owned.............................................. 1.04 .83 .48 .44
Stock price/book value............................... 2.15x 2.40x 2.60x 2.46x
Stock price/tangible book value...................... 2.82 3.04 2.87 2.67
Stock price/1999 earnings per share.................. 13.20 n/a 15.77 15.77
Stock price/2000 earnings per share.................. 11.66 n/a 14.13 14.28
Dividend yield....................................... 2.46% 2.46% 2.48% 2.71%
- ---------------
(1) Excludes $8.4 million of non-recurring charges related to the First Coastal
merger.
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45
For purposes of the above calculations, all earnings estimates are from
I/B/E/S, a nationally recognized earnings consolidator.
In addition, KBW compared the financial performance and market performance
of Triangle based on various financial measures of earnings performance,
operating efficiency, capital adequacy and asset quality and various measures of
market performance, including market/book values, price to earnings and dividend
yields to those of a group of comparable Southeastern and Mid-Atlantic bank
holding companies. For purposes of such analysis, the financial information used
by KBW was as of and for the quarter ended June 30, 1999, and data for Triangle
was as of and for the six months ended June 30, 1999. Stock price information
was as of August 19, 1999. The companies in the peer group were Fulton Financial
Corporation, Carolina First Corporation, Hancock Holding Company, F&M National
Corporation, WesBanco, Inc., Community Trust Bancorp, Alabama National BanCorp.,
Mid-America Bancorp, F&M Bancorp, FCNB Corp., Century South Banks, Inc.,
Republic Bancorp, Inc., and Farmers Capital Bank Corp. The results of these
comparisons are set forth in the following table.
PEER GROUP PEER GROUP
TRIANGLE MEDIAN AVERAGE
-------- ---------- ----------
Return on average assets.................................... 1.26% 1.17% 1.08%
Return on average equity.................................... 16.18 11.87 11.90
Net interest margin......................................... 4.10 4.41 4.42
Efficiency ratio............................................ 48.89 60.95 61.98
Equity/assets............................................... 7.77 9.90 10.18
Tangible equity/tangible assets............................. 6.80 9.06 8.79
Loan loss reserves/non-performing loans..................... 230.00 314.00 325.00
Net charge-offs/average loans............................... .31 .23 .18
Non-performing assets/loans + other real estate owned....... .71 .67 .61
Stock price/book value...................................... 2.49x 1.95x 2.16x
Stock price/tangible book value............................. 2.89 2.14 2.25
Stock price/1999 earnings per share......................... 15.02 15.95 16.11
Stock price/2000 earnings per share......................... 13.65 14.55 14.87
Dividend yield.............................................. 2.44% 2.77% 3.04%
Financial Impact Analysis. KBW performed pro forma merger analysis that
combined projected income statement and balance sheet information. Assumptions
regarding the accounting treatment, acquisition adjustments and cost savings
were used to calculate the financial impact that the merger would have on
certain Centura projected financial results. This analysis indicated that the
merger is expected to be dilutive to estimated earnings per share in 2000 and be
accretive thereafter, and decrease book value and tangible book value per share
based on quarter ended June 30, 1999 financial data. This analysis was based on
I/B/E/S estimates of Centura and Triangle's 2000 and 2001 earnings per share
(with 2001 estimates calculated by applying the growth rates in I/B/E/S
estimates from 1999 to 2000 to the 2000 estimates), and on Centura's management
estimates of the expected savings and a non-recurring merger and restructuring
charge to be realized or incurred by Centura in connection with the merger.
These projections were discussed with both Centura management and Triangle
management. The actual results achieved by Centura following the merger will
vary from the projected results, and the variations may be material.
In connection with its opinion dated as of the date of this joint proxy
statement-prospectus, KBW performed procedures to update, as necessary, certain
of the analyses described above and reviewed the assumptions on which such
analyses described above were based and the factors considered in connection
therewith. KBW did not perform any analyses in addition to those described above
in updating its August 22, 1999 opinion.
KBW has been retained by Centura's board of directors as an independent
contractor to act as financial adviser to Centura with respect to the merger.
KBW as part of its investment banking business, is continually engaged in the
valuation of banking businesses and their securities in connection with mergers
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and acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. As specialists in the
securities of banking companies, KBW has experience in, and knowledge of, the
valuation of banking enterprises. In the ordinary course of its business as a
broker-dealer, KBW may, from time to time, purchase securities from, and sell
securities to, Centura and Triangle and as a market maker in securities KBW may
from time to time have a long or short position in, and buy or sell, debt or
equity securities of Centura and Triangle for KBW's own account and for the
accounts of its customers.
Centura and KBW have entered into a letter agreement dated August 16, 1999,
relating to the services to be provided by KBW in connection with the merger.
Centura has agreed to be KBW fees as follows: a cash fee of $100,000 following
the signing of the letter agreement. In addition, Centura will pay to KBW at the
time of closing a cash fee ("contingent fee") of $900,000. Pursuant to the KBW
engagement agreement, Centura also agreed to reimburse KBW for reasonable
out-of-pocket expenses and disbursements incurred in connection with its
retention and to indemnify against certain liabilities, including liabilities
under the federal securities laws.
EFFECTIVE TIME OF THE MERGER
Subject to the conditions to the obligations of the parties to effect the
merger, the merger will become effective on the date and at the time specified
in the articles of merger reflecting the merger to be filed with the Secretary
of State in North Carolina. Unless Centura and Triangle agree otherwise, they
will use reasonable efforts to cause the merger to become effective on the date
designated by Centura that is within 30 days after the last to occur of:
(1) the effective date of the last consent of any regulatory authority
having authority over and approving or exempting the merger (taking
into account any required waiting period);
(2) the date on which Triangle stockholders approve the merger; and
(3) the date on which Centura stockholders approve the issuance of the
shares of Centura common stock pursuant to the merger agreement.
Centura and Triangle anticipate that the merger will become effective
during the first quarter of 2000. However, delays could occur.
Centura and Triangle cannot assure you that the necessary stockholder and
regulatory approvals of the merger and the issuance of shares of Centura common
stock will be obtained or that other conditions to consummation of the merger
can or will be satisfied. Either Triangle's or Centura's board of directors may
terminate the merger agreement if the merger is not completed by June 30, 2000,
unless it is not completed because of the willful breach of the merger agreement
by the party seeking termination. See "-- Conditions to Consummation of the
Merger" and "-- Waiver, Amendment, and Termination."
DISTRIBUTION OF CENTURA STOCK CERTIFICATES
Promptly after the merger is completed, each former Triangle stockholder
will be mailed a letter of transmittal and instructions for the exchange of the
certificates representing shares of Triangle common stock for certificates
representing shares of Centura common stock.
Triangle stockholders should not send in certificates until they receive a
letter of transmittal and instructions.
After Triangle stockholders surrender to the exchange agent certificates
for Triangle common stock with a properly completed letter of transmittal, the
exchange agent will mail such stockholders certificates representing the number
of shares of Centura common stock to which such stockholders are entitled and a
check for the amount to be paid in lieu of any fractional share (without
interest), if any, together with all undelivered dividends or distributions in
respect of the shares of Centura common stock (without interest thereon), if
any. Centura will not be obligated to deliver the consideration to any former
Triangle stockholder, until such stockholder has surrendered his or her Triangle
common stock certificates.
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Whenever a dividend or other distribution is declared by Centura on Centura
common stock with a Centura record date after the date on which the merger
became effective, the declaration will include dividends or other distributions
on all shares of Centura common stock that may be issued in the merger. However,
Centura will not pay any dividend or other distribution that is payable
following 30 days after the effective date of the merger to any former Triangle
stockholder who has not surrendered his or her Triangle common stock certificate
until the holder surrenders the certificate. If any Triangle stockholder's
common stock certificate has been lost, stolen, or destroyed, the exchange agent
will issue the shares of Centura common stock and any cash in lieu of fractional
shares upon the stockholder's submission of an affidavit claiming the
certificate to be lost, stolen, or destroyed by the stockholder of record and
the posting of a bond in such amount as Centura may reasonably direct as
indemnity against any claim that may be made against Centura with respect to the
certificate.
At the time the merger becomes effective, the stock transfer books of
Triangle will be closed to Triangle's stockholders and no transfer of shares of
Triangle common stock by any stockholder will thereafter be made or recognized.
If certificates for shares of Triangle common stock are presented for transfer
after the merger becomes effective, they will be canceled and exchanged for
shares of Centura common stock, a check for the amount due in lieu of fractional
shares, if any, and any undelivered dividends on the Centura common stock.
CONDITIONS TO CONSUMMATION OF THE MERGER
Centura and Triangle are required to complete the merger only after the
satisfaction of various conditions. These conditions include:
- the holders of a majority of the outstanding shares of Triangle common
stock must approve the merger;
- the holders of a majority of the shares of Centura common stock
represented at the Centura special meeting shall have approved the
issuance of shares of Centura common stock pursuant to the merger
agreement;
- Centura and Triangle must receive certain required regulatory approvals;
- Centura and Triangle must receive a written opinion of counsel as to the
tax-free nature of the merger;
- the shares of Centura common stock to be issued in the merger must be
approved for listing on the New York Stock Exchange, subject to official
notice of issuance;
- the representations and warranties of Triangle and Centura as set forth
in the merger agreement must be accurate as of the date of the merger
agreement and as of the date the merger becomes effective;
- Triangle and Centura must perform all agreements and comply with all
covenants set forth in the merger agreement;
- Centura and Triangle must receive all other consents that may be required
to complete the merger or to prevent any default under any contract or
permit which would be reasonably likely to have, individually or in the
aggregate, a material adverse effect on Triangle or Centura;
- Centura and Triangle must receive a letter as of the date the merger
becomes effective from KPMG LLP to the effect that the merger will
qualify for pooling-of-interests accounting treatment;
- Centura and Triangle must receive a letter as of the date the merger
becomes effective from PricewaterhouseCoopers LLP to the effect that such
firm is not aware of any matters relating to Triangle and its
subsidiaries that would preclude Triangle from participating in a merger
qualifying for pooling-of-interests accounting treatment;
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- the absence of any law or order or any action taken by any court,
governmental, or regulatory authority of competent jurisdiction
prohibiting or restricting the merger or making it illegal;
- Centura must receive agreements from each person Triangle reasonably
believes may be deemed an affiliate of Triangle; and
- certain other conditions must be satisfied, including the receipt of
various certificates from the officers of Triangle and Centura.
We cannot assure you as to when or if all of the conditions to the merger
can or will be satisfied or waived by the party permitted to do so. If the
merger is not effected on or before June 30, 2000, the board of directors of
either Triangle or Centura may terminate the merger agreement and abandon the
merger. See "-- Waiver, Amendment, and Termination."
REGULATORY APPROVAL
Centura must receive certain regulatory approvals before the merger can be
completed. Centura and Triangle have agreed to use their reasonable best efforts
to obtain all regulatory approvals required. There is no assurance that these
regulatory approvals will be obtained, when they will be obtained, or, if
obtained, that there will not be litigation challenging these approvals. There
can likewise be no assurance that the U.S. Department of Justice or "DOJ" or any
state attorney general will not attempt to challenge the merger on antitrust
grounds, or, if a challenge is made, the result of the challenge.
It is a condition to the completion of the merger that Centura and Triangle
receive all necessary regulatory approvals to the merger, without the imposition
by any regulator of any condition that, in the reasonable judgment of the
Centura board of directors, would so materially adversely impact the financial
or economic benefits of the merger as to make consummation of the merger
inadvisable. There can be no assurance that the regulatory approvals of the
merger will not contain terms, conditions or requirements which would have such
an impact.
Triangle and Centura are not aware of any material governmental approvals
or actions that are required to complete the merger, except as described below.
Should any other approval or action be required, Triangle and Centura
contemplate that they would seek such approval or action.
The merger is subject to approval by the Federal Reserve pursuant to
Section 3 of the Bank Holding Company Act of 1956, as amended or "BHCA." Centura
and Triangle have filed the required application and notification with the
Federal Reserve for approval of the merger. Assuming Federal Reserve approval,
the parties may not consummate the merger until 30 days after that approval.
During that time, the DOJ may challenge the merger on antitrust grounds and seek
the divestiture of certain assets and liabilities. With the approval of the
Federal Reserve and the DOJ, the waiting period may be reduced to no fewer than
15 days.
The Federal Reserve is prohibited from approving any transaction under the
applicable statutes that:
- would result in a monopoly;
- would be in furtherance of any combination or conspiracy to monopolize or
to attempt to monopolize the business of banking in any part of the
United States; or
- may have the effect in any section of the United States of substantially
lessening competition, tending to create a monopoly or resulting in a
restraint of trade, unless the Federal Reserve finds that the
anti-competitive effects of the transaction are clearly outweighed in the
public interest by the probable effect of the transaction in meeting the
convenience and needs of the communities to be served.
In addition, in reviewing a transaction under the applicable statutes, the
Federal Reserve will consider the financial and managerial resources of the
companies and their subsidiary banks and the convenience and needs of the
communities to be served. As part of, or in addition to, consideration of these
factors, the parties anticipate that the Federal Reserve will consider the
regulatory status of Centura and Triangle,
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current and projected economic conditions in the areas of the United States
where Centura and Triangle operate, and the overall capital and safety and
soundness standards established by the Federal Deposit Insurance Corporation
Improvement Act of 1991 or "FDICIA" and the regulations promulgated under the
FDICIA.
Furthermore, the Federal Reserve will assess the degree to which Centura
and Triangle and their subsidiaries have taken appropriate steps to assure that
electronic data processing systems and those of their vendors are year 2000
compliant, as well as their plans for ensuring year 2000 readiness of the
combined company. Additional information about Centura's and Triangle's year
2000 compliance efforts to date may be found in each company's Annual Report on
Form 10-K for the year ended December 31, 1998. See "WHERE YOU CAN FIND MORE
INFORMATION."
Under the Community Reinvestment Act of 1977, as amended or "CRA," the
Federal Reserve must take into account the record of performance of each of
Centura and Triangle in meeting the credit needs of the entire community,
including low- and moderate-income neighborhoods, served by each company and
their subsidiaries. Each of Centura's and Triangle's subsidiary banks has a
satisfactory CRA rating with the appropriate federal regulator.
The BHCA and Federal Reserve regulations require publication of notice of,
and the opportunity for public comment on, the application submitted by Centura
for approval of the merger, and authorize the Federal Reserve to hold a public
meeting in connection with the application if the Federal Reserve determines
that a meeting would be appropriate. Any meeting or comments provided by third
parties could prolong the period during which the application is subject to
review by the Federal Reserve.
As noted above, the merger may not be consummated until 30 days after
Federal Reserve approval, during which time the DOJ may challenge the merger on
antitrust grounds and seek the divestiture of certain assets and liabilities.
With the approval of the Federal Reserve and the DOJ, the waiting period may be
reduced to no fewer than 15 days. The commencement of an antitrust action by the
DOJ would stay the effectiveness of Federal Reserve approval of the merger,
unless a court specifically orders otherwise. In reviewing the merger, the DOJ
could analyze the merger's effect on competition differently from the Federal
Reserve, and, thus, it is possible that the DOJ could reach a different
conclusion than the Federal Reserve regarding the merger's competitive effects.
While Centura and Triangle believe there are substantial arguments to the
contrary, failure of the DOJ to object to the merger may not prevent the filing
of antitrust actions by private persons or state attorneys general.
In general, the Federal Reserve and the DOJ will examine the impact of the
merger on competition in various product and geographic markets, including
competition for deposits and loans. Centura and Triangle have proposed
divestitures of branches that together account for approximately $317 million in
deposits in North Carolina. Accompanying the divestiture will be associated
loans and an infrastructure to support those loans. Centura and Triangle believe
that their proposed divestiture is consistent with the antitrust guidelines of
the Federal Reserve and the DOJ, but can give no assurance that one or both of
these agencies will not seek greater levels of divestiture. Centura and Triangle
do not believe that the proposed divestiture will have any significant negative
effect on the combined company.
The merger is also subject to the prior approval of the North Carolina
Banking Commission.
Additionally, the proposed merger of Triangle's banking subsidiaries into
Centura Bank also is subject to the approval of the Federal Reserve and the
North Carolina Banking Commission. Such agencies will apply similar standards to
their review of the bank merger as applied to the merger of the holding
companies.
WAIVER, AMENDMENT, AND TERMINATION
To the extent permitted by law, the boards of directors of Centura and
Triangle may agree in writing to amend the merger agreement, whether before or
after stockholder approval of the merger agreement; provided, however, that
after such stockholder approval, no amendments may be made which modify the
manner or basis of the consideration to be received by the holders of the
Triangle common stock without
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further stockholder approval. In addition, before or at the time the merger
becomes effective, either Triangle or Centura, or both, may waive any default in
the performance of any term of the merger agreement by the other party or may
waive or extend the time for the compliance or fulfillment by the other party of
any and all of its obligations under the merger agreement. In addition, either
Centura or Triangle may waive any of the conditions precedent to its obligations
under the merger agreement, unless a violation of any law or governmental
regulation would result. To be effective, a waiver must be in writing and signed
by an authorized officer of Triangle or Centura, as the case may be.
At any time before the merger becomes effective, the boards of directors of
Centura and Triangle may agree to terminate the merger agreement. In addition,
either Triangle's board of directors or Centura's board of directors may
terminate the merger agreement in the following circumstances:
(1) in certain circumstances, upon the inaccuracy of any representation or
warranty of a party contained in the merger agreement if the inaccuracy
cannot be or has not been cured within 30 days after the giving of
written notice to the breaching party of such inaccuracy and which
inaccuracy would provide the terminating party the ability to refuse to
consummate the merger under the applicable standards set forth in the
merger agreement (provided that the terminating party is not then in
breach of any representation or warranty contained in the merger
agreement under the applicable standard set forth in the merger
agreement or in material breach of any covenant or other agreement
contained in the merger agreement);
(2) if a material breach by the other party of any covenant or agreement
contained in the merger agreement cannot be or has not been cured
within 30 days after the giving of written notice to the breaching
party of such breach (provided that the terminating party is not then
in breach of any representation or warranty contained in the merger
agreement under the applicable standard set forth in the merger
agreement or in material breach of any covenant or other agreement
contained in the merger agreement);
(3) if any consent of any regulatory authority required to complete the
merger or other transactions contemplated by the merger agreement has
been denied by final nonappealable action, or if any action taken by
such authority is not appealed within the time limit for appeal;
(4) if the stockholders of Triangle fail to approve the merger at the
Triangle special meeting;
(5) if the stockholders of Centura fail to approve the issuance of shares
of Centura common stock pursuant to the merger agreement at the Centura
special meeting;
(6) if the merger is not consummated by June 30, 2000, provided that the
failure to consummate is not caused by any willful breach of the merger
agreement by the party electing to terminate; or
(7) if any of the conditions precedent to the obligations of a party to
consummate the merger cannot be satisfied by June 30, 2000 (provided
that the terminating party is not then in breach of any representation
or warranty contained in the merger agreement under the applicable
standard set forth in the merger agreement or in material breach of any
covenant or other agreement contained in the merger agreement).
Triangle's and Centura's board of directors may also terminate the merger
agreement pursuant to the relevant provisions of the merger agreement described
in "-- What Triangle Stockholders Will Receive in the Merger."
If the merger is terminated, the merger agreement will become void and have
no effect, except that certain provisions of the merger agreement, including
those relating to the obligations to share certain expenses and maintain the
confidentiality of certain information obtained, will survive. Termination of
the merger agreement will not relieve any breaching party from liability for any
uncured willful breach of a representation, warranty, covenant, or agreement.
The Stock Option Agreements are governed by their own terms as to their
termination. See "-- Expenses and Fees" and "-- Stock Option Agreements."
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CONDUCT OF BUSINESS PENDING THE MERGER
The merger agreement obligates Triangle to conduct its business only in the
usual, regular, and ordinary course before the merger becomes effective and
imposes certain limitations on the operations of Triangle and its banking
subsidiaries. These items are listed in Article 7 of the merger agreement which
is attached as Appendix A to this joint proxy statement-prospectus. The merger
agreement authorizes Triangle to declare and pay regular quarterly dividends on
the Triangle common stock at a rate of $.10 per share with usual record and
payment dates which conform to past practice. The merger agreement contemplates
that the merger will be timed to occur at such a time that the Triangle
stockholders will not fail to receive a dividend during a quarterly period, nor
will they receive a dividend on both their Triangle common stock and the Centura
common stock they receive in the merger during the same quarterly period.
Triangle has also agreed that neither it nor any of its representatives
will directly or indirectly solicit any proposal for the acquisition of Triangle
or, except to the extent necessary to comply with the fiduciary duties of
Triangle's board of directors as advised by its counsel, furnish any non-public
information concerning Triangle that it is not legally obligated to furnish,
negotiate with respect to, or enter into any contract with respect to, any
proposal to acquire Triangle.
Centura and Triangle have also agreed not to take any action that would (1)
materially adversely affect their ability to obtain any consents required for
the merger, or (2) materially adversely affect their ability to perform their
covenants and agreements under the merger agreement.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
The merger will not change the present management team or board of
directors of Centura, except that at the first scheduled meetings of the boards
of directors of Centura and Centura Bank following the effective time of the
merger Centura and Centura Bank will expand the size of the Centura board of
directors and the Centura Bank board of directors and will elect Michael S.
Patterson, Chairman, President and Chief Executive Officer of Triangle and six
other individuals from the Triangle board of directors. In addition, Mr.
Patterson, shall be appointed chairman of the board of Centura and Centura Bank
and a member of the Centura executive committee. Information concerning the
management of Centura is included in the documents incorporated by reference in
this joint proxy statement-prospectus. See "WHERE YOU CAN FIND MORE
INFORMATION." For additional information regarding the interests of certain
persons in the merger, see "-- Interests of Certain Persons in the Merger."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
General. Certain members of Triangle's management and Triangle's board of
directors may be deemed to have certain interests in the merger that are in
addition to their interests as stockholders of Triangle generally. Triangle's
board of directors was aware of these interests and considered them, among other
matters, in approving the merger agreement.
Stock Options. Certain directors and executive officers of Triangle hold
options to purchase Triangle common stock. These options were issued under
Triangle's stock option plans. If the merger is consummated, those options
(whether or not they are exercisable at that time) will be converted into
options to purchase Centura common stock. Those options which would not
otherwise be exercisable at the effective time of the merger, will become
exercisable as a result of the merger, as a result of the change-of-control
provisions of these options.
The following table sets forth, with respect to (1) each executive officer,
(2) a group consisting of all the executive officers, and (3) Triangle's
non-executive officer directors as a group, the number of shares
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of Triangle common stock covered by outstanding Triangle options held by such
persons as of the Triangle record date.
OPTIONS WEIGHTED
OPTIONS CURRENTLY AVERAGE EXERCISE AGGREGATE VALUE
HELD EXERCISABLE PER OPTION OF OPTION(1)
------- ----------- ---------------- ---------------
Michael S. Patterson......................... 203,787 91,872 $13.04 $1,469,304.20
Robert E. Branch............................. 31,461 9,067 15.11 161,709.54
Debra L. Lee................................. 60,383 17,177 14.95 320,029.90
Steven R. Ogburn............................. 86,215 43,144 12.24 690,582.15
Edward O. Wessell............................ 43,717 11,684 15.14 223,393.87
Executive Officer Group (five persons)....... 425,563 172,944 13.52 2,864,038.90
Non-Executive Officer Director Group (25
persons)................................... 673,138 327,704 12.46 5,243,745
- ---------------
(1) Based on the closing price of Triangle common stock of $20.25 as listed on
the New York Stock Exchange on December 3, 1999.
When the merger becomes effective, each option granted under Triangle's
stock plans that is outstanding, whether or not exercisable will become an
option to purchase Centura common stock. See "-- Effect of the Merger on
Triangle Options."
Severance Agreements. Steven R. Ogburn, Debra L. Lee, Edward O. Wessell
and Robert E. Branch each have a "change of control" agreement with Triangle and
Triangle Bank. Each change of control agreement contains a provision stating
that in the event of termination of employment (other than for "cause" as
defined in such agreement) in connection with, or within a specified time after,
any change of control of Triangle or Triangle Bank, the employee will be paid a
termination payment in cash in a lump sum amount based on the employee's annual
compensation and benefits. The merger will constitute a change of control of
Triangle and, accordingly, if the employment of any of the above-named employees
is terminated without cause after the merger within the time period specified in
the applicable agreement, the employee will be entitled to the lump sum
termination payment. In addition, under the change of control agreements, the
employee is entitled to the lump sum termination payment in the event that he or
she voluntarily terminates employment after the merger under certain
circumstances set forth in the agreements. Centura and Triangle have agreed that
such circumstances will exist for one year following the merger. The following
chart shows you the estimated amount of the termination payment that each
Triangle executive officer would be entitled to in the event of a qualifying
termination of employment:
EXECUTIVE OFFICER PAYMENT AMOUNT
----------------- --------------
Steven R. Ogburn............................................ $281,600
Debra L. Lee................................................ $246,680
Edward O. Wessell........................................... $237,270
Robert E. Branch............................................ $238,850
Additional Severance Benefits. Additionally, after the effective time of
the merger, employees of Triangle who become employees of Centura or a
subsidiary of Centura (but excluding any employee who is a party to an
employment or change of control agreement) and whose employment is terminated
subsequent to the effective time of the merger shall receive certain severance
benefits based on such employees' service with Centura and Triangle. Such
benefits range from one week of pay for each year of service with a minimum of
four weeks of pay and a maximum of 12 weeks of pay for employees who are not
officers, to four weeks of pay for each year of service with a minimum 16 weeks
of pay and a maximum of 52 weeks of pay for certain officers.
Employment Agreement. Centura has offered employment to Mr. Patterson. As
of the effective time of the merger, Centura will enter into an employment
agreement with Mr. Patterson with a term of approximately five years that will
replace his existing employment agreement with Triangle Bank. The new agreement
calls for the election of Mr. Patterson to Centura's and Centura Bank's boards
of directors where he will serve as chairman, and to the executive committee of
the board of directors of Centura. Under the terms of his employment agreement,
Mr. Patterson will be guaranteed a minimum annual salary
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of $550,000 plus bonuses, stock options and other benefits and incentives
applicable to senior executive officers of Centura and Centura Bank on a basis
no less favorable than that of Centura's chief executive officer, including, but
not limited to, the opportunity to participate in Centura's Supplemental
Executive Retirement Plan and Centura's Discounted Stock Option/Deferred
Compensation Program. If Mr. Patterson is terminated for any reason other than
for "cause" as defined in the employment agreement, Mr. Patterson will be
entitled to receive all salary and benefits under the employment agreement that
he would have been entitled to through the term of the agreement had he not been
terminated. If Mr. Patterson chooses to resign without "good reason," as defined
in the employment agreement, or is terminated for cause, Centura will have no
further obligations to Mr. Patterson, other than with respect to previously
earned or accrued compensation and benefits.
As a condition to his entry into his employment agreement, Mr. Patterson
will waive any rights he might have (including, but not limited to, rights to
severance payments) under his existing employment agreement with Triangle Bank.
Indemnification; Directors And Officers Insurance. For a period of six
years after the completion of the merger, Centura has agreed to indemnify the
present and former directors, officers, employees, and agents of Triangle and
its subsidiaries against certain liabilities arising out of actions or omissions
occurring at or prior to the time the merger becomes effective (including the
merger) to the full extent permitted under North Carolina law, and Triangle's
articles of incorporation and bylaws. Centura has also agreed to use its
reasonable efforts to maintain in effect for a period of not less than three
years after completion of the merger, Triangle's existing directors' and
officers' liability insurance policy.
ACCOUNTING TREATMENT
It is anticipated that the merger will be accounted for as a
pooling-of-interests. Under the pooling-of-interests method of accounting, the
recorded amounts of the assets and liabilities of Triangle will be carried
forward at their previously recorded amounts and the consolidated financial
statements of Centura for all periods presented will be restated to include the
financial condition and results of operations of Triangle.
In order for the merger to qualify for pooling-of-interests accounting
treatment, substantially all (90% or more) of the outstanding Triangle common
stock must be exchanged for Centura common stock with substantially similar
terms. There are certain other criteria that must be satisfied in order for the
merger to qualify as a pooling-of-interests. Some of the criteria cannot be
satisfied until after the merger becomes effective. In addition, it is a
condition to closing the merger that KPMG LLP deliver a letter to Centura and
Triangle to the effect that the merger will qualify for pooling-of-interests
accounting treatment and that PricewaterhouseCoopers LLP deliver a letter to
Centura and Triangle to the effect that such firm is not aware of any matters
relating to Triangle which would preclude Triangle from participating in a
merger qualifying for pooling-of-interests accounting treatment.
Certain conditions will be imposed on the exchange of Triangle common stock
for Centura common stock in the merger by affiliates of Triangle. Certain
restrictions will also be imposed on the transferability of the Centura common
stock received by those affiliates in the merger. These conditions and
restrictions will be imposed in order, among other things, to ensure the
availability of pooling-of-interests accounting treatment. For information
concerning these conditions and restrictions see "-- Resales of Centura Common
Stock."
EXPENSES AND FEES
Centura and Triangle will each pay its own expenses in connection with the
merger, including filing, registration and application fees, printing fees, and
fees and expenses of its own financial or other consultants, investment bankers,
accountants, and counsel, except that each party will pay one-half of the
printing costs incurred in connection with the registration statement and this
joint proxy statement-prospectus.
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RESALES OF CENTURA COMMON STOCK
Centura common stock to be issued to Triangle stockholders in the merger
will be registered under the Securities Act of 1933, as amended. All shares of
Centura common stock received by Triangle stockholders in the merger will be
freely transferable after the merger by those Triangle stockholders who are not
considered to be "affiliates" of Triangle or Centura. "Affiliates" generally are
defined as persons or entities who control, are controlled by, or are under
common control with Triangle or Centura at the time of the Centura special
meeting (generally, executive officers, directors, and 10% or greater
stockholders).
Rule 145, promulgated under the Securities Act of 1933, as amended,
restricts the sale of Centura common stock received in the merger by affiliates
of Triangle and certain of their family members and related entities. Under the
rule, during the first calendar year after the merger becomes effective,
affiliates of Triangle or Centura may resell publicly the Centura common stock
they receive in the merger but only within certain limitations as to the amount
of Centura common stock they can sell in any three-month period and as to the
manner of sale. After the one-year period, affiliates of Triangle who are not
affiliates of Centura may resell their shares without restriction. Centura must
continue to satisfy its reporting requirements under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") in order for affiliates to resell,
under Rule 145, shares of Centura common stock received in the merger.
Affiliates also would be permitted to resell Centura common stock received in
the merger pursuant to an effective registration statement under the Securities
Act of 1933, as amended, or an available exemption from the Securities Act of
1933, as amended, registration requirements. This joint proxy
statement-prospectus does not cover any resales of Centura common stock received
by persons who may be deemed to be affiliates of Triangle or Centura.
The SEC's guidelines regarding qualifying for the "pooling-of-interests"
method of accounting also limit sales of shares of Centura and Triangle by their
affiliates in connection with the merger. The SEC's guidelines indicate that the
"pooling-of-interests" method of accounting generally will not be challenged on
the basis of sales by affiliates of the acquiring or acquired company if such
affiliates do not dispose of any of the shares of the corporation they own, or
shares of a corporation they receive in connection with a merger, during the
period beginning 30 days before the merger is consummated and ending when
financial results covering at least 30 days of post-merger operations of the
combined companies have been published.
Triangle has agreed to use its reasonable efforts to cause each person who
may be deemed to be an affiliate of Triangle to execute and deliver to Centura
not later than 30 days prior to the effective time of the merger, an agreement
intended to ensure compliance with the Securities Act of 1933, as amended, and
to preserve the ability of the merger to be accounted for as a
"pooling-of-interests." Each Triangle affiliate must agree not to sell, pledge,
transfer, or otherwise dispose of any Triangle common stock held by the
affiliate except as contemplated by the merger agreement or the affiliate
agreement. In addition, each Triangle affiliate must agree not to sell, pledge,
transfer or otherwise dispose of any Centura common stock received in the merger
(1) except in compliance with the Securities Act of 1933, as amended, and the
rules and regulations under the Securities Act of 1933, as amended, and (2)
until such time as financial results covering 30 days of combined operations of
Centura and Triangle have been published. Prior to publication of such results,
Centura will not transfer on its books any shares of Centura common stock
received by an affiliate in the merger. The stock certificates representing
Centura common stock issued to affiliates in the merger may bear a legend
summarizing these restrictions on transfer. See "-- Conditions to Consummation
of the Merger."
STOCK OPTION AGREEMENTS
As an inducement and a condition to the parties entering into the merger
agreement, Triangle and Centura entered into stock option agreements, under
which (1) Triangle granted Centura an option to purchase up to 5,014,000 shares
(representing 19.9% of the shares issued and outstanding before giving effect to
the exercise of such option) of Triangle common stock at a cash price per share
equal to $18.00 and (2) Centura granted Triangle an option to purchase up to
2,256,000 shares (representing 7.9% of the
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shares issued and outstanding before giving effect to the exercise of such
option), at a cash price per share equal to $56.87, under the circumstances
described below, subject to possible adjustment in certain circumstances. Under
the stock option agreements, neither Triangle's nor Centura's total profit
resulting from the exercise of the options may exceed $25 million.
The purpose of the option agreements is to increase the likelihood that the
merger will be completed by making it more difficult and more expensive for a
third party to gain control of either Triangle or Centura. Accordingly, the
options are exercisable only on the occurrence of certain events that generally
involve, in the case of either Triangle or Centura, the acquisition or attempted
acquisition of the company, a significant portion of its then outstanding common
stock or all or a significant portion of its assets.
Although the shares issuable upon exercise of the options would represent
approximately 16.6% of the Triangle common stock or 7.3% of the Centura common
stock outstanding after exercise, neither Triangle nor Centura may acquire more
than 5% of the other's common stock, pursuant to the exercise of the option or
otherwise, without prior approval of the Federal Reserve. Unless and until it
exercises its option, Triangle and Centura disclaim beneficial ownership of the
common stock subject to the options.
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS
In the merger, stockholders of Triangle will exchange their shares of
Triangle for shares of Centura. Triangle is a North Carolina corporation
governed by North Carolina law and Triangle's articles of incorporation and
bylaws. Centura is a North Carolina corporation governed by North Carolina law
and Centura's articles of incorporation and bylaws. There are significant
differences between the rights of Triangle stockholders and Centura
stockholders. The following is a summary of relevant provisions of the articles
of incorporation and bylaws of Triangle and Centura setting forth the current
rights of Triangle stockholders and those of Centura's stockholders and
highlighting any significant differences to Triangle's stockholders as a result
of the merger.
The following summary is not intended to be complete and is qualified it
its entirety by reference to the North Carolina Business Corporation Act, as
well as Centura's articles of incorporation and bylaws and Triangle's articles
of incorporation and bylaws.
ANTI-TAKEOVER PROVISIONS GENERALLY
Centura's articles of incorporation and bylaws contain certain provisions
designed to assist Centura's board of directors in playing a role if any group
or person attempts to acquire control of Centura so that Centura's board of
directors can protect the interests of Centura and its stockholders under the
circumstances. These provisions may help Centura's board of directors determine
that a sale of control is in the best interests of Centura's stockholders, or
enhance Centura's board of directors' ability to maximize the value to be
received by the stockholders upon a sale of control of Centura.
Although Centura's management believes that these provisions are beneficial
to Centura's stockholders, they also may tend to discourage some takeover bids.
As a result, Centura's stockholders may be deprived of opportunities to sell
some or all of their shares at prices that represent a premium over prevailing
market prices. On the other hand, defeating undesirable acquisition offers can
be a very expensive and time-consuming process. To the extent that these
provisions discourage undesirable proposals, Centura may be able to avoid those
expenditures of time and money.
These provisions also may discourage open market purchases by a company
that may desire to acquire Centura. Those purchases may increase the market
price of Centura common stock temporarily, and enable stockholders to sell their
shares at a price higher than that they might otherwise obtain. In addition,
these provisions may decrease the market price of Centura common stock by making
the stock less attractive to persons who invest in securities in anticipation of
price increases from potential acquisition attempts. The provisions also may
make it more difficult and time consuming for a potential acquiror to obtain
control of Centura through replacing the board of directors and management.
Furthermore, the provisions may make it more difficult for the Centura
stockholders to replace Centura's board of directors
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or management, even if a majority of the Centura stockholders believe that
replacing Centura's board of directors or management is in the best interests of
Centura. Because of these factors, these provisions may tend to perpetuate the
incumbent board of directors and management. For more information about these
provisions, see --Authorized Capital Stock," "-- Amendment of Charter and
Bylaws," "-- Classified Board of Directors and Absence of Cumulative Voting,"
"-- Director Removal and Vacancies," "-- Limitations on Director Liability,"
"-- Indemnification," "-- Special Meeting of Stockholders," "-- Stockholder
Nominations and Proposals," "-- Stockholder Votes Required for Certain Actions"
and "-- Fair Price Provision."
AUTHORIZED CAPITAL STOCK
CENTURA. Centura's articles of incorporation authorize the issuance of up
to (1) 50,000,000 shares of Centura common stock, of which 28,496,626 shares
were issued and outstanding as of September 30, 1999, and (2) 25,000,000 shares
of no par value preferred stock, of which no shares are issued. Centura's board
of directors may authorize the issuance of additional shares of Centura common
stock without further action by the Centura stockholders, unless such action is
required in a particular case by applicable laws or regulations or by any stock
exchange upon which Centura's capital stock may be listed. The Centura
stockholders do not have the preemptive right to purchase or subscribe to any
unissued authorized shares of Centura common stock or any option or warrant for
the purchase thereof.
Similarly, Centura's board of directors may issue, without any further
action by the Centura stockholders, shares of Centura preferred stock, in one or
more classes or series, with such voting, conversion, dividend, and liquidation
rights as Centura's board of directors may specify. In establishing and issuing
shares of Centura preferred stock, Centura's board of directors may designate
that Centura preferred stock will have voting rights in excess of one vote per
share or will vote as a separate class on any or all matters, thus diluting the
voting power of the Centura common stock. Centura's board of directors also may
designate that Centura preferred stock will have dividend rights that are
cumulative and that receive preferential treatment compared to Centura common
stock, and that Centura preferred stock will have liquidation rights with
priority over Centura common stock in the event of Centura's liquidation.
Subject to the payment of cash in lieu of fractional shares, Centura will
issue an estimated 12,075,214 shares of Centura common stock in connection with
the merger, including shares to be subject to assumed options and grants. Based
on the number of shares of Centura common stock outstanding on September 30,
1999, it is anticipated that, following the consummation of the merger, a total
of approximately 40,571,840 shares of Centura common stock will be outstanding
without taking into account any shares of Centura common stock repurchased by
Centura. See "BUSINESS OF CENTURA -- Recent Developments."
The authority to issue additional shares of Centura common stock provides
Centura with the flexibility necessary to meet its future needs without the
delay resulting from seeking Centura stockholder approval. The authorized but
unissued shares of Centura common stock will be issuable from time to time for
any corporate purpose, including, without limitation, stock splits, stock
dividends, employee benefit and compensation plans, acquisitions, and public or
private sales for cash as a means of raising capital. Such shares could be used
to dilute the stock ownership of persons seeking to obtain control of Centura.
In addition, the sale of a substantial number of shares of Centura common stock
to persons who have an understanding with Centura concerning the voting of such
shares, or the distribution or declaration of a dividend of shares of Centura
common stock (or the right to receive Centura common stock) to the Centura
stockholders, may have the effect of discouraging or increasing the cost of
unsolicited attempts to acquire control of Centura.
TRIANGLE. The authorized capital stock of Triangle consists of 50,000,000
shares of common stock, no par value per share, of which 25,250,119 shares were
outstanding as of September 30, 1999.
AMENDMENT OF CHARTER AND BYLAWS
CENTURA. Centura's articles of incorporation provide that the affirmative
vote of the holders of at least two-thirds of all the issued and outstanding
voting shares of capital stock is required to amend them.
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However, if such amendment has received the prior approval by an affirmative
vote of a majority of "Disinterested Directors," as defined therein, then the
affirmative vote of the holders of at least a majority of all the shares of
capital stock of Centura issued and outstanding and entitled to vote, or such
greater percentage approval as is required by North Carolina law, is sufficient
to amend the articles. A "Disinterested Director" is defined in the articles as
any member of Centura's board of directors who is unaffiliated with, and not a
nominee of, a "Control Person", as defined therein, and who was a member of
Centura's board of directors prior to the time a Control Person became such, and
any successor of a Disinterested Director who is unaffiliated with, and not a
nominee of, a Control Person, who is recommended to succeed a Disinterested
Director by a majority of Disinterested Directors then on Centura's board of
directors. A "Control Person" is defined in Centura's articles of incorporation
as any corporation, person, group, or other entity, which together with its
affiliates, prior to a business combination (as described below) beneficially
owns 10% or more of the shares of any class of equity or convertible securities
of Centura, and any affiliate of any such corporation, person, group, or other
entity.
Subject to certain restrictions set forth below, either Centura's board of
directors or the Centura stockholders may amend Centura's bylaws. Centura's
board of directors may amend the bylaws and adopt new bylaws except that:
(1) a bylaw adopted or amended by the stockholders may not be readopted,
amended, or repealed by Centura's board of directors if neither the
articles nor a bylaw adopted by the stockholders authorizes Centura's
board of directors to adopt, amend, or repeal that particular bylaw or
the bylaws generally;
(2) the Centura stockholders may adopt, amend, alter, change, or repeal the
bylaws; provided that, in addition to any requirements of the North
Carolina Business Corporation Act, the affirmative vote of the holders
of at least two-thirds of the voting power of all shares then entitled
to vote generally in the election of directors, voting together as a
single class, is required for the stockholders to adopt, amend, alter,
change, or repeal the bylaws.
(3) A bylaw that fixes a greater quorum or voting requirement for Centura's
board of directors may be amended or repealed:
- if originally adopted by the stockholders, only by the stockholders,
unless the bylaw permits amendment or repeal by Centura's board of
directors; or
- if originally adopted by the board of directors, either by the
stockholders or by not less than a majority of Centura's board of
directors and with a quorum and vote not less than that established by
the Centura stockholders.
TRIANGLE. Triangle is subject to the requirements of the North Carolina
Business Corporation Act with respect to amendments of Triangle's articles of
incorporation. Generally, the North Carolina Business Corporation Act requires
that the votes cast in favor of an amendment to Triangle's articles of
incorporation must exceed the votes cast against such amendment in order for
Triangle to amend Triangle's articles of incorporation. While Triangle is
subject to the North Carolina Business Corporation Act, Triangle's articles of
incorporation require the affirmative vote of 75% of all shares present at a
meeting where the issue considered is to amend Triangle's articles of
incorporation. This provision of Triangle's articles of incorporation makes it
more difficult for amendments to Triangle's articles of incorporation to be
approved by the Triangle stockholders. Accordingly, such provision makes it more
difficult for provisions in Triangle's articles of incorporation to be changed
in the event of a hostile takeover attempt.
Triangle's bylaws may be amended or repealed and new bylaws may be adopted
by action of Triangle's board of directors or the Triangle stockholders, except
as otherwise provided in Triangle's articles of incorporation or by the North
Carolina Business Corporation Act. Under the North Carolina Business Corporation
Act and the bylaws of Triangle, the board of directors may not readopt, amend or
repeal a bylaw adopted, amended or repealed by the stockholders if neither
Triangle's articles of incorporation nor a bylaw adopted by the stockholders
authorizes the board of directors to adopt, amend or
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repeal that particular bylaw or the bylaws generally. The stockholders may amend
or repeal the bylaws of Triangle, even though the bylaws may also be amended or
repealed by the board of directors. Triangle's bylaws further provide that the
board of directors has no power to adopt a bylaw: (1) changing the statutory
requirement for a quorum of directors or action by directors or changing the
statutory requirement for a quorum of stockholders or action by stockholders;
(2) providing for management of Triangle otherwise than by the board of
directors or a committee thereof; (3) increasing or decreasing the fixed number
of the size of the board of directors or the range of directors, or changing
from a fixed number to a range, or visa versa; or (4) classifying and staggering
the election of directors.
The bylaws of Triangle currently provide that the number of directors shall
be at least 10 but no more than 28. The board of directors may set the number of
directors in this range without stockholder approval. In addition, the bylaws
require the affirmative vote of 75% of shares of Triangle voting, in person or
by proxy, to increase or decrease the range and prohibit the board of directors
from changing the range without stockholder approval. The supermajority
requirement for a stockholder vote to change the range of the number of
directors makes it more difficult for Triangle's stockholders to increase the
size of Triangle's board of directors and elect directors to fill the vacancies
created thereby. Accordingly, one or more stockholders seeking to gain control
of Triangle's board of directors (for example, a tender offer or entity
attempting a hostile takeover) would find its task more difficult. This
requirement makes it more difficult for the size of Triangle's board of
directors to be increased without Triangle's existing board of directors'
consent.
CLASSIFIED BOARD OF DIRECTORS AND ABSENCE OF CUMULATIVE VOTING
CENTURA. Centura's articles of incorporation provide that Centura's board
of directors is divided into three classes, with each class to be as nearly
equal in number as possible. The directors in each class serve three-year terms
of office. The effect of Centura having a classified board of directors is that
only approximately one third of the members of Centura's board of directors are
elected each year, which effectively requires two annual meetings for the
Centura stockholders to change a majority of the members of Centura's board of
directors. The purpose of dividing Centura's board of directors into classes is
to facilitate continuity and stability of leadership of Centura by ensuring that
experienced personnel familiar with Centura will be represented on Centura's
board of directors at all times, and to permit Centura's management to plan for
the future for a reasonable time. However, by potentially delaying the time
within which an acquirer could obtain working control of Centura's board of
directors, this provision may discourage some potential mergers, tender offers,
or takeover attempts.
Pursuant to the bylaws, each stockholder generally is entitled to one vote
for each share of Centura common stock held and is not entitled to cumulative
voting rights in the election of directors as long as Centura common stock is
listed on a national securities exchange or held by more than 2,000 record
holders. With cumulative voting, a stockholder has the right to cast a number of
votes equal to the total number of such holder's shares multiplied by the number
of directors to be elected. The stockholder has the right to distribute all of
his votes in any manner among any number of candidates or to accumulate such
shares in favor of one candidate. Directors are elected by a plurality of the
total votes cast by all stockholders. With cumulative voting, it may be possible
for minority stockholders to obtain representation on the board of directors.
Without cumulative voting, the holders of more than 50% of the shares of Centura
common stock generally have the ability to elect 100% of the directors. As a
result, the holders of the remaining Centura common stock effectively may not be
able to elect any person to Centura's board of directors. The absence of
cumulative voting makes it more difficult for a Centura stockholder who acquires
less than a majority of the shares of Centura common stock to obtain
representation on Centura's board of directors.
TRIANGLE. Triangle's board of directors is divided into three classes,
with the number of directors in each class to be as nearly equal in number as
possible. Directors of each class are elected to hold office for three years.
Each director holds office until the annual meeting for the year in which his or
her term expires and until his or her successor is elected and qualified or
until his or her earlier death, resignation, retirement, removal or
disqualification.
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The holders of Triangle common stock are entitled to one vote per share
held of record on all matters submitted to a vote of the Triangle stockholders.
The Triangle stockholders do not have the right to vote cumulatively in the
election of directors. As a result of the absence of cumulative voting, the
majority of votes represented at a legal quorum may elect all directors and the
remaining minority stockholders may not elect any directors. The absence of
cumulative voting makes it more difficult for stockholders who hold a minority
of outstanding shares of Triangle common stock to elect representatives of their
choice.
DIRECTOR REMOVAL AND VACANCIES
CENTURA. Centura's articles of incorporation provide that: (1) a director
may be removed by the Centura stockholders only upon the affirmative vote of the
holders of two-thirds of the voting power of all shares of Centura capital stock
entitled to vote generally in the election of directors; and (2) vacancies on
Centura's board of directors may be filled only by Centura's board of directors.
The purpose of this provision is to prevent a majority stockholder from
circumventing the classified board system by removing directors and filling the
vacancies with new individuals selected by that stockholder. Accordingly, the
provision may have the effect of impeding efforts to gain control of Centura's
board of directors by anyone who obtains a controlling interest in Centura
common stock. The term of a director appointed to fill a vacancy expires at the
next meeting of stockholders at which directors are elected.
TRIANGLE. Triangle's articles of incorporation provide that a director may
be removed without cause by the stockholders only if (i) the removal without
cause is recommended to the stockholders by Triangle's board of directors
pursuant to a vote of not less than 75% of the directors then in office and (ii)
the stockholders approve such removal by a vote of 75% of the votes present at
the meeting where the issue is considered. Directors also are removable by the
stockholders with cause pursuant to a vote of 75% of the outstanding shares of
Triangle common stock, but no specific director recommendation is required.
Triangle's articles of incorporation define "cause" as "personal dishonesty,
incompetence, mental and physical incapacity, breach of fiduciary duty involving
personal profit, a failure to perform stated duties, or a violation of any law,
rule or regulation (other than a traffic violation or similar routine offense)
based on a conviction for such offense or an opinion of counsel to Triangle to
such effect."
The supermajority provisions of Triangle's articles of incorporation
discouraged hostile takeover attempts so that Triangle will be able to follow
through with its business plan which it has developed in the interest of all
Triangle stockholders. Triangle's management believes that, for a financial
institution, allowing Triangle's board of directors members to be removed and
replaced without cause by the stockholders would open Triangle to acquisition or
control by interests that might not follow through with Triangle's board of
directors' business plan for Triangle.
LIMITATIONS ON DIRECTOR LIABILITY
CENTURA. Centura's articles of incorporation provide for the elimination
of the personal liability of each director arising out of an action by Centura
or otherwise for monetary damages for breach of his duty as a director, except
for liability with respect to (1) acts or omissions not made in good faith that
the director at the time of such breach knew or believed were in conflict with
the best interests of Centura, (2) any liability under Section 55-8-33 of the
General Statutes of North Carolina, or (3) any transaction from which the
director derived an improper personal benefit.
Although this provision does not affect the availability of injunctive or
other equitable relief as a remedy for a breach of duty by a director, it does
limit the remedies available to a Centura stockholder who has a valid claim that
a director acted in violation of his duties, if the action is among those as to
which liability is limited. This provision may reduce the likelihood of
stockholder derivative litigation against directors and may discourage or deter
Centura stockholders or management from bringing a lawsuit against directors for
breach of their duties, even though such action, if successful, might have
benefited Centura and its stockholders. The SEC has taken the position that
similar provisions added to other corporations' certificates of incorporation
would not protect those corporations' directors from liability for violations of
the federal securities laws.
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TRIANGLE. Pursuant to the North Carolina Business Corporation Act,
Triangle's articles of incorporation of Triangle provide for the elimination of
personal liability of directors for monetary damage to the fullest extent
permitted by applicable law. The limitation on monetary damages does not
preclude other equitable remedies such as injunctive relief or rescission.
Further, such limitation may not be available for violations of federal and
state banking and securities laws.
INDEMNIFICATION
CENTURA. Under the North Carolina Business Corporation Act, a corporation
may indemnify any director against liability if the director:
- conducted himself or herself in good faith;
- reasonably believed, in the case of conduct in his or her official
capacity with the corporation, that his or her conduct was in the best
interests of the corporation, and in all other cases, that his or her
conduct was at least not opposed to the corporation's best interests;
- and, in the case of any criminal proceeding, had no reasonable cause to
believe his or her conduct was unlawful.
A North Carolina corporation may not indemnify a director:
- in connection with a proceeding by or in the right of the corporation in
which the director was adjudged liable to the corporation; or
- in connection with any other proceeding charging improper personal
benefit to him, whether or not involving action in his official capacity,
in which he was adjudged liable on the basis that personal benefit was
improperly received by him.
Unless limited by its articles of incorporation, a North Carolina
corporation must indemnify, against reasonable expenses incurred by him or her,
a director who was wholly successful, on the merits or otherwise, in defending
any proceeding to which he or she was a party because he or she is or was a
director of the corporation. Expenses incurred by a director in defending a
proceeding may be paid by the corporation in advance of the final disposition of
the proceeding if the director furnishes the corporation a written undertaking
by or on behalf of a director to repay such amount if it is ultimately
determined that he or she is not entitled to be indemnified by the corporation
against such expenses. A director may apply for court-ordered indemnification
under certain circumstances.
Unless a corporation's articles of incorporation provide otherwise,
(1) an officer of a corporation is entitled to mandatory indemnification
and is entitled to apply for court-ordered indemnification to the same
extent as a director,
(2) the corporation may indemnify and advance expenses to an officer,
employee, or agent of the corporation to the same extent as to a
director, and
(3) a corporation may also indemnify and advance expenses to an officer,
employee, or agent who is not a director to the extent, consistent with
public policy, that may be provided by its articles of incorporation,
bylaws, general or specific action of its board of directors, or
contract.
In addition and separate and apart from the indemnification rights
discussed above, North Carolina law further provides that a corporation may in
its articles of incorporation or bylaws or by contract or resolution indemnify
or agree to indemnify any one or more of its directors, officers, employees, or
agents against liability and expenses in any proceeding (including without
limitation a proceeding brought by or on behalf of the corporation itself)
arising out of their status as such or their activities in any of the foregoing
capacities; provided, however, that a corporation may not indemnify or agree to
indemnify a person against liability or expenses he may incur on account of his
activities which were at the time taken known or believed by him to be clearly
in conflict with the best interests of the corporation. A corporation may
likewise and to the same extent indemnify or agree to indemnify any person who,
at the request of
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the corporation, is or was serving as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust, or other enterprise or as a trustee or administrator under
an employee benefit plan. Any such provision for indemnification may also
include provisions for recovery from the corporation of reasonable costs,
expenses, and attorneys' fees in connection with the enforcement of rights to
indemnification and may further include provisions establishing reasonable
procedures for determining and enforcing the rights granted therein.
Centura's bylaws provide for the mandatory indemnification, to the fullest
extent permitted by law, of any person who at any time serves or has served as a
director or officer of Centura, or, at the request of Centura, is or was serving
as a director, officer, agent, partner, trustee, administrator, or employee of
another entity in the event such person is made or is threatened to be made, a
party to any threatened, pending, or completed civil, criminal, administrative,
investigative, or arbitrative action, suit, or proceeding and any appeal therein
(and any inquiry or investigation that could lead to such action, suit, or
proceeding), whether or not brought by or on behalf of Centura, seeking to hold
such person liable by reason of the fact that such person is or was acting in
such capacity. The indemnification provision in the Centura bylaws covers
reasonable expenses, including without limitation, all attorneys' fees actually
and necessarily incurred by such person in connection with any such action, suit
or proceeding, all reasonable payments made by such person in satisfaction of
any judgment, money decree, fine (including an excise tax assessed with respect
to an employee benefit plan), penalty, or settlement for which such person may
have become liable in such action, suit, or proceeding, and all reasonable
expenses incurred in enforcing the indemnification rights. Furthermore, Centura
may advance to such person his reasonable expenses incurred in connection with
any such action, suit or proceeding as authorized by Centura's board of
directors in the specific case or as authorized or required under any bylaw upon
receipt of an undertaking by or on behalf of such person to repay such amount
unless it is ultimately determined that such person is entitled to be
indemnified by Centura against such expenses.
Centura's bylaws further provide that Centura may, but is not required to,
indemnify any agent, employee, or other person as Centura's board of directors
deems appropriate. Centura's board of directors must take all such action as may
be necessary and appropriate to authorize Centura to pay the indemnification
required by the indemnification provision, including without limitation, to the
extent needed, making a good faith evaluation of the manner in which the
claimant for indemnity acted and of the reasonable amount of indemnity to such
claimant.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, or persons controlling Centura pursuant
to the foregoing provisions, Centura has been informed that, in the opinion of
the Commission, such indemnification is against public policy as expressed in
the Securities Act and is therefore unenforceable.
TRIANGLE. Triangle's bylaws provide for indemnification of its directors
and officers to the fullest extent permitted by North Carolina law. Under the
North Carolina Business Corporation Act, a corporation also may purchase
insurance on behalf of any person who is or was a director or officer against
any liability arising out of his status as such. Triangle currently maintains
directors' and officers' liability insurance.
SPECIAL MEETING OF STOCKHOLDERS
CENTURA. Centura's bylaws provide that any group of four of Centura's
board of directors, the Chairman of the Board, or the President may call a
Centura special meeting of stockholders. The Centura stockholders do not have
the right to call a Centura special meeting or to require that Centura's board
of directors call such a meeting. As a result, this provision, taken together
with the restriction on the removal of directors, would prevent a substantial
Centura stockholder from compelling stockholder consideration of any proposal
(such as a proposal for a merger) over the opposition of Centura's board of
directors by calling a Centura special meeting of stockholders at which such
Centura stockholder could replace the entire Centura board of directors with
nominees who were in favor of such proposal.
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TRIANGLE. Triangle's bylaws provide that special meetings of the Triangle
stockholders may be called at any time by the Chairman of Triangle's board of
directors, the President or Triangle's board of directors. Triangle stockholders
do not have the right to call a Triangle special meeting or to require that
Triangle's board of directors call such a meeting.
STOCKHOLDER NOMINATIONS AND PROPOSALS
CENTURA. Centura's articles of incorporation and bylaws provide that no
Centura stockholder may nominate individuals for election to Centura's board of
directors.
TRIANGLE. Any Triangle stockholder wishing to nominate one or more
directors or bring any other business before a meeting of stockholders must
provide notice to Triangle at least 50 days before the meeting.
FAIR PRICE PROVISION
CENTURA. The fair price provision of Centura's articles of incorporation
applies to business combinations that have not received the approval of
two-thirds of Centura's full board of directors and is available only to Centura
stockholders who vote against such business combinations and who elect to sell
their shares to Centura for cash at the fair price of such shares. The fair
price provision requires that the consideration for such shares be paid in cash
by Centura and that the price per share be at least equal to the greater of the
following:
(a) the highest price per share paid for Centura common stock during the
four years immediately preceding the business combination vote by any
Centura stockholder who beneficially owned 5.0% or more of Centura
common stock and who votes in favor of the business combination;
(b) the cash value of the highest price per share previously offered
pursuant to a tender offer to the Centura stockholders within the four
years immediately preceding the business combination vote;
(c) the aggregate earnings per share of Centura common stock during the
four fiscal quarters immediately preceding the business combination
vote multiplied by the highest price/earnings ratio of Centura common
stock at any time during the four fiscal quarters or up to the date the
business combination vote occurs;
(d) the highest price per share, including commissions and fees, paid by a
Control Person in acquiring any of its holdings of Centura common
stock; or
(e) the fair value per share of Centura common stock as determined by an
investment banking or appraisal firm chosen by a majority of the
members of Centura's board of directors voting against the business
combination, such fair value not taking into consideration the fact
that the shares are held by a majority of the Centura stockholders.
The fair price provision is designed primarily to discourage attempts to
acquire Centura in transactions utilizing two-tier pricing tactics, but the
provision may affect and potentially discourage other transactions that are not
two-tier structured. Transactions utilizing two-tier pricing tactics typically
involve the accumulation of a substantial block of a target corporation's stock
followed by a merger or other reorganization of the acquired corporation on
terms determined by the purchaser. In such two-tiered takeover attempts, the
purchaser generally pays cash to acquire a controlling interest in a corporation
and acquires the remaining interest by paying the remaining stockholders a price
lower than that paid to acquire the controlling interest. The board of directors
believes that the fair price provision may prevent some of the potential
inequities of two-tiered takeover attempts by encouraging persons interested in
acquiring Centura to negotiate in advance with Centura's board of directors
since, if two-thirds of Centura's full board of directors approves certain
business combinations, the fair price provision would be avoided. Centura's
board of directors believes that the interests of the Centura stockholders would
be best served by such negotiation based on careful consideration of all
relevant factors. Despite this belief, however, some Centura stockholders may
find the fair price provision disadvantageous to the extent it
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discourages changes in control in which Centura stockholders might receive, for
at least some of their shares, a substantial premium above the market price paid
to Centura stockholders who vote against the business combination and then elect
to sell their shares to Centura for cash. Furthermore, the provision may
encourage Centura stockholders to vote against a business combination, which has
been approved by a majority of a quorum but less than two-thirds of Centura's
full board of directors. In addition, assets of Centura could be used to
reacquire shares, possibly at a substantial premium, from Centura stockholders
who voted against the transaction, which may be to the detriment of Centura
stockholders who voted for the transaction. Finally, if the fair price provision
has the effect of giving management more bargaining power in negotiation with a
potential acquiror, it could result in management using the bargaining power not
only to try to negotiate a favorable price for an acquisition, but also more
favorable terms for management.
TRIANGLE. Triangle's articles of incorporation have a fair price provision
similar to Centura's described above.
STOCKHOLDER VOTES REQUIRED FOR CERTAIN ACTIONS
CENTURA. Centura's articles of incorporation provide that, unless more
restrictively required by applicable law, any business combination, as defined
therein, must be approved by a majority of a quorum of Centura's board of
directors and must receive one of the following levels of Centura stockholder
approval:
- at a Centura special or annual meeting of stockholders by an affirmative
vote of the stockholders holding at least a majority of the shares of
Centura common stock issued and outstanding and entitled to vote thereon,
provided that such business combination has received the prior approval
by a resolution adopted by an affirmative vote of at least two-thirds of
Centura's full board of directors before such business combination is
submitted for approval to the Centura stockholders; or
- at a Centura special or annual meeting of stockholders by an affirmative
vote of the stockholders holding at least two-thirds of the shares of
Centura common stock issued and outstanding and entitled to vote thereon
provided that such business combination has received the prior approval
by a resolution adopted by an affirmative vote of at least a majority of
a quorum of Centura's board of directors (but less than two-thirds of
Centura's board of directors).
In addition, if the business combination is approved by an affirmative vote
of at least two-thirds of the Centura stockholders entitled to vote and by a
majority of a quorum of Centura's board of directors but less than two-thirds of
Centura's full board of directors, the business combination must grant to
stockholders not voting to approve the business combination certain fair price
rights.
Under Centura's articles of incorporation, a "business combination" is
- any merger or consolidation of Centura into any other corporation,
person, group, or other entity where Centura is not the surviving or
resulting entity;
- any merger or consolidation of Centura with or into any "Control Person"
(as defined in the articles of incorporation) or with any corporation,
person, group, or other entity where the merger or consolidation is
proposed by or on behalf of a Control Person;
- any sale, lease, exchange, or other disposition of all or substantially
all of the assets of Centura;
- any sale, lease, exchange, or other disposition of more than 10% of the
total assets of Centura (determined as of the end of the most recent
fiscal year) to a Control Person;
- the issuance of any securities of Centura to a Control Person;
- the acquisition by Centura of any securities of a Control Person unless
such acquisition begins prior to the person becoming a Control Person or
is an attempt to prevent the Control Person from obtaining greater
control of Centura;
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- the acquisition by Centura of all or substantially all of the assets of
any Control Person or any entity where the acquisition is proposed by or
on behalf of a Control Person;
- the adoption of any plan or proposal for the liquidation or dissolution
of Centura which is proposed by or on behalf of a Control Person;
- any reclassification of securities or recapitalization of Centura which
has the effect of increasing the proportionate share of the outstanding
shares of any class of equity or convertible securities of Centura which
is beneficially owned or controlled by a Control Person;
- any of the above transactions which are between Centura and any of its
subsidiaries and which are proposed by or on behalf of any Control
Person; or
- any agreement, plan, contract, or other arrangement providing for any of
the above transactions.
The requirement of a supermajority vote of stockholders to approve certain
business transactions, as described above, may discourage a change in control of
Centura by allowing a minority of the Centura stockholders to prevent a
transaction favored by the majority of the Centura stockholders. Also, in some
circumstances, Centura's board of directors could cause a two-thirds vote to be
required to approve a transaction thereby enabling management to retain control
over the affairs of Centura and their positions with Centura. The primary
purpose of the supermajority vote requirement, however, is to encourage
negotiations with Centura's management by groups or corporations interested in
acquiring control of Centura and to reduce the danger of a forced merger or sale
of assets.
TRIANGLE. While Triangle is subject to the North Carolina Business
Corporation Act, Triangle's articles of incorporation provide that the
affirmative vote of the holders of not less than 80% of the outstanding shares
of Triangle common stock is required to approve certain transactions with
Triangle or any affiliate of Triangle specified therein, including any merger,
consolidation, sale of assets, share exchange, or dissolution. The supermajority
provision is inapplicable if the transaction has been approved (or in the case
of a dissolution recommended for stockholder approval) by two-thirds of all
directors of Triangle then in office or if the other entity is a corporation of
which a majority of the outstanding shares of all classes of stock entitled to
vote in elections of directors is owned of record or beneficially by Triangle or
its affiliates. The merger was unanimously approved by Triangle's board of
directors, making the supermajority provision inapplicable to it.
For purposes of such provision, an "affiliate" is any individual,
corporation, partnership, trust, estate, or other entity who directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, the party specified. Triangle's articles of
incorporation further provide that the board of directors, when evaluating the
merits of any transaction described in such provision, including any merger,
consolidation, sale of assets, or share exchange, or any offer of a party to
make a tender or exchange offer for any equity security of Triangle, shall, in
connection with the exercise of its judgment in determining what is in the best
interest of Triangle and its stockholders, give due consideration to all
relevant factors, including, without limitation, the social and economic effects
on the employees, depositors, customers, suppliers, and other constituents of
Triangle and its affiliates, and on the communities in which Triangle and its
affiliates operate or are located.
The supermajority provision of Triangle's articles of incorporation may
have the effect of delaying, deferring, or preventing a change in control of
Triangle, which some holders of Triangle common stock may deem to be in their
best interests.
The constituency provision of Triangle's articles of incorporation may
discourage or make more difficult certain acquisition proposals or business
combinations and, therefore, may adversely affect the ability of stockholders to
benefit from certain transactions opposed by Triangle's board of directors. The
constituency provision would allow Triangle's board of directors to take into
account the effects of an acquisition proposal on a broad number of
constituencies and to consider any potential adverse effect in determining
whether to accept or reject such proposal.
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DISSENTERS' RIGHTS OF APPRAISAL
CENTURA. Under the North Carolina Business Corporation Act, a stockholder
is generally entitled to dissent from, and obtain payment of the fair value of
his shares in the event of:
(1) consummation of a plan of reorganization to which the corporation is a
party, unless either
- stockholder approval is not required by the North Carolina Business
Corporation Act, or
- such shares are then redeemable by the corporation at a price not
greater than the cash to be received in exchange for such shares;
(2) consummation of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired, unless such
shares are then redeemable by the corporation at a price not greater
than the cash to be received in exchange for such shares;
(3) consummation of a sale or exchange of substantially all of the
corporation's property other than in the usual and regular course of
business, including a sale in dissolution, but not including a sale
pursuant to court order or to a plan by which substantially all of the
net proceeds of the sale will be distributed in cash to the
stockholders 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
- alters or abolishes a preferential right of the shares,
- creates, alters, or abolishes a right in respect of redemption of the
shares,
- alters or abolishes a preemptive right of the holder of the shares to
acquire shares or other securities,
- excludes or limits the right of the shares to vote on any matter, or
to cumulate votes,
- reduces the number of shares owned by the stockholder to a fraction of
a share if the fractional share so created is to be acquired for cash
under the North Carolina Business Corporation Act, or
- changes the corporation into a nonprofit corporation or cooperative
organization; or
(5) any corporate action taken pursuant to a stockholder vote, to the
extent the articles of incorporation, bylaws, or a resolution of the
board of directors provide that voting or nonvoting stockholders are
entitled to dissent and obtain payment for their shares.
The dissenters' rights described above are generally not available to
stockholders of a corporation, like Centura, with its common stock listed on a
national securities exchange. Centura's articles of incorporation and bylaws do
not provide for any such additional dissenters' rights.
TRIANGLE. Because Triangle is a North Carolina corporation listed on a
national securities exchange, Triangle stockholders do not have the dissenters'
rights.
STOCKHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS
CENTURA. The North Carolina Business Corporation Act gives a stockholder
of a North Carolina corporation the right to inspect and copy books and records
of the corporation during regular business hours, if he or she gives the
corporation written notice of his or her demand at least five business days
before the date of the inspection. In order to inspect certain records, written
demand must also be made in good faith and for a proper purpose and must
describe with reasonable particularity the purpose of the request and the
records the stockholder desires to inspect.
TRIANGLE. The Triangle stockholders have the right to inspect and copy
Triangle's books and records as set forth above.
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DIVIDENDS
CENTURA. Centura's ability to pay dividends on its common stock is
governed by North Carolina corporate law. Under North Carolina corporate law,
dividends may be paid so long as the corporation would be able to pay its debts
as they become due in the ordinary course of business and the corporation's
total assets would not be less than the sum of its total liabilities plus the
amount that would be needed, if the corporation were to be dissolved at the time
of the distribution, to satisfy the preferential rights upon dissolution to
stockholders whose preferential rights are superior to those receiving the
distribution.
There are various statutory limitations on the ability of Centura's banking
subsidiaries to pay dividends to Centura. See "CERTAIN REGULATORY
CONSIDERATIONS -- Restrictions on the Payment of Dividends."
TRIANGLE. Triangle's ability to pay dividends on Triangle common stock is
substantially similar to Centura's ability to do so as described above.
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma combined condensed balance sheet presents
(i) the historical unaudited consolidated balance sheet of Centura and Triangle
at September 30, 1999, and (ii) the pro forma combined condensed balance sheet
of Centura at September 30, 1999, giving effect to the merger, assuming the
merger is accounted for as a pooling of interests. The unaudited pro forma
combined condensed balance sheet should be read in conjunction with the
historical consolidated financial statements of Centura and the historical
consolidated financial statements of Triangle, including the respective notes
thereto, which are incorporated by reference in this joint proxy
statement-prospectus, and the unaudited pro forma financial information
appearing elsewhere in this joint proxy statement-prospectus. See "WHERE YOU CAN
FIND MORE INFORMATION" and "SUMMARY -- Historical and Pro Forma Comparative Per
Share Data and -- Selected Financial Data." The effect of anticipated
merger-related charges (estimated for purposes of the pro forma financial
statements at $35.7 million, net of taxes) to be taken by Centura in connection
with the merger has been reflected in the pro forma combined condensed balance
sheet; however, since the anticipated merger charges are nonrecurring, they have
not been reflected in the pro forma combined condensed statement of income. The
pro forma combined condensed balance sheet is not necessarily indicative of the
combined condensed financial position that actually would have occurred if the
merger had been consummated at the date indicated or which may be obtained in
the future.
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PRO FORMA CONDENSED BALANCE SHEET
AS OF SEPTEMBER 30, 1999
(UNAUDITED)
PRO FORMA CENTURA AND
ADJUSTMENTS TRIANGLE
INCREASE PRO FORMA
CENTURA(1)(2) TRIANGLE(1) (DECREASE)(3)(5)(6) COMBINED
------------- ----------- ------------------- -----------
(DOLLARS IN THOUSANDS)
ASSETS
Cash and due from banks............. $ 244,119 $ 54,130 $ 298,249
Due from banks, interest bearing.... 14,363 38,391 52,754
Federal funds sold.................. 59,571 -- 59,571
Investment securities:
Available for sale (cost of
$2,722,568).................... 2,146,232 524,691 2,670,923
Held to maturity (fair value of
$122,049)...................... 54,860 66,426 121,286
Loans............................... 5,852,553 1,540,633 7,393,186
Less: allowance for loan
losses......................... (72,619) (21,082) (93,701)
---------- ---------- ------- -----------
Net loans................... 5,779,934 1,519,551 7,299,485
Bank premises and equipment......... 115,811 37,404 153,215
Other assets........................ 461,595 105,713 567,308
---------- ---------- ------- -----------
Total assets................ $8,876,485 $2,346,306 $11,222,791
========== ========== ======= ===========
LIABILITIES
Deposits
Demand, noninterest bearing...... $ 967,488 $ 205,503 $ 1,172,991
Interest-bearing................. 4,447,496 1,323,305 5,770,801
Time deposits over $100.......... 619,452 213,973 833,425
---------- ---------- ------- -----------
Total deposits.............. 6,034,436 1,742,781 7,777,217
Borrowed funds...................... 1,243,006 260,820 1,503,826
Long-term debt...................... 787,102 143,454 930,556
Other liabilities................... 113,434 31,025 $35,660 180,119
---------- ---------- ------- -----------
Total liabilities........... 8,177,978 2,178,080 35,660 10,391,718
SHAREHOLDERS' EQUITY
Preferred stock, no par value,
25,000,000 shares authorized;
none issued...................... -- -- -- --
Common stock, no par value,
50,000,000 shares authorized;
shares issued and pro forma
outstanding of 39,859,180 as of
September 30, 1999............... 214,609 85,368 299,977
Common stock acquired by ESOP....... (43) -- (43)
Retained earnings................... 505,379 94,375 (35,660) 564,094
Accumulated other comprehensive
loss............................. (21,438) (11,517) (32,955)
---------- ---------- ------- -----------
Total shareholders' equity.......... 698,507 168,226 (35,660) 831,073
---------- ---------- ------- -----------
Total liabilities and equity........ $8,876,485 $2,346,306 $ -- $11,222,791
========== ========== ======= ===========
See accompanying notes to pro forma condensed financial information.
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PRO FORMA COMBINED CONDENSED STATEMENTS OF
INCOME FOR CENTURA AND TRIANGLE
(UNAUDITED)
The following unaudited pro forma combined condensed statements of income
have been prepared for (i) the nine months ended September 30, 1999, and give
effect to the merger, assuming the merger is accounted for as a pooling of
interests, and (ii) each of the three years in the period ended December 31,
1998 and give effect to the merger, assuming the merger is accounted for as a
pooling of interests, and Centura's merger with First Coastal Bankshares, Inc.
("First Coastal") that was completed on March 26, 1999, and accounted for as a
pooling of interests. The unaudited pro forma combined condensed statements of
income should be read in conjunction with the historical consolidated financial
statements of Centura and the historical consolidated financial statements of
Triangle, including the respective notes thereto, which are incorporated by
reference in this joint proxy statement-prospectus, and the unaudited pro forma
financial information, including the notes thereto, appears elsewhere in this
joint proxy statement-prospectus. See "WHERE YOU CAN FIND MORE INFORMATION" and
"SUMMARY -- Historical and Pro Forma Comparative Per Share Data and -- Selected
Financial Data." The effect of anticipated merger-related charges (estimated for
purposes of the pro forma financial statements at $35.7 million net of taxes) to
be taken by Centura in connection with the merger has been reflected in the pro
forma combined condensed balance sheet; however, since the anticipated
merger-related charges are nonrecurring, they have not been reflected in the pro
forma combined condensed statements of income. The pro forma financial data does
not give effect to anticipated enhancements in revenue and reductions in
expenses at Triangle in connection with the merger. The pro forma combined
condensed statements of income are not necessarily indicative of the results
that actually would have occurred if the merger had been consummated at the
dates indicated or which may be obtained in the future.
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PRO FORMA CONDENSED INCOME STATEMENT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
CENTURA AND
TRIANGLE
PRO FORMA
CENTURA(1) TRIANGLE(1) COMBINED(4)(5)(6)
-------------- -------------- --------------------
(DOLLARS IN THOUSANDS, EXCEPT PER COMMON SHARE DATA)
INTEREST INCOME
Loans, including fees........................... $ 378,848 $ 96,314 $ 475,162
Investment securities........................... 97,260 23,670 120,930
Short-term investments.......................... 1,911 486 2,397
----------- ----------- -----------
Total interest income........................... 478,019 120,470 598,489
INTEREST EXPENSE
Deposits........................................ 149,486 48,673 198,159
Borrowed funds.................................. 44,118 6,810 50,928
Long-term debt.................................. 31,242 6,479 37,721
----------- ----------- -----------
Total interest expense.................. 224,846 61,962 286,808
----------- ----------- -----------
Net interest income............................... 253,173 58,508 311,681
Provision for loan losses....................... 27,077 4,857 31,934
----------- ----------- -----------
Net interest income after provision............. 226,096 53,651 279,747
NONINTEREST INCOME
Service charges on deposits..................... 40,165 7,010 47,175
Credit cards and related fees................... 6,134 528 6,662
Other service charges, commissions, fees........ 26,051 1,804 27,855
Fees for trust services......................... 7,768 -- 7,768
Mortgage income................................. 19,952 1,743 21,695
Gain on sale of subsidary....................... 4,893 -- 4,893
Other noninterest income........................ 14,694 3,791 18,485
Securities (losses)/gains, net.................. (1,208) 585 (623)
----------- ----------- -----------
Total noninterest income........................ 118,449 15,461 133,910
NONINTEREST EXPENSE
Personnel....................................... 113,311 16,498 129,809
Occupancy....................................... 14,871 4,084 18,955
Equipment....................................... 15,800 3,780 19,580
Foreclosed real estate.......................... 1,273 65 1,338
Merger-related expenses......................... 6,858 3 6,861
Other operating expense......................... 80,273 13,573 93,846
----------- ----------- -----------
Total noninterest expense............... 232,386 38,003 270,389
----------- ----------- -----------
Income before income taxes...................... 112,159 31,109 143,268
Income taxes.................................... 38,051 10,430 48,481
----------- ----------- -----------
Net income........................................ $ 74,108 $ 20,679 $ 94,787
=========== =========== ===========
NET INCOME PER COMMON SHARE
Basic........................................... $ 2.60 $ 0.82 $ 2.38
Diluted......................................... 2.57 0.80 2.34
AVERAGE COMMON SHARES OUTSTANDING
Basic........................................... 28,468,226 25,157,391 39,789,052
Diluted......................................... 28,882,785 25,756,492 40,473,206
See accompanying notes to pro forma condensed financial information.
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PRO FORMA CONDENSED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
CENTURA, FIRST
CENTURA AND COASTAL, AND
FIRST COASTAL TRIANGLE
FIRST PRO FORMA PRO FORMA
CENTURA(1) COASTAL(1) COMBINED(7) TRIANGLE(1) COMBINED(4)(5)(6)
----------- ---------- ------------- ----------- -----------------
(DOLLARS IN THOUSANDS, EXCEPT PER COMMON SHARE DATA)
INTEREST INCOME
Loans, including fees.... $ 453,017 $ 39,003 $ 492,020 $ 121,640 $ 613,660
Investment securities.... 121,230 6,801 128,031 30,148 158,179
Short-term investments... 1,418 249 1,667 1,540 3,207
----------- ---------- ----------- ----------- -----------
Total interest income.... 575,665 46,053 621,718 153,328 775,046
INTEREST EXPENSE
Deposits................. 198,354 18,862 217,216 64,751 281,967
Borrowed funds........... 48,321 8,418 56,739 8,108 64,847
Long-term debt........... 29,672 -- 29,672 5,839 35,511
----------- ---------- ----------- ----------- -----------
Total interest expense... 276,347 27,280 303,627 78,698 382,325
----------- ---------- ----------- ----------- -----------
Net interest income........ 299,318 18,773 318,091 74,630 392,721
Provision for loan
losses................ 15,144 500 15,644 5,115 20,759
----------- ---------- ----------- ----------- -----------
Net interest income after
provision............. 284,174 18,273 302,447 69,515 371,962
NONINTEREST INCOME
Service charges on
deposits.............. 48,139 1,045 49,184 8,306 57,490
Credit cards and related
fees.................. 6,358 -- 6,358 634 6,992
Other service charges,
commissions, fees..... 29,863 1,047 30,910 1,805 32,715
Fees for trust
services.............. 9,304 -- 9,304 -- 9,304
Mortgage income.......... 17,689 4,871 22,560 3,609 26,169
Other noninterest
income................ 22,753 (1,234) 21,519 2,431 23,950
Securities gains, net.... 594 92 686 1,671 2,357
----------- ---------- ----------- ----------- -----------
Total noninterest
income................ 134,700 5,821 140,521 18,456 158,977
NONINTEREST EXPENSE
Personnel................ 134,114 9,326 143,440 21,750 165,190
Occupancy................ 15,913 2,497 18,410 5,006 23,416
Equipment................ 20,874 1,351 22,225 4,700 26,925
Foreclosed real estate... 1,171 87 1,258 40 1,298
Merger-related
expenses.............. -- -- -- 4,373 4,373
Other operating
expense............... 99,617 5,447 105,064 19,027 124,091
----------- ---------- ----------- ----------- -----------
Total noninterest
expense............... 271,689 18,708 290,397 54,896 345,293
----------- ---------- ----------- ----------- -----------
INCOME BEFORE INCOME
TAXES................. 147,185 5,386 152,571 33,075 185,646
Income taxes............. 50,314 1,943 52,257 11,217 63,474
----------- ---------- ----------- ----------- -----------
NET INCOME................. $ 96,871 $ 3,443 $ 100,314 $ 21,858 $ 122,172
=========== ========== =========== =========== ===========
NET INCOME PER COMMON SHARE
Basic.................... $ 3.67 $ 0.69 $ 3.57 $ 0.87 $ 3.10
Diluted.................. 3.60 0.67 3.50 0.84 3.03
AVERAGE COMMON SHARES
OUTSTANDING
Basic.................... 26,421,073 4,984,806 28,115,907 25,112,026 39,416,319
Diluted.................. 26,922,791 5,152,572 28,674,665 25,903,142 40,331,079
See accompanying notes to pro forma condensed financial information.
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PRO FORMA CONDENSED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
CENTURA, FIRST
CENTURA AND COASTAL AND
FIRST COASTAL TRIANGLE
FIRST PRO FORMA PRO FORMA
CENTURA(1) COASTAL(1) COMBINED(7) TRIANGLE(1) COMBINED(4)(5)(6)
----------- ---------- ------------- ----------- -----------------
(DOLLARS IN THOUSANDS, EXCEPT PER COMMON SHARE DATA)
INTEREST INCOME
Loans, including fees.... $ 406,078 $ 40,037 $ 446,115 $ 109,432 $ 555,547
Investment securities.... 107,369 8,359 115,728 25,751 141,479
Short-term investments... 1,642 203 1,845 2,920 4,765
----------- ---------- ----------- ----------- -----------
Total interest income.... 515,089 48,599 563,688 138,103 701,791
INTEREST EXPENSE
Deposits................. 183,941 19,728 203,669 61,358 265,027
Borrowed funds........... 40,453 9,909 50,362 6,484 56,846
Long-term debt........... 22,790 -- 22,790 1,871 24,661
----------- ---------- ----------- ----------- -----------
Total interest expense... 247,184 29,637 276,821 69,713 346,534
----------- ---------- ----------- ----------- -----------
Net interest income........ 267,905 18,962 286,867 68,390 355,257
Provision for loan
losses................ 13,418 225 13,643 5,121 18,764
----------- ---------- ----------- ----------- -----------
Net interest income after
provision............. 254,487 18,737 273,224 63,269 336,493
NONINTEREST INCOME
Service charges on
deposits.............. 40,703 728 41,431 7,131 48,562
Credit cards and related
fees.................. 5,036 -- 5,036 466 5,502
Other service charges,
commissions, fees..... 21,956 831 22,787 1,390 24,177
Fees for trust
services.............. 7,737 -- 7,737 -- 7,737
Mortgage income.......... 11,568 2,845 14,413 2,542 16,955
Other noninterest
income................ 21,231 (518) 20,713 3,323 24,036
Securities gains, net.... 136 15 151 2,070 2,221
----------- ---------- ----------- ----------- -----------
Total noninterest
income................ 108,367 3,901 112,268 16,922 129,190
NONINTEREST EXPENSE
Personnel................ 113,625 7,731 121,356 22,051 143,407
Occupancy................ 13,796 2,161 15,957 4,421 20,378
Equipment................ 21,632 1,070 22,702 3,540 26,242
Foreclosed real estate... 1,373 97 1,470 16 1,486
Merger-related
expenses.............. -- -- -- 2,651 2,651
Other operating
expense............... 86,950 4,922 91,872 17,446 109,318
----------- ---------- ----------- ----------- -----------
Total noninterest
expense............... 237,376 15,981 253,357 50,125 303,482
----------- ---------- ----------- ----------- -----------
INCOME BEFORE INCOME
TAXES................. 125,478 6,657 132,135 30,066 162,201
Income taxes............. 42,420 2,554 44,974 10,540 55,514
----------- ---------- ----------- ----------- -----------
NET INCOME................. $ 83,058 $ 4,103 $ 87,161 $ 19,526 $ 106,687
=========== ========== =========== =========== ===========
NET INCOME PER COMMON SHARE
Basic.................... $ 3.22 $ 0.82 $ 3.17 $ 0.79 $ 2.76
Diluted.................. 3.15 0.81 3.11 0.76 2.70
AVERAGE COMMON SHARES
OUTSTANDING
Basic.................... 25,798,324 4,974,937 27,489,803 24,657,449 38,585,655
Diluted.................. 26,331,392 5,079,515 28,058,427 25,560,528 39,560,665
See accompanying notes to pro forma condensed financial information.
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PRO FORMA CONDENSED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
CENTURA, FIRST
CENTURA AND COASTAL, AND
FIRST COASTAL TRIANGLE
FIRST PRO FORMA PRO FORMA
CENTURA(1) COASTAL(1) COMBINED(7) TRIANGLE(1) COMBINED(4)(5)(6)
----------- ---------- ------------- ----------- -----------------
(DOLLARS IN THOUSANDS, EXCEPT PER COMMON SHARE DATA)
INTEREST INCOME
Loans, including fees.... $ 379,044 $ 37,590 $ 416,634 $ 88,734 $ 505,368
Investment securities.... 88,928 10,523 99,451 27,485 126,936
Short-term investments... 1,788 232 2,020 1,624 3,644
----------- ---------- ----------- ----------- -----------
Total interest income.... 469,760 48,345 518,105 117,843 635,948
INTEREST EXPENSE
Deposits................. 169,046 23,897 192,943 54,164 247,107
Borrowed funds........... 30,427 7,732 38,159 5,610 43,769
Long-term debt........... 20,203 -- 20,203 11 20,214
----------- ---------- ----------- ----------- -----------
Total interest expense... 219,676 31,629 251,305 59,785 311,090
----------- ---------- ----------- ----------- -----------
Net interest income........ 250,084 16,716 266,800 58,058 324,858
Provision for loan
losses................ 9,596 150 9,746 2,515 12,261
----------- ---------- ----------- ----------- -----------
Net interest income after
provision............. 240,488 16,566 257,054 55,543 312,597
NONINTEREST INCOME
Service charges on
deposits.............. 34,758 391 35,149 6,551 41,700
Credit cards and related
fees.................. 3,452 -- 3,452 375 3,827
Other service charges,
commissions, fees..... 17,023 513 17,536 1,058 18,594
Fees for trust
services.............. 6,841 -- 6,841 -- 6,841
Mortgage income.......... 11,486 2,846 14,332 2,645 16,977
Other noninterest
income................ 16,018 (496) 15,522 1,198 16,720
Securities gains, net.... 1,798 1,798 1,142 2,940
----------- ---------- ----------- ----------- -----------
Total noninterest
income................ 91,376 3,254 94,630 12,969 107,599
NONINTEREST EXPENSE
Personnel................ 109,667 6,433 116,100 20,623 136,723
Occupancy................ 12,657 2,139 14,796 3,875 18,671
Equipment................ 19,556 1,112 20,668 3,140 23,808
Foreclosed real estate... 756 127 883 179 1,062
Merger-related
expenses.............. -- -- -- 494 494
Other operating
expense............... 81,874 9,118 90,992 16,565 107,557
----------- ---------- ----------- ----------- -----------
Total noninterest
expense............... 224,510 18,929 243,439 44,876 288,315
----------- ---------- ----------- ----------- -----------
INCOME BEFORE INCOME
TAXES................. 107,354 891 108,245 23,636 131,881
Income taxes............. 39,203 322 39,525 8,840 48,365
----------- ---------- ----------- ----------- -----------
NET INCOME................. $ 68,151 $ 569 $ 68,720 $ 14,796 $ 83,516
=========== ========== =========== =========== ===========
NET INCOME PER COMMON SHARE
Basic.................... $ 2.66 $ 0.11 $ 2.52 $ 0.62 $ 2.19
Diluted.................. 2.60 0.11 2.46 0.60 2.14
AVERAGE COMMON SHARES
OUTSTANDING
Basic.................... 25,605,621 4,964,107 27,293,417 24,056,284 38,118,745
Diluted.................. 26,261,830 4,991,666 27,958,996 24,785,058 39,112,272
See accompanying notes to pro forma condensed financial information.
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NOTES TO PRO FORMA CONDENSED FINANCIAL INFORMATION
(1) In the opinion of management of the respective companies, all
adjustments necessary for a fair presentation of the financial position
and results for the period have been included. Adjustments, if any, are
normal and recurring in nature.
(2) Centura's historical information as of and for the nine months ended
September 30, 1999 includes the First Coastal merger that was completed
on March 26, 1999 and accounted for as a pooling of interests.
(3) Centura and Triangle expect to recognize, in connection with the
transaction, merger related charges of approximately $40 to $60 million
to be incurred in the first and second quarters of 2000. A liability of
$48 million or $35.7 million, net of the related tax benefit, has been
recorded in the unaudited Pro Forma Condensed Balance Sheet. Components
of the merger charge are as follows:
MILLIONS
--------
Employee related........................................... $ 9.3
Occupancy and equipment.................................... 9.4
Conversion................................................. 7.0
Losses on sales of investment securities................... 10.0
Investment banker, legal and accounting fees, and other
merger-related costs..................................... 12.3
-----
$48.0
Since the anticipated merger charges are nonrecurring, they have not
been reflected in the Pro Forma Combined Condensed Statement of Income.
(4) The merger of Triangle is presented under the pooling-of-interests
method of accounting, with the issuance of Centura common stock for
Triangle common stock at an exchange ratio of .45 of a share of Centura
common stock for each share of Triangle common stock.
(5) Centura expects to realize significant revenue enhancements and cost
savings from the merger which are not reflected in the Pro Forma
Condensed Financial Information; therefore, the pro forma information
is not indicative of the results of future operations. However, there
can be no assurance that anticipated revenue enhancements or cost
savings will be achieved.
(6) Centura and Triangle anticipate that, in order to obtain regulatory
approvals for the merger, the companies will be required to divest
approximately $317 million of deposits with a significant portion from
the Rocky Mount, North Carolina market. No adjustment has been
included, however, in the unaudited Pro Forma Condensed Financial
Information for the anticipated divestitures.
(7) The merger of First Coastal is presented under the pooling-of-interests
method of accounting, with the issuance of Centura common stock for
First Coastal common stock at an exchange ratio of .34 of a share of
Centura common stock for each share of First Coastal common stock.
COMPARATIVE MARKET PRICES AND DIVIDENDS
Centura common stock is traded on the New York Stock Exchange or NYSE under
the symbol "CBC." Triangle common stock is traded on the NYSE under the symbol
"TGL." Prior to December 31, 1997, Triangle's common stock traded on the Nasdaq
National Market System. The following table sets forth, for the indicated
periods, the high and low closing sale prices for the Centura and Triangle
common stock as reported by the NYSE, and the cash dividends declared per share
of Centura and Triangle
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common stock for the indicated periods. The stock prices do not include retail
mark-ups, mark-downs or commissions.
CENTURA TRIANGLE(1)
------------------------------ ---------------------------
CASH CASH
PRICE RANGE DIVIDENDS PRICE RANGE DIVIDENDS
------------------ PAID --------------- PAID
HIGH LOW PER SHARE HIGH LOW PER SHARE
-------- ------- --------- ------ ------ ---------
1997
- ----
First Quarter..................... $ 44.875 $39.000 $ .25 $13.67 $10.67 $.07
Second Quarter.................... 47.625 35.750 .27 15.00 12.33 .07
Third Quarter..................... 58.500 47.625 .27 20.00 14.50 .08
Fourth Quarter.................... 69.000 55.875 .27 23.92 16.33 .08
----- ----
Total........................ $1.06 $.30
===== ====
1998
- ----
First Quarter..................... $ 72.188 $64.688 $ .27 $23.58 $19.38 $.08
Second Quarter.................... 75.500 61.313 .29 20.92 18.75 .09
Third Quarter..................... 71.125 56.000 .29 21.06 14.94 .09
Fourth Quarter.................... 74.375 60.250 .29 19.75 14.88 .09
----- ----
Total........................ $1.14 $.35
===== ====
1999
- ----
First Quarter..................... $ 73.875 $58.188 $ .29 $17.19 $15.19 $.09
Second Quarter.................... 62.000 54.938 .32 17.00 15.38 .09
Third Quarter..................... 58.125 39.625 .32 21.50 15.63 .10
Fourth Quarter (through December
10, 1999)....................... 52.938 41.375 .32 23.19 18.31 .10
----- ----
Total........................ $1.25 $.38
===== ====
- ---------------
(1) The dividends shown are dividends historically paid by Triangle on shares of
Triangle common stock outstanding on the date declared without restating
such dividends to reflect acquisitions of other entities by Triangle which
were accounted for under the pooling-of-interests method of accounting. On
June 30, 1998, Triangle effected a three-for-two split of Triangle common
stock effected in the form of a 50% stock dividend, payable to stockholders
of record on June 15, 1998. The information on Triangle presented in the
table has been revised to give effect to the stock split.
On December 10, 1999, the last sale price of Centura common stock as
reported on the NYSE was $45.4375 per share and the last sale price of Triangle
common stock as reported on the NYSE was $20.25 per share. On August 20, 1999,
the last business day prior to public announcement of the merger, the last sale
price of Centura common stock as reported by the NYSE was $52.00 per share and
the last sale price of Triangle common stock as reported on the NYSE was $16.50
per share.
The holders of Centura common stock are entitled to receive dividends when
and if declared by Centura's board of directors out of funds legally available
therefor. Although Centura currently intends to continue to pay quarterly cash
dividends on the Centura common stock, there can be no assurance that Centura's
dividend policy will remain unchanged after completion of the merger. The
declaration and payment of dividends thereafter will depend upon business
conditions, operating results, capital and reserve requirements, and the Centura
board of directors' consideration of other relevant factors. The principal
sources of funds for the payment of dividends by Centura are dividends from
Centura Bank and its other banking-related subsidiaries.
The holders of Triangle common stock are entitled to receive dividends when
and if declared by Triangle's board of directors out of funds legally available
therefor. Triangle has paid cash dividends each quarter since the third quarter
of 1994. The declaration and payment of dividends will depend upon business
conditions, operating results, capital and reserve requirements, and the
Triangle board of directors' consideration of other relevant factors. The
principal sources of funds for the payment of dividends by
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Triangle are dividends from its subsidiaries, Triangle Bank, Bank of Mecklenburg
and Coastal Leasing LLC.
Centura and Triangle are legal entities separate and distinct from their
subsidiaries and their revenues depend in significant part on the payment of
dividends from their respective subsidiary institutions. Centura's and
Triangle's subsidiary depository institutions are subject to certain legal
restrictions on the amount of dividends they are permitted to pay. See "CERTAIN
REGULATORY CONSIDERATIONS -- Restrictions on the Payment of Dividends."
BUSINESS OF TRIANGLE
Triangle, a North Carolina corporation, is a multi-bank holding company. On
September 30, 1999, Triangle had total consolidated assets of approximately
$2.35 billion, total consolidated loans of approximately $1.52 billion, total
consolidated deposits of approximately $1.74 billion, and total consolidated
stockholders' equity of approximately $168 million.
Triangle conducts its business activities through Triangle Bank and Bank of
Mecklenburg, its bank subsidiaries. Through Triangle Bank and its various
subsidiaries, Triangle offers a broad range of financial services, throughout
North Carolina. Triangle Bank has 68 branches in Eastern North Carolina. Bank of
Mecklenburg has three branches in the Charlotte area of North Carolina. Triangle
also operates through its wholly-owned leasing subsidiary, Coastal Leasing LLC.
Since the organization of Triangle Bank in January 1988, much of Triangle's
growth has occurred through 13 acquisitions of other depository institutions or
branches of other institutions. For additional information with respect to these
acquisitions, see Triangle's 1998 Form 10-K, Item 1: "RECENT ACQUISITIONS" and
"BUSINESS OF THE CORPORATION."
The principal executive offices of Triangle are located at 4300 Glenwood
Avenue, Raleigh, North Carolina 27612, and its telephone number at such address
is (919) 881-0455. Additional information with respect to Triangle and its
subsidiaries is included in documents incorporated by reference in this joint
proxy statement-prospectus. See "WHERE YOU CAN FIND MORE INFORMATION."
BUSINESS OF CENTURA
GENERAL
Centura, a North Carolina corporation, is a registered bank holding
company. On September 30, 1999, Centura had total consolidated assets of
approximately $8.876 billion, total consolidated loans of approximately $5.853
billion, total consolidated deposits of approximately $6.034 billion, and total
consolidated stockholders' equity of approximately $699 million.
Centura conducts its business activities through Centura Bank, its bank
subsidiary. Through Centura Bank and its various subsidiaries, Centura offers a
broad range of financial services, throughout North Carolina, South Carolina and
the Hampton Roads Region of Virginia.
Centura offers its customers a variety of services and delivery channels
including 227 full-service financial service offices; more than 230 ATMs at
financial centers and retail stores; its telephone banking center; its Internet
site; and its online money management software packages.
The principal executive offices of Centura are located at 134 North Church
Street, Rocky Mount, North Carolina 27804, and its telephone number at such
address is (252) 454-4400. Additional information with respect to Centura and
its subsidiaries is included in documents incorporated by reference in this
joint proxy statement-prospectus. See "WHERE YOU CAN FIND MORE INFORMATION."
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RECENT DEVELOPMENTS
Centura's board of directors has authorized the repurchase of up to
approximately 1,000,000 shares of Centura common stock. Under the authorization,
the number of shares purchased shall be consistent with the treatment of the
Triangle acquisition as a pooling of interests. Such purchases may be completed
in privately negotiated transactions or in open market purchases and may be
discontinued at any time.
ANTICIPATED OPERATING RESULTS OF THE MERGER
In connection with the execution of the merger agreement, Centura filed a
Current Report on Form 8-K which included information with respect to the
anticipated impact of the merger on the operating performance of Centura. In the
Form 8-K, Centura indicated that it expects the merger to be accretive to
earnings per share in 2001. It is estimated that pre-tax cost savings
opportunities, including the elimination of redundant operations, will total
approximately $32.0 million once the acquisition is fully integrated. The
transaction is projected to be 2.4% dilutive to Centura's earnings per share in
2000. The dilution is projected to be concentrated in the quarter that the
transaction closes (expected to be the first quarter of 2000), before the
realization of cost savings. Merger related charges of $50.0 million pre-tax in
the quarter of closing and an additional $10.0 million in the following quarter
are anticipated. See "A WARNING ABOUT FORWARD-LOOKING STATEMENTS" and "WHERE YOU
CAN FIND MORE INFORMATION."
CERTAIN REGULATORY CONSIDERATIONS
Centura and Triangle are bank holding companies registered with the Federal
Reserve. As such, each of Centura, Triangle and their non-bank subsidiaries are
subject to the supervision, examination, and reporting requirements of the Bank
Holding Company Act and the regulations of the Federal Reserve. Centura's and
Triangle's banking subsidiaries are also subject to supervision and examinations
by federal banking authorities. Set forth below is a brief summary of certain of
the areas of regulation. Information relating to Triangle is included in
Triangle's 1998 Annual Report on Form 10-K. A more complete discussion of
Centura is included in Centura's 1998 Annual Report on Form 10-K. See "WHERE YOU
CAN FIND MORE INFORMATION."
Centura and Triangle and their banking subsidiaries are subject to certain
federal and state laws and regulations relating to the following areas as
summarized below.
- Restrictions on the Payment of Dividends -- Centura and Triangle are
legal entities separate and distinct from their banking and other
subsidiaries, but depend principally on dividends from their subsidiary
depository institutions for cash flow to pay dividends to their
stockholders. There are statutory and regulatory limitations on the
payment of dividends by these subsidiary depository institutions to
Centura and Triangle as well as by Centura and Triangle to their
stockholders. Additionally, the subsidiary banks of Centura and Triangle
are subject to dividend restrictions of the State of North Carolina, and
to the regulations of the Federal Reserve. Under such dividend
restrictions, at September 30, 1999, Centura Bank could declare aggregate
dividends to Centura of approximately $142 million and Triangle's
subsidiary banks could declare aggregate dividends to Triangle of
approximately $94 million.
- Capital Adequacy -- Centura and Triangle and their banking subsidiaries
are required by state and federal regulators to comply with certain
capital adequacy standards related to various risk exposure and the
leverage position of financial institutions. Any bank or thrift that
fails to meet its capital guidelines may be subject to a variety of
enforcement remedies and certain other restrictions on its business. As
of September 30, 1999 Centura, Triangle and their banking subsidiaries
were in compliance with all such capital adequacy standards.
- Support of Subsidiary Institutions -- Under Federal Reserve policy,
Centura and Triangle are expected to act as sources of financial strength
for, and commit their resources to support, Centura
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Bank, Triangle Bank, Bank of Mecklenburg and the other banking
subsidiaries, even in times when Centura or Triangle might not be
inclined to provide it.
- Prompt Corrective Action -- Federal banking regulators are required to
audit Centura Bank, Triangle Bank, Bank of Mecklenburg and the other
banking subsidiaries to determine whether they are adequately
capitalized. If a banking institution is deemed by regulators to be
insufficiently capitalized, the regulators are required to take certain
actions designed to improve the capitalization situation of the financial
institution.
On November 12, 1999, the President signed into law the Gramm-Leach-Bliley
Act. This statute contains several provisions that may affect how Centura does
business or the nature of the competition that it faces. The act permits banks,
insurance companies, and securities firms to affiliate within a single corporate
structure, now known as a financial holding company. Using the financial holding
company structure, insurance companies and securities firms may acquire bank
holding companies, such as Centura or Triangle, and bank holding companies may
acquire insurance companies and securities firms. A bank holding company that
wishes to become a financial holding company must satisfy a number of
conditions, including that all of the insured depository institution
subsidiaries of the bank holding company have at least a "Satisfactory" CRA
rating. In addition, a financial holding company may not commence a new
financial activity or acquire control of a company engaged in such activities
without satisfying this CRA requirement. As a result of the act, Centura may
face increased competition from more and larger financial institutions. The act
also may cause Centura to consider whether to expand its securities or insurance
businesses. Centura currently conducts retail securities brokerage and insurance
brokerage through subsidiaries of Centura Bank. The act allows increased
activity in the insurance and securities underwriting businesses, to be
conducted through a subsidiary of a financial holding company and would involve
both additional risk and regulatory burdens. Centura has not made any decisions
on whether to expand its insurance and securities operations.
The act does not significantly alter the regulatory regime under which
Centura now operates. The Federal Reserve, Centura's current federal regulator
at both the bank and holding company level, and the North Carolina Commissioner
of Banks will remain Centura's regulators. The nature of the activities that
Centura may conduct in the bank or in a bank subsidiary remain, in the first
instance, a matter of North Carolina law. Centura's insurance and securities
businesses now are subject to regulation by the North Carolina insurance
commissioner and the SEC, respectively, and the act does not change this system.
The act also contains several provisions respecting customer privacy. The
extent of Centura's obligations in this regard will not be known until the
Federal Reserve and the other federal banking agencies issue rules applicable to
banks, Centura will be required to disclose a privacy policy to its customers on
an annual basis. In addition, if Centura provides nonpublic personal information
about customers to third parties for use in the marketing of third party
products, it must first disclose this fact to its customers and provide them an
opportunity to opt out of the arrangement. The act does not limit the sharing of
information among affiliates within the Centura family, although Centura is
aware that some members of Congress are seeking to expand the law to cover
inter-affiliate sharing.
DESCRIPTION OF CENTURA CAPITAL STOCK
Centura is authorized to issue 50,000,000 shares of Centura common stock,
of which 28,496,626 shares were issued and outstanding as of September 30, 1999.
Centura is also authorized to issue 25,000,000 shares of Centura preferred
stock, none of which is issued and outstanding.
Holders of Centura common stock are entitled to receive such dividends as
may be declared by Centura's board of directors out of funds legally available
therefore. The ability of Centura to pay dividends is affected by the ability of
its subsidiary depository institution to pay dividends, which is limited by
applicable regulatory requirements and capital guidelines. At September 30,
1999, under such requirements and guidelines, Centura's subsidiary depository
institution had $142 million of undivided
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profits legally available for the payment of dividends. See "CERTAIN REGULATORY
CONSIDERATIONS -- Payment of Dividends."
For a further description of Centura capital stock, See "EFFECT OF THE
MERGER ON RIGHTS OF STOCKHOLDERS."
OTHER MATTERS
As of the date of this joint proxy statement-prospectus, neither Triangle's
board of directors nor Centura's board of directors knows of any matters that
will be presented for consideration at the Triangle or Centura special meetings
other than as described in this joint proxy statement-prospectus. However, if
any other matters properly come before the Triangle or Centura special meetings
or any adjournment or postponement of the Triangle or Centura special meetings
and are voted upon, the enclosed proxy will be deemed to confer discretionary
authority to the individuals named as proxies to vote the shares represented by
such proxies as to any such matters.
STOCKHOLDER PROPOSALS
Triangle will hold its 2000 annual meeting of stockholders only if the
merger is not consummated. In order to be eligible for inclusion in Triangle's
proxy materials for the 2000 annual meeting, if held, any Triangle stockholder
proposal to take action at such meeting must have been received at Triangle's
executive offices at 4300 Glenwood Avenue, Raleigh, North Carolina 27612, no
later than November 30, 1999. Any such proposals shall be subject to the
requirements of the proxy rules adopted under the Securities Exchange Act of
1934, North Carolina law and Triangle's articles of incorporation and bylaws.
Centura expects to hold its next annual meeting of stockholders in April
2000, after the merger. Under the SEC rules, proposals of Centura stockholders
intended to be presented at that meeting must have been received by Centura at
its principal executive offices no later than November 11, 1999, to be included
in the proxy statement for the meeting.
EXPERTS
The consolidated financial statements of Centura Banks, Inc. and
subsidiaries as of December 31, 1998 and 1997, and for each of the years in the
three-year period ended December 31, 1998, have been incorporated herein by
reference and in the registration statement in reliance upon the report of KPMG
LLP, independent certified public accountants, incorporated herein by reference,
and upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Triangle Bancorp, Inc. and
subsidiaries as of December 31, 1998 and 1997, and for each of the years in the
three-year period ended December 31, 1998, have been incorporated herein by
reference and in the registration statement in reliance upon the report of
PricewaterhouseCoopers LLP, independent accountants, incorporated herein by
reference, given on the authority of said firm as experts in accounting and
auditing.
OPINIONS
The legality of the shares of Centura common stock to be issued in the
merger will be passed upon by Joseph A. Smith, Jr., General Counsel and
Corporate Secretary of Centura. Joseph A. Smith, Jr. is an officer of and
stockholder in, and receives compensation from, Centura. Mr. Smith owns 2,223
shares of Centura common stock and 19,507 stock options for shares of Centura
common stock of which 1,078 were vested as of the date of this joint proxy
statement-prospectus.
Certain tax consequences of the transaction have been passed upon by Alston
& Bird LLP, Washington, D.C.
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WHERE YOU CAN FIND MORE INFORMATION
Centura and Triangle file annual, quarterly and current reports, proxy and
information statements, and other information with the SEC under the Securities
Exchange Act of 1934. You may read and copy this information at the Public
Reference Section at the SEC at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. You may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet site that contains reports, proxy and information statements, and other
information about issuers that file electronically with the SEC. The address of
that site is http://www.sec.gov. In addition, you can read and copy this
information at the regional offices of the SEC at 7 World Trade Center, 13th
Floor, New York, New York 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. You can also inspect reports, proxy and
information statements, and other information about Centura at the offices of
the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
Centura filed a registration statement with the SEC under the Securities
Act of 1933, as amended, relating to the Centura common stock offered to the
Triangle stockholders. The registration statement contains additional
information about Centura and the Centura common stock. The SEC allows Centura
to omit certain information included in the registration statement from this
joint proxy statement-prospectus. The registration statement may be inspected
and copied at the SEC's public reference facilities described above.
This joint proxy statement-prospectus incorporates important business and
financial information about Centura and Triangle that is not included in or
delivered with this joint proxy statement-prospectus. The following documents
filed with the SEC by Centura are incorporated by reference in this joint proxy
statement-prospectus (SEC File No. 1-10646):
(1) Centura's Annual Report on Form 10-K for the fiscal year ended December
31, 1998;
(2) Centura's Quarterly Reports on Form 10-Q for the three months ended
March 31, 1999, June 30, 1999, and September 30, 1999;
(3) Centura's Current Reports on Form 8-K dated January 11, 1999, March 30,
1999, April 5, 1999, April 7, 1999, July 8, 1999, August 22, 1999, and
October 8, 1999.
(4) The description of Centura's current management and Centura's board of
directors contained in Centura's proxy statement filed pursuant to
Section 14(a) of the Exchange Act for Centura's Annual Meeting of
Stockholders held on April 15, 1998 and 1999;
The following documents filed with the SEC by Triangle are incorporated by
reference in this joint proxy statement-prospectus (SEC File No. 0-19398):
(1) Triangle's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998;
(2) Triangle's Quarterly Reports on Form 10-Q for the three months ended
March 31, 1999, June 30, 1999, and September 30, 1999;
(3) Triangle's Current Reports on Form 8-K dated March 17, 1999, August 22,
1999 and November 30, 1999.
Centura and Triangle also incorporate by reference additional documents
filed by them pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange
Act after the date of this joint proxy statement-prospectus and prior to final
adjournment of the Triangle special meeting. Any statement contained in this
joint proxy statement-prospectus or in a document incorporated or deemed to be
incorporated by reference in this joint proxy statement-prospectus shall be
deemed to be modified or superseded to the extent that a statement contained
herein or in any subsequently filed document which also is, or is deemed to be,
incorporated by reference herein modifies or supersedes such statement.
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You may obtain copies of the information incorporated by reference in this
joint proxy statement-prospectus upon written or oral request. The inside front
cover of this joint proxy statement-prospectus contains information about how
such requests should be made.
All information contained in this joint proxy statement-prospectus or
incorporated herein by reference with respect to Centura was supplied by
Centura, and all information contained in this joint proxy statement-prospectus
with respect to Triangle was supplied by Triangle.
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APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
TRIANGLE BANCORP, INC.
AND
CENTURA BANKS, INC.
DATED AS OF AUGUST 22, 1999
A-1
82
TABLE OF CONTENTS
PAGE
----
Parties..................................................... A-6
Preamble.................................................... A-6
ARTICLE 1 -- TRANSACTIONS AND TERMS OF MERGER............... A-6
1.1 Merger............................................ A-6
1.2 Time and Place of Closing......................... A-6
1.3 Effective Time.................................... A-7
1.4 Execution of Stock Option Agreements.............. A-7
ARTICLE 2 -- TERMS OF MERGER................................ A-7
2.1 Articles of Incorporation......................... A-7
2.2 Bylaws............................................ A-7
2.3 Directors and Officers............................ A-7
ARTICLE 3 -- MANNER OF CONVERTING SHARES.................... A-7
3.1 Conversion of Shares.............................. A-7
3.2 Anti-Dilution Provisions.......................... A-8
3.3 Shares Held by Triangle or Centura................ A-8
3.4 Fractional Shares................................. A-8
3.5 Conversion of Stock Rights........................ A-8
3.6 Conversion of Triangle Warrants................... A-9
ARTICLE 4 -- EXCHANGE OF SHARES............................. A-9
4.1 Exchange Procedures............................... A-9
4.2 Rights of Former Triangle Stockholders............ A-10
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES OF TRIANGLE..... A-10
5.1 Organization, Standing, and Power................. A-10
5.2 Authority; No Breach By Agreement................. A-11
5.3 Capital Stock..................................... A-11
5.4 Triangle Subsidiaries............................. A-12
5.5 SEC Filings; Financial Statements................. A-12
5.6 Absence of Undisclosed Liabilities................ A-13
5.7 Absence of Certain Changes or Events.............. A-13
5.8 Tax Matters....................................... A-13
5.9 Assets............................................ A-14
5.10 Environmental Matters............................. A-14
5.11 Compliance with Laws.............................. A-15
5.12 Labor Relations................................... A-15
5.13 Employee Benefit Plans............................ A-15
5.14 Material Contracts................................ A-17
5.15 Legal Proceedings................................. A-18
5.16 Reports........................................... A-18
5.17 Statements True and Correct....................... A-18
5.18 Accounting, Tax, and Regulatory Matters........... A-18
5.19 State Takeover Laws............................... A-18
5.20 Derivatives....................................... A-19
5.21 Year 2000......................................... A-19
5.22 Underwriting...................................... A-19
ARTICLE 6 -- REPRESENTATIONS AND WARRANTIES OF CENTURA...... A-19
6.1 Organization, Standing, and Power................. A-19
6.2 Authority; No Breach By Agreement................. A-19
6.3 Capital Stock..................................... A-20
6.4 Centura Subsidiaries.............................. A-20
A-2
83
PAGE
----
6.5 SEC Filings; Financial Statements................. A-21
6.6 Absence of Undisclosed Liabilities................ A-21
6.7 Absence of Certain Changes or Events.............. A-21
6.8 Tax Matters....................................... A-21
6.9 Assets............................................ A-22
6.10 Environmental Matters............................. A-23
6.11 Compliance with Laws.............................. A-23
6.12 Labor Relations................................... A-24
6.13 Employee Benefit Plans............................ A-24
6.14 Legal Proceedings................................. A-24
6.15 Reports........................................... A-24
6.16 Statements True and Correct....................... A-25
6.17 Accounting, Tax, and Regulatory Matters........... A-25
6.18 Derivatives....................................... A-25
6.19 Year 2000......................................... A-25
ARTICLE 7 -- CONDUCT OF BUSINESS PENDING CONSUMMATION....... A-26
7.1 Affirmative Covenants of Both Parties............. A-26
7.2 Negative Covenants of Triangle.................... A-26
7.3 Adverse Changes in Condition...................... A-27
7.4 Reports........................................... A-28
ARTICLE 8 -- ADDITIONAL AGREEMENTS.......................... A-28
8.1 Registration Statement; Joint Proxy Statement;
Stockholder Approvals............................. A-28
8.2 Exchange Listing.................................. A-28
8.3 Applications...................................... A-29
8.4 Filings with State Office......................... A-29
8.5 Agreement as to Efforts to Consummate............. A-29
8.6 Investigation and Confidentiality................. A-29
8.7 Press Releases.................................... A-29
8.8 Certain Actions................................... A-30
8.9 Accounting and Tax Treatment...................... A-30
8.10 State Takeover Laws............................... A-30
8.11 Agreement of Affiliates........................... A-30
8.12 Employee Benefits and Contracts................... A-31
8.13 Indemnification................................... A-31
8.14 Certain Modifications............................. A-33
8.15 Centura Merger Subsidiary Organization............ A-33
ARTICLE 9 -- CONDITIONS PRECEDENT TO OBLIGATIONS TO
CONSUMMATE........................................ A-33
9.1 Conditions to Obligations of Each Party........... A-33
9.2 Conditions to Obligations of Centura.............. A-34
9.3 Conditions to Obligations of Triangle............. A-35
ARTICLE 10 -- TERMINATION................................... A-36
10.1 Termination........................................ A-36
10.2 Effect of Termination.............................. A-38
10.3 Non-Survival of Representations and Covenants...... A-38
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PAGE
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ARTICLE 11 -- MISCELLANEOUS................................. A-39
11.1 Definitions...................................... A-39
11.2 Expenses......................................... A-45
11.3 Brokers and Finders.............................. A-45
11.4 Entire Agreement................................. A-45
11.5 Amendments....................................... A-46
11.6 Waivers.......................................... A-46
11.7 Assignment....................................... A-46
11.8 Notices.......................................... A-46
11.9 Governing Law.................................... A-47
11.10 Counterparts..................................... A-47
11.11 Captions......................................... A-47
11.12 Interpretations.................................. A-47
11.13 Enforcement of Agreement......................... A-47
11.14 Severability..................................... A-47
Signatures.................................................. A-48
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LIST OF EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
1. Form of Triangle Stock Option Agreement. (sec. 1.4).
2. Form of Centura Stock Option Agreement. (sec. 1.4).
3. Form of Plan of Merger. (sec. 1.1).
4. Form of Affiliate Agreement. (sections 8.11, 9.2(d)).
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made and
entered into as of August 22, 1999, by and between TRIANGLE BANCORP, INC.
("Triangle"), a corporation organized and existing under the Laws of the State
of North Carolina, with its principal office located in Raleigh, North Carolina;
and CENTURA BANKS, INC. ("Centura"), a corporation organized and existing under
the Laws of the State of North Carolina, with its principal office located in
Rocky Mount, North Carolina.
PREAMBLE
The Boards of Directors of Triangle and Centura are of the opinion that the
transactions described herein are in the best interests of the parties to this
Agreement and their respective stockholders. This Agreement provides for the
acquisition of Triangle by Centura pursuant to the merger (the "Merger") of
Triangle with and into a newly-formed, wholly-owned subsidiary of Centura
("Centura Merger Subsidiary"), organized under the Laws of the State of North
Carolina. Immediately following the Merger, Centura Merger Subsidiary will be
merged with and into Centura. At the effective time of the Merger, the
outstanding shares of the capital stock of Triangle shall be converted into
shares of the common stock of Centura (except as provided herein). As a result,
stockholders of Triangle shall become stockholders of Centura, and Centura shall
continue to conduct Triangle's business and operations. The transactions
described in this Agreement are subject to the approvals of the stockholders of
Triangle, the stockholders of Centura, the Board of Governors of the Federal
Reserve System, and certain state regulatory authorities, and the satisfaction
of certain other conditions described in this Agreement. It is the intention of
the parties to this Agreement that the Merger (i) for federal income tax
purposes shall qualify as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code, and (ii) for accounting purposes shall
qualify for treatment as a pooling of interests.
Immediately after the execution and delivery of this Agreement, as a
condition and inducement to the Parties' willingness to enter into this
Agreement, (i) Triangle is granting to Centura an option to purchase shares of
Triangle Common Stock (the "Triangle Stock Option Agreement"), in substantially
the form of Exhibit 1, and (ii) Centura is granting to Triangle an option to
purchase shares of Centura Common Stock (the "Centura Stock Option Agreement"),
in substantially the form of Exhibit 2.
Certain terms used in this Agreement are defined in Section 11.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, the Parties agree
as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this Agreement, at the
Effective Time, Triangle shall be merged with and into Centura Merger Subsidiary
in accordance with the provisions of Section 55-11-01 of the North Carolina
Business Corporation Act and with the effect provided in Section 55-11-06 of the
North Carolina Business Corporation Act (the "Merger"). Centura Merger
Subsidiary shall be the Surviving Corporation resulting from the Merger and
shall continue to be governed by the Laws of the State of North Carolina. The
Merger shall be consummated pursuant to the terms of this Agreement, which has
been approved and adopted by the respective Boards of Directors of Triangle and
Centura, and the Plan of Merger, in substantially the form of Exhibit 3, which
has been approved and adopted by the Board of Directors of Triangle and will be
approved and adopted by the Board of Directors of Centura Merger Subsidiary upon
its organization. Immediately subsequent to the Merger, Centura Merger
Subsidiary shall be merged with and into Centura.
1.2 TIME AND PLACE OF CLOSING. The consummation of the Merger (the
"Closing") shall take place at 9:00 A.M. on the date that the Effective Time
occurs (or the immediately preceding day if the
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Effective Time is earlier than 9:00 A.M.), or at such other time as the Parties,
acting through their duly authorized officers, may mutually agree. The place of
Closing shall be at such location as may be mutually agreed upon by the Parties.
1.3 EFFECTIVE TIME. The Merger and the other transactions contemplated by
this Agreement shall become effective on the date and at the time the North
Carolina Articles of Merger reflecting the Merger shall become effective with
the Secretary of State of the State of North Carolina (the "Effective Time").
Subject to the terms and conditions hereof, unless otherwise mutually agreed
upon in writing by the duly authorized officers of each Party, the Parties shall
use their reasonable efforts to cause the Effective Time to occur on or before
the 10th business day (as designated by Centura) following the last to occur of
(i) the effective date (including expiration of any applicable waiting period)
of the last required Consent of any Regulatory Authority having authority over
and approving or exempting the Merger, and (ii) the date on which the
stockholders of Centura and Triangle approve the matters relating to this
Agreement required to be approved by such stockholders by applicable Law.
1.4 EXECUTION OF STOCK OPTION AGREEMENTS. Immediately after the execution
of this Agreement and as a condition hereto, (i) Triangle is executing and
delivering to Centura the Triangle Stock Option Agreement, and (ii) Centura is
executing and delivering to Triangle the Centura Stock Option Agreement.
ARTICLE 2
TERMS OF MERGER
2.1 ARTICLES OF INCORPORATION. The Articles of Incorporation of Centura
Merger Subsidiary in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation after the Effective Time
until otherwise amended or repealed.
2.2 BYLAWS. The Bylaws of Centura Merger Subsidiary in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation
after the Effective Time until otherwise amended or repealed.
2.3 DIRECTORS AND OFFICERS. The directors of Centura Merger Subsidiary in
office immediately prior to the Effective Time shall serve as the directors of
the Surviving Corporation from and after the Effective Time in accordance with
the Bylaws of the Surviving Corporation. The officers of Centura Merger
Subsidiary in office immediately prior to the Effective Time shall serve as the
officers of the Surviving Corporation from and after the Effective Time in
accordance with the Bylaws of the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this Article 3, at
the Effective Time, by virtue of the Merger and without any action on the part
of Centura or Triangle, or the stockholders of either of the foregoing, the
shares of the constituent corporations shall be converted as follows:
(a) Each share of Centura Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
from and after the Effective Time.
(b) Each share of Centura Merger Subsidiary Common Stock issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.
(c) Each share of Triangle Common Stock (excluding shares held by any
Triangle Company or any Centura Company, in each case other than in a
fiduciary capacity or as a result of debts previously contracted) issued
and outstanding at the Effective Time shall be converted into .45 of a
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share of Centura Common Stock (subject to adjustment pursuant to Section
10.1(g) of this Agreement, the "Exchange Ratio").
3.2 ANTI-DILUTION PROVISIONS. In the event Triangle changes the number of
shares of Triangle Common Stock issued and outstanding prior to the Effective
Time as a result of a stock split, stock dividend, recapitalization, or similar
transaction with respect to such stock, the Exchange Ratio shall be
proportionately adjusted. In the event Centura changes the number of shares of
Centura Common Stock issued and outstanding prior to the Effective Time as a
result of a stock split, stock dividend, recapitalization, or similar
transaction with respect to such stock and the record date therefor (in the case
of a stock dividend) or the effective date thereof (in the case of a stock split
or similar recapitalization for which a record date is not established) shall be
prior to the Effective Time, the Exchange Ratio shall be proportionately
adjusted.
3.3 SHARES HELD BY TRIANGLE OR CENTURA. Each of the shares of Triangle
Common Stock held by any Triangle Company or by any Centura Company, in each
case other than in a fiduciary capacity or as a result of debts previously
contracted, shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
3.4 FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, each holder of shares of Triangle Common Stock exchanged pursuant to
the Merger who would otherwise have been entitled to receive a fraction of a
share of Centura Common Stock (after taking into account all certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of Centura
Common Stock multiplied by the market value of one share of Centura Common Stock
at the Effective Time. The market value of one share of Centura Common Stock at
the Effective Time shall be the closing price of Centura Common Stock on the
NYSE -- Composite Transactions List (as reported by The Wall Street Journal or,
if not reported thereby, any other authoritative source selected by Centura) on
the last trading day preceding the Effective Time. No such holder will be
entitled to dividends, voting rights, or any other rights as a stockholder in
respect of any fractional shares.
3.5 CONVERSION OF STOCK RIGHTS.
(a) At the Effective Time, each award, option, or other right to
purchase or acquire shares of Triangle Common Stock pursuant to stock
options, stock appreciation rights, or stock awards ("Triangle Rights")
granted by Triangle under the Triangle Stock Plans, which are outstanding
at the Effective Time, whether or not exercisable, shall be converted into
and become rights with respect to Centura Common Stock, and Centura shall
assume each Triangle Right, in accordance with the terms of the Triangle
Stock Plan and stock option agreement by which it is evidenced, except that
from and after the Effective Time, (i) Centura and its Compensation
Committee shall be substituted for Triangle and the Committee of Triangle's
Board of Directors (including, if applicable, the entire Board of Directors
of Triangle) administering such Triangle Stock Plan, (ii) each Triangle
Right assumed by Centura may be exercised solely for shares of Centura
Common Stock (or cash in the case of stock appreciation rights), (iii) the
number of shares of Centura Common Stock subject to such Triangle Right
shall be equal to the number of shares of Triangle Common Stock subject to
such Triangle Right immediately prior to the Effective Time multiplied by
the Exchange Ratio, and (iv) the per share exercise price (or similar
threshold price, in the case of stock awards) under each such Triangle
Right shall be adjusted by dividing the per share exercise (or threshold)
price under each such Triangle Right by the Exchange Ratio and rounding up
to the nearest cent. Notwithstanding the provisions of clause (iii) of the
preceding sentence, Centura shall not be obligated to issue any fraction of
a share of Centura Common Stock upon exercise of Triangle Rights and any
fraction of a share of Centura Common Stock that otherwise would be subject
to a converted Triangle Right shall represent the right to receive a cash
payment equal to the product of such fraction and the difference between
the market value of one share of Centura Common Stock and the per share
exercise price of such Right. The market value of one share of Centura
Common Stock shall be the closing price of Centura Common Stock on the
NYSE -- Composite Transactions List
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(as reported by The Wall Street Journal or, if not reported thereby, any
other authoritative source selected by Centura) on the last trading day
preceding the date of exercise of the Triangle Right. In addition,
notwithstanding the provisions of clauses (iii) and (iv) of the first
sentence of this Section 3.5, each Triangle Right which is an "incentive
stock option" shall be adjusted as required by Section 424 of the Internal
Revenue Code, so as not to constitute a modification, extension, or renewal
of the option, within the meaning of Section 424(h) of the Internal Revenue
Code. Centura agrees to take all necessary steps to effectuate the
foregoing provisions of this Section 3.5.
(b) As soon as reasonably practicable after the Effective Time,
Centura shall deliver to the participants in each Triangle Stock Plan an
appropriate notice setting forth such participant's rights pursuant thereto
and the grants pursuant to such Triangle Stock Plan shall continue in
effect on the same terms and conditions (subject to the adjustments
required by Section 3.5(a) after giving effect to the Merger), and Centura
shall comply with the terms of each Triangle Stock Plan to ensure, to the
extent required by, and subject to the provisions of, such Triangle Stock
Plan, that Triangle Rights which qualified as incentive stock options prior
to the Effective Time continue to qualify as incentive stock options after
the Effective Time. At or prior to the Effective Time, Centura shall take
all corporate action necessary to reserve for issuance sufficient shares of
Centura Common Stock for delivery upon exercise of Triangle Rights assumed
by it in accordance with this Section 3.5. As soon as reasonably
practicable after the Effective Time, Centura shall file a registration
statement on Form S-3 or Form S-8, as the case may be (or any successor or
other appropriate forms), with respect to the shares of Centura Common
Stock subject to such options and shall use its reasonable efforts to
maintain the effectiveness of such registration statements (and maintain
the current status of the prospectus or prospectuses contained therein) for
so long as such options remain outstanding. With respect to those
individuals who subsequent to the Merger will be subject to the reporting
requirements under Section 16(a) of the 1934 Act, where applicable, Centura
shall administer the Triangle Stock Plan assumed pursuant to this Section
3.5 in a manner that complies with Rule 16b-3 promulgated under the 1934
Act.
(c) All restrictions or limitations on transfer with respect to
Triangle Common Stock awarded under the Triangle Stock Plans or any other
plan, program, or arrangement of any Triangle Company, to the extent that
such restrictions or limitations shall not have already lapsed, and except
as otherwise expressly provided in such plan, program, or arrangement,
shall remain in full force and effect with respect to shares of Centura
Common Stock into which such restricted stock is converted pursuant to
Section 3.1 of this Agreement.
3.6 CONVERSION OF TRIANGLE WARRANTS. At the Effective Time, each Triangle
Warrant which is outstanding at the Effective Time, whether or not exercisable,
shall be converted into and become a right with respect to Centura Common Stock,
and Centura shall assume each Triangle Warrant, in accordance with the terms of
the agreement by which the Triangle Warrant is evidenced, except that from and
after the Effective Time, (i) each Triangle Warrant assumed by Centura may be
exercised solely for shares of Centura Common Stock, (ii) the number of shares
of Centura Common Stock subject to such Triangle Warrant shall be equal to the
number of shares of Triangle Common Stock subject to such Triangle Warrant
immediately prior to the Effective Time, multiplied by the Exchange Ratio, and
(iii) the per share exercise price under each such Triangle Warrant shall be
adjusted by dividing the per share exercise price under each such Triangle
Warrant by the Exchange Ratio and rounding up to the nearest cent.
ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time, Centura and
Triangle shall cause the exchange agent selected by Centura (the "Exchange
Agent") to mail to the former stockholders of Triangle appropriate transmittal
materials (which shall specify that delivery shall be effected, and risk of loss
and title to the certificates theretofore representing shares of Triangle Common
Stock shall pass, only upon proper delivery of such certificates to the Exchange
Agent). After the Effective Time, each holder of
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shares of Triangle Common Stock (other than shares to be canceled pursuant to
Section 3.3 of this Agreement) issued and outstanding at the Effective Time
shall surrender the certificate or certificates representing such shares to the
Exchange Agent and shall promptly upon surrender thereof receive in exchange
therefor the consideration provided in Section 3.1 of this Agreement, together
with all undelivered dividends or distributions in respect of such shares
(without interest thereon) pursuant to Section 4.2 of this Agreement. To the
extent required by Section 3.4 of this Agreement, each holder of shares of
Triangle Common Stock issued and outstanding at the Effective Time also shall
receive, upon surrender of the certificate or certificates representing such
shares, cash in lieu of any fractional share of Centura Common Stock to which
such holder may be otherwise entitled (without interest). Centura shall not be
obligated to deliver the consideration to which any former holder of Triangle
Common Stock is entitled as a result of the Merger until such holder surrenders
such holder's certificate or certificates representing the shares of Triangle
Common Stock for exchange as provided in this Section 4.1. The certificate or
certificates of Triangle Common Stock so surrendered shall be duly endorsed as
the Exchange Agent may require. Any other provision of this Agreement
notwithstanding, neither the Surviving Corporation nor the Exchange Agent shall
be liable to a holder of Triangle Common Stock for any amounts paid or property
delivered in good faith to a public official pursuant to any applicable
abandoned property Law.
4.2 RIGHTS OF FORMER TRIANGLE STOCKHOLDERS. At the Effective Time, the
stock transfer books of Triangle shall be closed as to holders of Triangle
Common Stock immediately prior to the Effective Time and no transfer of Triangle
Common Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 4.1 of
this Agreement, each certificate theretofore representing shares of Triangle
Common Stock (other than shares to be canceled pursuant to Section 3.3 of this
Agreement) shall from and after the Effective Time represent for all purposes
only the right to receive the consideration provided in Sections 3.1 and 3.4 of
this Agreement in exchange therefor, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time which have been declared or made
by Triangle in respect of such shares of Triangle Common Stock in accordance
with the terms of this Agreement and which remain unpaid at the Effective Time.
To the extent permitted by Law, former stockholders of record of Triangle shall
be entitled to vote after the Effective Time at any meeting of Centura
stockholders the number of whole shares of Centura Common Stock into which their
respective shares of Triangle Common Stock are converted, regardless of whether
such holders have exchanged their certificates representing Triangle Common
Stock for certificates representing Centura Common Stock in accordance with the
provisions of this Agreement. Whenever a dividend or other distribution is
declared by Centura on the Centura Common Stock, the record date for which is at
or after the Effective Time, the declaration shall include dividends or other
distributions on all shares issuable pursuant to this Agreement, but beginning
30 days after the Effective Time no dividend or other distribution payable to
the holders of record of Centura Common Stock as of any time subsequent to the
Effective Time shall be delivered to the holder of any certificate representing
shares of Triangle Common Stock issued and outstanding at the Effective Time
until such holder surrenders such certificate for exchange as provided in
Section 4.1 of this Agreement. However, upon surrender of such Triangle Common
Stock certificate, both the Centura Common Stock certificate (together with all
such undelivered dividends or other distributions without interest) and any
undelivered dividends and cash payments to be paid for fractional share
interests (without interest) shall be delivered and paid with respect to each
share represented by such certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF TRIANGLE
Triangle hereby represents and warrants to Centura as follows:
5.1 ORGANIZATION, STANDING, AND POWER. Triangle is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
North Carolina, and has the corporate power and authority to carry on its
business as now conducted and to own, lease, and operate its Material Assets.
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Triangle is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Triangle.
5.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Triangle has the corporate power and authority necessary to execute,
deliver, and perform its obligations under this Agreement and the Plan of Merger
and to consummate the transactions contemplated hereby and thereby. The
execution, delivery, and performance of this Agreement and the Plan of Merger,
and the consummation of the transactions contemplated herein and therein,
including the Merger, have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of Triangle, subject to the
approval of this Agreement and the Plan of Merger by the holders of a majority
of the outstanding shares of Triangle Common Stock entitled to be cast thereon,
which is the only stockholder vote required for approval of this Agreement and
the Plan of Merger and consummation of the Merger by Triangle. Subject to such
requisite stockholder approval, this Agreement and the Plan of Merger represent
legal, valid, and binding obligations of Triangle, enforceable against Triangle
in accordance with their respective terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought).
(b) Neither the execution and delivery of this Agreement and the Plan of
Merger by Triangle, nor the consummation by Triangle of the transactions
contemplated hereby or thereby, nor compliance by Triangle with any of the
provisions hereof or thereof, will (i) conflict with or result in a breach of
any provision of Triangle's Articles of Incorporation or Bylaws, or (ii)
constitute or result in a Default under, or require any Consent pursuant to, or
result in the creation of any Lien on any Asset of any Triangle Company under,
any Contract or Permit of any Triangle Company, where such Default or Lien, or
any failure to obtain such Consent, is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Triangle, or (iii) subject to
receipt of the requisite Consents referred to in Section 9.1(b) of this
Agreement, violate any Law or Order applicable to any Triangle Company or any of
their respective Material Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules of
the NYSE, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
or under the HSR Act, and other than Consents, filings, or notifications which,
if not obtained or made, are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Triangle, no notice to, filing with,
or Consent of, any public body or authority is necessary for the consummation by
Triangle of the Merger and the other transactions contemplated in this Agreement
and the Plan of Merger.
5.3 CAPITAL STOCK.
(a) The authorized capital stock of Triangle consists, as of the date of
this Agreement, of 50,000,000 shares of Triangle Common Stock, of which
25,197,731 shares are issued and outstanding as of the date of this Agreement
and not more than 26,833,810 shares (together with such number of additional
shares that will be issued for the fiscal year ending December 31, 1999 under
the Management Incentive Compensation Plan of Triangle) will be issued and
outstanding at the Effective Time. All of the issued and outstanding shares of
Triangle Common Stock are duly and validly issued and outstanding and are fully
paid and nonassessable under the North Carolina Business Corporation Act. None
of the outstanding shares of Triangle Common Stock has been issued in violation
of any preemptive rights of the current or past stockholders of Triangle.
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(b) Except as set forth in Section 5.3(a) of this Agreement or Section
5.3(b) of the Triangle Disclosure Memorandum, or as provided pursuant to the
Triangle Stock Option Agreement, there are no shares of capital stock or other
equity securities of Triangle outstanding and no outstanding Rights relating to
the capital stock of Triangle.
5.4 TRIANGLE SUBSIDIARIES. Triangle has disclosed in Section 5.4 of the
Triangle Disclosure Memorandum all of the Triangle Subsidiaries as of the date
of this Agreement. Except as set forth in Section 5.4 of the Triangle Disclosure
Memorandum, Triangle or one of its Subsidiaries owns all of the issued and
outstanding shares of capital stock of each Triangle Subsidiary. No equity
securities of any Triangle Subsidiary are or may become required to be issued
(other than to another Triangle Company) by reason of any Rights, and there are
no Contracts by which any Triangle Subsidiary is bound to issue (other than to
another Triangle Company) additional shares of its capital stock or Rights or by
which any Triangle Company is or may be bound to transfer any shares of the
capital stock of any Triangle Subsidiary (other than to another Triangle
Company). There are no Contracts relating to the rights of any Triangle Company
to vote or to dispose of any shares of the capital stock of any Triangle
Subsidiary. All of the shares of capital stock of each Triangle Subsidiary held
by a Triangle Company are duly authorized, validly issued, and fully paid and,
except as provided in statutes pursuant to which depository institution
Subsidiaries are organized, nonassessable under the applicable corporation Law
of the jurisdiction in which such Subsidiary is incorporated or organized and
are owned by the Triangle Company free and clear of any Lien. Except as set
forth in Section 5.4 of the Triangle Disclosure Memorandum, each Triangle
Subsidiary is either a bank or a corporation, and is duly organized, validly
existing, and (as to corporations) in good standing under the Laws of the
jurisdiction in which it is incorporated or organized, and has the corporate
power and authority necessary for it to own, lease, and operate its Assets and
to carry on its business as now conducted. Each Triangle Subsidiary is duly
qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Triangle. Each Triangle
Subsidiary that is a depository institution is an "insured institution" as
defined in the Federal Deposit Insurance Act and applicable regulations
thereunder, and the deposits in which are insured by the Bank Insurance Fund or
Savings Association Insurance Fund.
5.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Triangle has filed and made available to Centura all forms, reports,
and documents required to be filed by Triangle with the SEC since December 31,
1995 (collectively, the "Triangle SEC Reports"). The Triangle SEC Reports (i) at
the time filed, complied in all Material respects with the applicable
requirements of the 1933 Act and the 1934 Act, as the case may be, and (ii) did
not at the time they were filed (or if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing) contain any
untrue statement of a Material fact or omit to state a Material fact required to
be stated in such Triangle SEC Reports or necessary in order to make the
statements in such Triangle SEC Reports, in light of the circumstances under
which they were made, not misleading. Except for Triangle Subsidiaries that are
registered as a broker, dealer, or investment advisor or filings required due to
fiduciary holdings of the Triangle Subsidiaries, none of Triangle's Subsidiaries
is required to file any forms, reports, or other documents with the SEC.
(b) Each of the Triangle Financial Statements (including, in each case, any
related notes) contained in the Triangle SEC Reports, including any Triangle SEC
Reports filed after the date of this Agreement until the Effective Time,
complied or will comply as to form in all Material respects with the applicable
published rules and regulations of the SEC with respect thereto, was prepared or
will be prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes to such
financial statements, or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC), and fairly presented or will fairly present the
consolidated financial position of Triangle and its Subsidiaries as at the
respective dates and the consolidated results of its operations and cash flows
for the periods indicated, except that the unaudited interim financial
statements were or are
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subject to normal and recurring year-end adjustments which were not or are not
expected to be Material in amount or effect.
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Triangle Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Triangle, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Triangle as of
June 30, 1999, included in the Triangle Financial Statements or reflected in the
notes thereto and except for Liabilities incurred in the ordinary course of
business subsequent to June 30, 1999. No Triangle Company has incurred or paid
any Liability since June 30, 1999, except for such Liabilities incurred or paid
in the ordinary course of business consistent with past business practice and
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Triangle.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1999, except as
disclosed in the Triangle Financial Statements, (i) there have been no events,
changes, or occurrences which have had, or are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Triangle, and
(ii) the Triangle Companies have conducted their respective businesses in the
ordinary and usual course (excluding the incurrence of expenses in connection
with this Agreement and the transactions contemplated hereby).
5.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of any of the
Triangle Companies have been timely filed, or requests for extensions have been
timely filed, granted, and have not expired for Taxable Periods ended on or
before December 31, 1998, and, to the Knowledge of Triangle, all Tax Returns
filed are complete and accurate in all Material respects. All Tax Returns for
Taxable Periods ending on or before the date of the most recent fiscal year end
immediately preceding the Effective Time will be timely filed or requests for
extensions will be timely filed. All Taxes shown on filed Tax Returns have been
paid. There is no audit examination, deficiency, or refund Litigation with
respect to any Taxes, that is reasonably likely to result in a determination
that would have, individually or in the aggregate, a Material Adverse Effect on
Triangle, except to the extent reserved against in the Triangle Financial
Statements dated prior to the date of this Agreement. All Taxes and other
Liabilities due with respect to completed and settled examinations or concluded
Litigation have been paid.
(b) None of the Triangle Companies has executed an extension or waiver of
any statute of limitations on the assessment or collection of any Tax due
(excluding such statutes that relate to years currently under examination by the
Internal Revenue Service or other applicable taxing authorities) that is
currently in effect.
(c) Adequate provision for any Taxes due or to become due for any of the
Triangle Companies for the period or periods through and including the date of
the respective Triangle Financial Statements has been made and is reflected on
such Triangle Financial Statements.
(d) Each of the Triangle Companies is in compliance with, and its records
contain all information and documents (including properly completed IRS Forms
W-9) necessary to comply with, all applicable information reporting and Tax
withholding requirements under federal, state, and local Tax Laws, and such
records identify with specificity all accounts subject to backup withholding
under Section 3406 of the Internal Revenue Code, except for such instances of
noncompliance and such omissions as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Triangle.
(e) Except as set forth in Section 5.8(e) of the Triangle Disclosure
Memorandum, none of the Triangle Companies has made any payments, is obligated
to make any payments, or is a party to any contract, agreement, or other
arrangement that could obligate it to make any payments that would be disallowed
as a deduction under Section 280G or 162(m) of the Internal Revenue Code.
(f) There are no Material Liens with respect to Taxes upon any of the
Assets of the Triangle Companies.
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(g) Except as set forth in Section 5.8(g) of the Triangle Disclosure
Memorandum, there has not been an ownership change, as defined in Internal
Revenue Code Section 382(g), of the Triangle Companies that occurred during or
after any Taxable Period in which the Triangle Companies incurred a net
operating loss that carries over to any Taxable Period ending after December 31,
1998.
(h) No Triangle Company has filed any consent under Section 341(f) of the
Internal Revenue Code concerning collapsible corporations.
(i) After the date of this Agreement, no Material election with respect to
Taxes will be made without the prior consent of Centura, which consent will not
be unreasonably withheld.
(j) No Triangle Company has or has had a permanent establishment in any
foreign country, as defined in any applicable tax treaty or convention between
the United States and such foreign country.
5.9 ASSETS. The Triangle Companies have good and marketable title, free
and clear of all Liens, to all of their respective Assets. All Material tangible
properties used in the businesses of the Triangle Companies are in good
condition, reasonable wear and tear excepted, and are usable in the ordinary
course of business consistent with Triangle's past practices. All Assets which
are Material to Triangle's business on a consolidated basis, held under leases
or subleases by any of the Triangle Companies, are held under valid Contracts
enforceable in accordance with their respective terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
or other Laws affecting the enforcement of creditors' rights generally and
except that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceedings may be brought), and each such Contract is in full force and effect.
The Triangle Companies currently maintain insurance in amounts, scope, and
coverage reasonably necessary for their operations. None of the Triangle
Companies has received notice from any insurance carrier that (i) such insurance
will be canceled or that coverage thereunder will be reduced or eliminated, or
(ii) premium costs with respect to such policies of insurance will be
substantially increased, in either case as a result of extraordinary loss
experienced on the part of such Triangle Company. The Assets of the Triangle
Companies include all Assets required to operate the business of the Triangle
Companies as presently conducted in all Material respects.
5.10 ENVIRONMENTAL MATTERS.
(a) Each Triangle Company, its Participation Facilities, and its Loan
Properties are, and have been, in compliance with all Environmental Laws, except
those violations which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Triangle.
(b) There is no Litigation pending or, to the Knowledge of Triangle,
threatened before any court, governmental agency, or authority, or other forum
in which any Triangle Company or any of its Participation Facilities has been
or, with respect to threatened Litigation, may reasonably be expected to be
named as a defendant (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release into the
environment of any Hazardous Material, whether or not occurring at, on, under,
or involving a site owned, leased, or operated by any Triangle Company or any of
its Participation Facilities, except for such Litigation pending or threatened
that is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Triangle.
(c) There is no Litigation pending, or to the Knowledge of Triangle,
threatened before any court, governmental agency, or board, or other forum in
which any of its Loan Properties (or Triangle in respect of such Loan Property)
has been or, with respect to threatened Litigation, may reasonably be expected
to be named as a defendant or potentially responsible party (i) for alleged
noncompliance (including by any predecessor) with any Environmental Law or (ii)
relating to the release into the environment of any Hazardous Material, whether
or not occurring at, on, under, or involving a Loan Property, except for such
Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Triangle.
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(d) To the Knowledge of Triangle, during the period of (i) any Triangle
Company's ownership or operation of any of their respective current properties,
(ii) any Triangle Company's participation in the management of any Participation
Facility, or (iii) any Triangle Company's holding of a security interest in a
Loan Property, there have been no releases of Hazardous Material in, on, under,
or affecting (or potentially affecting) such properties, except such as are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Triangle. Prior to the period of (i) any Triangle Company's ownership
or operation of any of their respective current properties, (ii) any Triangle
Company's participation in the management of any Participation Facility, or
(iii) any Triangle Company's holding of a security interest in a Loan Property,
to the Knowledge of Triangle, there were no releases of Hazardous Material in,
on, under, or affecting any such property, Participation Facility, or Loan
Property, except such as are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Triangle.
5.11 COMPLIANCE WITH LAWS. Triangle is duly registered as a bank holding
company under the BHC Act. Each Triangle Company has in effect all Permits
necessary for it to own, lease, or operate its Material Assets and to carry on
its business as now conducted, except for those Permits the absence of which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Triangle, and there has occurred no Default under any such
Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Triangle. None of
the Triangle Companies:
(a) is in violation of any Laws, Orders, or Permits applicable to its
business or employees conducting its business, except for violations which
are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Triangle; and
(b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory
Authority or the staff thereof (i) asserting that any Triangle Company is
not in compliance with any of the Laws or Orders which such governmental
authority or Regulatory Authority enforces, where such noncompliance is
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Triangle, (ii) threatening to revoke any Permits, the
revocation of which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Triangle, or (iii) requiring any
Triangle Company (x) to enter into or consent to the issuance of a cease
and desist order, formal agreement, directive, commitment, or memorandum of
understanding, or (y) to adopt any Board resolution or similar undertaking,
which restricts materially the conduct of its business, or in any manner
relates to its capital adequacy, its credit or reserve policies, its
management, or the payment of dividends.
5.12 LABOR RELATIONS. No Triangle Company is the subject of any Litigation
asserting that it or any other Triangle Company has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state Law) or seeking to compel it or any other Triangle Company to bargain with
any labor organization as to wages or conditions of employment, nor is any
Triangle Company a party to or bound by any collective bargaining agreement,
Contract, or other agreement or understanding with a labor union or labor
organization, nor is there any strike or other labor dispute involving any
Triangle Company, pending or threatened, or to the Knowledge of Triangle, is
there any activity involving any Triangle Company's employees seeking to certify
a collective bargaining unit or engaging in any other organization activity.
5.13 EMPLOYEE BENEFIT PLANS.
(a) Triangle has disclosed to Centura in Section 5.13 of the Triangle
Disclosure Memorandum, and has delivered or made available to Centura prior to
the execution of this Agreement correct and complete copies in each case of, all
Material Triangle Benefits Plans. For purposes of this Agreement, "Triangle
Benefit Plans" means all pension, retirement, profit-sharing, deferred
compensation, stock option, employee stock ownership, severance pay, vacation,
bonus, or other incentive plan, all other written employee programs or
agreements, all medical, vision, dental, or other health plans, all life
insurance plans, and all other employee benefit plans or fringe benefit plans,
including, without limitation, "employee benefit plans"
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as that term is defined in Section 3(3) of ERISA maintained by, sponsored in
whole or in part by, or contributed to by, any Triangle Company for the benefit
of employees, retirees, dependents, spouses, directors, independent contractors,
or other beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries are eligible to
participate. Any of the Triangle Benefit Plans which is an "employee welfare
benefit plan," as that term is defined in Section 3(l) of ERISA, or an "employee
pension benefit plan," as that term is defined in Section 3(2) of ERISA, is
referred to herein as a "Triangle ERISA Plan." Any Triangle ERISA Plan which is
also a "defined benefit plan" (as defined in Section 414(j) of the Internal
Revenue Code or Section 3(35) of ERISA) is referred to herein as a "Triangle
Pension Plan." Neither Triangle nor any Triangle Company has an "obligation to
contribute" (as defined in ERISA Section 4212) to a "multiemployer plan" (as
defined in ERISA Sections 4001(a)(3) and 3(37)(A)). Each "employee pension
benefit plan," as defined in Section 3(2) of ERISA, ever maintained by any
Triangle Company that was intended to qualify under Section 401(a) of the
Internal Revenue Code and with respect to which any Triangle Company has any
Liability, is disclosed as such in Section 5.13 of the Triangle Disclosure
Memorandum.
(b) Triangle has delivered or made available to Centura prior to the
execution of this Agreement correct and complete copies of the following
documents: (i) all trust agreements or other funding arrangements for such
Triangle Benefit Plans (including insurance contracts), and all amendments
thereto, (ii) with respect to any such Triangle Benefit Plans or amendments, all
determination letters, Material rulings, Material opinion letters, Material
information letters, or Material advisory opinions issued by the Internal
Revenue Service, the United States Department of Labor, or the Pension Benefit
Guaranty Corporation after December 31, 1996, (iii) annual reports or returns,
audited or unaudited financial statements, actuarial valuations and reports, and
summary annual reports prepared for any Triangle Benefit Plan with respect to
the most recent plan year, and (iv) the most recent summary plan descriptions
and any Material modifications thereto.
(c) All Triangle Benefit Plans are in compliance with the applicable terms
of ERISA, the Internal Revenue Code, and any other applicable Laws, the breach
or violation of which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Triangle. A favorable determination
letter or opinion letter has been issued by the Internal Revenue Service with
respect to each Triangle ERISA Plan which is intended to be qualified under
Section 401(a) of the Internal Revenue Code, and Triangle is not aware of any
circumstances which will or could reasonably be expected to result in revocation
of any such favorable determination letter or opinion letter. Each trust created
under any Triangle ERISA Plan has been determined to be exempt from Tax under
Section 501(a) of the Internal Revenue Code and Triangle is not aware of any
circumstance which will or could reasonably be expected to result in revocation
of such exemption. With respect to each Triangle Benefit Plan to the Knowledge
of Triangle, no event has occurred which will or could reasonably give rise to a
loss of any intended Tax consequences under the Internal Revenue Code or to any
Tax under Section 511 of the Internal Revenue Code that is reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on Triangle.
There is no Material pending or, to the Knowledge of Triangle, threatened
Litigation relating to any Triangle ERISA Plan.
(d) No Triangle Company has engaged in a transaction with respect to any
Triangle Benefit Plan that, assuming the Taxable Period of such transaction
expired as of the date of this Agreement, would subject any Triangle Company to
a Material tax or penalty imposed by either Section 4975 of the Internal Revenue
Code or Section 502(i) of ERISA in amounts which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Triangle. Neither
Triangle nor any administrator or fiduciary of any Triangle Benefit Plan (or any
agent of any of the foregoing) has engaged in any transaction, or acted or
failed to act in any manner which could reasonably be expected to subject
Triangle to any direct or indirect Liability (by indemnity or otherwise) for
breach of any fiduciary, co-fiduciary, or other duty under ERISA, where such
Liability, individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect on Triangle. No oral or written representation or
communication with respect to any aspect of the Triangle Benefit Plans has been
made to employees of any Triangle Company which is not in accordance with the
written or otherwise preexisting terms and provisions of such plans,
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where any Liability with respect to such representation or disclosure is
reasonably likely to have a Material Adverse Effect on Triangle.
(e) No Triangle Pension Plan is subject to Section 302 of ERISA or Section
412 of the Internal Revenue Code. Neither any Triangle Pension Plan nor any
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any Triangle Company, or the single-employer
plan of any entity which is considered one employer with Triangle under Section
4001 of ERISA or Section 414 of the Internal Revenue Code or Section 302 of
ERISA (whether or not waived) (a "Triangle ERISA Affiliate") has an "accumulated
funding deficiency" within the meaning of Section 412 of the Internal Revenue
Code or Section 302 of ERISA. Any required contributions with respect to a
Triangle Pension Plan or any single-employer plan of a Triangle ERISA Affiliate
have or will be timely made and there is no lien or expected to be a lien under
Internal Revenue Code Section 412(n) or ERISA Section 302(f) or Tax under
Internal Revenue Code Section 4971. No Triangle Company has provided, or is
required to provide, security to a Triangle Pension Plan or to any
single-employer plan of a Triangle ERISA Affiliate pursuant to Section
401(a)(29) of the Internal Revenue Code.
(f) No Liability under Title IV of ERISA has been or is expected to be
incurred by any Triangle Company with respect to any defined benefit plan
currently or formerly maintained by any of them or by any Triangle ERISA
Affiliate that has not been satisfied in full (other than Liability for Pension
Benefit Guaranty Corporation premiums, which have been paid when due, except to
the extent any failure would not have a Material Adverse Effect on Triangle).
(g) Except as disclosed in Section 5.13 of the Triangle Disclosure
Memorandum, no Triangle Company has any obligations for retiree health and
retiree life benefits under any of the Triangle Benefit Plans other than with
respect to benefit coverage mandated by applicable Law.
(h) Except as set forth in Section 5.13 of the Triangle Disclosure
Memorandum, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will, by themselves, (i)
result in any payment (including, without limitation, severance, unemployment
compensation, golden parachute, or otherwise) becoming due to any director or
any employee of any Triangle Company from any Triangle Company under any
Triangle Benefit Plan or otherwise, (ii) increase any benefits otherwise payable
under any Triangle Benefit Plan, or (iii) result in any acceleration of the time
of payment or vesting of any such benefit.
5.14 MATERIAL CONTRACTS. Except as set forth in Section 5.14 of the
Triangle Disclosure Memorandum, none of the Triangle Companies, nor any of their
respective Assets, businesses, or operations, is a party to, or is bound or
affected by, or receives benefits under, (i) any employment, severance,
termination, consulting, or retirement Contract providing for aggregate payments
to any Person in any calendar year in excess of $75,000, (ii) any Contract
relating to the borrowing of money by any Triangle Company or the guarantee by
any Triangle Company of any such obligation (other than Contracts evidencing
deposit liabilities, purchases of federal funds, fully-secured repurchase
agreements, and Federal Home Loan Bank advances of depository institution
Subsidiaries, trade payables, and Contracts relating to borrowings or guarantees
made in the ordinary course of business), and (iii) any other Contract or
amendment thereto that would be required to be filed as an exhibit to a Form
10-K filed by Triangle with the SEC as of the date of this Agreement that has
not been filed as an exhibit to Triangle's Form 10-K filed for the fiscal year
ended December 31, 1998, or in another SEC Document and identified to Centura
(together with all Contracts referred to in Sections 5.9 and 5.13(a) of this
Agreement, the "Triangle Contracts"). With respect to each Triangle Contract:
(i) the Contract is in full force and effect; (ii) no Triangle Company is in
Default thereunder, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Triangle; (iii)
no Triangle Company has repudiated or waived any Material provision of any such
Contract; and (iv) no other party to any such Contract is, to the Knowledge of
Triangle, in Default in any respect, other than Defaults which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Triangle, or has repudiated or waived any Material provision
thereunder. Except for Federal Home Loan Bank advances, the junior subordinated
debentures associated with the outstanding Capital
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Securities of Triangle Capital Trust and other term liabilities incurred in the
ordinary course of business, all of the indebtedness of any Triangle Company for
money borrowed is prepayable at any time by such Triangle Company without
penalty or premium.
5.15 LEGAL PROCEEDINGS.
(a) There is no Litigation instituted or pending, or, to the Knowledge of
Triangle, threatened against any Triangle Company, or against any Asset,
employee benefit plan, interest, or right of any of them, that is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Triangle, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against any Triangle
Company, that are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Triangle.
(b) Section 5.15(b) of the Triangle Disclosure Memorandum includes a
summary report of all Litigation as of the date of this Agreement to which any
Triangle Company is a party and which names a Triangle Company as a defendant or
cross-defendant and where the maximum exposure is estimated to be $100,000 or
more.
5.16 REPORTS. Since January 1, 1996, or the date of organization if later,
each Triangle Company has timely filed all reports and statements, together with
any amendments required to be made with respect thereto, that it was required to
file with any Regulatory Authorities, except failures to file which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Triangle. As of their respective dates, each of such reports and
documents, including the financial statements, exhibits, and schedules thereto,
complied in all Material respects with all applicable Laws.
5.17 STATEMENTS TRUE AND CORRECT. None of the information supplied or to
be supplied by any Triangle Company or any Affiliate thereof regarding Triangle
or such Affiliate for inclusion in the Registration Statement to be filed by
Centura with the SEC will, when the Registration Statement becomes effective, be
false or misleading with respect to any Material fact, or contain any untrue
statement of a Material fact, or omit to state any Material fact required to be
stated thereunder or necessary to make the statements therein not misleading.
None of the information supplied or to be supplied by any Triangle Company or
any Affiliate thereof for inclusion in the Joint Proxy Statement to be mailed to
Centura's and Triangle's stockholders in connection with the Stockholders'
Meetings will, when first mailed to the stockholders of Centura and Triangle, be
false or misleading with respect to any Material fact, or contain any
misstatement of Material fact, or omit to state any Material fact required to be
stated thereunder or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or, in the case of the
Joint Proxy Statement or any amendment thereof or supplement thereto, at the
time of the Stockholders' Meetings, be false or misleading with respect to any
Material fact, or omit to state any Material fact required to be stated
thereunder or necessary to correct any Material statement in any earlier
communication with respect to the solicitation of any proxy for the
Stockholders' Meetings. All documents that any Triangle Company or any Affiliate
thereof is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated hereby will comply as to form in all Material
respects with the provisions of applicable Law.
5.18 ACCOUNTING, TAX, AND REGULATORY MATTERS. No Triangle Company or any
Affiliate thereof has taken or agreed to take any action, and Triangle has no
Knowledge of any fact or circumstance that is reasonably likely, to (i) prevent
the transactions contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment, (ii) prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, or (iii) materially impede or delay receipt of any
Consents of Regulatory Authorities referred to in Section 9.1(b) of this
Agreement or result in the imposition of a condition or restriction of the type
referred to in the last sentence of such Section.
5.19 STATE TAKEOVER LAWS. Each Triangle Company has taken all necessary
action to exempt the transactions contemplated by this Agreement from any
applicable "moratorium," "control share," "fair
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price," "business combination," or other anti-takeover laws and regulations of
the State of North Carolina (collectively, "Takeover Laws").
5.20 DERIVATIVES. All interest rate swaps, caps, floors, option
agreements, futures and forward contracts, and other similar risk management
arrangements, whether entered into for Triangle's own account, or for the
account of one or more of the Triangle Subsidiaries or their customers, were
entered into (i) in accordance with prudent business practices and all
applicable Material Laws, and (ii) with counterparties believed to be
financially responsible.
5.21 YEAR 2000. Triangle has completed the four phases of its Year 2000
readiness program, as described in the May 5, 1997, Statement of the Federal
Financial Institutions Examination Council ("FFIEC"), entitled "Year 2000
Project Management Awareness" and the April 10, 1998, "Guidance Concerning
Testing for Year 2000 Readiness." Triangle has made available to Centura
complete and accurate copies of its Year 2000 remediation contingency plan, as
described in the FFIEC Statements of March 17, 1998, and May 13, 1998, entitled
"Guidance Concerning Institution Due Diligence in Connection with Service
Provider and Software Vendor Year 2000 Readiness" and "Guidance Concerning
Contingency Planning in Connection with Year 2000 Readiness," respectively.
Triangle has completed the four phases of the business resumption contingency
planning process, as set forth in the guidance issued by FFIEC on December 11,
1998, and May 13, 1998, and has provided to Centura a complete and accurate copy
of its business resumption contingency plan, written documentation supporting
the plan's development and validation, the results of tests on the plan, and a
schedule for any future tests.
5.22 UNDERWRITING. Triangle has underwritten each loan reflected as an
Asset in the Triangle Financial Statements in accordance with Triangle's
underwriting procedures as set forth in its policies manual previously provided
to Centura and has, in its files, appropriate documentation, including notes and
collateralization documents, for each loan that are the legal, valid, binding
obligations of the obligor of each loan, enforceable in accordance with their
terms (except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, receivership, conservatorship,
moratorium, or similar Laws affecting the enforcement of creditors' rights
generally and except that the availability of the equitable remedy of specific
performance or injunctive relief is subject to the discretion of the court
before which any proceeding may be brought), except to the extent the failure to
underwrite a loan in accordance with Triangle's underwriting procedures or to
maintain appropriate documentation is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Triangle.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF CENTURA
Centura hereby represents and warrants to Triangle as follows:
6.1 ORGANIZATION, STANDING, AND POWER. Centura is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
North Carolina, and has the corporate power and authority to carry on its
business as now conducted and to own, lease, and operate its Material Assets.
Centura is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Centura.
6.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Centura has the corporate power and authority necessary to execute,
deliver, and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery, and performance of
this Agreement and the consummation of the transactions contemplated herein,
including the Merger, have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of Centura, subject to the
approval of the issuance of the
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shares of Centura Common Stock pursuant to the Merger by the holders of a
majority of the outstanding shares of Centura Common Stock present or
represented at the Centura Stockholders' Meeting, which is the only stockholder
vote required for the consummation of the Merger by Centura. Subject to such
requisite stockholder approval, this Agreement represents a legal, valid, and
binding obligation of Centura, enforceable against Centura in accordance with
its terms (except in all cases as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by Centura, nor
the consummation by Centura of the transactions contemplated hereby, nor
compliance by Centura with any of the provisions hereof, will (i) conflict with
or result in a breach of any provision of Centura's Articles of Incorporation or
Bylaws, (ii) constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien on any Asset of any Centura
Company under, any Contract or Permit of any Centura Company, where such Default
or Lien, or any failure to obtain such Consent, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Centura, or (iii)
subject to receipt of the requisite Consents referred to in Section 9.1(b) of
this Agreement, violate any Law or Order applicable to any Centura Company or
any of their respective Material Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules of
the NYSE, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
or under the HSR Act, and other than Consents, filings, or notifications which,
if not obtained or made, are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Centura, no notice to, filing with,
or Consent of, any public body or authority is necessary for the consummation by
Centura of the Merger and the other transactions contemplated in this Agreement
and the Plan of Merger.
6.3 CAPITAL STOCK. The authorized capital stock of Centura consists, as of
the date of this Agreement, of (i) 50,000,000 shares of Centura Common Stock, of
which 28,465,362 shares were issued and outstanding as of June 30, 1999, and
(ii) 25,000,000 shares of Centura Preferred Stock, none of which is issued and
outstanding. All of the issued and outstanding shares of Centura Common Stock
are, and all of the shares of Centura Common Stock to be issued in exchange for
shares of Triangle Common Stock upon consummation of the Merger, when issued in
accordance with the terms of this Agreement, will be, duly and validly issued
and outstanding and fully paid and nonassessable under the North Carolina
Business Corporation Act. None of the outstanding shares of Centura Common Stock
has been, and none of the shares of Centura Common Stock to be issued in
exchange for shares of Triangle Common Stock upon consummation of the Merger
will be, issued in violation of any preemptive rights of the current or past
stockholders of Centura.
6.4 CENTURA SUBSIDIARIES. Centura or one of its Subsidiaries owns all of
the issued and outstanding shares of capital stock of each Centura Subsidiary.
No equity securities of any Centura Subsidiary are or may become required to be
issued (other than to another Centura Company) by reason of any Rights, and
there are no Contracts by which any Centura Subsidiary is bound to issue (other
than to another Centura Company) additional shares of its capital stock or
Rights or by which any Centura Company is or may be bound to transfer any shares
of the capital stock of any Centura Subsidiary (other than to another Centura
Company). There are no Contracts relating to the rights of any Centura Company
to vote or to dispose of any shares of the capital stock of any Centura
Subsidiary. All of the shares of capital stock of each Centura Subsidiary held
by a Centura Company are fully paid and, except as provided in statutes pursuant
to which depository institution Subsidiaries are organized, nonassessable under
the applicable corporation Law of the jurisdiction in which such Subsidiary is
incorporated or organized and are owned by the Centura Company free and clear of
any Lien. Each Centura Subsidiary is either a bank or a corporation, and is duly
organized, validly existing, and (as to corporations) in good standing under the
Laws of the jurisdiction in which it is incorporated or organized, and has the
corporate power and authority necessary
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for it to own, lease, and operate its Assets and to carry on its business as now
conducted. Each Centura Subsidiary is duly qualified or licensed to transact
business as a foreign corporation in good standing in the States of the United
States and foreign jurisdictions where the character of its Assets or the nature
or conduct of its business requires it to be so qualified or licensed, except
for such jurisdictions in which the failure to be so qualified or licensed is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Centura. Each Centura Subsidiary that is a depository
institution is an "insured institution" as defined in the Federal Deposit
Insurance Act and applicable regulations thereunder, and the deposits in which
are insured by the Bank Insurance Fund or Savings Association Insurance Fund.
6.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Centura has filed and made available to Triangle all forms, reports,
and documents required to be filed by Centura with the SEC since December 31,
1995 (collectively, the "Centura SEC Reports"). The Centura SEC Reports (i) at
the time filed, complied in all Material respects with the applicable
requirements of the 1933 Act and the 1934 Act, as the case may be, and (ii) did
not at the time they were filed (or if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing) contain any
untrue statement of a Material fact or omit to state a Material fact required to
be stated in such Centura SEC Reports or necessary in order to make the
statements in such Centura SEC Reports, in light of the circumstances under
which they were made, not misleading. Except for Centura Subsidiaries that are
registered as a broker, dealer, or investment advisor or filings required due to
fiduciary holdings of the Centura Subsidiaries, none of Centura Subsidiaries is
required to file any forms, reports, or other documents with the SEC.
(b) Each of the Centura Financial Statements (including, in each case, any
related notes) contained in the Centura SEC Reports, including any Centura SEC
Reports filed after the date of this Agreement until the Effective Time,
complied or will comply as to form in all Material respects with the applicable
published rules and regulations of the SEC with respect thereto, was or will be
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by Form 10-Q of
the SEC), and fairly presented or will fairly present the consolidated financial
position of Centura and its Subsidiaries as at the respective dates and the
consolidated results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not or are not expected to
be Material in amount or effect.
6.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Centura Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Centura, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Centura as of
June 30, 1999, included in the Centura Financial Statements or reflected in the
notes thereto and except for Liabilities incurred in the ordinary course of
business subsequent to June 30, 1999. No Centura Company has incurred or paid
any Liability since June 30, 1999, except for such Liabilities incurred or paid
in the ordinary course of business consistent with past business practice and
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Centura.
6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1999, except as
disclosed in the Centura Financial Statements delivered prior to the date of
this Agreement, (i) there have been no events, changes or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Centura, and (ii) the Centura Companies have
conducted their respective businesses in the ordinary and usual course
(excluding the incurrence of expenses in connection with this Agreement and the
transactions contemplated hereby).
6.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of any of the
Centura Companies have been timely filed, or requests for extensions have been
timely filed, granted, and have not expired for Taxable Periods ended on or
before December 31, 1998, and, to the Knowledge of Centura, all Tax Returns
filed
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are complete and accurate in all Material respects. All Tax Returns for Taxable
Periods ending on or before the date of the most recent fiscal year end
immediately preceding the Effective Time will be timely filed or requests for
extensions will be timely filed. All Taxes shown on filed Tax Returns have been
paid. There is no audit examination, deficiency, or refund Litigation with
respect to any Taxes, that is reasonably likely to result in a determination
that would have, individually or in the aggregate, a Material Adverse Effect on
Centura, except to the extent reserved against in the Centura Financial
Statements dated prior to the date of this Agreement. All Taxes and other
Liabilities due with respect to completed and settled examinations or concluded
Litigation have been paid.
(b) None of the Centura Companies has executed an extension or waiver of
any statute of limitations on the assessment or collection of any Tax due
(excluding such statutes that relate to years currently under examination by the
Internal Revenue Service or other applicable taxing authorities) that is
currently in effect.
(c) Adequate provision for any Taxes due or to become due for any of the
Centura Companies for the period or periods through and including the date of
the respective Centura Financial Statements has been made and is reflected on
such Centura Financial Statements.
(d) Each of the Centura Companies is in compliance with, and its records
contain all information and documents (including properly completed IRS Forms
W-9) necessary to comply with, all applicable information reporting and Tax
withholding requirements under federal, state, and local Tax Laws, and such
records identify with specificity all accounts subject to backup withholding
under Section 3406 of the Internal Revenue Code, except for such instances of
noncompliance and such omissions as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Centura.
(e) None of the Centura Companies has made any payments, is obligated to
make any payments, or is a party to any contract, agreement, or other
arrangement that could obligate it to make any payments that would be disallowed
as a deduction under Section 280G or 162(m) of the Internal Revenue Code.
(f) There are no Material Liens with respect to Taxes upon any of the
Assets of the Centura Companies.
(g) There has not been an ownership change, as defined in Internal Revenue
Code Section 382(g), of the Centura Companies that occurred during or after any
Taxable Period in which the Centura Companies incurred a net operating loss that
carries over to any Taxable Period ending after December 31, 1998.
(h) No Centura Company has filed any consent under Section 341(f) of the
Internal Revenue Code concerning collapsible corporations.
(i) After the date of this Agreement, no Material election with respect to
Taxes will be made without the prior consent of Triangle, which consent will not
be unreasonably withheld.
(j) No Centura Company has or has had a permanent establishment in any
foreign country, as defined in any applicable tax treaty or convention between
the United States and such foreign country.
6.9 ASSETS. The Centura Companies have good and marketable title, free and
clear of all Liens, to all of their respective Assets. All Material tangible
properties used in the businesses of the Centura Companies are in good
condition, reasonable wear and tear excepted, and are usable in the ordinary
course of business consistent with Centura's past practices. All Assets which
are Material to Centura's business on a consolidated basis, held under leases or
subleases by any of the Centura Companies, are held under valid Contracts
enforceable in accordance with their respective terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
or other Laws affecting the enforcement of creditors' rights generally and
except that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceedings may be brought), and each such Contract is in full force and effect.
The Centura Companies currently maintain insurance similar in amounts, scope,
and coverage reasonably necessary for their operations. None of the Centura
Companies has received notice from any insurance carrier that (i) such
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insurance will be canceled or that coverage thereunder will be reduced or
eliminated, or (ii) premium costs with respect to such policies of insurance
will be substantially increased, in either case as a result of extraordinary
loss experienced on the part of such Centura Company. The Assets of the Centura
Companies include all Assets required to operate the business of the Centura
Companies as presently conducted in all Material respects.
6.10 ENVIRONMENTAL MATTERS.
(a) Each Centura Company, its Participation Facilities, and its Loan
Properties are, and have been, in compliance with all Environmental Laws, except
those violations which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Centura.
(b) There is no Litigation pending or, to the Knowledge of Centura,
threatened before any court, governmental agency, or authority, or other forum
in which any Centura Company or any of its Participation Facilities has been or,
with respect to threatened Litigation, may reasonably be expected to be named as
a defendant (i) for alleged noncompliance (including by any predecessor) with
any Environmental Law or (ii) relating to the release into the environment of
any Hazardous Material, whether or not occurring at, on, under, or involving a
site owned, leased, or operated by any Centura Company or any of its
Participation Facilities, except for such Litigation pending or threatened that
is not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Centura.
(c) There is no Litigation pending or, to the Knowledge of Centura,
threatened before any court, governmental agency, or board, or other forum in
which any of its Loan Properties (or Centura in respect of such Loan Property)
has been or, with respect to threatened Litigation, may reasonably be expected
to be named as a defendant or potentially responsible party (i) for alleged
noncompliance (including by any predecessor) with any Environmental Law or (ii)
relating to the release into the environment of any Hazardous Material, whether
or not occurring at, on, under, or involving a Loan Property, except for such
Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Centura.
(d) To the Knowledge of Centura, during the period of (i) any Centura
Company's ownership or operation of any of their respective current properties,
(ii) any Centura Company's participation in the management of any Participation
Facility, or (iii) any Centura Company's holding of a security interest in a
Loan Property, there have been no releases of Hazardous Material in, on, under,
or affecting (or potentially affecting) such properties, except such as are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Centura. Prior to the period of (i) any Centura Company's ownership or
operation of any of their respective current properties, (ii) any Centura
Company's participation in the management of any Participation Facility, or
(iii) any Centura Company's holding of a security interest in a Loan Property,
to the Knowledge of Centura, there were no releases of Hazardous Material in,
on, under, or affecting any such property, Participation Facility, or Loan
Property, except such as are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Centura.
6.11 COMPLIANCE WITH LAWS. Centura is duly registered as a bank holding
company under the BHC Act. Each Centura Company has in effect all Permits
necessary for it to own, lease, or operate its Material Assets and to carry on
its business as now conducted, except for those Permits the absence of which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Centura, and there has occurred no Default under any such
Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Centura. None of
the Centura Companies:
(a) is in violation of any Laws, Orders, or Permits applicable to its
business or employees conducting its business, except for violations which
are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Centura; and
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(b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory
Authority or the staff thereof (i) asserting that any Centura Company is
not in compliance with any of the Laws or Orders which such governmental
authority or Regulatory Authority enforces, where such noncompliance is
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Centura, (ii) threatening to revoke any Permits, the
revocation of which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Centura, or (iii) requiring any
Centura Company (x) to enter into or consent to the issuance of a cease and
desist order, formal agreement, directive, commitment, or memorandum of
understanding, or (y) to adopt any Board resolution or similar undertaking,
which restricts materially the conduct of its business, or in any manner
relates to its capital adequacy, its credit or reserve policies, its
management, or the payment of dividends.
6.12 LABOR RELATIONS. No Centura Company is the subject of any Litigation
asserting that it or any other Centura Company has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state Law) or seeking to compel it or any other Centura Company to bargain with
any labor organization as to wages or conditions of employment, nor is any
Centura Company a party to or bound by any collective bargaining agreement,
Contract, or other agreement or understanding with a labor union or labor
organization, nor is there any strike or other labor dispute involving any
Centura Company, pending or threatened, or to the Knowledge of Centura, is there
any activity involving any Centura Company's employees seeking to certify a
collective bargaining unit or engaging in any other organization activity.
6.13 EMPLOYEE BENEFIT PLANS. All Centura Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other applicable
Laws, the breach or violation of which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Centura. For
purposes of this Agreement, the term "Centura Plan" means each bonus, incentive
compensation, severance pay, medical, or other insurance program, retirement
plan, or other employee benefit plan program, agreement, or arrangement
sponsored, maintained, or contributed to by Centura or any trade or business,
whether or not incorporated, that together with Centura or any of its
Subsidiaries would be deemed a "single employer" under Section 414 of the
Internal Revenue Code (a "Centura ERISA Affiliate") or under which Centura or
any Centura ERISA Affiliate has any Liability or obligation. No Liability under
Title IV of ERISA has been incurred by Centura or any Centura ERISA Affiliate
that has not been satisfied in full, and no condition exists that presents a
Material risk to Centura or any Centura ERISA Affiliate of incurring any such
Liability. With respect to any Centura Plan that is subject to Title IV of
ERISA, full payment has been made, or will be made in accordance with Section
404(a)(6) of the Internal Revenue Code, of all amounts that Centura or any
Centura ERISA Affiliate is required to pay under Section 412 of the Internal
Revenue Code or under the terms of the Centura Plans, and no accumulated funding
deficiency (within the meaning of Section 412 of the Internal Revenue Code)
exists with respect to any Centura Plan. There are no Material actions, suits,
or claims pending, or, to the Knowledge of Centura, threatened or anticipated
relating to any Centura Plan. There has been no Material adverse change in the
financial position or funded status of any Centura Plan that is subject to Title
IV of ERISA since the date of the information relating to the financial position
and funded status of each such plan contained in Centura's Form 10-K filed for
the fiscal year ended December 31, 1998.
6.14 LEGAL PROCEEDINGS. Except as disclosed in the Centura Financial
Statements, there is no Litigation instituted or pending, or, to the Knowledge
of Centura, threatened against any Centura Company, or against any Asset,
employee benefit plan, interest, or right of any of them, that is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Centura, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against any Centura
Company, that are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Centura.
6.15 REPORTS. Since January 1, 1996, or the date of organization if later,
each Centura Company has timely filed all reports and statements, together with
any amendments required to be made with respect thereto, that it was required to
file with any Regulatory Authorities, except failures to file which are not
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reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Centura. As of their respective dates, each of such reports and
documents, including the financial statements, exhibits, and schedules thereto,
complied in all Material respects with all applicable Laws.
6.16 STATEMENTS TRUE AND CORRECT. None of the information supplied or to
be supplied by any Centura Company or any Affiliate thereof regarding Centura or
such Affiliate for inclusion in the Registration Statement to be filed by
Centura with the SEC will, when the Registration Statement becomes effective, be
false or misleading with respect to any Material fact, or contain any untrue
statement of a Material fact, or omit to state any Material fact required to be
stated thereunder or necessary to make the statements therein not misleading.
None of the information supplied or to be supplied by any Centura Company or any
Affiliate thereof for inclusion in the Joint Proxy Statement to be mailed to
Triangle's and Centura's stockholders in connection with the Stockholders'
Meetings, will, when first mailed to the stockholders of Triangle and Centura,
be false or misleading with respect to any Material fact, or contain any
misstatement of Material fact, or omit to state any Material fact required to be
stated thereunder or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or, in the case of the
Joint Proxy Statement or any amendment thereof or supplement thereto, at the
time of the Stockholders' Meetings, be false or misleading with respect to any
Material fact, or omit to state any Material fact required to be stated
thereunder or necessary to correct any Material statement in any earlier
communication with respect to the solicitation of any proxy for the
Stockholders' Meetings. All documents that any Centura Company or any Affiliate
thereof is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated hereby will comply as to form in all Material
respects with the provisions of applicable Law.
6.17 ACCOUNTING, TAX, AND REGULATORY MATTERS. No Centura Company or any
Affiliate thereof has taken or agreed to take any action, and Centura has no
Knowledge of any fact or circumstance that is reasonably likely, to (i) prevent
the transactions contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment, (ii) prevent the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, or (iii) materially impede or delay receipt of any
Consents of Regulatory Authorities referred to in Section 9.1(b) of this
Agreement or result in the imposition of a condition or restriction of the type
referred to in the last sentence of such Section.
6.18 DERIVATIVES. All interest rate swaps, caps, floors, option
agreements, futures and forward contracts, and other similar risk management
arrangements, whether entered into for Centura's own account, or for the account
of one or more the Centura Subsidiaries or their customers, were entered into
(i) in accordance with prudent business practices and all applicable Laws, and
(ii) with counterparties believed to be financially responsible.
6.19 YEAR 2000. Centura has completed the four phases of its Year 2000
readiness program, as described in the May 5, 1997, Statement of the FFIEC,
entitled "Year 2000 Project Management Awareness" and the April 10, 1998,
"Guidance Concerning Testing for Year 2000 Readiness." Centura has made
available to Triangle complete and accurate copies of its Year 2000 remediation
contingency plan, as described in the FFIEC Statements of March 17, 1998, and
May 13, 1998, entitled "Guidance Concerning Institution Due Diligence in
Connection with Service Provider and Software Vendor Year 2000 Readiness" and
"Guidance Concerning Contingency Planning in Connection with Year 2000
Readiness," respectively. Centura has completed the four phases of the business
resumption contingency planning process, as set forth in the guidance issued by
FFIEC on December 11, 1998, and May 13, 1998, and has provided to Triangle a
complete and accurate copy of its business resumption contingency plan, written
documentation supporting the plan's development and validation, the results of
tests on the plan, and a schedule for any future tests.
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ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF BOTH PARTIES. Unless the prior written
consent of the other Party shall have been obtained, and except as otherwise
expressly contemplated herein, each Party shall and shall cause each of its
Subsidiaries to (i) operate its business only in the usual, regular, and
ordinary course, (ii) preserve intact its business organization and Assets and
maintain its rights and franchises, (iii) use its reasonable efforts to maintain
its current employee relationships, and (iv) take no action which would (a)
adversely affect the ability of any Party to obtain any Consents required for
the transactions contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentence of Section 9.1(b) of
this Agreement, or (b) adversely affect the ability of any Party to perform its
covenants and agreements under this Agreement; provided that in the case of
Centura, the provisions of this Section 7.1 (other than the provisions of clause
(iv) above) shall not be deemed to preclude Centura from continuing to implement
its program of acquiring unaffiliated depository and nondepository institutions.
7.2 NEGATIVE COVENANTS OF TRIANGLE. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, Triangle
covenants and agrees that it will not do or agree or commit to do, or permit any
of its Subsidiaries to do or agree or commit to do, any of the following without
the prior written consent of the chief executive officer or chief financial
officer of Centura, which consent shall not be unreasonably withheld:
(a) amend the Articles of Incorporation, Bylaws, or other governing
instruments of any Triangle Company; or
(b) incur, guarantee, or otherwise become responsible for, any
additional debt obligation or other obligation for borrowed money (other
than indebtedness of a Triangle Company to another Triangle Company) in
excess of an aggregate of $500,000 (for the Triangle Companies on a
consolidated basis), except in the ordinary course of the business
consistent with past practices (which shall include, for Triangle
Subsidiaries that are depository institutions, creation of deposit
liabilities, purchases of federal funds, advances from the Federal Reserve
Bank or Federal Home Loan Bank, and entry into repurchase agreements fully
secured by U.S. government or agency securities), or impose, or suffer the
imposition, on any Asset of any Triangle Company of any Lien or permit any
such Lien to exist (other than in connection with deposits, repurchase
agreements, bankers acceptances, "treasury tax and loan" accounts
established in the ordinary course of business, the satisfaction of legal
requirements in the exercise of trust powers, and Liens in effect as of the
date hereof that are disclosed in the Triangle Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any shares, of
the capital stock of any Triangle Company, or declare or pay any dividend
or make any other distribution in respect of Triangle's capital stock,
provided that Triangle may (to the extent legally and contractually
permitted to do so), but shall not be obligated to, declare and pay regular
quarterly cash dividends on the shares of Triangle Common Stock at a rate
of $.10 per share with usual and regular record and payment dates in
accordance with past practice as disclosed in Section 7.2(c) of the
Triangle Disclosure Memorandum and such dates may not be changed without
the prior written consent of Centura; provided, that, notwithstanding the
provisions of Section 1.3 of this Agreement, the Parties shall cooperate in
selecting the Effective Time to ensure that, with respect to the quarterly
period in which the Effective Time occurs, the holders of Triangle Common
Stock do not receive both a dividend in respect of their Triangle Common
Stock and a dividend in respect of Centura Common Stock or fail to receive
any dividend; or
(d) except for this Agreement, or pursuant to the Triangle Stock
Option Agreement or pursuant to the exercise of Rights outstanding as of
the date of this Agreement and pursuant to the terms thereof in existence
on the date of this Agreement (or, in the case of the Management Incentive
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Compensation Plan, additional Rights that will be issued for the fiscal
year ending December 31, 1999), issue, sell, pledge, encumber, authorize
the issuance of, enter into any Contract to issue, sell, pledge, encumber,
or authorize the issuance of, or otherwise permit to become outstanding,
any additional shares of Triangle Common Stock or any other capital stock
of any Triangle Company, or any stock appreciation rights, or any option,
warrant, conversion, or other right to acquire any such stock, or any
security convertible into any such stock; or
(e) adjust, split, combine, or reclassify any capital stock of any
Triangle Company or issue or authorize the issuance of any other securities
in respect of or in substitution for shares of Triangle Common Stock, or
sell, lease, mortgage, or otherwise dispose of or otherwise encumber (i)
any shares of capital stock of any Triangle Subsidiary (unless any such
shares of stock are sold or otherwise transferred to another Triangle
Company) or (ii) any Asset other than in the ordinary course of business
for reasonable and adequate consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities and for purchases of other securities in the
ordinary course of business consistent with past practice, which in either
case have maturities of three years or less, purchase any securities or
make any Material investment, either by purchase of stock or securities,
contributions to capital, Asset transfers, or purchase of any Assets, in
any Person other than a wholly-owned Triangle Subsidiary, or otherwise
acquire direct or indirect control over any Person, other than in
connection with (i) foreclosures in the ordinary course of business, (ii)
acquisitions of control by a depository institution Subsidiary in its
fiduciary capacity, or (iii) the creation of new wholly-owned Subsidiaries
organized to conduct or continue activities otherwise permitted by this
Agreement; or
(g) grant any increase in compensation or benefits to the employees or
officers of any Triangle Company, except in accordance with past practice
and consistent with budget data previously provided to Centura or as
required by Law; pay any severance or termination pay or any bonus other
than pursuant to written policies or written Contracts in effect on the
date of this Agreement; enter into or amend any severance agreements with
officers of any Triangle Company; grant any increase in fees or other
increases in compensation or other benefits to directors of any Triangle
Company; or voluntarily accelerate the vesting of any stock options or
other stock-based compensation or employee benefits; or
(h) enter into or amend any employment Contract between any Triangle
Company and any Person (unless such amendment is required by Law) that the
Triangle Company does not have the unconditional right to terminate without
Liability (other than Liability for services already rendered), at any time
on or after the Effective Time; or
(i) adopt any new employee benefit plan of any Triangle Company or
make any Material change in or to any existing employee benefit plans of
any Triangle Company other than any such change that is required by Law or
that, in the opinion of counsel, is necessary or advisable to maintain the
tax qualified status of any such plan; or
(j) make any significant change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to
conform to changes in Tax Laws or regulatory accounting requirements or
GAAP; or
(k) commence any Litigation other than as necessary for the prudent
operation of its business or settle any Litigation involving any Liability
of any Triangle Company for Material money damages or restrictions upon the
operations of any Triangle Company; or
(l) except in the ordinary course of business, modify, amend, or
terminate any Material Contract or waive, release, compromise, or assign
any Material rights or claims.
7.3 ADVERSE CHANGES IN CONDITION. Each Party agrees to give written notice
promptly to the other Party upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
Material breach of any of its
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representations, warranties, or covenants contained herein, and to use its
reasonable efforts to prevent or promptly to remedy the same.
7.4 REPORTS. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the SEC, such financial statements will
fairly present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
changes in stockholders' equity, and cash flows for the periods then ended in
accordance with GAAP (subject in the case of interim financial statements to
normal recurring year-end adjustments that are not Material). As of their
respective dates, such reports filed with the SEC will comply in all Material
respects with the Securities Laws and will not contain any untrue statement of a
Material fact or omit to state a Material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Any financial statements contained
in any other reports to another Regulatory Authority shall be prepared in
accordance with Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 REGISTRATION STATEMENT; JOINT PROXY STATEMENT; STOCKHOLDER
APPROVALS. As soon as reasonably practicable after execution of this Agreement,
Centura shall file the Registration Statement with the SEC, and shall use its
reasonable efforts to cause the Registration Statement to become effective under
the 1933 Act and take any action required to be taken under the applicable state
Blue Sky or securities Laws in connection with the issuance of the shares of
Centura Common Stock upon consummation of the Merger. Triangle shall furnish all
information concerning it and the holders of its capital stock as Centura may
reasonably request in connection with such action. Triangle shall call a
Stockholders' Meeting, to be held as soon as reasonably practicable after the
Registration Statement is declared effective by the SEC, for the purpose of
voting upon approval of this Agreement and such other related matters as it
deems appropriate. Centura shall call a Stockholders' Meeting, to be held as
soon as reasonably practicable after the Registration Statement is declared
effective by the SEC, for the purpose of voting upon approval of the issuance of
shares of Centura Common Stock pursuant to the Merger and such other related
matters as it deems appropriate. In connection with the Stockholders' Meetings,
(i) Centura and Triangle shall prepare and file with the SEC a Joint Proxy
Statement and mail such Joint Proxy Statement to their respective stockholders,
(ii) the Parties shall furnish to each other all information concerning them
that they may reasonably request in connection with such Joint Proxy Statement,
(iii) the Boards of Directors of Centura and Triangle shall recommend to their
respective stockholders the approval of the matters submitted for approval, and
(iv) the Boards of Directors and officers of Centura and Triangle shall use
their reasonable efforts to obtain such stockholders' approvals, provided that
each of Centura and Triangle may withdraw, modify, or change in an adverse
manner to the other Party its recommendations if the Board of Directors of such
Party, after having consulted with and based upon the advice of outside counsel,
determines in good faith that the failure to so withdraw, modify, or change its
recommendation could constitute a breach of the fiduciary duties of such Party's
Board of Directors under applicable Law. In addition, nothing in this Section
8.1 or elsewhere in this Agreement shall prohibit accurate disclosure by either
Party of information that is required to be disclosed in the Registration
Statement or the Joint Proxy Statement or in any other document required to be
filed with the SEC (including, without limitation, a Solicitation/Recommendation
Statement on Schedule 14D-9) or otherwise required to be publicly disclosed by
applicable Law or regulations or rules of the NYSE.
8.2 EXCHANGE LISTING. Centura shall use its reasonable efforts to list,
prior to the Effective Time, on the NYSE, subject to official notice of
issuance, the shares of Centura Common Stock to be issued to the holders of
Triangle Common Stock pursuant to the Merger.
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8.3 APPLICATIONS. Centura shall promptly prepare and file, and Triangle
shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement.
8.4 FILINGS WITH STATE OFFICE. Upon the terms and subject to the
conditions of this Agreement, Centura Merger Subsidiary shall execute and file
the North Carolina Articles of Merger with the Secretary of State of the State
of North Carolina in connection with the Closing.
8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
reasonably practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including, without limitation, using its
reasonable efforts to lift or rescind any Order adversely affecting its ability
to consummate the transactions contemplated herein and to cause to be satisfied
the conditions referred to in Article 9 of this Agreement; provided, that
nothing herein shall preclude either Party from exercising its rights under this
Agreement. Each Party shall use, and shall cause each of its Subsidiaries to
use, its reasonable efforts to obtain all Consents necessary or desirable for
the consummation of the transactions contemplated by this Agreement.
8.6 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, each Party shall keep the other Party
advised of all Material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or cause to
be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the other
Party reasonably requests, provided that such investigation shall be reasonably
related to the transactions contemplated hereby and shall not interfere
unnecessarily with normal operations. No investigation by a Party shall affect
the representations and warranties of the other Party.
(b) Each Party shall, and shall cause its advisers and agents to, maintain
the confidentiality of all confidential information furnished to it by the other
Party concerning its and its Subsidiaries' businesses, operations, and financial
positions and shall not use such information for any purpose except in
furtherance of the transactions contemplated by this Agreement. If this
Agreement is terminated prior to the Effective Time, each Party shall promptly
return or certify the destruction of all documents and copies thereof, and all
work papers containing confidential information received from the other Party.
(c) Each Party agrees to give the other Party notice as soon as practicable
after any determination by it of any fact or occurrence relating to the other
Party which it has discovered through the course of its investigation and which
represents, or is reasonably likely to represent, either a Material breach of
any representation, warranty, covenant, or agreement of the other Party or which
has had or is reasonably likely to have a Material Adverse Effect on the other
Party.
(d) Neither Party nor any of their respective Subsidiaries shall be
required to provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of its customers, jeopardize
the attorney-client or similar privilege with respect to such information or
contravene any Law, rule, regulation, Order, judgment, decree, fiduciary duty,
or agreement entered into prior to the date of this Agreement. The Parties will
use their reasonable efforts to make appropriate substitute disclosure
arrangements, to the extent practicable, in circumstances in which the
restrictions of the preceding sentence apply.
8.7 PRESS RELEASES. Prior to the Effective Time, Centura and Triangle
shall consult with each other as to the form and substance of any press release
or other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 8.7
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
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8.8 CERTAIN ACTIONS. Except with respect to this Agreement and the
transactions contemplated hereby, no Triangle Company nor any Affiliate thereof
nor any Representative thereof retained by any Triangle Company shall, directly
or indirectly, initiate, solicit, encourage or knowingly facilitate (including
by way of furnishing information) any inquiries or the making of any Acquisition
Proposal. Notwithstanding anything herein to the contrary, Triangle and its
Board of Directors shall be permitted (i) to the extent applicable, to comply
with Rule 14d-9 and Rule 14e-2 promulgated under the 1934 Act with regard to an
Acquisition Proposal, (ii) to engage in any discussions or negotiations with, or
provide any information to, any Person in response to an unsolicited bona fide
written Acquisition Proposal by any such Person, if and only to the extent that
(a) Triangle's Board of Directors concludes in good faith and consistent with
its fiduciary duties to Triangle's stockholders under applicable Law that such
Acquisition Proposal could reasonably be expected to result in a Superior
Proposal, (b) prior to providing any information or data to any Person in
connection with an Acquisition Proposal by any such Person, Triangle's Board of
Directors receives from such Person an executed confidentiality agreement
containing confidentiality terms at least as stringent as those contained in the
Confidentiality Agreements, and (c) prior to providing any information or data
to any Person or entering into discussions or negotiations with any Person,
Triangle's Board of Directors notifies Centura promptly of such inquiries,
proposals, or offers received by, any such information requested from, or any
such discussions or negotiations sought to be initiated or continued with, any
of its Representatives indicating, in connection with such notice, the name of
such Person and the material terms and conditions of any inquiries, proposals or
offers. Triangle agrees that it will promptly keep Centura informed of the
status and terms of any such proposals or offers and the status and terms of any
such discussions or negotiations. Triangle agrees that it will, and will cause
its officers, directors and Representatives to, immediately cease and cause to
be terminated any activities, discussions, or negotiations existing as of the
date of this Agreement with any parties conducted heretofore with respect to any
Acquisition Proposal. Triangle agrees that it will use reasonable best efforts
to promptly inform its directors, officers, key employees, agents, and
Representatives of the obligations undertaken in this Section 8.8. Nothing in
this Section 8.8 shall (i) permit Triangle to terminate this Agreement (except
as specifically provided in Article 10) or (ii) affect any other obligation of
Centura or Triangle under this Agreement.
8.9 ACCOUNTING AND TAX TREATMENT. Each of the Parties undertakes and
agrees to use its reasonable efforts to cause the Merger to qualify, and to take
no action which would cause the Merger not to qualify, for treatment as a
pooling of interests for accounting purposes and as a "reorganization" within
the meaning of Section 368(a) of the Internal Revenue Code for federal income
tax purposes.
8.10 STATE TAKEOVER LAWS. Each Triangle Company shall take all necessary
steps to exempt the transactions contemplated by this Agreement from, or if
necessary challenge the validity or applicability of, any applicable Takeover
Laws.
8.11 AGREEMENT OF AFFILIATES. Triangle has disclosed in Section 8.11 of
the Triangle Disclosure Memorandum each Person whom it reasonably believes may
be deemed an "affiliate" of Triangle for purposes of Rule 145 under the 1933
Act. Triangle shall use its reasonable efforts to cause each such Person to
deliver to Centura not later than 30 days prior to the Effective Time, a written
agreement, in substantially the form of Exhibit 4, providing that such Person
will not sell, pledge, transfer, or otherwise dispose of the shares of Triangle
Common Stock held by such Person except as contemplated by such agreement or by
this Agreement and will not sell, pledge, transfer, or otherwise dispose of the
shares of Centura Common Stock to be received by such Person upon consummation
of the Merger except in compliance with applicable provisions of the 1933 Act
and the rules and regulations thereunder and until such time as financial
results covering at least 30 days of combined operations of Centura and Triangle
have been published within the meaning of Section 201.01 of the SEC's
Codification of Financial Reporting Policies. Shares of Centura Common Stock
issued to such affiliates of Triangle in exchange for shares of Triangle Common
Stock shall not be transferable until such time as financial results covering at
least 30 days of combined operations of Centura and Triangle have been published
within the meaning of Section 201.01 of the SEC's Codification of Financial
Reporting Policies, regardless of whether each such affiliate has provided the
written agreement referred to in this Section 8.11 (and Centura shall be
entitled
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to place restrictive legends upon certificates for shares of Centura Common
Stock issued to affiliates of Triangle pursuant to this Agreement to enforce the
provisions of this Section 8.11). Centura shall not be required to maintain the
effectiveness of the Registration Statement under the 1933 Act for the purposes
of resale of Centura Common Stock by such affiliates.
8.12 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective Time, but in
no event earlier than the consolidation of Triangle's depository institution
Subsidiaries with Centura's depository institution Subsidiaries, Centura shall
provide generally to officers and employees of the Triangle Companies, who at or
after the Effective Time become employees of a Centura Company (the "Continuing
Employees"), employee benefits under employee benefit plans on terms and
conditions which when taken as a whole are substantially equivalent to those
currently provided by the Centura Companies to their similarly situated officers
and employees. For purposes of participation and vesting (but not accrual of
benefits) under such employee benefit plans, (i) service under any qualified
plans of Triangle shall be treated as service under Centura's qualified plans,
and (ii) service under any other employee benefit plans of Triangle shall be
treated as service under any similar employee benefit plans maintained by
Centura. Centura shall cause the Centura welfare benefit plans that cover the
Continuing Employees after the Effective Time to (i) waive any waiting period
and restrictions and limitations for preexisting conditions or insurability, and
(ii) cause any deductible, co-insurance, or maximum out-of-pocket payments made
by the Continuing Employees under Triangle's welfare benefit plans to be
credited to such Continuing Employees under the Centura welfare benefit plans,
so as to reduce the amount of any deductible, co-insurance, or maximum
out-of-pocket payments payable by the Continuing Employees under the Centura
welfare benefit plans. The continued coverage of the Continuing Employees under
the employee benefits plans maintained by Triangle and/or any Triangle
Subsidiary immediately prior to the Effective Time during a transition period
not to exceed six months shall be deemed to provide the Continuing Employees
with benefits that are no less favorable than those offered to other employees
of Centura and its Subsidiaries, provided that after the Effective Time there is
no Material reduction (determined on an overall basis) in the benefits provided
under the Triangle employee benefit plans. Except as expressly provided in the
Supplemental Letter, Centura also shall cause Triangle and its Subsidiaries to
honor all employment, severance, consulting, and other compensation Contracts
disclosed in Section 8.12 of the Triangle Disclosure Memorandum to Centura
between any Triangle Company and any current or former director, officer, or
employee thereof, and all provisions of the Triangle Benefit Plans. To the
extent that Centura has agreed to cause Triangle or the appropriate Triangle
Subsidiary to honor the Contracts as set forth in the preceding sentence (the
"Triangle Compensation Contracts"), Centura acknowledges that (i) the Merger
constitutes a "Change of Control" and "Change in Control" (as applicable) for
all purposes pursuant to any such Triangle Compensation Contracts, and (ii) that
a "Termination Event" will exist under such Triangle Compensation Contracts
throughout the one-year period (or such shorter period as may be provided for in
the particular Triangle Compensation Contract) following the Effective Time.
Centura shall use all reasonable efforts to identify, and offer employment
opportunities to, qualified, satisfactorily performing employees of Triangle or
any Triangle Company in vacant positions within the business operations of
Centura and the Centura Companies for which such employees are qualified.
Centura shall give, and shall cause each Centura Company to give, priority
consideration to all such employees vis-a-vis all individuals other than current
employees of Centura or any Centura Company.
8.13 INDEMNIFICATION.
(a) From and after the Effective Time, in the event of any threatened or
actual claim, action, suit, proceeding, or investigation, whether civil,
criminal, or administrative, including, without limitation, any such claim,
action, suit, proceeding or investigation in which any person who is now, or has
been at any time prior to the date of this Agreement, or who becomes prior to
the Effective Time, a director or officer of Triangle or any Triangle Subsidiary
(the "Indemnified Parties") is, or is threatened to be, made a party based in
whole or in part on, or arising in whole or in part out of, or pertaining to (i)
the fact that he is or was a director, officer, trustee administering an
employee benefit plan, or employee of Triangle, any of the Triangle
Subsidiaries, or any of their respective predecessors or (ii) this Agreement or
any of the transactions contemplated hereby, whether in any case asserted or
arising before or after the Effective
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Time, Centura shall indemnify and hold harmless, as and to the fullest extent
permitted by Law, each such Indemnified Party against any Liability (including
reasonable attorneys' fees and expenses in advance of the final disposition of
any claim, suit, proceeding, or investigation to each Indemnified Party to the
fullest extent permitted by Law upon receipt of any undertaking required by
applicable Law), judgments, fines, and amounts paid in settlement in connection
with any such threatened or actual claim, action, suit, proceeding, or
investigation, and in the event of any such threatened or actual claim, action,
suit, proceeding, or investigation (whether asserted or arising before or after
the Effective Time), the Indemnified Parties may retain counsel reasonably
satisfactory to them; provided, however, that (a) Centura shall have the right
to assume the defense thereof and upon such assumption Centura shall not be
liable to any Indemnified Party for any legal expenses of other counsel or any
other expenses subsequently incurred by any Indemnified Party in connection with
the defense thereof, except that if Centura elects not to assume such defense or
counsel for the Indemnified Parties reasonably advises the Indemnified Parties
that there are issues which raise conflicts of interest between Centura and the
Indemnified Parties, the Indemnified Parties may retain counsel reasonably
satisfactory to them, and Centura shall pay the reasonable fees and expenses of
such counsel for the Indemnified Parties, (b) Centura shall not be liable for
any settlement effected without its prior written consent (which consent shall
not be unreasonably withheld), and (c) Centura shall have no obligation
hereunder to any Indemnified Party when and if a court of competent jurisdiction
shall ultimately determine, and such determination shall have become final and
nonappealable, that indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable Law. Centura's obligations under
this Section 8.13(a) continue in full force and effect for a period of six years
after the Effective Time; provided, however, that all rights to indemnification
in respect of any claim (a "Claim") asserted or made within such period shall
continue until the final disposition of such Claim.
(b) Centura agrees that all rights to indemnification and all limitations
on Liability existing in favor of the directors, officers, and employees of
Triangle and its Subsidiaries (the "Covered Parties") as provided in their
respective Articles of Incorporation, Bylaws, or similar governing instruments
as in effect as of the date of this Agreement with respect to matters occurring
prior to the Effective Time shall survive the Merger and shall continue in full
force and effect, and shall be honored by such entities or their respective
successors as if they were the indemnifying party thereunder, without any
amendment thereto, for a period of six years after the Effective Time; provided,
however, that all rights to indemnification in respect of any Claim asserted or
made within such period shall continue until the final disposition of such
Claim; provided, further, however, that nothing contained in this Section
8.13(b) shall be deemed to preclude the liquidation, consolidation, or merger of
Triangle or any Triangle Subsidiary, in which case all of such rights to
indemnification and limitations on Liability shall be deemed to so survive and
continue notwithstanding any such liquidation, consolidation, or merger. Without
limiting the foregoing, in any case in which approval by Centura is required to
effectuate any indemnification, Centura 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 Centura and the Indemnified
Party.
(c) Centura, from and after the Effective Time, will directly or indirectly
cause the persons who served as directors or officers of any Triangle Company at
or before the Effective Time to be covered by Triangle's existing directors' and
officers' liability insurance policy (provided that Centura may substitute
therefor policies of at least the same coverage and amounts containing terms and
conditions which are not less advantageous than such policy). Such insurance
coverage shall commence at the Effective Time and will be provided for a period
of no less than three years after the Effective Time.
(d) If Centura or any of its successors or assigns shall consolidate with
or merge into any other Person and shall not be the continuing or surviving
Person of such consolidation or merger or shall transfer all or substantially
all of its Assets to any Person, then and in each case, proper provision shall
be made so that the successors and assigns of Centura shall assume the
obligations set forth in this Section 8.13.
(e) The provisions of this Section 8.13 are intended to be for the benefit
of and shall be enforceable by, each Indemnified Party, his or her heirs and
representatives.
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8.14 CERTAIN MODIFICATIONS. Centura and Triangle shall consult with
respect to their loan, litigation, and real estate valuation policies and
practices (including loan classifications and levels of reserves) and Triangle
shall make such modifications or changes to its policies and practices, if any,
prior to the Effective Time, as may be mutually agreed upon. Centura and
Triangle also shall consult with respect to the character, amount, and timing of
restructuring and Merger-related expense charges to be taken by each of the
Parties in connection with the transactions contemplated by this Agreement and
shall take such charges in accordance with GAAP as may be mutually agreed upon
by the Parties. Neither Party's representations, warranties, and covenants
contained in this Agreement shall be deemed to be inaccurate or breached in any
respect as a consequence of any modifications or charges undertaken solely on
account of this Section 8.14.
8.15 CENTURA MERGER SUBSIDIARY ORGANIZATION. Centura shall organize
Centura Merger Subsidiary under the Laws of the State of North Carolina. Prior
to the Effective Time, the outstanding capital stock of Centura Merger
Subsidiary shall consist of 1,000 shares of Centura Merger Subsidiary Common
Stock, all of which shall be owned by Centura. Prior to the Effective Time,
Centura Merger Subsidiary shall not (i) conduct any business operations
whatsoever or (ii) enter into any contract or agreement of any kind, acquire any
assets, or incur any Liability, except as may be specifically contemplated by
this Agreement or the Plan of Merger or as the Parties may otherwise agree.
Centura, as the sole stockholder of Centura Merger Subsidiary, shall vote prior
to the Effective Time the shares of Centura Merger Subsidiary Common Stock in
favor of the Plan of Merger. At the Effective Time, Centura Merger Subsidiary
shall be a corporation duly organized and validly existing under the Laws of the
State of North Carolina, with the corporate power and authority necessary to
execute, deliver, and perform its obligations under the Plan of Merger and to
consummate the transactions contemplated by the Plan of Merger.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations of
each Party to perform this Agreement and to consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant to Section 11.6 of
this Agreement:
(a) STOCKHOLDER APPROVALS. The stockholders of Triangle shall have
approved this Agreement and the Plan of Merger, and the consummation of the
transactions contemplated hereby and thereby, including the Merger, as and
to the extent required by Law, by the provisions of any governing
instruments, and by the rules of the NYSE. The stockholders of Centura
shall have approved the issuance of shares of Centura Common Stock pursuant
to the Merger, as and to the extent required by Law, by the provisions of
any governing instruments, and by the rules of the NYSE.
(b) REGULATORY APPROVALS. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for
consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent obtained from any Regulatory Authority which is
necessary to consummate the transactions contemplated hereby shall be
conditioned or restricted in a manner (excluding such matters agreed to by
the Parties in the Supplemental Letter) which in the reasonable good faith
judgment of the Board of Directors of Centura would so materially adversely
impact the economic or business benefits of the transactions contemplated
by this Agreement, that had such condition or requirement been known as of
the date of this Agreement, Centura would not, in its reasonable judgment,
have entered into this Agreement.
(c) CONSENTS AND APPROVALS. Each Party shall have obtained any and
all Consents required for consummation of the Merger (other than those
referred to in Section 9.1(b) of this Agreement) or for the preventing of
any Default under any Contract or Permit of such Party which, if not
obtained
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or made, is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on such Party.
(d) LEGAL PROCEEDINGS. No court or governmental or Regulatory
Authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced, or entered any Law or Order (whether temporary,
preliminary, or permanent) or taken any other action which prohibits,
restricts, or makes illegal consummation of the transactions contemplated
by this Agreement.
(e) REGISTRATION STATEMENT. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the effectiveness
of the Registration Statement shall have been issued, no action, suit,
proceeding, or investigation by the SEC to suspend the effectiveness
thereof shall have been initiated and be continuing, and all necessary
approvals under state securities Laws or the 1933 Act or 1934 Act relating
to the issuance or trading of the shares of Centura Common Stock issuable
pursuant to the Merger shall have been received.
(f) EXCHANGE LISTING. The shares of Centura Common Stock issuable
pursuant to the Merger shall have been approved for listing on the NYSE,
subject to official notice of issuance.
(g) TAX MATTERS. Each Party shall have received a written opinion or
opinions from Alston & Bird LLP, in a form reasonably satisfactory to such
Party (the "Tax Opinion"), substantially to the effect that: (i) the Merger
will constitute a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code; (ii) no gain or loss will be recognized by
holders of Triangle Common Stock who exchange all of their Triangle Common
Stock solely for Centura Common Stock pursuant to the Merger (except with
respect to any cash received in lieu of a fractional share interest in
Centura Common Stock); (iii) the tax basis of the Centura Common Stock
received by holders of Triangle Common Stock who exchange all of their
Triangle Common Stock solely for Centura Common Stock in the Merger (plus
cash received in lieu of a fractional share interest in Centura Common
Stock) will be the same as the tax basis of the Triangle Common Stock
surrendered in exchange for the Centura Common Stock (reduced by an amount
allocable to a fractional share interest in Centura Common Stock for which
cash is received); and (iv) the holding period of the Centura Common Stock
received by holders who exchange all of their Triangle Common Stock solely
for Centura Common Stock in the Merger (plus cash received in lieu of a
fractional share interest in Centura Common Stock) will be the same as the
holding period of the Triangle Common Stock surrendered in exchange
therefor, provided that such Triangle Common Stock is held as a capital
asset at the Effective Time.
(h) POOLING LETTER. Each Party shall have received a letter, dated as
of the Effective Time, in a form reasonably acceptable to such Party, from
KPMG LLP to the effect that the Merger will qualify for
pooling-of-interests accounting treatment. Each Party shall have received a
letter, dated as of the Effective Time, in a form reasonably acceptable to
such Party, from PricewaterhouseCoopers LLP to the effect that such firm is
not aware of any matters relating to Triangle and its Subsidiaries which
would preclude Triangle from participating in a merger qualifying for
pooling-of-interests accounting treatment.
9.2 CONDITIONS TO OBLIGATIONS OF CENTURA. The obligations of Centura to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Centura pursuant to Section 11.6(a) of this Agreement:
(a) REPRESENTATIONS AND WARRANTIES. For purposes of this Section
9.2(a), the accuracy of the representations and warranties of Triangle set
forth in this Agreement shall be assessed as of the date of this Agreement
and as of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined to a
specified date shall speak only as of such date). The representations and
warranties of Triangle set forth in Section 5.3 of this Agreement shall be
true and correct (except for inaccuracies which are de minimis in amount).
The representations and warranties of Triangle set forth in Sections 5.18
and 5.19 of this Agreement shall be true and
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correct in all Material respects. There shall not exist inaccuracies in the
representations and warranties of Triangle set forth in this Agreement
(including the representations and warranties set forth in Sections 5.3,
5.18, and 5.19) such that the aggregate effect of such inaccuracies has, or
is reasonably likely to have, a Material Adverse Effect on Triangle;
provided that, for purposes of this sentence only, those representations
and warranties which are qualified by references to "material, "Material,"
"Material Adverse Effect," or variations thereof, or to the "Knowledge" of
Triangle or to a matter being "known" by Triangle shall be deemed not to
include such qualifications.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of Triangle to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all Material respects.
(c) CERTIFICATES. Triangle shall have delivered to Centura (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
duly authorized officers, to the effect that the conditions of its
obligations set forth in Section 9.2(a) and 9.2(b) of this Agreement have
been satisfied, and (ii) certified copies of resolutions duly adopted by
Triangle's Board of Directors and stockholders evidencing the taking of all
corporate action necessary to authorize the execution, delivery, and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as Centura and its
counsel shall request.
(d) AFFILIATE AGREEMENTS. Centura shall have received from each
affiliate of Triangle the affiliates agreement referred to in Section 8.11
of this Agreement, to the extent necessary to assure in the reasonable
judgment of Centura that the transactions contemplated hereby will qualify
for pooling-of-interests accounting treatment.
9.3 CONDITIONS TO OBLIGATIONS OF TRIANGLE. The obligations of Triangle to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Triangle pursuant to Section 11.6(b) of this Agreement:
(a) REPRESENTATIONS AND WARRANTIES. For purposes of this Section
9.3(a), the accuracy of the representations and warranties of Centura set
forth in this Agreement shall be assessed as of the date of this Agreement
and as of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined to a
specified date shall speak only as of such date). The representations and
warranties of Centura set forth in Section 6.3 of this Agreement shall be
true and correct (except for inaccuracies which are de minimis in amount).
The representations and warranties of Centura set forth in Section 6.17 of
this Agreement shall be true and correct in all Material respects. There
shall not exist inaccuracies in the representations and warranties of
Centura set forth in this Agreement (including the representations and
warranties set forth in Sections 6.3 and 6.17) such that the aggregate
effect of such inaccuracies has, or is reasonably likely to have, a
Material Adverse Effect on Centura; provided that, for purposes of this
sentence only, those representations and warranties which are qualified by
references to "material," "Material," "Material Adverse Effect," or
variations thereof, or to the "Knowledge" of Centura or to a matter being
"known" by Centura shall be deemed not to include such qualifications.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of Centura to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all Material respects.
(c) CERTIFICATES. Centura shall have delivered to Triangle (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
duly authorized officers, to the effect that the conditions of its
obligations set forth in Section 9.3(a) and 9.3(b) of this Agreement have
been satisfied, and (ii) certified copies of resolutions duly adopted by
Centura's Board of Directors and stockholders evidencing the taking of all
corporate action necessary to authorize the execution, delivery, and
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performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as Triangle and its
counsel shall request.
ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the stockholders of
Triangle or Centura, this Agreement may be terminated and the Merger abandoned
at any time prior to the Effective Time:
(a) By mutual consent of the Board of Directors of Centura and the
Board of Directors of Triangle; or
(b) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of Triangle and Section 9.3(a)
of this Agreement in the case of Centura or in Material breach of any
covenant or other agreement contained in this Agreement) in the event of an
inaccuracy of any representation or warranty of the other Party contained
in this Agreement which cannot be or has not been cured within 30 days
after the giving of written notice to the breaching Party of such
inaccuracy and which inaccuracy would provide the terminating Party the
ability to refuse to consummate the Merger under the applicable standard
set forth in Section 9.2(a) of this Agreement in the case of Triangle and
Section 9.3(a) of this Agreement in the case of Centura; or
(c) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of Triangle and Section 9.3(a)
in the case of Centura) in the event of a Material breach by the other
Party of any covenant or agreement contained in this Agreement which cannot
be or has not been cured within 30 days after the giving of written notice
to the breaching Party of such breach; or
(d) By the Board of Directors of either Party in the event (i) any
Consent of any Regulatory Authority required for consummation of the Merger
and the other transactions contemplated hereby shall have been denied by
final nonappealable action of such authority or if any action taken by such
authority is not appealed within the time limit for appeal, or (ii) the
stockholders of Centura or Triangle fail to vote their approval of the
matters submitted for the approval by such stockholders at the
Stockholders' Meetings where the transactions were presented to such
stockholders for approval and voted upon; or
(e) By the Board of Directors of either Party in the event that the
Merger shall not have been consummated by June 30, 2000, if the failure to
consummate the transactions contemplated hereby on or before such date is
not caused by any breach of this Agreement by the Party electing to
terminate pursuant to this Section 10.1(e); or
(f) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of Triangle and Section 9.3(a)
of this Agreement in the case of Centura or in Material breach of any
covenant or other agreement contained in this Agreement) in the event that
any of the conditions precedent to the obligations of such Party to
consummate the Merger cannot be satisfied or fulfilled by the date
specified in Section 10.1(e) of this Agreement; or
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(g) By the Board of Directors of Triangle, if it determines by a vote
of a majority of the members of its entire Board, at any time during the
ten-day period commencing two days after the Determination Date, if both of
the following conditions are satisfied:
(1) the Average Closing Price shall be less than the product of (i)
0.80 and (ii) the Starting Price; and
(2) (i) the quotient obtained by dividing the Average Closing
Price by the Starting Price (such number being referred to herein as
the "Centura Ratio") shall be less than (ii) the quotient obtained by
dividing the Index Price on the Determination Date by the Index Price
on the Starting Date and subtracting 0.15 from the quotient in this
clause (2)(ii) (such number being referred to herein as the "Index
Ratio");
subject, however, to the following three sentences. If Triangle refuses to
consummate the Merger pursuant to this Section 10.1(g), it shall give
prompt written notice thereof to Centura; provided, that such notice of
election to terminate may be withdrawn at any time within the
aforementioned ten-day period. During the five-day period commencing with
its receipt of such notice, Centura shall have the option to elect to
increase the Exchange Ratio to equal the lesser of (i) the quotient
(rounded to the nearest one-ten-thousandth) obtained by dividing (1) the
product of 0.80, the Starting Price, and the Exchange Ratio (as then in
effect) by (2) the Average Closing Price, and (ii) the quotient (rounded to
the nearest one-ten-thousandth) obtained by dividing (1) the product of the
Index Ratio and the Exchange Ratio (as then in effect) by (2) the Centura
Ratio. If Centura makes an election contemplated by the preceding sentence,
within such five-day period, it shall give prompt written notice to
Triangle of such election and the revised Exchange Ratio, whereupon no
termination shall have occurred pursuant to this Section 10.1(g) and this
Agreement shall remain in effect in accordance with its terms (except as
the Exchange Ratio shall have been so modified), and any references in this
Agreement to "Exchange Ratio" shall thereafter be deemed to refer to the
Exchange Ratio as adjusted pursuant to this Section 10.1(g).
For purposes of this Section 10.1(g), the following terms shall have
the meanings indicated:
"Average Closing Price" shall mean the average of the daily last
sales prices of Centura Common Stock as reported on the NYSE --
Composite Transactions List (as reported by The Wall Street Journal
or, if not reported thereby, another authoritative source as chosen
by Centura) for the ten consecutive full trading days in which such
shares are traded on the NYSE -- Composite Transactions List ending
at the close of trading on the Determination Date.
"Determination Date" shall mean the later of the date on which (i)
the Consent of the Board of Governors of the Federal Reserve System
(without regard to any requisite waiting period thereof) to the
Merger shall be received and (ii) the Triangle and Centura
stockholders approve the Merger at the Stockholders' Meetings.
"Index Group" shall mean the 13 bank holding companies listed
below, the common stocks of all of which shall be publicly traded and
as to which there shall not have been, since the Starting Date and
before the Determination Date, any public announcement of a proposal
for such company to be acquired or for such company to acquire
another company or companies in transactions with a value exceeding
25% of the acquiror's market capitalization. In the event that any
such company or companies are removed from the Index Group, the
weights (which shall be determined based upon the number of
outstanding shares of common stock) shall be
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redistributed proportionately for purposes of determining the Index
Price. The 13 bank holding companies and the weights attributed to
them are as follows:
BANK HOLDING COMPANIES WEIGHTING
---------------------- ---------
CCB Financial Corporation................................... 4.30%
Colonial BancGroup, Inc..................................... 11.80
Compass Bancshares, Inc..................................... 12.00
First Virginia Banks, Inc................................... 5.30
FirstMerit Corporation...................................... 9.60
Hibernia Corporation........................................ 16.90
Mercantile Bankshares Corporation........................... 7.30
National Commerce Bancorporation............................ 11.40
One Valley Bancorp, Inc..................................... 3.50
Provident Bankshares Corporation............................ 2.70
Riggs National Corporation.................................. 3.00
Trustmark Corporation....................................... 7.60
United Bankshares, Inc...................................... 4.60
------
Total............................................. 100.00%
======
"Index Price" on a given date shall mean the weighted average
(weighted in accordance with the factors listed above) of the last
sales prices of the companies composing the Index Group.
"Starting Date" shall mean the last full trading day immediately
preceding the date of the announcement by press release of the Merger.
"Starting Price" shall mean the last sale price per share of
Centura Common Stock as reported on the NYSE -- Composite
Transactions List (as reported by The Wall Street Journal or, if not
reported thereby, another authoritative source as chosen by Centura)
on the Starting Date.
If any company belonging to the Index Group or Centura declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares, or similar transaction between the date of
this Agreement and the Determination Date, the prices for the common stock
of such company or Centura shall be appropriately adjusted for the purposes
of applying this Section 10.1(g).
10.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement and the Supplemental Letter shall become void and have no effect,
except that (i) the provisions of this Section 10.2 and Article 11 and Section
8.6(b) of this Agreement shall survive any such termination and abandonment, and
(ii) a termination pursuant to Sections 10.1(b), 10.1(c), or 10.1(f) of this
Agreement shall not relieve the breaching Party from Liability for an uncured
willful breach of a representation, warranty, covenant, or agreement giving rise
to such termination. The Triangle Stock Option Agreement and the Centura Stock
Option Agreement shall be governed by their respective terms.
10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 10.3 and
Articles 2, 3, 4, and 11 and Sections 8.11 and 8.13 of this Agreement.
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ARTICLE 11
MISCELLANEOUS
11.1 DEFINITIONS.
(a) Except as otherwise provided herein, the capitalized terms set forth
below shall have the following meanings:
"ACQUISITION PROPOSAL" with respect to a Party shall mean any tender
offer or exchange offer or any proposal for a merger, acquisition of all of
the stock or Assets of, or other business combination involving such Party
or any of its Subsidiaries or the acquisition of a substantial equity
interest in, or a substantial portion of the Assets of, such Party or any
of its Subsidiaries.
"AFFILIATE" of a Person shall mean: (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by
or under common control with such Person; (ii) any officer, director,
partner, employer, or direct or indirect beneficial owner of any 10% or
greater equity or voting interest of such Person; or (iii) any other Person
for which a Person described in clause (ii) acts in any such capacity.
"AGREEMENT" shall mean this Agreement and Plan of Reorganization,
including the Exhibits (and excepting the Triangle Stock Option Agreement
and the Centura Stock Option Agreement) delivered pursuant hereto and
incorporated herein by reference.
"ASSETS" of a Person shall mean all of the assets, properties,
businesses, and rights of such Person of every kind, nature, character, and
description, whether real, personal, or mixed, tangible or intangible,
accrued or contingent, or otherwise relating to or utilized in such
Person's business, directly or indirectly, in whole or in part, whether or
not carried on the books and records of such Person, and whether or not
owned in the name of such Person or any Affiliate of such Person and
wherever located.
"BHC ACT" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"CENTURA COMMON STOCK" shall mean the no par value common stock of
Centura.
"CENTURA COMPANIES" shall mean, collectively, Centura and all Centura
Subsidiaries.
"CENTURA FINANCIAL STATEMENTS" shall mean (i) the consolidated
statements of condition (including related notes and schedules, if any) of
Centura as of June 30, 1999, and as of December 31, 1998 and 1997, and the
related statements of income, changes in stockholders' equity, and cash
flows (including related notes and schedules, if any) for the six months
ended June 30, 1999, and for each of the three years ended December 31,
1998, 1997, and 1996, as filed by Centura in SEC Documents, and (ii) the
consolidated statements of condition of Centura (including related notes
and schedules, if any) and related statements of income, changes in
stockholders' equity, and cash flows (including related notes and
schedules, if any) included in SEC Documents filed with respect to periods
ended subsequent to June 30, 1999.
"CENTURA MERGER SUBSIDIARY COMMON STOCK" shall mean the no par value
common stock of Centura Merger Subsidiary.
"CENTURA PREFERRED STOCK" shall mean the no par value preferred stock
of Centura.
"CENTURA STOCK OPTION AGREEMENT" shall mean the stock option agreement
by and between Centura and Triangle, in substantially the form of Exhibit
2.
"CENTURA SUBSIDIARIES" shall mean the Subsidiaries of Centura and any
corporation, bank, savings association, or other organization acquired as a
Subsidiary of Centura in the future and owned by Centura at the Effective
Time.
"CONFIDENTIALITY AGREEMENTS" shall mean those certain Confidentiality
Agreements, entered into prior to the date of this Agreement, between
Triangle and Centura.
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"CONSENT" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding, or undertaking of
any kind or character, or other document to which any Person is a party or
that is binding on any Person or its capital stock, Assets, or business.
"DEFAULT" shall mean (i) any breach or violation of or default under
any Contract, Order, or Permit, (ii) any occurrence of any event that with
the passage of time or the giving of notice or both would constitute a
breach or violation of or default under any Contract, Order, or Permit, or
(iii) any occurrence of any event that with or without the passage of time
or the giving of notice would give rise to a right to terminate or revoke,
change the current terms of, or renegotiate, or to accelerate, increase, or
impose any Liability under, any Contract, Order, or Permit, where, in any
such event, such Default is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on a Party.
"ENVIRONMENTAL LAWS" shall mean all Laws relating to pollution or
protection of human health or the environment (including ambient air,
surface water, ground water, land surface, or subsurface strata) and which
are administered, interpreted, or enforced by the United States
Environmental Protection Agency and state and local agencies with
jurisdiction over, and including common law in respect of, pollution or
protection of the environment, including the Comprehensive Environmental
Response Compensation and Liability Act, as amended, 42 U.S.C. 9601 et seq.
("CERCLA"), the Resource Conservation and Recovery Act, as amended, 42
U.S.C. 6901 et seq. ("RCRA"), and other Laws relating to emissions,
discharges, releases, or threatened releases of any Hazardous Material, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of any Hazardous
Material.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EXHIBITS" 1 through 4, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or document
without being attached hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"HAZARDOUS MATERIAL" shall mean (i) any hazardous substance, hazardous
material, hazardous waste, regulated substance, or toxic substance (as
those terms are defined by any applicable Environmental Laws) and (ii) any
chemicals, pollutants, contaminants, petroleum, petroleum products, or oil
(and specifically shall include asbestos requiring abatement, removal, or
encapsulation pursuant to the requirements of governmental authorities and
any polychlorinated biphenyls).
"HSR ACT" shall mean Section 7A of the Clayton Act, as added by Title
II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the rules and regulations promulgated thereunder.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"JOINT PROXY STATEMENT" shall mean the joint proxy statement used by
Centura and Triangle to solicit the approval of their respective
stockholders of the transactions contemplated by this Agreement, which
shall include the prospectus of Centura relating to the issuance of the
Centura Common Stock to holders of Triangle Common Stock.
"KNOWLEDGE" as used with respect to a Person (including references to
such Person being aware of a particular matter) shall mean the personal
knowledge of the chairman, president, chief financial
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officer, chief accounting officer, chief credit officer, general counsel,
or any executive vice president of such Person.
"LAW" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its
Assets, Liabilities, or business, including those promulgated, interpreted,
or enforced by any Regulatory Authority.
"LIABILITY" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost, or expense (including
costs of investigation, collection, and defense), claim, deficiency,
guaranty, or endorsement of or by any Person (other than endorsements of
notes, bills, checks, and drafts presented for collection or deposit in the
ordinary course of business) of any type, whether accrued, absolute or
contingent, liquidated or unliquidated, matured or unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention, or other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of, on, or with respect to any
property or property interest, other than (i) Liens for property Taxes not
yet due and payable, and (ii) for depository institution Subsidiaries of a
Party, pledges to secure deposits, and other Liens incurred in the ordinary
course of the banking business.
"LITIGATION" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, demand letter, governmental or
other examination or investigation, hearing, inquiry, administrative or
other proceeding, or notice (written or oral) by any Person alleging
potential Liability or requesting information relating to or affecting a
Party, its business, its Assets (including Contracts related to it), or the
transactions contemplated by this Agreement, but shall not include regular,
periodic examinations of depository institutions and their Affiliates by
Regulatory Authorities.
"LOAN PROPERTY" shall mean any property owned, leased, or operated by
the Party in question or by any of its Subsidiaries or in which such Party
or Subsidiary holds a security or other interest (including an interest in
a fiduciary capacity), and, where required by the context, includes the
owner or operator of such property, but only with respect to such property.
"MATERIAL" for purposes of this Agreement shall be determined in light
of the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine
materiality in that instance.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an event, change, or
occurrence which, individually or together with any other event, change, or
occurrence, has a Material adverse impact on (i) the financial condition,
results of operations, or business of such Party and its Subsidiaries,
taken as a whole, or (ii) the ability of such Party to perform its
obligations under this Agreement or to consummate the Merger or the other
transactions contemplated by this Agreement, provided that "Material
Adverse Effect" shall not be deemed to include the impact of (a) changes in
banking and similar Laws of general applicability or interpretations
thereof by courts or governmental authorities, (b) changes in GAAP or
regulatory accounting principles generally applicable to banks and their
holding companies, (c) actions and omissions of a Party (or any of its
Subsidiaries) taken with the prior consent of the other Party in
contemplation of the transactions contemplated hereby, and (d) the Merger
and compliance with the provisions of this Agreement on the operating
performance of the Parties.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NORTH CAROLINA BUSINESS CORPORATION ACT" shall mean the North
Carolina Business Corporation Act.
"1933 ACT" shall mean the Securities Act of 1933, as amended.
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"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended.
"NORTH CAROLINA ARTICLES OF MERGER" shall mean the Articles of Merger
to be executed by Centura Merger Subsidiary and filed with the Secretary of
State of the State of North Carolina relating to the Merger as contemplated
by Section 1.1 of this Agreement.
"NYSE" shall mean the New York Stock Exchange, Inc.
"ORDER" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or
writ of any federal, state, local, or foreign or other court, arbitrator,
mediator, tribunal, administrative agency, or Regulatory Authority.
"PARTICIPATION FACILITY" shall mean any facility or property in which
the Party in question or any of its Subsidiaries participates in the
management (including, but not limited to, participating in a fiduciary
capacity) and, where required by the context, said term means the owner or
operator of such facility or property, but only with respect to such
facility or property.
"PARTY" shall mean either Triangle or Centura, and "PARTIES" shall
mean both Triangle and Centura.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a party
or that is or may be binding upon or inure to the benefit of any Person or
its securities, Assets, or business.
"PERSON" shall mean a natural person or any legal, commercial, or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting
in a representative capacity.
"PLAN OF MERGER" shall mean the plan of merger by and between Triangle
and Centura Merger Subsidiary, in substantially the form of Exhibit 3.
"REGISTRATION STATEMENT" shall mean the Registration Statement on Form
S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC by
Centura under the 1933 Act with respect to the shares of Centura Common
Stock to be issued to the stockholders of Triangle in connection with the
transactions contemplated by this Agreement.
"REGULATORY AUTHORITIES" shall mean, collectively, the Federal Trade
Commission, the United States Department of Justice, the Board of the
Governors of the Federal Reserve System, the Office of the Comptroller of
the Currency, the Federal Deposit Insurance Corporation, the Office of
Thrift Supervision, all state regulatory agencies having jurisdiction over
the Parties and their respective Subsidiaries, the NASD, and the SEC.
"REPRESENTATIVE" shall mean any investment banker, financial advisor,
attorney, accountant, consultant, or other representative of a Person.
"RIGHTS" shall mean all arrangements, calls, commitments, Contracts,
options, rights to subscribe to, scrip, understandings, warrants, or other
binding obligations of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, shares of the capital stock
of a Person or by which a Person is or may be bound to issue additional
shares of its capital stock or other Rights.
"SEC" shall mean the United States Securities and Exchange Commission.
"SEC DOCUMENTS" shall mean all forms, proxy statements, registration
statements, reports, schedules, and other documents filed, or required to
be filed, by a Party or any of its Subsidiaries with any Regulatory
Authority pursuant to the Securities Laws.
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"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the
rules and regulations of any Regulatory Authority promulgated thereunder.
"STOCKHOLDERS' MEETINGS" shall mean the respective meetings of the
stockholders of Centura and Triangle to be held pursuant to Section 8.1 of
this Agreement, including any adjournment or adjournments thereof.
"SUBSIDIARIES" shall mean all those corporations, banks, associations,
or other entities of which the entity in question owns or controls 50% or
more of the outstanding equity securities either directly or through an
unbroken chain of entities as to each of which 50% or more of the
outstanding equity securities is owned directly or indirectly by its
parent; provided, there shall not be included any such entity acquired
through foreclosure or any such entity the equity securities of which are
owned or controlled in a fiduciary capacity.
"SUPERIOR PROPOSAL" means, with respect to Triangle, any written
Acquisition Proposal made by a Person other than Centura which is for (i)
(a) a merger, reorganization, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution, or similar
transaction involving Triangle as a result of which either (1) Triangle's
stockholders prior to such transaction (by virtue of their ownership of
Triangle's shares) in the aggregate cease to own at least 50% of the voting
securities of the entity surviving or resulting from such transaction (or
the ultimate parent entity thereof) or (2) the individuals comprising the
Board of Directors of Triangle prior to such transaction do not constitute
a majority of the board of directors of such ultimate parent entity, (b) a
sale, lease, exchange, transfer, or other disposition of at least 50% of
the assets of Triangle and its Subsidiaries, taken as a whole, in a single
transaction or a series of related transactions, or (c) the acquisition,
directly or indirectly, by a Person of beneficial ownership of 25% or more
of the common stock of Triangle whether by merger, consolidation, share
exchange, business combination, tender, or exchange offer or otherwise, and
(ii) which is otherwise on terms which the Board of Directors of Triangle
in good faith concludes (after consultation with its financial advisors and
outside counsel), taking into account, among other things, all legal,
financial, regulatory, and other aspects of the proposal and the Person
making the proposal, (a) would, if consummated, result in a transaction
that is more favorable to its stockholders (in their capacities as
stockholders), from a financial point of view, than the transactions
contemplated by this Agreement (after giving effect to the Triangle Stock
Option Agreement) and (b) is reasonably capable of being completed.
"SUPPLEMENTAL LETTER" shall mean the supplemental letter of even date
herewith between the Parties relating to certain understandings and
agreements in addition to those included in this Agreement.
"SURVIVING CORPORATION" shall mean Centura Merger Subsidiary as the
surviving corporation resulting from the Merger.
"TAX" OR "TAXES" shall mean all federal, state, local, and foreign
taxes, charges, fees, levies, imposts, duties, or other assessments,
including income, gross receipts, excise, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall
profits, environmental, federal highway use, commercial rent, customs
duties, capital stock, paid-up capital, profits, withholding, Social
Security, single business and unemployment, disability, real property,
personal property, registration, ad valorem, value added, alternative or
add-on minimum, estimated, or other tax or governmental fee of any kind
whatsoever, imposed or required to be withheld by the United States or any
state, local, or foreign government or subdivision or agency thereof,
including any interest, penalties, or additions thereto.
"TAXABLE PERIOD" shall mean any period prescribed by any governmental
authority, including the United States or any state, local, or foreign
government or subdivision or agency thereof for which a Tax Return is
required to be filed or Tax is required to be paid.
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"TAX RETURN" shall mean any report, return, information return, or
other information required to be supplied to a taxing authority in
connection with Taxes, including any return of an affiliated or combined or
unitary group that includes a Party or its Subsidiaries.
"TRIANGLE COMMON STOCK" shall mean the no par value common stock of
Triangle.
"TRIANGLE COMPANIES" shall mean, collectively, Triangle and all
Triangle Subsidiaries.
"TRIANGLE DISCLOSURE MEMORANDUM" shall mean the written information
entitled "Triangle Disclosure Memorandum" delivered prior to the execution
of this Agreement to Centura describing in reasonable detail the matters
contained therein and, with respect to each disclosure made therein,
specifically referencing each Section or subsection of this Agreement under
which such disclosure is being made. Information disclosed with respect to
one Section or subsection shall not be deemed to be disclosed for any other
purpose hereunder. The inclusion of any matter in this document shall not
be deemed an admission or otherwise to imply that any such matter is
Material for purposes of this Agreement.
"TRIANGLE FINANCIAL STATEMENTS" shall mean (i) the consolidated
statements of condition (including related notes and schedules, if any) of
Triangle as of June 30, 1999, and as of December 31, 1998 and 1997, and the
related statements of income, changes in stockholders' equity, and cash
flows (including related notes and schedules, if any) for the six months
ended June 30, 1999, and for each of the three years ended December 31,
1998, 1997, and 1996, as filed by Triangle in SEC Documents, and (ii) the
consolidated statements of condition of Triangle (including related notes
and schedules, if any) and related statements of income, changes in
stockholders' equity, and cash flows (including related notes and
schedules, if any) included in SEC Documents filed with respect to periods
ended subsequent to June 30, 1999.
"TRIANGLE STOCK OPTION AGREEMENT" shall mean the stock option
agreement by and between Triangle and Centura, in substantially the form of
Exhibit 1.
"TRIANGLE STOCK PLANS" shall mean the following stock plans of
Triangle: (i) 1998 Omnibus Stock Plan; (ii) 1988 Incentive Stock Option
Plan; (iii) 1998 Non-qualified Stock Option Plan for Directors; (iv) stock
options assumed in connection with acquisitions of other financial
institutions; and (v) the Management Incentive Compensation Plan.
"TRIANGLE SUBSIDIARIES" shall mean the Subsidiaries of Triangle, which
shall include the Triangle Subsidiaries described in Section 5.4 of this
Agreement and any corporation, bank, savings association, or other
organization acquired as a Subsidiary of Triangle in the future and owned
by Triangle at the Effective Time.
"TRIANGLE WARRANTS" shall mean the warrants issued by Unity Bank &
Trust Company and assumed by Triangle in connection with the acquisition of
Unity Bank & Trust Company.
(b) The terms set forth below shall have the meanings ascribed thereto in
the referenced sections:
Average Closing Price...................................... Section 10.1(g)
Centura ERISA Affiliate.................................... Section 6.13
Centura Ratio.............................................. Section 10.1(g)
Centura SEC Reports........................................ Section 6.5(a)
Claim...................................................... Section 8.13(a)
Closing.................................................... Section 1.2
Covered Party.............................................. Section 8.13(b)
Determination Date......................................... Section 10.1(g)
Effective Time............................................. Section 1.3
Exchange Agent............................................. Section 4.1
Exchange Ratio............................................. Section 3.1(b)
FFIEC...................................................... Section 5.21
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Indemnified Party.......................................... Section 8.13
Index Group................................................ Section 10.1(g)
Index Price................................................ Section 10.1(g)
Index Ratio................................................ Section 10.1(g)
Merger..................................................... Section 1.1
Starting Date.............................................. Section 10.1(g)
Starting Price............................................. Section 10.1(g)
Takeover Laws.............................................. Section 5.19
Tax Opinion................................................ Section 9.1(g)
Triangle Benefit Plans..................................... Section 5.13(a)
Triangle Contracts......................................... Section 5.14
Triangle ERISA Affiliate................................... Section 5.13(e)
Triangle ERISA Plan........................................ Section 5.13(a)
Triangle Rights............................................ Section 3.6(a)
Triangle Pension Plan...................................... Section 5.13(a)
Triangle SEC Reports....................................... Section 5.5(a)
(c) Any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words "include,"
"includes," or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
11.2 EXPENSES.
(a) Except as otherwise provided in this Section 11.2, each of the Parties
shall bear and pay all direct costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including filing,
registration, and application fees, printing fees, and fees and expenses of its
own financial or other consultants, investment bankers, accountants, and
counsel, except that each of the Parties shall bear and pay one-half of the
printing costs incurred in connection with the printing of the Registration
Statement and the Joint Proxy Statement.
(b) Nothing contained in this Section 11.2 shall constitute or shall be
deemed to constitute liquidated damages for the willful breach by a Party of the
terms of this Agreement or otherwise limit the rights of the nonbreaching Party.
11.3 BROKERS AND FINDERS. Except for Keefe, Bruyette & Woods, Inc. as to
Centura and except for Wheat First Securities, a division of First Union Capital
Markets Corp., as to Triangle, each of the Parties represents and warrants that
neither it nor any of its officers, directors, employees, or Affiliates has
employed any broker or finder or incurred any Liability for any financial
advisory fees, investment bankers' fees, brokerage fees, commissions, or
finders' fees in connection with this Agreement or the transactions contemplated
hereby. In the event of a claim by any broker or finder based upon his, her, or
its representing or being retained by or allegedly representing or being
retained by Triangle or Centura, each of Triangle and Centura, as the case may
be, agrees to indemnify and hold the other Party harmless of and from any
Liability in respect of any such claim.
11.4 ENTIRE AGREEMENT. Except as otherwise expressly provided herein, this
Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral (including any provision of
the Confidentiality Agreements which would act to preclude Centura or Triangle,
as the case may be, (or any Holder as defined in the Triangle Stock Option
Agreement or the Centura Stock Option Agreement, as the case may be, from
exercising its rights under such stock option agreement) to the extent that the
Triangle Stock Option Agreement or the Centura Stock Option Agreement, as the
case may be, is in force and effect, but excluding the Supplemental Letter).
Nothing in this Agreement expressed or implied, is intended to confer upon any
Person, other than the Parties or their respective successors, any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
other than as provided in Sections 8.11 and 8.13 of this Agreement.
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11.5 AMENDMENTS. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties, whether before or after
stockholder approval of this Agreement has been obtained; provided, that the
provisions of this Agreement relating to the manner or basis in which shares of
Triangle Common Stock will be exchanged for Centura Common Stock shall not be
amended (except in accordance with Section 10.1(g) of this Agreement) after the
Stockholders' Meetings without the requisite approval of the holders of the
issued and outstanding shares of Centura Common Stock and Triangle Common Stock,
as the case may be, entitled to vote thereon.
11.6 WAIVERS.
(a) Prior to or at the Effective Time, Centura, acting through its Board of
Directors, chief executive officer, chief financial officer, or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by Triangle, to waive or extend the time for the
compliance or fulfillment by Triangle of any and all of its obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of Centura under this Agreement, except any condition which, if not
satisfied, would result in the violation of any Law. No such waiver shall be
effective unless in writing signed by a duly authorized officer of Centura.
(b) Prior to or at the Effective Time, Triangle, acting through its Board
of Directors, chief executive officer, chief financial officer, or other
authorized officer, shall have the right to waive any Default in the performance
of any term of this Agreement by Centura, to waive or extend the time for the
compliance or fulfillment by Centura of any and all of its obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of Triangle under this Agreement, except any condition which, if not
satisfied, would result in the violation of any Law. No such waiver shall be
effective unless in writing signed by a duly authorized officer of Triangle.
(c) The failure of any Party at any time or times to require performance of
any provision hereof shall in no manner affect the right of such Party at a
later time to enforce the same or any other provision of this Agreement. No
waiver of any condition or of the breach of any term contained in this Agreement
in one or more instances shall be deemed to be or construed as a further or
continuing waiver of such condition or breach or a waiver of any other condition
or of the breach of any other term of this Agreement.
11.7 ASSIGNMENT. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests, or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by the Parties and their respective successors and assigns.
11.8 NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
Triangle: TRIANGLE BANCORP, INC.
4300 Glenwood Avenue
Raleigh, North Carolina 27612
Telecopy Number: (919) 781-6042
Attention: Michael S. Patterson
President, Chief Executive Officer, and
Chairman of the Board
and
Alexander M. Donaldson
General Counsel
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Copy to Counsel: ARNOLD & PORTER
Thurman Arnold Building
555 Twelfth Street, N.W.
Washington, D.C. 20004-1202
Telecopy Number: (202) 942-5999
Attention: Steven Kaplan
Centura: CENTURA BANKS, INC.
134 North Church Street
Rocky Mount, North Carolina
Telecopy Number: (252) 454-8283
Attention: Cecil W. Sewell, Jr.
Chairman of the Board and
Chief Executive Officer
and
Joseph A. Smith, Jr.
General Counsel
Copy to Counsel: ALSTON & BIRD LLP
601 Pennsylvania Avenue, N.W.
North Building, 11th Floor
Washington, D.C. 20004-2601
Telecopy Number: (202) 756-3333
Attention: Frank M. Conner III
11.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the Laws of the State of North Carolina.
11.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 CAPTIONS. The captions contained in this Agreement are for reference
purposes only and are not part of this Agreement.
11.12 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any Party, whether under
any rule of construction or otherwise. No Party to this Agreement shall be
considered the draftsman. The Parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all Parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of the
Parties.
11.13 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
11.14 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
ATTEST: TRIANGLE BANCORP, INC.
By: /s/ SUSAN C. GILBERT By: /s/ MICHAEL S. PATTERSON
--------------------------------------------------- ---------------------------------------------------
Susan C. Gilbert Michael S. Patterson
Secretary President, Chief Executive Officer, and
Chairman of the Board
[CORPORATE SEAL]
ATTEST: CENTURA BANKS, INC.
By: /s/ JOSEPH A. SMITH, JR. By: /s/ CECIL W. SEWELL, JR.
--------------------------------------------------- ---------------------------------------------------
Joseph A. Smith, Jr. Cecil W. Sewell, Jr.
Corporate Secretary Chairman of the Board and
Chief Executive Officer
[CORPORATE SEAL]
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APPENDIX B
PLAN OF MERGER
OF
TRIANGLE BANCORP, INC.
WITH AND INTO
CENTURA MERGER SUBSIDIARY, INC.
Pursuant to this Plan of Merger dated as of December 1, 1999 ("Plan of
Merger"), TRIANGLE BANCORP, INC. ("Triangle"), a corporation organized and
existing under the Laws of the State of North Carolina, shall be merged with and
into CENTURA MERGER SUBSIDIARY, INC. ("Centura Merger Subsidiary"), a
corporation organized and existing under the laws of the State of North Carolina
and a wholly-owned subsidiary of CENTURA BANKS, INC., a corporation organized
and existing under the laws of the State of North Carolina ("Centura").
ARTICLE 1
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set forth below
shall have the following meanings:
1.1 "ARTICLES OF MERGER" shall mean the Articles of Merger to be executed
by Centura Merger Subsidiary and filed with the Secretary of State of the State
of North Carolina relating to the Merger as contemplated by Section 2.1 of this
Plan of Merger.
1.2 "CENTURA COMMON STOCK" shall mean the no par value common stock of
Centura.
1.3 "CENTURA COMPANIES" shall mean, collectively, Centura and all Centura
Subsidiaries.
1.4 "CENTURA MERGER SUBSIDIARY COMMON STOCK" shall mean the no par value
common stock of Centura Merger Subsidiary.
1.5 "CONSENT" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
1.6 "EFFECTIVE TIME" shall mean the date and time on which the Merger
becomes effective pursuant to the Laws of the State of North Carolina as defined
in Section 2.2 of this Plan of Merger.
1.7 "EXCHANGE AGENT" shall mean the exchange agent selected by Centura.
1.8 "INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
1.9 "LAW" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a person or its assets,
liabilities, or business, including those promulgated, interpreted, or enforced
by any Regulatory Authority.
1.10 "MERGER" shall mean the merger of Triangle into and with Centura
Merger Subsidiary as provided in Section 2.1 of this Plan of Merger.
1.11 "MERGER AGREEMENT" shall mean the Agreement and Plan of
Reorganization, dated as of August 22, 1999, by and between Centura and
Triangle.
1.12 "NORTH CAROLINA BUSINESS CORPORATION ACT" shall mean the North
Carolina Business Corporation Act.
1.13 "NYSE" shall mean the New York Stock Exchange, Inc.
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1.14 "PARTY" shall mean either Triangle or Centura Merger Subsidiary, and
"PARTIES" shall mean both Triangle and Centura Merger Subsidiary.
1.15 "REGULATORY AUTHORITIES" shall mean, collectively, the Federal Trade
Commission, the United States Department of Justice, the Board of the Governors
of the Federal Reserve System, the Office of the Comptroller of the Currency,
the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, all
state regulatory agencies having jurisdiction over the Parties and their
respective Subsidiaries, the NYSE, and the SEC.
1.16 "SEC" shall mean the United States Securities and Exchange Commission.
1.17 "SUBSIDIARIES" shall mean all those corporations, banks, associations,
or other entities of which the entity in question owns or controls 50% or more
of the outstanding equity securities either directly or through an unbroken
chain of entities as to each of which 50% or more of the outstanding equity
securities is owned directly or indirectly by its parent; provided, there shall
not be included any such entity acquired through foreclosure or any such entity
the equity securities of which are owned or controlled in a fiduciary capacity.
1.18 "SUPPLEMENTAL LETTER" shall mean the supplemental letter of even date
herewith between Triangle and Centura relating to certain understandings and
agreements in addition to those included in this Plan of Merger.
1.19 "SURVIVING CORPORATION" shall refer to Centura Merger Subsidiary as
the surviving corporation resulting from the Merger.
1.20 "TRIANGLE COMMON STOCK" shall mean the no par value common stock of
Triangle.
1.21 "TRIANGLE COMPANIES" shall mean, collectively, Triangle and all
Triangle Subsidiaries.
1.22 "TRIANGLE STOCK PLANS" shall have the meaning set forth in the Merger
Agreement.
1.23 "TRIANGLE WARRANTS" shall mean the warrants issued by Unity Bank &
Trust Company and assumed by Triangle in connection with the acquisition of
Unity Bank & Trust Company.
Any capitalized term not defined herein shall have the meaning ascribed to
it in the Merger Agreement.
ARTICLE 2
TRANSACTIONS AND TERMS OF MERGER
2.1 MERGER. Subject to the terms and conditions of this Plan of Merger, at
the Effective Time, Triangle shall be merged with and into Centura Merger
Subsidiary in accordance with the provisions of Section 55-11-01 of the North
Carolina Business Corporation Act and with the effect provided in Section
55-11-06 of the North Carolina Business Corporation Act (the "Merger"). Centura
Merger Subsidiary shall be the Surviving Corporation resulting from the Merger
and shall continue to be governed by the Laws of the State of North Carolina.
2.2 EFFECTIVE TIME. The Merger and the other transactions contemplated by
this Plan of Merger shall become effective on the date and at the time the
Articles of Merger become effective with the Secretary of State of the State of
North Carolina (the "Effective Time"). Subject to the terms and conditions
hereof, unless otherwise mutually agreed upon in writing by the duly authorized
officers of each Party, the Parties shall use their reasonable efforts to cause
the Effective Time to occur on or before the 10th business day (as designated by
Centura) following the last to occur of (i) the effective date (including
expiration of any applicable waiting period) of the last required Consent of any
Regulatory Authority having authority over and approving or exempting the
Merger, and (ii) the date on which the stockholders of Centura and Triangle
approve the matters relating to this Plan of Merger required to be approved by
such stockholders by applicable Law.
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2.3 ARTICLES OF INCORPORATION. The Articles of Incorporation of Centura
Merger Subsidiary in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation after the Effective Time
until otherwise amended or repealed.
2.4 BYLAWS. The Bylaws of Centura Merger Subsidiary in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation
after the Effective Time until otherwise amended or repealed.
2.5 DIRECTORS AND OFFICERS. The directors of Centura Merger Subsidiary in
office immediately prior to the Effective Time shall serve as the directors of
the Surviving Corporation from and after the Effective Time in accordance with
the Bylaws of the Surviving Corporation. The officers of Centura Merger
Subsidiary in office immediately prior to the Effective Time shall serve as the
officers of the Surviving Corporation from and after the Effective Time in
accordance with the Bylaws of the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this Article 3, at
the Effective Time, by virtue of the Merger and without any action on the part
of Centura or Triangle, or the stockholders of either of the foregoing, the
shares of the constituent corporations shall be converted as follows:
(a) Each share of Centura Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
from and after the Effective Time.
(b) Each share of Centura Merger Subsidiary Common Stock issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.
(c) Each share of Triangle Common Stock (excluding shares held by any
Triangle Company or any Centura Company, in each case other than in a
fiduciary capacity or as a result of debts previously contracted) issued
and outstanding at the Effective Time shall be converted into .45 of a
share of Centura Common Stock (subject to adjustment pursuant to Section
10.1(g) of the Merger Agreement, the "Exchange Ratio").
3.2 ANTI-DILUTION PROVISIONS. In the event Triangle changes the number of
shares of Triangle Common Stock issued and outstanding prior to the Effective
Time as a result of a stock split, stock dividend, recapitalization, or similar
transaction with respect to such stock, the Exchange Ratio shall be
proportionately adjusted. In the event Centura changes the number of shares of
Centura Common Stock issued and outstanding prior to the Effective Time as a
result of a stock split, stock dividend, recapitalization, or similar
transaction with respect to such stock and the record date therefor (in the case
of a stock dividend) or the effective date thereof (in the case of a stock split
or similar recapitalization for which a record date is not established) shall be
prior to the Effective Time, the Exchange Ratio shall be proportionately
adjusted.
3.3 SHARES HELD BY TRIANGLE OR CENTURA. Each of the shares of Triangle
Common Stock held by any Triangle Company or by any Centura Company, in each
case other than in a fiduciary capacity or as a result of debts previously
contracted, shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
3.4 FRACTIONAL SHARES. Notwithstanding any other provision of this Plan of
Merger, each holder of shares of Triangle Common Stock exchanged pursuant to the
Merger who would otherwise have been entitled to receive a fraction of a share
of Centura Common Stock (after taking into account all certificates delivered by
such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of Centura Common Stock
multiplied by the market value of one share of Centura Common Stock at the
Effective Time. The market value of one share of Centura
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Common Stock at the Effective Time shall be the last sale price of Centura
Common Stock on the NYSE - Composite Transactions List (as reported by The Wall
Street Journal or, if not reported thereby, any other authoritative source
selected by Centura) on the last trading day preceding the Effective Time. No
such holder will be entitled to dividends, voting rights, or any other rights as
a stockholder in respect of any fractional shares.
3.5 CONVERSION OF STOCK RIGHTS.
(a) At the Effective Time, each award, option, or other right to purchase
or acquire shares of Triangle Common Stock pursuant to stock options, stock
appreciation rights, or stock awards ("Triangle Rights") granted by Triangle
under the Triangle Stock Plans, which are outstanding at the Effective Time,
whether or not exercisable, shall be converted into and become rights with
respect to Centura Common Stock, and Centura shall assume each Triangle Right,
in accordance with the terms of the Triangle Stock Plan and stock option
agreement by which it is evidenced, except that from and after the Effective
Time, (i) Centura and its Compensation Committee shall be substituted for
Triangle and the Committee of Triangle's Board of Directors (including, if
applicable, the entire Board of Directors of Triangle) administering such
Triangle Stock Plan, (ii) each Triangle Right assumed by Centura may be
exercised solely for shares of Centura Common Stock (or cash in the case of
stock appreciation rights), (iii) the number of shares of Centura Common Stock
subject to such Triangle Right shall be equal to the number of shares of
Triangle Common Stock subject to such Triangle Right immediately prior to the
Effective Time multiplied by the Exchange Ratio and rounded down to the nearest
whole share, and (iv) the per share exercise price (or similar threshold price,
in the case of stock awards) under each such Triangle Right shall be adjusted by
dividing the per share exercise (or threshold) price under each such Triangle
Right by the Exchange Ratio and rounding up to the nearest cent. Notwithstanding
the provisions of clause (iii) of the preceding sentence, each Triangle Right
which is an "incentive stock option" shall be adjusted as required by Section
424 of the Internal Revenue Code, so as not to constitute a modification,
extension, or renewal of the option, within the meaning of Section 424(h) of the
Internal Revenue Code. Centura agrees to take all necessary steps to effectuate
the foregoing provisions of this Section 3.5.
(b) As soon as reasonably practicable after the Effective Time, Centura
shall deliver to the participants in each Triangle Stock Plan an appropriate
notice setting forth such participant's rights pursuant thereto and the grants
pursuant to such Triangle Stock Plan shall continue in effect on the same terms
and conditions (subject to the adjustments required by Section 3.5(a) after
giving effect to the Merger), and Centura shall comply with the terms of each
Triangle Stock Plan to ensure, to the extent required by, and subject to the
provisions of, such Triangle Stock Plan, that Triangle Rights which qualified as
incentive stock options prior to the Effective Time continue to qualify as
incentive stock options after the Effective Time. At or prior to the Effective
Time, Centura shall take all corporate action necessary to reserve for issuance
sufficient shares of Centura Common Stock for delivery upon exercise of Triangle
Rights assumed by it in accordance with this Section 3.5. As soon as reasonably
practicable after the Effective Time, Centura shall file a registration
statement on Form S-3 or Form S-8, as the case may be (or any successor or other
appropriate forms), with respect to the shares of Centura Common Stock subject
to such options and shall use its reasonable efforts to maintain the
effectiveness of such registration statements (and maintain the current status
of the prospectus or prospectuses contained therein) for so long as such options
remain outstanding. With respect to those individuals who subsequent to the
Merger will be subject to the reporting requirements under Section 16(a) of the
1934 Act, where applicable, Centura shall administer the Triangle Stock Plan
assumed pursuant to this Section 3.5 in a manner that complies with Rule 16b-3
promulgated under the 1934 Act.
(c) All restrictions or limitations on transfer with respect to Triangle
Common Stock awarded under the Triangle Stock Plans or any other plan, program,
or arrangement of any Triangle Company, to the extent that such restrictions or
limitations shall not have already lapsed, and except as otherwise expressly
provided in such plan, program, or arrangement, shall remain in full force and
effect with respect to shares of Centura Common Stock into which such restricted
stock is converted pursuant to Section 3.1 of this Plan of Merger.
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3.6 CONVERSION OF TRIANGLE WARRANTS. At the Effective Time, each Triangle
Warrant which is outstanding at the Effective Time, whether or not exercisable,
shall be converted into and become a right with respect to Centura Common Stock,
and Centura shall assume each Triangle Warrant, in accordance with the terms of
the agreement by which the Triangle Warrant is evidenced, except that from and
after the Effective Time, (i) each Triangle Warrant assumed by Centura may be
exercised solely for shares of Centura Common Stock, (ii) the number of shares
of Centura Common Stock subject to such Triangle Warrant shall be equal to the
number of shares of Triangle Common Stock subject to such Triangle Warrant
immediately prior to the Effective Time, multiplied by the Exchange Ratio, and
(iii) the per share exercise price under each such Triangle Warrant shall be
adjusted by dividing the per share exercise price under each such Triangle
Warrant by the Exchange Ratio and rounding up to the nearest cent.
ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time, Centura and
Triangle shall cause the exchange agent selected by Centura (the "Exchange
Agent") to mail to the former stockholders of Triangle appropriate transmittal
materials (which shall specify that delivery shall be effected, and risk of loss
and title to the certificates theretofore representing shares of Triangle Common
Stock shall pass, only upon proper delivery of such certificates to the Exchange
Agent). After the Effective Time, each holder of shares of Triangle Common Stock
(other than shares to be canceled pursuant to Section 3.3 of this Plan of
Merger) issued and outstanding at the Effective Time shall surrender the
certificate or certificates representing such shares to the Exchange Agent and
shall promptly upon surrender thereof receive in exchange therefor the
consideration provided in Section 3.1 of this Plan of Merger, together with all
undelivered dividends or distributions in respect of such shares (without
interest thereon) pursuant to Section 4.2 of this Plan of Merger. To the extent
required by Section 3.4 of this Plan of Merger, each holder of shares of
Triangle Common Stock issued and outstanding at the Effective Time also shall
receive, upon surrender of the certificate or certificates representing such
shares, cash in lieu of any fractional share of Centura Common Stock to which
such holder may be otherwise entitled (without interest). Centura shall not be
obligated to deliver the consideration to which any former holder of Triangle
Common Stock is entitled as a result of the Merger until such holder surrenders
such holder's certificate or certificates representing the shares of Triangle
Common Stock for exchange as provided in this Section 4.1. The certificate or
certificates of Triangle Common Stock so surrendered shall be duly endorsed as
the Exchange Agent may require. Any other provision of this Plan of Merger
notwithstanding, neither the Surviving Corporation nor the Exchange Agent shall
be liable to a holder of Triangle Common Stock for any amounts paid or property
delivered in good faith to a public official pursuant to any applicable
abandoned property Law.
4.2 RIGHTS OF FORMER TRIANGLE STOCKHOLDERS. At the Effective Time, the
stock transfer books of Triangle shall be closed as to holders of Triangle
Common Stock immediately prior to the Effective Time and no transfer of Triangle
Common Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 4.1 of
this Plan of Merger, each certificate theretofore representing shares of
Triangle Common Stock (other than shares to be canceled pursuant to Section 3.3
of this Plan of Merger) shall from and after the Effective Time represent for
all purposes only the right to receive the consideration provided in Sections
3.1 and 3.4 of this Plan of Merger in exchange therefor, subject, however, to
the Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which have been
declared or made by Triangle in respect of such shares of Triangle Common Stock
in accordance with the terms of this Plan of Merger and which remain unpaid at
the Effective Time. To the extent permitted by Law, former stockholders of
record of Triangle shall be entitled to vote after the Effective Time at any
meeting of Centura stockholders the number of whole shares of Centura Common
Stock into which their respective shares of Triangle Common Stock are converted,
regardless of whether such holders have exchanged their certificates
representing Triangle Common Stock for certificates representing Centura Common
Stock in accordance with the provisions of this Plan of Merger. Whenever a
dividend or other
B-5
134
distribution is declared by Centura on the Centura Common Stock, the record date
for which is at or after the Effective Time, the declaration shall include
dividends or other distributions on all shares issuable pursuant to this Plan of
Merger, but beginning 30 days after the Effective Time no dividend or other
distribution payable to the holders of record of Centura Common Stock as of any
time subsequent to the Effective Time shall be delivered to the holder of any
certificate representing shares of Triangle Common Stock issued and outstanding
at the Effective Time until such holder surrenders such certificate for exchange
as provided in Section 4.1 of this Plan of Merger. However, upon surrender of
such Triangle Common Stock certificate, both the Centura Common Stock
certificate (together with all such undelivered dividends or other distributions
without interest) and any undelivered dividends and cash payments to be paid for
fractional share interests (without interest) shall be delivered and paid with
respect to each share represented by such certificate.
ARTICLE 5
MISCELLANEOUS
5.1 CONDITIONS PRECEDENT. Consummation of the Merger by Centura Merger
Subsidiary shall be conditioned on the satisfaction of, or waiver by Centura of
the conditions precedent to the Merger set forth in Sections 9.1 and 9.2 of the
Merger Agreement. Consummation of the Merger by Triangle shall be conditioned on
the satisfaction of, or waiver by Triangle of, of the conditions precedent to
the Merger set forth in Sections 9.1 and 9.3 of the Merger Agreement.
5.2 TERMINATION. This Plan of Merger may be terminated at any time prior
to the Effective Time by the parties hereto as provided in Article 10 of the
Merger Agreement.
5.3 COUNTERPARTS. This Plan of Merger may be executed in counterparts,
each of which shall be an original; but all of such counterparts together shall
constitute one and the same instrument.
In Witness Whereof, the parties have caused their duly authorized officers
to execute this Plan of Merger as of the date first above written.
TRIANGLE BANCORP, INC.
ATTEST: By:
Susan C. Gilbert Michael S. Patterson
Secretary President, Chief Executive Officer, and
Chairman of the Board
CENTURA MERGER SUBSIDIARY, INC.
ATTEST: By:
Joseph A. Smith, Jr. Cecil W. Sewell, Jr.
Secretary President
B-6
135
APPENDIX C
[WHEAT FIRST SECURITIES LETTERHEAD]
December 10, 1999
Board of Directors
Triangle Bancorp, Inc.
4300 Glenwood Ave.
Raleigh, NC 27612
Members of the Board:
Triangle Bancorp, Inc. ("Triangle") and Centura Banks, Inc. ("Centura")
have entered into an Agreement and Plan of Reorganization dated as of August 22,
1999 (the "Merger Agreement"), pursuant to which Triangle will combine with
Centura by means of the merger (the "Merger") of Triangle with and into a
newly-formed wholly-owned subsidiary of Centura. Upon consummation of the
Merger, each of the outstanding shares of the common stock, no par value, of
Triangle ("Triangle Stock") (other than shares held by dissenting shareholders
or shares held by Centura) will be converted into 0.450 of a share of the common
stock of Centura ("Centura Stock"), as adjusted in accordance with the terms of
the Merger Agreement (the "Exchange Ratio").
You have asked us whether, in our opinion, the Exchange Ratio is fair, from
a financial point of view, to the holders of Triangle Stock (other than Centura
and its affiliates).
Wheat First Securities, a division of First Union Securities, Inc. ("Wheat
First"), as part of its investment banking business, is regularly engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. In the ordinary course of
our business as a broker-dealer, we may, from time to time, have a long or short
position in, and buy or sell, debt or equity securities of Triangle or Centura
for our own account or for the accounts of our customers. Wheat First will
receive a fee from Triangle for our financial advisory services, which include
rendering this opinion.
In arriving at the opinion set forth below, we have conducted discussions
with members of senior management of Triangle and Centura concerning their
businesses and prospects and have reviewed certain publicly available business
and financial information and certain other information prepared or provided to
us in connection with the Merger, including, among other things, the following:
(1) Triangle's Annual Reports to Stockholders, Annual Reports on Form 10-K
and related financial information for the three fiscal years ended
December 31, 1998;
(2) Triangle's Quarterly Reports on Form 10-Q for the periods ended March
31, 1999, June 30, 1999 and September 30, 1999;
(3) Centura's Annual Reports to Stockholders, Annual Reports on Form 10-K
and related financial information for the three fiscal years ended
December 31, 1998;
(4) Centura's Quarterly Reports on Form 10-Q for the periods ended March
31, 1999, June 30, 1999 and September 30, 1999;
(5) Certain publicly available information with respect to historical
market prices and trading activities for Triangle Stock and Centura
Stock and for certain publicly traded financial institutions which
Wheat First deemed relevant;
(6) Certain publicly available information with respect to banking
companies and the financial terms of certain other mergers and
acquisitions which Wheat First deemed relevant;
(7) The Merger Agreement;
C-1
136
(8) Certain estimates of the cost savings, revenue enhancements and
divestitures projected by Triangle and Centura for the combined
company;
(9) Other financial information concerning the businesses and operations of
Triangle and Centura, including certain audited and unaudited financial
information and certain internal financial analyses and forecasts for
Triangle and Centura prepared by the senior managements of those
companies; and
(10) Such financial studies, analyses, inquiries and other matters as we
deemed necessary.
In preparing our opinion, we have relied on and assumed the accuracy and
completeness of all information provided to us or publicly available, including
the representations and warranties of Triangle and Centura included in the
Merger Agreement, and we have not assumed any responsibility for independent
verification of such information. We have relied upon the managements of
Triangle and Centura as to the reasonableness and achievability of their
financial and operational forecasts and projections, and the assumptions and
bases therefor, provided to us, and, with your consent, we have assumed that
such forecasts and projections reflect the best currently available estimates
and judgments of such managements, and that such forecasts and projections will
be realized in the amounts and in the time periods currently estimated by such
managements. We also assumed, without independent verification, that the
aggregate allowances for loan losses and other contingencies for Triangle and
Centura are adequate to cover such losses. We did not review any individual
credit files of Triangle or Centura, nor did we make an independent evaluation
or appraisal of the assets or liabilities of Triangle or Centura. We also
assumed that, in the course of obtaining the necessary regulatory approvals for
the Merger, no conditions will be imposed that will have a material adverse
effect on the contemplated benefits of the Merger, on a pro forma basis, to
Centura.
Our opinion is necessarily based upon market, economic and other conditions
as they exist and can be evaluated on the date hereof and the information made
available to us through the date hereof. Events occurring after that date could
materially affect the assumptions and conclusions contained in our opinion. We
have not undertaken to reaffirm or revise this opinion or otherwise comment on
any events occurring after the date hereof. Wheat First's opinion is directed to
the Board of Directors of Triangle and relates only to the fairness, from a
financial point of view, of the Exchange Ratio to the holders of Triangle Stock
(other than Centura and its affiliates) and does not address any other aspect of
the Merger or constitute a recommendation to any shareholder of Triangle as to
how such shareholder should vote with respect to the Merger. Wheat First's
opinion does not address the relative merits of the Merger as compared to any
alternative business strategies that might exist for Triangle, nor does it
address the effect of any other business combination in which Triangle might
engage.
It is understood that this opinion may be included in its entirety in the
Proxy Statement/ Prospectus. This opinion may not, however, be summarized,
excerpted from or otherwise publicly referred to without our prior written
consent.
On the basis of and subject to the foregoing, we are of the opinion that as
of the date hereof the Exchange Ratio is fair, from a financial point of view,
to the holders of Triangle Stock (other than Centura and its affiliates).
Very truly yours,
/s/ WHEAT FIRST SECURITIES
WHEAT FIRST SECURITIES,
a division of First Union Securities,
Inc.
[WHEAT FIRST SECURITIES FOOTER]
C-2
137
APPENDIX D
[KEEFE, BRUYETTE & WOODS, INC. LETTERHEAD]
December 10, 1999
Centura Banks, Inc.
134 North Church Street
Rocky Mount, NC 27804
Members of the Board:
You have requested our opinion as investment bankers as to the fairness,
from a financial point of view, to the shareholders of Centura Banks, Inc.
("Centura") of the exchange ratio in the proposed merger (the "Merger") of
Centura with Triangle Bancorp, Inc. ("Triangle"), pursuant to the Agreement and
Plan of Merger dated as of August 22, 1999 between Centura, and Triangle (the
"Agreement"). Under the terms of the Merger, each outstanding share of common
stock of Triangle will be exchanged for .4500 shares of common stock of Centura
(the "Exchange Ratio"). Keefe, Bruyette & Woods, Inc. ("KBW") was informed by
Centura, and assumed for purposes of its opinion, that the Merger (as defined
herein) would be accounted for as a pooling-of-interests under generally
accepted accounting principles and that the Merger will otherwise be consummated
on the terms contemplated by the Agreement.
KBW as part of its investment banking business is continually engaged in
the valuation of banking businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. As specialists in the
securities of banking companies we have experience in, and knowledge of, the
valuation of banking enterprises. In the ordinary course of our business as a
broker-dealer, we may, from time to time, purchase securities from, and sell
securities to Centura and Triangle and as a market maker in securities, we may
from time to time have a long or short position in, and buy or sell, debt or
equity securities of Centura and Triangle for our own account and for the
accounts of our customers. To the extent we have any such position as of the
date of this opinion it has been disclosed to Centura. We have acted as a
financial advisor to the Board of Directors of Centura in rendering this
fairness opinion and will receive a fee from Centura for our services.
In connection with this opinion, we have reviewed, among other things, the
Agreement and the related stock option agreement; Annual Reports to Stockholders
of Centura and Triangle for the three years ended December 31, 1998; certain
interim reports to stockholders and Quarterly Reports on Form 10-Q of Centura
and Triangle, and certain internal financial analyses and adjusted budget
forecasts for Centura and Triangle prepared by management. We also have held
discussions with members of the senior management of Centura and Triangle
regarding the past and current business operations, regulatory relationships,
financial condition and future prospects of their respective companies. In
addition, we have compared certain financial and stock market information for
Centura and Triangle with similar information for certain other companies the
securities of which are publicly traded, reviewed the financial terms of certain
recent business combinations in the banking industry and performed such other
studies and analyses as we considered appropriate.
In conducting our review and arriving at our opinion, we have relied upon
and assumed the accuracy and completeness of all of the financial and other
information provided to us or publicly available and we
D-1
138
KEEFE, BRUYETTE & WOODS, INC.
have not assumed any responsibility for independently verifying any of such
information. We have relied upon the management of Centura and Triangle as to
the reasonableness and achievability of the adjusted budget forecasts (and the
assumptions and bases therefor) provided to us, and we have assumed that such
forecasts reflect the best currently available estimates and judgments of
Triangle and Centura and that such forecasts will be realized in the amounts and
in the time period currently estimated by such managements. We have also assumed
that the aggregate allowances for loan losses for Centura and Triangle are
adequate to cover such losses. In rendering our opinion, we have not made or
obtained any evaluations or appraisals of the property of Centura or Triangle
nor have we examined any individual credit files.
We have considered such financial and other factors as we have deemed
appropriate under the circumstances, including among others the following: (i)
the historical and current financial position and results of operations of
Centura and Triangle; (ii) the assets and liabilities of Centura and Triangle;
and (iii) the nature and terms of certain other merger transactions involving
banks and bank holding companies. We have also taken into account our assessment
of general economic, market and financial conditions and our experience in other
transactions, as well as our experience in securities valuation and our
knowledge of the banking industry generally. Our opinion is necessarily based
upon conditions as they exist and can be evaluated on the date hereof and the
information made available to us through the date hereof.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Exchange Ratio pursuant to the Agreement is fair, from a
financial point of view, to the common shareholders of Centura.
Very truly yours,
/s/ KEEFE, BRUYETTE & WOODS, INC.
KEEFE, BRUYETTE & WOODS, INC.
D-2
139
REVOCABLE PROXY
TRIANGLE BANCORP, INC.
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
FOR AGAINST ABSTAIN
SPECIAL MEETING OF STOCKHOLDERS, FEBRUARY 3, 2000 C 1. Adoption of the Agreement / / / / / /
O and the related Plan of
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD M Merger by and between
OF DIRECTORS M Centura Merger Subsidiary,
O Inc. and Triangle Bancorp, Inc.
The undersigned hereby appoints Debra L. Lee N
and Steven R. Ogburn, or either of them in case the 2. In their discretion, the Proxies are authorized to vote upon such
other is unable or unwilling to act, as Proxies, other business as may properly come before the meeting or any
each with the power to appoint his or her substitute, adjournments thereof.
and hereby authorizes them to represent and to vote,
as designated below, all of the shares of voting THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE
stock of Triangle Bancorp, Inc. held of record by AGREEMENT AND PLAN OF REORGANIZATION AND THE RELATED PLAN OF MERGER.
the undersigned on December 9, 1999, at the Special
Meeting of Stockholders to be held on February 3, THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
2000, or any adjournments thereof. The affirmative DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER, BUT IF NO DIRECTION
vote of a majority of the shares represented at the IS MADE, THIS PROXY WILL BE VOTED FOR ADOPTION OF THE MERGER
meeting may authorize the adjournment of the meeting; AGREEMENT.
provided, however, that no proxy which is voted
against the Agreement and Plan of Reorganization,
dated as of August 22, 1999 by and between Centura
Banks, Inc. and Triangle Bancorp, Inc. (the
"Agreement") will be voted in favor of adjournment
to solicit further proxies for such proposal.
Please be sure to sign and date -----------------------
this Proxy in the box below. Date
- ---------------------------------------------------------
- --Stockholder sign above----Co-holder (if any) sign above
- --------------------------------------------------------------------------------
/\ DETACH ABOVE CARD, DATE, SIGN AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED. /\
TRIANGLE BANCORP, INC.
- --------------------------------------------------------------------------------
This appointment of proxy may be revoked at any time before it is exercised
by filing with the Secretary of the Corporation either an instrument revoking it
or a duly executed appointment of proxy bearing a subsequent date or by
attending the Special Meeting and voting in person.
The undersigned acknowledges receipt from Triangle Bancorp, Inc. prior to
the execution of this proxy, of Notice of Special Meeting, and the related joint
proxy statement-prospectus.
Please sign exactly as name appears on this proxy card. When shares are held
by joint tenants, both should sign. When signing as attorney-in-fact, executor,
administrator, personal representative, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by President
or other authorized officer. If a partnership, please sign in partnership name
by authorized person.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
140
REVOCABLE PROXY
TRIANGLE BANCORP, INC.
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
FOR AGAINST ABSTAIN
SPECIAL MEETING OF STOCKHOLDERS, FEBRUARY 3, 2000 E 1. Adoption of the Agreement / / / / / /
S and the related Plan of
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD P Merger by and between
OF DIRECTORS P Centura Merger Subsidiary,
Inc. and Triangle Bancorp, Inc.
The undersigned hereby appoints Debra L. Lee
and Steven R. Ogburn, or either of them in case the 2. In their discretion, the Proxies are authorized to vote upon such
other is unable or unwilling to act, as Proxies, other business as may properly come before the meeting or any
each with the power to appoint his or her substitute, adjournments thereof.
and hereby authorizes them to represent and to vote,
as designated below, all of the shares of voting THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE
stock of Triangle Bancorp, Inc. held of record by AGREEMENT AND PLAN OF REORGANIZATION AND THE RELATED PLAN OF MERGER.
the undersigned on December 9, 1999, at the Special
Meeting of Stockholders to be held on February 3, THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
2000, or any adjournments thereof. The affirmative DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER, BUT IF NO DIRECTION
vote of a majority of the shares represented at the IS MADE, THIS PROXY WILL BE VOTED FOR ADOPTION OF THE MERGER
meeting may authorize the adjournment of the meeting; AGREEMENT.
provided, however, that no proxy which is voted
against the Agreement and Plan of Reorganization,
dated as of August 22, 1999 by and between Centura
Banks, Inc. and Triangle Bancorp, Inc. (the
"Agreement") will be voted in favor of adjournment
to solicit further proxies for such proposal.
Please be sure to sign and date -----------------------
this Proxy in the box below. Date
- ---------------------------------------------------------
- --Stockholder sign above----Co-holder (if any) sign above
- --------------------------------------------------------------------------------
/\ DETACH ABOVE CARD, DATE, SIGN AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED. /\
TRIANGLE BANCORP, INC.
- --------------------------------------------------------------------------------
This appointment of proxy may be revoked at any time before it is exercised
by filing with the Secretary of the Corporation either an instrument revoking it
or a duly executed appointment of proxy bearing a subsequent date or by
attending the Special Meeting and voting in person.
The undersigned acknowledges receipt from Triangle Bancorp, Inc. prior to
the execution of this proxy, of Notice of Special Meeting, and the related joint
proxy statement-prospectus.
Please sign exactly as name appears on this proxy card. When shares are held
by joint tenants, both should sign. When signing as attorney-in-fact, executor,
administrator, personal representative, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by President
or other authorized officer. If a partnership, please sign in partnership name
by authorized person.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
141
/X/ PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE CENTURA BANKS, INC.
FOR AGAINST ABSTAIN
SPECIAL MEETING OF STOCKHOLDERS, FEBRUARY 3, 2000 1. Approval of the issuance of / / / / / /
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD shares of Centura common stock
OF DIRECTORS C pursuant to the Agreement.
The undersigned hereby appoints Frank L. Pattillo O
and Joseph A. Smith Jr., or either of them in case the M 2. In their discretion, the Proxies are authorized to vote upon such
other is unable or unwilling to act, as Proxies, M other business as may properly come before the meeting or any
each with the power to appoint his substitute, O adjournments thereof.
and hereby authorizes them to represent and to vote, N
as designated below, all of the shares of voting The undersigned acknowledges receipt from Centura Banks, Inc. prior
stock of Centura Banks, Inc. held of record by to the execution of this proxy of Notice of the Special Meeting and
the undersigned on December 9, 1999, at the Special the related joint proxy statement-prospectus.
Meeting of Stockholders to be held on February 3,
2000, or any adjournments thereof. The affirmative THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
vote of a majority of the shares represented at the ISSUANCE OF SHARES OF CENTURA COMMON STOCK PURSUANT TO THE AGREEMENT.
meeting may authorize the adjournment of the meeting;
provided, however, that no proxy which is voted THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
against the issuance of shares of Centura common DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER, BUT IF NO DIRECTION IS
stock pursuant to the Agreement and Plan of MADE, THIS PROXY WILL BE VOTED FOR APPROVAL OF THE PROPOSAL TO APPROVE
Reorganization, dated as of August 22, 1999 by and THE ISSUANCE OF SHARES OF CENTURA COMMON STOCK PURSUANT TO THE
between Centura Banks, Inc. and Triangle Bancorp, Inc. AGREEMENT.
(the "Agreement") will be voted in favor of
adjournment to solicit further proxies for such Please sign exactly as name appears on this proxy card. When shares
proposal. are held by joint tenants, both should sign. When signing as
attorney-in-fact, executor, administrator, personal representative,
trustee or guardian, please give full title as such. If a corporation,
please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by
authorized person.
Please be sure to sign and date
-----------------------
this Proxy in the box below. Date
- ---------------------------------------------------------
- --Stockholder sign above----Co-holder (if any) sign above
- -------------------------------------------------------------------------------
/\ DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED. /\
CENTURA BANKS, INC.
134 NORTH CHURCH STREET, ROCKY MOUNT, NC 27804
- -------------------------------------------------------------------------------
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
- -------------------------------------------------------------------------------
142
/X/ PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE CENTURA BANKS, INC.
FOR AGAINST ABSTAIN
SPECIAL MEETING OF STOCKHOLDERS, FEBRUARY 3, 2000 1. Approval of the issuance of / / / / / /
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD shares of Centura common stock
OF DIRECTORS 4 pursuant to the Agreement.
The undersigned hereby appoints Frank L. Pattillo 0
and Joseph A. Smith Jr., or either of them in case the 1 2. In their discretion, the Proxies are authorized to vote upon such
other is unable or unwilling to act, as Proxies, K other business as may properly come before the meeting or any
each with the power to appoint his substitute, adjournments thereof.
and hereby authorizes them to represent and to vote, P
as designated below, all of the shares of voting L The undersigned acknowledges receipt from Centura Banks, Inc. prior
stock of Centura Banks, Inc. held of record by A to the execution of this proxy of Notice of the Special Meeting and
the undersigned on December 9, 1999, at the Special N the related joint proxy statement-prospectus.
Meeting of Stockholders to be held on February 3,
2000, or any adjournments thereof. The affirmative THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
vote of a majority of the shares represented at the ISSUANCE OF SHARES OF CENTURA COMMON STOCK PURSUANT TO THE AGREEMENT.
meeting may authorize the adjournment of the meeting;
provided, however, that no proxy which is voted THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
against the issuance of shares of Centura common DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER, BUT IF NO DIRECTION IS
stock pursuant to the Agreement and Plan of MADE, THIS PROXY WILL BE VOTED FOR APPROVAL OF THE PROPOSAL TO APPROVE
Reorganization, dated as of August 22, 1999 by and THE ISSUANCE OF SHARES OF CENTURA COMMON STOCK PURSUANT TO THE
between Centura Banks, Inc. and Triangle Bancorp, Inc. AGREEMENT.
(the "Agreement") will be voted in favor of
adjournment to solicit further proxies for such Please sign exactly as name appears on this proxy card. When shares
proposal. are held by joint tenants, both should sign. When signing as
attorney-in-fact, executor, administrator, personal representative,
trustee or guardian, please give full title as such. If a corporation,
please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by
authorized person.
Please be sure to sign and date
-----------------------
this Proxy in the box below. Date
- ---------------------------------------------------------
- --Stockholder sign above----Co-holder (if any) sign above
- -------------------------------------------------------------------------------
/\ DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED. /\
CENTURA BANKS, INC.
134 NORTH CHURCH STREET, ROCKY MOUNT, NC 27804
- -------------------------------------------------------------------------------
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
- -------------------------------------------------------------------------------